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Agreement on Rules of Origin

Agreement on Rules of Origin

During the Uruguay Round, participating countries recognized the need to provide transparency to regulations and practices regarding Rules of Origin.

The main purpose was to prevent unnecessary obstacles to the flow of international trade. The Agreement established a Harmonization Work Programme (HWP) to harmonize Non-Preferential Rules of Origin.

  • The main goal is to bring about further liberalization and expansion of world trade.
  • The other motivation is to impose very precise disciplines on the application of Rules of Origin both now (transition period) and after the harmonization of Non-Preferential Rules of Origin.

Disciplines to Govern the Application of Rules of Origin

Under the Agreement, Members are obliged to adhere to the following disciplines:

  • Not to use Rules of Origin as instruments to pursue trade policy objectives.
  • Not to create restrictive, distorting or disruptive effects on international trade.
  • Not to discriminate against imports and exports or between Members.
  • To administer Rules of Origin in a consistent, uniform, impartial and reasonable manner.
  • To base Rules of Origin on a positive standard.
  • To publish laws, regulations, judicial decisions and administrative rulings relating to Rules of Origin.
  • To provide origin assessments upon request.
  • Not to apply changes in Rules of Origin retroactively.
  • To treat confidential information confidentially.

Architecture of the Harmonized Rules of Origin

To finalize the harmonization work programme, The WCO and the WTO have established an overall architectural design. The architecture will set out the principles under which the various rules are applied and will result in the final results for applying those rules to specific cases.

This encompasses

  • Definitions
  • General Rules
  • Two Appendices

Appendix 1: Definitions of Wholly Obtained Goods

This Appendix sets forth the definitions of the goods that are to be considered as being wholly obtained in one country. It provides for the origin determination of live animals born and raised in that country, and plants and minerals harvested or taken in that country.

Appendix 2: Product Specific Rules of Origin

This Appendix sets forth rules for determining the country of origin of a good when the origin of the good is not determined under Appendix 1. It will provide for the rules necessary for origin determination, including the primary rule and residual rule and their application.

In Appendix 2, Rules for the application of Appendix 2 are followed by the matrix rules covering goods classified in Chapters 1 to 97 of the Harmonized System. At the beginning of each Chapter, the negative standard, the primary rules, the residual rules and definitions may be set out.

There are still differing opinions concerning the concept of the minims, intermediate materials, fungible goods and putting up in sets.