Definition
Rules of Origin are the criteria used to determine the national source of a product. They are essential for applying trade agreement preferences, anti-dumping duties, quotas, and trade statistics.
Why it matters for traders
Without meeting the rules of origin, you cannot claim preferential duty rates under trade agreements — even if you have a certificate of origin. The rules determine whether your product "qualifies" for the agreement's benefits.
Main origin criteria
- Wholly Obtained — Goods entirely produced in one country (e.g., minerals mined, crops grown)
- Substantial Transformation — Goods that undergo a fundamental change in form, nature, or character
- Change in Tariff Classification (CTC) — The finished product has a different HS code than its inputs
- Value-Added Rule — A minimum percentage of the product's value must originate in the country
- Specific Process Rule — A specific manufacturing process must occur in the country
Operational example
A garment manufacturer in India imports fabric from China and makes shirts for export to the UAE under CEPA. The rules of origin require that the fabric undergo a change in tariff classification (from fabric HS 5208 to garment HS 6109) in India. Since the manufacturing process in India changes the HS code, the shirts qualify for CEPA preferential duty rates.