G/RO/W/186  
 
8 May 2019  
(19-3153) Page: 1/5 
Committee on Rules of Origin  Original: English  
 
FURTHER EVIDENCE FRO M UTILIZATION RATES  
The following submission, dated 3 May 2019, is being circulated at the request of the delegation of 
Tanzania, on behalf of the LDC Group . 
_______________  
 
1  BACKGROUND  
1.1  The Nairobi Decision on Preferential Rules of Origin for LDCs 2015 established for the first 
time, a set of multilaterally agreed guidelines to support LDC to benefit from the preferential market 
access granted by a number of WTO members.  
1.2  It is recalled that paragraph 4.3 of the Nairobi Decision provides as follows:  
4.3. Preferential rules of origin shall be notified as per the established procedures. In this 
regard, Members reaffirm their commitment to annually provide import data to the Secreta riat 
as referred to Annex 1 of the PTA Transparency Mechanism, on the basis of which the 
Secretariat can calculate utilization rates , in accordance with modalities to be agreed upon 
by the CRO.  
1.3 Four years later, most preference granting members have no tified their utilization rates that 
constitute a valuable tool to identify specific difficulties that LDC may face in complying with rules 
of origin, such as highlighted in the presentation made by the LDC Group at the last CRO meeting 
applying UNCTAD’s me thodology.1    
1.4 The presentation established that utilization rates are critical in assessing the stringency of 
rules of origin, clearly showing that (1) some preference -granting countries exhibit low utilization 
rates across all products, and (2) high utilization rates may also hide large  pockets of under -
utilization in specific sectors, implying a significant share of LDC imports subject to most -favoured 
nation (MFN) tariffs while eligible for preferential treatment.  
1.5 It was recognized at the last CRO meeting that further steps to simplify origin rules and 
improve utilization shall be considered. WTO members agreed that more research work therefore 
needs to be conducted in order to better understand the causes behind un der-utilization of tariff 
preferences and identify specific issues. The LDC Group committed to circulate a paper analyzing 
the link between low utilization rates and rules of origin in advance of the next committee meeting.  
1.6 This note is the first cont ribution of the WTO LDC Group. Further work may be elaborated in 
preparation of the next CRO meetings.  
2  THE SWISS UTILIZATIO N RATES  
2.1 Following the proposal by the delegation of Switzerland to serve as a pilot country to study 
the link between utilizati on rates and rules of origin, the present document focuses on swiss 
utilization rates.  
                                                 
