Rules of Origin
Rules of origin is a term used in the field of the international trade, which helps to determine from where a product comes. Rules of origin are needed to detect the national source of the imported and exported goods. These rules are important because restrictions and tariffs applied on the products depend on the country of origin. However, the rules of origin vary from country to country and agreement to agreement.
There exist 2 types of rules of origin:
1. Preferential rules of origin operate in the interior of free trade areas or preferential trade agreements, functioning on a tax concession. These trade agreements can be unilateral, bilateral or regional. In this case, the rules of origin settle what goods benefit from the tariff preference, and help avoid transshipment.
2. Non-preferential rules of origin are used to determine the country of origin for quotas, anti-dumping, statistics or origin, labelling. The non-preferential rules are based on the Kyoto convention, according to which the country of origin is the country where the commodity has been wholly produced; or for the goods produced in more than one country, the country of origin is the country where the last substantial transformation took place.
The rules of origin are needed for:
- implementation of measures and instruments of the international trade policy
- determining whether the imported goods shall receive preferential or non-preferential treatment
- trade statistics
- application of labels
