Tolerances applicable to non-originating materials

1. By way of derogation from paragraph 1 Article 7 and subject to paragraphs 2 and 3, non-originating materials may nevertheless be used, provided that their total value or net weight assessed for the product does not exceed:

a) 10 percent of the weight of the product or ex-works price for products of Chapters 2 and 4 to 24 of the HS, other than processed fishery products referred to in Chapter 16 of the HS.

b) 10 percent of the ex-works price of the product for other products, except for products of Chapters 50 to 63 of the HS.

c) The tolerances mentioned in Notes 6 and 7 of Annex I to this Circular apply for products of Chapters 50 to 63 of the HS.

2. Paragraph 1 shall not allow exceeding any of the percentages for the maximum value or weight of non-originating materials as specified in Annex II to this Circular.

3. Paragraphs 1 and 2 do not apply to goods wholly obtained in a Party within the meaning of Article 6.

4. Without prejudice to Article 10 and paragraph 2 of Article 11, the tolerance provided for in paragraph 1 and 2 applies to the sum of all the materials which are used in the manufacture of a product for which Annex II to this Circular requires that such materials be wholly obtained.

Article 9. Cumulation of origin

1. Goods shall be considered as originating in the exporting Party if such goods are obtained there by incorporating materials originating in the other Party, provided that the working or processing carried out in the exporting Party goes beyond the operations referred to in Article 10.

2. Materials listed in Annex III to this Circular originating in an ASEAN country which applies with the Union a preferential trade agreement in accordance with Article XXIV of GATT 1994, shall be considered as materials originating in Viet Nam when further processed or incorporated into one of the products listed in Annex IV to this Circular.

3. For the purpose of paragraph 2, the origin of the materials shall be determined according to the rules of origin applicable in the framework of the Union’s preferential trade agreements with those ASEAN countries.

4. For the purpose of paragraph 2, the originating status of materials exported from an ASEAN country to Viet Nam to be used in further working or processing shall be established by a proof of origin as if those materials were exported directly to the Union.

5. The cumulation provided for in paragraphs 2 to 4 applies if:

a) the ASEAN countries involved in the acquisition of the originating status have undertaken to: comply or ensure compliance with the EVFTA; and provide the administrative cooperation necessary to ensure the correct implementation of the EVFTA both with regard to the Union and among themselves.

b) undertakings referred to in subparagraph (a) have been notified to the Union.

c) the tariff duty the Union applies to the products listed in Annex IV to this Circular obtained in Viet Nam by use of such cumulation is higher than or the same as the duty the Union applies to the same product originating in the ASEAN country involved in the cumulation.

6. Proofs of origin issued by application of paragraph 2 shall bear the following entry: “Application of Article 3 (2) of Protocol 1 to the Viet Nam – EU FTA”.

7. Fabrics originating in the Republic of Korea shall be considered as originating in Viet Nam when further processed or incorporated into one of the products listed in Annex V to this Circular obtained in Viet Nam, provided that they have undergone working or processing in Viet Nam which goes beyond the operations referred to in Article 10.

8. For the purpose of paragraph 7, the origin of the fabrics shall be determined in accordance with to the rules of origin applicable in the framework of the Union’s preferential trade agreement with the Republic of Korea except for the rules set out in Annex II(a) to the Protocol on rules of origin of that Agreement.

9. For the purpose of paragraph 7, the originating status of the fabrics exported from the Republic of Korea to Viet Nam to be used in further working or processing shall be established by a proof of origin as if those fabrics were exported directly from the Republic of Korea to the Union.

10. The cumulation provided for in paragraphs 7 to 9 applies if:

a) the Republic of Korea applies with the Union a preferential trade agreement in accordance with Article XXIV of GATT 1994.

b) the Republic of Korea and Viet Nam have undertaken and notified to the Union their undertaking to comply or ensure compliance with the cumulation and provide the administrative cooperation necessary to ensure the correct implementation of the EVFTA.

11. Proofs of origin issued by application of paragraph 7 shall bear the following entry: “Application of Article 3 (7) of Protocol 1 to the Viet Nam – EU FTA”.12. The cumulation applying to materials originating in a non-Party shall apply guidelines of the Ministry of Industry and Trade.

Article 10. Insufficient working and processing

1. The following operations shall be considered as insufficient working or processing to confer the status of originating products, whether or not the requirements of Articles 7 and 8:

a) preserving operations to ensure that the products remain in good condition during transport and storage.

b) breaking-up and assembly of packages.

c) washing, cleaning, removal of dust, oxide, oil, paint or other coverings.

d) ironing or pressing of textiles and textile articles.

dd) simple painting and polishing operations.

e) husking and partial or total milling of rice; polishing and glazing of cereals and rice.

g) operations to colour or flavour sugar or form sugar lumps; partial or total milling of crystal sugar.

h) peeling, stoning and shelling of fruits, nuts and vegetables.

i) sharpening, simple grinding or simple cutting.

k) sifting, screening, sorting, classifying, grading, or matching (including the making-up of sets of articles)

l) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operation.

m) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;

o) simple addition of water, dilution, dehydration or denaturation of products.

p) simple assembly of parts of articles to constitute a complete article or disassembly of products into part.

q) combination of two or more of the operations specified in points (a) to (p).

r) slaughter of animals.

2. For the purpose of paragraph 1, operations shall be considered simple when for their performance neither special skills are required nor machines, apparatus or tools especially produced or installed for those operations.

3. All operations carried out either in the Union or in Viet Nam on a given product shall be considered together when determining whether the working or processing undergone by that product is to be regarded as insufficient within the meaning of paragraph 1.