RESTRICTED  
  
G/RO/M/63  
 
20 March 2015  
(15-1600)  Page: 1/6  
Committee on Rules of Origin    
 
 MINUTES OF THE MEETING OF 30 OCTOBER 2014 
CHAIRMAN: MR KEN CHANG-KENG CHEN (CHINESE TAIPEI) 
Subjects Discussed1 
1   HARMONIZATION OF NON-PRE FERENTIAL RULES OF ORIGIN – 
TRANSPOSITION OF DRAFT HARMONIZED RULES OF ORIGIN TO MORE RECENT VERSIONS OF THE HS NOMENCLATURE – CONSID ERATION OF RULES IN 
HS CHAPTERS 1 TO 40 (DOCUMENT JOB/RO/5) ............................................................... 1
 
2   HARMONIZATION OF NON-PREFERENTIAL RULES OF ORIGIN – PROPOSAL BY 
THE CHAIRMAN TO INITIATE A TRANSPARENCY EXERCISE OF MEMBERS' NON-PREFERENTIAL RULE S OF ORIG IN ........................................................................... 2
 
3   NOTIFICATIONS UNDER ARTICLE 5 AND UNDER PARAGRAPH 4 OF ANNEX II 
OF THE AGREEMENT ON RULES OF ORIGIN (DOCUMENTS G/RO/N/115 TO G/RO/N/124) .................................................................................................................. 2
 
4   REVIEW OF NEW DEVELOPMENTS IN RELATION TO PREFERENTIAL RULES OF 
ORIGIN FOR LEAST DEVELOPED COUNTRIE S (WT/MIN(13)/42 OR WT/L/917) .............. 3  
5   PREFERENTIAL RULES OF ORIGIN FOR LEAST DEVELOPED COUNTRIES – 
SUBMISSION BY UGANDA ON BEHALF OF THE LDC GROUP 
(DOCUMENT G/RO/W/148) ............................................................................................. 4  
6   TWENTIETH ANNUAL REVIEW OF THE IMPLEMENTATION AND OPERATION OF THE AGREEMENT ON RULES OF ORIGIN (G/RO/W/149) .................................................. 5
 
7   DRAFT REPORT (2014) OF THE CO MMITTEE TO THE COUN CIL FOR TRADE IN 
GOODS (G/RO/ W/150) ................................................................................................... 5  
8   OTHER BU SINESS ........................................................................................................ 5  
8.1   Report on letters to and from the General Council Chair .................................................. 5  
8.2   Date of ne xt CRO meeting .......................................................................................... 6  
 
1  HARMONIZATION OF NON-P REFERENTIAL RULES OF ORIG IN – TRANSPOSITION OF 
DRAFT HARMONIZED RULES OF ORIGIN TO MORE RECENT VERSIONS OF THE HS NOMENCLATURE – CONSIDERATION OF  RULES IN HS CHAPTERS 1 TO 40 
(DOCUMENT JOB/RO/5) 
1.1.  The Chairman recalled that the Secretariat had presented the results of the transposition of 
the draft rules of origin to the HS2012 nomenclature in document JOB/RO/5 at the April 2014 
meeting of the CRO. He recalled that this was the last stage of the transposition exercise and 
asked Members to verify the technical accuracy of  the work undertaken in order to discharge the 
Secretariat from the mandate it had been given. He recalled, furthermore, that the rules would remain open for comments at any time. In fact, he informed Members that a revision of the 
document was being prepared by the Secretariat to  reflect comments received from Japan, Norway 
and Ecuador. He added that some delegations had expressed the desire to dedicate some time to a closer analysis of the draft transposed rules. He  therefore invited Members to make comments to 
HS chapters 1 to 40 of the transposed draft harmonized rules. 
                                               
