RULES OF ORIGIN TRAINING MODULES

PART A. TUTORIAL

Module 6 - Specific Process of Production ROO

Table of Contents

Module 6 - Specific Process of Production ROO

• Topic 6 -1: Specific Process of Production ROO

• Topic 6 -2: Chemical Reaction ROO
• Topic 6 -3: Textile and Clothing Rules

This module comprises three topics which examine the Specific Process of Production ROO that
can be used to determine origin. This type of Product Specific Rule (PSR) can be used as an
alternative to the Regional Value Content (RVC) or Change in Tariff Classification (CTC) Rules of
Origin (ROO) or in some cases as an additional requirement to these ROO.

• Topic 1 explains the concept of Specific Process of Production ROO.

• Topic 2 explains the Specific Process of Production ROO called the Chemical Reaction
ROO. Also discussed in this Topic are minimal operations which do not qualify as a
Chemical Reaction ROO.
• Topic 3 explains the Specific Process of Production ROO called the ASEANAustralia-New
Zealand Free Trade Area (AANZFTA) Textile and Clothing ROO. The AANZFTA PSR Annex
contains Specific Process of Production ROO for Chapters 50 63 which relate to textiles,
clothing and made-up textile items. Specific Process of Production ROO are used for some
of these Chapters as in many cases a CTC or RVC ROO does not result in the required
substantial transformation being achieved. Explained in this topic are the ROO and
cumulation for Fabric, Clothing and Made-Up Textile Articles.

• Topic 6 -1: Specific Process of Production ROO

Specific Process of Production ROO require that the non-originating materialsundergo a specified
manufacturing or production process in an AANZFTA Party prior to being exported and claiming
preferential tariff treatment.

The Specific Process of Production ROO are written to state positively what process is required to
be carried out in the production of the good for it to be considered originating.

Under AANZFTA a relatively small number of products are required to meet a Specific Process of
Production ROO. Specific Process of Production ROO may also be used as an alternative to or in

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combination with an RVC or CTC ROO. The specific rules are detailed in Annex 2 to Chapter 3
(Rules of Origin) of the AANZFTA text.

Specific Process of Production ROO are simple to administer as manufacturers already have
knowledge of their manufacturing process and are able to establish if these processes meet the
ROO. Furthermore, the verification of Specific Process of Production ROO by Certificate of Origin
Issuing Authorities/Bodies or Customs Authorities is relatively straightforward as the steps of the
production process can be identified.

Specific Process of Production ROO have the benefit of consistency as, provided the same process
is followed, an eligible good will always continue to achieve originating status regardless of the cost
of materials, labour and other inputs.

This is an important reason AANZFTA contains Specific Process of Production ROO for certain
industries.

Specific Process of Production ROO are not affected by shifts in exchange rates and fluctuations in
international prices of materials which can significantly affect an exporter’s final cost structures
which are needed in RVC calculations.

Sensitivity to exchange rates and fluctuations in oil prices are especially the case with regard to
chemical and plastic goods which use derivatives of crude oil as materials. The price of crude oil is
always in fluctuation and thus any rule that uses the price of the crude oil may be difficult to meet
one day and easy to meet another day.

Specific Processes of Production ROO are not affected by changes in the sourcing of materials
which may impact on CTC ROO.

Specific Process of Production ROO aim to produce fairer outcomes across industries and Parties
by basing the determination of substantial transformation on the process of production rather than
on the costs and sourcing of input materials by individual manufacturers. In comparison, using a
single RVC threshold or CTC ROO for all goods does not take into account the different proportions
of materials, labour and capital which are used in production in different industries or the structure of
the Harmonized System (HS). Differences in these factors make it easier for some goods to meet a
single RVC or CTC ROO.

As Specific Process of Production ROO are tailored to a specific good, the ROO may appear
complicated but remember that the ROO has been created in consultation with the specific industry
group who will use the ROO.

The information used to determine origin and the source of that information is similar to other
methodologies. The group exercise below compares the information required to make a decision
based on an RVC, CTC or a Specific Process of Production ROO.

