   
  
G/RO/W/223/Rev.1  
 
6 November  2023 
(23-7462) Page: 1/14 
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  
Revision  
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 the "CRO should report its work to the General Council ahead 
of the Thirteenth  Ministerial Conference " (G/RO/95 ). 
 
In additi on, it also discharges the requirements of the 2013  (Bali) and 2015  (Nairobi) Ministerial 
Decisions on preferential 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   Cumulation  ................................ ................................ ................................ .............  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  ................................ ................................ ...................  7 
6.4   Discussion on different factors that could affect the Utilization of Trade Preferences  ............  8 
7   [NEXT STEPS/CONCLUSION]  ................................ ................................ ...................  9 G/RO/W/223/Re v.1 
 
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  8   REFERENCES TO DOCUMENTS CONSIDERED BY THE CRO (2013 -2023)  ......................  9 
ANNEX  1 ................................ ................................ ................................ ....................  10 
ANNEX  2 ................................ ................................ ................................ ....................  12 
ANNEX  3 ................................ ................................ ................................ ....................  13 
ANNEX  4 ................................ ................................ ................................ ....................  14 
 
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 ), [ALT ( EU): which responded to the proposal of the LDC Group to 
strengthen the discussion on preferential rules of origin1]. This Decision was also acknowledged in 
the Outcome Document of the Twelfth  Ministerial Conference.2 [ALT (LDCs)  In particular this 
docum ent reports the different views and content of the debates between the LDC WTO group and 
the preference giving members on the implementation of the Nairobi decision  during  the 
above -mentioned period.These  different views extend to the rationale of this report.On one hand, 
the WTO LDC group believes that the rationale for this report stems from their proposal  to strengthen 
the mandate of the CRO made at the Fifth anniversary to address an imbalance between the efforts 
deployed between LDC and PGM on the contributions to the debate on the implementation of the 
Nairobi Decision ,on the other hand, the PGM are of the view that the mandate for this report arises 
from MC12 and in particular the CRO decision ( G/RO/95 )]. 
1.2.  Against  this background, t his 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 rele vant, it indicates lessons 
learned and  [discusses practices /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 i dentification 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 the following  types of 
information:  
(i) Preferential rules of origin applied to  LDCs by preference -granting Members (rules of origin 
and the related administrative requirements ).  
(ii) Preferential tariffs and preferential imports under preferential trade arrangements (or other 
preferential trade agreements ); and 
(iii) Information about the procedures for the request and delivery of certificates of origin  applied 
by LDC beneficiaries.  
 
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 Decision3, Members adopted a template in 2017 
for the notification of preferential rules of origin and origin requi rements (G/RO/84 ). A new document 
series was created for the circulation of these notifications (G/RO/LDC/N ). The template has bee n 
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 . 
 
1 Document G/RO/W/194 . 
2 Document  WT/MIN(22)/24 , paragraph  8. 
3 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 origin 
applicable to imports from LDCs".  G/RO/W/223/Rev.1  
 
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  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 .4 
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. 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 and 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.  To date :5 
(i) Complete data6 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 201 5); 
Türkiye ; United Kingdom (since 2020); and United States.  In addition, China and India 
provided to the Secretariat enhanced datasets to facilitate a more accurate analysis of  the 
uptake in the ir 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 ; 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 regimes which offer tariff concessions.7 Such data  is 
needed for a full analysis of trade between LDCs and preference -granting Members . In this sense, 
Members currently are encouraged – but are not obliged – to notify to the WTO their preferential 
imports and tariffs under such schemes.8 Some Members have been providing the Secretariat with 
detailed import statistics concerning  their regi onal trade agreements and other concessions 
available, including Australia ; Canada ; China ; European Union ; Iceland ; India; Japan ; Montenegro ; 
Switzerland ; Chinese Taipei ; Türkiye ; United States of America . 
 
4 Document series G/RO/W/163  has been updated regularly to describe in detail these notif ications.  
5 Document series G/RO/W/163  has been updated regularly to describe in detail these notifications.  
6 Complete data refers to the submission of annual preferential imports (under preferential trade 
arrangements for LDCs) as well as preferential tarif fs. Data is available for all Members since 2010 unless 
otherwise indicated.  
7 Tariff concessions include any special programme which allow imports of certain goods to be 
temporarily or permanently exempt from the "normal" import duty. They may be implemen ted for social, 
humanitarian, economic or industry assistance purposes. Typical concessionary regimes include imports into 
free trade zones and duty drawback for manufacturing exporters.  
8 See paragraph  2 of the IDB  Decision "Modalities and operation of th e Integrated Database (IDB)"  
(G/MA/367 ). G/RO/W/223/Re v.1 
 
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  2.9.  The Committee encourage s all Members to consider t he 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.9 
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 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 process 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 simplification 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 informed 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 continued to allow  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 ); 
(x) Norway expanded cumulation possibilities in 2017 by introducing cumulation among LDCs 
after an inter -ministerial working group had examined the No rwegian GSP  scheme in light of 
the Nairobi Ministerial Decision  (G/RO/85 ); and 
(xi)  New Zealand is working to finalise revised rules of origin (including Product Specific Rules) for 
New Zealand 's GSP scheme to make them more aligned with the approach undertaken in  New 
Zealand 's Free Trade Agreements, taking into account , where practicable , the preferences 
signalled by LDCs. New Zealand will communicate these formally once the review is 
completed . 
 
4  IMPLEMENTATION OF THE BALI AND NAIROBI MINISTERIAL DECISIONS  
4.1.  Around 18 Different submissions and 14 presentations have been made , mostly  by the LDC 
Group , comparing  the existing practices of preference -granting Members with the relevant 
paragraphs of the Nairobi Decision in order to highlight the aspects t hat, in the view of the LDC 
Group, needed to be reformed (Annex 1 contains a full list of such submissions and presentations). 
 
9 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/Rev.1  
 
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  However, views about the status of implementation of the Nairobi Decision sometimes diverged 
between the LDC Group and preference  granting Members.  
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 paragraphs 1.1(a); 1.1(b); and 1.1(c) of the Nairobi Ministerial Decision . These 
submissions  have noted that : 
(ii) all preference -granting Members whose rules were based on the ad valorem  percentage 
criterion already use d a method of calculati on based on the value of non -originating materials , 
except for Australia, New Zealand, and the United States;  
(iii) currently , only Canada and the United Kingdom met the threshold of 75% of the value of 
non-originating materials , which the Nairobi Decision  noted was an option for preference -
granting Members to consider ; and 
(iv) currently , only the United Kingdom explicitly allow ed for the deduction of the costs of freight 
and insurance from the value of non -originating materials , which the Nairobi Decision  noted 
was an option for preference -granting Members to consider . Other preference -granting 
Members do not have such an allowance , or their rules were unclear in this respect ; 
(v)  rules of origin contained in  more recent  Free Trade Agreements (FTA) use the percentage 
criterion in combination with the change of tariff classification criterion rather than as a 
standalone criterion.  
 
4.1.2   Change of Tariff Classification Criterion  
4.3.  Different submissions by the LDC  Group have analysed pref erence -granting Members' practices  
in light of paragraphs  1.2(a); 1.2(b); and 1.2(c) of the Nairobi Decision . The submission s, focused 
on the rules applied by the European Union ; Japan ; Norway ; and Switzerland,  and noted the 
follow ing: 
(i) The LDC  Group re iterated the Group's preference , most notably,  for 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 common and, in most 
cases , 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 also circulated a detailed list of product -specific rules used by Japan which, in 
its view , should be reformed ( G/RO/W/209 ). The submission contained detailed alternative 
rules of origin and comments for consideration. Following this submission, bilateral 
consultat ions took place between th e LDC  Group and Japan in 2019 . The LDC Group and Japan 
held different views about the complexity or simplicity of product -specific rules used by Japan 
and bilateral discussions need to be pursued.   
 
4.1.3   Specific Working and Processing  Criterion  
4.4.  The LDC  Group has noted in different 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").  This issue 
has, however, not yet been discussed in the CRO  but can be taken up in the future . 
4.2  Cumulation  
4.5.  The LDC  Group  pointed out that cumulation possibilities can provide important flexibility. 
However, cumulation possibilities should not be a substitute for simple and [flexible ]rules of origin , 
since cumulation is often associated with a series of administrative proce dures and conditions. In  this 
sense, the general and product -specific rules of origin had to be considered together with cumulation 
for a full appraisal of the leniency or stringency of the rules  bearing in mind that  [flexible ] product 
specific rules of or igin should be a priority .  G/RO/W/223/Re v.1 
 
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  4.6.  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 practices used by 
some preference -granting Members , which could be replicated to facilitate the functioning of value 
chains through the use of cumulation possibilities. It was noted t hat Cambodia had to go through a 
cumbersome procedure to request for exten ded cumulation to the European Union in 
December  2022. This request was approved in September 2023.  
5  DOCUMENTARY REQUIREMENTS  
5.1  Proof of Origin  
5.1.  Paragraoh 1.8 of the Bali  Ministerial Dec ision 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). 
Australia's AST P; the Canadian GSP ; the US  AGOA ; the US Caribbean Basin Economic Recovery Act 
(CBERA) and the Nep al Preference Program also provide d for self -certification , while Japan allowed 
for self -certification of origin in certain instances.  The United Kingdom 's Developing Countries 
Trading Scheme also permits self -certification . China allowed for self -declaration for consignments 
that benefited from an advance origin ruling.  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.  Proof of origin is a key component of rules of origin  and trade facilitation. A note prepared by 
the WTO Secretariat  (G/RO/W/212 ) indicated  that preferences allowing for self-certification tend to 
be associated with higher levels of utilization than preferences requiring certificates of origin . 
5.2  Trade Facilitation Measures for Small Consignment s 
5.3.  The issue of " minimizing  documentation requirements for small consignments" has not yet 
been discussed in the Committee  but can be taken up in the future . 
5.3  Documentary Evidence of Direct Consignment  
5.4.  As noted in a submission of the LDC Group10, documentary evidence relate d 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 (e ither a through -bill of lading or a certificate of 
non-manipulation). Similary,  other preference -granting Members, such as the United States , did not 
require documentation related to non -manipulation if the final destination of the shipment from an 
LDC is marked as the United States. In this sense, the LDC  Group noted that the "non -alteration" 
rule introduced by the European Union could constitute a  better practice in this area.  
5.5.  An important difference between the EU's previous direct transportation requirement and its 
new non-manipulation clause (non -alteration principle) lies in the documentary evidence to be 
provided. Under t he new non -manipulati on (non -alteration principle) clause , the requirements are 
considered as satisfied unless the customs authorities have reasons to believe the contrary . In such 
cases, the customs authorities may request the importer to provide evidence of compliance, which  
may be given by any means.11 Hence, no documentary evidence has to be provided  to prove direct 
shipment unless customs administrations have a doubt. The LDC submission concluded that this 
provision , or similar arrangements, such as those adopted by Austral ia and New Zealand12, 
constitut ed a best practice that other preference -giving Members should progressively adopt . 
 
10 Document  G/RO/W/191 . 
11 A User's Handbook to the Rules of Preferential Origin used in trade between the European 
Community, other European Countries and the countries participating to the Euro -Mediterranean Partnership  
12 New Zealand does not require any certification or documentation (including for proof of origin) for 
LDC imports.  G/RO/W/223/Rev.1  
 
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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 Decision13, Members have : 
(i) Agreed to modalities for the calculation of utilization rates; and  
(ii) considered several notes , prepared both by the LDC Group, a preferenc e-granting Member, 
and the WTO Secretariat,  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 LDC. In practice, a good must simultaneously satisfy 
three requirements:  
(i) A good must be wholly obtained in the beneficiary LDC 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 accom panied 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 LDC to the 
preference -granting Member to avoid any risks of further manipulation in third or transit 
territories or, in case of transit, goods must satisfy the prescriptions in relation to documentary 
evidence about non -manipulation (or non -alternation) in tra nsit. 
 
