The document discusses rules of origin (RoO) in the Tripartite Free Trade Agreement (TFTA) between COMESA, EAC and SADC. It explains that RoO determine the country of origin of products and outlines the key rules used, including change in tariff classification and value added percentage. While international harmonization has had minimal impact on the TFTA RoO regime, further studies on harmonizing preferential RoO are still needed. The regimes in COMESA and EAC differ from SADC but the TFTA adopted rules similar to COMESA and EAC, which may cause conflicts with SADC's rules.

1. Francis Osiemo Omesa
Rules of Origin in COMESA-SADC-EAC:
The Impact of International Harmonization of
Rules of Origin on the Tripartite Free Trade
Agreement
© Francis Osiemo, Stellenbosch University
2012

2. Overview
 The Tripartite Free Trade Agreement (TFTA).
 What are Rules of Origin (RoO)?
 Rules of determining origin.
 COMESA-EAC-SADC RoO.
 International Harmonization of RoO.
 TFTA RoO.
 Conclusion.
© Francis Osiemo, Stellenbosch University
2012

3. The TFTA
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2012

4. Definition of RoO
 Rules to determine the country of origin of a
product.
© Francis Osiemo, Stellenbosch University
2012

5. Definition of RoO
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2012

6. Definition of RoO
 Classified into : - preferential; and
: - non-preferential.
© Francis Osiemo, Stellenbosch University
Press 2012

7. Definition of RoO: Preferential RoO
 Used in Free Trade Agreements (FTA) to
determine which goods qualify for preferential
treatment.
© Francis Osiemo, Stellenbosch University
2012

8. Definition of RoO: Preferential RoO
 An FTA is an agreement by a set of countries to
eliminate trade restrictions in intra-member
trade: (Article XXIV, GATT).
© Francis Osiemo, Stellenbosch University
2012

9. Definition of RoO: Preferential RoO
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2012

10. Definition of RoO: Preferential RoO
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2012

11. Definition of RoO: Preferential RoO
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2012

12. Definition of RoO: Non-Preferential
RoO
 Allocate origin for purposes of trade
statistics, trade restrictions or market access
restrictions.
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2012

13. Definition of RoO
 Preferential and non-preferential RoO are
further sub-categorised into product specific
RoO and regime wide RoO.
© Francis Osiemo, Stellenbosch University
2012

14. Rules of determining origin
 Goods are either: - wholly produced ; or
: - sufficiently processed.
© Francis Osiemo, Stellenbosch University
2012

15. Rules of Determining Origin: Wholly
produced goods
 Goods cultivated, extracted or grown in
countries eligible for preferential treatment.
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2012

16. Rules of determining origin: Wholly
produced goods
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2012

17. Rules of determining origin: Wholly
produced
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2012

18. Rules of determining origin: Wholly
Produced goods
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2012

19. Rules of determining origin:
Substantially transformed goods
 Goods produced with inputs from more than
one country.
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2012

20. Rules of determining origin:
Substantially transformed goods
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2012

21. Rules of determining origin: Product
Specific RoO
 The four rules:-
: - Regional (Local) Value Contents (RVC);
: - Specific Production Process (SP);
: - Change in Tariff Classification (CTH); and
: - Value Added Percentage (VA)
© Francis Osiemo, Stellenbosch University
2012

22. Rules of determining origin: Product
Specific RoO.
 Regional (Local) Value Contents (RVC): A
good originates from the country where it
underwent the last substantial transformation
into a new product.
© Francis Osiemo, Stellenbosch University
2012

23. Rules of determining origin: Product
Specific RoO.
 Specific Production Process (SP): determines
origin using specified process or technical
tests.
© Francis Osiemo, Stellenbosch University
2012

24. Rules of determining origin: Product
Specific RoO
 Change in Tariff Classification (CTH): confers
origin depending on the change in tariff
classification of the Harmonized System (HS)
of Tariff Nomenclature.
© Francis Osiemo, Stellenbosch University
2012

25. Rules of determining origin: Product
Specific RoO
 Value Added Percentage (VA): the origin of a
good is the country it underwent the highest
value addition.
© Francis Osiemo, Stellenbosch University
2012

26. Rules of determining origin: Regime
Wide RoO
 The 3 principles: -
: - Cumulation;
: - Tolerance or de minis rule; and
: - Absorption principle
© Francis Osiemo, Stellenbosch University
2012

27. Rules of determining origin: Regime
Wide RoO
 Cumulation: Allows importation of goods from
specific country or region(s) without affecting
its origin. Types of cumulation:-
 Bilateral: imports from a partner country.
 Diagonal: imports from a particular region.
 Full: Any processing activity from within a
country of a regional grouping.
© Francis Osiemo, Stellenbosch University
2012

28. Rules of determining origin: Regime
wide RoO
 Tolerance or de minis rule: allows for the use
of a percentage of non-originating material
without affecting the final product.
© Francis Osiemo, Stellenbosch University
2012

29. Rules of determining origin: Regime
wide RoO
 Absorption principle: Additional processing or
transformation of a product qualifying for
preferential treatment does not affect its
origin.
© Francis Osiemo, Stellenbosch University
2012

30. Rules of origin: Regime wide RoO
 NB:
The regime wide RoO allow for leniency in
the application of product specific RoO.
© Francis Osiemo, Stellenbosch University
2012

31. COMESA-EAC-SADC RoO:
COMESA
 The origin of goods in COMESA are
determined by:-
 The concept of wholly produced goods;
 CTH Rule;
 VA Rule; and
 Full cumulation.
© Francis Osiemo, Stellenbosch University
2012

32. COMESA-EAC-SADC RoO: EAC
 The origin of goods in EAC are determined
by:-
 The concept of wholly produced goods;
 VA Rule;
 CTH Rule; and
 Full cumulation.
© Francis Osiemo, Stellenbosch University
2012

33. COMESA-EAC-SADC RoO: SADC
 The origin of goods in SADC are determined
by:-
 The concept of wholly produced goods;
 VA Rule;
 CTH Rule;
 SP Rule;
 Full cumulation; and
 Tolerance/ de minis rule.
© Francis Osiemo, Stellenbosch University
2012

34. International Harmonization of RoO
 The harmonization of non- preferential RoO
is ongoing. The main instrument is the WTO
Agreement on RoO
 Previous attempts to harmonize preferential
RoO have been unsuccessful.
© Francis Osiemo, Stellenbosch University
2012

35. TFTA RoO
 Annex 4 of TFTA provides that origin of
goods is determined by:-
 The concept of wholly produced goods;
 CTH Rule;
 Principle of territoriality(new); and
 Full cumulation.
© Francis Osiemo, Stellenbosch University
2012

36. Conclusion
 The RoO regime in COMESA and EAC differ
from RoO in SADC but TFTA RoO regime is
similar to COMESA and EAC.
© Francis Osiemo, Stellenbosch University
2012

37. Conclusion
 International harmonization has minimal
impact on TFTA RoO as it focuses on non-
preferential RoO
© Francis Osiemo, Stellenbosch University
2012

38. Conclusion
 There is need for further studies on
international harmonization of preferential
RoO.
© Francis Osiemo, Stellenbosch University
2012

39. Conclusion
 Solutions for possible conflict with SADC’s
RoO?
© Francis Osiemo, Stellenbosch University
2012

40. Conclusion
 Make the RoO in TFTA more protective of
local industries.
© Francis Osiemo, Stellenbosch University
2012

41. Conclusion
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2012

42. © Francis Osiemo, Stellenbosch University
2012