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Share Yeenl Document Research Matrade Rules Of Origin Of Fta

  1. 1. RULES OF ORIGIN FOR FTA MALAYSIA – PAKISTAN MALAYSIA – JAPAN ASEAN – CHINA ASEAN – KOREA MATRADE 12 OCTOBER 2006
  2. 2. <ul><li>Content </li></ul><ul><li>Background: </li></ul><ul><li>- Definition of ROO </li></ul><ul><li>- Origin criteria </li></ul><ul><li>- Important concepts </li></ul><ul><li>Malaysia - Pakistan FTA (MPFTA) </li></ul><ul><li>Malaysia - Japan FTA (MAJEPA) </li></ul><ul><li>ASEAN - China FTA (ACFTA) </li></ul><ul><li>ASEAN - Korea FTA (AKFTA) </li></ul><ul><li>Operational Certification </li></ul><ul><li>Procedures (OCP) </li></ul>
  3. 3. ROO Definition <ul><li>The criteria used to determine the country in which the good has been produced or manufactured . </li></ul><ul><li>The basis used for international trade purposes . </li></ul><ul><li>Becoming more complex since more goods are produced from inputs / materials coming from multiple origins . </li></ul>
  4. 4. Why We Need ROO? <ul><li>Determine whether a good qualifies for preferential treatment under a trading arrangement (FTA). </li></ul><ul><li>Ensure benefits are limited to p roducts originated from the contracting parties . </li></ul><ul><li>Preserve (increase) existing external protection of countries within the FTA. </li></ul>
  5. 5. Originating Goods <ul><li>Goods that meet the conditions for preferential market access . </li></ul><ul><li>All other goods are called the non-originating goods . </li></ul>
  6. 6. Origin Criteria <ul><li>Wholly obtained or produced </li></ul><ul><li>Substantial Transformation ( ST ): </li></ul><ul><li>- Value added (VA) method </li></ul><ul><li>- Change in Tariff Classification ( CTC ) </li></ul><ul><li>- Specified Process of Manufacture </li></ul>
  7. 7. <ul><li>Wholly Obtained Goods </li></ul><ul><li>Originate entirely within the exporting country . </li></ul><ul><li>Includes: </li></ul><ul><li>- live animals born and raised in that country; </li></ul><ul><li>- animals obtained by hunting , trapping , fishing , gathering or capturing in that country; </li></ul><ul><li>- products obtained from live animals ; </li></ul><ul><li>- plants and plant products harvested, picked or gathered in that country; </li></ul><ul><li>- products of sea-fishing and other products taken from the sea outside a country ; </li></ul><ul><li>- goods obtained or produced on board factory ships ; </li></ul>
  8. 8. <ul><li>… ..wholly Obtained Goods </li></ul><ul><li>Products taken from the sea-bed or subsoil beneath the sea-bed outside a country; </li></ul><ul><li>Minerals and other naturally occurring substances ; </li></ul><ul><li>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 </li></ul><ul><li>Goods obtained or produced in that country solely from products referred to above </li></ul>
  9. 9. Substantial Transformation <ul><li>A product has undergone sufficient working or processing in the exporting country and has been transformed into a new and different article . </li></ul><ul><li>ST can be measured through: </li></ul><ul><li>- Value added (VA)/test of origin method; </li></ul><ul><li>- Change in Tariff Classification (CTC); </li></ul><ul><li>- Specified Process of Manufacture; </li></ul><ul><li>- Combinations of the above; </li></ul>
  10. 10. <ul><li>Value-added Method </li></ul><ul><li>Defines the degree of transformation required in terms of: </li></ul><ul><li>- minimum percentage of value that must come from the originating country ; or </li></ul><ul><li>- maximum amount of value that come from the use of imported parts and materials . </li></ul><ul><li>Methods for calculating VA: </li></ul><ul><li>- net-cost method </li></ul><ul><li>- ex-factory method </li></ul><ul><li>- FOB-based (transaction value) </li></ul>
