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WTO NEWS: 1998 PRESS RELEASES

Press/106
9 July 1998

WTO to continue work on harmonizing rules of origin

Concluding that work on the harmonization of non-preferential rules of origin could not be completed as foreseen in the Agreement on Rules of Origin on 20 July 1998 due to the complexity of issues, WTO members have committed themselves to make their best endeavour to complete the work by November 1999.

This conclusion is contained in a report adopted by the Committee on Rules of Origin on 6 July. The Council for Trade in Goods, on 8 July, approved the recommendations in the report and forwarded them to the General Council for adoption.

“Rules of origin” are the criteria used to define where a product was made. They are linked to the application of trade measures such as quotas, preferential tariffs, anti-dumping actions and countervailing duties.

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The WTO Agreement on Rules of Origin, the first-ever agreement on the subject, provides for a three-year work programme (launched in July 1995) to establish common ("harmonized") rules of origin on non-preferential trade of members that would be objective, transparent and predictable. These rules do not cover preferential arrangements such as free trade areas. The work is being conducted by the WTO Committee and a Technical Committee under the auspices of the World Customs Organization in Brussels.

The WTO Committee, in its report, noted that despite the complexity of issues substantial progress had been made in the work programme. Technical work on rules for specific products, for example, has been largely completed and work in other areas is far advanced.

The Chairman of the Committee, Mr. Ric Wells (Deputy Permanent Representative of Australia to the WTO), in introducing the report to the Goods Council, said that “the recommendations include a fixed deadline for completion of the work of the Technical Committee on Rules of Origin (May 1999), and a review of the status of the work by the Committee on Rules of Origin in June 1999 with a recommendation of a final deadline for completing the Harmonization Work Programme”. He added that the Committee “proposes to work under strict discipline, with future work programmes for both the Committee and the Technical Committee”.

The full text of Committee's report follows.

Report of the Committee on rules of origin to the Council for Trade in goods on the harmonization work programme Back to top

G/RO/25
(98-2685)
7 July 1998

Status of the work

1. The Harmonization Work Programme (HWP), in accordance with Article 9.2(a) of the Agreement on Rules of Origin (the Agreement), was officially launched on 20 July 1995, and was scheduled for completion by 20 July 1998, as the Agreement foresees that the HWP will be completed within three years of its initiation.

2. The Committee on Rules of Origin (CRO) notes that, despite the complexity of the issues under discussion, substantial progress has been made. Especially as regards the harmonization of rules of origin for specific products the technical work has been largely completed, and the templates, drawn up by the Technical Committee on Rules of Origin (TCRO) and setting out alternative options of possible solutions, are very useful for dealing with technically unresolved issues as a basis for trade policy considerations by the CRO. Additional work is, however, still necessary. Elaboration of definitions of goods wholly obtained is virtually completed, although several issues such as “products taken from the sea outside a country” and “environmental concerns with respect to the parts recovered from non-repairable articles” remain unresolved and need further consideration. Definitions of minimal operations or processes are far advanced but will be subject to further refinement. The CRO also notes that the overall architecture of the harmonized rules of origin (including general rules), section/chapter rules and residual rules still require considerable work (see Annex on the Status of the Harmonization Work Programme).

3. In conclusion, the CRO notes that, due to the complexity of issues, the work in connection with the Harmonization Work Programme as set out in Part IV of the Agreement, and identified in Articles 9.2(c) and 9.3 of the Agreement, could not be completed within the three-year period foreseen in Article 9.2(a) of the Agreement.

Continuation of the Harmonization Work Programme

4. Members commit themselves to make their best endeavour to complete the HWP by November 1999, and in this context, the CRO recommends that:

  • - the CRO, in cooperation with the TCRO, should continue the work identified in Articles 9.2(c) and 9.3 of the Agreement, in accordance with the indicative future work programme set out below;
  • - the Chairman of the TCRO shall report to each meeting of the CRO on the progress achieved in the TCRO;
  • - the TCRO shall submit the results of its work on overall architecture to the CRO in January 1999. It shall submit the final result of its work to the CRO by the end of May 1999 for final consideration by the CRO;
  • - the CRO shall report to the Council for Trade in Goods (CTG) on the progress of work in February, June and October 1999. In June 1999 the CRO shall review the status of the HWP and make a recommendation on a deadline for completing that work.

