Free trade
PEM: New rules of origin coming January 1, 2025
The modernized rules of origin will apply in the Pan-Euro-Med zone starting in 2025. A look at the countries, timeline, and rule changes.
26.09.2024
The EU and its fellow contracting parties in the Pan-Euro-Mediterranean (PEM) zone have, following several years of negotiations, agreed on reforms to the rules of origin under the Regional Convention.
The Regional Convention on PEM preferential rules of origin came into force in 2012. It gradually replaced the rules of origin in many of the bilateral agreements between the contracting parties.
Not all contracting parties initially agreed to the reformed rules, so they have been available as transitional rules for some agreements since 2021.
Starting January 1, 2025, only the new rules of origin will apply under the Regional Convention. The EU Directorate-General for Taxation and Customs Union (TAXUD) provides information on the website Pan-Euro-Mediterranean cumulation and PEM Convention.
Pan-Euro-Med matrix – which countries are included?
Companies in the EU can apply the transitional rules when trading goods with the following PEM contracting parties:
- Northern and Central Europe: Iceland, Liechtenstein, Norway (EEA), Switzerland, Faroe Islands (since September 1, 2021)
- Southern and Eastern Europe: Albania, Georgia (since September 1, 2021), North Macedonia (since September 9, 2021), Republic of Moldova (since November 16, 2021), Serbia (since December 6, 2021), Montenegro (since February 2, 2022), Kosovo (since October 15, 2022), Ukraine (since December 1, 2023)
- Mashreq states: Jordan, Palestine (since September 1, 2021)
Some of the contracting parties have also ratified the new rules in relation to each other, allowing for diagonal cumulation between these countries.
All contracting parties are represented in the Pan-Euro-Med matrix: the European Union, Switzerland, Iceland, Liechtenstein, Norway, the Faroe Islands, Turkey, Morocco, Algeria, Tunisia, Egypt, Israel, Jordan, Lebanon, the West Bank and Gaza Strip, Georgia, Moldova, Ukraine, Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia, and Kosovo.
The matrix describes which countries in the PEM zone have concluded agreements with each other and are therefore allowed to cumulate. “(C)” after a date indicates the application of the Regional Convention. “(R)” indicates the change of rules effective January 1, 2025. Agreements marked with an (R) in the matrix will apply only the new rules of origin without an alternative starting January 1, 2025.
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PEM rules of origin – key changes
The modernized rules of origin can be summarized in the following simplifications:
- Streamlined handling and processing rules
Elimination of cumulative requirements, lower thresholds, consolidation of rules of origin, and elimination of many former rules for HS headings and subheadings - Option to calculate ex-works price and value of non-originating materials on the basis of average values during a fiscal year
- Increase in general tolerance from 10% to 15%
- Introduction of weight rules, particularly in sections 1 to 24
- Option for textiles to achieve originating status through a wider range of processing steps
- Full cumulation for most goods
- Weakening of the no-drawback rule
Option of duty drawback (for inward processing, for example) for most products
Proofs of origin – current and future
The EUR-MED and the EUR-MED declaration of origin have been eliminated. EUR.1 and the declaration of origin remain in use. Approved exporters can also submit declarations of origin for consignments over 6,000 euros. It is also possible to agree bilaterally that, in lieu of the declaration of origin, a statement on the origin can be submitted by an exporter registered in an electronic database.
On December 7, 2023, the PEM Joint Committee also adopted a recommendation that electronic proofs of origin should be accepted under the current PEM Convention.
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