  11. 11. <ul><li>…… Value-added Method </li></ul><ul><li>The results of the calculation is called: </li></ul><ul><li>- Local/Regional Value Content (RVC) or </li></ul><ul><li>- Qualifying Value Content (QVC) </li></ul><ul><li>Examples : </li></ul><ul><li>- CEPT/AFTA: 40%; </li></ul><ul><li>- ASEAN-China FTA: 40% </li></ul><ul><li>- NAFTA: 50-60% </li></ul><ul><li>- Singapore-Japan FTA: 60% </li></ul>
  12. 12. Net-cost method <ul><li>RVC = x 100 </li></ul><ul><ul><li>RVC is the regional value content of a good (%); </li></ul></ul><ul><ul><li>VNM is the value of non-originating materials used by the producer in the production of the goods; and </li></ul></ul><ul><ul><li>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. </li></ul></ul>NC – VNM NC where
  13. 13. CEPT Local Content <ul><li>Calculation of 40% local content </li></ul><ul><li>Value of imported Value of undetermined </li></ul><ul><li>non-ASEAN materials, + origin materials, parts </li></ul><ul><li>parts or produce or produce </li></ul><ul><li>________________________________________ x 100% < 60 </li></ul><ul><li> FOB Price </li></ul>
  14. 14. <ul><li>Change in Tariff Classification </li></ul><ul><li>(Tariff shift rule) </li></ul><ul><li>Determine the origin of good by specifying the CTC of the Harmonised System of Tariff Nomenclature (HS) </li></ul><ul><li>ST occurred if a good obtained is classified in a different tariff classification than that of its non-originating inputs used in the process </li></ul><ul><li>CTC can occur at: </li></ul><ul><li>- Chapter level ( CC ): 2 digit HS </li></ul><ul><li>- Heading level ( CTH ): 4 digit HS </li></ul><ul><li>- Sub-heading level ( CTSH ): 6 digit HS </li></ul><ul><li>- Split heading/sub-heading </li></ul>
  15. 15. <ul><li>Specified Process of Manufacture </li></ul><ul><li>Defines certain manufacturing or processing operations that a product must undergo in the exporting country to confer origin (positive test). </li></ul><ul><li>Or, specifying manufacturing/processing procedures that do not confer origin (negative test). </li></ul><ul><li>Often used in conjunction with CTC and/or VA methods . </li></ul><ul><li>Widely applied for textiles & clothing and chemical products . </li></ul>
  16. 16. <ul><li>Products Specific Rules </li></ul><ul><li>Product Specific Rule or PSR is applicable to certain goods due to: </li></ul><ul><li>- inability of the product to meet the general rule ; </li></ul><ul><li>- requirement for flexible rule ; or </li></ul><ul><li>- sensitivity of the products that requires stringent rule . </li></ul>
  17. 17. Important Concepts <ul><li>Cumulation </li></ul><ul><li>Tolerance or De Minimis </li></ul><ul><li>Absorption principle </li></ul><ul><li>Neutral elements </li></ul><ul><li>Packing and packaging </li></ul><ul><li>Accessories, parts and tools </li></ul><ul><li>Interchangeable goods/materials </li></ul><ul><li>Minimal operations and processes </li></ul>
  18. 18. Cumulation <ul><li>Inputs originating in other countries which are members of the regional association are regarded as domestic input . </li></ul><ul><li>Types: </li></ul><ul><li>- bilateral </li></ul><ul><li>- diagonal </li></ul><ul><li>- full cumulation </li></ul><ul><li>ROO: 50% local content </li></ul><ul><li>Country A Country B Country C Country D </li></ul>Materials 20 % LC 30% LC Donor country
  19. 19. <ul><li>Tolerance or De Minimis </li></ul><ul><li>Rules that allow certain percentage of non-originating materials to be used without affecting the origin of the final product . </li></ul><ul><li>The rule applies to CTC and specific manufacturing process but not affect the value added rule . </li></ul>
  20. 20. <ul><li>Absorption Principle </li></ul><ul><li>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 . </li></ul>
  21. 21. <ul><li>Neutral elements </li></ul><ul><li>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 . </li></ul>
  22. 22. <ul><li>Packing and Packaging Materials </li></ul><ul><li>and Containers </li></ul><ul><li>The origin of packing and packaging materials and containers presented and classified with the goods shall be disregarded . </li></ul>
