RESTRICTEDWORLD TRADE
ORGANIZATIONG/RO/M/19
21 October 1998
(98-4095)
Committee on Rules of Origin
MINUTES OF THE MEETING OF 15 OCTOBER 1998
Chairman:  Mr. R. Wells (Australia)
The agenda proposed for the meeting, contained in WTO/AIR/927, was adopted by the
Committee on Rules of Origin (CRO) as follows:
Page
1. Endorsement of Basket 1 Decisions contained in the Eleventh and
Twelfth Reports of the Technical Committee on Rules of Origin to
the Committee on Rule s of Or igin...............................................................................1
2. Implications of the implementation of the harmonized rules of origin
on other WTO Agreements..........................................................................................2
3. Trade faci litation..........................................................................................................4
4. Notifications under Article 5 and paragraph 4 of Annex II of the
Agreement on Rules of Origin.....................................................................................4
5. Other business
- Date of the ne xt meeting..............................................................................................5
1. Endorsement of Basket 1 Decisions contained in the Eleventh and Twelfth Reports of the
Technical Committee on Rules of Origin to the Committee on Rules of Origin (G/RO/23,
G/RO/W/27, G/RO/ 27/Add.1 and G/RO/27/Add.1/Corr.1)
1.1 The Chairman noted that, in conformity with paragraph 2(c) of Article 9 of the Agreement on
Rules of Origin (the Agreement), the Technical Committee on Rules of Origin (TCRO) had submitted
to the CRO its Twelfth Report.  The Report had been circulated in document G/RO/27, and coveredthe results of the TCRO’s work under the Harmoni zation Work Programme (HWP) at its Twelfth and
Thirteenth Sessions held in Brussels from 14-24 April, 4-15 May and 2-12 June 1998.  The Secretariat
had also circulated the referral documents subm itted by the TCRO in document G/RO/27/Add.1 and
G/RO/27/Add.1/Corr.1.   As requested by the Secretariat of the TCRO, the following corrigendum to
document G/RO/27/Add.1 had also been circulated to Members:
“Add profiles at the end of each text for the following 13 split headings and split subheadings:
ex81.02(d), ex81.03(d), ex81.04(d), ex81.05(d), ex81.06(d), ex81.07(d), ex81.08(d),
ex81.09(d), ex81.10(d), ex81.11(d), ex8112.30(d), ex8112.99(a) and ex81.13(e)”.G/RO/M/19
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1.2 The Chairman recalled that the CRO, at its meeting from 25-29 May 1998, agreed to take up
the endorsement of Basket 1 Decisions contained in  the Eleventh Report at today’s meeting.  The
Eleventh Report and the templates thereof had been circulated in documents G/RO/23 and
G/RO/W/27.
1.3 The Chairman further stated that, as indicated in the letter of transmission of the Chairman of
the TCRO (G/RO/27/Add.1, page 2, last  paragraph), the status of the Chapter Notes for each product
sector was not resolved;  the Chapter Notes were to be the subject of discussions during the coming
TCRO Sessions.  Therefore, although several Chapter Notes were included in the list of Basket 1
Decisions in the two reports, those Chapte r Notes would not be endorsed by the CRO.
1.4 The Chairman drew attention to the fact th at, as indicated in documents G/RO/23 (page 4)
and G/RO/27 (page 4, para. 9), the list of Basket 1 Decisions contained in the two reports included not
only new Basket 1 Decisions, but also old  ones reached at previous Sessions of the TCRO.  Those old
Basket 1 Decisions had already been endors ed by the CRO (document G/RO/W/22/Rev.3).
1.5 In light of some technical difficulties raised by some delegations in relation to some of the
Basket 1 Decisions, the CRO requested the Secretariat to categorize the Basket 1 Decisions according
to the level of consensus achieved, and agreed to revert to this issue at the next meeting.
2. Implications of the implementation of the harmonized rules of origin on other WTO
Agreements (G/RO/W/28/Rev.1, G/RO/W/30-34)
2.1 The Chairman recalled that the CRO, at its meetings of 29 May and 16 June 1998, agreed that
delegations should submit to the Secretariat, by 30 September 1998, any issues that they wished to be
discussed in this connection at a future meeting of the CRO.  So far there had been four submissions:
from India (G/RO/W/28/Rev.1, G/RO/W/39);  from  the United States (G/RO/W/32);  from the
Dominican Republic and Honduras (G/RO/W/33);  and from El Salvador (G/RO/W/34).  A
submission from Korea had also recently been circulated informally (later circulated as document
G/RO/W/38).  The Secretariat had also circulated a working document which compiled provisions
relating to rules of origin in various WTO Agreements (G/RO/W/31).
