On March 27, 2024, the Ministry of Industry and Trade issued Circular No. 04/2024/TT-BCT ("Circular 04") amending and supplementing certain provisions of Circular No. 20/2014/TT-BCT dated June 25, 2014, of the Minister of Industry and Trade, which regulates the implementation of Rules of Origin in the ASEAN-Korea Free Trade Area Agreement.
Updating the content of the Third Protocol amending certain provisions regarding Rules of Origin and Customs Duties of the ASEAN-Korea Comprehensive Economic Cooperation Agreement ("AKFTA"), Circular 04 renames the "ASEAN-Korea Free Trade Area Agreement" to the "Agreement on Trade in Goods under the ASEAN-Korea Comprehensive Economic Cooperation Agreement" (hereinafter referred to as the "Agreement"). Additionally, Circular 04 includes the following amendments and supplements:
1. Supplementing the formula for calculating the Regional Value Content ("RVC") for non-originating goods
Circular 04 adds a direct RVC calculation formula for non-originating goods in the Rules of Origin under the Agreement. Thus, exporters or producers of the exporting Member State can flexibly choose to apply either the direct RVC calculation formula or the indirect RVC calculation formula as follows:
Direct formula:
VOM
RVC = ___________ x 100%
FOB
Where "VOM" is the value of originating materials, including the value of originating materials, direct labor costs, direct allocation costs, transportation costs, and profits.
Indirect formula:
FOB - VNM
RVC = __________________ x 100%
FOB
Where "VNM" is the value of non-originating input materials or materials whose origin cannot be determined, which may be:
- The CIF price at the time of importation of input materials, spare parts, or goods; or
- The first purchase price of input materials, spare parts, or goods whose origin cannot be determined in the territory of the exporting Member State where the processing or manufacturing stages take place.
When exporters or producers of the exporting Member State apply one of the above formulas, they must continue to use the selected RVC calculation formula throughout a fiscal year. In case the importing Member State conducts origin verification checks for goods, any such checks must be based on the RVC calculation formula that the exporter or producer of the exporting Member State has used.
2. Supplementing conditions for the Certificate of Origin (C/O) under the Agreement
Certificates of Origin (C/O) must meet the following conditions:
- In the form of a printed document with signatures, hand stamps, or electronic signatures of the C/O issuing authorities of the exporting Member State;
- Made on A4 paper;
- Compliant with the prescribed form in Annex VI-A issued together with
- Circular No. 20/2014/TT-BCT, referred to as the AK model C/O;
- Completed in English.
Circular 04 is effective from May 11, 2024.
Comment: