G/RO/W/203  
 
9 November 2020  
(20-8020) Page: 1/13 
Committee on Rules of Origin   
 
CALCULATION OF UTILIZATION RATES UNDER PREFERENTIAL DUTY SCHEMES  FOR 
LEAST DEVELOPED COUNTRIES : THE CASE OF MINERALS AND METALS  
NOTE BY THE SECRETARIAT1 
1  INTRODUCTION  
1.1.  Previous note s by the Secretariat indicated that Least Developed Countries (LDCs) were not 
making full use of non -reciprocal trade preferences available to them: in other words, imports eligible 
for preferen tial tariff treatment  paid Most-Favoured Nation duties instead of receiving  preferences . 
The Secretariat assessed  that this "under utilization"  of trade preferences concerned all preference -
granting Members, albeit to a varying extent (G/RO/W/179).  Calculations also highlighted that 
underutilization affected sectors  in different ways , but that  it was common also for goods subject to 
simple rules of origin, such as agricultural products  and fresh fruits and vegetables  deemed to be 
wholly obtained  (G/RO/W/185). Given that the non-utilization of preferences for such goods was 
counterintuitive, the Secretariat explored the hypothesis that strict direct consignment obligations 
could be hindering the ability of LDCs to fully utilize preferential market access conditions  
(G/RO/W/187/Rev.1).  
1.2.  This note expands th at analysis by examining the under utilizati on of trade preferences in the 
minerals and metals sector.  It aims at building a better understanding in the Committee on Rules of 
Origin about the impact of origin requirements on the utilization of trade preferences by LDCs , as 
mandated in paragraph 4.3 of the Nairobi Ministerial Decision (WT/L/917/Add.1).  
2  EXPORTS OF MINERALS AND METALS BY LDCS  
2.1.  In terms of export value, minerals and metals is one of the most significant sector s for many 
LDCs, even when crude and refined petroleum and other mineral fuel ex ports (HS 2709 and HS2710) 
are excluded from the analys is.  Overall, in 2018, LDCs exported minerals and metals of a total value 
of USD 40.7 billion to preference granting members listed in table 1. The majority  of these products 
are subject to MFN zero du ties and the  rest, about one -fourth of all imports,  can benefit from 
preferential tariff treatment. However, as the note will show, not all exported mineral and metals 
are reportedly receiving preferential market access and are subject to MFN duty treatment instead. 
Accordingly, full utilization of trade p reference could lead to considerable duty savings for LDC 
beneficiaries . 
2.1  Description of products covered in this analysis  
2.2.  The calculations in this note cover specifically the following product categories2: 
− Salts, earths, stones and cement (HS chapter s 25 and 68 ); 
− Mineral and metal s such as  iron, copper, nickel, cobalt, aluminium, lead  (HS chapter  26); 
 
1 This document has been prepared under the Secretariat's own responsibility and  is without prejudice to 
the positions of Members or to their rights and obligations under the WTO . 
2 "Minerals and Metals" comprise specifically the following HS codes: 2601 -17, 2620, Ch. 72 -76 
(except  7321-22), Ch. 78 -83 (except 8304 -05) Ch. 25, 2618 -19, 26 21, 2701 -04, 2706 - 08, 2711 -15, Ch.31, 
3403, Ch.  68-71 (except 6807, 701911 -19, 701940 -59), and 911310 -20. These products correspond to two of 
the "Multilateral Trade Negotiations (MTN)" categories used in different publications by the Secretariat for tari ff 
and trade analyses. The full list of MTN categories can be consulted in the 2020 WTO World Tariff Profiles 
(page  40), available at: https://www.wto.org/english/res_e/book sp_e/tariff_profiles20_e.pdf . G/RO/W/203  
 
