                      AGREEMENT ON RULES OF ORIGIN


      Members,

      Noting that Ministers on 20 September 1986 agreed that "the Uruguay 
Round of Multilateral Trade Negotiations shall aim to bring about further 
liberalization and expansion of world trade, strengthen the role of the GATT 
and increase the responsiveness of the GATT system to the evolving 
international economic environment";

      Desiring to further the objectives of the GATT 1994;

      Recognizing that clear and predictable rules of origin and their 
application facilitate the flow of international trade;

      Desiring to ensure that rules of origin themselves do not create 
unnecessary obstacles to trade;

      Desiring to ensure that rules of origin do not nullify or impair the 
rights of Members under the GATT 1994;

      Recognizing that it is desirable to provide transparency of laws, 
regulations, and practices regarding rules of origin;

      Desiring to ensure that rules of origin are prepared and applied in an 
impartial, transparent, predictable, consistent and neutral manner;

      Recognizing the availability of a consultation mechanism and 
procedures for the speedy, effective and equitable resolution of disputes 
arising under this Agreement;

      Desiring to harmonize and clarify rules of origin;

      Hereby agree as follows:


                                 PART I

                        DEFINITIONS AND COVERAGE

                                Article 1

                             Rules of Origin

1.    For the purposes of Parts I to IV of this Agreement, rules of origin 
shall be defined as those laws, regulations and administrative 
determinations of general application applied by any Member to determine the 
country of origin of goods provided such rules of origin are not related to 
contractual or autonomous trade rgimes leading to the granting of tariff 
preferences going beyond the application of Article I:1 of the GATT 1994.

2.    Rules of origin referred to in paragraph 1 shall include all rules of 
origin used in non-preferential commercial policy instruments, such as in 
the application of:  most-favoured-nation treatment under Articles I, II, 
III, XI and XIII of the GATT 1994;  anti-dumping and countervailing duties 
under Article VI of the GATT 1994;  safeguard measures under Article XIX of 
the GATT 1994;  origin marking requirements under Article IX of the GATT 
1994;  and any discriminatory quantitative restrictions or tariff quotas.  
They shall also include rules of origin used for government procurement and 
trade statistics.[1]


                                 PART II

        DISCIPLINES TO GOVERN THE APPLICATION OF RULES OF ORIGIN

                                Article 2

                Disciplines During the Transition Period

      Until the work programme for the harmonization of rules of origin set 
out in Part IV below is completed, Members shall ensure that:

      (a)  when they issue administrative determinations of general 
           application, the requirements to be fulfilled are clearly 
           defined.  In particular:

           -     in cases where the criterion of change of tariff 
                 classification is applied, such a rule of origin, and any 
                 exceptions to the rule, must clearly specify the 
                 sub-headings or headings within the tariff nomenclature 
                 that are addressed by the rule;
           -     in cases where the ad valorem percentage criterion is 
                 applied, the method for calculating this percentage shall 
                 also be indicated in the rules of origin;
           -     in cases where the criterion of manufacturing or processing 
                 operation is prescribed, the operation that confers origin 
                 on the good concerned shall be precisely specified;

      (b)  notwithstanding the measure or instrument of commercial policy to 
           which they are linked, their rules of origin are not used as 
           instruments to pursue trade objectives directly or indirectly;

      (c)  rules of origin shall not themselves create restrictive, 
           distorting, or disruptive effects on international trade.  They 
           shall not pose unduly strict requirements or require the 
           fulfilment of a certain condition not related to manufacturing or 
           processing, as a prerequisite for the determination of the 
           country of origin.  However, costs not directly related to 
           manufacturing or processing may be included for the purposes of 
           the application of an ad valorem percentage criterion consistent 
           with sub-paragraph (a) above;

      (d)  the rules of origin that they apply to imports and exports are 
           not more stringent than the rules of origin they apply to 
           determine whether or not a good is domestic and shall not 
           discriminate between other Members, irrespective of the 
           affiliation of the manufacturers of the good concerned;[2]

      (e)  their rules of origin are administered in a consistent, uniform, 
           impartial and reasonable manner;

