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WTO ANALYTICAL INDEX: AGREEMENT ON RULES OF ORIGIN

Agreement on Rules of Origin

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The texts reproduced here do not have the legal standing of the original documents which are entrusted and kept at the WTO Secretariat in Geneva.

> Preamble
> Article 1
> Article 2
> Article 3
> Article 4
> Article 5
> Article 6
> Articles 7 and 8
> Article 9
> Annex I
> Annex II

 

> Analytical Index main page


I. Preamble    back to top

A. Text of the Preamble

Members,

 

     Noting that Ministers on 20 September 1986 agreed that the Uruguay Round of Multilateral Trade Negotiations shall aim to “bring about further liberalization and expansion of world trade”, “strengthen the role of GATT” and “increase the responsiveness of the GATT system to the evolving international economic environment”;

 

     Desiring to further the objectives of GATT 1994;

 

     Recognizing that clear and predictable rules of origin and their application facilitate the flow of international trade;

 

     Desiring to ensure that rules of origin themselves do not create unnecessary obstacles to trade;

 

     Desiring to ensure that rules of origin do not nullify or impair the rights of Members under GATT 1994;

 

     Recognizing that it is desirable to provide transparency of laws, regulations, and practices regarding rules of origin;

 

     Desiring to ensure that rules of origin are prepared and applied in an impartial, transparent, predictable, consistent and neutral manner;

 

     Recognizing the availability of a consultation mechanism and procedures for the speedy, effective and equitable resolution of disputes arising under this Agreement;

 

     Desiring to harmonize and clarify rules of origin;

 

     Hereby agree as follows:


B. Interpretation and Application of the Preamble

No jurisprudence or decision of a competent WTO body.

 

Part I: Definitions and Coverage

 

II. Article 1     back to top

A. Text of Article 1

Article 1: Rules of Origin

1.     For the purposes of Parts I to IV of this Agreement, rules of origin shall be defined as those laws, regulations and administrative determinations of general application applied by any Member to determine the country of origin of goods provided such rules of origin are not related to contractual or autonomous trade regimes leading to the granting of tariff preferences going beyond the application of paragraph 1 of Article I of GATT 1994.

 

2.     Rules of origin referred to in paragraph 1 shall include all rules of origin used in non-preferential commercial policy instruments, such as in the application of: most-favoured-nation treatment under Articles I, II, III, XI and XIII of GATT 1994; anti-dumping and countervailing duties under Article VI of GATT 1994; safeguard measures under Article XIX of GATT 1994; origin marking requirements under Article IX of GATT 1994; and any discriminatory quantitative restrictions or tariff quotas. They shall also include rules of origin used for government procurement and trade statistics.(1)

 

(footnote original) 1 It is understood that this provision is without prejudice to those determinations made for purposes of defining “domestic industry” or “like products of domestic industry” or similar terms wherever they apply.


B. Interpretation and Application of Article 1

1.     Parts I to IV of the Agreement on Rules of Origin concern rules of origin for non-preferential (“most-favoured nation”) trade regimes. Preferential trade regimes, including those governing eligibility for preferential treatment under regional trade agreements as well as autonomous preferences, are governed by Part V.

 

Part II: Disciplines to Govern the Application of Rules of Origin

 

III. Article 2     back to top

A. Text of Article 2

Article 2: Disciplines During the Transition Period

     Until the work programme for the harmonization of rules of origin set out in Part IV is completed, Members shall ensure that:

 

(a)     when they issue administrative determinations of general application, the requirements to be fulfilled are clearly defined. In particular:

 

(i)     in cases where the criterion of change of tariff classification is applied, such a rule of origin, and any exceptions to the rule, must clearly specify the subheadings or headings within the tariff nomenclature that are addressed by the rule;

 

(ii)     in cases where the ad valorem percentage criterion is applied, the method for calculating this percentage shall also be indicated in the rules of origin;

 

(iii)     in cases where the criterion of manufacturing or processing operation is prescribed, the operation that confers origin on the good concerned shall be precisely specified;

 

(b)     notwithstanding the measure or instrument of commercial policy to which they are linked, their rules of origin are not used as instruments to pursue trade objectives directly or indirectly;

 

(c)     rules of origin shall not themselves create restrictive, distorting, or disruptive effects on international trade. They shall not pose unduly strict requirements or require the fulfilment of a certain condition not related to manufacturing or processing, as a prerequisite for the determination of the country of origin. However, costs not directly related to manufacturing or processing may be included for the purposes of the application of an ad valorem percentage criterion consistent with subparagraph (a);

 

(d)     the rules of origin that they apply to imports and exports are not more stringent than the rules of origin they apply to determine whether or not a good is domestic and shall not discriminate between other Members, irrespective of the affiliation of the manufacturers of the good concerned(2);

 

(footnote original) 2 It is understood that this provision is without prejudice to those determinations made for purposes of defining “domestic industry” or “like products of domestic industry” or similar terms wherever they apply.

 

(e)     their rules of origin are administered in a consistent, uniform, impartial and reasonable manner;

 

(f)     their rules of origin are based on a positive standard. Rules of origin that state what does not confer origin (negative standard) are permissible as part of a clarification of a positive standard or in individual cases where a positive determination of origin is not necessary;

 

(g)     their laws, regulations, judicial decisions and administrative rulings of general application relating to rules of origin are published as if they were subject to, and in accordance with, the provisions of paragraph 1 of Article X of GATT 1994;

 

(h)     upon the request of an exporter, importer or any person with a justifiable cause, assessments of the origin they would accord to a good are issued as soon as possible but no later than 150 days(3) after a request for such an assessment provided that all necessary elements have been submitted. Requests for such assessments shall be accepted before trade in the good concerned begins and may be accepted at any later point in time. Such assessments shall remain valid for three years provided that the facts and conditions, including the rules of origin, under which they have been made remain comparable. Provided that the parties concerned are informed in advance, such assessments will no longer be valid when a decision contrary to the assessment is made in a review as referred to in subparagraph (j). Such assessments shall be made publicly available subject to the provisions of subparagraph (k);

 

(footnote original) 3 In respect of requests made during the first year from the date of entry into force of the WTO Agreement, Members shall only be required to issue these assessments as soon as possible.

 

(i)     when introducing changes to their rules of origin or new rules of origin, they shall not apply such changes retroactively as defined in, and without prejudice to, their laws or regulations;

 

(j)     any administrative action which they take in relation to the determination of origin is reviewable promptly by judicial, arbitral or administrative tribunals or procedures, independent of the authority issuing the determination, which can effect the modification or reversal of the determination;

 

(k)     all information that is by nature confidential or that is provided on a confidential basis for the purpose of the application of rules of origin is treated as strictly confidential by the authorities concerned, which shall not disclose it without the specific permission of the person or government providing such information, except to the extent that it may be required to be disclosed in the context of judicial proceedings.


