A modernisation of the rules of origin has been emerging for some time now within the Pan-Euro-Mediterranean free trade Convention (PEM, for short). The PEM free trade area is of interest to companies because it covers many countries, and the contracting parties recognise processing steps and origin among one another, provided they apply the same rules of origin. This free trade area includes the Mediterranean countries (Egypt, Algeria, the Palestinian Territories, Israel, Jordan, Lebanon, Morocco, Syria, Tunisia), the Balkan states of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia, the EFTA states Norway, Iceland, Switzerland, Liechtenstein, as well as Turkey, the Faroe Islands, the Republic of Moldova, Georgia, and Ukraine.
These contracting parties agreed years ago to replace the rules of origin under the Regional Convention (RC) published in 2013 with modern and simpler rules of origin. This modernisation process has, since the start of the year, been in its final stretch, although the road here was rather bumpy:
In 2021, transitional rules, the so-called Transitional Rules, were introduced. Although modern and equipped with more generous processing rules, these found little acceptance in the business community. This was understandable, since the old, previous preferential system (“old RC”) and the new Transitional Rules were applicable as alternatives, but the rules of origin allowed no permeability whatsoever in cases where origin had already been obtained under the stricter rules. This made, in particular, the provision of proof complicated and, in practice, barely manageable.
On 1 January 2025, the Revised Regional Convention entered into force (Decision No. 1/2023, as amended by Decisions No. 1/2024 and 2/2024), containing modernised rules of origin corresponding to the Transitional Rules that had applied in the interim. These revised rules applied in 2025 in parallel with the old rules under the 2013 Regional Convention, and this time it had been agreed to permit permeability for goods that had acquired origin under the old, stricter rules. This permeability applied to goods of Chapters 1, 3, ex 16, and Chapters 25 to 97.
What complicated the legal position in 2025 was the fact that individual contracting states continued to apply exclusively the old rules, or only the new, revised rules. We described the situation in 2025 in detail in Schlagbaum issue 01/2025.
What currently applies?
Since 1 January 2026, only a single system of rules of origin applies. Contracting states apply among themselves either the old Regional Convention (2013 version), or the old origin protocols (so-called C countries), or the new, revised Regional Convention (so-called R countries). In bilateral trade in goods, the European Union now applies the old RC only vis-à-vis Algeria, and the old protocols only vis-à-vis Lebanon. In relation to all other contracting states, the new rules apply.
If companies wish to make use of cumulation, all the countries involved, that is, for example, the supplying country, the processing country, and the recipient country, must apply the same rules of origin. They must either all be R countries and apply the Revised Convention among themselves (R/R/R), or all be C countries and apply the old rules (C/C/C). According to a Specialist article from the customs administration (as at 2 April 2026), the only exception is said to apply in the case of Egypt as the country of destination, where certain countries are involved. If cumulation is to be used, it is essential to consult the so-called Matrix, which reflects which countries apply which rules among themselves. It is currently updated monthly and published on the website of the EU Commission (https://taxation-customs.ec.europa.eu/customs/international-affairs/pan-euro-mediterranean-cumulation-and-pem-convention_en?prefLang=de&etrans=de). For checking the rules of origin in bilateral trade in goods, it is advisable to work with the wup.zoll.de database, on a date-specific basis, using the rules of origin applicable at the relevant time. This is also advisable because the database contains information on the individual countries, and because, despite largely harmonised rules, some minor exceptions must once again be observed:
For instance, Morocco, Egypt, and the occupied Palestinian territories still apply, on a transitional basis for imports into the EU, the “Transitional Rules” corresponding to the Revised Regional Convention (marked in the Matrix as R/T or T/R).
What applies to proofs of preferential origin?
Proofs of origin from these countries carry corresponding annotations on import: “Transitional Rules” in the case of Egypt and the occupied Palestinian territories, “Revised Rules” in the case of Morocco. These must be specially coded on import. These annotations will only cease to apply once these countries apply the Revised Regional Convention (marked in the Matrix with status R instead of T).
The customs administration has addressed, in an informative Specialist article that has already been updated several times (as at the time of writing this article: 2 April 2026), what applies in the numerous individual cases in which proofs of origin were issued before 1 January 2026 but the import only takes place after that date. Apart from the three special cases mentioned, proofs of origin issued by a PEM contracting state after 1 January 2026 should, on import into the EU, carry no annotation. However, the Specialist article referred to indicates that the customs administration intends to take a lenient approach with regard to incorrect designations. Companies should bear this in mind if customs offices reject a proof of origin from a PEM contracting state on formal grounds.
For the issuance of proofs of origin in the EU for export to PEM contracting states, it should be noted that a reference to the underlying rules of origin is no longer required, meaning these no longer carry a “Revised Rules” annotation, even though they are issued on the basis of the new, revised agreement. Exception: due to temporary national measures, Egypt requires that proofs of origin for exports from the EU explicitly indicate the application of the revised rules (see Specialist article, as at 2 April 2026).
What applies with regard to the recognition of proofs of origin and supplier’s declarations as supporting documents for the purposes of cumulation, in the various individual cases in which proofs of origin and supplier’s declarations were issued before or after 1 January 2026, with or without an annotation, can be found in detail in the customs administration’s Specialist article (as at 2 April 2026).
Cumulation indication
One simplification under the new preferential rules is that the EUR-MED movement certificate no longer exists. When cumulation is applied to acquire origin, the proof of origin should, under Article 8(3) of Appendix I, carry the indication “CUMULATION APPLIED WITH…”. However, the contracting parties may waive this indication. Annex III to the so-called Matrix (see above) publishes a list of the contracting parties making use of this waiver (as at 16 March 2026, these are the EFTA states as well as Bosnia and Herzegovina). The number of countries issuing electronic movement certificates is also growing. These are published on an ongoing basis in Annex 1 to the Matrix, together with a link through which the authenticity of the certificates can be verified. As at 16 March 2026, Switzerland has been added to this list.
What is practically relevant for companies?
After all these formal remarks, it should not go unmentioned that the new set of rules brings many advantages, including:
- Simpler list rules, which permit higher proportions of non-originating materials, can mean that origin is now acquired in the manufacture of goods for which this was not previously the case.
- The tolerance thresholds for non-originating goods have been raised.
- For rules of origin containing a value clause, there is now the possibility of calculating the ex-works price of the products and the value of non-originating materials on the basis of average values. However, this simplification must be approved by customs (Article 4(3) of Appendix I).
The average value calculation is likely to provide relief for many companies whose input materials are subject to significant cost fluctuations. If the Revised Regional Convention hopefully becomes established across the entire PEM area in the course of 2026, and the exceptions of the past become a thing of the past, the modernised rules should ease trade in goods within the PEM free trade area in many respects.
Please feel free to contact us if you have any questions arising from the current transition.
