Sample Solution

b) US – Rules of Origin case
India requested consultations with the United States in respect of its rules of origin applicable to imports of textiles and apparel products as set out in Section 334 of the Uruguay Round of Agreement, Section 405 of the Trade and Development Act of 2000 and customs regulations implementing these provisions.

India argued that, prior to the abovementioned Section 334, the rule of origin applicable to textiles and apparel products was the “substantial transformation” rule. India considered that Section 334 changed the system by identifying specific processing operations which world confer origin to the various types of textiles and apparel products. In India’s view, these changes appear to have been made to protect the United States textiles and clothing industry from import competition. India indicated that the changes introduced by Section 334 had already been challenged by the European Communities on the grounds that they were incompatible with the United States’ obligations under the Agreement on Rules of Origin and other WTO Agreements.
Initially the Dispute Settlement Body deferred the establishment of panel. Further to a second request by India, the DSB established a panel. The panel requested for extension of time since the dispute involved complex matter and that it needed more than 6 months – time period. The panel concluded hearing of the dispute and circulated the report to the members. The panel found that India failed to establish that the United States had violated the GATT agreement.

It is said that this is the only case wherein the interpretation of the World trade Organization on Rules of Origin was sought. It is further said that even though India lost the case, India’s “original arguments” helped shape the interpretation of the WTO Rules of Origin.