MODULE #6 (a) it is wholly obtained or produced in the exporting

RULES OF ORIGIN Member State; or

WEEK 5 (b) it has an ASEAN Value Content or Regional Value
Content of 40% or above; or
(c) all of the non-originating materials used in its
production have undergone a Change in
MODULE INTRODUCTION Tariff Classification at the HS heading level; or
This module contains discussion on the different concepts (d) it has satisfied the required Product Specific Rules;
under ATIGA Rules of Origin and the Operational Certification or
Procedure (OCP) (e) it has satisfied the ASEAN Cumulative ROO
(Accumulation).
INTENDED LEARNING OUTCOME:
At the end of the module, the students should be able to:
o Identify if imported goods are originating or ROO CRITERIA:
not using the criteria in Rules of Origin.
o Discuss comprehensively the content and
relevance of Operational Certfication
Procedure.

RULES OF ORIGIN
DEFINITIONS:

 Rules of Origin means the specific provisions,

developed from principles established by national
legislation or international agreements ("origin
criteria"), applied by a country to determine the origin
of goods.( Revised Kyoto Convention Definition,
Specific Annex K) I. WHOLLY OBTAINED GOODS
(ATIGA, Chapter 3, Article 27)

 Rules of Origin is defined as those laws, regulations  Goods are generally considered to be wholly obtained
and administrative determinations of general when they are made entirely in the exporting country
application applied by any Member to determine the from materials produced in that same country.
country of origin of goods provided such rules of origin  Mineral exports, most agricultural products and
are not related to contractual or autonomous trade products like seafood harvested within the country are
regimes leading to the granting of tariff preferences. normally wholly obtained originating goods.
(WTO Definition -Agreement on Rules of Origin, Part
I, Article 1(1)) The following shall be considered as wholly obtained or
produced in the exporting Member State:
a. Plant and plant products, including fruit, flowers,
USES OF ROO vegetables, trees, seaweed, fungi and live plants,
grown and harvested, picked or gathered in the exporting
 To implement measures and instruments of Member State;
commercial policy such as anti-dumping duties and
safeguard measures; b. Live animals, including mammals, birds, fish,
 To determine whether imported products shall receive crustaceans, molluscs, reptiles, bacteria and viruses,
most-favored-nation (MFN) treatment or preferential born and raised in the exporting MemberLState;
treatment;
 For the purpose of trade statistics; c. Goods obtained from live animals in the exporting
 For the application of labelling and marking Member State;
requirements; and
 For government procurement. d. Goods obtained from hunting, trapping, fishing,
farming, aquaculture, gathering or capturing conducted
in the exporting Member State;
TYPES OF ROO
e. Minerals and other naturally occurring substances,
 Preferential ROO are part of preferential trade not included in paragraphs (a) to (d) of this Article,
agreements (e.g., Free Trade Area and Economic extracted or taken from its soil, waters, seabed or beneath its
Partnership Agreements) which provides for tariff seabed;
concessions. The ROO determine what products can
benefit from the tariff concession or preference. f. Products of sea-fishing taken by vessels registered
(Annex II to the WTO Agreement on ROO) with a participating party and entitled to fly its flag and
 Non-preferential ROO are used in the application of other products taken from the waters, seabed or beneath the
MFN treatment, anti-dumping, countervailing, seabed outside the territorial waters of that Member
safeguard measures, origin marking requirements. State, provided that that Member State has the rights
(Art. 1(2) of the WTO Agreement on ROO) to exploit such waters, seabed and beneath the seabed in
accordance with international law;

THE ATIGA ROO (ATIGA, Chapter 3, Article 26) g. Products of sea-fishing and other marine products
taken from the high seas by vessels registered with a
A good imported by a Member State from another Member Member State and entitled to fly the flag of that Member State;
State shall be treated as an originating good if it conforms to
the following origin requirements: h. Products processed and/or made on board factory
ships registered with a Member State and entitled to fly the
flag of that Member State, exclusively from products referred
to in sub-paragraph (g) above;
MATERIALS USED IN THE MANUFACTURE OF THE
i. Articles collected there which can no longer perform EXPORT PRODUCT
their original purpose nor are capable of being restored or
repaired and are fit only for disposal or recovery of parts of  ORIGINATING materials are those sourced from
raw materials, or for recycling purposes; within the FTA territory (not just the country of export).

