Reminder: Market access

Market access for goods refers to the conditions,

customs tariffs and non-tariff measures, applied by
countries to goods imported into their markets.
Market access: a different perspective
From an exporter’s point of view:

• Tariffs as “the last thing the exporter worries about”

A tax paid (or not) once you managed to reach the other country

• Some prerequisites:
• You found a buyer (importer) / someone interested in your product
• You comply with mandatory requirements of the importing country (e.g. product
quality requirements)
• At times: you comply with private standards required by the buyer (e.g.
GlobalG.A.P. certification)

Export • You managed to get the export licence and other documentation required by your
licence
own country

 If pre-requisites are fulfilled: preferential access = more competitive

 It is important to look at NTMs
Market access: Non-tariff measures (NTMs)
Overview

• Definition of NTMs

• Key concepts related to NTMs

• Role of NTMs in international

trade

• International classification of
NTMs

• Data sources; Market Access

Map

• Business experiences with NTMs

Discussion question: What are non-tariff
measures?

1) Definition?

2) Any examples?

3) Who applies them?

Definition

Non-tariff measures (NTMs)

Official policy measures on export and import, other than
ordinary customs tariffs, than can potentially have an effect on
international trade in goods, changing quantities traded, or prices
or both.

Mandatory requirements, rules or regulations legally set by the

government of the exporting, importing or transit country (in
contrast to private standards which are not legally set)

Can affect both export and import

Related terms

Non-tariff barriers (NTBs)

Different definitions: “NTMs with a discriminatory intent” / “NTMs that negatively affect
international trade”  in ITC’s work, the first definition is used

Procedural Obstacles
Procedural obstacles are practical challenges and processes that make compliance with a
particular regulation difficult when trading goods. These may include administrative hurdles,
transparency issues, infrastructural challenges and security issues companies may experience
when proving their compliance to a given regulation.

Public / international standards

Developed by international standards organisations, international standards are often referenced
in NTMs to align national requirements with international practice (as such reducing technical
barriers to trade). Examples include Codex Alimentarius (collection of internationally recognized
standards, codes of practice, guidelines, and other recommendations relating to food production
and food safety) and ISO standards.

Private (Voluntary) Standards

Standards developed by non-governmental entities which include individual firms, industry
organisations, and non-governmental organisations, among others. Compliance to these
standards is not legally required by national governments or multilateral regulations. Private
standards vary widely in their objectives and scope.
 8

NTM
Classification
• Logic linked to
WTO agreements

• Correspondence
with the EU
Helpdesk
taxonomy
 QUIZ: Which of these NTMs are real?

1. A country bans imports of a popular chocolate egg-shaped candy.

Importers who violate the ban are fined $2500 per chocolate egg.

2. A country requires imported skis to adhere to rigorous

product design standards, because of the “unique” snow in
that specific country.

3. Imported oranges are allowed to be green, but only if the

green does not cover more than 1/5th of the fruit’s surface
area.

4. A country only clears imported lobsters if the lobsters are

alive. The country begins inspecting all lobsters, which
causes them to die while waiting for inspection. The
lobsters do not clear customs.
 Why do governments impose NTMs?
• NTMs can be introduced for legitimate reasons, for example protection of
human, animal and plant health
• But can also be misused as an instrument of protection

Why do countries use NTMs? Why do countries use NTMs?

Importing Country Exporting Country

• Health and safety of consumers • Ensure adequate supply for the
• Environmental factors domestic market
• Infant industry protection • Maintain quality
• Achieve political goals • Ensure best value for their exports

 NTMs are not necessarily a trade barrier

They play an important role in enabling trade
Market Access: overview

Tariffs

Import related
regulations
Certificates,
Export related regulations inspection
Licenses, … requirements, …
NTMs: Why do we talk about them so much?
NTMs are omnipresent and are becoming increasingly important and complex
• Trade policy: national regulations are used as a trade policy instrument
• Consumer awareness: Swift in focus from protection to precaution. (e.g. increasing
demand for product and production-specific information)
• Complexity: NTMs often vary across products and countries and can change
quickly; e.g. requirements of US are different from EU
• Transparency: finding information and staying up-to-date on NTMs can be
challenging; information is scattered across many sources, only available in local
language etc.
• Trade obstacles and trade cost: NTMs can imply important trade cost, e.g.
because of the lack of infrastructure and efficient procedures in the exporting country
to meet complex requirements and demonstrate compliance with NTMs
• Policy makers often lack a clear understanding about what makes NTMs so costly
and how to reduce these cost
How do exporters and importers experience
non-tariff measures?
Exporters of agricultural products report more problems
than those in manufacturing
Share of exporters who encounter burdensome NTMs, by sector

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm
 The trade-hampering measures lie much closer to home
than one might expect
Distribution of reported NTM cases, by country applying the measure

Home OECD countries

(exporting)
country
28% 26%
31%
39%

Agriculture 13% Manufacturing

13%
Other developing
countries
20% 30%

Regional trade
agreeement partners

Source: ITC business surveys on NTMs; www.ntmsurvey.org

 The challenge?
SPS & TBT measures for agriculture, rules of origin for manufacturing

Technical requirements 11%

Regulations on product characteristics,
22% quality, poduction process. etc.

Conformity assessment 23%

Technical inspections, testing, certification etc
to prove compliance with technical regulations

Inspections and other entry formalities 13%

48% Customs clearance and border control

Charges and taxes 9%

Service charges, customs surcharges, etc. 4%
Quantity control measures
Quotas, licences, prohibitions

5%
Rules of origin and related certificate
5% 35%
Criteria & related certificate to determine the country of
5% origin of a product.

11% Other import-related measures

Finance measures, anti-competitive measures, trade remedies, etc.
4% 5%
Agriculture Manufacturing

Source: ITC (2015),The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm
 18

And what about the exporting country?

Types of challenging NTMs that are applied by the exporting
country

Export Export taxes

inspections and charges

Export
prohibitions
Export
Export certifications
licence

Source: ITC business surveys on NTMs; www.ntmsurvey.org

 Most regulations pose a problem because of procedural
obstacles
Share of NTM cases, by type of difficulty
100%
90%
The regulation is difficult only
80% 40% because of procedural obstacles
70% 58%
60%
50% The NTM is too strict + there
25%
are procedural obstacles
40%
30% 19%
20% 35% The regulation itself is too
10% 23% strict/difficult
0%
Agriculture Manufacturing

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm
What types of home country procedural obstacles are reported?

