WORLD TRADE
ORGANIZATIONG/RO/49
17 December 2001
(01-6355)
Committee on Rules of Origin
REPORT BY THE CHAIRMAN OF THE COMMITTEE ON RULES OF ORIGIN
TO THE GENERAL COUNCIL
1. Background
1.1 Pursuant to Article 9.2(a) of the Agreem ent on Rules of Origin, the harmonization work
programme for non-preferential rules of origin (HWP) was launched in July 1995 and scheduled to becompleted within three years of its initiation, i.e. by July 1998.   The deadline was extended until the
end of 1999, but even the extended deadline was passed without the  completion of the HWP.
1.2 On 15 December 2000, the General Council adopted the following decision  to expedite the
completion of the HWP:
"Members undertake to expedite the remaining work on the harmonization of non-preferential
rules of origin, so as to complete it by the time of the Fourth Ministerial Conference, or by the
end of 2001 at the latest. The Chairman of the Committee on Rules of Origin (CRO) shall
report regularly, on his own responsibility, to the General Council on the progress being
made. The first such report would be submitted to the Council at its first regular meeting in
2001, and subsequently at each regular meeting until the completion of the work programme."
(WT/L/384)
1.3 The mandate of the General Council was confirmed by the Doha Ministerial Conference as
follows:
"Takes note of the report of the Committee on Rules of Origin (G/RO/48) regarding progress
on the harmonization work programme, and urges the Committee to complete its work by the end of
2001 (WT/MIN(01)/17)."
1.4 In accordance with the decision of the General Council on 15 December 2000, the report by
the Chairman of the CRO was made to the General Council meeting on 9 February, 9 May and
18-19July 2001 respectively (WT/CG/M/63, 65 and 66).   In addition, a comprehensive report was
made to the General Council Special Sessi on on Implementation (G/R O/48 and G/RO/48/Add.1).
This is the final report on the outcome of the work carried out by the CRO in fulfilment of the
mandate from the General Council.
2. Assessment of  the progress of the HWP
2.1 In June 1999,  when the WCO Technical Committee on Rules of Origin submitted the final
results of its technical work on the Harmonization Work Programme, 486 outstanding
product-specific issues were before the Committee (G/RO/41).  Despite its best efforts, the Committeecould resolve only 22 issues by September 2000, averaging less than one issue per each of its
23 meetings over the three-year period (G/RO/M/11-33).G/RO/49
Page 2
2.2 The pace of the HWP began to accelerate in  October 2000, when the Chairman of the General
Council sent a letter to the Chairman of the Committee, indicating the General Council's
determination to complete the harmonization  work programme before the Doha Ministerial
Conference.  An awareness of the need to expedite the work was reflected in the flexibility shown by
many Members during the Committee meeting in November 2000, in which consensus was reachedon eight issues (G/RO/M/34).
2.3 Since then,  as summed up in the following table, the number of resolved issues increased
significantly:  24 issues in March; 42 issues in May;  67 issues in July; 115 in October, and 53 in
November – December 2001.
Number of  issues referred to the CRO Number of resolved issues
486 September 1997-September 2000:  22 (less than 1
per session)
November 2000:  8
March 2001:  24
May 2001:  42
July: 2001: 67October 2001: 115
November/December 2001: 53
Total:  331 ( with 155 outstanding issues)
2.4 In making such an encouraging progress, introduction of two methodological changes wasparticularly useful.  First, in April 2001 a new working methodology was adopted by the CRO
(G/RO/M/35, paragraph 8.3).  According to the new methodology, the options  recommended by the
Chairman served as a neutral basis for negotiations and many Members showed welcome flexibility to
support the Chairman's recommendations.
2.5 Second, in the discussion on machinery chapters (Chapters 84, 85 and 90), Members
advocating the value-added rule agreed to delete a large number of issues that, after the resolution of
differences specific to those issues, could be dealt with under the generic assembly issue or the blanks
issue, under the following conditions:
(1)  In the non-paper (JOB(01)/52), a registry would be provided to list all the issues deleted under
such conditions.  This registry would list generic issues, the resolution of which is still
pending.
(e.g. under Issue No. 1, if the generic rule involved is the assembly rule.)
(2)  Two remaining options (one favoured by Members supporting the value-added rule and the
other favoured by other Members) shall be kept  in the matrix (G/RO/45) as well as in the
registry cited in the above subparagraph (1).
