G/RO/99  
 
24 November  2023 
(23-7976) Page: 1/15 
Committee on Rules of Origin    
 
  
REPORT OF THE COMMITTEE ON RULES OF ORIGIN TO THE GENERAL COUNCIL  
ON PREFERENTIAL RULES OF ORIGIN FOR LEAST DEVELOPED COUNTRIES  
This report is being submitted by the Committee on Rules of Origin (CRO) to the General Council 
following the 2022  Decision on Preferential Rules of Origin and the Implementation of the Nairobi 
Ministerial Decision , which states that the "CRO should report its work to the General Council ahead 
of the Thirteenth  Ministerial Conference " (G/RO/95 ). 
 
In addition, it a lso discharges the requirements of the 2013  (Bali) and 2015  (Nairobi) Ministerial 
Decisions on preferential rules of origin for least developed countries (LDCs) (WT/L/917  and 
WT/L/917/Add.1  respectively) , which stipulate that the CRO " shall annually review the developments 
in preferential rules of origin applicable to imports from LDCs " and report to the General Council.  
 
1   INTRODUCTION  ................................ ................................ ................................ ..........  2 
2   TRANSPARENCY AND DATA AVAILABILITY (NOTIFICATIONS)  ................................ .... 2 
2.1   Preferential Rules of Origin  ................................ ................................ .........................  2 
2.2   Preferential Tariffs and Preferential Import Statistics  ................................ .......................  3 
3   RECENT DEVELOPMENTS REPORTED TO THE CRO  ................................ ........................  3 
4   IMPLEMENTAT ION OF THE BALI AND NAIROBI MINISTERIAL DECISIONS  ..................  4 
4.1   Requirements for the Assessment of Sufficient or Substantial Transformation  .....................  4 
4.1.1   Ad valorem  percentage Criterion  ................................ ................................ ...............  4 
4.1.2   Change of Tariff Classification Criterion  ................................ ................................ ...... 5 
4.1.3   Specific Working and Processing Criterion  ................................ ................................ ... 5 
4.2   Cumulation  ................................ ................................ ................................ ...............  5 
5   DOCUMENTARY REQUIREMENTS  ................................ ................................ .................  6 
5.1   Proof of Origin  ................................ ................................ ................................ ...........  6 
5.2   Trade Facilitation Measures for Small Consignments  ................................ .......................  6 
5.3   Documentary Evidence of Direct Consignment  ................................ ...............................  6 
6   IMPACT OF PREFERENTIAL RULES OF ORIGIN ON PREFERENC E UTILIZATION: 
THE ANALYSIS OF PREFERENCE UTILIZATION RATES  ................................ ......................  6 
6.1   Linking Preference Utilizatio n Rates and Preferential Rules of Origin  ................................ .. 7 
6.2   Modalities for the calculation of Utilization Rates  ................................ ............................  7 
6.3   Preference Utilization by LDCs  ................................ ................................ .....................  7 
6.4   Discussion on differe nt factors that could affect the Utilization of Trade Preferences  ............  8 
7   CONCLUSION AND NEXT STEPS  ................................ ................................ ...................  9 
8   REFERENCES TO DOCUMENTS CONSIDERED BY THE CRO (2013 -2023)  .....................  10 
ANNEX  1 ................................ ................................ ................................ ........................  11 
ANNEX  2 ................................ ................................ ................................ ........................  13 G/RO/99  
 
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  ANNEX  3 ................................ ................................ ................................ ........................  14 
ANNEX  4 ................................ ................................ ................................ ........................  15 
 
1  INTRODUCTION  
1.1.  This document reports on  the work conducted by the CRO from 2017 to October  2023 pursuant 
to the April  2022 "Decision on Preferential Rules of Origin and the Implementation of the Nairobi 
Ministerial Decision" ( G/RO/95 ) This Decision was also acknowledged in the Outcome Document of 
the Twelfth  Ministerial Conference.1 
1.2.  It describes progress, discussions and, if applicable, different views in the various areas of work 
of the CRO related to prefer ential rules of origin for LDCs. It highlights the main issues discussed 
and the state of play reached on the main components of this work. Where relevant, it indicates 
lessons learned and discusses practices  with respect to the use of preferential rules o f origin . Finally, 
it provides guidance for the future work of the Committee to advance further in the identification of 
possible best practices and lessons learned.  
2  TRANSPARENCY AND DATA AVAILABILITY (NOTIFICATIONS)  
2.1.  The work of the CRO on preferential ru les of origin requires access to the following  types of 
information:  
(i) Preferential rules of origin applied to  LDCs by preference -granting Members (rules of origin 
and the related administrative requirements ).  
(ii) Preferential tariffs and preferential imports under preferential trade arrangements (or other 
preferential trade agreements ); and  
(iii) Information about the procedures for the request and delivery of certificates of origin  applied 
by LDC beneficiaries.  
 
