twentY second ANNUAL REVIEW OF THE IMPLEMENTATION AND

OPERATION OF THE AGREEMENT ON RULES OF ORIGIN

background Note by the Secretariat^[1]

Article 6.1 of the Agreement on Rules of Origin provides that "the Committee shall review annually the implementation and operation of Part II and Part III of this Agreement having regard to its objectives".  The outcome of such a review will be incorporated to the Committee's Annual Review to the Council for Trade in Goods on the implementation and operation of the Agreement on Rules of Origin. This background document is circulated by the Secretariat in preparation for the 22^nd annual review of the implementation and operation of the Agreement, to be conducted at the meeting of the Committee on Rules of Origin on 22 September 2016.

1  Members and Observers of the Committee on Rules of Origin

1.1   Government representatives of all WTO Members and Observers are also Members and Observers to the CRO. In addition, the following international organizations also have observer status at the CRO: ACP, EFTA, IADB, IMF, OECD, UNCTAD, WCO and World Bank.

2  Officers of the Committee on Rules of Origin

2.1   Mr. Chih-Tung CHANG (Chinese Taipei) was elected Chairman of the Committee in May 2016.

3  Meetings of the Committee on Rules of Origin

3.1   The Committee on Rules of Origin (CRO) held two formal meetings in 2016:  on 22 April and on 22 September.  The minutes of these meetings are contained in documents G/RO/M/66 and [G/RO/M/67] respectively.  A number of other activities related to the work of the Committee were also held, including informal consultations and two information sessions on non-preferential rules of origin (on 21 April and on 22 September respectively).

4  Notifications

4.1   The CRO took note of a number of new notifications under Article 5. On the basis of notifications received to date: 47 Members apply legislation or some requirements with respect to non-preferential origin (i.e. 34% of WTO Members, counting the EU and its member states as one); 56 Members do not apply any non-preferential rules of origin; and 35 Members have not yet submitted any notification under Article 5 (see Annex 1 for a detailed list).

4.2   To improve transparency with respect to existing non-preferential rules of origin and to facilitate access to such information, notifications under Article 5 of the Agreement are being incorporated into the WTO Integrated Trade Intelligence Portal (I-TIP), the database through which Members can consult information about national trade policy measures (http://i-tip.wto.org).  In addition, the Secretariat is also revamping the rules of origin page of the WTO website to list the notifications received with links to the corresponding websites or legislation whenever these are available.  Work on both I-TIP and the WTO webpage should be completed by the end of 2016.

4.3   Finally, with respect to preferential rules of origin, a number of notifications have been received by the Secretariat. Most commonly, these notifications were submitted to the Committee on Regional Trade Agreements or the Committee on Trade and Development and subsequently circulated to the CRO.  After the conclusion of a regional trade agreement between Mongolia and Japan, all Members of the WTO implement at least one set of preferential rules of origin.

5  Work of the Committee (Parts II and III of the Agreement)

5.1   Part II of the Agreement relate to the multilateral disciplines which govern the utilization of non-preferential rules of origin by WTO Members. That is, it covers the transitional disciplines pending the adoption of harmonized rules (Article 2) and the disciplines once harmonized rules of origin have been adopted (Article 3). As it is, and noted in the Committee's 2013 Annual Report to the Council for Trade in Goods (CTG, G/L/1047), the implementation and operation of the Agreement is not satisfactory as the stalemate in the Harmonization Work Programme (HWP) compromises the central objective of the Agreement. Also, there are currently no procedures to examine existing rules of origin in light of the disciplines of Article II.

5.2   Pending the continuation of the HWP, the Committee agreed to initiate an "educational exercise" to exchange information about non-preferential rules of origin and better understand the impact that existing rules have on international trade. Members therefore participated in two "information sessions" and heard presentations about the impact of rules of origin on international trade and on the operation of businesses. The presentations made were circulated to Members in documents RD/RO/36, RD/RO/37, RD/RO/38, RD/RO/39, RD/RO/40, RD/RO/41, RD/RO/42, RD/RO/43, RD/RO/45, RD/RO/46 and RD/RO/47. In addition, summaries of the sessions held on 21 April and on 21 September have been prepared and circulated in documents G/RO/W/162 and G/RO/W/167 respectively.

5.3   With respect to the "transposition exercise" and the adjustment of draft harmonized rules of origin (G/RO/W/111/Rev.6) to reflect more recent versions of the HS nomenclature (JOB/RO/5 series), Members agreed to validate the accuracy of the transposed rules. The validation concerned merely the technical accuracy of the transposed rules and did not entail an endorsement of the rules themselves. It was also agreed that the transposed rules should remain a working document and that, therefore, Members, could submit comments to the transposed rules at any time.

5.4   With relation to other areas of work of the CRO, it should be noted that Members conducted a review of new developments in preferential rules of origin for LDCs according to the requirements of the 2013 and 2015 Ministerial Decisions (WT/L/917 and WT/L/917/Add.1). As required by the Decisions, a detailed report on this issue was prepared for the General Council (G/RO/79) and an oral report will be made to the Sub-Committee on LDCs.

6  AMENDMENTS, INTERPRETATIONS AND RECTIFICATIONS TO THE AGREEMENT

6.1   During the year under review the Committee has not dealt with any of these matters.

7  CONSULTATION AND DISPUTE SETTLEMENT

7.1   The Secretariat is not aware of any Member that has requested consultations under Article 7 of the Agreement on Rules of Origin.  Similarly, there are currently no disputes with respect to the Agreement on Rules of Origin (Article 8).

8  REPORT TO THE COUNCIL FOR TRADE IN GOODS

8.1   Members adopted the Committee's annual report (G/RO/W/166/Rev.2) and forwarded it to the CTG (G/L/1159).

Annex 1

A.    Members that do not implement non-preferential rules of origin