WTO members held their first discussions on 22 April regarding implementation of the Ministerial Decision on Preferential Rules of Origin for Least Developed Countries (LDCs). The Ministerial Decision was one of the key outcomes of the WTO’s 10th Ministerial Conference in Nairobi last December.

The provisions set out under the Nairobi Decision aim to facilitate least-developed countries’ export of goods to both developed and developing countries under unilateral preferential trade arrangements in favour of LDCs. Key beneficiaries will be countries of the LDC Group, the proponent for the Nairobi Decision.

The Nairobi Decision builds on the earlier 2013 Bali Ministerial Decision on preferential rules of origin by providing more detailed directions on specific issues, such as methods for determining when a product qualifies as “made in an LDC”, and when inputs from other sources can be “cumulated” – or combined together – into the consideration of origin. The provisions also call on preference-granting members to consider simplifying documentary and procedural requirements related to origin as well as other measures to further streamline customs procedures.

At a meeting of the WTO’s committee on rules of origin, the chairman, Christian Wegener (Denmark), reminded delegations that the Nairobi Decision contains an obligation for members to inform the committee about efforts they are making to implement the decision. Members thus need to start preparing this submission.

The chairman noted that, for developed countries, a notification on implementation is due by the end of 2016, while for developing countries with preferential schemes, the notification is due when they decide to start implementing the Nairobi Decision, in line with the flexibilities set out in paragraph 4.1 of the Decision.

“Because of the broad scope of the Decision and its provisions, I would urge all members to start preparing their communication as early as possible, so that all efforts are made to ensure a smooth implementation of the Decision,” Mr Wegener said. 

Speaking on behalf of the LDC Group, Benin raised several issues to move the discussions forward, including questions set out in a written submission to the committee meeting. Benin said it was important to have information on the present status of notifications on preferential rules of origin and how the preference-granting members would abide by their commitments. Benin also noted that an obligation already exists to provide trade and tariff data to the WTO but that some members have provided incomplete data or no data at all. The data will be used by the WTO Secretariat to calculate preference utilization rates, in accordance with modalities to be agreed upon by the committee.

Switzerland, the United States, China, Canada, the EU, Japan and Chile all outlined efforts currently under way or already completed to bring their practices in line with the Nairobi Decision. The EU said it always notified all regulations on rules of origin in the context of its Generalized System of Preferences (GSP) programmes and that it submits relevant import data on a regular basis. The US said it considered its preferential rules of origin well-positioned in terms of consistency with the Nairobi Decision as well as the notification requirements contained therein. China added that effective implementation of the Nairobi Decision will help LDCs increase their exports and integrate into global value chains.

Background

Rules of origin are the criteria used to determine where a product was made. Products that are deemed under such rules to be made in LDCs would qualify for preferential market access schemes for LDCs.

The 2013 Bali Decision set out, for the first time, a set of multilaterally agreed guidelines to help make it easier for LDC exports to qualify for preferential market access. The Bali Decision recognizes that each country granting trade preferences to LDCs has its own method of determining rules of origin, and it invites members to draw upon the elements contained in the Decision when they develop or build on their individual rules of origin arrangements applicable for LDCs.

The Decision also requires that members notify their preferential rules of origin for LDCs to the WTO to enhance transparency, make the rules better understood, and promote an exchange of experiences as well as mainstreaming of best practices. The WTO’s relevant bodies shall also annually review these rules of origin.

A briefing note on preferential rules of origin and other issues of interest to LDCs addressed at the Nairobi Ministerial Conference is available here.