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  − Products of minerals and metals such as iron, copper and steel products, copper and 
articles made of base me tals as well as metal alloys ( HS chapter s 72 to 81); 
− Tools and cutlery of base metal (HS chapter s 82 and 83);  
− Mineral fuels such as coal, natural gas, propane and butane but excluding crude and 
refined petroleum ( HS headings 2701 to 2704, 2706 to 2708 and 2711 to 2715 ); 
− Fertilizers ( HS chapter  31); 
− Mineral lubricants ( HS subheading 3403);  
− Ceramic products ( chapter  69); 
− Glass and glassware ( chapter  70 except 701911 -19, 701940 -59); and 
− Pearls, precious and semi -precious stones and jewellery  (HS chapter  71 and HS 
Subheadings 911310 and 20 ). 
2.2  Overview of LDC trade in these product s 
2.3.  The schemes  reviewed in this note are non-reciprocal preferential trade arrangements for LDCs 
(LDC-PTAs, henceforth) for which preferential tariff and preferential import statistic s are available 
with the Secretariat as indicated in Table 1.  
Table 1: List of PTAs included in the analysis  
Preference -granting Member  Year of tariff and import 
statistics  Preferential Trade Arrangement  
1. Australia  2018 GSP-LDC 
2. Canada  2018 GSP-LDC 
3. Chile 2018 LDC-specific  
4. China  2016 LDC-specific  
5. European Union  2018 GSP-LDC 
6. India 2015 LDC-specific  
7. Japan  2018 GSP-LDC 
8. Korea, Republic of  2018 LDC-specific  
9. Switzerland  2018 GSP-LDC 
10. Chinese Taipei  2018 LDC-specific  
11. Thailand  2018 LDC-specific  
12. United States (GSP/LDC)  2018 GSP-LDC 
13. United States (AGOA)  2018 AGOA  
Source:  Preferential Trade Arrangements database ( http://ptadb.wto.org ).3 
2.4.  China, India, the European Union and the Republic of Korea are , by far , the most important 
destinations by value of preference eligible minerals and metals originating in LDCs.  In total there 
are almost USD 9.9 billion of trade eligible for preferences of which China alone imports 44.2%, 
followed by India (25.1%), the European Union  (14%)  and the Republic of Korea  (9.7%) , as can be 
seen in Figure 1 . Nonetheless, LDC exports  eligible for preferences is substantial for all preference 
granting Members except for  Australia and Canada ( for whom trade eligible for preference s is less 
than USD 5 million).  
2.5.  In terms of export products, it  is worth highlighting that copper alone (HS chapter 74) accounts 
for 45% of imports from LDCs in this sector.  Other significant exports are precious or semi -precious 
stones, precious metals and jewellery  (16%, HS chapter  71), and a luminium (14%, mostly exports 
from Mozambique to the EU, HS chapter  76). 
 
 
 
 
 
 
 
 
 
3 Norway's MFN tariffs on imports of minerals and metals are equal to zero  in 2017 (the latest available 
year of import data detailing the duty scheme used). Hence, the Norwegian GSP scheme is not part of this 
analysis.  G/RO/W/203  
 
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  Figure 1: Total trade eligible for preferences in US D million , 2018  
 
Source: WTO Integrated Database, 20 20. 
2.6.  As far as LDC beneficiaries are concerned, Figure 2 shows the value  of LDC exports of minerals 
and metals to preference -granting Members listed in Table 1 . Zambia (key product: copper), the 
Democratic Republic of Congo (key products: cobalt and copper) and Mozambique (key product: 
aluminium)  account for the majority of exports in this sector . In addition,  Tanzania (key product: 
gold), Myanmar (key products: c opper, ferro -nickel, jewellery and precious stones), Madagascar 
(key product: nickel), Angola (key products: natural gas and diamonds), Guinea (key product: gold) 
and Burkina Faso (key product: gold)  have preference -eligible exports above USD 200 million . 
Almost all LDCs , however,  record substantial trade flows in minerals and metals.  
 
 
003471101137170206961138124844379
0 1000 2000 3000 4000 5000ChileChinese TaipeiCanadaAustraliaThailandSwitzerlandUSA (AGOA)JapanUSA (LDC)Korea, Republic ofEUIndiaChina
Total trade eligible for preferences in US$
millionG/RO/W/203  
 
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  Figure 2: Total trade eligible for preferences in US D million , by origin , 20184 
 
Source: WTO Integrated Database, 20 20. 
3  RULES OF ORIGIN APPLIED TO THESE PRODUCTS  
3.1.  Different  preference -granting Members apply different methods to determine the  origin of 
minerals and metal s, reflecting the heterogeneity of the products covered  in this sector . Two main 
types of rules can be distinguished, depending on the level of processing of the goods:  
3.1  "Wholly -obtained" good s 
3.2.  Wholly obtained goods covers  raw materials and semi-manufactured goods subject to very 
little processing. Products subject to t his rule include base metals and minerals (copper cathodes, 
aluminium, cobalt, zinc, lead or titanium ores), precious metals ( silver and gold), salt, earths (silica 
sand), blocks of stones or cut stones (granite, marble, mica, limestone or other building stones) , 
precious stones (worked or unworked)  and mineral fuels (coal, butane).  
3.3.  All preference -granting Members would deem such goods  to be wholly obtained, although the 
specific draft of the rules may be more or less explicit. For instance, the EU defines such prod ucts 
simply as " mineral products extracted within that country or territory " whereas the Canadian rule 
states that they must be " extracted from the soil or the seabed of the coun try" and the Indian rule 
explicitly defines them as " raw or mineral products i ncluding mineral fuels, lubricants and related 
materials as well as mineral or metal ores extracted from its territory ".  
3.4.  Of course, other products, even if subject to additional stages of processing, would be deemed 
to be "wholly obtained" as long as they  were manufactured from entirely wholly obtained materials. 
This would be the case, for instance, of simple ceramic and porcelain products, mineral oils, metal 
tools (e.g. bolts, screws), locks and padlocks, table and kitchen metal articles (e.g. spoons) a nd 
ornaments of base metals (e.g. statuettes).  All preference -granting Members also explicitly 
recognize that goods made only from wholly obtained goods would be deemed to be wholly obtained 
too. 
3.2  "Sufficiently" or "substantially transformed" goods :   
3.5.  Some of the goods  covered in this sector could fall under this category when they are made of 
different  materials, some of which are non -originating. For instance, metal alloys (steel, bra ss) or 
articles  made of metal alloys (tools, kitchen and table articles, ornaments, etc.), fertilizers and 
 
4 Detailed figures for each LDC can be found in Annex 1 to this note.  
G/RO/W/203  
 
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  jewellery.  For such products, some preference -granting Members apply their general rules of origin 
(Canada;  China;  India; Republic of  Korea;  Chinese Taipei ; Thailand;  and the US) while others use 
product -specific rules (EU ; Japan; and  Switzerland ). 
3.6.  China's rules are "CTH or a minimum local value content of 40%" and India's rules are "CTSH 
and a minimum  local value content (or regional value content, "RVC") of 30%". Korea's rules are 
based on the percentage value criterion (minimum local content of 40%) and so are those of the 
United States (local content (materials and "direct costs of processing") of at least 35%). 
Japan's  product -specific rules  are mostly based on  the CTH criterion , sometimes associated with 
specific requirement . Finally, the EU's  (and Switzerland's)  product -specific rules of origin are more 
granular and more varied . In general, the rule is either "CTH" or "CTH or a minimum value content 
of 30% " but for some products (e.g. jewellery) it is "CTH a nd a maximum content of non -originating 
materials of 50%". For some products, the CTH criteria may be combined with some restrictions 
("CTH except from").  
3.7.  Given the industrial profile  of most LDCs, the "wholly obtained" rule is most likely the origin 
criterion which applies to majority of ex ports originating in LDCs in this sector . 
4  UNDER UTILIZATION RATES: GENERAL OBSERVATIONS  
4.1.  The interest of focusing on under utilization at the most detailed level possible (as opposed to 
focusing on overall utilization) is that this approach could help identify, in a more specific manner, 
areas for further attention .5 As a result, identifying sectors with under utilization or "pockets of 
under utilization" as precisely as possible allows  for an examination of origin requirements and an 
identif ication of trade restrictive and trade facilitating practices . 
4.2.  Based on the data currently available with the Secretariat (Table 1 above) , there are 4 ,523 
observations of annual imports at tariff line level (i.e. a single tariff line with preferential imports 
from one LDC to one preference -beneficiary Member). The overall trade weighted underutilization 
rate for all minerals and metals, all LDCs and all preferential schemes is 66.7%. Interestingly, 
though, 84. 4% of observat ions have an underutilization of 100%, implying that smaller trade flows 
make less use of preferences. Even when trade flows below USD 100,000 and the top three  single 
largest trade flows (copper, aluminium and cobalt) are excluded, 66.5% of preferences ar e unused. 
Hence, underutilization of trade preferences in the minerals and metals sector is surprising high: 
only about 33.3% of all preference -eligible imports receive a preference in practice . 
4.3.  Given that underutilization rates in this section are trade w eighted, aggregate  under utilization 
rates are strongly influenced by large imports of minerals and metals from LDCs by China and India , 
and to a lesser extent the European Union and the Republic of Korea . At a more disaggregated level, 
however, there is substantial heterogeneity of preference utilization across beneficiary granting 
Members  is evident from Figure 3 . Preferences are fully used in Japan, almost fully used in the US, 
EU and Korea but strongly underutilized in most other schemes . 
 
