REGULATION
of 13 December 1988
Council Regulation (EEC) No 4264/88 of 13 December 1988 on the application of Decision No 1/88 of the EEC-Cyprus Association Council amending, as a consequence of the introduction of the harmonized system, the Protocol concerning the definition of the concept of ‘originating products’ and methods of administrative cooperation
[1988/4264]
Having regard to the Treaty establishing the European Economic Community, and in particular Article 113 thereof, Having regard to the proposal from the Commission, Whereas the Agreement establishing an Association between the European Economic Community and the Republic of Cyprus (1) was signed on 19 December 1972; Whereas, by virtue of Article 25 of the Protocol concerning the definition of the concept of ´originating products’ and methods of administrative cooperation, which forms an integral part of the above Agreement, the EEC-Cyprus Association Council has adopted Decision No 1/88 amending the said Protocol; Whereas it is necessary to apply this Decision in the Community, HAS ADOPTED THIS REGULATION:
Decision No 1/88 of the EEC-Cyprus Association Council shall apply in the Community.
The text of the Decision is attached to this Regulation.
The text of the Decision is attached to this Regulation.
This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Communities.
It shall apply from 1 January 1989. This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 13 December 1988. For the Council The President K. PAPANAYOTOU (1) OJ No L 133, 21. 5. 1973, p. 2. DECISION No 1/88 OF THE EEC-CYPRUS ASSOCIATION COUNCIL of 21 November 1988 amending, as a consequence of the introduction of the harmonized system, Protocol 2 concerning the definition of the concept of ´originating products’ and methods of administrative cooperation
THE ASSOCIATION COUNCIL, Having regard to the Agreement creating an Association between the European Economic Community and the Republic of Cyprus, signed on 19 December 1972, Having regard to the Protocol concerning the definition of the concept of ´originating products’ and methods of administrative cooperation, and in particular Article 25 thereof, Whereas the origin rules contained in the said Protocol are based on the use of the Customs Cooperation Council Nomenclature;
whereas the Customs Cooperation Council approved the International Convention on the Harmonized Commodity Description and Coding System (hereinafter referred to as the ´harmonized system’) on 14 June 1983;
whereas it is the intention that, as from 1 January 1988, the harmonized system will replace the current nomenclature for the purposes of international trade;
whereas it is therefore necessary to adapt the rules of origin contained in the Protocol so that they are based on the use of the harmonized system;
Whereas, in the light of experience, the presentation of the origin rules could be improved by grouping all the exceptions to the basic change of heading rule into one List and by providing detailed guidance on how it should be interpreted, HAS DECIDED AS FOLLOWS:
It shall apply from 1 January 1989. This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 13 December 1988. For the Council The President K. PAPANAYOTOU (1) OJ No L 133, 21. 5. 1973, p. 2. DECISION No 1/88 OF THE EEC-CYPRUS ASSOCIATION COUNCIL of 21 November 1988 amending, as a consequence of the introduction of the harmonized system, Protocol 2 concerning the definition of the concept of ´originating products’ and methods of administrative cooperation
THE ASSOCIATION COUNCIL, Having regard to the Agreement creating an Association between the European Economic Community and the Republic of Cyprus, signed on 19 December 1972, Having regard to the Protocol concerning the definition of the concept of ´originating products’ and methods of administrative cooperation, and in particular Article 25 thereof, Whereas the origin rules contained in the said Protocol are based on the use of the Customs Cooperation Council Nomenclature;
whereas the Customs Cooperation Council approved the International Convention on the Harmonized Commodity Description and Coding System (hereinafter referred to as the ´harmonized system’) on 14 June 1983;
whereas it is the intention that, as from 1 January 1988, the harmonized system will replace the current nomenclature for the purposes of international trade;
whereas it is therefore necessary to adapt the rules of origin contained in the Protocol so that they are based on the use of the harmonized system;
Whereas, in the light of experience, the presentation of the origin rules could be improved by grouping all the exceptions to the basic change of heading rule into one List and by providing detailed guidance on how it should be interpreted, HAS DECIDED AS FOLLOWS:
Decision No 1/79 is replaced by this Decision.
