What Are Deminimis Rules?
Interlink編集部What Is the De Minimis Rule?
The de minimis rule is a system that allows certain non-originating materials that do not meet origin criteria to be exceptionally accepted if their proportion remains below a specified threshold, enabling the product to be treated as an originating good.
In practice, this is sometimes referred to as the "minimal non-originating material rule," "small quantity rule," or simply the "de minimis rule."
This rule is primarily applied as a supplementary consideration when certain non-originating materials fail to meet the Change in Tariff Classification (CTC) requirement.
However, the de minimis rule does not allow unrestricted use of non-originating materials. Its applicability depends on factors such as the specific agreement, product category, materials involved, calculation method, excluded products, and the presence or absence of supporting documentation.
Purpose and Background of the System
Under the rules of origin, when non-originating materials are used, it is required that the HS code changes significantly between the finished product and its materials, that a certain level of regional value content is met, or that specific processing operations are carried out.
However, in actual manufacturing, very small parts, additives, auxiliary materials, secondary materials, or packaging-related materials may not fully comply with the Product-Specific Rules of Origin (PSR).
In such cases, the de minimis rule provides a system that allows exceptions within a defined limit.
The de minimis rule is not a relaxation of the rules of origin. It is a supplementary provision designed to handle small quantities of non-originating materials that are difficult to avoid in practice, within the limits specified by the agreement.
Scope Covered in This Article
| Item | Contents Covered in This Article | Contents Covered in Other Articles |
|---|---|---|
| Basics of the De Minimis Rule | This article organizes the system that allows a limited amount of non-originating materials that do not meet the origin criteria under certain conditions. | Overview of EPA/FTA as a whole, tariff rates by agreement, and detailed origin certification systems are covered in separate articles. |
| Relation to CTC | This article covers the process of considering de minimis for some materials that do not meet the Change in Tariff Classification (CTC) criteria. | Detailed CTC determination methods, HS code classification, and Product-Specific Rules of Origin (PSR) are covered in specialized articles. |
| Relation to RVC | When using the Regional Value Content (RVC) criterion, this article confirms consistency between the value of non-originating materials and de minimis judgment. | RVC calculation formulas, deduction and build-up methods, and treatment of cost items are covered in RVC-specific articles. |
| Verification by Agreement | This article summarizes key points to check for CPTPP, RCEP, bilateral EPAs, and other FTAs. | Official texts, permitted ratios, excluded items, and the latest operational practices for each agreement should be checked in official sources. |
| Value-Based and Weight-Based Criteria | This article covers the numerator and denominator used in de minimis judgment and the differences between value-based and weight-based criteria. | Details of currency conversion, customs value, FOB value, and material valuation calculations are covered in related calculation articles. |
| Considerations for Textile Products | This article addresses common concerns in textile products regarding weight-based criteria, process criteria, and excluded materials. | Product-Specific Rules of Origin (PSR) for textiles and special provisions by agreement are covered in dedicated articles. |
| Supporting Documentation and Supplier Certificates | This article covers the management of documents explaining material value, weight, HS codes, origin status, and manufacturing processes. | The format of supplier certificates, declarations of originating status, and how to complete origin certificates are covered in separate articles. |
| Responding to Customs Post-Import Verification | This article organizes the documents to be retained to explain the basis for applying the de minimis rule after importation. | Verification procedures, document retention periods, and how to respond to customs inquiries are covered in the EPA document retention article. |
Situations Where the De Minimis Rule Applies
The de minimis rule is not always available when some materials do not meet the rules of origin. Whether it can be used as an exception depends on confirming the applicable agreement, HS codes, Product-Specific Rules of Origin (PSR), types and proportions of materials, and supporting evidence.
| Situation | Reason the Rule Is Relevant | Key Points to Verify | Main Stakeholders |
|---|---|---|---|
| When some materials do not meet the CTC | Because the HS code change between the finished product and non-originating materials is insufficient for those materials. | Finished product HS code, material HS codes, PSR, material ratios | Exporter, manufacturer, importer |
| When non-originating materials are minor in quantity | Even if the quantity is small, it must be confirmed whether it falls within the allowable range under the agreement. | Material value, material weight, numerator/denominator, allowable percentage | Exporter, manufacturer, supplier |
| When dealing with textile products | Weight-based and process-based criteria, as well as excluded materials, are often challenging. | Textile-specific provisions, applicable materials, weight, process documentation | Manufacturer, exporter, importer |
| When using the RVC criteria as well | It is necessary to verify that the treatment of non-originating material value does not conflict with RVC calculations. | RVC calculation sheet, non-originating material values, de minimis determination sheet | Exporter, manufacturer, origin compliance manager |
| When considering cumulation under RCEP | Materials subject to cumulation and those subject to de minimis must be separately identified and organized. | RCEP originating materials, non-originating materials, cumulation documentation | Exporter, manufacturer, supplier |
| When customs post-import verification is expected | After import, it is necessary to explain the basis for applying the de minimis rule. | Calculation documents, material data, supplier certificates, records retention | Importer, exporter, manufacturer, customs broker |
Relationship with CTC, RVC, and PSR
The de minimis rule often becomes an issue within rules of origin, particularly in relation to the Change in Tariff Classification (CTC) criterion.
CTC requires that the classification under the HS code between non-originating materials and the finished product must change to a level specified by the agreement.
Even if some non-originating materials do not meet this classification change, the product may still be considered originating if the proportion of such materials falls within the de minimis threshold.
On the other hand, the Regional Value Content (RVC) criterion focuses on the percentage of value added within the region for the finished product. When applying the RVC criterion, how the de minimis rule applies and which calculation includes the value of non-originating materials depends on each specific agreement.
Therefore, in practice, it is essential first to review the Product-Specific Rules of Origin (PSR), confirm whether CTC, RVC, or the specific processing criterion applies, and then determine whether the de minimis rule can be used.
Comparison with Other Systems
| Standard / System | Main Function | Relation to De Minimis | Practical Verification Points |
|---|---|---|---|
| PSR | Sets the origin criteria required for each product. | First, confirm the Product-Specific Rules of Origin (PSR) to determine which criteria apply for the determination. | Check the PSR corresponding to the HS code. |
| CTC | Confirms the change in HS code between non-originating materials and the finished product. | The de minimis rule is often considered for some materials that do not meet the CTC. | Compare the HS codes of the finished product and the materials. |
| RVC | Verifies the ratio of regional value content. | Check consistency between the handling of non-originating material values and the de minimis judgment. | Manage the RVC calculation sheet and the de minimis calculation sheet without contradictions. |
| Specific Manufacturing Processes | Confirms whether certain manufacturing processes were performed. | Whether the de minimis rule can be applied to parts not meeting process criteria should be checked for each agreement and product. | Simple packaging, sorting, or labeling may be insufficient. |
| Cumulation System | Includes originating materials or production from contracting countries in origin determination. | It is necessary to distinguish materials handled by cumulation from those assessed via the de minimis rule. | Confirm whether the materials themselves qualify as originating materials under the agreement. |
| Shipment Criteria | Confirms that the originating status is maintained during transport. | Even if the de minimis rule supports origin qualification, failing shipment criteria may cause issues with preferential tariff rates. | Verify through bills of lading covering the entire route or bonded storage documents when transiting third countries. |
Key Points to Verify by Agreement
The de minimis rule varies by agreement in terms of permissible thresholds, calculation standards, excluded items, and treatment of textile products.
Therefore, just because it applies under CPTPP does not mean it can be applied the same way under RCEP. It is necessary to review the relevant provisions, Product-Specific Rules of Origin (PSR), and customs documentation for each applicable agreement.
| Agreement / System | Concept of Permissible Threshold | Calculation Basis | Treatment of Textile Products | Relation to RVC |
|---|---|---|---|---|
| CPTPP | Allows a certain range of use for some non-originating materials that do not meet CTC. | Verification of either value-based or weight-based criteria is required depending on the product. | For textiles, be attentive to section and chapter notes, weight criteria, and excluded materials. | If applying RVC criteria, confirm how non-originating material values are treated. |
| RCEP | In combination with broad cumulation, de minimis may be considered for materials not meeting CTC. | Verification of value or weight criteria is required depending on the product and agreement provisions. | For textiles, it is important to confirm applicable materials and weight criteria. | It is necessary to distinguish whether to handle these under cumulation, RVC, or de minimis rules. |
| Bilateral EPA | Confirm the specific de minimis provisions set by each agreement. | Varies by agreement and product. | Textiles, agricultural products, and others may have special treatments. | Check in conjunction with the RVC formulas specified by the agreement. |
| Other FTAs | Follow the rules of origin of each respective agreement. | Individually verify value-based, weight-based, or quantity-based criteria. | Confirm presence of excluded items or special provisions. | If used with RVC criteria, confirm consistency in calculation. |
What is important in comparing agreements is not simply “how much percentage is allowed.” You must confirm what the denominator is in calculating that percentage, which materials are included in the numerator, and which products are excluded from application.
