Simplification and Harmonization of ROOs

Rules of origin (ROOs) are a set of rules used to determine the “nationality” of a tradable good. Multiple sets of ROOs have come to coexist as free trade agreements (FTAs) have proliferated. These ROOs have become an important trade issue, mainly because the common practice of manufacturers to “outsource” parts/components from different countries makes it complicated to determine the “nationality” of final products. This presents difficulties for United Nations members, which must report trade statistics including the country of origin of imports and exports. More importantly, customs authorities face difficulties in determining what rate of customs duty to apply to products.

The workshop on Simplification and Harmonization of Rules of Origin aimed to draw implications and recommendations for simplification and harmonization of preferential ROOs to facilitate cross-border trade. Senior trade officials from member countries of the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC) as well as the People's Republic of China, Republic of Korea, and ASEAN Secretariat participated in the workshop, which was opened by ADBI Capacity Building and Training Director Worapot Manupipatpong. The workshop was held at ADB's Thailand Resident Mission in Bangkok on 18–21 March 2008 by ADBI in collaboration with ASEAN/SAARC Secretariats, United Nations Conference on Trade and Development (UNCTAD), government of Japan, and ADB's Office of Regional Economic Integration.

The participants reviewed the ROO policies of major trading partners (European Union, Japan, and United States) and examined the World Trade Organization (WTO) draft of a product-specific harmonized ROO that had been developed by the World Customs Organization. They also examined preferential ROOs such as the generalized system of preferences and ROOs of the North American Free Trade Agreement, ASEAN Free Trade Area, and South Asia Free Trade Agreement.

Recommendations proposed include an early adoption of the WTO harmonized ROO; application of best practices of existing FTA ROOs in new FTA negotiations; harmonization of definitions of technical terms used in FTA ROOs; use of the WTO draft harmonized ROO in new FTA ROOs where possible; and full use of the “advance ruling system” on a country of origin determination by authorities.

View an executive summary of the workshop proceedings and other materials.