WORLD TRADE
ORGANIZATIONG/RO/51
8 April 2002
(02-1834)
Committee on Rules of Origin
PROPOSED MECHANISM FOR THE SUBMISSION OF
THE VIEWS OF THE TECHNICAL COMMITTEE ON RULES OF ORIGIN
TO THE COMMITTEE ON RULES OF ORIGIN FOR AMENDMENTS
TO THE HARMONIZED NON-PREFERENTIAL RULES OF ORIGIN
Note by the Secretariat
The following communication, dated 3 April 2002, from the Technical Committee on Rules of
Origin (TCRO), has been forwarded by its Chairm an to the Chairman of the Committee on Rules of
Origin (CRO).
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Brussels, 3 April 2002
The TCRO held its 20th Session from 18 to 20 February 2002 and discussed the issue of the
mechanism for the submission of the views of th e Technical Committee to the CRO with respect to
amendments pursuant to Article 6, paragraph 3 of the Agreement on Rules of Origin.  At the request
of the Technical Committee, made at the last session, this issue was carefully studied by the
Secretariat and its suggestions were provided in Doc. OC0068E1.  The Secretariat's proposals were
generally accepted by the Technical Committee.  The Technical Committee has requested me to
submit the TCRO's proposal in this connection as reproduced in Annex E/2 to Doc. OC0071E2
(Report of the 20th Session), attached to this letter, for the consideration of the CRO.
I would like to briefly mention certain points of discussion with regard to this question during
the 20th Session of the Technical Committee.
(1) The Technical Committee felt that it was competent to carry out the technical tasks required
by Article 6.3 of the Agreement, in particular, technical rectifications to the harmonized
non-preferential rules of origin, which would require (i) labour-intensive work by the Secretariat and
(ii) extensive knowledge of both origin and the Harmonized System.
(2) The five-year review cycle adopted by the HS Committee should also be used for reviewing
the harmonized non-preferential rules of origin in order to make the rules more operational or to
reflect technological changes.  As described in the revised document, since product cycles are
becoming shorter, the pressure to keep the rules up to date will be great;  on the other hand, more rapid
amendment of the harmonized rules would appear problematic in view of the identified needs for
stability and the inevitable legislative process to adopt these amendments.  Therefore, a five-yearreview cycle would be most suitable in this respect.G/RO/51
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I would appreciate receiving the views of the Committee on Rules of Origin at its earliest
convenience.G/RO/51
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ATTACHMENT
Proposed mechanism for the submission of the views of the TCRO to the CRO
for amendments to the harmonized non-preferential rules of origin
Annex E/2 to Doc. OC0071E2
Background documents:
WTO Doc. G/RO/45/Revision OC0046E1
OC0021E1 OC0052E1
OC0040E1 OC0055E1OC0043E1 OC0066E1
OC0044E1
I. BACKGROUND
1. At the 19th Session of the Technical Committee on Rules of Origin (Technical Committee or
TCRO) the Secretariat was asked “to propose a mechanism to the Technical Committee [which would
make] it possible to systematically consider necessary amendments to the Harmonized Rules of
Origin, including amendments resulting from the periodic amendments to the Harmonized System,
and to submit them to the Committee [on Rules of Origin]”.
II. SECRETARIAT COMMENTS
2. While, at this point in time, the Harmonized Rule s of Origin are still being drafted in Geneva,
it is clear that the Rules are not intended to be set in stone once they have been completed andimplemented internationally.  Article 6, paragraph 3, of the Agreement on Rules of Origin (the
Agreement), in fact, provides that :
“The Committee, in co-operation with the Technical Committee, shall set up a mechanism to
consider and propose amendments to the results of the harmonization work programme, takinginto 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.”
In addition, General Rule 2, of the draft Rules (WTO G/RO/45/Rev.1 (Facilitator’s text))
states that :
“Amendments to the Harmonized System shall be examined according to the review
mechanism referred to in Article 6 (3) of the Agreement on Rules of Origin.”
3. From the above, it is clear that three possible reasons have been foreseen for the
amendment of the Harmonized Rules of Origin, namely :
• Amendments to the Harmonized System;
• The need for the Rules to be made “more operational”; and
• The need for the Rules to be updated to take account of technological change.G/RO/51
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HS-related amendments
4. The greatest impetus for amendments to the Harm onized Rules of Origin are likely to be the
amendments that are periodically made to th e Harmonized System.  The Harmonized System, of
course, provides the basis for the Harmonized Rules of Origin and it has been understood all along by
the drafters of the Rules that they will need to be maintained in parallel with the Harmonized System.
5. It is elementary that Customs and the trade cannot be expected to apply two similar, but
different nomenclatures, i.e., one for tariffs and another for origin determination purposes.  The base
nomenclature must, in fact, be the same.  Otherwise the situation becomes hopelessly complex.  The
Secretariat would, in fact, argue that the use of one base nomenclature for both tariff and origin
purposes is one of the bases underlying the development of the Harmonized Rules of Origin, which
are, after all, intended in part to simplify the determination of origin.