Calculation Basis for the Percentage
Under the de minimis rule, it is important that the amount stays "below a certain percentage," but what is used as the denominator for this calculation varies depending on the agreement and product category.
Generally, the value of non-originating materials may be compared against the value of the finished product. However, for products like textiles, the evaluation may be based on weight rather than value.
Therefore, it is necessary to check not only the percentage figure such as "within 10%," but also whether the 10% refers to a value-based or weight-based threshold, which materials are included in the numerator, and which value or weight is used as the denominator.
Summary of Value-Based and Weight-Based Criteria
| Calculation Basis | Numerator | Denominator | Common Application | Notes |
|---|---|---|---|---|
| Value-Based Criteria | Value of non-originating materials that do not meet the origin criteria | Value of the product, FOB value, transaction value, or other values specified by the agreement | General industrial products, products including parts and materials | Check material price, exchange rates, valuation methods, and allowable deductions. |
| Weight-Based Criteria | Weight of non-originating materials that do not meet the origin criteria | Total weight of the product or specific components as specified | Textiles, clothing, fabric products, etc. | Confirm the extent of the weight to be included in the applicable parts. |
| Item-Specific Special Criteria | Specified materials designated by the agreement or PSR | Standard values specified by the agreement or PSR | Specific agricultural products, chemicals, textiles, etc. | Prioritize checking item-specific rules over general rules. |
Which Calculation Basis to Use
The choice between value basis or weight basis is not at the discretion of the exporter or importer.
The applicable agreement, the HS code of the goods, Product-Specific Rules of Origin (PSR), general provisions, and special rules for textile products must be checked to determine the designated basis prescribed by the agreement.
In practice, the HS code of the finished product is verified first, then the applicable EPA/FTA is identified, followed by checking the Product-Specific Rules of Origin (PSR). Subsequently, it is confirmed step-by-step whether the item falls under the de minimis rule, whether a value or weight basis applies, which non-originating materials should be included in the numerator, and what value or weight constitutes the denominator.
System Application Flow
| Step | Check Points | Decision Points | Reference Documents |
|---|---|---|---|
| 1 | Identify the EPA or FTA to be used | De minimis provisions vary by agreement. | Agreement texts, customs materials, agreement-specific guides |
| 2 | Confirm the HS code of the finished goods | Different HS codes change the treatment of PSR and de minimis. | Product classification documents, specifications, catalogs, advance rulings |
| 3 | Check the Product-Specific Rules of Origin (PSR) | Confirm whether CTC, RVC, or processing criteria apply. | PSR tables, agreement annexes, customs materials |
| 4 | Verify origin status of each material | Separate originating materials, non-originating materials, and cumulation-eligible materials. | Material lists, parts lists, supplier certificates |
| 5 | Identify materials not meeting CTC | Extract non-originating materials that do not satisfy tariff classification change. | Finished goods HS code, materials HS codes, judgment tables |
| 6 | Confirm applicability for de minimis | Check exclusions, textile exceptions, and agreement restrictions. | Agreement provisions, general rules, exclusion lists |
| 7 | Calculate using value or weight criteria | Verify numerator, denominator, and allowable ratio per the agreement. | Price data, weight data, finished goods value data, calculation sheets |
| 8 | Ensure consistency with RVC calculation | Avoid contradictions in handling non-originating material values. | RVC calculation sheets, cost data, material price data |
| 9 | Organize certificates and supporting documents | Ensure consistency between origin certificates, declarations, and supporting evidence. | Origin certificates, declarations of originating status, calculation basis documents |
| 10 | Prepare for customs post-import verification | Retain documentation that can support explanations after Import Permit issuance. | Complete set of retained documents, records of partner communications, explanatory materials |
Identification of Non-Originating Materials
To apply the de minimis rule, you first need to identify which materials do not meet the origin criteria.
It is insufficient to simply classify materials sourced from foreign countries as non-originating. For each material, confirm whether it is originating or non-originating, and if non-originating, whether it meets the applicable criteria under the Product-Specific Rules of Origin (PSR).
