EU Generalised Scheme of Preference European Commission DG Trade

EU Generalised Scheme of Preference European Commission DG Trade Business Information Event Yerevan November 10, 2015

Disclaimer This presentation is not a legal document and has been prepared exclusively for information purposes. This should not be used by any party as a basis for any decisions with legal implications. The exclusive legal basis for GSP is Regulation (EU) No 978/2012 of the European Parliament and of the Council.

Table of content 1. The EU GSP and GSP+ scheme 2. EU-Armenia Trade. Use GSP+ potential 3. GSP rules of origin. Claim GSP+ preferences

Table of content 1. The EU GSP and GSP+ scheme 2. EU-Armenia Trade. Use GSP+ potential 3. GSP rules of origin. Claim GSP+ preferences

EU GSP Purpose & Origin The EU's first Generalised Scheme of Preferences (GSP) scheme was introduced in 1971 (WTO enabling clause). The current scheme is in effect since 1 January 2014, (Regulation (EU) No 978/2012). Trade instrument to support developing countries (GNI per capita of $4,125, World Bank) integration in international trade. Armenia benefits from GSP+ since January 2009.

EU GSP 3 programs Granted according to each beneficiaries' development needs and totalling a value of 50.8bn. of imports*. GSP ( 27.3bn) Tariff reduction on 6,200 tariff lines (further lines 2,300 no duties under MFN) GSP + ( 6.5bn) No duties on 6,200 tariff lines EBA ( 17bn) No duties and no quota for all goods except arms and ammunition * 2014 data

EU GSP Key changes since 1/1/14 Better focus on countries most in need: Reduction from 178 to 92 beneficiary countries Least Developed Countries (LDCs) and developing economies, with no other preferential access to the EU Stability and predictability: 10 years until Dec. 2023 Regular revision of countries and product status: Income criteria ("Upper Middle Income Country" limit) and market access criteria (e.g. FTA) Graduation mechanism for competitive products

EU GSP Coverage of standard GSP Currently 30 beneficiaries : AFRICA (10): Botswana*, Cameroon, Cote d'ivoire, Republic of Congo, Kenya, Ghana, Namibia, Nauru, Nigeria, Swaziland ASIA (9): Kyrgyzstan, India, Indonesia, Sri Lanka, Vietnam, Tajikistan, Turkmenistan**, Ukraine, Uzbekistan, AUSTRALIA & PACIFIC (6): Cook Islands, Fiji, Marshall (Islands), Micronesia (Federate States of), Niue, Tonga MIDDLE EAST (2): Iraq, Syria SOUTH AMERICA (3) Colombia**, Honduras**, Nicaragua** Legal source: *up to 31 Dec. 2015 (Delegated Regulation (EU) 1016/2014) **up to 31 Dec. 2015 (Delegated Regulation (EU) 1015/2014)

EU GSP Coverage of EBA Currently 49 beneficiaries : AFRICA (34): Angola, Burkina Faso, Burundi, Benin, Chad, Democratic Republic of Congo, Central African (Republic), Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Equatorial Guinea, Guinea- Bissau, Comoros Islands, Liberia, Lesotho, Madagascar, Mali, Mauritania, Malawi, Mozambique, Niger, Rwanda, Sierra Leone, Senegal, Somalia, South Sudan, Sudan, Sao Tome and Principe, Togo, Tanzania, Uganda, Zambia. ASIA (9): Afghanistan, Bangladesh, Bhutan, Cambodia, Lao (People's Democratic Republic), Myanmar/Burma, Nepal, Timor- Leste, Yemen. AUSTRALIA & PACIFIC (5): Kiribati, Samoa, Solomon Islands, Tuvalu, Vanuatu. CARABBEAN (1): Haiti.

EU GSP Coverage of GSP+ Cape Verde Armenia Georgia Mongolia Pakistan Panama, Guatemala, Costa Rica, El Salvador Philippines Bolivia, Ecuador Paraguay Peru

EU GSP Focus on GSP+ No duties on about 6,200 tariff lines (on top of the EU MFN no duty lines). Proactive application: each country has to apply Commitment : Vulnerable economies which make binding undertakings to ratify and effectively implement 27 core international conventions on human and labour rights, environment protection and good governance. Monitoring: Continuous dialogue with GSP+ beneficiaries and timely identification of areas where implementation should be improved.

12 EU GSP Focus on GSP+

GSP+ & business environment

EU GSP Largest GSP beneficiaries (all 3 programs) Total value GSP imports EUR 50,797 Mil. 2014 data.

EU GSP Breakdown by product (all 3 programs) Total value GSP imports EUR 50,797 Mil. 2014 data.

Table of content 1. The EU GSP and GSP+ scheme 2. EU-Armenia Trade. Use GSP+ potential 3. GSP rules of origin. Claim GSP+ preferences

EU Armenia trade flows

EU Armenia trade flows

EU Armenia trade flows

EU Armenia trade flows Evolution of EU GSP imports from Armenia ('000' ) 2012 2013 2014 6 months 2015 Imports (Total vs. GSP) % util rate Imports (Total vs. GSP) % util rate Imports (Total vs. GSP) % util rate Imports (Total vs. GSP) % util rate 273,629 90,652 33% 90% 215,542 58,239 27% 78% 228,616 59,583 26% 73% 143,905 58,601 41% 77% 3-5 Mio in un-paid duties Armenia uses GSP in specific sectors: clothing, aluminium, crayfish, juices, jams & other processed food, cigarettes, nuts & other seeds.

