WORLD TRADE G/RO/18
28July1997
ORGANIZATION(97-3174)
Committee onRules ofOrigin
EIGHTH REPORT OFTHE TECHNICAL COMMITTEE ONRULES OFORIGIN
TOTHE COMMITTEE ONRULES OFORIGIN
Note bytheSecretariat
1. Inconformity withparagraph 2(c)ofArticle 9oftheAgreement onRules ofOrigin, the
Technical Committee onRules ofOrigin hassubmitted totheCommittee onRules ofOrigin itsEighth
Report. TheReport covers theresults oftheTechnical Committee 'swork under theHarmonization
Work Programme through itsEighth Session heldinBrussels from 23Juneto4July1997.
2. Theattached Report (WCO document 41.213) isherewith circulated toMembers, together
withtheletter oftransmission oftheChairman oftheTechnical Committee onRules ofOrigin.G/RO/18
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Brussels, 18July1997
Dear MsBerrig,
Ihavepleasure intransmitting theEighth Report oftheTechnical Committee onRules ofOrigin
totheCommittee onRules ofOrigin.
ThisReport issubmitted inaccordance withtheprovisions ofArticle 9.2(c) oftheAgreement
andcovers theresults oftheTechnical Committee ’swork under theharmonization work programme
through itsEighth Session heldinBrussels from23Juneto4July1997. Enclosed forinformational
purposes isacopyofthedraftReport oftheEighth Session1oftheTechnical Committee which, in
accordance withtheTechnical Committee ’sprocedures, istobeapproved during theNinth Session
tobeheldfrom 8to26September 1997.
AssetoutintheReport totheCommittee, theTechnical Committee completed itsfirst
discussions onrules oforigin proposed forChapters 85through 90oftheHarmonized System, and
undertook itsBasket 2discussions ofChapters 25through 27,41through 43,and91.Concerning
these Basket 2discussions theTechnical Committee hascompleted itsconsideration and,except as
noted, issubmitting theresults totheCommittee. Itissubmitting forendorsement bytheCommittee
therules oforigin forthese chapters upon which consensus hasbeen reached. These have been
designatedasBasket1decisions.TherewerealsounresolvedissuesuponwhichtheTechnicalCommittee
wasunabletoreachconsensusafterexhaustingitsdiscussions.TheTechnicalCommittee’sinterpretations
andopinions concerning these unresolved issues, intheformofoptions anddiffering views, arebeing
referred totheCommittee fordecision. BoththeBasket 1decisions andunresolved issues aretobe
submitted shortly totheCommittee inanadministrative document2.
Looking ahead totheremainder oftheharmonization work programme, itisobvious thatfor
some chapters theTechnical Committee ’sdiscussions willnotbecompleted thisyear. Thediscussions
heldthisfarhaverevealed, among other things, issues which probably canberesolved onlyinthe
finalstages ofthework asthetwoCommittees elaborate thetextinterms ofitsoverall coherence.
Thus itappears thattheTechnical Committee willhave towork during thefirsthalfof1998 in
conjunction withtheCommittee.
Please accept, Madame Berrig, theassurance ofmyhighest consideration.
Yours Sincerely.
R.Janeczko,
Chairman.
1Available forconsultation intheSecretariat (Market Access Division).
2Tobecirculated indocument G/RO/18/Add.1.G/RO/18
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EIGHTH REPORT OFTHE TECHNICAL COMMITTEE ONRULES OFORIGIN
TOTHE COMMITTEE ONRULES OFORIGIN
1. TheTechnical Committee onRules ofOrigin helditsEighth Session inBrussels from23June
to4July1997. During thisSession, theTechnical Committee continued itsharmonization work on
rules oforigin forparticular products andproduct sectors; italsoexamined ingreater depth the
architectural design, theGeneral Rules andterminology. Italsoconsidered certain measures intended
toimprove thework method devised atitsSeventh Session fortackling theexamination ofBasket 2
goods.
