Ukraine became a party to the Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin (hereinafter – the Convention) on 1 January, 2018.
The Convention is an instrument that lays down identical rules of origin for goods traded under the relevant free trade Agreements concluded between its Contracting Parties.
The Contracting Parties to the Convention are: the EU; the EFTA States (Iceland, Liechtenstein, Norway, Switzerland); Albania; Algeria; Bosnia and Herzegovina; Georgia; Egypt; Israel; Jordan; Lebanon; Kosovo; Northern Macedonia; Morocco; Moldova; Palestine; Serbia; Syria; Tunisia; Turkey; Ukraine; Faroe Islands and Montenegro.
Ukraine's participation in the Convention potentially expands opportunities for export of goods at zero or reduced duty rate to promising foreign markets. The application of common rules of origin and the principle of diagonal cumulation also provides advantages for the development of trade relations between Contracting Parties and contributes to Ukraine's involvement in regional and international value chains.
The diagonal cumulation applies between more than two countries if they have free trade agreements containing identical rules of origin and cumulation provisions.
On the date of Ukraine's accession to the Convention Ukraine had existing free trade agreements with such Contracting Parties of the Convention: Georgia; the EFTA States; Northern Macedonia; Moldova; Montenegro. The creation of the deep and comprehensive free trade area is also provided for in the Association Agreement with the EU. All those Agreements contained protocols on rules of origin, specific to each Agreement.
To make the most of the benefits of the Convention and for the purpose of its implementation Ukraine is amending its current free trade agreements with Contracting Parties by replacing the protocols with rules of origin of the Convention:
DECISION No 1/2018 of the EU-Ukraine Customs Sub-Committee of 21 November 2018 replacing Protocol I to the EU-Ukraine Association Agreement, concerning the definition of the concept of ‘originating products’ and methods of administrative cooperation
On September 30, 2020, the Commission notice concerning the application of the Regional Convention on pan-Euro-Mediterranean preferential rules of origin or the protocols on rules of origin providing for diagonal cumulation between the Contracting Parties to this Convention (2020/C 322/03) was published in the Official Journal of the European Union. The updated matrix of the Convention contains designations for the application of diagonal cumulation of origin for goods between Ukraine and Georgia.
Actually, the conditions for the development of additional export opportunities in the Ukraine-EU-Georgia triangle have been created, which will promote the involvement of Ukrainian producers in regional and international value chains and potentially expand the opportunities for preferential export of goods to promising foreign markets
The rules of origin of the Convention apply automatically in new agreements between Ukraine and Contracting Parties from the moment of their entry into force. The Free Trade Agreement between the Cabinet of Ministers of Ukraine and the Government of the State of Israel (Law of Ukraine of July 11, 2019 № 2753-VIII) entered into force from January 1, 2021.
A final revision of the Convention is underway to modernize the rules of origin. The application of the updated rules of origin by the Parties to the Convention will have an impact in the long run on the development of the processing industry.