2.1  Preferential Rules of Origin  
2.2.  The CRO has made substantial progress in terms of the availability of information regarding 
preferential rules of origin applied to LDCs in the context of non -reciprocal trade preferences. As 
required by paragra ph 4.3 of the Nairobi  Ministerial Decision2, Members adopted a template in 2017 
for the notification of preferential rules of origin and origin requirements (G/RO/84 ). A new document 
series was created for the circulation of these notifications (G/RO/LDC/N ). The template has been  
instrumental in making available detailed and standardized information about Members' current 
practices. In addition, it has allowed for the preparation of documents that describe, analyse , and 
compare the current practices of preference -granting Members.  
2.3.  All preference -granting Members  (except Armenia;  Iceland;  and Morocco)  have notified the ir 
preferential rules of origin applied to LDCs under their non -reciprocal trade arrangements .3 
2.4.  In addition , Members took note of two  significant developments to acces s this information:  
(i) All notifications submitted  to the Secretariat are available on the WTO  Preferential Trade 
Arrangements database and in the WTO's three  official languages ( http://ptadb.wto.org ); and 
(ii) all rules of origin and origin requirements notified were made available through the "Origin 
Facilitator" tool (https://findrulesoforigin.org ). The Facilitator is a free, publicly available 
online tool which allows users to retrieve most-favoured -nation ( MFN) and preferential tariff 
rates as well as requirements related to origin at the tariff -line level. The Facilitator is the 
result of a collaboration between the WTO  Secretariat, the International Trade Centre, and 
the World Customs Organization . 
 
1 Document  WT/MIN(22)/24 , paragraph  8. 
2 Paragraph  4.3 reads: "[…] Furthermore, the CRO shall develop a template for the notification of 
preferential rules of origin, to enhance transparency and promote a better understanding of the rules of origin 
applicable to imports from LDCs".  
3 Document series G/RO/W/163  has been updated regularly to describe in detail these notif ications.  G/RO/99  
 
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  2.5.  The Committee encourages all p reference -granting Members to ensure that their notifications 
are complete and up to date, including any weblinks. 
2.2  Preferential Tariffs and Preferential Import Statistics  
2.6.  MFN and preferential tariff rates , and preferential import statistics are needed to calculate the 
utilization rates of non -reciprocal LDC trade preferences. Tariff rates are needed to identify the 
existence of a preference ( that is, the fact that the tariff is above  zero on a n MFN basis). Information 
about preferential import statistics is used to calculate the proportion of imports that receive 
preferential treatment under at least one  preferential arrangement.  
2.7.  Members made significant progress in improving the availability of data on preferential tariffs 
and imports  in compliance with the Transparency Mechanism for PTAs  (WT/L/806 ). However, 
significant gaps remain in this area  that impact the ability of the Secretariat to conduct a 
comprehensive  analysis of current rates of preference utilizatio n. To date :4 
(i) Complete data5 is available for : Australia; Canada; Chile (since 2014); China; 
European  Union ; Iceland ; India (since  2015); Japan (since 2015); Republic of Korea ; 
Montenegro (since 2017) ; Switzerland (since 2012) ; Chinese Taipei ; Thailand (since 201 5); 
Türkiye ; United Kingdom (since 2020); and United States.  In addition, China and India 
provided to the Secretariat enhanced datasets to facilitate a more accurate analysis of  the 
uptake in the ir Generalized System of Preferences ( GSP preferences ); and  
(ii) No data, or only partial information , is available for : Armenia; Kazakhstan; Kyrgyz Republic; 
Morocco; New Zealand  (tariffs only) ; Norway ; Russian Federation ; and Tajikistan.  
 
2.8.  In addition, one  significant gap that has emerged concerns  the availability of information on 
imports entering under "other" preferential schemes , whether these be Regional Trade Agreements  
(RTAs) , other preferential arrangements , or special regimes which offer tariff conc essions.6 Such 
data is needed for a full analysis of trade between LDCs and preference -granting Members . In this 
sense, Members are encouraged – but are not obliged – to notify to the WTO their preferential imports 
and tariffs under such schemes.7 Some Members have been providing the Secretariat with detailed 
import statistics concerning  their RTAs and other concessions available, including Australia ; Canada ; 
China ; European Union ; Iceland ; India; Japan ; Montenegro ; Switzerland ; Chinese Taipei ; Türkiye ; 
United States of America . 
2.9.  The Committee encourage s all Members to consider the  details  of their IDB  notifications  and 
to improve them where possible . The Secretariat shall, upon request, provide technical assistance 
in relation to  the submission of the data required for the IDB.8 
3  RECENT DEVELOPMENTS REPORTED TO THE CRO  
3.1.  A number of developments relating to preferential rules of origin and related administrative 
requirements have been  reported to the Committee since 2017, including the following:  
(i) Thailand initiated stakeholder consultations with a view to extending the duration of its 
preferential trade arrangement  for LDCs. The consultation would also aim at expanding the 
coverage of eligible products and improving the rules of origin ( G/RO/77 ; G/RO/91 ); 
(ii) China introduce d a series of improvements , including new cumulation options ( bilateral and 
regional cumulation ). The government also implemented  simplified documentary 
requirements for origin certification, allowing for the use of an importer's declar ation based 
 
4 Document series G/RO/W/163  has been updated regularly to describe in detail these notifications.  
5 Complete data refers to the submission of annual preferential imports (under preferential trade 
arrangements for LDCs) as well as preferential tariffs. Data is available for all Members since 2010 unless 
otherwise indicated.  
6 Tariff concessions include a ny special programme which allow imports of certain goods to be 
temporarily or permanently exempt from the "normal" import duty. They may be implemented for social, 
humanitarian, economic or industry assistance purposes. Typical concessionary regimes inclu de imports into 
free trade zones and duty drawback for manufacturing exporters.  
7 See paragraph  2 of the IDB  Decision "Modalities and operation of the Integrated Database (IDB)"  
(G/MA/367 ). 
8 Members may contact the Secretariat through the following email address: idb@wto.org . See 
document  G/MA/367 , paragraph  12, 23 -254 on technical assistance.  G/RO/99  
 
