Rules of Origin and Rules of Preference and the World Trade Organization: the Challenge to Global Trade Liberalization

Abstract

Rules of origin are the criteria used to determine the source country or territory of an imported product. The determination of origin is important where tariffs or other trade barriers differ depending on the source of imports. This is the case in the implementation of various trade restrictions and preferences. Rules of origin, for example, are a necessary accompaniment of commercial policy instruments such as country-specific import quotas as under the Multi-Fibre Arrangement, anti-dumping measures, safeguards, government procurement and quarantine restrictions implemented for reasons of health, safety or environmental protection. Rules of origin are also used in compilation of trade statistics and in the application of labeling and marking requirements. Rules of origin are used in determining whether or not a good is eligible for preferential treatment under the generalized system of preferences and other preferential trade arrangements. In particular, rules of origin have become critically important in the implementation of discriminatory regional and cross-regional trading arrangements such as free trade agreements, customs unions and common markets.1