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Preferential rules of origin—A conceptual outline

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Intereconomics

Abstract

The European Community’s preferential trading agreements with third countries all contain origin rules, which lay down a number of detailed criteria that must be met in order for goods to qualify for preferential customs treatment. These “preferential rules of origin” are currently under discussion by policy-makers1 and economists developing guidelines for policy-makers. However, no such discussion is apparent in the more recent academic literature. It appears that scientific debate so far has not analysed in depth the basic legal concepts and instruments contained in preferential trading agreements. The following article attempts to identify these instruments and draft a conceptual overview.

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References

  1. Rod Falvey, Geoff Reed: Rules of Origin as Commercial Policy Instruments, Research Paper 2000/18, Centre for Research on Globalisation and Labour Markets, University of Nottingham 2000.

  2. Cf. Edwin Vermulst: Rules of Origin as Commercial Policy Instruments — Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, pp. 61 f.

  3. Joseph A. LaNasa: An Evaluation of the Uses and Importance of Rules of Origin, and the Effectiveness of the Uruguay Round’s Agreement on Rules of Origin in Harmonizing and Regulating Them, Working Paper, Harvard Law School 1995.

  4. Cf. World Trade Organisation, Technical Information on rules of origin, http://www.wto.org/english/tratop_e/roi_e/roi_e.htm.

  5. As for the EC cf. articies 22ff of the Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community Customs Code, OJ 1992 L pp. 1–50 as amended by Regulation (EC) No. 2700/2000 of 16 November, OJ L 311 12.12.2000 p. 17; also Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code as ammended by Commission Regulation (EC) No. 993/2001 of 4 May 2001, OJ 2001 L 141 pp. 1–128.

  6. Cf. Regulation (EEC) 2913/92, Art. 23.

  7. Cf. ibid., Regulation (EEC) 2913/92, Art. 24.

  8. As for textiles cf. Regulation (EEC) No 2454/93, Art. 35 ff.

  9. Cf. HM Government, Department of Trade and Industry, www.dti. gov.uk/worldtrade/rules.htm.

  10. For a detailed analysis of non-preferential ROO see Edwin Vermulst, op. cit., Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, pp. 61 f.

  11. Decision of the GATT/WTO member states: Generalised Non Reciprocal and Non Discriminatory Preferences Beneficial to Developing Countries, GATT BISD 18 Suppl. 24 (1972).

  12. Joseph A. LaNasa, op. cit. An Evaluation of the Uses and Importance of Rules of Origin, and the Effectiveness of the Uruguay Round’s Agrement on Rules of Origin in Harmonizing and Regulating Them, Working Paper, Harvard Law School 1995.

  13. Cf. Regulation (EEC), 2913/92, Art. 20 lit. d.

  14. Cf. ibid. Regulation (EEC) 2913/92, Art. 20 lit. d. Art. 20 lit. e; for further recent information on the GSP scheme of the European Community see http://www.eurunion.org/legislat/gsp/l legislat.htm.

  15. Ibid. Regulation (EEC) 2913/92, Art. 22 lit. d.

  16. Ibid. Regulation (EEC) 2913/92, Art. 27 lit. a.

  17. Ibid. Regulation (EEC) 2913/92, Art. 27 lit. b.

  18. Cf. Edwin Vermulst, op. cit. Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, p. 82.

  19. ECJ, Judgment of 08/10/1986, Case 385/85, S.R. Industries v. Administration des Douanes, (1986) ECR 2929.

  20. Cf. HM Government, op. cit. Department of Trade and Industry, www.dti.gov.uk/worldtrade/rules.htm.

  21. Joseph A. La Nasa, op. cit. An Evaluation of the Uses and Importance of Rules of Origin, and the Effectiveness of the Uruguay Round’s Agreement on Rules of Origin in Harmonizing and Regulating Them, Working Paper, Harvard Law School 1995.

  22. Rod Falvey, Geoff Reed, op. cit. Rules of Origin as Commercial Policy Instruments, Research Paper 2000/18, Centre for Research on Globalisation and Labour Markets, University of Nottingham 2000. p. 2.

  23. Exceptions are Joseph A. La Nasa, op. cit. An Evaluation of the Uses and Importance of Rules of Origin, and the Effectiveness of the Uruguay Round’s Agreement on Rules of Origin in Harmonizing and Regulating Them, Working Paper, Harvard Law School 1995. also Edwin Vermulst, op. cit. Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, pp. 61. f.

  24. Joseph A. LANasa, op. cit. An Evaluation of the Uses and Importance of Rules of Origin, and the Effectiveness of the Uruguay Round’s Agreement on Rules of Origin in Harmonizing and Regulating Them, Working Paper, Harvard Law School 1995; also Edwin Vermulst, op. cit. Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, pp. 61 f.

  25. Cf. Euro-Mediterranean Interim Association Agreement on trade and cooperation between the European Community and the Palestine Liberation Organization (EC-Palestine Authority Association Agreement), Protocol 3 (Rules of Origin), Art. 4, OJ 1987 L 187 pp. 3 f.

  26. Cf. Agreement on the Establishment of a Free Trade Area between the Government of Israel and the Government of the United States of America (US-Israel FTA), Annex 3 (Rules of Origin), para 1 lit. a.

