RESTRICTED
WORLD TRADE
G/RO/M/41
16 July 2002
ORGANIZATION
(02-3960)
Committee on Rules of Origin
MINUTES OF THE MEETING OF 28 JUNE 2002
Chairman: Mr. Stefan Moser
I.
REPORT OF THE WORK OF THE TECHNICAL COMMITTEE ON RULES
OF ORIGIN (G/RO/51) ............................................................................................................ 1
II.
IDENTIFICATION OF CORE POLICY ISSUES TO BE REPORTED TO THE
GENERAL COUNCIL FOR DISCUSSION AND DECISION (JOB(02)/53).................... 4
III.
ISSUES TO BE RESOLVED IN THE COMMITTEE (JOB(02)/53) .................................. 4
IV.
ENDORSEMENT OF PROPOSALS ON HARMONIZED RULES OF ORIGIN
(G/RO/W/68/REV.3, G/RO/W/70/REV.2, G/RO/W/75/REV.1 AND G/RO/W/85) ............ 5
V.
IMPLICATIONS OF THE IMPLEMENTATION OF THE HARMONIZED
RULES OF ORIGIN ON OTHER WTO AGREEMENTS (G/RO/W/28/REV.1,
G/RO/W/30-34, 38, 42, 48, 50, 65, 66, 74 AND 83) ................................................................. 6
VI.
NOTIFICATIONS UNDER ARTICLE 5 AND PARAGRAPH 4 OF ANNEX II
OF THE AGREEMENT ON RULES OF ORIGIN (G/RO/N/37)...................................... 11
VII.
OTHER BUSINESS ................................................................................................................ 11
A.
DATES AND AGENDA FOR THE NEXT MEETING.......................................................................... 11
I.
REPORT OF THE WORK OF THE TECHNICAL COMMITTEE ON RULES OF
ORIGIN
1.1
The representative of the WCO, Mr. P-P. de Vaucher, stated that the last session of the
Technical Committee on Rules of Origin (the TCRO) was held at the WCO headquarters in Brussels
from 18 to 20 February 2002, under the chairmanship of Mr. Stefan Moser (Switzerland).
A.
THIRD PERIODIC REPORT ON TECHNICAL ASPECTS OF THE OPERATION AND STATUS OF THE
AGREEMENT
This report, for the period from 1 January to 31 December 2001, described the work done by
the CRO and the TCRO, as well as the technical assistance activities conducted by WCO officials.
The report also referred to certain studies carried out by the WCO secretariat at the request of the
TCRO.
G/RO/M/41
Page 2
B.
THIRD ANNUAL REVIEW ON TECHNICAL ASPECTS OF THE IMPLEMENTATION AND OPERATION
OF PARTS II AND III OF THE AGREEMENT
This report, covering the same period, indicated that no specific questions were brought to the
attention of the TCRO under Parts II and III. The report also referred to work carried out by the
secretariat at the request of the TCRO.
C.
TECHNICAL RECTIFICATIONS TO TAKE ACCOUNT OF THE ENTRY INTO FORCE OF THE 2002
VERSION OF THE HARMONIZED SYSTEM
As happened at the TCRO's 19th Session, and given that the TCRO had received no mandate
for this work from the CRO, it was decided that these rectifications should be examined informally
outside the official TCRO Session.
A WCO official gave a detailed presentation on the impact of these technical rectifications on
the rules which appear in Chapter 48 (this Powerpoint presentation is available on the WCO members'
website).
D.
PRACTICAL GUIDANCE ON THE IMPLEMENTATION OF THE AGREEMENT
The WCO Secretariat presented a document concerning practical guidance on the
implementation of the Agreement. This document provided practical and technical information on the
steps to be taken in order to be able to apply the Agreement in day-to-day work. It included
information on, for example:

international and national legal instruments which could be used as a reference when introducing
appropriate legislation and regulations;

technical information required for the determination of origin;

