The Standstill of Rules of Origin for Services: Towards a ‘Substantial Transformation’ Approach

While rules of origin (ROOs) for goods have been thoroughly discussed, similar rules for services remain nascent and have attracted insufficient scholarly attention to date. Despite their crucial role in determining the existence of trade in services and granting preferential treatment, current ROOs for services bear serious limitations as they are tied to the defectious approach of the General Agreement on Trade in Services (GATS). This article aims to examine the main strands of thought on this topic over the past two decades to illustrate the necessity of a new approach. It starts by affirming the importance of ROOs for services in the context of new patterns of trade. Next, it demonstrates how the GATS-based approach has brought progress in both rule-making practice and academic research to a standstill. By revisiting the ‘substantial transformation’ criterion, it then reveals the possibility of importing certain concepts from the sphere of goods to that of services and suggesting that some hints for the discussion should be found in other fields of law. Finally, it comes up with the recommendation that origin rules for services should be designed bottom-up and sector-specific.