Microsoft Word cept afta roo rev endorsed 17 afta council doc

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(Endorsed by the 17

th

 AFTA Council) 

 

1

RULES OF ORIGIN FOR THE CEPT SCHEME FOR AFTA 

 

 

 

 

In determining the origin of products eligible for the CEPT Scheme under the Agreement 

on the CEPT, the following Rules shall be applied:  

 

RULE 1 Originating Products 

 

Products under the CEPT imported into the territory of a Member State from another 

Member State which are consigned directly within the meaning of Rules 5 hereof, shall be 

eligible for preferential concessions if they conform to the origin requirements under any one of 

the following conditions :  

 

(a) 

Products wholly produced or obtained in the exporting Member State as defined 

in Rule 2; or  

 

(b) 

Products not wholly produced or obtained in the exporting Member State, 

provided that the said products are eligible under Rule 3 or Rule 4.  

 

 

RULE 2 Wholly Produced or Obtained 

 

 

Within the meaning of Rule I (a), the following shall be considered as wholly produced 

or obtained in the exporting Member State:  

 

(a) 

Mineral products extracted from its soil, its water or its Scheme;  

 

(b) 

Agricultural products harvested there;  

 

(c) 

Animals born and raised there;  

 

(d) 

Products obtained from animals referred to in paragraph (c) above;  

 

(e) 

Products obtained by hunting or fishing conducted there;  

 

(f) 

Products of sea fishing and other marine products taken from the sea by its 

vessels;  

 

(g) 

Products processed and/or made on board its factory ships exclusively from 

products referred to in paragraph (f) above;  

 

(h) 

Used articles collected here, fit only for the recovery of raw materials;  

 

(i) 

Waste and scrap resulting from manufacturing operations conducted there; and  

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 AFTA Council) 

 

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(j) 

Goods produced there exclusively from the products referred to in paragraph (a) 

to (i) above.  

 

 

RULE 3 Not Wholly Produced or Obtained 

 

(a) 

(i) 

A product shall be deemed to be originating from ASEAN Member States, 

if at least 40% of its content originates from any Member States.  

 

(ii) Locally-procured materials produced by established licensed 

manufacturers, in compliance with domestic regulations, will be deemed 

to have fulfilled the CEPT origin requirement; locally-procured materials 

from other sources will be subjected to the CEPT origin test for the 

purpose of origin determination.  

 

(iii) 

Subject to sub-paragraph (i) above, for the purpose of implementing the 

provisions of Rule I (b), products worked on and processed as a result of 

which the total value of the materials, parts or produce originating from 

non-ASEAN countries or of undetermined origin used does not exceed 

60% of the FOB value of the product produced or obtained and the final 

process of the manufacture is performed within the territory of the 

exporting Member State.  

 

(b) 

The value of the non-originating materials, parts or produce shall be:  

 

 

(i) 

The CIF value at the time of importation of the products or importation 

can be proven; or  

 

 

 (ii) 

The 

earliest 

ascertained price paid for the products of undetermined origin 

in the territory of the Member State where the working or processing takes 

place.  

 

The formula for 40% ASEAN Content is as follows:  

 

Value of Imported 

Non-ASEAN Materials, 

Parts or Produce 

 

+ 

Value of  

Undetermined Origin 

Materials, Parts or  

Produce 

 

 

X  100%  

≤  60% 

FOB Price 

 

 

(c)  

The method of calculating local/ASEAN content is as set out in Annex A of this 

Rules. The principles to determine cost for ASEAN origin and the guidelines for 

costing methodologies in Annex B shall also be closely adhered to.  

 

 

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RULE 4 Cumulative Rule of Origin 

 

Products which comply with origin requirements provided for in Rule 1 and which are 

used in a Member State as inputs for a finished product eligible for preferential treatment in 

another Member States shall be considered as products originating in the Member State where 

working or processing of the finished product has taken place provided that the aggregate 

ASEAN content of the final product is not less than 40%.  

 

RULE 5 Direct Consignment 

 

The following shall be considered as consigned directly from the exporting Member State 

to the importing Member State:  

 

(a) 

If the products are transported passing through the territory of any other ASEAN 

country;  

 

(b) 

If the products are transported without passing through the territory of any other 

non-ASEAN country;  

 

(c) 

The products whose transport involves transit through one or more intermediate 

non-ASEAN countries with or without transshipment or temporary storage in 

such countries, provided that:  

 

(i) 

The transit entry is justified for geographical reason or by consideration 

related exclusively to transport requirements;  

 

(ii) 

The, products have not entered into trade or consumption there; and  

 

(iii) 

The products have not undergone any operation there other than unloading 

and reloading or any operation required to keep them in good condition.  

 

RULE 6 Treatment of Packing 

 

(a) 

Where for purposes of assessing customs duties a Member State treats products 

separately from their packing, it may also, in respect of its imports consigned 

from another Member State, determine separately the origin of such packing.  