Process for Determining Materials Not Meeting CTC
| Verification Stage | Items to Confirm | Reference Materials | Actions if Issues Arise |
|---|---|---|---|
| Confirm HS Code of Finished Product | Verify which HS code the finished product falls under. | Import declaration data, classification documents, advance rulings, catalogs | If classification is unclear, clarify and establish classification basis before de minimis determination. |
| Confirm HS Codes of Materials | Verify the HS codes assigned to each material component. | Parts lists, material lists, supplier documents, SDS, catalogs | If material HS codes are unknown, request supporting documents from suppliers. |
| Compare with PSR | Check whether the materials meet the tariff classification change required by the Product-Specific Rules of Origin (PSR) for the finished product. | Product-Specific Rules of Origin (PSR), agreement texts, customs materials | Identify materials that fail to meet the PSR. |
| Identify Materials Not Meeting CTC | Specify non-originating materials that do not fulfill classification change requirements. | Material composition lists, HS code tables, evaluation sheets | Separate and manage materials that are subject to and excluded from the de minimis rule. |
| Check Eligibility for De Minimis | Confirm whether those materials qualify under the de minimis provision. | Agreement texts, general provisions, Product-Specific Rules of Origin (PSR), exclusion lists | If not eligible, consider meeting the PSR through material substitution or other measures. |
| Calculate Proportion | Calculate whether the proportion of materials not meeting CTC is within the allowable threshold. | Material price data, weight data, finished product value data, calculation sheets | If exceeding the threshold, consider switching to originating materials or applying RVC criteria. |
The de minimis rule does not mean disregarding non-originating materials that fail to meet the CTC. It is essential to explain clearly which materials do not meet which criteria and confirm that their proportion remains within the allowed limit.
De Minimis under CPTPP
The CPTPP also includes a de minimis provision.
Under CPTPP, after confirming the Product-Specific Rules of Origin (PSR), there may be consideration to apply the de minimis rule within a certain range for some non-originating materials that do not meet the tariff classification change criteria.
However, even within CPTPP, the de minimis rule cannot be applied uniformly to all products. Its treatment varies depending on the product, materials, PSR, whether it is a textile product, and the presence of any exclusions.
In practice, decisions are not based solely on the de minimis percentage. The CPTPP Product-Specific Rules of Origin (PSR), related general provisions, special rules for textile products, and the supporting documentation to be retained should be reviewed together.
De Minimis under RCEP
RCEP also includes provisions for de minimis.
Under RCEP, combined with the wide regional cumulation provisions, there may be cases where non-originating materials that do not meet the origin criteria can be considered under the de minimis rule within a certain threshold.
Since RCEP often assumes supply chains spanning multiple contracting parties, it is important to clearly distinguish originating materials, non-originating materials, and materials eligible for cumulation.
It is not sufficient that materials are merely procured from an RCEP member country. It is necessary to separately verify whether those materials qualify as originating under RCEP rules, can be accounted for under cumulation, or should be treated as non-originating and handled through the de minimis provision.
Why Extra Care Is Needed for Textile Products
Special attention is required when applying the de minimis rule to textile products.
Textile products involve processes such as yarn production, fabric making, sewing, and finishing that significantly affect origin determination, often resulting in stricter rules of origin.
Therefore, the de minimis provision cannot always be applied with the same approach as general industrial products. It is necessary to verify the relevant non-originating materials, weight thresholds, process criteria, Product-Specific Rules of Origin (PSR), and excluded materials.
In particular, for textile products, even a small proportion of non-originating materials may be excluded from de minimis treatment due to restrictions under the agreement.
Cases Where De Minimis Cannot Be Applied
The de minimis rule is not always applicable.
| Situation Where It Cannot Be Used | Reason | Documents to Confirm | Alternative Measures |
|---|---|---|---|
| When the item is excluded under the agreement | Some agreements or their annexes explicitly exclude de minimis application for certain items. | Agreement texts, exclusion lists, PSR tables | Consider meeting the PSR requirements by other means as usual. |
| If the calculated percentage exceeds the limit | The value or weight of non-originating materials exceeds the allowable range. | Material price data, weight data, calculation sheets | Switch to originating materials, review material composition, or consider RVC criteria. |
| When excluded by special provisions for textile products | Certain yarns, fabrics, or components may be excluded from de minimis application. | Textile special rules, material lists, weight data, process records | Change to originating materials or revise manufacturing processes to meet process criteria. |
| If material value or weight cannot be proven | There is no basis for calculation, making it impossible to demonstrate that the percentage is within limits. | Supplier certificates, price data, weight data | Obtain supporting documentation from suppliers. |
| When HS code classification is unclear | Unclear HS codes for finished products or materials prevent proper CTC determination. | Classification documents, product specifications, SDS, advance rulings | Prepare classification documents and consider applying for advance rulings if necessary. |
| If inconsistent with RVC calculations | The treatment of non-originating materials differs between de minimis determination and RVC calculations. | RVC calculation sheets, cost data, non-originating material value data | Redo RVC calculations based on the formula prescribed in the agreement. |
If de minimis cannot be used, before abandoning the claim of origin, consider alternative PSR criteria, RVC criteria, switching to originating materials, changing material composition, or revising manufacturing processes.
Relationship with Supplier Certificates
When applying the de minimis rule, supplier certificates can become important.
This is because they verify the value, weight, origin status, HS codes, and material composition of the materials eligible for de minimis.
If exporters or importers cannot fully identify the material information on their own, they may need to obtain certification documents from their suppliers of parts or raw materials to explain the proportion of non-originating materials.
| Information Verified by Supplier Certificates | Reason for Verification | Supporting Documents | Issues if Missing |
|---|---|---|---|
| Material Origin Status | To distinguish between originating and non-originating materials. | Supplier certificates, origin documents | Unable to justify treating the material as originating. |
| Material HS Code | To confirm compliance with Change in Tariff Classification (CTC) requirements. | Material specifications, SDS, catalogs | Cannot accurately identify materials failing to meet CTC. |
| Material Value | Used for value-based de minimis calculation. | Price lists, transaction documents, cost data | Unable to explain whether materials are within allowable percentage. |
| Material Weight | Used for weight-based de minimis calculation. | Weight data, specifications, composition charts | Cannot demonstrate compliance with weight criteria, especially for textiles. |
| Material Composition | To separate eligible and non-eligible materials. | Parts lists, material lists, formulation charts | Risk of mistakenly including excluded materials within de minimis calculations. |
| Manufacturing Process | Used to confirm process criteria and cumulation eligibility. | Manufacturing flowcharts, production records, processing descriptions | Unable to explain process-based criteria or cumulation compliance. |
A supplier certificate stating merely “This is an originating product” is not always sufficient. When applying the de minimis rule, supporting documents must clearly explain which materials, at what ratios, and based on what criteria the determination was made.
Scope of Involvement of Freight Forwarders and Customs Brokers
Since the de minimis rule is a system related to origin determination, it is generally difficult for freight forwarders or customs brokers alone to make the final judgment.
However, freight forwarders and customs brokers may be involved in verifying consistency among import declaration documents, transportation paperwork, and certification documents, as well as supporting the submission of documents during customs inquiries.
| Category | Areas Easily Supported | Matters Not to Be Definitively Determined | Practical Response |
|---|---|---|---|
| Review of Import Documents | Can assist with verification of consistency among invoices, packing lists, B/L, and origin certification documents. | Should not conclusively determine de minimis applicability based solely on the presence of documents. | Origin determination should be confirmed with the importer, exporter, and manufacturer. |
| HS Code Information | Can organize HS code information known by the importer and customs broker. | Should not definitively assign HS codes for finished products and materials without sufficient justification. | If classification basis is unclear, consult with customs brokers or specialists. |
| Shipment Criteria Documents | Can assist with reviewing B/L, Sea Waybill, through B/L, and bonded storage documents. | Should not confuse meeting shipment criteria with satisfying the de minimis rule. | Manage transportation documents separately from origin-related documents. |
| Customs Inquiry Response | Can support organizing submitted documents, tracking correspondence, and providing transportation records. | Should not explain the basis for material values, weights, RVC calculation, or manufacturing processes on behalf of others. | Origin explanations should be passed to document holders. |
| Supplier Documents | Can assist with listing and checking for missing documents received from the importer. | Should not definitively confirm the accuracy of supplier certificates. | The validity of the content should be confirmed by the exporter, manufacturer, and importer. |
| Pre-Declaration Check | Can verify whether all required documents are ready for applying EPA tariff rates. | Should not unilaterally conclude that de minimis calculations are correct under the agreement. | Connect to customs brokers, customs consultations, or experts as needed. |
Main Documents
The primary documents to check and retain when using the de minimis provision are as follows.