Table of content 1. The EU GSP and GSP+ scheme 2. EU-Armenia Trade. Use GSP+ potential 3. GSP rules of origin. Claim GSP+ preferences

What GSP+ means for Armenia? 6,200 products eligible with no duties (2,320 products with MFN = 0 832 products = not covered) Complete list is Annex IX, EU Reg. 978/2012 Savings in foregone customs duties Market reach, 28 countries without borders, 500 mio. consumers 1 st trading power, 16% of world exports and imports

How to use GSP preferences? Step 1: Check GSP+ product coverage Step 2: Check rules of origin criteria (Check the consignment conditions) Step 3: Prepare documentary evidence (Proof of origin)

Step 1. Check GSP+ product coverage Volume EU imports from Armenia 2014 "000" EUR tot imp GSP elig GSP pref Base metals (excl. iron and steel) 72,014 31% 6,694 5,913 Mineral products 39,004 17% 0 Clothing 38,847 17% 38,847 19,844 Pearls and precious metals 32,806 14% 155 61 Iron, steel 30,865 14% 30,457 30,405 Prepared foodstuffs, beverages, spirits 6,048 3% 1,294 1,212 Machinery 2,620 1% 305 27 Articles of leather and fur skins 1,393 1% 1,059 Fish 1,021 0% 1,021 982 Optical, clocks, musical equipment 874 0% 413 23 Articles of stone, ceramic products 508 0% 433 222 Tobacco 454 0% 454 443 Other 2,164 1% 682 449 Total 228,616 81,814 59,583

Step 1. Check GSP+ product coverage Volume EU imports from Armenia Duty range (MFN vs. GSP+) Base metals (excl. iron and steel) copper unrefined, molybdenum w aste MFN = 0; aluminium foil 7,5% becomes 0% Mineral products copper, molybdenum and other minerals ores, MFN=0 Clothing 12%, 10.5%, 6.5% becomes 0% Pearls and precious metals diamonds MFN = 0; jew eries 4%; 2.5% becomes 0% Iron, steel iron, steel 3.7% becomes 0% Prepared foodstuffs, beverages, spirits fermented beverages 7,7 EUR/hl; juice 17,6%; fruits 20,8% becomes 0% Machinery Articles of leather and fur skins 9.7%, 2.5% becomes 0% Fish crayfish 7.5% becomes 0% Optical, clocks, musical equipment 6.7%, 2.1% becomes 0% Articles of stone, ceramic products becomes 0% Tobacco becomes 0% Other Total 228,616

Step 2. Check Rules of origin 2010: Regulation (EU) No 1063/2010 amending Regulation (EEC) No 2454/93 Applicable from 1 January 2011: Relaxation of rules of origin, notably for LDCs Simplification of procedures Applicable from 1 January 2017: New procedure for making out proofs of origin which places more responsibility on the operators (REX, system of Registered Exporters) 26

Step 2. Check Rules of origin Type of rule is per sector (not per product) Production of final products Wholly obtained (i.e. vegetable, fish, minerals) OR Sufficient working or processing (list of rules in Annex 13a of 1063/2010) 27

Step 2. Check Rules of origin List of rules: Annex 13a Reg. (EU) 1063/2010 Example for chapter 61 Harmonized System heading Description of product Qualifying operation (Working or processing, carried out on non-originating materials, which confers originating status) 28 28

Step 3. Proofs of origin (pre REX) Form A certificate Requested by the exporter Issued (and stamped) by competent authorities in Beneficiary Country (BC). Stamps of BC communicated to EU Member States (MS) (repository of stamps managed by TAXUD) Value > 6k 29

Form A Certificate 30

Step 3. Proofs of origin (pre REX) EUR-1 certificate Requested by the exporter in the MS Issued by customs authorities in MS (bi-lateral cumulation) Value > 6k Invoice declaration Made out by exporters in BCs if value < 6k Made out by exporters in MSs (bi-lateral cumulation) if value < 6k Made out by approved exporters in MSs (bi-lateral cumulation) if value > 6k 31

Step 3. Proofs of origin (post REX) Statement on origin Made out by exporters in BCs Made out by exporters in MSs (bi-lateral cumulation) On any commercial documents Registered exporters: value > 6k All exporters: value < 6k Simplification 32

Step 3. Proofs of origin (cumulation) Use of materials originating in another country as if they are originating in the beneficiary country. Insufficient working or processing to confer the status of originating products (Art 78). 3 types possible for Armenia: o o o Bi-lateral cumulation: A beneficiary country may use materials from the EU for producing the final products to be exported Extended bi-lateral cumulation: Bi-lateral cumulation extended to materials of Norwegian, Swiss origin Extended cumulation (Georgia): Upon request, cumulation between a beneficiary country and a country with which the EU has a free trade agreement in force. No request received until now 33

More information on the EU's GSP : DG TRADE's dedicated website: http://ec.europa.eu/trade/policy/countries-andregions/development/generalised-scheme-of-preferences/ DG TAXUD Taric database http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp DG TRADE Export Helpdesk http://exporthelp.europa.eu/thdapp/index.htm 34

35 Thank you for your attention!