The products covered by the revised US origin rules and revised additional certification requirement are :

1. non-wool fabrics - fabrics of silk, cotton, man-made fibre or other vegetable fibre; and

2. specified made-up articles listed in Appendix I (excluding products of cotton, of cotton blends containing 16% or more by weight of cotton, or of wool).

The US origin rule for the products mentioned in paragraph 2 above has been revised to :

"Printing and dyeing plus at least two of the following specified finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing".

To parallel with the revised US origin rule and the licensing requirement, with immediate effect, products mentioned in paragraph 2 above for exporting to the US are eligible for Certificate of Hong Kong Origin (CHKO) if one of the following conditions, in addition to the Hong Kong origin rules, is satisfied :

1. all the processes of printing, dyeing and two or more specified finishing operations required by the US in paragraph 3 above are carried out in Hong Kong; or

2. forming fabrics in Hong Kong only when conditions in paragraph 5(a) above are neither met in Hong Kong nor met in a single place outside Hong Kong.

Apart from those products which are covered by paragraph 2 above, fabric-forming in Hong Kong remains as the additional certification requirement for the following products to be eligible for a CHKO for exporting to the US :

1. wool fabrics;

2. specified made-up articles listed in Appendix I (only those of cotton, of cotton blends containing 16% or more by weight of cotton, or of wool); and

3. certain textile made-up articles which have been required to perform fabric-forming in Hong Kong for exporting to the US under the additional certification requirement stipulated in Certificate of Origin Circular No. 7/96 dated 28 June 1996.

If the additional processes required in paragraph 3 are carried out by the applicant manufacturer or its authorized local subcontractor in their factory premises in Hong Kong, the applicant manufacturer should clearly specify each of these processes, together with the principal processes required under relevant Hong Kong origin rule, in the text field of "Principal Process(es) Done by Manufacturer and Outworker in Hong Kong" in the Electronic Data Interchange Certificate of Origin (EDI CO) end-user software. Applicant manufacturer should also choose the Manufacturer's Declaration code M01 in the application.

If any of the additional processes required in paragraph 3 are carried out by other parties in Hong Kong, applicant manufacturer should specify these processes, accompanied with the respective details of the responsible local factory(ies), viz. the name, address and factory registration number (if any), in the text field of "Manufacturer's Special Declaration/ Statement" in the EDI CO end-user software. This statement should be written as :

"(Processes) done by (factory name) of (factory registration number) at (factory address)".

In addition to the above statement, applicant manufacturer should choose the Manufacturer's Declaration code M01 and M14 (for exports of fabrics) or M15 (for exports of made-up articles), if printing and dyeing plus at least two specified finishing operations are done in Hong Kong.

If the fabrics are formed by the applicant manufacturer or its authorized local subcontractor in their factory premises in Hong Kong, the applicant manufacturer should accordingly specify the fabric-forming process, together with the principal processes required under relevant Hong Kong origin rule, in the text field of "Principal Process(es) Done by Manufacturer and Outworker in Hong Kong" in the EDI CO end-user software. Applicant manufacturer should also choose the Manufacturer's Declaration code M01 in the application.

If the fabrics are formed by other parties in Hong Kong, applicant manufacturer should specify the details, viz. the name, address and factory registration number (if any), of the local factory which is responsible for forming fabrics in the text field of "Manufacturer's Special Declaration/ Statement" in the EDI CO end-user software. This statement should be written as:-

"Fabrics formed by (factory name) of (factory registration number) at (factory address)".

In addition to the above statement, applicant manufacturer should choose the Manufacturer's Declaration code M01 and M05 (for exports of fabrics) or M06 (for exports of made-up articles), if the fabric-forming process is done in Hong Kong.

The Trade and Industry Department works closely with the Customs and Excise Department, through checks and inspections, to ensure compliance with the provisions of the origin certification system. Breach of any of the provisions of the origin certification system or failure to comply with other requirements specified by Director-General of Trade and Industry including those requirements promulgated by the Trade and Industry Department through notices and circulars from time to time may result in prosecution under the Import and Export Ordinance or the Protection of Non-Government Certificates of Origin Ordinance as appropriate, which provides for a penalty of a fine of HK$500,000 and 2 years' imprisonment. In addition, the Trade and Industry Department may take administrative actions against the exporters and manufacturers (including subcontractors as the case may be) concerned irrespective of whether they have been prosecuted. Such administrative actions may involve, but shall not necessarily be confined to, any of or all of the following: refusal to validate a Production Notification; refusal to issue a Certificate of Origin; suspension of certification facilities; cancellation of Factory Registration of the company/registered business concerned; disallowing a subcontractor to undertake the principal process(es) of manufacture, etc.

Should you require further information on the contents of this circular, please contact the following :