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2.3.1. The rules on nationality and origin

The conditions of access to EU external assistance (including EDF and OCTs) are laid down in the basic acts governing such assistance. For each basic act, specific eligibility provisions may apply.

For each basic act, the corresponding rules on nationality and origin are listed in Annexes A2 to this Practical Guide.

As from 15 March 2014, the rules of eligibility (nationality and origin) laid down in the CIR are applicable to all calls financed under the Budget with the exception of calls funded under IPA I. For actions financed under the Budget to which the CIR is not applicable, please refer to the specific eligibility rules (nationality and origin) specified in the relevant basic act and the relevant Annexes A2b or A2c for the list of eligible countries. The section below only addresses the eligibility rules under the CIR and under the EDF, for a detailed of the eligibility rules for the OCT please see Annexes A2.

- Rule on nationality

BUDGET-FUNDED PROGRAMMES

Subject to other specifics rules set out in the applicable financing decisions or financing agreements, for all EU budget-funded programmes, except IPA I the CIR is applicable. This regulation has aligned been nationality rules to a very large extend for DCI, ENI, PI and INSC. IPA II remains more restrictive while EIDHR and ISP are fully untied. Common core rules and particularities introduced in the CIR are presented in detail in Annex A2a. The main elements are summarised below:

Participation is open to international organisations and to all natural persons who are nationals of, and legal persons which are effectively established in, an eligible country (see the detailed list in Annex A2a):

  • a Member State of the European Union;

  • a Member State of the European Economic Area;

  • a beneficiary of the Instrument for Pre-Accession Assistance II,

  • Developing countries and territories,( included in the OECD-DAC list of ODA recipients), which are not members of the G-20 group;

  • Developing countries, as included in the list of ODA recipients, which are members of the G20 group, and any othercountries and territories, that are beneficiaries of the action financed by the Union under the Instruments concerned;

  • another third country, according to the derogations stated in the basic act (see point 2.3.2.);

  • another third country covered by a European Commission decision establishing reciprocal access to external aid.

  • Reciprocal access in the Least Developed Countries (LDC) and in Heavily Indebted Poor Countries (HIPC) is automatically granted to OECD members. For regional or global programmes which include at least one LDC or HIPIC, the automatic reciprocal access applies to the whole regional programme.

The CIR also provides for rules on how to reconcile its nationality rules with those of another entity or another Instrument involved in the project.

  • In the context of action implemented through direct management with partner and other donor, in the case of actions financed in full or co-financed in parallel, the rules of nationality of the EU instrument apply to the part of the action financed by it. In the other cases, countries that are eligible under the rules that partner or other donor are also eligible.

  • In the context of actions implemented under shared management with Member State, countries that are eligible under the rules of that Member State are also eligible.

  • In the context of actions implemented through indirect management, countries that are eligible under the rules of the entrusted body are also eligible, except when the management is entrusted to partner countries (as per article 58 c (i) of the FR). In the latter case the rules of the EU instrument applies.

  • In the case of actions implemented through a Trust Fund established by the Commission, countries which are eligible under the rules determined in the trust fund constitutive act are also eligible.

  • In the case of actions financed by more than one Instrument for external action, including the European Development Fund, the countries/beneficiaries/territories identified under any of these Instruments are eligible for the purpose of those actions.

  • In the case of actions of a global, regional or cross-border nature financed by one of the Instruments, the eligibility can be extended to the countries, territories and regions covered by the actions.

For each basic act, the detailed list of eligible countries are listed in Annexes A2a and A2b to this Practical Guide.

EDF-FUNDED PROGRAMMES

Until the entry into force of the revision of the  Annex IV to Cotonou Agreement, for EDF-funded programmes participation is open to international organisations and to all natural persons who are nationals of, or legal persons who are established in an eligible country (see the detailed list in Annex A2a):

  • an ACP State;

  • a Member State of the European Community, an official candidate country of the European Community or a Member State of the European Economic Area;

  • all natural persons who are nationals of, or legal persons who are established in, a Least Developed Country as defined by the United Nations;

  • any other country where reciprocal access to external assistance has been established. Reciprocal access in the Least Developed Countries as defined by the United Nations is automatically granted to the OECD/DAC members. For regional or global programmes which include at least one LDC the automatic reciprocal access applies to the whole regional programme.

