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Under the ACFTA, products imported by a Party shall be deemed to be originating and eligible for preferential concessions if they conform to the origin requirements under any one of the following:
| (a) |
Products which are wholly obtained or produced as set out and defined in Rule 3 which is "Wholly Obtained Products"; or |
| (b) |
Products not wholly produced or obtained provided that the said products are eligible under the following: |
|
| i. |
Rule 4 "Not Wholly Produced or Obtained", |
| ii. |
Rule 5 "Cumulative Rule of Origin" or |
| iii. |
Rule 6 "Product Specific Criteria". | |
Under Rule 4, a product shall be deemed to be originating if:
| (i) |
Not less than 40% of its content originates from any Party; or |
| (ii) |
If the total value of the materials, part or produce originating from outside of the territory of a Party (i.e. non-ACFTA) does not exceed 60% of the FOB value of the product so produced or obtained provided that the final process of the manufacture is performed within the territory of the Party. |
The formula for the 40% ACFTA content is calculated as follows:
|
Value of Non-ACFTA materials + Value of materials of Undertermined origin
-----------------------------------------------------------------------FOB Price |
x 100 % |
< 60% |
Therefore, the ACFTA content: 100% - non-ACFTA material = at least 40% |
Rule 5 which is the Cumulative Rule of Origin, refers to all 10 ASEAN countries and China value-added content (VA) of 40%.
Rule 6 refers to the Product Specific Rule (PSR) whereby products have undergone sufficient transformation in a country which shall be treated as originating goods of that Party.
| In summary, Local/Regional VA (%) = |
LOCAL/REGIONAL raw material cost
+ Direct labour cost
+ Direct overhead cost
+ Profit
+ Inland transport cost X 100%
FOB |
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