Annex 3 outlines the Rules of Origin in determining the origin of a good eligible for preferential tariff treatment.

Origin Criteria
Rule 2 clearly defines the Origin criteria. A good shall be deemed to be originating and eligible for preferential tariff treatment if it meets any one of the following:

The definition of wholly obtained is clearly outlined in Rule 3.

Not wholly obtained or Produced Goods
In Rule 4, a good shall be deemed to be originating if: 

The formula for calculating the RVC shall be:

(a)	Build-Up Method

VOM means value of originating materials, which includes the value of originating materials, direct labour cost, direct overhead cost, transportation cost and profit

(b)	Build-Down Method

RVC =

VOM - VNM -----------------       FOB

x 100%

VNM means value of non-originating materials, which shall be: (i) the CIF value at the time of importation of the materials, parts or goods; or (ii) the earliest ascertained price paid for the materials, parts or goods of undetermined origin in the territory of the Party where the working or processing has taken place.

Product Specific Rules

For the purposes of Rule 2 of the Rules of Origin, goods which satisfy the Product Specific Rules provided in Appendix 2 of Annex 3 shall be considered to be originating in the territory of the Party where working or processing of the goods have taken place. A good not wholly obtained or produced in the territory of the exporting Party, could satisfy the origin requirements under the Product Specific Rules stated in Rule 5.

Product Specific Rules means the rules that specify that the materials have undergone a change in tariff classification or a specific manufacturing or processing operation, or satisfy a regional value content or a combination of any of these criteria.

Treatment of Certain Goods
Rule 6 stipulates that certain goods shall be considered to be originating even if the production process or operation has been undertaken in an area outside the territories of Korea and ASEAN Member Countries (i.e. industrial zone) on materials exported from a Party and subsequently re-imported to that Party. The application of this Rule shall be mutually agreed upon by the Parties.

Accumulation
According to Rule 7, a good originating in the territory of a Party, which is used in the territory of another Party as material for a finished good eligible for preferential tariff treatment, shall be considered to be originating in the territory of the latter Party where working or processing of the finished good has taken place.

Except as provided for in Rule 7, the conditions for acquiring originating status must be fulfilled without interruption in the territory of the exporting Party.

Steps to Checking for Concession

To export to Republic of Korea, Singapore exporters should consider using the AKFTA if there is regional content.

Pre-export preparations are as follows:

Step 1:	Check with your importer in Korea or the Korean Customs Authority on the HS product code.
Step 2:	After obtaining the HS product code, look up the MFN rate and see if there is a duty. A product with 0% duty will not benefit from the AKFTA
Step 3:	If there is an MFN duty rate, then refer to the following located at: http://www.aseansec.org/akfta.htm
Step 4:	Look up the following annexes:  Annex1.          Modality for Tariff Reduction and Elimination for Tariff Lines Placed in the Normal Track. The tariff concessions under the Normal Track are found in Page 1 of Annex 1.  Annex 2.  Modality for Tariff Reduction/Elimination for Tariff Lines Placed in the Sensitive Track  a.  Appendix 1.  Sensitive List  b.  Appendix 2.  High Sensitive List
Step5:	The applied preferential tariff rate depends on the MFN rate and the year of exporting. To qualify for the FTA preferential rate, check that the product satisfies the Rules of Origin (ROO). Check if your product has a product-specific rule in Appendix 2 to Annex 3. Or, the product needs to satisfy the General Rules of Origin: a Regional Value Content (RVC) of 40% ASEAN-Korea content OR a Change in Tariff Heading (first 4 digits of HS code).

Comply with the documentation procedures for your Singapore-origin product. This involves factory registration with the Documentation Specialists Branch (DSB) of Singapore Customs, submission for approval of Manufacturing Cost Statement (MCS) to DSB for each product model to be exported (once approved and verified, the MCS is valid for one year) and application for the Form AK Certificate of Origin (CO) and Export Permit.

De minimis rule is available (Rule 10 of Annex 3)

De minimis rule provides for non-originating raw materials that does not meet the require change in tariff classification.

For goods under Chapter 50 to 63, non-originating materials will be exempted from required change if it does not exceed 10% of the total weight of the product

For other goods, non-originating materials will be exempted from required change if it does not exceed 10% of the FOB value of the final product.

Back-to-Back Arrangement 

AKFTA allows for back-to-back arrangement in that goods brought into Singapore from ASEAN countries or South Korea and re-exported (without processing in Singapore) to other ASEAN countries or South Korea can still enjoy concessions.

This process involves a Certificate of Origin issued by an intermediate exporting Party based on the Certificate of Origin issued by the first exporting Party.

The issuing authority of the intermediate Party may issue a back-to-back Certificate of Origin, if an application is made by the exporter while the good is passing through its territory, provided that:

(a) a valid original Certificate of Origin is presented;
(b) the importer of the intermediate Party and the exporter who applies for the back-to-back Certificate of Origin in the intermediate Party are the same; and
(c) verification procedures as set out in Rule 14 are applied.

Hence, for back-to-back arrangement, the importing and exporting party in Singapore must be the same entity

Validity period of back-to-back form AK will be 6 months*

*Note that originating status of the goods can be retained for as long as 12 months with this specific arrangement. Original Form AK (6 months) plus back-to-back Form AK (6 months)

3rd Party Invoicing

AKFTA allows for 3rd party invoicing arrangements (Rule 21 of Appendix 1 to Annex 3)

This means that the Customs authority in the importing Party may accept Certificates of Origin in cases where the sales invoice is issued either by a company located in a third country or by an exporter for the account of the said company, provided that the good meets the requirements of Annex 3.

The exporter of the goods shall indicate "third country invoicing" and such information as name and country of the company issuing the invoice in the Certificate of Origin.

Invoice can come from countries not within ASEAN or Korea.