possible choices as regards the organizational structure needed in order to ensure that economic
operators receive the information they required, and in order to deal with questions relating to the
harmonized rules of origin.
This document should be of use not only to those officials in member states who would be
responsible for applying the rules of origin in the field, but also to those responsible for training
customs officers, and for conveying all the necessary information to the private sector.
E.
COMPARATIVE STUDY ON THE CERTIFICATION OF ORIGIN
On the basis of a questionnaire completed by 85 administrations, the WCO Secretariat
presented a comparative study of the procedures used worldwide for certifying non-preferential
origin.
After a technical debate, the TCRO concluded that there was no need to change the existing
procedures. For the future, some countries considered that a certificate would not be necessary, others
took the opposite view, while a third group considered that a certificate should be required only in
certain specified circumstances.
At this stage, it was the country of importation which normally decided whether or not to
request a certificate of origin at importation. Where this was necessary, the declaration of origin was
certified in the country of exportation by an approved body (such as the Chamber of Commerce) or by
the Trade Minister, or alternatively by the customs service.
G/RO/M/41
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The TCRO also asked the WCO Secretariat to monitor work currently in progress with a view
to the introduction of electronic certification systems.
F.
MECHANISM FOR AMENDING THE RULES OF ORIGIN
At the request of the TCRO (at the 19th Session) a mechanism to keep the HRO under regular
review after they have been completed and to propose any necessary amendments was proposed by
the WCO Secretariat. This comprehensive proposal was generally accepted by the TCRO at the 20 th
Session. Having reflected members' comments after the Session, the revised document (Annex E/2 to
Doc. OC0071E2 (Report of the 20th Session)) was forwarded through the Chairman to the CRO for
consideration.
The TCRO felt that it was competent to carry out the technical tasks required by Article 6.3
(review mechanism) of the Agreement, in particular, technical rectifications to the HRO, which would
require (i) labour-intensive work by the WCO Secretariat and (ii) extensive knowledge of both origin
and the Harmonized System.
The TCRO also considered that the five-year review cycle adopted by the HS Committee
should be used for reviewing the HRO in order to make the Rules more operational and to reflect
technological changes. Since product cycles were becoming shorter, the pressure to keep the rules up
to date would be great; on the other hand, the more rapid amendment of the HRO would appear
problematic in view of the identified needs for stability and the inevitable legislative process to adopt
these amendments. Therefore, the TCRO felt that a five-year review cycle would be most suitable in
this respect.
G.
OTHER INFORMATION

Position regarding members/observers: China (People's Republic of) and Chinese Taipei have
become members of the TCRO.

Intersessional developments: the TCRO took note of the information provided by the Director.

Progress made by the CRO: the TCRO took note of the progress in Geneva. The TCRO decided
that working documents on this subject should be placed on the members' website, kept current
and no longer be printed.

Publication of TCRO documents/reports: the TCRO endorsed the WCO Secretariat proposal for
public access, noting that members' names should not be shown in a particular context.

Use of the "Discussion Forum": the TCRO took note of the information. This site would be used
for informal exchanges of views on, e.g., technical rectifications.

Contact point list: a "contact point list" will soon be placed on the members' website. This list
will include delegates' titles, mail and e-mail addresses, telephone and fax numbers.
1.2
The CRO took note of the report and expressed appreciation for the TCRO's continued
valuable work. The CRO also agreed to revert to the issue "proposed mechanism for the submission
of the views of the TCRO to the CRO for amendments to the HRO" (G/RO/51) at a future meeting.
G/RO/M/41
Page 4
II.
IDENTIFICATION OF CORE POLICY ISSUES TO BE REPORTED TO THE
GENERAL COUNCIL FOR DISCUSSION AND DECISION
2.1
The CRO identified the following core policy issues to be submitted to the General Council
for discussion and decision:

appendix 1, definition 2(i);

Issue Nos. 4(ii), 6(ii), 12, 15, 2, 16-20, 22, 91, 95, 110, 31, 79, 81, 45, 53, 55-64, 77,78, 98, 99,
101, 36, 66, 76, 100, 106, 121-125, and 35 of Chapters 1-24;

Issue Nos 1 and 8 of Chapters 25-27;