| Document Category | Main Documents | Purpose of Verification | Risks if Missing |
|---|---|---|---|
| Origin Certification Related | Certificate of Origin, Origin Declaration, Origin Statement | Verify the basis for declaring preferential tariff rates. | Unable to substantiate EPA or RCEP preferential tariff rates. |
| PSR Verification Materials | Supporting materials for Product-Specific Rules of Origin (PSR), agreement annexes, customs references | Confirm which origin criteria are required. | Possible misunderstanding of conditions for applying de minimis. |
| HS Code Materials | HS code verification documents for the cargo and materials | Identify non-qualifying materials for Change in Tariff Classification (CTC). | Risk of incorrect CTC assessment. |
| Material Documentation | Material composition lists, parts lists, material sheets | Organize qualifying, non-qualifying, and excluded materials. | Unable to explain which materials are included in the calculation. |
| Price & Weight Data | Price data for non-originating materials, weight data, finished product value data | Calculate percentages based on value or weight criteria. | Cannot demonstrate that allowed thresholds are met. |
| RVC Documents | RVC calculation data, cost data, FOB value data | Confirm consistency between RVC criteria and de minimis assessment. | Potential inconsistency in explaining origin determination. |
| Manufacturing Records | Manufacturing process charts, production records, processing details | Explain process criteria, cumulation, and material usage. | Unable to verify actual manufacturing operations. |
| Supplier Documentation | Supplier certificates, material certifications, supplier response records | Verify material origin, value, weight, and HS codes. | Potential inability to provide supporting evidence during customs post-import verification. |
Common Misunderstandings
| Misunderstanding | Actual Concept | Potential Issues |
|---|---|---|
| Non-originating materials can be freely used if the de minimis rule applies | This system is an exception that only permits some materials within the scope defined by the agreement. | The product may not be explained as originating, and preferential tariff rates may be denied. |
| Proof is unnecessary if within the allowable percentage | It is necessary to be able to demonstrate being within the allowable percentage using material cost, weight, parts lists, calculation documents, etc. | It is not possible to present evidence during post-import customs audits. |
| Textile products can be treated the same as general industrial products | For textiles, special rules involving weight criteria, process criteria, and exclusions for certain materials may cause issues. | Even small amounts of materials may fall outside the de minimis allowance. |
| RVC and de minimis are independent | It is necessary to confirm how non-originating material values are treated in RVC calculations, and the de minimis determination must be consistent. | Explanations of origin determination could become inconsistent. |
| The same treatment applies to all items under the same agreement | Application depends not only on the agreement but also on the product, HS code, PSR, and type of material. | The approach for different products may be mistakenly applied across the board. |
| The de minimis percentage is common across all EPAs and FTAs | Permissible percentages, calculation bases, and excluded items differ by agreement. | There is a risk of misapplying figures or calculation methods from other agreements. |
| A supplier’s certificate is always sufficient | The certificate’s content, including material HS codes, values, weights, and manufacturing process documentation, must be verified. | A certificate alone may not satisfy customs verification requirements. |
| Materials that do not meet the CTC can all be covered by the de minimis rule | De minimis cannot be used if there are excluded items, exceeding upper limits, textile-specific rules, or inconsistencies with RVC. | There is a risk of incorrectly declaring preferential tariffs. |
4-Column Decision Checklist
| Stage of Confirmation | Parties to Confirm | Items to Confirm | Actions if Issues Arise |
|---|---|---|---|
| Start of Transaction | Importer, Exporter, Customs Broker | Applicable EPA/FTA, target products, HS codes, presence of preferential tariff rates | If the agreement or HS codes are unclear, verify these before proceeding to origin determination. |
| Manufacturing and Procurement | Exporter, Manufacturer, Purchasing Department, Supplier | Material composition, origin of materials, presence of non-originating materials, supplier information | If material information is insufficient, obtain supplier certificates or material documentation. |
| Origin Determination | Exporter, Origin Management Personnel, Manufacturer | PSR, CTC, RVC, processing criteria, applicability of de minimis | If PSR cannot be met, consider de minimis, RVC, or material substitution options. |
| Calculation | Exporter, Manufacturer, Accounting/Cost Control | Value criteria, weight criteria, numerator/denominator, allowable ratios, exchange rates, pricing documentation | If calculation basis is inadequate, avoid assuming de minimis will apply. |