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  on any advance origin ruling issued by the customs administration of China. A de minimis 
value for low -value shipments (not more than CNY 6,000) was  also introduced  for which  no 
certification was required. Finally, a system of electronic certif ication was rolled out to further 
simplify certification procedures ( G/RO/77 ; G/RO/85 ); 
(iii) Australia  reported that it had initiated a comprehensive review process of its GSP, including 
the applicable preferential rules of origin  (paragraphs  4.1 to 4.7 of G/RO/M/67 ; G/RO/85 ); 
(iv) Japan informed Members about the s implification of preferential rules of origin for knitted 
apparel of HS Chapter  61 (G/RO/77 ; G/RO/81 ; G/RO/85 ); 
(v) the European Union  (EU) updated the Committee on several occasions on the introduction of 
its Registered Exporter System (REX System)  for self -certification (G/RO/79 ; G/RO/94 ). The 
REX System is also being utilized for imports to Norway  (G/RO/85 ), Switzerland and Türkiye  
(G/RO/87 ); 
(vi) Iceland reported that  new legislation governing non-reciprocal preferences for LDCs was  being 
prepared  and would be notified in due course (G/RO/89 ); 
(vii) the Russian Federation highlighted the key elements of its revised preferential rules of origin 
for LDCs being implemented under t he Eurasian Economic Union (EAEU)'s Common System 
of Tariff Preferences , which had entered into force in January  2019. The new rules are based 
on a calculation of the value of non -originating materials  (G/RO/91 ); 
(viii) the United Kingdom updated Members on the con tinuation of its trade preferences for LDCs 
during the transition period until 31  December  2020 and after its withdrawal from the 
European Union ( G/RO/91 ). The UK also informed Members about its Developing Countries 
Trading Scheme (DCTS) and the revised rules of origin to be implemented under it . The new 
rules simplified product -specific rule s, introduced cumulat ion with up to 95  other eligible 
Members , and continued to allow  the possibility of deduct ing freight and insurance costs from 
the calculation of the valu e of non -originating - materials  (G/RO/97 ); 
(ix) Canada introduced changes to allow additional apparel products to qualify for duty -free 
treatment when imported into Canada in 2017 ( G/RO/82 ); 
(x) Norway expanded cumulation possibilities in 2017 by introducing cumulation amo ng LDCs 
after an inter -ministerial working group had examined the Norwegian GSP  scheme in light of 
the Nairobi Ministerial Decision  (G/RO/85 ); and  
(xi)  New Zealand is working to finalise revised rules of origin (including product specific rules) for 
New Zealand 's GSP scheme to make them more aligned with the approach undertaken in New 
Zealand 's RTAs, taking into account , where practicable , the preferences  signalled by LDCs. 
New Zealand will communicate these formally once the review is completed . 
 
4  IMPLEMENTATION OF THE BALI AND NAIROBI MINISTERIAL DECISIONS  
4.1.  Around 18 different submissions and 14 presentations have been made , mostly  by the LDC 
Group , compar ing the existing practices of preference -granting Members with the relevant 
paragraphs of the Nairobi Decision in order to highlight the aspects that, in the view of the LDC 
Group, needed to be reformed (Annex 1 contains a full list of such submissions and  presentations). 
However, views about the status of implementation of the Nairobi Decision sometimes diverged 
between the LDC Group and preference granting Members.  
4.1  Requirements for the Assessment of Sufficient or Substantial Transformation  
4.1.1   Ad valorem  percentage Criterion  
4.2.  Different submissions by the LDC  Group have analysed preference -granting Members' practices  
in light of paragraphs 1.1(a); 1.1(b); and 1.1(c) of the Nairobi Ministerial Decision .9 These 
submissions  have noted that : 
(i) all preference -granting Members whose rules were based on the ad valorem  percentage 
criterion already use d a method of calculation based on the value of non -originating materials , 
except for Australia;  New Zealand;  and the United States;  
 
9 In addition, LDC submissions on this issue have also noted that some recent RTAs use the percentage 
criterion as an alternative to the change of tariff classification criterion rather than as a standalone criterion. 
Even though this was not covered by the Nairobi Ministerial Decision, the LDC Group has indicated that this 
could be a more trade facilitating practice.  G/RO/99  
 
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  (ii) currently , only C anada and the United Kingdom met the threshold of 75% of the value of 
non-originating materials , which the Nairobi Decision note d was an option for preference -
granting Members to consider ; and  
(iii) currently , only the United Kingdom explicitly allow ed for the deduction of the costs of freight 
and insurance from the value of non -originating materials , which the Nairobi Decision note d 
was an option for preference -granting Members to consider . Other preference -granting 
Members do not have such an allowance , or their rules were unclear in this respect ; 
 
4.1.2   Change of Tariff Classification Criterion  
4.3.  Different submissions by the LDC  Group have analysed preference -granting Members' practices  
in light of paragraphs  1.2(a); 1.2(b); and 1.2(c) of the Nairobi Decision . The submission s, focused 
on the rules applied by the European Union ; Japan ; Norway ; and Switzerland,  and noted the 
follow ing: 
(i) The LDC  Group reiterated the Group's preference , most notably,  for the el imination of 
exclusions and restrictions associated with CTC  rules and the elimination of rules which impose 
a combination of two or more criteria for the same product;   
(ii) according to the LDC  Group, exclusions and restrictions continue to be common and, in most 
cases , are not justifiable. Such rules are often also stricter than the rules of origin which have 
been agreed to in the context of some RTAs; and 
(iii) The LDC Group also circulated a detailed list of product -specific rules used by Japan which, in 
its view , should be reformed ( G/RO/W/209 ). The submission contained detailed alternative 
rules of origin and comments for consideration. Following this submission, bilateral 
consultations took place between th e LDC  Group and Japan in 2021. The LDC Gro up and Japan 
held different views about the complexity or simplicity of product -specific rules used by Japan 
and bilateral discussions need to be pursued.   
 
