Rules of Origin under the Asia-Pacific
Trade Agreement (APTA)
Regional Training Program on Enhancing Utilization of
ASEAN FTA, Trade Negotiation and Trade Policy
Development
Dr. Joong-Wan Cho
Chief, Trade Policy Section
Trade and Investment Division
Email: [email protected]
Rules of Origin
Rules of Origin are the criteria used to define where a
product was made.
Rules of Origin are used:
 to implement measures and instruments of commercial
policy (e.g., anti-dumping duties, safeguard measures,
etc.);
 to determine whether imported products shall receive
MFN treatment or preferential treatment;
 for the application of labeling and making
requirements;
 for the purpose of trade statistics; and
 for government procurement.
Rules of Origin
GATT/WTO has no specific rules governing the
determination of the country of origin of goods in
international commerce.
Each contracting party was free to determine its
own origin rules.
GATT/WTO stated that the rules of origin should
be left: “… within the province of each importing
country to determine, in accordance with the
provisions of its law, for the purpose of applying
the MFN provisions (and for other GATT
purposes), whether goods do in fact originate in
a particular country”.
Methods of Determining Product Origin:
Wholly Obtained Principle
Tradable Type
Principle/Criterion
Primary Goods
Wholly obtained in a single customs
territory/country
Agricultural Goods
Unprocessed and harvested within
customs territory/country
Marine Fisheries (outside
territorial waters of MC)
Ownership of vessels/means of catch
Forestry Products
Unprocessed and harvested within
customs territory/country
Mineral Products
Extracted within territory or seabed in
territorial waters
Scrap/Waste Products
Collected within and fit only for recovery
of raw materials
Methods of Determining Product Origin:
Tests for Determining Origin of Processes or Manufactured
Goods
Tests for
Processed/Manufactured Goods
Principle of Last Substantial
Transformation
Change in tariff heading (CTH) or A change from any 4-digit HS
change in tariff subheading
chapter to any other 4-digit HS
(CTSH) test
chapter (6 digits for CTSH)
Specified process test
Any manufacturing process
deemed to confer origin
Value-added (percentage) test
Minimum regional content or
maximum non-originating content
Mixed tests
SP test and CTH test; CTH test or
value-added test, or both
Rules of Origin Criteria in RTAs of AsiaPacific
RTAs
Type
Qualifying Criteria
Value content needs
to be at least 40%.
-- F.O.B. value
calculation basis
Cumulation
ASEAN Free
Trade Area
(AFTA)
Regional
--
Full
Australia-NZ
Closer
Economic
Relations Trade
Agreement
Regional
--
Bilateral (Full)
Asia-Pacific
Trade
Agreement
(APTA)
Regional
--
Full
Value content needs
to be at least 50%.
-- Factory cost
calculation basis.
Value content needs
to be at least 45%
(35% for LDCs).
-- Ex-factory price
calculation basis
Rules of Origin Criteria in RTAs of AsiaPacific (Cont’d)
RTAs
Type
Qualifying Criteria
China - ASEAN
Regional
--
Value content needs to be
at least 40%.
-- Elimination of duty rates for
products under HS Chapter
07 and 08 (vegetables and
fruits) which originate in the
party of the agreement.
Regional
India - Nepal
Bilateral
--
Change in tariff heading (4digit level; and
-- Value content needs to be
at least 30%.
Bilateral
India – Sri
Lanka
Bilateral
--
Bilateral
Change in tariff heading
(4-digit level); and
-- Value content needs to be
at least 35%.
-- F.O.B. calculation basis.
Cumulation
Rules of Origin Criteria in RTAs of AsiaPacific (Cont’d)
RTAs
Type
Qualifying Criteria
Value content needs to be
at least 40% (30% for goods
of LDCs).
-- F.O.B. value calculation
basis.
Cumulation
South Asian
Preferential
Trade
Agreement
Regional
--
Diagonal
Singapore Australia
Bilateral
--
Bilateral
Singapore Japan
Bilateral
--
Full
Value content needs to be
at least 50% (product specific
rule: 30%).
-- Factory cost calculation
basis.
Either change in tariff
heading (4-digit level); or
-- Value content needs to be
at least 60%.
