THE Common Market for Eastern and Southern Africa (COMESA) rules of origin should be be simplified Trade Law Centre (TRALAC) ,a Southern
African trade think tank has said.
The current scenario is proving difficult and costly to manufacturers in most Comesa member countries.
According to the latest research on “Rules of Origin Looking Outside the Box” , the rules of origin concept was proving complex as it was imposing adjustments to the supply chain of producers.
“If the rule is complex and imposes adjustments to the supply chain of a company, complying with the rules could be difficult or costly, so much that certain companies may simply not be able to comply with them,” states the report.
It states that currently there is no relationship between origin requirements and the productive capacity of the companies and countries.
The report says that in this case, rules may influence business choices and have an impact on competitiveness and the utilisation of preferential agreement on trade.
This is raising the cost of production by requiring a manufacturer to source inputs from a regional producer rather than from potentially cheaper source outside the region.
It stated that production processes have become simple hence fixing rules of origin criteria were becoming less helpful, especially when considering trade with developed countries that have diverse export and import options.
“If the rule is simple, predictable and easy to comply with, complying with the rule will be ease and the products will become eligible for preferences,” it stated.
It reported that a minimum provision that allows goods to qualify as originating as long as the materials were not worth more than seven per cent of transaction of value was assessed at a free on board value or the total cost of goods.
Another issue was that of accumulation, which requires all the processes to be done in a single country to be originated from that country.
The rules often accept the use of imported inputs from other selected country whose imported inputs would be considered to be domestic for original purposes was required.