      (f)  their rules of origin are based on a positive standard.  Rules of 
           origin that state what does not confer origin (negative standard) 
           are permissible as part of a clarification of a positive standard 
           or in individual cases where a positive determination of origin 
           is not necessary;

      (g)  their laws, regulations, judicial and administrative rulings of 
           general application relating to rules of origin are published as 
           if they were subject to, and in accordance with, the provisions 
           of Article X:1 of the GATT 1994;

      (h)  upon the request of an exporter, importer or any person with a 
           justifiable cause, assessments of the origin they would accord to 
           a good are issued as soon as possible but no later than 150 
           days[3] after a request for such an assessment provided that all 
           necessary elements have been submitted.  Requests for such 
           assessments shall be accepted before trade in the good concerned 
           begins and may be accepted at any later point in time.  Such 
           assessments shall remain valid for three years provided that the 
           facts and conditions, including the rules of origin, under which 
           they have been made remain comparable.  Provided that the parties 
           concerned are informed in advance, such assessments will no 
           longer be valid when a decision contrary to the assessment is 
           made in a review as referred to in sub-paragraph (j) below.  Such 
           assessments shall be made publicly available subject to the 
           provisions of sub-paragraph (k) below;

      (i)  when introducing changes to their rules of origin or new rules of 
           origin, they shall not apply such changes retroactively as 
           defined in, and without prejudice to, their laws or regulations;

      (j)  any administrative action which they take in relation to the 
           determination of origin is reviewable promptly by judicial, 
           arbitral or administrative tribunals or procedures, independent 
           of the authority issuing the determination, which can effect the 
           modification or reversal of the determination;

      (k)  all information that is by nature confidential or that is 
           provided on a confidential basis for the purpose of the 
           application of rules of origin is treated as strictly 
           confidential by the authorities concerned, which shall not 
           disclose it without the specific permission of the person or 
           government providing such information, except to the extent that 
           it may be required to be disclosed in the context of judicial 
           proceedings.



                                Article 3

                 Disciplines after the Transition Period

      Taking into account the aim of all Members to achieve as a result of 
the harmonization work programme set out in Part IV below, the establishment 
of harmonized rules of origin, the Members shall ensure, upon the 
implementation of the results of the harmonization work programme that:

      (a)  they apply rules of origin equally for all purposes as set out in 
           Article 1 above;

      (b)  under their rules of origin, the country to be determined as the 
           origin of a particular good is either the country where the good 
           has been wholly obtained or, when more than one country is 
           concerned in the production of the good, the country where the 
           last substantial transformation has been carried out;

      (c)  the rules of origin that they apply to imports and exports are 
           not more stringent than the rules of origin they apply to 
           determine whether or not a good is domestic and shall not 
           discriminate between other Members, irrespective of the 
           affiliation of the manufacturers of the good concerned;

      (d)  the rules of origin are administered in a consistent, uniform, 
           impartial and reasonable manner;

      (e)  their laws, regulations, judicial and administrative rulings of 
           general application relating to rules of origin are published as 
           if they were subject to, and in accordance with, the provisions 
           of Article X:1 of the GATT 1994;

      (f)  upon the request of an exporter, importer or any person with a 
           justifiable cause, assessments of the origin they would accord to 
           a good are issued as soon as possible but no later than 150 days 
           after a request for such an assessment provided that all 
           necessary elements have been submitted.  Requests for such 
           assessments shall be accepted before trade in the good concerned 
           begins and may be accepted at any later point in time.  Such 
           assessments shall remain valid for three years provided that the 
           facts and conditions, including the rules of origin, under which 
           they have been made remain comparable.  Provided that the parties 
           concerned are informed in advance, such assessments will no 
           longer be valid when a decision contrary to the assessment is 
           made in a review as referred to in sub-paragraph (h) below.  Such 
           assessments shall be made publicly available subject to the 
           provisions of sub-paragraph (i) below;

      (g)  when introducing changes to their rules of origin or new rules of 
           origin, they shall not apply such changes retroactively as 
           defined in, and without prejudice to, their laws or regulations;

      (h)  any administrative action which they take in relation to the 
           determination of origin is reviewable promptly by judicial, 
           arbitral or administrative tribunals or procedures, independent 
           of the authority issuing the determination, which can effect the 
           modification or reversal of the determination;

      (i)  all information which is by nature confidential or which is 
           provided on a confidential basis for the purpose of the 
           application of rules of origin is treated as strictly 
           confidential by the authorities concerned, which shall not 
           disclose it without the specific permission of the person or 
           government providing such information, except to the extent that 
           it may be required to be disclosed in the context of judicial 
           proceedings.



