It’s been an interesting week for #rulesoforigin with the @Foodanddrinkfed and @nabim_flour proposal coming out.

Here is a longish on the proposal and on origin in general

/1 https://twitter.com/AnnaJerzewska/status/1273247091725340673

First of all, the paper is a brilliant piece of work. It’s clear, super well researched and the proposed provisions are well thought through.

Worth noting - it’s not common for an industry body(ies) to come out with a fully-fledged draft origin protocol.

/2

It’s sometimes very hard to get companies to engage when formulating sectoral RoO recommendations (trust me!) and industry input is really needed – so just want to commend the authors on this fantastic report.

/3

To say that the proposal is ambitious would be an understatement. It makes the UK’s ask to use extended cumulation in its draft UK-EU FTA look basic.

This new proposal is an attempt to alleviate the impact of leaving the SM and CU in the food and drink sector.

/4

When combined the proposed provisions do that incredibly well - they would allow to maintain and protect the current supply chains and more.

/5

However, here lies the first problem – why would the EU agree to this?

It really is the embodiment of having your cake and eating it. The EU’s (Barnier’s) reaction to the RoO proposed by the UK (less ambitious than this) speaks volumes

/6

Here is a bit more on what I mean and the new origin proposal from the one and only @pmdfoster

/7 https://www.ft.com/content/e42cebfc-79d5-42a6-be77-6250881ced21

Extended cumulation – where you allow products originating from a country with which either one of the parties or both the UK and the EU have an FTA, to be considered as originating within the UK-EU trade deal – is advanced already. This proposal goes way further.

/8

Don’t get me wrong, all the proposed solutions are technically possible. Some build on existing practices and the proposals for SMEs and developing countries have merit. But they are advanced.

/9

Would potentially cause complaints and their WTO combability would likely be questioned.

Especially the provisions that go even beyond extended cumulation.

/10

The proposal introduces changes not only to the type of RoOs but also to how we calculate and account for them.

Since that is not the current practice, it’s a precedent that could have a snowball effect – which means the EU will think twice about the impact

/11

This brings me to the second point. Speaking to @ChrisHorseman2 from @BorderlexEditor I said that it takes RoOs forward a couple of decades.

Here is what I meant.

/12 https://borderlex.eu/2020/06/18/uk-and-eu-food-manufacturers-join-hands-to-call-for-liberal-rules-of-origin-in-future-trade-pact/

The question of harmonisation and flexibility of RoOs is not new (even though it's now in the spotlight in the UK).

In 2009 I participated in several APEC, ADB etc meetings in Tokyo where rules of origin were discussed - it was an old topic even back then.

/13

From 2016 onwards we had a Rules of Origin Policy Dialogue in Geneva – it brought together RoO experts from around the world, private and public sector. And incredible forum and a network of ppl (a number of us are still in touch and have formed an informal RoO network)

/14

The Policy Dialogue sadly no longer exists due to a bit of a governance mishap with one of the founding institutions, as many trade/ Geneva ppl will know.

However, the RoO work was good. Here is the link to the first event

/15

https://rtaexchange.org/dialogue/view?id=629

This was one of the fora where new proposals on RoOs were discussed. Extended cumulation was, of course, one of them. But other, sectoral simplifications were also considered. Especially in the follow-up work done less formally.

/16

In reality, to increase the economic benefits of FTAs this is where RoOs should be heading – more flexibility and equivalence. And the FDF proposal fits right into this theme and does it very well.

/17

However, as with earlier proposals and suggestions we discussed in the past, the key obstacle remains unchanged – RoOs are used as a non-tariff barrier.

It's not that you can't introduce new types of RoOs, cumulation, accounting etc. It's whether you want to

/18

RoOs in this sector are meant to protect the EU farmers and producers. And the proposed provisions open the EU market, in some areas even beyond what we have now when the UK is a member.

/19

So while it’s a good proposal, I cannot imagine the EU agreeing to the majority of the provisions.

Hopefully, a couple of them will survive and serve as a new RoO model but even that isn’t very likely.

/20

The proposal is an update of the earlier work done by the two organisations back in 2018 - the letters sent out are an attempt to bring this back to the attention of both negotiating parties

/21

The letters can be found here

/22

https://www.fdf.org.uk/rulesoforigin-eu-uk-fta.aspx

One of the earlier papers

/23

https://www.fdf.org.uk/corporate_pubs/FDF-Rules-of-origin-report.pdf

Last important point - the new proposal summarised in the letters (and +), even though advanced, seems to me to be a step back from the earlier 2018 paper.

/ends