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New deadline set for harmonising rules of origin

Geneva, 21 Dec (Chakravarthi Raghavan) - - The General Council of the World Trade Organization at its meeting on 20 December, agreed to set a new deadline of December 2002, for completing the work on the work programme on harmonization of non-preferential rules of origin, mandated by Part IV of the Uruguay Round Agreement on Rules of Origin.

Under Art. 9.2.a. of that agreement, this work was to have begun soon after entry into force of the WTO (1 January 1995) and completed within three years.

That deadline went by, and the United States and the major industrialized countries have been resisting any new deadlines, arguing that the work is complicated and technical.

Developing countries have by and large been the victims of the non-harmonization of the non-preferential rules of origin, particularly with major importing countries setting their own criteria and their customs administration applying such criteria on what constitutes ‘origin’.

In setting the one year deadline, till 21 Dec 2002, the General Council directed the Committee on Rules of Origin to hold two sessions and complete its own work within six months, and resolve as many issues as possible, and report to the General Council on its work and the outstanding issues.

Several developing country diplomats who have been involved in these negotiations said that there were some core issues that cannot be resolved at technical level, and have to be brought up before the General Council.

These questions include:

·        those relating to ‘assembly’ of imported components into the final product of export;

·        questions in the of ‘processing’ that acquires an origin.

This is of particular importance in such operations as in the textiles and clothing industry, and the ‘printing’ and ‘dyeing’ of textiles.

The US, for example, views both as a single operation to get ‘origin’, and slaps quotas on imports, or assigns the imported material to the quotas of countries under the Agreement on Textiles and Clothing.

However, in the trade the two are totally separate and viewed as two separate processes in other countries, particularly where ‘speciality’ printing or dyeing is involved..

There are questions relating to ‘processing’ for example in commodities like tea and coffee - where they may be grown in one country, and processed in another.

Other issues of processing and production arise, for example, in the case for fish and fish-products, or even deep sea mining activities (currently) for ‘research purposes’ where the Law of the Seas and its definition of national jurisdiction and international waters are involved.

Under the Law of Seas, a 12-mile limit is recognized for territorial waters (where the sovereignty of the adjoining coastal state prevails), a 200-mile zone for economic purposes, and the oceans beyond viewed as high-seas, with no national jurisdiction.

Vessels flying foreign-flags under agreement of coastal states, fish within the 200-mile zone, and sometimes outside on the high seas adjoining the 200-mile zone. The fish caught and netted are ‘processed’ on board such ships which, under maritime law, have the nationality of the country whose flag it flies. How these fish and products are classified for origin is an important matter for customs and other trade purposes.

In other actions, the General Council decided to continue its work of ‘Major Review of implementation of the Agreement on Textiles and Clothing (ATC),’ as required under Art 8.11 of the ATC. – SUNS5036

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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