Standards and Rules of Origin in East
Asia: introducing the key issues
Robert Kirk
rkirk@tsginc.com
World Bank-BFA Workshop
Hainan, China, June 26-27,2006
Overview
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Rules of Origin –
Definition
Approaches to ROO
Impact on ASEAN of ROO
Standards –
Standards as a trade issue
Multilateral and Regional Approaches
Rules of Origin: Defining Origin
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
Wholly Obtained
Substantial Transformation
–
–
–
Change of Tariff Classification (CTC)
Value Added
Specific Manufacturing Processes
Rules of Origin: Features
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Cumulation (bilateral, diagonal, full)
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Tolerance or de minimis
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Absorption or Roll-Up Principle
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Duty Drawback
Measuring ‘Restrictiveness’ of ROO
Recent work follows Estevadeordal (2000)
Index of Restrictiveness
CTC at HS 8-10 digit
CTC at HS 6 digit
CTC at HS 6 digit plus value content
CTC at HS 4 digit
CTC at HS 4 digit plus value content
CTC at HS 2 digit level
CTC at the HS 2 digit and Technical Requirements
Rules of Origin
EU- Pan Euro/GSP/Cotonou
CTC (4,2) VA (import content 50-30), Tech
Cumulation (bilateral, diagonal, full [Cotonou]
Tolerance (10, 10, 15 [Cotonou]), Absorption
NAFTA
CTC (2,4,6),VA (import content 50-40),Tech
Cumulation, Tolerance (7), Absorption
ASEAN Rules of Origin
AFTA
Value Added (import content 60 per cent)
Selected Specific Manufacturing Process
Bilateral Cumulation
Absorption
ASEAN Experience
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Administrative compliance costs
Cumbersome paperwork
Weak capacity for verification
Difficult for New ASEAN Members (CLMV)
Lack of certainty
Why standards?
“The real 21st Century issues are standards
and rules in areas such as safety, health or
consumer protection”
Pascal Lamy September 9, 2004
Standards and International Trade

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Decline in tariffs
Increase in standards and technical regulationspotential to use as a ‘tool of protection’
Voluntary standards and mandatory technical
regulations
Contrast with tariffs-technical regulations serve a
‘desirable’ objective and cannot be negotiated away
WTO TBT and SPS Agreements
Total number of TBT notifications since 1995
900
794
800
700
648
600
669
638
611
581
538
500
400
794
460
365
300
200
100
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source: WTO (2005a) Tenth Annual Review of the Implementation and Operation of the TBT Agreement G/TBT/15
WTO Principles
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Most Favoured Nation
National Treatment
Technical Regulations (as far as possible)
based on international standards
Not create unnecessary obstacles to trade
Transparent process
Standards: Institutions and Policy
Issues

Establishing the standard (technical experts)
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Ensuring goods and services meet the
standard (conformity assessment)

Ensuring conformity assessment functions
well –accreditation and recognition
The Technical Infrastructure of Conformity Assessment
Second and Third-Party Assessment
First-Party Assessment
Market
Market
Certification
SDoc
Metrology
Accreditation
Metrology
And/Or
Testing
Inspection
Product
Product
Supplier
Supplier
Traditional and New Approaches to
Standardization
Traditional Approach
 Weights and Measures
and Health & Safety
 Static Structure
 Domestic Focus
 Public Sector Activity
 Regulatory Focus
New Approach
 National and
International Focus
 Flexible structure
 Public-Private Activity
 International
Recognition
 Voluntary standards
ASEAN and Standards
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ASEAN Consultative Committee on Standards and
Quality (ACCSQ)
Institutional Structure (12 sub committees)
Goal of ‘One Standard, One Test, Accepted
Everywhere’
Upgrade to international standards
AFTA Council identified 20 products as priorities for
standards harmonization (1997-2005)
Main Focus now on Mutual Recognition Agreements
(MRA)
Mutual Recognition Agreements
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Limited in Scope –product group approach
The Pre-Conditions for equivalence between
national systems
Automaticity: What is recognized at the
individual level and what are the entry
requirements (pre-market approval)
Constraints within ASEAN
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Inadequate legal framework
Ineffective control of compliance
Deficient institutional coordination
Lack of awareness on quality issues
No accreditation infrastructure
Weak WTO Enquiry points
Summary
Rules of Origin
 Keep it simple and transparent with low
compliance costs
Standards
 Use regional agreements to support effective
implementation of multilateral agreements