Product-Specific Rules of Origin (PSR) — Origin Determination by HS Code
Interlink編集部What Are Product-Specific Rules of Origin
Product-Specific Rules of Origin (PSR) refer to the origin determination criteria set for each HS code under agreements such as EPA, FTA, CPTPP, and RCEP.
In English, they are called Product-Specific Rules of Origin or Product Specific Rules and are often abbreviated as PSR in practical business.
To apply preferential duty rates, it is necessary to confirm that the cargo qualifies as originating under the relevant agreement. The PSR specifically defines which criteria must be met for goods to be recognized as originating products.
In practice, the HS code of the cargo is first identified, then the corresponding PSR for that HS code is consulted. Based on this, compliance is confirmed by applying a combination of criteria such as the change in tariff classification, regional value content, specific processing, cumulation provisions, de minimis rules, and shipment criteria.
Scope Covered in This Article
This article explains how to verify product-specific rules of origin (PSR) defined by HS code when using EPA, FTA, CPTPP, RCEP, and similar agreements.
| Item | Contents Covered in This Article | Contents Covered in Other Articles |
|---|---|---|
| Basics of Product-Specific Rules of Origin | Clarifies that PSR are origin determination criteria defined for each HS code | The overall structure of rules of origin is covered in “Practical Guide to Rules of Origin Compliance” |
| Relationship with HS Codes | Explains that HS codes are the starting point for PSR verification and that HS code errors lead to PSR errors | Detailed HS code classification, advance rulings, and tariff classification are covered in separate articles |
| CTC, RVC, and Processing Criteria | Organizes how to interpret and select major origin criteria used in PSR | Detailed calculations and judgments for CTC, RVC, and processing criteria are covered in dedicated articles |
| Single, Alternative, and Multiple Conditions | Addresses practical concepts for distinguishing the structure of PSR conditions | Reading specific product rule tables by agreement is covered in individual EPA/FTA articles |
| Cumulation System and De Minimis Rules | Positions the cumulation system and de minimis rules as supportive mechanisms for PSR judgments | Detailed requirements for cumulation systems and de minimis rules are covered in separate articles |
| Differences Among Agreements | Explains that PSR may differ for the same HS code under CPTPP, RCEP, bilateral EPAs, etc. | Procedures, certification methods, and applicable products by agreement are covered in individual EPA/FTA articles |
| Relationship with Shipment Criteria | Notes that even when PSR are met, shipment routes may affect eligibility for preferential tariff rates | Details on third-country transit, through B/L, and bonded warehousing documents are covered in “What Are Shipment Criteria?” |
| Scope of Freight Forwarder Involvement | Clarifies documentation support and transport document arrangement roles freight forwarders can assist with, and the limits of their involvement in PSR judgments | Freight forwarder responsibilities, customs document checks, and B/L and transport document details are in related practical articles |
Purpose and Background of the System
Product-specific rules of origin are a system designed to limit the application of preferential tariff rates exclusively to products that qualify as originating goods under the agreement.
Under EPAs and FTAs, not all cargo exported from a contracting country automatically qualifies for preferential tariff treatment. To be recognized as originating goods under the agreement, the cargo must meet the rules of origin established for each specific product.
For example, one product may qualify as originating if it satisfies the tariff classification change criterion, while another product may require meeting value-added thresholds or undergoing specific processing steps.
Because the criteria to be checked differ by product, product-specific rules of origin are a central point of verification in EPA and FTA compliance practice.
Situations Where Product-Specific Rules of Origin Apply
| Situation | Why PSR Is Relevant | Main Parties Responsible for Verification | Practical Points to Note |
|---|---|---|---|
| Import Declaration Using EPA/FTA Tariff Rates | It is necessary to confirm that the goods qualify as originating products under the agreement | Importer, Exporter, Customs Broker | Check not only the presence of certificates but also supporting documentation proving compliance with PSR |
| Preparation of Certificates of Origin or Origin Declarations | Deciding which origin criteria to use to demonstrate originating status is required | Exporter, Producer, Importer | Clearly identify whether compliance is based on CTC, RVC, or processing criteria |
| Use of the Self-Certification System | The declarant must retain and be able to explain the basis for origin | Exporter, Producer, Importer | Retain not just origin declaration statements but also bills of materials, process flowcharts, and cost data |
| Change of Supplier | Changes in material origin or HS codes can affect PSR determination | Producer, Exporter, Procurement Department | Do not rely on past determinations; revalidate after supplier changes |
| Changes to Manufacturing Processes | May impact processing criteria or RVC calculations | Producer, Exporter, Origin Management Staff | Confirm the effects of outsourcing, process shortening, or change of processing country on origin status |
| Transit via a Third Country | Even if PSR is met, failure to meet shipment criteria may affect preferential tariff eligibility | Importer, Exporter, Freight Forwarder | Verify continuous B/L, transit documentation, and bonded storage records |
| Post-Clearance Customs Verification | Submission or explanation of supporting documents proving PSR compliance may be required | Importer, Exporter, Producer | Organize and preserve supporting documentation from the time of declaration |
Common Misunderstandings
The following misunderstandings frequently occur regarding product-specific rules of origin (PSR).
| Misunderstanding | Actual Consideration | Potential Issues |
|---|---|---|
| Confirming the PSR automatically determines origin | The PSR provides the criteria for determination, but it is necessary to verify materials, HS codes, cost, processes, and supporting documentation in practice | Declaring origin based only on reading the criteria without preparing supporting evidence |
| If the HS code is the same, the PSR is unchanged regardless of the agreement | Even for the same HS code, PSRs can differ among agreements such as CPTPP, RCEP, and Japan-EU EPA | Incorrectly applying criteria from one agreement to another |
| When options exist, you may freely choose the most advantageous criteria | Selection is limited to criteria recognized by the agreement and must be supported by evidence | Choosing criteria without documentation and being unable to explain them during customs verification |
| If the CTC is not met, you can always use the de minimis rule | Whether the de minimis rule applies depends on the agreement, product, materials, and calculation method | Overlooking excluded products or exceeding applicable thresholds |
| It is sufficient to only check the PSR displayed by search tools | Search tools are useful as an entry point, but final confirmation should be matched with the relevant agreement, customs documents, and retained records | Failing to verify the latest regulations or the operational interpretation of the importing country |
| HS codes can be determined solely by the product name provided by the exporter | HS code determination requires reviewing not only the product name but also materials, use, structure, processing condition, and whether it is a finished product or part | Confirming PSRs based on an incorrect HS code assumption |
| Meeting the RVC makes document retention simple | RVC requires managing FOB price, non-originating material value, cost details, calculation sheets, and related data | Inability to explain calculation basis leading to issues during post-verification |
| Listing process names suffices for process criteria | It is necessary to explain which processes were conducted in which country using process charts, production records, and subcontracting documents | Processes may be judged as minor or merely formal, risking non-compliance |
Application Requirements and Common Exclusions
Simply referring to the PSR table is insufficient to apply Product-Specific Rules of Origin. It is necessary to comprehensively verify the relevant agreement, HS code, certification method, supporting documents, and transportation routes together.
| Verification Item | Requirements for Application | Situations Often Excluded or Problematic | Practical Measures |
|---|---|---|---|
| Applicable Agreement | The specific EPA, FTA, CPTPP, RCEP, or other agreement in use is identified | Using PSRs from a different agreement | First determine the agreement applied in the declaration, then verify that agreement’s PSRs |
| HS Code | The HS code of the cargo is confirmed based on reasonable grounds | Determining HS code solely by product name | Check specifications, catalogs, materials, and intended use; if necessary, seek advance rulings |
| Existence of Preferential Tariff Rate | A preferential tariff rate is established for the item | PSR criteria met but no preferential tariff rate set | Consult tariff schedules and agreement provisions on tariff concessions |
| PSR Criteria | Correctly distinguish among CTC, RVC, processing criteria, multiple conditions, or elective criteria | Confusing elective criteria with multiple conditions | Review the PSR text, notes, chapter notes, and item-specific annotations |
| CTC | The change in HS code between finished product and non-originating materials meets the agreement’s threshold | Some materials remain under the same classification | Verify HS codes of materials and check de minimis applicability if needed |
| RVC | The required value-added ratio under the agreement is met and calculation basis is retained | Unable to provide cost data or value of non-originating materials | Retain FOB price, cost data, material values, and calculation sheets |
| Processing Criteria | The required processes are actually performed within the agreement’s signatory countries | Limited to minor processing such as packaging, labeling, or simple assembly | Confirm process flowcharts, work records, and subcontracting documents |
| Cumulation System | Conditions of the system allow incorporation of materials sourced and processing performed in signatory countries into origin determination | Automatically treating materials sourced from signatory countries as originating materials | Verify origin documentation concerning the materials themselves and supplier certificates |
| De Minimis Rule | Meeting all requirements for applicable agreement, items, materials, thresholds, and calculation methods | Applying to excluded items or exceeding thresholds | Confirm de minimis provisions and calculation basis specific to each agreement |
| Shipment Criteria | Originating goods are not processed or altered during transportation, and can be explained with necessary transport documents | Unable to demonstrate bond control or non-processing when transiting through third countries | Verify Bill of Lading, Through Bill of Lading, transshipment documents, and bonded storage documents |
Verification of HS Code as the Starting Point
Product-specific rules of origin are established for each HS code. Therefore, the first step in origin determination is to accurately verify the HS code of the cargo in question.
