1. Doing Business in Free Trade Areas
A Practical Guide for Philippine Exporters
Doing Business in Free Trade Areas
(DBFTA) II A Sectoral Approach
Philippine Trade Training Center (PTTC)
31 March 2011
Taking advantage of Philippine FTAs

2. DETERMINATION of ORIGIN

3. RULES OF ORIGIN PREFERENTIAL NON-PREFERENTIAL
Are regulations to determine the Country of Origin
“nationality of the goods”
PREFERENTIAL
Determine whether imported products shall be subjected to a most-favored nation (MFN) treatment or preferential treatment
e.g. ATIGA, ACFTA, AKFTA, AANZFTA, PJEPA, AJCEP
NON-PREFERENTIAL
Implement measures and instruments of commercial policy
e.g. anti-dumping, countervailing, safeguards

4. Why do we need the Rules of Origin in FTA?
To determine whether goods can be considered as originating goods of the contracting countries.
To implement trade and industry policies related to EPAs.
To promote trade by eliminating/ reducing tariff rates.

5. OBJECTIVES
To guide the exporter on the step-by-step processes in securing a Certificate of Origin from BOC
To guide Importer in claiming Preferential Tariff Treatment for products covered by Certificate of Origin under Bilateral and Multilateral Trade Agreements

6. Implementing Agency for the
ROLE OF THE
BUREAU OF CUSTOMS
Implementing Agency for the
Rules of Origin
1) Issuing Authority
2) Granting and Receiving Authority for
Preferential Tariff Treatment

7. Issuing Authority Issue ruling on the qualification of the product
Conducts pre-exportation evaluation
of products
Issue ruling on the qualification of
the product
Issue Certificate of Origin
Conducts retro-verification procedure

8. Granting Authority Evaluates application for availment of
Tariff preferences on products covered
by FTA
Grants Preferential Tariff concessions
for qualified products
Request for retro-verification

9. ORGANIZATIONAL STRUCTURE
COMMISSIONER OF CUSTOMS
INTERNAL ADMINISTRATION GROUP
ASSESSMENT & OPERATIONS COORDINATION GROUP
REVENUE COLLECTION & MONITORING GROUP
MANAGEMENT INFORMATION SYSTEM & TECHNOLOGY GROUP
INTELLIGENCE GROUP
ENFORCEMENT GROUP
POST ENTRY AUDIT GROUP
ADMINISTRATION OFFICE
Human Resource Management Division
Public Information & Assistance Division
Central Records & Management Division
General Services Division
Medical & Dental Division
Training & Development Division
Interim Internal Control Office
FINANCIAL MANAGEMENT OFFICE
Accounting Division
Budget Division
Planning & Policy Research Division
IMPORT & ASSESSMENT SERVICE
Valuation & Classification Division
Assessment Coordination & Monitoring Division
Warehouse Coordination Division
PORT OPERATIONS SERVICE
Auction & Cargo Monitoring & Disposal Division
Export Coordination Division
Port Operations & Coordination Division
FINANCIAL SERVICE
Statistical Analysis Division
Revenue Accounting Division
COLLECTION DIVISION
Collection Performance Evaluation Division
Liquidation & Assessment Audit Division
Bonds Audit Division
LEGAL SERVICE
Ruling & Research Division
Appellate Division
Prosecution & Litigation Division
Tax-Exempt Division
PLANNING & SYSTEMS DEVELOPMENT SERVICE
Planning & Management Information Division
Systems Development Division
TECHNOLOGY MANAGEMENT SERVICE
Systems Management Division
Technology Support Division
CUSTOMS INTELLIGENCE & INVESTIGATION SERVICE
Intelligence Division
Investigation & Prosecution Division
Internal Inquiry & Prosecution Division
Intellectual Property Unit
Warehouse Audit & Monitoring Unit
Risk Management Group
ENFORCEMENT & SECURITY SERVICE
Customs Police Division
TRADE INFORMATION & RISK ANALYSIS OFFICE
Trade Information Analysis Division I
Trade Information Analysis Division II
COMPLIANCE ASSESSSMENT OFFICE
Audit Division I
Audit Division II
Audit Division III
Audit Division IV
Audit Division V
17 District Collection Ports

10. CUSTOMS COLLECTION DISTRICTS
Port of Manila
Ninoy Aquino
International Airport
Manila International
Container Port
3 Major Ports
Port of
Batangas
Port of Clark
Int’l. Airport
Davao
Zamboanga
Cagayan de Oro
Surigao
Tacloban
San Fernando
Cebu
Iloilo
Subic
14 Provincial Ports
Legaspi
33 Sub Ports