4.1.3   Specific Working and Processing  Criterion  
4.4.  The LDC  Group has noted in different submissions that thi s criterion could be usefully applied 
for textiles and clothing provided that it reflects a single transformation requirement ( for example, 
"manufacture from fabric" for items of HS  Chapter  62, as applied by the European Union and Japan , 
and, for all appar el goods, from lesser developed AGOA beneficiaries, as applied by the 
United  States ). The same criterion could be used for HS  Chapters  28 to 30 ( namely, " chemical 
reaction").  This issue has, however, not yet been discussed in the CRO , but can be taken up i n the 
future . 
4.2  Cumulation  
4.5.  The LDC  Group pointed out that cumulation possibilities can provide important flexibility. 
However, cumulation possibilities should not be a substitute for simple and liberal rules of origin , 
since cumulation is often associated with a series of administrative procedures and conditions. In  this 
sense, the general and produ ct-specific rules of origin had to be considered together with cumulation 
for a full appraisal of the leniency or stringency of the rules , bearing in mind that  liberal  product 
specific rules of origin  should be a priority .  
4.6.  In this respect, the LDC  Group n oted difficulties related to the use of cumulation by Cambodia 
under the European Union's GSP (G/RO/W/220 ). The submission raised important cross -cutting 
issues concerning cumulation, the procedures attached to cumulation , and the implications of 
graduat ion of LDC s for other members of the same regional grouping.  The submission shared 
practices used by some preference -granting Members , which could be replicated to facilitate the 
functioning of value chains through the use of cumulation possibilities. It was noted that Cambodia 
had to make a request for extended cumulation to the EU due to the fact that cumulation was no 
longer possible with Viet Nam, once Viet Nam had become an EU FTA partner. The request was made 
in December  2022, and was approved in September 2023 . G/RO/99  
 
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  5  DOCUMENTARY REQUIREMENTS  
5.1  Proof of Origin  
5.1.  Paragra ph 1.8 of the Bali  Ministerial Decision recognizes self -certification as a useful trade 
facilitating practice . In that context, the LDC  Group noted that the European Union;  Norway;  and 
Switzer land had introduced self -certification under the Registered Exporter System (REX). 
Australia's ASTP; the Canadian GSP ; the US  AGOA ; the US Caribbean Basin Economic Recovery Act 
(CBERA) and the Nep al Preference Program also provide d for self -certification , while Japan allowed 
for self -certification of origin in certain instances.  The United Kingdom 's Developing Countries 
Trading Scheme also permits self -certification . China allowed for self -declaration for consignments 
that benefited from an advance origin r uling.  The LDC  Group requested  the delegations of Chile; 
China; India; the Republic of Korea; the Russian Federation; Chinese  Taipei ; and Thailand to 
introduce self -certification as an option for certain goods.  
5.2.  Proof of origin is a key component of rules o f origin  and trade facilitation. A note prepared by 
the WTO Secretariat  (G/RO/W/212 ) indicated  that preferences allowing for self-certification tend to 
be associated with higher levels of utilization than preferences requiring certificates of origin . 
5.2  Trade Facilitation Measures for Small Consignment s 
5.3.  The issue of " minimizing  documentation requirements for small consignments" has not yet 
been discussed in the Committee  but can be taken up in the future . 
5.3  Documentary Evidence of Direct Consignment  
5.4.  As noted in a submission of the LDC Group10, documentary evidence related to direc t 
consignment  could constitute an obstacle for certain LDCs, especially landlocked and island LDCs. 
In this respect, the LDC  Group noted that most preference -granting Members require d documentary 
evidence of non -manipulation in case of transit (either a th rough -bill of lading or a certificate of 
non-manipulation). Similary,  other preference -granting Members, such as the United States , did not 
require documentation related to non -manipulation if the final destination of the shipment from an 
LDC is marked as the United States.  In this sense, the LDC  Group noted that the "non -alteration" 
rule introduced by the European Union could constitute a better practice in this area.  
5.5.  The LDC Group noted that a n important difference between the EU's previous direct 
transportation requirement and its new non-manipulation clause (non -alteration principle) lies in the 
documentary evidence to be provided. Under t he new non -manipulation (non -alteration principle) 
clause, the requirements are considered as satisfied unless the customs authorities have reasons to 
believe the contrary . In such cases, the customs authorities may request the importer to provide 
evidence of compliance, which may be given by any means.11 Hence, no documentary evidence has 
to be provided  to prove direct shipment unless customs administrations have a doubt.  The 
LDC submission concluded that this provision , or similar arrangements, such as those adopted by 
Australia and New Zealand12, constitut ed a best practice that other preference -giving Members 
should progressively adopt . Canada also indicated that, in practice, it applies a similar standard.  
6  IMPACT OF PREFERENTIAL RULES OF ORIGIN ON PREFERENCE UTILIZATION: THE 
ANALYSIS  OF PREFERENCE UTILIZATION RATES  
6.1.  Further to paragraph  4.3 of the Nairobi Ministerial Decision13, Members have : 
(i) Agreed to modalities for the calculation of utilization rates; and 
 
10 Document  G/RO/W/191 . 
11 A User's Handbook to the Rules of Preferential Origin used in trade between the European 
Community, other European Countries and the countries participating to the Euro -Mediterranean Partnership . 
12 New Zealand does not require any certification or  documentation (including for proof of origin) for 
LDC imports.  
13 Paragraph  4.3 reads: "[…] Members reaffirm their commitment to annually provide import data to the 
Secretariat as referred to Annex  1 of the PTA  Transparency Mechanism, on the basis of which  the Secretariat 
can calculate utilization rates, in accordance with modalities to be agreed upon by the CRO".  G/RO/99  
 
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  (ii) considered several notes , prepared both by the LDC Group, a preference -granting Member, 
and the WTO Secretariat,  describing patterns of utilization of trade preferences by LDCs.  
 