This Decision shall apply from 1 January 1989. Done at Brussels, 21 November 1988. For the Association Council The President Th.
PANGALOS Joint Declaration concerning the review of the changes to the origin rules as a result of the introduction of the harmonized system
Where, following the amendments made to the Nomenclature, the new rules introduced by Decision No 1/88 alter the substance of any rule existing prior to Decision No 1/88 and it appears that such alteration results in a situation prejudicial to the interest of the sectors concerned, then, if one of the contracting parties so requests in the period up to and including 31 December 1990, an examination shall be made as a matter of urgency by the Association Council, of the need to restore the rule concerned as it was before Decision No 1/88. In any case, the Association Council shall decide to restore, or not to restore, the substance of the rule concerned within a period of three months of the request being made to it by either of the parties to the Agreement.
If the substance of the rule concerned is restored, then the parties to the Agreement shall also provide the legal framework necessary to guarantee that any customs duties improperly levied on the products concerned imported after 1 January 1989 can be reimbursed.
PANGALOS Joint Declaration concerning the review of the changes to the origin rules as a result of the introduction of the harmonized system
Where, following the amendments made to the Nomenclature, the new rules introduced by Decision No 1/88 alter the substance of any rule existing prior to Decision No 1/88 and it appears that such alteration results in a situation prejudicial to the interest of the sectors concerned, then, if one of the contracting parties so requests in the period up to and including 31 December 1990, an examination shall be made as a matter of urgency by the Association Council, of the need to restore the rule concerned as it was before Decision No 1/88. In any case, the Association Council shall decide to restore, or not to restore, the substance of the rule concerned within a period of three months of the request being made to it by either of the parties to the Agreement.
If the substance of the rule concerned is restored, then the parties to the Agreement shall also provide the legal framework necessary to guarantee that any customs duties improperly levied on the products concerned imported after 1 January 1989 can be reimbursed.
EXPLANATORY NOTES Note 1:
Articles 1 and 2 The terms ´the Community’ and ´Cyprus’ shall also cover the territorial waters of the Member States of the Community and of Cyprus respectively.
Vessels operating on the high seas, including factory ships, on which fish caught are worked or processed, shall be considered as part of the territory of the State to which they belong provided that they satisfy the conditions set out in Explanatory Note 4. Note 2 – Article 1 The conditions set out in Article 1 relative to the acquisition of originating status must be fulfilled without interruption in the Community or Cyprus.
If originating products exported from the Community or Cyprus to another country are returned, they must be considered as non-originating unless it can be demonstrated to the satisfaction of the customs authorities that:
– the goods returned are the same goods as those exported,and -they have not undergone any operations beyond that necessary to preserve them in good condition while in that country.
Note 3 – Article 1 In order to determine whether goods originate in the Community or in Cyprus it shall not be necessary to establish whether the power and fuel, plant and equipment, and machines and tools used to obtain such goods originate in third countries or not.
Note 4 – Article 2 (f) The term ´their vessels’ shall apply only to vessels:
– which are registered or recorded in a Member State or in Cyprus,-which sail under the flag of a Member State or of Cyprus,-at least 50 % of which are owned by nationals of the Member States and Cyprus or by a company which has its head office in a Member State or in Cyprus, of which the manager, managers, chairman of the board, and the majority of the members of such board are nationals of the Member States or Cyprus and of which, in addition, in the case of partnerships or limited companies, at least halt the capital belongs to the Member States or to Cyprus or to public bodies or nationals of the Member States or of Cyprus,-of which the captain and officers are all nationals of the Member States or of Cyprus,-of which at least 75 % of the crew are nationals of the Member States or of Cyprus.