1 The agenda of the meeting had been circulated in document WTO/AIR/4381. G/RO/M/63 
 
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  1.2.  The representative of Japan confirmed that his delegation had already provided written 
comments and that he looked forward to seeing their comments reflected in a revised document. 
The representatives of Thailand and Mexico mentioned that their colleagues needed some 
additional time to consider the rules and provide comments. 
1.3.  The Chairman proposed that this issue be taken up again at the following CRO meeting; in 
particular, an examination of the draft transposed rules in HS Chapters 41 to 97. 
1.4.  It was so agreed. 
2  HARMONIZATION OF NON-P REFERENTIAL RULES OF ORIG IN – PROPOSAL BY THE 
CHAIRMAN TO INITIATE A TRANSPARENCY EXERCISE OF MEMBERS' NON-PREFERENTIAL RULES OF ORIGIN 
2.1.  The Chairman recalled that, at the last CRO meeting, the Committee had discussed ways to 
carry forward its work on non-preferential rules o f  o r i g i n  i n  t h e  m o s t  m e a n i n g f u l  a n d  e f f i c i e n t  
manner. One of the options discussed consisted of  an exchange of views and experiences with 
relation to existing non-preferential rules of orig in. In the absence of harmonized rules, the only 
disciplines that applied to non-preferential rules of origin were those contained in Article 2 of the 
WTO Agreement on Rules of Origin. The idea would then be to use the mandate in that article to engage in an "educational exercise" to better understand the design, coverage and effect of 
existing non-preferential rules of origin. Member s had already expressed the view that this would 
be a useful exercise and one which could help the CRO to assess how best to move forward the negotiations for harmonized rules of origin (harmonization work programme, HWP). 
2.2.  According to the Chair, Members should engage in this exercise with the assurance that it 
would be purely educational. He also said that the Secretariat could assist by preparing thematic 
notes to be discussed. Finally, he added that the CRO would benefit from greater transparency regarding existing practices so he would favour all efforts which would make notifications and any 
legislation related to rules of origin more easily accessible. 
2.3.  Commenting on the Chair's proposals, the representative of Chinese Taipei agreed that there 
would be value to better understanding the impact of current non-preferential rules of origin, 
particularly as Article 2 of the Agreement only provided general guidelines for the provisional 
application of such rules. 
2.4.  Similarly, the representative of the Phili ppines said that her delegation was open to this 
educational exercise and that she would strongly favour hearing inputs from private sector 
representatives so as to assess the impact that non-preferential rules had on the industry. At the 
end of the day, the HWP had been launched prec isely to simplify and facilitate trade and the 
conduct of business. 
2.5.  The representative of Switzerland recalled that his delegation had already made, in 2013, a 
brief presentation of national practices relating to  non-preferential rules of origin. He agreed with 
the Chair's proposals and encouraged other delegations to also share their experiences with the 
CRO. 
2.6.  The Committee took note of the comments made and agreed to proceed accordingly. 
3  NOTIFICATIONS UNDER ARTICLE 5 AND UNDER PARAGRAPH 4 OF ANNEX II OF THE 
AGREEMENT ON RULES OF ORIGIN (DOCUMENTS G/RO/N/115 TO G/RO/N/124) 
3.1.  The Chairman reported that, since the last CRO meeting, new notifications, concerning both 
preferential and non-preferential rules of origin ha d been received. After these recent notifications, 
42 Members had notified that they implemented some type of non-preferential rules of origin while 
50 other Members did not and 40 Members still had to  submit their notification under paragraph 5 
of the Agreement. He proposed that the Members with outstanding notification obligations seek 
the assistance of the Secretariat to prepare their notification. 
3.2.  The Committee took note of the report and so agreed. G/RO/M/63 
 
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  4  REVIEW OF NEW DEVELOPMENTS IN RELATION TO PREFERENTIAL RULES OF ORIGIN 
FOR LEAST DEVELOPED COUNTRIES (WT/MIN(13)/42 OR WT/L/917) 
4.1.  The Chairman proposed to conduct the fi rst review of developments in the area of 
preferential rules of origin for LDCs, according to the procedures agreed at the last CRO meeting. 
4.2.  First, Members' would submit to the Secretariat any new or modified rules of origin which 
applied to trade preferences for LDCs. Members who had already submitted their notifications would simply ensure that the information remained complete and accurate. 
4.3.  Second, the Committee would review any notifications and Members would have a chance to 
exchange questions and answers. 
4.4.  Third, the Committee would then compile the information received as well as any comments 
made in a report to the General Council and the LDCs Sub-Committee. 
4.5.  Regarding the first item, the Chairman reported that several Members had already notified 
their preferential rules of origin to the WTO. Mo st of these notifications had been sent to the 
Committee on Trade and Development and could be easily accessed through the WTO Database on 
Preferential Trade Arrangements (https://ptadb.wto.org). He asked the Secretariat to make a 
short presentation of the database. 
4.6.  The Secretariat explained that the databa se had been created after a 2010 General Council 
decision (WT/L/806) and that it contained the full text of related legislation, including rules of 
origin associated with preferences for least developed countries. The Secretariat further explained that the information could be consulted by country  or territory implementing the preferences. So 
far, the database contained information for 17 WTO Members. 
4.7.  The Chairman thanked the Secretariat an d noted that the database was a very useful 
instrument, which could help the Committee have easy access to and easily examine rules of origin 
relating to preferences for LDCs. 
4.8.  Moving to the second item, the Chairman  mentioned that the Secretariat had received a 
notification from Chile regarding its preferen ces for LDCs (G/RO/N/124). He asked Chile to 
introduce that notification. 
4.9.  The representative of Chile confirmed that his government had taken the decision to 
eliminate tariffs on products from all LDCs. The scheme, which had been originally submitted to 
the Committee on Trade and Development (WT/COMTD/N/44), was fully in force. All products originating in LDCs could benefit from duty-free and quota-free (DFQF) access to Chile, with only 
two exceptions (sugar and wheat). The representative of Chile concluded by saying that his 
government attached great importance to the goal of better integrating LDCs into the multilateral trading system and that it was committed to implementing this Bali decision. 
4.10.  The Chairman thanked the representative of Chile and urged all Members to do more to 
facilitate trading conditions for LDCs. 
4.11.  The representative of Uganda, on behalf of the LDC group, expressed the group's sincere 
appreciation to the Government of Chile for adopting a DFQF market access scheme for 
LDC products in line with the Bali Ministerial decision. He said that this was indeed a very commendable initiative, particularly as the preferences were very comprehensive. He recalled that the LDCs had been asking for enhanced market access opportunities for their products since the 
creation of the WTO. He therefore urged other Member s to be inspired by the initiative of Chile and 
expand market access opportunities for LDCs. He recalled that Members had a commitment to ensure that products of commercial interest to LDCs were effectively included in their preferential 
schemes and that they should aim at covering 97% of all tariff lines in their schemes. In 
conclusion, he encouraged other Members to conduct meaningful reforms of their rules of origin with a view to making them simple, objective, an d transparent, to facilitate LDC exports on the 
basis of the Bali Ministerial Decision. 
4.12.  The Committee took note of the presentation and comments made. G/RO/M/63 
 
