The Origin Sub-Directorate World Customs Organization

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The Origin Sub-Directorate World Customs Organization NON-PAPER prepared for the 21st Session Technical Rectification of the Harmonized Non-Preferential Rules of Origin The Origin Sub-Directorate World Customs Organization Presented at the informal Session of the Technical Committee

Objectives The technical rectification exercise is aimed at adjusting the current rules of origin (agreed or proposed based on the HS 96 edition) to those based on the HS 02 edition without changing the outcome of the origin determination. This exercise can be undertaken mechanically without difficulty. However, technical rectifications may become overly complicated in certain cases. Taking several headings in Chapter 48 as examples, simplified rules have been suggested to the extent technically justifiable. This process requires extensive knowledge of the HS and rules of origin. Despite all such efforts, a few rules still remain complex. Further simplification would require a decision by policy-makers. The WCO Secretariat 2018/9/18

Basic Cases Hypothetical Example The WCO Secretariat 2018/9/18

Case 1: CTH rule for heading 77.01 Rectification is not necessary ! Hypothetical Example : Deletion of a subheading - Rule set out for heading Case 1: CTH rule for heading 77.01 77.01 X, Y, Z CTH 7701.10 X 7701.20 Y 7701.90 Z 77.01 X, Y, Z CTH 7701.10 X (deleted) 7701.90 Y, Z Rectification is not necessary ! The WCO Secretariat 2018/9/18

Case 2: CTSH rule for subheadings of heading 77.01 Hypothetical Example : Deletion of a subheading - Rules set out for subheadings Case 2: CTSH rule for subheadings of heading 77.01 77.01 X, Y, Z 7701.10 X CTSH 7701.20 Y CTSH 7701.90 Z CTSH 77.01 X, Y, Z 7701.10 X CTSH (deleted) 7701.90 Y, Z ex7701.90(a) Y CTSHS ex7701.90(b) Z CTSHS The WCO Secretariat 2018/9/18

Case 3: CTH rule for heading 77.02 Rectification is not necessary ! Hypothetical Example : Creation of subheadings - Rule set out for heading Case 3: CTH rule for heading 77.02 77.02 A, B, C CTH 7702.10 A 7702.20 B 7702.90 C 77.02 A, B, C CTH (7702.00) Rectification is not necessary ! The WCO Secretariat 2018/9/18

Case 4 : CTSH rule for heading 77.03 Hypothetical Example : Deletion of all subheadings - Rules set out for subheadings Case 4 : CTSH rule for heading 77.03 77.03 P, Q, R 7703.10 P CTSH 7703.20 Q CTSH 7703.90 R CTSH 77.03 P, Q, R (deleted) 77.03 P, Q, R ex77.03(a) P CTHS ex77.03(b) Q CTHS ex77.03(c) R CTHS The WCO Secretariat 2018/9/18

Case 5: CTSH rule for heading 77.04 Hypothetical Example : Splitting a subheading - Rules set out for subheadings Case 5: CTSH rule for heading 77.04 77.04 E, F, G 7704.10 E CTSH 7704.20 F CTSH 7704.90 G CTSH 77.04 E, F, G 7704.10 E CTSH 7704.21 (new) F1 7704.29 (new) F2 7704.90 G CTSH CTSH, except from 7704.29 CTSH, except from 7704.21 The WCO Secretariat 2018/9/18

Case 6(a) : CTSH rule for heading 77.05 Hypothetical Example : Reorganisation of subheading structure - Rules set out for subheadings Case 6(a) : CTSH rule for heading 77.05 77.05 E, F, G 7705.10 E(1,2,3) CTSH 7705.20 F(1,2,3) CTSH 7705.90 G(1,2,3) CTSH 77.05 E, F, G 7705.30 E1, F1, G1 7705.40 E2, F2, G2 7705.50 E3, F3, G3 The WCO Secretariat 2018/9/18

Case 6(b) : CTSH rule for heading 77.05 Easy way ! Hypothetical Example : Reorganisation of subheading structure - Rules set out for subheadings Case 6(b) : CTSH rule for heading 77.05 77.05 E, F, G 7705.10 E(1,2,3) CTSH 7705.20 F(1,2,3) CTSH 7705.90 G(1,2,3) CTSH 77.05 E, F, G ex77.05(a) E(1,2,3) CTHS ex77.05(b) F(1,2,3) CTHS ex77.05(c) G(1,2,3) CTHS 77.05 E, F, G 7705.30 E1, F1, G1 7705.40 E2, F2, G2 7705.50 E3, F3, G3 Easy way ! The WCO Secretariat 2018/9/18

