Lecture-7 NTM

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: 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
6
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
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%
13%
Agriculture 13% Manufacturing
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%

22% Regulations on product characteristics,
quality, poduction process. etc.
23%
Conformity assessment
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%
5% Rules of origin and related certificate 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

Most regulations pose a problem because of procedural
obstacles
Share of NTM cases, by type of difficulty
100%
90%
80% 40% The regulation is difficult only
70% 58% because of procedural obstacles
60%
50% 25% The NTM is too strict + there are
procedural obstacles
40%
30% 19%
20% The regulation itself is too
35% strict/difficult
10% 23%
0%
Agriculture Manufacturing
Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

What types of home country procedural obstacles are reported?
High cost
24%
Exporti
Admin ng
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
Discriminatory behaviour of officials

Informal or unusually high payment
Administrative burdens related to
Information/ transparency issues
Lack of recognition/ accreditation

Lack of sector-specific facilities
Time constraints
regulation
Type of
Other

Location of the

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

Experience
Ministry in charge of finance Non-Tariff Measures; www.intracen.org/publications/ntm

Other ministries/agencies
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, and the characteristics or their
production process. related processes and
• They also include conformity assessment methods production methods,
which confirm that products fulfill the requirements laid including administrative
down in regulations provisions, with which
compliance is
include measures that are applied in order to protect food
mandatory.”
safety and animal and plant health (Sanitary and
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 Health
- Ministry of Industry - Food and Drug Administration
- Ministry of Agriculture - Plant Protection Authorities
- Ministry of Health - Veterinary Services
- Consumer Protection Unit - Ministry of Fisheries and Livestock
- Environment Protection Unit - …
- …
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 Standards

• Compliance is MANDATORY and • Compliance is VOLUNTARY
form part of legislation
• Can be developed by a variety of
• Responsibility of the government bodies in the public or private
sector
• Consensus not necessary • Developed by consensus
• Encompass product
characteristics and • Contain only product
administrative provisions characteristics, or technical
requirements
• Goods cannot enter the country
• Goods can enter the country
TBT in international trade
Technical regulations
Standards
Testing, Calibration
C Inspection
Certification
Packaging
U Labelling
Other requirements
Country
B
S
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
diameter of the equatorial section of the
not exceed onefruit.
fifth of the total
surface of the
Oranges: 53 fruit
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
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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

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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
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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)
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TBT - Main principles
Non-
discriminati
on
Mutual 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
(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
(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
(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
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
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
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 Trade and Technical Inspection Other
and and valorem agree- of
Rate remedie Phytosani Barriers require- Non-tariff
bound preferen equi- ments Origin s tary to Trade ments measures
Quotas
tariffs ces valents Measures
Key concept: Rules of Origin
Or: About the “nationality” of fish caught in international
waters
51
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
52
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!
53
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
54
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

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14 basic types of rules of origin

Occurrence RuleDefinition
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-
6% CTSH originating 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)
57
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.
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.
58
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.
59
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)

60

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
?
HS 0702.00 HS 2002.90 HS 2009.50

61

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

other chapter.”
Criterion (ITC): CC
?
HS 0702.00 HS 2002.90 HS 2009.50

62

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

chapter, except from heading 07.02. ”
Criterion (ITC): CC + ECT
?
HS 0702.00 HS 2002.90 HS 2009.50

63

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%
?
HS 0702.00 Sugar HS 2002.90 HS 2009.50
30% Change in tariff heading (CTH)

Complicated ROO: Example 1
Preference hs6 rule criterion

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? M
e
Example EU-Algeria agreement My

boat
My
work
My
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
70
• 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
72
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)
k
interest?
Market Access Map

www.macmap.org


74

75
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
76
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?
77
Regularly updated ITC database of trade agreements

1. Agreement
http://findrulesoforigin.org/home/agreements
78
2. Product Connection to Market Access Map tariff database
http://findrulesoforigin.org/home/compare?reporter=757&partner=170,804,704&product=6109100
79
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
81
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…”
82
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

83
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

84
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.
85
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
Time for exercises
k
interest?
Market Access Map

www.macmap.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
Comment notifications
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
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0
02
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09
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Lecture-7 NTM

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Reminder: Market access

Market access for goods refers to the conditions,

• Key concepts related to NTMs

• Role of NTMs in international

• Data sources; Market Access

• Business experiences with NTMs

3) Who applies them?

Non-tariff measures (NTMs)

Mandatory requirements, rules or regulations legally set by the

Can affect both export and import

Non-tariff barriers (NTBs)

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

2. A country requires imported skis to adhere to rigorous

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

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

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

Importing Country Exporting Country

 NTMs are not necessarily a trade barrier

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

Home OECD countries

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

Technical requirements 11%

Inspections and other entry formalities 13%

Charges and taxes

11% Other import-related measures

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

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

Discriminatory behaviour of officials

Administrative burdens related to

Information/ transparency issues

Lack of recognition/ accreditation

Ministry in charge of finance Non-Tariff Measures; www.intracen.org/publications/ntm

• NTMs imposed by importing countries

• NTMs imposed by exporting countries

NTM series of more than 40 publications &

as well as other technical measures for national security

Technical regulations SPS measures

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

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

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

Technical Regulations Standards

Oranges with light green colour are

Labels on fish products exported to

A. Brand name H. Common Name

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

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

Main challenges reported by businesses for SPS / TBT

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

• Technical regulations should not create unnecessary obstacles to

Prevent creation of unnecessary technical

Agreement acknowledges countries’ rights to regulate for legitimate

Technical regulations, standards, conformity assessment procedures

• Not more trade restrictive than necessary (based on performance

Diseases carried by animals,

Animal or plant Entry, establishment or spread of

from Other damage caused by entry,

(Annex A WTO Agreement on SPS)

Laws, decrees, End product Processes and

Testing, inspection, Risk