The World Customs Organization (WCO) is urging countries, customs administrations, and the private sector to update their rules of origin so that classifying with the Harmonized System (HS) and determining origin are aligned.
Updating will help to avoid misapplication of rules of origin, keep revenue collection efficient, and fast-track trade, WCO said at a recent workshop.
At the same time, WCO acknowledged that it remains a challenge for the trading world to keep the rules of origin up-to-date.
Classification and origin determination of goods are closely interlinked, WCO said at the workshop held following the 35th Session of the Technical Committee on Rules of Origin.
The HS Nomenclature is updated every five years and virtually all preferential rules of origin placed in free trade agreements (FTAs) are linked to the HS Nomenclature and tariff classification, said WCO.
“It is therefore critically important to update rules of origin (i.e. Product Specific Rules) to ensure consistency between HS classification and origin determination. This would help to prevent misapplication of rules of origin, ensure efficient and effective revenue collection and facilitate trade.”
The HS amendments are made available at least two years before their implementation and the work can start at that time. However, WCO admitted that it could be a challenging task for countries due to the technical nature of the work.
In addition, different practices are in place in the different FTA parties. This can create obstacles in updating preferential rules of origin. In some countries, the updating of the rules requires an approval by the parliament, even though it is a technical task.
“Currently, not many agreements are regularly updated to the latest edition of the HS. However, this creates uncertainty and importers might lose the preferential tariff treatment,” said WCO.
To overcome these challenges, it suggested strengthening cooperation with officials responsible for tariff classification for the smooth updating of preferential rules of origin.
The WCO also urged its members to secure its tool “Guide for the Technical Upgrade of Preferential Rules of Origin.”
Developed in 2015 and updated in January 2017, the guide aims to assist users with updating their existing rules of origin to reflect changes in the Harmonized System.
Photo: CC BY-SA 3.0