Melilla International Trade and Customs Regulations

Melilla in International Trade: A Special Territory

In the treaty of accession of Spain to the European Union, it was agreed to exclude Ceuta and Melilla from the standard customs territory. Both cities operate under a special tax regime, characterized by a differentiated indirect tax known as IPSI (Tax on Production and Imports Services).

Melilla functions as a "Territory Franco," which implies the following benefits:

• Exemption from VAT.
• Exemption from customs duties and other community rights upon product entry.
• Non-implementation of import quotas.

Additionally, for industrial production manufactured in Melilla, products may acquire "Melilla origin" status under specific Rules of Origin, allowing for free circulation within the EU customs territory without tariffs.

The Rules of Origin

According to the World Trade Organization, rules of origin are the laws, regulations, and administrative decisions used to determine the country of origin of products. These rules define the processing required for non-originating materials to obtain "Melilla origin" status, which determines eligibility for preferential treatment and exemption from EU customs duties.

Requirements for Melilla Origin

To obtain Melilla origin, one of the following criteria must be met:

1. Sufficient Transformation

This is the general rule applied to raw materials from countries without EU trade agreements (e.g., China, USA, Brazil). One must consult Annex B of the regulation to determine the specific transformation requirements for each product.

2. Accumulation of Origin

Applicable to countries listed in the Official Journal (published 04/05/2002), this rule requires less transformation than Annex B. It includes two possibilities:

• A) Processing more than enough: Operations exceeding simple handling, storage, packaging, labeling, simple mixing, assembly, or animal slaughter.
• B) Value Added Rule: The product obtains Melilla origin if the value added in the Autonomous City of Melilla exceeds the value of raw materials originating from the countries listed for accumulation.

3. Wholly Obtained Products

Products that require no transformation, such as animals born and raised in Melilla, or local hunting and fishing products.