RULES OF ORIGIN FOR FTA MALAYSIA – PAKISTAN MALAYSIA – JAPAN ASEAN – CHINA ASEAN – KOREA MATRADE 12 OCTOBER 2006

Content Background: - Definition of ROO - Origin criteria - Important concepts Malaysia - Pakistan FTA (MPFTA) Malaysia - Japan FTA (MAJEPA) ASEAN - China FTA (ACFTA) ASEAN - Korea FTA (AKFTA) Operational Certification Procedures (OCP)

Content

Background:

- Definition of ROO

- Origin criteria

- Important concepts

Malaysia - Pakistan FTA (MPFTA)

Malaysia - Japan FTA (MAJEPA)

ASEAN - China FTA (ACFTA)

ASEAN - Korea FTA (AKFTA)

Operational Certification

Procedures (OCP)

ROO Definition The criteria used to determine the country in which the good has been produced or manufactured . The basis used for international trade purposes . Becoming more complex since more goods are produced from inputs / materials coming from multiple origins .

The criteria used to determine the country in which the good has been produced or manufactured .

The basis used for international trade purposes .

Becoming more complex since more goods are produced from inputs / materials coming from multiple origins .

Why We Need ROO? Determine whether a good qualifies for preferential treatment under a trading arrangement (FTA). Ensure benefits are limited to p roducts originated from the contracting parties . Preserve (increase) existing external protection of countries within the FTA.

Determine whether a good qualifies for preferential treatment under a trading arrangement (FTA).

Ensure benefits are limited to p roducts originated from the contracting parties .

Preserve (increase) existing external protection of countries within the FTA.

Originating Goods Goods that meet the conditions for preferential market access . All other goods are called the non-originating goods .

Goods that meet the conditions for preferential market access .

All other goods are called the non-originating goods .

Origin Criteria Wholly obtained or produced Substantial Transformation ( ST ): - Value added (VA) method - Change in Tariff Classification ( CTC ) - Specified Process of Manufacture

Wholly obtained or produced

Substantial Transformation ( ST ):

- Value added (VA) method

- Change in Tariff Classification ( CTC )

- Specified Process of Manufacture

Wholly Obtained Goods Originate entirely within the exporting country . Includes: - live animals born and raised in that country; - animals obtained by hunting , trapping , fishing , gathering or capturing in that country; - products obtained from live animals ; - plants and plant products harvested, picked or gathered in that country; - products of sea-fishing and other products taken from the sea outside a country ; - goods obtained or produced on board factory ships ;

Wholly Obtained Goods

Originate entirely within the exporting country .

Includes:

- live animals born and raised in that country;

- animals obtained by hunting , trapping , fishing , gathering or capturing in that country;

- products obtained from live animals ;

- plants and plant products harvested, picked or gathered in that country;

- products of sea-fishing and other products taken from the sea outside a country ;

- goods obtained or produced on board factory ships ;

… ..wholly Obtained Goods Products taken from the sea-bed or subsoil beneath the sea-bed outside a country; Minerals and other naturally occurring substances ; Scrap and waste derived from manufacturing or processing operations or from consumption in that country and fit only for disposal or for the recovery of raw materials ; and Goods obtained or produced in that country solely from products referred to above

… ..wholly Obtained Goods

Products taken from the sea-bed or subsoil beneath the sea-bed outside a country;

Minerals and other naturally occurring substances ;

Scrap and waste derived from manufacturing or processing operations or from consumption in that country and fit only for disposal or for the recovery of raw materials ; and

Goods obtained or produced in that country solely from products referred to above

Substantial Transformation A product has undergone sufficient working or processing in the exporting country and has been transformed into a new and different article . ST can be measured through: - Value added (VA)/test of origin method; - Change in Tariff Classification (CTC); - Specified Process of Manufacture; - Combinations of the above;

A product has undergone sufficient working or processing in the exporting country and has been transformed into a new and different article .