5 Section 5 of a previous note by the Secretariat (G/RO/W/185) discusses why the concept of 
under utilization is preferable to the concept of utilization. All calculations in this note concern  under utilization 
rates. All preference e ligible annual t rade values at the tariff line level below USD 1,000 are excluded in this 
section in order to focus on substantial trade flows only. In addition, the three largest annual LDC exports 
values at the tariff line level (i.e. values above USD 700 million)  are excluded equally to reduce their distortion 
of the general picture (copper, cobalt and aluminium).  G/RO/W/203  
 
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  Figure 3: Value of imports and underutilization of LDC minerals and metals exports 
eligible for LDC-PTA tariff treatment6, in USD million , 2018  
 
Source: WTO Integrated Database, 20 20. 
4.4.  The picture is also  heterogeneous in respect to the situation of beneficiary LDCs. 
Underutilization rates range  from above 95% in the case of 18 LDCs  (i.e. half of all the LDCs)  to 
below 25% for 4 LDCs. Interestingly, eight LDCs have an underutilization rate between 50% and 
80% showing that they have the capacity to utilize trade preferences but not for all their preferential 
exports .  
4.5.  Moreover, underutilization also varies substantially across HS chapter s, as can be seen in Figure 
4 below. There is almost no utilization of preferences in chapters 25 (salt, stones) and 71 (precious 
stones, jewellery) while there is almost full utilization in chapter 75  (nickel) . It is difficult to explain  
why the utilization of trade preferences would differ so significantly for similar products such as, for 
instance, nickel (HS chapter 75, underutilization of only 4%), iron and steel ( chapter 72, 
underutilization of 94%) or copper ( chapter 74, underutilization of 54%).  
4.6.  As can be seen in Figure 4, there does not seem to be a clear relation between the total ann ual 
value of imports and under utilization of preferential duty schemes : underutilization rates vary 
irrespective of the size of imports. One could have assumed that larger and import values involve 
large shipments, a larger number of firms , or bigger firms  who are better prepared to understand 
and comply with preferential origin requirements to use preferences more effectively . One peculiarity 
is HS chapter 71, with a very large value of trade ( more than USD 1.5 billion ) and an underutilization 
rate of 97%. Th e case of this chapter is examined in greater detail in section 6 below . 
 
6 Labels contain trade values ( million  USD), bubble size increases with the value of preference eligible 
trade . 
Australia , 4Canada , 3Chile , 0China , 2012
EU, 211India , 2484
Japan , 170 Korea, Republic of , 961Switzerland , 101
Chinese Taipei , 0Thailand , 71
USA (AGOA) , 137
USA (LDC) , 206
0%20%40%60%80%100%G/RO/W/203  
 
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  Figure 4: Value of imports and underutilization of LDC minerals and metals exports 
eligible for LDC-PTA tariff treatment  by HS chapter7, in US D million , 2018  
 
Source: WTO Integrated Database, 20 20. 
4.7.  The detailed underutilization rates for each scheme and beneficiary LDC are reproduced in 
Annex 1 of this note. As can be seen and as summarized above, an overall examination  of imports 
and underutil ization rates in the mineral and metals sector shows that there is no  clear pattern  
associating  under utilization  with a specific LDC beneficiary, or with a specific sector, or with a specific 
LDC-PTA or a type of origin criteria . As a result, other factors  which might help explain variations in 
underutilization rates are examined below.  
4.1  Do preferential margins influence the utilization or non -utilization of trade 
preferences in the minerals and metals sector?  
4.8.  One reason commonly put forward to explain the non -utilization of a trade preference is that 
the preferential margin , if too small,  might  not provide enough incentives for firms to use trade 
preferences . In other words: when the import duty rate applied on  an MFN basis is "low", there 
would be  no sufficient incentive for economic operators to comply with rules of origin to claim a 
preference. Previous calculations by the Secretariat , however,  indicated that MFN duties did not 
seem to be correlated to prefer ence utilization in the case of LDC duty schemes  (see graph s 1 and  2 
of G/RO/W/185).  
4.9.  Figure 6 below, explored this reasoning  with a specific focus on minerals and metals. As can 
be seen, n o clear pattern emerges when under utilization rates are related to preferential margins. 
In fact, under utilization rates are high irrespective of the MFN rates and highest for those goods 
where the preferential margin is greatest, i.e. those goods on which operators would make the 
largest duty savings ( goods subject to an  MFN rate s above 15%).  If preferential margins influenced 
the willingness of operators to claim a preferential tariff treatment , the graph would show an opposite 
trend: a high level of underutilization for goods subject to low preferential margins (below 2 % and 
between 2% and 5%) and decreasing underutilization for higher margins (between 5% and 15% 
and above 15%).  It should be noted that the analysis is based on aggregated datasets of annual 
import statistics and not transaction level data. Hence, fixed co sts, for example, related to an 
 