The Product Specific Rules (PSR) are detailed in Annex 2 to Chapter 3 (Rules of Origin) of
the AANZFTA text. The box below illustrates some of the Specific Process of Production
ROO.

Tariff Tariff Sub-

Product Description Product-specific rule
Heading Heading
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 RVC (40) or CC or no change in tariff
1509 1509.10 Olive oil – virgin classification is required provided that the
good is produced by refining
Slag, ash and residues Origin shall be conferred to a good of this
2620 2620.11 containing mainly zinc: subheading that is derived from production or
hard zinc spelter consumption in a Party
Insecticides, RVC (40) or CTSH, provided that at least 50
3808 3808.92 rodenticides: Other: per cent by weight of the active ingredient or
fungicides ingredients is originating
CTH or a change from fabric that is
Woven fabrics of
constructed but not further prepared or
synthetic filament yarn–
finished provided that it is dyed or printed and
5407 5407.10 obtained from high
undergoes at least two subsequent finishing
tenacity yearn of nylon,
processes in the territory of one or more of the
etc.
parties to render it directly usable
RVC(40) provided that the good is cut or knit
Women’s or girl’s suits
6104 6104.13 to shape and assembled in the territory of one
of synthetic fibres
or more of the parties or CC
CC provided that where the starting material is
fabric, the fabric is raw or unbleached fabric
6302 6302.31 Bed linen: of cotton
and fully finished in the territory of one or
more of the parties

• Topic 6 -2: Chemical Reaction ROO

Goods produced from mineral fuels, chemicals, plastics and rubber are covered by Chapters 27 -
40. As stated earlier, these goods are highly susceptible to fluctuations in commodity prices and
exchange rates. The PSR for these chapters usually contain ROO for individual tariff lines, but in
addition, there are often alternative rules which apply across the Chapters.

The ROO allow any good which is produced as a result of specified process of production to qualify
as an originating good, regardless of the source of the materials used to produce it.

Within AANZFTA the alternative ROO is called the Chemical Reaction ROO.

AANZFTA includes a Chemical Reaction ROO. Under AANZFTA this ROO can only be applied if a
good does not meet the RVC and CTC ROO.

The Chemical Reaction ROO only applies to goods classified in:

• Chapter 28: Inorganic chemicals; organic or inorganic compounds of precious metals, of

rare-earth metals, of radioactive elements or of isotopes;
• Chapter 29: Organic chemicals; and
• Chapter 32: Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and
other colouring matter; Paints and varnishes; putty and other mastics; inks.

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Before the Chemical Reaction ROO can be used, the goods must be first tested to determine
whether they meet the RVC or CTC ROO of the PSR Annex. If the chemicals meet the
requirements of one of these ROO, then the chemicals are originating and the Chemical Reaction
Rule cannot be used. If they fail to meet both the RVC and CTC ROO, then the chemicals can be
tested to see if it is a product of a defined chemical reaction that occurred in a Party.

The following process should be used when considering the use of the Chemical Reaction ROO.

RVC • First test the good against the RVC and CTC.
Or • If it meets either of these requirements then the good is originating.
CTC • If it fails to meet the RVC and CTC then test against the
Chemical Reaction.

• Test the good against the Chemical Reaction.

Chemical • If it meets the ROO it is originating.
Reaction • If it does not meet the ROO then it is a non-originating
good.

For each of these chapters, the alternative ROO allow any good which is produced as a result of a
chemical reaction to qualify as an originating good, regardless of where the materials used to
produce it were sourced from.

Chemical Reaction ROO

A chemical reaction is defined as “a process (including a biochemical process) which results in a

molecule with a new structure by breaking intramolecular bonds and by forming new intramolecular
bonds, or by altering the spatial arrangement of the molecule”.

The above example of hydrogen and oxygen combining to form water is probably the most
commonly known chemical reaction in the world. Two hydrogen atoms join to one oxygen atom to
form one water molecule. This example is included in this module to remind you what the Chemical
Reaction ROO represents.

