Circular No. 21/2010/TT-BCT dated May 17, 2010 of the Ministry of Industry and Trade on implementation of the rules of origin provided in the ASEAN trade in goods agreement

CIRCULAR

ON IMPLEMENTATION OF THE RULES OF ORIGIN PROVIDED IN THE ASEAN TRADE IN GOODS AGREEMENT

THE MINISTRY OF INDUSTRY AND TRADE

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 ASEAN Trade in Goods Agreement concluded on February 26, 2009, in Cha-am. Thailand, at the 14'h summit meeting of the member states of the Association of Southeast Asian Nations;

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 ASEAN Trade in Goods Agreement 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 (below referred to as C/O) means an originating good under the provisions of Appendix 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 ASEAN Trade in Goods Agreement (below referred to as ATIGA) is the one concluded on February 26, 2009, in Cha-am. Thailand, at the I4lh summit meeting of the member states of the Association of Southeast Asian Nations.

2. Vietnamese issuer of C/O form D (below referred to as C/O issuer) means organizations specified in Annex 13 to this Circular (not printed herein).

3. Applicant for C/O form D (below referred to as C/O applicant) 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 products when necessary;

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

5. Send specimens of signatures of persons authorized to sign C/O and their seals 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 exported goods 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 comply with other 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 CI O application and the specimen of the seal of the trader (Annex 12, 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 11, 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 10, not printed herein), which has been fully and duly filled in as guided in Annex 9 (not printed herein):

b/ The C/0 form (Annex 8. 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 exports 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 after 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 (70 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 C7O issuers. After examining application dossiers on the eCOSys, if agreeing to issue C/O, C/O issuers shall notify such via the eCOSys to applying traders 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 one 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/0 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 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 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 (70 issuance;

2. Carrying out procedures for registering specimens of signatures of persons competent to sign and issue C/0 and specimens of seals of Vietnamese C/0 issuers with the ASEAN Secretariat, and forwarding specimens of signatures of persons competent to sign and issue C/0 and specimens of seals of C/0 issuers of ATIGA 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 issuance of C/0.

Article 12. Reporting regime

1. C/0 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 C70 application dossiers.

2. C70 issuers that have not joined the eCOSys shall make eCOSys connection with the Department for E-Commerce and Information Technology under the Ministry of Industry and Trade. Pending the completion of the eCOSys connection. C/0 issuers shall make written monthly reports and via-email reports (transmitted in Excel data). A monthly report shall be sent to the Ministry of Industry and Trade no later than the 5th day of the following month, counting from the date of the postmark or from the date of sending email according to a form provided in Annex 14 (not printed herein).

3. C/0 issuers that have violated thrice the reporting regime prescribed in Clauses 1 and 2 of this Article shall be suspended from issuing C/0 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/0 issuers suspended from issuing C/0 to issue C/0 again based on the requests and explanations of these issuers.

Article 13. Implementation provisions

1. This Circular takes effect on July 1, 2010.

2. This Circular replaces the Ministry of Industry and Trade's Circular No. 01/2010/TP 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 establishment of the ASEAN Free Trade Area (AFTA).

ANNEX 1

RULES OF ORIGIN

(To the Ministry of Industry and Trade's Circular No. 21/2010/TT-BCT of May 17, 2010, on implementation of the rules of origin provided in the ASEAN Trade in Goods Agreement)

Article 1. Definitions

For the purposes of this Annex, the terms below are construed as follows:

1. "Aquaculture" means the farming of aquatic organisms including fish, mollusks. crustaceans, other aquatic invertebrates and aquatic plants, from feedstock such as eggs. fry. fingerlings and larvae, by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding, or protection from predators;

2. "OF" means the value of the goods imported, and includes the costs of freight and insurance up to the port or place of entry into the country of importation. The valuation shall be made in accordance with Article VII of GATT 1994 and the Agreement on the Implementation of Article VII of GATT 1994 as contained in Annex 1A to the WTO Agreement.