Incorrect HS code identification will lead to applying the wrong product-specific rules of origin. Even products that appear similar may have different HS codes depending on the materials, intended use, structure, processing state, or whether the item is a finished product or a component.
In practice, classification is not based solely on the product description on the invoice. Other documents such as product specifications, catalogs, bill of materials, intended use, manufacturing process, and drawings should be reviewed. If classification is difficult, using customs advance rulings or consulting experts may be considered.
Impact of Incorrect HS Code
| Stage | What Happens | Practical Impact | Countermeasures |
|---|---|---|---|
| HS Code Verification | Based on incorrect HS code | Falls outside the correct Product-Specific Rules of Origin (PSR) to be confirmed | Check product specifications, use, materials, and request advance rulings if necessary |
| PSR Verification | Confirms incorrect product-specific rule of origin | Overlooks required Change in Tariff Classification (CTC), Regional Value Content (RVC), and processing criteria | Re-examine applicable agreements and HS code versions |
| Supporting Document Preparation | Creates bill of materials and calculation data based on incorrect criteria | Undermines assumptions during customs verification | Recheck material HS codes, cost data, and processing information |
| Import Declaration | Declares preferential tariff rates based on incorrect origin determination | May result in denial of preferential tariff, additional duties, or review of past transactions | Correct the declaration and review past impacts as needed |
How to Interpret Product-Specific Rules of Origin
When checking product-specific rules of origin, refer to the product-specific rule table in the relevant agreement and verify which criteria apply to the corresponding HS code.
Product-specific rules of origin mainly use criteria such as tariff classification changes, value-added content, processing operations, combinations of multiple criteria, or selection among multiple criteria.
For example, when multiple criteria can be chosen, such as “CTC or RVC,” it is important to select the criterion that best fits your company’s manufacturing situation and the documentation you can maintain, ensuring the chosen rule is easier to explain.
Combinations of Criteria in PSR
| Combination Pattern | Meaning | Typical Examples | Key Points for Verification |
|---|---|---|---|
| Single Condition | Compliance with one specified criterion is required | Meeting CTC, or performing a specific process | If the criterion cannot be met, substitution with another may not be possible |
| Alternative | Meeting any one of several criteria suffices | CTC or RVC | Choose criteria that are easier to explain and for which supporting evidence can be retained |
| Multiple Conditions | All specified criteria must be met simultaneously | Meeting CTC plus performing a specified processing step | Satisfying only one criterion does not justify origin status |
| Condition with Exceptions | In addition to the base criteria, certain exceptions for specific materials or processes apply | Excluding certain non-originating materials or restricting certain materials | Check not only the main text, but also notes, chapter notes, and product-specific notes |
| Special Conditions | Special criteria are applied for products such as textiles, chemicals, and processed foods | Requirements such as yarn production, fabric manufacturing, sewing, chemical reactions | Do not rely solely on general CTC or RVC criteria |
Comparison of CTC, RVC, and Processing Criteria
When multiple criteria are available under PSR, choosing simply the “most favorable for tariff rates” is not sufficient; it is important to select a criterion that can be properly explained in practice.
| Criterion | Suitable Situations | Required Documentation | Points to Note |
|---|---|---|---|
| Change in Tariff Classification (CTC) | When the HS code of the finished product clearly differs from that of non-originating materials | HS codes of finished product and materials, bill of materials, classification justification documents | Accurate confirmation of each material’s HS code is necessary |
| Regional Value Content (RVC) | When HS code changes are difficult but sufficient value is added within the agreement area | FOB price, material costs, cost data, RVC calculation sheets, supplier certificates | Explanation is difficult without retaining cost and price documentation |
| Processing Criteria | When origin determination is mainly based on processing steps, such as textiles, chemicals, or processed foods | Process flow charts, manufacturing records, work orders, subcontracting documentation | It is necessary to explain not only process names but also actual work details |
| Multiple Conditions | When PSR requires multiple criteria simultaneously | Various supporting documents including HS code data, cost data, and process documentation | Do not mistakenly assume one criterion alone is sufficient |
Relationship with Tariff Classification Change Criteria
The tariff classification change criteria are standards used to verify whether the classification under the HS code has changed at or above the level specified in the agreement between non-originating materials and the finished product.
When CTC (Change in Tariff Classification) is specified in the Product-Specific Rules of Origin, the HS code of the finished product is compared with the HS codes of the non-originating materials used. If the classification change required by the agreement has occurred, the product may qualify as originating.
However, simple assembly, packaging, or labeling may not result in sufficient classification changes. Additionally, if some non-originating materials do not meet the CTC, it should be confirmed whether the de minimis rule can be applied.
Relationship with the Value-Added Criterion
The value-added criterion confirms that a certain percentage or more of the finished product’s value has been created within the contracting country or region covered by the agreement.
If the RVC is specified in the product-specific rules of origin, it is calculated based on factors such as FOB price, the value of non-originating materials, the value of originating materials, manufacturing costs, and cost data.
The RVC is useful for products where applying the CTC criterion is challenging, as it can demonstrate that sufficient value was added within the region. However, if the calculation basis or cost data are not retained, origin may not be demonstrable during customs verification.
Relationship with Processing Criteria
Processing criteria refer to standards that recognize goods as originating when specific manufacturing or processing steps have been performed within the territory of the agreement’s contracting parties.
For products such as textiles, chemicals, and processed foods, the country where each step of production is conducted can be a critical factor. For example, it may be required that certain stages—such as spinning, fabric production, cutting, or sewing—are completed within the qualifying region.
When applying processing criteria, it is necessary to be able to demonstrate which steps were actually performed through documentation such as process flowcharts, production records, work instructions, and subcontractor materials.
Relationship with the Cumulation System
The cumulation system allows raw materials or processing performed in agreement partner countries to be included when determining the origin of the final product.
When checking the product-specific rules of origin, it may be necessary to determine whether materials produced in other partner countries can be treated as originating materials.
If the cumulation system applies, production processes spanning multiple countries can be reflected in origin determination as long as the production or processing occurred within the agreement area.
However, even if materials are sourced from partner countries, they do not automatically qualify as originating materials. It is essential to verify that these materials themselves meet the originating criteria under the agreement, using documentation such as certificates of origin, origin declarations, or supplier declarations.
Relationship with the De Minimis Rule
The de minimis rule is a system that exceptionally allows a certain proportion of non-originating materials, which do not meet the origin criteria, within limits specified by the agreement.
When a product-specific rule requires a CTC, some non-originating materials may fail to meet the classification change. In such cases, it should be confirmed whether the de minimis rule can be applied.
However, the de minimis rule is not allowed unconditionally. Since the applicable percentage, calculation method, eligible products, and special provisions for textile products differ by agreement, the provisions of the relevant agreement must be checked.
Relationship with Shipment Criteria and Direct Shipment Requirements
Even if the Product-Specific Rules of Origin are met, failure to satisfy shipment criteria or direct shipment requirements may affect the application of preferential tariff rates.
Shipment criteria require confirmation that goods qualifying under the agreement are transported appropriately from the exporting country to the importing country.
When passing through a third country, it must be demonstrated that the cargo was not processed or altered, and that, where required, it was held under customs supervision or in bonded status.
In practice, this involves verifying documents such as the Bill of Lading, Sea Waybill, air waybill, through Bill of Lading, transshipment records, bonded custody certificates, and certificates of non-processing.
Item-Specific Rules of Origin under CPTPP
Under CPTPP, the origin of relevant cargo is determined by verifying the item-specific rules of origin corresponding to the cargo's HS code.
Since CPTPP uses a self-certification system, the declarant must retain documents that can substantiate the cargo's origin.
CPTPP establishes criteria by item, such as Change in Tariff Classification (CTC), Regional Value Content (RVC), and processing requirements. Additionally, de minimis rules and shipment criteria must also be confirmed.
Because it is a self-certification system, simply preparing a declaration is not enough. It is necessary to have documentation such as material lists, manufacturing process charts, RVC calculation data, and supplier information ready to demonstrate that the cargo meets the PSR requirements.
Product-Specific Rules of Origin under RCEP
Under RCEP, product-specific rules of origin are checked for each HS code to determine whether the cargo qualifies as originating under RCEP.
In addition to product-specific rules of origin, practical considerations under RCEP include identification of the country of origin, consecutive certification of origin, and shipment criteria.
For transactions involving multiple countries, it is necessary to clarify which country’s origin will be recognized and which certification method can be used.
Furthermore, under RCEP, the operation of certification methods may vary depending on the country and timing. It should be confirmed whether third-party certification, self-certification by authorized exporters, self-certification by exporters or producers, or self-certification by importers can be applied.
Why PSRs Differ by Agreement
Even for cargo with the same HS code, the product-specific rules of origin (PSRs) may differ depending on the agreement being used.
For example, one agreement may require only a CTC to qualify, while another may require an RVC. In some cases, one agreement allows a choice between CTC or RVC, whereas another may require a specific processing step in addition.
This variation arises because each agreement differs in negotiation content, contracting countries, industrial structures, products targeted for protection, and supply chain assumptions.
| Comparison Scenario | Possible Differences | Documents to Check | Practical Notes |
|---|---|---|---|
| CPTPP vs. RCEP | Even for the same HS code, the required CTC level or RVC threshold may differ | PSR tables, tariff schedules, and origin rule texts for each agreement | Being able to declare the goods as originating under one agreement does not guarantee the same conclusion under the other |
| Bilateral EPAs vs. Regional Agreements | Cumulation systems, certification methods, and how PSRs are described may differ | Agreement texts, product-specific rules, and certification method documents of the relevant EPA | Reconfirm PSRs for each agreement used |
| Textile Products | The required stage at which domestic processing applies—yarn, fabric, cutting, sewing—may differ | Process charts, material declarations, origin documents for fabric and yarn, product-specific notes | Confirm whether sewing alone suffices or if processing must start from the yarn or fabric stage |
| Chemicals and Processed Food Products | Not only CTC but specific chemical reactions or processing steps may be required | Manufacturing process charts, ingredient lists, reaction records, product-specific notes | Check not only the process names but also the actual operations performed |
| Declaring the Same Product under Multiple Agreements | Each agreement may use different standards, certification methods, and document retention requirements | Agreement-specific PSRs, certificates, self-declaration documents, costing records | Do not apply past determinations from one agreement automatically to another |
Practical Workflow for Verifying Product-Specific Rules of Origin
- Confirm the applicable EPA, FTA, CPTPP, RCEP, or other relevant trade agreements.
- Verify the HS code of the cargo in question.
- Check whether preferential tariff rates apply to the cargo.
- Identify the relevant product-specific rules of origin.
- Determine which criteria apply: CTC (Change in Tariff Classification), RVC (Regional Value Content), or processing requirements.
- If multiple criteria are available, select the one that best fits the actual manufacturing process.
- Confirm whether cumulation provisions can be utilized.
- Assess whether the de minimis rule can be applied.
- Verify compliance with shipment criteria and direct shipment requirements.
- Confirm the origin certification method to be used.
- Prepare the necessary documents, such as certificates of origin, origin declarations, or origin declaration statements.
- Retain supporting documents to substantiate the origin determination.
Checklist for Decision Points
Product-Specific Rules of Origin should not be checked only immediately before import declaration. They must be managed throughout the entire process, from the start of the transaction to post-clearance customs verification.
| Decision Point | Counterpart to Confirm With | Items to Confirm | Actions if Issues Arise |
|---|---|---|---|
| At Transaction Initiation | Importer, Exporter, Customs Broker | Applicable EPA/FTA, target countries, target products, availability of preferential tariff rates | If agreements or target products are unclear, first confirm tariff rates and agreements |
| When Confirming HS Codes | Importer, Exporter, Customs Broker | HS codes of subject cargo, basis for classification, HS code version under agreement | If classification is questionable, consider adding documents, consulting experts, or requesting advance rulings |
| When Confirming PSRs | Exporter, Importer, Origin Compliance Officer | CTC, RVC, processing criteria, options, and exceptions defined for applicable HS codes | If there is a misinterpretation of criteria, review agreement text, notes, and product-specific notes |
| When Determining Origin | Exporter, Producer, Importer | Material HS codes, material origin, RVC calculation, processing details, cumulation, de minimis rules | If supporting evidence is insufficient, suspend preferential use and prioritize document acquisition |
| When Preparing Certificates | Exporter, Importer, Producer, Issuing Authority | Consistency of certificate of origin, origin declaration, origin declaration statement, and supporting documents | If discrepancies exist between certificate and supporting documents, correct or verify before declaration |
| When Arranging Transport | Exporter, Importer, Freight Forwarder | Shipment criteria, direct shipment, third-country transit, transshipment, transport documents | For third-country transit, confirm whether through B/L or bonded storage documents can be obtained |
| During Customs Post-Clearance Verification | Importer, Exporter, Producer | Evidence supporting PSR compliance, materials, processing, costs, shipment criteria, document retention | Obtain missing documents and confirm any potential impact on prior declarations as necessary |
Key Documents
The main documents important for verifying product-specific rules of origin are as follows.
| Document | Purpose of Verification | Main Holders | Notes |
|---|---|---|---|
| HS Code Reference Documents | To identify the target product and applicable PSR | Importer, Exporter, Customs Broker | Incorrect HS codes lead to incorrect PSR identification |
| Product-Specific Rules of Origin Reference Materials | To confirm which origin criteria apply | Importer, Exporter, Origin Compliance Staff | Rules vary by agreement |
| Invoice and Packing List | To verify cargo details, price, quantity, and trade terms | Exporter, Importer | Do not judge HS codes by product name alone |
| Raw Material Lists, Parts Lists, Material Specifications | To confirm materials used and non-originating materials | Producer, Exporter | Check HS code and origin status for each material |
| Material HS Code Documents | To verify compliance with CTC | Producer, Exporter, Supplier | Compare HS codes of finished goods and materials |
| Manufacturing Process Description | To explain processing criteria and actual production | Producer, Exporter | Must explain not only process names but also work details |
| RVC Calculation Documents | To demonstrate compliance with value-added criteria | Producer, Exporter, Importer | Check consistency of FOB price, material costs, and cost data |
| Supplier Certificates | To verify material origin and values | Supplier, Producer, Exporter | Important when using cumulation provisions |
| Calculation Basis Documents for Using De Minimis Rules | To confirm non-originating materials within allowable limits | Producer, Exporter, Importer | Check applicable products, materials, limits, and calculation methods |
| Certificate of Origin and Origin Declaration | To declare goods as originating products | Exporter, Importer, Producer, Issuing Authorities | Check consistency between certificate and supporting documentation |
| B/L, Sea Waybill, Air Waybill | To verify transport routes and shipment criteria | Freight Forwarder, Shipping Line, Airline, Importer | Additional documents may be required for transshipment through third countries |
| Documents for Customs Verification Retention | To explain origin in post-clearance audits | Importer, Exporter, Producer | Documents should be retained in a state ready for submission after declaration |
Scope of Freight Forwarders' Involvement
Freight forwarders are not responsible for determining item-specific rules of origin themselves.
Judging PSRs requires information such as HS codes, manufacturing processes, raw materials, cost calculations, and supplier details. This information should be managed by importers, exporters, and producers.
Meanwhile, freight forwarders are positioned to verify the consistency of documents like invoices, packing lists, Bills of Lading, Sea Waybills, and Arrival Notices, as well as to organize transport documents related to shipment criteria.
