An Assessment of Rules of Origin in RCEP and ASEAN+1 Free Trade Agreements

ANASSESSMENTOFRULESOF ORIGININRCEPANDASEAN+1FREETRADEAGREEMENTS PramilaCrivelli,StefanoInama,andMarkPearson OCTOBER2023 ASIANDEVELOPMENTBANK ANASSESSMENTOFRULESOFORIGININRCEPANDASEAN+1FREETRADEAGREEMENTS PramilaCrivelli,StefanoInama,andMarkPearson OCTOBER2023 ASIANDEVELOPMENTBANK CreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO) ©2023AsianDevelopmentBank 6ADBAvenue,MandaluyongCity,1550MetroManila,PhilippinesTel+63286324444;Fax+63286362444 www.adb.org Somerightsreserved.Publishedin2023. ISBN978-92-9270-359-2(print);978-92-9270-360-8(electronic);978-92-9270-361-5(ebook) PublicationStockNo.TCS230396-2 DOI:http://dx.doi.org/10.22617/TCS230396-2 TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsandpoliciesoftheAsianDevelopmentBank(ADB)oritsBoardofGovernorsorthegovernmentstheyrepresent. ADBdoesnotguaranteetheaccuracyofthedataincludedinthispublicationandacceptsnoresponsibilityforanyconsequenceoftheiruse.ThementionofspecificcompaniesorproductsofmanufacturersdoesnotimplythattheyareendorsedorrecommendedbyADBinpreferencetoothersofasimilarnaturethatarenotmentioned. Bymakinganydesignationoforreferencetoaparticularterritoryorgeographicarea,orbyusingtheterm“country”inthispublication,ADBdoesnotintendtomakeanyjudgmentsastothelegalorotherstatusofanyterritoryorarea. ThispublicationisavailableundertheCreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO)https://creativecommons.org/licenses/by/3.0/igo/.Byusingthecontentofthispublication,youagreetobeboundbythetermsofthislicense.Forattribution,translations,adaptations,andpermissions,pleasereadtheprovisionsandtermsofuseathttps://www.adb.org/terms-use#openaccess. ThisCClicensedoesnotapplytonon-ADBcopyrightmaterialsinthispublication.Ifthematerialisattributedtoanothersource,pleasecontactthecopyrightownerorpublisherofthatsourceforpermissiontoreproduceit.ADBcannotbeheldliableforanyclaimsthatariseasaresultofyouruseofthematerial. Pleasecontactpubsmarketing@adb.orgifyouhavequestionsorcommentswithrespecttocontent,orifyouwishtoobtaincopyrightpermissionforyourintendedusethatdoesnotfallwithintheseterms,orforpermissiontousetheADBlogo. CorrigendatoADBpublicationsmaybefoundathttp://www.adb.org/publications/corrigenda.Note: Inthispublication,“$”referstoUnitedStatesdollars. ADBrecognizes“China”asthePeople’sRepublicofChinaand“Korea”astheRepublicofKorea.CoverdesignbyMichaelCortes. iii Tables,Figures,andBoxesiv Abbreviationsv Acknowledgmentsvi 1.Introduction1 2.FeaturesofRCEPRulesofOriginandAsean+1FreeTradeAgreements3 3.FormofProduct-SpecificRulesofOrigininRCEPandASEAN+1FreeTradeAgreements10 4.MethodologyforAssessingStringencyandLeniencyofProduct-SpecificRulesofOrigin18 5.MethodologyforCodingProduct-SpecificRulesofOrigin21 CodingStringency21 CodingConvergence22 6.ProofofOrigininASEAN+1FreeTradeAgreementsandRCEP30 7.ConclusionandRecommendations37 References39 iv Tables,Figures,andBoxes Tables 1ComparisonoftheArchitectureofRuleofOriginCriteriainRCEPandASEAN+1FTAs5 2ComparisonofCalculationMethodologyinDeterminingRegionalValueContent6 3ComparingDistributionandLengthofPSROTextamongRCEPandASEAN+1FTAs9 4SummaryofPSROComparisonsofASEANFTAsandtheRCEP11 5SummaryofPSROComparisonoftheRCEPandATIGA+1FTAs12 6ComparisonofProduct-SpecificRulesofOriginforGarments19 7StringencyComparisonandScores22 8ConvergenceandStringency25 9IssuanceofCertificatesofOriginandNotificationofSpecimenandStamps32 inASEAN+1FTAsandtheRCEP 10ComparisonofProofofOriginFormatandRelatedRequirements34 11ATIGAUtilizationRatesbyYear36 Figures 1RCEP,Product-SpecificRulesofOrigin13 2AANZFTA,Product-SpecificRulesofOrigin14 3ACFTA,Product-SpecificRulesofOrigin15 4AJCEP,Product-SpecificRulesofOrigin16 5AKFTA,Product-SpecificRulesofOrigin17 6ConvergencebyHSChapter27 7ImpactoftheAdoptionofaGeneralRule(RVC40orCTH)inACFTA28 Boxes 1ExamplesofStringencyCoding23 2HowtoCalculatetheConvergenceScores26 v AANZAASEAN-Australia-NewZealandFreeTradeAgreementADBAsianDevelopmentBank ACFTAASEAN-People’sRepublicofChinaFreeTradeAgreementAJCEPASEAN-JapanComprehensiveEconomicPartnershipAKFTAASEAN-RepublicofKoreaFreeTradeAgreement ASEANAssociationofSoutheastAsianNationsATIGAASEANTradeinGoodsAgreement CCChangeofChapter COCertificateofOrigin CPTPPComprehensiveandProgressiveAgreementforTrans-PacificPartnershipCTCChangeofTariffClassification CTHChangeofTariffHeadingCTSHChangeofTariffSubheadingFOBFreightonBoard FTAFreeTradeAgreement HSHarmonizedSystem PSROProduct-SpecificRulesofOrigin RCEPRegionalComprehensiveEconomicPartnershipRVCRegionalValueContent USUnitedStates VNMValueofNon-OriginatingMaterialsVOMValueofOriginatingMaterials WOWhollyObtained vi Acknowledgments ThisreportwaspreparedbytheRegionalCooperationandIntegrationDivision(ERCI)oftheEconomicResearchandDevelopmentImpact(ERDI)ofAsianDevelopmentBank(ADB).ItwassupportedbytheADBtechnicalassistanceproject,TA6740:RaisingtheValueofRegionalTradeAgreements—KeyFactorsforSuccessfulImplementationandPositiveEconomicImpact,financedbyADB’sTechnicalAssistanceSpecialFundandtheRegionalCoope