What are Rules of Origin?

Products made on board its factory ships exclusively

As to WTO – ROO as the determination of the from the products referred to in (v);
economic nationality as opposed to the geographical Mineral products extracted from its soil or its
nationality of a given good. seabed;
As to ATIGA – Applying to ASEAN region, products Used articles collected there fit only for the recovery
that comply ROO provisions, are classified as being of of raw materials;
ASEAN origin, and in turn, will be able to enjoy ATIGA Waste and scrap resulting from manufacturing
Preferential tariff rates. operations conducted there; and
Rules of Origin (ROO) are sets of principles to Products obtained there exclusively from the
determine the economic content and nationality of a products specified in the above.
product. They are used to ascertain the origin of a
good, i.e., not where the good has been shipped b. Substantial Transformation
from, but where the good has been deemed to have This requires that a good be transformed into a new
been produced or manufactured. Other uses of
and different article having a distinctive name,
ROO include:
To implement measures and instruments of character or use. Under the rule, a good is a product
commercial policy, such as anti- dumping duties and of the country where it last underwent substantial
quotas; transformation.
To determine whether imported products shall be
subjected to MFN or preferential treatment; What are the three major rules applied in
For purposes of trade statistics and issuance of substantial transformation?
certificate of origin; a. Regional Value Content (RVC Requirement)
For the application of labelling and marking Value added can be expressed either as a minimum
requirements; value added content expressed in percentage of total
product cost; or a maximum allowable cost
For public procurement; and
percentage assigned to the value of imported material
For process patent.
including those of undetermined origin.
b. Change in Tariff Classification Criteria
What are the two types of Rules of Origin?
This includes:
Non-preferential ROO - This is used to
Change in Chapter (CC)
implement measures and instruments of commercial
Implies that for origin to be conferred, the non-
policy, such as quotas, anti-dumping, safeguards,
originating material used to produce a good should be
subsidy, anti-circumvention, trade statistics, origin
classified outside the HS Chapter (2-digit level) where
labelling, and marking.
the final good whose origin is being determined is
Preferential ROO - This is used to establish
classified.
whether a product is qualified for preferential tariff
Change of Tariff Heading (CTH)
treatment. They are an integral component of
Connotes that to obtain origin, the non-originating
international trading arrangements, whether regional
material used to produce a good should have been
or bilateral, under specific Free Trade Areas (FTAs), in
classified in a tariff heading (4-digit level) outside the
order to avoid transshipment.
heading where the good under consideration is
classified. Changes between the subheadings of the
What is a Country of Origin?
main heading where the good is located will not
Country of origin refers to the country where a
confer origin under this rule.
product is obtained, produced or manufactured. Some
Change of Tariff Subheading (CTSH)
products clearly originate in a given country. But in
Suggests that to obtain origin, the non-originating
today’s world characterized by global production
material used for the good under consideration must
chains, other manufactured goods not only use
come from a different subheading (6-digit level) other
materials originating from other countries but also
than the subheading where the good in question is
undergo processing or assembly in multiple countries.
classified.
Change of Tariff Heading Split
What are the two basic criteria in determining
Same implication as change in tariff heading except
the country of origin of a product?
that an existing HS heading is (split) into two or more
A. Wholly Obtained
subheadings.
As the term implies, wholly obtained good refers to a
Change of Tariff Subheading Split
product occurring naturally within a country and to a
Same effect as change in tariff subheading except
good made entirely from said product. For this type of
that an existing subheading is (split) into two or more
good, origin is obviously derived from the country
tariff lines.
from which the good is obtained. The following
c. Specific Process Rule
categories of products are considered wholly obtained
Some goods are required to meet special product
in the exporting country:
specific rules in the exporting FTA Party. In many
Agricultural products harvested there;
cases, these rules specify a process that must be
Animals born and raised there; undergone in order for a good to be considered
Products obtained from animals referred to (ii) originating.
above;
Products obtained from hunting or fishing;
Products obtained of sea fishing and other products
taken from sea by its vessel;
What are the two methods used n the
determination of RVC?
a. Direct/Build Up Method
The sum of the value of originating materials,
overhead cost and profit is divided by the free-on-
board value of the finished product.
RVC = VOM x 100%
FOB
b. Indirect/Build Down Method
The sum of the value of non-originating imported
materials, parts and components including those of
unknown origin is divided by the free-on-board value
of the finished good.
RVC = VOM x 100%
FOB
How does the “accumulation rule” apply in the
determination of RVC?
Products which comply with origin requirements and
are subsequently used in an FTA Party as inputs for a
finished product eligible for preferential treatment in
another FTA Party shall be considered as products
originating in the FTA Party where working or
