DCFTA for Business

Tariffs

Rules of Origin

Origin of goods is the “economic nationality” of the goods for international trade purposes. There are two types of rules of origin:

Preferential;
Non-preferential;

Non-preferential Rules of Origin are used for following purposes: Most Favoured Nation (MFN) status, anti-dumping and countervailing duties, safeguard measures, quantitative and tariff rates, marking of the origin and trade statistics. Non-preferential rules of origin are regulated by the General Agreement on Tariffs and Trade (GATT) of 1994 of the World Trade Organization (WTO) and by the Addendum of 1974 to the International Convention (the Kyoto Convention) on the Simplification and Harmonization of Customs procedures.

Preferential Rules of Origin serve to set preferential tariffs for export purposes using trade regimes. Preferential rules of origin are regulated by the bilateral and multilateral agreements on free trade and national legislation.

For importing goods to the EU market, customs (import) duty is calculated according to the following factors: price of the goods, commodity code and country of origin of the goods, as well as any other special limitations and requirements applicable to individual cases. The DCFTA envisages the abolition of the import duty with certain prerequisites (see Article 26 of Association Agreement). Therefore, for trade purposes between Georgia and EU the preferential rules of origin are used. To benefit from this regime, the Georgian Origin (nationality) of the goods imported into EU must be proven.

To receive the status of Georgian Origin for Export goods in the EU, it is mandatory to fulfill the following conditions set out in the first protocol of AA:

The goods must be fully produced in Georgia; or
The goods are not fully produced in Georgia, but the materials used for production have undergone sufficient processing on the territory of Georgia.

The goods will be considered fully produced in Georgia if:

(a) Mineral products are extracted from its soil or from its seabed;

(b) Vegetable products are harvested there;

(d) Products from live animals are raised there;

(e) Products obtained by hunting or fishing are conducted there;

(f) Products of sea fishing and other products are taken from the sea outside the territorial waters of the exporting Party by its vessels;

(g) Products are made aboard its factory ships exclusively from products referred to in point (f);

(h) Used articles collected there fit only for the recovery of raw materials, including used tyres fit only for rethreading or for use as waste;

(i) Waste and scrap is generated from manufacturing operations conducted there;

(j) Products are extracted from marine soil or subsoil outside its territorial waters, provided that it has the sole rights to work that soil or subsoil;

(k) Goods are produced there exclusively from the products specified in points (a) to (j).

Remark:

The terms “vessel” and “factory ships” describes only the vessels or fishing vessels, which:

Are registered or recorded in one of the EU member states or Georgia;
Are sailing under the flag of one of the EU member states or Georgia;
Are, at lease by 50% owned by (a) the citizens of one of the EU member state or Georgia, or (b) company, with a head office located in one of the EU member states or Georgia and directors/managers, chairmen of the boards of directors/supervisory boards, or majority of board members are citizens of one of the EU member states or Georgia and in which, in case of partnership or Ltd model, at least half of the capital is owned by the citizens/state entities of one of the EU member states or Georgia;
Are piloted by captains and officers who are the citizens of one of the EU member states or Georgia;
The crew is at least by 75% composed of citizens of one of the EU member states or Georgia.

Sufficiently Reworked or Processed on the Territory of Georgia

Any goods that are not fully produced in Georgia but meet the requirements described in the second Annex of the first protocol of AA, will be considered sufficiently reworked and processed on the territory of Georgia. Raw material not originating from Georgia may be used for production process, providing:

Its total price does not exceed product Franco factory price;
The percentages given in the list for the maximum amount of external origin materials are not exceeded by virtue of this paragraph (Annex II).

Remark:

The following will be considered as insufficient working or processing:

(a) Preserving operations to ensure that the products remain in good condition during transport and storage;

(b) Breaking up and assembly of packages;

(d) Ironing or pressing of textiles;

(e) Simple painting and polishing operations;

(f) Husking, partial or total bleaching, polishing, and glazing of cereals and rice;

(g) Operations to colour sugar or form sugar lumps;

(h) Peeling, stoning and shelling, of fruits, nuts and vegetables;

(i) Sharpening, simple grinding or simple cutting;

(j) Sifting, screening, sorting, classifying, grading, matching; (including making up sets of articles); (k) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;

(l) Affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;

(m) Simple mixing of products, whether or not of different kinds;

(n) Mixing of sugar with any material;

(o) Simple assembly of parts of articles to constitute a complete article or disassembly of products into parts;

(p) A combination of two or more operations specified in points (a) to (o);

(q) Slaughter of animals.

The following documents must be presented to confirm the status of origin for importer country:

Movement certificate, issued by the Georgia Revenue Service;
Declaration of Origin (the form is attached to the IV Annex of the first protocol), which must be attached to the invoice, delivery notification or to any commercial documents and describe the relevant details of the product;

Declaration of Origin may be used by:

Authorized exporter (for more information please see the decree of 29 December 2010 #420 of the Government of Georgia);
Any exporter, in case of exporting goods with the total price of not more than EUR 6,000;

Remarks:

An authorized exporter can exercise Declaration of Origin regardless the value of the goods. The status of the Authorized Exporter can be obtained based on a statement submitted at the Georgian Revenue Service.
An exporter who claims the Declaration of Origin, must be ready to submit the relevant documentation to the Customs Authorities of the country where goods are exported, proving that the goods are of Georgian origin.

Certificate of Origin is valid for four months from the day of issuance and must be submitted to the Customs Authorities of the country where goods are exported to in this timeframe.

The difference between the terms “Produced in Georgia” and “Originated in Georgia” should be considered. The goods, produced in Georgia may not have a status of origin from Georgia. Additional information can be found at the website of the Georgian Revenue Service.