Recent Developments in Turkey-EU Customs Relations

This article deals with important changes for all traders involved in importing and exporting, using the tariff preference regime. In this context, it is necessary to remember that the so-called Euro-Mediterranean Partnership ("Pan-Euro-Med") aims to create free trade between the EU and its Mediterranean partners and amongst the partners themselves by 2010. The conclusion of association agreements between the EU and its partners, granting reciprocal trade preferences, is an important step toward this free trade area.

On 10 August 2006, the European Commission ("Commission") published a notice¹ ("Notice"), which provides an updated overview of the protocols on rules of origin, providing for diagonal cumulation specifying the date from which such cumulation becomes applicable. Diagonal cumulation means that products, which have obtained originating status in one country of the Pan-Euro-Med zone, may be added to products originating in any other country of the Pan-Euro-Med zone without losing their originating status within this zone. Cumulation can only be applied if the countries of final manufacture and of final destination have concluded free trade agreements, containing identical rules of origin, with all the countries participating in the acquisition of originating status, i.e. with all the countries from which all the materials used originate. Materials originating in a country that has not concluded an agreement with the countries of final manufacture and of final destination shall be treated as non-originating. Specific examples are given in the Explanatory Notes concerning the Pan-Euro-Med protocols on rules of origin.²

According to the Notice, for goods covered by the EC-Turkey Customs Union ("Customs Union"),³ diagonal accumulation has been applicable since 27 July 2006. For goods not covered by the Customs Union (agricultural, coal and steel products), diagonal cumulation is not yet applicable. Those products are subject to traditional preferential trade agreements and rules of origin in separate trade agreements, which the EU has concluded with Turkey. The EU and Turkey have yet to adopt the necessary changes, which provide for Pan-Euro-Med diagonal cumulation to the rules of origin in those agreements.

On 27 July 2006, Decision No 1/2006 of the EC-Turkey Customs Co-operation Committee, laying down detailed rules for the application of Decision No. 1/1995 of the EC-Turkey Association Council⁴ ("Decision"), came into force.

The new legislation contains a number of changes. Decisions No. 1/1999,⁵ No. 1/2000⁶ and No. 1/2001⁷ have been repealed. References to provisions of the repealed decisions shall be construed as references being made to the corresponding provisions of the Decision.

With regard to suppliers’ declarations, specifically long-term suppliers’ declarations, the Decision provides for suppliers in Turkey and the EU to include additional information such as checking a box stating whether or not the goods concerned have acquired preferential origin on the basis of cumulation, and if so, with whom. This additional information is required because application of Pan-Euro-Med cumulation is dependant upon all countries within the zone having concluded free trade agreements with each other, which contain identical rules of origin. According to Article 52 of the Decision, though, suppliers’ declarations to the forms in Decision No. 1/1999 may continue to be made for a period of twelve months from the entry into force of the Decision, except when they shall be used by exporters as evidence in support of applications for the issuance of movement certificates EUR-MED or as a basis for completing invoice declarations EUR-MED.

The applicability of Decision No. 1/2000 has been extended to all countries participating in the Pan-Euro-Med cumulation, provided that the conditions for diagonal cumulation are met. Decision No. 1/2000 also aims to ensure that goods covered by the Customs Union can benefit from the provisions on free circulation laid down in Decision No. 1/95 when they are imported into one part of the Customs Union, accompanied by a proof of origin issued in a country with which both the EU and Turkey have concluded preferential trade agreements, providing between them a system of cumulation of origin, based on identical rules of origin and a prohibition of any drawback or suspension from customs duties on the goods concerned. Once again, however, for agricultural, coal and steel products, which are not covered by the Customs Union, diagonal cumulation is not yet applicable.

A new aspect is the allowance of the customs authorities of the member states to issue "single authorisations" for approved exporters and to provide for acceptance by Turkey of A.TR movement certificates established on the basis of such authorisations.

Finally, as a result of Turkey’s integration into the Pan-Euro-Med diagonal cumulation regime, Decision No. 1/2005 of the EU-Morocco Association Council⁸ is no longer applicable. By way of derogation from the rule of the EU-Morocco Agreement,⁹ the garments, listed in the Annex to Decision No. 1/2005 of the EU-Morocco Association Council and obtained in Morocco from fabric originating in Turkey, were considered as originating in Morocco. In practical terms, this means that Turkish originating materials can be exported to Morocco, to be made into garments for export under preference to the EU.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.