Ukraine starts to apply PEM Convention

Ukraine starts to apply PEM Convention

The provisions of the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (PEM Convention) have started to be applied in bilateral trade between Ukraine and the European Union since January 1, 2019.

"PEM Convention is a tool that sets identical rules for the origin of goods, applied within the framework of free trade agreements between its parties," the press service of the Economic Development and Trade Ministry of Ukraine reports.

As noted, the further use of the PEM Convention will increase the benefits for national exporters by opening additional opportunities for Ukrainian producers as they will be able to use the principle of the diagonal cumulation of origin of goods that is used between the parties to the Convention, provided that they have agreed on free trade.

The 25 Contracting Parties to the PEM Convention are the EU, the EFTA States (Switzerland, Norway, Iceland and Liechtenstein), Albania, Algeria, Bosnia and Herzegovina, Georgia, Egypt, Israel, Jordan, Lebanon, Kosovo, the Republic of Macedonia, Morocco, Moldova, Palestine, Serbia, Syria, Tunisia, Turkey, Ukraine, the Faroe Islands and Montenegro. Ukraine has concluded free trade agreements with the following parties to the Convention: the EU, the EFTA, Georgia, Macedonia, Moldova and Montenegro. A free trade agreement between Ukraine and Israel is being prepared for signing. The talks on free trade between Ukraine and Turkey are ongoing.

In practice, the application of the PEM Convention provisions means that Ukrainian manufacturers will be able to purchase raw materials or components from a party to the Convention and export finished products to another party to the Convention without paying duties or at a reduced rate of duty. This will contribute to opening of new production capacities, a better use of production potential and joining the regional and international value chains.

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