Organization ofthesession
2. Inaccordance withthedecisions taken attheSeventh Session aspartofthemanagement plan
for1997, theEighth Session sawtheintroduction ofnewlonger working hours :thedaily meeting
timewasincreased bytwohours.
Completion ofthefirstexamination ofparticular products orproduct sectors
3. TheTechnical Committee examined, forthefirsttime, theproposals forrules oforigin for
thegoods ofChapters 85to90.Theresults ofthatwork aresetoutinAnnexes C.1,C.2,D.1,D.2,
E.1,E.2,F.1,F.2,G.1,G.2,H.1andH.2tothedraftReport ontheTechnical Committee ’sEighth
Session., acopyofwhich isenclosed forinformation. TheTechnical Committee thuscompleted its
firstexamination ofalltheHSChapters, marking animportant stage inthework onPhase IIofthe
harmonization work programme.
4. Forsome ofthose goods, theTechnical Committee decided thatimportant issues hadbeen
raised which required thattheybeassigned toBasket 2andexamined further atalatersession.
5. Asatprevious sessions, theTechnical Committee wasledtoexamine proposals forrules of
origin thatinvolved recourse tosupplementary criteria which, under astrict reading oftheAgreement
onRules ofOrigin, cameunder Phase IIIoftheHarmonization Programme. Forexample, theTechnical
Committee embarked onalengthy discussion ontheadded value criterion which some delegations
hadproposed orsupported forcertain goods oftheChapters examined. Thatdiscussion was,moreover,
necessary toenable thedelegations concerned toexplain thereasons behind theirchoice ofrules. Without
exhausting thetopic, thatdiscussion provided delegations withanopportunity tosetoutclearly the
advantages ordisadvantages theysawintheuseofthatcriterion. Theessential partofthatexchange
ofviews issetoutinAnnex E.1totheenclosed draftReport ontheEighth Session.
Beginning oftheexamination ofBasket 2goods
6. TheTechnical Committee examined, forthefirsttime, certain Basket 2goods: thegoods
classifiable inChapters 25to27,41to43and91.Theresults ofthatwork aresetoutatAnnexes
IJ/1,IJ/2,K/1,K/2,L/1andL/2totheReport ontheTechnical Committee ’sEighth Session. The
examination oftenmade itpossible tobring closer together theviews expressed during thefirstreading
and,inmany cases, itresulted inconsensus. These verysatisfying results were achieved following
averydetailed technical examination ofalltheoutstanding issues. Thediscussions werebased onthe
summarydocumentspreparedbytheSecretariatinaccordancewiththeTechnicalCommittee’sguidelines
atitsSeventh Session; thetechnical levelandhighquality ofthediscussions wereattributable tothe
veryfullcontributions furnished byalarge number ofdelegations.G/RO/18
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7. Theoutcome ofthiswork highlighted three types ofsituations:
(a) TheTechnical Committee hascompleted thetechnical examination oftheproducts in
accordance withPhases IIandIIIoftheharmonization programme forrulesoforigin
andreached aconsensus onaquestion enabling ittodetermine theorigin criterion
applicable totheproducts :thisresult isincluded inthedraftsession report andis
marked "Basket 1";itwillbetransmitted totheCommittee onRules ofOrigin for
approval, inaccordance withtheprovisions ofArticle 9,paragraphs 2(ii), 2(iii) and
3(a)oftheAgreement.
(b) TheTechnical Committee feelsthatthetechnical discussion hasbeenexhaustive without
reaching aconsensus and,inthiscase,theunresolved issueappears inthedraftsession
report marked "submitted toCommittee fordecision ":thisresult willbetransmitted
totheCommittee foradecision using atemplate, themodel ofwhich wasdiscussed
indepth.
(c) TheTechnical Committee feelsthatthediscussions havenotanalysed thetechnical
aspects ofaquestion insufficient depth andthattheissue should bere-examined at
alatersession: thisresult appears inthedraftsession report marked "Basket 2".
