The criteria in the rules of origin sets out specific and detailed conditions on the level of processing that an imported item from a non FTA partner country must undergo in the FTA partner country (or other eligible countries in the region) before being eligible to be called an originating product of a FTA partner country.
Some of the common criteria used are –
- Change in tariff classification (this could be at the tariff chapter, tariff heading or tariff sub heading level)
- Regional value addition.
- Substantial manufacturing or processing by excluding some minimal operations.
Rules of origin (ROO) are the criteria needed to determine the of a product for purposes of international trade. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.
Rules of origin are used-
To implement measures and instruments of commercial policy such as antidumping duties and safeguard measures.
To determine whether imported products shall receive most-favoured-nation (MFN) treatment or preferential treatment
For the purpose of trade statistics; • for the application of labelling and marking requirements; and • for government procurement.