Explanation of the Preferential Tariff System

What Is the Preferential Tariff System?

The Preferential Tariff System is a system that applies lower duty rates or duty-free treatment to certain imported goods originating from developing countries/regions or Least Developed Countries (LDCs), compared to the normally applied tariff rates.

In Japan, there are the Generalized System of Preferences (GSP) targeting beneficiary countries/regions, and the LDC preferential scheme that extends duty-free and quota-free treatment to a broader scope for Least Developed Countries.

However, preferential tariffs are not automatically applied simply because the cargo was exported from a developing country or LDC.

Importers must at least confirm the following points:

• Whether the exporting country/region qualifies as a beneficiary country or LDC at the time of import
• Whether the imported goods' HS code matches the preferential eligibility list
• Whether the goods meet the general preferential rules of origin as originating products
• Whether the required certificate of origin, such as Form A, is presented in principle
• Whether, if transshipping through a third country, the shipment meets the applicable Consignment Criteria
• Whether the goods are not subject to Entire Graduation, Partial Graduation, or Product-by-Exclusion from application
• Whether any emergency suspension measures for preferential treatment have not been triggered
• Which duty rate is available and appropriate to be used: EPA rates, general preferential rates, or LDC preferential rates

Preferential tariffs are not discount rates that importers can unconditionally choose simply by request.

It is necessary to comprehensively verify the eligible countries, applicable goods, rules of origin, Consignment Criteria, certification procedures, and exclusion measures, and to maintain the capability to explain the basis for these during import declaration and post-clearance verification.

Scope Covered in This Article

Item	Content Covered in This Article	Matters Requiring Individual Confirmation
Generalized System of Preferences (GSP)	Basic system targeting developing countries and regions	Beneficiary country and applicable items at time of import
LDC Preferences	Duty-free and quota-free measures for least developed countries	Exception items and LDC designation status
Rules of Origin	Wholly Obtained or Produced Goods and substantial transformation criteria	Specific rules of origin by product
Consignment Criteria	Requirements for direct shipment and shipments via third countries	Actual transport, storage, and processing conditions
Form A	Issuing authorities, entry fields, issuance timing, validity period	Issuance procedures by exporting country
Retroactive Issuance of Form A	Cases where Form A can be obtained after export	Reasons for Retroactive Issuance and customs decisions
Submission Exemption	Small-value shipments and goods with clear origin	Conditions of application and applicable items
Comparison with EPA	Differences in tariff rates, rules of origin, and certification systems	Agreement details for each EPA
Graduation Measures	Entire Graduation and Partial Graduation	Latest beneficiary countries and items by import year
Product-by-Exclusion	Exclusions for items with high import shares	Data published by year
Emergency Suspension of Preferences	Measures against import surges and damage to domestic industries	Target countries, items, and duration of application
Freight Forwarder	Management of document transmission, transport information, and shipment records	Final responsibility for customs judgment and tariff application
Post-clearance Verification	Verification of origin after import and document retention	Individual inquiries and additional documentation

Purpose of the Preferential Tariff System

The Preferential Tariff System applies lower tariff rates than usual to imported goods from developing countries and regions, supporting the increase of export income, industrialization, and economic development in those countries and regions.

By applying tariff rates lower than the standard rates, cargo originating from eligible countries gains better price competitiveness in the Japanese market.

However, the preferential tariffs are not merely a system to reduce the tariff burden for importers.

To prevent the undue application of preferential benefits to goods that are not actually produced in the eligible countries or that have been substituted in third countries, origin criteria, Consignment Criteria, Form A, and post-clearance verification systems have been established.

Basic Requirements for Applying Preferential Tariffs

Requirement	Verification Points	Main Reference Documents	If Not Met
Beneficiary Country Requirement	Whether the country or region is a preferential beneficiary or LDC at the time of import	Latest customs list of beneficiary countries	Preferential tariff rate cannot be applied
Item Requirement	Whether the applicable HS code is subject to preferential treatment	Tariff Schedule	Consider general tariff rate or WTO agreement tariff rate, etc.
Origin Requirement	Whether the product is wholly obtained or meets the substantial transformation criteria	Manufacturing process, raw material list, Form A	Not recognized as originating goods of the target country
Consignment Criteria	Whether shipment was direct or via an approved third country	B/L, certificate of transport requirements, storage records	Cannot maintain qualification as originating goods
Certification Procedure	Whether a valid Form A or equivalent can be submitted	Original Form A, electronic data, etc.	Preferential tariff rate generally cannot be applied
Exclusion Confirmation	Whether there is Entire Graduation, Partial Graduation, or Product-by-Exclusion	Yearly published customs data	Preferential tariff rate cannot be used for the country/item concerned
Declaration Requirement	Whether the preferential tariff rate is properly claimed at the time of import declaration	Import declaration form, NACCS information	Amending the declaration after issuance of the Import Permit may be difficult

Differences Between Generalized System of Preferences (GSP) and LDC Preferences

Comparison Item	Generalized System of Preferences (GSP)	LDC Preferences	Practical Verification
Eligible Countries / Regions	Countries and regions designated as beneficiaries under relevant laws	Countries designated as Least Developed Countries (LDCs) among the beneficiary countries	Check the latest list for the import fiscal year
Eligible Products	Products specified as eligible in laws and tariff schedules	Generally, a broader range of products qualify for duty-free and quota-free treatment	Exceptions exist even for LDCs
Tariff Rates	Lower than general or WTO agreement rates, or duty-free	Eligible products are generally duty-free	Verify by individual HS code
Rules of Origin	General GSP rules of origin	Based on the general GSP rules of origin	LDC designation alone does not prove origin
Certificate of Origin	Generally Form A	Generally Form A	Confirm issuing authority, issue date, and details
Consignment Criteria	Direct shipment or acceptable transit through third countries	Confirm Consignment Criteria in a similar manner	Retain documentation for third-country transit
Suspension of Application	Entire Graduation, Partial Graduation, Product-by-Exclusion, emergency suspensions	Suspension of LDC preference measures may be an issue	Check latest publicly available information

Even for LDC-origin products, not all items are unconditionally duty-free.

Importers must verify LDC designation, HS codes, origin criteria, Form A, Consignment Criteria, exceptions, and any suspension of application.

