Pan-Euro-Mediterranean (PEM) countries agreed to unlock the full potential for trade in the region

On 7 December 2023, the PEM Joint Committee adopted the new and modernised rules of origin that aims to increase trade between the European Union and neighbouring countries in the Pan-Euro-Mediterranean (PEM) region. The rules of origin will be implemented as of 1 January 2025 and will modernise all preferential trade agreements among the 24 PEM trading partners by making the relevant ‘rules of origin' in those agreements more flexible and business-friendly.

The PEM Joint Committee also agreed to develop the use of electronic certification of origin in the view of further simplification of customs formalities.

This amendment of the origin rules concerns 24 Contracting Parties to the PEM Convention: the European Union, Iceland, Liechtenstein, Norway, Switzerland, Faroe Islands, Türkiye, Morocco, Algeria, Tunisia, Egypt, Israel, Jordan, Lebanon, Palestine (this designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of the Member States on this issue), Georgia, the Republic of Moldova, Ukraine, Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia and Kosovo*.

Trade with these countries accounted for around €700 billion in 2022, which is half of the EU's preferential trade.

These provisions will make it easier for products to benefit from trade preferences, such as:

• Simpler product-specific rules, such as the elimination of cumulative requirements, thresholds for local value added, more adapted to EU production needs, and new double transformation for textiles;

• Increased thresholds of tolerance for non-originating materials, from 10% to 15%;

• The introduction of “full” cumulation, under which the manufacturing operations needed to acquire origin for most products can be split among several countries;

• The possibility of duty-drawback (repayment of duties on imported components) for most products to help EU exporters compete.

The new rules, the result of ten years of negotiations, will apply as of 1 January 2025 in the context of the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (PEM Convention).

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence

More on the PEM Convention is available here