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A56 EXCISE LAW TIMES [ Vol. 372

tions of origin. Producers who are eligible for preferential access to different
markets under different schemes with different rules of origin may find that their
product qualifies under some schemes but not others. For example, a company in
a developing country may find that the product it produces qualifies for prefer-
ential access to the EU market under the EU’s GSP scheme but that the same
product does not satisfy the rules of origin of the U.S. GSP scheme.
Requirement for Rules of Origin (ROO)
The requirement for indicating origin on the goods is also known as
‘Rules of Origin’ (ROO). It is a mechanism for identifying from where the goods
originate or from where it is being exported or the place of its manufacture. They
are the criteria needed to determine national source of a product. It is used by
governments, trade, industry and consumers to determine the country in which
imported goods should be treated as having been produced. Traditionally, it is
used to give preferential treatment to import and export of goods from certain
countries. The Rules of Origin as a matter of practice is an extension of import
and export laws.
There are various reasons necessitating the determination of origin of
goods. The foremost of these reasons is the import under preferential agreements
to ensure that the lowest or preferential rates are made available to the goods
originating from the countries under the preferential agreement. Other reason is
the reduced tariff provided through trade treaties between two or countries.
Usually these agreements are bilateral agreements between two countries and
are meant to reduce or completely remove tariffs to trade.
It is also necessary to ascertain the origin of goods in order to apply basic
trade policy measures such as tariffs, quantitative restrictions, anti-dumping and
countervailing duties. Other reasons are import under Most Favoured Nation
tariff rates (MFN Tariff) and for collection of trade statistics used for economic
indicators for policy makers. Depending upon the purpose for which they are
used, the rules differ from country to country. The requirement for indication of
origin of goods arises due to the international trade because of different trade
policies of different countries. Their importance is derived from the fact that du-
ties and restrictions in several cases depend upon the source of imports.
Counterfeiting of goods for availing the reduced tariff is becoming a
problem that is faced by the trade. The shift as counterfeiters move from tradi-
tional luxury goods into ordinary consumer products aggravates the issue. To
prevent this, it is required that the imported goods should be adequately marked
with the country of origin to determine their eligibility for reduced tariff. This
requirement of indication origin of goods is also important to implement
measures and instruments of commercial policy such as anti-dumping duties
and safeguard measures.
Indication of ROO – Indian perspective
The reason for imposing the origin indication requirement is also to
check the trade deflection. Sometimes it may so happen that goods from a third
party country enter into a member country through a partner country on a pref-
erential basis thereby causing trade deflection. The Rules of Origin has objective
of preventing this disposition. However, the benefit of this system is not 100%
realized, since member countries are hesitant to grant the preferential treatment
on goods which they trade in higher volume.
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