High cost
24%

Exporting
Admin
burden
Delays
15% Exporting
42%
country

Lack of
facilities Other
7% 12%

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience Non-Tariff Measures; www.intracen.org/publications/ntm
 Where should we look to find the solutions?
Distribution of procedural obstacles, by agency
Type of

Informal or unusually high

Information/ transparency
Discriminatory behaviour
Administrative burdens

Lack of sector-specific
related to regulation

Lack of recognition/
procedural obstacles

Time constraints

accreditation
of officials
payment

facilities

issues

Other
Location of the
procedural obstacles
Customs authority
Ministry in charge of international trade
Ministry in charge of agriculture
Ministry in charge of public health
Public/private organization for standard and quality
Chamber of commerce and trade support institution
Public/private organizations for certification
Ministry in charge of environmental affairs
Public/private organizations for inspection
Products testing and analysis laboratory
Port authority
Airport
Ministry in charge of finance
Other ministries/agencies
Other private companies/banks
Not specified

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm
How do we know this? ITC’s business surveys
... document the experiences of companies that are involved in international trade
and identify at product, sector and partner country level the predominant
regulatory and procedural trade obstacles.

• NTMs imposed by importing countries

• NTMs imposed by exporting countries

• Identification of existing national procedures and

facilities that could use strengthening
• Coverage of gaps in understanding of specific
measures resulting form a lack of access to
relevant information

NTM series of more than 40 publications &

survey results available at www.ntmsurvey.org
Key concept: SPS and TBT measures
 Technical (SPS/ TBT) versus non-technical NTMs
o What is a technical regulation?
“A document which lays
• Refer to product-specific properties.
down product
• Product characteristics, technical specifications, characteristics or their
and the production process. related processes and
• They also include conformity assessment production methods,
methods which confirm that products fulfill the including administrative
requirements laid down in regulations provisions, with which
include measures that are applied in order to protect compliance is
food safety and animal and plant health (Sanitary and mandatory.”
Phytosanitary Measures – SPS) (Annex 1, WTO TBT Agreement)
as well as other technical measures for national
security reasons, consumer safety reasons (also
known as “Technical Barriers to Trade – TBT”)

o Non-technical requirements:
• do not refer to product specific properties but to trade requirements
• shipping requirements, customs formalities, trade rules, taxation policies, etc.
• all other NTM measures, which are not technical requirements
Who prepares technical regulations and SPS measures?

Technical regulations SPS measures

- Ministry of Trade
- Ministry of Industry
- Ministry of Agriculture
- Ministry of Health
- Consumer Protection Unit
- Environment Protection Unit
- …
- Ministry of Health
- Food and Drug Administration
- Plant Protection Authorities
- Veterinary Services
- Ministry of Fisheries and Livestock
- …
Examples of products subject to TR

• Machinery and equipment which could endanger human life, e.g.

boilers, electricity-driven tools, metal and wood – working
equipment

• Potentially dangerous consumer articles, e.g. synthetic detergents

and cleaning agents, household electrical appliances, video and
TV sets, motor vehicles

• Hazardous raw materials and agricultural inputs, e.g., fertilizers,

pesticides, and specified chemicals.
Technical regulations compared to standards
Technical Regulations
• Compliance is MANDATORY and
form part of legislation
• Responsibility of the government
• Consensus not necessary
• Encompass product
characteristics and
administrative provisions
• Goods cannot enter the country
Standards
• Compliance is VOLUNTARY
• Can be developed by a variety of
bodies in the public or private
sector
• Developed by consensus
• Contain only product
characteristics, or technical
requirements
• Goods can enter the country
TBT in international trade
Technical regulations
Standards
Testing, Calibration
C Inspection
Certification
Packaging
U Labelling
Other requirements
Country
S B

T
Country
Technical regulations A
Standards O
Testing, Calibration
Inspection
Certification M
Packaging
Labelling
Other requirements S
 Example of a TBT measure
Product characteristics requirements on oranges

Oranges with light green colour are

Size is determined by the maximum
allowed, provided the colour does not
diameter of the equatorial section of the
exceed one fifth of the total surface
fruit.
of the fruit
Oranges: 53 mm
 Example: Canada labeling requirement on a
box of fish product

Labels on fish products exported to

Canada must include:

A. Brand name H. Common Name

B. Nutrient Content Claim I. Nutrition Facts Table
C. Storage Instructions J. "Contains" Statement
D. Country of Origin K. List of Ingredients
E. Composition Claim L. Identity and Principal Place of
F. Net Quantity Business
G. Canada Inspected Logo
 32

Main challenges reported by businesses for SPS / TBT

 Lack of information on foreign market standards

 High certification cost

 Burdensome certification and inspection procedures

 Duplication of control among different regulatory bodies

 Lack of testing facilities
 Lack of recognition in destination market of local labs
 Stringent requirements (difficult to comply with)

Source: ITC Businesses Surveys on NTMs in 66 countries, www.ntmsurvey.org

 33

Main challenges reported by businesses for SPS / TBT

Example: Inefficient testing and certification procedures

 Lengthy procedures
The problem? It’s the
 Frequent renewal quantity of papers to
 Excessive paperwork and numerous submit! There are
too many documents
administrative windows
needed to prepare
 Inaccessible or absent infrastructure the dossier. More
than 20 different
documents are
required for the
The testing process takes 1 - 2 months conformity
while the validity of the product itself is assessment process.
just a year. Another issue is that it is
very expensive to undertake this test
which hinders us from exporting.

Source: ITC Businesses Surveys on NTMs in 66 countries, www.ntmsurvey.org

Technical Regulations and WTO TBT Agreement
rules
• Technical regulations should not create unnecessary obstacles to
trade, therefore, should
− Not be more trade-restrictive than necessary
− Serve legitimate objective
− Take into account risks that non-fulfilment would create
− Be based on scientific and technical information
• Foreign and domestic products treated equally
• Be based on international standards (except when not appropriate /
not sufficient to fulfil legitimate interests)
Objective

Prevent creation of unnecessary technical

barriers to trade
• Establish rules for development, adoption and
application of Technical Requirements (technical
regulations, standards, and conformity assessment)
• Technical requirements for trade to be based on
international standards, guides or recommendations
as far as possible
• Transparency of requirements
35
Rights

Agreement acknowledges countries’ rights to regulate for legitimate

purposes:

Protection of animal
Quality of their Protection of human life
or plant life or health
exports or health

Protection of
Protection of Prevention of
security interests
environment deceptive
practices
 Salient features

• Base technical requirements for trade on

international standards, guidelines or
recommendations as far as possible
• Make requirements transparent
 Publish notifications of the proposed technical
regulations and conformity assessment procedures
 Provide reasonable opportunity to other interested
parties to comment on the proposed technical
regulations and conformity assessment procedures
 Take into account these comments in finalizing the
drafts
 Justify the requirements of the technical regulations,
should they be requested to do so
Salient features

Technical regulations, standards, conformity assessment procedures

should be

• Not more trade restrictive than necessary (based on performance

requirements than product descriptors)
• Not applied arbitrarily, or
• Not discriminatory against imports (national treatment)
• Not maintained if no longer necessary, (changed circumstances or
can be addressed in a less trade restrictive manner)

38
TBT - Main principles

Non-
discriminati
Mutual on
Harmonizat
recognitio
ion
n

Avoidance
of
Transparen Equivalen
cy unnecessar
ce
y obstacles
to trade
Sanitary and phytosanitary measures
PROTECTING HUMAN, ANIMAL, PLANTS, ENVIRONMENT
What is a sanitary or
phytosanitaryvmeasure?
To protect
…
Additives, contaminants, toxins or
Human or animal
from disease –causing organisms in
life or health
foods, drink, feedstuffs

Diseases carried by animals,

Human life or health from plants or their products, or from
pests

Animal or plant Entry, establishment or spread of

from pests, diseases, disease-causing
life or health
organisms, etc.

from Other damage caused by entry,

A country establishment or spread of pests

(Annex A WTO Agreement on SPS)

SPS measures comprise of

Laws, decrees, End product Processes and

regulations criteria production methods

Testing, inspection, Risk

certification, approval Quarantine Packaging and labelling
assessment
procedures treatments related to food safety
methods
Some examples of SPS measures
(1/4)
To protect…
Additives, contaminants,
Human or animal From toxins or disease organisms
life or health in foods, drink, feedstuffs

Residue limits in Aflatoxin limits in

seafood nuts
Some examples of SPS measures
(2/4)
To protect…
Diseases carried by animals,
Human life or health From plants or their products, or from
pests

Requirement for Avian influenza

rabies vaccination
Some examples of SPS measures
(3/4)
To protect…
Entry, establishment or spread of
Animal or plant
From pests, diseases, disease-causing
life or health
organisms, etc.

Foot- and mouth Prevent the spread of

disease fruit fly
Some examples of SPS measures
(4/4)
To protect…
From Other damage caused by entry,
A country
establishment or spread of pests

Prevent entry of Zebra

mussels via
Ballast water
Regulate seeds to
avoid entry of weeds
Important footnote!

 “Animals” include fish and wild fauna

 “Plants” include forests and wild flora

 “Pests” include weeds

 “Contaminants” include residues of pesticides and

veterinary drugs, as well as extraneous matter
Rights

Members have the right to take sanitary and

phytosanitary measures necessary for the protection of
human, animal or plant life or health, provided that such
measures are not inconsistent with the provisions of
this Agreement.
Obligations

Only to extent necessary Based on scientific principles

Non discriminatory /
national treatment

Not maintained without

sufficient scientific
evidence (unless No disguised protectionism
provisional )
Key Provisions of the SPS
Agreement
• Non-discrimination
• Scientific justification
• harmonization
• risk assessment
• consistency
• least trade-restrictiveness
• Equivalence
• Regionalization
• Transparency
• Technical assistance/special treatment
• Control, inspection and approval procedures
Consistency

Members shall
avoid arbitrary distinctions

in appropriate level of SPS

protection (ALOP) considered in
different situations

if distinctions result in discrimination or

disguised restrictions on trade
Measure be least trade restrictive

Once the NEED and LEVEL of protection are determined

Technically and economically

Conformity Assessment Procedures
DETERMINING IF REQUIREMENTS ARE FULFILLED
What is conformity assessment

‘Any procedure used, directly

or indirectly, to determine that
relevant requirements in
Technical Regulations or
standards are fulfilled’.

Annex 1 WTO/TBT Agreement

Components of Conformity Assessment

Supplier’s Declaration of
Testing Inspection Conformity (SDoC)

Product
certification System certification
Accreditation
Types of Conformity Assessment

First-party Carried out by the supplier organization

assessment

Second-party Carried out by the buyer

assessment

Third-party Carried out by an independent body

assessment
Conformity Assessment Procedures
TESTING
Conformity assessment - Testing

Determination of one or more characteristics of an

Testing object of conformity assesment, according to a
specified procedure

Evidence of degree of compliance with

regulatory or buyer’s technical
requirements

conclusion

Product meets or does not meet

regulatory or buyer’s requirements
Test reports

A regulatory body may accept a test report from a laboratory: Operated by the
regulatory authority

• with a good reputation established with the body

• recognized by the regulatory body itself

• accredited by a national accreditation body

• recognized by one of the partners under MRAs

• accredited by a body within ILAC Arrangement

Conformity Assessment Procedures
INSPECTION
Conformity Assessment – Inspection

Inspection
‘Examination of a product design, product,
process or installation, and determination
of its conformity with specific requirements
or, on the basis of professional judgement,
general requirements’
ISO/IEC 17000:2004
Conformity Assessment – Inspection methods
• Inspection is based more upon visual
examination

• Inspection depends more on inspector’s

discretion

• Inspection may include testing and/or

measurement
Conformity assessment – Inspection types

In-process In-use

Acceptance

Pre-shipment
Conformity Assessment Procedures
CERTIFICATION OF PRODUCTS
Conformity Assessment – Product
Certification
Product Certification

