1. Introduction

Historically, identifying the origin of goods was simpler because most products were manufactured within one country. Today, few products are made solely in one country, or even within one enterprise. Goods are now composites of inputs, transformations, and value-added activity from producers in many nations. Multinational corporations make investment decisions based partly on minimizing input costs and securing ready access to materials and labor for components that are consolidated into a final product and shipped worldwide using just-in-time logistics.

Components are often sourced from several countries, transported to a third country for consolidation, and then exported. What is the origin of those final goods? It may not be the country of export. The decision becomes harder when components or the final goods are produced within an area governed by a regional trade agreement with its own rules of origin.

A further difficulty has been the proliferation of regional trade agreements. These agreements often exclude non-contracting parties and limit producers in those States from competing for contracts. A framework was needed to govern the origin of goods. It also had to align with existing trade rules in the General Agreement on Tariffs and Trade (GATT) 1947 and GATT 1994. That framework became the Agreement on Rules of Origin 1995.

This Module gives you a foundation in Rules of Origin. You should supplement it with your own research and reading. The material covers both theory and practice across these areas:

Figure 2: WTO Deputy Director-General Angela Ellard delivering her opening remarks on the 30th anniversary of the Agreement on Rules of Origin on 4 April 2025.
Source: https://www.wto.org/english/news_e/news25_e/roi_04apr25_e.htm

2. Rules of Origin

Rules of origin

Learning objectives

2.1. Overview

Figure 3: Rules of Origin make accessing the benefits of trade agreements about as easy as eating a bowl of noodles with only one chopstick. 
Source: Australian Government Productivity Commission, 2017

Rules of Origin are often complex. The 1992 Agreement establishing the European Economic Area illustrates the scale: its Rules of Origin sits in Protocol 4 and contains 40 Articles, 8 Titles, 7 Annexes, across 151 pages.

This chapter looks at the law developed to deal with that complexity. The international instruments on Rules of Origin are less developed than those for Tariffs and Valuation. The World Trade Organization's (WTO) Agreement on Rules of Origin is designed to help resolve this, and there is a complete Specific Annex in the Revised Kyoto Convention (RKC) dealing with Rules of Origin (see Specific Annex K), but gaps in the law remain. We will examine these international instruments focusing on how governments are directed to administer the rules domestically. It is then up to companies such as DHL to seek to explain the rules to their customers, as seen in: DHL Guidance on Rules of Origin.

2.2. Free Trade Areas and Agreements

Free trade areas and Agreements

Preferential agreements

A preferential agreement provides preferential tariffs and market access to goods from a particular region while excluding others.

A preferential agreement grants preferential tariffs and market access to goods from a particular region or country, while excluding others from those same benefits. These arrangements are discriminatory by design: they favor specific trade partners over the rest of the world.

Real-word examples

These Agreements reflect a political relationship more than a trading one. They do, however, reduce protectionism in developed economies and create a base for export growth in smaller countries.

2.3. Regional Trade Agreements

Some of the plurilateral agreements between states or blocs in the same geographic region include:

A full list is available at the WTO website: https://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.

The three tables below show bilateral free trade agreements concluded by Australia, China, and the United States. They illustrate how the bilateral approach has expanded alongside the regional one, and why Certificates of Origin remain central to international trade; they provide the key evidence of entitlement to preferential access to markets.

Australia has bilateral agreements with:

Most free trade agreements allow members to keep their national tariffs. Rules of Origin are critical for without it, goods from outside the free trade area could be imported into the member with the lowest external tariff and then re-exported to another member as if they qualified for preference.

Well managed origin rules also encourage regional trade in raw materials and intermediate products, because producers prefer to use inputs sourced within the area so their goods qualify for preferential status and gain maximum market access. If the origin process is too expensive or complex to document, businesses may prefer to keep paying the external tariff. This can undermine regional trade.

As GATT rounds continue to reduce Customs duty rates, rules of origin (rather than tariffs themselves) may become the main method of offering some protection to industries within free trade areas, whether formal or informal.

An Oxford academic paper on Rules of Origin identified four ‘Laws’ on the operation and impact of preference within free trade areas:

2.4. Free Trade Zones, Customs Unions and Article XXIV, GATT

As shown by the European Union, an original Customs Union can evolve into a detailed political and economic entity with its own currency and market, operating under different rules depending on whether goods originate inside or outside the Union. The drafters of GATT recognized this potential.