  23. 23. <ul><li>Accessories, Spare Parts and Tools </li></ul><ul><li>To be disregarded when sold therewith and correspond , in kind and number , to the normal equipment thereof. </li></ul>
  24. 24. <ul><ul><ul><li>Minima l Operations and Processes </li></ul></ul></ul><ul><li>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: </li></ul><ul><li>ensuring preservation of goods in good condition for the purposes of transport or storage ; </li></ul><ul><li>facilitating shipment or transportation ; </li></ul><ul><li>packaging or presenting goods for sale ; </li></ul>
  25. 25. <ul><li>MALAYSIA-PAKISTAN FTA </li></ul><ul><li>(MPFTA) </li></ul>
  26. 26. Malaysia - Pakistan <ul><li>Interim ROO for the Early Harvest Programme ( EHP ) </li></ul><ul><li>Origin criteria : </li></ul><ul><ul><li>- Wholly obtained or produced </li></ul></ul><ul><ul><li>- 40% value content (single/cumulative) </li></ul></ul><ul><li>Cumulation : Aggregate Malaysia-Pakistan FTA content on final product must not be less than 40% . </li></ul><ul><li>Specific rules for selected products: </li></ul><ul><ul><li>- textiles and textile products </li></ul></ul><ul><ul><li>- jewellery </li></ul></ul>
  27. 27. <ul><li>Formula for calculating the Regional Value Content ( RVC) </li></ul><ul><li>Value of Non Value of materials </li></ul><ul><li>Malaysia-Pakistan + of undetermined </li></ul><ul><li>FTA materials origin x 100% < 60% </li></ul><ul><ul><li>FOB </li></ul></ul>Malaysia-Pakistan
  28. 28. Malaysia-Pakistan <ul><li>PODUCT SPECIFIC RULES </li></ul><ul><li>Textiles and textile products </li></ul><ul><ul><ul><li>One process rule: </li></ul></ul></ul><ul><ul><ul><ul><li>spinning </li></ul></ul></ul></ul><ul><ul><ul><ul><li>weaving </li></ul></ul></ul></ul><ul><ul><ul><ul><li>bleaching </li></ul></ul></ul></ul><ul><ul><ul><ul><li>dyeing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>printing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>finishing </li></ul></ul></ul></ul><ul><li>Jewellery </li></ul><ul><ul><ul><li>Change in tariff heading ( CTH ) </li></ul></ul></ul>
  29. 29. <ul><li>Minimal operations and processes </li></ul><ul><ul><li>Ensuring preservation of goods in good condition for the purposes of transport or storage. </li></ul></ul><ul><ul><li>Facilitating shipment or transportation. </li></ul></ul><ul><ul><li>Packaging or presenting goods for sale (This excludes encapsulation which is termed packaging by the electronics industry). </li></ul></ul>Malaysia-Pakistan
  30. 30. Malaysia-Pakistan <ul><li>Example of PSR </li></ul><ul><li>5208.11.000 - Unbleached: Plain weave, weighing not more than 100 g/m2 : </li></ul><ul><li>“ 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 . ” </li></ul>
  31. 31. Malaysia-Pakistan <ul><li>Example of PSR </li></ul><ul><li>5509.11.000 - Containing 85% or more by weight of polyester staple fibres: Single yarn: </li></ul><ul><li>“ 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.” </li></ul>
  32. 32. Malaysia - Pakistan <ul><li>5516.12.000 - Woven fabrics of artificial staple fibres: Dyed </li></ul><ul><ul><li>“ A change to heading 55.16 from any heading outside that group” or, </li></ul></ul><ul><li>“ 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 </li></ul><ul><li>“ 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.” </li></ul>
  33. 33. Malaysia - Pakistan <ul><li>Example of PSR </li></ul><ul><li>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: </li></ul><ul><li>“ A change to heading 7113 from any other headings.” </li></ul>
  34. 34. <ul><li>MALAYSIA-JAPAN FTA </li></ul><ul><li>(MAJEPA) </li></ul>
  35. 35. Malaysia - Japan <ul><li>Origin criteria : </li></ul><ul><ul><li>Wholly obtained or produced </li></ul></ul><ul><ul><li>40% Value Content or CTSH </li></ul></ul><ul><li>Cumulation: for certain products allows for cumulation from ASEAN countries . </li></ul><ul><li>Specific rules for selected products : </li></ul><ul><ul><li>textiles and clothing </li></ul></ul><ul><ul><li>agriculture and processed agricultural products </li></ul></ul><ul><ul><li>leather and footwear products </li></ul></ul><ul><ul><li>cement </li></ul></ul>
