28-03-2024

AMEND THE RULES OF ORIGIN IN AKFTA AGREEMENT

On March 27, 2024, the Ministry of Industry and Trade No. 04/2024/TT-BCT on amending and supplementing several Articles of the Circular No. 20/2014/TT-BCT dated June 25, 2014, of the Minister of Industry and Trade on the implementation of rules of origin in the Agreement establishing Asean – Korea free trade area (AKFTA). Circular No. 04/2024/TT-BCT on amending and supplementing Article 4, Appendix I on (Rules of Origin) enclosed with the Circular No. 20/2014/TT-BCT.

For the purposes of Point b Clause 1 Article 2, a good, except those covered under Article 5 as provided for in this Appendix, shall be deemed to be originating if the regional value content (herein after referred to as the “RVC”) is not less than 40% of the FOB value or if a good has undergone a change in tariff classification at 4 (four) digit-level (change of tariff heading) of the Harmonized System.

RVC shall be calculated adopting one of the following two formulas:

  • Direct formula: RVC = (VOM/FOB) x 100%

Within that, VOM means the value of originating materials, including the value of originating materials, direct expenses for workers, direct allocation expenses, transportation expenses and profits.

  • Indirect formula: RVC =((FOB – VNM)/FOB)x 100%

“VNM” means the value of non-originating materials or materials of undetermined origin, which shall be:

  • The CIF value at the time of importation of the materials, parts or goods; or
  • The earliest ascertained price paid for the materials, parts or goods of undetermined origin in the territory of the Party where the working or processing has taken place.

An exporter or producer of the exporting Party shall be given the flexibility to adopt the method of calculating the RVC, whether it is the direct or indirect method. The exporter or producer shall continue to use the selected method of calculating the RVC throughout the same fiscal year.

Any verification of the RVC by the importing Party shall be done based on the method of calculating the RVC used by the exporter or producer.

Clause 1 Article 5 of Appendix V (Procedures for issuance and verification of C/O) enclosed with Circular No. 20/2014/TT-BCT is amended as follows: Within that, a C/O shall be:

  • In a printed format which is manually or electronically signed, stamped and issued directly by the C/O issuing authorities of the exporting Party;
  • On A4 size paper;
  • In the attached Form in Appendix VI-A enclosed with the Circular No. 20/2014/TT-BCT, which is called as C/O Form AK;
  • In the English language.

The “ASEAN – Korea Free Trade Agreement” is renamed as “Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and Korea”.

The Circular takes effect on May 11, 2024.

Cirular No. 04/2024/TT-BCT

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