G/RO/W/169  
 
15 March 2017  
(17-1487) Page: 1/4 
 Committee on Rules of Origin  Original: English  
 
SUBMISSION BY CAMBOD IA ON BEHALF OF THE LEAST -DEVELOPED COUNTRIES  
Possible agenda items for a dedicated session  of the CRO  meeting  
on prefe rential rule s of origin for LDCs  
The following submission, dated 14 March 2017, is being circulated at the request of the 
delegation of Cambodia.  
 
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1  INTRODUCTION  
1.1 Paragraph 4.2 of the Nairobi decision on preferential rules of origin provides that :  "No later 
than 31 December  2016 each developed preference -granting Member,  and each developing 
preferenc e-granting Member undertaking the commitments in accordance with paragraph 4.1 up 
to that date or thereafter, shall inform the Committee on Rules of Origin (CRO) of the measures 
being taken to implement the above provisions.  
1.2 Besides, during the meeting  of the Committee on Rules of Origin held on 2 March 2017 the 
Committee adopted a template for notification of rules of origin for least-developed countries and 
the WTO secretariat circulated a paper estimating the utilization rates of preference s enjoyed by 
the least-developed countries in certain preference -granting members.   
1.3 Against this backdrop , the informal Dedicated Session of the CRO on preferential rules of 
origin for LDCs will provide an opportunity to the Members to consider and assess the n otifications 
or communications by preference -granting members received by the CRO on 31 December 2016 
or thereafter, to examine the utilization rates and review notifications of  the template to  be 
submitted by the preference -granting members by the date of  dedicated session.  
1.4 In addition the Dedicated Session will review how the existing rules of origin granted by 
preference -granting countries could be further improved and aligned to ensure simple and 
transparent rules of origin taking into account the Nairobi Decision for LDC preferential rules of 
origin.  
Note:   For each agenda item , a LDC representative will make a detailed presentation of the issue 
at stake to kick - start the discussions.   The proposed dedicated session could be held in July 2017 . 
2  ITEM 1:  JOINT DISCUSSI ON AND EXAMINATION O F THE IMPLEMENTATION  OF THE 
PARAGRAPH 1.1 OF THE  NAIROBI DECISION AND  OF THE EXISTING METH ODS OF 
CALCULATION FOR THE PERCENTAGE CRITERION  ACCORDING TO THE ABO VE 
MENTIONED PARAGRAPH OF THE NAIROBI DECIS ION.  
2.1 Paragr aph 1.1 of the Nairo bi Decision requires preference -granting members "adopt a 
method of calculation based on the value of non -originating materials ".  At the same, it allows 
"Preference -granting Members applying another method to continue to use it ", recog nizing "that 
the LDCs seek consideration of use of value of non -originating materials by such 
preference -granting Members when reviewing their preference programme. " 
2.2 It also requires the p reference -granting Members to consider developing or building "on 
their individual rules of origin arrangements applicable to imports from LDCs, allowing the use of G/RO/W/169  
 