                                PART III

            PROCEDURAL ARRANGEMENTS ON NOTIFICATION, REVIEW,
                   CONSULTATION AND DISPUTE SETTLEMENT

                                Article 4

                              Institutions

      There shall be established under this Agreement:

1.    a Committee on Rules of Origin (hereinafter referred to as "the 
Committee") composed of the representatives from each of the Members.  The 
Committee shall elect its own Chairman and shall meet as necessary, but not 
less than once a year, for the purpose of affording Members the opportunity 
to consult on matters relating to the operation of Parts I, II, III and IV 
of the Agreement or the furtherance of the objectives set out in these Parts 
and to carry out such other responsibilities assigned to it under this 
Agreement or by the Council for Trade in Goods.  Where appropriate, the 
Committee shall request information and advice from the Technical Committee 
(referred to in paragraph 2 below) on matters related to this Agreement.  
The Committee may also request such other work from the Technical Committee 
as it considers appropriate for the furtherance of the above-mentioned 
objectives of this Agreement.  The MTO Secretariat shall act as the 
Secretariat to the Committee;

2.    a Technical Committee on Rules of Origin (hereinafter referred to as 
"the Technical Committee") under the auspices of the Customs Co-operation 
Council (CCC) as set out in Annex I of this Agreement.  The Technical 
Committee shall carry out the technical work called for in Part IV and 
prescribed in Annex I of this Agreement.  Where appropriate, the Technical 
Committee shall request information and advice from the Committee on matters 
related to this Agreement.  The Technical Committee may also request such 
other work from the Committee as it considers appropriate for the 
furtherance of the above-mentioned objectives of the Agreement.  The CCC 
secretariat shall act as the secretariat to the Technical Committee.

                                Article 5

               Information and Procedures for Modification
                 and Introduction of New Rules of Origin

1.    Upon entry into force of the Agreement Establishing the MTO, each 
Member shall provide to the MTO Secretariat within 90 days its rules of 
origin, judicial decisions, and administrative rulings of general 
application relating to rules of origin in effect on the date of entry into 
force of the Agreement Establishing the MTO.  If by inadvertence a rule of 
origin has not been provided, the Member concerned shall provide it 
immediately after this fact becomes known.  Lists of information received 
and available with the MTO Secretariat shall be circulated to the Members by 
the MTO Secretariat.

2.    During the period referred to in Article 2 above, Members introducing 
modifications, other than de minimis modifications, to their rules of origin 
or introducing new rules of origin, which, for the purpose of this Article, 
shall include any rule of origin referred to in paragraph 1 above and not 
provided to the MTO Secretariat, shall publish a notice to that effect at 
least 60 days before the entry into force of the modified or new rule in 
such a manner as to enable interested parties to become acquainted with the 
intention to modify a rule of origin or to introduce a new rule of origin, 
unless exceptional circumstances arise or threaten to arise for a Member.  
In these exceptional cases, the Member shall publish the modified or new 
rule as soon as possible.


                                Article 6

                                 Review

1.    The Committee shall review annually the implementation and operation 
of Parts II and III of this Agreement having regard to its objectives.  The 
Committee shall annually inform the Council for Trade in Goods of 
developments during the period covered by such reviews.

2.    The Committee shall review the provisions of Parts I, II and III above 
and propose amendments as necessary to reflect the results of the 
harmonization work programme.

3.    The Committee, in cooperation with the Technical Committee, shall set 
up a mechanism to consider and propose amendments to the results of the 
harmonization work programme, taking into account the objectives and 
principles set out in Article 9.  This may include instances where the rules 
need to be made more operational or need to be updated to take into account 
new production processes as affected by any technological change.


                                Article 7

                              Consultation

      The provisions of Article XXII of the GATT 1994, as elaborated and 
applied by the Understanding on Rules and Procedures Governing the 
Settlement of Disputes, are applicable to this Agreement.


