G/RO/W/155  
 
3 June 2015  
(15-2914)  Page: 1/3  
Committee on Rules of Origin  Original: English  
 
 EU'S RESPONSES TO QUESTIONS PUT FORWARD BY THE DELEGATION OF BANGLADESH 
ON BEHALF OF THE LDC GROUP, IN ITS DOCUMENT "ELEMENTS FOR A DISCUSSION ON 
PREFERENTIAL RULES OF ORIGIN FOR LDCS" (DOCUMENT G/RO/W/154) 
 
The following submission, dated 27 May 2015, is bein g circulated at the request of the delegation 
of the European Union. 
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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? 
Answer: 
The EU has adopted a 70% maximum non-originating materials (NOM) threshold specifically for 
LDCs as regards 15 HS chapters (28, 29, 31, 32, 33, 35, 36, 37, 38, 39, 69, 87 and some few products in chapters 84, 85, 87 and 90).  For other chapters with a rule based on a maximum 
NOM threshold, the same 70% threshold is genera lly also applicable but to the benefit of all 
developing countries. 
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? 
Answer: 
The EU is already using a methodology based on a value of materials calculation. 
Paragraph 1.5 of the Decision provides that "In 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 exclus ions 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-origin ating materials classified in certain HS 
chapters, heading or subheadings? G/RO/W/155 
 
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  Answer: 
In many cases the EU rule based on a change of tariff heading permits the use of non-originating 
materials falling in the same heading as the product up to a certain value (from 20% up to 50% depending on the product).  It is the case of the rules of origin applicable to some products in 
chapter 27 and in the chemical sector. 
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 giving 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? 
Answer: 
The EU's assessment is that in general specific working or processing requirements are specialised 
rules, well-focussed and adapted to the prod uct concerned and thus generally not to the 
disadvantage of the country where manufacturing operations are taking place. 
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-giving coun tries are "graduating" ou t of their preference 
schemes some developing countries or are conclu ding 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 advers e effects.  In this context, 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 
graduated from GSP schemes or become no  longer eligible for cumulation since 
they are part of an FTA with the preference giving country? 
Answer: 
The EU has foreseen through the so-called "extended cumulation" tool a potential remedy to that 
situation in cases where FTAs are concluded with developing countries.  This tool would allow LDCs 
to carry on sourcing from such countries under cumulation and could even apply beyond existing 
cumulation groups which may be affected by the "g raduation" of some of their members.  Such an 
approach moreover appears to be particularly WTO-consistent. 
Paragraph 1.8 dealing with administrative requir ement 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 whil e many preference giving countries are still G/RO/W/155 
 
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  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"? 
Answer: 
The EU has eliminated such requirements by re versing the burden of proof: it is only where 
customs have reasons to believe that goods may have been altered in a country of storage or 
transit that they may request evidence of compliance with the non-alteration rule.  
b)  What measures are being considered by preference giving countries to 
implement self–certification by LDCs? 
Answer: 
The EU is setting up, together with Norway an d Switzerland, the Registered Exporter (REX) 
System which should be operational as of 1 January 2017; the EU will make the Registered 
Exporter System available to GSP beneficiary count ries, as a web application available on Internet. 
Competent authorities in GSP beneficiary countries  will use the system for registering exporters 
and next modifying their data or revoking them in well-defined circumstances.  
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? 
Answer: 
The EU will communicate regularly with GSP benefici ary countries on the self-certification system 
so as to ensure that all GSP beneficiary countries have, in due time, a good knowledge of the 
functioning of the new system.  A communication will soon be sent out to all GSP beneficiary 
countries explaining from a legal perspective the implications of the new system for the competent 
authorities of beneficiary countries.  This communication will include a Guide for Users intended for competent authorities.  Other communication actions will follow with more practical details 
concerning the information technology (IT) system itself (the Registered Exporters System). 
The REX system will be phased-in progressively from 2017 until 2020.  In the second half of 2016, 
the EU is planning a pilot phase in which a representative sample of volunteering GSP beneficiary 
countries should be involved.  The pilot will allow among others to identify practical difficulties with 
the implementation of the new system in beneficiary countries and where the assistance provided by the EU should be targeted. 
A few weeks before the implementation of the self -certification system starts, the EU intends to 
organise training sessions on the Registered Export er System and also provide e-learning modules. 
The EU will pay close attention to the communication and the assistance to be provided about the 
move to the new system so that the transition should be as smooth as possible. 
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