RESTRICTED
WORLD TRADE G/RO/M/9
24March 1997
ORGANIZATION(97-1220)
Committee onRules ofOrigin
MINUTES OFTHE MEETING OF6FEBRUARY 1997
Chairman: Mr.C.OSAKWE (Nigeria)
Theagenda proposed forthemeeting, circulated inWTO/AIR/481/Rev.3 wasadopted bythe
Committee asfollows:
Page
1. Observer status forinternational intergovernmental organizations inthe
Committee (G/RO/W/19/Rev.1) 2
2. Update oftheIntegrated Negotiating TextfortheHarmonization Work
Programme (G/RO/W/13/Rev.2) 2
3. Origin ofgoods obtained orproduced onvessels, factory ships, structures
andinstallations outside acountry (G/RO/M/8, G/RO/10) 3
4. Fifth Report bytheTechnical Committee onRules ofOrigin totheCommittee
onRules ofOrigin (G/RO/9) 4
5. Sixth Report bytheTechnical Committee onRules ofOrigin totheCommittee
onRules ofOrigin (G/RO/11) 4
6. Meaning oftheword "obtained" indefinition 1(i)ofappendix 1totheharmonized
rules oforigin (G/RO/M/8, Paragraphs 6.1and6.2) 6
7. Proposal bytheUnited States pursuant toArticle 9.3(a) oftheAgreement
onRules ofOrigin (G/RO/W/15) 6
8. Notifications under Article 5andparagraph 4ofAnnex IIoftheAgreement
onRules ofOrigin (G/RO/N/12-15) 8
9. Second annual review oftheimplementation andoperation ofthe
Agreement onRules ofOrigin (G/RO/W/18) 8
10. Election ofOfficers 8
11. Other Business 8
- DateofthenextmeetingG/RO/M/9
Page2
1. Observer status forinternational intergovernmental organizations intheCommittee
(G/RO/W/19/Rev.1)
1.1 TheChairman recalled thatatitsmeeting of18July1996, theGeneral Council hadapproved
the"Guidelines onObserver Status forInternational Intergovernmental Organisations" (Annex 3of
document WT/L/161). However, there hadbeenoneissuepending concerning thefinalization ofthe
Agreements with theWorld Bank andtheIMF which wasfinally resolved inDecember 1996.
DocumentG/RO/W/19/Rev.1containedalistoftheinternationalintergovernmentalorganizationshaving
observer status onanadhocbasis intheCommittee onRules ofOrigin andothers whose requests
forobserver status were pending.
1.2 Based onconsultations theChairman hadheldwithMembers onthisissue, theCommittee
agreed asfollows:
"The Committee reviewed applications bytheinternational intergovernmental
organizations withadhocobserver status intheCommittee, namely theIMF, ITCB, OECD,
UNCTAD, World Bank andtheWCO, aswellastheAfrican Caribbean andPacific (ACP)
Group, theEuropean FreeTrade Association (EFTA) andtheInter-American Development
Bank.
Itnoted thatinthecaseoftheIMFandWorld Bank, theirobserver status intheWTO
anditsvarious bodies wasalready covered bytheAgreements concluded between theWTO,
andtheIMFandtheWorld Bank.
Itdecided toaccord observer status totheITCB, OECD, UNCTAD, andtheWCO
onthebasis thattheyalready hadadhocobserver status withtheCommittee.
Following consultations andrecommendations bytheChairman, itwasagreed that
theCommittee would alsoaccord observer status totheACP, EFTA andtheInter-American
Development Bank onthebasis ofthecontent oftheirapplications.
Itwasagreed thatallobserver status would begranted onthebasisoffullreciprocity."
2. Update oftheIntegrated Negotiating Text fortheHarmonization Work Programme
(G/RO/W/13/Rev.2)
2.1 TheChairman recalled thatatitsmeeting on10May1996, theCommittee onRules ofOrigin
haddecided toestablish anIntegrated Negotiating TextfortheHarmonization Work Programme that
isthecommon working document andreference point fortheCommittee onRules ofOrigin andthe
Technical Committee onRules ofOrigin. ThefirstdraftIntegrated Negotiating Textwascontained
indocument G/RO/W/13. Since thenthedocument hadbeenperiodically updated. Thelatest update
wascirculated indocument G/RO/W/13/Rev.2, reflecting work donebytheCommittee, atitsmeeting
on11October 1996, andtheTechnical Committee during itsFifth Session from 16to
27September 1996 inBrussels. Thetextwould beconveyed totheTechnical Committee andthe
Chairman 'sletter conveying therevised Integrated Negotiating TexttotheTechnical Committee would
becirculated inthenearfuture.
