Building capacity to help Africa trade better

Rules of origin – looking outside the box

Trade Reports

Rules of origin – looking outside the box

Rules of origin – looking outside the box

Registration to the tralac website is required to download publications.

There is an almost universal agreement that the rules of origin (ROO), as designed mainly to stop trade deflection or ‘imports sneaking through the back door’ in preferential trade agreements, are becoming increasingly complex through an interplay of different rules and are therefore unduly trade restricting, costly to manufacturers and overall welfare reducing. ROO represent a non-tariff barrier (NTB) in a global trading environment where these NTBs are becoming more trade restrictive than actual tariffs, and especially so in a global manufacturing and trading environment that is rapidly changing in this century while the ROO remain firmly rooted in their 1970s base.

While some observers have boldly questioned the need for the ROO, unfortunately some indication of origin of goods will always be necessary. ROO are required as identification for reporting purposes and also for several trade-related reasons apart from preferential trade agreements. This leaves a situation whereby the best option forward is to reexamine the ROO and as a minimum try to simply coordinate the rules and regimes. This is more easily said than done as vested interests are becoming powerful and pervasive in the negotiating process.

Against this background, this paper examines the extent of how ROO may be impacting on African trade and challenge the perceived wisdom that applications of the ROO are either necessary or trade and welfare enhancing. This paper will concentrate upon the examination of the ROO in an African context. Until recently developing countries such as most African nations have primarily viewed the ROO as a defensive mechanism used to restrict access to the developed-country market.

This context is changing. We are living in an environment where the globalisation of manufacturing is challenging the definition of where a specific product is actually made, and many African countries are seeking trading relationships and policies to both become more active in the globalisation manufacturing chain and expand intra-African trade.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.


Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010