Documents considered by the committee on 10 November 2010, including the following recommendation for debate: Safety of offshore oil and gas activities - European Scrutiny Committee Contents

7   Rules of origin in preferential trade



COM(05) 100

Commission Communication: The rules of origin in preferential trade arrangements — Orientation for the future

Legal base
DepartmentBusiness, Innovation and Skills
Basis of considerationMinister's letter of 26 October 2010
Previous Committee ReportHC 34-i (2005-06), chapter 19 (4 July 2005)
To be discussed in CouncilSee paragraph 7.3 below
Committee's assessmentPolitically important
Committee's decisionCleared


7.1  The Commission says that rules of origin are an essential part of EU trade policy, particularly where tariff preferences are granted to products originating only in certain countries (as, for example, under the Generalised System of Preferences, which seeks to concentrate help on the least developed countries). However, it put forward in March 2005 this Communication, suggesting that these rules should reflect the link between the products and country concerned, especially as regards the level of processing of any external inputs, and that the arrangements in place were not satisfactory, as they involved a series of complex rules combined in many cases with poor enforcement. It therefore suggested a number of ways in which those arrangements could be improved.

7.2  As our predecessors noted in their Report of 4 July 2005, this involved in particular simplifying and relaxing the concept of origin, including cumulation of origin (which enables countries applying identical rules of origin to be formed into a group for origin purposes); more efficient procedures; and improved means of securing compliance. They also noted that the then Government had said that, although the document was not a formal proposal, its suggestions were welcome, but that these did not go far enough in making it easier for developing countries to benefit from preferential trading arrangements. It therefore intended to continue to press for greater liberalisation. Our predecessors also commented that, although the drawing up of appropriate rules of origin is a complex and technical area, it is nevertheless one of considerable importance in ensuring that developing countries benefit from intended tariff preferences. Consequently, although they thought it unlikely that they would wish to recommend the document for debate, they proposed to hold it under scrutiny, pending further information on the outcome of the Government's expressed intention to press for greater liberalisation.

Minister's letter of 26 October 2010

7.3  Despite this, our predecessors heard nothing further from the previous Government, but we have now received from the current Minister for Employment Relations, Consumer and Postal Affairs at the Department for Business, Innovation and Skills (Mr Edward Davey) a letter of 26 October 2010 in which he says that the reform of the GSP rules of origin has been a long and difficult exercise with considerable differences both within the Commission and between Member States. He adds that a proposal for a Commission Regulation to amend the existing rules of origin was put to a meeting of the Customs Code Committee on 20-21 September 2010, and that 25 Member States had voted in favour. The Commission is now expected to formally adopt the measure in the middle of this month, with it taking effect as from 1 January 2011.

7.4  The Minister adds that, although the Regulation does not go as far as the UK and a number of other Member States had been pressing for, it nevertheless represents a significant improvement on the existing rules so far as the Least Developed Countries are concerned (though the benefits for other countries are more marginal). He says that, in view of this, the UK supported the proposal, whilst making clear its belief that reform should have gone further in terms of liberalising the rules.


7.5  To the extent that our predecessors' request for further information remained unanswered for so long, the fault clearly lies with the previous Government, and we are grateful to the present Minister for this update. This makes it clear that the measures due to come into force shortly have been adopted by the Commission (and hence would not have been subject to parliamentary scrutiny), and that, although they do not go as far as the UK would have liked — notably, we understand, in relation to cumulation of origin — they are nevertheless a significant improvement on the existing rules. In view of this, we do not believe that any purpose would be served by continuing to hold this document under scrutiny, but we think it right to draw to the attention of the House both the failure to address our predecessors' request and the present Government's assessment of the rules to be enacted by the Commission.

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