G/RO/W/184/Rev.1  
 
19 October 2021  
(21-7900) Page: 1/10 
Committee on Rules of Origin  Original: English  
 
 
RULES OF ORIGIN BASED ON A CHANGE OF TARIFF CLASSIFICATION  
Revision  
The following submission, dated 13 October 2021, is being circulated at the request of the delegation 
of Tanzania, on behalf of the LDC Group.  
 
_______________  
 
 
It is recalled the LDC Group submitted a previous submission on change of tariff classification in 
May 20191. The submission recalled that Paragraph 1.2 of the Nairobi Decision provides as follows:  
1.2 When applying a change of tariff cl assification criterion to determine substantial 
transformation, preference -granting Members shall:  
 (a) As a general principle, allow for a simple change of tariff heading or change of tariff 
sub-heading.  
 (b) Eliminate all exclusions or restrictions to change of tariff classification rules, except 
where the preference -granting Member deems that such exclusions or restrictions are 
needed, including to ensure that a substantial transformation occurs.  
 (c) Introduce, where appropriate, a tol erance allowance so that inputs from the same 
heading or sub -heading may be used.  
According to such paragraph, the general principle for applying a CTC is a change of tariff heading 
(CTH) or a change of tariff subheading (CTSH).  
The second subparagraph (b)  calls for elimination of all exclusions or restrictions on such general 
principle of applying CTH or CTSH as general rule "except where the preference -granting Member 
deems that such exclusions or restrictions are needed, including to ensure that a substa ntial 
transformation occurs".  
In addition, paragraph 1.4 covers situations where combinations of two requirements have to be 
complied with to obtain originating status.  
 1.4 Preference -granting Members shall, to the extent possible, avoid requirements whic h 
impose a combination of two or more criteria for the same product. If a preference -granting 
Member still requires maintaining a combination of two or more criteria for the same product, 
that preference -granting Member remains open to consider relaxing su ch requirements for 
that specific product upon due request by an LDC.  
The former submission contained an extensive Annex I, concerning both the EU; Switzerland; 
Norway; and Japan that use extensively a combination of CTC with other requirements.  
 
1 See document G/RO/W/184 of 7 May 2019.  G/RO/W/184/Rev.1  
 
- 2 - 
 
  The result  of the analysis in Annex I carried out in the above -mentioned submission concluded as 
follows:  
"The issues to be considered to brin into conformity with the Paragraph 1.2 and 1.4 of the Nairobi 
Decisions the current use of the CTC criterion by the CTC gro up are threefold:  
(a) The exceptions to the general rules of CTH and CTSH are the norm rather than the exception 
for the CTC group. For instance, the rules of origin of Japan provides for CTH as a general 
rule, however there are 26 pages of exceptions to s uch general rule covering the majority of 
the HS chapters and at the time entire HS chapters.  
(b) The exceptions to the general rules are by far much stricter than the general rules going 
beyond any conceivable requirement for substantial transformation an d as such they are not 
justifiable.  
(c) In some cases, the same preference -giving countries have adopted more lenient rules of origin 
for the same products under FTAs that they have negotiated with other partners and/or there 
are existing best practices un der other FTAs on how substantial transformation could be 
achieved adopting less stringent requirements".  
Following the submission and the debate at the CRO meeting of May 2019 it was agreed that further 
consultations were necessary at bilateral level.  
Such bilateral consultation took place with Japan during 2019. However, at present, it has to be 
noted that conclusive responses to the detailed queries raised in the submission and reiterated by 
the LDC Group during the bilateral consultations with Japan hav e yet to be addressed.  
Annex I of this submission takes the point from where it has been left and it brings it forward with 
additional issues.  
The LDCs ackno wledge that URs under the Japan GSP are relatively in the high ranging above 80% 
in the last decade while the trade volume in terms of imports from LDCs has basically remained 
unaltered when external shocks are taken into account. Annex I shows that while utilization rates 
may be relatively high at general level, there are consistent pockets of un derutilization of the Japan 
trade preferences that my be generated by stringent product specific rules of origin and/or related 
administrative requirements like documentary evidence of direct consignment.  
In addition, utilization rates are one of the bench marks that may be used in assessing the adequacy 
rules of origin to LDC but not the only one. As stated in an earlier submission by the LDC Group2 
rules of origin for LDCs should be development -oriented contributing to create trading and 
investment opport unities in LDCs to build productive capacities and insertion in value chains. 
Examples of such possibilities are contained in the above -mentioned LDC submission.  
In some cases, it has been noted that there are product specific rules of origin requirements on 
chapters of the harmonized system where Japan shows MFN free of duty. It would be appreciated 
to better understand the need to maintain such RoO requirements when MFN rate of duty adopted 
by Japan is free.  
It is the understanding of the LDC  Group that Japan may be considering the revision of Japanese 
rules of origin under the periodical review of the Japanese scheme during 2021. It is hoped that this 
submission may be considered as a valuable input for such review. The tables in Annex I are by no 
means exhaustive and complete and the LDC Group is in fact refining the data and the analysis. In 
addition, this submission should be read in conjunction with the previous Annex I contained in 
document G/RO/W/184 of 7 May 2019, where detailed example s of product specific rules of origin 
of Japan that were found not in conformity with the Nairobi Decision were provided with exhaustive 
comments. The tables in Annex I have been assembled to resume a constructive debate based on 
both submissions.  
It has a lso to be noted that in the case of African LDCs there are, at the moment, no parallel or 
overlapping trade preferences besides the GSP. In the case of ASEAN LDCs, the ASEAN -Japan FTA 
 