8. Theproducts concerned andthereasons forclassifying theminoneofthethreeabove situations
arepresented hereafter:
Goods classified inBasket 1
9. Following these discussions, theTechnical Committee classified inBasket 1anumber of
headings, splitheadings, subheadings andsplitsubheadings oftheChapters examined; theyareset
outhereafter:
ForChapters 25to27:
25.01, 25.02, 25.03, 25.04, 25.05, 25.06, 25.07, 25.08, 25.09, 25.10, 25.11, 25.12, 25.13,
25.14, 25.15, 25.16, 2517.10, 2517.30, 2517.41, 2517.49, 25.18, 25.19, 25.20, 25.21, 25.22,
2523.10, 25.24, 25.25, 2526.10, 25.27, 25.28, 25.29, 25.30 (except formolybdenite
concentrates), 26.01 to26.17 (except forconcentrates andgoods calcined orroasted), 26.18,
26.19, 26.20, 26.21, 2701.11 to2701.19, 27.02, 27.03, 27.04, 27.05, 27.06, 2708.10, 27.09,
27.14 and27.16.
ForChapters 41to43:
41.01,4102.10,41.03,41.08,41.09,41.10,41.11,43.01,4302.11,4302.12,4302.13,4302.19
and4302.20.
ForChapter 91:
ex91.10 (a),9111.90 and9112.90 aswellasaChapter Note
Goods which arethesubject ofunresolved issues submitted totheCommittee fordecision
10. However,notwithstandingitsthoroughexaminationoftheseChapters,theTechnicalCommittee
wasunable toreach consensus inrespect ofanumber ofHSheadings andsubheadings, onaccount
ofthedifficulties indetermining theorigin-conferring substantial transformation oftheproductsG/RO/18
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concerned. Thetechnical discussions being exhausted, theunresolved issues should besenttothe
Committee foradecision. They canbesummarized asfollows:
ForChapters 25to27:
(i) Istheproduction ofcement from clinker asubstantial transformation?
Subheadings concerned: 2523.21 to2523.90
(ii) Isthecrushing orpowdering ofnatural steatite andtalcasubstantial
transformation?
Subheading concerned: 2526.20
(iii) Istheprocessing ofmolybdenum oreintomolybdenum concentrate (lubricant)
of25.30 asubstantial transformation?
Heading concerned: ex25.30(b)
(iv) Istheconversion ofmetal oresintoconcentrates, including bycalcination or
roasting, asubstantial transformation?
Headings concerned: ex26.01(a) toex26.17(a), ex26.01(b) toex26.17(b)
(v) Istheproduction ofbriquettes, ovoids andsimilar solid fuels from coala
substantial transformation?
Subheading concerned: 2708.20
(vi) Isthemanufacture ofpitch cokefrom pitches ofcoaltarsandother mineral
tarsofthesame heading asubstantial transformation?
Subheading concerned: 2708.20
ForChapters 41to43:
(i) Isthedehairing orde-wooling ofsheep orlambskins ofsubheadings 4102.21
and4102.29 asubstantial transformation ?
Subheadings concerned: 4102.21 and4102.29
(ii) Isachange ofheading sufficient toexpress thesubstantial transformation of
thegoods assembled from parts?
Headings concerned: 42.01, 42.04, 42.05, 42.06
(iii) Isitasubstantial transformation toassemble furskins from pieces, cuttings
orother unassembled parts offurskins?
Subheading concerned: 4302.30G/RO/18
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ForChapter 91:
(i) Isthecountry oforigin ofafinished watch orclock thecountry offinal
assembly orthecountry oforigin ofthemovement usedinitsproduction ?
Headings concerned: 91.01 to91.07
(ii) What istheappropriate description inex-91.10(b) ofcomplete movements,
partly assembled, andofincomplete movements?
Heading concerned: ex91.10(b)
(iii) Arechanges tocomplete andassembled movements ofheadings 91.08 or91.09
from partly assembled complete movements orincomplete movements of
ex-91.10(b), orfrom other movements ofex-91.10(c), substantial
transformation?
