Description of a Change in Tariff Classification (CTC) based Rule of Origin under KORUS
Last Published: 3/22/2018

A Change in Tariff Classification (Tariff-Shift) Rule of Origin

A Tariff-Shift rule is one type of rule of origin used in Annex 6-A of KORUS. If the product specific rule in Annex 6-A for your product is a tariff shift rule, then to qualify for the FTA-negotiated preferential tariff rate, the non-originating inputs of the product must be substantially transformed in Korea or the United States.

This transformation is defined by the tariff-shift rule in terms of a change in the HS Code of the input to the HS code of the final product (e.g., processing wood into furniture). This type of tariff shift test shows that non-originating inputs have been sufficiently changed in either the United States or Korea to allow them to qualify for a preferential tariff.

The relevant rule for your product may indicate that the change in HS code must be from another chapter, from another heading or from another sub-heading. A chapter is indicated by the first two digits of the HS Code, the heading by the next two digits, and the sub-heading by the third pair of digits.
 

For example, the HS code for an electric shaver is 8510.10.  85 is the chapter; 8410 is the heading; and 8510.10 is the subheading. The rule for this product shows a simple tariff shift: "A change to subheading HS 8510.10 through HS 8510.30 from any other subheading.”

This means all non-originating parts (e.g. that are non-U.S. of Korea made) must be classified under the six-digit level subheadings that fall outside of the "HS 8510.10 through HS 8510.30" range, they comply with the tariff shift type rule of origin,

Tip: If the rule does not make references to percentage based content (regional value content) requirement, products cannot be qualified based on such a rule even if they contain significant percentage of U.S. or Korean content.  Use only the rule that applies to your products HS code.
 

 

Step 3: Identify the Rule of Origin under KORUS

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.

Prepared by the International Trade Administration. With its network of 108 offices across the United States and in more than 75 countries, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



South Korea US Korea Free Trade Agreement