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RULE OF ORIGIN PROVISIONS : A MOVE
TOWARDS PROTECTIONISM!
By
Dr. P. Sree Sudha, LL.D. (NLSIU)
Associate Professor, DSNL University

Introduction
Preferential rules of origin are applied by coun-
tries that offer certain trade partners zero-duty or re-
duced-duty access for their imports as a means of deter-
mining the eligibility of products to receive such preferential access. These rules
of origin are required to prevent trade deflection or simple transshipment,
whereby products from non-preferred countries are redirected through a free
trade partner to avoid the payment of Customs duties. They are meant to ensure
that only goods originating in participating countries enjoy duty preferences.
Rules of origin are thus integral to preferential trade agreements such as bilateral
and regional free trade agreements and to the non-reciprocal preferences that
industrial countries offer to developing countries. The nature of rules of origin
and their application can have profound implications for trade flows and for the
work of customs authorities. Rules of origin can be designed in such a way as to
restrict trade and therefore can be used, and are being used, as instruments of
trade policy. The proliferation of free trade agreements throughout the world,
with the accompanying preferential rules of origin, is increasing the burden on
customs services in many countries, with implications for the ease of trade. Per-
haps surprisingly, given their potential to influence trade flows, preferential
rules of origin are one area of trade policy that has been subject to very little dis-
cipline during the ages of the multilateral rules-based system now governed by
the World Trade Organization (WTO). Determining the country of origin of
products has become more difficult over the past four decades as technological
change, declining transport costs, and the process of globalization have led to the
splitting up of production chains and the distribution to different locations of the
various elements in the production of a goods. The issue becomes which of these
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