2.2 TheRepresentative ofSwitzerland expressed concern withthevolume ofthenextupdate of
theIntegrated Negotiating Text, which hadalready reached about 500pages atpresent, and,without
taking afinaldecision onthisissue, suggested circulating onlysubsequent additions tothecurrent text,
taking intoconsideration thatnochanges would bemade tothetext,onlyadditions, untiltheBasket 2
discussions intheTechnical Committee arefurther advanced.G/RO/M/9
Page3
2.3 TheCommittee tooknoteofSwitzerland 'ssuggestion asapossible approach inmanaging the
volume oftextandagreed torevert tothisissue atasubsequent meeting.
3. Origin ofgoods obtained orproduced onvessels, factory ships, structures andinstallations
outside acountry (G/RO/M/8, G/RO/10)
3.1 TheChairman noted thatatthelastmeeting, theCommittee hadnarrowed down fourdraft
proposals intoaone-option proposal which wascontained inparagraph 3.3ofdocument G/RO/M/8.
Aninformation paper bythePhilippines concerning theInternational Seabed Authority wascirculated
indocument G/RO/10.
3.2 Based ontheconclusions reached bytheinformal Working Group onthismatter andthe
statements made inthemeeting, theCommittee agreed asfollows:
"The informal Working Group reviewed yetagain theone-option proposal bythe
ChairmanasadoptedbytheCommitteeatitsmeetingon11October,1996.Therewasconsensus
onthemain body ofthetextofdefinitions 2(i),2(ii)and2(iii). There wasalsoagreement
onthetextofthenote. Theconsensus textadopted andrecommended bytheinformal Working
Group isasfollows:
Definition
2(i) Products ofsea-fishing andother products taken from theseaoutside acountry are
considered tobewholly obtained inthecountry ofregistration ofthevessel thatcarries out
those operations.
(ii) Goods obtained orproduced onboard factory shipsareconsidered tobewholly obtained
inthecountry ofregistration ofthefactory ships, provided thatthose goods aremanufactured
from theproducts referred toinsubparagraph (i)originating inthesame country.
(iii) Products taken from theseabed orsubsoil beneath theseabed outside acountry are
considered tobewholly obtained inthecountry thathastherights toexploit thatseabed or
subsoil.
Note
Theterm"registration" indefinitions 2(i)and(ii)includes registration thatacountry
grants tochartered vessels orfactory ships, provided thatthisregistration isinaccordance
withtherequirements ofthatcountry.
_________________
Argentina proposed analternative textonthescope oftheterm"country" asfollows:
Definition 2(i): Products ofsea-fishing andother products taken from theseaoutside the
territorial seaandmaritime zones overwhich thecoastal statehasjurisdiction areconsidered
tobewholly obtained inthestateofregistration ofthevessel thatcarries outthose operations.
Definition (iii):products taken fromtheareaoftheseabed andocean floorandsubsoil thereof
outside national jurisdiction, asdefined inaccordance withtheprovisions oftheUnited Nations
Convention ontheLawoftheSea,areconsidered tobewholly obtained inthestatethathas
theexploitation rights, inconformity withtheprovisions ofthatConvention andtheAgreement
relating totheImplementation ofPartXIofthatConvention of28July1994.G/RO/M/9
Page4
Inresponse totheArgentine proposal, mostdelegations strongly expressed theview
thatthedefinition oftheterm"country" should continue tofocus onpractical issues having
abearing ontheassignment oforigin onproducts produced orobtained either within acountry
oroutside acountry. Inthisregard, itwasagreed thattheArgentine proposal required further
consultations."
3.3 Therepresentative ofNewZealand stated thatNewZealand 'sunderstanding oftheNotewas
thatindefinition 2(i)and(ii)theproducts andgoods inquestion wereconsidered tobewholly obtained
inacountry thatgranted registration tochartered vessels orfactory ships, provided thatthisregistration
wasinaccordance withtherequirements ofthatcountry.
3.4 Therepresentative ofJapan recalled thatJapan hadproposed, during theinformal consultations,
afootnote todefinition 2(i)toAppendix 1asfollows: "further consideration should begiven tothe
scope oftheterm"country" ifnecessary, inthecourse oftheharmonization work programme". The
representative ofVenezuela supported theJapanese position.
3.5 TheCommittee tooknoteofthestatements made.
_________________
Based onconsultations theChairman hadheldwithMembers, theCommittee reviewed the
Fifth andtheSixth Reports oftheTechnical Committee, i.e.agenda items 4and5,together.
4. Fifth Report bytheTechnical Committee onRules ofOrigin totheCommittee onRules of
Origin (G/RO/9)
TheChairman noted thatinconformity withparagraph 2(c)(ii) ofArticle 9oftheAgreement
onRules ofOrigin, theTechnical Committee onRules ofOrigin hadsubmitted totheCommittee on
Rules ofOrigin itsFifthReport. TheReport wascontained indocument G/RO/9. TheReport pertained
to:
(a) theresults ofthecontinuing work under Phase IIoftheHarmonization Work
Programme; and
(b) responses totherequests raised bytheCommittee onRules ofOrigin (G/RO/W/14,
G/RO/7 and8).
5. Sixth Report bytheTechnical Committee onRules ofOrigin totheCommittee onRules of
Origin (G/RO/11)
5.1 TheChairman noted thatinconformity withparagraph 2(c)ofArticle 9oftheAgreement on
Rules ofOrigin, theTechnical Committee onRules ofOrigin hadsubmitted totheCommittee onRules
ofOrigin itsSixth Report contained indocument G/RO/11. TheReport covered theresults ofthe
continuing work under Phase IIoftheHarmonization Work Programme andreflected theprogress
ofwork intheTechnical Committee through theSixth Session held inBrussels from
16to20December 1996.
5.2 Mr.Janeczko, theChairman oftheTechnical Committee, stated thatdetails ofthework
accomplished attheFifth andSixth Sessions werecontained intheTechnical Committee 'sReports.
Heemphasizedthatthisyearwouldbecriticalbecausethedeadlinefortheworkwasapproachingrapidly.
AstheTechnical Committee wasprogressing through itswork onproduct-specific rules, itwasgetting
toastage where issues thatwentbeyond purely technical considerations should betransmitted totheG/RO/M/9
Page5
Committeeforconsiderationatatradepolicylevel,possiblyafterthemeetingoftheTechnicalCommittee
inMay. TheTechnical Committee, atitsforthcoming meeting, would discuss amanagement plan
toensure thatitswork could befinished thisyear. Itwasintended tohavefourformal meetings and
possibly twoinformal meetings. Some ofthework would bedonebytelephone correspondence and
other ways ofcontact. TheTechnical Committee would alsoconsider indicating inthethirdcolumn
oftheProduct Specific Rules thesubstance ofthedebate rather thanjustcodes andterms like"CTSH"
or"basket 2",sothatanybody reading thedocument could understand howdiscussions intheTechnical
Committee onthese items hadprogressed.
5.3 Based onconsultations theChairman hadheldwithMembers onthisissueandstatements made
atthismeeting,theCommitteeagreedtomandatetheChairmantocommunicatethefollowingconclusions
onthismatter totheChairman oftheTechnical Committee onRules ofOrigin:
"The Committee carefully considered theFifth Report oftheTechnical Committee
onRules ofOrigin totheCommittee onRules ofOrigin, contained indocument G/RO/9, and
theprovisional SixthReport, contained indocument G/RO/11. Theconsideration ofthedetailed
reports wereprefaced byanintroductory overarching statement byMr.Janeczko, theChairman
oftheTechnical Committee, inthecourse ofwhich hehighlighted several issues ofkey
importance andoutlined thecontinuing work oftheTechnical Committee inPhase IIofthe
Work Programme. These issues were asfollows:
a) theproposed management plantobeintroduced attheSeventh Session oftheTechnical
Committee forthetreatment oftheoutstanding items under Phase IIoftheWork Programme;
b) alistoftheoutstanding issues tobeconsidered bytheTechnical Committee onRules
ofOrigin asfollows:
- initial discussions oforigin rulesproposed forChapters 34(part) -40,52-63, and82-90;
- completion ofBasket 2discussions ofproduct specific rules forallchapters;
- completion ofPhase IIIdiscussions ofproduct specific rules forallchapters;
- completion ofarchitectural design andgeneral rules ofinterpretation;
- finalelaboration ofthedefinitions ofgoods considered asbeing wholly obtained in
asingle country andminimal operations orprocesses thatdonotbythemselves confer
origin toagood; and
- assembly oftheAnnex;
c) theintention oftheChairman oftheTechnical Committee toraisewiththeTechnical
Committee theissuethatdraftspecific rulesforparticular products andproduct sectors, where
thetechnical possibilities hadbeenexhausted andaresolution needed tobefound atapolicy
level, should betransmitted totheCommittee onRules ofOrigin forconsideration;
d) concern about reservations byMember states onparticular products andproduct sectors
which haveimplications forthecompletion ofPhase IIoftheWork Programme.
