The Preferential Origin Regime and Global Value Chains
Access to preferential import tariffs under a free trade agreement (FTA) is governed by clearly defined rules of origin designed to prevent non-members from enjoying the benefits. However, a company’s ability to trade under preference even when it meets these rules, is subject to a number of other conditions and requirements. In particular, the documentary evidence required to demonstrate compliance with rules of origin can create an unintended second layer of protection and act as a non-tariff barrier to trade. This paper examines the current rules of origin requirement and how it applies to global value chains. It puts forth several recommendations for improvements in implementation.