   
  
G/RO/W/223  
 
3 August  2023 
(23-5292) Page: 1/15 
Committee on Rules of Origin    
 
REPORT OF THE COMMITTEE ON RULES OF ORIGIN TO THE GENERAL COUNCIL  
ON PREFERENTIAL RULES OF ORIGIN FOR LEAST DEVELOPED COUNTRIES  
DRAFT  
This report is being submitted by the Committee on Rules of Origin (CRO) to the General Council 
following the 2022  Decision on Preferential Rules of Origin and the Implementation of the Nairobi 
Ministerial Decision , which states that "[t]he CRO should report its work to the General Council ahead 
of the Thirteenth  Ministerial Conference " (G/RO/95 ). 
 
In addition, it also discharges the requirements of the 2013  (Bali) and 2015  (Nairobi) Ministerial 
Decisions on preferent ial rules of origin for least developed countries (LDCs) (WT/L/917  and 
WT/L/917/Add.1 , respectively) , which stipulate that the CRO " shall annually review the 
developments in preferential rules of origin applicable to imports from LDCs " and report to the 
General Council.  
 
1   INTRODUCTION  ................................ ................................ ................................ ..........  2 
2   TRANSPARENCY AND DATA AVAILABILITY (NOTIFICATIONS)  ................................ .... 2 
2.1   Preferential Rules of Origin  ................................ ................................ .........................  2 
2.2   Preferential Tariffs and Preferential Import Statistics  ................................ .......................  3 
3   RECENT DEVELOPMENTS REPORTED TO THE CRO  ................................ ........................  4 
4   IMPLEMENTATION OF THE BALI AND NAIROBI MINISTERIAL DECISIONS  ..................  4 
4.1   Requirements for the Assessment of Sufficient or Substantial Transformation  .....................  5 
4.1.1   Ad valorem  percentage Criterion  ................................ ................................ ...............  5 
4.1.2   Change of Tariff Classification Criterion  ................................ ................................ ...... 5 
4.1.3   Specific Working and Processing Criterion  ................................ ................................ ... 5 
4.2   Cumulatio n ................................ ................................ ................................ ...............  5 
5   DOCUMENTARY REQUIREMENTS  ................................ ................................ .................  6 
5.1   Proof of Origin  ................................ ................................ ................................ ...........  6 
5.2   Trade Facilitation Measures for Small Consignments  ................................ .......................  6 
5.3   Documentary Evidence of Direct Consignment  ................................ ...............................  6 
6   IMPACT OF PREFERENTIAL RULES OF ORIGIN ON PREFERENCE UTILIZATION:  
THE ANALYSIS OF PREFERENCE UTILIZATION RATES  ................................ ......................  7 
6.1   Linking Preference Utilization Rates and Preferential Rules of Origin  ................................ .. 7 
6.2   Modalities for the Calculation of Utilization Rates  ................................ ............................  7 
6.3   Preference Utilization by LDCs  ................................ ................................ .....................  8 
6.4   Factors Not Related to Rules of Origin Which Affect the Utilization of Trade Preferences  ....... 8 
6.5   Factors Related to Rules of Origin  ................................ ................................ ................  9 
7   WAY FORWARD  ................................ ................................ ................................ .........  10 G/RO/W/223  
 
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  8   REFERENCES TO DOCUMENTS CONSIDERED BY THE CRO (2013 -2023)  .....................  10 
ANNEX  1 ................................ ................................ ................................ ........................  11 
ANNEX  2 ................................ ................................ ................................ ........................  14 
ANNEX  3 ................................ ................................ ................................ ........................  15 
 
1  INTRODUCTION  
1.1.  This document reports on  the work conducted by the CRO from 2017 to October  2023 pursuant 
to the April  2022 "Decision on Preferential Rules  of Origin and the Implementation of the Nairobi 
Ministerial Decision" ( G/RO/95 ). This Decision was also acknowledged in the Outcome Document of 
the Twelfth  Ministerial Conference.1 
1.2.  This report describes progress in the different areas of work of the CRO  related to preferential 
rules of origin for LDCs . It highlights the main issues  discussed and the state of play reached on the 
main components of the work. When relevant, it indicates lessons learned and best practices on the 
use of preferential rules of origin, including from the point of view of LDCs. Finally, it provides 
guidance for the future work of the Committee to advance further in the identification of possible 
best practices and lessons learned.  
2  TRANSPARENCY AND DATA AVAILABILITY (NOTIFICATIONS)  
2.1.  The work of the CRO on preferential rules of origin requires access to two types of information:  
(i) Preferential rules of origin applied to  LDCs by preference -granting Members (rules of 
origin and the related administrative requirements); and  
 
(ii) preferential tariffs and preferential imports under preferential trade arrangements (or 
other preferential trade agreements ). 
 