2 Challenges faced by LDCs in complying with preferential rules of origin under unilateral preference 
schemes, paper presented by Uganda on behalf of the LDC Group. Document G/RO/W/148 of 28 October 2014.  G/RO/W/184/Rev.1  
 
- 3 - 
 
  provides alternative preferences that may be available to ASEAN LDCs. Ho wever, preliminary 
analysis contained in the table of Annex I shows that utilization rates under such FTA are rather low 
and that Roo are stringent.  
The tables outline a number of examples where Japan is invited to introduce reforms to bring GSP 
rules of o rigin in conformity with the relevant paragraphs of the Nairobi Decision.  
As outlined in the recent submission by the LDC Group3 more than five years have now passed from 
the adoption of the Nairobi Decision on preferential rules of origin for LDCs. Some progress has been 
recorded in achieving better transparency through the adoption of a notification template and the 
notification of the utilization rates of the Duty Free and Quota Free schemes. However, no parallel 
progress in implementing the substantive  part of the Nairobi Decision was observed, in particular on 
the paragraphs concerning the substantial transformation and certification requirements.  
As we are now approaching the next WTO Ministerial Conference, it is of paramount importance to 
show that  concrete progress has been made that could be adequately reflected in the outcome of 
the forthcoming Ministerial. Thus, it is now time to focus the debate in the Committee on Rules of 
Origin (CRO) on how to effectively implement the substantive aspects of  the Nairobi Decision on 
preferential rules of origin for LDCs.  
We hope that the submission may mark the start of a constructive engagement in improving rules 
of origin for LDCs by all preference -giving countries.  
_______________  
 
 
3 See document G/RO/W/194 of 5 March 2020: 5th Anniv ersary of the Nairobi Ministerial Decision: 
Review of Implementation, Identification of Gaps, and the Way Forward – Communication from the LDC Group.   
  G/RO/W/184/Rev.1  
 
- 4 - ANNEX I  
TABLE 1: UTILIZATION OF THE GSP SCHEME OF JAPAN BY HS HEADING (2019)  
Ranked in descending order according to value of imports received under MFN (USD thousands)  
HS Code  Description  Value of Imports (USD thousands)  UR (%)  Rules o f Origin  Comments 
on GSP rules 
of origin  Technical 
Elements  Suggested 
Best RoO 
Practice  Total  Dutiable  GSP 
Covered  Received under  
GSP Regional 
EPA MFN GSP EPA GSP ASEAN -
Japan  
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 
0303  Fish; frozen  60,073  60,073  60,073  998 0 59,075  1.66 0 Manufactured 
from 
products 
other than 
those of 
Chapter 3  CC This rule 
practically 
requires that 
all products of 
chapter 3 are 
wholly 
obtained and 
practically 
disregard that 
filleting of fish 
is a 
substantial 
transformation  Further 
investigation 
has to be 
carried out on 
the reason for 
low utilization. 
In any case, it 
may be 
observed that 
filleting fish 
should be 
considered as 
a substantial 
transformation.  There is  a 
need to 
further 
discuss the 
reasons for 
such low 
utilization and 
reform the 
actual Rules 
of origin 
accordingly.  
4202  Trunks; suit, 
camera  235,402  235,402  235,402  184,413  6,695  44,294  78.34  2.84 Manufactured 
from 
products of 
the different 
tariff 
headings 
(excluding 
heading 
42.05) of the 
products  CC Heading 4205 
classifies 
Other articles 
of leather or 
of composition 
leather 
including 
parts. The 
exclusion of 
this heading 
means that 
assembly of 
parts of 
leather into a 
finished article 
of leather is 
not origin  
conferring  Excluding non -
originating 
parts from the 
assembly 
process may 
be overly 
stringent rule 
even taking 
into account 
the tolerance 
rule Manufacture 
from 
materials of 
any heading, 
except that of 
the product 
or 
Manufacture 
in which the 
value of all 
the materials 
used does not 
exceed 70 of 
the ex -works 
price of the 
product (EU 
rules of origin 
for LDCs) .  
  G/RO/W/184/Rev.1  
 