ST can be measured through:

- Value added (VA)/test of origin method;

- Change in Tariff Classification (CTC);

- Specified Process of Manufacture;

- Combinations of the above;

Value-added Method Defines the degree of transformation required in terms of: - minimum percentage of value that must come from the originating country ; or - maximum amount of value that come from the use of imported parts and materials . Methods for calculating VA: - net-cost method - ex-factory method - FOB-based (transaction value)

Value-added Method

Defines the degree of transformation required in terms of:

- minimum percentage of value that must come from the originating country ; or

- maximum amount of value that come from the use of imported parts and materials .

Methods for calculating VA:

- net-cost method

- ex-factory method

- FOB-based (transaction value)

…… Value-added Method The results of the calculation is called: - Local/Regional Value Content (RVC) or - Qualifying Value Content (QVC) Examples : - CEPT/AFTA: 40%; - ASEAN-China FTA: 40% - NAFTA: 50-60% - Singapore-Japan FTA: 60%

…… Value-added Method

The results of the calculation is called:

- Local/Regional Value Content (RVC) or

- Qualifying Value Content (QVC)

Examples :

- CEPT/AFTA: 40%;

- ASEAN-China FTA: 40%

- NAFTA: 50-60%

- Singapore-Japan FTA: 60%

Net-cost method RVC = x 100 RVC is the regional value content of a good (%); VNM is the value of non-originating materials used by the producer in the production of the goods; and NC is the total cost occurred in respect of all goods produced by a producer, minus any costs related to sales promotion, marketing, after-sales service, packaging shipping, etc. NC – VNM NC where

RVC = x 100

RVC is the regional value content of a good (%);

VNM is the value of non-originating materials used by the producer in the production of the goods; and

NC is the total cost occurred in respect of all goods produced by a producer, minus any costs related to sales promotion, marketing, after-sales service, packaging shipping, etc.

CEPT Local Content Calculation of 40% local content Value of imported Value of undetermined non-ASEAN materials, + origin materials, parts parts or produce or produce ________________________________________ x 100% < 60 FOB Price

Calculation of 40% local content

Value of imported Value of undetermined

non-ASEAN materials, + origin materials, parts

parts or produce or produce

________________________________________ x 100% < 60

FOB Price

Change in Tariff Classification (Tariff shift rule) Determine the origin of good by specifying the CTC of the Harmonised System of Tariff Nomenclature (HS) ST occurred if a good obtained is classified in a different tariff classification than that of its non-originating inputs used in the process CTC can occur at: - Chapter level ( CC ): 2 digit HS - Heading level ( CTH ): 4 digit HS - Sub-heading level ( CTSH ): 6 digit HS - Split heading/sub-heading

Change in Tariff Classification

(Tariff shift rule)

Determine the origin of good by specifying the CTC of the Harmonised System of Tariff Nomenclature (HS)

ST occurred if a good obtained is classified in a different tariff classification than that of its non-originating inputs used in the process

CTC can occur at:

- Chapter level ( CC ): 2 digit HS

- Heading level ( CTH ): 4 digit HS

- Sub-heading level ( CTSH ): 6 digit HS

- Split heading/sub-heading

Specified Process of Manufacture Defines certain manufacturing or processing operations that a product must undergo in the exporting country to confer origin (positive test). Or, specifying manufacturing/processing procedures that do not confer origin (negative test). Often used in conjunction with CTC and/or VA methods . Widely applied for textiles & clothing and chemical products .

Specified Process of Manufacture

Defines certain manufacturing or processing operations that a product must undergo in the exporting country to confer origin (positive test).

Or, specifying manufacturing/processing procedures that do not confer origin (negative test).

Often used in conjunction with CTC and/or VA methods .

Widely applied for textiles & clothing and chemical products .

Products Specific Rules Product Specific Rule or PSR is applicable to certain goods due to: - inability of the product to meet the general rule ; - requirement for flexible rule ; or - sensitivity of the products that requires stringent rule .

Products Specific Rules

Product Specific Rule or PSR is applicable to certain goods due to:

- inability of the product to meet the general rule ;

- requirement for flexible rule ; or

- sensitivity of the products that requires stringent rule .

Important Concepts Cumulation Tolerance or De Minimis Absorption principle Neutral elements Packing and packaging Accessories, parts and tools Interchangeable goods/materials Minimal operations and processes

Cumulation

Tolerance or De Minimis

Absorption principle

Neutral elements

Packing and packaging

Accessories, parts and tools

Interchangeable goods/materials

Minimal operations and processes

Cumulation Inputs originating in other countries which are members of the regional association are regarded as domestic input . Types: - bilateral - diagonal - full cumulation ROO: 50% local content Country A Country B Country C Country D Materials 20 % LC 30% LC Donor country

Inputs originating in other countries which are members of the regional association are regarded as domestic input .

Types:

- bilateral

- diagonal

- full cumulation

ROO: 50% local content

Country A Country B Country C Country D

Tolerance or De Minimis Rules that allow certain percentage of non-originating materials to be used without affecting the origin of the final product . The rule applies to CTC and specific manufacturing process but not affect the value added rule .

Tolerance or De Minimis

Rules that allow certain percentage of non-originating materials to be used without affecting the origin of the final product .

The rule applies to CTC and specific manufacturing process but not affect the value added rule .

Absorption Principle Parts and materials which have acquired originating status by satisfying the relevant ROO for that product can be treated as being of domestic origin in any further processing and transformation .

Absorption Principle

Parts and materials which have acquired originating status by satisfying the relevant ROO for that product can be treated as being of domestic origin in any further processing and transformation .

Neutral elements The origin of the power and fuel , plant and equipment , including safety equipment , or machines and tools used to obtain a good or the materials used in its manufacture which do not remain in the good or form part of the good shall not be taken into account .

Neutral elements

The origin of the power and fuel , plant and equipment , including safety equipment , or machines and tools used to obtain a good or the materials used in its manufacture which do not remain in the good or form part of the good shall not be taken into account .

Packing and Packaging Materials and Containers The origin of packing and packaging materials and containers presented and classified with the goods shall be disregarded .

Packing and Packaging Materials

and Containers

The origin of packing and packaging materials and containers presented and classified with the goods shall be disregarded .

Accessories, Spare Parts and Tools To be disregarded when sold therewith and correspond , in kind and number , to the normal equipment thereof.

Accessories, Spare Parts and Tools

To be disregarded when sold therewith and correspond , in kind and number , to the normal equipment thereof.

Minima l Operations and Processes Operations or processes undertaken, by themselves or in combination with each other for the purposes listed below, are considered to be minimal and shall not be taken into account in determining whether a good has been wholly obtained in one country: ensuring preservation of goods in good condition for the purposes of transport or storage ; facilitating shipment or transportation ; packaging or presenting goods for sale ;

Minima l Operations and Processes

Operations or processes undertaken, by themselves or in combination with each other for the purposes listed below, are considered to be minimal and shall not be taken into account in determining whether a good has been wholly obtained in one country:

ensuring preservation of goods in good condition for the purposes of transport or storage ;

facilitating shipment or transportation ;

packaging or presenting goods for sale ;

MALAYSIA-PAKISTAN FTA (MPFTA)

MALAYSIA-PAKISTAN FTA

(MPFTA)

Malaysia - Pakistan Interim ROO for the Early Harvest Programme ( EHP ) Origin criteria : - Wholly obtained or produced - 40% value content (single/cumulative) Cumulation : Aggregate Malaysia-Pakistan FTA content on final product must not be less than 40% . Specific rules for selected products: - textiles and textile products - jewellery

Interim ROO for the Early Harvest Programme ( EHP )

Origin criteria :

- Wholly obtained or produced

- 40% value content (single/cumulative)

Cumulation : Aggregate Malaysia-Pakistan FTA content on final product must not be less than 40% .

Specific rules for selected products:

- textiles and textile products

- jewellery

Formula for calculating the Regional Value Content ( RVC) Value of Non Value of materials Malaysia-Pakistan + of undetermined FTA materials origin x 100% < 60% FOB Malaysia-Pakistan

Formula for calculating the Regional Value Content ( RVC)

Value of Non Value of materials

Malaysia-Pakistan + of undetermined

FTA materials origin x 100% < 60%

FOB

Malaysia-Pakistan PODUCT SPECIFIC RULES Textiles and textile products One process rule: spinning weaving bleaching dyeing printing finishing Jewellery Change in tariff heading ( CTH )

PODUCT SPECIFIC RULES

Textiles and textile products

One process rule:

spinning

weaving

bleaching

dyeing

printing

finishing

Jewellery

Change in tariff heading ( CTH )

Minimal operations and processes Ensuring preservation of goods in good condition for the purposes of transport or storage. Facilitating shipment or transportation. Packaging or presenting goods for sale (This excludes encapsulation which is termed packaging by the electronics industry). Malaysia-Pakistan

Minimal operations and processes

Ensuring preservation of goods in good condition for the purposes of transport or storage.

