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APEC RULES OF ORIGIN - GENERAL FRAMEWORK

This compendium is the result of an initiative by the APEC Sub-Committee on Customs Procedures to develop a guide on Rules of Origin within APEC. The emphasis has been on creating a compendium suitable for use within the business community, to better inform importers and exporters of current Rules of Origin trading arrangements.

Every attempt has been made to provide readers with topical and accurate information. However, this publication is not designed to serve as a substitute for the relevant statutory provisions. Readers should therefore refer also to the relevant economies' legislative provisions, which may change at any time.

ASIA-PACIFIC ECONOMIC COOPERATION COMPENDIUM ON RULES OF ORIGIN

CONTENTS

1. GENERAL FRAMEWORK
   

   1.1 List Of APEC Members

   1.2 Introduction To Rules Of Origin

   1.3 Preferential Trade Initiatives Of APEC Members

   1.4 Summary of Non-Preferential Rules of Origin

2. APEC ECONOMIES' RULES OF ORIGIN
   

   2.1 AUSTRALIA

   2.2 BRUNEI DARUSSALAM

   2.3 CANADA

   2.4 CHILE

   2.5 PEOPLE'S REPUBLIC OF CHINA

   2.6 HONG KONG

   2.7 JAPAN

   2.8 REPUBLIC OF KOREA

   2.9 MALAYSIA

   2.10 NEW ZEALAND

   2.11 PAPUA NEW GUINEA

   2.12 THE REPUBLIC OF THE PHILIPPINES

   2.13 SINGAPORE

   2.14 CHINESE TAIPEI

   2.15 THAILAND

   2.16 UNITED STATES OF AMERICA

3. APPENDICES
   
   
4. GLOSSARY

1.1 LIST OF APEC MEMBERS

• Australia
• Brunei Darussalam ‡ Canada
• Chile‡
• People's Republic of China † Hong Kong †
• Indonesia Japan † Korea Malaysia ‡ Mexico
• New Zealand ‡
• Papua New Guinea ‡
• The Republic of the Philippines ‡ Singapore
• Chinese Taipei † Thailand ‡
• USA
  

† Economy has no preferential ROO
‡ Economy has no non-preferential ROO

Rules of Origin

Rules of origin (ROO) are the basis on which the country of origin of goods is determined for international trade purposes. They are used to determine the country in which goods have been produced or manufactured in cases where the production or manufacture took place in more than one country. These rules are necessary to ensure that provisions applying selectively on the basis of origin are not avoided by minimal processing, trade diversion and similar circumvention methods.

There are two types of ROO:

Non-preferential Rules of Origin

Non-preferential rules of origin are important for a number of reasons, including the application of

tariffs, quotas, dumping and marketing of goods. Preferential rules of origin

Preferential rules of origin are used to determine goods which may enter a country under preferential

treatment. That is, they are used to establish whether the goods are eligible for special treatment under

a trading arrangement between two or more economies. Preferential (or reduced) rates of duty are applied to goods which are found to be the products or manufacture of a country defined as a preference country. The principal objective of preferential rules of origin is to ensure that benefits are restricted to those goods which originate and are traded within the particular preference area.

Substantial Transformation

Annex D1 of the International Kyoto Convention provided the international basis for signatories to determine the origin of goods produced in more than one country. Without being definitive about the process, it indicated that the origin of goods should be determined by the last/final country in which "substantial transformation" of the goods took place. It indicated that "substantial transformation" could be determined by applying one of three different methods:

• percentage of value added;
• change in tariff heading; or
• specified process of manufacture.

Within APEC, some economies use the "value-added" method, others use the "change in tariff heading" method, and some use a combination, as a means of determining substantial transformation and thereby the origin of products.

Value-added

Under this method, a minimum percentage of the value of a good must have been added within the country or preferential area for which origin is being claimed. There are a range of minimum percentages applied under different trade agreements described in this compendium. There may also be other requirements which need to be satisfied.

Change in Tariff Heading

Under this method, "substantial transformation" is said to have occurred if a good is classified to a different tariff heading than that of its component materials after production

In some specific instances, change of tariff heading alone will not necessarily confer origin. In such instances, supplementary criteria must be used to determine whether the change in tariff heading confers origin.

Specified Process of Manufacture

Generalised System of Preferences

1.3 PREFERENTIAL TRADE INITIATIVES OF APEC MEMBERS

1.3 PREFERENTIAL TRADE INITIATIVES OF APEC MEMBERS (Cont.)

† Details not provided
* Both methods used - for details see Canada's appendix on NAFTA rules
** Primary criterion used is change in tariff heading

1.4 SUMMARY OF NON-PREFERENTIAL RULES OF ORIGIN

The following are summary tables of the non-preferential rules of origin for each APEC member.

In the summary tables, the following abbreviations are used: