The Faroe Islands - Members of the Pan-Euro-Med Agreement
The Faroes is since 1 December 2005 a partner in the Pan-Euro-Med Cumulation of Origin, which includes the EU and applicant countries, EFTA countries, and Mediterranean counterparts. The agreement between the Faroes and the EU is in Protocol 3 to the 1997 Free Trade Agreement between the Faroe Islands and the EU.The Pan-Euro-Med Cumulation System is of major economic significance, with several features from which the industry in the Faroe Islands and their trading partners can now benefit. Prior to its creation, all European and Mediterranean countries had incompatible rules of origin and little account was taken of the fact that a manufactured product often contains material from several countries. In the context of the Pan-Euro-Med system, cumulation means that products that have obtained originating status in any one of the countries within the system may be added to products originating in any one of the other countries, without losing their originating status within the pan-Euro-Med zone (diagonal cumulation of origin). One condition in using the Cumulation of Origin is that the countries within the system have a bilateral Free Trade Agreement. The Faroes currently have such agreements with the EU, Iceland, Norway and Switzerland.