Goods sufficiently transformed

A product can still originate in the EU or a partner country even though it was made with materials from other countries or partly processed abroad, i.e. not in the partner country. This is the case if the product has been sufficiently transformed.

The criteria for when a product has been sufficiently transformed are described by product-specific list rules in the origin protocol of the relevant trade agreement.

In most EU agreements the criteria are described in the following format:

• Column 1: The heading or code as per the Harmonized System (HS).
• Column 2: The description of the product.
• Column 3: Description of the processing required to be carried out in the EU or in the trading partner to confer origin to the product.
• Column 4: Alternative processing, if available.

In case there also is a rule in column 4, you may choose between column 3 and column 4. It is advisable to first check the rule in column 4.

The three rules for sufficient transformation

There are three basic rules used in the product-specific list rules (columns 3 and 4) to determine whether a product has been sufficiently transformed in the EU or in a trading partner country.

A) The 'value added' rule

You may find a rule where the value of all the non-originating materials used by the manufacturer/exporter in the EU or a trading partner country cannot exceed a certain percentage of the (ex-works) price of the product.

It is stated as manufacture in which the value of all the materials used does not exceed [X]% of the ex-work price of the product.

In this case, you must determine

• the customs value of all the non-originating materials used in the manufacture of the product (i.e. based on the value that is declared to the customs authorities of the EU or the trading partner country at the import of these  materials)

and compare it with

• the ex-works price of the product (i.e. the price of the good when leaving the facility where it was produced).

The rule is met if the value of the non-originating materials does not exceed the percentage specified in the rule.

B) Change of tariff classification

You may find the rule that a good cannot have the same tariff classification as any of the non-originating materials imported by the manufacturer/exporter from a third country and used in the product.

It is stated as manufacture from materials of any heading except that of the product.

In this case, you must determine

• the tariff classification of the non-originating materials used (on 4-digit heading level)

and compare it with

• the tariff classification of the product you want to export or import.

The rule is met if the tariff classification of the two is not the same.

C) Manufacture from certain products

You may find a rule that allows the manufacturer/exporter to use specific non-originating materials from third countries (other than the EU or the trading partner country) in the manufacture of the product and still qualify it as originating in the EU or a trading partner country.

It will be stated as manufacture from [type of good], e.g. [yarn] [meat], etc.

The manufacturer/exporter may also import the material in a previous state of production (e.g. for yarn, you may import fibers). However, the manufacturer/exporter may not import a material in a later stage of production (e.g. for yarn, you may not import fabric).

For the complete list see the origin protocol on each preferential agreement. Be aware that in some cases the rule may be a combination of criteria a), b) and/or c).