Facilitating shipment or transportation.

Packaging or presenting goods for sale (This excludes encapsulation which is termed packaging by the electronics industry).

Malaysia-Pakistan Example of PSR 5208.11.000 - Unbleached: Plain weave, weighing not more than 100 g/m2 : “ A change to heading 52.08 through 52.12 from any heading outside that group, provided that the fabric is undergone one or more of the preparatory or finishing operations . ”

Example of PSR

5208.11.000 - Unbleached: Plain weave, weighing not more than 100 g/m2 :

“ A change to heading 52.08 through 52.12 from any heading outside that group, provided that the fabric is undergone one or more of the preparatory or finishing operations . ”

Malaysia-Pakistan Example of PSR 5509.11.000 - Containing 85% or more by weight of polyester staple fibres: Single yarn: “ A change to heading 55.09 from any heading outside that group, except from heading 50.04 through 50.06, 51.06 through 51.10, 52.03 through 52.07, 54.01 through 54.06 or 55.06 through 55.11.”

Example of PSR

5509.11.000 - Containing 85% or more by weight of polyester staple fibres: Single yarn:

“ A change to heading 55.09 from any heading outside that group, except from heading 50.04 through 50.06, 51.06 through 51.10, 52.03 through 52.07, 54.01 through 54.06 or 55.06 through 55.11.”

Malaysia - Pakistan 5516.12.000 - Woven fabrics of artificial staple fibres: Dyed “ A change to heading 55.16 from any heading outside that group” or, “ A change to heading 55.16 from heading 50.04 through 50.06, 51.06 through 51.10, 52.04 through 52.07, 53.06 through 53.08, 54.01 through 54.06 or 55.08 through 55.11, provided that the fabric is dyed or printed , undergone one or more of the preparatory or finishing operations ”; or “ A change to heading 55.16 from heading 50.04 through 50.06, 51.06 through 51.10, 52.04 through 52.07, 53.06 through 53.08, 54.01 through 54.06 or 55.08 through 55.11, provided that the yarn is dyed prior to weaving the fabric, undergone one or more of the preparatory or finishing operations.”

5516.12.000 - Woven fabrics of artificial staple fibres: Dyed

“ A change to heading 55.16 from any heading outside that group” or,

“ A change to heading 55.16 from heading 50.04 through 50.06, 51.06 through 51.10, 52.04 through 52.07, 53.06 through 53.08, 54.01 through 54.06 or 55.08 through 55.11, provided that the fabric is dyed or printed , undergone one or more of the preparatory or finishing operations ”; or

“ A change to heading 55.16 from heading 50.04 through 50.06, 51.06 through 51.10, 52.04 through 52.07, 53.06 through 53.08, 54.01 through 54.06 or 55.08 through 55.11, provided that the yarn is dyed prior to weaving the fabric, undergone one or more of the preparatory or finishing operations.”

Malaysia - Pakistan Example of PSR 7113.11.000 - Of precious metal whether or not plated or clad with precious metal: Of silver, whether or not plated or clad with other precious metal: “ A change to heading 7113 from any other headings.”

Example of PSR

7113.11.000 - Of precious metal whether or not plated or clad with precious metal: Of silver, whether or not plated or clad with other precious metal:

“ A change to heading 7113 from any other headings.”

MALAYSIA-JAPAN FTA (MAJEPA)

MALAYSIA-JAPAN FTA

(MAJEPA)

Malaysia - Japan Origin criteria : Wholly obtained or produced 40% Value Content or CTSH Cumulation: for certain products allows for cumulation from ASEAN countries . Specific rules for selected products : textiles and clothing agriculture and processed agricultural products leather and footwear products cement

Origin criteria :

Wholly obtained or produced

40% Value Content or CTSH

Cumulation: for certain products allows for cumulation from ASEAN countries .

