Regional Comprehensive Economic Partnership (RCEP)
WHAT IS RCEP AND WHAT DOES IT MEAN FOR NEW ZEALAND EXPORTERS?
For an overview of the countries involved click here
Exports of New Zealand origin goods to countries party to RCEP, which have ratified the agreement, will enjoy preference. This means that the importers of goods from RCEP countries, including New Zealand, will pay a lower percentage of duty than the standard duty rate on many goods.
Much of the value in RCEP lies in the future, as reduced duty benefits for many goods do not apply until a number of years after the agreement is in force. Eventually RCEP will facilitate duty free, or at least considerably reduced duties, for New Zealand’s exports across its existing Free Trade Agreements with ASEAN, Australia, China, Japan and the Republic of Korea.
WHICH COUNTRIES DOES RCEP INVOLVE AND WHEN DOES RCEP COME INTO EFFECT?
The RCEP came into force on 1 January 2022 with New Zealand as an original party:
New Zealand, Australia, Brunei Darussalam, Cambodia, China, Japan, Lao PDR, Singapore, Thailand, Viet Nam; from 1 February 2022 for the Republic of Korea, from 18 March 2022 for Malaysia and from 2 January 2023 for Indonesia. As these countries have ratified the agreement, the benefits of RCEP applies.
HOW CAN I FIND OUT WHETHER THERE IS A PREFERENTIAL DUTY RATE UNDER RCEP FOR OUR GOODS?
- You will need the correct HS Code sub heading (1st6 digits of the HS Code, New Zealand statistical export code)
- Not all countries will offer the same preference (reduced duty rate) to every country in RCEP. China, Indonesia, Japan, Korea, Philippines, Thailand, and Viet Nam have an “Appendix on Tariff Differentials” which apply to a maximum of 100 Tariff lines. Note that these are subject to change when additional parties join RCEP. Refer to the “Appendix on Tariff Differentials” under ‘Market Access Annexes’ click here
- Click here to look up on the official tariff finder website to check whether there is a duty preference under RCEP for New Zealand origin goods. When New Zealand has more than one trade agreement with the country goods are being exported to, you will also be able to use this tool to compare which agreement offers the best duty preference.
It would be advisable to cross reference this with the actual RCEP Tariff schedules (2-D annexes)
- For goods of an another RCEP party origin refer to the “Market Access Annexes – Schedule of Tariff Commitments” for the country of import, and look up the applicable duty rate for the current year for each HS Code (6 digit sub-heading) of interest. Click here.
HOW DO I DETERMINE WHETHER OUR GOODS WILL MEET ORIGIN REQUIREMENTS UNDER RCEP?
Click here to read Chapter 3 Section A Rules of Origin.
Wholly obtained goods are only those which meet the criteria under Article 3.3.
All processed and manufactured goods will be required to satisfy the Product Specific Rules of Origin (PSR) as specified in Annex 3A, click here to look up the relevant PSR for your goods.
Where possible, it is recommended that manufactured goods meet the Change of Tariff classification rules.
Goods produced with ingredients or components imported from an RCEP party benefit from the cumulation provisions of Chapter 3, Article 3.4. There is a ‘De Minimis’. tolerance for goods imported from non-RCEP parties which do not meet the required Change of Tariff classification PSR. This usually a maximum of 10% of the FOB value of the goods, but for some HS Codes, it will be a maximum of 10% of the good’s weight. Refer to Chapter 3, Article 3.7
When the PSR dictates that the goods are required to meet a Regional Value Content rule (usually ‘RVC40’) the process of production may not be solely those outlined in the listed ‘Minimal Operations and Processes’ . Refer to Chapter 3, Article 3.6 There are 2 RVC formula options to determine the goods has at least 40% of the FOB value added as a result of the production process in New Zealand. Refer Chapter 3, Article 3.5
Having determined which origin criterion a good would qualify under, the exporter is required to keep records supporting the option selected and present these in the event of a post entry audit. Details of this obligation is set out in Chapter 3, Section B, Article 3.27 (Page 3-24, 25). See Verification question below for further information.
the RCEP party we are exporting to has aN “appendix on tariff differentials”. are there additional requirements for our goods?
Yes. Goods which qualify as originating in an RCEP party, which are subject to a Tariff Differential in the RCEP party of import, are also required to have a minimum 20% value added in the RCEP country of origin.