2.1  Preferential Rules of Origin  
2.2.  The CRO has made substantial progress in terms of the availability of information regarding 
preferential rules of origin applied to LDCs in the context of non -reciprocal trade preferences. As 
required by paragraph  4.3 of the Nairobi  Ministerial Decision2, Members adopted a template in 2017 
for the notification of preferential rules of origin and  origin requirements (G/RO/84 ). A new document 
series was created for the circulation of these notifications (G/RO/LDC/N ). The template has been  
instrumental in making detailed and standardized information about Members' current practices  
available . In addition, it has allowed for the preparation of documents that describe, analyse , and 
compare the current practices of preference -granting Members.  
2.3.  All preference -granting Members  (except Armenia, Iceland,  and Morocco)  have notified the ir 
preferential rules of origin applied to LDCs under their non -reciprocal trade arrangements .3 
2.4.  In addition , Members took note of two  significant developments to access this information:  
(i) All notifications submitted  to the Secretariat are available on the WTO  Preferential Trade 
Arrangements database and in the WTO's three  official languages 
(http://ptadb.wto.org ); and 
(ii) all rules of origin and origin requirements notified were made available through the 
"Origin Facilitator" tool (https://findrulesoforigin.org ). The Facilitator is a free, publicly 
available online tool which allows users to retrieve most-favoured -nation ( MFN) and 
preferential tariff rates as well as requirements related to origin at the tariff -line level. 
 
1 Document  WT/MIN(22)/24 , paragraph  8. 
2 Paragraph  4.3 reads: " […] Furthermore, the CRO shall develop a template for the notification of 
preferential rules of origin, to enhance transparency and promote a better understanding of the rules of or igin 
applicable to imports from LDCs ". 
3 Document series G/RO/W/163  has been updated regularly to describe in detail these notifications.  G/RO/W/223  
 
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  The Facilitator is the result of a collaboration between the WTO  Secretariat, the 
International Trade Centre, and the World Customs Organization . 
2.5.  The Committee encourages all p reference -granting Members to ensure that their notifi cations 
are complete and up to date, including any Internet links.  
2.2  Preferential Tariffs and Preferential Import Statistics  
2.6.  MFN treatment,  preferential tariff rates , and preferential import statistics are needed to 
calculate the utilization rates of non -reciprocal LDC trade preferences. Tariff rates are needed to 
identify the existence of a preference ( that is, the fact that the tariff is above  zero on a n MFN basis). 
Information about preferential import statistics is used to calculate the proportion of imports that 
receive preferential treatment under at least one  preferential arrangement.  
2.7.  Members made significant progress in improving the availability of data on preferential tariffs 
and imports  in compliance with the Transparency Mechanism for PTAs  (WT/L/806 ). However, 
significant gaps remain in this area  that impact the ability of the Secretariat to conduct a 
comprehensive  analysis of current rates of preference utilization.  As of [September]  2023:4 
(i) Complete data5 is available for : [Australia; Canada; Chile (since 2014); China; 
European Union ; Iceland ; India (since  2015); Japan (since 2015); Republic of Korea ; 
Montenegro (since 2017) ; Switzerland (since 2012) ; Chinese Taipei ; Thailand (since 
2015); Türkiye ; United Kingdom (since 2020); and United States.  In addition, China 
and India advised at the June  2023 Committee meeting that they had liaised  with the 
Secretariat regarding the provision of enhanced datasets to the WTO's Integrated 
Database (IDB), which would facilitate more accurate analysis of  the uptake in the 
Generalized System of Preferences ( GSP preferences )]; and  
 
(ii) no data, or only partial information , is available for : [Armenia; Kazakhstan; Kyrgyz 
Republic; Morocco; New Zealand (tariffs only); Norway ; Russian Federation (tariffs 
only); and Tajikistan. ] 
 
2.8.  In addition, one  significant gap that has emerged concerns  the availability of information on 
imports entering under "other" preferential schemes , whether these be regional trade agreements, 
other preferential arrangements , or special national regimes which offer tariff concessions.6 In fact, 
before concluding that LDCs are not utilizing , or not fully utilizing , a preferential trade arrangement, 
it is first necessary to verify whether or not benefi ts are being received under other preferences that 
may be available. In the absence of such data, a full analysis of trade between LDCs and 
preference -granting Members , including on the impact of rules of origin on the utilization of 
preferences , is not po ssible. In this sense, Members currently are encouraged – but are not obliged – 
to notify to the WTO their preferential imports and tariffs under such schemes.7 
2.9.  The Committee encourage s all Members to consider the  details  of their IDB  notifications  and 
to improve them where possible . The Secretariat shall, upon request, provide technical assistance 
in relation to the submission of the data required for the IDB.8 
 
4 Document series G/RO/W/163  has been updated regularly to describe in detail these notifications  [to 
be updated in light of developments by 15  September].  
5 Data is available for all Members since 2010 unless otherwise indicated.  
6 Tariff concessions include any special programme which allow imports of certain go ods to be 
temporarily or permanently exempt from the "normal" import duty. They may be implemented for social, 
humanitarian , economic  or industry assistance purposes . Typical concessionary regimes include imports into 
free trade zones and d uty drawback for  manufacturing exporters . 
7 See paragraph  2 of the IDB  Decision "Modalities and operation of the Integrated Database (IDB) " 
(G/MA/367 ). 
8 Members may contact the Secretariat through the following email address: idb@wto.org . See 
document  G/MA/367 , paragraph  12, 23 -254 on technical assistance . G/RO/W/223  
 
