Rules of origin are particularly important in free trade agreements established to grant preferences exclusively to products of preferential origin. In this context, rules of origin are essential to distinguish between products originating in the Contracting Parties and those originating in third countries. Such differentiation has two objectives: 1. It allows the importing Party to determine whether a product is eligible for preferential treatment under this Free Trade Agreement; (2) It avoids the scenario in which exports from third countries enter the free trade agreement through the member with the lowest external tariffs (i.e. relocation).  This explains why, in a customs union, it is not necessary to lay down rules of origin between their contracting parties – members of a customs union must maintain a common external customs duty for imports from third countries.  Given the small number of World Customs Organization (WCO) members that adhere to the specific Annex K (membership of specific annexes is optional), the Kyoto Agreement has a rather insignificant impact on the application of rules of origin in international trade. However, this Convention contains many important definitions and standards that serve as a harmonized basis for national legislation and trade agreements for the formulation of origin. In addition to the definition of rules of origin, it also contains definitions of “country of origin”, “substantial transformation” and a number of recommended practices.
 Learn more about Rules of Origin and the resources that allow you to qualify your shipment for FTA preferential tariff treatment. In addition to the criteria of nuclear origin, the rules of origin also include general provisions covering other aspects of the determination of origin. They are called “general forecasts” because they are applied in all areas and are not product-specific. Although there is no harmony between trade agreements, the Comparative Study on Origin Rules of The WCO listed the most frequently found provisions in this category.  On the basis of this study, the following glossary is made available to businesses by the International Trade Centre as a brief guideline.  The way in which free trade agreements are designated may also be different. . .