Procedure by which a third party provides

written assurance that a product, process or
service conforms to specified requirements

Product Certification Mark

Product expected to meet the claimed standards

Conformity Assessment Procedures
CERTIFICATION OF SYSTEMS
Conformity Assessment – Management
system certification

• Deals with the processes and procedures of the

manufacturer, producer, supplier or service provider

• Business to business requirement

• Implementation & certification is voluntary

• Some buyers make it a pre-requisite for doing business

with a supplier
Conformity Assessment – Examples of management
system certification

• ISO 9000 Quality Management Systems

• ISO 22000 Food Safety Management Systems

• ISO 14000 Environmental Management Systems

• OHSAS 18001 Occupational Health and Safety

Management Systems

• SA 8000 Social Accountability

• WRAP (Worldwide Responsible Accredited Production)

Product certification
•Certification mark on the packaging
•Product conformance to specified
requirements
•Activities such as inspection, testing
and assessment of the quality control
system are combined
•Possible resolution of complaints by
the certification body
System certification
•Certificate of system conformance
•Ability of an organization consistently to
supply products that conform to customer
and regulatory requirements
•Assessment of the quality management
system
•Verification of the corrective action taken
by the certified organization by the
certification body
Conformity assessment – Selecting a
system certification body

Selection of a certification body

Views of
Time buyers
&
Accreditation cost
scope includes
Accredited your area
by a national of business
accreditation
body Influenced by proximity
of the certification body
Conformity Assessment Procedures
ACCREDITATION
Accreditation

Accreditation

‘Third-party attestation related to a conformity assessment

body conveying formal demonstration of its
competence to carry out specific conformity assessment
tasks’

conclusion

Confidence in competence, integrity and

impartiality of certifier
Acceptance of certificates

At National Accreditation
Level

National
Accreditation
Mutual
And Mutual
Across Recognition
Recognition
between borders between
Certifiers
Accreditors

78
Mutual Recognition Agreements

Recognition at three levels

• Political agreements between governments (regulated sector)
e.g. Australia - EU MRA

• Agreements between accreditation bodies (voluntary sector)

e.g. ILAC

• Agreements between individual laboratories and

– certification bodies (voluntary sector) e.g. IECEE
– Certification Body Scheme
Conformity assessment &TBT rules

Information on
Applied equally Carried out requirements provided
irrespective of origin expeditiously on request

Fees equitable to Facilities and

domestic and foreign sampling not to be Review complaints
applicants inconvenient on procedures
 What matters to exporters?
Key messages from ITC’s interviews with nearly 30,000 businesses

1. Clarity of what is being applied when

Multitude of regulations and agreements, types of certifications and related procedures
leads to confusion not only of businesses but also of customs officials
 Transparency; policymakers’ awareness of practical implications of rules

2. Consistency of what is being applied when

(Preferential) rules versus (non-preferential) practice: At times, the practice on the
ground differs from what is written in laws / has been negotiated. Unpredictability
comes with significant cost for businesses.
 Training of customs officials; transparency; appeal procedures

3. Procedural efficiency
Rules imply procedures and procedures have time and cost implications. Example
RoO: if a preference can be gained, it may be worth it (but at times is not…). In cases
of non-preferential rules, this is just a cost with (in most cases) no gains
 Review procedures; Think (again) about non-preferential rules
Tackling the transparency challenge: NTM
data collection coverage
So back to our information tools….
k
Where do I find all this information for products and markets of my
interest?

Market Access Map Let’s focus

on this first
www.macmap.org

Sanitary and Phyto-Sanitary measures (SPS)

and Technical Barriers to Trade (TBT)
notification alert system: www.epingalert.org

Rules of Origin Facilitator

Find and compare rules of origin, related provisions and
certification requirements
http://findrulesoforigin.org/
Data types

Market Access Map

Other market access
Tariffs
conditions

Applied MFN Ad Sanitary

Tariff Trade Rules and Technical Inspection Other
and and valorem agree- of Trade
Rate remedies
Phytosani Barriers require- Non-tariff
bound preferen equi- ments Origin tary to Trade ments measures
Quotas
tariffs ces valents Measures
Let’s go live

Market Access Map

www.macmap.org
(Delete this slide)
Suggestion to show overall MacMap orientation + more in-depth:
• Simple search: find non-tariff measures (e.g.: India – avocadoes)
– Show the list of regulations (it’s long!)

– Show type of regulations (e.g. SPS / TBT labelling), additional info

of the issuing authority etc

– Mention that the data is meant to give a first orientation to simplify

further search

– I would then use the time for specific exerces related to finding
NTMs in MAcMap
Time for exercises
Key concept: Rules of Origin
Or: About the “nationality” of fish caught in international
waters
 92

Rules of Origin
What they are
The “economic
What they are not nationality” of goods in
international trade
A good source of (“customs origin”)
information for
consumers

What they will never

do
What they do
- They define one (and
only one) origin to Accept something as
each and every product; “made in the world”
- They make FTAs possible
 93

Rules of Origin – Why?

Non-preferential ROOs
- Trade statistics
- Trade policy measures: e.g. anti-dumping / tariff rate quotas
- Government procurement
- Etc.

Preferential ROOs
“Except as otherwise
- Trade agreements: determining provided in this
eligibility for preferences Agreement, each Party
shall eliminate its customs
duties on originating
Each trade agreement has its goods of the other Party”
own sets of rules of origin!
 94

Origin in practice
Toothed-wheels of cast iron and steel (HS code 8483.90.81.90) imported into the EU
http://findrulesoforigin.org/home/compare?reporter=276&partner=410,484,842&product=8483908190

Cost of goods: MFN tariff: 2.7%

$500
$500 + 2.7%
No trade agreement in place =
MFN rate

$500
$500 + 0%
Meet the rule of origin under the EU-
Mexico agreement = preferential rate

$500
$500 + 2.7%
Do not meet the rule of origin under the
EU-South Korea agreement = MFN rate
 95

Origin qualifying process

In order for a product to be traded under preferential origin (tariff), the
exporter needs to answer ‘YES’ to each of the five questions.

IF the answer to any of the questions is ‘NO’, the product has got
to be traded under the MFN rate

• Is there a trade agreement between

1. Agreement the country of export and import?

• Is there a preferential tariff rate for the

2. Product product under the agreement?

• Does the product comply with the rule

3. Rule of origin under the agreement?

• Can the exporter prove the origin of

4. Proof the product?

• Can the exporter comply with other

5. Compliance origin provisions and conditions?
Origin criteria: basic principles

Substantial / sufficient transformation of

goods Wholly obtained
goods
- Change of tariff heading: all non-
originating materials used in the production
of the product have undergone a change in
tariff classification

HS4 08.05 HS4 20.09

- Value addition:
E.g. production in which the value of all non-originating materials
used does not exceed 50 % of the transaction value of the product.

- Technical requirements: E.g. pasteurization of milk

 97

14 basic types of rules of origin

Occurrence Rule Definition
6% WO Good is entirely (i.e. wholly) obtained or manufactured in one country without using any non-originating materials.
The non-originating inputs are not required to be classified in a different HS code than the final good to confer
5% NC
originating status.
The originating status is conferred to a good that is classified in a different HS chapter than the non-originating
7% CC
inputs.
The originating status is conferred to a good that is classified in a different HS heading than the non-originating
43% CTH
inputs.
The originating status is conferred to a good that is classified in a different HS subheading than the non-originating
6% CTSH
inputs.
The originating status is conferred to a good that is classified in a different HS tariff item than the non-originating
0% CTI
inputs.
10% ALW The originating status is allowed to be conferred from non-originating inputs of specific HS codes.
The originating status cannot be conferred to a good if the non-originating inputs are from HS codes listed under
10% ECT
exception.
A good originates in the country where a defined technical requirement, i.e. a specific working or processing,
13% SP has taken place.
61% RVC A good obtains originating status if a defined regional value content percentage has been reached.
0.1% RQC A good obtains originating status if a defined regional quantity content percentage has been reached.
A good obtains originating status if a defined regional value content percentage on a part or parts has been
3% RVP
reached.
A good obtains originating status if a defined regional quantity content percentage on a part or parts has been
0% RQP
reached.
2% Other Origin criteria other than related to wholly obtained, CTC, value (quantity) content, or specified process.

Note: “Occurrence” means % of presence of the rule among all 500,000 FTA x HS6 combinations (as of Oct 12, 2018)
 98

Example of rules of origin classification

Good: Sports car - HS 8703.24

Trade agreement Rule of origin Criterion (ITC)

A change from any other heading,

FTA, China-Peru provided there is a regional value content CTH and RVC 50%
of not less than 50 percent.
A change to subheading 8703.21 through
8703.90 from any other heading, provided
NAFTA there is a regional value content of not CTH and RVC 62.5%
less than 62.5 percent under the net cost
method.
A change to subheading 8703.21 through
EPA, Japan- 8703.90 from any other heading, provided
there is a regional value content of not
CTH and RVC 65%
Mexico
less than 65 percent.
 99

Value added calculations - example

Parts Motor cars and other motor vehicles

Various HS codes HS Heading 87.03

Rule of origin: production in which the value of all non-

originating materials used does not exceed 50 % of the
ex-works price or transaction value of the product.
 100

Change in tariff classification – Tomato juice

Good: Tomato juice - HS 2009.50

Process: Tomato juice is made from tomato paste, which in turn is made from
fresh tomatoes.
Tomato juice and tomato paste are classified in the same Ch. 20 (Prepared
fruits,vegs,nuts), but in different headings. Tomatoes are in Ch. 07.

Tomatoes Tomato paste Tomato juice

HS 0702.00 HS 2002.90 HS 2009.50

Change in tariff heading (CTH)

Change in chapter (CC)

 101

Change in tariff classification – Tomato juice

Good: Tomato juice - HS 2009.50

Example 1: LDC of Switzerland: “The good obtained should be classified under a HS

tariff heading other than that covering each of the non-originating products used”

Criterion (ITC): CTH

Tomatoes Tomato paste Tomato juice

?
HS 0702.00 HS 2002.90 HS 2009.50

Change in tariff heading (CTH)

Change in chapter (CC)

 102

Change in tariff classification – Tomato juice

Good: Tomato juice - HS 2009.50

Example 2: NAFTA: “A change to subheading 2009.50 through 2009.80 from any

other chapter.”
Criterion (ITC): CC

Tomatoes Tomato paste Tomato juice

?
HS 0702.00 HS 2002.90 HS 2009.50

Change in tariff heading (CTH)

Change in chapter (CC)

 103

Change in tariff classification – Tomato juice

Good: Tomato juice - HS 2009.50

Example 3: EPA, Japan-Mexico: “A change to subheading 2009.50 from any other

chapter, except from heading 07.02.”
Criterion (ITC): CC + ECT

Tomatoes Tomato paste Tomato juice

?
HS 0702.00 HS 2002.90 HS 2009.50

Change in tariff heading (CTH)

Change in chapter (CC)

 104

Change in tariff classification – Tomato juice

Good: Tomato juice - HS 2009.50
Example 4: AGADIR: “Manufacture from materials of any heading, except that of the
product, and in which the value of all the materials of Chapter 17 used does not exceed
30% of the ex-works price of the product.”
Criterion (ITC): CTH + ECT 30%

Tomatoes Tomato paste Tomato juice

?
HS 0702.00 Sugar HS 2002.90 HS 2009.50

30% Change in tariff heading (CTH)

Change in chapter (CC)

 Complicated ROO: Example 1

Preference hs6 rule criterion

A change to subheading 3810.10 through

3810.90 from any other chapter, except from
chapter 28 through 38; or A change to
EPA, Japan- subheading 3810.10 through 3810.90 from any
381010 CC + ECT or CTSH + RVC 50 %
Mexico other subheading within chapter 28 through 38,
whether or not there is also a change from any
other chapter, provided there is a regional
value content of not less than 50 percent.
 So what about me? Me

Example EU-Algeria agreement My boat

My work

My fish
Anything else?
My boat?