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  3  RECENT DEVELOPMENTS REPORTED TO THE CRO  
3.1.  A number of developments relating to preferential rules  of origin and related administrative 
requirements have been  reported to the Committee since 2017, including the following:  
(i) Thailand initiated stakeholder consultations with a view to extending the duration of its 
preferential trade arrangement  for LDCs. The consultation would also aim at expanding 
the coverage of eligible products and improving the rules of origin ( G/RO/77 ; G/RO/91 ); 
 
(ii) China introduce d a series of improvements , including new cumulation options ( bilateral 
and regional cumulation ). The government also implemented  simplified documentary 
requirements for country -of-origin certification , allowing for the use of an importer's 
declaration based on any advance origin ruling issued by the customs administration of 
China. A de minimis value for low -value shipments (not more than CNY 6,000) was  also 
introduced  for which  no certification was required. Finally, a system of electronic 
certification was rolled out to further simplify certification procedures ( G/RO/77 ; 
G/RO/85 ); 
 
(iii) Australia  reported that it had initiated a comprehensive review p rocess of its GSP, 
including the applicable preferential rules of origin  (paragraphs  4.1 to 4.7 of 
G/RO/M/67 ; G/RO/85 ); 
 
(iv) Japan informed Members about the s implification of preferential rules of origin for 
knitted apparel of HS Chapter  61 (G/RO/77 ; G/RO/81 ; G/RO/85 ); 
 
(v) the European Union  (EU) updated the Committee  on several occasions on the 
introduction of its Registered Exporter System (REX System)  for self -certification 
(G/RO/79 ; G/RO/94 ). The REX System is also being utilized for imports to Norway  
(G/RO/85 ), Switzerland and Türkiye  (G/RO/87 ); 
 
(vi) Iceland reported that  new legislation governing non-reciprocal preferences for LDCs was  
being prepared  and would be notified in due course (G/RO/89 ); 
 
(vii) the Russian Federation highlighted the key elements of its revised preferential rules of 
origin for LDCs being implemented under the Eurasian  Economic Union (EAEU)'s 
Common System of Tariff Preferences , which had entered into force in January  2019. 
The new rules are based on a calculation of the value of non -originating materials  
(G/RO/91 ); 
 
(viii) the United Kingdom updated Members on the continuation of its trade preferences for 
LDCs during the transition period until 31  December  2020 and after its withdrawal from 
the European Union ( G/RO/91 ). The UK also in formed Members about its Developing 
Countries Trading Scheme (DCTS) and the revised rules of origin to be implemented 
under it . The new rules simplified product -specific rule s, introduced cumulat ion with up 
to 95  other eligible Members , and introduc ed the possibility of deduct ing freight and 
insurance costs from the calculation of the value of non -originating - materials  
(G/RO/97 ); 
 
(ix) Canada introduced changes to allow additional apparel products to qualify for duty -free 
treatment when imported into Canada in 2017 ( G/RO/82 ); and 
 
(x) Norway expanded cumulation possibilities in 2017 by introducing cumulation among 
LDCs after an inte r-ministerial working group had examined the Norwegian GSP  scheme 
in light of the Nairobi Ministerial Decision.  (G/RO/85 ). 
 
4  IMPLEMENTATION OF THE BALI AND NAIROBI MINISTERIAL DECISIONS  
4.1.  Different submissions of the LDC Group compared the existing practices of preference -granting 
Members with the relevant paragraphs of the Nairobi Decision in order to highlight the aspec ts that, 
in the view of the LDC Group , need ed to be reform ed (Annex 3 contains a full list of such 
submissions) . However, v iews about the status of implementation of the Nairobi Decision often 
diverged  among the LDC Group and preference -granting Members . G/RO/W/223  
 
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  4.1  Requirements for the Assessment of Sufficient or Substantial Transformation  
4.1.1   Ad valorem  percentage Criterion  
4.2.  Different submissions by the LDC  Group have analysed preference -granting Members' practices  
in light of  the relevant paragraphs of the Nairobi Ministerial Decision , and have highlighted the 
follow ing: 
(i) The LDC  Group reiterated the Group's preference , and the Nairobi Ministerial Decision's 
recommendation , for a method of calculation based on the ex -works price or free  on 
board (f.o.b. ) value of non -originating materials. Non -originating materials should be 
allowed up to 75% of the final value of goods;  
 
(ii) all preference -granting Members (except Australia, New Zealand, and the United 
States) whose rules were based on the ad valorem  percentage criterion already use a 
method of calculation based on the value of non -originating materials;  
 
(iii) currently , only Canada and the United Kingdom meet the threshold of 75% of the value 
of non -originating materials;  and 
 
(iv) currently , only the United Kingdom explicitly allows for the deduction of the costs of 
freight and insurance from the value of non -originating materials. Other 
preference -granting Members do not have such an allowance , or their rules were unclear 
in this respect.  
 
