ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Perspective

Rules of Origin and Changes in the Customs Law and Procedures

The article highlights the growing use of concepts like country of origin and rules of origin in the domain of international trade and how they have become increasingly relevant to India. In this context, it discusses the recent changes introduced in the Customs Act and rules, to prevent the misuse of the provisions of free trade agreements and protect the interests of the domestic industry, and their implications.

 

India’s preferential trade arrangements (PTAs) and regional trade agreements (RTAs) have registered prolific growth in the last three decades. By September 2020, as many as 306 RTAs were in force when compared to just 28 in 1990.1 The PTAs notified by India to the World Trade Organization (WTO) number around 35 (not counting the sub-schemes), in the data available on the WTO website.2 The PTAs are one-­sided trade preferences and include generalised system of preferences (GSP) schemes, as well as other non-reciprocal preferential schemes that were granted a waiver by the WTO’s general council.

In any free trade agreement (FTA), the signatory countries agree on a lower or a preferential tariff to be applied to the goods exchanged between them, while at the same time, the participating countries remain unbound to levy their own (higher) rate of duties on imports from other non-participating countries. It is imperative, thus, that there be set criteria devised to determine the national source of a product in any such preferential arrangement to distinguish products of the partner country/region from that produced by others. This becomes especially important in light of the fact that in the distributed production processes and integrated global value chains of ­today, there is a substantial likelihood that products often pass through many countries in the production process. This fundamental realisation is what inserts the concept of “country of origin” (COO) of the imported goods and the “rules of origin” (ROO) in the domain of international trade.

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Updated On : 26th Jul, 2021

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