First, Confirm the HS Code

The eligible items and tariff rates under the preferential tariff system are confirmed based on the HS code in the applied tariff schedule, not on general product names as a rule.

Even for products with the same commercial name, the HS code may differ due to material, usage, processing status, composition, structure, and other factors.

Check Item	Details to Confirm	Impact of Errors	Response
Product Name	Confirm the specific item, not just the commercial name	Incorrect identification of applicable item	Obtain catalogs or specifications
Material	Main material and composition ratio	Changes in chapter, heading, or subheading	Review composition sheet
Usage	Whether it is a specialized or a general-purpose product	Misclassification based on usage	Obtain user manual
Processing Status	Raw material, semi-finished product, or finished product	Changes in tariff rate and origin criteria	Confirm manufacturing process
Sets / Composite Goods	Composition of multiple materials or multiple items	Incorrect judgment of main characteristics	Prepare detailed component list
Import Year	Tariff schedule applied at the time of import declaration	Use of tariff rates from previous years	Check the latest applied tariff schedule

If the importer obtains Form A based on an incorrect HS code, there is a risk that the origin criteria section, tariff rate, and eligible items on Form A will be mistaken in a linked manner.

Structure of the Generalized System of Preferences (GSP) Rules of Origin

To apply the GSP preferential tariff, the goods must be originating products from a GSP beneficiary country or region.

The GSP rules of origin primarily classify originating products into the following two categories.

Originating Product Category	Basic Meaning	Example	Main Supporting Documents
Wholly Obtained or Produced Goods	Goods entirely obtained or produced in a single GSP beneficiary country	Agricultural products harvested or minerals extracted in that country	Production records, extraction records, Form A
Products Subject to Substantial Transformation	Goods manufactured or processed in specified ways, even if non-originating materials are used	Apparel, machinery parts manufactured using imported raw materials	BOM (Bill of Materials), manufacturing process details, HS code, Form A

Minor operations such as simple packaging, repacking, labeling, or sorting alone are generally not recognized as substantial transformation.

Since the actual origin criteria differ depending on the HS code and product, it is necessary to confirm not only the country of manufacture but also the materials’ country of origin, processing steps, and product-specific rules.

Determination of Wholly Obtained or Produced Goods and Substantial Transformation Criteria

Verification Stage	Verification Item	Judgment	Action if Insufficient
Country of Production Confirmation	Country where the goods were harvested, produced, or manufactured	Whether completely produced in a single country	Obtain a producer's certificate
Raw Material Confirmation	Whether foreign materials are used	Distinguish Wholly Obtained or Produced Goods from goods produced using non-originating materials	Obtain a Bill of Materials
HS Code Confirmation	HS codes of materials and finished products	Whether the tariff classification change criteria are met	Confirm the basis for classification
Processing Step Confirmation	Operations performed in the target country	Whether substantial processing/manufacturing occurred	Obtain process charts and factory documents
Exception Operation Confirmation	Packaging, sorting, blending, label application, etc.	Whether only minor operations were performed	Confirm the presence or absence of additional processing
Certificate of Origin Confirmation	Origin criteria such as Box 8 of Form A	Whether manufacturing conditions align with the certificate details	Inquire with the exporter or issuing authority

Donor-country Content Rule and Accumulation

The Generalized System of Preferences (GSP) Rules of Origin include the Donor-country Content Rule, under which materials exported from Japan to a beneficiary country can be treated as originating materials of that country under certain conditions, and Accumulation that allows qualifying production processes among specified Southeast Asian countries to be combined under defined conditions.

However, since the applicable countries, eligible products, excluded items, and required supporting certificates are specified, these rules do not simply apply because Japanese materials are used or processing is carried out in multiple ASEAN countries.

System	Basic Concept	Additional Supporting Documents	Notes
Donor-country Content Rule	Considers certain materials exported from Japan as originating materials for origin determination	Certificate concerning materials imported from Japan	Some items are excluded
Accumulation	Evaluates materials and processing across multiple eligible countries as a single operation	Accumulation processing and manufacturing certificate	Confirm eligible countries, processes, and documentation requirements

Consignment Criteria

The rules of consignment are regulations intended to confirm that goods exported as originating products from beneficiary countries retain their origin identity and qualification until they arrive in Japan.

As a general rule, the goods must be transported directly from the beneficiary country or region to Japan.

This is to prevent the goods from being substituted with other products, undergoing additional processing, or entering ordinary trade in a third country, thereby ensuring that the goods described on Form A and those imported into Japan are identical.

Transiting Through a Third Country Does Not Automatically Disqualify Preferential Tariff Eligibility

Due to geographical circumstances, shipping routes, transshipment, or temporary storage, cargo may transit through a third country.

Even when transiting through a third country, preferential tariff rates may apply if the prescribed Consignment Criteria are met and the cargo identity and control status can be sufficiently demonstrated through necessary documentation.

Handling in Third Country	Considerations under Consignment Criteria	Points to Verify	Key Documents
Simple Transshipment	May be accepted if transshipment is necessary for transportation	Whether cargo has been altered	Through B/L, transshipment records
Temporary Storage	May be accepted if under customs supervision in a bonded area or equivalent	Storage location, duration, supervision status	Third country customs certification, warehouse records
Operations to Preserve Cargo	Limited to operations necessary to maintain good condition	Details and necessity of operations	Work reports, customs certification
Packaging Change / Repacking	Identity and originating status may be questioned depending on content	Reason for operation, any cargo changes	Photos, work records, customs certification
Processing / Manufacturing	As a rule, likely to lose originating status	Processes conducted in the third country	Production and processing records
Sale / Consumption in Third Country	Continuity as cargo destined for Japan may be questioned	Ownership, inventory, transaction status	Sales documents, inventory records

Documents Evidencing Compliance with the Consignment Criteria

For cargo transiting third countries, it is generally required to submit documentation at the time of import declaration that demonstrates compliance with the Consignment Criteria.