  36. 36. <ul><li>Formula for calculating the RVC </li></ul><ul><li>FOB - Value of Non-originating Material x 100% </li></ul><ul><ul><li>FOB </li></ul></ul>Malaysia - Japan
  37. 37. Malaysia-Japan <ul><li>Refrigerator: </li></ul><ul><ul><li>Part A (Japan) - US$ 200 </li></ul></ul><ul><ul><li>Part B (Japan) - US$ 100 </li></ul></ul><ul><ul><li>Part C (China) - US$ 200* </li></ul></ul><ul><ul><li>Part D (India) - US$ 200* </li></ul></ul><ul><ul><li>Other Costs (N/A) - US$ 300 </li></ul></ul><ul><ul><li>FOB Price - US$1,000 </li></ul></ul><ul><ul><li>US$1,000- US$400* x 100 = 60% </li></ul></ul><ul><ul><li>US$1,000 </li></ul></ul><ul><ul><li>The product (refrigerator) qualifies as an originating good. </li></ul></ul>
  38. 38. Malaysia - Japan <ul><li>PRODUCT SPECIFIC RULES </li></ul><ul><li>Textiles and clothing </li></ul><ul><ul><ul><li>Two process rule: </li></ul></ul></ul><ul><ul><ul><ul><li>spinning </li></ul></ul></ul></ul><ul><ul><ul><ul><li>weaving </li></ul></ul></ul></ul><ul><ul><ul><ul><li>bleaching </li></ul></ul></ul></ul><ul><ul><ul><ul><li>dyeing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>printing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>finishing </li></ul></ul></ul></ul><ul><ul><ul><li>Flexibility – one of the processes could be done within the ASEAN countries . </li></ul></ul></ul>
  39. 39. Malaysia - Japan <ul><li>Agriculture and processed agricultural products (Chapter 1 -21) </li></ul><ul><ul><ul><li>Exclusive wholly obtained or Chapter Change ( CC ) with allowable cumulation from ASEAN countries . </li></ul></ul></ul><ul><li>Leather and footwear products (Chapters 41, 43 and 64) </li></ul><ul><ul><ul><li>Exclusive wholly obtained . </li></ul></ul></ul>
  40. 40. Malaysia - Japan <ul><ul><ul><li>Cement (Chapter 25) </li></ul></ul></ul><ul><ul><ul><ul><li>Cement clinkers and portland cement – change in tariff heading ( CTH ) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Other white cement – change in tariff subheading ( CTSH ) </li></ul></ul></ul></ul>
  41. 41. <ul><li>De Minimis : A good that does not undergo a change in tariff classification ( CTC ) shall be considered as originating if: </li></ul><ul><ul><li>if the value of non-originating materials (NOM) does not exceed 10% of the FOB value of the good; or </li></ul></ul><ul><ul><li>for textiles and apparel , if the weight of NOM does not exceed 7% of the total weight of the product. </li></ul></ul>Malaysia - Japan
  42. 42. Malaysia - Japan <ul><li>Example of PSR </li></ul><ul><li>Chapter 52 - Cotton </li></ul><ul><li>“ 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 . ” </li></ul>
  43. 43. Malaysia - Japan <ul><li>Chapter 61 - Articles of Apparel and Clothing Accessories , Knitted or Crocheted </li></ul><ul><li>“ 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. ” </li></ul>
  44. 44. Malaysia - Japan <ul><li>1604.13 - Sardines, sardinella and brisling or sprats </li></ul><ul><li> </li></ul><ul><li>“ 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. ” </li></ul>
  45. 45. Malaysia - Japan <ul><li>Chapter 41 - Raw Hides and Skins (Other than Furskins) and Leather : </li></ul><ul><li>“ A change to heading 41.01 through 41.03 from any other chapter. ” </li></ul>
  46. 46. <ul><li>ASEAN-CHINA FTA </li></ul><ul><li>(ACFTA) </li></ul>
  47. 47. ASEAN-China <ul><li>Based on CEPT ROO and OCP </li></ul><ul><li>Origin criteria : </li></ul><ul><ul><li>Wholly obtained or produced </li></ul></ul><ul><ul><li>40% Value Content </li></ul></ul><ul><li>Cumulative incl. all ASEAN countries and China (excl. Hong Kong, Taiwan, Macau) </li></ul><ul><li>Specific rules for selected products: </li></ul><ul><ul><li>textiles products </li></ul></ul><ul><ul><li>preserved fish food </li></ul></ul><ul><ul><li>leather goods and furskin products </li></ul></ul><ul><ul><li>footwear </li></ul></ul>
