In December 2023, new rules for the PEM Agreement were adopted, which aim to increase trade between the European Union and neighbouring countries in the Pan-Euro-Mediterranean (PEM) region. The rules of origin will apply from 1 January 2025 and will cause changes to all preferential trade agreements between 24 countries or countries. Parties to the PEM Agreement.

This change in rules of origin concerns: the European Union, Iceland, Liechtenstein, Norway, Switzerland, Faroe Islands, Turkey, Morocco, Algeria, Tunisia, Egypt, Israel, Jordan, Lebanon, Palestine (this designation should not be construed as recognition of a Palestinian state and is without prejudice to the individual positions of Member States on this issue), Georgia, Republic of Moldova, Ukraine, Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia and Kosovo.

Trade with these countries amounted to around €700 billion in 2022, half of the EU's preferential trade.

These provisions will make it easier for products to benefit from trade preferences such as:

• simpler product-specific rules, such as the removal of cumulative requirements, thresholds for local added value, better tailored to the EU's production needs and the new twin transitions for textiles;

• Increased tolerance for non-originating materials from 10% to 15%;

• Introduction of 'full' cumulation, whereby the production operations required to establish the origin of most products can be split between several countries;

• Duty drawback (duty drawback on imported parts) for most products.