basic-guide-to-exporting_Latest_eg_main_086196

Chapter 18Rules of Originfor FTAsIn this chapter . . .• The important role of Rules of Origin• Qualifying your goods• Product-specific and percentage-based rules• Doing the mathOne of the key ways to take advantage of the Free Trade Agreement (FTA) is to understand theRules of Origin (ROOs). Put simply, to qualify for the reduced-duty benefit, the product exportedmust originate from an FTA party or must contain a specified percentage of U.S. inputs andcomponents. Each FTA has its own Rules of Origin that describe how exported goods shipped to acountry or a region may qualify for duty-free or reduced-duty benefits. Because the ROOs are FTAspecificand product-specific, they need to be followed carefully.The next section presents a general overview of the steps that must be taken before a goodcan be qualified for an FTA benefit. The different types of ROOs are examined, and the specificways products may qualify for FTAs are explained. These include the concept of substantialtransformation and product-specific and percentage-based formulas used in qualifying productsfor FTAs. How the ROOs are applied to specific FTAs is explained, and the ROOs for textiles,chemicals, and agricultural products, as well as the de minimis provision, fungible goods, andshipping spare parts and accessories, are all discussed.To receive preferential treatment under an FTA, the exported good:1. Must be made in the FTA territory2. Must meet the appropriate Rule of Origin pertaining to specific products and the specific FTA3. Must be documented as originating via appropriate certifications or information provided tothe importer or its representative brokerEach FTA contains a specific chapter on Rules of Origin Procedures and lists all product-specificROOs by Harmonized System (HS) numbers. The final texts of all FTAs can be found at1.usa.gov/1ph6Np9.U.S. Commercial Service • A Basic Guide to Exporting201