B. Interpretation and Application of Article 2

1. Article 2

(a) Disciplines prescribed by Article 2(b) through (d) and Members’ discretion regarding rules of origin

2.     With respect to the provisions prescribed by Article 2 of the Agreement on Rules of Origin, the Panel in US — Textiles Rules of Origin explained that subparagraphs (b) through (d) lay down a negative set of disciplines that apply during the transition period (until the work programme set out in Part IV is completed). After this transition period, i.e. upon implementation of the results of the harmonization work programme, Members will apply harmonized rules of origin, and the application of those rules will be subject to the provisions of Article 3. According to the Panel, during the transition period members enjoy “considerable discretion in designing and applying their rules of origin”:

“With regard to the provisions of Article 2 at issue in this case — subparagraphs (b) through (d) — we note that they set out what rules of origin should not do: rules of origin should not pursue trade objectives directly or indirectly; they should not themselves create restrictive, distorting or disruptive effects on international trade; they should not pose unduly strict requirements or require the fulfilment of a condition unrelated to manufacturing or processing; and they should not discriminate between other Members. These provisions do not prescribe what a Member must do.

 

By setting out what Members cannot do, these provisions leave for Members themselves discretion to decide what, within those bounds, they can do. In this regard, it is common ground between the parties that Article 2 does not prevent Members from determining the criteria which confer origin, changing those criteria over time, or applying different criteria to different goods.

 

Accordingly, in assessing whether the relevant United States rules of origin are inconsistent with the provisions of Article 2, we will bear in mind that, while during the post-harmonization period Members will be constrained by the result of the harmonization work programme, during the transition period, Members retain considerable discretion in designing and applying their rules of origin.”(1)

2. Article 2(b)

(a) Purpose of Article 2(b)

3.     The Panel in US — Textiles Rules of Origin explained that Article 2(b) is intended to preclude Members from using rules of origin “to substitute for, or to supplement, the intended effect of trade policy instruments”:

“In our view, Article 2(b) is intended to ensure that rules of origin are used to implement and support trade policy instruments, rather than to substitute for, or to supplement, the intended effect of trade policy instruments. Allowing Members to use rules of origin to pursue the objectives of ‘protecting the domestic industry against import competition’ or ‘favouring imports from one Member over imports from another’ would be to substitute for, or supplement, the intended effect of a trade policy instrument and, hence, be contrary to the objective of Article 2(b).”(2)

(b) Pursuit of trade objectives

4.     In US — Textiles Rules of Origin, the Panel, examining a claim under Article 2(b), found that the two key issues in applying this provision were how to assess the purpose for which rules of origin are being used, and how to interpret the “trade objectives” that may not be pursued via rules of origin:

“The Panel agrees with the parties that the operative part of Article 2(b) is the phrase ‘rules of origin are not [to be] used as instruments to pursue trade objectives directly or indirectly’. It is clear from this phrase that in order to establish a violation of Article 2(b), a Member needs to demonstrate that another Member is using rules of origin for a specified purpose, viz., to pursue trade objectives. … this interpretation of Article 2(b), which is not in dispute, confronts the Panel with the following two issues. First, how is the Panel to determine whether a Member’s rules of origin are used for the purpose specified in Article 2(b)? And second, what are “trade objectives”?’(3)

(c) Examination of objectives for which rules of origin are used

5.     The Panel in US — Textiles Rules of Origin had the task of evaluating the objective for which rules of origin are used, in order to apply the phrase in Article 2(b), “used as instruments to pursue trade objectives”. The Panel decided to utilize the approach taken by the Appellate Body to evaluating purpose in the context of de facto discrimination claims under Article III of the GATT 1994 — drawing on structural and other objective indicia of intent:

“[W]e agree with India that the Appellate Body has already taken a position on how panels should conduct an inquiry into the objectives of a measure. The Appellate Body did so in the context of an analysis under Article III:2, second sentence, of the GATT 1994. In examining whether a tax measure was applied ‘so as to afford protection to domestic production’, the Appellate Body stated that:

 

‘[…] it is not necessary for a panel to sort through the many reasons legislators and regulators often have for what they do and weigh the relative significance of those reasons to establish legislative or regulatory intent.’ The subjective intentions inhabiting the minds of individual legislators or regulators do not bear upon the inquiry, if only because they are not accessible to treaty interpreters. It does not follow, however, that the statutory purposes or objectives — that is, the purpose or objectives of a Member’s legislature and government as a whole — to the extent that they are given objective expression in the statute itself, are not pertinent. To the contrary, as we also stated in Japan — Alcoholic Beverages:

 

‘Although it is true that the aim of a measure may not be easily ascertained, nevertheless its protective application can most often be discerned from the design, the architecture, and the revealing structure of a measure. (emphasis added)’(4)

 

The reasons cited by the Appellate Body in support of its view do not appear to be specific to the provisions of Article III:2, second sentence, of the GATT 1994. Hence, these reasons apply with equal force in the context of Article 2(b) of the RO Agreement. Accordingly, in applying Article 2(b), we will follow the above-quoted statement by the Appellate Body.”(5)

(d) “trade objectives”

6.     In US — Textiles Rules of Origin, the Panel then interpreted the meaning of the term “trade objectives” as it appears in Article 2(b). While the Panel considered that it would not be necessary to develop a general definition of this term, it concluded that “the objectives identified by India — i.e., the objectives of ‘protecting the domestic industry against import competition’ and ‘favouring imports from one Member over imports from another’ — may, in principle, be considered to constitute ‘trade objectives’ in pursuit of which rules of origin may not be used.”(6)

(e) Trade effect is not necessarily a trade objective

7.     In US — Textiles Rules of Origin, India claimed that a US measure (“section 405”) providing exemptions to the general origin rule for flat textile goods was being used to pursue the trade objective of favouring imports from the European Communities over imports from other countries (particularly from developing countries such as India). Section 405 had been agreed with the European Communities to settle an earlier EC dispute against the United States. The Panel found that section 405 had been adopted to create exceptions from the general rule for products of export interest to the European Communities and that the US objective was to settle a bilateral WTO dispute with the European Communities.(7) However, it found that the EC concerns were solely with market access for its own products, not with gaining an advantage over other suppliers in the US market; settling a bilateral dispute did not imply any intention by either the EC or the United States to disfavour third parties.(8) Finally, the Panel found that even if this provision actually had a discriminatory effect, it could not infer discriminatory intent from mere effects:

“[E]ven if section 405 had the practical effect of favouring goods imported from the European Communities over competitive goods imported from other Members, that effect might be incidental rather than intentional. In other words, we do not think that the mere effect of favouring European Communities imports over imports from other Members would in itself justify the inference that creating such an effect is an objective pursued by the United States.”(9)

3. Article 2(c), first sentence

(a) “themselves”

8.     The Panel in US — Textiles Rules of Origin considered that the term “themselves” in Article 2(c) means that Article 2(c) focuses on a Member’s rules of origin as a policy instrument, rather than the underlying commercial policy. The Panel discussed the term “themselves” as follows:

“[W]e consider that, in the first sentence of Article 2(c), the pronoun ‘themselves’ is used mainly to emphasize the preceding term ‘rules of origin’. By emphasizing the term ‘rules of origin’, the pronoun ‘themselves’ brings out very clearly that the first sentence of Article 2(c) is concerned with a Member’s rules of origin, as distinct from something other than rules of origin, and that it is rules of origin, as opposed to something other than rules of origin, that must not ‘create restrictive, distorting, or disruptive effects on international trade’.