Document	Contents That Can Be Verified	Practical Notes
Copy of Through B/L	Continuous transportation from the country of origin to Japan	Confirm that the shipment is destined for Japan from the time of issuance in the country of origin
Certificate from Third Country Customs or Equivalent	Transshipment, temporary storage, and supervision under customs control	Verify the issuing authority and the contents of the certificate
Other Documents Deemed Appropriate by the Customs Director	Transportation route, identity of the cargo, handling in the third country	Consult customs on a case-by-case basis for each cargo
Route Description in Box 3 of Form A	Mode of transport and transshipment points in third countries	May not alone suffice if other documentation cannot be obtained
Warehouse or Terminal Records	Storage period, cargo packaging, container number	Confirm whether customs will accept these records as appropriate documentation

Even if a through B/L or similar documents cannot be obtained, customs may recognize compliance with Consignment Criteria if there are valid reasons and the transportation route section of Form A or other documents support it.

However, submitting only Form A does not necessarily suffice just because the cargo transits a third country.

What Is the Generalized System of Preferences (GSP) Certificate of Origin Form A?

To apply the preferential tariff under the Generalized System of Preferences, it is generally required to submit the legally prescribed GSP Certificate of Origin Form A at the time of import declaration.

This certificate is commonly referred to as "Form A."

Form A is not merely a self-declaration prepared by the exporter.

It is a certificate issued by the customs authority of the country of origin or by an authorized government agency, chamber of commerce, or other eligible institution, based on the exporter's declaration.

Basic Requirements for Form A

Verification Item	Basic Requirement	Practical Verification	If Issues Arise
Format	Form A of the Generalized System of Preferences Certificate of Origin	Check that it is not an EPA certificate or a non-preferential certificate	Obtain the correct Form A
Issuing Authority	Customs or an authorized competent body	Is it an issuing authority published by customs?	Confirm with the issuing authority
Issuance Timing	In principle, at the time of cargo export	Check the relation to the shipment date and export date	Confirm conditions for Retroactive Issuance
Validity Period	In principle, one year from the date of issuance	Is the import declaration date within the validity period?	Confirm whether extension or reissuance is possible
Signature / Seal	Prescribed signature and seal of the exporter and issuing authority	Check for omissions or unnatural corrections	Inquire with the issuing authority
Origin Criterion	Indicates wholly produced or substantial transformation, etc.	Does it match the manufacturing facts and HS code?	Request proof from the exporter
Identical Cargo	The imported cargo and cargo described in Form A must be identical	Verify item name, quantity, marks, and invoice	Obtain explanatory documents or corrected certificates

Form A Boxes and Key Points for Verification

Box	Main Information	Verification Items in Import Practice	Notes
Box 1	Name, address, and country of the exporter	Issuer of Invoice, seller, exporter	Check trade flow separately for third-country Invoice
Box 2	Name, address, and country of the consignee	Invoice, B/L, importer information	Confirm trade structure when marked "To Order," etc.
Box 3	Means and route of transport	Vessel, transshipment point, B/L route	Critical field for shipments via a third country
Box 4	Official use section	Notations on reissuance, Accumulation and the Donor-country Content Rule, etc.	Verify required display and certification numbers
Box 5	Item number	Correspondence of multiple items	Match order with cargo details
Box 6	Marks and numbers	Packing List, external markings	Also confirm indications when marks are not present
Box 7	Number of packages, type, and item name	Invoice, Packing List, import declaration item names	General names may not confirm identity
Box 8	Origin criteria	Symbols such as P, W, required HS code	Confirm if goods are wholly obtained or substantially transformed
Box 9	Total weight or other quantity	Packing List, B/L, import declaration quantities	Be able to explain reasons for quantity discrepancies
Box 10	Invoice number and date	Invoice used for import declaration	Be cautious of replacement Invoices or third-country Invoices
Box 11	Certification by issuing authority	Place of issue, date, signature, seal impression	Verify authenticity of issuing authority
Box 12	Exporter's declaration	Country of manufacture, export to Japan, signature	Watch out for missing exporter signature

Origin Criteria in Box 8 of Form A

Example Mark	Basic Meaning	Points to Confirm
P	Wholly Obtained or Produced Good	Is the product entirely obtained in a single preferential beneficiary country?
W	Product Meeting Substantial Transformation Criteria	Are the required HS code and processing steps correct?
Other Specified Marks	May involve the Donor-country Content Rule or Accumulation, etc.	Check the attached certificate and the description in Box 4

Even if "W" is marked on Form A, if the actual manufacturing process or raw materials do not meet the criteria, the product may not be recognized as a preferential originating product.

Importers should not make judgments based solely on the marks on Form A, but obtain documentation regarding manufacturing processes and raw materials from exporters or producers as needed.

Issuance Date of Form A and Retroactive Issuance

Form A is, in principle, issued at the time of export of the cargo.

In practice, if it is issued within approximately 10 days after export, it may be treated as having been issued at the time of export.

Additionally, retroactive issuance may be accepted under prescribed circumstances such as natural disasters in the exporting country, the exporter’s omission to apply, or obtaining an incorrect certificate.

Issuance Situation	Basic Handling	Points to Confirm	Measures
Issued before or at export	Normal issuance	Shipment date, issuance date, exporter	Verify the details
Issued shortly after export	May be treated as issuance at export	Difference from export date	Confirm with customs and customs broker
Retroactive issuance for prescribed reasons	May be accepted	Reason for retroactive issuance, prescribed notation	Keep documentation of the reason
Issued after a long period without reason	Validity may be questioned	Basis and issuing authority	Consult customs before import declaration

A notation such as “Issued Retroactively” does not guarantee validity in all cases.

The reason for retroactive issuance, issuing authority, issuance procedure, and timing of the import declaration are comprehensively verified.

Validity Period, Corrections, and Reissuance of Form A

Item	Basic Handling	Points to Confirm
Validity Period	As a general rule, one year from the date of issuance	Is it valid on the date of import declaration?
Correction	Each correction requires the seal or signature of the issuing authority	Is it only corrected by handwriting?
Reissuance	The indication "DUPLICATE" or a similar notation is required	Relation to the original issuance date
Extension of Validity Period	May be allowed due to disasters or other unavoidable reasons	Customs approval and reasons for extension
Minor Errors	If authenticity, identity, and origin are confirmed, it may still be accepted as valid	Are there multiple deficiencies or errors in important items?

Even if there are errors on Form A, the importer or freight forwarder must not correct them independently.

If corrections are necessary, as a general rule, confirm with the exporter and the issuing authority, and request formal correction or reissuance.