+
So what’s the problem?
 Main challenges reported: Rules of Origin
The cost of preferential market access

• Cost of obtaining the certificate of origin

1

• De jure versus de facto preferential treatment

2

• Strict origin requirements / mutually exclusive

3 requirements between agreements

 Sometimes it is more costly to prove product

origin than to pay MFN

Source: ITC business surveys on NTMs in 30 countries, 2010-2016, www.ntmsurvey.org

Preferential market access: the cost

• Getting the certificate of origin

1
2 to 3 months to prepare
the dossier. It’s a waste of 10 different
time. In addition, it’s documents,
Up to two repetitive. every time!
weeks only for
issuance

 Inefficiencies in issuing the

certificate of origin

2 weeks to prepare the

3-4 additional days just documents to be
because I have to come submitted, 5 days to
to the capital 3-4 receive the certificate
days Source: ITC business surveys on NTMs in 66 countries, 2010-
2016, www.ntmsurvey.org
 111

• Exporter testimonies (continued)

2

The partner country

 Language issues
doesn't apply both
 De jure versus de facto preferential existing agreements
although the product
treatment
satisfies the rules of
origin. The situation
forces us to pay tariffs
When exporting to any Arab country and […] and for some
issuing GAFTA certificate of origin, the products it becomes
certificate must be written 100% in Arabic. non-profitable to
There are some technical wordings, letters export.
and numbers that cannot be translated.
The customs officials do not understand
this point and usually reject the certificate.

Source: ITC business surveys on NTMs in 66 countries, 2010-2016, www.ntmsurvey.org

The majority of difficulties linked to the certificate of origin are
encountered at home (in the exporting country)

Share of procedural obstacles*, by location

Rules of Origin Other types of NTMs

94% 59% 41%

6%

In the partner In the partner

In the home country In the home country
country country

*Note: Only cases reported by exporters

Source: ITC business surveys on NTMs in 30 developing countries, 2010-2016
www.ntmsurvey.org
 113

Quiz Time

• A container of toys is shipped from Kuantan Port (Malaysia) to Port of

Los Angeles (U.S.). Can we say that the origin of these items is
Malaysia?
No. Port of departure does not tell us anything about the origin of the items.

If MFN tariff on your product is 0%, can you still need a certificate of
origin?

Yes. You might steel need a non-preferential certificate of origin in certain cases.
You might also need a preferential certificate of origin if the buyer keeps insisting,
or to be exempt from certain additional fees (i.e. merchandise processing fee in
the case of some U.S. agreements)
So back to our information tools….
k
Where do I find all this information for products and markets of my
interest?

Market Access Map

www.macmap.org

Sanitary and Phyto-Sanitary measures (SPS)

and Technical Barriers to Trade (TBT)
notification alert system: www.epingalert.org

Rules of Origin Facilitator

Find and compare rules of origin, related provisions and
certification requirements
http://findrulesoforigin.org/
 115

Rules of Origin Facilitator

 116

What does the tool offer?

• Product-specific rules of origin. The tool currently covers nearly 114 agreements
(growing by the minute )
• Includes bilateral and multilateral agreements as well as non-preferential
regimes of certain countries (EU, United States, Switzerland)
• Provides comprehensive information on all origin provisions: covers rules of
origin as well as general origin requirements (e.g. certification)
• Allows to access original documentation. Provides links to text of the agreement,
certificate templates and designated local customs authorities
• Includes a range of other supporting materials and articles
• Constantly updated with new agreements, materials and functionality
 117

Remember the origin qualifying process

In order for a product to be traded under preferential origin (tariff), the
exporter needs to answer ‘YES’ to each of the five questions.

IF the answer to any of the questions is ‘NO’, the product has got
to be traded under the MFN rate

• Is there a trade agreement between

1. Agreement the country of export and import?

• Is there a preferential tariff rate for the

2. Product product under the agreement?

• Does the product comply with the rule

3. Rule of origin under the agreement?

• Can the exporter prove the origin of

4. Proof the product?

• Can the exporter comply with other

5. Compliance origin provisions and conditions?
 118

Regularly updated ITC database of trade agreements

1. Agreement
http://findrulesoforigin.org/home/agreements
 119

2. Product Connection to Market Access Map tariff database

http://findrulesoforigin.org/home/compare?reporter=757&partner=170,804,704&product=61091000
 120

3. Rule Key principles and definitions

Based on the Kyoto Convention, there are two main methods for
determining the origin of a product:

1. Where only one country is involved, the good is considered wholly obtained
in that country (originating in this country). Examples include live animals born
and raised there, mineral products extracted from the ground, food products
grown and harvested in the territory of the party (e.g. fruits, grains).

2. Where more than one country is involved in the production process, the origin
of the good is determined based on the country where the last substantial
transformation took place. There are three methods for determining
substantial transformation:
1) Change of tariff classification (based on HS code)
2) Value added calculations, or
3) Specified manufacturing or processing operations

Rules of origin can also consist of a combination of the above methods

3. Rule
Rules of Origin

Wholly obtained Substantial transformation

(WO) basic standard describing what confers to the good its ‘essential
obtained from the earth or sea, or grown on land character’

Help: What is wholly obtained?

 http://findrulesoforigin.org/glossary/wo

Specified process
Change in tariff classification (SP)
(CTC)

Ch. 01  Ch. 02
Value added content
(RVC)
Help: What is CTC?
 http://findrulesoforigin.org/glossary/ctc
Help: What is RVC?
 http://findrulesoforigin.org/glossary/rvcformula

+ any combination
 122

What to do if I don’t understand the rule?

Example: NAFTA: “A change to subheading 2009.40 through 2009.80 from any
other chapter.”

1. Click on “Criterion (ITC)”

2. Click on ‘Find Out More’ and read general (introductory) notes to the rules

In the case of NAFTA, print out the following words in front of the rule:

“All non-originating materials used to produce the good must

undergo…”
 123

Exercise: Ketchup from Jordan

Good: Ketchup - HS 2103.20

Task: Using findrulesoforigin.org, find applicable rule of origin for ketchup under
Canada-Jordan FTA and work out whether this ketchup made in Jordan qualifies
for preference.