The term ‘themselves’ is meant to highlight that, although there may be commercial policy measures which create restrictive, distorting, or disruptive effects on international trade, the rules of origin used to implement and support these commercial policy measures must not create restrictive, distorting, or disruptive effects on international trade additional to those which may be caused by the underlying commercial policy measures.(10) Similarly, in cases where an underlying commercial policy measure does not cause any restrictive, distorting, or disruptive effects on international trade, the word ‘themselves’ would serve to underscore that rules of origin must not create any new restrictive, distorting, or disruptive effects on international trade.”(11)

(b) “create”

9.     The Panel in US — Textiles Rules of Origin continued exploring the interpretation of terms used in Article 2(c) first sentence, and explained that the term “create” ensures that there should be a “causal link” between a certain rule of origin and a prohibited trade effect for that rule of origin to be considered inconsistent with the first sentence of Article 2(c):

“The next element of the text of the first sentence of Article 2(c) to be considered is the term ‘create’. The ordinary meaning of the term ‘create’ is to ‘cause, occasion, produce, give rise to’.(12) Thus, it is implicit in the term ‘create’ that a Member’s rules of origin only contravene the first sentence of Article 2(c) if there is a causal link between those rules and the prohibited effects specified in the first sentence.(13)”(14)

(c) “restrictive, distorting or disruptive effects”

10.     The Panel in US — Textiles Rules of Origin explained that the prohibited “restrictive, distorting, or disruptive effects” listed in the first sentence of Article 2(c) form “alternative bases” for a claim:

“Turning to the prohibited effects — i.e., ‘restrictive, distorting, or disruptive effects’ — the Panel notes that these effects constitute alternative bases for a claim under the first sentence of Article 2(c), as is confirmed by the use of the disjunctive ‘or’. Accordingly, independent meaning and effect should be given to the concepts of ‘restriction’, ‘distortion’ and ‘disruption’. In this regard, we note that the ordinary meaning of the term ‘restrict’ is to ‘limit, bound, confine’; that of the term ‘distort’ is to ‘alter to an unnatural shape by twisting’; and that of the term to ‘disrupt’ is to ‘interrupt the normal continuity of’.(15) Thus, the first sentence of Article 2(c) prohibits rules of origin which create the effect of limiting the level of international trade (‘restrictive’ effects); of interfering with the natural pattern of international trade (‘distorting’ effects); or of interrupting the normal continuity of international trade (‘disruptive’ effects).”(16)

(d) “effects on international trade”

11.     The Panel in US — Textiles Rules of Origin determined that the term “effects on international trade” could not be interpreted as covering adverse effects on trade in different goods:

“[W]e cannot assume that Members intended to bring adverse effects on different types of goods within the ambit of the prohibition set out in the first sentence of Article 2(c). Indeed, as the Appellate Body has said in a different context, ‘[t]o sustain such an assumption and to warrant such a far-reaching interpretation, treaty language far more specific […] would be necessary’.(17) We consider that the same could be said of Article 2(c), first sentence.(18)

 

Therefore, we consider that it would not be appropriate to interpret the phrase ‘effects on international trade’ as covering adverse effects on trade in different (but closely similar) types of finished goods. We construe the phrase ‘effects on international trade’ to cover trade in the goods to which the relevant rule of origin is applied (e.g., cotton bed linen)”.(19)

4. Article 2(c), second sentence

(a) “unduly strict requirements”

12.     In US — Textiles Rules of Origin, the Panel explained the meaning of the phrase “unduly strict requirement” in the context of India’s claim that the United States’ measures at issue imposed strict requirements that did not assist the United States in determining the country with which the product had the most significant economic link. The Panel explored the meaning of the sentence examining each term:

“First, we need to examine what kind of ‘requirements’ are covered by the obligation that Members must ensure that their rules of origin not ‘pose unduly strict requirements’. In this regard, we note the view of the United States that the clause ‘as a prerequisite for the determination of the country of origin’ qualifies also the phrase ‘[rules of origin] shall not pose unduly strict requirements’. While the English version of Article 2(c) may be susceptible of such an interpretation, the equally authentic French version is not.(20) Nevertheless, the clause ‘as a prerequisite for the determination of the country of origin’ is part of the immediate context of the term ‘requirements’. Considered as relevant context, the clause at issue lends force to the argument that the ‘requirements’ which must not be unduly strict include the kind of requirements which must be fulfilled as a prerequisite for the determination of the country of origin. Article 2(a) of the RO Agreement provides further contextual support for such an interpretation. The first sentence of that provision states that the ‘requirements to be fulfilled’ must be clearly defined. It is clear to us that these requirements include the substantive requirements which must be met for a good to be determined to originate in a particular country. For these reasons, we read the term ‘requirements’ in the second sentence of Article 2(c) as encompassing the substantive origin requirements(21) that must be met for a good to obtain origin status.(22)

 

Another issue presented by the phrase ‘unduly strict requirements’ is the interpretation to be given to the adjective ‘strict’. The most pertinent dictionary definitions of the term ‘strict’ are ‘exacting’(23) and ‘rigorous’(24). Thus, a ‘strict’ requirement is an exacting or rigorous requirement. In the specific context of Article 2 of the RO Agreement, and also bearing in mind our interpretation of the term ‘requirements’, ‘strict’ requirements are, therefore, those requirements which make the conferral of origin conditional on conformity with an exacting or rigorous (technical) standard.(25)

 

The second sentence of Article 2(c) only precludes Members from imposing requirements which are ‘unduly’ strict. The dictionary meaning of the adverb ‘unduly’ is ‘more than is warranted or natural; excessively, disproportionately’.(26) Accordingly, an origin requirement can be considered to be ‘unduly’ strict if it is excessively strict.”(27)

(i) fulfilment of a certain condition not related to manufacturing or processing

13.     In US — Textiles Rules of Origin, the Panel noted that the sentence “fulfilment of a certain condition not related to manufacturing or processing” requires Members to ensure that the conditions that their rules of origin impose as a prerequisite for the conferral of origin do not include a condition unrelated to the manufacturing or processing:

“[W]e consider that the ordinary meaning of the second clause is clear. It requires Members to ensure that the conditions their rules of origin impose as a prerequisite for the conferral of origin not include a condition which is unrelated to manufacturing or processing.(28) We note the example offered by the United States that a rule of origin would not conform to this requirement if it stated that a good can only be ascribed the origin of a country if the good has been certified by several authorities through a time-consuming process in the exporting country.”(29)

5. Article 2(d)

(a) Scope of application of non-discrimination rule

14.     In US — Textiles Rules of Origin, India argued that rules of origin violate Article 2(d) if they result in unjustifiably differential treatment of “closely related (Indian and European Communities) products”. The Panel rejected India’s claim and explained that India’s argument was partly based on the erroneous assumption that Members should apply “the same rule of origin, or at least equally advantageous rules, to ‘closely related’ products imported from different Members”. The Panel then determined that Article 2(d) does not intend to preclude discrimination across different (but closely related) goods imported from different Members:

“[W]e recall that the second clause of Article 2(d) states that rules of origin ‘shall not discriminate between other Members, irrespective of the affiliation of the manufacturers of the good concerned’. It does not state that rules of origin ‘shall not discriminate between closely related goods of other Members […]’. Thus, the plain terms of the second clause do not support India’s reading.

 

Moreover, the expression ‘the good concerned’ in the singular indicates that the second clause of Article 2(d) is not concerned with discrimination across different (but closely related) goods. Were it otherwise, the second clause would arguably have referred to ‘the goods concerned’ in the plural. In our view, the use of the singular suggests that, for the purposes of assessing whether there is discrimination ‘between Members’, a comparison should be made between the rule of origin applicable to a particular good when imported from one or more Members and the rule(s) of origin applicable to the same good — ‘the good concerned’ — when imported from one or more other Members.

 

If the second clause of Article 2(c) were intended to preclude discrimination across different (but closely related) goods, we consider it likely that the drafters would have provided some textual guidance as to the product scope of the prohibition set forth in the second clause. Indeed, we note that other WTO nondiscrimination provisions, such as Articles I, III and IX of the GATT 1994, do specify the product scope of the prohibitions they contain.(30)

 

Finally, our reading of the second clause of Article 2(d) is consistent with the objective of that clause. In our view, the principal objective of the second clause of Article 2(d) is to ensure that, for a given good, the strictness of the requirements that must be satisfied for that good to be accorded the origin of a particular Member is the same, regardless of the provenance of the good in question (i.e., Member from which the good is imported, affiliation of the manufacturers of the good, etc.).(31)”(32)

 

IV. Article 3    back to top

A. Text of Article 3

Article 3: Disciplines after the Transition Period

     Taking into account the aim of all Members to achieve, as a result of the harmonization work programme set out in Part IV, the establishment of harmonized rules of origin, Members shall ensure, upon the implementation of the results of the harmonization work programme, that:

 

(a)     they apply rules of origin equally for all purposes as set out in Article 1;

 

(b)     under their rules of origin, the country to be determined as the origin of a particular good is either the country where the good has been wholly obtained or, when more than one country is concerned in the production of the good, the country where the last substantial transformation has been carried out;

 

(c)     the rules of origin that they apply to imports and exports are not more stringent than the rules of origin they apply to determine whether or not a good is domestic and shall not discriminate between other Members, irrespective of the affiliation of the manufacturers of the good concerned;

 

(d)     the rules of origin are administered in a consistent, uniform, impartial and reasonable manner;

 

(e)     their laws, regulations, judicial decisions and administrative rulings of general application relating to rules of origin are published as if they were subject to, and in accordance with, the provisions of paragraph 1 of Article X of GATT 1994;

 

(f)     upon the request of an exporter, importer or any person with a justifiable cause, assessments of the origin they would accord to a good are issued as soon as possible but no later than 150 days after a request for such an assessment provided that all necessary elements have been submitted. Requests for such assessments shall be accepted before trade in the good concerned begins and may be accepted at any later point in time. Such assessments shall remain valid for three years provided that the facts and conditions, including the rules of origin, under which they have been made remain comparable. Provided that the parties concerned are informed in advance, such assessments will no longer be valid when a decision contrary to the assessment is made in a review as referred to in subparagraph (h). Such assessments shall be made publicly available subject to the provisions of subparagraph (i);

 

(g)     when introducing changes to their rules of origin or new rules of origin, they shall not apply such changes retroactively as defined in, and without prejudice to, their laws or regulations;

 

(h)     any administrative action which they take in relation to the determination of origin is reviewable promptly by judicial, arbitral or administrative tribunals or procedures, independent of the authority issuing the determination, which can effect the modification or reversal of the determination;

 

(i)     all information which is by nature confidential or which is provided on a confidential basis for the purpose of the application of rules of origin is treated as strictly confidential by the authorities concerned, which shall not disclose it without the specific permission of the person or government providing such information, except to the extent that it may be required to be disclosed in the context of judicial proceedings.


B. Interpretation and Application of Article 3

15.     By their own terms, the provisions of Article 3 will only enter into effect after the harmonization work programme has been concluded and its results have been implemented.

 

Part III: Procedural Arrangements on Notification, Review, Consultation and Dispute Settlement

 

V. Article 4    back to top

A. Text of Article 4

Article 4: Institutions

1.     There is hereby established a Committee on Rules of Origin (referred to in this Agreement as “the Committee”) composed of the representatives from each of the Members. The Committee shall elect its own Chairman and shall meet as necessary, but not less than once a year, for the purpose of affording Members the opportunity to consult on matters relating to the operation of Parts I, II, III and IV or the furtherance of the objectives set out in these Parts and to carry out such other responsibilities assigned to it under this Agreement or by the Council for Trade in Goods. Where appropriate, the Committee shall request information and advice from the Technical Committee referred to in paragraph 2 on matters related to this Agreement. The Committee may also request such other work from the Technical Committee as it considers appropriate for the furtherance of the above-mentioned objectives of this Agreement. The WTO Secretariat shall act as the secretariat to the Committee.

 

2.     There shall be established a Technical Committee on Rules of Origin (referred to in this Agreement as “the Technical Committee”) under the auspices of the Customs Co-operation Council (CCC) as set out in Annex I.(33) The Technical Committee shall carry out the technical work called for in Part IV and prescribed in Annex I. Where appropriate, the Technical Committee shall request information and advice from the Committee on matters related to this Agreement. The Technical Committee may also request such other work from the Committee as it considers appropriate for the furtherance of the above-mentioned objectives of the Agreement. The CCC Secretariat shall act as the secretariat to the Technical Committee.


B. Interpretation and Application of Article 4

1. Observers

16.     At its meeting on 4 April 1995, the Committee on Rules of Origin agreed that governments granted observer status by the WTO General Council would be allowed to attend meetings of the Committee as observers, without prejudice to the possibility of holding closed sessions without observers.(34)

2. Rules of procedure

17.     At its meeting of 16 November 1995, the Committee on Rules of Origin adopted its Rules of Procedure(35), which were subsequently approved by the Council for Trade in Goods at its meeting of 1 December 1995.(36)

18.     The Committee on Rules of Origin reports to the Council for Trade in Goods on an annual basis.(37)

3. Drafting Group on Rules of Origin

19.     At its meeting on 27 June 1995, the Committee on Rules of Origin set up a Drafting Group to elaborate a definition of the term “country” for the purposes of the Agreement on Rules of Origin.(38) At its meeting on 16 November 1995, the Committee on Rules of Origin agreed to adopt the following recommendation from the Drafting Group:

“[T]he Committee requests the Technical Committee to fully proceed with its Harmonization Work Programme in the absence of an abstractly constructed definition of the term ‘country’; and to forward to it unresolved issues relating to the definition of the term ‘country’, for a final determination; and

 

the Committee may request the Drafting Group to address particular issues relating to the definition of the term ‘country’ and, in that connection, to offer clarification that may enhance the work of the Technical Committee;”(39)

4. Working Group

20.     At its meeting on 16 November 1995, the Committee on Rules of Origin agreed, as concerned the process of reviewing the reports submitted to the Committee by the Technical Committee on Rules of Origin in Brussels, to establish an open-ended Working Group to deal with bracketed interpretations and opinions of the Technical Committee, and consequently forward appropriate recommendations to the Committee on Rules of Origin for final consideration and decision.(40)

 

VI. Article 5    back to top

A. Text of Article 5

Article 5: Information and Procedures for Modification and Introduction of New Rules of Origin

1.     Each Member shall provide to the Secretariat, within 90 days after the date of entry into force of the WTO Agreement for it, its rules of origin, judicial decisions, and administrative rulings of general application relating to rules of origin in effect on that date. If by inadvertence a rule of origin has not been provided, the Member concerned shall provide it immediately after this fact becomes known. Lists of information received and available with the Secretariat shall be circulated to the Members by the Secretariat.