6.1  Linking Preference Utilization Rates and Preferential Rules of Origin 
6.2.  Preference utilization rates are a useful marker to examine the impact of origin -related 
requirements. In fact, customs will only grant preferential treatment to goods which are deemed to 
"originate" in the beneficiary LDC. In practice, a good must simul taneously satisfy 
three  requirements:  
(i) A good must be wholly obtained in the beneficiary LDC or comply with minimum substantial 
transformation requirements (that is, satisfy general or product -specific rules of origin);  
(ii) a good must demonstrate compliance with such requirements by being accompanied by the 
prescribed proof of origin ( namely,  a certificate of origin delivered by a designated competent 
authority or certifying body , or a self -declaration of origin); and  
(iii) a good must in principle be directly consigned from the beneficiary LDC to the 
preference -granting Member to avoid any risks of further manipulation in third or transit 
territories or, in case of transit, goods must satisfy the prescriptions in relation to documentary  
evidence about non -manipulation (or non -alteration) in transit.  
 
6.3.  If a preference is fully utilized (that is, a utilization rate of 100%), it necessarily  indicates that 
these three  requirements have been simultaneously met , and therefore that origin requir ements did 
not hinder the utilization of the preference.  
6.4.  If, on the contrary, a preference is not being utilized,  it could be an indication that different 
factors are hindering preference utilization, including some factors related to rules of origin and 
origin requirements.  However, before linking a low utilization rate to the hindrance of rules of origin 
and origin requirements, various factors, as stated below , need to be considered as they could 
explain the reason why preferences are not being used . 
6.2  Modalities for the calculation of U tilization Rates  
6.5.  The Committee agreed to a modality for the calculation of utilization rates in 2016. Annex 4 
contains the agreed formula as well as references to more recent discussions held in the CRO in this 
respect.  
6.3  Preference U tilization by LDCs  
6.6.  Presentations14 on utilization rates made by the LDC group showed that (1) some preference -
granting Members  exhibit low utilization rates across all products, and (2) high utilization rates may 
also hide large pocket s of under -utilization in specific sectors, implying a significant share of LDC 
imports are subject to most -favoured -nation (MFN) tariff  rates despite being  eligible for preferential 
treatment.  
6.7.  The examination of import statistics for the 2015  - 2019 perio d indicates that utilization of 
preferences can be improved in all preferential arrangements. It also suggests that utilization rates 
vary significantly across different preference granting Members. Even in cases of overall high levels 
of utilization, ther e might also be "pockets" of non utilization in certain sectors, and some preferential 
arrangements show a low or very low level of utilization. In addition, preference utilization rates 
show significant annual variations, which confirms the benefits of ex amining multiple years to 
identify structural patterns and trends. Preliminary analysis seems to indicate that t rade preferences 
tend to be less used when trade values are low. Higher trade values generally have higher preference 
utilization.15 
6.8.  While the d iscussions in the CRO were useful to better understand the impact of rules of origin 
on preference utilization, they also highlighted that further work is needed in this area  so that 
Members can have a more accurate picture about the utilization of trade p references by LDCs . 
Analyses by the LDC Group and by some preference -granting Members were both useful and 
 