Whenever you are trying to decide if a reaction meets the Chemical Reaction ROO, always bring it
back to basics and examine it in comparison to the production of water.

Not considered to be chemical reactions

The following are not considered to be chemical reactions for the purposes of determining whether
a product is an originating good:

• dissolving in water or other solvents;

• the elimination of solvents, including solvent water; or
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 • the addition or elimination of water of crystallization (i.e. water that is found in the crystalline
framework of a metal complex but which is not directly bonded to the metal ion).

The Chemical Reaction ROO is located as chapter notes which are found at the beginning of
Chapters 28, 29 and 32 of the PSR Annex.

CHAPTER 29 ORGANIC CHEMICALS

Chapter Note:

Any good of this chapter that is the product of a chemical reaction shall be
considered to be an originating good if the chemical reaction occurred in a Party.
The “chemical reaction” rule may be applied to any good classified in this
chapter if the product fails to satisfy the regional value content and change in
tariff classification criteria provided for in the Product Specific Rule.

Note: For the purposes of this Chapter a “chemical reaction” is a process

(including a biochemical process) which results in a molecule with a new
structure by breaking intramolecular bonds and by forming new intramolecular
bonds, or by altering the spatial arrangement of the molecule. The following are
not considered to be chemical reactions for the purposes of determining whether
a product is an originating good:

(a) dissolving in water or other solvents;

(b) the elimination of solvents including solvent water; or
(c) the addition or elimination of water of crystallization.

Put simply, when a good does not meet either the RVC ROO or the CTC ROO,
the Chemical Reaction ROO means that if a chemical reaction occurs during
production in an AANZFTA Party for a good of Chapter 28, 29 or 32 the good
produced is an originating good and is eligible for preferential duty rates.

Put simply, when a good does not meet either the RVC ROO or the CTC ROO, the Chemical
Reaction ROO means that if a chemical reaction occurs during production in an AANZFTA Party for
a good of Chapter 28, 29 or 32 the good produced is an originating good and is eligible for
preferential duty rates.

Example
1 Question:

Good C (FOB $15) classified in Chapter 28 is produced in an AANZFTA Party through a chemical
reaction between non-originating materials A (HS 28, value $5) and B (HS 28, value $5).

The PSR for the good is “RVC(40) or CTSH”. The Chemical Reaction ROO applies to Chapter 28 in
cases where the specified PSR have not been met.

Is good C originating?

Answer:

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Materials A and B are both contained in the same subheading, as good C therefore the CTSH ROO
has not been met.

Due to the high value of the imported non-originating materials the good also fails to meet the
RVC(40) ROO (15 – 10) / 15 x 100 = 33%.

Because neither the RVC(40) nor the CTSH ROO has been met the Chemical Reaction Roo can be
examined.

The Chemical Reaction ROO requires a chemical reaction to take place in the territory of a Party for
the good to be originating.

As the good was produced in the territory through a chemical reaction, the good is an originating
good.

Material A Material B
(value $5) (value $5)

Good C
(HS 28
FOB $15)

Good C is produced as a result of meeting the Chemical Reaction ROO

2 Question:

Hydrochloric acid (HS 2806.10) with an FOB value of $10 is produced in Thailand by a chemical
reaction when originating hydrogen (HS 2804.10) is mixed with chlorine (HS 2801.10) and dissolved
in water.

The chlorine is imported from China for $7. The PSR for subheading 2803.10 is “RVC(40) or
CTSH”.

The Chemical Reaction ROO applies to Chapter 28 in cases where the other PSR have not been
met. Is the Hydrochloric acid originating?

Answer:

The hydrochloric acid is classified to Chapter 28 and was produced via a chemical reaction, the
manufacturer must first check the RVC(40) and CTSH ROO.

The good fails to meet the RVC(40) ROO (10 – 7) / 10 x 100 = 30%.

Using the CTSH ROO, the hydrochloric acid is originating because the non-originating imported
chlorine (HS 2801.10) comes from a different subheading to the hydrochloric acid (HS 2806.10).

