This term is related with international trade. Rules of Origin means identifying the origin of the commodity, ie, in which country the commodity has been manufactured. Usually a final product has different components produced in different countries. The question is how much proportion of that final product has been produced in the FTA partner country. Determining where a product comes from is no longer easy when raw materials and parts crisscross the globe to be used as inputs in scattered manufacturing plants. Rules of origin is important in constructing the FTAs. It is also important in implementing such trade policy instruments as anti-dumping and countervailing duties, origin marking, and safeguards measures. Several FTAs stipulate that a commodity should have at least 40% of a commodity should have originated in the FTA partners.
