Chapter 2: Rules of origin Section 1: Rules of origin
Article ORIG.1: Objective
The objective of this Chapter is to lay down the provisions determining the origin of goods for the purpose of application of preferential tariff treatment under this Agreement, and setting out related origin procedures.
Article ORIG.2: Definitions For the purposes of this Chapter, the following definitions apply:
(a) “classification” means the classification of a product or material under a particular chapter, heading, or sub-heading of the Harmonised System;
(b) “consignment” means products which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice;
(c) “exporter” means a person, located in a Party, who, in accordance with the requirements laid down in the laws and regulations of that Party, exports or produces the originating product and makes out a statement on origin;
(d) “importer” means a person who imports the originating product and claims preferential tariff treatment for it;
(e) “material” means any substance used in the production of a product, including any components, ingredients, raw materials, or parts;
(f) “non-originating material” means a material which does not qualify as originating under this Chapter, including a material whose originating status cannot be determined;
(g) “product” means the product resulting from the production, even if it is intended for use as a material in the production of another product;
(h) “production” means any kind of working or processing including assembly.
Article ORIG.3: General requirements
1. For the purposes of applying the preferential tariff treatment by a Party (the EU or the UK respectively) to the originating good of the other Party (the place (the UK or the EU as the case may be) of export) in accordance with this Agreement, provided that the products satisfy all other applicable requirements of this Chapter, the following products shall be considered as originating in the other Party (the place (the UK or the EU) of export):
(a) products wholly obtained in that Party (the place of export) within the meaning of Article ORIG.5 [Wholly obtained products];
(b) products produced in that Party (the place of export) exclusively from originating materials in that Party; and
(c) products produced in that Party (the place of export) incorporating non-originating materials provided they satisfy the requirements set out in ANNEX ORIG-2 [Product-specific rules of origin].
2. If a product has acquired originating status, the non-originating materials used in the production of that product shall not be considered as non-originating when that product is incorporated as a material in another product.
3. The acquisition of originating status shall be fulfilled without interruption in the United Kingdom or the Union (the EU).
Article ORIG.4: Cumulation of origin
1. A product originating in a Party (the place (the EU or the UK) of import) shall be considered as originating in the other Party (the place (the UK or the EU) of export) if that product is used as a material in the production of another product in that other Party (the place (the UK or the EU) of export).
2. Production carried out in a Party (the place (the EU or the UK) of import) on a non-originating material may be taken into account for the purpose of determining whether a product is originating in the other Party (the place (the UK or the EU) of export).
3. Paragraphs 1 and 2 do not apply if the production carried out in the other Party (the place (the EU or the UK) of import) does not go beyond the operations referred to in Article ORIG.7 [Insufficient production].
4. In order for an exporter to complete the statement on origin referred to in point (a) of Article ORIG.18(2) [Claim for preferential tariff treatment] for a product referred to in paragraph 2 of this Article, the exporter shall obtain from its supplier a supplier’s declaration as provided for in Annex ORIG-3 [Supplier’s declaration] or an equivalent document that contains the same information describing the non-originating materials concerned in sufficient detail to enable them to be identified.
Article ORIG.5: Wholly obtained products
1. The following products shall be considered as wholly obtained in a Party (the place (the UK or the EU) of export) :
(a) mineral products extracted or taken from its soil or from its seabed;
(b) plants and vegetable products grown or harvested there;
(c) live animals born and raised there;
(d) products obtained from live animals raised there;
(e) products obtained from slaughtered animals born and raised there;
(f) products obtained by hunting or fishing conducted there;
(g) products obtained from aquaculture there if aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants are born or raised from seed stock such as eggs, roes, fry, fingerlings, larvae, parr, smolts or other immature fish at a post-larval stage by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding or protection from predators;
(h) products of sea fishing and other products taken from the sea outside any territorial sea by a vessel of a Party;
(i) products made aboard of a factory ship of a Party exclusively from products referred to in point (h);
(j) products extracted from the seabed or subsoil outside any territorial sea provided that they have rights to exploit or work such seabed or subsoil;
(k) waste and scrap resulting from production operations conducted there;
(l) waste and scrap derived from used products collected there, provided that those products are fit only for the recovery of raw materials;
(m) products produced there exclusively from the products specified in points (a) to (l).
2. The terms “vessel of a Party” and “factory ship of a Party” in points (h) and (i) of paragraph 1 mean a vessel and factory ship which:
(a) is registered in a Member State or in the United Kingdom;
(b) sails under the flag of a Member State or of the United Kingdom; and
(c) meets one of the following conditions:
(i) it is at least 50% owned by nationals of a Member State or of the United Kingdom; or
(ii) it is owned by legal persons which each:
(A) have their head office and main place of business in the Union or the United Kingdom; and
(B) are at least 50% owned by public entities, nationals or legal persons of a Member State or the United Kingdom.
