## Facts

- A German importer reorganized production of electronic typewriters after trade-defense measures were applied to goods originating in Japan.
- Components were manufactured in Japan, while final assembly occurred in Taiwan (or another third country) before export to Germany.
- German customs treated the finished typewriters as of Japanese origin and applied the relevant trade-defense duties.
- The importer argued that assembly outside Japan conferred origin in the assembly country.
- A German finance court referred questions for a preliminary ruling on the interpretation of Council Regulation (EEC) No. 802/68:
  - Article 5 (whether processing/assembly is a “substantial process or operation” conferring origin), and
  - Article 6 (a presumption of circumvention when operations are moved to another country after trade measures).
- The reference also raised how those provisions should be read in light of the Kyoto Convention rules on origin accepted by the Community.

## Issues

1. Whether “simple assembly” of previously manufactured parts qualifies as a “substantial process or operation” under Article 5 of Regulation 802/68 so as to confer origin.
2. When assembly performed in a country different from the components’ origin is sufficient to confer origin in the country of assembly.
3. Under what conditions Article 6 permits a presumption that relocating assembly to another country was intended to circumvent trade-defense measures, and how that presumption may be rebutted.

## Decision

- The Court ruled that simple assembly operations are not a “substantial process or operation” for determining origin under Article 5, as interpreted consistently with the Kyoto Convention.
- The Court ruled that assembly can confer origin in the country of assembly if, technically and in view of the goods’ definition, the assembly is the decisive production stage in which the intended use becomes definite and the goods acquire their specific qualities.
- If the “decisive production stage” criterion is not conclusive, the national court should examine whether the assembly results in an appreciable increase in the finished product’s commercial ex-works value.
- The Court ruled that when assembly is transferred from a country subject to specific trade provisions to another country in close temporal connection with those provisions’ entry into force, Article 6 may create a presumption of an intent to circumvent the measures.
- The presumption is rebuttable if the manufacturer proves reasonable grounds for locating assembly in the other country beyond avoiding the measures.
- The Court provided interpretive answers only; application to the facts and resolution of the customs dispute remained for the referring national court.

## Legal Principles

- “Simple assembly” does not confer origin; it refers to assembly that does not require specially qualified staff, sophisticated tools, or specially equipped factories and does not contribute to the goods’ essential characteristics or properties.
- Assembly of previously manufactured parts may confer origin where it is the decisive production stage that fixes the product’s intended use and gives it its specific qualities.
- Where the decisive-stage test does not resolve origin, value added may be relevant; an appreciable increase in commercial ex-works value can support treating assembly as origin-conferring.
- A relocation of assembly shortly after trade restrictions targeting a particular origin can justify a rebuttable presumption of circumvention under Article 6.
- National authorities and courts must determine the factual nature of the assembly and evaluate whether (i) Article 5 confers origin and (ii) Article 6’s presumption arises and is rebutted.

## Conclusion

The Court clarified that origin does not change through simple assembly, but it may shift to the assembly country when assembly is the decisive manufacturing stage (with value added as a secondary indicator), and it endorsed a rebuttable presumption of circumvention when assembly is moved soon after trade-defense measures take effect.


Brother Int’l GmbH v. Hauptzollamt Giessen, Case C-26/88, [1989] E.C.R. 4253 (C.J.E.C. 1989)