Members review reforms to facilitate participation in rules of origin work

Improving functioning of committee and implementation of digital tools

The interim Chair of the committee, Mr Guna Seelan Balakrishnan from Malaysia, noted that members last year considered measures which they could introduce to improve the functioning of the committee and facilitate the work of delegates. A total of seven measures were agreed and have already been implemented, such as using an e-Agenda and an annotated agenda to facilitate the work.

The Secretariat provided updates on the status of putting these measures into action and provided demonstrations of some of the tools to members.

Among the improvements are the revamp of the rules of origin gateway page on the WTO website. New features include a guide for new delegates on the work of the committee, a page dedicated to events and experience sharing sessions, and a page with academic and research articles describing the impact of rules of origin on international trade. The goal is to foster more interaction with users and to provide a knowledge hub on rules of origin.

Draft Transparency Decision On Non-Preferential Rules Of Origin

The interim Chair outlined a proposal to address the impasse regarding a Draft Transparency Decision on Non-Preferential Rules of Origin, which sets out a template for members to notify rules of origin that they use when applying most-favoured-nation tariff treatment to imported goods.  The draft decision has been on the agenda of the committee since 2019 and has broad support, but members have not been able to reach consensus on the initiative.

The interim Chair proposed a change of approach with a shorter and simpler draft decision reaffirming members' commitment to transparency and updated notifications. The decision would then refer to an annex containing a template to be used on a voluntary basis. The interim Chair said he would send a communication with all the details in writing so that members have time to consider and consult on the proposal, with an informal meeting to be held later to discuss it. 

Ten members took the floor to comment.  The interim Chair said he would follow up with the written communication in the coming days with the details of the new approach he is suggesting.

Committee report to General Council on preferential rules of origin for LDCs

The interim Chair invited members to comment on the report of the Committee on Rules Of Origin to the General Council on preferential rules of origin for LDCs, which was circulated on 24 November 2023 (G/RO/99).

Fourteen members took the floor to comment.  Several noted the report's conclusion that the committee should continue its work to ensure that preferential rules of origin applicable to imports from LDCs are transparent and simple and contribute to facilitating market access, in line with the Decision on Measures in Favour of Least Developed Countries and the Bali and Nairobi Ministerial Decisions. 

Others noted and endorsed the report's conclusion that, in light of the divergent views of members on the implementation of the Bali and Nairobi Decisions and best practices in this regard, it is necessary to continue relevant discussions in the committee as well as intensify bilateral engagement with a view to facilitating the use of preferential trade arrangements by the LDCs.

The LDC Group of WTO members outlined the work programme for advancing the work in 2024-25, with a focus on discussing best practices in the committee.  The group also proposed to hold an intersessional meeting in the spring of 2025 to deepen the discussion on possible best practices and the utilization rate and take stock of developments and achievements.

Recent developments on preferential rules of origin for LDCs

The European Union made a presentation to the committee on how it was meeting the objectives of the Nairobi Decision on preferential rules of origin for LDCs through the EU's Generalised Scheme of Preferences (GSP).  The EU noted that the overwhelming majority of imports originating in LDCs receive duty-free treatment in the EU market, with over 91% of eligible imports receiving trade preferences.  Clothing and footwear account for 83% of imports under the EU's LDC trade preferences.

The United States made a presentation on utilization of preferences under its five trade preference programmes.  The US noted that trade preferences are not always utilized, even for goods where origin is easy to establish.  Preferences under the African Growth and Opportunity Act, for example, are only used for 72.7% of imports by value from beneficiary countries.

Notifications of preferential rules of origin for LDCs and preferential import data

The WTO Secretariat reported on members' use of an agreed template for the notification of preferential rules of origin, an initiative agreed at the 2015 Nairobi Ministerial Conference to enhance transparency and promote a better understanding of the rules of origin applicable to imports from LDCs. 

To date, 21 notifications have been received from members regarding their preferential rules of origin while three notifications remain outstanding.  Twelve members have notified their tariffs under preferential trade arrangements while 12 notifications remain outstanding.

Canada notified members of changes to its Least Developed Country Tariff (LDCT) programme which will take effect next year.  The changes include allowing LDC beneficiaries an additional three-year period to retain full tariff benefits under the programme following the formal change in their UN LDC status.  This is in line with the October 2023 decision by the WTO's General Council on the extension of unilateral preferences for graduating LDCs, Canada said. Canada also reported on reforms to further simplify the rules of origin used to offer preferences to products originating in LDCs, including for apparel products.

Discussion of papers submitted by members

The LDC Group presented a paper analysing the utilization rate of LDC preferences provided by the United Kingdom under its Developing Countries Trading Scheme (G/RO/W/228), which took effect in June 2023, replacing an earlier system based on European Union rules of origin. 

Speaking on behalf of the LDC Group, Togo said the review of the UK system was a useful exercise and showed a high uptake of the preferences by LDC exporters, although it noted a low level of awareness of the new scheme among LDC businesses. 

The United Kingdom thanked the LDC Group for the rich analysis in its report and said it would respond and comment in full at the next committee meeting.

The LDC Group also presented a paper entitled "Towards Simple and Transparent Rules of Origin for LDCs: Convergence on Appliance Rules of Origin Criteria for Most Exported Products from LDCs under DFQF - Submission by the LDC Group" (G/RO/W/229).  In its paper, the group said it was important to initiate a dialogue regarding potential future reforms on LDC rules of origin, with the aim of enhancing discussions on best practices and fostering convergence towards simple and transparent rules of origin. The LDC Group also presented an updated work programme for 2024-25 containing a list of issues where the LDCs are planning to present submissions at future committee meetings, with the aim of reporting the outcomes at the next Ministerial Conference.

Speaking for the LDC Group, Senegal welcomed the fact that a number of preference-granting members have undertaken reforms of their rules of origin in their Generalized System of Preference (GSP) schemes and free trade agreements which have made it easier for LDCs to gain access to their markets.  Nine delegations took the floor to comment on the LDC Group paper.

Next meetings of the committee

The next formal committee meetings are scheduled for 21 November 2024 and 22 May 2025.

Background

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.

Share