  27. EC-Israel Euromed Association Agreement, Protocol 4 (Rules of Origin), Art. 5 OJ 2000 L 70, p. 51 f.

  28. For example cf. Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States and the State of Israel (EC-Israel Euromed Association Agreement), Protocol 4 (Rules of Origin), Art. 6 OJ 2000 L 70, p. 52; or US-Israel FTA, Annex 3 (Rules of Origin), para 2, http://199.88.185.106/tcc/data/commerce html/TCC_Documents/ IsraelFreeTrade.html.

  29. Rod Falvey, Geoff Reed, op. cit. Rules of Origin as Commercial Policy Instruments, Research Paper 2000/18, Centre for Research on Globalisation and Labour Markets, University of Nottingham 2000, p. 1; also Edwin Vermulst, op. cit. Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, pp. 61–102; Edwin Vermulst, Paul Waer, Jacques Bourgeois (eds.): Rules of Origin in International—Revisited, in: Journal of World Trade, Vol. 26, No. 4, 1992, pp. 61–102; is (eds.): Rules of Origin in International Trade: A Comparative Study, Ann Arbor 1994, The University of Michigan Press.

  30. Cf. EC-Israel Euromed Association Agreement, Protocol 4 (Rules of Origin), Annex I and II, in which all three critiria can be identified, e.g. change in tariff heading test and value added test for HS Heading 87 09 Work trucks and technical test for HS Heading 2504 Natural crystalline graphit.

  31. Cf. US-Israel FTA, Annex 3 (Rules of Origin), para 1 lit. c.

  32. For further details about the various tests and their advantages and disadvantages see Edwin Vermulst, op. cit. Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, pp. 63–75; also Rod Falvey, Geoff Reed, op. cit. Rules of Origin as Commercial Policy Instruments, Research Paper 2000/18, Centre for Research on Globalisation and Labour Markets, University of Nottingham 2000. FN 1–4, and Joseph A. LaNasa, op cit.

  33. For a survey on the economic theory of regional integration arrangements cf. Dean A. DeRosa: Regional Integration Arrangements, Static Economic Theory, Quantitative Findings and Policy Guidelines, Worldbank, Policy Research Working Paper 2007, http: //ourworld.compuserve.com/homepages/adrintl/w.htm.

  34. Jiandong Ju, Kala Krishna: Firm Behaviour and Market Access in a Free Trade Area with Rules of Origin, NBER Working Paper No. 6857, 1998, p. 1.

  35. Joseph A. LaNasa, op. cit. An Evaluation of the Uses and Importance of Rules of Origin, and the Effectiveness of the Uruguay Round’s Agreement on Rules of Origin in Harmonizing and Regulating Them, Working Paper, Harvard Law School 1995.

  36. ECJ, Judgment of 08/10/1986, Case 385/85, S.R. Industries v. Administration des Douanes, (1986) ECR 2929.

  37. Cf. EC-Israel Euromed Association Agreement, Protocol 4 (Rules of Origin), Art. 16 f. or EC-Palestine Authority Euromed Association Agrement, Protocol 3 (Rules of Origin), Art. 14 f.

  38. Cf. definitions regarding “bilateral cumulation” and “diagonal cumulation”, in: The Sussex European Institute: Study on the economic impact of extending the pan-European system of cumulation of origin to the Mediterranean partners part of the Barcelona process, Final Report, University of Sussex, pp. 6 f.

  39. According to Edwin Vermulst op. cit. Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, p. 80, Japan is an exception from this development because of its geographical distance.

  40. Ibid. Rules of Origin as Commercial Policy Instruments—Revisited, in: Journal of World Trade, Vol. 26, No. 6, 1992, pp. 61 f.

  41. Jiandong Ju, Kala Krishna, op. cit. Firm Behaviour and Market Access in a Free Trade Area with Rules of Origin, NBER Working Paper No. 6857, 1998, p. 1.

  42. Cf. EC Association Agreements with Poland OJ 1993 L 348 p. 1, Hungary OJ 1993 L 347 p. 1, Czech Republic OJ 1994 L 360 p. 1, Slovakia OJ 1994 L 359 p. 1, Slovenia OJ 1999 L 51 p. 3, Romania OJ 1994 L 357 p. 1, Bulgaria OJ 1994 L 358 p. 1, Estonia OJ 1998 L 68 p. 1, Latvia OJ 1998 L 26 p. 1, and Lithuania OJ 1998 L 51 p. 1.

  43. Cf. EC Euromed Association Agreements with Tunisia OJ 1998 L 97 p. 2, Morocco OJ 2000 L70 p. 2, Israel OJ 2000 L 70 p. 2 and Palestinian Authority OJ 1997 L 187 p. 3.

  44. Rod Falvey, Geoff Reed, op. cit. Rules of Origin as Commercial Policy Instruments, Research Paper 2000/18, Centre for Research on Globalisation and Labour Markets, University of Nottingham 2000, p. 16.

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  1. European Commission, Brussels, Belgium

    Thinam Jakob

  2. In-house counsel in the legal affairs department of OMV AG, Vienna, Austria

    Gernot Fiebiger

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Jakob, T., Fiebiger, G. Preferential rules of origin—A conceptual outline. Intereconomics 38, 138–146 (2003). https://doi.org/10.1007/BF03031765

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