Specific rules for selected products :

textiles and clothing

agriculture and processed agricultural products

leather and footwear products

cement

Formula for calculating the RVC FOB - Value of Non-originating Material x 100% FOB Malaysia - Japan

Formula for calculating the RVC

FOB - Value of Non-originating Material x 100%

FOB

Malaysia-Japan Refrigerator: Part A (Japan) - US$ 200 Part B (Japan) - US$ 100 Part C (China) - US$ 200* Part D (India) - US$ 200* Other Costs (N/A) - US$ 300 FOB Price - US$1,000 US$1,000- US$400* x 100 = 60% US$1,000 The product (refrigerator) qualifies as an originating good.

Refrigerator:

Part A (Japan) - US$ 200

Part B (Japan) - US$ 100

Part C (China) - US$ 200*

Part D (India) - US$ 200*

Other Costs (N/A) - US$ 300

FOB Price - US$1,000

US$1,000- US$400* x 100 = 60%

US$1,000

The product (refrigerator) qualifies as an originating good.

Malaysia - Japan PRODUCT SPECIFIC RULES Textiles and clothing Two process rule: spinning weaving bleaching dyeing printing finishing Flexibility – one of the processes could be done within the ASEAN countries .

PRODUCT SPECIFIC RULES

Textiles and clothing

Two process rule:

spinning

weaving

bleaching

dyeing

printing

finishing

Flexibility – one of the processes could be done within the ASEAN countries .

Malaysia - Japan Agriculture and processed agricultural products (Chapter 1 -21) Exclusive wholly obtained or Chapter Change ( CC ) with allowable cumulation from ASEAN countries . Leather and footwear products (Chapters 41, 43 and 64) Exclusive wholly obtained .

Agriculture and processed agricultural products (Chapter 1 -21)

Exclusive wholly obtained or Chapter Change ( CC ) with allowable cumulation from ASEAN countries .

Leather and footwear products (Chapters 41, 43 and 64)

Exclusive wholly obtained .

Malaysia - Japan Cement (Chapter 25) Cement clinkers and portland cement – change in tariff heading ( CTH ) Other white cement – change in tariff subheading ( CTSH )

Cement (Chapter 25)

Cement clinkers and portland cement – change in tariff heading ( CTH )

Other white cement – change in tariff subheading ( CTSH )

De Minimis : A good that does not undergo a change in tariff classification ( CTC ) shall be considered as originating if: if the value of non-originating materials (NOM) does not exceed 10% of the FOB value of the good; or for textiles and apparel , if the weight of NOM does not exceed 7% of the total weight of the product. Malaysia - Japan

De Minimis : A good that does not undergo a change in tariff classification ( CTC ) shall be considered as originating if:

if the value of non-originating materials (NOM) does not exceed 10% of the FOB value of the good; or

for textiles and apparel , if the weight of NOM does not exceed 7% of the total weight of the product.

Malaysia - Japan Example of PSR Chapter 52 - Cotton “ A change to heading 52.04 through 52.07 from any heading outside that group , provided that, where non-originating materials of heading 52.03 are used, each of the non-originating materials is carded or combed in the territory of either Country or a third state which is a member country of the ASEAN . ”

Example of PSR

Chapter 52 - Cotton

“ A change to heading 52.04 through 52.07 from any heading outside that group , provided that, where non-originating materials of heading 52.03 are used, each of the non-originating materials is carded or combed in the territory of either Country or a third state which is a member country of the ASEAN . ”

Malaysia - Japan Chapter 61 - Articles of Apparel and Clothing Accessories , Knitted or Crocheted “ A change to heading 61.01 through 61.17 from any other chapter, provided that, where non- originating materials of heading 50.07, 51.11 through 51.13, 52.08 through 52.12, 53.09 through 53.11, 54.07 through 54.08, 55.12 through 55.16 or chapter 60 are used, each of the non-originating materials is knitted or crocheted in the territory of either Country or a third State which is a member country of the ASEAN. ”