 

(b) 

Where paragraph (a) above is not applied, packing shall be considered as forming 

a whole with the products and no part of any packing required for their transport 

or storage shall be considered as having been imported from outside the ASEAN 

region when determining the origin of the products as a whole.  

 

RULE 7 Certificate of Origin 

 

A claim that products shall be accepted as eligible for preferential concession shall be 

supported by a Certificate of Origin issued by a government authority designated by the 

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exporting Member State and notified to the other Member States in accordance with the 

Certification Procedures to be developed and approved by the Senior Economic Officials 

Meeting (SEOM).  

 

RULE 8 Review 

 

These rules may be reviewed as and when necessary upon request of a Member State and 

may be open to such modifications as may be agreed upon by the Council of Ministers. 

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(Endorsed by the 17

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 AFTA Council) 

 

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ANNEX A 

 

METHOD OF CALCULATION OF LOCAL/ASEAN CONTENT 

 

1. 

Member Countries shall adhere to only one method of calculating local/ASEAN content, 

i.e. whether it is the direct or indirect method, although Member Countries shall not be prevented 

from changing their method, if deemed necessary.  Any change in the calculation method shall 

be notified to the AFTA Council Meeting.  

 

2.  

FOB price shall be calculated as follows:  

 

a.  FOB Price = Ex-Factory Price + Other Costs 

 

b.  Other Costs in the calculation of the FOB price shall refer to the costs incurred in 

placing the goods in the ship for export, including but not limited to, domestic 

transport costs, storage and warehousing, port handling, brokerage fees, service 

charges, etc. 

 

3. 

Formula for ex-factory price:  

 

a.  Ex-Factory Price = Production Cost + Profit 

 

b.  Formula for production cost,  

 

i.  Production Cost =  Cost of Raw Materials + Labour Cost + Overhead 

Cost 

 

ii.  Raw Materials shall consist of:  

 

•  Cost of raw materials 

•  Freight and insurance 

 

iii.  Labour Cost shall include: 

 

•  Wages 

•  Remuneration 

•  Other employee benefits associated with the manufacturing process 

 

iv.  Overhead Costs, (non-exhaustive list) shall include, but not limited to: 

 

•  real property items associated with the production process (insurance, 

factory rent and leasing, depreciation on buildings, repair and 

maintenance, taxes, interests on mortgage) 

•  leasing of and interest payments for plant and equipment 

•  factory security 

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•  insurance (plant, equipment and materials used in the manufacture of 

the goods) 

•  utilities (energy, electricity, water and other utilities directly 

attributable to the production of the good) 

•  research, development, design and engineering 

•  dies, moulds, tooling and the depreciation, maintenance and repair of 

plant and equipment 

•  royalties or licenses (in connection with patented machines or 

processes used in the manufacture of the good or the right to 

manufacture the good) 

•  inspection and testing of materials and the goods 

•  storage and handling in the factory 

•  disposal of recyclable wastes  

 

•  cost elements in computing the value of raw materials, i.e. port and 

clearance charges and import duties paid for dutiable component 

 

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(Endorsed by the 17

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 AFTA Council) 

 

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ANNEX B 

 

PRINCIPLES AND GUIDELINES ON THE CEPT-AFTA RULES OF ORIGIN 

 

 

A. 

Principles to Determine Cost for ASEAN Origin 

 

i. 

Materiality – all cost material to the evaluation, assessment and determination of 

origin; 

 

ii. 

Consistency – costing allocation method should be consistent unless justified by 

commercial reality; 

 

iii. 

Reliability – costing information must be reliability and supported by appropriate 

information; 

 

iv. 

Relevance – costs must be allocated based on objective and quantifiable data; 

 

v. 

Accuracy – costing methodology should provide an accurate representation of the 

cost element in question; 

 

vi. 

Application of GAAP of the exporting country – costing information must be 

prepared based in accordance with the general accepted accounting principles and 

this includes the avoidance of double-counting of cost items; 

 

vii. 

Currency – updated costing information from existing accounting and costing 

records of companies should be used to calculate origin. 

 

 

B. 

Guidelines for Costing Methodologies  

 

i. 

Actual Costs – basis for actual costs should be defined by the company.  Actual 

costs should include all direct and indirect costs incurred in producing the 

product. 

 

ii. 

Projected and Budgeted Costs – projected costs may be used if it is justified. 

Companies should provide variance analysis and proof during the period origin is 

claimed to indicate accuracy of projections. 

 

iii. 

Standards Costs – the basis for standards costs should be indicated. Companies 

should provide evidence that the costs are used for accounting purposes.  

 

iv. 

Average/Moving Average Costs – average costs may be used if justified; the 

basis for calculating average costs, including time period, etc. should be 

highlighted.  Companies should provide variance analysis and proof during the 

period origin is claimed to indicate accuracy of average costs. 

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v. 

Fixed Costs – fixed costs should be apportioned according to sound cost 

accounting principles.  They should be a representative reflection of unit costs for 

the company in the particular period in question. The method for apportionment 

should be indicated.