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Rule of Origin

2011/05/23 

PREFERENTIAL ROO

WHAT  IS  PREFERENTIAL  ROO ?

Preferential rules of origin (ROO) is applicable to goods of specific countries and country group and is provided for within Thailand’s external trade agreements where Thailand extends preferential tariff rate to the specified countries and country groups.  
THAILAND’S PREFERENTIAL RULES OF ORIGIN

As a general guide, for goods to be eligible for the tariff preferential, the goods must meet one of the following ROO criteria:
1.    Goods wholly obtained in the country or unmanufactured raw materials of the country : Essentially, these goods are the natural products of the country, e.g., plant products (fruits, vegetables, flowers, trees), animals, minerals and other naturally occurring substances extracted from the country’s soil, etc.
2.    Substantial Transformation : Substantial transformation is defined as a fundamental change in form, appearance or nature such that the goods existing after the change are new and different goods from those existing before the change.  Substantial transformation determines the country of origin of a product.  This occurs when, after the last substantial manufacturing or processing, the commodity has its essential character.

To determine exactly what is the last substantial transformation, three general rules are applied:
(a)    Change of tariff classification : It means the criteria according to which substantial transformation is deemed to have occurred when all the materials used in the production of a product are classified in a heading other than that of the producton. Change of tariff classification can be any level, though 4-digit level is the most common.
(b)    Value added-rule : It means the ex-factory cost of a finished product minus the Customs value of the materials imported from outside the contracting party and used in the process of production.
(c)    Manufacturing processing rule: Under the manufacturing process rule, the minimum transformation is described.

3.    Minimal Operations or Processes: Minimal operations or processes that do not, by themselves or in combination with each other, confer origin to a good are defined as follows:
(a)     operations or processes to ensure the preservation of goods in good condition for the purposes of transport and/or storage;
(b)     operations or processes to facilitate shipment or transportation; and
(c)     operations or processes that concern the packaging or presentation of goods for sale.
Although not exhaustive, examples of such ‘minimal operations or processes’ includes:
•    affixing of marks, labels or distinguishing signs on goods or their packages
•    application of grease, anti-rust paint or protective coating
•    chilling
•    cleaning or washing
•    crushing
•    dilution with water or any other aqueous solution
•    grouping of packages
•    husking, shelling or stoning
•    packing, unpacking, repacking or breaking bulk
•    preparation for sale and quality control inspections
•    pressing, labelling, ticketing
•    removing of damaged parts
•    salting
•    testing or calibration
•    sifting, screening or sorting
•    spreading out
•    ventilation or drying
The following countries and country groups have access to the preferential trade arrangements with Thailand. As long as the goods from these countries and country groups meet the preferential rules of origin, they are eligible for preferential tariff rates :
1.    CEPT Scheme for AFTA
2.    ASEAN-China
3.    ASEAN-Japan
4.    Thailand-Australia
5.    Thailand-India  
6.    Thailand-New Zealand
7.    Thailand-Japan

For further information: http://www.customsclinic.org/index.php?option=com_content&view=article&id=160&Itemid=207&lang=en

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