Rules of Origin in fisheries sector (Contd)



Overview of the "new" EPA RoO for fish

The EU RoO underlying the fishing sector have seen a small number of changes following EPA negotiations between the ACP countries and the EU. Although many ACP countries requested more favourable RoO conditions, most notably with respect to the status of fish caught within the EEZ, most of these demands were not fulfilled during negotiations.

Under EPA RoO, changes were made to the following :

• the wholly produced conditions saw changes mainly to the crewing requirement, and leasing and chartering provisions.

• Pacific ACP countries were granted a special derogation with regard to the use of non-originating fish.

• some EPA regional country-groups have received a limited derogation similar to that which existed under the former Cotonou Agreement.

• a non-originating value tolerance was included in parts of Chapter 03 (Fish and crustaceans, molluscs and other aquatic invertebrates) and 16 (Preparation of fish or of crustaceans, molluscs and other aquatic vertebrates).

The main changes to the wholly produced rules relate to the removal of the crewing condition. Whereas Cotonou required that at least 50% of the crew, master and officers included, must be nationals of the European Community, ACP or Overseas Countries and Territories (OCT), EPA RoO have dropped this requirement. Ownership conditions however remain in place.

Changes to the conditions underlying a charter or lease agreement have also been changed, the most important of which is the requirement (under the old rules, as well as others such as the EU GSP) that the EU must have been offered the opportunity to negotiate a fisheries partnership agreement and the EC did not accept this offer1. Under the EPA provisions, this requirement has been changed to a right of first refusal of a leasing or chartering agreement (presumably under the same conditions as that offered to a third country).
The Pacific EPA regional group was granted a special dispensation which allows countries belong to this group to use non-originating fish when further processed into goods classified under Chapter 16 (specifically goods classified under HS16042 and HS16053). These were largely based on the fact that Pacific countries more vulnerable to the threat of seasonal fish stock, with local processors suffering during times when targeted fish species moved out of the area. Due to the countries distant location, they were also considered of little interest to the EU's distant water fleet. The new provisions can be summarised as follows4 :

• These provisions apply only to Pacific EPA States and only to processed fish products of heading 1604 and 1605.

• Products of heading 1604 and 1605 must be processed in on-land premises in a Pacific EPA State from non-originating materials of heading 0302 or 0303 that have been landed in the port of a Pacific EPA State.

• The Pacific ACP State (utilising these provisions) must notify the EC prior to utilising these clauses.

• The Pacific ACP State must prepare a report on the implementation of this which must be presented to the EC within three years after the initial notification.

• The usual EU SPS measures, and standards on conservation and sustainable management of fishing resources, continue to apply.

With respect to a similar quota-based limited derogation along the lines of which existed under Cotonou, and which had to be shared between the entire ACP Group, similar derogations were granted to some EPA regions but not others5 . Regional country groupings that have been granted special derogations in the Interim EPA RoO include the East African Community (EAC) configuration as well as the Eastern and Southern African ESA) group. Specifically, the following derogations apply:

• The EAC group was granted a derogation for 2,000 tonnes of tuna loins in the EPA provisions. Since these are yet to be fully implemented, Kenya applied for a temporary derogation and in November 2008 received a special derogation for tuna loins of 2,000 tons. As the only exporter of commercial quantities of tuna to the EU within this EPA group, Kenya's temporary derogation equals the all-EAC derogation granted under the Interim EPA.

• The ESA Group was granted a derogation of the same volume as previously allocated to the entire ACO group. This is now effectively shared between Madagascar, Mauritius and Seychelles as the only countries within this configuration with tuna processing facilities. In the meantime, all three countries obtained a temporary derogation from the general RoO applicable to fish as currently in force6 in terms of the EC's Market Access Regulations of 20 December 2007. These derogations were granted to Mauritius in July 2008, Seychelles in August and Madagascar in September of 2008.

• Provision is made in some other draft texts, notably the EC-Ghana and EC-Cote d'Ivoire RoO Protocols, for a derogation for tuna loins and canned tuna, although the specifics are yet to be finalised.