As the hydrochloric acid meets the CTSH ROO the hydrochloric acid is originating.
The Chemical Reaction ROO cannot be used as the hydrochloric acid meets the CTSH ROO.

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 Non-originating
Originating
Chlorine from
Hydrogen
China
(HS 2804.10)
(HS 2801 value $7)

Hydrochloric
Acid (HS
2806.10
FOB %10

3 Question:

Acrylic paint (HS 3209.10) is produced in Cambodia from non-original materials of Chapter 28 and
29 and a small amount of paint made from vinyl polymers (HS 3209.10) imported from Korea.

The nonoriginating materials represent two-thirds of the value of the good.

The final good is produced as a result of a chemical reaction.

The PSR for subheading 3209.10 is “RVC(40) or CTSH”.

The Chemical Reaction ROO applies to Chapter 32 in cases where the other PSRs are not met. Is
the paint originating?

Answer:

The producer has the choice of two methods of obtaining origin:

The PSR can be used (RVC(40) or CTSH); or

If the goods fail to meet the above PSR, as the goods are classified within Chapter 32, the chemical
reaction rule is applicable.

As the RVC value of the good is 33 per cent (two thirds or 66 per cent of the value is represented by
the non-original imports) the good does not meet the RVC(40) ROO.

The non-originating vinyl polymer paint (HS 3209.10) is classified in the same subheading as the
final good (HS 3209.10); therefore the acrylic paint does not meet the CTSH ROO.

Because the good has failed to meet the RVC and CTC ROO the Chemical Reaction ROO can now
be considered.

The acrylic paint was produced as a result of a chemical reaction so the final good is considered to
be an originating good.

The Chemical Reaction ROO and Minimal Operations

As identified in Module 4 (General Rule - Regional Value Content), Article 7 (Minimal Operations
and Processes) of Chapter 3 (Rules of Origin) contains specific provisions on minimal operations
and processes which are not considered sufficient on their own to confer origin.
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Minimal operations and process provisions are not used with CTC ROO as the ROO are set at the a
ppropriate chapter (two-digit), heading (four-digit), or subheading (six-digit) level of the HS, or
exceptions are applied, which disqualify certain operations from conferring originating status and
ensure that the good is a product of substantial transformation.

Similarly, the minimal operations and process provisions do not apply to Specific Process of
Production ROO. Like CTC ROO, the Specific Process of Production ROO themselves set out what
activities are not considered substantial.

For example, the Chemical Reaction ROO in AANZFTA states that, “The following are not
considered to be chemical reactions for the purposes of determining whether a product is an
originating good:

• dissolving in water or other solvents;

• the elimination of solvents including solvent water; or
• the addition or elimination of water of crystallization.”

Minimal Operations and Processes

RVC CTC Chemical Reaction Rule
a) ensuring preservation of Unnecessary as the level of the a) dissolving in water or other
goods in good condition for CTC rule determines what solvents; or
the purposes of transport or activities count as substantial
storage; b) the elimination of solvents,
transformation. In some cases
b) facilitating shipment or including solvent water;
transportation; the CTC rule may specifically
c) packaging or presenting exclude certain operations e.g. c) the addition or elimination of
goods for transportation or “CTSH except from...”. water of crystallization.
sale; g)
d) simple processes, consisting
of sifting, classifying,
washing, cutting, slitting,
bending, coiling and
uncoiling and other similar
operations;
e) affixing of marks, labels or
other like distinguishing
signs on products or their
packaging; and
f) mere dilution with water or
another substance that does
not materially alter the
characteristics of the goods.

• Topic 6 -3: Textile and Clothing Rules

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The PSR Annex contains Specific Process of Production ROO for Chapters 50 – 63. These
chapters relate to textiles, clothing and made-up textile items. Specific Process of Production ROO
are used for some of these chapters as in many cases a CTC or RVC ROO does not achieve the
required substantial transformation.

Fabric Rules

The AANZFTA Parties have agreed that fabric is substantially transformed when greige or raw
fabric is transformed to enable it to be used for the construction of clothing or other made up textile
items.

