Preferential origin
Also known as: Preferential origin, PSR - Product Specific Rules
Customs determination that goods have been sufficiently processed in the country of origin under the rules of a free-trade agreement and can therefore enjoy reduced or zero duties in the importing country.
Description
Preferential origin — not to be confused with non-preferential (purely statistical) origin — determines whether an imported textile can benefit from reduced or eliminated duties under a free-trade agreement. The basis is the specific agreement: EU-Vietnam (EVFTA, 2020), EU-Canada (CETA), EU-Japan (JEFTA), EU-UK (TCA), EU-South Korea, EU-Switzerland, EU-Turkey (customs union) as well as unilateral preferences such as GSP for developing countries.
Textiles often have particularly strict product-specific rules of origin (PSR). For apparel of HS chapters 61 and 62 EU FTAs almost always require "manufacture from yarn" (double transformation): the yarn must be spun in the preferential country, converted to fabric/knit and then made up into apparel. A pullover cut and made up in Vietnam from Chinese fabric therefore does not obtain preferential origin Vietnam under EVFTA. Proof is provided under EU preferences by a statement on origin from the registered exporter (REX system) or by movement certificate EUR.1/EUR-MED for older agreements. Incorrect preferential statements are punished with back-payment of duties and fines by EU customs.
Properties
| Legal basis | Respective free-trade agreement (EVFTA, CETA, JEFTA, TCA, etc.) |
|---|---|
| Textile rule EU FTA | Usually "manufacture from yarn" (double transformation) |
| EU proof | REX statement or EUR.1/EUR-MED |
| Example | Apparel of HS 61/62 with textile origin Vietnam under EVFTA |
Related product categories
Sources & references
1- EU Access2Markets - Rules of Origin trade.ec.europa.eu https://trade.ec.europa.eu/access-to-markets/en/content/rules-origin-0