- 5 - HS Code  Description  Value of Imports (USD thousands)  UR (%)  Rules o f Origin  Comments 
on GSP rules 
of origin  Technical 
Elements  Suggested 
Best RoO 
Practice  Total  Dutiable  GSP 
Covered  Received under  
GSP Regional 
EPA MFN GSP EPA GSP ASEAN -
Japan  
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 
0307  Molluscs;  138,527  138,527  137,711  118,908  794 18,825  85.84  0.57 Manufactured 
from 
products 
other than 
those of 
Chapter 3  CC This PSRO 
practically 
requires that 
all products of 
chapter 3 are 
wholly 
obtained and 
practically 
disregard a 
number of 
working or 
processing 
operation that 
may be 
carried out 
within the 
chapter such 
making flours 
or pellets our 
of molluscs.   Further 
investigation 
has to be 
carried out on 
the reason for 
high value of 
trade receiving 
MFN 
treatment. 
Direct 
shipment 
requirement in 
any case it 
may be 
observed that 
making flours 
and smoke 
mollusks within 
the same 
chapter should 
be considered 
a substantial 
transformation.  There is a 
need to 
further 
discuss the 
reasons 
explaining 
almost 19 
million of 
imports 
receiving MFN 
treatment 
and reform 
the actual 
Rules of 
origin 
accordingly  
6109  T-shirts, 
singlets (KoC)  340,900  340,900  340,900  319,808  3,624  17,468  93.81  1.06  
  G/RO/W/184/Rev.1  
 
- 6 - HS Code  Description  Value of Imports (USD thousands)  UR (%)  Rules o f Origin  Comments 
on GSP rules 
of origin  Technical 
Elements  Suggested 
Best RoO 
Practice  Total  Dutiable  GSP 
Covered  Received under  
GSP Regional 
EPA MFN GSP EPA GSP ASEAN -
Japan  
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 
6110  Jerseys, 
pullovers  479,410  479,410  479,410  461,101  2,532  15,777  96.18  0.53 Manufactured 
from woven 
fabrics, felt, 
nonwovens, 
KoC fabrics 
or lace of 
Chapter 50 
to 56 or 58 
to 60 CC, s.t., 
where NOM 
of heading 
50.07, 
51.11 
through 
51.13, 
52.08 
through 
52.12, 
53.09 
through 
53.11, 
54.07 
through 
54.08, 
55.12 
through 
55.16 or 
chapter 6 0 
are used, 
each of the 
NOM is KoC 
entirely in 
one or more 
of the 
Parties.  In spite of the 
high utilization 
rates, there 
are still 
significant 
amounts of 
trade 
receiving MFN 
treatment.  The PSRO 
requires 
manufacturing 
from woven 
fabrics. It may 
be the case 
that the 
garments have 
been 
assembled 
from parts of 
garments in 
the same 
chapter. To be 
further 
investigated  There is a 
need to 
further 
discuss the 
reasons for 
the large 
value of 
imports 
receiving MFN 
treatment 
that may be 
due to the 
PSRO or 
related 
admini strative 
requirement 
such as 
documentary 
evidence of 
direct 
shipment 
requirement  
6402  Footwear  79,950  79,950  0 0 64,196  15,754  0.00 80.30  Manufactured 
from 
products of 
the different 
tariff heading 
(excluding 
heading 
64.06) of the 
products  CC It is clear that 
this PSRO is 
overly 
stringent as 
already 
contained in 
the former 
submission.4 Assembly of 
parts of shoes 
into shoes is a 
substantial 
transformation  Manufacture 
from 
materials of 
any heading, 
except from 
assemblies of 
uppers affixed 
to inner soles 
or to other 
sole 
components 
of heading 
6406 (EU 
rules of origin 
for LDCs)  
 