What Freight Forwarders Can Support and Should Not Conclude
| Item | What Freight Forwarders Can Support | What Freight Forwarders Should Not Conclude | Practical Response |
|---|---|---|---|
| Document Consistency | Check consistency of Invoice, Packing List, B/L, and Sea Waybill | Final judgment on whether Product-Specific Rules (PSR) are fulfilled | If inconsistencies arise, prompt exporter, importer, or customs broker for confirmation |
| Transportation Route | Organize information on direct shipments, third-country transits, transshipments, and intermediate points | Legal judgment on whether shipment criteria are met | Confirm availability of through B/L, transit documents, and bonded warehouse records |
| Guidance on Required Documents | Verify presence of certificates of origin, origin declarations, and transport documents | Guaranteeing adequacy of supporting origin documents | Organize presence/absence of required documents and leave origin determination to the cargo owner |
| Facilitating Confirmation with Cargo Owner | Encourage exporter, importer, and producer to verify HS codes, PSR, and material data | Origin determination based on manufacturing process and cost information | Clearly identify parties and documents to be confirmed and provide guidance accordingly |
| Preparation for Customs Verification | Organize transport documents and shipment-related materials | Guaranteeing fulfillment of CTC, RVC, and processing criteria | Arrange transport-related documents and have origin documents supplemented by exporter or producer |
Common Issues in Product-Specific Rules of Origin
| Situation | Issue | What Should Be Checked | Practical Response |
|---|---|---|---|
| Failure to Meet CTC | Parts and finished goods remain classified under the same HS code, failing to meet the tariff classification change criteria | HS code of materials, HS code of finished goods, applicability of de minimis rule | If CTC alone cannot explain, verify whether de minimis or alternative criteria can be applied |
| Cases Explained by RVC | CTC criteria are not met, but origin can potentially be established using value-added criteria | FOB price, material costs, cost data, RVC calculation sheets | Retain calculation basis and confirm compliance with the RVC requirements under the agreement |
| Processing Criterion | For textile products, confirm which stage—yarn, fabric, cutting, or sewing—requires regional processing | Process flow charts, production records, subcontracting documentation | Verify not only process names but also the actual processing details and countries where processing was conducted |
| Differences Among Agreements | Under RCEP, the product may qualify as originating, but a different PSR may apply under CPTPP | PSR, certification methods, and cumulation systems applicable to each agreement | Reconfirm the PSR for each agreement used |
| Cumulation System | Use of originating materials produced in other contracting countries to determine the origin of the final product | Origin documentation for the materials themselves, supplier certificates | Confirm that materials are not only from contracting countries but also qualify as originating materials under the agreement |
| De Minimis Provision | Some non-originating materials do not meet the CTC; confirm allowance within agreement tolerance limits | Material costs, weights, excluded items, calculation basis | Check the limits, applicable items, and calculation methods for each agreement |
| Lack of Compliance with Shipment Criteria | PSR are satisfied, but documents explaining bonded storage or non-processing during transit through a third country are insufficient | B/L, transit documentation, bonded storage documents, transshipment records | Verify transport route and shipment criteria documents before shipment |
| Customs Post-Verification | Determined compliance with PSR at declaration, but unable to submit material lists or process charts later | Complete set of retained documents, determination charts, material lists, process charts, cost data | Retain all relevant documents from the declaration stage onward to prepare for post-verification |
Application Scenarios of the System
Scenario 1: Considering Use of the De Minimis Rule When CTC Is Not Met
Sometimes, when comparing the HS code of the finished product with that of certain non-originating materials, it is found that some materials do not meet the required tariff classification changes under the product-specific rules of origin.
In such cases, the use of preferential tariff rates should not be immediately abandoned. Instead, whether the de minimis rule can be applied under the relevant agreement should be verified. However, the applicability of the de minimis rule varies depending on the agreement, product, material, calculation method, and maximum allowable percentage.
In practice, the value or weight of non-originating materials, the presence of excluded items, applicable agreement limits, and calculation documentation are reviewed to determine if the de minimis rule can explain origin compliance. If not, alternative criteria such as RVC should also be considered.
Scenario 2: Differences in PSRs for the Same HS Code between CPTPP and RCEP
When exporting or importing the same finished product to multiple countries, it may qualify as originating under the CPTPP but require different criteria under RCEP.
Even with the same HS code, each agreement may have differing CTC thresholds, RVC requirements, processing criteria, cumulation provisions, and certification methods. A determination of origin under one agreement does not guarantee the same conclusion under another.
In practice, it is important first to identify which agreement applies and then confirm its specific PSRs. When declaring under multiple agreements, managing separate determination tables, supporting documents, and certification procedures for each agreement is essential.
Scenario 3: Processing Criteria Issues in Textile Products
For textiles, simply completing final sewing within the treaty country does not always suffice to qualify the goods as originating.
Product-specific rules of origin for textiles may require proof of processing from certain stages such as yarn, fabric, cutting, or sewing within the designated territory. It is necessary to confirm whether sewing alone is adequate or if origin at the yarn or fabric stage is required.
In such cases, reviewing material lists, origin documentation for yarn and fabric, processing flowcharts, production records, and subcontracting documentation is essential. It is necessary to clearly explain not only the process names but also the actual countries where each process was performed.
Scenario 4: Explaining Origin through RVC but Lacking Cost Documentation
For products where origin is difficult to establish through CTC, sufficient value addition within the treaty area may allow origin to be certified via RVC.
However, using RVC requires documentation such as FOB price, value of non-originating materials, value of originating materials, manufacturing costs, calculation formulas, and supplier data. Without maintaining calculation documentation, origin cannot be explained during customs verification.
In practice, before choosing RVC, it should be confirmed whether the necessary cost data can be obtained and preserved. It is also important to check whether sales price data matches cost data used for origin determination and can be managed internally.
Scenario 5: PSRs Are Met but Insufficient Transit Documentation
Even if goods meet PSRs, if transportation via third countries cannot be documented to prove no processing or alteration occurred, this may affect preferential tariff benefits.
For example, if transshipment or storage occurs in a third country, documents such as through Bills of Lading, transit records, bonded warehouse documentation, and transshipment logs may be required. While PSR determination and transport route confirmation are separate issues, both are important for applying preferential tariff rates.
In practice, transportation routes should be confirmed before shipment. When third-country transit is involved, the ability to secure necessary transit documentation should be verified. Managing PSR supporting documents and transportation documentation together is recommended for security.
Practical Checklist
When verifying product-specific rules of origin, please confirm the following points:
- Whether the applicable EPA or FTA has been identified
- Whether the HS code for the cargo has been confirmed
- Whether documentation supporting the HS code has been retained
- Whether preferential tariff rates apply to the cargo
- Whether the relevant product-specific rules of origin have been checked
- Which criteria—CTC, RVC, or processing stage—are specified
- Whether the differences among sole conditions, alternative conditions, cumulative conditions, exceptions, and special provisions have been confirmed
- If multiple criteria are available, whether the selected criteria can be supported with documentation
- Whether HS codes and origin status have been verified for each material
- If using RVC, whether cost data and calculation sheets have been retained
- If using processing criteria, whether process charts and manufacturing records have been retained
- If applying cumulation, whether origin documentation for the materials themselves has been checked
- If using de minimis rules, whether eligibility and calculation basis have been confirmed
- In cases of transit via a third country, whether shipment criteria have been verified
- Whether all supporting documents are retained in preparation for customs verification
Summary
Product-specific rules of origin are origin determination criteria established for each HS code and serve as the core reference for utilizing preferential tariff rates under EPA, FTA, CPTPP, and RCEP agreements.
In practice, it is essential first to accurately confirm the HS code, then verify the applicable PSR, and organize which criteria—CTC, RVC, or processing standard—must be met.
PSRs may specify single conditions, optional conditions, multiple conditions, or conditions with exceptions, and their content can vary by agreement.
When multiple criteria can be chosen, it is important not simply to select the most advantageous one but to explain using the criteria that best align with your company’s manufacturing actualities and available documentation.
Product-specific rules of origin are the starting point for origin determination, and to prepare for customs verification, it is necessary to manage HS codes, materials, processes, costs, certification methods, and shipment criteria as an integrated whole.