11. COLLECTION DISTRICT II-A: PORT OF MANILA
ORGANIZATIONAL CHART
COLLECTION DISTRICT II-A: PORT OF MANILA

12. KINDS OF CERTIFICATE OF ORIGIN
GSP Form A : Generalized System of Preference
Form D : ASEAN Trade in Goods Agreement
Form E : ASEAN China Free Trade Area
Form AK : ASEAN Korea Free Trade Area
Form JP : JAPAN PHILIPPINES Economic
Partnership Agreement
Form AANZ : ASEAN-AUSTRALIA-NEW ZEALAND
Free Trade Area
Form AJ : ASEAN-JAPAN Comprehensive
Economic Agreement
White CO : CO for General Merchandise (non-preferential)

13. What are the Main Elements of
RULES OF ORIGIN?
Origin criteria
A. Wholly-Obtained Product
B. Product that have undergone substantial
Transformation
1. Change in Tariff Classification (CTC)
2. Value-added
3. Specific Process
C. Accumulation
D. Specific Concepts
II. Direct Consignment
IIl. Documentary evidence

14. Basic Concepts of Rules of Origin
Origin Criteria : A rule needed to determine the country of origin of the product at the time of exporting of the goods.
Consignment : A rule is needed to determine whether the goods have lost the status as product of that country or not
Procedural Provisions : A rule is needed to specify the procedure whereby the importers prove to the Party that the declared goods qualify as “Produced” in the Party at the time of import

15. Preferential Treatment
Conditions to Receive
Preferential Treatment
Products shall be specified as eligible for Preferential Treatment
(items in concession schedule)
2. Products shall satisfy the substantive conditions on Origin Criteria, Consignment Criteria and Procedural Provisions

16. What are Origin Criteria?
Means of determining HOW and
WHEN a product can be considered
as ORIGINATING from a specific
country
The core of the Rules of Origin

17. “ORIGINATING” GOODS 1. Wholly-obtained and produced goods
Goods made entirely in the
exporting FTA Party (e.g. the
Philippines) from materials
produced in that same country
(e.g. goods grown, born and
raised, gathered, or extracted
in the Philippines)
Example: The Philippines’
agricultural exports including
seafood harvested within the
country, and mineral goods

18. 2. Goods underwent substantial transformation process
“ORIGINATING” GOODS
2. Goods underwent substantial
transformation process
Products manufactured from exporting country wholly or partly from imported materials or components, including materials of undetermined or of unknown origin, are considered as ORIGINATING in that country if its materials, parts or components have undergone SUBSTANTIAL WORKING OR PROCESSING there.

19. Types of Goods Underwent Substantial Transformation
1. Change in Tariff Classification Rule (CTC Rule) 2. Value-added rule (VA Rule) 3. Specific Manufacturing or Processing Rule (Process Rule) 4. Co – equal Rule

20. 2. VALUE-ADDED RULE (VA Rule)
ROO based on value-added (i.e., value-added rule) measure the
extent of manufacturing or processing undertaken in a country by
reference to the value added to the good.
There are two requirements:
the final processing must be performed in a country; and
the value added in the country, calculated using a given formula, must satisfy the required threshold
The formula may measure local content based on the FOB value, the ex-factory price or the ex-factory cost. Certain cost adjustments may be required.
Packaging materials and containers for retail sale, if classified with the good, are included in the calculation of value-added while packing materials and shipping containers are excluded.

21. 3. SPECIFIC MANUFACTURING or PROCESSING OPERATION RULE (Process Rule)
ROO based on process ascertain the critical process or element in the manufacture of a good.
The country where such a critical process is done or where a critical element is obtained would be the country of origin of the good.

22. 4. CO-EQUAL RULE
In any case that a Rule of Origin is a combination of CTC Rule, Regional Value Content Rule or Specific Process Rule, these three criteria are the co equal rule; therefore, any one of these criteria must be satisfied (no priority) is established among the three.

