Conceptual and Policy Issues in Rules of Origin: Implications for SAPTA and SAFTA

Rules of origin are applied in both preferential and non-preferential trading regimes. The system of rules of origin has been a very useful mechanism in identi fying the origin of goods for the adoption of various commercial policies such as anti-dumping duties, countervailing duties and voluntary restraint arrangements. It has also been used in preventing trade deflection in regional trading arrange ments. The present article argues that it also plays a developmental role in a coun try or region. However, rules of origin should be designed in a manner that is not trade restricting. They should not become trade barriers due to their complex methods of implementation.The countries of SAARC have been making progress on various fronts of regional economic cooperation. In this context, the present study weighs the pros and cons of relaxation of the rules of origin requirements under the SAPTA regime. As SAARC countries progress from SAPTA to SAFTA, an efficacious sys tem of granting originating status to products would be required. The article also tries to evolve an approach for setting in place a SAFTA rules of origin system by taking into account various SAARC region-specific characteristics. It further takes into consideration the present status of WTO negotiations on non-preferential rules of origin.