Information on the PEM Convention
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The PEM Convention (Regional Convention on pan-Euro-Mediterranean preferential rules of origin) sets out common rules of origin for goods under numerous free trade agreements between countries in Europe and the Mediterranean region.
The rules determine whether a product qualifies as originating goods and can therefore benefit from preferential tariff treatment, such as reduced customs duties or duty-free importation.
The PEM Convention applies to rules of origin in most free trade agreements to which Iceland is a party with countries in Europe and the Mediterranean region. The rules provide a common framework that ensures the consistent application of rules of origin among the contracting parties.
What are rules of origin and why are they important?
Rules of origin are rules that determine the country in which a product is considered to originate. The rules are not based solely on the country from which the goods are exported, but also on how the product is manufactured and which materials or production processes are involved.
Rules of origin are important because they determine whether a product can benefit from preferential tariff treatment under free trade agreements. Only products that meet the origin requirements are considered originating goods and may therefore qualify for reduced customs duties or duty-free importation into a partner country.
When determining origin, consideration is given, among other things, to whether a product is wholly produced in a particular country or has undergone sufficient processing or manufacturing there. In many cases, materials or production processes from more than one contracting party may also be taken into account, provided that the conditions for accumulation are met.