Rules of Origin in Trade Agreements

Rules of Origin are criteria used to determine the national source of a product in international trade. They are critical in preferential trade agreements because they prevent "trade deflection" — where goods from non-member countries are routed through a member country to take advantage of lower tariffs. Rules of origin typically specify minimum value addition or substantial transformation that must occur within the partner country. Common criteria include: Change in Tariff Classification (CTC), Regional Value Content (RVC) thresholds, and product-specific rules. In the WTO framework, the Agreement on Rules of Origin (1994) seeks to harmonise non-preferential rules of origin.