Note 5 – Articles 2 and 3 1. The unit of qualification for the application of the origin rules shall be the particular product which is considered as the basic unit when determining classification using the nomenclature of the harmonized system.
In the case of sets of products which are classified by virtue of General Rule 3, the unit of qualification shall be determined in respect of each item in the set;
this also applies to the sets of heading Nos 6308, 8206 and 9605.Accordingly, it follows that:
– when a product composed of a group or assembly of articles is classified under the terms of the harmonized system in a single heading, the whole constitutes the unit of qualification,-when a consignment consists of a number of identical products classified under the same heading of the harmonized system, each products must be taken individually when applying the origin rules.
2.Where, under General Rule 5 of the harmonized system, packing is included with the product for classification purposes, it shall be included for purposes of determining origin.
Note 6 – Article 3 (1) The Introductory Notes to Annex III shall also apply where appropriate to all products manufactured using non-originating materials even if they are not subject to a specific condition contained in the List in Annex III but are subject instead to the change of heading rule set out in Article 3 (1). Note 7 – Article 4 ´Ex works price’ shall mean the price paid to the manufacturer in whose undertaking the last working or processing is carried out, provided the price includes the value of all the products used in manufacture.
´Customs value’ shall be understood as meaning the customs value laid down in the Convention concerning the valuation of goods for customs purposes signed in Brussels on 15 December 1950. ANNEX II
List of products referred to in Article 1 which are temporarily excluded from the scope of this Protocol HS headingNo Description of product ex 2707 Oils in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents, being oils similar to mineral oils obtained by distillation of high temperature coal tar, of which more than 65 % by volume distils at a temperature of up to 250° C (including mixtures of petroleum spirit and benzole), for use as power or heating fuels ex 2709to2715 Mineral oils and products of their distillation;
bituminous substances;
mineral waxes ex 2901 Acyclic hydrocarbons for use as power or heating fuels ex 2902 Cyclanes and cyclenes (other than azulenes), benzene, toluene, xylenes, for use as power or heating fuels ex 3403 Lubricating preparations containing petroleum oils or oils obtained from bituminous minerals, provided they represent less than 70 % by weight ex 3404 Artificial waxes and prepared waxes with a basis of paraffin, petroleum waxes, waxes obtained from bituminous minerals, slack wax or scale wax ex 3811 Prepared additives for lubricating oil, containing petroleum oils or oils obtained from bituminous minerals ANNEX III
List of working or processing required to be carried out on non-originating materials in order that the product manufactured can obtain originating status INTRODUCTORY NOTES General Note 1:
1.1. The first two columns in the list describe the product obtained.
The first column gives the heading number, or the chapter number, used in the harmonized system and the second column gives the description of goods used in that system for that heading or chapter.
For each entry in the first two columns a rule is specified in column 3. Where, in some cases, the entry in the first column is preceded by an ´ex’, this signifies that the rule in column 3 applies only to the part of that heading or chapter as described in column 2. 1.2.Where several heading numbers are grouped together in column 1 or a chapter number is given and the description of product in column 2 is therefore given in general terms, the adjacent rule in column 3 applies to all products which, under the harmonized system, are classified in headings of the chapter or in any of the headings grouped together in column 1. 1.3.Where there are different rules in the list applying to different products within a heading, each indent contains the description of that part of the heading covered by the adjacent rule in column 3. Note 2:
2.1.The term ´manufacture’ covers any kind of working or processing including ´assembly’ or specific operations.
However, see Note 3.5 below.
2.2.The term ´material’ covers any ´ingredient’, ´raw material’, ´component’ or ´part’, etc.
, used in the manufacture of the product.
2.3.The term ´product’ refers to the product being manufactured, even if it is intended for later use in another manufacturing operation.
3.1.In the case of any heading not in the list or any part of a heading that is not in the list, the ´change of heading’ rule set out in Article 3 (1) applies.
