Questions and answers

The DCFTA rules of origin (Protocol II and its further amendment for its alignment to PEM rules of origin) introduce some new elements in EU-MD preferential trade which are not found under ATP, such as:

• Prohibition of no-drawback of, or exemption from, customs duties;
• Possibility for granting approved exporters status to MD economic operators (under ATP such status was foreseen only for EU exporters)
• Possibility for diagonal cumulation with other countries of the PEM zone with which the EU and Moldova have free trade agreements with identical rules of origin 
• Possibility for Moldovan customs to request from EU Member States customs authorities to carry out subsequent verification of proofs of origin issued in the EU

The EU-MD DCFTA, including Protocol II, is provisionally applied since 1 September 2014. However, in parallel, until 31 December 2015, the EU Autonomous Trade Preferences (ATP) towards Moldova continued to apply. During that period Moldovan operators had the choice of exporting products to the EU using one of the two preferential regimes, applying either the provisions of the Protocol II of the AA MD-EU DCFTA or the EU rules of origin for ATP purposes laid down in Regulation 2454/93. Thereby, if choosing the preferential regime under ATP, the import duties for non-originating materials imported to Moldova for production purposes for subsequent preferential exports to the EU were not paid, as the EU ATP rules of origin do not have a no-drawback condition. As from 1 January 2016 the DCFTA became the only available preferential regime, requiring the mandatory application of no-drawback rule in Moldova, as prescribed by Protocol II. According to the provision regulating the rule the obligation for payment of duties arises when the proof of origin is issued (from 1 January 2016 onward), not when the non-originating materials have been imported (until 31 December 2015). Therefore such duties are payable, i.e. repayment of duties is not allowed.

There are no such legal requirements and obligations thus EUR.1 certificates should not be rejected for such reasons.

The rule set by Protocol II of EU – MD DCFTA prescribes that duties are to be paid in the exporting country as if the products obtained from the non-originating materials are retained for home use. It does not take into account whether duties for the non-originating materials have been paid in the EU Member State supplying these materials for processing and subsequent import of the final product in the EU. Thereby, if MD economic operator imports from the EU the raw material that was previously released into free circulation in the EU, the double payment (in the EU and in Moldova) of duties for this raw material could not be avoided. A possible solution for avoiding the double payment is whether the object of the transaction makes the goods which are not released into free circulation to EU, but are placed there under a suspensive regime (e.g. customs warehousing, free zone, etc).

The customs territory of the EU is a single territory (comprising the EU MS’ territories). In general, for origin purposes the EU is considered as a whole, one unit, therefore any MS can be considered as the exporting country and in some cases this MS might differ from the one in which the exporter is established and keeps all evidence concerning the origin of the goods. 

For certification of the preferential origin, the exporter (including the approved one) is the person able to determine and certify the origin (on the basis of the relevant documentation, including the supplier's declarations), to answer the subsequent verifications and to engage her/his responsibility on the correctness of her/his declarations concerning origin. The exporter, as a declarant or as an economic operator having goods declared on her/his behalf in view of the exportation is not necessarily the same person.

PEM rules of origin do not contain any definition of “exporter”. EU understanding of the term for the purpose of preferential origin can be illustrated by the definition in the EU Regulation 2015/2446 (Union Customs Code Delegated Act), Art. 37 (20) – person who is exporting the goods, whether or not she/he is the manufacturer and whether or not he himself carries out the export formalities.   

According to the strict rules of PEM Convention, to which Moldova is a signatory country since 1 September 2015, the endorsement “issued retrospectively“ shall be made in English language. The aim of this rule is to simplify and facilitate the trade activities by avoiding the use of various linguistic versions, which might confuse the importing country.

The option of not rejecting such certificates based on the flexibility provided by the provision on dealing with discrepancies and formal errors can also be considered by MDCS from the perspective of overall impact on preferential trade and trade facilitation.

The “approved exporter” status empowers the economic operator to declare (self-certify) the preferential origin of the goods, which s/he is exporting, by including a special text (origin declaration) in the invoice or in other commercial document. There is no value limit of the goods s/he can export under this form of certification of origin. S/He does not have to apply to customs for a EUR.1 certificate at each export. The benefits can be outlined as follows: facilitation of export operations by saving time and costs (in Moldova there is a fee for the issuance of EUR.1 6 (euro each); raising of respect/appreciation by counterparts in the importing country, as s/he will be perceived as a reliable partner; raising of competence in the area of origin, as s/he is required to possess, maintain and update knowledge and understanding on rules of origin.

