Companies doing business in China can lower the costs of cross-border trade and avoid compliance risks by ensuring that they have a sound understanding of China’s preferential and non-preferential rules of origin (ROO).
There are two types of rules of origin:
1. Most-favored-nation trade (non-preferential ROO)
2. Imports under bilateral and regional trade agreements (preferential ROO)
The World Trade Organization does not have an agreement on product-specific and detailed ROO, and international trade is governed by national laws and bilateral and multilateral international agreements.
Non-preferential ROO provide that if an imported good is wholly obtained in a particular country, that country is the country of origin. If, on the other hand, a good is produced or manufactured in two or more countries, the country in which the good is finally materially changed is the country of origin.
Preferential ROO under FTAs and CEPAs vary from agreement to agreement, but in each case there are key differences from non-preferential ROO, including in the areas of regional value content, product-specific rules and standards, content accumulation, direct transportation, and certificate verification cooperation.
To further understand Chinese Rules of Origin, please visit WorldTrade\Interactive.
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