If a ´change of heading’ condition applies to any entry in the list, then it is contained in the rule in column 3. 3.2.The working or processing required by a rule in column 3 has to be carried out only in relation to the non-originating materials used.
The restrictions contained in a rule in column 3 likewise apply only to the non-originating materials used.
3.3.Where a rule states that ´materials of any heading’ may be used, materials of the same heading as the product may also be used, subject, however, to any specific limitations which may also be contained in the rule.
However, the expression ´manufacture from materials of any heading including other materials of heading No . . .’ means that only materials classified in the same heading as the product of a different description than that of the product as given in column 2 of the list may be used.
3.4.If a product, made from non-originating materials which has acquired originating status during manufacture by virtue of the change of heading rule or its own list rule, is used as a material in the process of manufacture of another product, then the rule applicable to the product in which it is incorporated does not apply to it.
– For example, an engine of heading No 8407, for which the rule states that the value of the non-originating materials which may be incorporated may not exceed 40 % of the ex works price, is made from ´other alloy steel roughly shaped by forging’ of heading No 7224. If this forging has been forged in the country concerned from a non-originating ingot then the forging has already acquired origin by virtue of the rule for heading No ex 7224 in the List.
It can then count as originating in the value calculation for the engine regardless of whether it was produced in the same factory or another.
The value of the non-originating ingot is thus not taken into account when adding up the value of the non-originating materials used.
3.5.Even if the change of heading rule or the rule contained in the list is satisfied, a product does not have origin if the processing carried out, taken as a whole, is insufficient within the meaning of Article 3 (4). Note 4:
4.1. The rule in the list represents the minimum amount of working or processing required and the carrying out of more working or processing also confers originating status;
conversely, the carrying out of less working or processing cannot confer origin.
Thus if a rule says that non-originating material at a certain level of manufacture may be used, the use of such material at an earlier stage of manufacture is allowed and the use of such material at a later stage is not.
4.2.When a rule in the list specifies that a product may be manufactured from more than one material, this means that any one or more of the materials may be used.
It does not require that all be used.
– For example, the rule for fabrics says that natural fibres may be used and that chemical materials, among other materials, may also be used.
This does not mean that both have to be used, one can use one or the other or both.
If, however, a restriction applies to one material and other restrictions apply to other materials in the same rule, then the restrictions only apply to the materials actually used.
-For example, the rule for sewing machines specifies that the thread tension mechanism used has to originate and that the zigzag mechanism used also has to originate;
these two restrictions only apply if the mechanisms concerned are actually incorporated into the sewing machine.
4.3.When a rule in the list specifies that a product must be manufactured from a particular material, the condition obviously does not prevent the use of other materials which, because of their inherent nature, cannot satisfy the rule.
-For example, the rule for heading No 1904 which specifically excludes the use of cereals or their derivatives does not prevent the use of mineral salts, chemicals and other additives which are not produced from cereals.
-For example, in the case of an article made from non-woven materials, if the use of only non-originating yarn is allowed for this class of article, it is not possible to start from non-woven cloth – even if non-wovens cannot normally be made from yarn.
Articles 1 and 2 The terms ´the Community’ and ´Cyprus’ shall also cover the territorial waters of the Member States of the Community and of Cyprus respectively.
Vessels operating on the high seas, including factory ships, on which fish caught are worked or processed, shall be considered as part of the territory of the State to which they belong provided that they satisfy the conditions set out in Explanatory Note 4. Note 2 – Article 1 The conditions set out in Article 1 relative to the acquisition of originating status must be fulfilled without interruption in the Community or Cyprus.
If originating products exported from the Community or Cyprus to another country are returned, they must be considered as non-originating unless it can be demonstrated to the satisfaction of the customs authorities that:
– the goods returned are the same goods as those exported,and -they have not undergone any operations beyond that necessary to preserve them in good condition while in that country.
Note 3 – Article 1 In order to determine whether goods originate in the Community or in Cyprus it shall not be necessary to establish whether the power and fuel, plant and equipment, and machines and tools used to obtain such goods originate in third countries or not.
