Issuance of APTA Certificate of Origin for Non-Concession Raw Materials to Prove Cumulative Origin Released

Regarding the issuance of an APTA (Asia-Pacific Trade Agreement) Certificate of Origin (CO), we would like to provide a detailed explanation of whether a CO can be issued for raw materials that are not subject to tariff concessions but are necessary to prove the cumulative origin of a final product.

In short, even if a raw material is not an APTA concession item, an APTA CO can be issued for it, provided it satisfies the APTA rules of origin. This is primarily done to support the cumulative origin status of the final product.

Generally, an APTA CO is issued for final products listed in the APTA concession schedule to allow the importer to benefit from preferential tariff rates. However, there are specific instances where materials themselves require certification to facilitate trade for finished goods.

The Significance and Scope of Cumulative Application

The 'Cumulative Application' (or Accumulation) provision is a vital concept for the effective utilization of trade agreements. It allows producers to count value-added or processing stages performed in other member countries toward the origin determination of the final product. This encourages regional supply chain integration and provides flexibility when a single country cannot meet the origin criteria alone.

APTA allows for such accumulation under the "APTA Rules of Origin (Annex II)." Specifically, Article 1 of these rules stipulates that an APTA CO can be issued for goods that satisfy the origin criteria. The key point here is that for the purpose of proving a raw material's contribution to the final product's origin status, that material can be recognized as an 'originating good' and receive a CO, even if the material itself is not a concession item.

Specific Purposes and Utilization of COs for Non-Concession Materials

• Role as Supporting Evidence: An APTA CO for raw materials serves as official documentation that the material is an originating product of an APTA member state. When a final product manufacturer seeks to meet origin criteria, such as Regional Value Content (RVC) through accumulation, this CO is the essential evidence. Without it, the material may be treated as non-originating, regardless of where it was produced.
• Contributing to Final Product Origin: For example, if a final product manufactured in Korea struggles to meet the RVC threshold (e.g., 35% or 40%) using only domestic value-added, it can incorporate the value of a raw material imported from China (an APTA member). If that Chinese material has an APTA CO, its value is added to the Korean value-added, helping the final product achieve preferential origin status.
• Prevention of Misunderstanding: It is important to note that this CO does not grant preferential tariffs to the 'raw material itself' during its own importation if it is a non-concession item. The CO is issued and utilized solely as evidence for the 'origin determination of the final product.'

Practical Considerations and Compliance

• Active Cooperation from Suppliers: To utilize accumulation, the final product manufacturer must obtain accurate origin information and an APTA CO from the raw material supplier. Therefore, suppliers must verify whether their materials meet APTA criteria—such as Wholly Obtained (WO), Change in Tariff Classification (CTC), or RVC—and apply for the CO through the relevant authorities or self-certification systems.
• Verification of Origin Criteria: Even if the material is not a concession item, it must independently satisfy the specific rules of origin outlined in Annex II of the APTA. A CO cannot be issued simply because a material was traded within the region; it must undergo sufficient transformation or meet the required value thresholds.
• Importance of Document Management: Both exporters of final products and suppliers of raw materials must maintain rigorous records, including Bills of Materials (BOM), manufacturing process charts, purchase invoices, and origin declarations. These documents are critical for defending against origin verifications conducted by the customs authorities of the importing country.

In conclusion, if you intend to secure preferential origin for a final product using the accumulation provision under APTA, obtaining an APTA CO for raw materials—even those not subject to concessions—is both possible and essential. This strategy is key to securing international competitiveness and maximizing tariff benefits. We recommend meticulous management of origin data across your entire supply chain.