What Are Rules of Origin?
Rules of origin determine where goods are considered to 'come from' for trade purposes. They govern who can claim preferential duty rates.
Key Takeaways
- Rules of origin define which country goods are considered to originate from.
- Only goods meeting origin requirements can claim preferential FTA duty rates.
- Certificates of origin are the documentary proof required to claim the preference.
Why origin matters
For a free trade agreement to benefit trade between specific countries, it must prevent goods from third countries routing through an FTA partner to claim preferential rates. Rules of origin are the criteria that define what level of production or transformation is needed for goods to genuinely 'originate' from a country — and therefore qualify for the lower tariff.
The main types of rules
Wholly obtained: goods produced entirely within the origin country (agricultural goods, raw materials). Substantial transformation: goods manufactured using imported inputs must undergo a sufficient process within the origin country — typically defined as a change in tariff heading, a minimum percentage of local value added, or a specific manufacturing process requirement.
Certificates of origin
To claim a preferential duty rate, the importer must be able to prove origin. This is usually done through a supplier's declaration on the commercial invoice, a formal Certificate of Origin issued by a Chamber of Commerce, or — for CPTPP — a self-certification by an approved exporter. HMRC can challenge origin claims and request evidence.
Common pitfalls
Goods assembled in an FTA country using predominantly third-country components often do not meet origin requirements. Simple operations (packing, labelling, minor assembly) are typically excluded. Always ask your supplier for formal origin confirmation — not just their word — and verify against the specific rule for your HS code in the relevant agreement.