                                Article 8

                           Dispute Settlement

      The provisions of Article XXIII of the GATT 1994, as elaborated and 
applied by the Understanding on Rules and Procedures Governing the 
Settlement of Disputes, are applicable to this Agreement.


                                 PART IV

                    HARMONIZATION OF RULES OF ORIGIN

                                Article 9

Objectives and Principles

1.    With the objectives of harmonizing rules of origin and, inter alia, 
providing more certainty in the conduct of world trade, the Ministerial 
Conference shall undertake the work programme set out below in conjunction 
with the CCC, on the basis of the following principles:

      (a)  rules of origin should be applied equally for all purposes as set 
           out in Article 1 above;

      (b)  rules of origin should provide for the country to be determined 
           as the origin of a particular good to be either the country where 
           the good has been wholly obtained or, when more than one country 
           is concerned in the production of the good, the country where the 
           last substantial transformation has been carried out;

      (c)  rules of origin should be objective, understandable and 
           predictable;

      (d)  notwithstanding the measure or instrument to which they may be 
           linked, rules of origin should not be used as instruments to 
           pursue trade objectives directly or indirectly.  They should not 
           themselves create restrictive, distorting or disruptive effects 
           on international trade.  They should not pose unduly strict 
           requirements or require the fulfilment of a certain condition not 
           relating to manufacturing or processing as a prerequisite for the 
           determination of the country of origin.  However, costs not 
           directly related to manufacturing or processing may be included 
           for purposes of the application of an ad valorem percentage 
           criterion;

      (e)  rules of origin should be administrable in a consistent, uniform, 
           impartial and reasonable manner;

      (f)  rules of origin should be coherent;

      (g)  rules of origin should be based on a positive standard.  Negative 
           standards may be used to clarify a positive standard.

Work Programme

2.    (a)  The work programme shall be initiated as soon after the entry 
           into force of the Agreement Establishing the MTO as possible and 
           will be completed within three years of initiation.

      (b)  The Committee and the Technical Committee provided for in Article 
           4 of this Agreement shall be the appropriate bodies to conduct 
           this work.

      (c)  To provide for detailed input by the CCC, the Committee shall 
           request the Technical Committee to provide its interpretations 
           and opinions resulting from the work described below on the basis 
           of the principles listed in paragraph 1 of this Article.  To 
           ensure timely completion of the work programme for harmonization, 
           such work shall be conducted on a product sector basis, as 
           represented by various chapters or sections of the Harmonized 
           System (HS) nomenclature.

           (i)   Wholly Obtained and Minimal Operations or Processes

           The Technical Committee shall develop harmonized definitions of:

           -     the goods that are to be considered as being wholly 
                 obtained in one country.  This work shall be as detailed as 
                 possible;
           -     minimal operations or processes that do not by themselves 
                 confer origin to a good.

           The results of this work shall be submitted to the Committee 
           within three months of receipt of the request from the Committee.

           (ii)  Substantial Transformation - Change in Tariff 
           Classification

           -     The Technical Committee shall consider and elaborate upon, 
                 on the basis of the criterion of substantial 
                 transformation, the use of change in tariff subheading or 
                 heading when developing rules of origin for particular 
                 products or a product sector and, if appropriate, the 
                 minimum change within the nomenclature that meets this 
                 criterion.
           -     The Technical Committee shall divide the above work on a 
                 product basis taking into account the chapters or sections 
                 of the HS nomenclature, so as to submit results of its work 
                 to the Committee at least on a quarterly basis.  The 
                 Technical Committee shall complete the above work within 
                 one year and three months from receipt of the request of 
                 the Committee.

           (iii) Substantial Transformation - Supplementary Criteria

           Upon completion of the work under (ii) for each product sector or 
           individual product category where the exclusive use of the HS 
           nomenclature does not allow for the expression of substantial 
           transformation, the Technical Committee:

           -     shall consider and elaborate upon, on the basis of the 
                 criterion of substantial transformation, the use, in a 
                 supplementary or exclusive manner, of other requirements, 
                 including ad valorem percentages[4] and/or manufacturing or 
                 processing operations[5], when developing rules of origin 
                 for particular products or a product sector;
           -     may provide explanations for its proposals;
           -     shall divide the above work on a product basis taking into 
                 account the chapters or sections of the HS nomenclature, so 
                 as to submit results of its work to the Committee at least 
                 on a quarterly basis.  The Technical Committee shall 
                 complete the above work within two years and three months 
                 of receipt of the request from the Committee.

