DECISION No 1/89 OF THE EEC-EGYPT COOPERATION COUNCIL of 30 August 1989 amending, as a consequence of the introduction of the harmonized system, Protocol No 2 concerning the definition of the concept of 'originating products' and methods of administrative cooperation

THE COOPERATION COUNCIL,

Having regard to the Cooperation Agreement between the European Economic Community and the Arab Republic of Egypt, signed on 18 January 1977,

Having regard to Protocol No 2 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 Protocol No 2 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 as from 1 January 1988 the harmonized system was introduced for the purposes of international trade; whereas it is therefore necessary to adapt the rules of origin contained in Protocol No 2 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:

Article 1

In the last subparagraph of Article 1 of Protocol No 2, the words 'in List C in Annex IV' are replaced by 'in Annex II'.

Article 2

Article 3 of Protocol No 2 is replaced by the following:

'Article 3

1. The expressions ''Chapters'' and ''headings'' used in this Protocol shall mean the chapters and the headings (four-digit codes) used in the nomenclature which makes up the ''harmonized commodity description and coding system'' (hereinafter referred to as the ''harmonized system'' or ''HS'').

The expression ''classified'' shall refer to the classification of a product or material under a particular heading.

2. For the purposes of Article 1, non-originating materials are considered to be sufficiently worked or processed when the product obtained is classified in a heading which is different from those in which all the non-originating materials used in its manufacture are classified, subject to the provisions of paragraphs 3 and 4.

3. For a product mentioned in columns 1 and 2 of the list in Annex III, the conditions set out in column 3 for the product concerned must be fulfilled instead of the rule in paragraph 2.

4. For the purpose of implementing Article 1, the following shall always be considered as insufficient working or processing to confer the status of originating product, whether or not there is a change of heading:

(a) operations to ensure the preservation of merchandise in good condition during transport and storage (ventilation, spreading out, drying, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations);

(b)simple operations consisting of removal of dust, sifting or screening, sorting, classifying, matching (including the making-up of sets of articles), washing, painting, cutting up;

(c)i(i) changes of packaging and breaking up and assembly of consignments;

(ii)simple placing in bottles, flasks, bags, cases, boxes, fixing on cards or boards, etc., and all other simple packaging operations;

(d)affixing marks, labels or other like distinguish- ing signs on products or their packaging;

(e)simple mixing of products, whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in this Protocol to enable them to be considered as originating;

(f)simple assembly of parts of articles to constitute a complete article;

(g)a combination of two or more operations specified in subparagraphs (a) to (f);

(h)slaughter of animals.'

Article 3

Article 4 of Protocol No 2 is replaced by the following:

'Article 4

1. The term ''value'' in the list in Annex III shall mean the customs value at the time of the import of the non-originating materials used or, if this is not known and cannot be ascertained, the first ascertainable price paid for the materials in the territory concerned.

Where the value of the originating materials used needs to be established, this paragraph shall be applied mutatis mutandis.

2. The term ''ex-works price'' in the list in Annex III shall mean the ex-works price of the product obtained minus any internal taxes which are, or may be, repaid when the product obtained is exported.'

Article 4

Article 6 of Protocol No 2 is hereby amended as follows:

1. In paragraph 2, the expression 'Article 3 (3)' is replaced by 'Article 3 (4)', and the words 'Brussels nomenclature' by 'harmonized system'.

2.The following paragraph is added:'

4. Sets within the meaning of General Rule 3 of the harmonized system shall be regarded as originating when all component articles are originating products. Nevertheless, when a set is composed of originating and non-originating articles, the set as a whole shall be regarded as originating provided that the value of the non-originating articles does not exceed 15 % of the ex-works price of the set.'

Article 5

1. Annexes I, II and III to this Decision replace Annexes I, II, III and IV to Protocol No 2.

2. Annexes V and VI are renumbered IV and V.

Article 6

1. Products which were exported before 1 January 1990, accompanied by a Movement Certificate EUR 1 or Form EUR 2, shall be considered as originating under the rules in force on 1 January 1990.

2. Movement Certificates EUR 1 or Forms EUR 2 issued or made out before 1 January 1990 under the rules in force before that date shall be accepted up to and including 31 May 1990 according to the rules in force when they were issued.

3. Articles 19 and 20 of Protocol No 2 shall apply in the case of goods exported before 1 January 1990 and retrospective or duplicate Movement Certificates may be issued under the rules in force before that date.

Article 7

Decision 3/80 is hereby replaced by this Decision.

Article 8

This Decision shall apply from 1 January 1990.

Done at Brussels, 30 August 1989.

For the Cooperation Council

The President

H. M. EL KAMEL

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 1/89 alter the substance of any rule existing prior to Decision No 1/89 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 1992, an examination shall be made as a matter of urgency by the Cooperation Council, of the need to restore the rule concerned as it was before Decision No 1/89.

In any case, the Cooperation 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 1990 can be reimbursed.

ANNEX I

EXPLANATORY NOTES

Note 1: Articles 1 and 2

The terms 'the Community' and 'Egypt' shall also cover the territorial waters of the Member States of the Community and of Egypt 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 Egypt.

If originating products exported from the Community or Egypt 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 Malta 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 Egypt,

-which sail under the flag of a Member State or of Egypt,

-at least 50 % of which are owned by nationals of the Member States and Egypt or by a company which has its head office in a Member State or in Egypt, 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 Egypt 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 Egypt or to public bodies or nationals of the Member States or of Egypt,

-of which the captain and officers are all nationals of the Member States or of Egypt,

-of which at least 75 % of the crew are nationals of the Member States or of Egypt.

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

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ANNEX III

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