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.  If, on the contrary, a preference is not being utilized,  it could be an indication that different 
factors are hindering preference utilization, including some factors related to rules of origin and 
origin requirements.  [Insert text to be provided by the LDC Group and China].  
6.2  Modalities for the calculation of U tilization Rates  
6.5.  The Committee agreed to a modality for the calculation of utilization rates in 2016. Annex 4 
contains the agreed formula as well as references to more recent discussions held in the CRO in this 
respect.  
6.3  Preference U tilization by LDCs  
6.6.  Presentations14 on utilization rates made by the LDC group showed that (1) some preference -
granting Members  exhibit low utilization rates across all products, and (2) high utilization rates may 
also hide large pockets of under -utilization in specific sectors, implying a significant share of LDC 
imports are subject to most -favoured -nation (MFN) tariff  rates despite being  eligible for preferential 
treatment.  
6.7.  The examination of import statistics  for the 2015-2019 period indicates  that utilization of 
preference s can be improved in all prefere ntial arrangements . It also suggests that utilization rates 
vary significantly across different preference -granting Members. Even in cases of overall high levels 
of utiliza tion, there might also be "pockets" of non -utilization in certain sectors , and some 
preferential arrangements show a low or very low level of utilization.  In addition, preference 
utilization rates show significant annual variations, which confirms the benefits of examining multiple 
 
13 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 w ith modalities to be agreed upon by the CRO".  
14 Presentation s RD/RO/58  and RD/RO/73 . G/RO/W/223/Re v.1 
 
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  years to identify structural patterns and trends . Strong variation s of utilization depending on trade 
values could also be an in dication that the utilization of preferences is influenced by trade values .  
6.8.  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 consideration. [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.  For this reason, it is recommended that preference -granting Members 
collaborate with the Secretariat and other stakeholders for the calculation of utilization rates.  [To be 
edited in light of text to be submitted by the deletations of China and the LDCs] ] 
6.9.  A submission prepared by the LDC group , showed large pockets of underutilization in 
Switzerland 's trade preferences.15 It was observed that Swiss utilization rates for garments and 
clothing imports of HS Chapters 61 and 62  (0-49%), were lower than those observed in the EU  
(95%) on average. Given that the EU and Swiss rules of origin were identical, it was deemed 
necessary  to identify the reasons for such lower utilization rates in the Swiss market.  Constructive 
bilateral consultation s took place between Switzerland and the LDC group and pointed to the effect 
of direct consignment requirement s on utilization . Internal consu ltations to improve utilization rates 
of preferences granted to LDCs are ongoing in Switzerland .  
6.10.  Another submission16 analyzed the utilization of China's preferential arrangement.  [The 
submission found low utilization rates on a wide range of tariff lines : from raw materials, natural 
products, and agricultural products (see sugar cane) to garments and other industrial products 
(motors, static converters, etc.). China objected to these findings , explaining that utilization of other 
preferences or duty relie f schemes could explain the low utilization of China's LDC preferences. 
Subsequently, China submitted a detailed response ( G/RO/M/73 ) showing that the ASEAN -China 
FTA benefitted Cambodia and Myanmar and that the Asia Pacific Trade Agreement benefitted 
Bangladesh. This response emphasized the need for a correct and complete dataset on Utilization 
Rates as an indispensable tool.  The analysis also showed that duty relief schemes are granted erga 
omnes , cannot be cons idered as a preference  and hence must be excluded from the calculation of 
of utilization rates.   
6.11.  A subsequent submission by the LDC group17 found similar patterns of utilization in  China 's 
and India's preferential arrangements . A wide range of tariff lines , including wholly obtained 
products, clothing and textile, and precious stones  are not receiving preferential treatment . The LDC 
Group acknowledged that the data used was incomplete and therefore called on China and India to 
redouble efforts to provide th e WTO secretariat with an appropriate and complete set of data. China 
and India's representatives objected to the findings of the LDCs' submission, stating that the 
methodology used by the LDCs to calculate utilization rates did not take into account other  duty 
relief schemes.  [To be edited in light of text to be submitted by the deletations of China and the 
LDCs]  
6.4  Discussion on different factors that  could affect the Utilization of Trade Preferences  
6.12.  It was also discussed  in the CRO  that additional factors c ould help explain low rates of 
preference utilization, including:  
a) The existence of several preferential schemes or the availability of other tariff concessions (for 
example, Australia grants trade preferences to Cambodia under the "Australian System of 
Tariff Preferences" (ASTP) and under the ASEAN -Australia -New Zealand Free Trade Agreement 
(AANZFTA)  and under the Regional Comprehensive Economic Partnership (RCEP)  As a result, 
low preference utilization under one scheme may indicate that better rules of origin or 
preferential margins are provided under a FTA rather than t hrough unilateral preferences 
under the DFQF initiative. These aspects need to be properly analysed to identify ways and 
means to improve rules of origin in the context of duty free and quota free initiatives for LDCs.  
b) 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 
 
