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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 régimes 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.(1)
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;(2)
(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(3) 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(4) and/or manufacturing or processing operations(5), 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.
Rôle 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.(6)
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 régimes 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(7)
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.
1. It is understood that this provision is without prejudice to those determinations made for purposes of defining "domestic industry" or "like products of domestic industry" or similar terms wherever they apply.
2. With respect to rules of origin applied for the purposes of government procurement, this provision shall not create obligations additional to those already assumed by Members under the GATT 1994.
3. In respect of requests made during the first year from entry into force of the Agreement Establishing the MTO, Members shall only be required to issue these assessments as soon as possible.
4. If the ad valorem criterion is prescribed, the method for calculating this percentage shall also be indicated in the rules of origin.
5. If the criterion of manufacturing or processing operation is prescribed, the operation that confers origin on the product concerned shall be precisely specified.
6. At the same time, consideration shall be given to arrangements concerning the settlement of disputes relating to customs classification.
7. In respect of requests made during the first year from entry into force of the Agreement Establishing the MTO, Members shall only be required to issue these assessments as soon as possible.
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