G/RO/W/152  
 
17 November 2014  
(14-6722)  Page: 1/3  
Committee on Rules of Origin  Original: English  
 
 EXCHANGE OF LETTERS BETWEEN 
 THE CHAIRMAN OF THE COMMITTEE ON RULES OF ORIGIN AND 
 THE CHAIRMAN OF THE GENERAL COUNCIL  
REGARDING THE STATE OF PLAY IN THE HARMONIZATION WORK PROGRAMME 
 
This document is being circulated pursuant to the request made by delegations at the meeting of 
the Committee on Rules of Origin (CRO) of 30 Nove mber 2014. It contains the letters exchanged 
between the Chairman of the CRO and the Chairman  of the General Council regarding the state of 
play in the Harmonization Work Programme (HWP).  
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- Letter from the Chairman of the Committee on Rules of Origin 
 Let me start by congratulating you for your recent appointment as Chairman of the General Council.  I am writing to you in my capacity of outgoing Chairman of the Committee on Rules of 
Origin (CRO), to brief you on the work of that Committee with respect to the negotiations for the 
harmonization of non-preferential rules of origin (usually referred to as the Harmonization Work Programme, or HWP).  
As you know, negotiations for the harmonization of non-preferential rules of origin are mandated 
by the WTO Agreement on Rules of Origin (Article s 9 and 3).  These negotiations started in 1995 
and, despite substantive progress, have come to an almost complete standstill due to divergences 
on a number of "core policy issues".  These core policy issues were referred to the General Council 
for political guidance in 2002 and consultations were carried out on them until 2007.  Among these issues, the following two are particularly significant: 
i. "Implications". What became known as the "implications issue" refers to divergences 
regarding the scope of application of the newly harmonized rules of origin.  In fact, several 
trade instruments require the determination of origin, as is recalled in Article 1 of the Agreement on Rules of Origin, including: most-favoured nation treatment in the 
determination of import duties; safeguard measures; anti-dumping measures; 
countervailing duties; origin marking and labelling; discriminatory quantitative restrictions or tariff quotas, government procurement; and trade statistics.  Members have polarized views 
regarding whether the harmonized rules should also apply to such other instruments or not.  
As a compromise, the Chairperson of the Committee had proposed in 2006 that each Member would choose the instruments to which it would apply the harmonized rules and 
notify the Secretariat.  Nevertheless, a partial or selective application of the rules could not 
be accepted by all WTO Members. 
ii. "Dual rule for machinery":  Members also held  divergent views on the identification of rules 
for the machinery sector (about 600 tariff lines in HS Chapters 84-90), largely because of 
uncertainties regarding the utilization of harmonized rules of origin for trade policy 
measures.   Some Members had argued that value-added rules should be used for this sector while other Members argued the opposite.  The Chairperson of the Committee had 
proposed, in 2006, that both tariff-shift rules and value added rules be used depending on 
Members' preferences ("double approach" or "dual rule"), but this pragmatic solution could not be accepted by all WTO Members. 
Recognizing Members' divergences on these issues, the General Council, on 27 July 2007, 
recommended that work on these issues be suspended until such guidance from the General Council would be forthcoming.  In practice, there has not been any appetite in the Committee to G/RO/W/152 
 
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  negotiate technical elements in the absence of a po litical understanding on the future scope of the 
rules.  The fact that the "core policy issues" ha d been referred to the General Council has also 
meant that some Members refused to engage in discussions in the CRO arguing that the Committee is not competent to discuss them in the absence of further instructions from the 
General Council. 
Recently, a more fundamental question has emerged.  It relates to the very need to conclude 
these negotiations: 
i. Some Members mentioned that concluding the harmonization negotiations was no longer a 
political priority. According to them, world trade had changed dramatically since the late 1990s, when the HWP had initiated.  The WTO now covered virtually all major trading nations, so distinguishing preferential, MFN and non-MFN origin did not make sense any 
longer.  National customs administrations now needed to focus on preferential origin only.  
They also argued that products were now "made in the world", so the concept of national origin had lost its importance.  For these Members, the Committee should reduce the 
frequency of its meetings and focus on alternative areas, for instance:  certification and 
verification of origin, trade in value chains and global production networks, transparency regarding non-preferential and preferenti al rules of origin and notifications. 
ii. Other Members believed that fully harmonized, non-preferential rules of  origin remained an 
important objective to facilitate world trade.  These Members would support an intensification of the Committee's work to conclude the negotiations.  They argued that non-preferential rules of origin might have lost importance for tariff treatment, but that their 
relevance had increased in the context of trade remedies, government procurement, and 
labelling, etc.  However, they noted that full negotiations could only resume if there was a clear political commitment to conclude the HWP. 
iii. Some Members, from both previous groups, also mentioned that they were ready to explore 
the possibility of concluding the HWP for their voluntary adoption by Members as 
"guidelines". 
As it is, the implementation and operation of the Agreement is not satisfactory as the adoption of 
harmonized non-preferential rules of origin constitutes its central objective.  However, given these differences in Members' views, it is impossible for me to propose any significant technical work or draw a future roadmap. 
Given this situation, I would like to suggest that, under your guidance and recommendation, and 
following consultations as may be necessary, the General Council instructs the CRO to discuss all issues as it deems necessary in order to take decisions with respect to the continuation or not of 
the HWP.  Giving full responsibility back to the Committee will clarify procedural stumbling blocks 
and give the Committee an opportunity to discuss the fundamental questions it faces.  
 
 
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  - Letter from the Chairman of the General Council 
 
 I would like to congratulate you on your appointment as the Chairman of the Committee on Rules of Origin, and I wish you a very productive and successful term. 
 
 I refer to the letter dated 31 March 2014 that your predecessor, Mr. Marhijn Visser, addressed to me concerning the negotiations for the harmonization of non-preferential rules of 
origin.  Mr. Visser's letter referred to the core policy issues of "Implications" and "Dual rule for 
machinery" and to questions that were raised in the CRO about the need to conclude the negotiations.  
 I have undertaken consultations with Members on the issues raised in the letter, and the 
general sense from my consultations is that Members would wish the Committee on Rules of Origin to continue its work on all the issues as it deems necessary, without the matter being referred to 
the General Council at this stage. 
       
             
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