Basic Approaches to Determine the Origin and Exemplification of Documents Necessary to be Prepared and Stored

Revised January 2015 Origin Certification Policy Office Ministry of Economy, Trade and Industry (METI)

1. Introduction

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An Economic Partnership Agreement (EPA) is beneficial to reduce and eliminate tariffs on goods produced within the parties to the agreement. To utilize this advantage, it is necessary to clarify that goods to be exported are those of an EPA party (originating goods). For this purpose, each EPA has established rules to specify whether goods qualify as originating goods (rules of origin). Among the various rules of origin, some of the most easy-to-understand examples are the goods produced wholly in a party (wholly obtained or produced goods) such as iron ore or cattle produced wholly in the party. Additionally, when goods are manufactured from materials or parts imported from a third country, substantial production/processing is necessary according to the rules of origin set forth for each good. Criteria for substantial production/processing include a change in tariff classification criteria, value added (VA) criteria, and specific manufacturing or processing operation criteria. This document presents a basic approach to a change in tariff classification criteria and VA criteria, which are used most frequently, and some examples of preparing documents which demonstrate to meet these criteria. We hope this document helps you better understand the origin certification system, leads to increased compliance, and contributes to sound export trade development.

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- CTC rules are criteria which enable goods to be considered as originating goods when the HS number has been changed between the final product and non-originating materials/parts (i.e. when production/processing occurring such change has been done).

51.07 51.05

HS number changes at the 4-digit level! (Heading from 51.05 to 51.07)

Wool Yarn

If change of tariff heading (CTH), for example, is required for certain goods and the HS number is changed at the 4-digit level, the goods qualify as originating goods of Japan.

Japan Third Country

Export Spinning

2. Change in Tariff Classification Criteria (CTC Rules) CTC：Change in Tariff Classification

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1. A table comparing the goods and all materials/parts used for manufacturing (See the next page)

2. Documents which support the fact that the manufacturing was performed using the materials/ parts described in the comparative table

4. A copy of the invoice and shipping documents for export goods to which the CO is issued, a copy of issued CO

Exemplification of Documents to be Stored

Parts list Flowchart of manufacturing process Production order Other documents such as the input record of each material/part (record of inventory storage from/to warehouse) (These supporting documents [however described] are not necessarily required to be stored at the specific section, but should be available accordingly from relevant departments within the organization.)

Basic Approach

◎Give tariff classification number (HS number) to the parts on the part lists of the goods to which a certificate of origin (CO) is issued to determine the origin status depending on whether the HS number has been changed between the goods and materials/parts used for the goods.

3. For materials/parts which were treated as originating, supporting documents to prove the origin status.

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For materials/parts procured domestically, information provided by the supplier (i.e., documents to prove that they are originating goods. See pages 16 and 17 of this document)

When materials/parts concerned are originating goods in partner countries, a copy of the CO and other documents to prove that the materials/parts concerned are originating goods (i.e., a comparative table and/or calculation worksheet described later).

HS number Name of goods HS number Name of parts Unit price3917 Plastic pipe3923 Protector3926 Drive gear4016 Washer5901 Fabric tape7318 Receptacle7318 Tapping screw7318 Nut7318 Class fuse7318 Spounge seal

8536 Connector9607 Fastener

Motor Originating (Malaysia) Certificate of Japan-ASEAN EPA (issued by Malaysia)

Ferrite core Originating (Malaysia) Documents provided by supplier (△△ Factory)

(8532) LED Originating (Japan) Documents provided by supplier (△△ Factory, ●● Manufacturing)

(8544) Copper wire Originating (Japan) Documents provided by supplier (△△ Factory, ○○Ltd.)

(8544) Electrical conductor Originating (Malaysia) Certificate of Japan-ASEAN EPA (issued by Malaysia): Accumulation*

Origin and other information

8544.30 Wire harness

【Goods】Country of production: Japan; Location of manufacture: ●● Factory ; Destination: Thailand 【Name of Agreement】 Japan-ASEAN EPA 【Applied Origin Criteria】 CTC Rule: CTH (4-digits change)

Date of preparation: (month) (date), (year)

Example Comparative Table in Use of Change in Tariff Classification Criteria (CTC Rule) (assumed to utilize Japan-ASEAN EPA)

・A supplier who submitted documents must prepare a similar comparative table and/or calculation worksheet related to delivered material/parts.

