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News

Origin labelling: rules are too complicated

05/10/2018 - François-Xavier Branthôme
“Complex regulations undermine free-trade agreements”

On 29 May 2018, the European Commission has adopted the new rules on labelling the origin of the primary ingredient in food which were endorsed by a vote by the Member States. The new regulation will ensure a high level of transparency, providing EU citizens with clear information about the origin of food sold on the EU market. 
Under the Regulation on food information to consumers (FIC), the origin of primary ingredient must be indicated if different from the origin of the food in order to not deceive consumers and to harmonise the presentation of such information. There will be a certain level of flexibility for food business operators in order to take into account the various methods of food processing. The legislation (*) will apply from 1 April 2020.

Rules inhibit trade
Complex rules of origin labelling requirements inhibit trade and SMEs pay a particularly heavy price, trade bodies amfori and EuroCommerce warn. Speaking at a conference in Brussels, the heads of both associations argued that unless rules of origin requirements are reformed, they will continue to discourage European companies from taking advantage of "hard won concessions" in free trade agreements. 
"Even the most beneficial trade agreements have little effect if the rules of origin are too complicated. There is definitely something wrong when small companies, but also some big enterprises prefer to pay import duties rather than dealing with a set of different rules of origin," EuroCommerce director general Christian Verschueren said.
"There is an urgent need for a modernised system which recognises that we are operating in a world of global supply chains, where complex products are made up of parts from all over the world."

Bilateral agreements between the EU and third party countries frequently contain different requirements, complicating the picture further still.
"Origin rules need to be simplified, harmonised […]. Without these improvements there is a definite risk that the benefits of trade agreements will continue to be only partially adopted and even a risk to the future of new trade agreements entirely," Christian Ewert, president of amfori - a business association supporting open and sustainable trade - added.
On top of these difficulties, under the recently-adopted Registered Exporters System (REX) that replaces the certificate of origin Form A, importers now run the risk of being held liable for any incorrect information provided by the exporter on the origin of a product. "This approach should be revisited to find a more balanced set of rules on an importer's burden of proof when dealing with customs authorities in the EU”, the trade associations argued.
Neil McMillan (EuroCommerce) explained that the complexity for rules of origin work to the detriment of importers or exporters who seek to benefit from reduced tariff rates under free trade agreements with suppliers from outside the EU.
National Country of Origin Labelling (COOL] requirements can add to this burden. For example, McMillan observed, when Italy introduced COOL requirements the food industry was resistant. "There was protest from Canadian wheat producers and some Italian pasta manufacturers, who saw the Italian rules on declaring the origin of wheat used in pasta could cause problems, both in reducing Canadian exports and manufacturers finding sufficient supplies of the right grades of wheat."

A number of European countries have introduced some form of COOL regulations, including France, Spain and Italy; France is due to report back to the EU on its pilot COOL project this December. EuroCommerce said this will be a significant moment for COOL and stressed it is important for European regulators to ensure that COOL rules do not undermine the single market.
“We expect the European Commission to carefully consider the conclusions of the French report in order to make sure those origin rules do not constitute a barrier to the single market”, McMillan said.
"There is some anecdotal evidence that cross-border sales of the basic commodities that go into some of the products covered by national COOL rules have indeed seen a significant reduction, but it is too early to tell the longer-term impact at this stage."

Some complementary data
(*) Implementing Regulation (EU) 2018/775
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32018R0775&from=EN

(*) Règlement d'Exécution (UE) 2018/775 
https://eur-lex.europa.eu/legal-content/FR/TXT/HTML/?uri=CELEX:32018R0775&from=EN

For further details about labelling legislation or Registered Exporters System, see also: 
(FR) https://www.actualitesdudroit.fr/browse/environnement-qualite/qualite/13756/indication-de-l-origine-d-un-ingredient-modalites
(ENG) https://ec.europa.eu/food/safety/labelling_nutrition/labelling_legislation_en and
https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/rules-origin/general-aspects-preferential-origin/arrangements-list/generalised-system-preferences/the_register_exporter_system_en

Source: foodnavigator.com, ec.europa.eu/info, actualitesdudroit.fr
 
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