Circular No. 01/2010/TT-BCT dated January 08, 2010 of the Ministry of Industry and Trade on implementation of the rules of origin provided in the agreement on common effective preferential tariff (CEPT) scheme for the ASEAN free trade area (AFTA)

THE MINISTRY OF INDUSTRY AND TRADE

Circular No. 01/2010/TT-BCT of January 8, 2010, on implementation of the rules of origin provided in the Agreement on Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA)

Pursuant to the Government’s Decree No. 189/2007/ND-CP of December 27, 2007, defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Agreement on Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA);

Pursuant to the Government’s Decree No. 19/2006/ND-CP of February 20, 2006, detailing the Commercial Law regarding origin of goods;

The Minister of Industry and Trade prescribes the implementation of the rules of origin provided in the Agreement on Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA) as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Goods eligible for issuance of certificates of origin form D

A good eligible for issuance of certificates of origin form D (referred to as C/O in this Circular) means an originating good under the provisions of Annex 1 to this Circular for which a C/O is issued by a C/O form D issuer.

Article 2. Interpretation of terms

1. The Agreement on Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA) among the Southeast Asian nations (below referred to as the CEPT Agreement) is the one officially concluded on January 28, 1992, in Singapore.

2. Vietnamese issuer of C/O form D (referred to as C/O issuer in this Circular) means organizations specified in Annex 12.

3. Applicant for C/O form D (referred to as C/O applicant in this Circular), means an exporter, producer or a lawfully authorized representative of an exporter or producer.

4. eCOSys means Vietnam’s certificate of origin management and issuance electronic system at http://www.ecosys.gov.vn.

Article 3. Responsibilities of C/O applicants

C/O applicants shall:

1. Register trader dossiers with C/O issuers under Article 5;

2. Submit C/O application dossiers to C/O issuers;

3. Prove that their exports satisfy all origin requirements, and facilitate the verification of the origin of these goods by C/O issuers;

4. Take responsibility before law for the accuracy and truthfulness of their declarations related to C/O applications, including cases of authorization by exporters;

5. Promptly report to C/O issuers at which traders have filed C/O applications on C/O issued by Vietnamese C/O issuers which are rejected by importing countries (if any);

6. Facilitate the verification by C/O issuers at production establishments or places where exports are raised, grown, harvested and processed;

7. Prove the authenticity of the origin of exported goods at the request of the Ministry of Industry and Trade, C/O issuers or customs offices of Vietnam or importing countries.

Article 4. Responsibilities of C/O issuers

C/O issuers shall:

1. Give guidance to C/O applicants upon request;

2. Receive and examine trader dossiers and C/O application dossiers;

3. Verify the actual origin of goods when necessary;

4. Issue C/O when goods satisfy the origin requirements in this Circular and
C/O applicants observe all provisions of Article 3;

5. Send specimens of signatures of persons authorized to sign C/O and seals of C/O issuers to the Ministry of Industry and Trade (the Import and Export Department) under the Ministry of Industry and Trade’s regulations for registration with competent authorities of importing countries;

6. Settle complaints related to C/O issuance according to their competence;

7. Re-verify the origin of exports at the request of competent authorities of importing countries;

8. Exchange information relating to the C/O issuance with other C/O issuers;

9. Make reports and participate in all professional training courses on origin and respond to other requests under regulations of the Ministry of Industry and Trade.

Chapter II

PROCEDURES FOR C/O ISSUANCE

Article 5. Registration of trader dossiers

1. C/O applicants may be considered for C/O issuance only at places where they have registered their trader dossiers and after they have completed trader dossier registration procedures. A trader dossier comprises:

a/ Registration of the specimen of the signature of the person authorized to sign the C/O application and the specimen of the seal of the trader (Annex 11, not printed herein);

b/ Business registration certificate of the trader (a certified true copy);

c/ Tax identification number registration certificate (a certified true copy);

d/ A list of production establishments (if any) of the trader (Annex 10, not printed herein).

2. Before the C/O application, any change in the trader dossier shall be notified to the C/O issuer with which this dossier has been registered. A trader dossier shall be updated once every two (2) years.

3. In case of a force majeure circumstance or for a plausible reason, if wishing to get a C/O issued by a C/O issuer different from that with which it has registered the trader dossier, a C/O applicant shall provide written plausible reasons for the non-application at the C/O issuer with which it has registered the trader dossier, and register the trader dossier with the new C/O issuer.