Bill of Materials* Watch how ketchup is made: https://youtu.be/pzKdUYtlXSQ

Ingredient HS code Origin Cost

Tomato paste 2002.90 China $1
Sugar 17 Turkey ¢30 Final price (EXW):
Salt 2501.00 Pakistan ¢10 $3
Cloves 0907.20 unknown ¢10
Vinegar 2209.00 Turkey ¢10
Onion powder 0712.20 China ¢10
Glass bottle 7010.90 China ¢30

* all other materials not on the list are of Jordanian origin

 124

Solution: Ketchup from Jordan qualifies!

Good: Ketchup - HS 2103.20

Key: The ketchup rule of origin under Canada-Jordan FTA is “A change from any
other subheading.” (CTSH). This means every non-originating material has to be
classified in a subheading (6-digit code) other than 2103.20.
http://findrulesoforigin.org/home/compare?reporter=124&partner=400&product=21032010

Bill of Materials* Watch how ketchup is made: https://youtu.be/pzKdUYtlXSQ

Ingredient HS code Origin Cost Passes CTSH shift? Final

Tomato paste 2002.90 China $1 Yes price
(EXW):
Sugar 17 Turkey ¢30 Yes
Salt 2501.00 Pakistan ¢10 Yes $3
Cloves 0907.20 unknown ¢10 Yes
Vinegar 2209.00 Turkey ¢10 Yes
Onion powder 0712.20 China ¢10 Yes
Glass bottle 7010.90 China ¢30 Disregarded (see Packaging)

* all other materials not listed are of Jordanian origin

 125

Other origin requirements 5. Compliance

In addition to fulfilling the rule of origin, products exported under preference

need to comply with a number of other origin requirements and conditions.
These requirements are sometimes referred to as general origin rules and
cover a number of issues.

Exporters and importers often find that these additional requirements

are less transparent, difficult to navigate and comply with than rules of
origin themselves. They can be the reason exporters of goods eligible
for preferential treatment decide to export under the MFN tariffs.
 126

Other origin requirements - examples

 Origin calculation and application: How to calculate value added? How to

treat inputs used during the production process originating in partner countries?
How to treat spare parts? (e.g. Cumulation, Value added calculation, Wholly
obtained products, Sets, Accessories, Spare Parts and Tools)
 Flexibility: Are there any rules that allow for additional flexibility? (e.g. De
Minimis)
 Certification and proof of origin: What type of document is required? Can the
exporter self-certify origin or does the proof need to be issued by an authorised
body? How long is the proof valid for? (e.g. Certification, Approved exporter,
Period of validity, Exemption of certification)
 Shipping and handling: Does the good need to be shipped directly from the
country of export to the country of import? Can it be repackaged on the way?
(e.g. Principle of Territoriality, Direct transport)
 Accounting: How long do the documents relating to originating goods need to
be stored? (e.g. Retention period, Supporting documents, Verifications)
Let’s go live
(Delete this slide)
Show ROO facilitator – select one example (maybe best to choose
one where two overlapping agreements exist), to go over details
(type of rule, certification, other provisions)
Mention that this tool is work in progress
Mention that there is also basic ROO in MAcMap but not as
sophisticated
Time for exercises
WTO TBT -Government structures

Central National National

government enquiry point notification
responsible (NEP) authority (NNA)
for
compliance

Facilities for
Central /
conformity
National
assessment
standards body
services
(NSB)
Technical Regulations and TBT rules

IF TR / CAP Performance-
International based
Standard

AND
Significant Allow &
consider Finalize
effect on trade
commen
60tsdays

Justify
Transparency: SPS

establish an Enquiry Point

AND
designate a Notification Authority
Members shall
Publish all SPS measures.

notify other Members of new or changed

SPS regulations when

no international standard exists regulation may

OR AND have significant
the new regulation is different than effect on trade
the international standard

WTO Committee on SPS

So back to our information tools….
k
Where do I find all this information for products and markets of my
interest?

Market Access Map

www.macmap.org

Sanitary and Phyto-Sanitary measures (SPS)

and Technical Barriers to Trade (TBT)
notification alert system: www.epingalert.org

Rules of Origin Facilitator

Find and compare rules of origin, related provisions and
certification requirements
http://findrulesoforigin.org/
What is e-Ping?

Les pays modifient leurs réglementations SPS et OTC (prescriptions

Alert system for
relatives aux produits) assez régulièrement.
SPS and TBT notifications
Comment rester à jour?

Enables the private (and public) sector to keep track

of SPS / TBT notifications of interest
1. Published by export markets
2. And also by products
SPS/TBT notifications on the rise
More than 4,000
notifications in 2017!
4500

4000

3500

3000

2500
SPS
2000
TBT
1500

1000

500

0
Example of notifications
 ePing: tool to track/manage
notifications
 SPS/TBT notification  Communication platform
email alerts matching facilitating dialogue among
users’ filtering criteria public/private sector

Publicly available in EN, FR, ES

Launched in Nov. 2016
Prior to e-Ping
 Prior to ePing

SPS/TBT
Notificatio
n Enquiry Point
(EP)
Notifyin WTO or Sector
Governmen Producers/
g (SPS and National organization
t agencies Exporters
member TBT IMS) Notification s
Authority
(NNA)

Comment
s in 60
days!
 Goal is to address potential trade problems at an early
stage
Notifying member
Producer/Exporter
Comment
s in 60
Enquiry Point or
days!
National
SPS/TBT Notification Notification Government
Authority agencies

WTO
(SPS & TBT IMS)

Other interested Sector

parties Associations
 More than 3,400
Growing user community users
March 2018
 ePing’s value-added
1. One interface for SPS/TBT

2. Rapid and customized alerts for users, avoiding information

overflow

3. Forum to discuss, share information, assisting public

consultations

4. Increased compliance with transparency obligations

5. Drawing on resources and expertise of three coordinating

agencies
Register and receive notification alerts
Register and receive alerts
http://www.epingalert.org

Register to receive alerts and

access all functionalities

Select your language

Register page - overview

1.If you like to receive all

notifications, leave all boxes
blank

2.To render the best filter

results with respect to
products, fill out each box
(product names: OR)
Example of email alert
Example of notification summary
Example of email alert (2)

Direct link to the SPS/TBT Enquiry

Point contact details on the website
Enquiry Point contact list
Search notifications and create filters for
additional alerts
The “search notifications” page

