Rules of Origin (Textile & Clothing only) at a Glance

Rules of Origin (ROO) are the criteria used to determine where a good has been made, for the purpose of ensuring that only the products of countries which are party to the FTA, enjoy tariff preferences (elimination/reduction of import duties).

Types of Rules of Origin (ROO)

  • Wholly obtained
  • Value content (VC) or regional value content (RVC)
  • Change in Tariff Classification (CTC)
  • Process Rule
  • Product Special Rule (PSR)

Malaysia - Japan  JMEPA

The Japan-Malaysia Economic Partnership Agreement (JMEPA) entered into force on 13 July 2006. For textile and apparel products, tariffs are eliminated with immediate effect. Rules of Origin for Textile and Apparel Products are as follows :

§       Product Special Rule (PSR) for textiles and Clothing

§       2 substantial transformation with Change in Tariff Classification (CTH).

§       The two processes covers : spinning, weaving, bleaching, dyeing, printing or finishing

§       Flexibility – One of the process could be done within the ASEAN countries.

§       De Minimis - Specific 7 percent by weight of the good that do not undergo applicable tariff change classification.

ASEAN-China FTA (ACFTA)  

ASEAN-China FTA for Trade in Goods Agreement (TIG) was signed on 29th November 2004.  Tariff on textiles and apparel will be fully eliminated by 1st January 2010 or 2012.

Product Special Rule (PSR) for textiles and textile products adopted from CEPT ROO. Exporters can choose the Alternative Rule of either

  • 40% value content rule or
  • Change of tariff heading (CTH)

ASEAN-Korea FTA (AKFTA)

Negotiations for the AKFTA commenced in 2005. The Trade in Goods (TIG) chapter of the AKFTA entered into force on 1 June 2007, while negotiations for the Trade in Services chapter are still ongoing. Tariffs for most textile and apparel items are scheduled to be eliminated by 2009.

Product Special Rule (PSR) was adopted for textile products :

  • Chapter 50-59 : Generally change of tariff classification (CTC) or Regional Value Content (RVC) 40%. Certain tariff lines require CTC accompanied by at least two preparatory or finishing operations;
  • Chapter 61-63 : CTC provided that the goods is both cut and a sewn in the territory of any party

Malaysia - Pakistan FTA (MPFTA)

Malaysia - Pakistan Free Trade Agreement was launched on February 2005. Both countries signed an Agreement on Early Harvest Programme (EHP) on 1 October 2005 which came into force on 1 January 2006.

Tariffs on products identified for the EHP have been reduced to 0-5 per cent. Under the EHP, Malaysia offered a total 114 products covering yarn, clothing and textile products. Pakistan offered 125 products covering electrical appliances and machinery, plastics, chemicals, rubber and timber products.

Negotiations are on-going and expected to be completed by end-2007. One process Product Special Rule (PSR)  applied to textiles and textile products. The process covers spinning, weaving, bleaching, dyeing, printing and finishing.

Below are the documents needed to enjoy preferential duty treatment under the abovementioned bilateral or multilateral agreements :

  • Form D for export to ASEAN countries
  • Form MJEPA for Malaysia-Japan FTA
  • Form E for ASEAN-China FTA
  • Form AK for ASEAN-Korea
  • Form MPFTA for Malaysian-Pakistan FTA

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