AANZFTA Parties have agreed that this occurs where the fabric undergoes at least two finishing
operations to render it directly usable.

Greige Fabric
Greige is an unfinished woven or knitted fabric just off the weaving looms or knitting machine that
hasn’t been bleached or dyed. Greige fabric has not been given any finishing at all.

An indicative list of finishing operations is as follows

Indicative List of Textile Finishing Process

antibacterial finish; dry beating; softening; pre-sensitization;
antisoil finish; embossing; pre-shrunk;
antistatic agent; embrittled; pressure decatizing;
backtanning; emerizing; proofing;
baking/thermofixation; filling; relaxing;
baulk finish; fixing; rigging;
beating (finishing); flame retardant treatment; schreiner;
beetled finish; fluorochemical finishing; setting;
biopolishing; foam finishing; shrink-resistant;
bleaching; friction calendering; silicone finish;
blown finish; fulling; simili mercerizing;
boiling off gigging; desizing; singeing;
bottoming; glazing; soaping;
brushing; grass bleaching/grassing/crofting; softening;
causticizing; loading; soil release finish;
clear finish; London shrinking; solvent scouring;
compressive shrinking; mercerization (hot/post/slack); sour;
conditioning; mordanted; stabilized finish;
crabbing; proofing; milling; stainblocker;
cramping; relaxing; mordanted; stiffened;
crease-resist finish; napping/friezé; stitch finish;
crêping; napping/friezé; stripping;
curing/flash-curing/moist curing; padding/slop padding/nip padding; sueding;

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 cuttling; parchmentizing; water-repellent;
decatizing/decating; plaiting; wet fixation;
delustring; polishing; Wigan finish.
desizing; potting;
dressing (lace) precrêping;

This list is not exhaustive – other finishing operations may be origin conferring provided that at least
two finishing operations have been undertaken in conjunction with printing or dyeing.

‘Rendering the fabric directly usable’ requires that no additional finishing operations are required to
ensure that the fabric can be used in the production of a finished article (e.g. clothing or other made-
up textile items).

Not all fabric chapters of the HS distinguish between greige fabric and finished fabric.

The table below provides the tariff structure for goods of headings 5112 and 5210. You will note that
the term greige in not used. For heading 5210 the fabric is split into groups such as unbleached,
bleached, dyed and printed which indicate the degree of “finishing” the goods may have been
subjected to. These particular groupings cover the fabric from its unfinished state to a state that
includes several finishing processes. For heading 5112 there is no split into such groups.

Tariff structure for fabric

WOVEN FABRICS OF COMBED WOOL OR OF COMBED FINE ANIMAL

5112.
HAIR:
- Containing 85% or more by weight of wool or of fine animal hair:
5112.11 --Of a weight not exceeding 200 g/m2
WOVEN FABRICS OF COMBED WOOL OR OF COMBED FINE ANIMAL
5112.
HAIR:
5112.19 --Other
5112.20 -Other, mixed mainly or solely with man-made filaments
5112.30 -Other, mixed mainly or solely with man-made staple fibres
5112.90 -Other
WOVEN FABRICS OF COTTON, CONTAINING LESS THAN 85% BY
5210. WEIGHT OF COTTON, MIXED MAINLY OR SOLELY WITH MAN-MADE
FIBRES, WEIGHING NOT MORE THAN 200 g/m2:
-Unbleached:
5210.11 --Plain weave
5210.19 --Other fabrics
-Bleached:
5210.21 --Plain weave
5210.29 --Other fabrics
-Dyed:
5210.31 --Plain weave
5210.32 --3-thread or 4-thread twill, including cross twill
5210.39 --Other fabrics
-Of yarns of different colours:

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 5210.41 --Plain weave
5210.49 --Other fabrics
-Printed:
5210.51 --Plain weave
5210.59 --Other fabrics

Under a CTC ROO for these chapters, fabric is required to be made from yarn. In order to maintain
the principle that non-originating greige fabric can be used in the production of a finished fabric a
second rule for fabric is also applied to certain HS codes.