When the proposed amendments to Annex IV of Cotonou are adopted (foreseen mid 2014), the list above will be modified as follows:

  • an ACP State.

  • a Member State of the European Community, beneficiaries of the Instrument for pre-accession assistance of the European Community, a Member State of the European Economic Area and overseas countries and territories covered by Council Decision (2001/822/EC of 27 November 2001);

  • developing countries and territories, as included in the OECD-DAC list of ODA recipients, which are not members of the G-20 group, without prejudice to the status of the Republic of South Africa, as governed by Protocol 3;

  • countries for which reciprocal access to external assistance has been established by the Commission in agreement with ACP countries;

  • A Member State of the OECD, in the case of contracts implemented in a Least Developed Country or a Highly Indebted Poor Country (HIPC), as included in the OECD-DAC list of ODA Recipients published by the OECD-DAC; For regional or global programmes which include at least one LDC or HIPIC, the automatic reciprocal access applies to the whole regional programme.

Until the entry into force of the revision of the  Annex Iv to Cotonou Agreement, Annexe IV to Cotonou provides for the following rules on how to reconcile its nationality rules with those of another entity or another Instrument involved in the project:

  • W hen an operation is implemented through an international organisation, the rules of the organisation are also applicable;

  • When an operation is implemented as part of a regional initiative, natural and legal persons from a country participating in the relevant initiative are also eligible;

  • When an operation is co-financed with a third State, participation is also open to all persons eligible under the rules of the above mentioned third State;

  • In the case of projects financed from the Investment Facility, the procurement rules of the Bank shall apply;

When the proposed amendments to Annex IV of Cotonou are adopted (foreseen mid 2014), the list above will be modified as follows:

  • W hen an operation is implemented through an international organisation, the rules of the organisation are also applicable;

  • When an operation is implemented as part of a regional initiative, natural and legal persons from a country participating in the relevant initiative are also eligible;

  • When an operation is co-financed with a partner or other donor or implemented through a Trust Fund established by the Commission, participation is also open to all persons eligible under the rules of that partner, other donor or under the rules determined in the Trust Fund constitutive act;

  • In case of actions implemented through entrusted bodies, which are Member States or their agencies, the European Investment Bank or through international organisations or their agencies, natural and legal persons who are eligible under the rules of that entrusted body as identified in the agreements concluded with the co-financing or implementing body shall also be eligible;

  • In the case of projects financed under another EU financial Instrument, participation is also open to all persons eligible under any of these Instruments.

For the complete list of eligible countries please refer to Annex A2a to this Practical Guide.

- Rules for experts:

  • Both for the EDF (including OCTs) and BUDGET-Funded programmes, the nationality of experts and other natural persons employed or legally contracted do not have to follow the nationality rules. Therefore, unless otherwise provided for in the applicable financing decision/agreement, experts recruited or otherwise legally contracted by an eligible contractor/sub-contractor, may be of any nationality.

How to verify compliance with the nationality rules?

For the purposes of verifying compliance with the nationality rule, the tender dossier and the guidelines for applicants require tenderers and applicants being natural persons to state the country of which they are nationals. For legal persons, the tender dossier and the guidelines for applicants requires that the country in which they are established is stated and evidenced by presenting the documents required under that country's law.

If the contracting authority (or evaluation committee) suspects that a candidate, tenderer or applicant does not comply with the rules, it must ask the candidate/tenderer/applicant to provide evidence demonstrating actual compliance with the applicable rules.

To demonstrate their actual compliance with the "establishment" criteria, legal persons have to demonstrate that:

  • their legal person is formed under the law of an eligible State, and

  • their real seat is within an eligible State. "Real seat" must be understood as the place where its managing board and central administration are located or its principal place of business.

This is to avoid awarding contracts to firms which have formed “letter box” companies in an eligible country to circumvent the nationality rules.

The decision on whether or not candidates/tenderers/applicants are eligible is taken by the contracting authority (usually on the basis of the information and evidence provided during the evaluation).

origin of goods

  •  The rule of origin:

All supplies10 purchased under a procurement contract, or in accordance with a grant contract, financed under the EU budget or the EDF shall originate from an eligible country as per the corresponding Instrument. (see above, 'nationality', and below, 'Derogations to the rule on nationality and origin').

