Merits and Demerits of Rules of Origin

Abstract

ROO are used to determine the origin of goods that may enter a country under preferential treatment, i.e. they are used to establish whether the goods are eligible for special treatment under a regional trading arrangement between two or more participants. The main purpose is to ensure that the benefits of preferential tariff treatment are confined to only those products which have been harvested, grown, produced or manufactured in the exporting RTA member. Products that originate in third countries, i.e. the non-RTA members, and merely passing through, or undergo only a minor or superficial process in the signatory exporting country, are not entitled to any preferential benefit. Evolving an appropriate system of ROO is necessary in regional trading arrangements to fulfil various objectives. Unfortunately, there has not been any standard framework that could be used as a reference-point by the policy-makers in devising origin criteria in a regional grouping (Ratna & Ramanan 2005).