  48. 48. <ul><li>Formula for calculating the RVC </li></ul><ul><li>Value of Non Value of materials </li></ul><ul><li>ACFTA materials + of undetermined </li></ul><ul><li> origin x 100% < 60% </li></ul><ul><ul><li>FOB Price </li></ul></ul>ASEAN-China
  49. 49. ASEAN-China <ul><li>PSR – as the Only Rule </li></ul><ul><ul><ul><li>Applicable to 6 wool and woven products . </li></ul></ul></ul><ul><ul><ul><li>PSR for other products is being negotiated </li></ul></ul></ul><ul><ul><ul><li>Products (input) must be wholly obtained from within ACFTA . </li></ul></ul></ul><ul><ul><ul><li>40% Value Added or other rules cannot be applied for these products </li></ul></ul></ul>
  50. 50. ASEAN-China <ul><li>PSR – as the Alternative Rule </li></ul><ul><ul><ul><li>Applicable to 466 products covering: </li></ul></ul></ul><ul><ul><ul><li>- textiles and textiles products ; </li></ul></ul></ul><ul><ul><ul><li>- preserved fish food ; </li></ul></ul></ul><ul><ul><ul><li>- leather goods, furskin products; </li></ul></ul></ul><ul><ul><ul><li>- footwear . </li></ul></ul></ul><ul><ul><ul><li>Exporters can choose whether to use 40% VA rule or alternative PSR . </li></ul></ul></ul>
  51. 51. ASEAN-China <ul><ul><ul><li>The Alternative Rule is based on: </li></ul></ul></ul><ul><ul><ul><li>- specific process of manufacture for textiles and textiles products (adopted from CEPT ROO ). </li></ul></ul></ul><ul><ul><ul><li>- Change of Tariff Classification ( CTC ) for other products , mostly Change of Tariff Heading ( CTH ). </li></ul></ul></ul>
  52. 52. <ul><li>Minimal operations and processes </li></ul><ul><ul><li>Ensuring preservation of goods in good condition for the purposes of transport or storage . </li></ul></ul><ul><ul><li>Facilitating shipment or transportation . </li></ul></ul><ul><ul><li>Packaging or presenting goods for sale (This excludes encapsulation which is termed packaging by the electronics industry). </li></ul></ul>ASEAN-China
  53. 53. <ul><li>ASEAN-KOREA FTA </li></ul><ul><li>(AKFTA) </li></ul>
  54. 54. ASEAN-Korea <ul><li>Origin criteria: </li></ul><ul><ul><li>Wholly obtained or produced </li></ul></ul><ul><ul><li>40% RVC or CTH </li></ul></ul><ul><li>Cumulative includes all ASEAN countries and Korea </li></ul><ul><li>Specific rules for selected products: </li></ul><ul><ul><li>agriculture products </li></ul></ul><ul><ul><li>textiles products </li></ul></ul><ul><ul><li>process agricultural products </li></ul></ul><ul><ul><li>Iron and steel </li></ul></ul><ul><ul><li>automotive </li></ul></ul>
  55. 55. <ul><li>Formula for calculating RVC </li></ul><ul><ul><li>Built-up Method </li></ul></ul><ul><ul><li>RVC = Value of Originating Material x 100% </li></ul></ul><ul><ul><li> FOB </li></ul></ul><ul><ul><li>Build-down Method </li></ul></ul><ul><ul><li>RVC = FOB - Value of Non-originating Material x 100% </li></ul></ul><ul><ul><li> FOB </li></ul></ul>ASEAN-Korea
  56. 56. ASEAN-Korea <ul><li>PSR – as the Only rule </li></ul><ul><ul><ul><li>General rule of 40% RVC or CTH cannot be applied for these products </li></ul></ul></ul><ul><ul><ul><li>The rules are based on: </li></ul></ul></ul><ul><ul><ul><ul><li>wholly obtained in a territory of the exporting country </li></ul></ul></ul></ul><ul><ul><ul><ul><li>wholly obtained within AKFTA </li></ul></ul></ul></ul><ul><ul><ul><ul><li>process rule </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Change in Tariff Classification at various level: CC , CTH or CTSH </li></ul></ul></ul></ul><ul><ul><ul><ul><li>combination of RVC and/or CTC </li></ul></ul></ul></ul>
  57. 57. ASEAN-Korea <ul><li>Agriculture (Chapter 1 – 14) </li></ul><ul><ul><ul><li>wholly obtained in the territory of the exporting country except : </li></ul></ul></ul><ul><ul><ul><ul><li>25 tariff lines - wholly obtained in the territory of any party </li></ul></ul></ul></ul><ul><ul><ul><ul><li>27 tariff lines – RVC at various % or CTC at various level. </li></ul></ul></ul></ul><ul><li>Processed agricultural products (Ch 15 - 24) </li></ul><ul><ul><ul><li>RVC or CTC or combination of RVC and/or CTC </li></ul></ul></ul>
