RESTRICTEDWORLD TRADE
ORGANIZATIONG/RO/M/17
20 July 1998
(98-2857)
Committee on Rules of Origin
MINUTES OF THE MEETING OF 19 JUNE 1998
Chairman:  Mr. R. Wells (Australia)
The agenda proposed for the meeting, contained in WTO/AIR/859, was adopted with the
inclusion of items 2 and 3 under “Other Business” as follows:
Page
1. Future work of the Committee on Rules of Origin
in connection with the Harm onization Work Programme ....................................... 1
2. Implications of the implementation of the harmonized rules
of origin on other WTO Agreements....................................................................... 5
3. Date of the ne xt meeting.......................................................................................... 5
1. Future work of the Committee on Rules of Origin in connection with the Harmonization
Work Programme
1.1 Based on informal consultations which had taken place on 18 June 1998, the Chairman
summarized the situation as follows:
"The Committee on Rules of Origin (CRO) discussed this issue on the basis of the
Chairman’s proposal, but did not reach a consensus, due to widely differing views among
Members."
In its discussion, the Committee focused on five points, namely:
(i) setting a new deadline:  some Members were not in favour of setting a new fixed
deadline, given the uncertain future outcome of work and the difficulty in predictingthe time needed for the remaining work;  other Members preferred a fixed deadline.
There were various proposals for the deadline; many Members suggested a deadline
of September next year or before the third WTO Ministerial Conference;  some
preferred the end of this year;
(ii) work on issues on product-specific rules of origin:  some Members suggested that the
CRO should postpone further discussions on these issues until early next year when
work on the horizontal issues (general rules, etc.) will be completed by the Technical
Committee on Rules of Origin (TCRO).  They believed that product-specific issues
can only be meaningfully discussed once these horizontal issues are solved.  Other
Members argued that the work on product-specific issues should continue in Geneva
in order not to lose momentum;G/RO/M/17
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(iii) the timetable for future work:  some Members believed that the CRO must prepare
detailed work programmes for the coming 12 months both for the CRO and the
TCRO.  Other Members thought that rigid work programmes would not contribute to
arriving at an early conclusion of the work;
(iv) sending back templates to the TCRO:  some Members argued that the CRO should
send back to the TCRO all templates.  The purpose would be for the TCRO to review
them on the basis of the new horizontal rules and hopefully narrow down further the
options for solutions.  Other Members were opposed to that proposal, arguing that
only certain specific issues could be sent back, if considered necessary, with clear
reasons and guidelines;  and
(v) which WTO body should decide about the extension of the deadline:  two Members
proposed that the decision on the extension of the deadline should be taken by the
General Council since this deadline had been stipulated in the Agreement on Rules of
Origin (the Agreement);  many Members were in favour of the Council for Trade inGoods (CTG) taking this decision;  it was agreed that this issue would be placed on
the agendas of the meetings of both the CTG on 8 July 1998, and the General Councilon 15 July 1998.
1.2 The representative of the legal services of the  Secretariat stated that, as concerns the question
as to which WTO body should decide on the extension of the deadline, under the WTO Agreement,
the basic decision-making powers in the WTO were assigned to the Ministerial Conference (and,
when it is not in session, to the General Council), but there was no clear demarcation of
responsibilities between the General Council and the sectoral Councils.  However, there was a
precedent in the services sector, where decisions on extensions of deadlines had been taken by theCouncil for Trade in Services (CTS), and not by the General Council.  On that basis, it would be
appropriate if this Committee wished to report to the CTG that it could not meet the deadline for the
Harmonization Work Programme (HWP), and that it intended to proceed in a certain manner.  On the
other hand, there was nothing wrong with taking such  a decision at the highest level, if the CRO, for
political reasons, so decided.  As concerns the question as to whether or not a decision should be
taken before the expiration of the deadline, he stated that there was a precedent in the WTO where
decisions had been taken after a deadline had expired.  These decisions authorized certain actions tocontinue, although the time for such actions had expired.  More specifically, under the Fourth
Protocol to the GATS, if by 1 December 1997 the Protocol had not been accepted by all Members,
those Members which had accepted it by that date  could decide, prior to 1 January 1998, on its entry
into force.  In fact that decision was not taken within the time-period specified in the Protocol.  After
the expiration of the period in which the decision should have been taken, the CTS authorized thegroup of Members to take that decision.  As concerns the third question as to whether or not a formal
amendment of the Agreement was needed in order to  extend the work programme, he noted that there
were some practical problems:  an amendment to the provisions of WTO Agreements, even of a
nature that would not alter the rights and obligations of Members, would not come into force until
two-thirds of the Members had deposited with the Secretariat their formal acceptance of theamendment.  He also stated that, although there were explicit deadlines in the services sector, for
example, the deadline for negotiating emergency safeguard measures under Article X of the GATS,
those deadlines had effectively been extended, not by an amendment, but by a decision of the CTS.