Future work programme

5. With regard to the future work for the HWP, the CRO recommends the following guidelines:

  • - the overall architecture of the harmonized rules of origin (including general rules) should first be addressed in order to ensure consistency of the relevant horizontal rules;
  • - section/chapter rules and residual rules should subsequently be established;
  • - with a view to refining and clarifying further technically unresolved issues, and in light of the discussions on overall architecture, the CRO may request the TCRO to review further certain templates with specified reasons for its request and also with definite guidelines on how the TCRO should conduct its review; and
  • - the Secretariats of the WTO and WCO should provide technical assistance, where requested, to Members in order to facilitate their work.

6. With a view to keeping up the momentum in the work concerning the HWP, and on the basis of the above guidelines, the CRO proposes the following indicative future work programme:

September – December 1998

TCRO:

- Overall architecture
- Section/chapter rules and residual rules

CRO:

- Implications of the implementation of the harmonized rules of origin on other WTO Agreements
- Discussion on product-specific rules which are not directly affected by overall architectural considerations, in particular also relating to Chapters 72 to 81 (Metals)
- Discussion on criteria for requesting the TCRO to review templates
- Discussion of Article 2 of the Agreement

January-May 1999

TCRO

- Product- specific rules which the CRO has requested the TCRO to review in light of the outcome of the discussions on overall architecture
- Outstanding product-specific rules
- Outstanding issues concerning definitions of goods wholly obtained
- Outstanding issues concerning definitions of minimal operations

January – July, September – October 1999

CRO

- Overall architecture
- Section/chapter rules and residual rules
- Definitions of goods wholly-obtained
- Definitions of minimal operations
- Any outstanding product-specific rules
- Issues related to trade facilitation, pending agreement by the CTG

- Review of the status of the HWP and recommendation of a deadline for completion of the HWP
- Consideration of the results of the HWP in terms of their overall coherence

Annex
Status of the harmonization work programme
Back to top
Note by the Secretariat

This document has been revised by the Secretariat in light of the meeting of the TCRO in June 1998 in preparation for the informal discussion on the future work of the Committee. This overview is provided on the basis of the information available to the Secretariat.

A. Architecture/general rules

There was agreement in the TCRO, at its Second Session, that the overall architectural design of the harmonized rules of origin which contains General rules as a core part should be discussed and decided at the last stage of the Harmonization Work Programme. As of the date of this document the texts with square brackets or the issues to be resolved are as follows (see G/RO/W/13/Rev.3, pp. 2-5):

- Preamble
- Article 3 (Definitions):

- Paragraph 2 (Neutral elements)

- Paragraph 3 (Other definitions, as necessary)

- Article 4 (Determination of origin):

- Paragraph 2, Subparagraph (c) (General residual rule)

- Article 7 (Special provisions):

- Paragraph 1 (Neutral elements)

- Paragraph 4 (Mixtures)

- Paragraph 5 (Fungible goods and materials)

- Article 8 (De minimis)

B. Definitions of goods being wholly obtained

The texts with square brackets are as follows (see G/RO/W/13/Rev.3, pp. 6-8):

- Paragraph 1 (clarification of “obtained”, “produced” and “manufactured”")
- Paragraph 1(g) (Non-repairable articles)
- Paragraph 1(h) (Parts recovered from non-repairable articles)
- Paragraph 1(i) (Goods obtained from goods from paragraphs 1(a)-1(h))
- Paragraph 2 (Products taken from the sea outside a country)

C. Minimal operations or processes

The TCRO, at its Second Session, concluded that the definitions of minimal operations or processes should be subject to further refinement or elaboration throughout the Second and Third Phases of the Work Programme (see G/RO/W/13/Rev.3, p.544).

D. Product-specific rules

- The TCRO has not yet finished its work on “Principles of Application” (see G/RO/W/13/Rev.3, p.9).
- The following table provides an overview of the status of work on product-specific rules.