Case 6(c) : CTSH rule for heading 77.05 Hypothetical Example: Reorganisation of subheading structure - Rules set out for subheadings Case 6(c) : CTSH rule for heading 77.05 77.05 E, F, G 7705.10 E(1,2,3) CTSH 7705.20 F(1,2,3) CTSH 7705.90 G(1,2,3) CTSH 77.05 E, F, G ex7705.30(a) E1 CTSHS, except E2, E3 ex7705.30(b) F1 CTSHS, except F2, F3 ex7705.30(c) G1 CTSHS, except G2, G3 ex7705.40(a) E2 CTSHS, except E1, E3 ex7705.40(b) F2 CTSHS, except F1, F3 ex7705.40(c) G2 CTSHS, except G1, G3 ex7705.50(a) E3 CTSHS, except E1, E2 ex7705.50(b) F3 CTSHS, except F1, F2 ex7705.50(c) G3 CTSHS, except G1, G2 77.05 E, F, G 7705.30 E1, F1, G1 7705.40 E2, F2, G2 7705.50 E3, F3, G3 Another Way ! The WCO Secretariat 2018/9/18

(1) Changes to the HS structure remaining Part 1 : Analysis of the HS amendments and mechanical technical rectifications of the Harmonized Non-Preferential Rules of Origin - (1) Changes to the HS structure remaining within a heading The WCO Secretariat 2018/9/18

Rectification is not necessary ! (1) A. Complete reorganisation of the coverage of the subheadings (scrap and build) within a heading A rule will be set out for heading 01.01 Rectification is not necessary ! The WCO Secretariat 2018/9/18

A rule is set out for heading 38.17 Rectification is not necessary ! (1) B. Deletion of subheading(s) within the same heading; thus, in many cases, the residual subheading covers more goods than before A rule is set out for heading 38.17 Rectification is not necessary ! The WCO Secretariat 2018/9/18

The WCO Secretariat 2018/9/18

How shall rules for the residual subheading be set out ? The WCO Secretariat 2018/9/18

(1) C. Splitting subheading(s) within the same heading, i. e (1) C. Splitting subheading(s) within the same heading, i.e., goods initially covered by one subheading are now covered by several subheadings The WCO Secretariat 2018/9/18

How shall rules for the newly split subheadings be set out ? The WCO Secretariat 2018/9/18

(1) D. Creating subheadings in a heading that had no subheadings under HS 1996 The WCO Secretariat 2018/9/18

The WCO Secretariat 2018/9/18

(2) Changes to the HS structure extending beyond one heading Part 1 : Analysis of the HS amendments and mechanical technical rectifications of the Harmonized Non-Preferential Rules of Origin - (2) Changes to the HS structure extending beyond one heading The WCO Secretariat 2018/9/18

Chapter 41 - Raw hides, skins, leather (2) A. Reorganisation of Chapter structure Chapter 41 - Raw hides, skins, leather The WCO Secretariat 2018/9/18

(2) A. Reorganisation of Chapter structure The WCO Secretariat 2018/9/18

(2) A. Reorganisation of Chapter structure The WCO Secretariat 2018/9/18

(2) B. Deletion of a heading; consequently, the content of the heading was transferred to another heading Moved to here from 25.27, 2530.40, 2530.90 The WCO Secretariat 2018/9/18

(2) C. Splitting the coverage of heading into several headings within the same Chapter The WCO Secretariat 2018/9/18

(2) C. Splitting the coverage of heading into several headings within the same Chapter The WCO Secretariat 2018/9/18

(2) D. Creating a new heading or subheading; consequently, the new heading or subheading covers various goods that were previously classified in other heading(s) The WCO Secretariat 2018/9/18

(2) D. Creating a new heading or subheading; consequently, the new heading or subheading covers various goods that were previously classified in other heading(s) The WCO Secretariat 2018/9/18

(2) E. Amending part of the heading text only, resulting in a change in the scope of the heading The WCO Secretariat 2018/9/18

SUGGESTED SIMPLIFIED PRESENTATION Part 2 : SUGGESTED SIMPLIFIED PRESENTATION A. Undergoing complete production process - always origin conferring B. No need to except “impossible changes” from a tariff shift rule C. Chapter Notes can address : “simple” cutting; disassembly The WCO Secretariat 2018/9/18

Subheadings 4012.11 to 4012.19 (retreaded tyres) The WCO Secretariat 2018/9/18

Subheadings 3824.71 to 3824.90 The WCO Secretariat 2018/9/18

Outline of changes between HS 96 and HS 02 Chapter 48 Outline of changes between HS 96 and HS 02 A. Changes in dimensions Headings 48.01, 48.04 to 48.08 B. Deletion of dimensional criteria Headings 48.02, 48.10 and 48.11 C. Change in scope of the expression “graphic paper” Adding “obtained by a chemi-mechanical process” Note 5 to Chapter 48 The WCO Secretariat 2018/9/18