Chapter 61 - Articles of Apparel and Clothing Accessories , Knitted or Crocheted

“ A change to heading 61.01 through 61.17 from any other chapter, provided that, where non- originating materials of heading 50.07, 51.11 through 51.13, 52.08 through 52.12, 53.09 through 53.11, 54.07 through 54.08, 55.12 through 55.16 or chapter 60 are used, each of the non-originating materials is knitted or crocheted in the territory of either Country or a third State which is a member country of the ASEAN. ”

Malaysia - Japan 1604.13 - Sardines, sardinella and brisling or sprats “ A change to subheading 1604.13 from any other chapter, provided that, where non- originating materials of chapter 3 are used, each of the non-originating materials is obtained by fishing in the territory of a third State which is a member country of the ASEAN or taken by vessels, which are registered in and sail under the flag of a third State which is a member country of the ASEAN, from the sea outside the territorial sea of that third State. ”

1604.13 - Sardines, sardinella and brisling or sprats

“ A change to subheading 1604.13 from any other chapter, provided that, where non- originating materials of chapter 3 are used, each of the non-originating materials is obtained by fishing in the territory of a third State which is a member country of the ASEAN or taken by vessels, which are registered in and sail under the flag of a third State which is a member country of the ASEAN, from the sea outside the territorial sea of that third State. ”

Malaysia - Japan Chapter 41 - Raw Hides and Skins (Other than Furskins) and Leather : “ A change to heading 41.01 through 41.03 from any other chapter. ”

Chapter 41 - Raw Hides and Skins (Other than Furskins) and Leather :

“ A change to heading 41.01 through 41.03 from any other chapter. ”

ASEAN-CHINA FTA (ACFTA)

ASEAN-CHINA FTA

(ACFTA)

ASEAN-China Based on CEPT ROO and OCP Origin criteria : Wholly obtained or produced 40% Value Content Cumulative incl. all ASEAN countries and China (excl. Hong Kong, Taiwan, Macau) Specific rules for selected products: textiles products preserved fish food leather goods and furskin products footwear

Based on CEPT ROO and OCP

Origin criteria :

Wholly obtained or produced

40% Value Content

Cumulative incl. all ASEAN countries and China (excl. Hong Kong, Taiwan, Macau)

Specific rules for selected products:

textiles products

preserved fish food

leather goods and furskin products

footwear

Formula for calculating the RVC Value of Non Value of materials ACFTA materials + of undetermined origin x 100% < 60% FOB Price ASEAN-China

Formula for calculating the RVC

Value of Non Value of materials

ACFTA materials + of undetermined

origin x 100% < 60%

FOB Price

ASEAN-China PSR – as the Only Rule Applicable to 6 wool and woven products . PSR for other products is being negotiated Products (input) must be wholly obtained from within ACFTA . 40% Value Added or other rules cannot be applied for these products

PSR – as the Only Rule

Applicable to 6 wool and woven products .

PSR for other products is being negotiated

Products (input) must be wholly obtained from within ACFTA .

40% Value Added or other rules cannot be applied for these products

ASEAN-China PSR – as the Alternative Rule Applicable to 466 products covering: - textiles and textiles products ; - preserved fish food ; - leather goods, furskin products; - footwear . Exporters can choose whether to use 40% VA rule or alternative PSR .

PSR – as the Alternative Rule

Applicable to 466 products covering:

- textiles and textiles products ;

- preserved fish food ;

- leather goods, furskin products;

- footwear .

Exporters can choose whether to use 40% VA rule or alternative PSR .

ASEAN-China The Alternative Rule is based on: - specific process of manufacture for textiles and textiles products (adopted from CEPT ROO ). - Change of Tariff Classification ( CTC ) for other products , mostly Change of Tariff Heading ( CTH ).

The Alternative Rule is based on:

- specific process of manufacture for textiles and textiles products (adopted from CEPT ROO ).

- Change of Tariff Classification ( CTC ) for other products , mostly Change of Tariff Heading ( CTH ).

