Module 3_RULES OF ORIGIN

1. Overview of Rules of Origin (ROO) and Certificate of Origin (CO)

  • Rules of Origin (ROO): Laws, regulations, and administrative determinations to establish the country of origin of a good.

  • Country of Origin: Where a good is obtained, produced, or manufactured.

  • Import Duties: Member States shall reduce or eliminate these duties on originating goods from other Member States.

2. Types of Rules of Origin

2.1. Preferential ROO

  • Part of preferential trade agreements (FTAs) allowing tariff concessions.

  • Determines products eligible for concessions.

2.2. Non-Preferential ROO

  • Used for quotas, anti-dumping, safeguard measures, trade statistics, and origin labeling.

3. Conditions for Originating Goods

A good is considered originating if it meets any of the following:

  1. Wholly Obtained: Entirely produced within the exporting Member State.

  2. Not Wholly Obtained: Must satisfy at least one of the following criteria:

    • Regional Value Content (RVC) requirements met.

    • Change in tariff classification of non-originating materials.

    • Undergoes specific manufacturing or processing operations.

4. Determination of Origin

4.1. Wholly Obtained Goods (WO)

  • Includes goods made entirely from materials produced in the exporting country:

    • Plant Products: Fruits, vegetables, flowers, etc.

    • Live Animals: Born and raised in the exporting state.

    • Goods obtained from hunting, trapping, fishing, or farming within the state.

4.2. Substantial Transformation (ST)

  • Concept based on:

    1. Value-Added (VA) Rule

    2. Change in Tariff Classification Rule (CTC)

    3. Process Rule

4.3. Regional Value Content (RVC) Calculation

  • Defined as at least 40% of the final product’s value must originate from within ASEAN territory.

5. Examples of Origin Determination

5.1. Example 1: Washing Machines

  • Manufacturing costs calculated; must meet a 40% RVC to qualify for preferential tariff treatment under AFTA when exported to Myanmar.

5.2. Example 2: Mirror with Metal Frame

  • To determine if the mirror qualifies as originating under the ATIGA, evaluate the tariff classifications and the RVC.

6. Change in Tariff Classification (CTC)

6.1. Change in Chapter (CC)

  • First two digits of HS classification are different.

6.2. Change in Heading (CTH)

  • First four digits differ.

6.3. Change in Subheading (CTSH)

  • First six digits differ.

7. Specific Rules and Processes

7.1. Product Specific Rules (PSR)

  • Apply to specific tariff classifications; can include both CTC and RVC requirements.

7.2. Minimal Operations & Processes

  • Certain operations categorized as minimal that do not contribute to originating status.

8. Additional Rules for Evaluation

8.1. Direct Consignment Rule

  • Goods retain originating status if transported directly to the importing country or if passing through another member state solely for transport reasons.

8.2. De Minimis Rule

  • Allows non-originating material up to a certain percentage of the good’s value to qualify as originating.

9. Certificates of Origin (CO)

9.1. General Conditions

  • Must meet the eligibility list, transport requirements, compliance with origin criteria, and have a preferential certificate of origin.

9.2. Certificate of Origin Form (Form D)

  • Accomplished by the exporter, certified by an issuing body, indicating the product’s origin.

9.3. Issuance and Loss

  • Process for issuance and procedures for loss of Certificate of Origin.

10. Conclusion

  • The understanding of Rules of Origin is critical for ensuring products qualify for tariff reductions under FTAs, impacting international trade and compliance.