3. "FOB" means the free-on-board value of the goods, inclusive of the costs of transport to the port or site of final shipment abroad. The valuation shall be made in accordance with Article VII of GATT 1994 and the Agreement on the Implementation of Article VII of GATT 1994 as contained in Annex lA to the WTO Agreement;

4. "Generally accepted accounting principles" means the recognized consensus or substantial authoritative support in the territory of a Member State, with respect to the recording of revenues, expenses, costs, assets and liabilities; the disclosure of information; and the preparation of financial statements. These principles may encompass broad guidelines of general application as well as detailed standards, practices and procedures;

5. "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;

6. "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:

7. "Materials" means any matter or substance used or consumed in the production of goods or physically incorporated into another good or is subject to a process in the production of another good;

8. "Originating goods or originating material" means goods or material that qualifies as originating in accordance with the provisions of this Annex;

9. "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;

10. "Production" means methods of obtaining goods, including growing, mining, harvesting, raising, breeding, extracting, gathering, collecting, capturing, fishing, trapping, hunting, manufacturing, producing, processing or assembling goods; and.

11. "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 a Regional Value Content criterion (or percentage of value) or a combination of any of these criteria.

Article 2. Origin criteria

Goods imported into the territory of a Member .State from another Member Slate 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 Slate as set out and defined in Article 3: or.

2. A good not wholly obtained or produced in an exporting Member State, provided that it is eligible under Article 4 or 6.

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, including fruits, flowers, vegetables, trees, seaweed, fungi and live plants, grown and harvested, picked or gathered in the exporting Member State;

2. Live animals, including mammals, birds, fish, crustaceans, mollusks, reptiles, bacteria and viruses, born and raised in the exporting Member State;

3. Goods obtained from live animals in the exporting Member State:

4. Goods obtained from hunting, trapping, fishing, farming, aquaculture. gathering or capturing conducted in the exporting Member State;

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 waters, seabed or beneath the seabed outside the territorial waters [2] of that Member Stale, 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 or 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; and.

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 goods

1. General origin criteria.

a/Goods specified in Clause 2, Article 2 shall be deemed to be originating in the Member State where working or processing of the goods has taken place if:

- the goods have a regional value content (below referred to as "ASEAN Value Content" or the "Regional Value Content (RVC)") of not less than forty percent (40%) calculated using the formula set out in Article 5; or,

- all non-originating materials used in the production of the goods have undergone a change in tariff classification (below referred to as "CTC") at four-digit level (i.e.. a change in tariff heading) of the Harmonized System.

b/ Each Member State shall permit the exporter of the good to decide whether to use either the "Regional Value Content (RVC) of not less than forty percent (40%)" or "change in tariff classification at four-digit level" specified at Point a. Clause 1 when determining whether the goods qualify as originating goods of the Member State.

2.- Product specific rules.

a/ Notwithstanding Clause 1 of this Article, goods listed in Annex 2 shall qualify as originating goods if the goods satisfy the product specific rules set out therein.

b/ Where a product specific rule provides a choice of rules from an RVC-based rule of origin, a CTC-based rule of origin, a specific manufacturing or processing operation (SP). or a combination of any of these, each Member State shall permit the exporter of the goods 10 decide which rule to use in determining whether the goods qualify as originating goods of the Member State.

c/ Where product specific rules specify a certain RVC. it is required that the RVC of a good is calculated using the formula set out in Article 5.

d/ CTC-based or SP-based rule of origin shall apply only to non-originating materials.

3. Notwithstanding Clauses 1 and 2 of this Article, a good which is covered by Attachment A or B of the Ministerial Declaration on Trade in Information Technology Products adopted in the Ministerial Conference of the WTO on December 13. 1996. set out as Annex 4. shall be deemed to be originating in a Member State if it is assembled from materials covered under the same Annex.

