From January 1, 2019, the application of the provisions of the Regional Convention on pan-Euro-Mediterranean preferential rules of origin in bilateral trade has been launched between Ukraine and the European Union.
The PEM Convention is a tool that establishes identical rules of origin for goods used in the framework of free trade agreements between the contracting parties.
In the future, the use of the PEM Convention will enhance the benefits for national exporters through the opening up additional opportunities for Ukrainian producers: they will be able to use the principle of diagonal cumulation of origin of goods applied among the parties to the Convention on the condition of the existence of free trade regimes between them.
There are currently 25 parties to the Convention, namely, the EU, the EFTA countries (Iceland, Liechtenstein, Norway, Switzerland), Albania, Algeria, Bosnia and Herzegovina, Georgia, Egypt, Israel, Jordan, Lebanon, Kosovo, Macedonia, Morocco, Moldova, Palestine, Serbia, Syria, Tunisia, Turkey, Ukraine, Faroe Islands and Montenegro.
Ukraine has concluded free trade agreements with the following participants in the Regional Convention: the EU, EFTA, Georgia, Macedonia, Moldova, Montenegro. The Free Trade Agreement between Ukraine and Israel is being prepared for signing. Negotiations on the conclusion of the Free Trade Agreement between Ukraine and Turkey are underway.
In practice, the application of the provisions of the PEM Convention means that the Ukrainian producer will be able to procure raw materials or components from one of the parties to the Convention while the finished products to export to another party to the Convention without paying customs duties or at a reduced rate.
This will facilitate the opening of new production capacities, increased use of production potential and the joining to regional and international value-added chains.