Rules of Origin

Rules of Origin determine the national source of a product. They implement trade policies such as tariffs, quotas, and trade agreements.

Products must meet specific criteria to qualify as originating in a particular country. These criteria include substantial transformation, value-added thresholds, and tariff classification shifts.

Substantial transformation requires a product to undergo significant manufacturing or processing. Value-added thresholds specify a minimum percentage of a product’s value that must be added in the originating country. Tariff classification shifts mandate a change in the product’s tariff classification due to manufacturing processes.

Country of origin labeling provides clarity on the source of goods. Trade agreements like NAFTA, USMCA, and TPP incorporate Rules of Origin to manage preferential treatment. World Trade Organization (WTO) agreements also use these rules to facilitate global trade standards.

Correct understanding of Rules of Origin ensures compliance with international trade regulations. Misclassification can result in penalties or denied entry at borders.