Article 5. Formula for RVC calculation

1. For the purposes of Article 4. the formula for calculating RVC is as follows:

a/ Direct method:

2. For the purpose of calculating RVC provided in Clause 1 of this Article:

a/ ASEAN material cost is the CIF value of originating materials, parts or goods that are acquired or self-produced by the producer in the production of the good;

or.

b/ Indirect method:

b/ Value of non-originating materials, parts or goods is:

- The CIF value at the time of importation of the goods or importation can be proven; or.

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

c/ Direct labor cost includes wages, remuneration and other employee benefits associated with the manufacturing process:

d/ The calculation of direct overhead cost includes, but is not limited to. real property items associated with the production 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 production of the goods); 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 of the goods or the right to manufacture the goods); 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 paid for dutiable component; and.

e/ FOB price means the free-on-board value of the goods as defined in Article 1. FOB price shall be determined by adding the value of materials, production cost, profit and other costs.

3. Member States shall determine and adhere to only one method of calculating the RVC. 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 to the RVC calculation by the importing Member State shall be done on the basis of the method used by the exporting Member State.

4. In determining the RVC, Member States shall closely adhere to the guidelines for costing methodologies set out in Annex 5 (not printed herein).

5. Locally-procured materials produced by established licensed manufacturers, in compliance with domestic regulations, shall be deemed to have fulfilled the origin requirement of this Annex; locally-procured materials from other sources shall be subjected to the origin verification under the Agreement on Customs Valuation for the purpose of origin determination.

6. The value of goods under this Annex shall be determined in accordance with the provisions of the Agreement on Customs Valuation.

7. Vietnam shall apply the indirect method of calculation specified at Point b. Clause 1 of this Article for determining the origin of exports under the ATIGA.

Article 6. Accumulation

1. Unless otherwise provided for in the ATIGA, 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 RVC of the material is less than forty percent (40%). the RVC 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 twenty percent (20%). The implementing guidelines are set out in Annex 6 (not printed herein).

Article 7. 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 of goods in a Member State:

a/ ensuring preservation of goods in good conditions for the purposes of transport or storage;

b/ facilitating shipment or transportation; and,

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 8. 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 from an exporting Member State to an importing Member State; or,

b/ If the goods are transported through one or more Member State other than the exporting Member State or the importing Member State, or through any non-ASEAN Member State, 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 keeping them in good conditions.

Article 9. The minimized percentage of material fails to meet the CTC criterion

1. A good that fails to meet the CTC criterion shall be considered as originating if the value of all non-originating materials (used in its production) that do not undergo the required CTC does not exceed ten percent (10%) 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 of this Article shall, however, be included in the value of non-originating materials for any applicable RVC requirement for the good.

Article 10. Treatment of packages and packing materials

1. Packaging and packing materials for retail:

a/ If the good is subject to the RVC 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 fulfill the CTC criterion 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 11. Accessories, spare parts and tools

1. If a good is subject to the requirements of CTC or SP, the origin of accessories, spare parts, tools and instructional or other information materials presented with the good shall not be taken into account in determining whether the good qualifies as an originating good, provided that:

a/ the accessories, spare parts, tools and instructional or other information materials are not invoiced separately from the good; and,

b/ the quantities and value of the accessories, spare parts, tools and instructional or other information materials are customary for the good.

2. If a good is subject to the RVC-based rule of origin, the value of the accessories, spare parts, tools and instructional or other information materials shall be taken into account as the value of the originating or non-originating materials, as the case may be. in calculating the RVC of the originating good.

Article 12. Neutral elements

In order to determine whether a good originates, it is not necessary 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; and.

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 a part of that production.

Article 13. Identical and interchangeable materials

1. For the purpose of establishing 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 or stock control practices 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 14. C/O

A claim that a good shall be accepted as eligible for preferential tariff treatment shall be supported by a C/O issued by a government authority designated by the exporting Member State as set out in Annex 8 and notified to the other Member States as set out in Annex 7 (not printed herein).-