Retrospective Issuance of Blanket Statement of Origin for Goods Supplied Prior to the Entry into Force of an FTA Released

In the FTA environment, proof of origin is a critical factor in determining export competitiveness. Particularly when a new FTA enters into force, there are many inquiries regarding the determination of origin and the issuance of documents for goods supplied before and after the effective date. To conclude, even for goods already supplied before the FTA's effective date, a Blanket Statement of Origin can be issued retrospectively, provided the requirements of the agreement are met. This is because origin documentation for materials is essential when an exporter ships the final product after the FTA has taken effect.

1. Principles of Origin Recognition for Goods Supplied Prior to Entry into Force

A Blanket Statement of Origin is a document in which a domestic supplier confirms to an exporter that the supplied goods meet the origin criteria of a specific FTA. If the materials were used in the production of a final product exported after the effective date, or if the final product itself was supplied before the effective date but is to be exported after, the supplier can perform an origin determination. The most important factor is not the time of supply, but whether the production process and material breakdown at the time of manufacture satisfy the Product-Specific Rules (PSR) of the newly effective agreement.

While FTAs grant tariff benefits based on the date of entry into force, the conditions for achieving originating status are judged based on past production records. Therefore, even if you supplied the goods before the FTA took effect, it is legally and practically feasible to issue a retrospective statement if the production process or value-added ratio at that time aligns with the standards of the agreement.

2. Reviewing Compliance with Product-Specific Rules (PSR)

Before issuing the statement, you must verify the HS Code of the goods and review the Product-Specific Rules (PSR) defined in the agreement. The following criteria are commonly applied:

• Change in Tariff Classification (CTC): Checking if the HS Code of the raw materials and the HS Code of the finished product have changed at a certain level (e.g., 4-digit or 6-digit).
• Value Added Criterion (VAC): Calculating whether the regional value content generated during production meets the percentage (e.g., 40% or more) required by the agreement.
• Specific Process (SP): Determining origin based on whether a specific chemical reaction or manufacturing process was performed domestically.

You must re-verify these criteria based on the Bill of Materials (BOM), raw material purchase records, and manufacturing process flowcharts from the time of supply. If there is objective data proving that the criteria are met, the origin can be stated as 'Republic of Korea' on the Blanket Statement of Origin.

3. Practical Considerations and Document Management

There are several practical precautions when issuing a Blanket Statement of Origin retrospectively. First is the setting of the blanket period. A Blanket Statement of Origin can typically cover a period of up to 12 months from the date of issuance, including the date of supply. Therefore, you must set an appropriate blanket period by considering the gap between the pre-effective supply date and the current issuance date.

Second is preparedness for post-clearance verification. Customs authorities may conduct strict verifications on documents issued retrospectively during the early stages of an FTA. Beyond merely issuing the statement, you are obligated to retain supporting documents for origin for five years, such as the Declaration of Origin, BOM, and production records. If a subsequent verification finds the goods to be non-originating, legal liabilities or administrative fines may be imposed on both the exporter and the supplier. Therefore, it is safer to make an accurate determination with the help of a professional.

In conclusion, you may issue a Blanket Statement of Origin for goods supplied before the FTA's effective date after carefully confirming that they meet the origin requirements, which will significantly assist the exporter in utilizing the FTA.