14 Presentation s RD/RO/58  and RD/RO/73 . 
15 Document G/RO/W/204 . G/RO/99  
 
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  mutually complementary, helping members to get a better understanding of the possible causes of 
low utilization rates. For this reason, it is recomme nded that preference -granting Members 
collaborate with the LDC Group and the Secretariat in further calculating utilization rates.  
6.9.  A submission prepared by the LDC group, showed large pockets of underutilization in 
Switzerland's trade preferences.16 Constr uctive bilateral consultations took place between 
Switzerland and the LDC group  since 2019  and pointed to the effect of direct consignment 
requirements on utilization. Internal consultations to improve utilization rates of preferences granted 
to LDCs are o ngoing in Switzerland.  
6.10.  In addition, submission s by the LDC group  analyzed the utilization of China's preferential 
arrangement17, pointing out to low preference utilization in several sectors.  In response, China 
submitted detailed calculations18 including imports under the ASEAN -China FTA and Asia Pacific 
Trade Agreement.  Utilization was higher in almost all cases when such preferences were taken into 
account.  Discussions emphasized the need for comprehensive calculations of preference utilization  
and pointed that duty relief schemes granted on a n MFN basis cannot be considered as a preference 
and hence must be excluded from the calculation s.  
6.11.  Finally, a  subsequent submission by the LDC group also concluded that there was scope to 
improve the utili zation of India's preferential arrangements.19 India observed that on taking into 
account  the  preferential trade under RTAs and trade treaties and excluding  MFN duty -free lines 
from calculations, the preference utilization was higher.  Further, trade pref erences tend to be less  
used when MFN tariff incidence is very low . The LDC Group acknowledged that the data used was 
incomplete and therefore called on India to to provide the WTO secretariat with an appropriate and 
complete set of data.  India recalled th at it had submitted all complementary  data to the Secretariat . 
6.4  Discussion on different factors that  could affect the Utilization of Trade Preferences  
6.12.  It was also discussed  in the CRO  that additional factors could help explain low rates of 
preference utilization, including:  
a) The existence of several preferential schemes or the availability of other tariff concessions (for 
example, Australia grants trade preferences to Cambodia under the  "Australian System of 
Tariff Preferences" (ASTP) and under the ASEAN -Australia -New Zealand Free Trade Agreement 
(AANZFTA)  and under the Regional Comprehensive Economic Partnership (RCEP) ). Low 
preference utilization , under one scheme  does not necessarily indicate problems related to 
origin requirement s in a specific scheme and could rather reflect that trade is being channeled 
through multiple schemes.  Low underutilization could also  suggest  that better rules of origin 
or preferential margins are provided under a n FTA rather than through unilateral preferences . 
These aspects could be further analysed in the Committee.    
b) economic operators may not be aware of the availability of preferences or may  simply  choose 
not to claim any preferential benefits, including because they perceive these benefits to be 
insignificant ( such as a tariff margin that is too small) or because they perceive compliance 
costs to be too high ( for example, the time or documentation needed to obtain a certificate of 
origin is too long , or the costs of consigning goods directly are too high) ; 
c) the utilization of trade preferences also varies greatly from one LDC to another. Going forward, 
a better understanding  of these differences – and particularly the case of LDCs who managed 
to improve their utilization rates , such as Afghanistan or Rwanda – could yield useful insights 
about the mechanics behind better preference utilization ; 
d) there might be a "learn ing by doing effect" . In other word s, the utilization of preferences 
increases with time, as operators become increasingly familiar with the preference and its 
requirements.  This is noted at least in one PTA-LDC (Chile). It  would be useful to better 
understand any strategies  that were implemented to increase awareness of, and compliance 
with, preferential origin requirements;  
e) direct consignment obligations and the related documentary evidence seem to have a 
significant impact  on the ability of LDCs to utilize their available trade preferences. Landlocked 
 
16 Document G/RO/W/186 . 
17 Documents G/RO/W/192  and G/RO/W/222 . 
18 Documents G/RO/W/227  and RD/RO/107 . 
19 Document G/RO/W/222 . G/RO/99  
 
- 9 - 
 
  LDCs find it more difficult to benefit from trade preferences. In fact, the analysis shows that 
there is a significantly lower utilization of preferences in the case of landlo cked LDCs;  
f) the modalities concerning proofs of origin also seem to have a significant impact on the ability 
of LDCs to utilize trade preferences. Self-certification is associated, in general, with better 
preference utilization. Nevertheless, these findings  need to be interpreted with caution given 
limitations in the methodology and data , as well as the difficulties in isolating the impact on 
origin certification of other factors;   
g) better preference utilization also depends on effective technical assistance provided by 
preference -grating Members  and aid for trade initiative s to fund trade facilitation  reforms in 
beneficiary LDCs, in particular to promote trade preferences among economic operators , and 
facilitate and simplify the administrative proc edures for the application and delivery of 
certificates of origin ; and  
h) In addition, the following events were organized which explored the factors that influence the 
utilization  of trade preferences, including rules of origin:  
 
- A first  webinar  organized by the Secretariat 2021 "What drives the utilization of trade 
preferences";  
- a second, follow -up webinar organized by the Secretariat in 2022 on "What drives the 
utilization of trade preferences"; and  
- a webinar  organized by the  delegation  of the United States during the 8th WTO Aid for 
Trade Review on "How can exporting countries improve utilization of US  Trade 
Preference Programs?"  
 
6.13.  Going forward, some preference -granting Members have noted that it would be useful for 
preference -granting Members and beneficiary LDCs to strengthen their cooperation on the 
calculation of utilization rates , and to strive together to improve the accuracy of the relevant 
research.  Members are also encouraged to carry out their own stud ies about the utilization of LDC -
PTAs and share them in the CRO.  
6.14.  In relation to the utilization of trade preferences, Members also took note of the launch by 
UNCTAD of the online platform " Database on Generalized System of Trade Preferences Utilization ". 
This tool provides information on the utilization of  the GSP  schemes , as well as other trade 
preferences granted to developing Members and LDCs by Canada, the European Union, Japan,  and 
the United States . 
7  CONCLUSION  AND NEXT STEPS  
7.1.  It is important that the Committee on Rules of Origin fulfil s the intention of the Agreement on 
Rules of Origin, that clear and predictable rules of origin facilitate the flow of international trade and 
do not create unnecessary obstacles. To that end the Committee should continue its work to ensure 
that preferentia l rules of orgin applicable to imports from LDCs are transparent and simple and 
contribute to facilitating market access in line with the Decision on Measures in Favour of Least 
Developed Countries and the Bali and Nairobi Decision s. 
7.2.  In addition  to the abo ve and in conformity with the Decision of the Committee on Rules of 
Origin on preferential rules of origin adopted on 14 April 2022, Members will continue and , to the 
extent possible,  intensify  their work on identifying  and where possible, agreeing  on best  practices 
on preferential rules of origin and related administrative requirements.  
7.3.  On the basis of the above, Members consider that in light of the divergent views of Members 
on the implementation of the Bali and Nairobi Decisions and best practices in th is regard, it is 
necessary to continue relevant discussions in the Committee on Rules of Origin as well as intensify 
bilateral engagement , with a view to facilitating the use of preferential trade arrangements by the 
LDCs.  This could translate, for instanc e, into an active engagement by preference -granting Members 
in monitoring the utilization of their preferences, sharing their practices and experience in the 
Committee and analyzing their practices in light of the relevant Ministerial Decisions.   G/RO/99  
 