23. COCONUT SECTOR CC = Change in Chapter 1513.1910 Refined Oil
Knotted netting of twine
CC = Change in Chapter
AANZFTA
ATIGA
AKFTA
ACFTA
AJCEP
PJEPA
RVC (40) or CC
RVC (40) or CTSH WO
RVC (40) CTH
RVC (40) CC
CTH except Chapter 8 and 12
RVC (40) or Textile Rule or CC
CC, provided that, where non-originating materials of heading through 50.06, through 51.10, through 52.07, through 53.08, through 54.06, through are used, each of the non-originating materials is spun entirely in one or more of the Parties.
CC, provided that, where non-originating materials of heading through 50.06, through 51.10, through 52.07, through 53.08, through 54.06, through are used, each of the non-originating materials is spun entirely in either Party or a non-Party which is a member country of the ASEAN

24. COCONUT SECTOR 2009 Top EXPORTS OF COCONUT SECTOR H.S. CODE
DESCRIPTION
AANSFTA
ATIGA
AKFTA
ACFTA
AJCEP
COPRA WO
RVC (40) CC
COCONUT SHELL POWDER
REFINED OIL
OF COCONUT SHELL NOT AGGLOMERA
BALES COIR RAW
COCONUT
COCO PEAT
OTHER COCONUT
RVC (40) or CC
RVC (40) or CTH
RVC (40) or CTSH
CC, provided that, where non-originating materials of heading through 50.06, through 51.10, through 52.07, through 53.08, through 54.06, through are used, each of the non-originating materials is spun entirely in one or more of the Parties.
2009 Top EXPORTS OF COCONUT SECTOR

25. Change in Tariff Classification
CC – Change of Chapter –
Change to this Chapter from any
other Chapter
 CTH – Change of Tariff Heading –
Change to this heading from any
other heading
 CTSH – Change of Tariff Subheading –
Change to this subheading from any
other subheading
 Based on HARMONIZED SYSTEM (HS)

26. 1. Change in – tariff classification Rule (CTC Rule)
Philippines
Exported
Coconut / Copra
H.S
Refined Oil H.S
Australia
A Philippine oil factory buys copra from various farmers as a raw material for the production of a refined oil to be exported to Australia. Continued…

27. For purposes of determining origin of the refined oil:
Continued…
For purposes of determining origin of the refined oil:
• The coconut (801.19) is an originating material. The heading of the finished product (refined oil) is different from that of the coconut. The required change has occurred.
The product refined oil is an ”originating goods” of the Philippines, hence this qualify for PREFERENTIAL TARIFF TREATMENT.

28. Continued…
The HS code of refined oil is and its origin rule under ATIGA is “A regional value content of not less than 40 percent; or
A change to subheading from any other. The rule requires that the 6-digit (i.e. subheading) code of the refined oil be different from those of the materials used in its production in the Philippines.

29. For purposes of determining the Regional Value Content of the refined oil:
• The COCONUT is originating material.
The FOB price of the refined oil is $ 140.
Using the formula,
R.V.C. of Refined oil = FOB $140 — 0 (Non Originating Material)
FOB $ (Local materials)
= 1 x 100 = 100 %
The “refined oil” as manufactured in the Philippines using originating materials satisfies the regional value content as mandated under the Rules of Origin thus it is an “originating” good of the Philippines.

30. OPERATIONAL PROCEDURES
RULES OF ORIGIN
OPERATIONAL PROCEDURES

31. MANUFACTURER / EXPORTER
Operational Certification Procedures (OCP) for ROO
Step 1:
APPLICATION FOR
PRE EXPORT VERIFICATION
MANUFACTURER / EXPORTER
Applies for the pre-export verification of the origin of goods
Step 2:
PRE-EXPORT VERIFICATION
ISSUING AUTHORITY / BODY
Conducts the pre-export examination
MANUFACTURER / EXPORTER
Applies for a CO. Submits the result of pre-export verification and appropriate requirements.
Step 3:
CO APPLICATION
ISSUING AUTHORITY / BODY
Issues the CO. Retains duplicate copy of the CO.
Step 4:
CO ISSUANCE
MANUFACTURER / EXPORTER
Sends original CO to the IMPORTER. Retains the triplicate copy of the CO.