With respect to the specific non-originating value tolerance that has been drafted into some of the product-specific RoO provisions in Chapters 03 and 16, this allows exporters to use up to 15% non-originating fish (i.e. fish that does not comply with the 'wholly-produced' provisions, whether sourced from a third country or simply not fulfilling the vessel or ownership requirements). The likely impact of this provision is indeterminate as the RoO Protocol already contains a general value tolerance of 15% (based on the ex-works price of the final product).

The RoO for fish in other agreements

Few other preferential trade regimes contain RoO that are as restrictive and complex as those in EU trade agreements. Nevertheless, many still consider fish to be a sensitive sector, more so than other sectors, and impose special requirements that must be met in order to confer local origin.

For example, the intra-SADC RoO are similar in structure to the EU RoO. The basic requirement is that to be considered as originating in the context of intra-SADC trade, products must be wholly produced in a SADC FTA Member State. The conditions for 'wholly produced' are defined having been met when products are obtained by hunting or fishing conducted "there", as well as "products of sea fishing and other products taken from the sea by their vessels, and products made on board their factory ships exclusively from these products". The place of production is linked to the nationality of the vessel and must be of a Member State, with origin conferred where the product is landed. Specifically, a vessel must sail under the flag of a Member State, and at least 75 percent of the officers and crew of the vessel must be nationals of a Member State. With respect to ownership criteria, at least the majority control and equity holding in respect of the vessel must be held by nationals of a Member State or institution, agency, enterprise or corporation of the Government of such Member State.

Under the Japanese GSP, fish products of Chapter 03 and 16 do not fall under the normal RoO (requiring a CTH to confer origin), but instead must be wholly produced in the exporting beneficiary country and shipped directly to Japan.

NAFTA RoO are more lenient with respect to fish. Where raw and processed fish is "wholly obtained or produced" it qualifies as originating, with the conditions attached to this paragraph considerably more flexible than in many other agreements. Specifically, fish is considered as wholly obtained and hence originating7:

• goods obtained from hunting, trapping or fishing in Canada, Mexico or the United States.

• goods (fish, shellfish and other marine life) taken from the sea by vessels registered or recorded with Canada, Mexico or the United States and flying its flag.

• goods produced on board factory ships from the goods referred to in the subparagraph above provided such factory ships are registered or recorded with that country and fly its flag.

No crew or ownership requirement with respect to vessels is specified. While the "wholly obtained" provisions form the basic reference point to the RoO for fish, the product-specific rules allow the use of non-originating fish for products classified within Chapter 16 ("preparations of … fish or of crustaceans, molluscs or other aquatic invertebrates"). Specifically, the rules for Chapter 16 require a "change in chapter" to confer origin; this implies that non-originating materials classified under a different Chapter (i.e. raw fish of Chapter 3) may be used since the processing into canned tuna of heading HTS1604 results in a 'change in chapter'. Products within Chapter 3 are also subject to a change in chapter, but since unprocessed raw fish is also classified within the same chapter the de facto requirement is that wholly obtained fish must be used.

1)These provisions appear to differ slightly between different Agreements: for example, the SADC-EC Interim EPA in Article 5(3) refers to the (European) Community having been offered the right of first refusal, whereas the EU-Caribbean EPA in Art. 6(3) refers to operators in the European Community having been offered the right of first refusal.
2)HS 1604: Prepared or preserved fish; caviar and caviar substitutes prepared from fish eggs.
3)HS 1605: Crustaceans, molluscs and other aquatic invertebrates, prepared or preserved.
4)These provisions were originally detailed in the EC Market Access Regulations 1528 of 20 December 2007. This Regulation is considered an interim provision granting ACP countries that have initialled an Interim EPA market access pending completion of the EPA negotiations.
5) In this respect it must be noted that EPAs between the ACP and EU are being negotiated at a regional rather than all-ACP (as previously under Cotonou) or individual level. The ACP derogation under tuna amounted to 2,000 tons of tuna loins and 8,000 tons of canned tuna annually.
6)As currently applied through the EC Market Access Regulations of 1528 of 20 December 2007.
7)For further details see:www.customs.gov/xp/cgov/trade/trade_programs/international_agreements/free_trade/nafta/customs_procedures/rules_origin/

Related articles:
- Rules of Origin in fisheries sector (Part I)

- Rules of Origin in the textiles and clothing Sector (Part II)
- Rules of Origin in the textiles and clothing sector (Part I)