The CEPT only applies to goods originating within ASEAN. The general rule is that local ASEAN content must be at least 40% of the FOB value of the good. The local ASEAN content can be cumulative, that is, the value of inputs from various ASEAN members can be combined to meet the 40% requirement. The following formula is applied:
( Raw material cost
+ Direct labour cost
+ Direct overhead cost
+ Profit
+ Inland transport cost )
x 100 % FOB value
However, for certain products, special rules apply:
Change in Chapter Rule for Wheat Flour;
Change of Tariff Sub-Heading for Wood-Based Products;
Change in Tariff Classification for Certain Aluminum and Articles thereof.
The exporter must obtain a “Form D” certification from its national government attesting that the good has met the 40% requirement. The Form D must be presented to the customs authority of the importing government to qualify for the CEPT rate. Difficulties have sometimes arisen regarding the evidentiary proof to support the claim, as well as how ASEAN national customs authorities can verify Form D submissions. These difficulties arise because each ASEAN national customs authority interprets and implements the Form D requirements without much co-ordination.