They included Article XXIV in the Agreement because they believed regional trade liberalization would encourage global trade liberalization.

To establish a Free Trade Area or a Customs Union that is GATT compliant, the FTA or union must meet the requirements of Article XXIV, GATT:

The emergence of unions and free trade areas has created a growing need for Rules of Origin that are uniform across the world. The more that Rules of Origin are set by regional groupings rather than at the global level, the greater the risk that Customs Unions will use Rules of Origin to shut out goods on criteria not used anywhere else.

Article XXIV is likely to remain a contentious legal provision. The stall and lack of progress of the Doha Round has again raised the risk that the world divides into trading blocs, creating external tariff and non-tariff barriers between those blocs while protectionism disappears within them.

2.5. Bilateral Trade Agreements

Bilateral agreements have long been a feature of international trade relations. They were common before GATT was created, and for many countries they have taken on new importance. Australia has recently concluded bilateral free trade agreements with the United Kingdom, India, and Indonesia. The Australian government has recently concluded negotiations for a free trade agreement with the European Union in March 2026; however, the FTA is not in force as yet. Australia’s agreement with the Gulf Cooperation Council (GCC) is still under consideration while its FTA with the United Arab Emirates (UAE) entered into force on 1 October 2025. Note that some bilateral agreements amount to the creation of a free trade area, as done by ANZCERTA, the Agreement between Australia and New Zealand.

ANZCERTA is a good example of a bilateral agreement that gives greater force and clarity to WTO commitments under GATT and the related agreements. Not all bilateral agreements have that effect.

3. The Meaning of Origin

Learning objectives

Origin is the country in which goods were made or manufactured. It is not necessarily the country where the goods were shipped from. Origin matters because it determines whether a good qualifies for preferential treatment, or whether it is subject to discriminatory controls such as quotas or anti-dumping duty. These preferences or discriminations can arise under GATT, or from other trading Agreements such as bilateral free trade agreements, agreements establishing free trade areas or Customs zones, and preferential agreements such as the Lome Convention.

Given current global trading patterns and the intra-industry flows of raw and intermediate inputs, determining the origin status of a finished product is not always easy. The number of free trade Agreements continues to grow, each with its own Rules of Origin, and there is not yet a global set of standards on how those rules are to be defined and administered. Rules of origin fall into two categories: non-preferential and preferential.

3.1. Non-Preferential and Preferential Rules of Origin

3.2. The 'Rules' Generally

A good is considered wholly obtained if it is entirely produced or manufactured in one country, making that country its origin. When more than one country is involved in production, origin is determined by which country substantially transformed the good. Substantial transformation is established by one of the following methods, or a combination of them:

4. WTO Agreement on Rules of Origin

Learning objectives

GATT contains many provisions which require the determination of origin. Rules of Origin are important in implementing trade policy instruments such as anti-dumping and countervailing duties, origin marking, and safeguard measures. To ensure as much uniformity as possible in interpreting GATT, the Uruguay Round produced a WTO Agreement on Rules of Origin which is an Annex to the WTO Agreement. We consider this Agreement first.

The Agreement is in 4 parts and has 2 Annexes.

The first point to note is Article 1, paragraph 1, which expressly provides that the Agreement is not intended to apply to ‘contractual or autonomous trade regimes leading to the granting of tariff preferences going beyond the application of paragraph 1 of Article I of GATT 1994.’ In other words, the determination goods’ origin enjoying preference granted beyond the basic MFN treatment provided for in Article I will not be caught by this Agreement.

 Conversely, Article 1, paragraph 2 of the Agreement provides:

The Agreement contemplates a work program for the harmonization of Rules of Origin, based on work to be done within the WCO, to determine Rules of Origin for each tariff heading in the Harmonised System. This work began in 1995 but has not yet been completed, and has proved much harder than originally envisaged. The Agreement contemplated one set of rules to apply during the transitional period, and a new set of disciplines to apply after the work had been completed. We are still in the transition period, and the disciplines set out in Article 2 still apply.

Origin is now well understood for wholly obtained goods. Substantial transformation is where the contention remains.

