PDF The Origin of Goods: Rules of Origin in Regional Trade Agreements

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Division of International Trade in Goods and Services, and Commodities. United Nations trade policies and strategies in multilateral, interregional and regional trade negotiations. This paper is part of a new .. f. agreement on rules of origin.
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What are Rules of Origin & Certificates of Origin

Thank you for your feedback. Written By: Bruce E. See Article History. Start your free trial today for unlimited access to Britannica. Learn More in these related Britannica articles:. International trade , economic transactions that are made between countries.

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Among the items commonly traded are consumer goods, such as television sets and clothing; capital goods, such as machinery; and raw materials and food. Other transactions involve services, such as travel services and payments for foreign patents see service industry.

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Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports. There is wide variation in the practice of governments with regard to the Rules of Origin. We will discuss that in more detail later. Therefore, two cotton shirts might be identical in every particular, except origin.

Due to free trade agreement FTA Rules of Origin only one might qualify for reduced or zero tariffs under a particular free trade agreement. As well as gains — such as zero tariffs — the origin of a product can mean it is restricted. Crude oil may be crude oil, but an US company cannot import it from Iran.

In fact, it is entirely possible for an automobile made in Detroit to be simultaneously American and not-American at the same time — like Schrodinger's car. These Rules of Origin use criteria like tariff shift, Regional Value Content, de minimis and so forth. Manufacturers can gain preferential treatment for their goods — little or no duties — if they qualify as originating under the FTA. Non-preferential Rules of Origin are used to determine the Country of Origin.

Rules of origin - Wikipedia

This is subjective. That means it is typically defined as the country where the last substantial transformation of the good took place. Therefore, an automobile made in Detroit, using raw materials and parts sourced from around the world, can rightly claim that its Country of Origin is the USA. However, it does not mean that the same car qualifies for preferential duties under any FTAs to which the United States is a party.

Government bodies issue Rules of Origin metrics.

Origin of goods

These set out how to qualify a product under a particular free trade agreement. As you can imagine, there is a wide variety in how governments around the world do this. Tariff shift is where non-originating material inputs have been sufficiently changed through manufacturing into a new finished good. The Regional Value Content RVC is where the rule requires a certain amount of materials from the signatory countries of the agreement.


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The RVC varies depending on the free trade agreement. Furthermore, not all Rules of Origin within a given free trade agreement require them. De minimis is a threshold where the non-originating, non-shifting materials are so small that they are removed from the equation.


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Like RVC, the de minimis change depending on the free trade agreement and for some free trade agreements it is not permitted. Trade and investment data, information and publications Australia's trade statistics at a glance Fact sheets for countries and regions Australia's trade balance Trade statistics Trade and investment publications and articles Foreign investment statistics Request customised statistics.

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