j. Waste and scrap derived from:  NON-ORIGINATING materials are:

(i) production in the exporting Member State; o Materials imported from a country outside the
or territory; or
(ii) used goods collected in the exporting o Materials produced in the territory but because of
Member State, provided that such
the requirements of the ROO fail to meet the ROO.
goods are fit only for the recovery of raw materials;
and
 Any material of UNKNOWN or UNCONFIRMED
ORIGIN should always be treated as NON
(k) Goods obtained or produced in the exporting
ORIGINATING.
Member State from products referred to in paragraphs (a) to
(j) of this Article.
LEVEL OF CHANGES IN TARIFF CLASSIFICATION:
II. SUBSTANTIAL TRANSFORMATION (ATIGA, Chapter 3,
 CHANGE IN CHAPTER (CC)
Article 28)
The HS classification of the Non-Originating Input
Material/s is different at the first two digit level
 Requires a product to be transformed into a different
(Chapter) vis-à-vis Final Product classification.
article.
 The materials, parts or components used in the
 CHANGE IN TARIFF HEADING (CTH)
manufacture of the product have undergone
The HS classification of the Non-Originating Input
SUFFICIENT WORKING OR PROCESSING.
Material/s is different at the first four digit level
 A product is originating in the country where it last
(Heading) vis-à-vis Final Product classification.
underwent substantial transformation.
 CHANGE IN TARIFF SUBHEADING (CTSH)
The HS classification of the Non-Originating Input
SUFFICIENT WORKING OR PROCESSING
Material/s is different at the first six digit level
Three main criteria:
(Subheading) vis-à-vis Final Product classification.
 ASEAN Value Content or Regional Value Content
(RVC);
 Change in Tariff Classification (CTC) Rule; and C1. PRODUCT SPECIFIC RULES (PSR)
 Product Specific Rule or Specific Process Rule.
 The product specific rules specify which condition/s
a good must satisfy in order to be considered as an
a. REGIONAL VALUE CONTENT (RVC) originating good, e.g. Regional Value Content
(RVC); AND/OR Change in Tariff Classification
(CTC)
 RVC is the regional content threshold.
 RVC is used where it has been decided that the ROO
should insist that at least 40% of the final value of the C2. SPECIFIC PROCESS RULE
good must come from within the FTA territory.
 This criterion requires the non- originating materials
to undergo a specific manufacturing or processing
CALCULATION OF RVC: operation in the exporting country.

a. DIRECT METHOD CALCULATION (BUILD-UP METHOD)  Applicable to Textile and Textile Products.

RVC= ASEAN Material Cost+ Direct Labor Cost+ Direct

Overhead Cost+ Other Cost+ Profit DE MINIMIS RULE (ATIGA, Chapter 3, Art. 33)
FOB Price
 The requirement of CTC is that ALL non- originating
RVC= QUOTIENT x 100% materials must undergo the required tariff shift.
 However, for a material that cannot meet the required
“tariff shift” the de minimis rule provides an additional
b. INDIRECT METHOD CALCULATION (BUILD DOWN possibility for said material to qualifying as
METHOD; QUALIFYING VALUE CONTENT METHOD “originating”. The value of the non-originating material
that did not satisfy the CTC must not exceed the
RVC= FOB Price- Value of Non-Originating Materials, agreed percentage of the adjusted value of the good.
Parts of Goods (under the ATIGA : 10% of the FOB value of the
FOB Price good.)
RVC= QUOTIENT x 100%  Note that the de minimis provision does not apply to
b. CHANGE IN TARIFF CLASSIFICATION (CTC) the RVC Rule.
 Under this criterion, imported materials, parts or
components must undergo sufficient working or ROO ACCUMULATION RULE (ATIGA, Chapter 3, Art. 30, &
processing. Annex 6)