Reference: Chapter 2 Article 2.6 (Page 2-4 to 2-6) click here
our goods were produced with ingredients or components from other rcep countries, but did not have a 20% value add in New zealand. can they still qualify for preference?
When the good is subject to a Tariff Differential but does not meet the 20% value add requirement, there is an alternative which allows the goods to be classified as originating in the RCEP party that contributed the highest value of originating materials used to produce the good.
Reference: Chapter 2 Article 2.6 Paragraph 4.
ARE THERE ANY OTHER REQUIREMENTS TO QUALIFY FOR PREFERENTIAL DUTIES UNDER RCEP?
Yes. Goods need to be consigned directly from New Zealand to the importing party. Goods may be transhipped via ports in other countries en-route. Note: In Paragraph 3 there is mention that Certificates of Non-Manipulation (CNM) may be required by the importing party and as CNM are not issued retrospectively, it would be best to determine prior to shipment whether the importing party will seek a CNM.
For details of the limitations and provisions refer to Chapter 3, Section A, Article 3.15. (Page 3-11)
HOW DO I SHOW THAT OUR GOODS ARE OF NEW ZEALAND ORIGIN? IS A CERTIFICATE OF ORIGIN REQUIRED? DOES THE CHAMBER OF COMMERCE STAMP THE CERTIFICATE OF ORIGIN?
At entry into force the exporter will require a Certificate of Origin (CO) using the RCEP Certificate of Origin template issued by an issuing body. To apply email: email@example.com
In the future approved exporters will be able to provide a RCEP Declaration of Origin.
Exports to Australia and Japan: New Zealand exporters may self-declare the origin of their goods. The requirements are specified in Chapter 3, Article 3.18, paragraph (b) and Annex 3B, paragraph 2.
WE ARE REQUIRED TO STATE THE ORIGIN CRITERION FOR EACH GOOD. HOW DO WE DO THIS?
The Origin conferring criteria are listed in the Overleaf Notes of the RCEP Certificate of Origin template.
- Wholly obtained or produced exclusively from originating materials (as specified in Chapter 3, Article 3.3):
- WO for New Zealand origin: Article 3.2 (a)
- Produced entirely in territory of one or more parties exclusively from originating materials (as specified in Chapter 3, Article 3.3):
- PE for New Zealand origin: Article 3.2(b)
- Manufactured goods meeting Product Specific Rule as outlined in Annex 3A:
- CTC (Change in Tariff Classification)
- RVC (Regional Value Content)
- CR (Chemical Reaction)
- ACU ( Accumulation – Goods comply with Chapter 3, Article 3.4
- DMI (De Minimis) – Goods comply with Chapter 3, Article 3.7
Reference: RCEP Chapter 3, Section A, Article 3.1 – 3.15 (Pages 3-2 to 3-12).
MAY THE CERTIFICATE OF ORIGIN BE IN ELECTRONIC FORMAT (PDF)?
RCEP provides for electronic format Certificates of Origin to be accepted, however, this is at the discretion of the importing party. When the pdf format is not accepted, it is recommended that a hard copy print out of the RCEP CO is presented in colour and that signature images are clear and in blue ink.
Reference: Chapter 3, Section B, Article 3.16 Paragraph 5a (Page 3-13).
WE ARE SHIPPING NEW ZEALAND ORIGIN GOODS TO A RCEP PARTY, BUT WE ARE NOT THE SELLER TO THE IMPORTER. HOW DO WE MANAGE ‘THIRD-PARTY’ TRANSACTIONS?
RCEP provides for Third-Party Transactions. When the invoices used for importation were not issued by the exporter or producer, the ‘Third-Party Invoicing’ Box on the RCEP Certificate of Origin is to be ticked and the name and country of the Third-Party is to be provided in Box 14, with the Third-Party’s invoice number and date to be given in Box 13.
Reference: Chapter 3, Section B, Article 3.20, (Page 3-27) and RCEP Certificate of Origin Overleaf Notes 10
THE GOODS HAVE LEFT NEW ZEALAND. CAN A CERTIFICATE OF ORIGIN BE DATED AFTER THE SHIPMENT DATE?