1 See forthcoming UNCTAD's study Drafting rules of origin , July 2019.  G/RO/W/186  
 
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  2.2 Table 1 below  reports the value of Swiss imports from LDC beneficiaries (column (1)), for 
tariff lines (column (2)) where the utilization rate (column (8)) defined as the value of imports 
entering under LDC/ GSP (column (6)) divided by the value of imports eligible for the preferential 
treatment (column (5)), lies below 70%. Observations for year 2017 are sorted in descending order 
of import values that are entering under MFN while eligible for the preferentia l treatment (column 
(7)). It is important to keep in mind that all values reported in Table 1 are dutiable. 
The corresponding MFN specific rate is reported  under column (9).  
Table 1 - Switzerland Imports from Least Developed Countries 2017 - Tariff lines  
Utilization Rates (UR) < 70%, sorted in descending value of imports entering under MFN (> US$5  million)  
Country  Tariff line  Product description  Imports (US$  thousands)  UR 
(%) Specific 
MFN duty Dutiable  Eligible  Entering under  
LDC/GSP MFN 
(1) (2) (3) (4) (5) (6) (7) (8) (9) 
Bangladesh  62034200  Men's or boys' suits, ensembles, 
jackets, blazers, trousers […] - of 
cotton  80'555  80'555  27'489  53'067  34 182 fr./  
100kg brut  
Bangladesh  61091000  T-shirts, singlets and other vests, 
knitted or crotched  - of cotton  49'890  49'890  13'469  36'421  27 152 fr./  
100kg brut  
Bangladesh  61102000  Jerseys, pullovers, cardigans, 
waistcoats [… ], knitted  or 
crotched  - of cotton  61'207  61'207  26'609  34'599  43 120 fr./  
100kg brut  
Tanzania  71039100  Rubies, sapphires and emeralds  30'866  30'866  0 30'866  0 800 fr./  
100kg brut  
Myanmar  71039100  Rubies, sapphires and emeralds  26'864  26'864  0 26'864  0 800 fr./  
100kg brut  
Bangladesh  61103000  Jerseys, pullovers, cardigans, 
waistcoats […], k nitted or 
crotched  - of MMF 42'075  42'075  16'311  25'764  39 300 fr./  
100kg brut  
Mozambique  71039100  Rubies, sapphires and emeralds  14'425  14'425  0 14'425  0 800 fr./  
100kg brut  
Bangladesh  62046290  Women's or girls' suits, 
ensembles, jackets, blazers, 
dresses, […] - of cotton  24'336  24'336  10'334  14'002  42 302 fr./  
100kg brut  
Madagascar  71039100  Rubies, sapphires and emeralds  10'229  10'229  0 10'229  0 800 fr./  
100kg brut 
Bangladesh  62052000  Men's or boys' shirts. - of cotton  17'512  17'512  7'737  9'775  44 200 fr./  
100kg brut  
Bangladesh  61051000  Men's or boys' shirts, k nitted or 
crotched  - of cotton  11'775  11'775  3'080  8'695  26 130 fr./  
100kg brut  
Bangladesh  64039100  Footwear with outer soles of 
rubber, plastics, leather […]. - 
covering ankle  8'421  8'421  258 8'163  3 143 fr./  
100kg brut  
Zambia  71039100  Rubies, sapphires and emeralds  7'865  7'865  0 7'865  0 800 fr./  
100kg brut  
Bangladesh  62029300  Women's or girls' overcoats, car -
coats, capes, cloaks, […] - of MMF 9'249  9'249  1'474  7'775  16 575 fr./  
100kg brut  
Bangladesh  61099000  T-shirts, singlets and other vests, 
knitted or crotched  of other textile 
materials  8'665  8'665  1'561  7'104  18 391 fr./  
100kg brut  
Cambodia  62034200  Men's or boys' suits, ensembles, 
jackets, blazers, trousers […] - of 
cotton  8'993  8'993  1'951  7'041  22 182 fr./  
100kg brut  
Bangladesh  61046200  Women's or girls' suits, 
ensembles, jackets, blazers, 
dresses, […] - of cotton  15'415  15'415  8'590  6'825  56 165 fr./  
100kg brut  
Cambodia  61099000  T-shirts, singlets and other vests, 
knitted or crotched  of other textile 
materials  7'336  7'336  1'183  6'153  16 391 fr./  
100kg brut  
Cambodia  61046200  Women's or girls' suits, 
ensembles, jackets, blazers, 
dresses, […] - of cotton  8'020  8'020  1'914  6'105  24 165 fr./  
100kg brut  
Cambodia  64039992  Footwear with outer soles of 
rubber, plastics, leather  […]. – 
other 7'740  7'740  1'666  6'074  22 145 fr./  
100kg brut  
Cambodia  61046300  Women's or girls' suits, 
ensembles, jackets, blazers, 
dresses, skirts, divided skirts, 
trousers, bib - of synthetic fibres  6'835  6'835  1'137  5'698  17 418 fr./  
100kg brut  G/RO/W/186  
 