 The FINAL PRODUCT to be obtained must be  A good originating in a Member State, which is used
classified under an HS code that is different from the in another Member State as inputs for a finished good
HS code classification of non-originating materials, eligible for preferential tariff treatment, shall be
parts or components used. considered to be originating in the latter Member State
 where working or processing of the finished good has E. IDENTICAL AND INTERCHANGEABLE MATERIALS
taken place. (ATIGA, Chapter 3, Art. 37)

 TYPES OF ACCUMULATION  Commodities which are identical and interchangeable

are also known as “Fungible
o FULL ACCUMULATION – Accumulation of Goods”.
the full value of the product from a party in an
FTA territory.  These are materials being of the same kind and
o PARTIAL ACCUMULATION – Parties are commercial quality, possessing the same technical
allowed to accumulate inputs with other and physical characteristics, and which after being
Member States to hurdle the ROO criterion. incorporated into the finished product cannot be
Tariff preference is given to the final exporting distinguished from one another for origin purposes by
country. virtue of any markings, etc.
o Under the ATIGA, inputs are eligible for partial
cumulation, if at least 20% of the RVC of the  Determined by:
good is originating in the contributing Member o PHYSICAL SEGREGATION of each of the
State. materials; or
o ACCOUNTING SEGREGATION of stock
control applicable, or inventory management
ROO TREATMENTS FOR OPERATIONS AND OTHER practice, in the exporting Party.
ELEMENTS o Once a decision has been taken on the
inventory management method, that method
shall be used throughout the fiscal year.
A. MINIMAL OPERATIONS & PROCESSES (ATIGA,
Chapter 3, Art. 31)
Operations or processes considered to be minimal and not be ROO SYSTEMS
taken into account in determining
whether a good is originating in one Party: A. SELF- CERTIFICATION SYSTEM

 ensuring preservation of goods in good condition for  The purpose of this Self-Certification Scheme is to
the purposes of transport or storage; facilitate intra-ASEAN trade, expedite and lessen the
 shipment or transportation; and cost of doing business.
 packaging or presenting goods for sale.  Previously, there were two (2) pilot projects for Self-
Certification that has been approved by the ASEAN
Economic Ministers and ASEAN Free Trade Area
B. PACKAGES AND PACKING MATERIALS (ATIGA, Council. These were established to acquire
Chapter 3, Art. 34) knowledge and practical experience of the self-
Packaging and Packing Materials for retail sale: certification mechanism in preparation for the
implementation of an ASEAN-Wide Self- Certification
a) Under the RVC criterion, their value shall be taken into System.
account in its origin assessment, and considered to be  The ASEAN-Wide Self-Certification System was
forming a whole with the good. incorporated into the ATIGA through the First Protocol
b) If the packaging and packing material or container is to Amend the ATIGA.
classified with the goods in accordance with HS GIR 5,
then they are not required to meet the CTC requirement of
the product specific rule that the originating good had to B. TRANSPORTATION OF GOODS (DIRECT
meet. CONSIGNMENT)
(ATIGA, Chapter 3, Art. 32)

C. ACCESSORIES, SPARE PARTS AND TOOLS  An originating good retains its originating status if it is
IMPORTED WITH ORIGINATING GOODS transported from the exporting Party the importing
(ATIGA, Chapter 3, Art. 35) Party:
o without passing through any non- Party; or
1) Under the CTC or Specific Process Rule, these shall not o Goods transported through one or more
be taken into account in determining whether the good Parties, other than the exporting Party and the
qualifies as an originating good, provided that: importing Party, or through a non-Party,
 these are not invoiced separately from the originating provided that:
good; and  the transit entry is justified for
 their quantities and value are customary for the geographical reason or by
imported good. consideration related exclusively to
transport requirements;
2) Under the RVC criterion, their value shall be taken into  the goods have not entered into trade
account as the value of the originating or non-originating or consumption there; and
materials, as the case may be, in calculating the RVC of  the goods have not undergone any
the operation there other than unloading
originating good. and reloading or any other operation
to preserve them in good condition.

