Rules of origin determine which goods can benefit from the lower rates of customs duty under preferential trade arrangements such as the Cotonou Agreement. Under the Cotonou Agreement, products from African, Caribbean and Pacific (ACP) countries enter the EU duty free. In the case of a can of tuna from non- ACP countries, the rate of import duty into the EU is 24 per cent. When a product, such as a can of tuna, uses inputs from a number of countries, it is necessary to have a rule that determines whether that can qualifies for preferential treatment. The current rules of origin used by the EU are complex and susceptible to abuse.

The Cotonou Agreement and related annexes provide for the preferential access of ACP exports into the EU and the rules of origin that allow products to qualify for preferential treatment. In the case of canned and loined fish, fish caught in ACP territorial waters (12 miles from shore) automatically qualify irrespective of who catches the fish. However, catches from the exclusive economic zone or EEZ (200 miles from shore or beyond) are subject to vessel ownership criteria. Only if the vessel is owned by an EU or ACP country will that can of fish be deemed to have originated in the ACP and to qualify for preferential access into the EU market.

This has a number of effects. First, it encourages fishing effort in the territorial sea and increases competition between medium-scale or industrial fleets and artisanal and subsistence fishers. Second, this rule of origin creates a long-term subsidy for EU distant water fleets in ACP territorial waters. As few ACP states have large capital intensive purse seine fleets, this in effect means that fish, such as tuna, must be caught by EU fleets in order to qualify for preferential treatment

Source : Trade & Environment.org