32. The Requirements for PRE-EXPORT EVALUATION
1. Written request for evaluation to be submitted at least 5 days
prior to exportation
2. Complete list of all materials (local and imported) used in the
production
3. Breakdown of cost element
4. Import and Export declaration
5. Production Flowcharts
6. Company profile
7. Other documents to support originating status of the product
8. Photo of production process
The Requirements for PRE-EXPORT EVALUATION

33. Copy of approved Export Declaration
Copy of Bill Lading / Airway Bill
Commercial Invoice
Copy of Export Permit for regulated
products
requirements for the
Issuance of co

34. Issuance of certificate of origin
Exporter presents CO Declaration to the Export
Division
2. Trade Control Examiner conducts evaluation and
verification documents
3. Trade Control Examiner checks if the product is
included in the list covered by the Preferential
Tariff
4. Trade Control Examiner submits findings to the
Chief, Export Division
5. Chief, Export Division signs Certificate of Origin
PrOCEDUREs for the
Issuance of certificate of origin

35. Import Clearance Procedure for shipment covered by
Certificate of Origin
FORM D/E/AK/JP/AANZ/AJ
Check by Preferential Rate Unit (PRU),
Formal Entry Division (FED) for:
Formal Compliance
Presentation Time Compliance
Origin Criteria Compliance

36. Verification of Form D/E/AK/JP/AANZ/AJ with issuing office abroad
Retroactive Verification of Certificate of Origin FORM D/E/AK/JP/AANZ/AJ
Verification of Form D/E/AK/JP/AANZ/AJ
with issuing office abroad
Reasonable doubt exists:
authenticity of the documents
accuracy of the information regarding
the origin of products or certain parts

37. ON-SITE VERIFICATION
Customs Authorities in the importing country can conduct verification in the exporting Party: If not satisfied with the verification conducted by the issuing authority in the exporting party under exceptional cases. a. Systematic Fraud b. Cost of the verification is less than the revenue that can be recovered as a result of the verification

38. Pending result of verification of the CO:
The shipment may be granted provisional release under the following term:
Importer to post a guarantee in the form of either a manager /cashier check or a company postdated check
Amount equivalent to the difference of the duties and taxes due based on MFN rates and the preferential rates

39. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
JCEP
I. ISSUING AUTHORITIES
Government authorities:
Customs–PHI,SGP
Ministry of Commerce- THA, KH, LA and MM
Ministry of Trade – IDN, MAL, VN
Ministry of Foreign Affairs & Trade - BRU
Government authorities
China – Customs
Authority designated by the government- Korea Chamber of Commerce
Korean Customs Service
Australia Chamber of Commerce and Industry
New Zealand Chamber of Commerce and Industry
Japan Chamber of Commerce and Industry

40. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
II. PRE EXPORT EXAMINATION
Yes, Exporter to submit documents as basis for supporting evidence of origin
Same as in ATIGA
Yes, as provided in the Implementing Regulations

41. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
III. EXPORTER APPLICATION
Written application to issuing authorities with prescribed minimum data
Same as in ATIGA
Written application to issuing authorities with prescribed minimum data and proof of origin of the goods

42. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
IV. CERTIFICATE OF ORIGIN
Unique Certificate number Origin plus two copies
Official Seal / signature of issuing body
Specified minimum data requirements
Issued within 3 days of export
Unique Certificate number Origin plus three copies
Dedicated form / data requirements
Unique Certificate number Origin plus two copies
Same as in ATIGA
Same as in AKFTA

43. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
V. PERIOD OF VALIDITY
12 Months
Normally 4 months
6 months when transhipped through a non-Party
6 months

44. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
VI. RETROACTIVE ISSUANCE
Yes, up to 12 Months
Same as in
Same as in ATIGA

45. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
VII. ACTION BY IMPORTER
Submit original copy of Certificate at time of import declaration
Submit original copy of Certificate plus triplicate copy at time of import declaration
Triplicate copy sent back to issuing authority in exporting country
Same as in ATIGA

46. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
VIII. NO CERTIFICATE REQUIRED
No certificate required for goods valued at less than $200 FOB
Same as in ATIGA

47. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
IX. BACK TO BACK CERTIFICATE
Yes, required in transhipment cases
Movement
Certificate
Effectivity
Jan 2011
Same as in ATIGA

48. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
X. VERIFICATION PROCEDURE
Request shall be made in writing and accompanied with the CO also specify the reason for retro verification
Same as in
Same as in ATIGA
 Same As in ATIGA .

49. MATRIX OF OPERATIONAL PROCEDURES OF
VARIOUS FTA-ROO
ATIGA
ACFTA
AKFTA
AANZFTA
AJCEP
XI. RECORD KEEPING
Issuing body, exporter and importer to keep relevant record for 3 years
Same as in ATIGA

50. SAMPLE CO FORM

51. Reminder:
The Certificate of Origin, once duly certified by an authorized official of the Philippine Government, becomes a public document. Anyone who furnishes or causes to be furnished false information in any material particular shall be liable and punishable under the Revised Penal Code of the Philippines and other related laws.

52. Thank you for your kind attention!