DRAFT
REPORT (2025) OF THE COMMITTEE ON RULES OF ORIGIN
TO THE GENERAL COUNCIL ON PREFERENTIAL RULES
OF ORIGIN FOR LEAST DEVELOPED COUNTRIES
This report is being submitted by the Committee on Rules of Origin
(CRO) to the General Council as required by the 2013 (Bali) and the 2015
(Nairobi) Ministerial Decisions on preferential rules of origin for least
developed countries (_WT/L/917 and _WT/L/917/Add.1, respectively). According to the provisions of these Decisions, the Committee on Rules of Origin (CRO) "shall
annually review the developments in preferential rules of origin applicable to
imports from LDCs […] and report to the General Council."
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Introduction
1._
The implementation of the Ministerial Decisions and items related to
preferential rules of origin for LDCs continued to feature prominently in the
agenda of the CRO's two formal meetings of 2025, held on 3-4 April (_
WTO/AIR/RO/21 and _
JOB/RO/15), and 5-6 November (_
WT/AIR/RO/22/Rev.2 and _
JOB/RO/18). More details about discussions on
these issues can be found in the minutes of these meetings (documents _
G/RO/M/84 and _
G/RO/M/85 (to be issued), respectively).
1 Transparency (notifications)
1.1. Document _G/RO/W/163/Rev.14 (last updated in April 2025) provides an overview of notifications
received relating to preferential rules of origin and preferential tariffs and
imports.
1.1 Preferential rules of origin
1.2. The adoption of a notification template
by the Committee in 2017 (_G/RO/84) proved very effective in encouraging
the notification of standardized information about preferential rules of
origin. Only three Members
have not yet notified their preferential rules of origin to the Secretariat.
1.3. Product-specific rules of origin
applicable under non-reciprocal trade preferences can be accessed through the WTO, ITC, and the WCO "Origin
Facilitator" (www.findrulesoforigin.org).
1.4. The
scope of information notified to the WTO Secretariat concerning preferential
tariffs and import statistics has considerably improved over the past few years.
Notwithstanding the fact that some statistics are still outstanding for some
preference-granting Members, the Secretariat now has a good overview of
preferential imports originating in LDCs over the past 15 years or so. These
notifications can be used to calculate preference utilization rates and to
examine preferential rules of origin where utilization may be low.
1.5. For
a more comprehensive analysis, preference-granting Members should consider
notifying their imports from LDCs under (reciprocal) regional trade agreements
(RTAs), if any.
1.6. These
notifications, including preferential import
statistics, can be accessed through the WTO Preferential Trade Arrangements (PTA) database (http://ptadb.wto.org).
2 Recent developments and reports by preference-granting members
2.1. The following preference-granting Members presented or reported
developments to their preferential rules of origin for LDCs to the Committee:
2.1 China
2.2. China updated the Committee on the introduction of an electronic
system for issuing certificates of origin for LDCs. This web-based system
allowed LDC issuing bodies to prepare and issue certificates online, print
blank certificates locally, and facilitate direct communication between customs
officials in China and issuing bodies in LDCs for verification purposes. The
system also provided statistical data on the certificates issued. Initially
trialled in 2020 with five LDCs (Bangladesh, Ethiopia, Mozambique, Niger,
and Timor-Leste), the system was improved and now features a better interface with
enhanced performance and security. By allowing automatic transfer of origin
data to China Customs, the system ensured quick and efficient clearance
procedures. Since its upgrade, 16 LDCs have begun using the online issuance
function, with 1,500 certificates and 10,000 blank certificates issued online.
2.3. LDC delegations asked China to notify the relevant legal texts in
English so that they could study and provide more detailed comments. LDC
delegations also noted that the self-printing or electronic certification was
not the same as self-certification.
2.2 The European Union
2.4. The European Union (EU) updated the Committee on two features of the
EU's preferential rules of origin (_RD/RO/137):
·_
Self-certification:
the EU recalled that the European Commission had proposed transitioning to a
self-certification system in 2005 to simplify and improve transparency. This
change was implemented through legislative changes in 2010 and phased in from
2017 to 2020. Since then, the EU had offered self-certification for registered
users through the REX (Registered Exporter) System, which was intended to
create a more trade facilitative environment for LDCs.
·_
Non-manipulation:
the EU recalled that the adoption of the "non-manipulation principle"
had been a central feature of the reform and simplification of the EU's
requirements relating to the transportation of goods. Non-manipulation allowed
certain operations during transit, including storage and splitting of goods,
thus reflecting modern logistical realities. The system was based on trust in
traders, exporters, and logistics operators, with customs authorities verifying
compliance only when there were doubts over a possible manipulation of the
products during transit. This concept balanced trade facilitation with control,
providing a more permissive approach compared to the previously used direct
transportation rules. However, control remained essential to ensuring that the
system functioned correctly. A monitoring system had been implemented in
collaboration with GSP partners.
2.5. The LDC Group reiterated that it considered the non-manipulation
principle, and the absence of any documentary requirement, as a best practice.
Representatives of the LDC Group also highlighted that the introduction of self-certification
had not resulted in an increase in cases of fraud and that controls were based
on risk assessment.
2.3 Australia
2.6. Australia provided an overview of the Australian System of Tariff
Preferences (ASTP), established in 1966 and benefiting 179 countries and places
(_RD/RO/135/Rev.1). Australia welcomed examples of exporters that faced difficulties
accessing the Australian market under the ASTP, and bilateral engagement to
resolve such difficulties. The presentation covered key aspects of the
Australian ASTP, such as:
·_
Ad valorem threshold and cumulation:
to qualify for preferences, at least 50% of originating content had to be added
by a beneficiary LDC to the total factory cost, with the possibility of
sourcing up to 25% from anywhere in a qualifying area. Hence, by virtue of the
basic rules and cumulation, the ASTP allowed for up to 75% non-LDC content. In
other words, Australian rules of origin allowed materials from all developing
countries, Forum Island countries, and Australia, to count as originating
content, up to a limit of 25% of the total factory cost. This limit was
intended to ensure that the benefits of the duty-free entry flowed primarily to
LDCs rather than to other developing countries. As a result, LDCs had to
account for only 25% of the total factory costs, and the other 25% could be
sourced from elsewhere in the qualifying area.
·_
Transportation
and trade documents: goods did not need to be shipped directly from a
beneficiary LDC to Australia. The focus was on the product rather than the
route. The only requirement was that Australia had to be the intended
destination. Minor operations such as storage and labelling were permitted, and
documentary requirements were minimal, encouraging self-certification.
2.4 Switzerland
2.7. Switzerland recalled that LDCs could also use self-certification
under the REX System since 1 January 2017 (together with the European
Union and Norway). Under the REX system, registered exporters were asked to
present a simple declaration of origin, replacing the previous certificate of
origin. Despite low levels of preference utilization before January 2024, Switzerland
recalled that over 90% of imports from LDCs benefited from zero-duty treatment.
Goods consigned directly displayed higher utilization rates than goods
consigned indirectly. The presentation further recalled that Switzerland had
eliminated all import duties on industrial goods in January 2024 (_G/MA/W/185). Since then, preferences were available only for agricultural
goods. That meant that the rules of origin for industrial goods were no longer relevant,
as no preferences were available. As a result, there was no need to examine
past utilization of these preferences. Switzerland would continue to monitor
utilization rates after 2024 as data became available.
2.8. The
LDC Group pointed out that understanding the utilization of Switzerland's
preferences in the past could offer useful insights about the impact of rules
of origin and patterns of utilization. As a result, they asked Switzerland to
consider sharing studies, even if the results were no longer applicable given
the elimination of certain tariffs.
2.5 Japan
2.9. Japan introduced a complement to a previous notification of
preferential rules of origin for LDCs (_G/RO/LDC/N/JPN/1/Rev.1/Add.1). This document had been prepared as a follow‑up to discussions in
the CRO, during which the LDC Group had requested additional information
about the consignment of goods. The notification clarified that alternative documents
were accepted in case of indirect consignment, including express seaway view,
bill of lading for multimodal or ocean transport, and various multimodal
transport documents.
2.10. The Representative of the LDC Group thanked Japan for the
clarification and noted that the requirement for trade documents in case of
indirect consignment could constitute a trade barrier for LDCs. For that
reason, the Group continued to prefer the "non-manipulation
principle" and the request for additional documents only in case of doubts
of manipulation during transit.
