EU's declaration of revising RoO has sparked debates. It is argued that the new set of rules favor the RMG exporters, while it is facing condemnation of textile exporters.

European Commission has revised its regulations for rules of origin (RoO) for the products imported under the Generalized System of Preferences (GSP). The rules are in favor of developing countries, enabling them with duty free access. At the same time, it has also imposed strict policy regulations so as to make sure there are no deceptions.

Rules of origin are used for determining the country of origin for merchandise during international trade transactions. EU has devised rules to make sure that the goods imported into the European countries are originally made in the countries covered by EUs GSP regulations. This makes them eligible to enjoy exceptions from certain customs tariffs. The root of these rules date back to the 70s.

RoO is what an importing country considers as the amount of value added in the merchandise of the exporting country making it eligible to be considered as an export of that particular (exporting) country. Additionally, RoO can also restrict the countries from which an exporting country may source its raw materials. Though the rules of EU were highly debated in general, those related to clothing imports were criticized more due to its high average tariffs. They were carped as being too complex, stringent, and out-of-date.

Europe has recently revised the rules so that they enable simplicity and easy conformity for the developing countries. The new rules consider the various sectors of production, and the processing requirements. Special provisions are added considering the benefit of the Least Developed Countries (LDCs) facilitating them to claim origin for goods that are processed therein, though the main materials are not manufactured there. The new rules of origin also demand proof of origin for the goods imported into EU. Current procedures for certification of origin are carried out by third country authorities. This would be replaced by statements made directly by the exporters.

Boon for RMG Exporters:

The new set of rules is expected to benefit developing countries more, especially Pakistan. The new regulation simplifies the rules and procedures for developing countries that wish to gain preferential trade arrangement with EU. The revised regulations eliminate the current two step process for manufacturing ready-made garments. The imported fabrics used by the LDC countries for making apparels, that are exported to EU can still enjoy the GSP benefits.

The new regulations are also anticipated by industry analysts to fillip Bangladesh's RMG exports to European markets. It is believed to widen market access facilities, enabling the exporters to import fabrics from anywhere in the world. The condition that only locally made fabrics would gain more duty-free access to EU has now been relaxed. This has benefited the exporters which is crystal clear by the surge of its apparels during the period of January-June 2011. During the fiscal 2010-11, Bangladesh exported apparel worth of USD 7.20 billion. With relaxed access apparel exports for the current year is expected to be more than USD 10.50 billion.