During the Uruguay Round, three tests for substantial transformation were recognized, but it did not prove possible to reach agreement on one single determinant of origin. Article 2 therefore reflects all three tests as being legitimate:

Article 2 does not attempt to define each of these tests but sets out criteria under which they are to be administered. Article 3 of the Agreement sets out the basic principles about the way in which Rules of Origin are to be applied once the transitional phase is over. Article 2, paragraph (c) requires that rules of origin shall not themselves create restrictive, distorting or disruptive effects on international trade.

The concept of the transitional phase comes from Part IV of the Agreement. Article 9 establishes a work program (with the WCO) to harmonize origin rules on the basis of certain key principles, set out in paragraph 1 of Article 9 (the principles largely included in Articles 2 and 3). The agenda for this harmonization program is set out in Article 9, paragraph 2 (c), which also requires the work to be conducted on a product sector basis, as represented by various chapters of the Harmonised System. The work was designed to achieve the following objectives:

The Agreement also contains two Annexes. Annex I establishes a Technical Committee on Rules of Origin, and Annex II contains a Common Declaration with regard to Preferential Rules of Origin. The Declaration seeks to apply similar administrative rules to non-GATT origin issues as to GATT origin issues. These relate to matters such as transparency of regulations, the need for positive standards rather than negative ones, judicial review of administrative decisions, and the treatment of confidential commercial information.

5. Rules of Origin under the Revised Kyoto Convention

Learning objectives

We now look at some of the standards in the WCO's Revised Kyoto Convention, Specific Annex K, which sets out how Customs agencies should administer their rules of origin as part of revenue collection.

5.1. Revised Kyoto Convention - Specific Annex K

There has been considerable activity within the WTO and the WCO to develop standard origin rules. Although this work has proved harder than anticipated and is still incomplete, substantial agreement on the basic rules of origin now exists. These understandings find their latest expression in Annex K to the Revised Kyoto Convention.

The Annex contains three chapters.

Most of the provisions in Annex K are Recommended Practices rather than Standards, which suggests that they do not yet enjoy universal support, and which allows states to enter reservations against them should they wish.

Chapter 1 provisions are worth a closer look. The table below sets out those goods which can be regarded as wholly obtained from a particular country.

In addition, Recommended Practice (RP) 3 says that the substantial transformation criterion should apply to any good that is manufactured in more than one country. RP 4 recommends that the Harmonized System is be used to assist in determining substantial transformation.

RP 5 recommends that where the substantial transformation criterion is expressed in terms of the ad valorem percentage rule, the values to be taken into consideration should be:

RP 6 recommends that operations which do not contribute, or which contribute only to a small extent to the essential characteristics or properties of the goods, and in particular operations confined to one or more of those listed below, should not be regarded as constituting substantial manufacturing or processing:

The table below sets out some special WCO rules to assist with determining origin:

Despite the activities of the WTO and the WCO, there is still considerable scope for States to determine within their own legislation what criteria they will use to determine origin. There are also some creative bilateral arrangements in place. Where bilateral or other agreements stipulate a particular methodology, that methodology must be incorporated into domestic law.

5.2. Certificates of Origin

A Certificate of Origin is a document certifying that the products being exported originate and are manufactured in the country of the seller. With the Certificate of Origin, a buyer (typically the importer) is assured that the products being purchased originate and are manufactured in the country of the seller (typically the exporter).

Importing countries consider the origin of imported goods when determining the duty that will be assessed on the goods imported and whether the imports are given preferential access. Other considerations are whether the goods are subject to quota, and whether they come from an embargoed nation, in which case the goods will not be allowed entry.

5.3. What do they look like?

There is no prescribed form for a certificate or declaration by the manufacturer. It should, however, describe the goods and indicate that, in accordance with the Customs Act or whichever applicable legislation, the goods are eligible for preference. The name of the person signing the certificate or declaration should also be clearly stated.

A sample form is shown in Annex 1 to Specific Annex K (Reading 3) and actual samples are shown in Figure 4 and Figure 5 below.

How do you obtain a Certificate of Origin?

Australia deals with two types of certificates of origin:

In Australia, a Certificate of Origin can be obtained from a Chamber of Commerce by completing a Declaration of Origin and providing the relevant export documentation. A Declaration of Origin is an affidavit signed by the exporter or their representative certifying the country of growth, production or manufacture of the exported goods. Copies of the following documents must also be provided:

Some examples of goods that require Certificates of Origin include chemicals, garments, jewelry, meat, pharmaceuticals, rice, sugar, textiles, wool, and wheat.