Article 6. C/O application dossiers

1. A C/O application dossier comprises:

a/ The C/O application form (Annex 9, not printed herein), which has been fully and duly filled in as guided in Annex 8 (not printed herein);

b/ The C/O form (Annex 7, not printed herein), which has been fully filled in;

c/ The customs declaration for which customs procedures have been completed. This declaration is not required for exported goods which are not subject to customs declaration under law;

d/ The commercial invoice;

e/ The bill of lading or equivalent document in case the trader has no bill of lading. When a back-to-back C/O is issued for the whole goods lot or part of the goods lot brought from a non-tariff zone into the domestic market, this document may be exempted if the trader does not actually hold it.

Pending the availability of the customs declaration for which customs procedures have been completed and the bill of lading (or any document equivalent to bill of lading), the C/O applicant may submit these documents later within fifteen (15) working days from the date of receipt of C/O.

2. When finding it necessary, the C/O issuer may request the C/O applicant to supply additional documents related to the exports, such as customs declaration of imported materials and auxiliary materials; export permit (if any); purchase and sale contract; value-added invoices on the purchase and sale of domestic materials and auxiliary materials; samples of materials and auxiliary materials or exports; description of the manufacturing process with HS headings of input materials and products (for change in tariff classification (CTC) criteria or good manufacturing or processing operation criteria); or calculation of the regional value content (RVC) (for RVC criteria); and other documents proving the origin of exports.

3. The papers specified at Points c, d and e of Clause 1, and in Clause 2, may be copies bearing the signatures and true-copy stamps of traders’ representatives at law or authorized persons, together with their originals for comparison at the request of C/O issuers when necessary.

4. For traders joining the eCOSys, their persons authorized to sign C/O applications shall declare data via the eCOSys, give their e-signatures and automatically transmit them to C/O issuers. After examining application dossiers on the eCOSys, if agreeing to issue C/O, C/O issuers shall notify such via the eCOSys to applicants to submit complete dossiers on paper to C/O issuers for comparison before issuing C/O.

Article 7. Receipt of C/O application dossiers

When C/O applicants file their dossiers, record officers shall receive and examine these dossiers, then notify C/O applicants in dossier receipts or other written forms of any of the following actions:

1. Issuance of C/O under Article 8;

2. Request for supplementation of documents under Article 6;

3. Refusal to issue C/O when detecting that:

a/ C/O applicants fail to register trader dossiers under Article 5;

b/ C/O application dossiers are inaccurate or incomplete as required in Article 6;

c/ C/O applicants have not yet submitted documents which are allowed to be submitted later under Article 6;

d/ Dossiers contain contradictory details;

e/ C/O application dossiers are filed with offices other than those with which trader dossiers have been registered;

f/ C/O declarations are filled in by handwriting, or contain erasures or contents which are unreadable, or printed in multicolor inks;

g/ There are lawful grounds to evidence that goods are non-originating under this Circular or C/O applicants have committed fraudulent or dishonest acts in proving the origin of their goods.

Article 8. Issuance of C/O

1. A C/O shall be issued within three (3) working days after the C/O applicant files a complete and valid dossier, except the cases specified in Clause 2 of this Article.

2. C/O issuers may conduct verification at production establishments if they deem that the dossier examination provides insufficient grounds for C/O issuance or when they detect signs of illegal acts in connection to previously issued C/O. Verifiers of C/O issuers shall make minutes of verification results and request C/O applicants and/or exporters to jointly sign these minutes. In case C/O applicants and/or exporters refuse to sign these minutes, verifiers shall write the reasons for such refusal in the minutes and sign them for certification.

The time limit for issuing or refusing to issue a C/O in this case is five (5) working days after the C/O applicant files a complete dossier.

3. In the course of consideration for C/O issuance, if detecting goods which fail to satisfy origin requirements or C/O application dossiers which are incomplete or invalid, C/O issuers shall notify such to C/O applicants under Clause 2 or Clause 3, Article 7.

4. The verification must not impede the delivery of goods or payment by exporters, unless it is due to the fault of exporters.

Article 9. Withdrawal of issued C/O

C/O issuers may withdraw C/O they have issued in the following cases:

1. Exporters or C/O applicants have forged documents.

2. Issued C/O are not conformable with the origin criteria.

Chapter III

MANAGEMENT OF C/O ISSUANCE

Article 10. Competence to sign C/O

Only persons who have completed procedures for specimen signature registration with the Ministry of Industry and Trade for forwarding to the ASEAN Secretariat for registration with competent authorities of importing countries may sign and issue C/O.

Article 11. Focal point

The Import and Export Department of the Ministry of Industry and Trade shall act as the focal point performing the following jobs:

1. Guiding and inspecting the C/O issuance;

2. Carrying out procedures for registering specimens of signatures of persons competent to sign and issue C/O and specimens of seals of Vietnamese C/O issuers with the ASEAN Secretariat, and forwarding specimens of signatures of persons competent to sign and issue C/O and specimens of seals of C/O issuers of CEPT Agreement member states to the Ministry of Finance (the General Department of Customs);

3. Assisting the Minister of Industry and Trade in settling matters related to the implementation of C/O.

Article 12. Reporting regime

1. C/O issuers shall update information on C/O issuance on the eCOSys on a daily basis. Information updates must cover all information required to be declared in C/O application dossiers.

2. C/O issuers which have not yet connected to the eCOSys shall make eCOSys connection with the Department for E-Commerce and Information Technology of the Ministry of Industry and Trade. Pending the completion of eCOSys connection, C/O issuers shall send monthly reports in writing and by e-mail (with data in the Excel format). Reports for a month must be sent to the Ministry of Industry and Trade not later than the 5th day of the subsequent month, based on the date shown in the postmark or the date of sending e-mail and made according to a form provided in Annex 13 (not printed herein).

3. C/O issuers that have violated thrice the reporting regime prescribed in Clauses 1 and 2 of this Article shall be suspended from issuing C/O and be announced on the website of the Ministry of Industry and Trade. After at least 6 months, the Ministry of Industry and Trade will consider empowering C/O issuers suspended from issuing C/O to issue C/O again based on the requests and explanations of these issuers.

Article 13. Implementation provisions

1. This Circular takes effect on February 21, 2010.

2. This Circular replaces the Ministry of Industry and Trade’s Circular No. 12/2009/TT-BCT of May 22, 2009, on implementation of the rules of origin provided in the ASEAN Trade in Goods Agreement.

For the Minister of Industry and Trade
Deputy Minister
NGUYEN THANH BIEN

 

Annex 1

RULES OF ORIGIN

(To the Ministry of Industry and Trade’s Circular No. 01/2010/TT-BTC of January 8, 2010, on implementation of the rules of origin provided in the Agreement on Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA))

In determining the origin of goods eligible for preferential tariffs pursuant to the Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (below referred to as the CEPT-AFTA Agreement), the following shall be applied:

Article 1. Definitions

1. “Member State” means the individual parties to the CEPT-AFTA Agreement, i.e., Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic, Malaysia, the Federation of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, and the Socialist Republic of Vietnam;

2. “Materials” means raw materials, ingredients, parts, components, sub-assembly and/or goods that are physically incorporated into another good or are subject to a process in the production of another good;

3. “Goods” include materials and/or products, which can be wholly obtained or produced in a Member State, even if they are intended for later use as materials in another production process. For the purposes of this Annex, the terms “goods” and “products” can be used interchangeably;

4. “Originating goods” means products or materials that qualify as originating under this Annex;

5. “Production” means methods of obtaining goods including growing, mining, harvesting, raising, breeding, extracting, gathering, collecting, capturing, fishing, trapping, hunting, manufacturing, producing, processing or assembling a good;

6. “Product-specific rules” means rules that specify that the materials have undergone a change in tariff classification or a specific manufacturing or processing operation, or satisfy regional value content criterion (or ad-valorem criterion) or a combination of any of these criteria;

7. “Identical and interchangeable materials” means materials being of the same kind and commercial quality, possessing the same technical and physical characteristics, and which after being incorporated into the finished product cannot be distinguished from one another for origin purposes by virtue of any markings;

8. “Packing materials and containers for transportation” means the goods used to protect a good during its transportation, different from those containers or materials used for its retail.

Article 2. Origin criteria

Goods imported into the territory of a Member State from another Member State shall be considered to be originating and eligible for preferential tariff treatment if they conform to the origin requirements under any one of the following conditions:

1. A good which is wholly obtained or produced in an exporting Member State as set out and defined in Article 3;

2. A good not wholly obtained or produced in an exporting Member State, provided that it is eligible under Article 4 or Article 5.

Article 3. Wholly obtained or produced

Products referred to in Clause 1 of Article 2 shall be considered to be originating or wholly obtained or produced in the exporting Member State in the following cases:

1. Plants and plant products grown and harvested, picked or gathered there;

2. Live animals born and raised there;

3. Goods obtained from live animals referred to in Clause 2 of this Article;

4. Goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted there;

5. Minerals and other naturally occurring substances, not included in Clauses 1 thru 4, extracted or taken from the soil, waters, seabed or beneath the seabed of that Member State;

6. Products of sea-fishing taken by vessels registered with a Member State and entitled to fly its flag and other products[1] taken from the territorial waters, seabed or beneath the seabed outside the territorial waters[2] of that Member State, provided that that Member State has the rights to exploit such waters, seabed and beneath the seabed in accordance with international law[3];

7. Products of sea-fishing and other marine products taken from the high seas by vessels registered with a Member State and entitled to fly the flag of that Member State;

8 Products processed and/or made on board factory ships registered with a Member State and entitled to fly the flag of that Member State, exclusively from products referred to in Clause 7 of this Article;

9. Articles collected there which can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for disposal or recovery of parts of raw materials, or for recycling purposes;

10. Waste and scrap derived from:

a/ Production there; or,

b/ Used goods collected there, provided that such goods are fit only for the recovery of raw materials.

11. Goods obtained or produced in a Member State from products referred to in Clauses 1 thru 10 of this Article.

Article 4. Not wholly obtained or produced

1. A good referred to in Clause 2, Article 2 shall be considered to be originating in the Member State where working or processing of the good has taken place if:

a/ It has a regional value content (below referred to as “ASEAN value content” or the “regional value content (RVC)”) of at least 40 percent which is calculated using the formula set out in Clause 2 of this Article; or all non-originating materials used for producing the goods have undergone a change in tariff heading (“CTH”) at four (4) digit level;

b/ Notwithstanding Point a, Clause 1 of this Article, a good referred to in Annex 2 shall be considered to be originating if it satisfies the criteria set out therein.

2. The formula for calculating RVC:

a/ Direct formula:

RVC

=

ASEAN material cost

+

Direct labor cost

+

Direct overhead cost

+

Other costs

Profit

x

100%

FOB price

b/ Indirect formula:

RVC	=	FOB price	-	Value of non-originating materials, parts or products	x	100%
		FOB price

3. For the purpose of calculating the regional value content provided in Clause 2:

a/ The value of non-originating materials, parts or products is:

- The CIF price at the time of importation of the products; or,

- The earliest ascertained price paid for the products of undetermined origin in the territory of the Member State where the working or processing takes place;

b/ Labor cost includes wages, remuneration and other employee benefits associated with the manufacturing process;

c/ The overhead cost includes real property items associated with the manufacturing process (insurance, factory rent and leasing, depreciation on buildings, repair and maintenance, taxes, interests on mortgage); leasing of and interest payments for plant and equipment; factory security; insurance (plant, equipment and materials used in the manufacture of the goods); utilities (energy, electricity, water and other utilities directly attributable to the manufacture); research, development, design and engineering; dies, molds, tooling and the depreciation, maintenance and repair of plant and equipment; royalties or licenses (in connection with patented machines or processes used in the manufacture or the right to manufacture); inspection and testing of materials and the goods; storage and handling in the factory; disposal of recyclable wastes; and cost elements in computing the value of raw materials, i.e., port and clearance charges and import duties (if any) and the like;

d/ FOB price means the free-on-board value of the good, inclusive of the cost of transport to the port or site of final shipment abroad. FOB price shall be determined by adding the value of materials, production cost, profit and other costs;

e/ Other costs refer to the costs incurred in placing the goods in the ship for export, including domestic transport costs, storage and warehousing, port handling, brokerage fees, service charges and the like.

4. Member States shall determine and adhere to only one method of calculating the ASEAN value content. Member States shall be given the flexibility to change their calculation method provided that such change is notified to the AFTA Council at least six (6) months prior to the adoption of the new method. Any verification of the ASEAN value content calculation by the importing Member State shall be done on the basis of the method used by the exporting Member State.

5. Vietnam shall use the indirect formula for calculating the ASEAN value content.

6. In determining the costs referred to in Clause 3 of this Article, Member States shall closely adhere to the guidelines for costing methodologies set out in Annex 4.

7. Locally procured materials produced by manufacturers established in compliance with domestic regulations shall be deemed to have fulfilled the origin requirements in this Annex; locally procured materials from other sources shall be subjected to the origin test according to this Annex.

