Pan-Euro-Mediterranean (PEM): Change at the start of 2025

At the turn of the year 2024/2025, far-reaching changes are planned in the area of origin of goods and preferences. These require adaptations of the AEB Origin & Preferences software as well as the cooperation of those responsible in the companies that use this software. The changes affect companies in the EU and Switzerland. Companies in the UK are not affected.

This article is the central location for all currently known and forthcoming specialist information, instructions, and calls to action.


What are PEM and the Regional Convention?

What will change?

When will the change come into force?

Effects on the AEB software and your processes

Which preparations do you need to take?

Technical information and instructions

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What are PEM and the Regional Convention?

The Pan-European Mediterranean zone of origin (short: Pan-Euro-Med or PEM zone) is a group of countries that have concluded numerous bilateral free trade agreements with each other since 2005, using the same rules of origin and thus creating the basis for the Pan-Euro-Mediterranean cumulation.

It turned out to be difficult to amend a large number of agreements at the same time. The aim was not to jeopardize the system of identical rules of origin. For this reason, the rules of origin were combined into a separate set of rules in 2013 – the so-called Regional Convention. From then on, the free trade agreements referred only to the rules of the Regional Convention for the origin protocol, which sets out the rules for the preferential origin of goods. In order to change the rules of origin, the change only needs to be made in the Regional Convention and no longer needs to be implemented in all bilateral preferential agreements.

The contracting parties have agreed on such a change to the rules of origin from January 1, 2025. The Pan-Euro-Med matrix describes which countries from the PEM zone have concluded agreements with each other and are therefore allowed to cumulate. The application of the Regional Convention is indicated by a date with the suffix "(C)". The change in the rules from January 1, 2025 is marked with an "(R)".

Not all free trade agreements have yet been converted to the Regional Convention. It is to be expected that free trade agreements will continue to switch to the new rules beyond January 1, 2025 and that information will be published on how to proceed until then.

What will change?

Viewed in isolation, the new rules are easier to comply with. The main long-term simplifications coming into force are the following:

• Increase in general tolerance from 10% to 15%
• Changes to the content and structure of the list rules, in particular through:
  • Increase in the proportion of permitted non-originating materials depending on the ex-works price; ergo higher percentage
  • Reduction of combination rules
  • Introduction of weight rules
  • Simplifications for the textile and chemical sectors through special procedures, additional textual rules that may apply
  • Many header rules are summarized in the chapter rules; i.e. omission of many ex-rules for HS heading or HS sub-heading
• Movement certificate EUR-MED and declaration of origin on the invoice EUR-MED are no longer required

As a result of these changes, existing rule assignments must be dissolved and rules reassigned. Accordingly, the calculations and assessments must be carried out again.

When will the rule change come into force?

This rule change will come into force on January 1, 2025. From this date, the new rules will apply to the agreements marked with “(R)” in the matrix. A decision on whether and, if so, how the previous rules may continue to be used is expected from mid-December.

Effects on the AEB software and your processes

AEB will provide a service pack for Origin & Preferences by end of December, which will guide you step by step through the necessary adjustments using a new widget.
For the software operated in the cloud, the service pack will be installed automatically. If you are running Origin & Preferences as an on-premises installation, you will need to install the service pack yourself.

Which preparations do you need to take?

• Allocate sufficient specialist resources for the turn of the year 2024/2025, e.g. for rule assignment and, if necessary, the creation of manual list rules. For a direct comparison of the old and new rules, you can find help in the article PEM rules 2025: Comparing new and old list rules.
• The changeover via the new widget must be carried out after the turn of the year by an administrator with specialist knowledge. This is a prerequisite for you to be able to continue working with Origin & Preferences. Also take this into account for substitution situations such as vacation or sick days.
• If you use customized forms in Origin & Preferences, these only need to be adapted in special cases. You can find information on this in the article PEM rules 2025: Challenges and your next steps.

Technical information and instructions

Prepare yourself for the changeover from now until December 2024. You can find information on your next steps in the article PEM rules 2025: Challenges and your next steps.

AEB offers an online seminar regarding The New PEM Rules of Origin in AEB's O&P on November 20, 2024 from 9 am to 10:30 am. Get insights into the new rules of origin, the planned transitional provisions and the implementation in AEB's Origin & Preferences.

As the seminar on November 20 is fully booked, AEB is offering a second date on December 4, 2024.

Please note that the seminar will be in German only. Register here!

• Register here: Seminar zu den neuen PEM-Ursprungsregeln in O&P von AEB

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