. /.WORLD TRADE
ORGANIZATIONG/RO/33
2 March 1999
(99-0799)
Committee on Rules of Origin
PROGRESS REPORT OF THE COMMITTEE ON RULES OF ORIGIN TO
THE COUNCIL FOR TRADE IN GOODS ON THE STATUS OF
THE HARMONIZATION WORK PROGRAMME
1. One of  the objectives of the Agreement on Rules of Origin is to harmonize non-preferential
rules of origin.  The Harmonization Work Programme (HWP), which was launched on 20 July 1995,
was scheduled for completion, pursuant to Article 9.2 (a) of the Agreement, within three years of its
initiation, i.e. by 20 July 1998. However, while the Committee on Rules of Origin in Geneva (CRO)and the Technical Committee on Rules of Origin in Brussels (TCRO) – the body responsible for the
technical aspects of the work - made substantial progress in the HWP during this three-year period,
the work, due to the complexity of issues, has not been completed as scheduled.  While recognizing
that the CRO was mandated to complete the HWP within three years of its initiation and the
importance of concluding its Work Programme forthwith so as to provide more certainty in theconduct of world trade and to ensure that rules of origin do not themselves create restrictive, distorting
or disruptive effects on international trade, the Council for Trade in Goods (CTG) and the General
Council, in July 1998, approved the recommendations of the CRO that it, in cooperation with the
TCRO, should continue the work identified in Articles 9.2(c) and 9.3 of the Agreement;  that
Members commit themselves to make their best endeavour to complete the HWP by November 1999;that the TCRO shall submit the final result of its work to the CRO by the end of May 1999 for final
consideration by the CRO;  that the CRO shall report to the CTG on the progress of work in February,
June and October 1999; and that in June 1999 the CRO shall review the status of the HWP and make
a recommendation on a deadline for completing that work (see document G/RO/25).  This progress
report is made in this context.
2. Since its meeting in July 1998, the CRO has held three formal meetings, in October and
November 1998 and February 1999, and endorsed about 270 Basket 1 Decisions, i.e. the product-
specific rules of origin on which consensus has been reached by the TCRO. The CRO confirmed that
these basket 1 items should not be reopened at the level of the CRO, keeping in mind however that, in
accordance with Article 9.3(b) of the Agreement, th e CRO would finally consider the results of the
Harmonization Work Programme (HWP) in terms of their overall coherence.  The total number ofproduct-specific rules submitted by the TCRO and e ndorsed by the CRO since the start of the HWP
amounts now to about 1750 at the level of HS subhe adings (the total number of HS subheadings is
5113).
3. As agreed in July 1998 by the CRO (see G/RO /25, para. 5), the TCRO discussed the overall
architecture of the harmonized rules of origin at its two sessions in October and December 1998.
Measurable progress has been made, particularly in respect of the general rules.  Nevertheless, the
TCRO was unable to complete the work, as scheduled.  The main reason for this delay is a divergence
of views over the method of application for the primary rules.  The question concerns whether a
primary rule applicable to a good is to be applied with respect to any country in which it might havebeen satisfied or with respect only to the country in which a good underwent final processing;  in
other words, when the search for an origin ou tcome for a good under the primary rules has been
exhausted, and consequently when the application of residual rules is triggered.  The TCROG/RO/33
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concluded that underlying the differences in approach, notwithstanding the technical character of the
debate, were differing trade policy objectives.   Thus, having exhausted the technical debate, this
matter was submitted to the CRO, with a request for expedited consideration.  The TCRO is of the
view that the resolution of this issue will have a critical bearing upon its ability to conclude the work
on overall architecture and on the substance of the residual rules (see G/RO/29, 30 and 32).  CROMembers agreed that the issue required further discussion, including bilaterally between delegations,
and expeditious resolution.
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