Standards and Rules of Origin in East Asia: introducing the key issues Robert Kirk

Standards and Rules of Origin in East Asia: introducing the key issues

• Robert Kirk

• [e-mail]

• World Bank-BFA Workshop

• Hainan, China, June 26-27,2006

Rules of Origin –

• Rules of Origin –

• Definition

• Approaches to ROO

• Impact on ASEAN of ROO

• Standards –

• Standards as a trade issue

• Multilateral and Regional Approaches

Wholly Obtained

• Wholly Obtained

• Substantial Transformation

• Change of Tariff Classification (CTC)
• Value Added
• Specific Manufacturing Processes

Cumulation (bilateral, diagonal, full)

• Cumulation (bilateral, diagonal, full)

• Tolerance or de minimis

• Absorption or Roll-Up Principle

• Duty Drawback

Recent work follows Estevadeordal (2000)

• Recent work follows Estevadeordal (2000)

• Index of Restrictiveness

• CTC at HS 8-10 digit

• CTC at HS 6 digit

• CTC at HS 6 digit plus value content

• CTC at HS 4 digit

• CTC at HS 4 digit plus value content

• CTC at HS 2 digit level

• CTC at the HS 2 digit and Technical Requirements

EU- Pan Euro/GSP/Cotonou

• EU- Pan Euro/GSP/Cotonou

• CTC (4,2) VA (import content 50-30), Tech

• Cumulation (bilateral, diagonal, full [Cotonou]

• Tolerance (10, 10, 15 [Cotonou]), Absorption

• NAFTA

• CTC (2,4,6),VA (import content 50-40),Tech

• Cumulation, Tolerance (7), Absorption

AFTA

• AFTA

• Value Added (import content 60 per cent)

• Selected Specific Manufacturing Process

• Bilateral Cumulation

• Absorption

Administrative compliance costs

• Administrative compliance costs

• Cumbersome paperwork

• Weak capacity for verification

• Difficult for New ASEAN Members (CLMV)

• Lack of certainty

“The real 21st Century issues are standards and rules in areas such as safety, health or consumer protection”

• “The real 21st Century issues are standards and rules in areas such as safety, health or consumer protection”

• Pascal Lamy September 9, 2004

Decline in tariffs

• Decline in tariffs

• Increase in standards and technical regulations-potential to use as a ‘tool of protection’

• Voluntary standards and mandatory technical regulations

• Contrast with tariffs-technical regulations serve a ‘desirable’ objective and cannot be negotiated away

• WTO TBT and SPS Agreements

Most Favoured Nation

• Most Favoured Nation

• National Treatment

• Technical Regulations (as far as possible) based on international standards

• Not create unnecessary obstacles to trade

• Transparent process

Establishing the standard (technical experts)

• Establishing the standard (technical experts)

• Ensuring goods and services meet the standard (conformity assessment)

• Ensuring conformity assessment functions well –accreditation and recognition

Traditional Approach

• Traditional Approach

• Weights and Measures and Health & Safety

• Static Structure

• Domestic Focus

• Public Sector Activity

• Regulatory Focus

ASEAN Consultative Committee on Standards and Quality (ACCSQ)

• ASEAN Consultative Committee on Standards and Quality (ACCSQ)

• Institutional Structure (12 sub committees)

• Goal of ‘One Standard, One Test, Accepted Everywhere’

• Upgrade to international standards

• AFTA Council identified 20 products as priorities for standards harmonization (1997-2005)

• Main Focus now on Mutual Recognition Agreements (MRA)

Limited in Scope –product group approach

• Limited in Scope –product group approach

• The Pre-Conditions for equivalence between national systems

• Automaticity: What is recognized at the individual level and what are the entry requirements (pre-market approval)

Inadequate legal framework

• Inadequate legal framework

• Ineffective control of compliance

• Deficient institutional coordination

• Lack of awareness on quality issues

• No accreditation infrastructure

• Weak WTO Enquiry points

Rules of Origin

• Rules of Origin

• Keep it simple and transparent with low compliance costs

• Standards

• Use regional agreements to support effective implementation of multilateral agreements