G/RO/W/154
17 April 2015
(15-2066)  Page: 1/3
 Committee on Rules of Origin  Original: English
 
ELEMENTS FOR A DISCUSSION ON PREFERENTIAL RULES OF ORIGIN FOR LDCS 
SUBMISSION BY BANGLADESH, ON  BEHALF OF THE LDC GROUP 
The following submission, dated 15 April 2015, is bein g circulated at the request of the delegation 
of Bangladesh on behalf of the LDC Group. 
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1. Background 
1.1 At the meeting of the Committee on Rules of Origin (CRO) held on 10 April 2014, the 
Chairman recalled that the Ninth WTO Ministerial Conference held in Bali in 2013 adopted a Decision on Preferential Rules of Origin for LD Cs (WT/L/917).  Paragraph 1.10 of the Decision 
mandated the CRO to "annually review developments in preferential rules of origin applicable to 
imports from LDCs" and "report to the General Council".  The Chairman also proposed in addition 
"to intensify efforts in the CRO to exchange information regarding existing preferential rules of origin for LDCs". 
1.2 At the meeting of the CRO held on 30 October 2014, Uganda, on behalf of the LDC Group, 
presented a comprehensive report outlining the ch allenges faced by the LDCs in complying with 
existing rules of origin under unilateral prefer ential schemes.  The report, based on the LDC 
submission contained in document G/RO/W/148 was welcomed by a number of delegations.  
A number of them needed additional time to stud y the report in detail.  The Chairman of the 
Committee on CRO said that discussions on the LDC submission would continue at the next 
meeting of the CRO scheduled for April 2015.  
1.3 This short paper aims at stimulating a discussion by putting forward to Members a set of 
questions as to how they are responding to the guidelines adopted at the Bali Ministerial Conference, with the ultimate objective of iden tifying possible measures for further facilitating 
market access for LDC products.   
2. Elements for a discussion on prefer ential rules of origin for LDCs  
2.1 Paragraph 1.1 of the Decision on Preferenti al Rules of Origin for LDCs provides that 
"Members should endeavour to develop or build on their individual rules of origin arrangements 
applicable to imports from LDCs in accordance with the following Guidelines".  Accordingly some questions (indicated in bold below) are raised to preference giving countries to better understand how they are considering addressing the various elements contained in the Decision.  
2.2 LDC Group recognizes that no single form of Rules of Origin (RoO) used by preference giving 
countries to determine origin is necessarily better than the other.  However,  the LDC submission to 
the CRO last October shows unequivocal evidence that under certain conditions the reform of RoO 
reflecting global value chains and commercial reality generates a market response in LDCs. 
The reforms in Canada and the EU adapted the RoO to the industrial context resulting in an increase in utilization rate, relocation of factories to LDCs, increased manufacturing capacity, more 
skilled jobs creation as well as backward linkages. 
2.3 Paragraph 1.3 of the Decision provides that "it is desirable to keep the level of value addition 
threshold as low as possible" and "notes that
 the LDCs seek consideration of allowing foreign G/RO/W/154 
 
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  i n p u t s  t o  a  m a x i m u m  o f  7 5 %  o f  v a l u e  i n  o r d e r  f o r  a  g o o d  t o  q u a l i f y  f o r  b e n e f i t s  u n d e r  L D C  
preferential trade arrangements". 
1) How preference-giving countries that ar e currently adopting different percentages 
are moving towards the adoption of a lowe r percentage requirements in case of 
percentage calculation of domestic content or a greater allowance of 
non-originating materials to allow the insertion of LDCs into global value chains? 
It has been noted that certain preference givi ng countries are still maintaining a value added 
calculation while lessons learned demonstrated that a value of material calculations is easier 
to comply with in terms of calculation, transparency and predictability.  
2) How these preference giving countries using a percentage criterion are intending 
to move towards a methodology based on a value of materials calculation taking 
into account the lessons learned and the evolution of their rules of origin?  
Paragraph 1.5 of the Decision provides that "I n the case of rules based on the change of 
tariff classification criterion, a substantial or sufficient transformation should generally allow 
the use of non-originating inputs as long as an article of a different heading or sub-heading 
was created from those inputs in an LDC…". 
The LDCs note that preference giving countries  using the change of tariff classification 
criterion provide, in certain cases, for a series of exclusions of the use of materials classified 
in other chapters heading or subheadings such as the following rule for certain products of chapter 16:  Manufactured from products other than those of Chapter 1, 2, 3, 5, 10, 11, 16 or 19. 
3) How Preference giving countries using a change of tariff classification are 
considering to further simplify their rules of  origin by eliminat ing or reducing the 
restriction on the use of certain non-orig inating materials classified in certain 
HS chapters, heading or subheadings?  
Paragraph 1.6 provides that "In the case of rules that allow a specific manufacturing or 
processing operation for the purpose of conferring origin, such rules should, as far as 
possible, take into account the productive capacity in LDCs". 
While the LDCs note that some preference givi ng countries have made considerable progress 
in the textile and clothing sector by allowing a single stage process (i.e. from non-originating fabric to finished garment) a number of rules in other sectors like steel and metals still 
demand double processing requirements that are not matching LDC productive capacity or 
are not reflecting their industrial operations. 
4)  How preference giving countries us ing RoO based on specific working or 
processing requirements consider moving towards a single working or processing 
operations reflecting substantial transformation?  
Paragraph 7 of the Decision states that "Cumulation should be considered as a feature of 
non-reciprocal preferential trade. 
The LDCs note that many preference-givin g countries are "graduating" out of their 
preference schemes some developing countries or are concluding FTAs with developing countries that are member of the same Regional trade integration group with LDCs.  As a 
result of these evolutions developing countries member of the same regional trade 
integration group of LDCs may be excluded from  the scope of cumulation granted to LDCs.  
This may reduce substantially the scope of cumulation for LDC and may have significant 
adverse effects.  In this contex t, recent reforms of GPT scheme  of Canada may be taken into 
consideration.  
5)  How preference giving countries are co nsidering measures to remove or alleviate 
the adverse effects that may diminish th e value of cumulation for LDCs once 
developing countries member of the same  regional trade integration group are G/RO/W/154 
 
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  graduated from GSP schemes or become no  longer eligible for cumulation since 
they are part of an FTA with the preference giving country?  
Paragraph 1.8 dealing with administrative requ irement of rules of origin provides that 
"The documentary requirements regarding compliance with the rules of origin should be 
simple and transparent.  For instance, requirement to provide proof of non-manipulation or 
any other prescribed form for a certification of origin for products shipped from LDCs across other Members may be avoided.  With regard to certification of rules of origin, whenever 
possible, self-certification may be recognized". 
The LDCs notes that under the Trade facilitation Agreement they are requested to engage on 
a number of trade reforms to facilitate trade while many preference giving countries are still requiring documentary evidence of non-manipulation that is particularly challenging for 
landlocked and island LDCs.  
Progress has been made by some preference giving countries towards accepting self-
certification. However the LDCs are not benefitting from particular technical assistance for 
administering self-certification that may be particularly demanding during the transition 
phase.  
6)  Taking into consideration the demand s that the Trade Facilitation Agreement may 
pose to LDCs,  
a)  How preference giving countries are considering the elimination of 
documentary evidence of "non-manipulation"? 
b)  What measures are being considered by preference giving countries to 
implement self–certification by LDCs?  
c)  What measures and programmes of te chnical assistance are being considered 
by preference giving countries when mo ving to accept self-certification or 
other similar administration like registered exporters? 
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