Headings concerned: 91.08 and91.09
(iv) Arechanges tofinished watch orclock cases fromcaseparts, ortowatch or
clock cases from caseblanks, substantial transformation?
Headings concerned: 9111.10 to9111.80, 9112.10 to9112.80
(v) Ischange tofinished straps, bands orbracelets from parts classified
within 91.13, orchange from blanks classified within 91.13, substantial
transformation?
Headings concerned: 9113.10 and9113.20
(vi) Isthemanufacture ofunassembled watch straps from fabric substantial
transformation?
Heading concerned: 9113.90
Goods maintained inBasket 2
11. TheTechnical Committee noted thatitcould onlyexamine thetransformation process ofcertain
products oftheChapters atissueindepth inthelightoftheforthcoming discussion oncertain product
sectors (chemicals andtextiles). Theheadings andsubheadings covered bythisprocedure aremarked
inAnnexes K/2,L/2andIJ/2bytheheading "Basket 2"incolumn E.Theproblems tobefurther
examined areindicated hereafter :
ForChapters 25to27:
(i) What changes fromother headings orwithin theheading toproduce thegoods
ofheading 27.07 aresubstantial transformations: Chemical reaction/physical
processes/mixing?
Heading concerned: 27.07G/RO/18
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(ii) Howtoexpress aruleoforigin todetermine whether amixture composed of
materials ofthesame (sub)heading, orofmaterials ofmore than one
(sub)heading, hasundergone asubstantial transformation?
Headings concerned: 27.10, 27.11, 27.12, 27.13
(iii) Can refining orcertain specific processes beconsidered substantial
transformation?
Heading concerned: 27.13
(iv) What changes from other headings orwithin theheading toproduce the
petroleum gases andother gaseous hydrocarbons ofheading 27.11 are
substantial transformations?
Heading concerned: 27.11 aswellasNotes proposed forChapters 25to27
ForChapters 41to43:
(i) Arepre-tanning, tanning, re-tanning, finishing orparchment-dressing ofleather
substantial transformations ?
Headings concerned: 41.04 to41.07, 42.02, 42.03, 43.03 and43.04 aswell
asNotes prepared forChapters 41to43
12. Thisfirstexamination ofBasket 2goods alsoledtheTechnical Committee toconsider how
theresults ofthatwork should beforwarded totheCommittee onRules ofOrigin. Itlooked atthe
recommendations made bytheTokyo Intersessional Group (TIG) which, atitsmeeting inApril 1997,
hadconcentrated onhowtheissues unresolved afterthesecond examination ofBasket 2goods should
beforwarded totheCommittee onRules ofOrigin. Thedetailed discussions onthismatter arereported
under ItemIVintheReport ontheEighth Session.
13. Finally, itwasdecided that,inorder toprovide theCommittee onRules ofOrigin withthe
information needed tofullygrasp theproblems, thoseunresolved issues would besenttothatCommittee
using anadministrative document setting outspecific information which would bepresented inaclear,
transparent andobjective manner. Itwould besetoutinafileusing apre-established model. All
theissues relating toaChapter would begrouped together inasingle filetofacilitate anoverall approach
totheproblems bytheCommittee.
Future work
14. TheNinth Session oftheTechnical Committee willbeheld inBrussels from 8to
26September 1997, i.e.athree-week meeting tocontinue theexamination ofBasket 2goods.
Report ontheSeventh Session oftheTechnical Committee
15. TheReport ontheSeventh Session oftheTechnical Committee wasofficially adopted atthe
Eighth Session.G/RO/18
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Provisional nature oftheReport ontheEighth Session
16. Asagreed inthemanagement plan, theTechnical Committee spent thewhole oftheEighth
Session continuing itswork andwastherefore unable toadopt thesession report during thesession.
Theenclosed report istherefore provisional andwillbereplaced bythefinalreport.