3. The remaining work
A. Product-specific issues
3.1 The following table is the sectoral and statistica l analysis of the issues resolved and those still
to be resolved.  As the table shows,  significant progress was made in all sectors, but a
significant number of issues remain unresolved in the agricultural and the textile chapters.G/RO/49
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3.2 The relative lack of progress in the agricultura l and the textile chapters seem to be due to
several factors:  (1) those sectors were traditionally considered as ‘sensitive’ sectors;  (2) the issues in
those chapters should be addressed one by one on their own merit, and a global solution is more
difficult to be applied to the issues in those chapters;  and (3) the CRO’s work on those chapters was
started later than for other chapters.
Product groups Number of issues
referred to the CRONumber of
resolved
issuesNumber of
outstanding
issues% of
resolved
issues
1-24 (Agricultural products) 125 63 62 50
25-27 (Mineral products) 10 8 2 80
28-40 (Chemicals) 38 27 9 71
41-43 (Leather 8 6 2 75
44-49 (Wood and paper) 11 11 0 100
50-63 (Textiles) 83 50 33 60
64-67 (Footwear) 14 9 5 64
68-70 (Ceramics) 12 9 3 75
71 (Precious stones and metals) 5 5 0 100
72-73 (Steel) 12 9 3 75
74-81 (Non-ferrous) 24 19 5 79
82-83 (Articles of metal) 17 17 0 100
84-90 (Machinery) 86 69 17 80
91 (Clocks and watches) 6 5 1 83
92-97 (Miscellaneous articles) 35 31 4 89
TOTAL 486 331 155 68
B. Horizontal issues
3.2 The  discussion on the overall architecture is well advanced (G/RO/45/Rev.1).  Many
Members are of the view that further progress can be made on the overall architecture on the basis of
the progress  on product specific issues made since May 2001, when discussion on overall
architecture was  suspended, pending further progress on product-specific issues.
3.3 After the discussion on the implications  of the HWP for other WTO Agreements, held on
23 July, the Committee agreed that “any discussion on the implications of the HWP should be
conducted in such a manner as to facilitate the HWP and would not hinder its progress.”  The
discussion, however, could not lead to any ag reement on concrete actions(G/RO/M/37).  Some
Members are of the view that further progress can be made on the implications on the basis of theprogress made on product specific issues.
4. A suggested course of work to complete the HWP
4.1 On 10 December 2001, on the last day of its last session before the expiry of the mandate of
the General Council, the CRO discussed on the future course of work to complete the HWP.
4.2 As a background, the Chair took note of the following:
- that a good momentum has been created to advance the HWP and the momentum should not
be lost;
- that a relatively slower progress in the agricultural and the textile chapters was due, among
others, to the fact that discussions on those chapters started later, and there had not beenG/RO/49
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sufficient opportunity to discuss all the related factors to resolve the issues found in those
chapters;  and
- that an extension of the mandate from the General Council would be helpful to maintain  the
momentum for the completion of the HWP.
4.3 Based on the above assessment, the Chair made the following proposal on his own
responsibility:
- To  request the General Council for the extens ion of the mandate in order to have two more
sessions of the CRO devoted to the HWP in the first half of year  2002;
- To utilise those two sessions to further advance the HWP, focusing in particular upon the
agricultural and the textile chapters.  In the process, modification of methodologies could be
helpful to make further progress in those chapters;
- To have further discussion on the overall architecture and the implication of the HWP for
other WTO Agreements on the basis of the progress made on product-specific issues;  and
- To aim to streamline the remaining issues to a limited number of core policy-level issues,
which would be reported to the General Council for discussion and resolution at that level.
4.4       Some Members were of the view that all the progress possible at the level of the Committee
had already been made, and the remaining work was of such a nature as to be addressed directly at the
General Council, which is a higher, policy level organization.
4.5 Other Members agreed with the Chair on the good momentum which had been created in the
past one year, and were of the view that the momentum should be utilised as much as possible in the
resolution of more issues at the level of the Committee.  Logically, these Members wished to have the
mandate of the General Council extended beyond the end of 2001.
5. Conclusion
5.1 Conclusively, a good momentum has been created and a large number of issues could be
resolved.  However, there still remain an important number of issues which could not be resolved by
the deadline mandated by the General Council and the Ministerial Conference.  Therefore, the
Committee on the Rules of Origin wishes to benefit from further guidance of the General Council.
5.2 The General Council, in its deliberation on the issu e, may wish to refer to the latest version of
the collection of Chair’s recommendations for product-specific issues, which is contained in
document JOB(01)/52/Rev.4 (to be issued).
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