EU Relaxes Rules of Origin for GSP Imports

Laws & Regulations

BRUSSELS, Belgium – Since 1 January 2011, the European Union applies rules of origin for GSP beneficiaries which are considerably simplified and therefore easier to comply with. Important for the bike business are the special provisions for LDCs which allow them to enjoy preferential treatment with up to 70% of non-originating input.

EU Relaxes Rules of Origin for GSP Imports

Specifically for bicycles with or without ball bearings, the new rules stipulate that the product has to be a manufacture in which the value of all non-originating materials does not exceed 70% of the ex-works price of the product.

For electric bikes, i.e. pedelecs and e-bikes, the producer can choose between manufacturing a vehicle from materials not classified in heading 8711or manufacturing a vehicle in which the value of all non-originating materials does not exceed 70% of the ex-works price of the product. This means for instance that an OEM bike manufacturer in Bangladesh can import from abroad up to 70% of the ex-works price of components for his bikes produced for export to Europe.

Cooperation between countries

Furthermore, the European Commission has simplified the cumulation rules in order to stimulate the cooperation between LDCs with identical rules of origin. The Commission has defined 4 groups of countries that are allowed to apply regional cumulation. This means that parts and components produced in one of the countries within a group are considered originating products for a final product made in one of the other countries of the group.

The groups are:

  • Group I: Brunei- Darussalam, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam.
  • Group II: Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Peru, Venezuela.
  • Group III: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka.

As a result bicycle makers in these LDCs should be enabled to offer a wider range of products as they are less limited in their choice of specifications.

Integration LDCs in world economy

The European Union has changed the existing trade rules as an acknowledgement, in the context of the Doha Development Agenda, of the need for a better integration of LDCs into the world economy. The new rules should improve their access to the markets of developed countries.

A second change in the preferential trade arrangements will only become effective as of 2017. Today, it is the third country authorities that carry out certification of origin. From 2017, that system will be replaced by statements of origin issued directly by exporters through an electronic system. This should reduce red-tape for business as well as allowing authorities of the exporting countries to better focus on controls against fraud and abuse.

Since the new system involves some complex issues, such as the establishment of an electronic record of registered exporters, the implementation requires a few years’ time.

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