Taxation and Customs Union

Non-Preferential Origin

Non-preferential rules of origin are used to determine the country of origin of goods for the application of the most-favoured nation treatment (MFN) but also for the implementation of a number of commercial policy measures such as anti-dumping and countervailing duties, trade embargoes, safeguard measures and quantitative restrictions or tariff quotas. They are also used for trade statistics, public tenders and origin marking.

The EU applies its own set of non-preferential rules of origin provisions, which may be different from those of any other third country.

General aspects of non-preferential origin

There are two basic concepts to determine the origin of goods namely wholly obtained products and products having undergone a last substantial transformation. If only one country is involved in producing a good the wholly obtained concept will be applied.

In practice this will mostly be restricted to 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, the concept of last, substantial transformation determines the origin of the goods.

Determination of non-preferential origin

Products wholly obtained in a single country

When only one country is involved in the manufacture of a product, Article 60(1) UCC applies. This article provides that “goods wholly obtained in a single country or territory shall be regarded as having their origin in that country or territory”. Article 31 UCC-DA specifies the notion of “goods wholly obtained”. It enumerates an exhaustive list of goods which shall be considered as wholly obtained in a single country or territory.

Two or more countries are involved in the manufacture of the product

When two or more countries are involved in the manufacture of the product, Article 60(2) UCC applies. This Article provides that “goods the production of which involves more than one country or territory shall be deemed to originate in the country or territory where they underwent their last, substantial, economically justified processing or working, in an undertaking equipped for that purpose, resulting in the manufacture of a new product or representing an important stage of manufacture”.

A distinction should be made between products which are included in Annex 22-01 UCC-DA and those which are not included there.

However, some provisions apply to all products, whether or not included in Annex 22.01 UCC-DA:

  • Certain working or processes never confer non-preferential origin on a product obtained, even when the rule is fulfilled. These are known as minimal operations (Art.34 UCC-DA).
  • Where the purpose of the processing or working operation carried out in another country or territory is to avoid the application of certain tariff measures, that operation shall be deemed not to be economically justified. In such circumstances, the country of origin is determined by application of the "residual rules" (Art. 33 UCC-DA).

Determination of origin for products which are included in the Annex 22-01 UCC-DA

For particular goods, legally binding rules have been laid down in Annex 22-01 UCC-DA in order to determine the criteria to be fulfilled and/or the operations to be carried out on the product in the last country of production to confer non-preferential origin on the product.

The rules in the annex must be read in combination with the introductory notes describing how to apply the rules of Annex 22-01 UCC-DA (see also the Guidance on non-preferential rules of origin which provides some clarifications on the use of Annex 22-01 UCC-DA). The list rules applicable to products covered by specific provisions in Annex 22-01 are represented in a highlighted manner in the table of "list rules".

When the list rule is not fulfilled in the last country of production, the country of origin is determined by application of the "residual rules" laid down at the beginning of each Chapter.

The provisions of Annex 22-01 (including its introductory notes) only apply to goods specifically listed at at least 4 HS digit level in this Annex .

Determination of origin for products not included in the Annex 22-01 UCC-DA

For goods not listed in Annex 22-01 UCC-DA the origin is determined on a case-by-case basis by evaluating any process or operation in relation to the concept of the last substantial processing or working as defined in Article 60(2) of the UCC. No legally binding rules exist for those products. In an effort to increase the harmonised interpretation of the basic principle of 'last substantial transformation' for goods not listed in Annex 22-01 UCC-DA, specific non-legally binding guidance for those products has been elaborated.

In this respect, the definitions and the rules of the "introductory notes to the table of list rules" apply, equally in a non binding way. The guidance for those products is added to the table of "list rules" in a non highlighted manner.

The application of the non-legally binding rule may not contradict the principle established in Article 60(2) UCC. When the list rule is not fulfilled in the last country of production, the country of origin is determined by application of the "residual rules" laid down at the beginning of each Chapter.

Checking the declared origin and proof of origin

The non-preferential origin of the goods is a mandatory element of the declaration for release for free circulation.

The declarant is responsible for the correct origin determination and should hold the information on the processing that has taken place in the last country of production of the goods declared for release for free circulation in the EU.

Proof of origin is all evidence submitted to support the declared origin. Customs authorities should not request a non-preferential certificate of origin issued in a third country as a proof of the origin. The only exception is a certificate of origin for products subject to special non-preferential import arrangements as referred to in Articles 57-59 UCC-IA and laid down in Annex 22-14- UCC-IA, where this is specifically requested in the legislation for example to benefit from a certain quota.

More information is to be found in the Guidance on non-preferential rules of origin