BUDGET-FUNDED PROGRAMMES

However, according to the CIR, when the value of the supplies to be purchased is below 100 000 euros per purchase, the supplies do not have to originate from an eligible country (full untying). This general derogation to the rule of origin implies that :

  •  for the award of supply contract, the tender procedures for which the budget envisaged for the amount to be supplied is below 100 000 euros (i.e. if works or anciliary services are requested, the budget envisaged for them is not taken into account) will benefit from this general derogation. The contract notice will have to indicate that the tender procedure benefit from the derogation. If the procurement procedure is to be divided into lots, this applies per lot. The division into lot shall not be used to get around the rules of origin. The services would have to pay special attention to the legitimity of the division into lot to avoid artificial slicing.

  •  within a grant or works contract, the rules of origin applies only to supply purchase for an amount equal or above 100 000 euros.

Please note that the above rule is not yet applicable to EDF funded contracts; it will only be applicable after adoption of the revision of Annex IV of Cotonou (foreseen mid 2014).

  • The scope of the rule:

Subject derogation ( granted on case by case or resulting from a general derogation provided for by the Legal basis) all goods to be delivered under a supply contract fall under the rules of origin, as do materials, goods and components to be incorporated or to form part of the permanent works under a works contract.

Considering that the rule of origin applies to all items tendered and supplied, it is not enough if only a certain percentage of the goods tendered and supplied or a certain percentage of the total tender and contract value comply with this requirement.

Goods purchased by the contractor for use during the carrying out of the contract (such as machinery used by a supply contractor for testing and installing the goods supplied, equipment used by a works contractor for building a road11, computer used by a service contractor to draft a study) are not subject to the rule of origin. It is only if the contract explicitly states that at the end of the contract the ownership of the goods is transferred from the contractor to the contracting authority (in the case of procurement contracts) or to the designated local beneficiary(ies) or affiliated entity(ies) and/or final beneficiary of the action (in the case of grant contracts), that these good are subject to the rule of origin.

  •  Definition of "origin":

The term 'origin' is defined in the relevant EU legislation on rules of origin for customs purposes: the Customs Code (Council Regulation (EEC) No 2913/92) in particular its Articles 22 to 24 thereof, and the Code's implementing provisions (Commission Regulation (EEC) No 2454/93).

The country of origin is not necessarily the country from which the goods have been shipped and supplied. Two basic concepts are used to determine the origin of goods, namely the concept of “wholly obtained” products and the concept of products having undergone a "last substantial transformation".

If only one country is involved in the production, the "wholly obtained" concept will be applied. In practice, these goods wholly obtained in a single country shall be regarded as having their origin in that country. This will be restricted to mostly products obtained in their natural state and products derived from wholly obtained products.

If two or more countries are involved in the production of goods it is necessary to determine which of those countries confers origin on the finished goods. For this purpose the concept of "last, substantial transformation" is applied.

  •  The proof:

When submitting its tender, the tenderer must state expressly that all the goods meet the requirements concerning origin and must state the country(ies) of origin. When tendering for systems comprising more than one item, the origin of each item in the system must be specified. The supplier may be requested to provide documents supporting the stated origin. In this case, the supplier must provide a certificate of origin or additional information considering that the issuing authority may refuse to issue at tendering stage a certificate of origin without presentation of commercial invoices.

The official certificates of origin must, in any case, be submitted at the latest when the certificate of provisional acceptance is requested. Failing this, the contracting authority will not make any further payment to the contractor.

Certificates of origin must be issued by the competent authorities of the goods' or supplier's country of origin (usually the Chamber of Commerce) and comply with the international agreements to which that country is a signatory.

It is the contracting authority's obligation to check the existence of a certificate of origin. Where there are serious doubts about the authenticity of a certificate of origin or the information it contains (e.g. because of discrepancies in the document, spelling errors, etc.), the contracting authority should contact the issuing authority and request confirmation of the authenticity of the documents submitted and the information it contains. For EDF procurement, supplies originating in the Overseas Countries and Territories are regarded as originating in the EU.


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10
Supplies and materials under Cotonou, Annex IV.

11
In a work contract, the option of having equipment vested in the contracting authority, given under Article 43.3 of the General Conditions, only applies while the works are being carried out and therefore does not constitute full transfer of the property.



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