Is it possible to issue an APTA certificate of origin if non-concessional raw materials meet the origin criteria for cumulative proof of origin of the final product under APTA? Released

Regarding the issuance of the APTA (Asia-Pacific Trade Agreement) Certificate of Origin, I will explain in detail the possibility of issuing non-concession raw materials for cumulative origin proof of the final product.

To conclude, even if the raw material is not an APTA concession item, it is possible to issue a certificate of origin if it meets the APTA origin criteria for cumulative origin proof of the final product.

The APTA Certificate of Origin is basically issued for the final goods to which the preferential tariff under the APTA concession list applies. In other words, this certificate is required to enjoy tariff benefits by applying preferential tariffs to the product in the importing country.

Importance and Scope of Cumulative Application

However, the 'Cumulative Application' clause, an important concept for the efficient use of trade agreements, allows for an important exception to this principle. Cumulative application is a system that determines whether the origin criteria of the final product are met by summing up the added value or processing processes that occurred in several contracting countries within the region. This encourages the activation of production and supply chains within the region and provides flexibility to receive benefits even when it is difficult to meet the origin criteria within a single country.

APTA also allows for such cumulative application in the "Asia-Pacific Trade Agreement Rules of Origin (Annex 2)." In particular, Article 1 of these regulations specifies that an APTA Certificate of Origin can be issued for goods that meet the origin criteria. The key here is that if the purpose is to prove the contribution of 'raw materials' to determine the origin status of the final product, the raw material can be recognized as having the status of 'goods that meet the origin criteria' and thus be eligible for a certificate of origin, even if it is not an APTA concession item in itself.

Specific Purpose and Utilization of Certificate of Origin for Non-Concession Raw Materials

• Role as Evidence: The APTA Certificate of Origin for raw materials is an official document proving that the raw material is a product of origin from an APTA member country. When a final product manufacturer wants to meet origin criteria such as the Regional Value Content (RVC) through cumulative application, it becomes key evidence to prove the origin status of raw materials imported from other contracting countries. Without this certificate, the raw material may not be recognized as regional and could be considered non-origin material.
• Contribution to Meeting the Origin of the Final Product: For example, if a final product produced in Korea seeks to receive APTA benefits, there may be cases where it is difficult to meet the origin criteria (e.g., RVC 35% or 40%) with added value generated only within Korea. In this case, if a specific raw material imported from China, an APTA member country, meets the APTA origin criteria and an APTA Certificate of Origin is issued, the value of this raw material can be combined with the added value in Korea to increase the RVC of the final product and secure preferential origin.
• Prevention of Misunderstanding: It is important to note that this certificate of origin is not intended to grant preferential tariffs for the 'raw material itself.' Since the raw material is not an APTA concession item, preferential tariffs do not apply when importing the raw material in the importing country. It is issued and used solely for the purpose of proving the 'origin determination of the final product.'

Practical Considerations and Points to Note

• Active Cooperation from Raw Material Producers: To utilize cumulative application, the final product manufacturer must obtain accurate origin information and an APTA Certificate of Origin for the raw material from the raw material supplier. Therefore, the raw material supplier must thoroughly verify whether the raw material meets the APTA origin criteria (e.g., wholly obtained, change in tariff classification, regional value content, etc.) and apply for a certificate of origin through self-declaration or an institution if necessary.
• Verification of Raw Material Origin Criteria Compliance: Even if the raw material is not a concession item, to obtain an APTA Certificate of Origin, the raw material must individually meet the origin criteria specified in the APTA Rules of Origin (Annex 2). For example, the raw material must be wholly produced in a specific contracting country, undergo sufficient processing to meet the change in tariff classification criteria, or meet its own regional value content criteria. A certificate of origin cannot be issued simply because the raw material was traded within the region if it is not of regional origin.
• Importance of Document Management: Both the final product exporter and the raw material supplier must thoroughly manage origin-related documents (BOM, manufacturing process flowchart, raw material purchase evidence, origin declaration, etc.) to prepare for future origin verification requests from the customs of the importing country. These documents serve as important evidence to prove the origin status of the raw material and the compliance of the final product's origin.

In summary, if you wish to secure preferential origin for the final product by utilizing cumulative application under APTA, it is possible and very important to obtain an APTA Certificate of Origin proving that the raw material meets the APTA origin criteria, even if it is not a concession item. Remember that this can be a key factor in securing international competitiveness and utilizing preferential tariff benefits for the final product, and ensure thorough origin management across the entire supply chain.