2.2 The representative of Korea stated that harmonization work was very significant and crucial
to eliminate several trade obstacles caused by different rules of origin.  However, discussing the work
itself was not enough to achieve its intended goal.  Due attention should therefore be paid to
application because harmonized rules of origin should be applied to non-preferential trade policy
instruments as widely as possible without creating any trade-restrictive or distorting effects.  The
backbone of Korea’s argument was the principle of non- discrimination and the spirit of the text of the
WTO Agreements.  In the case of the Agreement on Implementation of Article VI of the GATT 1994
(Agreement on Anti-Dumping), it had no direct relationship with rules of origin.  This was because
investigations were based on the market conditions prevailing in the exporting country, and not on the
origin of a good.  However, the concept of “origin” was meaningful in cases stipulated in Articles 2.2
and 2.5 of the Agreement on Anti-Dumping.  These Articles referred to situations, inter alia , where
there were no sales of like products in the ordinary course of trade in the domestic market of theexporting country, or where an intermediate country was involved.  In such cases, harmonized rules of
origin should be applied to determine the country of origin, and by implication, the country concerned
by the investigation.  This rationale also applied to the Agreement on Subsidies and Countervailing
Measures.  With regards to the relationship with the Agreement on Textiles and Clothing (ATC) as
well as the Agreement on Safeguards, rules of origin  should be referred to determine, for example,
which country’s quota would be affected where a third country was involved.  In addition to such
areas of concern, rules of origin should also be applied to non-preferential trade policy matters such as
government procurement and trade statistics.  As concerns circumvention of anti-dumping measures,
although there was yet to be an agreement on this issue, harmonized rules of origin could be useful.G/RO/M/19
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2.3 The representative of India thanked the delegation of Korea for its paper, which in his view
aptly brought out, with the help of specific examples, some of the possible areas where the
implementation of the proposed harmonized rules of origin would have major implications on other
WTO Agreements.  Article 1.2 of the Agreement sp ecifically provided that harmonized rules should
be applied equally for purposes of all trade policy instruments, including any discriminatory
quantitative restrictions, origin marking requirements, anti-dumping, countervailing duties, etc.  The
Korean paper, when viewed in the perspective of th is Article, clearly illustrated some of the issues
which needed to be addressed so as to ensure that the proposed harmonized rules of origin did not
upset the balance of rights and obligations, adversely affect market access in any way, or result in a
distortion of world trade.  As concerned the implications of the implementation of the harmonized
rules of origin on the ATC, he said that, taking the example in which certain textile products underquantitative restrictions were exported from country A to country B, where they underwent
substantive transformation, and were then exported to a third country C, which was maintaining those
restrictions, then any quota adjustments should necessarily be with respect to country B and not with
respect to country A.  He agreed with what Korea had stated, that if this were not done then it would
constitute a violation of the principle of non-discrimination, in the sense that products whollyproduced in country B would be treated differentl y from those processed and thereby obtaining origin
in country B.  It would therefore be clear, at least with reference to the implications of rules of origin
on the textiles sector, that the more processes there were, which were recognized as constituting
substantial transformation, the greater would be the certainty in the administration of the restrictions
applied to products covered by the ATC.  He similarly agreed with the thoughts that had been putforth with relation to the Agreement on Anti-Dumping and the Agreement on Safeguards.  In this
context those instances needed to be addressed where the Agreement was silent on the residual rules
that might be required to assign origin to a product that was neither wholly obtained in one country
nor satisfied the criterion of substantial transformation.
2.4 The representative of Hong Kong, China stated that he agreed with the main thrust of the
Korean paper, namely that the scope of application of harmonized rules of origin should include all
non-preferential commercial policy instruments, including anti-dumping duties.  The aim of rules of
origin was to determine whether a particular trade measure would be applied to a given product
involved in international trade.  Such trade measures were normally directed against a product
originating in a particular country.  It was therefore quite obvious that rules of origin were relevant in
the application of such trade measures.  In the case of anti-dumping, rules of origin were clearlyrelevant whether anti-dumping was based on the concept of “exporting country” or “origin country”.