2.6 United Kingdom
2.11. The United Kingdom provided an overview of preferential rules of
origin under its Developing Countries Trading Scheme (DCTS):
·_
Rules of origin:
the scheme's design had been informed by a 2021 public consultation, which
had led to an increase in permitted non‑originating content for LDCs to 75%,
covering 48 chapters, and to simplifying the preference rules for most
chapters of the Harmonized System. Manufacturers in DCTS beneficiaries had
to calculate and retain proof of non‑originating content value, add value
through processing, and calculate the ex‑works price of the final good. The UK
did not require a certificate of non‑manipulation for goods shipped across
third countries, and digital proof of origin could be provided upon
request.
·_
Preference
utilization: in addition, the UK also reported that it had been monitoring the
rates of preference utilization to identify underutilized sectors and products
and inform future policy development. In this sense, the calculation of Preference
Utilization Rates (PURs) was of strategic importance to ensure that businesses
benefited from preferential tariff rates. The UK had sought to include data‑sharing
agreements in all its new and renegotiated agreements, finding data from
partner countries vital for monitoring and evaluating trade and policy
developments. Following its analysis of PURs, the UK was reviewing its rules of
origin for textiles, given the sector's importance to developing countries.
2.12. LDC delegations noted that several aspects of the DCTS rules of
origin could be considered as best practices, in particular those related to
the deduction of freight and insurance costs in the calculation of
non-originating value. The LDC Group invited the UK to share further details
about these flexibilities to inform other preference-granting Members.
[To be completed in light of discussions held
at the formal CRO meeting of 5 and 6 November]
3 Papers presented for discussion
3.1. A representative of Madagascar presented the results of
research that sought to identify cumulation opportunities in Africa and cases
in which rules of origin could be seen as fostering regional integration. While
cumulation could incentivize regional value chains, it also presented
challenges, such as additional paperwork and the need to provide evidence that
sourced inputs qualified for cumulation. The research had been based on a
literature review, input‑output analysis, questionnaires, and interviews with
firms. Preliminary results indicated that bilateral cumulation with the
European Union was well‑utilized by the South African automotive industry and
Mauritius (exporting under the interim Economic Partnership Agreement). The presenter
also reported difficulties raised by Mauritian firms, such as the limited scope
of cumulation, connectivity issues, trade information gaps, and administrative
hurdles. Recommendations included promoting full cumulation, sensitization, and
capacity‑building on rules of origin and cumulation.
3.2 Cambodia – Preference utilization
3.2. A representative of Cambodia recalled that PURs were a powerful indicator
to analyse rules of origin (_G/RO/W/235) and discussed the utilization of different agreements by Cambodia
(_RD/RO/108). The illustrations contained in the paper and the presentation
highlighted the importance of accurately analysing PURs for each individual
arrangement to gain insights to guide trade policy choices. A methodology such
as the calculation of "underutilization" did not allow for drawing
specific conclusions in relation to the functioning of rules of origin under
specific preferential arrangements. For that reason, the representative of
Cambodia noted that the Committee should continue to focus on preference-specific
calculations. As a result, preference-granting Members should notify not only preferential
imports granted under unilateral trade preferences but also under reciprocal
free trade agreements or all other available preferences. Cambodia invited
preference‑granting Members to monitor the utilization of trade preferences and
share the results with the Committee.
[To be completed in light of discussions held
at the formal CRO meeting of 5 and 6 November]
4 LDC Group expectations and future
work by the CRO
4.1. The LDC Group presented papers (_G/RO/W/236 and _G/RO/W/240) enumerating some of the Group's specific requests
to preference-granting Members regarding their preferential rules of origin.
The papers also included suggestions concerning future work in the CRO.
4.2. Some preference-granting Members
noted that they had already provided certain clarifications about their
preferential rules of origin for LDCs. Some added that they were already
applying some of the practices enumerated in the papers. Others questioned the
rationale of some practices described in the papers. Some preference-granting
Members said that they would welcome greater bilateral engagement with the LDC
Group, and more focused discussions on specific cases of barriers faced by LDC
exporters.
[To be completed in light of discussions held
at the formal CRO meeting of 5 and 6 November]
5 Annual Report to the General Council
5.1. A draft of this report was
considered by the CRO on 5-6 November 2025. The draft was
subsequently completed, amended by the Secretariat, and circulated to Members for
review and adoption. In the absence of comments on that draft, the report was
adopted through written procedures on [date].
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