The second section examines the prevalence of different types of RoO in one hundred RoO regimes used worldwide. PTA industry linkages over those between the PTA and the rest of the world (ROW), and, as such, to indirectly protect producers of PTA-based inputs against their extra-PTA rivals (Krueger, 1993; Krishna and Krueger, 1995). RoO administrative costs derive from the procedures required to ascertain compliance with the requirements of the RoO regime.
Third, the regime-wide RoO that allows for flexibility in the application of the product-specific RoO, such as cumulation, drawback and self-certification, facilitates aggregate trade flows. The last part of this section presents an analytical, comparative assessment of (1) the relative restrictiveness of the product-specific RoO governing different economic sectors in the different RoO regimes, and (2) the degree of flexibility introduced in the different RoO -regimes of the regime-wide RoO. Also, the RoO of the EU's Generalized System of Preferences (GSP) and the 2000 Cotonou Agreement with the African, Caribbean and Pacific (ACP) developing countries approximate the single list, PANEURO model.
However, the RoO of the US-Singapore FTA is again more complex, like the NAFTA RoO. The generality of the LAIA model is echoed by most Asian and African RoO regimes. However, the overall limitation of the non-preferred model is lower than that of most preferred RoO regimes.
The line in the middle of the box represents the median 50th percentile of the data. However, as discussed above, RoO regimes use several mechanisms to add flexibility to the application of the product-specific RoO. The minimum value of zero results when de minimis is less than 5 percent and none of the other regime-wide RoO is included in the PTA.
RoO “Innovations”: Ad Hoc Mechanisms for Flexibility
The RoO phase-ins are less in the case of Chile and relate to textiles and bicycles for the first three years of the agreement. Tables 8(a) and 8(b) list the phase-ins granted to Mexico and Chile in the RoO regimes with the EU. 25 The other RoO phase-outs in the EU-Mexico FTA involve Zea indurate maize (until 2002), organic chemicals (subheadings of headings 2914 and 2915 contain stricter RoO until June 2003); learning (heading 4104 involves change of heading rather than TECH by 2002); knitted garments (in which chapter 61, instead of manufacturing yarn, allows a greater number of options until 2002); unknitted clothing (whereby various headings in chapter 62 allow a greater number of options than manufacture from yarn until 2002, and a third alternative RoO will be made available from 2003); and nuclear fuel elements (heading 8401 involved a looser RoO until 2005).
Tables 9(a) and 9(b) present such deviations in the EU-Mexico and EU-Chile FTAs respectively at the heading level. 9026 (Instruments or apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases, excluding instruments and apparatus of heading 9032) VC 60% CH Note: VC implies the minimum origin value of all materials used in the production of the final product at the ex-works price of the final product. Note: VC hereby implies the minimum origin value of all materials used in the production of the final product, at the ex-works price of the final product.
Although the deviations are quite small, the fact that most of them have less stringent rules of origin than that of the PANEURO model suggests, similar to the gradual introduction of RoO, that Mexico and Chile have achieved some favorable sectoral results in RoO. negotiations with the EU. For Mexico, there are the most discrepancies in clothing; footwear; machines and mechanical devices; electrical machinery and equipment; vehicle parts; and optical instruments. 26 Nevertheless, the EU is generally considered the ultimate beneficiary of RoO packages, especially after the completion of the RoO phase-out.
For example, Mexico's goal was to keep the RoO on auto components at 30 percent of the vehicle's value (Holbein et al. 2002). However, the FTA provides preferential access to the European market for units that have at least 50 percent local content based on value added by Mexican producers; as mentioned above, after the third year of the FTA, the local content will increase to 60 percent as under the single list. However, in the Chile-EU FTA, fish will be considered to originate in the country where the vessel that catches them; as such, only fish caught by Chilean or EU vessels can enter the EU duty-free four years after the agreement.
This means that fish caught by third country vessels in the territorial waters of either Chile or the EU will not comply with the RoO. The concept of OP allows Singapore to outsource part of the manufacturing process, usually the lower value-added or labor-intensive activities, to the neighboring countries, but to transfer the value of Singapore's production done prior to the outsourcing activity to local, Singaporean count content. when meeting the RoO required by the export market. Under the scheme, certain IT components and medical devices are not subject to RoO when shipped from either party to the FTA.