-- F.O.B. value calculation
basis.
Rules of Origin Criteria in RTAs of AsiaPacific (Cont’d)
RTAs
Type
Singapore – NZ
(Closer
Economic
Partnership)
Bilateral
--
Value content needs to be
at least 40%.
-- Ex-factory cost calculation
basis.
Bilateral
Bilateral
--
Bilateral
Regional
--
Bilateral (Full)
Singapore –
United States
South Pacific
Trade and
Economic
Cooperation
Agreement
Qualifying Criteria
Either change in tariff
heading (2,4 or 6-digit level);
and/or
-- For specific products: value
content needs to be at least
30-60%.
-- Highly product-specific.
Value content needs to be
at least 50%.
-- Factory cost calculation
basis.
-- Non-reciprocol.
Cumulation
Rules of Origin Criteria in RTAs of AsiaPacific (Cont’d)
RTAs
Thailand Australia
United States Australia
Source: Compiled by
Rajan S. Ratna, 2006
Type
Qualifying Criteria
Cumulation
Bilateral
--
Product-specific change in
tariff heading (4 or 6-digit
level) and/or for specific
products.
-- Value content percentage
of 40-55%.
-- F.O.B. calculation basis.
Bilateral
Bilateral
--
Bilateral
Change in tariff heading
(2,4 or 6-digit level) and/or
for specific products.
-- Value content needs to be
at least 35% 9automotive:
50% net cost).
-- F.O.B. calculation basis.
Rules of Origin under the APTA
Products contained in the National Lists of
Concessions shall be eligible for preferential
treatment if they satisfy the RoO under the
APTA (Article 8 and Annex II of the APTA).
Rule 1: Originating Products – (a) Products
wholly produced or obtained in the exporting
Participating State (as defined in Rule 2); (b)
Products not wholly produced or obtained in
the exporting PS (provided that export
products are eligible under Rule 3 or Rule 4).
Rules of Origin under the APTA
Rule 2: The following shall be considered as wholly produced or
obtained in the exporting PS of APTA: (a) Raw or mineral
products extracted from its soil, its water or its seabeds; (b)
Agricultural/forestry products harvested there; (c) Animal born
and raised there; (d) Products obtained from animals referred to
in (c); (e) Products obtained by hunting or fishing conducted
there; (f) products of sea fishing and other marine products
taken from the high seas by its vessels; (g) Products processed
and/or made on board its factory ships exclusively from products
referred to in (f); (h) Parts or raw materials recovered there from
used articles which can no longer perform their original purpose
nor are capable; (i) Used articles collected there which can no
longer perform their original purpose there which are fit only for
disposal or for the recovery of parts or raw materials; (j) Waste
and scrap resulting from manufacturing operations conducted
there; (k) Goods produced there exclusively from the products
referred to in (a) to (j).
Rules of Origin under the APTA
Rule 3: Not Wholly Produced or Obtained
(a) Within the meaning of Rule 1(b), products worked on or
processed as a result of which the total value of the materials,
parts or produce originating from non-PS or of undetermined
origin used does not exceed 55% of the f.o.b. value of the
products produced or obtained and the final process of
manufacture is performed within the territory of the exporting PS
shall be eligible for preferential concessions, subject to the
provisions of Rule 3(c), (d) and (e)
(b) Sectoral Agreements: Provisions may need to be made for
special criteria to apply. Consideration may be given to these
criteria as and when the sectoral agreements are negotiated.
The formula for calculating the content of non-originating
materials, and its requirement for obtaining the originating status
referred to in rule 3(a): [(Value of imported non-originating materials, parts or
produce + Value of undetermined origin materials, parts or produce) / f.o.b. price ] x 100 ≤
55% .
Rules of Origin under the APTA
Rule 3(d): The value of the non-originating materials, parts or
produce shall be: (i) the c.i.f. value at the time of importation of
materials, parts or produce where this can be proven; or (ii) The
earliest ascertainable price paid for the materials, parts or
produce of undetermined origin in the territory of the PS where
the working or processing takes place.
