Preferential Origin Flashcards
Who determines the rules of origin, importing or exporting country?
Rules of origin are those of the importing country.
Purpose of preferential origin?
To provide duty benefits through free trade agreements
Do you have to us preferential origin?
No, but if you do you have to ensure you comply with all rules
Technical RoO x 5 types?
Tariff shift,
Value percentage,
Specific Process,
Alternative rule,
General Tolerance,
BOM - name and purpose?
Bill Of Materials - Product is broken down into its parts, materials or ingredients to determine preferential eligibility.
Out of 5 origin rules. Main 3 for determining preferential origin.
Tariff shift,
Value-percentage,
Specific Process,
Previous guidance on RoO name?
Notice 828
Main points of Notice 828
Importers - establish if goods met rule for Pref treatment
Exporters/Manufacturers - Find rules which must be satisfied for export under Pref
Substantially/Sufficiently transformed Identified by three methods
Value added,
Tariff change
Qualifying manufacturing process.
UK gov guidelines for Pref Origin 3 step process
Step One - Find 4 digit tariff heading
Step Two - Check if good are Wholly Produced. If yes they are originating products.
Step Three - Identify relevant tariff heading rule. Refer to FTA text for origin rule.
Percentage of Value criterion example.
A certain value specified by the UK trade tariff must be added locally. I.E 60% of final value added locally, so no more than 40% of final value added with non-origination inputs.
General Tolerance Rule - Purpose
Pre-defined maximum percentage of non originating goods.
Some product categories have a more specific tolerance and are not included.
General Tolerance tested first.
Other origin rules: Principal of territory meaning
During manufacture, process needs to be completed uninterrupted within country claiming origin.
Other origin rule: Direct transport rule
Originating product MUST go directly form origin country to destination. If traveling through third country not included in cumulation zone, transit document will be required!
No splitting, re-packing or processing in other counters. Can only be unloaded to preserve condition.
Other Origin Rule: No-drawback rule
Used in certain FTA’s
As manufacture, you cannot import goods under customs suspension regime, then export under preference.
Either
1/ Claim reduced duty on imports for manufacture,
or
2/ Pay duties and allow customer to claim preference.
Additional provisions: Cumulation - Explain
A type of flexibility withing Free Trade Agreements allowing products sourced from other countries to be classed as “Originating” as not to negate preferential origin status.
Four types of Cumulation?
Bilateral
Diagonal
Regional
Full
Bilateral Cumulation Explained
Operates between 2 counties
FTA must contain provision for cumulative origin
If Value added rule - Value of goods excluded from percentage threshold
If change tariff rule - no Verification of tariff change for either country goods needed
IF manufacture rule - no verification of materials from either country required.
Diagonal Cumulation
Materials with originating status in a contracting country, used in manufacture in other contracting country will not lose status if then exporting to third contracting country.
All countries must follow same RoO and FTA principals
Regional cumulation
Same as diagonal cumulation, but only exists und the GSP scheme.
Goods can be use form other contracting countries without affecting origin at export.
Origin of finished product = country goods last processed or based on customs value.
Full Cumulation
As with other cumulation rule plus:
Goods worked or processed in a county not part of the FTA can be ignored in either Value added rule or Processing rule.
Cumulation in a nut shell
When using cumulation, you expand the origination zone to include materials from partner countries.
Origin of spare parts, tools and sets.
If normal equipment used along with the main product, and invoices at the same time, they can be called a set, and will share origin of the main product.
EXW price of the set must not exceed 15% from non-originating parts
Six main elements to determine origin
Principal of territoriality,
Direct Transport Rule,
No-Drawback Rule,
Cumulation,
Accounting segregation,
Product Sets,
Certificate of origin, How are they processed
Chamber of commons have multiple electronic systems in place.
You have to apply to use the system,
You must submit, formal undertaking and specimen signature,
You can use any chamber of commerce.
Preference documents. What can be used x 4
GSP -Generalised System of preferences - Form A
EUR1 movement certificate
Suppliers declaration
EUR 1 : 2 x types
EUR1 C1299 - For preference with countries within the EU
EUR-MED C1300 for pref with other participating countries
How long can customs authorities check origin status
Up to three years after import. If there is not sufficient evidence, duty may be recovered
What is an invoice declaration?
A declaration from exporter, on commercial invoice confirming the good are originating.
Used on low value goods, usually under £5500
Invoice declaration deadline
usually 2 years,
Supplier declaration?
Made by the supplier/Manufacture to confirm goods are originating
Approved Exporter Status
An exporter who has met certain customs authority conditions. It can be removed if the exporter abuses authorisation.
Applying for Approved Exporter Status
Export on regular basis,
Preference requirements met if required,
Docs will be completed carefully and taken care of.
Apply online with C1454 form.
GSP full name
Generalised System of Preferences
GSP, three frameworks
Lease Developed countries,
General framework,
Enhanced framework
GPS - Last developed countries framework explained?
UN-Classed as least developed,
Imports are quote free and nil duty
does not apply to arms and ammunition
GPS, General framework explained?
World back classed as low to low-middle income,
reduced import duty on certain goods.
GPS, Enhanced framework explained?
World bank classed as Low and Lower-middle income.
countries with lack of export diversity and integration with international trading system
