Originating Goods
A good shall qualify as an originating good of a Party if :
(a) it is wholly obtained or produced entirely in the Party as provided for in Article 25;
(b) the good has a regional value content (RVC), of not less than forty (40) per cent, and the final process of production has been performed in the Party; or
(c) all non-originating materials used in the production of the good have undergone a change in tariff classification (hereinafter referred to as “CTC”) at the 4-digit level (i.e. a change in tariff heading) of Harmonized System.
Calculation of Regional Value Content
For the purposes of calculating the RVC of a good, the following formula shall be used:
RVC = FOB - VNM
-----------------
FOB
x 100%
where
(a) “FOB” is the free-on-board value of a good, inclusive of the cost of transport from the producer to the port or site of final shipment abroad;
(b) “RVC” is the RVC of a good, expressed as a percentage; and
(c) “VNM” is the value of non-originating materials used in the production of a good.
Accumulation
Originating materials of a Party used in the production of a good in another Party shall be considered as originating materials of that Party where the working or processing of the good has taken place.
Product Specific Rule
A good subject to product specific rules shall qualify as an originating good if it satisfies the applicable product specific rules set out in Annex 2.
The categories are as follows in addition to the wholly obtained and RVC explained above:
(i) “CC” denotes a change to the chapter, heading or subheading from any other chapter. This means that all non-originating materials used in the production of the good have undergone a change in tariff classification at the 2-digit level (i.e. a change in chapter) of Harmonised System (HS);
(ii) “CTH” denotes a change to the chapter, heading or subheading from any other heading. This means that all non-originating materials used in the production of the good have undergone a change in tariff classification at the 4-digit level (i.e. a change in heading) of HS;
(iii) “CTSH” denotes a change to the chapter, heading or subheading from any other subheading. This means that all non-originating materials used in the production of the good have undergone a change in tariff classification at the 6-digit level (i.e. a change in subheading) of HS;
Where a product specific rule provides a choice of rules from a RVC-based rule of origin, a CTC-based rule of origin, a specific manufacturing or processing operation, or a combination of any of these, each Party shall permit the exporter of the good to decide which rule to use in determining whether the good qualifies as an originating good of the Party.
Information Technology Products
With the exception where the former good is classified under subheadings 8541.10 through 8542.90, a good which is covered by Attachment A or B of the Ministerial Declaration on Trade in Information Technology Products and is used as a material in the production of another good in a Party may be considered as an originating material of the Party.