To better illustrate the relevance of rules of origin, he pointed out that the great majority of anti-
dumping actions were directed against products originating in a specific economy.  For such cases, the
harmonized rules of origin were clearly relevant.  While there were some cases directed against
products exported from a specific exporting economy, the harmonized rules of origin should also berelevant since conscious decisions were needed in such cases to determine whether the products in
question had originated in that exporting economy or originated from somewhere else for the purpose
of determining the normal value for individual companies concerned.
2.5 The representatives of Canada, the Dominican Republic
, the EC , Egypt , Japan , Mexico , the
Philippines and the United States  welcomed the Korean submission and stated that they needed more
time to study it.2.6 The representative of the United States stated that the comments of previous speakers
indicated that there appeared to be no common understanding on the implications of the harmonized
rules on other WTO Agreements.  He also stated that more communication with other WTO bodies
was needed.G/RO/M/19
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2.7  The representatives of Canada, the Dominican Republic , the EC , Egypt , Japan  and the
Philippines supported the view that more communication with other WTO bodies was needed.
2.8 The CRO took note of the statements made and agreed  to revert to this issue at the next
meeting.
3. Trade facilitation (paras. 6.6-6.9 of G/C/M/34, G/RO/W/26, G/RO/W/26/Add.1)
3.1 The Chairman noted that, as agreed at the meeting of the Council for Trade in Goods (CTG)
on 8 July 1998, the CRO was invited to address those aspects of trade facilitation which it regarded as
being related to the Agreement, with a view to in troducing the results of those discussions into the
informal CTG discussions in March 1999.  As directed by Ministers at the Singapore MinisterialConference, the objective of the work on trade facilitation was to “undertake exploratory and
analytical work, drawing on the work of other international organizations, on the simplification of
trade procedures in order to assess the scope for WTO rules in this area” (paragraph 21 of
WT/MIN(96)/DEC).  The CTG, since that date, had been carrying out exploratory work on trade
facilitation.  In particular, a Symposium on Trade Facilitation was organized from 9-10 March 1998under the auspices of the CTG which helped to identify the main areas where traders face obstacles
when moving goods across borders (G/C/W/113, G/ C/W/115).  Following the Symposium, the CTG,
at the meeting on 8 July 1998, agreed to invite various other WTO bodies to address those aspects of
trade facilitation which they regard as being related to their respective areas of work.
3.2 The Chairman stated that the CRO had been discussing one aspect of trade facilitation since
May 1997, on its own initiative (G/RO/M/10, paragraph 7).  Noting that certain provisions of the
Agreement on Rules of Origin already covered  some customs practices which were linked to trade
facilitation, the CRO, at its meeting on 3 October 1998, mandated the Secretariat to conduct a survey
of Members’ practices with reference to Article 2(h) as well as paragraph 3(d) of Annex II of theAgreement (G/RO/M/11, paragraphs 3.1-3.3).  The Secr etariat had circulated information provided by
32 Members in documents G/RO/W/26 and G/RO/W/26/Add.1.
3.3 The representative of Canada stated that the harmonization of rules of origin itself would
facilitate the flow of international trade.  She suggested that the report to be made to the CTG in
March contain a status report on the implementation by Members on certain aspects of the
Agreement, highlighting in particular advance ruling s issued by authorities, the non-retroactivity of
rule application, and the confidentiality of information.
3.4 The representatives of the EC and US  supported the Canadian suggestion.
3.5 The CRO took note of the statements made, and agreed  to revert to this issue at the next
meeting.4. Notifications under Article 5 and paragraph 4 of Annex II of the Agreement on Rules of
Origin (G/RO/N/19, G/RO /N/20/Rev.1, G/RO/N/21-23)
4.1 The Chairman noted that the Secretariat had circulated five documents informing delegations
of notifications received since its meeting in November 1997, the last time this item had been on the
agenda.  To date 64 Members had made notifications of non-preferential rules of origin and 69
Members had made notifications of preferential rules of origin.  He expressed concern that the
number of Members that had not yet complied with the notification requirements was considerableand urged Members who had not yet notified to do so as early as possible.  He also urged Members
who did not apply rules of origin, non-preferential or preferential, to notify the Secretariat to that
effect so that a complete picture could be obtained.G/RO/M/19
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4.2 The representative of the United States stated that his authorities were reviewing the
notification on the System of European Cumulation of  Origin, and that it was likely that they would
submit questions thereon.
4.3 The representative of the EC had doubts about the usefulness of such examination.
4.4 The CRO took note of the statements made.
5. Other business
- Date of the next meeting
5.1 The Chairman proposed  that the CRO meet on 5 November 1998.
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