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Rules of Origin Standards for Trade Agreements Recommended by Business Group

Wednesday, May 10, 2017
Sandler, Travis & Rosenberg Trade Report

The International Chamber of Commerce has issued a set of eight recommendations for standard rules of origin in preferential trade agreements to further facilitate global trade. There are now more than 400 bilateral and regional PTAs worldwide, the ICC said, and new ones increasingly overlap existing ones, resulting in diverging rules of origin regulations and procedures that are becoming a trade barrier along the entire supply chain. Setting common standards and procedures for cross-border transactions aims to lower costs and increase predictability, especially for small and medium-sized enterprises.

Kyoto Convention. Governments party to PTA negotiations should streamline rules of origin and origin procedures by following the provisions of the World Customs Organization Revised Kyoto Convention in line with the principles of the World Trade Organization’s Trade Facilitation Agreement.

Cumulation. Common bilateral parties to differing regional agreements should be allowed to share or cumulate origin across trading regions and agreements.

Verification. The WCO, in close cooperation with the private sector, should develop common procedural standards for customs verification of origin documentation under PTAs in the spirit of the provisions of the TFA.

Dispute resolution. Origin disputes under PTAs should not be decided unilaterally by the customs authority of a single trade agreement partner; instead, PTAs should contain provisions for resolution of such disputes within commercially responsive timeframes.

Capacity. Governments preparing to enter a PTA should ensure that there are capacity building programs in place prior to entry into force of the agreement, particularly when dealing with developing and emerging markets.

Cohesion. Standardizing procedural requirements across PTAs makes trade easier and allows business processes along the whole supply chain to be replicated and automated, further reducing trading costs.

Negotiations. Governments should align on the starting point from which to commence PTA negotiations, which would help streamline trade and ultimately reduce costs for business and consumers.

Multilateral agreements. PTAs should be considered as steps toward multilateral agreements, and the streamlining of mega-regional PTA negotiations could create momentum towards broader trade liberalization.

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