Keynote Speech for the ADB/WCO Regional Seminar on Rules of Origin

8-12 March 2004, ADB, Manila, Philippines

 

Kunio Mikuriya, Deputy Secretary General, WCO

 

Ladies and Gentlemen:

 

I should begin by thanking the Asian Development Bank for co-organizing the seminar.  The ADB has kindly offered the beautiful facilities and will make a contribution in putting the rules of origin in the context of economic development.  We are happy to see the recent development in enhancing strategic partnership with the ADB.  My special thanks also goes to the Bureau of Customs of the Philippines as host administration.  This country is known for its hospitality and indeed we have enjoyed the warm welcome since our arrival to Manila.  I would like to express my appreciation to the UNCTAD and the US Customs for providing resource persons.  Last but not least, we are grateful for the Japan Customs for its generous financial and in-kind contribution.

 

There has been a growing awareness of the importance of rules of origin in international trade, as it greatly affects the pattern of trade and investment, the engine of poverty reduction.  Mindful of the need for simple, transparent and predictable rules of origin, the Uruguay Round took up this issue in its agenda.  As a consequence, the WTO Agreement on Rules of Origin stipulates the harmonization work program on non-preferential rules of origin.  It also includes the principles for preferential rules of origin as recommendation.  In line with the WTO Agreement, the WCO submitted the outcome of its technical work on non-preferential rules of origin to the WTO in 1999.  While progress has been made in Geneva since then, trade negotiators should resolve several key issues, including the scope of application of the harmonized rules of origin, implication question so to speak.  I hope that the progress in the current Doha Round gives an impetus for finalizing the harmonization work.

 

Turning to the preferential rules of origin, a new trend of bilateral and regional trade arrangements has emerged since the 1990`s.  Preferential rules of origin are one of the key components of these trade arrangements that identify who can benefit preferential treatment for their goods under which conditions.  Needless to say, distinction should be made between unilateral preferences and contractual preferences.  While unilateral preferences, including Generalized System of Preferences (GSP), are intended to give preferential market access to developing countries for development policy purpose, contractual preferences are intended to give basis for bilateral and regional trade arrangements on a reciprocal basis.  Whereas trade negotiators often negotiate rules of origin, it is Customs administrations that are responsible for their implementation.  When I visit Customs administrations, I often hear the difficulties that they encounter with regard to rules of origin, due to its complexity of application.  Issuance and verification of origin certificate is another challenge, as they are often the sources of fraud.  By the same token, trade community expresses its concern on this subject and complains that rules of origin are too costly and burdensome.  This is particularly problematic for small and medium size enterprises that are the driving force for export-led economic development.

 

The WCO has recently hosted a Customs/Business Meeting, entitled as “What does the future hold for rules of origin?”  It was organized on the occasion of this year’s International Customs Day, January the 26th.   We invited prominent experts from international organizations, trade and Customs.  More than 300 participants gathered and a series of intensive discussion took place.  The speakers pointed out two types of problems, rules themselves and administration or implementation of rules.  In the rules area, they underscored the need for simpler, more transparent and predictable rules.  Along with the development of global production sharing, it would be necessary and desirable to revisit cumulative rules and minimum operations.  In the administration of rules, they highlighted the question of certificates and calculation of added values among others.  Uniform and harmonized approach in these areas would be highly desirable.  In this connection, they also emphasized the need for capacity building, both for Customs and small and medium size enterprises.

 

This week’s seminar is a natural extension or evolution of the WCO initiative in January at regional level.  Since the movement of Free Trade Agreements has recently gained importance in the Asia-Pacific region, I believe that this topic has a great relevance to the region.  We are expected to learn about the two existing models of preferential rules of origin, namely those of the European Union and the United States.  We will also have an opportunity to learn the GSP and other systems.  The agenda will naturally cover the non-preferential rules of origin later this week.  I hope we can take a snapshot of the current rules of origin situation in this region and share problems that we are faced with.  The program is very rich and well supported by experts.  Your active participation is the key to the successful meeting and I wish you a fruitful discussion, which would also result in enhancing a regional network of experts.

 

Thank you very much for your attention.