A. Changes in dimensions Headings 48.01, 48.04 to 48.08 HS 1996 HS 2002 A not exceeding 15 cm B 15 cm – 36 cm C exceeding 36 cm A not exceeding 15 cm B 15 cm – 36 cm C exceeding 36 cm ex48.23 48.01 CTH ex48.02 ex48.02 48.01 ex48.23 48.04 CTH ex48.23 48.04 ex48.23 48.05 CTH ex48.02 ex48.23 48.05 ex48.23 48.06 CTH ex48.23 48.06 ex48.23 48.07 CTH ex48.23 48.07 ex48.23 48.08 CTH ex48.23 48.08 The WCO Secretariat 2018/9/18

B. Deletion of dimensional criteria Headings 48.02, 48.10 and 48.11 HS 1996 HS 2002 A not exceeding 15 cm B 15 cm – 36 cm C exceeding 36 cm A not exceeding 15 cm B 15 cm – 36 cm C exceeding 36 cm ex48.23 48.02 CTH ex48.02 ex48.23 48.10 CTH 48.10 ex48.23 48.11 CTSH, CTSHS 48.11 The WCO Secretariat 2018/9/18

Obtained by a chemi-mechanical process C. Change in scope of the expression “graphic paper” Note 5 to Chapter 48 HS 1996 HS 2002 A not exceeding 15 cm B 15 cm – 36 cm C exceeding 36 cm A not exceeding 15 cm B 15 cm – 36 cm C exceeding 36 cm ex48.23 48.01 CTH ex48.02 ex48.02 48.01 ex48.23 48.02 CTH ex48.02 ex48.02 ex48.23 48.05 CTH ex48.02 ex48.02 ex48.23 48.05 Obtained by a chemi-mechanical process The WCO Secretariat 2018/9/18

No change between HS 96 and HS 02 Headings 48.03, 48.09, 48.12 - 48.22 The WCO Secretariat 2018/9/18

Methodology Possible ? The WCO Secretariat 2018/9/18

Methodology Possible ? The WCO Secretariat 2018/9/18

paper production process Methodology Complete paper production process Wood Ch.44 Pulp Ch.47 Paper Ch.48 Books Ch.49 The WCO Secretariat 2018/9/18

How to change from one kind of paper to another? Methodology How to change from one kind of paper to another? The WCO Secretariat 2018/9/18

Involving the complete paper production process Methodology Recycling paper Pulp, Recovered paper Chapter 48 Chapter 47 Chapter 48 Involving the complete paper production process The WCO Secretariat 2018/9/18

CTH, except from Necessary ? Methodology How to simplify the rectified rules ? CTH, except from Necessary ? The WCO Secretariat 2018/9/18

Methodology In summary : A. Complete paper production process - always origin conferring B. No need to except “impossible changes” from a tariff shift rule C. Chapter Notes can address : “simple” cutting; disassembly The WCO Secretariat 2018/9/18

Analyses - 48.02 (graphic paper) HS 1996 HS 2002 A not exceeding 15 cm B 15 cm - 36 cm C exceeding 36 cm A not exceeding 15 cm B 15 cm - 36 cm C exceeding 36 cm ex48.23 48.01 CTH ex48.02 ex48.02 48.01 Change in dimension, new definition of “graphic paper” ex48.23 CTH 48.02 CTH ex48.02 ex48.02 Deletion of dimensional criterion new definition of “graphic paper” Change in dimension, new definition of “graphic paper” ex48.23 48.05 CTH ex48.02 ex48.02 ex48.23 48.05 The WCO Secretariat 2018/9/18

Analyses - 48.02 (graphic paper) HS 1996 HS 2002 A not exceeding 15 cm B 15 cm - 36 cm C exceeding 36 cm A not exceeding 15 cm B 15 cm - 36 cm C exceeding 36 cm ex48.23 48.01 CTH ex48.02 ex48.02 48.01 ex48.23 CTH 48.02 CTH ex48.02 ex48.02 CTH ex48.23 48.05 CTH ex48.02 ex48.02 ex48.23 48.05 The WCO Secretariat 2018/9/18

Analyses - 48.05 (other uncoated paper) HS 1996 HS 2002 A not exceeding 15 cm B 15 cm - 36 cm C exceeding 36 cm A not exceeding 15 cm B 15 cm - 36 cm C exceeding 36 cm Change in dimension, new definition of “graphic paper” new definition of “graphic paper” ex48.23 CTH 48.05 CTH ex48.02 ex48.02 ex48.23 ex48.23 48.05 Changes : impossible or complete production process CTH Changes : by “simple” cutting The WCO Secretariat 2018/9/18

