Country Of Origin Requirements Essay ⋆ Business Essay Examples ⋆ EssayEmpire

At the global level there are no uniform or enforceable guidelines governing country of origin requirements. Apart from treaty obligations, which may be bilateral or multilateral, and excluding any obligations arising as a member of a customs union, for example, the European Community (EC), individual countries have considerable freedom in the following: the way in which a product acquires origin (for example, whether it is wholly, or partly processed); limits on the extent to which value is added in non-preference countries; and documentary requirements to establish origin. Additionally, further restrictions may be imposed on country-of-origin marking in the case of specific products that are being exported (for example, “Swiss” watches and watch movements).

In the EC there exist two broad rules determining rules of origin: preferential rules and non-preferential rules. The former allow most products originating in a preferential-partner country to be imported to the EC after little, if any, common external tariff. Such preferences apply to Norway, Iceland, Switzerland, and Turkey (pan-European partners) as well as to Egypt, Israel, Jordan, and Lebanon (pan-Mediterranean partners). These arrangements have been supplemented by a pan-Euro-Med cumulation agreement that helps manufacturers satisfy relevant origin rules provided they originate within the EC’s preferential trading arrangements.

Non-preferential rules apply to imported products originating from countries for which the EC does not extend preferential arrangements. This includes Australia, Japan, and the United States. Products covered by non-preferential rules include those “wholly obtained or produced” in a single country (for example, extracted mineral products), and those whose production involved more than one country (for example, electrical and electronic goods). Where more than one country was involved in the production of a good, the originating country is defined as that in which the final major process was effected.

In the United States, it is a legal requirement that U.S. content must be disclosed on certain types of products, for example, motor cars, textiles, and woolen and fur products. The relevant legislation governing the description to be applied to each of these products is, respectively, the American Automobile Labeling Act, the American Textile Fiber Products Identification Act, the Wool Products Labeling Act, and the Fur Products Labeling Act.

However, in certain cases, North American Free Trade Agreement (NAFTA) override rules can be used if a NAFTA preference is claimed. For example, China is a producer of comforter shells and the down used to fill these shells. Both of these textile products are sent to Canada, where the down is inserted into the shells. Although China is the country of origin of the finished comforter, Canada, which is a NAFTA member, can claim duty preference and if this is successful, the country of origin of the finished comforter is recognized as Canada. However, a product comprising foreign components may be labeled “Assembled in the USA” when its assembly has occurred in the United States and this assembly represents a “substantial transformation.” It is also the case that certain qualified “Made in the USA” claims can be made. For example, “Made in the USA of U.S. and imported parts.” Such qualified statements are considered appropriate when the products that include U.S. content don’t satisfy the criteria for making unqualified “Made in the USA” claims.

Outside of the European Union and North America, countries are free to impose such restrictions as they wish on country of origin requirements, especially when country designations apply to particular products. In the case of watches, for example, Swiss law defines a watch as Swiss made when its movement is Swiss, its movement is cased in Switzerland, and the final inspection of the watch occurs in Switzerland.

A final category of origin requirement to which reference should be made concerns regional appellations that belong to particular countries. For example, “Stilton” cheese (England) and wines from the French regions of Burgundy and Champagne. Misuse of a regional appellation (for example, labeling wine “Burgundy” when it was not made there), can mislead consumers and it can lead to unfair competition (producers who do not have the right to the appellation nonetheless use it to try to capture some of the goodwill attached to genuine appellation products). Rules governing these appellations were promulgated by the International Convention for the Protection of Industrial Property dating back to the later 19th century (for example, Paris, 1883, and Brussels, 1900), and have more recently been covered by the Agreement on Trade-Related Aspects of International Property Rights (TRIPS), which set out the rules governing the registration of these appellations and the methods required to ensure their protection. In the case of wines and spirits, the TRIPS agreement contains special clauses that afford these products even higher levels of protection.

Bibliography:

Australian Competition and Consumer Commission, Country of Origin Claims and the Trade Practices Act (Australian Competition and Consumer Commission, 2002);
Australian Competition and Consumer Commission, Electrical Goods: Country of Origin Guidelines to the Trade Practices Act (Australian Competition and Consumer Commission, 2003);
Australian Competition and Consumer Commission, Food and Beverage Industry: Country of Origin Guidelines to the Trade Practices Act (Australian Competition and Consumer Commission, 2005);
United States Congress: House Committee on Agriculture: Subcommittee on Domestic Marketing, Consumer Relations, and Nutrition, Implementation of Country of-Origin Labeling Requirements under Florida Produce Labeling Act of 1979: Hearing Before the Subcommittee on Domestic Marketing, Consumer Relations, and Nutrition of the Committee on Agriculture (House of Representatives, One Hundredth Congress, second session, April 15, 1988);
United States Congress, House Committee on Ways and Means, Subcommittee on Trade, Country-of-Origin Labeling Requirements for Imported Meat and Other Food Products: Hearing Before the Subcommittee on Trade of the Committee on Ways and Means (House of Representatives, One Hundredth Congress, second session, September 27, 1988);
United States General Accounting Office, Countryof-Origin Labeling Opportunities for USDA and Industry to Implement Challenging Aspects of the New Law: Report to Congressional Requesters (United States General Accounting Office, 2003);
Vermulst, P. Waer, and J. Bourgeois, eds., Rules of Origin in International Trade: A Comparative Study (University of Michigan Press, 1994).

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