Issue Nos. 2, 4 and 5 of Chapters 28-40;

Issue Nos 6 and 7 of Chapters 41-43;

Issues Nos. 12, 13, 35, 37, 47, 58, 45, 46, 49, 50, 48, 55, 59, 61, 62, 69, 63-67, 71, 75 and 77 of
Chapters 50-63;

Issue Nos. 12, 9, 13, 14 of Chapters 64-67;

Issue Nos. 3 and 5 of Chapters 72-74;

Issue Nos. 1, 33, 56, 59, 60, 69, 75-77 of Chapters 84, 85 and 90; and

Issue No. 1 of Chapter 91.
III.
ISSUES TO BE RESOLVED IN THE COMMITTEE
3.1
The Chairman stated as follows:
Chapters 1-24
-
Issue Nos. 49 and 50: There was consensus on the Chairman's recommendation for
ex. 1604(a) (CTH subject to Chapter Note 1(a) (Subject to EC and US).
-
Issue No. 54: There was consensus on Option A (CTHS).
-
Issue No. 75: There was growing consensus towards Option D (non-origin conferring).
-
Issue No. 93: There was consensus on Option B (CTH).
-
Issue No. 110: There was growing consensus towards the Chairman's recommendation
(CTH, except from heading 04.01 through 04.03).
Chapters 28-40
-
Issue No.22: There was consensus on Option A (CTH, or change within this heading
following the cutting into discs, wafers or similar forms, polishing or coating with an epitaxial
layer).
G/RO/M/41
Page 5
Chapters 84, 85 and 90
-
Issue No. 13: There was consensus to delete this issue.
Chapters 93-97
-
Issue No. 6: There was consensus on the Chairman's recommendation (CTH, or change from
HS 9401.90/9403.90, provided one essential part of the furniture is already originating)
(subject to MEX, MOR, THA).
-
Issue No. 7: There was consensus on the Chairman's recommendation (CTH, or CTHS
provided one essential part of the furniture is already originating.
-
Issue No. 12: There was consensus on option C (CTH) (subject to AUS, MOR, THA).
3.1
The CRO took note of the statement.
IV.
ENDORSEMENT OF PROPOSALS ON HARMONIZED RULES OF ORIGIN
4.1
The CRO endorsed the following proposals on HRO:
-
Chapters 1-24 – Issue No. 23: to endorse option B (the primary rule of subheading 0408.99
should read "the country of origin of the goods of this subheading shall be the country in
which the eggs are obtained from the animals").
-
Chapters 1-24 – Issue Nos. 24-25: to endorse option C (the primary rule of subheading
0408.19 should read "the country of origin of the goods of this subheading shall be the
country in which the eggs are obtained from the animals").
-
Chapters 1-24 – Issue Nos. 112-113: to endorse option A (the current split heading
ex13.02(c) should be renumbered as ex13.02(a), and the primary rule thereof should read
"CTHS"; the current split headings ex13.02(a), ex13.02(b) and ex13.02(e) should be
renumbered as ex13.02(c) (other), and the primary rule thereof should read "CC".
-
Chapters 50-63 – Issue No.3: to endorse Option B:
split heading ex50.04(a), ex50.05(a) and ex50.06(b) should be deleted; split headings
ex50.04(b) and (c), ex50.05(b) and (c), ex50.06(c) and (d) should be renumbered as
ex50.04(a) and (b), ex50.05 (a) and (b), ex50.06 (b) and (c); each primary rule of
renumbered split heading ex50.04 (b) and ex50.05(b) should read "CTH, except from
heading 50.06"; the primary rule of renumbered split heading ex 50.06(c) should read
"CTH except from heading 50.04 or 50.05";
-
each primary rule of split heading ex51.06(c), ex51.07(c) and ex51.08(c) should read
"CTH except from heading 51.09"; the primary rule of split heading ex51.09(c)
should read "CTH, except from headings 51.06 through 51.08;
-
the primary rule of split heading ex51.10(c) should read "CTH";
-
each primary rule of split heading ex52.05(c) and ex52.06(c) should read "CTH,
except from heading 52.04 or 52.07";
G/RO/M/41
Page 6
-
the primary rule of split heading ex52.07(c) should read: "CTH, except from headings
52.04 though 52.06";
-
each primary rule of split heading ex53.06(c), ex53.07(c) and ex53.08(c), should read
"CTH".
-
split headings ex54.01(a), ex54.04(a)(1), ex54.04(c)(1), ex54.05(a)(1), ex54.05(c)(1),
ex54.06(a) should be deleted; split headings ex54.01(b) and (c), ex54.04(b)(1) and
(a)(2) and (b)(2), ex54.05(b)(1) and (a)(2) and (b)(2), ex54.06(b) and (c) should be
renumbered as ex54.01(a) and (b), ex54.04(a) and (b)(1) (other-cut from sheet) and
(b)(2) (other-other), ex54.05(a) and (b)(1) (other-cut from sheet) and
(b)(2)(other-other) and ex54.06(a) and (b) respectively; the primary rule of
renumbered split heading ex54.01(b) should read "CTH, except from headings 54.02
through 54.06"; each primary rule of renumbered split heading, ex54.04(b)(2),
ex54.05(b)(2) should read "CTH, except from headings 54.01 or 54.06"; the primary