Filter Names

Filter Details

Notification List

Record Navigation Footer

Functionalities on ePing enhancing communication
Functionalities on ePing enhancing
communication
 Functionalities on ePing enhancing
communication
Access the notifications in all
three official WTO languages

Write contributions and share files

related to a given notification
These functionalities need to be
activated by EP or NNA

Create favourites lists and

share notifications with other
users or external contacts
Add notifications to favorites list
Add notifications to favourites list

Optional: select reminder date

Create/select category
Share notifications
Share notifications
Share notifications

 Share a notification issued by your

government (or neighbouring
government ) with a colleague

 Add email address(es), subject and

message (or select a group you have
created if you have group management
or Enquiry Point rights)
(Delete this slide)
Most of the previous can be shown directly live
Time for exercises
Starting point for further research? ?
• Information is scattered across different national, regional and
international sources

• Availability depends on the destination country

• It is necessary to take the time and to do desk research in order to get an

overview and understanding of the relevant the NTMs

- Business associations, Chamber of Commerce, etc.... might have additional

information
- Other exporters – however, as compliance with NTMs is such a challenge for
exporters, they are often not willing to share their experiences with others

162
National Standards – getting information
about them
Many countries use Codex standards to develop their national standards  Codex provides
exporters insight into national standard baselines

WTO member countries are bound by the SPS and TBT Agreements which provide
guidelines on standards relating to
• Health protection measures (SPS)
• Technical requirements and conformity assessment procedures (TBT)

Each WTO member has a national enquiry point for questions about the country’s standards,
control, inspection & risk assessment procedures.
See WTO website for national enquiry point contacts details for SPS & TBT:
• SPS:http://www.wto.org/english/tratop_e/sps_e/sps_agreement_cbt_e/c10s1p1_e.htm#enquirypoints
• TBT: http://www.wto.org/english/tratop_e/tbt_e/tbt_enquiry_points_e.htm
 Codex Alimentarius
“Food code” created 1963 by FAO and WHO to:

• Protect health of consumers

• Ensure fair trade practices in food trade
• Promote coordination of food standards work undertaken by
international governmental and non-governmental
organizations

Source:
www.codexalimentarius.org
CBI Market Information: https://www.cbi.eu/
EU Trade Helpdesk
Everything you need to know about accessing the EU market

• General and specific

requirements

• (Regional and country)

• Internal Taxes

• Import procedures

Source: http://trade.ec.europa.eu/tradehelp
Tracking the reasons for food rejection at
customs

WHY ?

167
 RASFF (European Union)

• The RASFF portal was put in place to enable EU food and feed
control authorities to exchange information about measures taken
responding to serious risks detected in relation to food or feed

• Helps EU Member States act rapidly and in a coordinated manner in

response to a health threats caused by food or feed

• RASFF has an interactive searchable online database. Here you can

see the most recent RASFF notifications as well as search for
information on any notification issued in the past

Link: http://ec.europa.eu/food/food/rapidalert/index_en.htm
RASFF Portal (EU)
 What it regulates

• Foods • Electronic products

- Bottled water emitting radiation
- Additives (microwave, x-ray, lasers)
- Infant formulas • Cosmetics
• Drugs - Colour additives for
- Prescription
makeup
- Non-prescription
- Skin products
• Biologics
- Vaccines - Perfumes
- Blood and blood • Veterinary products
products • Tobacco products
- Allergenics
• Medical devices

Source:
http://www.fda.gov/AboutFDA/
Transparency/Basics/ucm194
879.htm
OASIS Portal (USA)
Operational and Administrative System for Import Support (OASIS)
U.S. Food and Drug Administration prepares this information in an effort to provide the public with
information on products that have been found to appear in violation of the Food, Drug, and
Cosmetic Act.
Maximum Residue Levels (MRL)
• MRLs are the maximum legal concentration
levels for pesticides and veterinary drug
residues in or on food or feed
• Based on good agricultural practices and to
ensure the lowest possible consumer exposure.

Finding MRL regulations:

• The US Foreign Agricultural Service (FAS) has an MRL database

for all plants & animals, all pesticides & veterinary drugs and
covering all countries: http://www.mrldatabase.com/

• The EU has a database for pesticides regulations in the EU:

http://ec.europa.eu/dgs/health_food-safety/index_en.htm
 Other selected data sources on NTMs
Source Description Source

Global database on countries regulations on food safety

FAOlex http://faolex.fao.org/
& animal & plant health

Japan External Numerous documents devoted to Japan's standards and

http://www.jetro.go.jp/en/reports/regu
Trade Organisation regulations concerning import procedures, quarantine lations
(JETRO) periods, technical requirements

Regulations.gov Find and comment on proposed regulations and related

http://www.regulations.gov
(USA) documents published by the U.S. Federal government

General Administration of Quality Supervision, Inspection

http://english.aqsiq.gov.cn/Lawsand
AQSIQ (China) and Quarantine of the People's Republic of China - Regulations/
Regulations on food safety & animal & plant health

Australia’s Biosecurity Import Conditions database for

more than 20,000 plants, animals, minerals and https://bicon.agriculture.gov.au/Bicon
BICON (Australia) Web4.0
biological products. It helps you to determine what import
conditions exist and if an import permit is required.

The Integrated Trade Intelligence Portal provides

information compiled by the WTO on trade policy
WTO I-TIP measures. I-TIP covers both tariff and non-tariff https://i-tip.wto.org
measures, government procurement, regional trade
agreements and the WTO accession commitments.
Summary: you should now be able to…
Understand what Non-Tariff
Measures are and be aware
of different types of
regulations
Find information about non-
tariff measures in
www.macmap.org, ePing
and the Rules of Origin
Facilitator
Better understand the
business perspective on
NTMs and practical
challenges that they struggle
with when trying to comply
with NTMs
Define rules of origin and
understand their importance
in international trade
Please evaluate the training
PUT THE CORRECT LINK HERE
Next steps

- Additional 2-day training (HCMC)

- Training of trainers (from May onwards)

- Replication of trainings by certified trainers (as of

Q3 2019)
For more information

www.ntmsurvey.org

ntm@intracen.org

@ITC_MktAnalysis

ITCmarketanalysistools

Trade and Market

Intelligence section (TMI)

International Trade Centre