Yes, however in the invoice the EU originating goods should be clearly indicated, e.g. by marking the respective items, or by mentioning the origin of the goods in a special column for the purpose. Besides, the text of the invoice declaration should explicitly mention the preferential origin. In case the invoice contains goods of different preferential origin, all of them should be mentioned.

Still not, as currently not all conditions are fulfilled (e.g. notice indicating the fulfilment of the necessary requirement to apply cumulation still not published in EU Official Journal). Bearing also in mind that the FTA between Moldova and Turkey unilaterally provides for cumulation with the EU, at export to the EU the cumulation with Turkey is not allowed. Neither can preferences be granted for Turkish goods imported from the EU with a proof of origin issued in the EU. While at export to Turkey the cumulation with the EU is possible e.g.to use EU materials. The last case would be the application of the cumulation provided for in the Moldova-Turkey FTA, not the PEM cumulation, which is still not applicable.

The goods permitted for export under the approved exporter status are fixed in the authorisation issued by MDCS. The scope of goods covered by the authorisation depends on what the candidate for obtaining the status has applied for, i.e. how s/he has completed the application form. If the application did not contain information about the goods that are not produced by her/him, the authorisation would not cover such goods. Thus s/he does not have the right to export goods which s/he has not produced using the “approved exporter” status. In order to extend the scope of application of her/his authorisation s/he should submit an additional application mentioning this specific information.

No, as there is no legal base for that. The EUR.1 certificates and other proofs of origin have relevance and are to be applied only within specific FTAs in force between the country of exportation and importation, as well as between the other countries in the PEM zone, which participated in the acquisition of the origin of the respective goods. For example, Moldova cannot issue EUR.1 certificate to Egypt for goods of Moldovan origin, or for goods of EU origin, even though in the second case there is a FTA between Egypt and the EU.

Yes, the PEM rules of origin provide for such an option based on the provisions for diagonal cumulation (cases of retaining the origin). The proof of origin to be issued in Moldova should be based on the proof of origin for the goods in question issued in the partner country from where the goods have been previously imported in Moldova. It should be noted that in case a EUR.1 is issued at export from Moldova, it would be according to the normal procedure, not as a replacement certificate (intended for use in the importing country).

The possibilities for obtaining originating materials will be extended to a wider area, which will facilitate the better utilization of the preferences in the Moldova-Ukraine FTA, as well as those under the FTAs that each of the countries has with other PEM partners with which cumulation is applicable. For example: Moldovan operators could use Ukrainian materials in the production of goods for export to the EU and EU materials for export to Ukraine.

It will be also possible to receive and send under preferential terms goods traded among these countries, as it will be allowed to issue proofs of origin for goods originating in any of the countries with which cumulation is applicable.

The proof of origin could be issued for example: at exportation of EU goods to Ukraine, or Ukrainian goods to the EU, as well as to receive EU goods from Ukraine or Ukrainian goods from the EU. In short, the conditions for trade involving Moldova, Ukraine and the EU will be as the one currently existing among Moldova, the EU and the CEFTA countries. They could be further extended upon conclusion of new FTAs and/or adoption of PEM rules of origin in preferential trade involving other parties of PEM Convention.

The use of EUR.1 certificate between Ukraine and Moldova will be possible when the legal base for this is created, for example by adoption in the free trade agreement (FTA) between both countries of the rules of origin in the Pan-Euro-Mediterranean (PEM) Convention. The introduction of PEM rules of origin in the bilateral agreement would also link the FTAs which Moldova and Ukraine have with other countries of the PEM zone, such as the EU. The same is also valid in respect of preferential trade with Georgia, which has recently joined the PEM Convention.

As the matter involves an amendment of international agreements, which takes time, the use of EUR.1 in trade between Moldova and Ukraine cannot be expected in the near future. At present, preferences cannot be granted neither for Ukrainian goods imported in Moldova, nor for Moldovan goods imported in Ukraine, on the bases of EUR.1 certificate issued in either of the two countries, or in the EU.

It is also not possible to recognize EU preferential origin in bilateral trade between Moldova and Ukraine.