Verification between Form A and Commercial Documents

Verification Item	Form A	Documents for Verification	Checks for Discrepancies
Exporter	Box 1	Invoice, B/L	Is it a third-country invoice or a trading company transaction?
Consignee	Box 2	B/L, Import Declaration	Is it "To Order" or under a bank's name?
Transport Route	Box 3	B/L, Arrival Notice	Are transshipment points or third-country storage indicated?
Description of Goods	Box 7	Invoice, Packing List	Can the goods be confirmed as identical?
Origin Criteria	Box 8	Manufacturing Process, HS Code	Is the basis for P or W correct?
Quantity / Weight	Box 9	Packing List, B/L	Is there split shipment or quantity changes?
Invoice Number	Box 10	Invoice for Import Declaration	Is it a replacement, reissue, or third-country invoice?
Issuance Date	Box 11	B/L Shipment Date	Does it correspond to Retroactive Issuance?
Signature / Seal	Boxes 11 and 12	Registered Issuing Authority Information	Are there any omissions or unnatural corrections?

When There Is an Invoice from a Third Country

In trading involving trading companies or triangular trade, the exporter in the country of origin and the seller issuing the invoice to the Japanese importer may be different.

In such cases, the exporter listed in Form A, Box 1, and the issuer of the invoice used for import declaration may not match.

The existence of such a mismatch does not immediately result in disqualification for preferential tariff treatment. However, documentation explaining the consistency of the cargo identity, commercial flow, country of origin, and the relationship between invoices will be required.

• Invoice from the exporter in the country of origin
• Invoice from the third country trading company
• Sales contract
• Purchase order
• Packing list
• Bill of Lading (B/L)
• Form A
• Commercial flow diagram

Cases Where Form A Submission Is Not Required

As a general rule, submission of Form A is required; however, it may be omitted for cargo with a total taxable value of 200,000 yen or less, or for goods that the customs director recognizes as having an obvious country of origin based on the type and form of the goods.

Nevertheless, omitting the submission of Form A does not mean that the origin criteria themselves do not need to be met.

Category	Possibility of Submission Omission	Points to Note
Total taxable value of 200,000 yen or less	Submission of a certificate of origin may be omitted	Check the total taxable value and items in the entire declaration
Goods with clear origin	Items published by customs may be exempted	Confirm HS code and exclusion criteria
Low-value cargo routed through a third country	Submission of a document evidencing compliance with the Consignment Criteria may also be omitted	The Consignment Criteria must still be actually satisfied
Multiple items in one declaration	Determination varies depending on total value and item composition	Do not decide based on only one item

If Form A Is Not Ready at the Time of Import Declaration

Form A should, in principle, be submitted at the time of import declaration.

However, in cases of disasters or other unavoidable reasons, or when approval for release before Import Permit is granted upon provision of security, Customs may allow a submission extension.

Submission extensions will not necessarily be granted solely because of delayed request to the exporter, internal processing oversight, or reluctance to wait for the original document’s arrival.

Situation	Basic Response	Points to Confirm
Available before import declaration	Make preferential declaration after obtaining Form A	Relation to cargo storage fees and delivery deadlines
Unavoidable reason exists	Consult Customs about submission extension	Reason, planned submission date, security
Request release before Import Permit	Confirm procedures for providing security, etc.	Tariff difference, submission deadline
Cannot obtain Form A	Consider declaring at a non-preferential tariff rate	Whether corrections are allowed after Import Permit

Differences Between Generalized System of Preferences and EPA Preferential Tariffs

Both the Generalized System of Preferences (GSP) and EPA preferential tariff rates apply lower-than-standard rates, but they differ in legal basis, eligible countries, applicable items, rules of origin, and certification procedures.

Comparison Item	Generalized System of Preferences (GSP)	EPA Preferential Tariff Rates	Practical Notes
Nature of the System	A system unilaterally granted by Japan to developing countries	A system based on international agreements between contracting parties	Though both are called "preferential," they are distinct systems
Eligible Countries	GSP beneficiary countries/regions	Contracting countries under each EPA	Do not select the system based on country name alone
Applicable Items	Items designated under the Temporary Tariff Measures Act and related tariff schedules	Tariff concession lists defined in each EPA	The most advantageous system may differ by item
Tariff Rates	GSP rates or LDC preferential rates	EPA tariff rates specific to each agreement	Confirm import date and phased reduction schedules
Rules of Origin	GSP-specific rules of origin	Rules of origin unique to each EPA	Do not apply one system’s criteria to the other
Certification Method	Primarily Form A	Third-party certification, authorized exporters, self-declaration, etc.	Procedures vary by EPA
Consignment Criteria	GSP Consignment Criteria	Shipment and prohibited modification rules under each EPA	Required documents may differ
Post-clearance Verification	Verification of origin under the GSP system	Audits under each EPA	Document retention is required

Comparison of EPA Tariffs and GSP Tariffs

When an EPA contracting country is also a Generalized System of Preferences (GSP) beneficiary country, or when trading with countries that have previously used GSP, both EPA tariff rates and GSP rates may be relevant.

However, you cannot simply choose the certificate with the lower tariff rate after the fact.

The comparison must be made after confirming commodity coverage, exclusions, rules of origin, and eligibility of certificates for each system.

Verification Order	Verification Item	Notes
1	Determine the correct HS code	Foundation for tariff comparison
2	Check WTO agreement tariffs, provisional tariffs, etc.	Comparison with unconditional tariffs is necessary
3	Confirm if covered by GSP or LDC preferences	Check Entire Graduation, Partial Graduation, or Product-by-Exclusion
4	Confirm applicable EPA tariff rates	Multiple EPAs may be involved
5	Check rules of origin for each system	Lower tariff rate may not apply if origin criteria are unmet
6	Confirm obtainable certificates	Do not confuse Form A with EPA certificates
7	Determine the actually applicable tariff rate	Retain documentation to explain to customs

Graduation and Exclusion Measures

Under the Generalized System of Preferences (GSP), there are provisions to exclude countries with advanced economic development or products with strong international competitiveness from preferential tariff treatment.

Even if a country or product was eligible for preferential rates in the past, this does not guarantee current eligibility.