7 Labels contain trade values ( million  USD), bubble size increases with the value of preference eligible 
trade . 
chapter 25 ; 142
chapter 26 ; 120chapter 27 ; 453
chapter 31 ; 19chapter 34 ; 0
chapter 68 ; 2
chapter 69 ; 25chapter 70 ; 2chapter 71 ; 1596
chapter 72 ; 310
chapter 73 ; 69chapter 74 ; 2840
chapter 75 ; 328chapter 76 ; 200
chapter 78 ; 88chapter 79 ; 16chapter 80 ; 12
chapter 81 ; 112chapter 82 ; 15
chapter 83 ; 13chapter 91 ; 2
0%20%40%60%80%100%underutilization
HS chapterG/RO/W/203  
 
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  individual transaction, cannot be taken into consideration. However, it seems plausible to conclude 
that preferential margins do not influence, in general, the utilization or non -utilization of trade 
preferences by LDCs in t his sector.  
Figure 6: Underutilization of trade preferences for minerals and metals vs. preferential 
margin (a ll trade, weighted by preferential trade volume ), 20188 
 
Source: WTO Integrated Database, 20 20 
4.10.   An exception to this general observation could be high -value goods such as precious stones. 
For such goods, product quality and firm -supplier relations are more determinant than the 
availability of trade preferences. For instance, imports  of more than USD 90 million of rubies, 
sapphires and emeralds (HS 710391) to Switzerland are subject to a n MFN rate of CHF 800 per 
100kg  and no preferences are utilized (underutilization rate of 100%). Such cases are, however, 
circumscribed to some products only.  
4.11.   Given the s ignificant values associated with imports of some mineral and metal products, a n 
increase of utilization in this sector could lead to significant duty savings, even in instances in which 
the MFN duty rates and the resulting preferential margins are relativ ely low . 
4.2  Are stricter origin criteria associated with more c omplex products  and higher 
preference underutilization?  
4.12.   Another possible assumption would be that raw materials and less processed goods products 
are associated with simpler origin criteria (wholl y obtained goods) and would therefore be associated 
with fuller utilization of preferences. Conversely, more complex manufactured goods could be 
associated with more complex product -specific rules  and therefore a more variable ability to utilize 
preferences by firms. To test this hypothesis,  underutilization rates were examined in relation to the 
complexity of products.9 The majority of products in the minerals and metals in MTN category are 
 
8 Note: Eligible Trade values at the tariff line level below USD 1,000 are excluded in this section in order 
to focus on trade flows with substantial values. In addition, the three biggest trade flows at the tariff line level 
(i.e. above USD 700 million) w ere also excluded to avoid any distortions.  
9 Products were grouped using the "Broad Economic Categories", which classifies products either as 
primary or processed: https://unstats.u n.org/unsd/trade/classifications/bec.asp . 
0%10%20%30%40%50%60%70%80%90%100%
<=2 <2 & <=5 <5 & <=15 >15underutilization
Preference MarginG/RO/W/203  
 