rule of split heading ex54.06(b) should read "CTH, except from heading 54.01
through 54.05" (see document G/RO/W/67/Rev.3 for the primary rule of renumbered
split headings ex54.04(b)(1) and ex54.05(b)(1) – "CTH, except from heading 39.20
or 39.21).
-
the primary rule of split heading ex55.08(c) should read "CTH, by corespinning from
yarns or fibres; each primary rule of split headings ex55.09(c) and ex55.10(c) should
read "CTH, except from heading 55.08 or 55.11; the primary rule of split heading
ex55.11(c) should read: "CTH, except from headings 55.08 through 55.10".
-
Chapters 84-85 and 90 – Issue No. 55: to delete this issue.
-
Chapters 86-90 – Issue No. 71: to delete this issue.
-
Chapters 86-90 – Issue Nos. 72, 73 and 74A: to delete these issues1.
V.
IMPLICATIONS OF THE IMPLEMENTATION OF THE HARMONIZED RULES
OF ORIGIN ON OTHER WTO AGREEMENTS
5.1
The Chairman noted that, recognizing that, in the view of several Members, a major
breakthrough could be made only through reaching a common understanding on the implications of
the Harmonized Rules of Origin on other WTO Agreements, the CRO, over the past several years,
had held intensive discussions on this issue. The issue of implications was raised in 1998 and there
had been six submissions on the table: from India (G/RO/W/28/Rev.1, 30, 42 and 50); from the
United States (G/RO/W/32, 48 and 65); from the Dominican Republic and Honduras (G/RO/W/33);
from El Salvador (G/RO/W/34); from Korea (G/RO/W/38); and from Japan (G/RO/W/66 and 74)
(G/RO/M/15, paragraphs 2.2-2.4; G/RO/M/16, paragraphs 3.1-3.3; G/RO/M/19, paragraphs 2.1-2.8;
G/RO/M/23, paragraphs 4.1-4.13; G/RO/M/26, paragraphs 4.1-4.9; G/RO/M/37, paragraphs 3.1-3.3;
G/RO/M/40, paragraphs 4.1-4.27).
5.2
The Chairman made the following proposal for adoption by the CRO:
"1.
Pursuant to Article 3(a) of the Agreement on Rules of Origin ("the Agreement"),
Members should ensure, upon the implementation of the results of the Harmonization Work
Programme (HWP), that they apply the harmonized rules of origin (HRO) equally for all non1
Two options are to be kept in the relevant documents.
G/RO/M/41
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preferential commercial policy instruments as set out in Article 1 of the Agreement, in which
rules of origin are used; and
2.
Each Member, in accordance with its rights and obligations under the provisions of
the WTO Agreements [other than this Agreement], is to decide whether rules of origin are
used in its non-preferential commercial policy instruments."
5.3
The representative of Brazil, as a preliminary comment, expressed concern over the words "in
which rules of origin are used" at the end of paragraph 1 of the Chairman's proposal and stated that
this selective quotation of provisions of the Agreement might indicate that the CRO intended to
interpret the provisions of the Agreement, which was beyond its mandate. Since the provisions of the
Agreement were very clear, he did not want them reiterated in paragraph 1. Paragraph 2 of the
Chairman's proposal, in his view, appeared to indicate that each Member was free to choose when it
would apply rules of origin, but he believed that each Member had made binding commitments under
the WTO Agreement in which, whenever there was a requirement in a WTO Agreement for
determination of origin, the HRO should be applied equally. The basic concept behind the HWP was
to have rules of origin that would be applied in a consistent manner.
5.4
The representative of the European Communities stated that the EC was still considering the
Chairman's proposal and recalled that Members had reached agreement on the HWP because they
wanted to create a predictable and clear framework concerning the application of rules of origin for
everybody involved in international trade, such as producers, importers, exporters, customs. He then
stated that it seemed better in paragraph 1 of the Chairman's proposal to stick to the original text
rather than a partial quotation. With regard to paragraph 2 he doubted whether a predictable
environment would really be created when Members were left to decide whether or not to use rules of
origin.
5.5
The Chairman stated that paragraph 1 was not a selective quotation, since Article 3(a) of the
Agreement referred to Article 1.2 in which rules of origin were defined as all rules of origin "used" in
non-preferential commercial policy instruments; hence nothing was added and nothing was left out in
paragraph 1 of the Chairman's proposal. Under paragraph 2 of the Chairman's proposal, it was not the