Measure	Target	Basic Structure	Practical Impact
Entire Graduation	Entire country or region	Based on criteria such as income classification and global export share	All products originating from the country are generally excluded
Partial Graduation	Specific products from a specific country	Country income and export criteria combined with product-specific import performance	The relevant products are excluded for a certain period
Product-by-Exclusion	Specific products with high import volume or share	Based on import amount and share over a specified period	Preferential treatment for the relevant country and product is suspended for a set time
Emergency Preferential Suspension	Products experiencing an import surge that impact domestic industry	Determined by investigation and assessment of damage to domestic industry	Preferential duty rates may revert to the general rates

Criteria for Entire Graduation

Entire Graduation refers to the measure of excluding an entire beneficiary country from preferential tariff treatment.

Official criteria include factors such as income classifications over consecutive years and the country’s share of total global exports.

Importers should verify the list of beneficiary countries for the import year rather than relying on past Form A certificates or previous customs clearance records.

Partial Graduation and Product-by-Exclusion

Partial Graduation excludes certain specified items from preferential treatment for a fixed period when countries that have reached a certain economic level and export scale exceed thresholds of import value and import share into Japan.

Product-by-Exclusion applies when the import value from a specific country and the share of that item within Japan’s total imports of the item are high.

Therefore, even for cargo imported from the same country, preferential treatment may apply to some items but not to others depending on the HS code.

Emergency Suspension of Preferential Tariff Measures

The emergency suspension of preferential tariff measures is a system that temporarily halts the application of preferential tariff rates when the import volume of the targeted goods rapidly increases due to preferential treatment, causing or potentially causing damage to domestic industries producing similar or directly competing goods in Japan. This suspension is implemented urgently to protect domestic industries.

It is commonly referred to as the "Escape Clause."

The emergency suspension of preferential tariff measures does not impose tariffs higher than the general tariff rates; rather, it stops the application of preferential tariffs and reverts to the regular tariff rates that are normally applied.

Checkpoints	Details	Impact on Importers
Import Increase	Is there a rapid increase in imports from preferential beneficiary countries?	Risk of tariff rate changes for the targeted items
Impact on Domestic Industry	Damage to sales, production, pricing, employment, etc.	Investigation and activation information need to be confirmed
Scope	Goods, relevant countries/regions, and duration	Scope may differ by HS code even for the same product name
Implementation Timing	Published effective start date	Confirm tariff rate at the time of import declaration

Post-clearance Verification and Importer's Accountability

Even after an Import Permit has been granted under the preferential tariff rate, customs may verify the cargo's origin status, authenticity of Form A, Consignment Criteria, and cargo identity.

The importer should not rely solely on the fact that Form A was issued, but must retain documentation to demonstrate the originating status when necessary.

Verification Item	Main Documentation	Example Issues
Raw Materials	Bill of Materials, Purchase Records	Non-originating materials exceed allowed thresholds
Manufacturing Process	Process Charts, Factory Descriptions	Only minor processing performed
HS Code	Classification Documents, Specifications	Classification on Form A differs from import declaration
Form A	Original Document, Issuance Information	Questions about issuing authority, signature, or seal
Cargo Identity	Invoice, Packing List, Bill of Lading, Photos	Discrepancies in product name, quantity, or marks
Consignment Criteria	Through B/L, Third Country Customs Certificates	Suspected processing or sale in a third country

Items Freight Forwarders and Customs Brokers Should Verify

Freight forwarders and customs brokers are not in a position to guarantee that preferential tariffs will always be applied.

Based on the importer’s instructions, they verify the required documents, transportation routes, declaration information, and tariff rate candidates, and inquire with the importer if there are any deficiencies or inconsistencies.

Item to Verify	Verification Details	Main Reference Documents	If There Is an Issue
Intent to Use Preferential Tariff	Whether the importer wishes to apply preferential tariffs	Customs Clearance Request Form	Confirm intent before declaration
HS Code	Relevant item and tariff rate	Specification Sheets, Tariff Rate Table	Request classification basis from importer
Beneficiary Country	Applicable country and LDC status at time of import	Latest Customs List	Do not use outdated information
Form A	Format, issuing authority, date, signature	Form A	Request corrections or reissuance from exporter
Commercial Documents	Product name, quantity, invoice, parties involved	Invoice, Packing List, B/L	Add documents to prove identity
Transportation Route	Transit through third countries, transshipment, storage	B/L, Arrival Notice	Obtain documents evidencing compliance with the Consignment Criteria
EPA Comparison	Availability of EPA tariff rates and certificates of origin	EPA Certificate, Tariff Rate Table	Do not confuse systems; ask importer to select
Exclusions from Application	Entire Graduation, Partial Graduation, Product-by-Exclusion	Annual official publications	Declare using non-preferential tariff rates

Classification by the Standard Five Classifications for Freight Forwarders

The following Standard Five Classifications are not legally established or industry-wide classifications but serve as an analytical framework within this series to organize the scope of freight forwarders' involvement.

Standard Five Classification	Possible Tasks Related to Preferential Tariffs	Judgments/Guarantees Normally Excluded	Documentation for Confirming Scope of Responsibility	Practical Notes
Simple Intermediary	Delivery of Form A, Invoice, B/L, etc.	Guarantee of origin or tariff application	Email, work instructions	Transmit documents accurately without alteration
Cargo Transportation Service Provider	Provide transport route, transshipment locations, and B/L information	Legal guarantee that third-country transit meets Consignment Criteria	Cargo Transportation Service Contract, Booking	Notify customs broker of route changes
NVOCC / House B/L Issuer	Issue House B/L and provide documentation proving transport route	Guarantee preferential application based solely on House B/L	House B/L, Master B/L	Cross-check routes and involved parties between both B/Ls
Door-to-Door Single Contractor	Manage integrated transport and transshipment from country of origin to Japan	Guarantee of origin standards, customs determinations, or duty amounts	Door-to-Door Contract, Transport Clause	Retain information on third-country storage and repacking
Agent / Coordinator for Specific Operations	Coordinate acquisition of Form A, customs consultation, and document collection	Origin certification and legal judgments beyond delegation scope	Power of Attorney, Customs Clearance Request	Distinguish between document collection and final decision-making

Contracting Carrier and Actual Carrier are concepts indicating contractual positions in transport agreements and do not replace the Standard Five Classifications.

Individual tasks such as forwarding Form A, issuing through B/Ls, providing transshipment information, and coordinating customs inquiries do not themselves constitute a sixth classification.

Common Practical Issues

Case	Main Issues	Key Points for Determination	Initial Response	Main Documents
Invoice number on Form A does not match	Cargo identity	Whether it is a replaced invoice or a third-country invoice	Create a trade flow and document correspondence chart	Form A, old and new invoices
Form A issued after shipment	Issuance timing / Retroactive Issuance	Number of days, reason, required declarations	Confirm with issuing authority and customs	B/L, Form A, letter of explanation
No through B/L for third-country transshipment	Shipment criteria	Management and identity at the third country	Gather substitute documentary evidence	B/Ls for each segment, customs certification
A Previously Eligible Country Has Become Subject to Entire Graduation	Beneficiary country requirements	Designation status for the import year	Check applicable standard and EPA tariff rates	Latest list of beneficiary countries
Partial Graduation for specific items only	Item-specific exclusions	HS codes and import year	Reconfirm applicable tariff rates	Exclusion list by fiscal year
Cargo from an LDC but an exceptional item	Inapplicability of LDC duty-free treatment	Applied tariff schedule	Confirm applicable rates	Tariff schedule
Declared GSP with EPA certificate	Confusion between systems and certificates	System used and rules of origin	Confirm proper certification method	EPA certificate, Form A
Quantity on Form A differs from imported quantity	Cargo identity / partial import shipments	Reasons for split shipments or quantity changes	Explain relationship using transactional documents	Packing list, B/L, inventory records

Example 1: Case Where the Invoice Number on Form A Was the Pre-Replacement Number

A Japanese importer planned to apply the Generalized System of Preferences (GSP) tariff to apparel imported from a beneficiary country.

The exporter initially obtained Form A based on the first issued Invoice.

Subsequently, quantity adjustments and discounts were made, and a new Invoice number was used in the import declaration.

The old Invoice number and date remained recorded in box 10 of Form A.

The customs clearance officer did not immediately invalidate Form A solely due to the discrepancy in numbers but cross-checked the old Invoice, new Invoice, Packing List, purchase order, and discount agreement.

As a result, it was confirmed that both the old and new Invoices related to the same goods, and documents explaining the correspondence of quantity, marks, and product descriptions were organized.

However, if there are multiple inconsistencies within Form A or if the identity of the goods cannot be confirmed, correction or reissuance by the issuing authority may be required.

In this case, it was important not only that the Invoice numbers matched but also that it could be comprehensively demonstrated that the imported goods and those described in Form A were identical.

Example 2: Case Where Form A Was Issued After Shipment

The importer requested the exporter to obtain Form A at the time of the sales contract.

However, the exporter obtained a regular non-preferential certificate of origin and did not apply for Form A.

After shipment, the error was discovered, and the exporter applied for Form A from the authorized issuing body.

The issuance date was after the shipment date, but the exporter submitted documentation to the issuing body showing that they had been requested to obtain Form A from the beginning, the circumstances of obtaining the incorrect certificate, and evidence of the cargo export date.

The importer submitted to the customs broker Form A, the B/L, the request email at the time of the sales contract, the incorrectly obtained certificate, and the reasons for the Retroactive Issuance.

Because Retroactive Issuance does not automatically apply simply due to the presence of such a notation, the importer confirmed the treatment with customs before import declaration.

In this case, not only the form of issuance after shipment but also the circumstances permitting Retroactive Issuance and the propriety of the issuance procedure were important.

Example 3: Case Where a Through B/L Could Not Be Obtained Due to Transshipment in a Third Country

To transport cargo from a preferential beneficiary country located inland to Japan, the cargo was carried by truck to a neighboring country’s port, then shipped by sea from that port.

Because the land transport and sea transport were under separate contracts, a through B/L covering the journey from the country of origin to Japan was not issued.

Box 3 of Form A indicated truck transport from the country of origin to the third country port, and ocean transport from the third country port to Japan by the vessel.

The importer collected the inland waybill, ocean B/L, records of cargo storage entries and exits at the bonded warehouse in the third country, container numbers, cargo photos, and local customs clearance documents.

It was also confirmed that no processing or sales activities other than transshipment and short-term storage occurred in the third country.

Even if a through B/L is not available, it may be possible to recognize compliance with the Consignment Criteria based on other documentation; however, the importer did not make an independent judgment and consulted customs before filing the import declaration.

Example 4: Case Where EPA Tariff Rates Were Lower

The importer had planned to use the Generalized System of Preferences (GSP) as in past transactions and obtained Form A.

However, an EPA with the importing country was in effect, and the EPA tariff rates for the applicable items were set lower than the GSP rates.

The customs broker confirmed not only the applicable tariff rates but also the EPA’s product-specific rules of origin and certification procedures.

Although the goods met the GSP rules of origin, additional verification was required for the EPA’s rules of origin.

Since the exporter could prepare the EPA-specific certificate of origin and the EPA’s Consignment Criteria were also fulfilled, the importer chose to apply the EPA tariff rates.

Even though Form A had been obtained, it was not used directly as the EPA’s certificate of origin.

In this case, it was necessary to separately compare the tariff rates, origin criteria, and certification methods for each preferential system.

Example 5: Case Where Partial Graduation Caused Some Items from the Same Country to Lose Preferential Tariff Eligibility

The importer had been continuously importing multiple types of manufactured products from the same preferential beneficiary country.

Until the previous year, all items were imported using the general preferential tariff rates.

Before filing the import declaration for the new fiscal year, it was confirmed that only specific HS codes were subject to Partial Graduation or Product-by-Exclusion.

The exporting country itself remained a preferential beneficiary country, and preferential tariff rates continued to apply to the other items.

The importer did not rely solely on past customs clearance results or the existence of Form A, but cross-checked each item’s HS code against the latest exclusion list.

For the items excluded, WTO agreement tariff rates or applicable EPA tariff rates were checked, and the import cost was recalculated accordingly.