The Fabric ROO

A change from fabric that is constructed but not further prepared or finished, provided that it is dyed
or printed and undergoes at least two subsequent finishing processes in the territory of one or more
of the Parties to render it directly usable.

Like the Chemical Reaction ROO, the Fabric ROO in the AANZFTA is also designed to prevent
certain activities, undertaken on their own, from conferring origin. In the case of fabric, merely
washing and drying the fabric without printing or dyeing or further finishing operations would not be
considered to be sufficient for origin purposes. Similarly, when the finishing operations have been
completed the good must be directly usable.

The Fabric Chapter Note

For the purposes of this Chapter, if a claim for origin is based on dyeing, printing and at least two
subsequent finishing processes, washing or drying shall not be considered to be finishing
processes. An indicative list of finishing processes is provided in the Appendix to the PSR.

Example

4. Question:

Dyed woven fabric (HS 5514.21) is produced in Thailand from imported non-originating unbleached
fabric (HS 5514.11) from China.

The dyes and pigments (Chapter 32) are imported from Japan and are also non-originating.

The raw material is dyed, washed, dried, brushed, singed and mercerised.

The material is sold for the manufacture of clothing.

The PSR subheading 5514.21 is “CTH or a change from fabric that is constructed but not further
prepared or finished provided that it is dyed or printed and undergoes at least two subsequent
finishing processes in the territory of one or more of the parties to render it directly usable”.

Is the dyed woven fabric originating?

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Answer:

The dyed woven fabric (HS 5514.21) is in the same heading (HS 5514) as the non-originating raw
material (HS 5514.11) so the fabric cannot meet the CTH ROO.
Dyes and
Unbleached
pigment
fabric from Cina
from Japan
(HS 5514.11)
(HS 32)

Dyed woven
fabrics
(HS 5514.2)

The specific process of production ROO allows the use of unbleached (raw) fabric that is non-
originating provided at least two other finishing operations occur.

Washing and drying do not qualify as finishing operations.

The unbleached fabric is also brushed, singed and mercerised. Brushing and mercerisation are on
the indicative list.

As the fabric is dyed and has undergone at least two finishing operations and is in a state where it
can be used to manufacture clothing, the dyed woven fabric is originating.

Clothing

The AANZFTA sets out Specific Process of Production ROO for clothing.

In these cases the specific process of production is used in combination with the RVC.

Profit may be included in RVC calculations under the AANZFTA. The clothing manufacturing sector
is particularly susceptible to manipulation of profit which would enable goods which have not
undergone a substantial transformation to qualify as originating goods.

The AANZFTA Parties have agreed that in addition to a RVC ROO clothing is required to be cut or
knit to shape and assembled in one or more of the Parties from fabric in order to be deemed
originating.

AANZFTA Clothing ROO

RVC(40) provided that the good is cut or knit to shape and assembled in the territory of one or more
of the parties.

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 Pattern Cuts Assembled

Example

5. Question:

Cotton tracksuits (FOB $10, HS 6112.11) are made in Cambodia from cotton fabric ($5, HS
5208.31) imported from China.

Originating cotton thread and elastic are imported from Thailand.

The factory in Cambodia cuts the fabric and sews the parts together.

The PSR subheading 6112.11 is “RVC(40) provided that the good is cut or knit to shape and
assembled in the territory of one or more of the parties or CC”.

Are the tracksuits originating?

Answer:

The manufacturer has chosen to use the combination RVC and Specific Process of Production
ROO.

The good meets the RVC(40) ROO (10 – 5) / 10 x 100 = 50%.

Non-originating
Originating
cotton fabric from
cotton thread
China ($5, HS
and elastic
5208.31)

Cotton
tracksuits
(FOB $10,HS
6112.11)

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Additionally, as the tracksuits were cut and assembled in Cambodia they meet the Specific Process
of Production ROO. The tracksuits are therefore originating goods.