*Accumulation is a rule that enables originating material (x) of an EPA party to be considered as originating material of Japan when determining the origin status, if the originating material (x) is used for production of goods (y) produced in Japan. Japan-Mexico, Japan-Peru, Japan-Malaysia, Japan-Indonesia, Japan-Brunei, Japan-Philippine and Japan-Australia EPAs all define a provision to take the partner's production into account (see page 20). 5

• For non-originating materials, neither business documents nor other documents related to origin are required.

• Even though the

required change in HS number cannot be confirmed, the material can be considered as originating in Japan if the fact that the material is originating good in a partner country is demonstrated.

・For non-originating materials, check the change in HS number.

・A change in HS number is not required to check for originating materials.

・Cost information is not required in principle except for application of De Minimis (described later).

・As a change in HS number is not required to check for originating materials, providing the HS number is not required in principle. ・If the change in HS

number can be confirmed, the originating material also can be considered as non-originating (suppliers' document is not required in this case).

2. When determining the origin status, while the change of HS number should be confirmed between the goods and materials/parts that were used, the level of HS number may be the one to confirm the necessary change according to the applicable CTC rule.

Points

It is desired to inquire with the importer or customs of the importing country through the importer to check the correct HS number of the goods (as customs of the importing country preferentially determine the final HS number of the goods).

HS2002 Japan-Mexico, Japan-Malaysia, Japan-Chile, Japan-Thailand, Japan-Indonesia, Japan-Brunei, Japan-ASEAN and Japan-Philippines

HS2007 Japan-Switzerland, Japan-Viet Nam, Japan-India, and Japan-Peru

HS2012 Japan-Australia

1. Applicable HS varies by agreement.

Any changes at the 2-digit level satisfy the changes at the 4-digit level.

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(1) 2-digits for CC (CTC rule at the 2-digit [Chapter] level) (2) 2- or 4-digits for CTH (CTC rule at the 4-digit [Heading] level) (3) 2-, 4- or 6-digits for CTSH (CTC rule at the 6-digit [Sub-heading] level)

* If it is shown that the goods-specified CTC rule set out in the rules of origin is satisfied by comparing the HS number of final products manufactured and that of the materials/parts used to produce the final products, the HS number of the secondary materials/parts is not required to be checked.

4. If the materials/parts belong to the same HS numbers as export goods and do not satisfy the CTC rule applied to the export goods even after production activities, the following measures can be considered:

5. If an EPA is utilized for the same goods continuously, it is necessary to check regularly within the organization that the goods concerned satisfy the CTC rule as they are. If there are any changes in factors determining the origin status, it is necessary to re-check.

* "De Minimis" permits use of certain non-originating materials which do not satisfy the CTC rule if their proportion does not exceed a certain level (i.e., a tiny proportion). For the Japan-ASEAN EPA, the certain levels are, for example, not exceeding 10% of the weight of the goods for HS50-63 (Textiles) and not exceeding 10% of FOB value of goods for HS28-49 and HS64-97 (Other Industrial Products). As products and proportions subject to De Minimis vary depending on the agreement, it is necessary to check the agreement sufficiently to utilize it.

3. If it is too difficult to control the materials/parts separately due to a huge number of items, they can be controlled as parts of certain modules rather than separately in accordance with the actual conditions of the production process.

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Points

- Instead of non-originating materials/parts which do not satisfy the change of tariff classification required, use originating materials/parts

- Consider the possibility of applying the De Minimis* rule - If the rules of origin stipulated "or a VA rule," consider the possibility of applying the VA rule (see

the next section and later)

- VA rules are criteria which enable goods to be considered as originating goods, if the proportion of the value (qualifying value content [QVC]/regional value content [RVC]), which is converted from the portion qualified as originating created in the production process of the goods, exceeds a certain threshold.-

FOB Value: $20,000

- Engine - Transmission - Suspension - Braking equipment - Bearings - Tires - Wheels

Processing/ Assembling

Import

If a VA 40% rule, for example, is required for goods concerned and the QVC exceeds 40%, the goods are qualified as originating goods of Japan.

