The LDCs Group at the WTO presented an “elements for discussion” paper aimed at triggering an exchange on how members are responding to the 2013 Decision and, ultimately, identifying ways to facilitate market access for LDC products. The paper sets out six specific questions to preference-giving countries on the operation of their rules of origin schemes.
Speaking for the group, Bangladesh said it recognises that no single system of rules of origin used by preference-giving countries is better than the other. However, there is “unequivocal evidence” that, under certain conditions, the reform of rules of origin to reflect current global value chains and commercial realities can generate positive outcomes for LDCs.
A paper from the group presented to the committee last October argues that reforms adopted by several preference-giving members have resulted in increased utilization of preferences, relocation of factories to LDCs, increased manufacturing capacity, and more skilled jobs creation in LDCs.
The 2013 Decision sets out guidelines for members to develop their own rules of origin arrangements applicable to LDC imports with the aim of facilitating market access for LDC goods. The Decision also calls on members to annually review developments in preferential rules of origin applicable to LDC imports.
Several LDC Group members said preferential rules of origin was a priority for them in the WTO’s post-Bali work and that it was time to address implementation of the 2013 Decision.
Canada said its rules of origin system was generally consistent with the Bali Decision guidelines. The EU said it would shortly send replies to the LDC Group’s six questions and that it was looking forward to discussions on the paper. The United States noted that legislation reinstating Generalized System of Preferences for LDCs was working its way through the US Congress, while China highlighted recent changes to its duty-free benefits programme that have already led to a 27% increase in LDC imports in the first quarter of 2015.
The committee also heard a presentation from the WTO Secretariat regarding non-preferential rules of origin being implemented by members as well as the current state of play in the WTO’s work programme on harmonizing non-preferential rules of origin. In addition, the secretariat of the World Customs Organization made a presentation about ongoing work on non-preferential rules of origin, while several members presented their current practices and legislation.
Some members took the floor to argue that non-preferential rules of origin remained a very relevant trade policy instrument and that the lack of harmonization hindered international trade. Others reiterated that harmonized rules were not a priority for businesses. The chairperson concluded that it would be useful to continue this educational exercise at the next committee meeting and proposed to broaden and deepen the analysis of existing rules, with possible input from private sector representatives.
The committee concluded by electing Mr Christian Wegener (Denmark) to succeed Mr Chen as chairperson.
Rules of origin are the criteria needed to determine the national source of a product. Rules of origin are important in the application of import duties as well as trade policy instruments such as anti-dumping and countervailing duties, origin marking, and safeguard measures.
There is wide variation in the practice of governments with regard to the rules of origin. The WTO’s Agreement on Rules of Origin aims at long-term harmonization of rules of origin, other than rules of origin relating to the granting of tariff preferences, and to ensure that such rules do not themselves create unnecessary obstacles to trade.
Further information on the WTO’s work regarding rules of origin can be found at www.wto.org/origin.
Details on the LDC Group and others in the WTO can be found here.