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  4.13.  Finally, in accordance with the Minister ial Decision, the Chairman mentioned that the 
Secretariat had prepared a draft report to the General Council which had been circulated as a room 
document. He asked Members to review and adopt it so that it could be sent to the General Council (G/RO/76) and the Sub-Committee on LDCs. 
4.14.  The Committee adopted the report. 
5  PREFERENTIAL RULES OF ORIGIN FOR LEAST DEVELOPED COUNTRIES – SUBMISSION 
BY UGANDA ON BEHALF OF THE LDC GROUP (DOCUMENT G/RO/W/148) 
5.1.  The Chairman drew Members' attention to a paper recently submitted by Uganda on behalf of 
the LDC group, which contained a wealth of information and facts regarding the operation of 
preferential rules of origin. He invited the delegation of Uganda to introduce the paper. 
5.2.  The representative of Uganda noted that th e rules of origin which applied to LDCs remained 
the same since the 1970s, despite all the chan ges that the world economy had undergone. The 
only exceptions were the rules applied by Ca nada and the EU, which had been substantially 
reformed. He added that, although desirable, the LDC Group had not asked for the harmonization 
of preferential rules of origin. The key message in  the paper was that preferential rules of origin 
should reflect global value chains and be drafted in a commercially meaningful and viable manner so as to yield benefits for foreign direct investment and local businesses in LDCs. 
5.3.  The paper presented by the LDCs illustrate d some of the difficulties related with the value 
added percentage criterion. That criterion entailed detailed understanding of rules to define what were the allowable and non-allowa ble costs, often requiring accounting skills to itemize such costs 
to the single unit of production. The experience of LDCs indicated that a criterion based on the 
value of materials would be preferable. Using a formula based on the value of materials would 
favour LDCs by excluding the costs of transpor tation of non-originating materials. The paper 
recommended a percentage level of 15% to 25% depending on the product. 
5.4.  The paper also argued that "utilization rate s" were a clear indicator of the effectiveness of 
trade preferences. Such an indicator could be defi ned as a ratio between the proportion of imports 
which actually received preferences at the time of customs clearance and could be seen as a 
reflection of the stringency and/or complexity of the programme's rules of origin and ancillary 
requirements. 
5.5.  The experience of LDCs showed that the re form of rules of origin in the EU EBA and the 
Canadian GSP had positively affected the utilization rates. In Canada, the introduction of special 
rules for textile and clothing had increased the utilization rate to 100% immediately. In addition, 
the value of imports had also increased. Similarly, after the EU reform of rules of origin in the apparel and clothing sector, the utilization rate had increased from 49% to 92%, with exports of 
these items increasing by 47%. In addition, the EU reform had also stimulated exports on 
non-traditional products, as illustrated by exports of bicycles from Cambodia. 
5.6.  In comparison, the US preferential rules of origin had remained unchanged since 1974. The 
success of exports under AGOA seemed limited to the clothing sector, for which rules of origin 
were more liberal and similar to those introduced by the EU (the rules deemed a single transformation to be origin conferring). The case  of Japan, where preferential rules had likewise 
never been reformed, was similar: LDC exports we re stagnant despite a high utilization rate. 
5.7.  In conclusion, the evidence presented in the paper, according to Uganda, was unequivocal: a 
reform in preferential rules of origin could, under certain conditions, stimulate a market response in LDCs, particularly if the rules reflected the pr oductive capacity of LDCs. The reforms in Canada 
and the EU had led to higher utilization rates, the relocation of factories in LDCs, increased 
manufacturing capacity, and the creation of more skilled jobs as well as backward linkages. Having regard to such evidence, Uganda and the LDC group encouraged the US and Japan as well as other 
preference giving countries to reconsider the form  and the substance of their preferential rules. 
5.8.  The Chairman thanked the representative of  Uganda for his informative and very detailed 
presentation of the paper. He mentioned that the paper reminded the CRO about the importance 
of reforming rules of origin to facilitate LDC trad e and to try to increase LDC export opportunities. G/RO/M/63 
 