Minimal operations and processes Ensuring preservation of goods in good condition for the purposes of transport or storage . Facilitating shipment or transportation . Packaging or presenting goods for sale (This excludes encapsulation which is termed packaging by the electronics industry). ASEAN-China

Minimal operations and processes

Ensuring preservation of goods in good condition for the purposes of transport or storage .

Facilitating shipment or transportation .

Packaging or presenting goods for sale (This excludes encapsulation which is termed packaging by the electronics industry).

ASEAN-KOREA FTA (AKFTA)

ASEAN-KOREA FTA

(AKFTA)

ASEAN-Korea Origin criteria: Wholly obtained or produced 40% RVC or CTH Cumulative includes all ASEAN countries and Korea Specific rules for selected products: agriculture products textiles products process agricultural products Iron and steel automotive

Origin criteria:

Wholly obtained or produced

40% RVC or CTH

Cumulative includes all ASEAN countries and Korea

Specific rules for selected products:

agriculture products

textiles products

process agricultural products

Iron and steel

automotive

Formula for calculating RVC Built-up Method RVC = Value of Originating Material x 100% FOB Build-down Method RVC = FOB - Value of Non-originating Material x 100% FOB ASEAN-Korea

Formula for calculating RVC

Built-up Method

RVC = Value of Originating Material x 100%

FOB

Build-down Method

RVC = FOB - Value of Non-originating Material x 100%

FOB

ASEAN-Korea PSR – as the Only rule General rule of 40% RVC or CTH cannot be applied for these products The rules are based on: wholly obtained in a territory of the exporting country wholly obtained within AKFTA process rule Change in Tariff Classification at various level: CC , CTH or CTSH combination of RVC and/or CTC

PSR – as the Only rule

General rule of 40% RVC or CTH cannot be applied for these products

The rules are based on:

wholly obtained in a territory of the exporting country

wholly obtained within AKFTA

process rule

Change in Tariff Classification at various level: CC , CTH or CTSH

combination of RVC and/or CTC

ASEAN-Korea Agriculture (Chapter 1 – 14) wholly obtained in the territory of the exporting country except : 25 tariff lines - wholly obtained in the territory of any party 27 tariff lines – RVC at various % or CTC at various level. Processed agricultural products (Ch 15 - 24) RVC or CTC or combination of RVC and/or CTC

Agriculture (Chapter 1 – 14)

wholly obtained in the territory of the exporting country except :

25 tariff lines - wholly obtained in the territory of any party

27 tariff lines – RVC at various % or CTC at various level.

Processed agricultural products (Ch 15 - 24)

RVC or CTC or combination of RVC and/or CTC

ASEAN-Korea Textiles and clothing Chapters 50 - 59 : generally CTC or RVC 40%. Certain tariff lines require CTC accompanied by at least two preparatory or finishing operations . Chapters 61 - 63 : CC provided that the good is both cut and sewn in the territory of any party .

Textiles and clothing

Chapters 50 - 59 : generally CTC or RVC 40%. Certain tariff lines require CTC accompanied by at least two preparatory or finishing operations .

Chapters 61 - 63 : CC provided that the good is both cut and sewn in the territory of any party .

ASEAN-Korea Other industrial products (124 tariff lines) RVC CTC Combination of RVC and/or CTC

Other industrial products

(124 tariff lines)

RVC

CTC

Combination of RVC and/or CTC

De Minimis : A good that does not undergo a change in tariff classification shall be considered as originating if: if the value of NOM does not exceed 10% of the FOB value ; or for textiles and apparel , if the weight of NOM does not exceed 10% of the total weight of the product. ASEAN-Korea

De Minimis : A good that does not undergo a change in tariff classification shall be considered as originating if:

if the value of NOM does not exceed 10% of the FOB value ; or

for textiles and apparel , if the weight of NOM does not exceed 10% of the total weight of the product.