D. NEUTRAL ELEMENTS (INDIRECT MATERIALS)  Transportation to the importing Party through

(ATIGA, Chapter 3, Art. 36) another participating Party does not affect the
originating status of the good.
 It is not necessary to determine the origin of
NEUTRAL ELEMENTS which were used in production  If the good is imported into another FTA Party and
and not incorporated into the good. then re-exported it may be eligible for a “BACK-
TO-BACK CERTIFICATE” to enable it to retain
originating status on the basis of the original
certificate of origin.
 o A back-to-back certificate is not required
in a case of simple transshipment of the
good through a participating Party, i.e.
where it is not imported into that Party. I. Answer the following:

OPERATIONAL CERTIFICATION PROCEDURE FOR THE 1. Determine whether or not the following goods are
ATIGA ROO wholly-obtained under the ATIGA when exported to the
Philippines.
 OCP is the official method of implementing the Rules
of Origin of the ATIGA; a. Irreparable automobile bodies from Singapore.
 Covers operational procedures on the issuance and b. Live wild boars from China migrated to and caught in
verification of the Certificate of Origin (Form D) and Viet Nam.
other related administrative matters; c. Kopi Luwak or Civet Coffee made in Indonesia from
 Attached to the ATIGA as Annex 8. partly-digested coffee cherries eaten an defecated by
the Asian palm civet of Indonesia.
d. Used led TVs from Malaysia.
A. PROOF OF ORIGIN (ATIGA, Chapter 3, Art. 38 and OCP 2. A local manufacturer produces stuffed dolls
Rule 1 A, as amended) classified under AHTN code 9503.00.21. These
dolls are to be exported to Myanmar under the
 A Proof of Origin means a document which certifies
ATIGA with production costs per doll as follows:
that the goods exported meets the ROO provisions in
the ATIGA. Description Origin Origin Status
Value (US$)
 Proof of Origin may be in the form of:
Fabrics & Yarn Phils. Originating
o Certificate of Origin (Form D);
Clothes/Stuffing Brazil Non-
o Electronic Certificate of Origin (e-
Originating 3.00
Form D); or
o Origin Declaration. Other Costs + Profit Phils. Originating
FOB/pc.

A1. (a) Certificate of Origin (Form D) (OCP Rule 7): The ATIGA origin criterion required for dolls
is “a regional value content of not less than
- Attached as Annex 7 to the ATIGA; 40 percent”.
- In ISO A4 size paper;
- Made in the English language; Are the stuffed dolls Philippine originating under
- Bear a reference number separately given by each place the ATIGA ROO?
of office of issuance;
- Bear the authorized signature and official seal of the
issuing authority; and 3. Wood sculptures (HS 97.03) made in Indonesia from
- Comprise of one (1) original (Light violet) and two (2) logs (HS 44.03) taken from trees in Sumatra Island,
carbon copies (Duplicate Indonesia, for export to the Philippines. Are these
(Orange) and Triplicate (Orange)) sculptures Indonesian originating under the ATIGA
ROO?

A2. Electronic Certificate of Origin (e-Form D) (OCP Rule

27):
4. Steel nails (AHTN code 7317.00.10) made entirely
- Is a CO Form D that is structured in accordance with the from steel scraps (AHTN code C7204.49.L00) collected
ATIGA e-Form D Process Specification and Message within the Philippines. Are subject nails originating
Implementation Guideline (which is the agreed flow, under the ATIGA ROO when exported to Indonesia?
processes and data structures of the electronic CO Form D
and related documents).
- Has the equivalent legal effect as the CO Form D in paper 5. Motocross motorcycles made in Indonesia classified
format. under AHTN code 8711.20.91 are fitted with wheel rims
originating from the US classified under AHTN code
A3. (c) Origin Declaration (OCP Rule 12 B): 8714.10.50. If the ROO criterion for the motorcycles is
CTH, are the goods Indonesia originating under the
- Is a declaration on the origin of goods made by a Certified ATIGA when exported to the Philippines?
Exporter (CE) under the ATIGA Self- Certification Scheme.
- Made out on the commercial invoice. If cannot be made
out on the commercial invoice, it may be made out on any
of the following: II. Make a COMPREHENSIVE OUTLINE on Operational
a. Billing statement; Certification Procedure (OCP). Illustrate processes
b. Delivery order; or using diagrams and flow charts.
c. Packing list
- Bears the name and manually executed signature of the
authorized signatories.

END OF MODULE TEST: