WORLD TRADE
ORGANIZATIONG/RO/W/88
9 July 2002
(02-3803)
Committee on Rules of Origin Original:  English
IMPLICATIONS OF THE IMPLEMENTATION OF THE
HARMONIZED RULES OF ORIGIN ON OTHER WTO AGREEMENTS
Submission from New Zealand
The following communication, dated 24 June 2002, has been received from the Permanent
Mission of New Zealand.
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Introduction
This paper contains observations about harmoni sed rules of origin (ROO) and their possible
implications on other WTO agreements. It attempts to clarify the implications of the harmonised ROOon:
(a)  ROO applied by a Member for imports and exports (marks of origin).
(b) The criteria used to determine the origin of goods produced and sold on the domestic market
(domestic labelling requirements).
(c) ROO used for the purposes of the WTO Agreement on Technical Barriers to Trade (TBT
Agreement).
New Zealand hopes discussions on these issues will assist in advancing the work of the
Committee on Rules of Origin (CRO) and hopefully encourage members to take an approach to
harmonising ROO that takes into full account the ob jectives and principles of the Agreement on Rules
of Origin (ARO).
(a) Marks of origin – Article IX of the General Agreement on Tariffs and Trade 1994
Under Article 1.2 of the ARO, the ROO from  the harmonisation work programme (HWP)
include the ROO used in the application of orig in marking requirements under article IX of the
General Agreement on Tariffs and Trade (GATT) 1994. Article IX applies to marks of origin
requirements used in relation to imports and exports. The explicit reference to marks of origin in
Article 1.2 of ARO indicates that the ROO eventuating from the HWP should be used to determine
the country of origin to be marked on goods.  For a particular member, this means that where they are
exporting to a country that has origin marking requirements, they will need to apply the HWP todetermine how they mark such goods. Such export ing members would then have to amend their ROO
(applied to imports and exports)  to establish consistency with the ROO that emerge from the HWP.
Another consideration is that Article IX.2 of the GATT 1994 requires that any difficulties and
inconveniences caused by enforcing marks of origin requirements to be reduced to a minimum, with
due regard being given to the necessity of protecting consumers against fraudulent or misleadingG/RO/W/88
Page 2
indications. (Once the HWP is completed these ROO will form the basis for determining origin under
any origin marking requirements).
Article IX.6 states members should cooperate to ensure trade names are not used in a way that
“misrepresents” the true origin of a product to the detriment of distinctive regional or geographicalnames of the products of a territory of a member. Does Article IX.6 mean that trade names cannot be
used if this misrepresents the origin of a product as defined by the HWP ROO? Will the HWP ROO
facilitate this co-operation or make it more difficult?
(b) Domestic labelling requirements
Article 1.2 of the ARO states that ROO from the HWP will apply for marks of origin applied
pursuant to Article IX of the GATT. These Article IX marks of origin are the marking requirements
that a Member may place on goods from other members. Accordingly, Article IX does not apply to
domestic labelling for goods made and consumed within the territory of a  member, so domestic
labelling is not immediately within the scope of Article 1.2.
However, Article 2(d) of the ARO states that, until the HWP is completed Members shall
ensure that the ROO they apply to imports and e xports are not more stringent than the ROO used to
determine whether or not goods are domestic. This means that the ROO applied to determine whether
or not a product can be considered “domestic”, must be at least as liberal as the ROO being applied to
imports and exports. In order to label a product as domestic, members  will have to apply the HWPROO or at least apply ROO that are no more st ringent than the HWP ROO. This discipline on
determining whether goods are domestic and can be labelled as such will also be in place after the
HWP is completed
1.
All this suggests that the ROO currently used by  members to determine origin for imports and
exports cannot be more stringent than those used to determine whether or not goods are ‘domestic’.
Conversely, it could also be argued that the ROO used by members for domestic labelling purposes
cannot be any less stringent (or more favourable) than the ROO used for determining the origin of
export and imports.
This indicates that, before and after the HWP is completed, if members apply ROO to imports
and exports that are more stringent than the ROO they use to determine whether or not goods aredomestic, they will need to either:
• change their ROO for exports and imports so they are not more stringent;  or
• change the ROO they use to determine whether or not goods are domestic so they are not less
stringent;  or
• decline to enforce the ROO that result from the HWP, if these are more stringent than the ROO
used to determine whether goods are domestic or not.
The provisions of GATT Article III also warrant consideration in this regard, since they
further underline the need to avoid any discrimination between regulations applicable to domestic and
imported products.
                                                     
1 Article 3(c) ARO.G/RO/W/88
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(c) WTO Agreement on Technical Barriers to Trade
The definition of technical regulation in Annex 1 of the TBT Agreement expressly includes
any ‘marking or labelling requirements’2. Accordingly, any technical regulations relating to labelling
must be developed and applied consistently with  the provisions of the TBT Agreement. The TBT
Agreement is not expressly listed in Article 1.2 of the ARO, but we have already established that
Article IX ‘marks of origin’ do fall within the ambit of the ARO. This seems to create potential
difficulties in determining which disciplines to apply when developing mandatory country of origin
labelling, and whether or not when developing such  requirements to ensure consistency with the TBT
Agreement or the ARO or both.
For example, under Article 2.4 of the WTO TBT Agreement, if a member applies a technical
regulation requiring the country of origin to be labelled on goods, they should use existing relevant
international standards as the basis for their technical regulation. In the case of prepackaged food, an
international standard exists in the form of the Co dex Alimentarius General Standard for the Labelling
of Prepackaged Foods3. Under section 4.5 of the general standard, country of origin is required to be
labelled on prepackaged food if its omission would mislead or deceive the consumer. This generalstandard further provides that where production of goods involves two or more countries, the country
of origin is where the “nature of the product is changed”.
The HWP on the other hand provides the ROO to be used in the determining of origin for
origin marking requirements applied by members to imported goods. The criterion in ARO providesthat where production of goods involves two or more  countries, origin is determined by where the
“last substantial transformation” takes place. If a Member requires the country of origin to be labelled
on prepackaged food, this requirement could fall under Article IX of the GATT 1994 as a mark of
origin and therefore be subject to the ROO referred to in the ARO.  However under the TBT
Agreement, the relevant international standard must be applied. Would the ARO ROO override the
directive in section 4.5 of the General Standard? Could they be read consistently or is it fair to say that
the provisions in the TBT agreement and the ARO appear to be at odds with each other?
Conclusion
The purpose of this paper has been to encourage a greater assessment of the potential
implications of harmonised ROO on other WTO agreements.  There is need for the coherenceexercise mandated in the ARO to include further discussion of this issue. As mentioned in a previous
paper
4,  tabled jointly by New Zealand and Australia, we believe that the work of the CRO would be
facilitated considerably by closer reference to the objectives and principles in the ARO.
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2 Annex I of the TBT Agreement: - technical regulations include labelling requirements as they apply
to products
3 CODEX STAN 1-1985 (Rev. 1-1991), Codex Alimentarius
4 G/RO/W/83.