The Pan-Euro-Mediterranean Convention on Preferential Rules of Origin and its Benefits: A Comparative Analysis of its application for Georgia, Moldova and Ukraine

Tamara Kovziridze, Veronika Movchan, Michael Emerson, Vadim Gumene

The present article explains ‘diagonal cumulation’ and its benefits under the Pan-Euro-Mediterranean (PEM) Convention on the rules of origin, as will be applied by the three DCFTA states, Georgia, Moldova and Ukraine. The article argues that for countries with comparatively limited domestically available intermediate products and raw materials diagonal cumulation offers increased opportunities for complying with domestic content requirements in order to then benefit from tariff preferences under various FTAs with PEM countries. Overall the PEM Convention marks a technical step in the direction of a multilateral pan-Euro-Mediterranean free trade area, with a partial integration of the complex network of over 60 bilateral FTAs. This paper compares Georgia, Moldova and Ukraine in terms of their status for joining the PEM Convention, their trade flows in final and intermediate products with PEM countries, as well as their potential benefits from diagonal cumulation.