Page 6 - The South China Business Journal
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Rules of Origin Criteria of
ASEAN’s
Free Trade Agreements
Rules of Origin (RoO) are guidelines that help the cost of the good and all costs necessary to bring the
importers and manufacturers determine the country good onto the carrier.
of origin of a product. RoOs establish the product’s
eligibility for preferential tariff treatment available under 2. Change in Tariff Classification (CTC)
FTAs. In other words, products qualifying as originating
under a FTA may be allowed to pay lower or no import To qualify as originating under the CTC rule, the non-
tariff when imported into another FTA member country. originating material used in the production of the good
To qualify as originating goods, imported items must must not have the same HS classification as the final
either be: good. Manufacturers and exporters must know the HS
classification of the final good and the non-originating
• Wholly-obtained or produced entirely in an FTA raw materials to use this method.
member country; or
• Must have undergone a ‘substantial transformation’.
For the goods that are partially produced within an FTA
member country, substantial transformation guarantees
that a meaningful manufacturing process has taken
place in the free trade area for the good to qualify as
originating. The criteria to determine the country of
origin for such goods is based upon three methods as
explained below.
1. Regional Value Content (RVC)
RVC requires that a certain percentage of the good’s
value must originate in a FTA member country for the
good to be considered as originating. Under ASEAN’s
FTAs, this percentage is generally 40 percent of the Free
on Board (FOB). FOB is the price actually paid or payable
to the exporter for a good when the good is loaded onto
the carrier at the named port of exportation, including
4 AmCham South China
Rules of Origin Criteria of
ASEAN’s
Free Trade Agreements
Rules of Origin (RoO) are guidelines that help the cost of the good and all costs necessary to bring the
importers and manufacturers determine the country good onto the carrier.
of origin of a product. RoOs establish the product’s
eligibility for preferential tariff treatment available under 2. Change in Tariff Classification (CTC)
FTAs. In other words, products qualifying as originating
under a FTA may be allowed to pay lower or no import To qualify as originating under the CTC rule, the non-
tariff when imported into another FTA member country. originating material used in the production of the good
To qualify as originating goods, imported items must must not have the same HS classification as the final
either be: good. Manufacturers and exporters must know the HS
classification of the final good and the non-originating
• Wholly-obtained or produced entirely in an FTA raw materials to use this method.
member country; or
• Must have undergone a ‘substantial transformation’.
For the goods that are partially produced within an FTA
member country, substantial transformation guarantees
that a meaningful manufacturing process has taken
place in the free trade area for the good to qualify as
originating. The criteria to determine the country of
origin for such goods is based upon three methods as
explained below.
1. Regional Value Content (RVC)
RVC requires that a certain percentage of the good’s
value must originate in a FTA member country for the
good to be considered as originating. Under ASEAN’s
FTAs, this percentage is generally 40 percent of the Free
on Board (FOB). FOB is the price actually paid or payable
to the exporter for a good when the good is loaded onto
the carrier at the named port of exportation, including
4 AmCham South China