Article 5. Accumulation

1. A good originating in a Member State, which is used in another Member State as materials for a finished good eligible for preferential tariff treatment, shall be considered to be originating in the latter Member State where working or processing of the finished good has taken place.

2. If the ASEAN value content of the material is less than 40 percent, the qualifying ASEAN value content to be cumulated using the RVC criterion shall be in direct proportion to the actual domestic content provided that it is equal to or more than 20 percent. The implementing guidelines are set out in Annex 5.

Article 6. Minimal operations and processes

1. Operations or processes undertaken, by themselves or in combination with each other for the purposes listed below, are considered to be minimal and shall not be taken into account in determining origin:

a/ Ensuring preservation of goods in good condition for the purposes of transport or storage;

b/ Facilitating shipment or transportation;

c/ Packaging or presenting goods for sale.

2. A good originating in a Member State shall retain its initial originating status, when exported from another Member State, where operations undertaken have not gone beyond those referred to in Clause 1 of this Article.

Article 7. Direct consignment

1. Preferential tariff treatment shall be applied to a good satisfying the requirements of this Annex and which is consigned directly between the territories of the exporting Member State and the importing Member State.

2. The following shall also be considered as consigned directly from the exporting Member State to the importing Member State:

a/ If the goods are transported by passing through the territory of any other Member State;

b/ If the goods are transported without passing through the territory of any non-Member State;

c/ The goods whose transport involve transit through one or more intermediate non-Member State with or without transshipment or temporary storage in such countries, provided that:

- The transit entry is justified for geographical reason or by consideration related exclusively to transport requirements;

- The goods have not entered into trade or consumption there; and,

- The goods have not undergone any operation there other than unloading and reloading or any operation required to keep them in good condition.

Article 8. De Minimis

1. A good that fails to meet the criterion of a change in tariff classification shall be considered as originating if the value of all non-originating materials (used in its production) that do not undergo the required change in tariff classification is less than ten (10) percent of the FOB value of the good and the good meets all other applicable criteria set forth in this Annex.

2. The value of non-originating materials referred to in Clause 1 shall, however, be included in the value of non-originating materials for any applicable ASEAN value content requirement for the good.

Article 9. Treatment of packages and packing materials

1. Packaging and packing materials for retail:

a/ If the good is subject to the ASEAN value content criterion, the value of packaging and packing materials for retail shall be taken into account in its origin assessment, where the packaging and packing materials are considered to be forming a whole with the good.

b/ In case Point a, Clause 1 of this Article is not applicable, packaging and packing materials for retail, when classified together with the packaged good shall not be taken into account in considering whether all non-originating materials used in the manufacture of a product fulfil the criterion corresponding to a change of tariff classification of the said good.

2. Containers and packing materials exclusively used for the transport of a good shall not be taken into account for determining the origin of the said good.

Article 10. Accessories, spare parts and tools

The origin of accessories, spare parts, tools and instructional or other information materials presented with a good shall not be taken into account in determining the origin of the good, provided that such accessories, spare parts, tools and instructional or information materials are classified with the good and their customs duties are collected with the good by the importing Member State.

Article 11. Neutral elements

In order to determine whether a good originates, it is unnecessary to determine the origin of the following which might be used in its production and not incorporated into the good:

1. Fuel and energy;

2. Tools, dies and molds;

3. Spare parts and materials used in the maintenance of equipment and buildings;

4. Lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings;

5. Gloves, glasses, footwear, clothing, safety equipment and supplies;

6. Equipment, devices and supplies used for testing or inspecting the good;

7. Catalyst and solvent;

8. Any other goods that are not incorporated into the good but of which use in the production of the good can reasonably be demonstrated to be part of that production.

Article 12. Identical and interchangeable materials

1. For the purpose of determining the origin of a good, when the good is manufactured utilizing originating and non-originating materials, mixed or physically combined, the origin of such materials can be determined by generally accepted accounting principles of stock control applicable in the exporting Member State.

2. Once a decision has been taken on the accounting principles of stock control, those principles shall be used throughout the fiscal year.

Article 13. C/O form D

A claim that a good shall be accepted as eligible for preferential tariff treatment shall be supported by a C/O form D issued by a government authority designated by the exporting Member State and notified to the other Member States to the CEPT-AFTA Agreement in accordance with the C/O issuance procedures, as set out in Annex 6 (not printed herein).

Article 14. Review and modification

This Annex may be reviewed and modified as and when necessary upon request of a Member State and may be open to such reviews and modifications as may be agreed upon by the AFTA Council.-