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  classified as "processed products ", and for this category, the underutilization rate is 66%. 
Interestingly, underutilization is even higher , at 73%, for  the remaining " primary products ". 
5  WHICH OTHER FACTORS INFLUENCING UNDERUTILIZATION ? 
5.1.  If underutilization is n ot clearly associated with the stringency of rules of origin (wholly obtained 
origin criteria) or preferential margins, other factors could be influencing the ability of LDC exporters 
to utilize trade preferences. Such other factors could relate to : (1) a poor awareness by economic  
operators that trade preferences are available ; or (2) a poor ability to comply with other origin 
requirements, namely origin certification or direct consignment rules.  Both are discussed below.  
Finally, another possibility  is that the data being analysed does not take into account special regimes 
which allow for duty -free importation. It is possible that  such regimes could be significant in the case 
of some products (e.g. metals which are imported to be processed and exported and  which could 
hence benefit from duty drawback  schemes ). The data notified by Members to the WTO might not 
reflect that a preference was ultimately granted. However, such cases are circumscribed and  would 
not affect the overall findings for this entire sect or. 
5.1  Awareness  that a preference is available  
5.2.  Awareness that a trade preference is available is an essential component of preference 
utilization. However, it is a factor which cannot be tested through trade statistics at an aggregate 
level. Only firm -level evidence could confirm that firms are not claiming a preference because they 
are not aware that one is available  or because they prefer not to invest to develop the necessary 
knowledge about preferences . Nevertheless, while it might not be possible to quan tify the influence 
that this could have on underutilization, i t is plausible to assume that  this lack of awareness hinder s 
greater utilization, in particular for small -value consignments (assuming that the exporting firms are 
also smaller and less exposed to international trade).  
5.2  Direct consignment rules  
5.3.  As was shown in a previous note  by the Secretariat (G/RO/W/187/Rev.1) , stricter direct 
consignment and documentary requirements are associated with higher  under utilization , at least in 
the case of  agricultural products. Th e same finding can also be observed for minerals and metals.  
As can be noted in Figure 8 below, underutili zation rates are higher for landlocked LDCs  (76%) than 
for LDCs with sea access (62%) indicating that logistical and transportation arrangements can 
influence preference utilization in this sector too.  However, the difference in underutilization for both 
LDC groups is less marked for minerals than had been noted for agricultural products .10 
 
10 The underutilization rate for landlocked LDCs was more than double (52%) that of LDCs with access 
to the sea (21%) (Graph 1 in G/RO/W/187/Rev.1).  G/RO/W/203  
 
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  Figure 8: Underutilization rates for minerals and metals for Landlocked LDCs vs. LDCs 
with sea access , 2018  
 
Source: WTO Integrated Database, 20 20 
6  THE SPECIFIC CASE OF CHAPTER 71  
6.1.  To get a better understanding about possible patterns  of underutilization in minerals and 
metals, this section examines the case of a narrower range of goods : those of HS chapter 71 
(precious stones, gold, jewellery).  
6.2.  More than USD 1.5 billion of imports  from LDCs are eligible for preferences in this chapter . 
On the preference -granting Member side, India is the main importer of goods originating in LDCs 
(82% of imports in this chapter ), followed by China (9%) and Switzerland (6%). On  the 
preference -beneficiary Member side, Tanzania and Burkina Faso are  the main  exporters ( gold to 
India) followed by  Myanmar (rubies, sapphires and emeralds to Switzerland). Underutilization is high 
in chapter 71: across all the top 25 LDC exports by valu e (at the tariff line level) all products have 
an underutilization of 100%, except for exports of silver waste and scrap from Zambia to the Republic 
of Korea ( 0% under utilization).  While overall underutilization for the entire chapter is very significant 
(95%), underutilization rates vary significantly across HS sub -headings.  
6.3.  Despite th is relativ e concentration of flows  at the chapter level , a detailed analysis of specific 
subheadings yields interesting observations in relation to origin criteria . Table 2 below details 
underutilization rates and origin criteria for HS subheading 711311 . As can be seen, there are 
interesting variations: for example , silver exports from Niger almost fully utilized preferences in the 
EU but not in China, Japan or Switzerland . In the case of Nepal, preferences are only partially used 
with the EU, but almost fully used in the case of Japan and the US, despite very similar origin criteria.  
In this particular case, variations in origin criteria do not seem to lead to higher or lower  preference 
utilization.  
Table 2: Underutilization and origin criteria for a rticles of jewellery and parts thereof, of 
silver ( HS 711311)  
Preference -granting 
Member  Exporting 
LDC Value of trade eligible for 
preferences (US D) Origin criteria  Under utilization  
EU Niger  837,898  CTH or RVC 30%  4% 
China  Niger  615,348  CTH or RVC 40%  100%  
Japan  Niger  102,660  CTH 100%  
0%10%20%30%40%50%60%70%80%
sea access landlockedunderutilizationG/RO/W/203  
 
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  Preference -granting 
Member  Exporting 
LDC Value of trade eligible for 
preferences (US D) Origin criteria  Under utilization  
Switzerland  Niger  114,058  CTH or RVC 30%  100%  
EU Nepal  595,741  CTH or RVC 30%  44% 
Japan  Nepal  193,655  CTH 6% 
USA (LDC)  Nepal  798,716  RVC 35%  16% 
Korea, Rep. of  Myanmar  110,091  RVC 40%  100%  
 
6.4.  Similar observations can be made in respect of HS subheading 711319  as shown in Table 3 
below. As can be seen, under utilization rates vary  and do not seem to follow a pattern related to the 
applicable origin criteria . For instance, exports from Lao PDR to Australia hardly e ver utilize 
preferences while Nepal's exports always do in most instances: yet, the rule is identical. Nepal's 
exports to the US also use effectively preferences while Lao PDR exports to Canada do not  at all. In 
the particular case of this subheading and these two LDCs therefore, the ability of firms to use 
preferences in the exporting LDC seem to be more important than the type of origin criteria being  
used.  The case of exports from Nepal in HS  711311 (previous table) seems to confirm this.  
Table 3: Underutilization and origin criteria for a rticles of jewellery of precious metal 
other than silver ( HS 711319 ) 
Preference -granting 
Member  Exporting LDC  Value of trade eligible for 
preferences (US D) Origin criteria  Underutilization  
Switzerland  Myanmar  3,705,896  CTH or RVC 30%  100%  
EU Myanmar  828,586  CTH or RVC 30%  100%  
EU Mozambique  141,886  CTH or RVC 30%  100%  
USA (LDC)  Nepal  1,253,765  RVC 35%  6% 
USA (LDC)  Cambodia  801,957  RVC 35%  0% 
Australia  Lao PDR  1,065,863  RVC 50% (LDC 25%)  91% 
Australia  Nepal  260,056  RVC 50% (LDC 25%)  12% 
Canada  Lao PDR  258,678  RVC 20%  100%  
Japan  Myanmar  265,587  CTH 100%  
 
7  POSSIBLE CONCLUSIONS  
7.1.  Minerals and metals are another sector for which underutilization of trade preferences is 
surprisingly high: only about a third of imports from LDCs receive preferences in this sector. This is 
all the more surprising as many products in this sector are wholly obtained goods. Howe ver, 
underutilization does not affect all products, all LDCs and all preference -granting Members in the 
same manner. Utilization varies greatly between different schemes and, within each scheme, 
between sectors. Given the significant values of imports of m inerals and metals, improving 
preference utilization could yield significant duty savings for beneficiary LDCs.  
7.2.  As shown in this note, however, the reasons associated with the non -utilization or 
underutilization of trade preferences are not entirely clear,  but some reasons could be excluded. 
First, low preferential margins do not seem to influence utilization. Second, the complexity of 
products (whether raw materials or more processed goods) also do not seem to influence utilization. 
Third, the origin crite rion also does not seem to clearly influence utilization  (whether wholly obtained 
or substantially transformed, whether the criterion is based on value or tariff classification, etc.), 
although this reason cannot be dismissed for specific tariff lines.  
7.3.  As a result, other possible reasons should be further studied, in particular: direct consignment 
rules (whether goods are consigned directly or were transhipped); variations in obligations related 
to origin certification (not examined in this note); and awaren ess among economic operators that a 
preference is available.   
  G/RO/W/203  
 
- 12 - ANNEX 1 – UNDERUTILIZATION OF TRADE PREFERENCES IN MINERALS AND METAL PRODUCTS: MEMBER -BY-MEMBER BREAKDOWN  
2018 OR LATEST AVAILABLE YEAR  (SEE TABLE 1)  
(1) Share of total imports eligible for LDC preferences but not receiving preferential treatment (%)  
(2) Value of total imports eligible for LDC preferences but not receiving preferential treatment (in thousand USD) 
  Australia  Canada  Chile China  EU India 
(1)(%) (2) (1)(%) (2) (1)(%) (2) (1)(%) (2) (1)(%) (2) (1)(%) (2) 
Afghanistan  100 8 86 167 100 0 100 195 99 949 100 45 
Angola  100 19 100 11 100 0 100 78,584  29 3,061  100 104,489  
Bangladesh  14 77 96 768 68 94 100 78 5 1,390  100 50,940  
Benin              100 1 81 8 95 22,140  
Burkina Faso  100 1 100 4         85 166 100 216,748  
Burundi      100 0     100 2 100 0 100 2 
Cambodia  3 28 37 591 100 35 100 5,999  7 1,025  76 2,742  
Central African Republic  100 2 100 0 100 0     100 11     
Chad      100 5 100 22 100 68 100 20     
Democratic Republic of the Congo      100 1     100 1,727,696  99 261 100 34,466  
Djibouti      100 0     100 21 100 5,764  100 410 
The Gambia      100 8         97 24 100 2,847  
Guinea  100 2 99 4 100 1 100 20 99 37 100 253,730  
Guinea -Bissau                  100 5 100 314 
Haiti  100 2 70 25 100 2     46 21 100 2,280  
Lao People's Democratic Republic  91 974 100 263         100 116 58 77,676  
Lesotho      100 0 100 0 100 14     100 3,646  
Liberia      100 12     100 2,919  100 143 100 8,819  
Madagascar  72 14 99 39 100 7 22 22,038  9 247 100 7,198  
Malawi      100 0     100 9 99 84 100 60 
Mali 100 13 100 0     100 6 90 302 100 167,116  
Mauritania      100 1     100 20 100 194 100 9,013  
Mozambique  100 4 100 45 100 1 100 19,693  0 440 100 253,678  
Myanmar  60 55 100 31 100 14 100 411,356  54 7,482  100 748 
Nepal  15 74 21 53 92 27 48 3,174  29 690 100 64,655  
Niger  100 32 75 24     100 621 11 101 100 234 
Rwanda      100 0     51 12 99 51 40 443 
Senegal  100 2 61 3     100 13 12 3,034  95 25,607  
Sierra Leone  100 64 95 9     100 1,939  100 113 100 14,694  
Solomon Islands  100 4 100 0         100 6     
Tanzania  100 8 25 3     100 15,030  99 654 99 501,069  
Togo  100 29 72 0     100 8 90 287 100 114,325  
Uganda  100 76 99 11 100 10 100 18 99 223 100 256 
Vanuatu  100 26     100 10 100 16 100 4 100 20 
Yemen      100 18 100 0 99 8,852  42 2,354  100 2,723  
Zambia  100 13 100 0 100 0 98 1,967,802  2 307 7 31,880  
 Total LDCs    1,527    2,096    223   4,266,204    29,574    1,975,013  
  
  G/RO/W/203  
 
- 13 -   Japan  Rep. of Korea  Switzerland  Chinese Taipei  Thailand  USA (AGOA)  USA (LDC)  
(1)(%) (2) (1)(%) (2) (1)(%) (2) (1)(%) (2) (1)(%) (2) (1)(%) (2) (1)(%) (2) 
Afghanistan  100 15 100 2 100 5,453      100 4     65 102 
Angola      20 35,176              100 8 100 8 
Bangladesh  39 82 81 4,109  80 252 100 2 100 165         
Benin          100 1                 
Burkina Faso  100 6 100 0 100 4 100 7             
Burundi                  100 0     0     
Cambodia  4 24 97 833 91 58 100 1 100 56,739      25 9,843  
Central African Republic      69 1,316  100 13         100 28 100 28 
Chad                              
Democratic Republic of the Congo      0 1,732  100 49     100 0     1 103 
Djibouti      100 0         100 1 100 13 100 13 
The Gambia                  100 7 100 3 100 3 
Guinea      100 54 100 16     100 0 100 53 100 53 
Guinea -Bissau                              
Haiti          28 10     100 0     25 100 
Lao People's Democratic Republic  100 17 100 101 100 46     100 13,123          
Lesotho          100 1,428          100 6 100 6 
Liberia      100 134         100 1 100 5 100 5 
Madagascar  0 28 1 1,139  100 14,779      100 366 4 193 4 193 
Malawi      100 0         100 0         
Mali 0     38 374         100 1 49 15 49 15 
Mauritania      100 57 100 54                 
Mozambique  0     100 6,460  100 21,403          81 1,058  81 1,058  
Myanmar  14 284 5 201 100 52,226  100 29 100 966     8 288 
Nepal  20 88 76 8 65 794 79 227 100 24     9 278 
Niger  100 103 100 3 100 132     100 37 72 87 72 87 
Rwanda      100 0 100 1         8 68 8 68 
Senegal  0     100 120 100 11     100 1 76 13 76 13 
Sierra Leone      100 55         100 1 28 113 28 113 
Solomon Islands      100 0                     
Tanzania      100 1,979  100 409     100 2 83 19 83 19 
Togo  100 5 100 0 100 127     100 1         
Uganda      36 191 100 1     100 0 5 92 5 92 
Vanuatu                              
Yemen      100 5,843  100 17     100 3     0  
Zambia  0    3 2,777  100 3,587      100 0 31 39,057  31 39,057  
Total LDCs    652   62,664    100,871    266   71,442    40,831    51,545  
Source: WTO Integrated Database, 20 20. 
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