New Rules of Origin Initiative to Help Firms Better Utilize Trade Preferences

· Rules of Origin Facilitator provides firms with free access to a unique searchable database on duty savings in trade agreements

The World Trade Organization is partnering with the International Trade Centre (ITC) and World Customs Organization (WCO) in an initiative which will enable firms to take fuller advantages of benefits under free trade agreements and preferential trade arrangements by helping them comply with product rules of origin requirements.

Presented to WTO members at a 17 October meeting of the Committee on Rules of Origin, the Rules of Origin Facilitator provides firms with free access to a unique searchable database on duty savings in trade agreements, and the corresponding rules of origin. Users can search the tool by product name or product code, and access original documentation, including certificates of origin.

Availability of this information will help reduce transaction costs and make it easier for firms to claim reduced or zero duty rates under free trade agreements and preferential trade arrangements. The information will be of particular benefit to small and medium-size firms by allowing them to access the information through an easy-to-navigate system.

Rules of origin are the criteria used to define where a product was made and are important for implementing other trade policy measures, including preferences in favour of developing countries or least developed countries (LDCs).

In a video message, WTO Director-General Roberto Azevêdo said companies must understand and use dozens of different types of rules of origin to use the tariff preferences now in force in hundreds of bilateral and regional trade agreements. Each preferential agreement has its own specific obligations regarding the certification and transportation of goods.

"Governments and companies need reliable information about rules of origin," DG Azevêdo said. "And this information needs to be accessible for free, in simple, standardized language.

"The Facilitator fills a real gap," he added. "We believe this tool will prove especially useful for smaller companies in developing and least developed countries. These are the companies that have greatest trouble navigating international trade requirements"

WTO Deputy Director-General Yi Xiaozhun told members that the initiative, launched by the ITC and WCO in 2018, "fits perfectly" with the objectives of the committee.

"It offers greater transparency and predictability," DDG Yi noted. "It complements our recent Trade Facilitation Agreement. It supports the integration of least developed countries to the global economy. And it reduces time and costs for small and medium enterprises in all WTO Members."

ITC Deputy Executive Director Dorothy Tembo said: ‘I am very pleased to welcome the WTO to this Rules of Origin partnership. With the WTO on board we will be able to make this invaluable digital tool available to more enterprises in developing countries and ensure greater transparency in trade.’

The Rules of Origin Facilitator is the most comprehensive tool of its kind available, covering product-specific rules of origin as well as provisions on origin certification in more than 300 agreements and applied by more than 190 countries. The goal is to expand coverage to include not only all preferential schemes currently in force worldwide, but also to cover non-preferential rules of origin requirements.

Accessing information on rules of origin in trade agreements has been a struggle for firms, particularly smaller ones. According to an ITC business survey covering 60 countries, rules of origin were identified as the most common source of trade constraints by micro, small and medium-size enterprises (MSMEs).

The Rules of Origin Facilitator has benefitted from WTO notifications regarding preference-granting members. Twenty-two WTO members with tariff preferences for LDCs have notified their programmes to the WTO. The detailed origin requirements and notifications can be found in the WTO's Preferential Trade Arrangements Database.

Better utilization of tariff preferences by LDCs has been a focus of work within the Committee. WTO members continued to review the use and application of preferential rules of origin programmes in line with the Nairobi Decision on Preferential Rules of Origin for LDCs. The Decision calls on developed country members, and developing country members in a position to do so, to ensure that preferential rules of origin applicable to imports from LDCs are transparent and simple, and contribute to facilitating market access.