External Sector Updates- 4 | Economy for UPSC 2024 (Pre & Mains) PDF Download

 Page 1


E C O N O M Y
E X T E R N A L S E C T O R
UPDATES
PART - 4
Page 2


E C O N O M Y
E X T E R N A L S E C T O R
UPDATES
PART - 4
RULES OF ORIGIN
Rules of origin are laws, regulations and procedures 
that identify where an imported product originally came from. 
The rules vary from country to country, and are often specified in free trade agreements. 
The rules often refer to a certain quantity of inputs, processing, transformation, etc. that needs to be done in the country.
Identifying a product’s country of origin helps customs agencies know what regulations and fees 
apply to a given product. 
Tariffs may be reduced or increased depending on where a product comes from.
Rules of origin (ROO) are the criteria needed to determine the country of origin of a product for purposes of international trade. 
Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.
Rules of origin are used:
• to implement measures and instruments of commercial policy such as antidumping duties and safeguard measures;
• to determine whether imported products shall receive most-favoured-nation
(MFN) treatment or preferential treatment;
• for the purpose of trade statistics;
• for the application of labelling and marking requirements; and
• for government procurement.
Page 3


E C O N O M Y
E X T E R N A L S E C T O R
UPDATES
PART - 4
RULES OF ORIGIN
Rules of origin are laws, regulations and procedures 
that identify where an imported product originally came from. 
The rules vary from country to country, and are often specified in free trade agreements. 
The rules often refer to a certain quantity of inputs, processing, transformation, etc. that needs to be done in the country.
Identifying a product’s country of origin helps customs agencies know what regulations and fees 
apply to a given product. 
Tariffs may be reduced or increased depending on where a product comes from.
Rules of origin (ROO) are the criteria needed to determine the country of origin of a product for purposes of international trade. 
Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.
Rules of origin are used:
• to implement measures and instruments of commercial policy such as antidumping duties and safeguard measures;
• to determine whether imported products shall receive most-favoured-nation
(MFN) treatment or preferential treatment;
• for the purpose of trade statistics;
• for the application of labelling and marking requirements; and
• for government procurement.
JUST SAYING
India is the biggest trading partner for Nepal, Bhutan and Sri Lanka.
Page 4


E C O N O M Y
E X T E R N A L S E C T O R
UPDATES
PART - 4
RULES OF ORIGIN
Rules of origin are laws, regulations and procedures 
that identify where an imported product originally came from. 
The rules vary from country to country, and are often specified in free trade agreements. 
The rules often refer to a certain quantity of inputs, processing, transformation, etc. that needs to be done in the country.
Identifying a product’s country of origin helps customs agencies know what regulations and fees 
apply to a given product. 
Tariffs may be reduced or increased depending on where a product comes from.
Rules of origin (ROO) are the criteria needed to determine the country of origin of a product for purposes of international trade. 
Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.
Rules of origin are used:
• to implement measures and instruments of commercial policy such as antidumping duties and safeguard measures;
• to determine whether imported products shall receive most-favoured-nation
(MFN) treatment or preferential treatment;
• for the purpose of trade statistics;
• for the application of labelling and marking requirements; and
• for government procurement.
JUST SAYING
India is the biggest trading partner for Nepal, Bhutan and Sri Lanka.
PREFERENTIAL TRADE AGREEMENT (PTA)
In a PTA, two or more partners agree to reduce tariffs on agreed number of tariff lines. 
The list of products on which the partners agree to reduce duty is called positive list. 
India MERCOSUR PTA is such an example. 
However, in general PTAs do not cover substantially all trade. 
Page 5


E C O N O M Y
E X T E R N A L S E C T O R
UPDATES
PART - 4
RULES OF ORIGIN
Rules of origin are laws, regulations and procedures 
that identify where an imported product originally came from. 
The rules vary from country to country, and are often specified in free trade agreements. 
The rules often refer to a certain quantity of inputs, processing, transformation, etc. that needs to be done in the country.
Identifying a product’s country of origin helps customs agencies know what regulations and fees 
apply to a given product. 
Tariffs may be reduced or increased depending on where a product comes from.
Rules of origin (ROO) are the criteria needed to determine the country of origin of a product for purposes of international trade. 
Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.
Rules of origin are used:
• to implement measures and instruments of commercial policy such as antidumping duties and safeguard measures;
• to determine whether imported products shall receive most-favoured-nation
(MFN) treatment or preferential treatment;
• for the purpose of trade statistics;
• for the application of labelling and marking requirements; and
• for government procurement.
JUST SAYING
India is the biggest trading partner for Nepal, Bhutan and Sri Lanka.
PREFERENTIAL TRADE AGREEMENT (PTA)
In a PTA, two or more partners agree to reduce tariffs on agreed number of tariff lines. 
The list of products on which the partners agree to reduce duty is called positive list. 
India MERCOSUR PTA is such an example. 
However, in general PTAs do not cover substantially all trade. 
FREE TRADE AGREEMENT (FTA)
In FTAs, tariffs on items covering substantial bilateral trade are eliminated between the partner 
countries.
However each maintains individual tariff structure for non-members. 
India Sri Lanka FTA is an example. 
The key difference between an FTA and a PTA is that while in a PTA there is a positive list of 
products on which duty is to be reduced.
In an FTA there is a negative list on which duty is not reduced or eliminated. 
Thus, compared to a PTA, FTAs are generally more ambitious in coverage of tariff lines 
(products) on which duty is to be reduced.