 

2.     During the period referred to in Article 2, Members introducing modifications, other than de minimis modifications, to their rules of origin or introducing new rules of origin, which, for the purpose of this Article, shall include any rule of origin referred to in paragraph 1 and not provided to the Secretariat, shall publish a notice to that effect at least 60 days before the entry into force of the modified or new rule in such a manner as to enable interested parties to become acquainted with the intention to modify a rule of origin or to introduce a new rule of origin, unless exceptional circumstances arise or threaten to arise for a Member. In these exceptional cases, the Member shall publish the modified or new rule as soon as possible.


B. Interpretation and Application of Article 5

1. Notification procedures

21.     At its meeting of 4 April 1995, the Committee on Rules of Origin agreed that, if a notification under Article 5.1 and paragraph 4 of Annex II were to be made in a language other than one of the WTO working languages, such notification should be accompanied by a summary in one of the WTO working languages.(41)

22.     At its meeting of 1 February 1996, the Committee on Rules of Origin adopted a procedure to deal with queries by Members in respect of national legislation; such queries should be communicated to the Secretariat ten working days in advance of the meeting at which they are to be raised.(42)

2. Notifications

23.     As of 28 October 2010 when the Committee conducted its sixteenth annual review under Article 6, 38 Members had notified non-preferential rules of origin, 42 Members had notified that they do not have non-preferential rules of origin, and 46 Members had not notified non-preferential rules of origin, pursuant to Article 5. As of the same date, 84 Members had notified preferential rules of origin, four Members had notified that they did not have preferential rules of origin, and one Member had not notified preferential rules of origin, pursuant to paragraph 4 of Article II. For 37 other Members, preferential rules of origin had been notified to other WTO bodies or were available with the Secretariat.(43)

 

VII. Article 6    back to top

A. Text of Article 6

Article 6: Review

1.     The Committee shall review annually the implementation and operation of Parts II and III of this Agreement having regard to its objectives. The Committee shall annually inform the Council for Trade in Goods of developments during the period covered by such reviews.

 

2.     The Committee shall review the provisions of Parts I, II and III and propose amendments as necessary to reflect the results of the harmonization work programme.

 

3.     The Committee, in cooperation with the Technical Committee, shall set up a mechanism to consider and propose amendments to the results of the harmonization work programme, taking into account the objectives and principles set out in Article 9. This may include instances where the rules need to be made more operational or need to be updated to take into account new production processes as affected by any technological change.


B. Interpretation and Application of Article 6

1. Article 6.1

24.     As of 30 September 2011, the Committee on Rules of Origin has conducted sixteen reviews of the implementation and operation of the Agreement.(44)

 

VIII. Articles 7 and 8    back to top

A. Text of Articles 7 and 8

Article 7: Consultation

     The provisions of Article XXII of GATT 1994, as elaborated and applied by the Dispute Settlement Understanding, are applicable to this Agreement.

Article 8: Dispute Settlement

     The provisions of Article XXIII of GATT 1994, as elaborated and applied by the Dispute Settlement Understanding, are applicable to this Agreement.


B. Interpretation and Application of Articles 7 and 8

25.     The only dispute in which a panel report has been adopted where the provisions of the Agreement on Rules of Origin were invoked is US — Textiles Rules of Origin.

 

Part IV: Harmonization of Rules of Origin

 

X. Article 9    back to top

A. Text of Article 9

Article 9: Objectives and Principles

1.     With the objectives of harmonizing rules of origin and, inter alia, providing more certainty in the conduct of world trade, the Ministerial Conference shall undertake the work programme set out below in conjunction with the CCC, on the basis of the following principles:

 

(a)     rules of origin should be applied equally for all purposes as set out in Article 1;

 

(b)     rules of origin should provide for the country to be determined as the origin of a particular good to be either the country where the good has been wholly obtained or, when more than one country is concerned in the production of the good, the country where the last substantial transformation has been carried out;

 

(c)     rules of origin should be objective, understandable and predictable;

 

(d)     notwithstanding the measure or instrument to which they may be linked, rules of origin should not be used as instruments to pursue trade objectives directly or indirectly. They should not themselves create restrictive, distorting or disruptive effects on international trade. They should not pose unduly strict requirements or require the fulfilment of a certain condition not relating to manufacturing or processing as a prerequisite for the determination of the country of origin. However, costs not directly related to manufacturing or processing may be included for purposes of the application of an ad valorem percentage criterion;

 

(e)     rules of origin should be administrable in a consistent, uniform, impartial and reasonable manner;

 

(f)     rules of origin should be coherent;

 

(g)     rules of origin should be based on a positive standard. Negative standards may be used to clarify a positive standard.

Work Programme

2.     (a)     The work programme shall be initiated as soon after the entry into force of the WTO Agreement as possible and will be completed within three years of initiation.

 

(b)     The Committee and the Technical Committee provided for in Article 4 shall be the appropriate bodies to conduct this work.

 

(c)     To provide for detailed input by the CCC, the Committee shall request the Technical Committee to provide its interpretations and opinions resulting from the work described below on the basis of the principles listed in paragraph 1. To ensure timely completion of the work programme for harmonization, such work shall be conducted on a product sector basis, as represented by various chapters or sections of the Harmonized System (HS) nomenclature.

 

(i)     Wholly Obtained and Minimal Operations or Processes

 

The Technical Committee shall develop harmonized definitions of:

 

  • the goods that are to be considered as being wholly obtained in one country. This work shall be as detailed as possible;
     
  • minimal operations or processes that do not by themselves confer origin to a good.

The results of this work shall be submitted to the Committee within three months of receipt of the request from the Committee.

 

(ii)     Substantial Transformation — Change in Tariff Classification

 

  • The Technical Committee shall consider and elaborate upon, on the basis of the criterion of substantial transformation, the use of change in tariff subheading or heading when developing rules of origin for particular products or a product sector and, if appropriate, the minimum change within the nomenclature that meets this criterion.
     
  • The Technical Committee shall divide the above work on a product basis taking into account the chapters or sections of the HS nomenclature, so as to submit results of its work to the Committee at least on a quarterly basis. The Technical Committee shall complete the above work within one year and three months from receipt of the request of the Committee.

