Impact of Origin Rules for Textiles and Clothing on Developing Countries

by Munir Ahmad

Issue Paper 3

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Rules of origin are an essential for the conduct of international trade. They are needed to determine the nationality of traded products, which, in turn, is used for a whole variety of commercial policy purposes: to collect trade statistics; to apply import tariffs; to impose countervailing or anti-dumping duties on unfairly traded products; to apply safeguard measures for temporary protection to domestic industries in times of need; to administer requirements with respect to marking of products to help consumers to distinguish between them depending on their source. Origin rules are also required for administering preferential trade agreements to ensure that only the intended countries benefit from those preferences.

Textile and clothing are no exception to these essentials. Over time, however, origin rules in this sector have so evolved as to serve as conditions on access to markets or to provide protection to domestic textile industries. And, in the context of preferential arrangements, these rules have increasingly been designed to provide advantage to textile producers in preference-granting countries. While, on the one hand, this situation limits the possibility for preference-receiving countries to derive full benefit from preference schemes, on the other it has led to the creation of new distortions to trade in the sector. Origin rules are also a major factor behind concerns about the sustainability of many developing countries’ exports following the expiry of quota restrictions.

This paper is intended as an input to policy-makers and other stakeholders. It aims to provide an analysis of the working of various origin schemes in as simple and user-friendly a manner as possible.

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