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  5.9.  The representatives of Canada, Brazil an d India thanked the delegate of Uganda and the 
LDC group for having shared their experiences in  the CRO. Having regard to the length and 
complexity of the paper, they asked that Members be given more time to examine the paper before providing more substantial comments at the following CRO meeting. 
5.10.  The representative of Switzerland also th anked Uganda and the LDCs for their substantive 
submission and informative presentation. He added that Switzerland recognised the importance of 
the Bali Ministerial decision on preferential rules of origin for LDCs and, as such, he recalled that 
Switzerland already implemented rules similar to those of the EU and Canada. He encouraged 
other Members to also simplify their rules and move forward with the implementation of the Bali Ministerial Decision on rules of origin for LDCs. 
5.11.  The representative of the European Union joined other Members in welcoming the paper 
submitted by the LDC group and emphasized that the EU attached great importance to ensuring 
that the LDCs could benefit from preferential rules of origin designed to facilitate their market access. He encouraged other Members to be guided by this objective. 
5.12.  The Chairman thanked delegations for their comments. He invited all delegations to provide 
additional comments or questions in written form so as to facilitate the work of the LDCs in 
preparing their responses. He also proposed that the Committee continue discussing the paper at 
its following meeting. 
5.13.  It was so agreed. 
6  TWENTIETH ANNUAL REVIEW OF THE IMPLEMENTATION AND OPERATION OF THE 
AGREEMENT ON RULES OF ORIGIN (G/RO/W/149) 
6.1.  The Chairman mentioned that the Secretariat had prepared a background note to assist the 
Committee in its 20th review of the implementation and op eration of the Agreement on Rules of 
Origin. Given the state of play in the HWP, he thought that the Agreement was clearly not being 
fully implemented. However, he thought that the CRO was moving in the right direction to utilize 
its resources meaningfully. 
6.2.  The representative of the European Union asked that paragraph 5.1 of the draft report be 
modified to read "verify" instead of "validate". 
6.3.  The Chairman invited Members to adopt the report with that rectification. 
6.4.  The Committee adopted the report. 
7  DRAFT REPORT (2014) OF THE COMMITTE E TO THE COUNCIL FOR TRADE IN GOODS 
(G/RO/W/150) 
7.1.  The Chairman noted that the Secretariat ha d prepared a draft report describing the work of 
the CRO in 2014 to be sent to the Council for Trade in Goods (G/RO/W/150). He said that the 
report was factual and meaningful and proposed that Members adopt it. 
7.2.  It was so agreed. 
8  OTHER BUSINESS 
8.1  Report on letters to and from the General Council Chair 
8.1.  The Chairman said that he wished to brief the CRO about an exchange of letters between the 
Chairman of the CRO and the Chairman of the General Council. He recalled that in March of 2014 
his predecessor, Mr Visser, had sent a letter to the Chairman of the General Council informing him 
about the state of play in the CRO. In his lette r, he had asked the General Council to provide 
instructions to the CRO with respect to the continuation or not of the HWP. After consultations, the Chairman of the General Council had sent his reply, informing the CRO that the General Council 
wished "the CRO to continue its work on all issu es as it deem[ed] necessary, without the matter 
being referred to the General Council at this stage". G/RO/M/63 
 
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  8.2.  The Chairman stated the letter was clear: the CRO should discuss any issue as necessary, 
including any of the core policy issues. He hoped that this would contribute to more meaningful work being conducted in the CRO. In this sense, Members' support and engagement would be crucial. He proposed that the Committee take note of this report in order to record this item in the 
minutes of the meeting. 
8.3.  It was so agreed. 
8.2  Date of next CRO meeting 
8.4.  The Chairman proposed that the date for the next Committee meeting be tentatively set for 
28 April 2015. 
8.5.  The Committee took note of the date. 
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