Capacity Building and High-level Policy Dialogue on Best Practices

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The objective of this project is to support the Bank¿s borrowing member clients in the design, compliance, and administration of rules of origin in preferential trading arrangements. On July 21, 2010, the Board of Governors approved the Report on the Ninth General Increase in Resources of the Inter-American Development Bank (AB-2764). The GCI-9 report mandates five sector priorities for the Bank, one of which is competitive regional and global international integration. The proposed project is aligned with this competitive regional and global international integration priority. The Rules of Origin (RoO) in preferential trading arrangements (free trade agreements and other trade preference systems) is a topic of significant technical complexity, which poses a potential barrier to effective utilization of trade preferences thus undermining the stated goals of the preference programs, which are a key element of both regional and global economic integration. While RoO are not traditionally defined as a technical barrier to trade (TBT), they are similar in many ways. In this context, there is significant identified need in the region for expanded capacity in matters of private compliance with, and public administration of RoO. These needs are increased when new preference programs are introduced. Furthermore, the existing origin regimes in many countries/agreements are antiquated. Rules are expressed in product nomenclatures that are often many years out of date, and certification and verification protocols are insufficient to modern trade and lengthening international supply chains. Countries of the region require support for the modernization of these aspects of their origin regimes in order to better facilitate trade. The IDB, through the Integration and Trade Sector (INT/INT) has been an early leader in the development of methodologies and tools for analysis and dissemination of understanding of RoO. This leadership position has been reinforced through the intense capacity building activities that the Bank has carried out in the region. At the same time, the IDB¿s support for multiple regional negotiation processes has led to broad recognition by client countries of the Bank as a pioneering institution and leader in this technical area. In this context, and in the absence of any global institutionalized expertise, the IDB is in a unique position to create a network of experts in this area. Looking forward, the challenge facing most Latin American countries of the region is no longer one of negotiation, but rather of implementation of trade agreements, of control and administration of the rules of origin, and support of exporters in ensuring compliance with these rules in order to take advantage of the tariff preferences for which they can be eligible. This demands both a robust and scalable capacity to provide training in RoO fundamentals, but also flexibility to respond to needs for customized, context-specific requests for capacity building.