ASEAN-Korea Example of PSR 0305.20 - Livers and roes of fish, dried, smoked, salted or in brine “ Wholly-Obtained or Produced in the territory of any Party. ”

Example of PSR

0305.20 - Livers and roes of fish, dried, smoked, salted or in brine

“ Wholly-Obtained or Produced in the territory of any Party. ”

ASEAN-Korea 1604.16 - Anchovies “ Change to Subheading 1604.16 from any other Chapter, provided that the materials from Chapter 3 are Wholly-Obtained or Produced in the territory of any Party; or A regional value content of not less than 40 percent of the FOB value of the good, provided that the materials from Chapter 3 are Wholly-Obtained or Produced in the territory of any Party. ”

1604.16 - Anchovies

“ Change to Subheading 1604.16 from any other Chapter, provided that the materials from Chapter 3 are Wholly-Obtained or Produced in the territory of any Party; or A regional value content of not less than 40 percent of the FOB value of the good, provided that the materials from Chapter 3 are Wholly-Obtained or Produced in the territory of any Party. ”

ASEAN-Korea 51.05 - Wool and fine or coarse animal hair, carded or combed (including combed wool in fragments). “ Change to Heading 51.05 from any other Chapter; or A regional value content of not less than 40 percent of the FOB value of the good. ”

51.05 - Wool and fine or coarse animal hair, carded or combed (including combed wool in fragments).

“ Change to Heading 51.05 from any other Chapter; or A regional value content of not less than 40 percent of the FOB value of the good. ”

ASEAN-Korea 61.04 - Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) knitted or crocheted. “ Change to Heading 61.04 from any other Chapter, provided that the good is both cut and sewn in the territory of any Party; or A regional value content of not less than 40 percent of the FOB value of the good. ”

61.04 - Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) knitted or crocheted.

“ Change to Heading 61.04 from any other Chapter, provided that the good is both cut and sewn in the territory of any Party; or A regional value content of not less than 40 percent of the FOB value of the good. ”

OPERATIONAL CERTIFICATION PROCEDURES

OPERATIONAL CERTIFICATION PROCEDURES

Certificate of Origin ( CO ) Form MPFTA for Malaysia-Pakistan Form XX for Malaysia-Japan Form E for ASEAN-China Form AK for ASEAN-Korea For export to ASEAN countries, exporters can choose to use either CEPT Form D or FTA’s Forms . Advisable to use Form D , unless using other FTA Forms could render more benefits Certificate of Origin

Certificate of Origin ( CO )

Form MPFTA for Malaysia-Pakistan

Form XX for Malaysia-Japan

Form E for ASEAN-China

Form AK for ASEAN-Korea

For export to ASEAN countries, exporters can choose to use either CEPT Form D or FTA’s Forms .

Advisable to use Form D , unless using other FTA Forms could render more benefits

Application for the CO: MITI is the sole issuance authority Forms are available from FMM and its branches. Pre-exportation verification to determine the origin of a product is required prior to CO approval . Result of the verification is valid for two years . Certificate of Origin

Application for the CO:

MITI is the sole issuance authority

Forms are available from FMM and its branches.

Pre-exportation verification to determine the origin of a product is required prior to CO approval .

Result of the verification is valid for two years .

Claim for preferential tariff treatment Present the CO to Customs Authority of the importing party . if there is reasonable doubt , Customs Authority of the importing party may request issuing authority of the exporting party to conduct retroactive check . if not satisfied , the Customs Authority may conduct verification visit to the manufacturer’s premise in exporting country . Certificate of Origin

Claim for preferential tariff treatment

Present the CO to Customs Authority of the importing party .

if there is reasonable doubt , Customs Authority of the importing party may request issuing authority of the exporting party to conduct retroactive check .

if not satisfied , the Customs Authority may conduct verification visit to the manufacturer’s premise in exporting country .

Certificate of Origin Time limit for presentation of CO Discretion - 6 months AKFTA Discretion 6 months 4 months ACFTA - - 12 months JMEPA Discretion 6 months 4 months MPFTA Force Majeure Extension Normal

Time limit for presentation of CO

Fraudulent Act Government Authorities concerned shall cooperate in the action to be taken in the territory of the respective Party against the persons involved . Each Party is responsible to provide legal sanction for fraudulent acts related to a Certificate of Origin.

Government Authorities concerned shall cooperate in the action to be taken in the territory of the respective Party against the persons involved .

Each Party is responsible to provide legal sanction for fraudulent acts related to a Certificate of Origin.

THANK YOU