New rules of origin database to help SMEs better utilize FTA benefits

New rules of origin database to help SMEs better utilize FTA benefits

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A free searchable database on rules of origin requirements and duty savings under free trade agreements (FTAs) is now available to firms, according to the World Trade Organization (WTO).

The Rules of Origin Facilitator is a joint initiative by the WTO, International Trade Centre (ITC) and World Customs Organization (WCO) which will enable firms, especially micro, small and medium-size enterprises (MSMEs), to take fuller advantage of benefits under FTAs and preferential trade arrangements (PTAs) by helping them comply with product rules of origin requirements.

Presented October 17 to WTO members, the Rules of Origin Facilitator provides firms with free access to a unique searchable database on duty savings in trade agreements, and the corresponding rules of origin.

Users can search the tool by product name or product code, and access original documentation, including certificates of origin, said WTO in a statement.

With such information, firms can reduce their transaction costs and find it easier to claim reduced or zero duty rates under FTAs and PTAs. 

“The information will be of particular benefit to small and medium-size firms by allowing them to access the information through an easy-to-navigate system,” said WTO.

Rules of origin are the criteria used to define where a product was made and are important for implementing other trade policy measures, including preferences in favor of developing countries or least developed countries (LDCs).

WTO director-general Roberto Azevêdo said companies must understand and use dozens of different types of rules of origin to use the tariff preferences now in force in hundreds of bilateral and regional trade agreements. Each preferential agreement has its own specific obligations regarding the certification and transportation of goods.

“Governments and companies need reliable information about rules of origin,” Azevêdo said. “And this information needs to be accessible for free, in simple, standardized language.”

The facilitator fills a real gap and will prove especially useful for smaller companies in developing and least developed countries. “These are the companies that have greatest trouble navigating international trade requirements,” he added.

WTO deputy director-general Yi Xiaozhun said the initiative, launched by the ITC and WCO in 2018, offers greater transparency and predictability.

“It complements our recent Trade Facilitation Agreement. It supports the integration of least developed countries to the global economy. And it reduces time and costs for small and medium enterprises in all WTO Members.”

ITC deputy executive director Dorothy Tembo welcomed the WTO to this Rules of Origin partnership. “With the WTO on board we will be able to make this invaluable digital tool available to more enterprises in developing countries and ensure greater transparency in trade.”

The Rules of Origin Facilitator is the most comprehensive tool covering product-specific rules of origin as well as provisions on origin certification in more than 300 agreements and applied by more than 190 countries. The goal is to expand coverage to include not only all preferential schemes currently in force worldwide, but also to cover non-preferential rules of origin requirements.

According to an ITC business survey covering 60 countries, rules of origin were identified as the most common source of trade constraints by MSMEs.

Image by purplegillian from Pixabay

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