Abstract
This article discusses the deadlock in the WTO on multilateral harmonization of non-preferential rules of origin (RoO) and reviews some of the RoO included in recent preferential trade agreements. We argue that there is a trend towards adoption of similar approaches and that this suggests that cooperation to reduce the trade-impeding effects of differences in RoO across jurisdictions is more feasible than often is assumed by observers and policymakers. From a trade facilitation perspective such cooperation could be based on plurilateral initiatives under the umbrella of the WTO. These could include a focus on pursuit of greater convergence between preferential and nonpreferential RoO helping to achieve the long-standing goal of moving towards harmonization of rules of origin.
Highlights
Trade agreements require the parties to agree on the rules that will determine whether a product is eligible to benefit from whatever provisions are** The views expressed are those of the authors and do not necessarily reflect those of the United Nations
In this paper we focus on the ROO included in the original Trans-Pacific Partnership (TPP)
The 1999 draft harmonized rules of origin (HRO) text represents a tangible sign of convergence that, even if not adopted, influenced the way RoO were negotiated in subsequent preferential trade agreements (PTAs)
Summary
Trade agreements require the parties to agree on the rules (regulations) that will determine whether a product is eligible to benefit from whatever provisions are. A recent trend is the adoption of an upper bound on the amount or share of imported (non-originating) physical materials that may be embodied in a product The latter is easier for firms to understand and to comply with than value added based criteria, and has been advocated by low-income countries in the context of non-reciprocal preferential market access programs implemented by OECD nations and emerging economies (Inama, 2011). Differences across RoO regimes maintained by importing countries create costs for firms as they imply that firms seeking to benefit from preferential access regimes must ensure that their production processes are tailored so as to satisfy the RoO regime prevailing in each market they sell to Such additional cost effects arise in the case for non-preferential RoO: differences across countries, both in terms of substantive requirements and in terms of labelling, will imply specific fixed costs of exporting to different markets.
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