  58. 58. ASEAN-Korea <ul><li>Textiles and clothing </li></ul><ul><ul><ul><li>Chapters 50 - 59 : generally CTC or RVC 40%. Certain tariff lines require CTC accompanied by at least two preparatory or finishing operations . </li></ul></ul></ul><ul><ul><ul><li>Chapters 61 - 63 : CC provided that the good is both cut and sewn in the territory of any party . </li></ul></ul></ul>
  59. 59. ASEAN-Korea <ul><li>Other industrial products </li></ul><ul><li>(124 tariff lines) </li></ul><ul><ul><ul><li>RVC </li></ul></ul></ul><ul><ul><ul><li>CTC </li></ul></ul></ul><ul><ul><ul><li>Combination of RVC and/or CTC </li></ul></ul></ul>
  60. 60. <ul><li>De Minimis : A good that does not undergo a change in tariff classification shall be considered as originating if: </li></ul><ul><ul><li>if the value of NOM does not exceed 10% of the FOB value ; or </li></ul></ul><ul><ul><li>for textiles and apparel , if the weight of NOM does not exceed 10% of the total weight of the product. </li></ul></ul>ASEAN-Korea
  61. 61. ASEAN-Korea <ul><li>Example of PSR </li></ul><ul><li>0305.20 - Livers and roes of fish, dried, smoked, salted or in brine </li></ul><ul><li>“ Wholly-Obtained or Produced in the territory of any Party. ” </li></ul>
  62. 62. ASEAN-Korea <ul><li>1604.16 - Anchovies </li></ul><ul><li>“ 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. ” </li></ul>
  63. 63. ASEAN-Korea <ul><li>51.05 - Wool and fine or coarse animal hair, carded or combed (including combed wool in fragments). </li></ul><ul><li>“ 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. ” </li></ul>
  64. 64. ASEAN-Korea <ul><li>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. </li></ul><ul><li>“ 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. ” </li></ul>
  65. 65. <ul><li>OPERATIONAL CERTIFICATION PROCEDURES </li></ul>
  66. 66. <ul><li>Certificate of Origin ( CO ) </li></ul><ul><ul><li>Form MPFTA for Malaysia-Pakistan </li></ul></ul><ul><ul><li>Form XX for Malaysia-Japan </li></ul></ul><ul><ul><li>Form E for ASEAN-China </li></ul></ul><ul><ul><li>Form AK for ASEAN-Korea </li></ul></ul><ul><li>For export to ASEAN countries, exporters can choose to use either CEPT Form D or FTA’s Forms . </li></ul><ul><ul><li>Advisable to use Form D , unless using other FTA Forms could render more benefits </li></ul></ul>Certificate of Origin
  67. 67. <ul><li>Application for the CO: </li></ul><ul><ul><li>MITI is the sole issuance authority </li></ul></ul><ul><ul><li>Forms are available from FMM and its branches. </li></ul></ul><ul><ul><li>Pre-exportation verification to determine the origin of a product is required prior to CO approval . </li></ul></ul><ul><ul><li>Result of the verification is valid for two years . </li></ul></ul>Certificate of Origin
  68. 68. <ul><li>Claim for preferential tariff treatment </li></ul><ul><ul><li>Present the CO to Customs Authority of the importing party . </li></ul></ul><ul><ul><li>if there is reasonable doubt , Customs Authority of the importing party may request issuing authority of the exporting party to conduct retroactive check . </li></ul></ul><ul><ul><li>if not satisfied , the Customs Authority may conduct verification visit to the manufacturer’s premise in exporting country . </li></ul></ul>Certificate of Origin
  69. 69. Certificate of Origin <ul><li>Time limit for presentation of CO </li></ul>Discretion - 6 months AKFTA Discretion 6 months 4 months ACFTA - - 12 months JMEPA Discretion 6 months 4 months MPFTA Force Majeure Extension Normal
  70. 70. Fraudulent Act <ul><li>Government Authorities concerned shall cooperate in the action to be taken in the territory of the respective Party against the persons involved . </li></ul><ul><li>Each Party is responsible to provide legal sanction for fraudulent acts related to a Certificate of Origin. </li></ul>
  71. 71. THANK YOU

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