case that each Member was totally free to choose whether or not to use rules of origin. Paragraph 2
read that each Member "in accordance with its rights and obligations under the provisions of the WTO
Agreements other than this Agreement" was to decide whether rules of origin were used in its
non-preferential commercial policy instruments. Therefore if a certain WTO Committee decided to
use rules of origin for certain purposes under the Committee's domain, all Members should apply the
HRO for those purposes. Article IV.1 of the Agreement on Government Procurement provided that
"a Party shall not apply rules of origin to products or services imported or supplied for purposes of
government procurement … which are different from the rules of origin applied in the normal course
of trade …" and Article IV.2 of the same Agreement provided that "following the conclusion of the
work programme for the harmonization of rules of origin for goods to be undertaken under the
Agreement on Rules of Origin …, Parties shall take the results of that work programme and those
negotiations into account in amending paragraph 1 as appropriate". Members who were Parties to this
plurilateral Agreement would, therefore, have a certain obligation to follow with regard to the
application of the HRO. The Agreement on Textiles and Clothing seemed to need rules of origin in
its operation. However in many cases, as he pointed out, non-preferential commercial policy
instruments could be implemented without the use of rules of origin. For example, certain Members,
under Articles I and II of the GATT 1994, decided to apply their MFN tariff rates only for Members
and used rules of origin to discriminate against non-Members; while other Members decided to apply
their MFN tariff rates not only to Members but also to non-Members. In this latter case Members did
not need rules of origin. The same was true for origin marking requirements. Under Article IX of the
GATT 1994, each Member was entitled to decide whether or not it would require the importers to
mark origin on the imported goods, and, if so required, on which products the importers should mark
G/RO/M/41
Page 8
origin. If a Member, as its commercial policy, decided not to impose origin marking requirements,
rules of origin would not be used. In summary, the Chairman's proposal suggested that under
Articles 3(a) and 1.2 of the Agreement, the HRO should be applied when a Member used rules of
origin either voluntarily or in accordance with the provisions of WTO Agreements, in order to
implement certain non-preferential commercial policy instruments. In this case Members should
apply the single HRO equally for all non-preferential commercial policy instruments in which its rules
of origin were used. They should not be allowed to apply various rules of origin for different
purposes.
5.6
The representative of the Philippines stated that there might be some margin for a more
careful quotation in paragraph 1 of the Chairman's proposal and expressed concern about the legal
unpredictability and insecurity which could grow under paragraph 2, in which each Member appeared
to have a unilateral right to decide where rules of origin were to be followed.
5.7
The representative of Canada stated that there seemed to be a drafting issue in paragraph 1,
rather than a substantive one. On paragraph 2, the Canadian position was that the application of the
HRO to other policy instruments was dependent upon the other policy instruments. Paragraph 2
seemed to state the same position, the other way around, almost in a negative fashion. Therefore a
positive redrafting of paragraph 2 would be needed.
5.8
The representative of India expressed serious reservations about the Chairman's proposal. He
felt that paragraph 1 sought to restrict the application of the HRO, ignoring the fact that Article 1.2 of
the Agreement provided only a list of commercial policy instruments, whereas the intention and
purpose of the Agreement was that the HRO should be used in all non-preferential commercial policy
instruments. As regards paragraph 2, he pointed out that very often each Member had a different view
on the rights and obligations of Members; therefore if there was a dispute on the rights and
obligations, the same disputes would carry over to the application of the HRO. In other words, the
HRO would virtually be relegated to a secondary position. He further stated that linking the
application of the rules of origin to each Member's rights and obligations under WTO Agreements