Made Up Textile Articles

The AANZFTA also has a Specific Process of Production ROO for certain made-up textile articles of
Chapter 63. Some of these goods are flat and their manufacture from fabric may be a simple
process, e.g. bed sheets and table cloths. A CC ROO would allow fabric, which is in a different
chapter of the HS to the finished goods, to be transformed into bed sheets and table cloths by
simple cutting and hemming. In order to better represent the concept of substantial transformation,
an additional requirement is placed on the CTC ROO for these products.

AANZFTA Made Up Textile Articles ROO

CC provided that where the starting material is fabric, the fabric is raw or unbleached fabric and fully
finished in the territory of one or more of the parties.

Example
6. Question:

Cotton bed sheets (HS 6302.21) are made in Viet Nam from printed cotton fabric (HS 5208.51)
imported from China.

Originating cotton thread is imported from Thailand.

The PSR for subheading 6302.21 is “CC provided that where the starting material is fabric, the
fabric is raw or unbleached fabric and fully finished in the territory of one or more of the Parties”. Are
the bed sheets originating?

Answer:

Printed cotton
Cotton thread
fabrics from China
(originating)
(HS 5208.51)

Bed sheeting
(non-
originating)

As the starting fabric was printed not raw or unbleached fabric that could be fully finished in the
territory of one or more of the Parties, the Made Up Textile Articles ROO has not been met. The bed
sheeting is therefore non-originating.

7. Question:

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Cotton bed sheets (HS 6302.21) are made in Viet Nam from printed cotton fabric (HS 5208.51)
imported from Singapore.

Unbleached cotton fabric (HS 5208.11) was imported Singapore from China for finishing. The fully
finished fabric was exported from Singapore to Viet Nam. Originating cotton thread are imported
from Thailand.

The PSR subheading 6302.21 is “CC provided that where the starting material is fabric, the fabric is
raw or unbleached fabric and fully finished in the territory of one or more of the Parties”.

Are the bed sheets originating?

Unbleached cotton Cotton
fabrics (HS5208.51) thread
(Finished in Singapore) (originating)

Printed cotton Bed

fabrics sheeting
(HS 5208.51) (HS 6302.21)

Answer:

As the starting fabric was unbleached fabric that was fully finished in Singapore the Made Up Textile
Articles ROO has been met.

The CC ROO has been met by the change from chapter 52 to chapter 63. The bed sheeting is
therefore originating.

Cumulation in the Fabric, Clothing and Made Up Textile Articles Rule

An important characteristic of the fabric, clothing and some of the made-up textile articles rules is
that they can be considered to involve “full cumulation”. Full cumulation is where all manufacturing
and processing operations carried out in FTA parties is counted for the purposes of origin
determination.

In example 4 above, the parts for the tracksuit could be cut in Viet Nam (a Party to the AANZFTA)
and then assembled in Cambodia. The parts cut in Viet Nam can be taken into account in
determining whether the tracksuits assembled in Cambodia are originating whether or not the parts
themselves are AANZFTA originating. Full cumulation is important as it allows business to establish
manufacturing operations which best suit their long term requirements.

Example
8. Question:

Cotton tracksuits (FOB $10, HS 6112.11) are made in Cambodia from cotton fabric ($5, HS
5208.31) imported from China.

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Originating cotton thread and elastic are imported from Thailand.

A factory in Viet Nam cuts the fabric and the Cambodian factory sews the parts together.

The PSR subheading 6112.11 is “RVC(40) provided that the good is cut or knit to shape and
assembled in the territory of one or more of the parties or CC”.

Are the tracksuits originating?

Answer:

The manufacturer has chosen to use the combination RVC and Specific Process of Production
ROO as the manufacturer knows the good meets the RVC(40) ROO.

The tracksuits meet the RVC(40) ROO (10 – 5) / 10 x 100 = 50%.

AANZFTA
Parties

Vietnam

Cambodia

The tracksuits were cut in Viet Nam an AANZFTA Party and assembled in Cambodia also an
AANZFTA Party.

This is in accordance with the requirement that the good is cut or knit to shape and assembled in
the territory of one or more of the Parties. The tracksuits are therefore originating.

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