International Chamber of Commerce Offers Rules of Origin Recommendations
The International Chamber of Commerce would like to see global "cohesion" for rules of origin for Preferential Trade Agreements (PTA) and offered eight recommendations for governments to help align such rules, the ICC said in a news release (here). With now more than 400 PTAs, "diverging rules of origin regulations and procedures are becoming a trade barrier along the whole supply chain," the ICC said in its recommendations (here). Also, many PTAs overlap geographically, creating "confusing and inconsistent market entry arrangements, which are particularly felt by small and medium sized enterprises," it said.
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The first recommendation is that PTA governments seek to streamline rules of origin in line with the World Trade Organization's Trade Facilitation Agreement (TFA). The group also called on the World Customs Organization to develop "procedural standards for customs verification of origin documentation under PTAs, in the spirit" of the TFA. Among subjects the WCO should consider are "approval processes by customs authorities for e-commerce origin solutions (including Artificial Intelligence systems implemented for the Harmonized System)," and "trusted third party origin documentation issuance under PTAs, under appropriate global standards, to reduce costs for traders."
The PTAs should also include "provisions into agreements that allow procedures enabling ‘extended cumulation’ or ‘cross cumulation’ to occur between their common agreements," the ICC said. "This allows common bilateral parties to differing regional agreements to share or cumulate origin across trading regions and agreements." The trade group also said origin disputes shouldn't be decided "unilaterally by the customs authority" of one of the members. "Instead, all PTAs should contain provisions for resolution of minor origin disputes within commercially responsive timeframes, with appropriate support for importers and exporters involved in the transaction."
The customs capabilities of trading partners should be considered carefully before entering a PTA , the ICC said. Also, "parties to PTA negotiations should aim for horizontal global cohesion of PTA Rules of Origin procedures wherever possible, to facilitate the possibility of a future multilateral agreement," the trade group said. Starting points for trade agreement negotiations should also be standardized, the ICC said. "The problem of aggregate complexity in differing treaties could be overcome through the acceptance of a set of standard definitions and procedures for all border crossing and market access," it said. All PTAs should also be considered as steps "on the path to an eventual agreement at the multilateral level," as the ICC "strongly believes that where the proliferation of PTAs raises the risk of regulatory fragmentation, streamlining of mega-regional PTA negotiations could create momentum towards broader trade liberalization," it said.
WCO Secretary General Kunio Mikuriya said the WCO welcomes the recommendations, which highlight "the need to set common standards and procedures for cross border transactions." The WCO recently issued an updated guide on rules of origin and similarly noted concern with the growing patchwork of rules (see 1701190008). “Businesses of all sizes find themselves unable to manage the complexity and administrative burden of origin requirement procedures, which gradually form a behind-the-border barrier to trade," said Donia Hammami, head of ICC Customs and Trade Facilitation Policy. "Streamlining the certification of procedures will go a long way towards making this easier for traders.”