15 Document G/RO/W/186 . 
16 Document G/RO/W /192. 
17 Document G/RO/W/222 . G/RO/W/223/Rev.1  
 
- 9 - 
 
  insignificant ( such as a tariff margin that is too small) or because they perceive compliance 
costs to be t oo high ( for example, the time or documentation needed to obtain a certificate of 
origin is too long , or the costs of consigning goods directly are too high) ; 
c) 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 ; 
d) there might be a "learn by doing effect" . In other words, the utilization of preferences 
increases with time, as operators become increasingly familiar with the preferen ce and its 
requirements.  This is noted at least in 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;  
e) direct consignment obligat ions and the related documentary evidence seem to have a 
significant impact  on the ability of LDCs to utilize their available trade preferences. Landlocked 
LDCs find it more difficult to benefit from trade preferences. In fact, the analysis shows that 
there is a significantly lower utilization of preferences in the case of landlocked LDCs;  
f) 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, i n 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;   
g) better preference utilization also depends from effective technical assistance provided by 
preference -grating Members  and aid for trade initiative to fund 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 ; and 
h) In addition, the following events were organized which explored the factors that influence the 
utilization  of trade preferences, including rules of origin:  
 
- A first  Webinar  organized by the Secretariat 2021 "What drives the utilizati on of trade 
preferences";  
- a second, follow -up Webinar  organized by the Secretariat in 2022 on "What drives the 
utilization o f trade preferences"; and  
- 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?"  
 
6.13.  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 
calculation of utilization rates , and to strive together to improve the accuracy of the relevant 
research.  Members are also encouraged to carry out their own stud ies about the utilization of LDC -
PTAs and share them in the CRO.  
6.14.  In relation to the utilization of trade pref erences, 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 Members and LDCs by Canada, t he European Union, Japan,  and 
the United States . 
7  [NEXT STEPS/CONCLUSION]  
7.1.  [Insert text to be provided by the LDC Group and the European Union]  
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 list of annual reports from 
the CRO to the General Council on preferential rules of origin for LDCs since 2013.  
 