IN SUMMARY The WCO Secretariat 2018/9/18

Basic Cases Hypothetical Example The WCO Secretariat 2018/9/18

Case 1: CTH rule for heading 77.01 Rectification is not necessary ! Hypothetical Example : Deletion of a subheading - Rule set out for heading Case 1: CTH rule for heading 77.01 77.01 X, Y, Z CTH 7701.10 X 7701.20 Y 7701.90 Z 77.01 X, Y, Z CTH 7701.10 X (deleted) 7701.90 Y, Z Rectification is not necessary ! The WCO Secretariat 2018/9/18

Case 2: CTSH rule for subheadings of heading 77.01 Hypothetical Example : Deletion of a subheading - Rules set out for subheadings Case 2: CTSH rule for subheadings of heading 77.01 77.01 X, Y, Z 7701.10 X CTSH 7701.20 Y CTSH 7701.90 Z CTSH 77.01 X, Y, Z 7701.10 X CTSH (deleted) 7701.90 Y, Z ex7701.90(a) Y CTSHS ex7701.90(b) Z CTSHS The WCO Secretariat 2018/9/18

Case 3: CTH rule for heading 77.02 Rectification is not necessary ! Hypothetical Example : Creation of subheadings - Rule set out for heading Case 3: CTH rule for heading 77.02 77.02 A, B, C CTH 7702.10 A 7702.20 B 7702.90 C 77.02 A, B, C CTH (7702.00) Rectification is not necessary ! The WCO Secretariat 2018/9/18

Case 4 : CTSH rule for heading 77.03 Hypothetical Example : Deletion of all subheadings - Rules set out for subheadings Case 4 : CTSH rule for heading 77.03 77.03 P, Q, R 7703.10 P CTSH 7703.20 Q CTSH 7703.90 R CTSH 77.03 P, Q, R (deleted) 77.03 P, Q, R ex77.03(a) P CTHS ex77.03(b) Q CTHS ex77.03(c) R CTHS The WCO Secretariat 2018/9/18

Case 5: CTSH rule for heading 77.04 Hypothetical Example : Splitting a subheading - Rules set out for subheadings Case 5: CTSH rule for heading 77.04 77.04 E, F, G 7704.10 E CTSH 7704.20 F CTSH 7704.90 G CTSH 77.04 E, F, G 7704.10 E CTSH 7704.21 (new) F1 7704.29 (new) F2 7704.90 G CTSH CTSH, except from 7704.29 CTSH, except from 7704.21 The WCO Secretariat 2018/9/18

Case 6(a) : CTSH rule for heading 77.05 Hypothetical Example : Reorganisation of subheading structure - Rules set out for subheadings Case 6(a) : CTSH rule for heading 77.05 77.05 E, F, G 7705.10 E(1,2,3) CTSH 7705.20 F(1,2,3) CTSH 7705.90 G(1,2,3) CTSH 77.05 E, F, G 7705.30 E1, F1, G1 7705.40 E2, F2, G2 7705.50 E3, F3, G3 The WCO Secretariat 2018/9/18

Case 6(b) : CTSH rule for heading 77.05 Easy way ! Hypothetical Example : Reorganisation of subheading structure - Rules set out for subheadings Case 6(b) : CTSH rule for heading 77.05 77.05 E, F, G 7705.30 E1, F1, G1 7705.40 E2, F2, G2 7705.50 E3, F3, G3 77.05 E, F, G ex77.05(a) E(1,2,3) CTHS ex77.05(b) F(1,2,3) CTHS ex77.05(c) G(1,2,3) CTHS Easy way ! The WCO Secretariat 2018/9/18

SUGGESTED SIMPLIFIED PRESENTATION Part 2 : SUGGESTED SIMPLIFIED PRESENTATION A. Undergoing complete production process - always origin conferring B. No need to except “impossible changes” from a tariff shift rule C. Chapter Notes can address : “simple” cutting; disassembly The WCO Secretariat 2018/9/18

Involving the complete paper production process Recycling paper Pulp, Recovered paper Chapter 48 Chapter 47 Chapter 48 Involving the complete paper production process Origin conferring ! The WCO Secretariat 2018/9/18

How to simplify the rectified rules ? CTH, except from Not necessary The WCO Secretariat 2018/9/18

Summary - Technical rectifications Technical rectifications can be undertaken mechanically without difficulty. However, this exercise may become overly complicated in certain cases. Technical rectifications can go beyond a mechanical change to the rules of origin. Consequently, most of the rules can be presented in a simple manner, without resulting in substantive changes. But a few rules will require policy decisions to achieve further simplification. The WCO Secretariat 2018/9/18

Where to Get More Information Reference documents: OC 0065E1(10/12/2001) OC 0052E1(20/12/2000) OC 0044E1(10/1/2000) Amendments to The Harmonized System Nomenclature Several non-papers Address further inquiries to : The Origin Sub-Directorate Tel: (32 02) 209 92 53; Fax: (32 02) 209 94 92 e-mail : origin.subdirectorate@wcoomd.org The WCO Secretariat 2018/9/18