Rle of the Committee

3.    On the basis of the principles listed in paragraph 1 of this Article:

      (a)  the Committee shall consider the interpretations and opinions of 
           the Technical Committee periodically in accordance with the 
           time-frames provided in (i), (ii) and (iii) above with a view to 
           endorsing such interpretations and opinions.  The Committee may 
           request the Technical Committee to refine or elaborate its work 
           and/or to develop new approaches.  To assist the Technical 
           Committee, the Committee should provide its reasons for requests 
           for additional work and, as appropriate, suggest alternative 
           approaches;

      (b)  upon completion of all the work identified in (i), (ii) and (iii) 
           above, the Committee shall consider the results in terms of their 
           overall coherence.

Results of the Harmonization Work Programme and Subsequent Work

4.    The Ministerial Conference shall establish the results of the 
harmonization work programme in an annex as an integral part of this 
Agreement.[6]  The Ministerial Conference shall establish a time-frame for 
the entry into force of this annex.



                                 ANNEX I

                 TECHNICAL COMMITTEE ON RULES OF ORIGIN

Responsibilities

1.    The on-going responsibilities of the Technical Committee shall include 
the following:

      (a)  at the request of any member of the Technical Committee, to 
           examine specific technical problems arising in the day-to-day 
           administration of the rules of origin of Members and to give 
           advisory opinions on appropriate solutions based upon the facts 
           presented;

      (b)  to furnish information and advice on any matters concerning the 
           origin determination of goods as may be requested by any Member 
           or the Committee; 

      (c)  to prepare and circulate periodic reports on the technical 
           aspects of the operation and status of this Agreement;  and

      (d)  to review annually the technical aspects of the implementation 
           and operation of Parts II and III of this Agreement.                           

2.    The Technical Committee shall exercise such other responsibilities as 
the Committee may request of it.

3.    The Technical Committee shall attempt to conclude its work on specific 
matters, especially those referred to it by Members or the Committee, in a 
reasonably short period of time.

Representation

4.    Each Member shall have the right to be represented on the Technical 
Committee.  Each Member may nominate one delegate and one or more alternates 
to be its representatives on the Technical Committee.  Such a Member so 
represented on the Technical Committee is hereinafter referred to as a 
"member" of the Technical Committee.  Representatives of members of the 
Technical Committee may be assisted by advisers at meetings of the Technical 
Committee.  The MTO Secretariat may also attend such meetings with observer 
status.

5.    Members of the CCC who are not MTO Members may be represented at 
meetings of the Technical Committee by one delegate and one or more 
alternates.  Such representatives shall attend meetings of the Technical 
Committee as observers.

6.    Subject to the approval of the Chairman of the Technical Committee, 
the Secretary-General of the CCC (hereinafter referred to as "the 
Secretary-General") may invite representatives of governments which are 
neither MTO Members nor members of the CCC and representatives of 
international governmental and trade organizations to attend meetings of the 
Technical Committee as observers.

7.    Nominations of delegates, alternates and advisers to meetings of the 
Technical Committee shall be made to the Secretary-General.

Meetings

8.    The Technical Committee shall meet as necessary, but not less than 
once a year.

Procedures

9.    The Technical Committee shall elect its own Chairman and shall 
establish its own procedures.



                                ANNEX II

     COMMON DECLARATION WITH REGARD TO PREFERENTIAL RULES OF ORIGIN

1.    Recognizing that some Members apply preferential rules of origin, 
distinct from non-preferential rules of origin, the Members hereby agree as 
follows.

2.    For the purposes of this Common Declaration, preferential rules of 
origin shall be defined as those laws, regulations and administrative 
determinations of general application applied by any Member to determine 
whether goods qualify for preferential treatment under contractual or 
autonomous trade rgimes leading to the granting of tariff preferences going 
beyond the application of Article I:1 of the GATT 1994.

