On December 7, 2023, the PEM Joint Committee definitively adopted new, modernized rules of origin with the aim of enhancing trade between the European Union and neighboring countries in the Pan-Euro-Mediterranean (PEM) region. These rules will come into effect on January 1, 2025, and will modernize all preferential trade agreements among the 24 PEM trading partners by making the 'rules of origin' in those agreements more flexible and business-friendly.

Additionally, the PEM Joint Committee has agreed to develop the use of electronic certificates of origin to further streamline customs formalities.

This amendment to the rules of origin involves 24 contracting parties to the PEM Convention, including the European Union, Iceland, Liechtenstein, Norway, Switzerland, the Faroe Islands, Turkey, Morocco, Algeria, Tunisia, Egypt, Israel, Jordan, Lebanon, Palestine, Georgia, the Republic of Moldova, Ukraine, Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia, and Kosovo.

Trade with these countries constitutes approximately half of the EU's preferential trade in terms of value.

These provisions will simplify the process for products to benefit from trade preferences, including:

• Streamlined product-specific rules, such as the elimination of cumulative requirements, thresholds for local value added, more tailored to EU production needs, and new double transformation for textiles;
• Increased tolerance thresholds for non-originating materials, from 10% to 15%;
• The introduction of "full" cumulation, allowing the manufacturing operations necessary to obtain origin for most products to be distributed among several partner countries;
• The possibility of duty drawback (repayment of duties on imported components) for most products to assist EU exporters in remaining competitive.

The new rules, the result of a decade of negotiations, will apply as of January 1, 2025, within the framework of the Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin (PEM Convention).

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