Pan-European-Mediterranean (PEM) Zone
Pexels Suzy Hazelwood
The Pan-European-Mediterranean Zone was implemented in 2005. The idea was to create a cumulation zone between Europe and its neighbours and to encourage intra-regional integration by promoting trade and cooperation. The PEM Convention allows for the cumulation of origin between different countries within the zone. Cumulation of origin is one of the ways to allow for greater flexibility when it comes to using raw and semi-manufactured materials in the production process. It allows a member of a trade agreement to use originating products from other members.
What is PEM?
The Pan-European-Mediterranean Zone was implemented in 2005. The idea was to create a cumulation zone between Europe and its neighbours and to encourage intra-regional integration by promoting trade and cooperation. The PEM Convention allows for the cumulation of origin between different countries within the zone. Cumulation of origin is one of the ways to allow for greater flexibility when it comes to using raw and semi-manufactured materials in the production process. It allows a member of a trade agreement to use originating products from other members.
It is based on free trade agreements with identical rules of origin between members. Basically, members of the Convention replace the rules of origin annexe or protocol in their bilateral trade agreement with a reference to the one within the Convention.
Who are the members of PEM?
The PEM zone currently comprises the EU, Iceland, Liechtenstein, Norway, Switzerland, the Faroe Islands, Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia, Türkiye, Albania, Bosnia and Herzegovina, the Republic of North Macedonia, Montenegro, Serbia, Kosovo, the Republic of Moldova, Georgia and Ukraine.
Revised PEM Convention
In 2019, the European Commission submitted a package of proposals including new, more flexible, PEM rules of origin. The aim was to bring the rules in line with modern trade agreements and complex global supply chains. The modernisation meant simpler, more business-friendly rules for companies and savings across supply chains in the region. The new rules have been provisionally applied by some of the parties on a bilateral basis since September 2021 under the transitional period. As such, both sets of rules of origin coexist.
After over a decade of talks and negotiations the new rules were supposed to finally be implemented on 1 January 2025. This has now been postponed to 1 January 2026 (see Decision No 2/2024) due to a delay in ratification by Member States. The two sets will continue to coexist and companies in countries that apply the transitional period can choose which ones they want to apply. This also means a fairly complex network of cumulation provisions and origin certificates. After 1 January 2026, the revised rules of origin will apply throughout the entire PEM zone as the only set of rules.