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  Country  Tariff line  Product description  Imports (US$  thousands)  UR 
(%) Specific 
MFN duty Dutiable  Eligible  Entering under  
LDC/GSP MFN 
(1) (2) (3) (4) (5) (6) (7) (8) (9) 
Bangladesh  62019300  Men's or boys' overcoats, car -
coats, capes, cloaks, […] - of MMF 6'196  6'196  904 5'293  15 497 fr./  
100kg brut  
Haiti 33012930  Essential oils (terpeneless or not) 
[…] – other 5'230  5'230  0 5'230  0 3 fr./100kg 
brut 
Bangladesh  62034300  Men's or boys' suits, ensembles, 
jackets, blazers, trousers […] - of 
cotton  6'691  6'691  1'653  5'038  25 500 fr./  
100kg brut  
Source: TAO database, 1 May 2019; Note: man -made fibres (MMF), knitted or crocheted.  
2.3 Three main observations can be drawn from Table 1:  
- Several LDCs experienced difficulties to benefit from preferential treatment in the 
garment and clothing sectors. Bangladesh and Cambodia are particularly affected with 
considerable values taxed at the MFN specific duty. Considering the first three tariff 
lines under HS chapter 61 and 62 together, the value of imports entering under MFN 
treatment while eligible for preferential treatment amounted US$124 million only for 
Bangladesh. As for Ca mbodia, out of US$9 million total imports from Cambodia under 
a single tariff line (62034200), only less than US$2 million entered the Swiss market 
duty-free, leading to 7 million imposed by the MFN specific duty.  
- Tariff line 71039100 is critical for all LDCs exporting rubies, sapphires, and emeralds to 
Switzerland. All six countries concerned2 exhibit a utilization rate of zero, for a total 
import value of US$99.7 million.  
- Haiti did not benefit from the preference granted for exports of essential oi ls (tariff line 
33012930) leading to US$5.3 million that could potentially enter duty -free the Swiss 
market but that instead are imposed the specific MFN duty.  
Table 2 - Switzerland Imports from Least Developed Countries 2017 – HS Chapters  
Utilization Rates (UR) < 70%, sorted in descending value of imports entering under MFN (>  US$2  million)  
Country  HS Product description  Imports ( US$ thousands)  UR 
(%) Dutiable  Eligible  Entering under  
LDC/GSP MFN 
Bangladesh  61 Articles of apparel & clothing accessories, 
knitted or crocheted  259'491  259'491  100'900  158'590  39 
Bangladesh  62 Articles of apparel & clothing accessories, not 
knitted or crocheted  207'387  207'387  74'000  133'388  36 
Cambodia  61 Articles of apparel and clothing accessories, 
knitted or crocheted  76'149  76'149  28'204  47'945  37 
Tanzania  71 Natural or cultured pearls, precious or semi - 
precious stones […]  32'170  32'170  0 32'170  0 
Cambodia  62 Articles of apparel & clothing accessories, not 
knitted or crocheted  41'447  41'447  11'677  29'770  28 
Myanmar  71 Natural or cultured pearls, precious or semi - 
precious stones […]  27'512  27'512  0 27'512  0 
Cambodia  64 Footwear, gaiters and the like […]  28'083  28'083  5'519  22'564  20 
Myanmar  62 Articles of apparel & clothing accessories, not 
knitted or crocheted  23'669  23'669  6'924  16'745  29 
Bangladesh  64 Footwear, gaiters and the like; […]  20'325  20'325  5'016  15'310  25 
Mozambique  71 Natural or cultured  pearls, precious or semi - 
precious stones […]  14'746  14'746  0 14'746  0 
Madagascar  71 Natural or cultured pearls, precious or semi - 
precious stones […]  10'383  10'383  27 10'356  0 
Madagascar  62 Articles of apparel & clothing accessories,  not 
knitted or crocheted  8'677  8'677  3 8'674  0 
Zambia  71 Natural or cultured pearls, precious or semi - 
precious stones […]  7'920  7'920  0 7'920  0 
Bangladesh  63 Other made up textile articles […]  8'184  8'184  2'723  5'461  33 
                                                 
2 In order of import values: Tanzania, Myanmar, Mozambique, Madagascar, Zambia and Afghanistan 
(US$1.679 million imports of product of tariff line 71039100 from Afghanistan not reported under Table 1). G/RO/W/186  
 