QVC*= $20,000－$3,000 $20,000

×100 = 85% > 40%

Japan

Third Country

*QVC: Qualifying Value Content QVC is 85 % in this case

Processing

Originating Materials

Non-Originating Materials

3. Value Added Criteria (VA Rules) VA：Value Added

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Vehicle

Total amount: $3,000 - Car audio - Lighting lamps - Mirrors - Others

Basic Approach

◎ The origin status is determined by calculating the QVC (including the value of originating materials) which is configured by the production process, and whether it exceeds the specific baseline (called the "threshold").

➣Calculating the proportion of value added to FOB value by specifying non-originating materials or by specifying originating materials and subtracting their total value from total material costs (build-down method).

➣ Calculating the proportion of value added to FOB value by building up originating portion (value of originating materials + production costs [labor costs/production expenses] + profit) (build-up method).

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3. For materials/parts treated as originating, supporting documents to prove their origin status

4. A copy of the invoice and shipping documents for export goods to which the CO is issued, a copy of the issued CO

Exemplification of the Documents to be Stored

1. Calculation worksheet to describe QVC (See the next page) (Describe unit price, originating/non-originating, origin information, costs, profit and other information for all "materials/parts" used in the production. Providing the HS number is not required.) 2. Documents to show the fact that the figures in a calculation worksheet are appropriate and documents to show the fact that manufacturing was performed from the materials/parts described

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Parts list (Whether originating or non-originating should be specified. In case of the build-up method, information of originating materials to be built up is sufficient.)

Flowchart of manufacturing process Production order Record of finished goods (ex. record of inventory from/to storage warehouse) Record of input material/parts (ex. record of inventory from/to storage warehouse)

【Build-down method】 Documents regarding the unit price of non-originating materials (accounting record, sales slip, invoice, contract, bill, etc.)

【Build-up method】 Calculation sheet of Production costs Documents regarding the unit price of originating materials to be built up or production costs, etc. (accounting record, sales slip, invoice, contract, bill, payment record, etc.) (These supporting documents [however described] are not necessarily required to be stored at the origin certification section, but should be available accordingly at relevant departments within the organization.)

For materials/parts procured domestically, information provided by the supplier (i.e., documents to prove that they are originating goods. See pages 16 and 17 of this document)

When the materials/parts concerned are originating goods in partner countries, a copy of the CO and other documents to prove that the materials/parts are originating goods of the other countries (i.e., comparative table and/or calculation worksheet).

(HS number) Name of parts Originating / non-originating Unit price Origin and other information Price information

(8443) Tape cartridge Origin (Malaysia) JPY CO of Japan-ASEAN EPA (issued by Malaysia): Accumulation Inventory record, copy of invoice for import

(8501) Motor Origin (Malaysia) JPY CO of Japan-ASEAN EPA (issued by Malaysia): Accumulation Inventory record, copy of invoice for import

(8505) Ferrite core Origin (Malaysia) JPY Documents provided by supplier (△△ Factory) Inventory record, copy of invoice for import

(8532) LED Origin (Japan) JPY Documents provided by supplier (△△ Factory, ●● ManufacturingInventory record, contracts , domestic invoice

(8544) Copper wire Origin (Japan) JPY Documents provided by supplier (△△ Factory, ○○Ltd.) Inventory record, contracts, domestic invoice

Total value of originating materials 1,100 JPY

(3917) Plastic pipe Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(3923) Protector Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(3926) Drive gear Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(4016) Washer Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(5901) Fabric tape Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(7318) Receptacle Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(7318) Tapping screw Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(7318) Nut Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(7318) Class fuse Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(7318) Spounge seal Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(7320) Surgeabsorbers

Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(7320) Spring Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(8310) Sign plate Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(8003) Solder Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(8533) Electric resistor Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(8534) Printed circuit Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(8536) Connector Non-originating JPY Worksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

(9607) Fastener Non-originating JPYWorksheet for Unit price, supporting documents such as account book and sales slip, purchase invoice,inventory record

Total value of non-originating materials 1,400 JPY

Production costs/expenses - 2,700 JPY Details of production costs

- 400 JPY Details of production costs

- 200 JPY Details of production costs, transaction description of internal transport and custom broker, etc.