processing of the finished product has taken place.
There are two (2) types of accumulation, namely:
Full Accumulation
Accumulation of the full value of the product from a
party in an FTA territory.
Partial Accumulation
Parties are allowed to accumulate inputs with other
member countries to hurdle the ROO criterion. Tariff
preference is given to the final exporting country.
In the determination of RVC, what are
considered indirect materials, accessories and
spare parts, and packaging materials or
containers? How are they treated?
What are the other rules that may be applied in
determining the country of origin?
a. Exception Rule
This prohibits a tariff shift from a particular
classification, e.g., RVC (40) or Change in Tariff
Heading, except from 4809 under the ASEAN-
Australia-New Zealand FTA (AANZFTA).
b. Alternative Rule
Would confer origin under two different
circumstances, e.g., wholly obtained or change from
youth to maturity (live horses).
c. Supplementary Rule
There are requirements, which could be in terms of
production process or characteristics of the final
product, which are imposed in addition to another
rule in order to complete the conferment of origin for
a particular good.
d. Residual Rule
This is to cover those goods to which the specific
rules will not apply.
What is the “de minimis” in Rules of Origin?
An FTA may incorporate a de minimis provision that
allows a good to qualify as an originating good
provided that the total value of all non-originating
materials which do not satisfy the change in tariff
classification requirement does not exceed a set
percentage of the free-on-board value of the final
good, usually ranged from 7%-15%.
What are the processes that do not confer
origin?
Regardless of criterion used to confer origin, the
following operation/s are considered to be insufficient
working or processing that does not confer originating
status to a product:
a. Operations to ensure the preservation of products
in good condition during transport and storage
(drying, chilling, adding salt etc.)
b. Simple operations consisting of sifting, sorting,
classifying or matching, washing, painting or cutting
up;
c. Changes of packing and breaking up and
assembling of consignment;
d. Simple slicing, cutting and repacking or placing in
bottle, flasks, bags, boxes and all other simple
packing operations;
e. Affixing of marks, labels or other like distinguishing
signs on products or their packaging;
f. Simple mixing of products;
g. Simple assembly of parts of products to constitute
a complete product;
h. Combination of two or more operations specified in
(a) to (f); and
i. Slaughter of animals.
What is a Certificate of Origin?
Declaration of the exporter, as certified by the
issuing authority (the Bureau of Customs, or BOC, in
the case of a Philippine exporter), that the export
product complies with the origin requirement as
specified under a bilateral, regional, or multilateral
trading arrangement.
In the same way that a passport is an evidence of
the nationality of a person, a Certificate of Origin
(CO) is an evidence of the economic nationality of a
product that must be presented by a Philippine
importer to BOC for them to avail of the preferential
tariff rates.
There are two kinds of CO, namely:
Non-preferential Treatment
CO for General Merchandise: White CO
Preferential Treatment:
Generalized System of Preference: Form A
ATIGA: Form D
AANZFTA: Form AANZ
ACFTA: Form E
AJCEPA: Form AJ
AIFTA: Form AI
 AKFTA: Form AK measures intended to promote a more competitive
PJEPA: Form JP environment as well as enactments designed to
prevent a reduction in competition.
Operational Certification Procedure for the
Rules of Origin of the ASEAN Common Effective What is Competition Policy?
Preferential Tariff Scheme for ASEAN Free Competition policy broadly refers to all laws,
Trade Area government policies and regulations aimed at
CO FORM D establishing competition and maintaining the same. It
Shall be an ISO A4 size paper; includes measures intended to promote, advance and
Shall be made in English; ensure competitive market conditions by the removal
Shall bear a reference number separately given by of control, as well as to redress anti-competitive
each place of office of issuance; results of public and private restrictive practices.
Shall bear the manually executed signature and seal
of the authorized issuing authority; What are the goals of Competition Policy?
Shall comprise one original (light violet) and two
carbon copies (duplicate – orange; triplicate –
orange); and
Under ATIGA (OCP, Rule 14), a CO Form D shall be
valid for a period of 12 months from the date of
issuance.
ATIGA OCP Rule 7, a CO shall comprise one original
and two carbon copies.
Original – forwarded by the exporter to the importer
for submission to customs
Duplicate – retained by the issuing authority
Triplicate – retained by the exporter What are the basic market structures in which
the degree of competition affects prices,
Kinds of Certification
Self-Certification outputs and profits?
By exporters, importers or either of the two (e.g.,
NAFTA, Canada, US and New Zealand)
Government Certification
- By the government authorities such as Customs or
Trade Department
- By the designated bodies under the supervision of
government such as the Chamber of Commerce or
Trader’s Association.
ASEAN Self-Certification
- Enables “Certified Exporters” to make invoice
declarations on the origin of the goods. Declaring that
their products have satisfied the requirements of the
ATIGA ROO;
- Eliminates the need for exporters to present a CO What is a market failure?
Form D in claiming tariff preference under the ATIGA, Market failure occurs when the market is unable to
thus reducing the documentation burden of traders. achieve an efficient and equitable allocation of
resources.

