Date:12/06/2005 URL: http://www.thehindubusinessline.com/2005/06/12/stories/2005061202160400.htm

Back Panel to finalise approach to rules of origin for FTA with Asean soon

Our Bureau

New Delhi , June 11

INDIA'S approach to the formulation of a new set of rules of origin for the India-Asean Free Trade Agreement (FTA) will be finalised by mid-July.

The expert group on preferential rules of origin constituted by the Commerce Ministry would round off countrywide consultations with the industry by the month-end, the Chairman of the expert group, Mr P.R.V. Ramanan, said.

Addressing an interactive session on `Rules of origin issues in India-Asean FTA,' Mr Ramanan said the evaluation of new rules of origin approach comes in the wake of the rejection by Asean of India's general approach to its various FTAs. The rejection was on grounds of lack of consistency in the criterion adopted for domestic value addition, inability to recognise China's endorsement of the norms set out by Asean and complexity in the minimum qualifying operations to confer the origin status, according to Mr Ramanan.

The session was organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) in association with the Ministry of Commerce and Industry.

Rules of origin are the criteria that determine the country of origin of the product. Tariff concessions under the FTA are available only if the products satisfy the rules of origin as agreed between the member countries of FTA.

India is following a `twin criteria' approach for the rules of origin in existing FTAs. This approach involves mainly two methods to determine the origin of the product. One method is the value addition method and the other is the change in tariff heading (CTH) method.

Besides the above methods, India also specifies a range of operations, i.e.`non-qualifying operations' that are deemed to be insufficient working or processing to confer origin. These include processes such as simple packaging operations (bottling, placing in boxes, bags and cases, and simple fixing on cards and boards); simple mixing of products and simple assembly of parts; and operations to ensure the preservation of products during transport and storage.

After the India-Asean Summit in November 2004, India had presented a list of items on which it desired the application of `twin criteria.' Asean did not agree with India's proposal of change in the CTH method.