3.    The Members agree to ensure that:

      (a)  when they issue administrative determinations of general 
           application, the requirements to be fulfilled are clearly 
           defined.  In particular:

           -     in cases where the criterion of change of tariff 
                 classification is applied, such a preferential rule of 
                 origin, and any exceptions to the rule, must clearly 
                 specify the sub-headings or headings within the tariff 
                 nomenclature that are addressed by the rule;
           -     in cases where the ad valorem percentage criterion is 
                 applied, the method for calculating this percentage shall 
                 also be indicated in the preferential rules of origin;
           -     in cases where the criterion of manufacturing or processing 
                 operation is prescribed, the operation that confers 
                 preferential origin shall be precisely specified;

      (b)  their preferential rules of origin are based on a positive 
           standard.  Preferential rules of origin that state what does not 
           confer preferential origin (negative standard) are permissible as 
           part of a clarification of a positive standard or in individual 
           cases where a positive determination of preferential origin is 
           not necessary;

      (c)  their laws, regulations, judicial and administrative rulings of 
           general application relating to preferential rules of origin are 
           published as if they were subject to, and in accordance with, the 
           provisions of Article X:1 of the GATT 1994;

      (d)  upon request of an exporter, importer or any person with a 
           justifiable cause, assessments of the preferential origin they 
           would accord to a good are issued as soon as possible but no 
           later than 150 days[7] after a request for such an assessment 
           provided that all necessary elements have been submitted.  
           Requests for such assessments shall be accepted before trade in 
           the good concerned begins and may be accepted at any later point 
           in time.  Such assessments shall remain valid for three years 
           provided that the facts and conditions, including the 
           preferential rules of origin, under which they have been made 
           remain comparable.  Provided that the parties concerned are 
           informed in advance, such assessments will no longer be valid 
           when a decision contrary to the assessment is made in a review as 
           referred to in sub-paragraph (f) below.  Such assessments shall 
           be made publicly available subject to the provisions of 
           sub-paragraph (g) below;

      (e)  when introducing changes to their preferential rules of origin or 
           new preferential rules of origin, they shall not apply such 
           changes retroactively as defined in, and without prejudice to, 
           their laws or regulations;

      (f)  any administrative action which they take in relation to the 
           determination of preferential origin is reviewable promptly by 
           judicial, arbitral or administrative tribunals or procedures, 
           independent of the authority issuing the determination, which can 
           effect the modification or reversal of the determination;

      (g)  all information that is by nature confidential or that is 
           provided on a confidential basis for the purpose of the 
           application of preferential rules of origin is treated as 
           strictly confidential by the authorities concerned, which shall 
           not disclose it without the specific permission of the person or 
           government providing such information, except to the extent  that 
           it may be required to be disclosed in the context of judicial 
           proceedings.

4.    The Members agree to provide to the MTO Secretariat promptly their 
preferential rules of origin, including a listing of the preferential 
arrangements to which they apply, judicial decisions, and administrative 
rulings of general application relating to their preferential rules of 
origin in effect on the date of entry into force of this Common Declaration.  
Furthermore, Members agree to provide any modifications to their 
preferential rules of origin or new preferential rules of origin as soon as 
possible to the MTO Secretariat.  Lists of information received and 
available with the MTO Secretariat shall be circulated to the Members by the 
MTO Secretariat.


1. It is understood that this provision is without prejudice to those 
determinations made for purposes of defining "domestic industry" or "like 
products of domestic industry" or similar terms wherever they apply.

2. With respect to rules of origin applied for the purposes of government 
procurement, this provision shall not create obligations additional to those 
already assumed by Members under the GATT 1994.

3. In respect of requests made during the first year from entry into force 
of the Agreement Establishing the MTO, Members shall only be required to 
issue these assessments as soon as possible.

4. If the ad valorem criterion is prescribed, the method for calculating 
this percentage shall also be indicated in the rules of origin.

5. If the criterion of manufacturing or processing operation is prescribed, 
the operation that confers origin on the product concerned shall be 
precisely specified.

6. At the same time, consideration shall be given to arrangements concerning 
the settlement of disputes relating to customs classification.

7. In respect of requests made during the first year from entry into force 
of the Agreement Establishing the MTO, Members shall only be required to 
issue these assessments as soon as possible.



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