1. 1 PREFERENTIAL RULES OF ORIGIN A GLOBAL EU TRADE POLICY BASIC PRINCIPLES PREFERENTIAL TRADE ARRANGEMENTS ARE AIMED AT INCREASING RECIPROCAL TRADE IN GOODS AND ACCESS TO THE COMMUNITY MARKET FOR PRODUCTS FROM DEVELOPING COUNTRIES BY ELIMINATING OR REDUCING CUSTOMS DUTIES THESE TARIFF PREFERENCES ONLY MAKE SENSE IF THEY APPLY TO PRODUCTS ACTUALLY AND REALLY OBTAINED IN THE COUNTRY THAT GRANTED THE PREFERENCE… ORIGINATING STATUS OF GOODS

2. 2 REQUIRED ACTION IN THREE AREAS +ACTION TO DETERMINE THE ORIGIN OF THE PRODUCT +ACTION TO CHECK IF RULES OF ORIGIN ARE FAIRLY APPLIED +PROCEDURE FOR BALANCE OF RESPONSIBILITIES BETWEEN TRADE GAINING FROM PREFERENTIAL ARRANGEMENTS AND AUTHORITIES

3. 3 WHAT IS THE IMPACT OF PREFERENTIAL ARRANGEMENTS? +EU USES PREFERENTIAL ARRANGEMENTS TO GIVE PREFERENTIAL TREATMENT TO IMPORTS FROM GIVEN COUNTRIES AND FOR GIVEN GOODS EITHER BY REGIONAL ECONOMIC INTEGRATION TO CREATE FREE TRADE AREAS OR CUSTOMS UNION OR UNILATERAL… PRIMARILY WITH A VIEW TO THE DEVELOPMENT OF THE BENEFICIARY COUNTRIES +HOW EXTENSIVE? _EU INVOLVED IN 4O PREFERENTIAL ARRANGEMENTS WITH COUNTRIES OR GROUPS OF COUNTRIES _ABOUT TWO THIRD OF COMMUNITY ANNUAL IMPORT _WORTH SOME 1000 BILLION EURO _PREFERENTIAL ARRANGEMENTS ACCOUNT FOR 45% OF THESE COUNTRIES _21% OF COMMUNITY TOTAL ANNUAL IMPORTS

4. 4 IMPORTANT PROPORTION BUT RATHER LOW PROPORTION +BECAUSE NO ARRANGEMENTS WITH MAJOR TRADE PARTNERS SUCH AS US … JAPAN … +BECAUSE MANY PRODUCTS ARE NOT SUBJECT TO CUSTOMS DUTY +BECAUSE NOT ALL THE PRODUCTS ARE ELIGIBLE FOR PREFERENCE +BECAUSE SOME ELIGIBLE PRODUCTS DO NOT SATISFY TO CONDITIONS OF ORIGIN +BECAUSE TRADERS SOMETIMES ABANDON THE IDEA OF CLAIMING PREFERENCE HAVING WEIGHED UP THE PROFIT TO BE GAINED AGAINST THE COST

5. 5 WHAT ARE PREFERENTIAL RULES? BASIC ORIGINATING STATUS=PREFERENCE PASSPORT _RAW MATERIALS _WORKING OR PROCESSING OF NON ORIGINATING CRITERIA GENERATING CHANGE IN TARIFF HEADING…PERCENTAGE OF VALUE ADDED SPECIFIC PROCESS… OR COMBINATION OF CRITERIA HOW TO CHECK ? CERTIFICATION BY AUTHORITIES OF EXPORTING COUNTRIES EITHER DIRECTLY …VIA CERTIFICATES OF AUTHORITIES OR INDERECTLY…VIA AUTHORISATION ENABLING EXPORTERS TO DEMONSTRATE THE ORIGIN

6. 6 SIMPLE PRINCIPLE… DIFFICULT MANAGEMENT =MANAGEMENT OF THE SYSTEM AND MONITORING OF RIGHT APPLICATION OF THE RULES NOT ALWAYS EASY =MONITORING OF THE REGIME AND APPROPRIATE APPLICATION OF THE RULES BY CONTRACTING PARTIES …ESPECIALLY SOME COUNTRIES WITHOUT WELL ORGANISED ADMINISTRATIONS IS NOT AN EASY TASK FOR THE COMMUNITY AND FOR THE COMMISSION IN PARTICULAR. +INDEED IMPLEMENTATION OF PREFERENTIAL TARIFFS =REQUIREMENT OF PERMANENT EXCHANGE OF INFORMATION INDISPENSABLE FOR MANAGEMENT OF RULES OF ORIGIN +THOUGH THE COUNTRIES WHERE PROBLEMS ARE ORIGINATING ARE KNOWN THE FEASIBILITY OF CONTROL ON THE SPOT IN COUNTRY OF ORIGIN IS DIFFICULT +HUGE FINANCIAL LOSSES FOR THE COMMUNITY IN CASE OF FRAUDS AND IRREGULARITIES..WRONG OR FALSIFIED..OR REAL FALSIFIED CERTIFICATES OF ORIGIN +IMPORTER PROVING GOOD FAITH CAN BE EXEMPTED FROM PAYMENT OF DUTIES… RECENT EVOLUTION

7. 7 DIFFICULT MANAGEMENT +FOR SOME PRODUCTS IT IS CLEAR THAT THEY ORIGINATE IN A COUNTRY BECAUSE OBTAINED FROM LOCAL RAW MATERIALS +FOR SOME PRODUCTS IT IS LESS CLEAR BECAUSE THE GOODS ARE THE PRODUCT OF WORKING OR PROCESSING OF NON ORIGINATING IMPORTED GOODS IN A COUNTRY…TURKISH TELEVISIONS +IF IN THE LATTER CASE A PRODUCT IS TO OBTAIN ORIGINATING STATUS THE PROCESSING MUST BE SUBSTANTIAL ENOUGH TO ESTABLISH A GENUINE LINK BETWEEN THE PRODUCT AND THE COUNTRY

8. 8 DIFFICULT MANAGEMENT +CRITERIA HAVE BEEN ESTABLISHED FOR EACH CATEGORY OF PRODUCTS… TARIFF HEADING..PERCENTAGE OF VALLUE ADDED…SPECIFIC PROCESS OR COMBINATION OF CRITERIA IN ORDER TO DETERMINE WHETHER OPERATIONS CARRIED OUT IN A GIVEN COUNTRY ON NON ORIGINATING MATERIALS USED TO OBTAIN THE PRODUCTS ARE SUFFICIENT TO CONSIDER THEM AS ORIGINATING FROM THAT COUNTRY +SOME MINOR OPERATIONS… MINIMAL PROCESSES NEVER CONFER ORIGINATING STATUS OF THE GOODS

9. 9 NEW EXAMINATION…NEW 2004 CONSULTATION=GREEN PAPER OF THE EU COMMISSION CHECKING ORIGIN REQUIRE ARRANGEMENTS FOR CLOSE ADMINISTRATIVE COOPERATION BETWEEN EXPORTING COUNTRIES AND IMPORTING COUNTRIES WHO GRANTED PREFERENCE TREATMENT THE OBVIOUSLY SIMPLE MECANISM BETWEEN COUNTRIES OF DEPARTURE AND COUNTRIES OF ENTRY IS VERY SIMPLY INDICATING WHERE THE SHORTCOMINGS,IRREGULARITIES AND EVEN FRAUDS CAN BE DETECTED AND SLIP IN THE PREFERENTIAL ARRANGEMENTS WHATEVER THEIR STRUCTURE IS THE EU COMMISSION AWARE OF THE PROBLEMS LAUNCHED AT THE END OF 2OO3 A WIDE RANGE CONSULTATION AND IS CURRENTLY EXAMINING THE VIEWS OF AUTHORITIES AND TRADE THIS ONGOING PROCESS WILL GENERATE NEW RECOMMENDATIONS

