This study analyzes general rules of origin, product specific rules and origin implementation procedures, which are included in the areas of rules of origin prescribed in Korea-China FTA. According to the result of the study, rules of origin of Korea-...
This study analyzes general rules of origin, product specific rules and origin implementation procedures, which are included in the areas of rules of origin prescribed in Korea-China FTA. According to the result of the study, rules of origin of Korea-China FTA are not much different from those of other agreements but some articles and individual commodities show distinctive features. One of the characteristics is that the area to determine originating goods is limited to the territory of a Party so that the accumulation of wholly obtained goods is not allowed. Also, more items produced in Kaesung Industrial Complex are recognized as originating goods under Korea-China FTA, compared to other agreements. Therefore, South Korean companies are expected to be benefited from the agreement. In terms of the calculation of regional value content, the build-down method alone is allowed and non-qualifying operation(minimal operations or process) that does not recognize the country of origin adopts positive system to prevent customs administrations from interpreting the rules arbitrarily. The De Minimis rule for textile products which is mostly applied as a quantity standard is widened so that the rule can be applied as a price but the principle of direct transport is strict compared to other agreements. In particular, temporarily stored products in the third country can be stored for only up to 3 months and supporting documents are also required. Under the circumstances, it is expected to be hard to apply preferential tariff treatment to transit shipments via Hong Kong. In the case of product specific rules set up to 5,205 sub-heading of Harmonized System, the standard of wholly obtained goods is applied to basic agricultural and marine products while change in tariff criterion(Chapter, Heading and Sub-Heading) is used for processed or industrial products. Regional value contents(40~60%), alternative rule(CC ․ CTH ․ CTSH or RVC) and combination rule(CTH and RVC) are used for some items.
Origin implementation procedures are similar to those prescribed in other FTAs. However, in the case of China, it is necessary to express ones will for preferential tariff application after the acceptance of import declaration. Also, the period of keeping document for import is different: three years in China and five years in Korea. The price of goods that can be exempted from the certificate of origin is 700 dollars, respectively low compared to those in other agreements.
However, the establishment of Electronic Origin Data Exchange System between the two countries is prescribed in the agreement. That seems to work to the advantage of ex/importing companies in both countries according to the analysis since if the system is established, the companies can omit the submission of the certificate of origin when preferential tariff is applied