Article ORIG.6: Tolerances
1. If a product does not satisfy the requirements set out in ANNEX ORIG-2 [Product-specific rules of origin] due to the use of a non-originating material in its production, that product shall nevertheless be considered as originating in a Party (the place (the UK or the EU) of export), provided that:
(a) the total weight of non-originating materials used in the production of products classified under Chapters 2 and 4 to 24 of the Harmonised System, other than processed fishery products of Chapter 16, does not exceed 15% of the weight of the product;
(b) the total value of non-originating materials for all other products, except for products classified under Chapters 50 to 63 of the Harmonised System does not exceed 10% of the ex-works price of the product; or
(c) for a product classified under Chapters 50 to 63 of the Harmonised System, the tolerances set out in Note 7 and 8 of ANNEX ORIG-1 [Introductory Notes to the Product-Specific Rules of Origin] apply.
2. Paragraph 1 does not apply if the value or weight of non-originating materials used in the production of a product exceeds any of the percentages for the maximum value or weight of non- originating materials as specified in the requirements set out in ANNEX ORIG-2 [Product-specific rules of origin].
3. Paragraph 1 of this Article does not apply to products wholly obtained in a Party (the place (the UK or the EU) of export) within the meaning of Article ORIG.5 [Wholly obtained products]. If ANNEX ORIG-2 [Product-specific rules of origin] requires that the materials used in the production of a product are wholly obtained, paragraphs 1 and 2 of this Article apply.
Article ORIG.7: Insufficient Production
1. Notwithstanding point (c) of Article ORIG.3(1) [General requirements], a product shall not be considered as originating in a Party(the place (the UK or the EU) of export) if the production of the product in a Party (the place (the UK or the EU) of export) consists only of one or more of the following operations conducted on non-originating materials:
(a) preserving operations such as drying, freezing, keeping in brine and other similar operations where their sole purpose is to ensure that the products remain in good condition during transport and storage;2
(b) breaking-up or assembly of packages;
(c) washing, cleaning; removal of dust, oxide, oil, paint or other coverings;
(d) ironing or pressing of textiles and textile articles;
(e) simple painting and polishing operations;
(f) husking and partial or total milling of rice; polishing and glazing of cereals and rice; bleaching of rice;
(g) operations to colour or flavour sugar or form sugar lumps; partial or total milling of sugar in solid form;
(h) peeling, stoning and shelling, of fruits, nuts and vegetables;
(i) sharpening, simple grinding or simple cutting;
(j) sifting, screening, sorting, classifying, grading, matching including the making-up of sets of articles;
(k) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;
(l) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;
2 Preserving operations such as chilling, freezing or ventilating are considered insufficient within the meaning of point (a), whereas operations such as pickling, drying or smoking that are intended to give a product special or different characteristics are not considered insufficient.
(m) simple mixing of products, whether or not of different kinds; mixing of sugar with any material;
(n) simple addition of water or dilution with water or another substance that does not materially alter the characteristics of the product, or dehydration or denaturation of products;
(o) simple assembly of parts of articles to constitute a complete article or disassembly of products into parts;
(p) slaughter of animals.
2. For the purposes of paragraph 1, operations shall be considered simple if neither special skills nor machines, apparatus or equipment especially produced or installed are needed for carrying out those operations.
Article ORIG.8: Unit of qualification
1. For the purposes of this Chapter, the unit of qualification shall be the particular product which is considered as the basic unit when classifying the product under the Harmonised System.
2. For a consignment consisting of a number of identical products classified under the same heading of the Harmonised System, each individual product shall be taken into account when applying the provisions of this Chapter.
Article ORIG.9: Packing materials and containers for shipment
Packing materials and containers for shipment that are used to protect a product during transportation shall be disregarded in determining whether a product is originating.
Article ORIG.10: Packaging materials and containers for retail sale
Packaging materials and containers in which the product is packaged for retail sale, if classified with the product, shall be disregarded in determining the origin of the product, except for the purposes of calculating the value of non-originating materials if the product is subject to a maximum value of non- originating materials in accordance with ANNEX ORIG-2 [Product-specific rules of origin].
Article ORIG.11: Accessories, spare parts and tools
1. Accessories, spare parts, tools and instructional or other information materials shall be regarded as one product with the piece of equipment, machine, apparatus or vehicle in question if they:
(a) are classified and delivered with, but not invoiced separately from, the product; and
(b) are of the types, quantities and value which are customary for that product.