He further stated that the continuation of the negotiations would not violate the provisions of the
Agreement;  there was no provision in the Agreement which said that the negotiations could not becontinued.  Article 9.2 of the Agreement simply stated that the negotiations were to be finished within
the three-year period.  Finally, he emphasized that the results of the HWP should be agreed to by
consensus.  An agreement on the results by consensus would render moot any procedural questions
that might have occurred along the way.G/RO/M/17
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1.3 The representative of Colombia stated that th e present situation with regard to the extension
of the deadline was identical to the one in the Services sector.  On that occasion, it was concluded that
the CTS was legally entitled to take a decision on that matter.  Therefore, he believed that the CTG
should take a decision on the extension of the deadline for the HWP.
1.4 The representative of Malaysia, speaking on behalf of ASEAN, stated that a definite deadline
for both the CRO and the TCRO should be set.  He also urged that pending the completion of the
work programme, all WTO Members should refrain from using any unilateral rules of origin which
could be detrimental to the trade of other Members.
1.5 The representative of Mexico stated that his delegation was not in favour of sending back the
templates to the TCRO, since it was a prerogative of the CRO to examine any matter which had been
transmitted to it by the TCRO, and to take final decisions on such matters.
1.6 The representative of Switzerland stated that according to the Agreement, the harmonization
of non-preferential rules of origin should be completed by 20 July 1998.  During the past 12 months,
the TCRO had taken more than 2,000 origin decisions by consensus for specific products.  More than
300 issues had been submitted to the CRO for de cision.  The CRO had considered the unresolved
issues during several meetings, focusing in particular on agricultural products (111 issues), minerals
(12 issues), chemical and pharmaceutical products (32 issues), leather (5 issues), textiles and clothing
(73 issues), and watches (6 issues).  The CRO had solved only a very small number of issues.Delegations had presented their positions in detail.  Some options had been refined.  However the
underlying factors behind different positions, in particular the policy motivations, were very rarely
introduced in the discussions.  The CRO had not achieved a substantial result because it had not
moved from an information exchange stage to a negotiating stage.  The CRO had also not been able to
finalize the rules for wholly obtained products where two issues were still outstanding.  At its lastmeeting, the TCRO had largely completed the examination of the product-specific rules.  The TCRO
had also considered some chapter rules applying to all products in the chapters concerned.  Some
issues relating to chapter rules had been submitted to the CRO for decision, while some were still with
the TCRO.  During its October and December 1998 m eetings, the TCRO would have to finalize the
architecture of the rules (i.e. introduction, order of application, general mixture rule, general residual
rule, de minimis rule and product-specific residual rules).  He further stated that the Ministers had
mandated the CRO to conduct the work relating to the HWP.  This mandate contained in theAgreement was part of the built-in agenda.  An extension of the time-limit to conclude these
negotiations, therefore, could only be taken by the General Council, the highest authority in the WTO
when Ministers did not meet.  He suggested that the Chairman of the CRO hold informal
consultations to assess the situation and to analyze and identify the reasons why the CRO had not
been able to fulfil this mandate.  This appeared to  be the first time that a deadline set out in the
built-in agenda in WTO Agreements had not been met.  The CRO should report to the CTG, which
would then have to report to the General Council, in order to seek guidance for the future work as
well as the extension of the time-limit for the completion of the mandate given by the Ministers.  The
extension of the time-limit had to be accompanied by a detailed work programme for the CRO until
the end of the current year.  Such a work programme should include an identification of remainingissues which had to be solved in a negotiating process in Geneva and issues where further technical
work needed to be done in the TCRO in Brussels.  The CRO should then meet immediately after the
meeting of the General Council.  This work should  be completed before the summer break.  Under no
circumstances should the extension of the time-limit lead to an open-ended process.
1.7 The representative of India supported the statements made by ASEAN and stated that a
definite deadline for both the CRO and the TCRO should be set.  If Members wished to carry on with
the momentum which had been building during th e last few months, the pending work could be
completed well before the end of next year.  During the transition period, Members should refrainG/RO/M/17
Page 4
from using any unilateral or discriminatory rules of origin which would be detrimental to the trade
interests of Members, particularly those of developi ng country Members.  Finally he agreed with the
Swiss delegation that this was the first time that a deadline set in an agreement had not been met, and
that this issue, therefore, should be referred by the CTG to the General Council for a final decision.
1.8 The representative of Argentina stated that a definite deadline for both the CRO and the
TCRO should be set.  He was not in favour of sending the templates back to the TCRO.  This work, in
his view, should be carried out by the CRO.
1.9 The representative of Canada stated that the CRO should develop a realistic work programme
with a flexible time-frame.  As concerned the legal procedure, the CRO should make a
recommendation to the CTG and the CTG should report that recommendation to the General Council.
1.10 The representative of the United States doubted whether a fixed deadline was the best way to
ensure a quality product and stated that an unrealistic deadline for the HWP might not be of benefit to
the credibility of the CRO and the WTO.  He disagreed with the view of the Swiss delegation that this
negotiation was the first one in the built-in agenda in WTO Agreements which had not met itsdeadline.  There were precedents as the Colombian delegation had pointed out.  Note should be taken
of the fact that those decisions had been taken at the Council level as opposed to the General Council
level.
1.11 The representative of Mauritius stated that further consultations with his capital on this issue
were needed.  He also wondered how the requests made by the delegations of the Dominican
Republic, Honduras and El Salvador would be dealt with by the CRO.
1.12 The Chairman stated that the implications of the implementation of the harmonized rules of
origin on other WTO Agreements would be discussed at the next meeting of the CRO.
1.13 The representative of the European Communities stated that the EC was strongly committed
to finalizing the Harmonization Work Programme before the next Ministerial Conference.  However,
he expressed concern about a fixed deadline with a rigid work programme in light of unpredictable
future situations.
1.14 The representative of Norway stated that his delegation preferred a fixed deadline for the
HWP.  He also noted that it was regular procedure for the CTG to take note of a recommendation
from a Committee and to transmit it to the General Council for decision.
1.15 The representative of Pakistan expressed his disappointment at not having met the original
deadline.  He also stated that the future work programme should be subject to a realistic but absolutely
final deadline.
1.16 The representative of Australia stated that a deadline was necessary to maintain momentum
and that a realistic work programme for the CRO and the TCRO should be prepared with the aim of
completing the HWP by September 1999.
1.17 The representative of Egypt supported the statement from ASEAN and stated that a realistic
work programme with a fixed deadline would help delegations to plan and allocate their financial and
human resources.
1.18 The representative of New Zealand stated that the HWP could be successfully completed by
the next Ministerial Conference.  He supported the idea of a fixed deadline to ensure that the work of
the CRO and the TCRO would be as far advanced as possible prior to the next Ministerial
Conference.  In his view, the July 1998 deadline had exercised strong pressure on Members to achieveG/RO/M/17
Page 5
as many results as they could.  Without such a deadline, much less progress would have been made.
He pointed out that when the Agreement had been drafted, it had been difficult to foresee how much
work would be needed, and how long the work woul d take.  He also recalled that under the approach
the CRO had taken over the past year, in some instances the CRO had received templates which had
not been translated into French and Spanish, and there had not been enough time to reflect on them.Therefore, a more realistic timetable, based on past experience, should be prepared.  Over the
following six months the CRO should discuss Articles 1 and 3 of the Agreement, while the TCRO
should work on overall architectural issues.  The TCRO should then complete its work on product-
specific rules by March 1999.  The CRO should resume its discussions on product-specific rules only
in the second quarter of 1999.  As concerns the question of sending back templates to the TCRO, he
stated that some templates might need to be reconsidered by the TCRO, while basket 1 issues should
not be reopened.
1.19 The representative of Korea preferred a definite deadline to open-ended negotiations.
1.20 The representative of Morocco stated that a decision on extending the deadline for a matter
that was part of the built-in agenda in the Agreemen t should be taken at the highest level of the WTO,
namely the General Council or the Ministerial Conference.  The decision to extend the deadline was
an amendment to the provisions of the Agreement, and the procedures laid down in the WTO
Agreement should be strictly adhered to.  He also believed that a definite deadline should be set, and
that detailed work programmes should not be discussed until the length of the programme was
decided.  The work programme should also take into account the proposals made by India, theDominican Republic, Honduras and El Salvador.  He further stated that templates should not be sent
back to the TCRO.
1.21 The Committee took note of the statements made.
2. Implications of the implementation of the harmonized rules of origin on other WTO
Agreements
2.1 The representative of the United States, recalling that in connection with this matter, the
CRO, at its last meeting, had agreed that delegations should submit to the Secretariat, by
19 June 1998, any issues that they might wish to have discussed at a future meeting of the CRO,
proposed that the deadline be extended.
2.2 The CRO agreed to extend the deadline to 30 September 1999.
3. Date of the next meeting
3.1 It was agreed that the CRO hold its next meeting on 1 July 1998.
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