4 G/RO/W/184 of 7 May 2019.   
  G/RO/W/184/Rev.1  
 
- 7 - HS Code  Description  Value of Imports (USD thousands)  UR (%)  Rules o f Origin  Comments 
on GSP rules 
of origin  Technical 
Elements  Suggested 
Best RoO 
Practice  Total  Dutiable  GSP 
Covered  Received under  
GSP Regional 
EPA MFN GSP EPA GSP ASEAN -
Japan  
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 
4203  Articles of 
apparel and 
clothing 
accessories, 
leather  13,999  13,999  0 0 0 13,999  0 0 Manufactured 
from 
products of 
the different 
tariff 
headings 
(excluding 
heading 
42.05) of the 
products  CC Heading 4205 
classifies 
Other articles 
of leather or 
of composition 
leather 
including 
parts. The 
exclusion of 
this headings 
means that 
assembly of 
parts of 
leather into a 
finished article 
of leather is 
not origin 
conferring.  Assembly 
article of 
leather from 
parts should be 
considered 
substantial 
transformation  CTH 
6201  Overcoats, 
carcoats,  196,613  196,613  196,613  184,315  2 12,296  93.75  0 Manufactured 
from woven 
fabrics, felt, 
nonwovens, 
KoC fabrics 
or lace of 
Chapter 50 
to 56 or 58 
to 60 CC, s.t., 
where NOM 
of heading 
50.07, 
51.11 
through 
51.13, 
52.08 
through 
52.12, 
53.09 
through 
53.11, 
54.07 
through 
54.08, 55.12 
through 
55.16 or 
chapter 60 
are used, 
each of the 
NOM is 
woven 
entirely in 
one or more 
of the 
Parties.  In spite of the 
high utilization 
rates, there 
are still 
significant 
amounts of 
trade 
receiving MFN 
treatment.  The PSRO 
requires 
manufacturing 
from woven 
fabrics. It may 
be the case 
that the 
garments have 
been 
assembled 
from parts of 
garments in 
the same 
chapter. To be 
further 
investigated  There is a 
need to 
further 
discuss the 
possible 
reasons for 
the amount of 
trade 
receiving MFN 
treatment 
that may be 
due to the 
PSRO or 
related 
administrative 
requirement 
such as 
documentary 
evidence of 
direct 
shipment 
requirement  6202  Coats  
(Women)  168,549  168,549  168,549  156,700  207 11,642  92.97  0.12 
6204  Suits 
(Women/Girls)  514,001  514,001  514,001  491,393  12,005  10,603  95.60  2.34  
  G/RO/W/184/Rev.1  
 
- 8 - HS Code  Description  Value of Imports (USD thousands)  UR (%)  Rules o f Origin  Comments 
on GSP rules 
of origin  Technical 
Elements  Suggested 
Best RoO 
Practice  Total  Dutiable  GSP 
Covered  Received under  
GSP Regional 
EPA MFN GSP EPA GSP ASEAN -
Japan  
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 
0304  Fish fillets and 
other fish 
meat 19,947  19,947  19,947  10,230  0 9,717  51.29  0 Manufactured 
from 
products 
other than 
those of 
Chapter 3  CC This rule 
practically 
requires that 
all products of 
chapter 3 are 
wholly 
obtained and 
practically 
disregard a 
number of 
working or 
processing 
operation that 
may be 
carried out 
within the 
chapter such 
as filleting, 
making flours, 
or pellets out 
of 
crustaceans.  Filleting of fish 
should be 
considered as 
a substantial 
transf ormation.  
Further 
investigation 
has to be 
carried out on 
the reason for 
relatively low 
utilization. In 
any case it 
may be 
observed that 
making flours 
and smoke 
crustaceans 
should be 
considered a 
substantial 
transformation  There is need 
to further 
discuss t he 
reasons for 
relatively low 
utilization and 
reform the 
actual Rules 
of origin 
accordingly  0306  Crustaceans  68,983  68,983  68,983  60,868  106 8,009  88.24  0.15 
6307  Other made 
up articles 
incl. dress 
patterns  23,962  23,962  23,962  5,912  10,697  7,353  24.67  44.64  Manufactured 
from 
chemical 
products, 
from 
products of 
heading 
47.01 to 
47.06, or 
50.01, or 
from natural 
textile fibres 
(excluding 
raw silk), 
manmade 
staple fibres 
or textile 
fibre waste  CC, s.t., 
where NOM 
of heading 
50.07, 
51.11 
through 
51.13, 
52.08 
through 
52.12, 
53.09 
through 
53.11, 
54.07 
through 
54.08,55.12 
through 
55.16 or 
chapter 60 
are used, 
each of the 
NOM is 
woven, or 
KoC entirely 
in one or The rule is 
basically 
requiring a 
double 
transformation 
requirement: 
the making up 
of fabrics and 
the making of 
the textile 
articles from 
fabrics  Double 
transformation 
requirements 
are obsolete 
and do not 
respect real 
value chains 
commercially 
meaningful  Making up 
from fabric or 
Manufacture 
in which the 
value of all 
the no - 
originating 
materials 
used does not 
exceed 70 of 
the ex -works 
price of the 
product  6306  Tarpaulins, 
awnings and 
sunblinds  7,226  7,226  7,226  0 437 6,789  0 6.05  
  G/RO/W/184/Rev.1  
 