Common Misunderstandings

Misunderstanding	Actual Concept	Practical Notes
Preferential tariff rates apply when importing from developing countries	Requirements for eligible countries, products, origin, and documents are necessary	Confirm all requirements for each import
All imports from LDCs are duty-free	There are exceptions under the LDC duty-free, quota-free scheme	Check HS codes and tariff schedules
The exporting country is the country of origin	The exporting country and country of origin may differ	Verify manufacturing process and raw materials
A "Made in" label means the product is originating	The label alone does not prove compliance with general preferential origin rules	Check Form A and the manufacturing basis
Possession of Form A guarantees preferential treatment	Eligible products, Consignment Criteria, and exclusions must also be met	Verify requirements beyond Form A
EPA Certificates of Origin can be used to claim GSP benefits	GSP and EPA are separate schemes	Prepare certificates corresponding to the scheme being used
Passing through a third country automatically disqualifies preferential treatment	Preference may be recognized if prescribed Consignment Criteria are met	Obtain through B/L or equivalent
No documents are needed if cargo is only transshipped in a third country	Shipment requirement proof is generally required	Check documentation before import declaration
Form A can be issued anytime after shipment	Generally issued at export; Retroactive Issuance has conditions	Confirm issuance date and reason
The importer can correct errors on Form A	Formal corrections require procedures by the issuing authority	Do not make unauthorized corrections
Countries and products previously eligible will always remain so	Graduation and exclusion of application change annually	Check the latest lists
You can freely choose the system with the lowest tariff rate	Must meet origin and certificate requirements of each scheme	Do not select based on tariff rate alone
The customs broker guarantees preferential treatment application	The importer is responsible for the declared information and its basis	The importer should prepare relevant supporting documents
Origin documents do not need to be kept after Import Permit	Document management is necessary for post-clearance verification	Establish internal document retention rules

Decision Flow for Applying Preferential Tariffs

1. Confirm the imported cargo’s product name, material, use, and processing status.
2. Check the HS code on the applicable tariff schedule.
3. Verify whether the exporting country/region is a beneficiary of preferential treatment or an LDC at the time of import.
4. Confirm whether the relevant HS code qualifies under the Generalized System of Preferences (GSP) or LDC preferential items.
5. Check for Entire Graduation, Partial Graduation, or Product-by-Exclusion.
6. Confirm if any emergency suspension measures for preferential treatment are in effect.
7. Verify that the goods are Wholly Obtained or Produced Goods or meet the substantial transformation criteria.
8. If using the Donor-country Content Rule or Accumulation, confirm relevant requirements.
9. Confirm that a valid Form A has been issued.
10. Verify the issuing authority, issue date, validity period, signature, and seal on Form A.
11. Cross-check Form A against the Invoice, Packing List, and Bill of Lading.
12. If transshipment through a third country is involved, confirm Consignment Criteria.
13. Obtain through Bill of Lading and third-country customs certificates if applicable.
14. Compare available EPA tariff rates and general preferential tariff rates.
15. Confirm compliance with the origin rules and certification procedures under each scheme.
16. Decide on the tariff rate and origin certification identifier to use at import declaration.
17. Retain supporting documentation to prepare for post-clearance verification.

Practical Judgment Checklist

Check Timing	Contact / Documents	Items to Confirm	Actions if Issues Arise
Before Import Contract	Exporter, Sales Contract	Preference Utilization, Form A Acquisition Obligation	Clearly state in contract terms
At Product Inspection	Manufacturer, Specifications	Material, Usage, Processing Status	Obtain additional HS classification documents
At Ordering	Exporter, Purchase Order	Request Form A Issuance, Required Descriptions	Decide issuance deadline and responsible person
Before Shipment	Exporter, Form A Draft	Product Name, Quantity, Invoice, Origin Criteria	Correct before issuance
At Booking	Freight Forwarder, B/L Draft	Transshipment Locations, Third-Country Routing, Through B/L	Arrange documents evidencing compliance with the Consignment Criteria
Upon Receiving Form A	Issuing Authority Information, Form A	Signature, Seal, Issuance Date, Validity Period	Request corrections or reissuance
Before Import Declaration	Tariff Schedule, Latest Customs Information	Eligible Countries, Eligible Products, Exclusions	Consider alternate tariff rates
At Tariff Rate Comparison	EPA Documents, Form A	General Preference and EPA Tariff Rates and Origin Rules	Select the available system to use
When Transiting Third Countries	B/L, Third-Country Customs Certification	Consignment Criteria, Identity, Customs Supervision	Consult customs in advance
At Import Declaration	Customs Broker, NACCS	Tariff Rate, Origin Identification, Submitted Documents	Consult regarding submission extension for missing documents
After Import Permit	Internal Origin Documents	Preserve documents needed for subsequent verification	Designate responsible party and storage location
At Next Year’s Import	Latest Beneficiary Country / Exclusion List	Graduation, Partial Graduation, Tariff Changes	Do not reuse past records as is

Situations Where Consultation with Experts Is Recommended

• When determining the HS code is difficult
• When it is unclear whether the manufacturing process meets the substantial transformation criteria
• When materials or processing involve multiple countries
• When utilizing the Donor-country Content Rule or Accumulation
• When there are doubts about the issuing authority, signature, or seal on Form A
• When Form A was issued after shipment
• When Form A has expired
• When Form A does not match the Invoice, B/L, or Packing List
• When a third-country Invoice is used
• When transshipment, long-term storage, or repackaging occurred in a third country
• When it is impossible to obtain a through B/L or third-country customs certificate
• When it is unclear whether to apply the general preferential tariff or the EPA
• When the scope of Entire Graduation, Partial Graduation, or Product-by-Exclusion is unclear
• When an error in preferential tariff application is discovered after the Import Permit
• When post-clearance verification is requested by customs

Related Laws and Standards

• Temporary Tariff Measures Act
• Order for Enforcement of the Temporary Tariff Measures Act
• Ordinance for Enforcement of the Temporary Tariff Measures Act
• Customs Act
• Enforcement Order of the Customs Act
• General Preferential Tariff Rules of Origin
• Schedule of Applied Tariff Rates
• Operational Standards for Emergency Suspension of Preferential Tariffs
• Rules of Origin and Operational Procedures under Each EPA

Practical Points of Caution

• Preferential tariff eligibility is determined by the country of origin, not merely by the country of export.
• Confirm the correct HS code of the imported goods initially.
• Check the eligible countries/regions and applicable items for each import year.
• Even LDC-origin goods may have exceptions.
• Form A differs from EPA certificates of origin and non-preferential certificates of origin.
• Form A is generally issued by an authorized issuing body at the time of export.
• The validity period of Form A is generally one year from the date of issue.
• Retroactive Issuance of Form A requires prescribed reasons and procedures.
• Importers or freight forwarders should not independently correct Form A.
• Verify product name, quantity, invoice number, issue date, signature, seal, and origin criteria.
• For transshipment through third countries, confirm the Consignment Criteria documents such as continuous B/L.
• Confirm that no processing, sale, or regular distribution has occurred in the third country.
• Even if the total taxable value is less than 200,000 yen, the origin criteria itself must be satisfied.
• Rules of origin and certification methods differ between general preferential tariffs and EPA.
• Do not compare only tariff rates; select the system that actually meets the requirements.
• Entire Graduation, Partial Graduation, and Product-by-Exclusion should be reviewed annually.
• Past customs clearance records do not guarantee current application.
• Keep origin-related documents for post-clearance verification after Import Permit is issued.
• Freight forwarders are not in a position to guarantee preferential tariff application or duty amounts.
• The importer is responsible for verifying the final import declaration details and supporting documents.

Summary

• The preferential tariff system applies reduced or zero tariff rates to certain imports originating from developing countries or regions.
• Japan has the Generalized System of Preferences (GSP) and LDC preferences for least developed countries.
• Simply being exported from a beneficiary country or LDC does not automatically qualify the goods for preferential tariff rates.
• It is necessary to confirm all relevant factors including eligible countries, eligible products, rules of origin, Consignment Criteria, certification procedures, and any exceptions to application.
• Eligible products and tariff rates are checked based on HS codes rather than general product names.
• General preferential origin products include both Wholly Obtained or Produced Goods and those subject to substantial transformation.
• Minor operations such as packaging, repackaging, or labeling alone may not confer originating status.
• When using the Donor-country Content Rule or Accumulation, confirm the applicable countries, eligible products, and required supporting certificates.
• Shipment criteria are rules to verify that the goods maintain their originating status from the country of origin until arrival in Japan.
• The principle is direct shipment, but certain conditions may permit transit through third countries.
• For third-country shipments, a through Bill of Lading, certification from third-country customs, or other documents deemed appropriate by the Customs Director are required.
• If processing, sale, or normal distribution occurs in the third country, Consignment Criteria may not be satisfied.
• When using the general preferential tariff, Form A, the GSP Certificate of Origin, is generally submitted.
• Form A is issued by the customs or an authorized competent body of the exporting country.
• Form A is principally issued at export and is generally valid for one year from the date of issue.
• Retroactive Issuance of Form A may be accepted under certain specified circumstances.
• Boxes 1 through 12 of Form A should be checked, including exporter, consignee, transport route, product description, rules of origin, quantity, invoice, and signature/stamp.
• Box 8 of Form A indicates “P” for Wholly Obtained or Produced Goods and “W” for products meeting substantial transformation rules, among others.
• Product descriptions, quantities, parties, and invoice numbers on Form A should be cross-checked against the invoice, packing list, and Bill of Lading.
• If a third-country invoice is used, documents explaining the commercial flow between the original exporter, the third-country seller, and the Japanese importer should be prepared.
• Corrections to Form A must be made through formal procedures of the issuing authority.
• In case of reissuance, check for markings such as “DUPLICATE” and its relation to the original issuance date.
• For shipments with a customs value of 200,000 yen or less, Form A submission may be exempted in some cases.
• Even if submission is exempted, compliance with rules of origin and Consignment Criteria remains obligatory.
• General preferential tariffs and EPAs are distinct systems with different eligible countries, tariff rates, origin rules, and certification procedures.
• Form A cannot always be used as EPA proof of origin, nor can EPA certificates necessarily substitute for Form A.
• EPA tariff rates may be lower than general preferential rates but require compliance with EPA-specific origin requirements.
• Entire Graduation applies to the entire country, while Partial Graduation and Product-by-Exclusion affect particular countries and products.
• Graduation and exclusion measures change annually; therefore, past application history should not be solely relied upon.
• Emergency suspension of benefits is a system that halts preferential rates based on sudden import surges and damage to domestic industries.
• Even after Import Permit, customs may conduct post-clearance origin verification.
• Importers should retain not only Form A but also underlying evidence such as manufacturing processes, raw materials, transport routes, and commercial documents.
• Freight forwarders and customs brokers should check and communicate required documents and transport information but do not guarantee preferential treatment or customs decisions.
• In the Standard Five Classifications, the transfer of Form A or provision of shipment documents is organized according to the involvement scope of Simple Intermediary, Cargo Transportation Service Provider, NVOCC / House B/L Issuer, Door-to-Door Single Contractor, and Agent / Coordinator for Specific Operations.
• Contracting Carrier and Actual Carrier refer to positions in the transport contract and do not replace the Standard Five Classifications.
• Individual operations such as support for obtaining Form A, issuance of through Bills of Lading, or customs consultations do not constitute a sixth classification by themselves.

When using preferential tariffs, do not make decisions based solely on the exporting country name or presence of Form A. Confirm the correct HS code, beneficiary status, eligible products, rules of origin, Consignment Criteria, exceptions, and the applicable tariff rates for the import year as a comprehensive set.

For goods routed through third countries, secure through Bills of Lading, certificates from third-country customs, bonded warehouse records, and other documentation early to prevent shortages of Consignment Criteria evidence just before import declaration.

When comparing general preferential tariffs and EPA preferential rates, verify not only the tariff figures but also compliance with their distinct rules of origin and certification procedures.

This article provides general information on Japan’s Generalized System of Preferences, LDC preferences, Form A, GSP rules of origin, Consignment Criteria, comparison with EPA rates, graduation and exclusion measures, and freight forwarding and customs clearance practices. It does not determine the HS classification, origin certification, preferential tariff application, validity of Form A, fulfillment of Consignment Criteria, or tariff amounts for specific cargoes. Actual import declarations should be confirmed based on the Temporary Tariff Measures Act in force at the time of import, relevant ministry ordinances, the tariff schedule in effect, the latest customs publications, Form A, transport documents, manufacturing data, and customs rulings.