10. 10 SHORTCOMINGS AND FAILURES IN COOPERATION =UP TO DATE RECOMMENDATIONS ARE NOT EVIDENT BECAUSE THE CURRENT SYSTEM ADMINISTRATING AND SUPERVISING THE RULES OF ORIGIN IS BASED ESSENTIALLY ON ADMINISTRATIVE COOPERATION BETWEEN AUTHORITIES OF EXPORTING AND IMPORTING COUNTRIES +EXPORTING COUNTRIES CERTIFY AND VERIFY THE ORIGIN OF THE PRODUCTS +MANAGEMENT IS A MATTER OF ADMINISTRATIVE COOPERATION AND IRREGULARITIES REPRESENT AN HINDRANCE FOR FAIR TRADE AND THE PROTECTION OF ECONOMIC AND FINANCIAL INTERESTS OF THE COMMUNITY +ADMINISTRATIVE COOPERATION MEAN THAT IMPORTING COUNTRIES SHOULD RELY ON EXPORTING COUNTRIES IN THE EVENT OF PROBLEMS OR SUSPECTED PROBLEMS

11. 11 SHORTCOMINGS =IF THIS COOPERATION IS FAILING OR NOT WELL IMPLEMENTED IMPORTING COUNTRIES ARE IN A POWERLESS POSITION TO PROTECT ITS LEGITIMATE INTERESTS =THE BASIS IS THE GOODWILL AND THE GOOD FAITH OF EXPORTING COUNTRIES =OFTEN EXPORTING COUNTRIES ARE RELUCTANT TO ACTION TO CONDUCT THOROUGH CHECKS IN CONNECTION WITH AN EXPORT OPERATION..EVEN WHEN REQUIRED BY IMPORTING COUNTRIES ON REASONABLE GROUNDS

12. 12 EU COMMISSION 2004 GREEN PAPER=A NEW STRATEGY? A NEW DISTRIBUTION OF RESPONSIBILITES WITH REGARD TO ORIGIN IS REQUIRED BETWEEN AUTHORITIES OF COUNTRIES LINKED BY PREFERENTIAL ARRANGEMENTS AS WELL BETWEEN AUTHORITIES AND TRADE THE 2004 GREEN PAPER IS AN APPROPRIATE REFLECTION AT THE STAGE OF CONSULTATION THE JUDGMENT OF THE COURT OF FIRST INSTANCE IN LUXEMBURG IN THE TURKISH TELEVISION CASE WAS ONE IMPETUS

13. 13 CONCLUSION ANYWAY AT THE STAGE OF THE GREEN PAPER CONSULTATION TRADE SHOULD INSIST ON SOME BASIC REALISTIC PROPOSALS AND SOLUTIONS TO MINIMIZE IRREGULARITIES AND FRAUDS =COMPULSORY VERIFICATION OF STAMPS IN COUNTRY OF ORIGIN AND COUNTRY OF ENTRY = STRICTLY MONITORING OF ISSUE OF CERTIFICATES =PRECISE SANCTIONS FOR FRAUD AGREED BY CONTRACTING PARTIES = INCREASED SELECTION OF LIABILITY OF PARTNER COUNTRIES =ABOLITION OF PREFERENTIAL AGREEMENTS WITH HIGH RISK COUNTRIES =EXTENSION OF THE PRINCIPLE OF GOOD FAITH FOR OPERATORS WHO WERE NEVER IN A POSITION TO DETECT INITIAL STAGE IRREGULARITY OR FRAUD = A GOOD FAITH PRINCIPLE MEANS NO REPONSIBILITY FOR TRADE… AS A RESULT OF TURKISH TELEVISION JUDGMENT

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