Rules of Origin (ROO) Foreign Trade

Criteria used to establish the country of origin of a product

Foreign Trade (Importing, Exporting)
Foreign Trade

Rules of Origin (ROO) are the criteria used to establish the country of origin of a Product, playing a critical role in international trade. They determine a product’s economic nationality and are essential for the application of various trade policies, including:

Tariffs
Import quotas
Anti-dumping Measures and countervailing duties
1. Agreement on Safeguards
Trade statistics compilation
Labeling and Marketing requirements

Types of Rules of Origin

Preferential Rules of Origin

These rules are applied in the context of Free Trade Agreements (FTAs) and other preferential trade arrangements. Products that meet the origin criteria under an FTA are eligible for reduced or zero tariffs when traded between member countries.
Examples:
1. Under the USMCA, an automobile must meet specific content and labor requirements to qualify for tariff-free treatment
2. The EU–Japan Economic Partnership Agreement (EPA) outlines detailed origin criteria for goods such as electronics and agricultural products.

Non-Preferential Rules of Origin

These rules apply in situations outside of preferential trade agreements, typically under Most Favored Nation (MFN) treatment as governed by World Trade Organization (WTO) rules. They are used to:

Compile trade statistics
Enforce labeling and marking requirements (e.g., “Made in Japan”)
Administer anti-dumping and countervailing duties
Regulate government procurement policies
Non-preferential Rules of Origin are also important in applying trade remedies or responding to trade disputes.
Trade Facilitation Agreement
Agreement on Sanitary Measures
Agreement on Technical Barriers to Trade
Agreement on Preshipment Inspection

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