other than the Agreement itself would in fact go against the intention of transparency, neutrality and
predictability which were enshrined in the Agreement itself and which were sought to be achieved by
the HWP. Therefore, if paragraph 2 were accepted, it would virtually negate the work that the CRO
had been doing over the last seven years, or at least dilute the application and scope of the HRO. He
also pointed out that the preamble to the Agreement said that it was to remove unnecessary obstacles
to trade, and stated that trade meant all WTO Agreements.
5.9
The representative of Egypt shared the concerns expressed by Brazil and India over the
confusing words "in which rules of origin are used" in paragraph 1, as well as over paragraph 2 which
might indicate that each Member would retain the unilateral right to decide on the application of the
HRO. She emphasized that the CRO was under the obligations of the Agreement itself, not under
WTO Agreements other than that Agreement.
5.10
The representative of Argentina, as a preliminary comment, stated that the Chairman's
proposal seemed to suggest that the provisions of other WTO Agreements had precedence over those
of the Agreement itself. However, since the provisions of the Agreement were more specific than
those of other WTO Agreement, the Agreement had precedence over other WTO Agreements.
5.11
The representative of Colombia stated that in order for Members to continue the HWP, a
common understanding on the implications issue needed to be reached, and shared the concerns
expressed by Brazil, India and other Members over the Chairman's proposal.
G/RO/M/41
Page 9
5.12
The representative of New Zealand had some serious reservations about the Chairman's
proposal. Paragraph 1 seemed to provide more flexibility to the Agreement than what was currently
in the provisions of the Agreement. Paragraph 2 also seemed to give some broad discretion.
5.13
The representative of the United States stated that the reason why the CRO had not been able
to achieve resolution of so many of the crucial product-specific issues was the absence of a common
understanding of the provisions of the Articles of the Agreement under discussion, and that the
Chairman's proposal was very useful. He shared the views expressed by Canada that the application
of the HRO to other policy instruments was dependent on the other Agreements covering those policy
instruments, and expressed difficulty in accepting some delegations' views that, due to the words
"equally apply" in Article 3(a) of the Agreement, there was a prospective obligation to use the HRO
for all commercial policy instruments, which meant the creation of a new obligation for Members. In
this connection he pointed out that some Members had notified that they did not currently have rules
of origin. This fact would, in his view, mean that such Members were currently implementing other
non-preferential commercial policies under other WTO Agreements without using rules of origin,
whether they were the SPS Agreement, the TRIPS Agreement, the TBT Agreement or the
Anti-Dumping Agreement. He then asked where the requirements were that in the future they would
have to use the HRO in order to implement measures covered by other WTO Agreements, if these
Members were not currently obliged to use rules of origin in order to implement te measures covered
by these other WTO Agreements.
5.14
The representatives of Brazil and India stated that the reason why some Members did not
have non-preferential rules of origin was that they believed that the HWP could be concluded within
the specified time.
5.15
The representative of the United States stated that he had not suggested that that Members,
that had notified that they did not at present have non-preferential rules of origin, were not entitled to
use commercial policy instruments. What he had said was that commercial policy instruments could
be implemented without the use of rules of origin. While sharing the views expressed by Brazil that
under certain WTO Agreements there would be an obligation to use rules of origin, he stated that
there was a broad range of Agreements in which non-preferential commercial policy instruments
could be implemented without the use of rules of origin, e.g. the TBT Agreement concerning labelling
of goods, and measures taken for SPS requirements. He also recalled the US submission contained in
document G/RO/W/65, in which several questions were raised as to the applicability of the HRO for
the trademark of "100% Colombian coffee" in terms of the TBT Agreement, the TRIPS Agreement
