The Rules of Origin Facilitator: New Tool for Increasing Trade

By Dzmitry Kniahin and Anna Jerzewska

Text on the joint initiative by the ITC, WCO and WTO which helps micro, small and medium-sized enterprises (MSMEs) benefit from international trade opportunities.

Originally published by ITC (HERE).

 

The Rules of Origin Facilitator is a new online tool which makes navigating the complex landscape of trade agreements easier. It allows micro, small and medium-sized enterprises (MSMEs) to find opportunities to benefit from preferential duty rates and learn about the conditions they would need to fulfill.

There are currently over 400 free trade agreements and preferential trade arrangements in place worldwide. They allow importers to claim a lower rate of customs duties provided certain conditions are met. Origin requirements are a highly complex area of trade. Many companies, particularly smaller ones, are not aware of trade agreements and related tariff preferences; if they are, they do not know how to take advantage of the low duty rates available for their product. 

For importers, not taking advantage of such opportunities leads to overpayment of customs duties in cases where goods are eligible for preferential rates. For exporters, this means losing comparative advantage over competitors. According to International Trade Centre (ITC) business surveys on non-tariff measures in over 60 countries, rules of origin and related certification requirements are among the most frequently cited trade obstacles for MSMEs. 

The Rules of Origin Facilitator is the first global searchable database on trade agreements, preferential tariffs and origin requirements. The tool, developed by ITC and the World Customs Organization (WCO), was unveiled in mid-2018.

Launching the tool, ITC Executive Director Arancha González said: ‘This new Rules of Origin tool will improve transparency in global trade. It will generate more trading opportunities for MSMEs, which will be able to profit from benefits offered by trade agreements, by making complicated trade rules more transparent and easily accessible through the new tool.’

WCO Secretary-General Kunio Mikuriya said: ‘WCO is pleased to team up with the ITC for this new, joint initiative to increase transparency and knowledge in trade and make the subject of rules of origin more easily accessible for Customs officers, companies, trade policymakers, and trade institutions.’

Available online at findrulesoforigin.org, the Rules of Origin Facilitator contains information on trade agreements and applicable tariff rates at the detailed product level. The database includes product-specific rules of origin as well as provisions on origin certification, cumulation, audit trail, shipment and invoicing. Necessary documentation such as certificates of origin and links to local authorities’ websites are also provided.

Currently the tool covers more than 90 trade agreements applied by 115 countries as well as non-preferential regimes of the European Union, the United States of America and Switzerland. ITC is continuously increasing the coverage with the aim of encompassing all existing trade agreements. The Rules of Origin Facilitator covers the entire spectrum of traded goods, ranging from raw agricultural commodities to sophisticated machinery and electronics.

The tool is easy and intuitive to use. In order to check origin requirements for a given product the user simply selects a country or countries of export, the destination market and product of interest, using either the Harmonized System (HS) customs classification code or the keyword search.

The results view lists all available trade agreements corresponding to the selected parameters. The tool allows filtering between agreements already in force and those which will be implemented in the future. It also allows filtering out the agreements where detailed rules of origin are not yet available – agreements already in force but not yet included in the fully functional part of the tool.

The tool shows basic information for all trade agreements in force, such as the difference between the preferential and the most favoured nation (MFN) duty rates as well as the date of entry into force and type of agreement.

For the over 90 agreements for which ITC has already processed the data, the user can access further details including the exact wording of the rule, cumulation provisions, possible shipment requirements and information on the origin certificate (for example, issuing authority and validity). 

Reference material available on the website, including articles and examples, provides further clarity on the different types of rules and related provisions. An information button next to each provision allows the user to access a comprehensive glossary with definitions of the provisions and simple examples of how they can be applied.

The Rules of Origin Facilitator is a unique tool designed to provide vital market access information to MSMEs via a simple search. It also allows comparing requirements across agreements. The tool is free of charge, thereby reducing information costs and allowing users to seize available trade opportunities. This contributes to reducing trade obstacles associated with rules of origin as well as to increasing utilization of preferences under trade agreements.