Nama : Bella Oktaviani

NIM : 1706084203

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Do Rules of Origin in Free Trade Agreements Comply

with Article XXIV GATT?
The multilateral trading system on WTO are purpose to achieve
trade liberalization guided by the non-discriminating principle, there are

a. Most Favoured Nation (MFN)

b. National Treatments

In Article XXIV exempt members from complying with the MFN

Principle when they trade with fellow members of RTA, and allows them
to extend and receive exclusive privileges consisting of duty-free and
lower tariff treatment from each other.

Rules of origin are used to determine whether or not a good is of

FTA origin and should therefore receive FTA preferential treatment. Rule
of origin can also define the minimum percentage of the value of a good
that must be added within FTA, or certain manufacturing process that
must take place within the FTA, in order for a good to be classified as of
FTA origin. If a good does not satisfy the FTA rule of origin, then the
MFN and not the FTA tariff would be applied.
 In determining which goods are of FTA origin the FTA rules of
origin should remain neutral, they should simply identify the products
qualifying for FTA preferential tariff coverage. If the rules of origin are
overly restrictive they would extend, in addition to the preferential tariffs,
further protection to the goods from FTA countries.

The Declaration defines preferential rules of origin as “those laws,

regulations and administrative determinations of general application
applied by any member to determine whether goods qualify for
preferential treatment under contractual or autonomous trade regimes
leading to the granting of tariff preferences…”

The crucial characteristic of preferential rules of origin, including

FTA rules of origin, is that they determine whether a product originates
in a territory of a State to which a preference applies.

Under the definitions of rules of origin (whether non-preferential,

preferential or FTA rules of origin) in the WTO Agreements on Rules of
Origin and the Declaration, they have been considered part of the more
general categories of trade related laws, regulations, or administrative
regulations.

The fact that Article XXIV does not mention ‘rules of origin’ was
perceived as an impediment to considering that it covers rules of origins.

FTA rules of origin are necessary to identify the goods that qualify
for the preferential tariff. This qualification is a means to prevent
extending the FTA’s preferences to goods which originate outside the
territory covered by the FTA’s to avoid trade deflection.

While FTA rules of origin ensure, as necessary, the privileges of

FTA partners, they should still be neutral. The neutrality of FTA rules of
origin, and hence their consistency with Article XXIV, runs parallel to the
idea of minimizing the adverse effects on non-FTA parties.