Note 4 – Article 2 (f) The term ´their vessels’ shall apply only to vessels:
– which are registered or recorded in a Member State or in Cyprus,-which sail under the flag of a Member State or of Cyprus,-at least 50 % of which are owned by nationals of the Member States and Cyprus or by a company which has its head office in a Member State or in Cyprus, of which the manager, managers, chairman of the board, and the majority of the members of such board are nationals of the Member States or Cyprus and of which, in addition, in the case of partnerships or limited companies, at least halt the capital belongs to the Member States or to Cyprus or to public bodies or nationals of the Member States or of Cyprus,-of which the captain and officers are all nationals of the Member States or of Cyprus,-of which at least 75 % of the crew are nationals of the Member States or of Cyprus.
Note 5 – Articles 2 and 3 1. The unit of qualification for the application of the origin rules shall be the particular product which is considered as the basic unit when determining classification using the nomenclature of the harmonized system.
In the case of sets of products which are classified by virtue of General Rule 3, the unit of qualification shall be determined in respect of each item in the set;
this also applies to the sets of heading Nos 6308, 8206 and 9605.Accordingly, it follows that:
– when a product composed of a group or assembly of articles is classified under the terms of the harmonized system in a single heading, the whole constitutes the unit of qualification,-when a consignment consists of a number of identical products classified under the same heading of the harmonized system, each products must be taken individually when applying the origin rules.
2.Where, under General Rule 5 of the harmonized system, packing is included with the product for classification purposes, it shall be included for purposes of determining origin.
Note 6 – Article 3 (1) The Introductory Notes to Annex III shall also apply where appropriate to all products manufactured using non-originating materials even if they are not subject to a specific condition contained in the List in Annex III but are subject instead to the change of heading rule set out in Article 3 (1). Note 7 – Article 4 ´Ex works price’ shall mean the price paid to the manufacturer in whose undertaking the last working or processing is carried out, provided the price includes the value of all the products used in manufacture.
´Customs value’ shall be understood as meaning the customs value laid down in the Convention concerning the valuation of goods for customs purposes signed in Brussels on 15 December 1950. ANNEX II
List of products referred to in Article 1 which are temporarily excluded from the scope of this Protocol HS headingNo Description of product ex 2707 Oils in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents, being oils similar to mineral oils obtained by distillation of high temperature coal tar, of which more than 65 % by volume distils at a temperature of up to 250° C (including mixtures of petroleum spirit and benzole), for use as power or heating fuels ex 2709to2715 Mineral oils and products of their distillation;
bituminous substances;
mineral waxes ex 2901 Acyclic hydrocarbons for use as power or heating fuels ex 2902 Cyclanes and cyclenes (other than azulenes), benzene, toluene, xylenes, for use as power or heating fuels ex 3403 Lubricating preparations containing petroleum oils or oils obtained from bituminous minerals, provided they represent less than 70 % by weight ex 3404 Artificial waxes and prepared waxes with a basis of paraffin, petroleum waxes, waxes obtained from bituminous minerals, slack wax or scale wax ex 3811 Prepared additives for lubricating oil, containing petroleum oils or oils obtained from bituminous minerals ANNEX III
List of working or processing required to be carried out on non-originating materials in order that the product manufactured can obtain originating status INTRODUCTORY NOTES General Note 1:
1.1. The first two columns in the list describe the product obtained.
The first column gives the heading number, or the chapter number, used in the harmonized system and the second column gives the description of goods used in that system for that heading or chapter.
