WORLD TRADE
ORGANIZATIONG/RO/32
28 January 1999
(99-0318)
Committee on Rules of Origin
REPORT OF THE TECHNICAL COMMITTEE ON RULES OF ORIGIN
ON PROGRESS MADE AT ITS 15TH SESSION
TO THE COMMITTEE ON RULES OF ORIGIN
In conformity with paragraph 4 of the Report of the Committee on Rules of Origin to the
Council for Trade in Goods on the Harmonization Wo rk Programme (G/RO/25), the Chairman of the
Technical Committee on Rules of Origin has submitted to the Committee on Rules of Origin a Report
on progress made at the 15th Session of the TCRO.  The Report is herewith circulated to Members.
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SUBJECT: Progress Report to the Committee on Rules of Origin Following the 15 th Session of
the Technical Committee on Rules of Origin (held in Brussels from 7 to
18 December 1998)
1. This Progress Report is submitted pursuant to the reporting arrangements endorsed by the
Council for Trade in Goods in July, 1998.  This is the last Progress Report I shall make after three
years service as Chairman of the WTO Technical Committee on Rules of Origin (Technical
Committee).  It therefore seems appropriate to supplement my report concerning the 15 th Session by
offering some reflections on the overall status of the harmonization work programme.
2. Following the Committee’s review of the ha rmonization project in July, 1998 the Technical
Committee’s programme of work has been arranged in line with the recommendations of the
Committee.  The agendas for the 14 th and 15 th Sessions were prepared with the expectation that the
Technical Committee could complete its consideration of the overall architecture (including general
rules), the residual rules, and the section and chapter notes for submission of the results to theCommittee during this month of January, 1999.  Measurable progress has been made, particularIy in
respect of the general rules. Nevertheless I must report that the Technical Committee was unable to
complete these tasks by the end of the 15 th Session.
3. The detailed results of the Technical Committee’s 15 th Session appear in the Draft Report of
the Session, (WCO Doc. 42.819
1).  As usual, the Technical Committee is to approve this as its final
Report of the Session at the 16 th Session.
4. The completion of this phase of the work must be a matter of concern to both Committees.
There should be no question that all WTO Members remain committed to completing the
harmonization work programme.  Participation at the meetings continues with a high level of
enthusiasm, and it is obvious also that intensive work is being done in capitals to support the efforts of
delegations.  I have noted that delegates who are less active in the debates are nevertheless following
                                                     
1 Available for consultation in the Secretariat (Market Access Division).G/RO/32
Page 2
them closely with full understanding of, and interest in, what is at stake.  Even in the best of
circumstances, however, the work can be technically complex and intermixed with policy questions.
The elaboration of the overall architecture has proved particularly challenging.
5. In my view there are several reasons why the Technical Committee could not complete this
particular phase of its work as intended.  First, new proposals were regularly submitted during or
immediately before the meetings.  Whatever the merits of these proposals, this does not provide
enough time for other Members to analyze them and receive instruction from capitals.  In most cases
consideration of such proposals must be held over for future sessions.  I might add that this entirely
administrative problem has persisted since the beginning of the work.
6. The progress on architecture and residual rules also has been affected adversely by the
emergence during the  15 th Session of a major divergence of views over the method of application for
the primary rules.  The question presents itself in a technical context, inasmuch as it has to do with
whether a primary rule applicable to a good is to be applied with respect to any country in which it
might have been satisfied or with respect only to the country in which a good underwent final
processing.  The implication from the technical perspective of these differing approaches is that thereis not presently consensus as to when the search for an origin outcome for a good under the primary
rules has been exhausted, and consequently when the application of residual rules is triggered.  Upon
examination of these approaches during the 15 th Session it further emerged that the respective
proponents have in mind quite different origin outcomes under the same scenarios.
7. The Technical Committee concluded that underlying the differences in approach,
notwithstanding the technical character of the debate, were differing trade policy objectives.  Thus at
the conclusion of the Session, having exhausted the technical debate, it was decided to submit a
referral to the Committee with a request for expedited consideration.  The Technical Committee
considers that the resolution of this issue will have a critical bearing upon its ability to conclude theoverall architecture and the substance of the residual rules.  Until the Committee actively engages on
this issue there can be progress on the technical side at the margins, but the overall architecture will be
lacking its necessary characteristic as a system for origin determination.
8. Although intensive work on the substance and organization of the residual rules has been
done, particularly during the 15 th Session, the Technical Committee has taken note that a number of
delegations plan to submit new proposals during 1999.  The knowledge that there would be furtherproposals on residual rules, which are viewed by a number of delegations as a very important part of
the overall architecture, gave the 15 th Session discussions and decisions concerning residual rules a
rather tentative and provisional character.  The Technical Committee reluctantly concluded that the
detailed elaboration of the residual rules could not be completed until the new proposals could be
considered during 1999.
9. I would observe that at this juncture the T echnical Committee in looking at the new proposals
for residual rules has found itself obliged to resume the kind of analysis which it did during earlier
work, i.e., examination of origin outcomes in terms of substantial transformation and the various
criteria by which this is expressed.  The difference now is that for some delegations residual rules are
also part of the consideration.  It would be sensible to acknowledge that the work on substantial
transformation for specific products is far from finished.  Delegates have been reluctant to commit
themselves to proposals for residual rules because  there was still uncertainty as to the applicable
primary rules for a particular good.  A number have referred during the discussions to the many
unresolved substantial transformation questions which are pending with the Committee, and havestated that progress would be facilitated when these questions are answered.  This observation is
justified, and I would add that the unresolved status of the referred issues is also having an influenceG/RO/32
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upon the proposals for the overall architecture, as there is a tendency to try to promote through such
proposals particular origin outcomes linked to trade policies.
10. The fact that overcoming these difficulties and unresolved issues continues to be dependent
on trade policy as much as on technical considerations serves to reinforce our shared understandingthat progress at the Technical Committee and the Co mmittee is a joint commitment.  At this key point
in the harmonization work the two committees need  to make good on that commitment in order to
meet the latest deadline.
11. Notwithstanding all that I have enumerated, there are grounds for optimism.  As I indicated
previously, the commitment of the Members to this project has not diminished.
12. Moreover, I think we can finally say, after fifteen Technical Committee sessions, that the
technical approaches on all the major issues have now been tabled.  The Technical aspects of this
harmonization work are, in this sense, very far advanced.  This means that apart from the most recent
referral on architecture, the importance of which should not be understated, representatives to both
committees can see more or less the entire picture and can start in earnest to evaluate options for finaloutcomes.
13. All of the options have been recapitulated in the Consolidated Text of the Technical
Committee
1, recently issued by the WCO Secretariat.  The Consolidated Text offers a convenient
reference as the basis for further work which can be updated easily.
14. The 16 th Session will be held from 1 to 12 March 1999 in Brussels.  The Technical
Committee has planned (in accord with the work plan suggested by the Committee) to take up
residual rules, chapter notes and other unresolved issues with reference to Chapters 25-49, 64-81 and
92-97 of the HS, and to resume its consideration of architecture issues.  Members indicated during the
15th Session that this tentative agenda should be open to revision as appropriate in response to
developments in the Committee.
15. I would observe that the TCRO has set an ambitious programme.  I must again emphasize that
progress will be hampered without some substantive input on the resolution of the outstanding
Templates currently with the Committee.  Resolu tion of the question posed by the architecture
template from the 15 th Session and now referred to Geneva will also be essential for any real progress
in meeting the programme set out by the CRO for 1999.
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1 Available for consultation in the Secretariat (Market Access Division).