2. Accessories, spare parts, tools and instructional or other information materials referred to in paragraph 1 shall be disregarded in determining the origin of the product except for the purposes of calculating the value of non-originating materials if a product is subject to a maximum value of non- originating materials as set out in ANNEX ORIG-2 [Product-specific rules of origin].
Article ORIG.12: Sets
Sets, as defined in General Rule 3 for the Interpretation of the Harmonised System, shall be considered as originating in a Party if all of their components are originating. If a set is composed of originating and non-originating components, the set as a whole shall be considered as originating in a Party, if the value of the non-originating components does not exceed 15 % of the ex-works price of the set.
Article ORIG.13: Neutral elements
In order to determine whether a product is originating in a Party (the place (the UK or the EU) of export), it shall not be necessary to determine the origin of the following elements, which might be used in its production:
(a) fuel, energy, catalysts and solvents;
(b) plant, equipment, spare parts and materials used in the maintenance of equipment and buildings;
(c) machines, tools, dies and moulds;
(d) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings;
(e) gloves, glasses, footwear, clothing, safety equipment and supplies;
(f) equipment, devices and supplies used for testing or inspecting the product; and
(g) other materials used in the production which are not incorporated into the product nor intended to be incorporated into the final composition of the product.
Article ORIG.14: Accounting segregation
1. Originating and non-originating fungible materials or “fungible products” shall be physically segregated during storage in order to maintain their originating and non-originating status.
2. For the purpose of paragraph 1, ‘fungible materials’ or “fungible products” means materials or products that are of the same kind and commercial quality, with the same technical and physical characteristics, and that cannot be distinguished from one another for origin purposes.
3. Notwithstanding paragraph 1, originating and non-originating fungible materials may be used in the production of a product without being physically segregated during storage if an accounting segregation method is used.
4. Notwithstanding paragraph 1, originating and non-originating fungible products classified in Chapter 10, 15, 27, 28, 29, heading 32.01 to 32.07, or heading 39.01 to 39.14 of the Harmonised System may be stored in a Party before exportation to the other Party without being physically segregated provided that an accounting segregation method is used.
5. The accounting segregation method referred to in paragraphs 3 and 4 shall be applied in conformity with a stock management method under accounting principles which are generally accepted in the Party.
6. The accounting segregation method shall be any method that ensures that at any time no more materials or products receive originating status than would be the case if the materials or products had been physically segregated.
7. A Party may require, under conditions set out in its laws or regulations, that the use of an accounting segregation method is subject to prior authorisation by the customs authorities of that Party. The customs authorities of the Party shall monitor the use of such authorisations and may withdraw an authorisation if the holder makes improper use of the accounting segregation method or fails to fulfil any of the other conditions laid down in this Chapter.
Article ORIG.15: Returned products
If a product originating in a Party exported from that Party to a third country returns to that Party, it shall be considered as a non-originating product unless it can be demonstrated to the satisfaction of the customs authority of that Party that the returning product:
(a) is the same as that exported; and
(b) has not undergone any operation other than what was necessary to preserve it in good condition while in that third country or while being exported.
Article ORIG.16: Non-alteration
1. An originating product declared for home use in the importing Party shall not, after exportation and prior to being declared for home use, have been altered, transformed in any way or subjected to operations other than to preserve it in good condition or than adding or affixing marks, labels, seals or any other documentation to ensure compliance with specific domestic requirements of the importing Party.
2. The storage or exhibition of a product may take place in a third country, provided that the product remains under customs supervision in that third country.
3. The splitting of consignments may take place in a third country if it is carried out by the exporter or under the responsibility of the exporter, provided that the consignments remain under customs supervision in that third country.
4. In the case of doubt as to whether the requirements provided for in paragraphs 1 to 3 are complied with, the customs authority of the importing Party may request the importer to provide evidence of compliance with those requirements, which may be given by any means, including contractual transport documents such as bills of lading or factual or concrete evidence based on the marking or numbering of packages or any evidence related to the product itself.
Article ORIG.17: Review of drawback of, or exemption from, customs duties
Not earlier than 2 years from the entry into force of this Agreement, at the request of either Party, the Trade Specialised Committee on Customs Cooperation and Rules of Origin shall review the Parties’ respective duty drawback and inward-processing schemes. For this purpose, at the request of a Party, no later than 60 days from that request, the other Party shall provide the requesting Party with available information and detailed statistics covering the period from the entry into force of this Agreement, or the previous 5 years if that is shorter, on the operation of its duty-drawback and inward-processing scheme. In the light of this review, the Trade Specialised Committee on Customs Cooperation and Rules of Origin may make recommendations to the Partnership Council for the amendment of the provisions of this Chapter and its Annexes, with a view to introducing limitations or restrictions with respect to drawback of or exemption from customs duties.