Total non-material costs 3,300 JPY

- 5,800 JPY Contracts, copy of invoice, Shipment record, etc.

64 USD Foreign exchange rate 1 USD =\90 JPY

FOB value

Profit

Transportation costs/charges

【Goods】Country of production: Japan; Location of manufacture: ●● Factory; Destination: Thailand 【Name of Agreement】Japan-ASEAN EPA 【Applied Origin Criteria】VA Rule: VA 40%

➣Raw material composition (Providing HS number is not required in principle.)

Date: (month) (date), (year)

Example of Calculation Worksheet used for Value Added Criteria (VA Rule) (assumed to utilize Japan-ASEAN EPA)

・ As the value of originating materials is not necessary with the build-down method, no document is required as the basis for unit prices of originating materials if the build-down method is used. If the value of originating materials is built up, however, supporting documents are required as the basis for the value.

・ The simpler method can be

selected freely from among the build-down and build-up methods considering the number of originating/non-originating materials, amount of value, etc.

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・ If non-material costs (e.g. , labor costs, overhead costs, profit) are included in the added value in the build-up method, supporting documents are required for the value concerned.

・ Unit price can be decided according to the accounting standards adopted by each company.

(1)

(2)

In case of the build-up method, check first whether non-material costs (1) exceed the threshold. In this case, calculate the percentage of to 3,300 JPY in FOB value (approximately 57 %). As it exceeds threshold (40%), material costs are not required to be used for the calculation. If it does not exceed, simply continue to build up the value of originating materials until non-material costs + value of originating materials (2) exceeds the threshold

HS number Name of goods FOB value (value of shipments) FOB value (converted in yen) Value Added Non-originating material value QVC Threshold

8544.30 Wire harness 64USD 5,800 JPY 4,400 JPY 1,400 JPY 76% 40%

1. If the QVC exceeds the threshold solely with the company's own non-material costs including production costs and profit, the materials/parts, which are the company's in-house parts or are purchased from the other companies, can be considered as non-originating (confirmation of the origin status is not required).

2. If the QVC does not exceed the threshold by considering all the material costs as non-originating, check first the origin status of the company's own in-house parts and/or materials/parts whose origin status is easily determined. If QVC exceeds the threshold by adding costs of materials/parts whose origin status is confirmed, other materials can be considered as non-originating.

Points

3. Unit price of "materials/parts" can be determined according to the accounting standards adopted by each company.

4. If QVC still does not satisfy the VA Rule even after the costs of materials/parts whose origin status is confirmed are added, consider the possibility of applying the CTC rule out in the rules of origin for the goods (see pages 3 to 7).

5. If an EPA is utilized for the same goods continuously, it is necessary to check the change in actual unit price regularly within the organization and ensure that the goods concerned satisfy the threshold, since QVC may below the threshold due to price fluctuation resulting from exchange rate, change in FOB value or change in value of materials.

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( focusing on managing those materials which may affect the origin status such as materials whose unit price is high, or building up the QVC higher than the threshold so that it may handle price fluctuation).

4. Other References

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2. Documents, such as a copy of invoice and/or documents to prove the origin status, which are used for the examination of CTC rule and VA rule respectively in common, are not necessarily needed to be stored for both rules respectively, but only one set of them is sufficient to be stored.

1. A table comparing goods and all materials/parts used for manufacturing for determination of the origin status according to the CTC rule, and a calculation worksheet describing QVC for determination of the origin status according to the VA rule, can be prepared as either separate charts or an integrated chart.

When both CTC and VA Rules are Required to be Satisfied at the Same Time

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Those who are Qualified to Request Determination of the Originating Goods

1. Exporters who have production information or “producers” may request determination of the originating goods of the export goods.

2. Above “producers” mean those who produce the goods and are able to submit documents to demonstrate that the goods to be exported are originating goods.

