CPTPP Rules of Origin: What Vietnam Exporters Must Prove

CPTPP rules of origin decide whether your shipment gets the lower tariff, and the answer comes down to two things. Your product must qualify as "originating," and you must be able to prove it on paper. The agreement has been in force for Vietnam since 14 January 2019, so exporters now face these tests on real orders.

What "originating" means

A good counts as originating under Article 3.2 of the agreement's origin chapter in three ways. First, it is wholly obtained or produced in a member country, such as crops grown or fish caught there. Second, it is made in the region entirely from originating materials. Third, it is made in the region with some imported inputs, but it still meets the product-specific rule for its tariff line.

The third route is the most common for factories. Imported fabric, parts or ingredients are allowed, as long as the finished product passes its rule. Check the rule for your exact tariff code before you quote a price.

Sources: CPTPP origin chapter (Chapter 3), Articles 3.2 and 3.3, as published in the Trans-Pacific Partnership text; the CPTPP carries that chapter over.

The three common tests

Product-specific rules usually use one of three tests, or a mix. Some need a change in tariff classification. That means the finished good falls under a different tariff heading than the foreign inputs. Others need a regional value content figure. The chapter allows three ways to work it out: a focused value method, a build-down method and a build-up method. The build-down method takes the value of the good, subtracts the value of non-originating materials, and divides by the value of the good.

Keep your cost sheets ready, because the value test is only as good as your numbers. The value of the good is the transaction value, without international shipping costs.

Sources: CPTPP origin chapter, Article 3.5 (regional value content) and Article 3.1 (definitions).

Two rules that help you qualify

Accumulation lets you count materials made in other member countries as if they were made at home. If you buy originating yarn from one member and weave it in Vietnam, that yarn counts. Work done on inputs inside the region can also add toward origin, even if that work alone did not make the input originating.

The de minimis rule gives a small safety margin. If a good has non-originating materials that fail the tariff change test, it can still qualify when those materials are no more than 10 percent of the value of the good. The good must meet all other rules. Textile and apparel goods follow their own rules instead, and some listed goods are excluded.

Sources: CPTPP origin chapter, Articles 3.10 (accumulation) and 3.11 (de minimis).

The proof you must have

The importer claims the lower tariff based on a certification of origin. Under Article 3.20, that certification can be completed by the exporter, the producer or the importer. Vietnam has up to five years after entry into force before it must accept an importer's own certification, so for now plan around the exporter or producer.

The certification does not need a set format. It must be in writing, say that the good is originating, and carry the minimum data listed in Annex 3-B. One certification can cover a single shipment, or identical shipments within a period of up to 12 months. It stays valid for one year after issue, unless the importing country allows longer. Importers may submit it in English.

Some members told the others at entry into force that they would use a different route, where a competent authority issues the certification or an approved exporter completes it. Under Annex 3-A, a member that does this must set out its requirements in public laws or regulations. Ask your Vietnamese authority or customs broker which route applies to your product before the first shipment, and check the official instructions on the form.

Sources: CPTPP origin chapter, Article 3.20 and its footnote on the five-year period, Annex 3-A (other arrangements).

Mistakes to avoid

Most failed claims come from weak records, not from bad products. These are the ones to watch.

• Guessing the tariff code. The product-specific rule follows the code, so a wrong code means a wrong test.
• Skipping supplier proof. If you claim that inputs are originating, you need paper from the supplier.
• Letting the certification expire. Check the one-year limit and the shipment period.
• Leaving out required data. Missing fields from Annex 3-B can sink a claim.
• Throwing records away. Producers and exporters who certify must keep all records that show the good is originating for at least five years from the date of issue. Importers keep theirs for at least five years from the date of import.

Importing countries can also ask for verification of origin under Article 3.27, and penalties for false claims exist under Article 3.30. A clean file answers most questions fast.

Sources: CPTPP origin chapter, Article 3.26 (record keeping), Article 3.27 (verification) and Article 3.30 (penalties).

A simple checklist

Before you ship, confirm the tariff code and its product-specific rule. Then collect supplier statements and cost sheets, run the test, and complete the certification with every required field. File it with your records. Treat each new product as a new check, because a rule that works for one tariff line may not work for the next.

This note is general trade information, not legal or customs advice. Always confirm the current rules with the Vietnamese customs authority or a licensed customs broker.

Sources: Trans-Pacific Partnership, Chapter 3, Rules of Origin and Origin Procedures, ustr.gov/sites/default/files/TPP-Final-Text-Rules-of-Origin-and-Origin-Procedures.pdf; Wikipedia, "Comprehensive and Progressive Agreement for Trans-Pacific Partnership" (Vietnam's National Assembly approved the agreement on 12 November 2018, Vietnam deposited its documents on 15 November 2018, and entry into force for Vietnam was 14 January 2019).