Towards Inclusive Rules of Origin

On 21-22 November, ICTSD in partnership with the Inter-American Development Bank (IDB) organised a dialogue on inclusive rules of origin (RoO). The meeting represents the first in a series of RTA Exchange dialogues set to take place over the course of 2016 and 2017 to systematically explore possibilities for convergence and coherence-building between regional trade agreements (RTAs) and the multilateral trading system.

RTAs have been a driving force behind recent trade liberalisation efforts and the formation of many global value chains (GVCs). However, RTAs also create limitations for both countries inside and outside a trading block due to their rules of origin. The complexity and variety of RoO that exist today represents a challenge for many firms seeking to participate in production networks across various trade agreements. Empirical evidence suggests that strict rules of origin often result in the sub-optimal functioning of value chains by disincentivising the use of cheaper parts and materials from third countries. Complex and diverse sets of RoO have also affected the ability of developing countries including least developed countries (LDCs) to fully benefit from the enhanced market access granted through preferential schemes or negotiated under their RTAs.