Division Introduction

The concept of the origin of goods enters into the implementation of many measures whose application is the responsibility of the customs. The rules applied to determine origin employ two different basic criteria: the criterion of goods ‘wholly produced’ in a given country, where only one country enters into consideration in attributing origin, and the criterion of ‘substantial transformation’, where two or more countries have taken part in the production of the goods. The ‘wholly produced’ criterion applies mainly to ‘natural’ products and to goods made entirely from them, so that goods containing any parts or materials imported or of undetermined origin are generally excluded from its field of application. The ‘substantial transformation’ criterion can be expressed by a number of different methods of application.

In practice the substantial transformation criterion can be expressed:

• by a rule requiring a change of tariff heading in a specified nomenclature, with lists of exceptions,

  and/or

• by a list of manufacturing or processing operations which confer, or do not confer, upon the goods the origin of the country in which those operations were carried out,

  and/or

• by the ad valorem percentage rule, where either the percentage value of the materials utilized or the percentage of the value added reaches a specified level.

The advantages and disadvantages of these various methods of expression, from the point of view of the customs and of the user, may be summed up as follows: