Commercial Information Circulars

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e-mail address : enquiry@tid.gov.hk

Ref. : TRA CR 1316

3 December 2004
(Updated August 2006)

Dear Sirs,

Certificate of Origin Circular No. 15/2004

Outward Processing Arrangement (OPA) for Piece-Knitted Garments

Introduction

Further to the Certificate of Origin Circular No.14 /2004 dated 30 November 2004 on the "Textiles Control Arrangements for 2005", this Circular serves to inform traders of the requirements and procedures for outward processing of non-origin conferring operations of piece-knitted garments under the Outward Processing Arrangement (OPA). Unless otherwise specified in this Circular, traders are advised to make reference to the Certificate of Origin Circular No. 7/2003 dated 14 April 2003 on the OPA (Note: That circular has been superceded by Certificate of Origin Circular No. 13/2006 dated 1 August 2006).

Revised Hong Kong Origin Rule for Piece-knitted Garments

2. With effect from 1 January 2005, Hong Kong origin rule for piece-knitted garments will be revised as follows:

1. The origin criterion is "manufacture from yarn" and the origin conferring process¹ is "knitting of yarn into knit-to-shape panels²" or;

2. The origin criterion is "manufacture from knit-to-shape panels" and the origin conferring process is "linking/stitching of knit-to-shape panels into garments³ ".

Outward processing of non-origin conferring processes for knit-to-shape garments will be regulated under the OPA. From 1 January 2005 onwards, traders who wish to conduct outward processing of non-origin conferring operations or subsidiary or minor finishing process(es) for piece-knitted garments outside Hong Kong must first register with the Trade and Industry Department for OPA and follow the relevant requirements and conditions before export for outward processing. Application and details for the OPA are set out in the paragraphs 3-5 below.

Outward Processing Arrangement (OPA)

3. The OPA enables manufacturers registered with the Department to subcontract outside Hong Kong the non-origin conferring process(es) without affecting the eligibility of such goods for attaining Hong Kong origin status.

4. A prerequisite for participation in the OPA is that the goods concerned must have undergone the origin conferring process(es) in Hong Kong which are sufficient to qualify them as of Hong Kong origin. Manufacturers who wish to participate in the OPA must hold a valid Factory Registration (FR) and obtain prior OPA registration with the Trade and Industry Department.

5. For further details of prevailing OPA conditions and requirements, please refer to relevant paragraphs of the Certificate of Origin Circular No. 7/2003 dated 14 April 2003 (Note: That circular has been superceded by Certificate of Origin Circular No. 13/2006 dated 1 August 2006).

6. Traders are advised to seek clarifications with the Department in case of doubt on the manufacturing processes allowable to be subcontracted outside Hong Kong before OPA exports in order to avoid any misunderstanding which may in turn affect the origin status of the products concerned. For OPA enquiries, traders can complete the Enquiry Form  and return to the Customer Service Centre of the Factory Registration and CO(CEPA) Branch.

OPA of Piece-knitted Garments in 2005

7. In view of the revised Hong Kong origin rule for piece-knitted garments effective from 1 January 2005 traders who are engaged in producing piece-knitted garments and who wish to make use of the OPA for outward processing should note the following:

1. where "knitting of yarn into knit-to-shape panels" is performed in Hong Kong

1. If the manufacturer has performed the panel knitting process in Hong Kong, the manufacturer should complete and sign the OPA Combined Form in the capacity of Applicant before exporting the knitted panels for outward processing, or;

2. If the manufacturer has subcontracted the process of panel knitting to another local manufacturer under the Local Subcontracting Arrangement (LSA), relevant information has to be declared under the "Applicant's Declaration" of the Original and Duplicate copies of the OPA Combined Form(s).

Specimen of a duly completed OPA Combined Form in quadruplicate is at Appendix II (i) to (iv) for reference.

2. where "linking/stitching of knit-to-shape panels into garment" is performed in Hong Kong

There is no change in the prevailing OPA conditions and requirements. For details, please refer to relevant paragraphs of the Certificate of Origin Circular 7/2003 dated 14 April 2003 (Note: That circular has been superceded by Certificate of Origin Circular No. 13/2006 dated 1 August 2006).

Local Subcontracting Arrangement (LSA)

8. Traders may wish to note that manufacturers employing local subcontractors to carry out origin conferring process of manufacture or entire production of piece-knitted garments must obtain prior approval from the Department under the LSA. In applying for LSA, both the manufacturer and subcontractor must hold a valid Factory Registration. The LSA application is free of charge. Under normal circumstances, the processing of LSA application takes one clear working day from the date of submission. Traders are however encouraged to allow adequate time and apply for LSA as early as practicable to avoid unnecessary delay. The approval is valid for 12 months irrespective of the number of orders involved. Where the principal manufacturer wishes to employ more than one local subcontractor, separate applications are required in respect of each subcontractor. For further information on the LSA, please contact the Customer Service Centre or the Factory Registration Section of Factory Registration and CO(CEPA) Branch.

Important Notes

9. Traders are reminded that the requirements and procedures set out in this Circular relate only to the subcontracting of non-origin conferring operations of piece-knitted garments outside Hong Kong under the OPA. Traders should also comply with other licensing or documentation requirements that would need to be followed for the export and import of the particular products concerned.

10. Traders should complete the Combined Form properly and provide accurate, up-to-date and all necessary particulars in the appropriate fields on the Form. Failure to do so may lead to delay in processing or refusal to validate by Customs officers and/or other legal/administrative action to be taken against the parties concerned.

11. This Circular and the Certificate of Origin Circular No. 7/2003 dated 14 April 2003 are subject to revision from time to time (Note: That circular has been superceded by Certificate of Origin Circular No. 13/2006 dated 1 August 2006). Traders are reminded to observe any change in the updated version of the Circulars which will be distributed at Factory Registration and CO(CEPA) Branch's Customer Service Centre and available at the Department's web site at http://www.tid.gov.hk.

Warning

12. The Department works closely with the Customs and Excise Department, through checks and inspections, to ensure that manufacturers registered under the OPA are in compliance with the registration conditions. Any abuse of the OPA system is taken seriously. In addition to prosecution under the Import and Export Ordinance, which provides for a penalty of a fine of HK$500,000 and 2 years imprisonment, the Department may also take administrative actions against the parties concerned irrespective of whether they have been prosecuted. Such administrative actions may involve, but shall not necessarily be confined to, any or all of the followings : refusal to validate a Combined Form; refusal to issue a licence/certificate of origin; suspension of all kinds of certification/licensing facilities; and cancellation of the FR/OPA Registration of the parties concerned.

Enquiries

13. Should you require further information on the contents of this Circular, please contact Customer Service Centre (Tel : 2398 5525) and/or respective sections of Factory Registration and CO(CEPA) Branch at 3/F, Trade and Industry Department Tower, 700 Nathan Road, Kowloon.

Yours faithfully,

(Warren HO)
for Director-General of Trade and Industry

Encls (Appendix II (i), Appendix II (ii), Appendix II (iii), Appendix II (iv) (pdf format)) 

To : All Trade and Industrial Associations
      All Textiles and Clothing manufacturers registered under the Factory Registration

¹Origin-conferring process(es), or principal manufacturing process(es), is/are the process(es) of manufacture required to be performed in Hong Kong which confers origin to a finished article. On the other hand, non origin-conferring, or subsidiary or minor finishing, process is any manufacturing process, other than the principal / origin-conferring process, which contributes towards the manufacture of an article.

²Knit-to-shape panels are panels knitted to shape ready for assembly without further manufacturing process other than minor trimming and/or cutting of the collar to shape.

³When two or more manufacturing processes are listed in the same origin-conferring process but separated by an oblique stroke (i.e. "/"), the oblique stroke has the meaning of "and" if the named manufacturing processes are part of a complete manufacturing process leading to the manufacture of the finished product.

Note : The Chinese text of this Notice to Exporters is for reference only. In case of discrepancies between the English and Chinese texts, the English text shall for all purposes be conclusive.