WTO Rules of Origin V1.0

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WTO Agreement on Rules of Origin Presented By Asham Cheema 09020241003 Vishal Singla 09020241048 Deepika Singh 09020241056 Introduction: ³Rules of origin´ are the criteria used to define where a product was made. They are an essential part of trade rules due to the following policies discriminate between exporting countries: y y y y Quotas Preferential tariffs Anti-dumping actions Countervailing duty Rules of origin are also used to compile trade statistics, and for ³made in ...´ labels that
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    WTOAgreement on Rules of Origin Presented ByAsham Cheema 09020241003Vishal Singla 09020241048Deepika Singh 09020241056    Introduction: ³Rules of srcin´ are the criteria used to define where a product was made. They are anessential part of trade rules due to the following policies discriminate between exportingcountries: y Quotas y Preferential tariffs y Anti-dumping actions y Countervailing dutyRules of srcin are also used to compile trade statistics, and for  ³ma de in ...´ labels thatare attached to products. This is complicated by globalization and the way a product canbe processed in several countries before it is ready for the market.The Rules of Origin Agree m ent requires WTO members to ensure that their rules of srcin are transparent; that they do not have restricting, distorting or disruptive effects oninternational trade; that they are administered in a consistent, uniform, impartial andreasonable manner; and that they are based on a positive standard (in other words, theyshould state what does confer srcin rather than what does not  ) .For the longer term, the agreement aims for common (³harmonized´ ) rules of srcin amongall WTO members, except in some kinds of preferential trade ² for example, countriessetting up a free trade area are allowed to use different rules of srcin for products tradedunder their free trade agreement. The agreement establishes a harmonization workprogramme, based upon a set of principles, including making rules of srcin objective,understandable and predictable. Rule of srcin in the context of intern a tion a l tr  a de Classification of ³Rules of Origin´There are two types of rules of srcin: y Preferential y Non-Preferential.Non-preferential rules of srcin are used to distinguishforeign products from domestic products when a countrydoes not want to provide the former with the sametreatment granted to the latter. In some countries, for example, public procurement either excludes foreignproducts or reserves certain transactions to domestic PreferentialNon-Preferential Classificationof Rules of Origin   products, or grants a margin of preference to them. According to WTO Agreement, signed in Marrakech in 1994, ³the general notion of rules of srcin shall include all rules of srcin used in non-preferential commercial policyinstruments, such as in the application of most-favored-nation treatment, anti-dumping andcountervailing duties, safeguard measures, and any discriminatory quantitative restrictionsor tariff quotas´.Hence, non-preferential rules are important for several reasons including theapplication of tariffs, quotas, antidumping and agreements on textiles and clothing.Preferential rules of srcin are used to determine which goods may enter a country under apreferential treatment. They define if goods are eligible for special treatment under atrading arrangement between two or more countries, such as the free trade areas, bilateraland regional integration agreements. According to the agreements, certain productsbenefit from duty-free or duty-reduced entry into the nations granting special treatment,provided that they srcinate from specific countries. If the product is judged as ³notsrcinated´ from that country because, for example, it has not undergone substantialtransformation or has had little value added there, the applicable tariff rate would usuallybe the most favored- nation rateThe WTO Agreement on Rules of Origin is applied only to non-preferential rules of srcin. It is not applicable to the process of determination of the country of srcin for preferential trade, for which the srcin is determined on the basis of the provisionsprescribed by a country for the particular system of preferences4. Recognizing that someMembers applied preferential rules of srcin, distinct from non-preferential ones, a³Common Declaration with Regard to Rules of Origin´ has been added to the maindocument. In this Declaration, members agree to apply many of the same generalprinciples for rules of srcin to those rules, which they use to administer preferentialarrangements (either in free trade areas or within GSP ) and to notify these rules. However,they do not accept to apply harmonized rules for preferential purposes.  For the aims of this Common Declaration, ³preferential rules of srcin shall bedefined as those laws, regulations and administrative determinations of general applicationapplied by any Member to determine whether goods qualify for preferential treatmentunder contractual or autonomous trade regimes leading to the granting of tariff preferences going beyond the application of paragraph 1 of Article I of GATT 1994´.Within this context, the main purpose of rules of srcin is to ensure that benefitsarising from preferential tariff treatment under the Generalized System of Preferences(GSP ) or any other preferential arrangement is limited to products that have beenproduced or manufactured in the preference-receiving country.Therefore, rules of srcin are crucial instruments both to identify the nationality of agiven good and to determine whether and which commercial arrangements have to beapplied. They are also a tool of trade policy to differentiate between priority partner states.The differences between the two regimes are the mirror image of deliberatedifferent trade policy objectives and the rationale for this differentiation has beenunderlined in the framework of the EU rules of srcin by the European Court of Justice(ECJ ) in the S.R. Industries v. Administration des douanes case.Global harmonization of rules of srcinIn 1953 the International Chamber of Commerce made the first attempt to harmonize rulesof srcin: it submitted a resolution to the contracting parties recommending the adoption of a uniform definition for determining the nationality of manufactured goods. In the 1970¶sanother effort was made with the Kyoto Convention. It came into force the 25 September 1974, with the aim of attaining a harmonized scheme of custom procedures. .The use of the rules of srcin to implement trade restrictive and trade distortivepolicies finally lead to the inclusion of ³rules of srcin´ as a topic of the Uruguay Roundmultilateral trade negotiations. The WTO Agreement on Rules of Origin was part of theoutcomes of the Uruguay Round: it sought to harmonize the non-preferential rules of srcin
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