4.3.  Some preference -granting Members  objected to such proposals stating that their present rules 
of origin already comply with the Nairobi Decision.  
4.1.2   Change of Tariff Classification Criterion  
4.4.  Submissions by the LDC  Group also analysed preference -granting Members' practices related 
to the use of rules of origin based on the change of tariff classification (CTC) criterion. The LDC Group 
focused on the rules used by the European Union,  Japan , Norway , and Switzerland , and noted the 
follow ing: 
(i) The LDC  Group reiterated the Group's preference for the parameters contained in the 
Nairobi Ministerial Decision in this area, most notably, the elimination of exclusions and 
restrictions associated with CTC  rules and the elimination of rules which impose a 
combination of two or more criteria for the same product;  
 
(ii) according to the LDC  Group, exclusions and restrictions continue to be widespread and 
in most cases are not justifiable. Such rules are often also stricter than the rules of 
origin which have been agreed to in the context of free trade agreements ; and 
 
(iii) the LDC Group circulated a list of product -specific rules used by Japan which, in its view , 
should be reformed ( G/RO/W/209 ). Following this submission, bilateral consultation s 
took place between the LDC  Group and Japan in 2019 . No further progress has been  
reported to the CRO and, according to the LDC  Group,  the points raised about the 
complexity of rules of origin in Japan still needed to be addressed.  
 
4.1.3   Specific Working and Processing  Criterion  
4.5.  The LDC  Group has noted in differen t submissions that this criterion could be usefully used for 
textiles and clothing provided that it reflects a single transformation requirement ( for example, 
"manufacture from fabric" for items of HS  Chapter  62, as applied by the European Union and Japan) . 
The same criterion could be used for HS  Chapters  28 to 30 ( namely, " chemical reaction").  
4.2  Cumulation  
4.6.  The LDC  Group pointed out that cumulation possibilities can provide important flexibility. 
However, cumulation possibilities should not be a substitute fo r simple and liberal rules of origin , G/RO/W/223  
 
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  since cumulation is often associated with a series of administrative procedures and conditions. In 
this sense, the general and product -specific rules of origin had to be considered together with 
cumulation for a full a ppraisal of the leniency or stringency of the rules.  
4.7.  In this respect, the LDC  Group noted difficulties related to the use of cumulation by Cambodia 
under the European Union's GSP (G/RO/W/220 ). The submission raised important cross -cutting 
issues concerning cumulation, the procedures attached to cumulation , and the graduation of LDC s 
and neighbouring countries in the same regional group. The submission shared lessons learned and 
best practices that preference -giving Members could adopt (i)  to facilitate compliance with origin 
requirements ; (ii) to mitigate any adverse effects arising from graduation by facilitating cum ulation 
procedures ; and (iii)  to maintain regional value chains, as implicitly recommended by paragraph  2 
of the Nairobi Decision on cumulation.  
4.8.  The submission described the complex and lengthy procedures to request extended cumulation 
in the European Unio n, noting that, since December  2022, when the application had been lodged, 
there had not been a formal response from the EU. The submission also highlighted that Canada 
had provided examples of best practices in addressing similar challenges , and explained  that 
ACP countries participating in an economic partnership agreement s (EPAs) with the EU could be 
facing similar difficulties in deriving the benefits of cumulation. The EU explained that the matter 
would be further discussed with Cambodia.  
5  DOCUMENTARY R EQUIREMENTS  
5.1  Proof of Origin  
5.1.  The Nairobi Ministerial Decision recognizes self -certification as a useful trade facilitating 
practice . In that context, the LDC  Group noted that the European Union , Norway,  and Switzerland 
had introduced self -certification under the Registered Exporter System (REX). The Canadian GSP 
and the US  AGOA also provide d for self -certification , while Japan allowed for self -certification of 
origin in certain instances. The LDC  Group requested  the delegations of Chile; China; India; the 
Republic of Korea; the Russian Federation; Chinese  Taipei ; and Thailand to introduce 
self-certification as an option for certain goods.  
5.2  Trade Facilitation Measures for Small Consignment s 
5.2.  The issue of " minimizing  documentation requirements f or small consignments" has not yet 
been discussed in the Committee.  
5.3  Documentary Evidence of Direct Consignment  
5.3.  The LDC  Group noted in certain submissions that documentary evidence related to direct 
consignment could constitute an obstacle for certain LDCs, especially landlocked and island LDCs. 
In this respect, the LDC  Group noted that most preference -granting Members require d documentary 
evidence of non -manipulation in case of transit (either a through -bill of lading or a certificate of 
non-manipulation). In this sense, the LDC  Group noted that the "non -alteration" rule introduced by 
the European Union could constitute a best practice in this area. Under th e EU's new regime,  the 
non-manipulation (non -alteration principle) clause shall be considered satisfied a priori unless 
customs  administrations have a doubt about the goods ( G/RO/W/191 ). 
5.4.  The LDC submission concluded that the non -alteration principle provision introduced by the 
European Union, or similar arrangements, such as those adopted by Australia and New Zealand , 
constitut ed a best practice that other preference -giving Members should progressively adopt . G/RO/W/223  
 
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  6  IMPACT OF PREFERENTIAL RULES OF ORIGIN ON PREFERENCE UTILIZATION: THE 
ANALYSIS  OF PREFERENCE UTILIZATION RATES  
6.1.  Further to paragraph  4.3 of the Nairobi Ministerial Decision9, Members have : 
(i) Agreed to modalities for the calculation of utilization rates; and  
 
(ii) considered several notes describing patterns of utilization of trade preferences by LDCs.  
 