Summary Table of Status of Work on Product-Specific Rules of Origin
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HS Code number

Document symbol

Unresolved issues transmitted to the CRO

Basket 1 (Subheading level)

Further work to be done by the TCRO (chapters)

1-24

(Agricultural products)

G/RO/22/Add.1

[For chapters 13 and 15: 12th Report of the TCRO to the CRO]

106

[+11]

275 Mixture/blending: 4, 7-9, 11, 15-21, 24;

Definition of “refining”: 15;

Definition of “food preparation”: 16-21;

Minimal operations or processes: 16, 22;

Method of calculation for value added criterion: 3, 15;

Chapter residual rules: 15

25-27

(Mineral products)

G/RO/W/23/Rev.1

[12th Report1]

2

[+13]

116
28-40

(Chemicals)

[12th Report1] [25] [607]
41-43

(Leather)

G/RO/W/23/Rev.1, G/RO/23 5 41 General Rules for the Interpretation of the HS (GIR) 2(a) - collection of parts: 42-43;

Disassembly: 42-43;

Definitions of “complete making up”: 42-43;

Simple processes: 42-43

44-49

(Wood and paper)

G/RO/19/Add.1

[12th Report1]

5

[+6]

17

[+4]

GIR 2(a): 44-46, 48, 49;

Assembly/disassembly: 44-46, 48, 49;

Chapter residual rules: 44-49

50-63

(Textiles)

G/RO/W/27 71 32 Spinning of yarn, extrusion of monofilament, fabric making: 50-63;

Definitions of “fabric-making process”: 50-63;

Minimal operations or processes: 50-63;

Chapter residual rules: 61, 62;

Sets for 63.08 (Basket 2)

64-67

(Footwear)

G/RO/19/Add.1

[12th Report1]

10

[+4]

14

[+2]

68-70

(Ceramics)

G/RO/19/Add.1, G/RO/23

[12th Report1]

6

[+4]

115
71

(Precious stones and metals)

G/RO/19/Add.1

[12th Report1]

1

[+3]

37 “Ottawa” terminology as Chapter Note;

Definitions of “blanks”, “unfinished form”;

Chapter residual rules

72-73

(Steel)

[12th Report1] [12] [161] Assembly: 73;

Disassembly: 73;

Packaging/repackaging: 73;

GIR 2(a) - collection of parts: 73

74-81

(Metals)

[12th Report1] [18] [42] Assembly: 74-81;

Disassembly: 74-81;

Packaging/repackaging: 74-81;

GIR 2(a) - collection of parts: 74-81;

Coiling/uncoiling: 74-81

82-83

(Articles of metal)

[12th Report1] [19] [56] Assembly: 82-90;

Disassembly: 82, 84-90;

Change of use: 82, 84;

GIR 2(a) - collection of parts: 84-90;

Blanks/incomplete goods: 82-90;

Sets: 82;

Packaging/repackaging: 84, 85, 90;

Multi-function/composite machines: 84, 85;

Functional units: 84, 85, 90;

Recertification/retesting: 84;

Degradation: 84;

Subassemblies: 84-90;

Chapter residual rules: 82-90;

Method of calculation for value added criterion: 84-90;

Terminology - CTH/CTSH: 82, 83

84

(Machinery)

To be examined by the TCRO in October
85

(Electronics)

To be examined by the TCRO in October
86-89

(Transportation equipment)

[12th Report1] [32] [None]
90

(Scientific equipment)

[12th Report1] [21] [1]
91

(Clocks and watches)

G/RO/W/23/Rev.1 6 2
92

(Musical instruments)

G/RO/19/Add.1 2 8 GIR 2(a);

Disassembly;

Packaging/repackaging

93-97

(Miscellaneous articles

[12th Report1]

[Ch.97-to be examined by the TCRO in October]

[33] [29]
G/RO/22/Add.1

[For chapters 13 and 15: 12th Report of the TCRO to the CRO]

106

[+11]

275 Mixture/blending: 4, 7-9, 11, 15-21, 24;

Definition of “refining”: 15;

Definition of “"food preparation”: 16-21;

Minimal operations or processes: 16, 22;

Method of calculation for value added criterion: 3, 15;

Chapter residual rules: 15