Some valid questions, the result of joint work between nations, can be drawn from the MERCOSUR Summit held on July 4 in Puerto Iguazú.
These refer to the approval of the update of the "MERCOSUR Origin Regime", the preparation of the "Special Report on the Technical Study on the status and situation of the level of integration of the Integrated Control Areas", as well as the preparation and approval of the "Manual of Procedures for the Exchange of Customs Information of MERCOSUR".
Now, what does this imply? new MERCOSUR Origin Regime (ROM)?
With this question, the conversation began with the National Coordinator for Argentina of the Technical Committee No. 3 on “Trade Standards and Disciplines”, Lic. Andrea Russo, who summed up the issue: “Rules of origin are the criteria necessary to determine the origin of a product. Their relevance is explained by the fact that the duties and restrictions applied to imports may vary depending on the origin of the imported products.”
The specialist explained that the current ROM was established by CMC Decision No. 01/09 with an ALADI structure (80s and 90s), and that the MERCOSUR States Parties decided to begin its review and modernization in 2019, to incorporate facilitating devices, present in the most recent Agreements signed by the bloc with third countries and trade blocs (European Union, Singapore, among others).
So what happened now? In Russo’s words, “finally, consensus was reached” for the update of the ROM, which covers both the normative text in all its articles and appendices, as well as the revision of the requirements of origin, the general rule of origin (GR) and the specific requirements of origin (SROs). This specification was defined in CMC Decision No. 06/23.”
And another question: What are the main technical aspects of the new ROM? Many are interesting. I take here those highlighted by the National Coordinator of CTN°3:
- All the ROM modifying regulations subsequent to DEC. CMC No. 01/09 are incorporated until 2023.
- Articles containing previously non-existent “definitions” are included to facilitate the interpretation of operational matters by trade operators.
- An Appendix of “Introductory Notes to the REO Table” is added to facilitate the reading of the specific origin requirements and avoid problems in the application of the ROM.
- The origin requirements are unified, facilitating their application, modifying the current structure of a general rule with exceptions to a single list of requirements for the entire NCM.
- The concept of “regional content value” (RCV) is replaced by “maximum value of non-originating materials”. From now on, a criterion of maximum permitted imported inputs is established instead of minimum value of regional inputs, as is the global trend in the latest generation agreements.
- The maximum value of non-originating materials allowed in the manufacture of a product was modified by 5% across the entire tariff universe, which had value rules.
- The verification of origin is carried out in a streamlined and efficient manner, with greater possibilities of avoiding disqualification of origin.
- The ROM is established to remain in force until the Parties so require, without the need for extension.
- Certification by the exporter is enabled as a possible alternative for States Parties that wish to implement it, to the current system of certification by certifying entities authorized by governments.
- It makes it possible to rectify data errors in the certificate of origin.
- The process of verifying origin is generally streamlined. Inclusion of verification of origin of materials, in addition to the product.
- The validity period of the certificate of origin is extended to 12 months, doubling the previous time and making the operation easier.
- An article is included referring to the exclusion of automotive sector products from the scope of the new ROM, reaffirming that trade in this sector is governed by the bilateral Agreements in force between the States Parties (ACE 14 AR-BR, ACE 57 AR-UY and ACE 13 AR-PY).
That said, Andrea Russo added a particular observation about the new ROM. Have we improved? Yes, we always aim to improve. Can it be perfected? Of course, and that is our ongoing task. This is the best result that could be achieved after these last 4 years of negotiations and, as can be seen in the standard, "the objective is always that with all these changes, it is also possible to facilitate the reading and application of the ROM for all trade operators in MERCOSUR."
The other issues were raised in aspects related to Customs Affairs and Trade Facilitation. Here it is appropriate to mention the work of Technical Committee No. 2 (CT2) on Customs Affairs and Trade Facilitation, which depends on the MERCOSUR Trade Commission and is defined by Dr. Héctor Juárez as a "true factory of harmonizing proposals."
What has CT2 developed? Precisely, the National Coordinator for Uruguay of CT2, Laura Dighiero, referred to two points. Firstly, to the preparation of the "Special Report on the Technical Study on the status and situation of the level of integration of the Integrated Control Areas", got after "intense work to consolidate and analyze the results of all the surveys carried out in each Integrated Control Area."
According to him, the document was submitted to the MERCOSUR Trade Commission and includes, for each Integrated Control Area, the positive and negative points identified in each of them. And in the Conclusions, the Strengths, Weaknesses, Opportunities and Threats that can be identified to support future decision-making by the authorities of the States Parties of the bloc, related to the integration process, are listed.
Dighiero said that "it is planned to complement this study with the work of a consultancy that will further study the situation of the Integrated Control Areas existing on the bilateral borders with the greatest movement of people and cargo."
Secondly, the Coordinator for Uruguay of CT No. 2 commented on the preparation and approval of the “Procedures Manual for the “Exchange of Customs Information of MERCOSUR”.
“Customs cooperation and mutual assistance is another of the main lines of action of Technical Committee No. 2,” he stressed. He explained that “in a globalized world, combating customs offences requires having accurate and timely information. This was understood by Customs in CT 2, which considered the need to generate a legal framework for the exchange of information, negotiating an Agreement on Cooperation and Mutual Assistance between Customs for the prevention and fight against customs offences (CMC Decision No. 1/97).”
With the deepening of the relationship between Customs, the rules relating to the exchange of information through computer systems were harmonized, consolidated in CMC Decision No. 26/06 "Agreement on Cooperation, Exchange of Information, Data Consultation and Mutual Assistance between Customs Administrations of MERCOSUR" and approving a similar Agreement with Bolivia (28th Additional Protocol to ACE 36).
In light of this, - Dighiero pointed out - it was understood that it is convenient and necessary to have a Manual that constitutes a tool for use by the Customs areas responsible for the exchange of information. This explains why the Manual is conceived as "a dynamic instrument that can be updated to adapt to the reality of Customs at any given time."
More precisely, Dighiero explained: “The competent authorities are indicated there, the mechanism for requesting information, receiving it and responding to it, the information provided spontaneously or by request, as well as the security requirements., In addition, the MERCOSUR Customs Information Exchange Form – FIIAM, which standardizes requests for information and responses, which was also updated.”
These issues were highlighted by the presidents at the Puerto Iguazú Summit. However, they are not sufficient to advance the integration process.
Can we have expectations in the process? We should. The topic is clearly important. As the Dr. Ricardo Xavier Basaldúa «Countries must improve integration». And with this he means «coordinating macroeconomic policies within MERCOSUR, a requirement provided for in Article 1 of the Treaty of Asunción as an important issue to be harmonized». On the other hand, he points out «the importance of continuing the negotiation for the approval of the Agreement with the European Union, because it constitutes a strategic agreement, which would insert MERCOSUR in a forceful and relevant way in the international arena».
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