Overview of the ROO Provisions. The tariff commitments in AANZFTA only apply to goods which comply with its ROO provisions and are therefore eligible to be considered to be AANZFTA originating goods, and which are supported by a COO issued by an Issuing Authority/Body in the exporting Party (see Part 3.3 below). Under these provisions a good will be considered an AANZFTA originating good if: It is wholly produced or obtained in a Party (as provided in Article 3 of Chapter 3 (Rules of Origin) of the Agreement); or It makes use of non-originating materials but these are substantially transformed; or It is produced in a Party exclusively from originating materials from one or more of the Parties. Many agricultural, fishery and mineral goods will meet the requirements for being wholly produced or obtained. However, manufactured goods typically make use of components and inputs from a range of countries and will therefore generally involve at least some use of non-originating materials. This means that most manufactured goods will need to comply with AANZFTA’s rules on substantial transformation of these non-originating materials in order to be deemed an AANZFTA originating good. AANZFTA’s Substantial Transformation Requirements AANZFTA’s ROO make use of a number of internationally recognized tests for determining substantial transformation: Change in Tariff Classification (CTC): non-originating materials must undergo the required change in their tariff classification under the HS within the specified AANZFTA Party. The required CTC change might be at one of three levels: a change in tariff chapter, at the 2-digit level of the HS; a change in tariff heading, at the 4-digit level of the HS; or a change in tariff sub-heading, at the 6-digit level of the HS. Regional Value Content (RVC): the proportion of the value of the exported good added within the AANZFTA Parties must reach a specified threshold (i.e. this puts a limit on the proportion of the value of the exported good represented by non-originating materials). Specified processing: non-originating materials must undergo specified processing within AANZFTA Parties. Many Products have Co-Equal CTC or RVC Rules An important feature of AANZFTA’s ROO is that for many goods they allow manufacturers the choice of using either a CTC rule or an RVC rule in order to determine the origin of the good. AANZFTA’s ROO fall into the following general categories: The “co-equal” rules – the choice of either a CTC rule or an RVC rule – apply to products covered by about 83 per cent of HS sub-headings. For about 10 per cent of HS sub-headings there is only a CTC rule (mainly textiles and some clothing). For about 1.3 per cent of HS sub-headings there is only an RVC rule (mainly motor vehicles and some motor vehicle parts). A requirement that a specified process is met is generally applied in combination with either a CTC or an RVC rule (e.g. textile finishing processes). For about two-thirds of chemical products, there is a chemical reaction rule. This provides that in the event the chemical product does not meet the applicable CTC and RVC rules, it would still be considered an AANZFTA originating good if it has been produced as the result of a chemical reaction that occurred in an AANZFTA Party. For about 4.5 per cent of HS sub-headings the good must meet XXXXXXX’s wholly obtained rules in order to be considered AANZFTA originating. Attachment 1 provides an overview of where to find the ROO provisions in AANZFTA. Cumulation A key feature of AANZFTA’s ROO is that it allows for cumulation. This means that a good that complies with the AANZFTA ROO (i.e. it is an AANZFTA originating good), and which is exported to another AANZFTA Party where it is used as a material in the production of another good, is considered to originate in the Party where the working or processing of the finished good has taken place. As a result, the use of originating goods as inputs or components in the production of another good can be counted towards that other good meeting AANZFTA’s ROO requirements. For example: If a CTC test is applicable to the finished good, AANZFTA originating materials used in the production of that good do not have to comply with this test because the test only applies to non-originating materials used in the production of the finished good. If an RVC test is applicable to the finished good, AANZFTA originating materials used in the production of that good can be counted towards meeting the specified RVC requirement. The fact that a good has been sourced from an AANZFTA Party does not necessarily mean it can be used for the purposes of the cumulation provisions. The good must be an AANZFTA-originating good in accordance with the Agreement’s ROO provisions for it to be used for the purposes of the cumulation provisions.
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