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  non-originating materials up to 75% of the final value of the product, or an equivalent threshold in 
case another calculation method is used, to the extent  it is appropriate and the benefits of 
preferential treatment are limited to LDCs " as well as "consider the deduction of any costs 
associated with the transportation and insurance of inputs from other countries to LDCs ." 
2.3 Against this backdrop, a thread bare discussion may take pla ce on what steps 
preference -granting members have taken towards fulfilling the target set out in Paragraph 1.1 , 
what challenge s they have been facing and how best to implement the Decision .  
3  ITEM 2:  JOINT DISCU SSION AND EXAMINA TION OF THE IMPLEMEN TATION OF THE 
PARAGRAPH 1.2 OF THE  NAIROBI DECISION AND  EXAMINATION OF THE E XISTING 
METHODS OF USING A C HANGE OF TARIFF CLAS SIFICATION TO DETERM INE 
SUBSTANTIAL TRANSFOR MATION ACCORDING TO THE NAIROBI DECISION  
3.1 Paragraph 1.2 of the De cision states that : 
"(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 Mem ber deems that such exclusions or restrictions are needed, 
including to ensure that a substantial transformation occurs;  
(c)  Introduce, where appropriate, a tolerance allowance so that inputs from the same head ing 
or sub -heading may be used."  
3.2 On the basis of the notification received from preference -giving members , the Secretariat 
can be asked to make a presentation about current practices .  The Committee could then discuss  
concerns , challenges and recommendation s to implement this provision.   
4  ITEM 3 :  JOINT DISCUSSION AND EXAMINATION OF T HE IMPLEMENTATION OF  THE 
PARAGRAPH 1.3 OF NAI ROBI DECISION AND EX AMINATION OF THE EXI STING METHODS 
OF USING A SPECIFIC WORKING OR PROCESSIN G REQUIREMENT TO DET ERMINE 
SUBSTANTIAL TRANSFOR MATION ACCORDING TO THE ABOVEM ENTIONED PARAGRAPH 
OF THE NAIROBI DECIS ION 
4.1 Preference -granting members  implementing this provision could share their experience on 
the use of the processing criteria , report associated challenges and discuss benefits to  the LDCs. 
From the discussions, Members may e xtrapolate best practices that could guide other preference -
granting M embers.  
4.2 Paragraph 1.3 of the Nairobi decision lists a series of specific working or processing in 
different sectors.  It is noted that some preference -giving countries a re using such criterion in the 
case of textile and clothing requiring a single stage of specific manufacturing and processing 
requirement ( assembly of fabrics into a finished garment) that has greatly facilitated the utilization 
of preferences by LDCs. Cou ld this practice be applied by othe r preference -granting countries?  
4.3 Further, it is noted that the other examples quoted in paragraph 1.3 have  not been adopted 
by preference -giving countries especially in agrifood products, chemicals and machinery and 
electronics. The following questions could be discussed :  How could the use of a specific 
manufacturing or pro cessing operation criterion contribute to rules that are  simpler and  more 
transpar ent? Could preference -granting countries consider adopting rules that recognize the 
processing of raw agricultural products into processed agricultural products? Could Members  
envisage , as provided for in the Decision , the use of chemical reaction s as substantial 
transformation for a number of chemical products? C ould the concept of assembly operations 
going beyond simple assembly be considered as substantial transformation for some machinery 
and electronics?   G/RO/W/169  
 
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  5  ITEM 4:  JOINT DISCU SSION AND EXAMINATIO N OF THE IMPLEMENTAT ION OF 
PARAGRAPHS 1.4 AND  1.5 OF THE NAIROBI D ECISI ON AND EXAMINATION O F THE 
EXISTING METHODS OF USING A COMBINATION OF TWO OR MORE CRITE RIA FOR THE 
SAME PRODUCT ACCORDI NG TO THE ABOVEMENTI ONED PARAGRAPH OF TH E NAIROBI 
DECISION  
5.1 Paragraph 1.4 invites  preference -granting countries to  "avoid requirements which impose a 
combination of two or more criteria for the same product ".  The same paragraph invites 
preference -granting members "to consider relaxing such requirements for a specific product upon 
due request by an LDC ." 
5.2 Paragraph 1.5 maintains that "Preference -granting Members are encouraged to offer 
alternative rules for the same product ." 
5.3 Members may discuss how best to implement the requirements of paragraph 1.4.  
5.4 It is no ted that a number of preference -granting countries provide  alternative  rules of origin 
for the same product while other s do not .  Alternative rules of origin for the same products may be 
trade facilitating and could offer  LDC manufacturers and exporters a wider choice of substantial 
transformation criteria to comply with .  The following questions could be discussed : could 
preference -granting countries consider adopt ing alternative rules of origin for the same products?  
At the informal dedicated session, t he LDCs could submit  a list of possible alternative rules 
applicable to  certain categories of products for the consideration of preference -granting countries . 
6  ITEM 5: JOINT DISCUS SION AND EXAMINATION  OF THE IMPLEMENTATIO N OF 
PARAGRAPHS 2.1 AND  2.2 OF THE NAIROBI D ECISION AND EXAMINAT ION OF THE 
EXISTING METHODS OF PROVIDING CU MULATION ACCORDING T O THE 
ABOVEMENTIONED PARAG RAPHS OF THE NAIROBI  DECISION  
7  ITEM 6 (A) PARAGRAPH  2.1 
7.1 Paragraph 2.1 point s out that cumulation should be read in conjunction with the substantial 
transformation requirement s of each preference -granting member.  A combined examination of 
the two to could offer an overall assessment of the stringency or leniency of a given set of rules of 
origin (i.e. stringent requirement s for substantial transformation may  prove easier to comply with 
if different forms of c umulation are available while a seemingly generous substantial 
transformation criterion may be difficult to comply with in the absence of cumulation ).  In general, 
a lenient requirement of substantial transformation allowing the sourcing of inputs from the  most 
competitive supplier should be  preferred over a combination of stricter substantial transformation 
criteria and cumulation , since cumulation is associated with the compliance with administrative 
requirements and graduation criteria.  
7.2 Paragraph 2.1  of the Nairobi Decision list s different forms of cumulation that may be 
applied. During the informal dedicated session, preference -granting members may review existing 
practices and consider useful options to expand the scope of their own cumulation provi sions. In 
particular, Members may consider the difficulties that arise when regional cumulation is granted 
only to a subset of countries that does not reflect  the actual composition of regional trade 
arrangement s.  
7.3 The following questions could be disc ussed :  Could preference -granting Members who are  
currently  not providing any form of cumulation consider  the possibility of providing  at least a 
minimum number of cumulation  options ? Would preference -granting members that are already 
providing some form o f cumulation considering expand ing their provisions ? Could preference -
granting members offering cumulation on a regional basis reform their rules to ensure that LDCs 
who are part of the same regional trade agreement  are not excluded from cumulation rules?  
8  ITEM 6 (B) PARAGRAPH  2.2 
8.1 Paragraph 2.2 invites  preference -granting countries to remain open to consider ing particular 
cumulation possibilities in the case of specific products or sectors. It may be noted that under 
certain GSP schemes the cumulation po ssibilities ha ve been severely diminished by the graduation G/RO/W/169  
 