Rule 3(e): The following operations or processes are considered to
be insufficient to confer the status of originating products:- (i)
Operations to ensure the preservation of products in good
condition either for transportation or storage; (ii) Simple
operations consisting of removal of dust, sifting or screening,
sorting, classifying, matching, washing, painting, cutting up; (iii)
Changes of packaging and breaking up and assembly of
consignments; (iv) Simple slicing, cutting or repacking or placing
in bottles, flasks, bags, boxes, fixing on cards or boards; (v) The
fixing of marks, labels or other like distinguishing signs on
products or their packaging; (vi) Simple mixing;
Rules of Origin under the APTA
3(e) continued:
vii) Simple assembly of parts of products to constitute a complete
product; (viii) Slaughter of animals; (ix) Peeling, unflaking, grain
removing and removal of bones; and (x) A combination of two or
more operations specified above.
Rule 4: Cumulative Rules of Origin
Products which comply with origin requirements provided in Rule
1 and which are used by a PS as input for a finished product
eligible for preferential treatment by another PS shall be
considered as a product originating in the territory of the PS
where working or processing of the finished product has taken
place provided that the aggregate content originating in the
territory of the PS is not less than 60% of its f.o.b. value.
Rules of Origin under the APTA
Rule 5: Direct Consignment
Directly consigned from the exporting PS to the importing PS: (a) If the
products are transported without passing through the territory of any
non-PS; (b) The products whose transport involves transit through one
or more intermediate non-PS with or without transshipment or
temporary storage in such countries, provided that: (i) the transit entry
is justified for geographical reason or by considerations related
exclusively to transport requirements; (ii) the products have not entered
into trade or consumption there; and (iii) the products have not
undergone any operation there other than unloading and reloading or
any operation required to keep them in good condition.
Rule 6: Treatment of Packaging
When determining the origin of products, packing should be considered
as forming a whole with the product it contains. However, packing may
be treated separately if the national legislation so requires.
Rules of Origin under the APTA
Rule 8: Certificate of Origin
Products eligible for preferential concessions shall be supported
by a Certificate of Origin (CoO) issued by an authority
designated by the government of the exporting PS and notified
to the other PS in accordance with the attached sample (CoO)
and notes for the completion thereof.
Rule 8: Prohibition and Co-operation
(a) Any PS may prohibit importation of products containing any
inputs originating from States with which it does not have
economic and commercial relations.
(b) PS will do their best to co-operate in order to specific origin of
inputs in the CoO.
Rules of Origin under the APTA
Rule 9: Review
These Rules may be reviewed as and when
necessary upon request of one-third of the PS and
may be open to such modifications as may be
agreed upon.
Rule 10: Special Criteria Percentage
Products originating in least developed PS can be
allowed a favorable 10 percentage points applied to
the percentages established in Rules 3 & 4. Hence,
for Rule 3, the percentage would not exceed 65%,
and for Rule 4, the percentage would not be less
than 50%.
APTA Supplementary Rules of Origin
under Negotiation
Alternative criteria under negotiation by the APTA Standing
Commmittee: To improve efficiency of origin determination, a
change in tariff classifications at four digit-level (CTH) of the
Harmonized System (HS) should be added in Rule 3(a) and
sectoral agreements of Rule 3(b) should made for specific goods
The draft modification of the article of Rule (3a) and 3(b and the
sectoral agreement for specific products: Rule 3 (Not wholly
produced or obtained)
Added to 3(a), “Alternatively, a product which has undergone a
change in tariff classification at 4-digit level (CTH) of the
Harmonized system shall be eligible for preferential concessions.
Added to 3(b), “Within the meaning for Rule 1(b), the products
which satisfy the Sectoral Agreements provided in Appendix 1
shall be eligible for preferential concessions.
Rules of Origin under the APTA
In conclusion:
Simple, Common Rules of Origin with minimum local value
content requirement of 45% f.o.b. (35% for LDCs), compared
favorably to other RTAs.
A set of operational procedures for the certification and
verification of the origin of goods was adopted in Oct. 2007, the
first time such a common agreement was reached among
developing countries in the region.
Visit APTA official web site: www.unescap.org/tid/apta.asp
Thank you for paying attention.
Your valued comments are
welcome!
[email protected]