| Certificate Preparation | Exporter, Issuing Agency, Self-declaration Personnel | Consistency between origin certificate or declaration of origin and supporting documentation | If documents do not match supporting evidence, correct before submission. |
| Import Declaration | Importer, Customs Broker | Applicability of EPA tariff rate, validity of certificate, consistency with cargo content | If inconsistencies occur, confirm with exporter or manufacturer before declaring. |
| Post-Clearance Customs Audit | Importer, Exporter, Manufacturer | Basis for applying de minimis, material value, weight, HS codes, manufacturing processes | If documentation is incomplete, inquire with partners and keep records of responses. |
| Correction and Recurrence Prevention | Importer, Exporter, Purchasing, Legal, Customs Compliance | Past transactions, identical products, same suppliers, utilization history of the same agreement | If misapplication is found, conduct comprehensive review of past and future transactions. |
Common Practical Issues
| Situation | Common Issues | Documents to Verify | Practical Measures |
|---|---|---|---|
| When CTC Non-Compliant Materials Are in Small Quantities | Some components may not meet the tariff classification change criteria, raising concerns whether the amount falls within the agreement’s allowed threshold. | Finished product HS code, material HS codes, price data, weight data | Prepare calculation tables demonstrating that the non-compliance ratio is within the allowable limit. |
| When the Share of Non-Originating Materials Exceeds the Limit | The value or weight of non-originating materials may exceed the permissible range set by the agreement. | Material price data, weight data, finished product value data | Consider switching to originating materials, modifying material composition, or applying the RVC criteria. |
| For Textile Products | Even small quantities may be subject to weight criteria or exclusions under textile-specific provisions. | Textile special rules, material lists, weight data, process documentation | Do not apply the same judgment as general manufactured goods; check the textile-specific rules carefully. |
| Issues with Consistency Between RVC and De Minimis | There may be inconsistencies between non-originating material values calculated under the RVC and those used for the de minimis determination. | RVC calculation sheets, cost data, material price data | Align RVC and de minimis calculations under the same assumptions and parameters. |
| Confusion Between RCEP Cumulation and De Minimis | Materials procured from RCEP contracting countries might be mistakenly treated as originating materials. | RCEP originating material documents, supplier certificates, material lists | Distinguish materials handled under cumulation rules from those processed via de minimis treatment. |
| Insufficient Basis in Supplier Certificates | Certificates may exist but lack supporting data such as material value, weight, or HS codes. | Supplier certificates, price data, weight data, SDS, specifications | Confirm not only the certificate content itself but also verify supporting documentation. |
| Incorrect HS Codes Resulting in Erroneous CTC Non-Compliance Judgment | Errors in finished product or material HS codes can lead to incorrect classification change determinations. | Classification reference materials, advance rulings, catalogs, material specifications | Reconfirm the HS codes for both finished products and materials before conducting de minimis calculations. |
| Inability to Obtain Supporting Evidence After Import | It may be impossible to explain material value or weight during customs post-import verification. | Retained records, correspondence with trading partners, calculation tables, certificates | Store documents that can be submitted in the future at the time of certificate preparation. |
Application Scenarios of the System
Scenario 1: When Non-Compliant Parts under CPTPP Fall Within the De Minimis Threshold
When importing machinery parts using CPTPP, checking the Product-Specific Rules of Origin (PSR) corresponding to the finished product’s HS code may reveal that some non-originating parts do not meet the Change in Tariff Classification (CTC) requirement.
In this case, it is not necessary to immediately forgo CPTPP tariff rates; instead, you should verify whether these non-originating parts qualify under the de minimis provision, whether they fall within the threshold set by the agreement, and whether to calculate based on the value or weight standard.
In practice, it is essential to prepare documentation including the finished product value, prices of non-originating parts, material HS codes, the bill of materials, and supplier certificates, so you can clearly demonstrate that non-compliant materials fall within the allowable range.
Scenario 2: When Textile Products Are Excluded from De Minimis
For textile products such as clothing and fabric items, even a small amount of non-originating materials may be excluded from de minimis coverage due to the specific textile provisions under the agreement.