6.1  Linking Preference Utilization Rates and Preferential Rules of Origin  
6.2.  Preference utilization rates are a useful marker to examine the impact of origin -related 
requirements. In fact, customs will only grant preferential treatment to goods which are deemed to 
"originate" in the beneficiary country. In practice, a good must simultaneously satisfy 
three  requirements:  
(i) A good must be wholly obtained in the beneficiary country or comply with minimum 
substantial transformation requirements (that is, satisfy general or product -specific 
rules of origin);  
 
(ii) a good must demonstrate compliance with such requirements by being accompanied by 
the prescribed proof of origin ( namely,  a certificate of origin delivered by a designated 
competent authority or certifying body , or a self -declaration of origin); and  
 
(iii) a good must in principle be directly consigned from the beneficiary country to the 
preference -granting country to avoid any risks of further manipulation in third or transit 
countries or, in case of transit, goods must satisfy the prescriptions in relation to 
documentary evidence about non -manipulation (or non -alternation) in transit.  
 
6.3.  If a preference is fully utilized (that is, a utilization rate of 100%), it necessarily  indicates that 
these three  requirements have been simultaneously met , and therefore that origin requirements did 
not hinder the utilization of the preference.  
6.4.  To the contrary, low preference utilization rates could indicate that these requirements are too 
demanding or too costly , and that in certain cases they cannot be met . Therefore, the calculation 
and monitoring of preference utilization rates offer a useful means by which to examine the extent 
to which rules of origin are facilitating market access for LDCs while allowing for the full use of the 
preferences available to  them. 
6.2  Modalities for the Calculation of Utilization Rates 
6.5.  First, regarding the methodology for the calculation of utilization rates, the Secretariat had 
proposed to use the following formula based on the discussion in G/RO/W/161 , namely the 
modalities of calculation agreed by the CRO : 
𝑝𝑢𝑟𝑖𝑣𝑎𝑙𝑢𝑒=∑∑𝑃𝑇𝐴𝑗,𝑝𝑟𝑒𝑝𝑜𝑟𝑡𝑒𝑑
𝑝 𝑗
∑∑𝑃𝑇𝐴𝑗,𝑝𝑒𝑙𝑖𝑔𝑖𝑏𝑙𝑒
𝑝 𝑗 
𝑝𝑢𝑟𝑖,𝑝𝑣𝑎𝑙𝑢𝑒: PREFERENCE UTILIZATION RATE (per cent) based on import value  by preference granting Member  
where:  i 
j = preference granting Member  
= preference receiving Member  
 p = product  
 PTAreported = imports reported to have taken place under the PTA preferential duty scheme  
 PTAeligible = imports under any eligible tariff line, i.e. preferential duty < MFN duty rate.  
 
6.6.  More recently, the notes of the Secretariat have reflected a change of focus from "utilization" 
to "non -utilization" or  "underutilization" instead. The methodology and data needs are identical, but, 
in the view of the Secretariat, the results allow for a more comprehensive analysis of the factors 
that define trade between LDCs and preference -granting Members. Underutilizat ion rates reflect the 
 
9 Paragraph  4.3 reads: "[…] Members reaffirm their commitment to annually provide import data to the 
Secretariat as referred to Annex  1 of the PTA  Transparency Mechanism, on  the basis of which the Secretariat 
can calculate utilization rates, in accordance with modalities to be agreed upon by the CRO".  G/RO/W/223  
 
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  proportion of imports which pay MFN  duties despite being eligible for at least one  trade preference 
programme  as reflected in the following formula :10 
𝑝𝑢𝑟𝑖𝑣𝑎𝑙𝑢𝑒=∑∑𝑀𝐹𝑁𝑗,𝑝𝑝𝑟𝑒𝑓  𝑒𝑙𝑖𝑔𝑖𝑏𝑙𝑒
𝑝 𝑗
∑∑𝑃𝑇𝐴𝑗,𝑝𝑒𝑙𝑖𝑔𝑖𝑏𝑙𝑒
𝑝 𝑗 
𝑝𝑢𝑢𝑟𝑖,𝑝𝑣𝑎𝑙𝑢𝑒: PREFERENCE UNDERUTILIZATION RATE (per cent) based on import value  by preference granting 
Member  
where:  i 
j = preference granting Member  
= preference receiving Member  
 p = product  
 MFNpref eligible = imports under any preference eligible tariff line, i.e. , preferential duty < MFN 
duty rate , but are imported under the Most-Favoured -Nation (MFN) tariff 
 PTAeligible = imports under any eligible tariff line, i.e.  preferential duty < MFN duty rate.  
 
6.3  Preference U tilization by LDCs  
6.7.  Different notes by the Secretariat and by the LDC  Group and other delegations have reported 
on preference utilization rates and assessed the relevant implications (see Annex  1 and 2). In  
addition, the following events were organized which explored the factors that influence the utilization 
of trade preferences, including rules of origin:  
(i) A first  Webinar  organized by the Secretariat 2021 "What drives the utilization of trade 
preferences";  
 
(ii) a second , follow -up Webinar organized by the Secretariat in 2022  on "What drives the 
utilization of trade preferences";  and 
 
(iii) a webinar  organized by the delegation of the United States during the 8th WTO Aid for 
Trade Review on "How can exporting countries improve utilization of US  Trade 
Preference Programs?"  
 
6.8.  The examination of import statistics  for the 2015-2019 period confirms that utilization of 
preference s can be improved in all prefere ntial arrangements . It also confirms that utilization rates 
vary significantly across different prefere nce-granting Members. Even in cases of overall high levels 
of utilization, there might also be "pockets" of non -utilization in certain sectors , and some 
preferential arrangements show a low or very low level of utilization.  
6.9.  In addition, preference utilization rates show significant annual variations, which confirms the 
benefits of examining multiple years to identify structural patterns and trends . Strong variation s 
could also be an indication that the utilization of preferen ces is influenced by trade values . 
6.10.  While the discussions  in the CRO  were useful to better understand  the impact of rules of origin 
on pr eference utilization, they also highlighted various limitations in the data that require the 
Committee 's further conside ration. In many cases , the relevant preference -granting Member 
identified discrepancies between the analys es and their own internal research , while in certain other 
cases, temporary tariffs and other factors not available to the Secretariat were identified  as limiting 
the scope of the analysis.  
6.4  Factors Not Related to Rules of Origin Which Affect the Utilization of Trade 
Preferences  
6.11.  The Secretariat has indicated in its notes that additional factors, not related to rules of origin, 
may help explain low rates of preference utilization, including:  
(i) The existence of several competing preferential schemes or the availability of other tariff 
concessions (for example, Australia grants trade preferences to Cambodia both under 
the "Australian System of Tariff Prefe rences" (ASTP) and under the 
ASEAN -Australia -New Zealand Free Trade Agreement (AANZFTA). As a result, low 
preference utilization under one  scheme does not necessarily indicate problems related 
 
10 G/RO/W/161/Rev.1 [to be issued] . G/RO/W/223  
 
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  to origin requirements in a specific scheme , and could rather simply reflect that trade 
is being channelled through multiple schemes);  and 
 
(ii) economic operators may not be aware of the availability of preferences or may  simply  
choose not to claim any preferential benefits, including because they perceive these 
benefits to be insignificant ( such as a tariff margin that is too small) or because they 
perceive compliance costs to be too high ( for example, the time or documentation 
needed to obtain a certificate of origin is too long , or the costs of c onsigning goods 
directly are too high).  
 
6.5  Factors Related to Rules of Origin  
6.12.  Different submissions of the LDC Group and notes prepared by the Secretariat have explored 
the linkages between rules of origin and origin -related administrative requirements and t he 
utilization of trade preferences. This link is complex and preference utilization rates do not always 
allow for clear -cut conclusions. The  following points could be noted  in this regard : 
(i) The under or non -utilization of preferences is common in many  sectors , including 
sectors for which simple rules of origin apply, such as agricultural goods or minerals 
(that is, wholly obtained products). The LDC  Group pointed to  low utilization rates in 
the case of the preferences of China's and India. Low utilizati on rates affected a wide 
range of tariff lines, from raw materials, natural products, and agricultural products , to 
garments and other industrial products. The analysis showed zero  utilization, especially 
for certain African LDC s. The delegation of China o bjected to these findings , explaining 
that benefits under other preferences or duty relief schemes could explain the low 
utilization of China's LDC  preferences. China's response emphasized the need for the 
notification of a correct and complete dataset. The LDC  Group called on China and India 
to provide the WTO  Secretariat with an appropriate and complete set of data ; 
 
(ii) the utilization of trade preferences also varies greatly from one LDC to another. Going 
forward, a better understanding of these differences – and particularly the case of LDCs 
who managed to improve their utilization rates , such as Afghanistan or Rwanda – could  
yield useful insights about the mechanics behind better preference utilization ; 
 
(iii) there might be a "learning by doing effect" in the case of at least one  PTA-LDC (Chile). 
It would be useful to better understand any strategies  that were implemented to 
increase awareness of, and compliance with , preferential origin requirements;  
 
(iv) direct consignment obligations seem to have a significant impact on the ability of LDCs 
to utilize their available trade preferences. L andlocked LDCs find it more difficult to 
benefit from trade preferences. In fact, the analysis shows that there is a significant ly 
lower  utilization of preferences in the case of landlocked LDCs . In a detailed analysis of 
utilization rates for Switzerland , the LDC  Group  identified large pockets of 
underutilization. Bilateral consultation s between Switzerland and the LDC  Group helpe d 
to identify reasons linked to the direct consignment requirement. However, reforms to 
facilitate LDC compliance with this requirement , and to contribute to a higher utilization 
of the Swiss preferences , have not yet been reported to the CRO ; 
 
(v) the modalities concerning proofs of origin also seem to have a significant impact on the 
ability of LDCs to utilize trade preferences. Self-certification is associated, in general, 
with better preference utilization. Nevertheless, these findings need to be  interpreted 
with caution given limitations in the methodology and data , as well as the difficulties in 
isolating the impact on origin certification of other factors;  and 
 
(vi) better preference utilization also require s trade facilitation  reforms in beneficiary LDCs, 
in particular to promote trade preferences among economic operators , and facilitate and 
simplify the administrative procedures for the application and delivery of certificates of 
origin.  
 
6.13.  Going forward, some  preference -granting Members have noted that it would be useful for 
preference -granting Members and beneficiary LDCs to strengthen their cooperation for the G/RO/W/223  
 
- 10 - 
 
  calculation of utilization rates , and to strive together to improve the accuracy of the relevant 
research.  
6.14.  In relation to the utilization of trade preferences, Members also took note of the launch by 
UNCTAD of the online platform " Database on Generalized System of Trade Preferences Utilization ". 
This tool provides information on the utilization of the GSP  schemes , as well as other trade 
preferences  granted to developing countries and LDCs by Canada, the European Union, Japan,  and 
the United States . 
7  WAY FORWARD  
7.1.  [Members reaffirm their commitment and shared responsibility to achieving the objective of 
implementing preferential rules of origin for LDCs  that are simple and transparent and that contribute 
to facilitating market access. Members agree to continue their work in the CRO, and in particular:  
(i) Continue an examination of substantive aspects of the preferential rules of origin used 
by preference -granting Members in light of the provisions of the Bali and Nairobi 
Ministerial Decisions;  
 
(ii) identify , as appropriate, lessons learned and best practices to design and administer 
rules of origin;  
 
(iii) preference -granting Members shall revi ew their legislation in light of the provisions of 
the Nairobi Ministerial Decision and any agreed best practices and report on any 
developments to the CRO. Members that are not in a position to align their legislation 
with such provisions and best practic es shall submit the reasons for such 
non-alignment;  
 
(iv) the Committee shall continue to report on the progress made in implementing the 
Ministerial Decisions and any recommendations to the General Council ; and 
 
(v) in the context of the efforts made to i mprove the functioning of the CRO , it is 
recommended that the CRO may be provided with funds from the technical assistance 
budget of the WTO to carry out research on identifying specific difficulties encountered 
by LDC s in meeting rules of origin and relat ed administrative requirements. ] 
 
8  REFERENCES TO DOCUMENTS CONSIDERED BY THE CRO (2013 -2023)  
Annex  1 contains a list of documents submitted by delegations . Annex  2 contains the list of 
background notes prepared by the WTO  Secretariat . Annex  3 contains the l ist of annual reports from 
the CRO to the General Council on preferential rules of origin for LDCs since 2013.  
 
_______________  
  
  G/RO/W/223  
 
- 11 - ANNEX  1 
DOCUMENTS CONCERNING PREFERENTIAL RULES OF ORIGIN FOR LDCS  
List of Documents Submitted by the LDC  Group on Preferential Rules of Origin for LDCs  (2013-2023) 
Document Symbol  Title Member  Date of 
Discussion  
G/RO/W/148  Challenges Faced by LDCs in Complying with Preferential Rules of Origin under 
Unilateral Preference Schemes  LDC Group  November  2015 
G/RO/W/154  Elements for a Discussion on Preferential Rules of Origin for LDCs  LDC Group  April 2015 
G/RO/W/159  Implementation of the Ministerial Decisions on Preferential Rules of Origin for Least 
Developed Countries  LDC Group  April 2016 
G/RO/W/169  Possible Agenda Items for a Dedicated Session of the CRO  Meeting on Preferential 
Rules of Origin for LDCs  LDC Group  October  2017 
RD/RO/52  Developments Regarding Methods of Calculation of the Percentage Criterion 
(Paragraph  1.1 of the Nairobi Decision)  Tanzania and Lao  PDR (on behalf of 
the LDC  Group)  October  2017 
RD/RO/53  Developments Regarding Methods using a Change of Tariff Classification Criterion to 
Determine Substantial Tr ansformation (Paragraph  1.2 of the Nairobi Decision)  Benin (on behalf of the LDC  Group)  October  2017 
RD/RO/54  Developments Regarding Methods using a Specific Manufacturing or Processing 
Operation Criterion to Determine Substantial Transformation ( Paragraph  1.3 of the 
Nairobi Decision ) Myanmar (on behalf of the 
LDC Group)  October  2017 
RD/RO/55  Developments Regarding Methods using a Combination of Requirements to 
Determine Substantial Transformation ( Paragraphs  1.4 and 1.5 of the Nairobi 
Decision)  Tanzania (on behalf of the 
LDC Group)  October  2017 
RD/RO/56  Developments Regarding Cumulation Provisions (Paragraphs  2.1 and 2.2 of the 
Nairobi Decision)  Cambodia (on behalf of the 
LDC Group)  October  2017 
RD/RO/57  Developments Regarding Documentary Requirements (Parag raph 3 of the Nairobi 
Decision)  Nepal (on behalf of the LDC  Group)  October  2017 
RD/RO/58  Utilization Rates under Preferential Trade Arrangements for Least Developed 
Countries  Yemen (on behalf of th e LDC  Group)  October  2017  
  G/RO/W/223  
 
- 12 - Document Symbol  Title Member  Date of 
Discussion  
G/RO/W/174  Implementation of the Nairobi Ministerial Decision on Preferential Rules of Origin for 
LDCs LDC Group  April 2018 
RD/RO/73  Identifying Low Utilization of Trade Preferences Due to the Stringency of Rules of 
Origin: New Evidence  Tanzania (on behalf of the 
LDC Group)  October  2018 
G/RO/W/184  and Rev.1  
RD/RO/79  (presentation)  Rules of Origin Based on  a Change of the Tariff Classification Criterion  LDC Group  
Tanzania (on behalf of the 
LDC Group) May 2019 
G/RO/W/186  and 
RD/RO/80  (presentation)  Further Evidence from Utilization Rates  LDC Group  
Bangladesh (on behalf of the 
LDC Group)  May 2019 
G/RO/W/191  and 
RD/RO/82  (presentation)  Direct Consignment Rules and Low Utilization of Trade Preferences  Cambodia (on behalf of the 
LDC Group)  October  2019 
G/RO/W/192  and 
RD/RO/84  (presentation)  Further Evidence from Utilization Rates: Utilization by LDCs of China's Preference  LDC Group  
Tanzania (on behalf of the 
LDC Group)  October  2019 
RD/RO/87  Fifth Anniversary of the Nairobi Ministerial Decision: Review of Implementation, 
Identification of Gaps and the Way Forward  Yemen and Cambodia (on behalf of 
the LDC  Group)  March  2020 
G/RO/W/202  and 
RD/RO/91  Submission of the LDC  Group t o the Committee on Rules of Origin Ad Valorem  
Criterion  (Paragraph  1.1 of the Nairobi Decision)  LDC Group  
Tanzania and Afghanistan (on behalf 
of the LDC  Group)  November  2020 
G/RO/W/198  Submission of Chad on Behalf of the LDC Group on Preferential Rules of Origin for 
Least Developed Countries  LDC Group  November  2020 
G/RO/W/209  Further Submission on Rules of Origin Based on a Change of Tariff Classification: 
The Case  of Rules of Origin used by Japan  LDC Group  October  2021 
G/RO/W/210  Taking Note of the Implementation of the Bali and Nairobi Ministerial Decisions at 
MC12 LDC Group  October  2021 
G/RO/W/211  Examination of Existing Origin -Related Documentary Requirements (Paragraph  1.8 
of the Bali Decision and Paragraph  3.1 of the Nairobi Decision)  LDC Group  April 2022 
G/RO/W/216  Preliminary Examination of Proposed New Rules of Origin under the UK Developing 
Countries Trading Scheme ( DCTS ) LDC Group  October  2022 
G/RO/W/220  The Impact of GSP  Graduation on LDCs and Cumulation  – The Case of Cambodia  Cambodia  June 2023  
  G/RO/W/223  
 
- 13 - Document Symbol  Title Member  Date of 
Discussion  
G/RO/W/222  and 
RD/RO/102  (presentation)  Further Evidence from Utilization Rates Utilization by LDCs of China and India's 
Preference  LDC Group  
Senegal (on behalf of the LDC  Group)  June 2023 
RD/RO/103  Alternative Methods of Assessing Utilization of Preferential Rules of Origin of LDCs  China  June 2023 
 
_______________  
 
 
   
  G/RO/W/223  
 
- 14 - ANNEX  2 
LIST OF BACKGROUND NOTES PREPARED BY THE SECRETARIAT ON PREFERENTIAL RULES OF ORIGIN FOR LDCS  (2013-2023) 
Document Symbol  Title Date  
G/RO/W/161  [and Rev.1 to be 
issued]  Modalities for the Calculation of "Preference Utilization"  25 August  2016 
G/RO/W/168/Rev.1  Utilization Rates under Preferential Trade Arrangements for Least Developed Countries under the LDC Duty 
Scheme  4 October  2017 
G/RO/W/178  Preferential Rules of Origin for Least -Developed Countries Rules of Origin Based on the Criterion of Change of 
Tariff Classification  15 October  2018 
RD/RO/W/179  Utilization Rates under Preferential Trade Arrangements for Least Developed Countries under the LDC Duty 
Scheme 15 October  2018 
G/RO/W/185  Utilization Rates under Preferential Trade Arrangements for Least Developed Countries Under the LDC Duty 
Scheme  9 May 2019 
G/RO/W/187/Rev.1  and 
RD/RO/81  (presentation)  Impact of Direct Consignment Requirements on Preference Utilization by LDCs  17 October  2019 
G/RO/W/203  and 
RD/RO/89  (presentation)  Calculation of Utilization Rates under Preferential  Duty Schemes for Least Developed Countries: The Case of 
Minerals and Metals  13 November  2020 
G/RO/W/204  and 
RD/RO/94  (presentation)  Utilization of Trade Preferences by Least Developed Countries: 2015 -2019 Patterns and Trends  7 May 2021 
G/RO/W/212  and 
RD/RO/99  (presentation)  Certification of Origin and the Utilization of Trad e Preferences by Least Developed Countries  6 June 2023 
 
_______________  
 
 
 G/RO/W/223  
 
- 15 - 
 
  ANNEX  3 
LIST OF REPORTS TO THE GENERAL COUNCIL ON PREFERENTIAL RULES OF ORIGIN FOR LDCS  
Year  Annual Reports to the General Council  
Draft  Adopted  
2014 - G/RO/76  
2015 G/RO/W/156  G/RO/77  
2016 G/RO/W/164/Rev.2  G/RO/79  
2017 G/RO/W/173  G/RO/85  
2018 G/RO/W/180  G/RO/87  
2019 G/RO/W/188/Rev.1  G/RO/89  
2020 G/RO/W/201  G/RO/91  
2021 G/RO/W/207  G/RO/94  
2022 G/RO/W/213/Rev.1  G/RO/97  
2023 [To be issued]  [To be issued]  
 
__________  