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  Country  HS Product description  Imports ( US$ thousands)  UR 
(%) Dutiable  Eligible  Entering under  
LDC/GSP MFN 
Madagascar  61 Articles of apparel & clothing accessories, 
knitted or crocheted  7'151  7'151  1'785  5'367  25 
Haiti 33 Essential oils and resinoids; perfumery, 
cosmetic […]  5'318  5'318  0 5'318  0 
Myanmar  61 Articles of apparel & clothing accessories, 
knitted or crocheted  9'618  9'618  4'723  4'896  49 
Cambodia  87 Vehicles other than railway or tramway  5'624  5'624  808 4'816  14 
Solomon 
islands  71 Natural or cultured pearls, precious or semi - 
precious stones […]  4'413  4'413  0 4'413  0 
Lao PDR 61 Articles of apparel & clothing accessories,  
knitted or crocheted  3'570  3'570  13 3'557  0 
Bangladesh  42 Articles of leather […]  3'390  3'390  187 3'203  6 
Myanmar  64 Footwear, gaiters and the like […]  3'650  3'650  552 3'099  15 
Source: TAO database, 1 May 2019.  
2.4 Given the high number of tariff line – country pairs with utilization rates below 70% (8 ,601 
cases out of 11 ,923 observations), Table 2 reports similar information as Table 1 but aggregated at 
the HS Chapter level, allowing to g et a better understanding of the magnitude of the trade concerned 
by low utilization rates. In particular, the following observations can be made:  
- In the garment and clothing sector, 292 million USD of imports of Chapter 61 and 62 
from Bangladesh are re ceiving the MFN treatment while eligible for duty -free entry. This 
value amounts to almost US$78 million for Cambodia, US$21.6 million for Myanmar, 
US$14 million for Madagascar and US$6.3 million for Lao with preference margins 
ranging between 120CHF/100kg and 575CHF/100kg (see Table 1);  
- Cambodia is facing difficulties to benefit from th e preferential treatment in other sectors 
than garments and textile, in particular footwear of HS Chapter 64 ( US$22.5 million 
imports receiving MFN treatment) and bicycles of HS Chapter 87 ( US$4.8 million), with 
preference margins of respectively 145CHF/10 0kg and 23CHF/100kg;  and 
- Under HS Chapter 71, other tariff lines than Rubies, sapphires and emeralds (71039100) 
are showing zero utilization rates. That is for example the case of diamonds imports 
(HS 71023900) from the Solomon Islands amounting to 4.4 million. Both tariff lines 
exhibit a preference margin of 800CHF/100kg.  
2.5 Finally, it has to be noted that Table 1 and Table 2 represent only a snapshot of the data and 
the list of tariff lines -country pairs where bilateral discussions could improve market access is not 
exhaustive. Other countries could potentially also face difficulties in some selected sectors that could 
be worth investigating further, as shown in Table 3.  
Table 3 - Switzerland Imports from Least Developed Countries 2017 – LDC Beneficiaries  
Country  Imports ( US$ thousands)  
UR (%) Dutiable  Eligible  Entering under  
LDC/GSP MFN 
Afghanistan  2'234  2'234  7 2'227  0 
Angola  13 13 0 13 0 
Bangladesh  504'850  504'850  185'833  319'017  37 
Benin  380 380 214 166 56 
Burkina Faso 1'016  1'016  11 1'005  1 
Cambodia  158'521  158'521  51'155  107'366  32 
Central African Republic  88 88 0 88 0 
Chad 10 10 0 10 0 
Comoros  991 991 0 991 0 
Dem. Rep. of C ongo 377 377 243 134 64 
Djibouti  6 6 3 3 45 
Eritrea  2 2 0 2 0 
Ethiopia  3'945  3'551  1'057  2'495  30 
Gambia  14 14 0 14 0 
Guinea  156 156 19 137 12 
Haiti 5'510  5'510  1 5'508  0 
Lao PDR 8'389  8'389  514 7'876  6 
Liberia  430 430 14 416 3 
Madagascar  31'666  31'666  4'939  26'727  16 G/RO/W/186  
 
- 5 - 
 
  Country  Imports ( US$ thousands)  
UR (%) Dutiable  Eligible  Entering under  
LDC/GSP MFN 
Malawi  9 9 0 9 0 
Mali 537 526 31 495 6 
Mauritania  329 329 0 329 0 
Mozambique  34'933  34'933  19'580  15'353  56 
Myanmar  67'103  67'103  14'000  53'104  21 
Nepal  8'075  8'075  3'428  4'647  42 
Niger  216 113 14 98 13 
Rwanda  5 4 2 2 41 
Senegal  10'813  10'813  7'337  3'477  68 
Sierra Leone 345 345 0 345 0 
Solomon islands  20'236  20'236  15'587  4'649  77 
Somalia  35 35 0 35 0 
Sudan  3'941  3'941  3'940  1 100 
Tanzania  50'574  49'024  16'576  32'448  34 
Togo 375 372 279 92 75 
Uganda  4'640  4'611  4'128  483 90 
Zambia  8'073  7'978  18 7'960  0 
Source: TAO database, 1 May 2019.  
 
3  PRELIMINARY DISCUSSI ONS LINKING SWISS UT ILIZATION RATES TO RULES OF 
ORIGIN  
3.1 Swiss utilization rates for garments and clothing imports of HS Chapters 61 and 62 ranging 
between zero and 49% ( Table 2), are much lower than those observed in the EU that amount to 
95% on average3. Given that EU and Swiss rules of origin for garments of chapters 61 and 62 are 
identical, it is necessary to clari fy the reasons for such lower utilization rates in the Swiss market.  
3.2 Pearls and precious stones of HS Chapter 71 are primary products that should normally be 
considered as originating since they are mostly wholly obtained in the LDCs.  
3.3 One possibl e explanation of such low utilization may be linked to the fact that Switzerland is 
a landlocked country near to large distribution networks and hubs. Hence low utilization may be due 
to certification and direct shipment requirements and related documentar y evidence rather than the 
substantive rule of origin requirements (substantial transformation). Another explanation could also 
be the relatively low MFN specific duty.  
__________  
 
 
                                                 
3 Utilization rates of  HS 61 and 62 , 2017: 97% for Bangladesh, 96% and 97% for Cambodia, 91% and 
95% for Myanmar .