For each entry in the first two columns a rule is specified in column 3. Where, in some cases, the entry in the first column is preceded by an ´ex’, this signifies that the rule in column 3 applies only to the part of that heading or chapter as described in column 2. 1.2.Where several heading numbers are grouped together in column 1 or a chapter number is given and the description of product in column 2 is therefore given in general terms, the adjacent rule in column 3 applies to all products which, under the harmonized system, are classified in headings of the chapter or in any of the headings grouped together in column 1. 1.3.Where there are different rules in the list applying to different products within a heading, each indent contains the description of that part of the heading covered by the adjacent rule in column 3. Note 2:
2.1.The term ´manufacture’ covers any kind of working or processing including ´assembly’ or specific operations.
However, see Note 3.5 below.
2.2.The term ´material’ covers any ´ingredient’, ´raw material’, ´component’ or ´part’, etc.
, used in the manufacture of the product.
2.3.The term ´product’ refers to the product being manufactured, even if it is intended for later use in another manufacturing operation.
3.1.In the case of any heading not in the list or any part of a heading that is not in the list, the ´change of heading’ rule set out in Article 3 (1) applies.
If a ´change of heading’ condition applies to any entry in the list, then it is contained in the rule in column 3. 3.2.The working or processing required by a rule in column 3 has to be carried out only in relation to the non-originating materials used.
The restrictions contained in a rule in column 3 likewise apply only to the non-originating materials used.
3.3.Where a rule states that ´materials of any heading’ may be used, materials of the same heading as the product may also be used, subject, however, to any specific limitations which may also be contained in the rule.
However, the expression ´manufacture from materials of any heading including other materials of heading No . . .’ means that only materials classified in the same heading as the product of a different description than that of the product as given in column 2 of the list may be used.
3.4.If a product, made from non-originating materials which has acquired originating status during manufacture by virtue of the change of heading rule or its own list rule, is used as a material in the process of manufacture of another product, then the rule applicable to the product in which it is incorporated does not apply to it.
– For example, an engine of heading No 8407, for which the rule states that the value of the non-originating materials which may be incorporated may not exceed 40 % of the ex works price, is made from ´other alloy steel roughly shaped by forging’ of heading No 7224. If this forging has been forged in the country concerned from a non-originating ingot then the forging has already acquired origin by virtue of the rule for heading No ex 7224 in the List.
It can then count as originating in the value calculation for the engine regardless of whether it was produced in the same factory or another.
The value of the non-originating ingot is thus not taken into account when adding up the value of the non-originating materials used.
3.5.Even if the change of heading rule or the rule contained in the list is satisfied, a product does not have origin if the processing carried out, taken as a whole, is insufficient within the meaning of Article 3 (4). Note 4:
4.1. The rule in the list represents the minimum amount of working or processing required and the carrying out of more working or processing also confers originating status;
conversely, the carrying out of less working or processing cannot confer origin.
Thus if a rule says that non-originating material at a certain level of manufacture may be used, the use of such material at an earlier stage of manufacture is allowed and the use of such material at a later stage is not.
4.2.When a rule in the list specifies that a product may be manufactured from more than one material, this means that any one or more of the materials may be used.
It does not require that all be used.
– For example, the rule for fabrics says that natural fibres may be used and that chemical materials, among other materials, may also be used.
This does not mean that both have to be used, one can use one or the other or both.
If, however, a restriction applies to one material and other restrictions apply to other materials in the same rule, then the restrictions only apply to the materials actually used.
-For example, the rule for sewing machines specifies that the thread tension mechanism used has to originate and that the zigzag mechanism used also has to originate;
these two restrictions only apply if the mechanisms concerned are actually incorporated into the sewing machine.
4.3.When a rule in the list specifies that a product must be manufactured from a particular material, the condition obviously does not prevent the use of other materials which, because of their inherent nature, cannot satisfy the rule.
-For example, the rule for heading No 1904 which specifically excludes the use of cereals or their derivatives does not prevent the use of mineral salts, chemicals and other additives which are not produced from cereals.
-For example, in the case of an article made from non-woven materials, if the use of only non-originating yarn is allowed for this class of article, it is not possible to start from non-woven cloth – even if non-wovens cannot normally be made from yarn.