(iii)     Substantial TransformationSupplementary Criteria

 

Upon completion of the work under subparagraph (ii) for each product sector or individual product category where the exclusive use of the HS nomenclature does not allow for the expression of substantial transformation, the Technical Committee:

 

  • shall consider and elaborate upon, on the basis of the criterion of substantial transformation, the use, in a supplementary or exclusive manner, of other requirements, including ad valorem percentages(4) and/or manufacturing or processing operations(5), when developing rules of origin for particular products or a product sector;

(footnote original) 4 If the ad valorem criterion is prescribed, the method for calculating this percentage shall also be indicated in the rules of origin.

 

(footnote original) 5 If the criterion of manufacturing or processing operation is prescribed, the operation that confers origin on the product concerned shall be precisely specified.

 

  • may provide explanations for its proposals;
     
  • shall divide the above work on a product basis taking into account the chapters or sections of the HS nomenclature, so as to submit results of its work to the Committee at least on a quarterly basis. The Technical Committee shall complete the above work within two years and three months of receipt of the request from the Committee.

Role of the Committee

3.     On the basis of the principles listed in paragraph 1:

 

(a)     the Committee shall consider the interpretations and opinions of the Technical Committee periodically in accordance with the timeframes provided in subparagraphs (i), (ii) and (iii) of paragraph 2(c) with a view to endorsing such interpretations and opinions. The Committee may request the Technical Committee to refine or elaborate its work and/or to develop new approaches. To assist the Technical Committee, the Committee should provide its reasons for requests for additional work and, as appropriate, suggest alternative approaches;

 

(b)     upon completion of all the work identified in subparagraphs (i), (ii) and (iii) of paragraph 2(c), the Committee shall consider the results in terms of their overall coherence.

Results of the Harmonization Work Programme and Subsequent Work

4.     The Ministerial Conference shall establish the results of the harmonization work programme in an annex as an integral part of this Agreement.(6) The Ministerial Conference shall establish a time-frame for the entry into force of this annex.

 

(footnote original) 6 At the same time, consideration shall be given to arrangements concerning the settlement of disputes relating to customs classification.


B. Interpretation and Application of Article 9

26.     The Committee on Rules of Origin has pursued work on the harmonization of non-preferential rules of origin. This work was formally launched when the Chairman of the Committee sent a letter on 20 July 1995 to the Chairman of the Technical Committee on Rules of Origin, transmitting the Committee’s request pursuant to Article 9.2(c) that the Technical Committee undertake the work on harmonization of non-preferential rules of origin provided for in Article 9.(45)

27.     At its meeting of 10 May 1996, the Committee on Rules of Origin decided to establish an Integrated Negotiating Text for the Harmonization Work Programme, as a common working document and reference point for the Technical Committee on Rules of Origin in Brussels and the Committee in Geneva; this text would include the overall architectural design for the Harmonization Work Programme; an annex of definitions for goods considered as being wholly obtained in one country; an annex of product-specific rules; and an annex for minimal operations and processes which do not by themselves confer origin.(46) Although Article 9.2(a) provides that the Harmonization Work Programme is to be completed “within three years of initiation”, on 7 July 1998, the Committee reported to the Council for Trade in Goods that while considerable progress had been made, due to the complexity of issues, the work in connection with the Harmonization Work Programme identified in Articles 9.2(c) and 9.3 could not be completed within the three-year period foreseen in Article 9.2(a). At its meeting of July 1998, the General Council adopted the recommendations of the Committee on Rules of Origin, i.e. that the Committee continue its work in cooperation with the Technical Committee, and strive to complete the work by November 1999.(47)

28.     In 1999–2000, the Committee held intensive meetings. The Technical Committee submitted the final result of its work to the Committee on 9 June 1999. The Committee discussed the architecture of the harmonized rules of origin, issues regarding product-specific rules of origin, and the implications of the implementation of the harmonized rules of origin on other WTO Agreements.(48) After the General Council decided on 15 December 2000 to complete work by the Doha Ministerial Conference or by the end of 2001 at the latest(49), the number of resolved issues increased greatly. The Committee Chairman reported regularly to the General Council. In December 2001, the General Council considered a report by the Committee, and agreed to extend the deadline until the end of 2002.(50)

29.     In July 2002, the Committee Chairman reported again to the General Council, identifying 94 core policy issues for discussion and decision at the level of the General Council. These issues included a number of product-specific rules, and the implications for other WTO Agreements of adoption of the harmonized rules of origin.(51) In December 2002, the General Council considered another progress report, agreed to extend to July 2003 the deadline for completion of negotiations on the 94 core policy issues, and agreed that after these issues were settled, the Committee would complete the harmonization work programme by 31 December 2003.(52) In July 2003, the General Council considered a further progress report and extended the deadline for 94 core policy issues to July 2004 and for overall completion to December 2004.(53) In July 2004, the General Council again considered a progress report by the Committee Chairman, noting division on the issue of whether the future harmonized rules of origin should be used for the Anti-Dumping Agreement; the General Council agreed on a further one-year extension.(54) The Committee Chair’s progress report in July 2005 noted that views remained divided on the application of harmonized rules of origin to trade remedies. The General Council agreed to a further one-year extension to the end of 2006.(55) In July 2006, the General Council agreed to a further extension to the end of 2007.(56)

30.     At the General Council’s meeting on 27 July 2007, the Chair of the Committee again reported on progress and outlined the division of views regarding proposed dual rules of origin for machinery (HS Chapters 84–90) and regarding whether harmonized rules of origin should be applied to trade remedies. The Chairman of the General Council noted that delegations in the Committee felt that the difficulties they had encountered on the “implications” issue and in the machinery sector were such that guidance from the General Council was now warranted on how to take these issues forward. The General Council agreed that work on these issues would be suspended until such guidance from the General Council would be forthcoming, and that, in the meantime, the Committee would continue its work with a view to resolving all technical issues including the technical aspects of the overall architecture, as soon as possible.(57)

31.     Since 2007, the Committee has continued its discussions on technical issues. On 15 October 2007, the Committee circulated a draft Consolidated Text of Non-Preferential Rules of Origin.(58) The most recent revision of this text, circulated on 11 November 2010, comprises a draft Annex III to the Agreement on Rules of Origin and a decision of the Ministerial Conference that would adopt the new Annex III. The draft Annex III comprises general rules; an appendix defining goods that are to be considered as being wholly obtained in one country; and an appendix of product-specific rules of origin for each chapter of the Harmonized System of customs classification.(59)

 

XI. Annex I    back to top

A. Text of Annex I

Annex I: Technical Committee on Rules of Origin

Responsibilities

1.     The ongoing responsibilities of the Technical Committee shall include the following:

 

(a)     at the request of any member of the Technical Committee, to examine specific technical problems arising in the day-to-day administration of the rules of origin of Members and to give advisory opinions on appropriate solutions based upon the facts presented;

 

(b)     to furnish information and advice on any matters concerning the origin determination of goods as may be requested by any Member or the Committee;

 

(c)     to prepare and circulate periodic reports on the technical aspects of the operation and status of this Agreement; and

 

(d)     to review annually the technical aspects of the implementation and operation of Parts II and III.

 

2.     The Technical Committee shall exercise such other responsibilities as the Committee may request of it.

 

3.     The Technical Committee shall attempt to conclude its work on specific matters, especially those referred to it by Members or the Committee, in a reasonably short period of time.