- 10 - 
 
  8  REFERENCE S TO DOCUMENTS CONSIDERED BY THE CRO (2013 -2023)  
8.1.  Annex  1 contains a list of documents submitted by delegations . Annex  2 contains the list of 
background notes prepared by the WTO  Secretariat . Annex  3 contains the list of annual reports from 
the CRO to the G eneral Council on preferential rules of origin for LDCs since 201 3. 
_______________    
  G/RO/99  
 
- 11 - ANNEX  1 
DOCUMENTS CONCERNING PREFERENTIAL RULES OF ORIGIN FOR LDCS  
List of Documents Submitted by the LDC  Group and other Members on Preferential Rules of Origin for LDCs  (2013-2023) 
Document Symbol  Title Member  Date of 
Discussion  
G/RO/W/148  Challenges faced by LDCS in complying with preferential rules of origin under unilateral preference 
schemes  LDC Group  November  2015 
G/RO/W/154  Elements for a discussion on preferential rules of origin for LDCs  LDC Group  April 2015 
G/RO/W/159  Implementation of Nairobi Ministerial Decision on Preferential Rules of Origin for least developed 
countries  LDC Group  April 2016 
G/RO/W/169  Possible agenda items for a dedicated session of the CRO meeting on preferential rules of origin for 
LDCs LDC Group  October  2017 
RD/RO/52  Developments regarding methods of calculation of the percentage criterion (paragraph 1.1 of the 
Nairobi Decision and item 1 of document G/RO/W/169 ) Tanzania and Lao  PDR (on 
behalf of the LDC  Group)  October  2017 
RD/RO/53  Developments regarding methods using a change of calculation of tariff classification criterion to 
determine substantial transformation  (Paragraph  1.2 of the Nairobi Decision  and Item 2 of 
Document G/RO/W/169 ) Benin (on behalf of the 
LDC Group)  October  2017 
RD/RO/54  Developments regarding methods using a specific manufacturing or processing operation criterion 
to determine substantial transformation  (Paragraph  1.3 of the Nairobi Decision  and Item 3 of 
Document G/RO/W/169 ) Myanmar (on behalf of the 
LDC Group)  October  2017 
RD/RO/55  Developments regarding methods using a combination of requirements to determine substantial 
transformation  (Paragraphs  1.4 and 1.5 of the Nairobi Decision  and Item 4 of Document 
G/RO/W/169 ) Tanzania (on behalf of the 
LDC Group)  October  2017 
RD/RO/56  Developments regarding cumulation provisions (Paragraphs  2.1 and 2.2 of the Nairobi Decision  and 
Item 5 of Document G/RO/W/169 ) Cambodia (on behalf of the 
LDC Group)  October  2017 
RD/RO/57  Developments regarding documentary requirements (Paragraph  3 of the Nairobi Decision  and Item 
6 of Document G/RO/W/169 ) Nepal (on behalf of the 
LDC Group)  October  2017 
RD/RO/58  Utilization rates under preferential trade arrangements for least developed countries (paragraph 4.3 
of document WT/L/917/Add.1)  Yemen (on behalf of the 
LDC Group)  October  2017 
G/RO/W/174  Implementation of the Nairobi Ministerial Decision on Preferential Rules of Origin for Least 
Developed Countries  LDC Group  April 2018 
RD/RO/73  Identifying low utilization of trade preferences due to the stringency of rules of origin: new evidence  Tanzania (on behalf of the 
LDC Group)  October  2018 
G/RO/W/184  and 
Rev.1  
RD/RO/79  
(presentation)  Rules of origin based on a change of tariff classification  LDC Group  
Tanzania (on behalf of the 
LDC Group) May 2019 
G/RO/W/186  and 
RD/RO/80  
(presentation)  Further evidence from utilization rates  LDC Group  
Bangladesh (on behalf of 
the LDC  Group)  May 2019   
  G/RO/99  
 
- 12 - Document Symbol  Title Member  Date of 
Discussion  
G/RO/W/191  and 
RD/RO/82  
(presentation)  Direct consignment rules and low utilization of trade preferences  Cambodia (on behalf of the 
LDC Group)  October  2019 
G/RO/W/192  and 
RD/RO/84  
(presentation)  Further evidence from utilization rates: utilization by LDCs of China's preference  LDC Group  
Tanzania (on behalf of the 
LDC Group)  October  2019 
RD/RO/87  Fifth anniversary of the Nairobi Ministerial Decision: Review of implementation, identification of 
gaps and the way forward  Yemen and Cambodia (on 
behalf of the LDC  Group)  March  2020 
G/RO/W/202  and  
RD/RO/91  Submission of LDC to the Committee on Rules of Origin ad valorem criterion - Communication from 
the LDC Group  LDC Group  
Tanzania and Afghanistan 
(on behalf of the 
LDC Group)  November  2020 
G/RO/W/197  Further Clarification on the LDC Group's Report of Utilization by LDCs of China's Preference''  China  July, 2020  
G/RO/W/198  Submission of Chad on behalf of the LDC Group - Preferential rules of origin for least developed 
countries  LDC Group  November  2020 
G/RO/W/209  Further submission on rules of origin based on a change of tariff classification  - The case  of rules of 
origin used by Japan LDC Group  October  2021 
G/RO/W/210  Taking note of the implementation of the Bali and Nairobi Ministerial Decisions at MC12 LDC Group  October  2021 
G/RO/W/211  Examination of existing origin -related documentary requirements (paragraph  1.8 of the Bali 
Decision and paragraph  3.1 of the Nairobi Decision)  LDC Group  April 2022 
G/RO/W/216  Preliminary examination of proposed new rules of origin under the UK Developing Countries Trading 
Scheme ( DCTS ) LDC Group  October  2022 
G/RO/W/220  The impact of GSP  graduation on LDCs and cumulation  – The case of Cambodia  Cambodia  June 2023 
G/RO/W/222  and 
RD/RO/102  
(presentation)  Further evidence from utilization rates  - Utilization by LDCs of China and India's preference  Djibouti  (on behalf of the 
LDC Group)  June 2023 
RD/RO/103  Alternative methods of assessing utilization of preferential rules of origin of LDCs  China  June 2023 
G/RO/W/227  China's study on utilization by LDCs of China's preference in 2020  China  October 2023  
RD/RO/108  Understanding the Importance of Differentiating Utilization Rates of Preferential Trade 
Arrangements: Lesson Learned and Best Practice  Cambodia  October 2023  
 
