The CEPT Rules of Origin have undergone further revision which has become effective 1 August 2008.

Origin Criteria

Under Article 2, goods imported under the CEPT Scheme into the territory of a Member State from another Member State shall be eligible for preferential tariff treatment if they conform to the origin requirements under any one of the following conditions:

(a)	a good which is wholly obtained or produced in the exporting Member State as set out and defined in Article 3; or
(b)	a good not wholly obtained or produced in the exporting Member State, provided that the said products are eligible under Article 4 or Article 5.

Not Wholly Owned or Produced

In Article 4, a good shall be deemed to be originating in the Member State where working or processing of the good has taken place:

(a)	if at least 40% of its content (hereinafter referred to as "ASEAN Value Content" or the "Regional Value Content (RVC)") originates from that Member State or it has undergone a change in tariff classification at four-digit level (change in tariff heading) of the Harmonised System; or;
(b)	if it is specified in Appendix C and satisfies the criteria set out therein.

A product may be considered as originating from an ASEAN country if at least 40% of its contents originate from any ASEAN country. The following formula is used for calculating the local content or ASEAN content:

Direct Method: RVC  =

Local / ASEAN raw material cost + Direct labour cost + Direct overhead cost + Profit + Other cost X 100%  FOB Price

The FOB Price refers to the total raw materials cost + direct labour cost + direct overhead cost + profits + other costs.

                                        FOB Price - Non-Originating Materials, Parts or Produce 
Indirect Method: RVC =  -------------------------------------------------------------------  x100%
                                                                       FOB Price

Accumulation

Article 5 stipulates that a good originating in a Member State, which is used in another Member State as materials for a finished good eligible for preferential tariff treatment, shall be considered to be originating in the latter Member State where working or processing of the finished good has taken place.

Secondly, if the RVC of the material is less than 40%, the qualifying ASEAN Value Content to be cumulated using the RVC criterion shall be in direct proportion to the actual domestic content provided that it is equal to or more than 20%. The Implementing Guidelines are set out in Appendix B.

Product Specific Rules

Product Specific Rules (PSRs)refer to rules that specify that the materials have undergone a change in tariff classification or a specific manufacturing or processing operation, or satisfy an ad-valorem criterion or a combination of any of these criteria.

A good not wholly obtained or produced in the territory of the exporting Party, could satisfy the origin requirements under the PSRs. The PSRs will enable each product to be assessed in terms of its particular production method in ASEAN Member Economies. This rule will enable manufacturers in the region to easily work out if their products will qualify as originating goods under AFTA.

Please refer to Appendix C for the list of AFTA PSRs.