The World Trade Organization (WTO) members have agreed to ask the chair of the Committee on Rules of Origin (RoO) to consult with delegations and propose a way forward on an initiative aimed at enhancing transparency regarding non-preferential RoO. The decision was made at a committee meeting on 13 October 2022.
The Committee Chair told members she would reach out to delegations to hold consultations in the coming weeks on specific aspects of the current proposal with a view to preparing a chair's text. Once the draft is ready, the Chair said it would circulate the text and organise further consultations.
The initiative, which was originally proposed in January 2019, would require members to notify the WTO Secretariat of the rules of origin they use in the application of most-favoured-nation treatment to imports, using an agreed notification template. Members would outline their practices with respect to certification of origin and other mandatory documentary proofs of origin for non-preferential purposes, using an agreed template, and notify the WTO Secretariat of substantive changes to their RoO and related documentary requirements.
Proponents argue the proposal would close information gaps and make it easier to access up-to-date information about non-preferential original requirements, something that would be useful not only for members’ governments but also for customs administration's businesses and trade operators. This, they say, would ultimately lead to clear and predictable RoO which would in turn facilitate the flow of international trade.
Transparency regarding non-preferential RoO is an objective shared by all Members, but three delegations have expressed some concerns about the initiative as proposed.
RoO 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.
Non-preferential RoO are those which apply in the absence of any trade preference — that is, when trade is conducted on a Most Favoured Nation (MFN) basis. Some trade policy measures such as quotas, anti-dumping or “made in” labels may require a determination of origin and, therefore, the application of non-preferential rules.
Fifty-three (53) members have notified the WTO Secretariat that they apply non preferential RoO, counting the European Union (EU) and its member states as one, while 63 members have informed the Secretariat that they do not apply any non-preferential RoO. The remaining 21 members have not yet submitted a notification.
Following the committee meeting an informal session was held virtually on the issue of harmonisation of non-preferential rules of origin, which members of the public were invited to attend. Members of the Secretariat provided a history of efforts by WTO members to negotiate and adopt harmonised non-preferential RoO and the stumbling blocks they encountered.
Impact of Certification Practices on the Utilisation of Trade Preferences
At the 13 October 2022 committee meeting the WTO Secretariat presented the results of a paper it had prepared on members' requirements related to certificates of origin (proof of origin) (CoO) and the possible effects that such requirements may have on the utilisation of non-reciprocal trade preferences by least developed country (LDC) members.
The paper found that self-certification (where the origin of the goods and compliance with specific origin criteria is attested by the producer or exporter of the goods) is generally associated with better preference utilisation when compared to third party utilisation (where the origin of the goods and their compliance with specific origin criteria is attested by a designated or mutually recognised authority). Underutilisation rates for members allowing self-certification (22%) was less than half the underutilisation for members applying third-party certification (49%).
The Secretariat cautioned that this was not a universal observation and not confirmed by more detailed calculations with reference to several preference-granting members. However, calculations focusing exclusively on agricultural goods did associate self-certification with better preference utilisation.
Self-certification remains a recommended benchmark of the Bali and the Nairobi Ministerial Decisions on preferential RoO for LDC).
A number of Members welcomed the paper, with some saying they would submit comments to the Secretariat to improve its content.
Preferential rules of origin for LDCs
Members reviewed recent developments in relation to preferential rules of origin for LDCs, including notification of preferential rules for LDCs and preferential import data. The United Kingdom (UK), Thailand and Japan updated members on recent changes to their respective programmes.
Next meeting
The next meeting of the Committee on RoO is tentatively scheduled for 11 May 2023.