_______________  
 
 
    
  G/RO/99  
 
- 13 - ANNEX  2 
LIST OF BACKGROUND NOTES PREPARED BY THE SECRETARIAT ON PREFERENTIAL RULES OF ORIGIN FOR LDCS  (2013-2023) 
Document Symbol  Title Date  of discussion  
G/RO/W/161  Modalities for the calculation of "Preference utilization"  September  2016 
G/RO/W/168/Rev.1  Utilization rates under preferential trade arrangements for least developed countries under the LDC duty 
scheme  October  2017 
G/RO/W/178  Preferential rules of origin for least  developed countries  - Rules of origin based on the criterion of change of 
tariff classification  October  2018 
RD/RO/W/179  Utilization rates under preferential trade arrangements for least developed countries under the LDC duty 
scheme  October  2018 
G/RO/W/185  Utilization rates under preferential trade arrangements for least developed countries under the LDC duty 
scheme  May 2019 
G/RO/W/187/Rev.1  and  
RD/RO/81  (presentation)  Impact of direct consignment requirements on preference utilization by least developed countries  October  2019 
G/RO/W/203  and  
RD/RO/89  (presentation)  Calculation of utilization rates under preferential duty schemes for Least Developed Countries : the case of 
minerals and metals  November  2020 
G/RO/W/204  and  
RD/RO/94  (presentation)  Utilization of trade preferences by Least Developed Countries - 2015 - 2019 patterns and trends  May 2021 
G/RO/W/212  and 
RD/RO/99  (presentation)  Certification of origin and the utilization of trade preferences by least developed countries  June 2023 
G/RO/W/161/Rev.1  Modalities for the calculation of " Preference utilization"  - Revision  October 2023  
 
_______________  
 
 
 G/RO/99  
 
- 14 - 
 
  ANNEX  3 
LIST OF REPORTS TO THE GENERAL COUNCIL ON PREFERENTIAL RULES OF ORIGIN FOR LDCS  
Year  Annual Reports to the General Council  
Draft  Adopted  
2014 - G/RO/76  
2015 G/RO/W/156  G/RO/77  
2016 G/RO/W/164/Rev.2  G/RO/79  
2017 G/RO/W/173  G/RO/85  
2018 G/RO/W/180  G/RO/87  
2019 G/RO/W/188/Rev.1  G/RO/89  
2020 G/RO/W/201  G/RO/91  
2021 G/RO/W/207  G/RO/94  
2022 G/RO/W/213/Rev.1  G/RO/97  
 
 
  G/RO/99  
 
- 15 - 
 
  ANNEX  4 
METHODOLOGY FOR THE CALCULATION OF PREFERENCE UTILIZATION RATES  
1. The Committee adopted  the following modalitiy for the calculation of utilization rates : 
𝑝𝑢𝑟𝑖𝑣𝑎𝑙𝑢𝑒=∑∑𝑃𝑇𝐴𝑗,𝑝𝑟𝑒𝑝𝑜𝑟𝑡𝑒𝑑
𝑝𝑗
∑∑𝑃𝑇𝐴𝑗,𝑝𝑒𝑙𝑖𝑔𝑖𝑏𝑙𝑒
𝑝𝑗 
𝑝𝑢𝑟𝑖,𝑝𝑣𝑎𝑙𝑢𝑒: PREFERENCE UTILIZATION RATE (per cent) based on import value by preference granting Member  
where:  I 
J = preference granting Member  
= preference receiving Member  
 P = product  
 PTAreported = imports reported to have taken place under the PTA preferential duty scheme  
 PTAeligible = imports under any eligible tariff line, i.e. preferential duty < MFN duty rate.  
 
2. More recently, the notes of the Secretariat have also used "underutilization" as a complementary 
methodolo gy for the discussion of preference utilization rates. The use of this  methodology allow s 
for a comprehensive analysis of the factors that define trad e between LDCs and preference -granting 
Members. Underutilization rates reflect the proportion of imports which pay MFN  duties despite being 
eligible for at least one  trade preference programme . Nevertheless , under this methodology, 
different preferential a rrangments, with their own individual rules of origin, are lumped together. 
For this reason, underutilization rates alone do not  allow to make policy conclusions about the rules 
of origin applied in individual preferential arrangements. However, a  combined  use of both methods 
can be useful.  
3. The methologies  for the calculation of preference utilization rates as well as data requirements 
for such calculations are discussed in greater detail in document G/RO/W/161/Rev.1 . 
__________