◎ Exporters and producers are obliged to store documents regarding the goods to which the CO is issued for the following period from the date of issue of the CO.

Storage Period

5 years 3 years

Japan-Mexico, Japan-Malaysia, Japan-Chile, Japan-Thailand, Japan-Indonesia, Japan-Philippine, Japan-India, Japan-Peru and Japan-Australia

Japan-Brunei, Japan-ASEAN, Japan-Switzerland, and Japan-Viet Nam

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【Example】 In case Company A outsources manufacturing to Company B while Company A controls and directs production including production-related planning, decision-making on specification, procuring, supplying or designating of raw materials, if Company A and B can submit documents to demonstrate that goods concerned are originating goods, both companies can request producers to make a determination of originating goods.

• In connection with requesting the supplier to submit these documents, explain the rules of origin, etc. sufficiently.

• To minimize the burden on the supplier, it is desired to request a minimum information to satisfy the CTC or VA rule. If the VA Rule is applied, for example, calculate first the company’s own VA, then prioritizing to request information of the parts at a high price or whose origin status is easy to determine in order to build up the minimum value to satisfy the criteria.

Examples of Documents Provided by Suppliers to declare that the Goods are Originating Goods

• Ensure appropriate communication channels to access the suppliers for information on any changes relating to the origin status due to any changes in designer/supplier or other reasons.

Document to support the fact that materials/parts used are originating good should include information such as the date of preparation of the document, name of supply destination, name and address of manufacturer, name, section and contact information of person in charge, applicable agreement, statement that goods are originating goods, name of manufactured goods (in English), information to specify the goods (e.g., serial or model number), HS number, origin criteria, place of manufacturing (name of factory). The following form is an example of the document including the above mentioned information. The document’s format does not matter as long as it contains the above information.

(1) When demonstrating the fact that materials/parts used are originating goods by the supplier’s declaration

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(month)(date), (year)

Dear (Producer)

We hereby certify that our products described below are originating goods according to the Agreement between Japan and XX for an Economic Partnership.

Name of Supplier Name: XX Co., Ltd. Address: 1-3-1, Kasumigaseki, Chiyoda-ku, Tokyo Person in charge: Section: Section, Department

Contact: Tel: Fax:

Name of goods (in English)

Serial/Model number

HS number Origin criteria Place of

manufacturing

○○○ (XXX) AB1122/CD－I ○○○○ CTC (Change in Heading) △△Factory

○○○ (XXX) EF3344/GH－II (○○○○) VA (over 40% ) ○○ Factory

1. There is an individual contract on manufacturing parts concerned

(2) When demonstrating the fact that materials/parts are originating goods by the documents retained by producers

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(a) A copy of the individual contract on manufacturing parts concerned. Such specific contract should include names of parts, other necessary information to specify the parts (e.g., model numbers, materials, and sizes), and names of vendees and vendors. This information can be an annex to the contract such as the order form or design drawing.

(b) Change in HS number between parts/other materials concerned and final goods can be confirmed by producers (vendees of the

parts/other materials) by giving the HS number respectively. Meanwhile, if the VA rule is applied to the parts/other materials, the percentage (%) of the added value should be mentioned in a copy of individual contract concerned in addition to the name, section, and contact information of the person in charge of the vendors.

2. There is no individual contract on manufacturing parts concerned, but there is a general contract such as a basic contract (a) A copy of the basic contract and a separate order form if there is a statement such as "an individual order must be placed based on a

separate order form." The order form should include the name of parts, other necessary information to specify the parts (e.g., model numbers, materials, and size), names of vendees and vendors, order numbers, and order dates (in order to confirm that the order is based on the master agreement).

(b) Change in HS number between parts/other materials concerned and final goods can be confirmed by producers (vendees of the

parts/other materials) by giving the HS number respectively. Meanwhile, if the VA rule is applied to the parts/other materials, the percentage (%) of the added value should be mentioned in a copy of the order form concerned in addition to the name, section and contact information of the person in charge of the vendors.

(a) A copy of the statement of delivery to confirm that manufacturing parts are manufactured and delivered according to the contract and order form concerned. The statement of delivery should include information such as names of parts, model numbers, quantity, name of manufacturing factory, order number, and order date.