What are the sources of market failure?

What is a Competition Law?
Competition law refers to the framework of rules and
regulations designed to foster the competitive
environment in a national economy. It consists of
Public Goods – which if provided to one
consumer, is freely available to all consumers
Income Distribution – the market will not
necessarily ensure equitable distribution of incomes.
This may motivate government to introduce policies
to redistribute wealth through measures, i.e., income
taxes and social security benefits.
Monopoly – the operations of monopoly or natural
monopoly often result in misuse of market power and
inefficient allocation of resources, which reduce
community welfare. For this reason, governments
generally regulate monopoly and enforce laws
preventing cartels. This type of market scenario is a
major rationale for a comprehensive competition
policy.
Externalities – arise when an activity confers a
benefit (like the benefit of education or immunization)
or imposes a cost (pollution) on a third party, without
the cost or benefit being included in the market price What are the duties and responsibilities of the
of that activity. OFC?
Information Asymmetries – in theory, buyers Investigate all cases involving violations of
and sellers in a competitive market have complete competition laws and prosecute violators to prevent,
knowledge about a product or service characteristics restrain and punish monopolization, cartels and
and quality. Information asymmetries between combinations in restraint of trade;
producers and consumers can lead to market failure Enforce competition policies and laws to protect
and reduce community welfare. consumers from abusive, fraudulent, or harmful
corrupt business practices;
What are the main areas/concerns which Supervise competition in markets by ensuring that
competition policy and law should address? prohibitions and requirements of competition laws are
adhered to, and to this end, call on other government
agencies and/or entities for submission of reports and
provision for assistance;
Monitor and implement measures to promote
transparency and accountability in markets;
Prepare, publish and disseminate studies and
reports on competition to inform and guide the
industry and consumers; and
Philippines’ Major competition-related laws Promote international cooperation and strengthen
1987 Constitution - Prohibits monopolization and Philippine trade relations with other countries,
combination in restraint of trade (on a rule of reason economies, and institutions in trade agreements.
basis), but has no imposable sanctions for violation;
Revised Penal Code of the Philippines (Article
186) - Describes monopolization and combinations in
restraint of trade as acts punishable and describes
penalties, including imprisonment and fines of
between P200,000.00 and P600,000.00; it is similar in
nature to Section 2 of the US Sherman Act;
Republic Act 3247 – Known as the Act to Prohibit
Monopolies and Combinations in Restraint of Trade,
this law provides for treble damages for civil liabilities
arising from anti-competitive behaviour.
Republic Acts 165 and 166 - These are the
Patent Law and Trademark Law, respectively, and
describe the appropriate civil actions which can be
resorted to and penalties imposable for breaches.
Presidential Decree 49 - This is the Copyright
Law and penalizes copyright infringement.
Republic Act 386 - This is the Civil Code of the
Philippines and stipulates the collection of damages
arising from unfair competition.
Republic Act 7581 - The Price Act protects
consumers by stipulating price manipulation
(hoarding, profiteering and cartels) as illegal for
certain commodities in cases of emergency.
Republic Act 7394 - The Consumer Act of the
Philippines imposes penalties for behavior such as
deceptive, unfair and unconscionable sales practices
in both goods and credit transactions.
Philippine Corporation Code - Provides for rules
and proceedings for approving mergers,
consolidations and combinations for the Securities
and Exchange Commission
Executive Order (EO) No. 45, series of 2011 -
Designating the Department of Justice (DOJ) as the
Competition Authority

What is the Office for Competition?

The Office for Competition (OFC) is the country’s
central body on competition created pursuant to EO
No. 45 (Designating the Department of Justice as the
Competition Authority) signed on June 9, 2011. OFC
is under the Office of the Secretary of Justice.