and Article IX of GATT 1994.
5.16
The representative of Japan stated that Japan had been seeking clarity in the specific area of
the relationship between the HRO and domestic consumer labelling of foods and
sanitary/phytosanitary measures (G/RO/W/74). There had been very fruitful and constructive
discussions on this matter in the CRO, as reflected in document G/RO/M/40, which provided certain
comfort for Japan in continuing the HWP. In this light, he requested that the fact that such
discussions had taken place in the CRO be duly brought to the attention of the General Council in a
fair and objective manner.
5.17
The representative of India stated that when Members agreed to harmonize rules of origin, it
was presupposed that this would cast new obligations. When Members agreed that these new rules of
origin would apply across the board in respect of all non-preferential commercial policy, it was
presupposed that this would also cast new obligations, otherwise there would be no point in having
harmonized rules of origin.
5.18
The representative of Pakistan stated that Pakistan was in the process of looking at these
paragraphs carefully and would like to reserve the right to give its comments at a later time. He
G/RO/M/41
Page 10
recalled that when study to be undertaken on implications of implementation of the HRO was
proposed vis-à-vis the other WTO Agreement, his delegation was looking at how the HRO would
impact trade when Members were making use of trade remedies provided for in other Agreements.
The question was not whether Members could apply the HRO or not as being suggested by
paragraph 2 of the Chairman's proposal, but how the HRO would work in the context of other
Agreements. He also recalled that in one of the presentations made to the General Council the former
Chairman, Mr. Ahn, had cited the example pertaining to anti-dumping actions. He had indicated the
situation where for example fabrics from country "A" were exported to country "B". Country "B"
converted those fabrics into some product, for example bed linen, and dumped it into country "C". In
this situation if the rules were fabric forward, where would the anti-dumping action lie? Would it be
taken against country "B" or in the light of the fabric-forward rule against country "A"? More
importantly the question arose as to which product would be targeted for anti-dumping margins,
would it be fabric originating from country "A", or as the end-product of the bed linen? Would the
margins be established against bed linen or the export of country "A"? When Pakistan had requested
that this study be undertaken some years back, his delegation had been told by certain trading partners
that negotiators should look beyond the ATC period. His delegation had responded that Pakistan's
concerns were mainly regarding trade in the post-ATC period. In the view of his delegation, the issue
should be submitted to the General Council. However, the proposed language did not reflect the
actual intention of the study. He therefore strongly urged that this issue be further examined in the
backdrop of the actual request prompting the study on implications of the HRO on other Agreements
so that the General Council was appropriately briefed and could provide directions or decisions on the
issue in the proper perspective context.
5.19
The representative of New Zealand stated that the work of the CRO was now at a crucial
stage. A deadline had been set by Ministers in Doha to conclude the HWP by the end of this year.
The commendable efforts made by the Chairman and Secretariat to reinvigorate this work might result
in this deadline being met. The flexibility shown by Members in recent meetings would also assist in
meeting the deadline. She recalled that at the meeting in April, New Zealand had tabled a paper with
Australia outlining the importance of negotiating rules of origin consistently with the objectives of the
HWP as set out in the Agreement. The importance of meeting this objective could not be overstated.
Harmonizing rules of origin was only a means to an end – that end being to add certainty to trade and
not create undue restrictions or disruptions on international trade. This echoed much of what New
Zealand had said previously in the CRO and underpinned the paper they had prepared for this meeting
(G/RO/W/88). Essentially the paper attempted to clarify the scope of the HRO and where these could
apply in terms of other WTO Agreements and their provisions. Ultimately it was hoped that
