24-hour hotline : 23 922 922
e-mail address : email@example.com
Ref : TRA CR 1327/1/4
10 October 2003
Certificate of Origin Circular No. 20/2003
Certificate of Preference Circular No. 18/2003
Textiles Trader Registration Circular No. 21/2003
Commercial Information Circular No. 252/2003
Notice to Exporters
Series 1 (USA) No. 58/2003
Series 2 (EU)No. 47/2003
Series 3 (Countries other than USA & EU) No. 52/2003
The Mainland and Hong Kong
Closer Economic Partnership Arrangement (CEPA)
Rules of Origin for Implementation of Zero Tariff for Trade in Goods
This circular outlines the basic principles for determining Hong Kong origin for implementation of zero tariff for trade in goods under the Mainland and Hong Kong Closer Economic Partnership Arrangement ("CEPA") and the origin criteria in respect of the 273 Mainland 2001 tariff codes included in the initial phase of tariff preference under CEPA.
(a) Principles of CEPA Rules of Origin
The CEPA rules of origin are set out in Annex 2 of CEPA (copies of Annex 2 of CEPA are available at the Trade and Industry Department's Information Counter, G/F, Trade and Industry Department Tower, 700 Nathan Road, Kowloon, or you may wish to follow this link: http://www.tid.gov.hk/english/cepa/fulltext.html for online access to full text of CEPA). The origin of goods seeking zero tariff under CEPA will be determined in accordance with the following principles :
- the goods are wholly obtained in Hong Kong; or
- the goods have undergone substantial transformation in Hong Kong.
"Goods wholly obtained in Hong Kong" refers to:
- mineral products mined or extracted in Hong Kong;
- plants or vegetable products harvested or collected in Hong Kong;
- live animals born and raised in Hong Kong;
- products obtained in Hong Kong from live animals specified in (iii) above;
- products obtained from hunting or fishing in Hong Kong;
- fish and other marine products obtained by fishing conducted in the high seas by vessels holding a licence issued by Hong Kong and flying the Hong Kong Special Administrative Region flag;
- products obtained from the processing of products set out in (vi) above aboard vessels holding a licence issued by Hong Kong and flying the Hong Kong Special Administrative Region flag;
- waste and scrap articles collected in Hong Kong which are produced from consumption in Hong Kong and fit only for the recovery of raw materials;
- waste and scrap which are produced from processing or manufacturing operations in Hong Kong and fit only for the recovery of raw materials;
- goods obtained through processing in Hong Kong of products set out in (i) to (ix) above.
As for "substantial transformation", it is determined according to the basic criteria set out below :
- "Manufacturing or processing operations" - refers to the principal manufacturing or processing operations carried out in Hong Kong, which confer essential characteristics to the final product.
- "Change in Tariff Heading" (CTH) - refers to the processing and manufacturing operations of non-originating materials carried out in Hong Kong and resulting in a product of a different four-digit tariff heading under the "Product Description and Harmonized System Codes". Moreover, no production, processing or manufacturing operations are subsequently carried out outside Hong Kong which will result in a change in the four-digit tariff heading.
- "Value-added content" - refers to the total value of raw materials and component parts originated in Hong Kong, Hong Kong labour costs, and product development costs exclusively incurred in Hong Kong being greater than or equal to 30% of the FOB value of the exporting goods, and that the final manufacturing or processing operations are completed in Hong Kong. The "value-added" formula is as follows :
value of raw materials + value of component parts+
labour costs + product development costs
|x 100%||³ 30%|
|FOB value of the exporting goods|
Processes including simple diluting, mixing, packaging, bottling, drying assembling, sorting or decorating will not be regarded as substantial transformation. The origin of energy, factory premises, facilities, machinery and equipment, tools for production of the goods, and origin of the materials used in the production process but not constituting the composition or the component parts of the goods will not be taken into account in determining the origin of the goods. Traders are advised to refer to Articles 3-8 of CEPA Annex 2 for details.
(b) Origin Criteria for the 273 Mainland 2001 Tariff Codes Included in the Initial Phase of Tariff Preference
Based on the broad principles mentioned in paragraphs 2-5 above, the origin criteria for the 273 Mainland 2001 tariff codes that would be eligible for zero tariff from 1 January 2004 are set out in Table 1 of CEPA Annex 2.
(c) Procedures for Claiming Zero Tariff
Products importing into the Mainland and claiming zero import tariff under CEPA must be accompanied by a Certificate of Hong Kong Origin - CEPA (CO(CEPA)) issued by the Trade and Industry Department or one of the five Government Approved Certification Organizations1 in accordance with the CEPA rules of origin. Details on the application procedures will be announced in a separate circular to be issued in November 2003.
For further information on CEPA rules of origin, please visit the Department's website: http://www.tid.gov.hk/english/cepa/ or contact us at :
Telephone No. : 2398 5525
Fax No. : 2787 6048
Email : firstname.lastname@example.org
for Director-General of Trade and Industry
1 The five Government Approved Certification Organizations are the Hong Kong General Chamber of Commerce; Federation of Hong Kong Industries; the Chinese Manufacturers' Association of Hong Kong; the Indian Chamber of Commerce, Hong Kong; and the Chinese General Chamber of Commerce.
For enquiries and complaints about factory audit check, factory inspection, production verification and consignment checks, please contact the Customs and Excise Department at the following telephone numbers :Factory Audit Check Division 2398 5218 Consignment and Factory Inspection Division 1 2398 5240 Consignment and Factory Inspection Division 2 2417 6011 Complaint Hotline 8100 3553