Regulations on not wholly obtained or produced goods under the AKFTA in Vietnam

Regulations on not wholly obtained or produced goods under the AKFTA in Vietnam
Dương Châu Thanh

Circular 20/2014/TT-BCT issued by the Minister of Industry and Trade Circular 04/2024/TT-BCT dated March 27, 2024 amending Circular 20/2014/TT-BCT prescribing rules of origin in ASEAN - Korea Free Trade Agreement (AKFTA)

Regulations on not wholly obtained or produced goods under the AKFTA in Vietnam

Regulations on not wholly obtained or produced goods under the AKFTA in Vietnam are amended in Circular 04/2024/TT-BCT as follows:

(1) For the purposes of Point b Clause 1 Article 2, a good, except those covered under Article 5 as provided for in Appendix of Circular 20/2014/TT-BCT, shall be deemed to be originating if the regional value content (hereinafter referred to as the “RVC”) is not less than 40% of the FOB value or if a good has undergone a change in tariff classification at 4 (four) digit-level (change of tariff heading) of the Harmonized System.

(2) RVC shall be calculated adopting one of the following two formulas:

- Direct formula:

RVC + (VOM/FOB) x 100%

Where: “VOM” means value of originating materials, which includes the value of originating materials, direct labour cost, direct overhead cost, transportation cost and profit.

- Indirect formula:

RVC + [(FOB – VNM)/FOB] x 100%

Where: “VNM” means value of non-originating materials or materials of undetermined origin, which shall be:

+ The CIF value at the time of importation of the materials, parts or goods; or

+ The earliest ascertained price paid for the materials, parts or goods of undetermined origin in the territory of the Party where the working or processing has taken place.

(Currently, Circular 20/2014/TT-BCT only stipulates one formula for calculating RVC)

(3) An exporter or producer of the exporting Party shall be given the flexibility to adopt the method of calculating the RVC, whether it is the direct or indirect method as prescribed in clause (2).

The exporter or producer shall continue to use the selected method of calculating the RVC throughout the same fiscal year. Any verification of the RVC by the importing Party shall be done on the basis of the method of calculating the RVC used by the exporter or producer.

Circular 04/2024/TT-BCT takes effect on May 11, 2024.

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