For example, if certain yarns, fabrics, or components are designated as excluded materials, a small weight alone does not automatically allow these to be covered by de minimis.
In such cases, you should consider alternative ways to demonstrate origin, such as switching the materials to originating materials, reviewing manufacturing processes, or confirming whether another PSR criterion can be met, rather than relying on de minimis.
Scenario 3: Recalculating Due to Inconsistencies Between RVC and De Minimis
When determining origin using the Regional Value Content (RVC) criteria alongside the de minimis provision, issues can arise regarding the treatment of the value of non-originating materials.
Even if the de minimis calculation shows the value within the allowed threshold, if the same material value is not correctly accounted for in the RVC calculation, the overall origin determination explanation may become inconsistent.
In such cases, it is necessary to follow the RVC calculation formula specified in the agreement, organize the value of non-originating materials, the finished product value, deductible items, and materials subject to calculation, and prepare the de minimis assessment and RVC calculation tables so they are logically consistent.
Scenario 4: Confusing Cumulative Materials with De Minimis Materials under RCEP
Under RCEP, broad regional cumulation allows the use of originating materials from other RCEP contracting countries in origin determination.
However, simply purchasing materials from an RCEP member does not necessarily mean those materials are originating under RCEP. It is important to separate and confirm whether materials qualify as cumulative originating materials or are classified as non-originating materials treated under de minimis rules.
In this scenario, verifying supplier certificates, origin certificates, material lists, and process documentation is essential to separately organize materials processed by cumulation and those subject to de minimis assessment.
Scenario 5: Insufficient Supporting Documentation Beyond Supplier Certificates
When applying the de minimis provision, even if supplier certificates are submitted, there may be insufficient evidence regarding the material value, weight, HS codes, and component composition.
In customs post-import verification, authorities may require evidence beyond merely the supplier’s certification, specifically documentation that clearly identifies which parts are non-originating materials and that they fall within the allowed percentage.
In such cases, in addition to the supplier certificates, it is important to retain price documentation, weight data, specifications, Safety Data Sheets (SDS), bills of materials, and manufacturing process records to ensure reproducibility of the calculation basis.
Practical Points
When applying the de minimis provision, first confirm the applicable agreement and the Product-Specific Rules of Origin (PSR) for the relevant goods.
Next, identify which non-originating materials do not meet the origin criteria and calculate whether their value falls within the allowable range defined by the agreement.
Even small amounts of non-originating materials cannot be covered by the de minimis provision if the agreement’s conditions are not met. It is necessary to check the permissible thresholds, calculation methods, excluded items, special rules for textiles, the relationship with RVC, and the availability of supporting documentation.
Furthermore, when using the de minimis provision in conjunction with the RVC standard, it is important to verify how the value of non-originating materials is factored into the calculations and whether the de minimis determination and the RVC calculation do not conflict.
The de minimis rule serves as a supplementary method when the rules of origin cannot be satisfied. It should not be relied on from the outset. Origin status should primarily be confirmed through CTC, RVC, or process-based criteria, with de minimis applied only as a complementary measure when necessary.
Summary
The de minimis rule is a provision that exceptionally allows a limited amount of non-originating materials that do not meet the rules of origin, within the range specified by the agreement.
It mainly functions as a complement to the Change in Tariff Classification (CTC) criteria and is an important point of verification in agreements such as CPTPP and RCEP.
However, the de minimis rule is not a universally applicable provision. It requires confirmation of the specific percentage allowed under each agreement, product-specific restrictions, value or weight thresholds, its relationship with Regional Value Content (RVC), special rules for textiles, and the availability of supporting documentation.
When determining origin, it is essential first to check the Product-Specific Rules of Origin (PSR), systematically apply the CTC, RVC, and process criteria, and then, if necessary, consider the de minimis rule as a supplementary measure.
If using the de minimis rule, it is necessary to confirm not only that the amount is minimal but also that the materials qualify under the provision, that the percentage is within limits, that the calculation method complies with the agreement, and that the amounts can be supported by evidence.
To prepare for post-import customs verification, it is important for importers, exporters, manufacturers, and suppliers to organize material information and calculation bases, and to continuously manage the underlying documents for origin certificates or declarations of originating goods.
This article is provided for general informational purposes only; for item-specific tariff classification, origin determination, customs treatment, or legal interpretation, confirm with customs authorities, customs brokers, legal advisers, or other qualified specialists.
