New Mercosur Rules of Origin, key to streamlining regional trade, enter into force

By Estudio Chaloupka

On 18 July, 2024, just a year after the negotiations ended, the new Mercosur Rules of Origin (ROM) will enter into force, replacing the existing rules, which date back to 2009.

The Rules of Origin list the requirements and procedures to determine whether a product is exempt from import duties in trade between Mercosur Member States. When goods are manufactured entirely within the territory of a Member State, as is the case with agricultural products, their origin is clear. However, the definition of origin becomes more complex when materials imported from non-member countries are used in the manufacturing process.

In a context of delocalization of production, where importing inputs is the rule, having an instrument that makes it possible to determine how and why a product originates in Mercosur is key to strengthening the integration process.

The Rules have been subsequently amended since the Treaty of Asunción of 1991. The latest revision of the Rules, which started in 2019 and concluded in July 2023, aimed at modernizing the rules and provisions according to the best international standards and the results of Mercosur's external negotiations. The revision took 4 years of complex technical work.

The new set of rules has significant advantages over the previous one:

-It lowers the regional value content requirement that goods must meet to obtain Mercosur tariff preferences.  This will enable regional producers to reduce their input costs and help them participate in global value chains.

-It allows exporters to self-declare the origin of their goods (self-certification), as an alternative to the current certifications issued by government-authorized entities, which simplifies and streamlines the procedure.

-It establishes an origin verification and control procedure conducted by customs authorities that is more efficient and expeditious than the current one.

-It is more consistent and easier to interpret, and it includes the majority of all the new concepts and provisions of Mercosur's agreements.

-It amends the current ROM structure, as it replaces a general rule of origin that provides for exceptions with a single list of specific origin requirements (REOs) for the entire tariff schedule, and includes an appendix with "Introductory Notes" to facilitate the interpretation of the requirements.

-It provides for a temporary transition process to help users and businesses adapt to the new rules.