New steps forward on rules of origin worldwide

Olio Officina

SOURCE: WTO – Rules of origin are the criteria needed to determine the national source of a product. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports but there is wide variation in the practice of governments. Thus, the Committee on Rules of Origin aims at long-term harmonization and is at work on implementing the decision on Preferential Rules of Origin for the Least Developed Countries (LDCs) adopted at the WTO’s Ninth Ministerial Conference in Bali last December. Last week the Committee carried out its first review of new developments and heard from Chile regarding the new rules associated with the duty-free and quota-free scheme it recently implemented. Uganda also presented, on behalf of the LDCs Group, a new report outlining the challenges faced by LDCs in complying with existing rules of origin under unilateral preferential schemes. The report examines in detail the trade impact from reforms in preferential rules of origin adopted by Canada (in 2003) and the European Union (effective in 2011) and concludes that such reform “triggered dramatic increases in the utilization rates of existing preferences and, most importantly, generated an overall increase of trade flows thanks to new investment and manufacturing operation located in LDCs.” The report also argues that a change in rules of origin reflecting global value chains “generates a market response in terms of investment and trade flows,” as well as illustrating the difficulties in meeting certain origin criteria that are based on percentage criteria. Uganda invited the United States and Japan, where preferential rules of origin remain largely unchanged since the 1970s, to review the substance and form of their systems in this area. Canada, Brazil, India, Switzerland and the EU all welcomed the LDCs Group report but said they needed additional time to study the report in detail. The chairman of the committee, Ken Chang-keng Chen of Chinese Taipei, said that discussions on the report would continue at the next meeting of the committee in April 2015.

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