Representation

4.     Each Member shall have the right to be represented on the Technical Committee. Each Member may nominate one delegate and one or more alternates to be its representatives on the Technical Committee. Such a Member so represented on the Technical Committee is hereinafter referred to as a “member” of the Technical Committee. Representatives of members of the Technical Committee may be assisted by advisers at meetings of the Technical Committee. The WTO Secretariat may also attend such meetings with observer status.

 

5.     Members of the CCC which are not Members of the WTO may be represented at meetings of the Technical Committee by one delegate and one or more alternates. Such representatives shall attend meetings of the Technical Committee as observers.

 

6.     Subject to the approval of the Chairman of the Technical Committee, the Secretary-General of the CCC (referred to in this Annex as “the Secretary-General”) may invite representatives of governments which are neither Members of the WTO nor members of the CCC and representatives of international governmental and trade organizations to attend meetings of the Technical Committee as observers.

 

7.     Nominations of delegates, alternates and advisers to meetings of the Technical Committee shall be made to the Secretary-General.

Meetings

8.     The Technical Committee shall meet as necessary, but not less than once a year.

Procedures

9.     The Technical Committee shall elect its own Chairman and shall establish its own procedures.


B. Interpretation and Application of Annex I

32.     The Technical Committee has presented periodic reports to the Committee on its operations.

 

XII. Annex II    back to top

A. Text of Annex II

Annex II: Common Declaration With Regard to Preferential Rules of Origin

1.     Recognizing that some Members apply preferential rules of origin, distinct from non-preferential rules of origin, the Members hereby agree as follows.

 

2.     For the purposes of this Common Declaration, preferential rules of origin shall be defined as those laws, regulations and administrative determinations of general application applied by any Member to determine whether goods qualify for preferential treatment under contractual or autonomous trade regimes leading to the granting of tariff preferences going beyond the application of paragraph 1 of Article I of GATT 1994.

 

3.     The Members agree to ensure that:

 

(a)     when they issue administrative determinations of general application, the requirements to be fulfilled are clearly defined. In particular:

 

(i)     in cases where the criterion of change of tariff classification is applied, such a preferential rule of origin, and any exceptions to the rule, must clearly specify the subheadings or headings within the tariff nomenclature that are addressed by the rule;

 

(ii)     in cases where the ad valorem percentage criterion is applied, the method for calculating this percentage shall also be indicated in the preferential rules of origin;

 

(iii)     in cases where the criterion of manufacturing or processing operation is prescribed, the operation that confers preferential origin shall be precisely specified;

 

(b)     their preferential rules of origin are based on a positive standard. Preferential rules of origin that state what does not confer preferential origin (negative standard) are permissible as part of a clarification of a positive standard or in individual cases where a positive determination of preferential origin is not necessary;

 

(c)     their laws, regulations, judicial decisions and administrative rulings of general application relating to preferential rules of origin are published as if they were subject to, and in accordance with, the provisions of paragraph 1 of Article X of GATT 1994;

 

(d)     upon request of an exporter, importer or any person with a justifiable cause, assessments of the preferential origin they would accord to a good are issued as soon as possible but no later than 150 days(7) after a request for such an assessment provided that all necessary elements have been submitted. Requests for such assessments shall be accepted before trade in the good concerned begins and may be accepted at any later point in time. Such assessments shall remain valid for three years provided that the facts and conditions, including the preferential rules of origin, under which they have been made remain comparable. Provided that the parties concerned are informed in advance, such assessments will no longer be valid when a decision contrary to the assessment is made in a review as referred to in subparagraph (f). Such assessments shall be made publicly available subject to the provisions of subparagraph (g);

 

(footnote original) 7 In respect of requests made during the first year from entry into force of the WTO Agreement, Members shall only be required to issue these assessments as soon as possible.

 

(e)     when introducing changes to their preferential rules of origin or new preferential rules of origin, they shall not apply such changes retroactively as defined in, and without prejudice to, their laws or regulations;

 

(f)     any administrative action which they take in relation to the determination of preferential origin is reviewable promptly by judicial, arbitral or administrative tribunals or procedures, independent of the authority issuing the determination, which can effect the modification or reversal of the determination;

 

(g)     all information that is by nature confidential or that is provided on a confidential basis for the purpose of the application of preferential rules of origin is treated as strictly confidential by the authorities concerned, which shall not disclose it without the specific permission of the person or government providing such information, except to the extent that it may be required to be disclosed in the context of judicial proceedings.

 

4.     Members agree to provide to the Secretariat promptly their preferential rules of origin, including a listing of the preferential arrangements to which they apply, judicial decisions, and administrative rulings of general application relating to their preferential rules of origin in effect on the date of entry into force of the WTO Agreement for the Member concerned. Furthermore, Members agree to provide any modifications to their preferential rules of origin or new preferential rules of origin as soon as possible to the Secretariat. Lists of information received and available with the Secretariat shall be circulated to the Members by the Secretariat.


B. Interpretation and Application of Annex II

33.     Preferential origin rules have also been discussed in the Committee on Regional Trade Agreements.(60) Preferential origin rules are also available in the WTO Secretariat’s online database of regional trade agreements.(61)

 

Footnotes:

1. Panel Report, US — Textiles Rules of Origin, paras. 6.23–6.25. back to text
2. Panel Report, US — Textiles Rules of Origin, para. 6.43; see also para. 6.84. back to text
3. Panel Report, US — Textiles Rules of Origin, para. 6.36. back to text
4. (footnote original) Appellate Body Report, Chile — Taxes on Alcoholic Beverages (“Chile — Alcoholic Beverages”), WT/DS87/AB/R, WT/DS110/AB/R, adopted 12 January 2000, DSR 2000:I, 281, para. 62 (footnotes omitted). back to text
5. Panel Report, US — Textiles Rules of Origin, paras. 6.37–6. 38. back to text
6. Panel Report, US — Textiles Rules of Origin, para. 6.44. back to text
7. Panel Report, US — Textiles Rules of Origin, paras. 6.112, 6.114. back to text
8. Panel Report, US — Textiles Rules of Origin, paras. 6.113–6.114. back to text
9. Panel Report, US — Textiles Rules of Origin, para. 6.117. back to text
10. (footnote original) It is worth noting in this context that Article 3.2 of the Agreement on Import Licensing Procedures on non-automatic licensing contains provisions along these lines. Specifically, it states that “[n]on-automatic licensing shall not have trade-restrictive or — distortive effects on imports additional to those caused by the imposition of the restriction” (emphasis added). back to text
11. Panel Report, US — Textiles Rules of Origin, paras. 6.136–6.137. back to text
12. (footnote original) The New Shorter Oxford English Dictionary, L. Brown, ed., Clarendon Press, 1993, Vol. I, p. 198. back to text
13. (footnote original) It is relevant to point out here that the Appellate Body has given a similar interpretation to the previously mentioned Article 3.2 of the Agreement on Import Licensing Procedures. Appellate Body Report, European Communities — Measures Affecting the Importation of Certain Poultry Products (“EC — Poultry”), WT/DS69/AB/R, adopted 23 July 1998, DSR 1998:V, 2031, paras. 126–127. back to text
14. Panel Report, US — Textiles Rules of Origin, para. 6.140. back to text
15. (footnote original) The New Shorter Oxford English Dictionary, L. Brown, ed., Clarendon Press, 1993, Vol. II, p. 2569; Vol. I, pp. 707 and 702, respectively. back to text
16. Panel Report, US — Textiles Rules of Origin, para. 6.141. back to text
17. (footnote original) Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones) (“EC — Hormones”), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998,DSR 1998: I, 135, para. 165. back to text
18. (footnote original) In response to a question from the Panel, India argues that the plural in Article 2(c) means that that provision applies both to an individual rule of origin as well as to a Member’s system of rules of origin. India’s reply to Panel question No. 48. Since India, in developing its claim, does not rely on this interpretation of the text of Article 2(c), it is sufficient to note that we understand the plural in Article 2(c), first sentence, to refer to a Member’s “rules of origin” taken individually, i.e., to individual rules of origin as they apply to individual goods. Indeed, provisions like the second sentence of Article 2(c), the first clause of Article 2(d), Article 2(f) and Article 3(a) of the RO Agreement cannot reasonably be read to lay down disciplines for anything other than individual rules of origin. back to text
19. Panel Report, US — Textiles Rules of Origin, paras. 6.146–6.147. See also para. 6.172. back to text
20. (footnote original) The French version of Article 2(c), second sentence, reads as follows:
     “[Les règles d’origine] n’imposeront pas de prescriptions indûment rigoureuses ni n’exigeront, comme condition préalable à la détermination du pays d’origine, le respect d’une certaine condition non liée à la fabrication ou à l’ouvraison.”
     The Spanish text of Article 2(c), second sentence, seems to track the French version rather than the English version. It reads:
     “[Las normas de origen] [n]o impondrán condiciones indebidamente estrictas ni exigirán el cumplimiento de una determinada condición no relacionada con la fabricación o elaboración como requisito previo para la determinación del país de origen.” back to text
21. (footnote original) For the purposes of this dispute, we need not decide whether the “requirements” mentioned in the second sentence of Article 2(c) would also encompass the formal, or administrative, requirements which may be imposed in order to assess compliance with rules of origin (e.g., documentation requirements). back to text
22. (footnote original) The negotiating history of the RO Agreement tends to confirm that the term “requirements” refers to the substantive origin requirements that must be met for a good to obtain origin status. The first clause of Article 2(c), second sentence, appears to originate in two provisions proposed by Japan. The first of these proposed provisions states that “the requirements to be fulfilled in the determination of origin shall be clearly defined. […] Rules of origin which state only what does not confer origin […] or state only abstract conditions or unduly strict conditions shall be prohibited”. MTN.GNG/NG2/W/52, p. 5 (emphasis added). The other provision proposed by Japan states that “[t]echnically excessive requirements as a prerequisite for the determination of country of origin shall be prohibited”. Ibid. back to text
23. (footnote original) Blacks Law Dictionary, B. A. Garner (ed.), West Group, 1999, p. 1434. back to text
24. (footnote original) Merriam-Webster OnLine Thesaurus, http://www.m-w.com (March 2003). We note that the French version of the second sentence of Article 2(c) also uses the adjective “rigoureux”. back to text
25. (footnote original) In other words, we think that the “strictness” of requirements is to be assessed from the perspective of countries wanting to obtain origin status, rather than from the perspective of countries wanting to lose origin status. back to text
26. (footnote original) The New Shorter Oxford English Dictionary, L. Brown (ed.), Clarendon Press, 1993, Vol. 2, p. 3480. back to text
27. Panel Report, US — Textiles Rules of Origin, paras. 6.204–6.206. back to text
28. (footnote original) We are aware that the third sentence of Article 2(c) states that “costs not directly related to manufacturing or processing may be included for the purposes of the application of an ad valorem percentage criterion consistent with subparagraph (a)”. But the third sentence opens with the word “however”, which implies a contrast between the second and third sentences. back to text
29. Panel Report, US — Textiles Rules of Origin, para. 6.208. back to text
30. (footnote original) For instance, Article I of the GATT 1994 prohibits discrimination as between “like” products only. back to text
31. (footnote original) The Panel notes that this is consistent with its view that Article 2 is intended to leave Members a considerable measure of discretion in designing and applying their rules of origin. Supra, para. 6.25. back to text
32. Panel Report, US — Textiles Rules of Origin, paras. 6.245–6.248. back to text
33. See Section X below. back to text
34. G/RO/M/1, para. 11. In addition, Representatives of the ACP, EFTA, IADB, IMF, ITCB, OECD, UNCTAD, WCO and the World Bank were invited to attend meetings of the Committee on Rules of Origin in 2000 in an observer capacity. See G/L/413, para. 1. back to text
35. G/RO/M/3. The adopted rules of procedure can be found in G/L/149. back to text
36. G/C/M/7. back to text
37. Annual reports to the Council for Trade in Goods: G/L/36, 36/Corr.1, 119, 210, 271, 326, 413, 656, 704, 747, 790, 831, 870, 905 and 939. back to text
38. G/RO/M/2, paras. 10–16. back to text
39. G/RO/M/3, paras. 3.1–3.2. back to text
40. The terms of reference of the Working Group can be found in G/RO/M/3, para. 4.3. back to text
41. G/RO/M/1, para. 44. For details on Members’ notifications relating to preferential and non-preferential rules of origin, see G/RO/70, pp. 6–8. back to text
42. G/RO/M/5, para. 1.3. back to text
43. G/RO/M/55, section III; G/RO/70, Secretariat Background Note for Sixteenth Annual Review of the Implementation and Operation of the Agreement on Rules of Origin, 17 December 2010. back to text
44. See G/RO/3, G/RO/12, G/RO/21, G/RO/28, G/RO/43, G/RO/47, G/RO/50, G/RO/55, G/RO/57, G/RO/59, G/RO/60, G/RO/63, G/RO/65, G/RO/67, G/RO/69 and G/RO/70. back to text
45. For text of letter, see G/RO/W/4; for the decision to launch work programme, see G/RO/M/1. back to text
46. G/RO/M/6, para. 1 The Integrated Negotiating Text was issued as G/RO/W/13 and was replaced inter alia by G/RO/45, G/RO/45/Rev.2 and addenda. back to text
47. Committee recommendation: G/RO/25; General Council action: WT/GC/M/29, item 4. back to text
48. G/RO/42. back to text
49. WT/GC/M/59, Section 1(e); WT/L/384, para. 5. back to text
50. WT/GC/M/72; Committee progress report, G/RO/49. back to text
51. G/RO/52; WT/GC/M/75. back to text
52. WT/GC/M/77. back to text
53. WT/GC/M/81. back to text
54. WT/GC/M/87. back to text
55. WT/GC/M/97. back to text
56. WT/GC/M/103. back to text
57. WT/GC/M/109, item 6. back to text
58. G/RO/W/111. back to text
59. G/RO/W/111/Rev.6. back to text
60. See, e.g., WT/REG/W/45, Secretariat Note on “Rules of Origin Regimes in Regional Trade Agreements”, 5 April 2002. back to text
61. http://rtais.wto.org. back to text

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