_______________    
  G/RO/W/223/Rev.1  
 
- 10 - 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 Nairobi Ministerial Decision 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 and item 1 of document G/RO/W/169 ) Tanzania and Lao  PDR (on 
behalf of the LDC  Group)  October  2017 
RD/RO/53  Developments regarding methods using a change of calculation of tariff classification criterion to 
determine substantial transformation  (Paragraph  1.2 of the Nairobi Decision  and Item 2 of 
Document G/RO/W/169 ) 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  and Item 3 of 
Document G/RO/W/169 ) Myanmar (on behalf of the 
LDC Group)  Octob er 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  and Item 4 of Document 
G/RO/W/169 ) 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  and 
Item 5 of Document G/RO/W/169 ) Cambodia (on behalf of the 
LDC Group)  October  2017  
RD/RO/57  Developments regarding documentary requirements (Paragraph  3 of the Nairobi Decision  and Item 
6 of Document G/RO/W/169 ) Nepal (on behalf of the 
LDC Group)  October  2017 
RD/RO/58  Utilization rates under preferential trade arrangements for least developed countries (paragraph 4.3 
of document WT/L/917/Add.1)  Yemen (on behalf of the 
LDC Group)  October  2017 
G/RO/W/174  Implementation of the Nairobi Ministerial Decision on Preferential Rules of Origin for Least 
Developed Countries  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 tariff classification  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/223/Rev.1  
 
- 11 - Document Symbol  Title Member  Date of 
Discussion  
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 LDC to the Committee on Rules of Origin ad valorem criterion - Communication from 
the LDC Group  LDC Group  
Tanzania and Afghanistan 
(on behalf of the 
LDC Group)  November  2020 
G/RO/W/197  Further Clarification on the LDC Group's Report of Utilization by LDCs of China's Preference''  China  July, 2020  
G/RO/W/198  Submission of Chad on behalf of the LDC Group - 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/222  and 
RD/RO/102  
(presentation)  Further evidence from utilization rates  - Utilization by LDCs of China and India's preference  Djibouti  (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/Rev.1  
 
- 12 - ANNEX  2 
LIST OF BACKGROUND NOTES PREPARED BY THE SECRETARIAT ON PREFERENTIAL RULES OF ORIGIN FOR LDCS  (2013-2023) 
Document Symbol  Title Date  of discussion  
G/RO/W/161  Modalities for the calculation of "Preference utilization"  7 September  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  15 May 2019 
G/RO/W/187/Rev.1  and  
RD/RO/81  (presentation)  Impact of direct consignment requirements on preference utilization by least developed countries  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  20 May 2021 
G/RO/W/212  and 
RD/RO/99  (presentation)  Certification of origin and the utilization of trade preferences by least developed countries  6 June 2023 
 
_______________  
 
 
 G/RO/W/223/Rev.1  
 
- 13 - 
 
  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]  
 
 
  G/RO/W/223/Rev.1  
 
- 14 - 
 
  ANNEX  4 
METHODOLOGY FOR THE CALCULATION OF PREFERENCE UTILIZATION RATES  
1. The Committee adopted  the following modalitiy for the calculation of utilization rates : 
𝑝𝑢𝑟𝑖𝑣𝑎𝑙𝑢𝑒=∑∑𝑃𝑇𝐴𝑗,𝑝𝑟𝑒𝑝𝑜𝑟𝑡𝑒𝑑
𝑝𝑗
∑∑𝑃𝑇𝐴𝑗,𝑝𝑒𝑙𝑖𝑔𝑖𝑏𝑙𝑒
𝑝𝑗 
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.  
 
2. More recently, the notes of the Secretariat have also used "underutilization" as a complementary 
methodolo gy for the discussion of preference utilization rates. The use of this  methodology allow s 
for a comprehensive analysis of the factors that define trad e between LDCs and preference -granting 
Members. Underutilization rates reflect the proportion of imports which pay MFN  duties despite being 
eligible for at least one  trade preference programme . Nevertheless , under this methodology, 
different preferential a rrangments, with their own individual rules of origin, are lumped together. 
For this reason, underutilization rates alone do not  allow to make policy conclusions about the rules 
of origin applied in individual preferential arrangements. However, a  combined  use of both methods 
can be useful.  
3. The methologies for the calculation of preference utilization rates as well as data requirements 
for such calculations are discussed in greater detail in document G/RO/W/161/Rev.1 . 
__________  