Copyright 1995 NLCIFT
Title:AGREEMENT ON RULES OF ORIGIN
AGREEMENT ON RULES OF ORIGIN
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 the GATT and increase the responsiveness
of the GATT system to the evolving international economic
environment";
Desiring to further the objectives of the 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 the 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:
PART I
DEFINITIONS AND COVERAGE
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 r‚gimes leading to the granting of tariff preferences going
beyond the application of Article I:1 of the 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 the
GATT 1994; anti-dumping and countervailing duties under
Article VI of the GATT 1994; safeguard measures under
Article XIX of the GATT 1994; origin marking requirements under
Article IX of the GATT 1994; and any discriminatory quantitative
restrictions or tariff quotas. They shall also include rules of
origin used for government procurement and trade statistics.
PART II
DISCIPLINES TO GOVERN THE APPLICATION OF RULES OF ORIGIN
Article 2
Disciplines During the Transition Period
Until the work programme for the harmonization of rules of
origin set out in Part IV below 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:
- 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 sub-headings or headings within the
tariff nomenclature that are addressed by the
rule;
- 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;
- 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 sub-paragraph (a) above;
(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;
(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 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 Article X:1 of the
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 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 sub-
paragraph (j) below. Such assessments shall be made
publicly available subject to the provisions of sub-
paragraph (k) below;
(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.
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
below, the establishment of harmonized rules of origin, the
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 above;
(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 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 Article X:1 of the
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 sub-paragraph (h)
below. Such assessments shall be made publicly
available subject to the provisions of sub-
paragraph (i) below;
(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.
PART III
PROCEDURAL ARRANGEMENTS ON NOTIFICATION, REVIEW,
CONSULTATION AND DISPUTE SETTLEMENT
Article 4
Institutions
There shall be established under this Agreement:
1. a Committee on Rules of Origin (hereinafter referred to 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 of the
Agreement 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 below)
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 MTO Secretariat shall act as
the Secretariat to the Committee;
2. a Technical Committee on Rules of Origin (hereinafter
referred to as "the Technical Committee") under the auspices of
the Customs Co-operation Council (CCC) as set out in Annex I of
this Agreement. The Technical Committee shall carry out the
technical work called for in Part IV and prescribed in Annex I of
this Agreement. 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.
Article 5
Information and Procedures for Modification
and Introduction of New Rules of Origin
1. Upon entry into force of the Agreement Establishing the MTO,
each Member shall provide to the MTO Secretariat within 90 days
its rules of origin, judicial decisions, and administrative
rulings of general application relating to rules of origin in
effect on the date of entry into force of the Agreement
Establishing the MTO. 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 MTO Secretariat shall be
circulated to the Members by the MTO Secretariat.
2. During the period referred to in Article 2 above, 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 above and not provided to the
MTO 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.
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 above 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.
Article 7
Consultation
The provisions of Article XXII of the GATT 1994, as
elaborated and applied by the Understanding on Rules and
Procedures Governing the Settlement of Disputes, are applicable
to this Agreement.
Article 8
Dispute Settlement
The provisions of Article XXIII of the GATT 1994, as
elaborated and applied by the Understanding on Rules and
Procedures Governing the Settlement of Disputes, are applicable
to this Agreement.
PART IV
HARMONIZATION OF RULES OF ORIGIN
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 above;
(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 Agreement Establishing the MTO
as possible and will be completed within three years of
initiation.
(b) The Committee and the Technical Committee provided for
in Article 4 of this Agreement 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 of this Article. 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 Transformation - Supplementary
Criteria
Upon completion of the work under (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 and/or manufacturing or processing
operations, when developing rules of origin for
particular products or a product sector;
- 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.
R"le of the Committee
3. On the basis of the principles listed in paragraph 1 of this
Article:
(a) the Committee shall consider the interpretations and
opinions of the Technical Committee periodically in
accordance with the time-frames provided in (i), (ii)
and (iii) above 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 (i), (ii)
and (iii) above, 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. The Ministerial Conference shall establish
a time-frame for the entry into force of this annex.
ANNEX I
TECHNICAL COMMITTEE ON RULES OF ORIGIN
Responsibilities
1. The on-going 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 of
this Agreement.
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 MTO Secretariat may also attend such
meetings with observer status.
5. Members of the CCC who are not MTO Members 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 (hereinafter referred
to as "the Secretary-General") may invite representatives of
governments which are neither MTO Members 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.
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 r‚gimes leading
to the granting of tariff preferences going beyond the
application of Article I:1 of the 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:
- 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 sub-headings or headings
within the tariff nomenclature that are addressed
by the rule;
- 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;
- 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 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
Article X:1 of the 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
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 sub-paragraph (f) below. Such
assessments shall be made publicly available subject to
the provisions of sub-paragraph (g) below;
(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. The Members agree to provide to the MTO 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 this Common Declaration.
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 MTO Secretariat. Lists of information
received and available with the MTO Secretariat shall be
circulated to the Members by the MTO Secretariat.