Promulgation Authorities:  General Administration of Customs

Promulgation Date:  2018.04.28

Effective Date:  2018.05.01

Validity Status:  valid

Provisions on the Substantial Transformation of Criteria in Non-Preferential Rules of Origin (Revised in 2018)

Provisions on the Substantial Transformation of Criteria in Non-Preferential Rules of Origin (Revised in 2018)

Article 1    In order to determine the origin for imports and exports correctly, these Provisions are formulated according to the Regulations of People's Republic of China on the Place of Origin for Imports and Exports.

Article 2    These Provisions shall, under non-preferential trade measures, apply to the determination of origin of goods where more than two countries or regions participate in the production.

Article 3    The criteria for determining the substantial transformation of imports and exports shall base on the change in tariff classification, and where the change in tariff classification fails to reflect substantial transformation, ad valorem percentage and manufacturing or processing operation shall be based as the supplement criteria.

Article 4    "Change in tariff classification" refers to, after the raw materials not originated from a county (region) is manufactured or processed in the country (region), the change of four-digit tariff classification of the goods derived takes place in Imports and Exports Tariff of People's Republic of China.

Article 5    "Manufacturing or processing operations" refers to the principal operations carried out in a country (region) which confer essential characteristics to the goods derived after the manufacturing or processing operations.

Article 6    "ad valorem percentage" refers to, after the raw materials not originated from a county (region) is manufactured or processed in the country (region), the value added exceeds 30% of the value of the goods derived, and the formula is as follows:

ex work price-the value of non-originating raw materials

---------------------------------------------------------------------×100%≥30%

ex work price

"Ex work price" refers to the price of finished products paid to the manufacturer.

"Value of non-originating raw materials" refers to the value of import raw materials and spare parts for manufacturing or assembling the finished products directly, including raw materials or spare parts whose place of origin is unknown, which is calculated by its import cost, insurance and freight (CIF).

Calculation of the said "ad valorem percentage" shall be conform to generally accepted accounting principles and the Regulations of Import and Export Tariff of the People's Republic of China

Article 7    The goods whose substantial transformation is determined by the criteria of manufacturing or processing operations and Ad Valorem Percentage are specified in the Detailed List of Goods Applicable to the Criteria of Manufacturing or Processing Operations and ad valorem percentage (see annex), and whether or not substantial transformation takes place shall be determined according to the specified criteria. The substantial transformation of goods not specified in the Detailed List of Goods Applicable to the Criteria of Manufacturing or Processing Operations and Ad Valorem Percentage shall apply the criteria of change in tariff classification.

Article 8    The Detailed List of Goods Applicable to the Criteria of Manufacturing or Processing Operations and Ad Valorem Percentage shall be amended by the General Administration of Customs in conjunction with the Ministry of Commerce, and be publicized

Article 9    These Provisions shall be effective as of January 1, 2005.