G.4.3-Korea Rules of Origin Step 3: Find Rule of Origin Identify Rule of Origin under KORUS
U.S.-Korea Free Trade Agreement
Rules of Origin
Step 3: Identify the Rule of Origin under KORUS
The rules of origin define which products qualify for the FTA-negotiated preferential tariff rate (FTA rate) under KORUS.
Broadly speaking, products that are originating in either the United States or Korea are eligible for the FTA rate – although only the Korean Customs Service can definitively make a determination about FTA eligibility for imports into Korea. A product is originating under KORUS if it is:
a) wholly obtained or produced entirely in the United States or Korea,
b) produced entirely in the United States and Korea and each of the non-originating materials (inputs) that are part of the good (product) being exported have met the relevant product-specific rule of origin; or
c) produced entirely in the U.S. or Korea from originating materials (inputs).
A simplistic illustration of this might be a wooden chair, which to be originating could be a) made in the United States from U.S. wood; b) made in the United States from Argentine wood, but because the wood has been transformed into a chair, it now meets the rule of origin for a chair; or c) made in the United States from Korean wood.
If your product is produced in the United States or Korea and contains non-originating inputs (non-US and non-Korean content, including content from an unknown origin), you will need to look at the specific rule of origin for your product to determine whether it is originating under KORUS.
The new (updated) product specific rules of origin can be found here [Annex 4-A (textiles and apparel); Annex 6-A; Annex 6-A-1 (other products)] and in the full text of the agreement on the USTR webpage.
Another source of rules of origin is USITC General Note 33 of the 2018 US Tariff Schedule (page 680).
| Revision to Rules of Origin Following exchanges of letters between Ambassador Froman and Korean Trade Minister Yoon, and between Ambassador Froman and Korean Ambassador Ahn, the United States and Korea have agreed on a conversion of the U.S.-Korea Free Trade Agreement’s product-specific rules of origin (Annex 4-A, Annex 6-A, and Appendix 6-A-1 of the FTA). This agreement entered into effect on January 1, 2014. his conversion aligns these specific rules of origin with the nomenclature of the most current 2012 Harmonized Tariff Schedule (HTS). This conversion was necessary, as the U.S.-Korea Free Trade Agreement was negotiated while the 2002 HTS was current, and therefore used the now outdated nomenclature. Until now, exporters and importers seeking preferential tariffs under KORUS had to figure out what HTS code their product had under the 2002 nomenclature in order to determine the correct rule of origin. This conversion eliminates that step, streamlining the process for U.S. and Korean traders. |
There is a limited de minimis exception (Article 6.6) available for most products where the non-originating inputs do not exceed 10 percent of the adjusted value of the product. However, there are restrictions on this exception for various agricultural products (listed in Annex 6-B) and a different rule applies for textiles and apparel products (Article 4.2.7).
Although rules of origin under KORUS differ by product, they typically fall within three general categories, consisting of:
1) A change in tariff classification (tariff-shift); or
2) A regional value-content requirement (RVC); or
3) A combination of change in tariff classification and regional value content.
Note: The information presented on this website is meant to serve as a general guide. Only the agreement text and the customs regulations issued to implement the agreement are definitive. For complex issues or where interpretation is required, U.S. exporters should seek legal assistance or an advance ruling from the Korean Customs Service.
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