Members expressed theirviews ontheissues raised bytheChairman oftheTechnical
Committee.Whilstwelcominghisreportandcommendinghimforthestatementmade,Members
agreed withhimthatmuch needed tobedone inorder toadhere tothetime-frame oftheG/RO/M/9
Page6
Harmonization Work Programme. Several points wereemphasized, including thenecessity
offocusing onthelastsubstantial transformation andtheneedforconsistency ofdraftproduct
specific rules, thesimplicity ofrules, aswellastheneedforthehorizontal consistency of
rules.
Inconsidering thedetails oftheFifth andSixth Reports, under theFifth Report the
Committee noted thecontinuing elaboration ofdraftproduct specific rules under Phase IIof
theWork Programme, thedevelopment oftheoverall architectural design, aswellasthe
continued elaboration ofgeneral rules andcommon terminology. Inthisregard, Members
welcomed andencouraged every effort thatcould bemade toguarantee thetimely completion
oftheHarmonization Work Programme. InbothReports, theelaboration ofdraftproduct
specific rules under Phase IIoftheWork Programme wasnoted, inaddition tothefactthat
supplementary criteria which were supposed tobeexamined under Phase IIIoftheWork
Programme were practically being touched upon.
Finally, following asuggestion bytheChairman oftheTechnical Committee, the
Committee welcomed hisproposal toforward totheCommittee onRules ofOrigin draftspecific
rules forparticular products andproduct sectors where thetechnical possibilities hadbeen
exhausted andaresolution needed tobefound atapolicy level."
5.4 TheRepresentative ofJapan stated thatJapan intended tohostaninformal meeting inTokyo
inthesecond halfofApril thisyearinorder toconsider thespecific rulesrelating toparticular products
andproduct sectors, suchaswatches, where Members hadfound some technical difficulties inreaching
aconsensus.
5.5 TheCommittee tooknoteofthestatements made.
6. Meaning oftheword "obtained" inDefinition 1(i)ofAppendix 1totheHarmonized Rules
ofOrigin (G/RO/M/8, Paragraphs 6.1and6.2)
6.1 TheChairman recalled thattherepresentative ofCanada hadraised thequestion ofthemeaning
oftheword "obtained" inthecontext ofgoods wholly obtained inDefinition 1(i)ofAppendix 1at
itsmeeting on11October 1996.
6.2 Based onconsultations theChairman hadheldwithMembers, theCommittee agreed tomandate
theChairmantocommunicatetheconclusionsonthismattertotheChairmanoftheTechnicalCommittee
onRules ofOrigin asfollows:
"TheCommittee reviewed aproposal made bythedelegation ofCanada regarding the
needfortheclarification ofandprecision intheword "obtained" when usedtogether withthe
word "produced" inthecontext ofdefinition 1(i)ofAppendix 1oftheIntegrated Negotiating
Text, ongoods considered asbeing wholly obtained inonecountry. Several views were
expressed. Theviewwasalsoexpressed thatclarification ofandprecision intheuseofthe
word "obtained" werecontained, toalargeextent, inthenotes tothedefinition inAppendix 1.
Nonetheless, itwasagreed thatinorder toavoid confusion andmisunderstanding, particularly
intheimplementation ofagreed harmonized Rules ofOrigin inthefuture, itwasnecessary
thattheTechnical Committee should revisit thetwoterms inthecontext oftherequests of
theCommittee onRules ofOrigin of21Mayand16September 1996 related tothemeaning
oftheterm"produced", withaviewtoachieving greater precision andclarity."G/RO/M/9
Page7
7. Proposal bytheUnited States pursuant toArticle 9.3(a) oftheAgreement onRules ofOrigin
(G/RO/W/15)
7.1 TheChairman recalled thatatitsmeeting on11October 1996, theCommittee hadagreed to
revert totheproposal made bytheUnited States regarding aspecific "starting point" tobeundertaken
asanewapproach bytheTechnical Committee initsworkinthesecond Phase oftheWork Programme.
Thisproposal wascontained indocument G/RO/W/15.
7.2 Based onconsultations theChairman hadheldwithMembers, theCommittee agreed toforward
totheChairman oftheTechnical Committee onRules ofOrigin theconclusion bytheCommittee as
follows:
"1. TheCommittee considered therevised USproposal pursuant toArticle 9.3(a)ofthe
Agreement onRules ofOrigin asastarting point forPhase IIoftheHarmonization Work
Programme. Although there wasstrong support byMembers, theCommittee didnotreach
aconsensus infavour oftheproposal.
2. Theviewwaswidely shared thatthegeneral approach oftheUSproposal appeared
tobeaconfirmation oftheapproach being pursued bytheTechnical Committee, tousethe
change intariff classification toexpress thelastsubstantial transformation.
3. Nonetheless, itwasrecognized thatconsideration ofother criteria provided forinthe
Agreement should beundertaken when deemed necessary, because theHSnomenclature does
notallow fortheexclusive expression ofsubstantial transformation.
4. Itwasalsoagreed thattheCommittee 'sviewontheUSproposal should beconveyed
totheTechnical Committee foritsfurther consideration inthecontext ofPhase IIoftheWork
Programme, atthesame timeastheCommittee onRules ofOrigin inGeneva continues with
further consultations ontheUSproposal."
7.3 TheCommittee alsoagreed thattherevised USproposal which hadbeendistributed informally,
should becirculated asadocument intheG/RO/W- series.
7.4 TheRepresentative ofIndia stated thatIndia considered therecent USproposal asa"starting
point" fororigin harmonization discussions. Inthiscontext, henoted thattheTechnical Committee
hadalsobeenexamining therulesoforigin forparticular products based ontheprinciple ofsubstantial
transformation. Under thisapproach, theHarmonized System Nomenclature wasbeing usedtodraw
uptherulesoforigin. Forinstance, oneoftheprinciples which theTechnical Committee wasworking
onwastoaccord theorigin wherever goods moved from onetariff sub-heading toanother intheHS
Nomenclature. Exceptions tothegeneral ruleasabove were alsobeing simultaneously discussed.
Inthiscontext theTechnical Committee hadrecognized thatthere would besome products where a
value addition rulemight havetobeapplied. Inother words, theapplication ofthe"value test"would
beconsidered asalastresort orasaresidual andsupplementary criterion.
India didnotsupport theapplication ofthevalue testonanacross-the-board basis. Further,
itdidnotfavour thedomestic content requirement of45%proposed bysome Members, since such
arulewould acttothedetriment ofseveral export sectors inIndia. More significantly, ifsucharule
oforigin should beapplied intheelectronics sector, itwould bepositively against India'sinterest.
Thevalue testwould becomplicated, non-transparent, andburdensome toadminister. Moreover, it
would entail substantial costofadministration aswellascompliance. India, therefore, agreed with
theanalysis contained intherevised USproposal andsupported theproposal.G/RO/M/9
Page8
7.5 Therepresentative ofJapan recalled thatmany Members hadexpressed theviewthatthescope
ofthevalue testassupplementary criteria under Phase IIIshould beminimized because ofthecomplexity
andthelackofpredictability. Healsostated itwasunderstood thatthemeaning ofthe"other criteria"
insub-paragraph 7.2.3 above included thevalue-added test.
7.6 TheCommittee tooknoteofthestatements made.
8. Notifications under Article 5andparagraph 4ofAnnex IIoftheAgreement onRules ofOrigin
(G/RO/N/12-15)
8.1 TheChairman recalled thatsincethelastmeeting theSecretariat hadcirculated fourdocuments
informing delegations ofthenotifications received (G/RO/N/12-15). Todate,51Members hadmade
notifications ofnon-preferential rules oforigin and54Members ofpreferential rules oforigin. He
expressed concern thatanumber ofMembers hadnotcomplied withthenotification requirements,
andurged Members whohadnotyetnotified todosoasearly aspossible.
8.2 TheCommittee tooknoteofthestatement.
9. Second Annual Review oftheImplementation andOperation oftheAgreement onRules of
Origin (G/RO/W/18)
9.1 The Chairman noted that theCommittee had before itabackground working
document (G/RO/W/18) prepared bytheSecretariat forthesecond review oftheimplementation and
operation oftheAgreement. Nostatement wasmade inthisregard.
9.2 TheCommittee agreed thatithadconducted itsannual review oftheimplementation and
operation oftheagreement onthebasis oftheSecretariat background note(G/RO/W/18) andthatthe
Secretariat should issuearevised document intheG/RO/-series, deleting thewords within thebracket
inparagraph 3ofdocument G/RO/W/18.
10. Election ofOfficers
10.1 Therepresentative oftheSecretariat informed theCommittee thatinaccordance withthe
established guidelines forappointment ofofficers, theChairman oftheCouncil forTrade inGoods
wascarrying outinformal consultations onaslateofnames fortheappointments ofchairpersons of
subsidiary bodies. Todate, theconsultations hadnotyetbeencompleted.
10.2 Inlightofthissituation theCommittee agreed topostpone theelection ofthechairperson and
vice-chairperson ofthisCommittee andtotakeupthematter asthefirstagenda itematthenextmeeting.
11. Other Business
- Dateofthenextmeeting
11.1 TheChairman proposed tohavethenextmeeting oftheCommittee on15May1997, preceded
byinformal meetings on12and13May1997.