(b) If the vendor outsources materials further to subcontractors and there is any provision that requires obtaining approval of

outsourcing from the vendee in the individual contract or basic contract between vendee and vendors, it is sufficient for the producer(vendees) to confirm that the materials are originating goods by obtaining a document including above necessary information such as the order form between vendors and subcontractors based on the individual contract or basic contract.

* Note that an additional explanation to demonstrate that materials/parts concerned retain the origin status might be required such as

additional explanation of the manufacturing process of the materials/parts supplied to the exporter/producer of the final goods, if the customs in the partner country requests the information relating to the origin status of the export goods.

3. Common documents to 1. and 2. to be retained

Treatment of In-House Parts

【Basic Principle】

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• Value of in-house parts not as materials/parts of final goods but as products for third party sale in a single unit Note: If they have been exported as single units previously and the value calculated by subtracting the VNM

from the FOB value (at the previous export) exceeds the threshold of the VA rule, they can be considered as originating goods.

• Value when alternative and similar materials/parts are purchased • Value which the third party deems appropriate (i.e., value which can be regarded as appropriate in the market)

1. In case the materials/parts used for the production of the export goods are in-house parts (in-house products) and the in-house parts satisfy the rules of origin, the value of in-house parts can be counted as originating value when calculating the QVC applying the VA rule to confirm the origin of export goods, provided that the basis of the value of the in-house parts concerned is clear and objective.

2. If each material/part used for the production of the export goods is considered as parts of a module, the grouping of the parts of each module should be convincible. To avoid doubts that the combination is arbitrarily formed so that QVC satisfies the threshold of VA rule, it should be considered carefully.

Note: Attention should be paid so that no case would be considered as irrational combination by customs. Because the calculated QVC could exceed the threshold by grouping the Parts A (originating goods) and B

(not satisfying the threshold ) as one module even if such grouping is objectively unreasonable.

【Example】 For example, the value of in-house parts following bases is considered as reasonable.

Production costs/expenses

Profit

Transportation costs/charges

Originating materials

Goods

Part A

Non-originating materials

Part B

Part C

ケ Case 1: Case 2:

Non-Material Costs solely are enough to exceed the threshold

Non-Material Costs solely are not enough to exceed the threshold

If non-material costs (production costs/expenses, profit, transportation costs/charge) are enough to exceed the threshold,* originating material can be treated as non-originating material ( the origin status is not required to be confirmed).

If non-material costs (production costs/expenses, profit, transportation costs/charge) are not enough to exceed the threshold, building up originating materials whose origin status is easily proved until QVC exceeds threshold! Remaining originating materials can be treated as non-originating materials as well as Case 1.

Treatment of the components purchased from suppliers

Example of Treatment of Components (in case of VA 40 % rule)

Part A

If Part A is purchased from a domestic supplier, it can be controlled not as a separate material and/or parts concerned but as the parts of a module like a so-called subassembly such as Part a, b or c in accordance with the state of the production process and/or others.

Part a-1

Part a-2

Part c-2

Part c-1

Part b-1

Part a-1-1 Part a-1-2 Part a-2-1 Part a-2-2 Part a-2-3 Part b-1-1 Part b-1-2 Part c-1-1 Part c-1-2 Part c-2-1 Part c-2-2

* It is preferable to consider additional 10 % margin for threshold (50 % of threshold) taking the possible impact of foreign exchange rates or other factors into account.

Non-m

aterial costs M

aterial costs

・

・

・

・

・

・

Part b

Part a

Part c ・a engine control unit case as parts composing an engine,

・a body, lens or stage as parts composing microscope,

can be controlled as module respectively 19

Example of Supporting Documents for Originating Materials that is Included in Non-originating Materials

The following are examples of supporting documents for calculation of QVC under the agreements which allows taking the partner country's production into account.