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  of some GSP beneficiaries from cumulation. Preference -granting countries have adopted different 
practices to remedy this occurrence , most notably the EU and Canada.  
8.2 The following questions may be discussed :  What solution could  be envisaged to address the 
adverse effects that on some LDCs from the graduation of developing countries beneficiaries?   
9  ITEM 6:  JOINT DISCU SSION AND EXAMINATIO N OF THE IMPLEMENTAT ION OF 
PARAGRAPH 3 OF THE N AIROBI DEC ISION AND EXAMINATIO N OF THE EXISTING 
DOCUMENTARY REQUIREM ENTS ACCORDING TO TH E ABOVEMENTIONED PAR AGRAPH OF 
THE NAIROBI DECISION  
9.1 Paragraph 3 of the Nairobi Decision calls for improvements in the current practices 
concerning the proof of evidence , non-manipulation requirements , and provisions concerning small 
consignments and self -certification in paragraph . It may be noted that preference -granting 
countries currently have different requirements on such issues. These requirements range  from a 
liberal and  trade facilitating approach (e.g. information and evidence in case of doubt ) to very 
demanding requirements (e.g. the requirement of a through bill lading covering the passage 
through transit countries in all cases) . Similarly , there are different practic es that have been 
adopted by preference -granting countries on the treatment of small consignments and self -
certification . 
9.2 The following question s may be discussed : Are preference -granting countries considering 
easing  existing requirements related to d ocumentary evidence and non-manipulation? What are 
the most trade -facilitating options related to small consignments and self -certification? Would it be 
possible t o envisage best practices in these  areas?  
10  ITEM 7: UTILIZATION OF PREFERENCE  
10.1 As per the d ecision of Paragraph 4.3, the CRO has already agreed on modalities utilization 
rates and the Secretariat has presented a first preliminary report of utilization rates during the 
meeting held on 2  March 2017 (G/RO/W/168).   The dedicated session may examine this 
preliminary report in greater detail with a view to drawing linkages between lower utilization rates 
and the design and stringency of specific origin requirements . Some of the questions which may be 
discussed include: recommendations to increase the utilization of preferences by the LDCs  and 
options to improve presentation of the report of the Secretariat to also take into account other 
overlapping preferential arrangements .  
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