Yes. RCEP Certificates of Origin issued after the time of shipment are to be ticked “Issued Retroactively”. Certificates of Origin may be issued no later than one year after shipment date and are valid for 1 year post shipment
Reference: Chapter 3, Section B, Article 3.17, Paragraph 8 (Page 3-15)
THE IMPORTER IS REQUESTING ‘PROOF’ THE GOODS QUALIFY UNDER THE ORIGIN CRITERION WE HAVE NOMINATED ON OUR CERTIFICATE OF ORIGIN. WE ARE CONCERNED ABOUT PROVIDING COMMERCIALLY SENSITIVE INFORMATION EITHER TO THE IMPORTER OR DIRECT TO THE IMPORTING CUSTOMS AUTHORITIES. HOW CAN WE COMPLY WITH THIS TYPE OF REQUEST?
RCEP importing Customs Authorities have powers to seek verification of any claim that goods meet the nominated origin criterion, through to visiting the producer’s premises. It is expected that those RCEP countries with higher base duty rates will place claims for preference under greater levels of scrutiny.
Reference: Chapter 3, Section B, Articles 3.24 (Pages 3-22, 23)
Contact the Chamber of Commerce that issued the related RCEP Certificate of Origin, should you receive requests for information to support the claimed RCEP Origin for your goods.
DETAILS HAVE CHANGED OR WE HAVE NOTICED AN ERROR AFTER WE PROVIDED THE RCEP CERTIFICATE OF ORIGIN TO THE IMPORTER. CAN WE MAKE A CHANGE?
Yes. You will be able to apply for a replacement of a certified RCEP CO. The applicant would add the text “This certificate cancels and replaces Certificate xxxxxx dated dd mmm yyyy” in Box 14 and provide the details of the changed data to the Chamber. Replacements may only be issued within 12 months of the shipment date.
Reference: Chapter 3, Section B, Article 3.17, Paragraphs 5(a) & 8 (Pages 3-14, 3-15)
WE ARE HAVING OUR GOODS MANUFACTURED UNDER LICENCE IN ONE RCEP COUNTRY, BRINGING THEM BACK TO NEW ZEALAND FOR QUALITY CONTROL, WAREHOUSING AND THEN EXPORTING TO OTHER RCEP COUNTRIES. CAN WE GET THE BENEFIT OF RCEP PREFERENTIAL TARIFFS WITH THIS BUSINESS MODEL?
Yes. RCEP has provision for ‘Back to Back’ Certificates of Origin. Goods may not be further processed in the intermediate RCEP party and are required to be received into the final RCEP import market within one year of date the goods are shipped from the RCEP party of production.. Refer Chapter 3, Article 3.19
REMINDER: CLAIMING PREFERENCE UNDER A FREE TRADE AGREEMENT IS A PRIVILEGE NOT A RIGHT
When a New Zealand exporter provides a ‘proof of origin’ it is their responsibility to ensure their goods meet the requirements of the origin criterion they have opted to select.
Once the option becomes available for Trusted Exporters to self declare origin under RCEP the lack of ‘red tape’ may look attractive at first glance. Exporters will require detailed procedures to ensure compliance and minimise commercial and legal risks. For example through missing required information, inadvertently misrepresenting the origin of the goods or an importer using the declaration for goods other than the New Zealand exporter’s consignment, which have an increased likelihood of resulting in preference being declined, making full duty payable by the importer, or verification processes being initiated which delay clearance unless, again, full duties are paid and possibly of penalties being imposed.
It is recommended that exporters read and fully understand Chapter 3 and Annex 3A prior to completing a ‘proof of origin’. Particularly the paragraphs related to obligations, verification provisions and penalties (also refer to the NZ Customs Act 2018 in respect of these matters for all export documentation).
Click here to read the full text of RCEP Chapter 3 Rules of Origin and Origin Procedures
Click here to read the full text of RCEP Annex 3A Product Specific Rules of Origin
Full information about RCEP and aspects other than origin are available click here.
Authored by: International Division of the Auckland Business Chamber, © December 2021.
Disclaimer: The Auckland Business Chamber makes all reasonable efforts to ensure that the information published in this resource is accurate and up-to-date. However the matters covered are subject to regular review and no warranty or representation can be provided regarding the accuracy of such information. The Auckland Business Chamber does not accept liability for any losses or damage arising directly or indirectly from reliance on the information.