discussions on this issue would advance the work of the CRO and encourage Members to take an
approach to harmonizing rules of origin which took into full account the objectives and principles of
the Agreement. Article 1.2 of the Agreement provided a list, albeit a non-exhaustive one, of where
the HRO would be used in the application of non-preferential commercial policy instruments. Some
Members had already touched on this in previous meetings. Papers submitted by Japan and the US
had also highlighted a clear need for more thinking on this issue. New Zealand's paper looked at the
reference in Article 1.2 of the Agreement to Article IX of the GATT and how this might be
interpreted. This reference indicated that the rules of origin that would emerge from the HWP should
be used as the criteria to determine origin for any mandatory regulations where origin was required to
be marked on goods. Whether this would actually be the case remained to be seen. Discussion by the
CRO would help in understanding this issue and potentially provide clarity on the issue. The paper
also considered the TBT Agreement and how application of the HRO might not necessarily sit
comfortably with the provisions of the Agreement. In the past this issue had only been glanced at,
because of concerns about cutting across the jurisdiction of the TBT Committee. Nevertheless, the
time was ripe for discussion of this issue, given that one of the agenda items for this meeting of the
CRO was "Implications of harmonized rules of origin on other WTO Agreements". While Members
should not feel compelled to give firm views on this, she encouraged Members to consider the issues
raised in New Zealand's paper and to provide their thoughts. The paper also touched on the issue of
G/RO/M/41
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domestic rules of origin (or international rules of origin for domestic labelling purposes) which
countries had in place to define whether or not goods were domestic. The paper's analysis showed
that a stock-take might be required by Members to assess whether their domestic rules of origin were
consistent with the Agreement. Again, she welcomed any views on this. In closing, she hoped that
New Zealand's paper would provide a catalyst for Members to advance the HWP. She did not,
however, wish to adopt a "finish at all cost" approach, if this would mean losing sight of the original
objectives and principles of the Agreement. Addressing these issues now rather than later would
facilitate the CRO in its work and go some way to ensuring that the implications issue did not come
back to haunt Members after the HWP was completed. She hoped that when the matter was placed
before the General Council later in the year, they would be made well aware of the issues raised in the
New Zealand paper and the other papers tabled during this meeting.
5.20
The representative of Australia stated that the views expressed in the joint submission by
Australia and New Zealand (G/RO/W/83) should be reflected in the Chairman's report to the General
Council. He recalled that a number of issues had been raised in this paper, which went well beyond
the narrow implications issue under discussion. The issues included the importance of securing a
trade-facilitating outcome to the negotiations, and ensuring that the HWP would produce rules of
origin that were coherent, which meant that they should be logical and consistent.
5.21
The CRO took note of the statements made and agreed to submit this issue to the General
Council as a core policy issue.
VI.
NOTIFICATIONS UNDER ARTICLE 5 AND PARAGRAPH 4 OF ANNEX II OF THE
AGREEMENT ON RULES OF ORIGIN
6.1
The Chairman recalled that since the last meeting the Secretariat had circulated a document
informing delegations of notifications submitted by China, Chinese Taipei, Georgia and Hong Kong,
China (G/RO/N/37). To date, 83 Members had made notifications of non-preferential rules of origin
and 84 Members had made notifications of preferential rules of origin.
6.2
The Chairman expressed concern that a number of Members had not yet complied with the
notification requirements. He urged Members who had not yet notified to do so as early as possible.
6.3
The CRO took note of the statement.
VII.
OTHER BUSINESS
A.
DATES AND AGENDA FOR THE NEXT MEETING
7.1
The Chairman suggested that the dates and agenda for the next meeting be set in consultation
with delegations and also in light of developments in the General Council.
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