The Future of the Global RoO Panorama: Toward a De Jure Harmonization of Preferential RoO?
The rapid evolution of the preferential RoO panorama contrasts with the glacial progress of the non-preferential RoO negotiations. First, the definition of RoO will have implications for the application of many other international trade policy instruments; thus, the beneficiaries of the other agreements will have a share in the harmonization process. Although the objectives of the SPS Agreement and the ARO differ, their provisions must be compatible.
Codex Alimentarius defines the international norms for food products, and informs consumers about the ingredients and processes involved in the production of the final product. Most developing countries favor RoO that assigns origin to the country in whose EEZ the fish was caught, while the EC supports an RoO that determines the origin of fish caught in the EEZ by the origin of the vessel. 28 Furthermore, that consumers have recently become more demanding about the information about the origin of meat and the type of processing that can be used, will probably have important implications for the Codex and the definition of RoO (Thorstensen 2002).
In addition to raising the profile of the RoO talks, various ways are being envisaged in the WTO to facilitate the resolution of pending issues. Third, the Doha Round can help find solutions to the larger issues that prevent the finalization of the harmonization program, such as anti-dumping and the definition of trademarks. In turn, GSP RoO are the responsibility of the Trade and Development Commission.
Admittedly, some might argue that the entrenchment of the preferential RoO regimes since the mid-1990s, the rampant de facto convergence in RoO regimes and the overall lowering of tariffs around the world have made the harmonization of non-preferential RoO increasingly irrelevant. First, if used as a benchmark for harmonizing preferential RoO, as seen above, non-preferential RoO is less restrictive and complex than any of the main RoO schemes. 29 Of course, qualifying for preferential treatment would, even in the presence of harmonized RoO, require outsourcing relationships and production to be tailored to the requirements of the RoO of the PTA granting the preferences.
As such, their negotiations would probably not involve as much consideration of other WTO agreements as the harmonization of non-preferential trading rules does. Simultaneously, the growing interest of policy analysts and academia in RoO will help to understand the operation and effects of different types of RoO. The political will to negotiate preferential RoOs will not be easy to muster given the entrenchment of RoO regime models and the interests that support them, and simply because of the very full agendas of WTO members.
Conclusion
EC's Wonderland: An Overview of the Pan-European Harmonized Protocols of Origin." Journal of World Trade 33, 4. Negotiating Preferential Market Access: Case of the North American Free Trade Agreement." Journal of World Trade 34, 1 (February). Regional Economic Agreements and Multinational Firms: NAFTA's Investment Provisions." In Hafiz Mirza, ed.
A plea for reform of the WTO regime on rules of origin.” Journal of World Trade 36, 2 (April). Excessive documentation costs as a non-tariff measure: an empirical analysis of the effects of documentation costs.” Working document. The relationship between regional trade agreements and the multilateral trading system: the role of rules of origin.” Trade Committee Working Party (June 19).
Rules of Origin in the EC Context: The EC Commission's Origin Approach.” In Kees Jan Kuilwijk and Robert Wright, eds. Firstly, the RoO based on the import content rule is equated with a change to the heading (value 4) if the content requirement does not exceed 50 percent of the non-originating inputs of the ex-works price of the product allows. In the case of the non-preferential RoO, a RoO requiring an amendment to the item or an amendment to the item and an exception and/or TECH is coded as 1.
VNM is the value of non-originating materials used by the manufacturer in the production of the good. VNM is the value of non-originating materials used by the manufacturer in the production of the goods; and. VOM is the value of the originating materials used by the manufacturer in the production of the good.
Where it cannot be determined that a change in title has occurred, the CIF value of the non-originating ingredients may not exceed 40 percent of the FOB value of the final product. Also, the share of citizens of the Member States in the ownership of the manufacturing plant must not be less than 51%. It cannot be less than 35 percent of the appraised value of the article at the time it enters the other Party.
