We hear a lot about the so-called "rules of origin" within the international logistics sector, but do we know what they mean?
The rules of origin refer to the criteria used to determine the country of origin of an imported product.
According to the World Trade Organization (WTO), they are important because the specific duties and restrictions applicable may depend on the actual source of imports.
In addition, many of the provisions of the GATT 1994 apply to the extent that an "originating" product is affected in a member.
Rules of origin can also increase the administrative costs of business transactions of the company or business (including compliance with bureaucratic requirements) and also generate administrative and surveillance costs for the authorities customs offices. In addition, depending on how rules or origin are determined, they can have a significant impact on investment and trade flows.
There is a WTO rules committee, which meets at least once a year to review the implementation and operation of the agreement. A technical committee on rules of origin was also established under the auspices of the global customs organization. The agreement on rules of origin aims to harmonize non-preferential rules of origin and ensure that these rules do not in themselves create unnecessary barriers to trade.
In what cases are the rules of origin used?
Rules of origin are used in the following cases:
– In applying trade policy measures and instruments such as anti-dumping duties and safeguard measures;
– In determining whether imported products will be accorded most-favoured-nation (MFN) treatment or preferential treatment;
– For the purpose of the development of trade statistics;
– When applying labelling and marking requirements; And
– In public procurement.