By Regulation (EU) No 978/2012 of the European Parliament and of the Council applying a scheme of generalised tariff preferences from 1 January 2014, the Union granted generalised tariff preferences to Cambodia.

Commission Regulation (EEC) No 2454/93 establishes the definition of the concept of originating products to be used for the purpose of the scheme of generalised tariff preferences (‘GSP’). That Regulation provides for the possibility to grant, in certain precisely defined circumstances, derogations from that definition in favour of GSP beneficiary countries. The regional cumulation provisions under Regulation (EEC) No 2454/93 were amended by Implementing Regulation (EU) No 530/2013, which clarified that regional cumulation can only apply in the same regional group to countries which, at the time of exportation to the Union, are beneficiaries of the GSP. These amendments by Implementing Regulation (EU) No 530/2013 apply from 1 January 2014.

On 15 May 2013, Cambodia submitted a request for a transition period according to which the Cambodian bicycle industry would continue to be entitled, for the purpose of determining the origin of bicycles of HS heading 8712 Cambodia exports to the Union, to consider parts originating in Malaysia and Singapore as materials originating in Cambodia by virtue of regional cumulation under the GSP scheme as of 1 January 2014, the date the amended regional cumulation provisions apply.

Cambodia has a growing bicycle industry, but the industry remains weak and has been relying heavily on the supply of parts originating in neighbouring countries that used to be GSP beneficiary countries and belonged to the same regional cumulation group, in particular Singapore and Malaysia.

By letter of 9 August 2013 the Commission requested Cambodia to submit further information. On 26 September 2013 Cambodia transmitted its answer to that request, as a result of which its application was considered as complete.

As of 1 January 2014, Singapore is no longer a GSP eligible nor GSP beneficiary country and thus the possibility of cumulation with the other countries of the regional cumulation Group I ceases to exist. As of 1 January 2014, Malaysia is no longer a GSP beneficiary country but remains on the list of GSP eligible countries.

As a consequence, from 1 January 2014, bicycle parts originating in Singapore and Malaysia cannot be considered as originating in Cambodia under regional cumulation, which prevents Cambodia from meeting the rule of origin applicable to least-developed countries for this product (HS heading 8712). Indeed, even though that rule allows for the use of up to 70 % of non-originating materials, the share of non-originating materials in certain bicycles assembled in Cambodia would exceed that limit.

Cambodia has presented in its submission to the Commission plans for encouraging bicycle part manufacturers to invest in the country over the next three years with a view to adapting its industry towards a greater independence in its supplies and the building-up of a local industry supplying originating materials for the manufacture of bicycles. Meanwhile, according to Cambodia, in order for the industry to remain viable in the short term, Cambodian manufacturers still need to rely on using bicycle parts under the rules on regional cumulation, for the purposes of exports to the Union under the GSP scheme.

Therefore, Cambodia requests a three-year derogation to give it sufficient time to prepare itself to comply with the rules for the acquisition of origin.

In the light of the explanations given by Cambodia, to allow it to genuinely consolidate a bicycle parts industry it is considered that an unlimited derogation is not necessary for Cambodia. A limitation of the quantities of bicycles originating in and exported from Cambodia under this derogation should thus be provided for, in the form of a quota whose quantities should decrease over the three years during which that derogation will be applicable. The quantities have been established on the basis of the models of bicycles for which the country needs the derogation for meeting the abovementioned 70 % threshold and should be managed in accordance with Regulation (EEC) No 2454/93.

In order to allow efficient monitoring of the operation of the derogation, it is necessary to lay down the obligation for the authorities of Cambodia to communicate regularly to the Commission details of the certificates of origin Form A which have been issued within the framework of the derogation.

The derogation should concern products of HS heading 8714 originating in Malaysia.

The measures provided for in this Regulation are in accordance with the opinion of the Customs Code Committee,