Rules Of Origin

The criteria used to determine the country of origin ,that is the place where article is produced,manufactured,or grown, are called the  Rules of origin. Rules of Origin are important  for purposes of international trade. Rules of origin are also used to compile trade statistics, and for “made in ...” labels that are attached to products.

There are two common type of rules of origin depending upon application, the preferential and non-preferential rules of origin.The exact rules vary from country to country

Non-preferential

Non-preferential rules of origin are used to determine the country of origin for certain purposes. likebe  quotas, anti-dumping, anti-circumvention, statistics or origin labeling.

Non-preferential rules originated from the Kyoto convention which stated that if a product is deemed having origin in that country if ii is wholly obtained or produced completely within one country . For products which has been produced in more than one country the product shall be determined to have origin in the country where the last substantial transformation which is determined by general rules like change of tariff classification,value added rule,special processing rule.

According to the non-preferential rules a product always has exactly one country of origin. However, the non-preferential rules. Non-preferential may differ form country to country; the same product may have different origins depending on which country's scheme is applied. Usually it is the rules of the country into which a product is being imported that apply.

Preferential

Preferential RoO are part of a free trade area or preferential trade arrangement which includes tariff concessions. These rules of origin might be unilateral, bilateral or regional (also sometimes called multilateral) trade arrangements. The rules of origin determine what products can benefit from the tariff concession or preference, in order to avoid transshipment
According to the Rules of Origin Agreement WTO members should ensure

For the longer term, the agreement aims for common (“harmonized”) rules of origin among all WTO members, except in some kinds of preferential trade — for example, countries setting up a free trade area are allowed to use different rules of origin for products traded under their free trade agreement. The agreement establishes a harmonization work programme, based upon a set of principles, including making rules of origin objective, understandable and predictable. The work was due to end in July 1998, but several deadlines have been missed. It is being conducted by a Committee on Rules of Origin in the WTO and a Technical Committee under the auspices of the World Customs Organization in Brussels. The outcome will be a single set of rules of origin to be applied under non-preferential trading conditions by all WTO members in all circumstances.

An annex to the agreement sets out a “common declaration” dealing with the operation of rules of origin on goods which qualify for preferential treatment.