1. Documents to consider the value of originating materials used for production of non-originating material

Goods (A) 100 USD

Non-originating materials (B) 30 USD

Non-originating materials (C) 40 USD

Originating materials of Japan (D) 20 USD

Originating materials of Country Z (F)

5 USD

Non-originating materials (G) 20 USD

Japan

* If the above-mentioned manufacturing is performed and supporting documents can be prepared, the VNM can be limited not to the total amount of non-originating materials B and C but to the total amount of non-originating materials G and C in above-mentioned EPA to calculate the QVC of goods A.

Country Z (EPA partner) Profit/Labor Costs, etc. (H)

5 USD

Profit/Labor Costs, etc. (E) 10 USD

Documents regarding the material (F) shown in the

chart below

Documents regarding production costs (H) in Country Z shown in the chart below

* Target agreements : Japan-Mexico, Japan-Malaysia, Japan-Indonesia, Japan-Brunei, Japan-Philippine, Japan-Peru or Japan-Australia EPAs.

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Documents which support the fact that the materials used for non-originating materials are originating materials Documents regarding the value of the originating materials used for the production of non-originating materials

(e.g., declaration, sales slips, invoices, contracts, bills, payment records provided by manufacturers which produced materials (B) shown in the chart below)

2. Documents to consider partner country's production and other costs Documents on calculation basis concerning production costs for production of the non-originating material

(e.g., declaration,* sales slips, invoices, contracts, bills, payment records provided by manufacturers which produced material (B) shown in the chart below)

* Declaration should include the following information: date of preparation of the document, name of supply destination of manufactured non-originating materials (B), name and address of manufacturers, information to specify the non-originating materials (B), price information about originating materials (F) and profit/labor costs, etc. (H).

Step 1

Check the HS Number of Export Goods

Check the Rules of Origin of Export

Goods

Check the Origin Status of Export

Goods

Apply for and Obtain the CO

First of all, the HS number of export goods should be checked to utilize EPA. Inquire also with the importer (if applicable, customs of the importing country) to check

the correct HS number. HS2012 is used for Japan-Australia, HS2007 for Japan-Viet Nam, Japan-Switzerland,

Japan-India and Japan-Peru, and HS2002 for other agreements.

Once the rules of origin of export goods (e.g., CTC or VA) is specified, check whether the goods are originating goods by referring to this document!

Check the EPA tariff rate of goods with a confirmed HS number. (i.e., whether the tariff rate is more advantageous than the normally applicable one) For a specific EPA tariff rate, refer to each EPA's “Concession Schedule" or JETRO's

"World Tariffs".

Check the rules of origin to confirm whether the goods are qualified to benefit from the EPA.

Check the rules of origin for specific export goods with the rules of origin chapter or product specific rules of each agreement.

Once the goods to be exported are confirmed as originating goods, access the JCCI website to start the application procedure for issuance of a CO.

Check the EPA Tariff Rate

Step 4

Step 2

Step 3

Step 5

For EPA beginners (Reference) Procedure for Obtaining EPA CO

* According to the agreement, the customs in the partner country may require METI to confirm the contents of the CO, and METI may request information to the users of the CO separately (Documents in English may be requested to be prepared). 21

✔ EPA in general Economic Partnership Division, Trade Policy Bureau, METI FAX: +81-3-3501-1592 E-mail: epa-soudan@meti.go.jp Website: http://www.meti.go.jp/policy/trade_policy/epa/english.htm

✔ Issuance of EPA Certificate of Origin International Division, the Japan Chamber of Commerce and Industry FAX: +81-3-3201-7778 E-mail: tokuteico@jcci.or.jp Website: http://www.jcci.or.jp/international/certificates-of-origin/（※Japanese website） * Please contact each applying institution for individual cases regarding determination and issuance.

✔ EPA Export in general Business Information Service, JETRO Headquarters Tokyo TEL: +81-3-3582-5651 Business Information Service, JETRO Osaka TEL: +81-6-4705-8606

Contact Information

✔ Origin Certification System Origin Certification Policy Office, Trade and Economic Cooperation Bureau, METI FAX: +81-3-3501-5896 E-mail: gensanti-syoumei@meti.go.jp Website: http://www.meti.go.jp/policy/external_economy/trade_control/boekikanri/gensanchi/epa.html （※Japanese website）

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