As Chambers of Commerce are often one of the principal issuing authorities for Certificates of Origin, the ICC provides the following information for its members on its website: ICC Certificates of Origin.

What is a Certificate of Origin?

A Certificate of Origin (CO) is a document attesting that goods in a particular export shipment are wholly obtained or produced or manufactured or processed in a particular country (country of origin). Virtually every country in the world considers the origin of imported goods when determining what duty will be assessed on the goods or, in some cases, whether the goods may be legally imported at all.

There are two types of certificates.

Certificates of origin may be needed to comply with Letters of Credit, foreign Customs requirements, or a buyer’s request.

Unlike the ATA Carnet, there is no international chain among chambers of commerce for the issuance of certificates of origin.

In most countries, Chambers of Commerce are the key agent in the delivery of Certificates of Origin. In some countries, this privilege may also be extended to other industry groups. The role of Chambers of Commerce in delivering Certificates of Origin can be traced back to the 1923 Geneva Convention relating to the Simplification of Customs Formalities (Article 11), eventually updated by the Kyoto Convention.

Under the Convention, signatory governments were obliged to make the process and procedures as simple as possible for companies requiring Certificates of Origin. The State may also allow these certificates to be issued by other organizations “which possess the necessary authority and offer the necessary guarantees” to the State. Due to the widespread network of the Chamber of Commerce community in nearly all countries and its respected reputation in serving the business community, Chambers of Commerce are recognized as the authority to issue a Certificate of Origin.

Figure 4: Certificate of Origin

Figure 5: China-Australia Certificate of Origin

Compliance verification

In many countries, Customs operates in a self-assessment environment, where information provided to it is treated in the first instance as true and correct. Underpinning this self-assessment environment are risk management strategies to identify cargo that may require further attention, and a number of compliance management tools including real-time checking of entries and post-entry audits.

Customs’ compliance monitoring may take place at the time of entry, or after the goods are delivered into home consumption. Customs may require an importer to produce supporting information to confirm that the criteria for eligibility for preference rates of duty have been met. This information should be requested from the overseas manufacturer.

If Customs subsequently finds that the goods do not meet the relevant terms and conditions to qualify for preferential treatment, they will demand any duty short-paid and may impose penalties. Additional action may be taken where fraud is involved, including prosecution.

6. Case Study: The Australia - United States Free Trade Agreement

7. Bibliography

■        Australia-United States Free Trade Agreement, Guide to Navigating the AUSFTA Tariff Schedules and Rules of Origin Annexes, http://www.dfat.gov.au/trade/negotiations/us_fta/final-text/chapter_5.html

■        Cadot, Olivier (Editor), Estevadeordal, Antoni (Editor), Suwa-Eisenmann, Akiko (Editor), Verdier, Thierry (Editor) 2006, Rules of Origin in Regional Trade Agreements, https://mddb.apec.org/documents/2006/cti/fta-rta/06_fta-rta1_005.pdf

■        International Chamber of Commerce, Origin, http://www.iccwbo.org/wcf/id2808/index.html

■        Islam M.R., 1999, International Trade Law, LBC Information Services, Sydney.

■        Pryles, Waincymer and Davies 2004, International Trade Law, Lawbook Co, Sydney.

■        TAXUD EU and Non-Preferential Origin, http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/non-preferential/index_en.htm

■        TAXUD EU and Preferential Origin, http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/preferential/index_en.htm

■        United Nations Centre for Trade and Development 2004, Forum on Multilateralism and Regionalism: The new interface, Geneva. Available on UNCTAD website: http://www.unctad.org/en/docs//tdl369_en.pdf

■        United States Department of Agriculture Economic Research Service 2003, Multilateralism and Regionalism: Dual Strategies for Trade Reform, Washington DC. Available on the Economic Research Service's website: http://www.ers.usda.gov/Amberwaves/September03/Features/Multilateralism.html

■        World Customs Organization, 1999, Revised Kyoto Convention on the simplification and harmonisation of Customs procedures, General Annex, WCO Brussels.

■        World Customs Organization, 1999, Revised Kyoto Convention on the simplification and harmonisation of Customs procedures, Specific Annex K, WCO Brussels.

■        World Trade Organization, 1994, Agreement on Rules of Origin, Geneva.

■        World Trade Organization, 1994, Marrakesh Agreement Establishing the World Trade Organisation, Geneva.