6. Given this premise, the Technical Committee needs to take account of the fact that the
Harmonized System is being amended periodically (approximately every five years) to keep it abreast
of changes in trading patterns and technology.  The latest set of amendments to the Harmonized
System went into effect on 1 January 2002.  The next  update of the Harmonized System is scheduled
for implementation in 2007.
7. The HS Convention provides for a two and one-ha lf year implementation period.  Thus, once a
set of amendments to the Harmonized System has been formally approved by the WCO Council (by
Article 16 Recommendation), HS Contracting Parties have two and one-half years to implement thoseamendments in their tariff and statistical nomenclatures.  In effect then, the same implementation
period should apply to make the necessary conforming changes to the Harmonized Rules of Origin.
8. While two and one-half years seems like a lot of time, in the Secretariat’s view, it is barely
enough time for the tasks at hand.  As we have already seen at the last two Technical Committeesessions, technical rectifications to the Harmonized Rules are not an easy undertaking.  The task
involves much more than a mechanical transpositi on of the HS amendments into the structure of the
Harmonized Rules (see also Doc. OC0052E1  under Agenda Item III (a)).
9. The technical rectification process will clearly take some time, involving both the TCRO and
the CRO, as well as national industry consultations.  In addition, once the TCRO and CRO have
agreed on the amendments to the Rules a great deal of work will need to take place internationally and
nationally to implement the changes.
10. Internationally, the amended Rules will need to be published in the three official languages
and widely disseminated.  Explanatory materi als will need to be developed and published.
Educational and technical assistance programmes will need to be set up by the WTO and WCO toensure the smooth implementation of the amendments.
11. Nationally, the amended Rules will need to be translated (in the case of fourth language
Members).  The amended Rules will need to be incorporated in national legislation and/or regulations.
National educational and training programmes will need to be developed for the various governmentagencies involved in the administration of the rules of origin, as well as for the trade.  Computer
programmes and databases will need to be modified to take account of the amendments to the rules of
origin.G/RO/51
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12. Based on the foregoing, and particularly the need in some administrations for parliaments to
conform national origin legislation to the amendments to the Harmonized Rules of Origin, the two and
one-half period foreseen by the HS implementation process may only barely be enough time to make
the changes necessary for origin purposes.
13. Based on the concerns and needs raised above and on our experience with technical
rectifications to date, the Secretariat would make the following suggestions for dealing with
amendments to the Harmonized Rules of Origin necessitated by the periodic amendments to the
Harmonized System:
(1) The procedures for the technical rectification exercise should be agreed by the TCRO and
CRO as soon as possible (see also Doc. OC0052E1 under Agenda
Item III (a) for the 19th Session).
(2) The TCRO should be delegated the responsibility to examine technical rectifications arising
out of the periodic amendments to the Harmonized System and to make recommendations for
the approval of the CRO.
(3) The TCRO should not wait for formal approval of an Article 16 Recommendation (see
Appendix attached) by the WCO Council to init iate its work, but should rather examine
technical rectifications on the basis of the HS amendments that have been provisionally
approved by the HS Committee.  This will allow the bulk of the two and one-half year
implementation period to be used for international and national implementation work.
(4) The number and length of TCRO meetings necessary for this work would have to be
determined at the beginning of each HS Review Cycle when the scope of the review isdecided upon.
(5) The TCRO should propose technical rectifications (on the basis of working documents to be
prepared by the Secretariat (see Doc. OC0052E1 under Agenda Item III (a), for example))
which will result in an accurate transposition of the amendments to the Harmonized System
without substantively changing the origin results of the existing rules.
(6) These consensus proposals of the TCRO should be transmitted to the CRO for provisional
adoption on a flow basis in groupings determined to be appropriate by the Technical
Committee.
(7) Once the WCO Council has formally approved the final Article 16 Recommendation to amend
the Harmonized System, the TCRO should finally consider the entire package of amendmentsand make a final comprehensive proposal for the amendment of the Harmonized Rules of
Origin to the CRO.
(8) The CRO should then consider and adopt the complete set of amendments in accordance with
the procedures for the amendment of the Agreement on Rules of Origin.  (Article 6, paragraph
3).  At the moment the Facilitator's remarks on the draft Harmonized Rules of Origin provide
in pertinent part (General Rule 2) that:
“Any amendments of the rules of origin result ing from such an examination shall take effect
on the date approved by the Ministerial Conference [General Council].”G/RO/51
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(9) The international and national implementatio n work will then be able to commence.
14. The Secretariat is aware that it has proposed much of the technical rectification work to be
undertaken by the TCRO rather than the CRO itself.  There are several reasons for this.  The most
important is that the work is extremely technical, detailed and labour intensive.  We believe that this
was the kind of work that was envisioned for the TC RO by the drafters of the Origin Agreement.  We
further believe that since these amendments are driven by the amendments to the Harmonized Systemit makes sense to have this work done by the organization that was responsible for and is most familiar
with the HS amendments.  Finally, the proposal l eaves the final decisions with the CRO in Geneva.
