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When Drafting a Certificate of Origin for Goods Traded Domestically, Which FTA Agreement-Specific and Item-Specific Criteria Should Be Applied to Accurately Determine the Origin of the Final Exported Goods? Released

2025-08-14 08:07
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The following is the original Korean text translated into English:
  1. The Nature and Importance of the Certificate of Origin (Comprehensive)
    When preparing the Certificate of Origin (Comprehensive) for goods traded domestically, you inquired about which FTA agreement-specific and item-specific criteria should be applied to accurately determine the origin of the final export goods. The Certificate of Origin (Comprehensive) can be considered as a certificate of origin traded domestically. It is not merely a document for domestic transactions but is ultimately a very important intermediate evidence in determining the origin of the final export goods. Therefore, the determination of origin for goods traded domestically must be made in the same way as in FTA agreements to accurately confirm the origin of the final export goods.
    For this reason, when preparing the Certificate of Origin (Comprehensive), the origin must be determined according to the origin determination criteria and methods set for each FTA agreement and item to be finally exported. This is because thorough origin management from the domestic supply chain is necessary to prevent origin-related disputes or disadvantages that may arise at the export stage.
  2. Application of Origin Determination Criteria by FTA Agreement and Item
    Each FTA agreement has its own origin determination criteria, and even within the same FTA, the criteria applied differ depending on the item (HS Code). All these elements must be considered when preparing the Certificate of Origin (Comprehensive). The main origin determination criteria are as follows.
    • Wholly Obtained (WO): Applied to goods that are entirely produced or obtained in the contracting country of the agreement. Minerals, agricultural, and fishery products in their primitive forms are representative. For example, minerals mined or agricultural products cultivated in Korea will have Korea as their origin.
    • Not Wholly Obtained (NWGO): Applied to goods produced across two or more countries, determining where substantial transformation occurred. This criterion applies to most industrial products, and one or more of the following detailed criteria must be met.
      • Change in Tariff Classification (CTC): The HS Code of goods produced using non-originating materials must change by a certain unit. Examples include a 10-digit change (CTSH), a 6-digit change (CTH), and a 4-digit change (CTS). This is the most commonly used criterion.
      • Regional Value Content (RVC): The value-added ratio occurring in a specific country or region must be above a certain level in the price of the goods. Generally, the deduction method (Build-down method) calculates the regional value-added ratio by excluding the price of non-originating materials from the final goods price (FOB), and the build-up method calculates the ratio against total production costs by summing specific costs such as regional material costs and labor costs. Each FTA has different minimum required ratios.
      • Specific Process Rule (SPR): A method where specific production processes must be completed within the contracting country of the agreement to recognize origin. It is mainly applied to specific industries such as chemical and textile products.
    • Other Supplementary Criteria and Exceptions:
      • De Minimis: A criterion where non-originating materials below a certain ratio are considered not to affect origin determination.
      • Accumulation: A criterion that allows all originating materials or processing occurring in the region to be considered as regional origin and summed. This facilitates meeting origin requirements in complex global supply chains.
      • Indirect Materials: Goods used in production but not part of the final product (e.g., tools, catalysts, fuel) are generally not considered as non-originating materials in origin determination.
  3. Practical Considerations for Accurate Origin Determination
    The preparer of the Certificate of Origin (Comprehensive) must follow the following procedures based on these criteria.
    • Confirm Final Export FTA and HS Code: It is essential to first confirm which FTA will be applied for the final export and to which country, as well as the exact HS Code of the goods. This is a necessary preliminary step to find and apply the item-specific origin determination criteria (PSR) of the relevant FTA.
    • Analyze Bill of Materials (BOM): You must thoroughly understand the list of all materials (raw materials, parts, etc.) used in producing the goods, along with the HS Code, origin, and price information of each material. Identifying what the non-originating materials are and their proportion is key to origin determination.
    • Obtain and Review Sub-Supplier's Certificate of Origin (Comprehensive): For domestically sourced raw materials or parts used in production, you must obtain an appropriate Certificate of Origin (Comprehensive) from the supplier and review its content. It is also important to verify the appropriateness of the supplier's origin determination during this process.
    • Determine Origin and Prepare Documents: Based on the collected information, determine the origin of the goods according to the relevant FTA and item-specific origin determination criteria, and accurately prepare the Certificate of Origin (Comprehensive) based on this. Seeking assistance from experts such as customs brokers, if necessary, is a way to reduce misjudgments in this process.
  4. Conclusion: Importance of Origin Management Across the Entire Supply Chain
    The Certificate of Origin (Comprehensive) is a key tool for ensuring transparency and reliability of origin information within the domestic supply chain. Accurate determination of the origin of final export goods is not just about meeting export requirements but is an important process for fully enjoying FTA benefits and enhancing a company's external credibility by complying with international trade norms. Therefore, a thorough understanding and application of FTA agreement-specific and item-specific origin determination criteria when preparing the Certificate of Origin (Com
    [This content regarding export and import clearance regulations and their interpretations is based on the customs and trade laws of the Republic of Korea.]

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JJ Goh
Representative Customs Broker
NPU Customs Consulting
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