The Philippines' additional rules of origin under RCEP
The Philippines is a country that applies differentiated tariff schedules for RCEP partners or partner groups. In addition to the separate tariff schedules for each partner or partner group, Annex I of the RCEP Agreement also includes a Sub-Annex specifying a list of certain product groups subject to differentiated preferential tariff commitments that must comply with additional rules of origin (beyond the general rules of origin). This means that imported goods listed in the Sub-Annex of the Philippines’ tariff schedule must not only satisfy the rules of origin applicable to those goods (as specified in Annex 3A – Product Specific Rules of Origin of Chapter 3 on Rules of Origin) but must also comply with the additional rules of origin set out in the Sub-Annex.
Additional rules of origin
The additional rules of origin are defined in the same way for countries that apply differentiated preferential tariff commitments under RCEP (including the Philippines). Specifically, this rule requires that the value content contributed by the exporting country (including the value of materials, labor, profit, etc.) accounts for at least 20 percent of the total value of the goods.
The additional rules of origin of the Philippines are applied starting from the first year and, in most cases, are implemented over a period of 15 years (see the detailed implementation schedule of the additional rules of origin of the Philippines in the Sub-Annex of Annex I).
Applicable preferential tariff rate
- In the case where the goods simultaneously meet both of the following conditions:
(i) The goods undergo substantial processing in the exporting country when the goods are produced entirely from originating materials within the RCEP region (meaning that only minimal processing operations, as defined in the Agreement, are performed in other member countries, if any); and
(ii) The goods comply with the additional rules of origin as specified in the Sub-Annex of the Philippines’ tariff schedule.
In this case, the applicable preferential tariff rate is the tariff rate granted by the Philippines to the exporting RCEP member.
- In the case where the goods do not meet either of the two conditions (i) and (ii) mentioned above:
In this situation, the applicable preferential tariff rate will be the tariff rate granted by the Philippines to the RCEP member that contributes the largest share of originating material value used in the production of the goods.
Source: Center for WTO and International Trade - VCCI