- 9 - HS Code  Description  Value of Imports (USD thousands)  UR (%)  Rules o f Origin  Comments 
on GSP rules 
of origin  Technical 
Elements  Suggested 
Best RoO 
Practice  Total  Dutiable  GSP 
Covered  Received under  
GSP Regional 
EPA MFN GSP EPA GSP ASEAN -
Japan  
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 
more of the 
Parties.  
6406  Footwear; 
parts of 
footwear  7,560  7,560  0 0 1,037  6,523  0 13.72  Manufactured 
from 
products of 
the different 
tariff heading 
(excluding 
heading 
64.06) of the 
products  CC It is clear that 
this PSRO is 
overly 
stringent for 
parts of shoes 
as already 
contained in 
the former 
submission.5 Assembly of 
parts of shoes 
into shoes  is a 
substantial 
transformation  Manufacture 
from 
materials of 
any heading, 
except from 
assemblies of 
uppers affixed 
to inner soles 
or to other 
sole 
components 
of heading 
6406 (EU 
rules of origin 
for LDCs)  6403  Footwear; 
with outer 
soles 211,056  211,056  211,056  164,668  40,248  6,140  78.02  19.07  For footwear 
products, the 
utilization rate 
could be 
improved.  
6203  Suits 
(Men/Boys)  560,990  560,990  560,990  554,362  958 5,670  98.82  0.17 Manufactured 
from woven 
fabrics, felt, 
nonwovens, 
KoC fabrics 
or lace of 
Chapter 50 
to 56 or 58 
to 60 CC, s.t., 
where NOM 
of heading 
50.07, 
51.11 
through 
51.13, 
52.08 
through 
52.12, 
53.09 
through 
53.11, 
54.07 
through 
54.08, 
55.12 
through  In spite of the 
high utilization 
rates, there 
are still more 
than 
USD 5 million 
of trade 
receiving MFN 
treatment.  The PSRO 
requires 
manufacturing 
from woven 
fabrics. It may 
be the case 
that the 
garments have 
been 
assembled 
from parts of 
garments in 
the same 
chapter. To be 
further 
investigated  There is a 
need to 
further 
discuss  the 
possible 
reasons for 
the amount of 
trade 
receiving MFN 
treatment 
that may be 
due to the 
PSRO or 
related 
administrative 
requirement 
such as 
documentary 
evidence of 
direct 
shipment 
requirement  
 
5 G/RO/W/184 of 7 May 2019.   
  G/RO/W/184/Rev.1  
 
- 10 - HS Code  Description  Value of Imports (USD thousands)  UR (%)  Rules o f Origin  Comments 
on GSP rules 
of origin  Technical 
Elements  Suggested 
Best RoO 
Practice  Total  Dutiable  GSP 
Covered  Received under  
GSP Regional 
EPA MFN GSP EPA GSP ASEAN -
Japan  
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 
           55.16 or 
chapter 60 
are used, 
each of the 
NOM is 
woven 
entirely in 
one or more 
of the 
Parties.    
 
 
Notes: KoC: Knitted or Crocheted.  
__________