Amendments to make the Rules “more operational” or to reflect technological change
15. The Harmonized Rules of Origin will need to be kept up to date in terms of the needs of its
users and changes in technology.  As the need arises, the TCRO should also be able to suggestnecessary changes to the Rules in order to keep the amended Rules as simple and administrable as
possible.  These necessary changes should be reported separately to the CRO for its consideration.
16. At a time when industry looks at product cycles  in terms of months and no longer years the
pressure to keep the Rules up to date will be grea t.  At the same time, since the Rules will provide a
world-wide discipline for non-preferential trade policy instruments and will be entrenched in
national legislation in most Member administrations there will be a need for a degree of long term
stability.  The TCRO and the CRO will need to balance these conflicting demands in seeking to keep
the Harmonized Rules of Origin relevant.
17. Many of the technological changes will, of course, already have been addressed by the
proposals to amend the Harmonized System.  Neverthe less, some technological issues may be raised
in the context of the split headings and subheadings created for purposes of the Rules.
18. The Secretariat also believes that it is extremely important to keep the Rules operationally
sound; that is as “user-friendly” as possible.  We would expect that as the Rules are implemented
internationally a number of proposals to streamline and simplify the Rules will come forward.  In this
connection, the Secretariat believes that a reduction in the number of split headings and subheadings
to the bare minimum would be desirable in the inte rest of simplification and administerability of the
Rules.
19. We expect that proposals to amend the Rules from an operational or technological standpoint
will be generated from a number of sources – the private sector, governmental and intergovernmental
agencies and the Secretariat.  Private sector proposals will, of course, need to be presented through the
appropriate governmental or intergovernmental agency.  The WCO Secretariat has had a long tradition
as an active Secretariat and would expect to continue that tradition in seeking to maintain and improve
the Harmonized Rules of Origin.
20. In view of the anticipated technical nature of the expected proposed amendments we would
again recommend that the initial submissions for these amendments be made to the Technical
Committee, which would examine them on the basis of a working document to be prepared by the
Secretariat.  The proposals would be examined from the administrative, technological and economicstandpoint.
21. Once approved the TCRO would send the propo sed consensus amendments to the CRO on a
flow basis for provisional adoption.G/RO/51
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22. The Secretariat would recommend that these amendments be bundled with the amendments
resulting from the HS review process (e.g., every five years).  More rapid amendment of the
Harmonized Rules would appear problematic to the Secretariat in view of the identified needs for
stability and the inevitable legislative process to adopt these amendments nationally in individual
administrations.
III. CONCLUSION
23. As requested by the Technical Committee, the Secretariat has attempted to outline a
mechanism for the systematic consideration of amendments to the Harmonized Rules of Origin.  The
Secretariat has identified two major areas of amendments – those stemming from the periodic
amendment of the Harmonized System and those initiated in response to operational needs ortechnological changes.  We have suggested a major role for the Technical Committee in the
consideration of these amendments and have proposed that amendments be bundled for adoption by
the CRO in alignment with the HS amendment schedule.
24. The Technical Committee is asked to express its views as to whether it can :
(1) agree with the Secretariat’s proposed mechanisms for the systematic consideration of
amendments to the Harmonized Rules of Origin;
(2) agree with the suggested role for the Techni cal Committee in the consideration of these
amendments; and
(3) agree with the proposal to bundle amendments to the Harmonized Rules of Origin in
alignment with the HS amendment schedule.
25. If the Technical Committee can agree with the proposals made above, the Secretariat would
suggest that these proposals be submitted to the CRO for consideration.G/RO/51
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INTERNATIONAL CONVENTION ON
THE HARMONIZED COMMODITY DESCRIPTION
AND CODING SYSTEM
(done at Brussels on 14 June 1983)
(As amended by the Protocol of Amendment
to the International Convention on the Harmonized Commodity
Description and Coding System of 24 June 1986)
ARTICLE 16
Amendment procedure
1. The Council may recommend amendments to th is Convention to the Contracting Parties.
2. Any Contracting Party may notify the Secretary General of an objection to a recommended
amendment and may subsequently withdraw su ch objection within the period specified in
paragraph 3 of this Article.
3. Any recommended amendment shall be deemed to be accepted six months after the date of its
notification by the Secretary General provided that there is no objection outstanding at the endof this period.
4. Accepted amendments shall enter into force for all Contracting Parties on one of the following
dates :
(a) where the recommended amendment is notified before 1 April, the date shall be the first
of January of the second year following the date of such notification,
or
(b) where the recommended amendment is notified on or after 1 April, the date shall be the
first of January of the third year following the date of such notification.
5. The statistical nomenclatures of each Contracting Party and its Customs tariff nomenclature or,
in the case provided for under paragraph 1 (c) of Article 3, its combined tariff/statistical
nomenclature, shall be brought into conformity with the amended Harmonized System on the
date specified in paragraph 4 of this Article.
Any State or Customs or Economic Union signing without reservation of ratification, ratifying or
acceding to this Convention shall be deemed to have accepted any amendments thereto which, at the
date when it becomes a Contracting Party, have entered into force or have been accepted under the
provisions of paragraph 3 of this Article.
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