ABBREVIATIONS 1 ASEAN Association of Southeast Asian Nations 2 C/O Certificate of Origin 3 CPTPP Comprehensive and Progressive Agreement for Trans - Pacific Partnership 4 CTC Code Transf
Motivation of research topic
Countries worldwide are enhancing their trade relationships through bilateral and multilateral agreements, a trend that includes Vietnam's participation in various "new-generation free trade agreements" like CPTPP, EVFTA, and RCEP These agreements feature comprehensive commitments, deep enforcement mechanisms, and address non-traditional areas such as labor and the environment A critical aspect of these agreements is the determination of goods' origin, which significantly influences the Vietnamese economy by impacting the eligibility for preferential treatment among member countries Properly identifying the origin of goods is also vital for governments to protect local markets as trade expands However, this process is complex due to differing rules of origin across multiple agreements Therefore, thorough research on these regulations is essential for Vietnam to enhance its commercial laws and maximize benefits from global economic integration.
Vietnam's recent signing of the RCEP, a significant free trade agreement, presents an opportunity for deeper integration into the global economy However, alongside the economic benefits, Vietnam must address various challenges, necessitating policy and legal reforms to align RCEP implementation with the country's specific context Of particular interest are the rules of origin for goods established by RCEP, which differ from those in other new-generation agreements like the CPTPP and EVFTA Analyzing these differing rules of origin can provide valuable insights for enhancing Vietnamese law.
Because of the reasons mentioned above, we have chosen the topic “Rules of
Origin in the RCEP Agreement and the comparison with other regional trade agreements” as a research topic for this graduation thesis.
Literature review
1 The article “Regional Comprehensive Economic Partnership Agreement:
Opportunities and challenges for Vietnamese businesses” , of Kim Ngoc and Tran
In the 2015 article published in the Social Science Vietnam Journal, No 9(94), the authors provide a comprehensive overview of the Regional Comprehensive Economic Partnership (RCEP), highlighting the opportunities and challenges it presents for Vietnamese businesses They also propose strategic solutions to help Vietnam maximize its economic benefits from this Free Trade Agreement (FTA).
2 The doctoral dissertation “Rules of origin with the application of preferential tariffs of Vietnam in the ASEAN Economic Community” , of Nguyen
In 2017, Hoang Tuan examined the rules of origin for goods and their influence on preferential tariffs within ASEAN The author proposed strategies for effectively applying these rules in Vietnam, drawing insights from the experiences of countries like Singapore, Malaysia, Thailand, Indonesia, and Japan.
The report titled "Effective Implementation of the Regional Comprehensive Economic Partnership and Enhancing Economic Autonomy: Requirements for Improving Trade and Investment Institutions in Vietnam" by Tran Thi Hong Minh, Nguyen Anh Duong, Do Thi Le Mai, and Nguyen emphasizes the need for strategic reforms in Vietnam's trade and investment institutions to fully leverage the benefits of the Regional Comprehensive Economic Partnership (RCEP) It outlines key requirements for enhancing economic autonomy and fostering sustainable growth through improved institutional frameworks.
Thi Phuong Loan and Pham Thien Hoang, in their report for the Australia Program for Support Vietnam’s Economic Reform (Aus4Reform), evaluated the scale and quality of Vietnam's trade and investment activities with RCEP partners They identified key institutional and structural challenges that hinder Vietnam's ability to capitalize on RCEP opportunities The authors proposed medium- and long-term institutional reforms aimed at enhancing the efficiency of RCEP implementation while boosting the autonomy of the Vietnamese economy.
4 The business handbook “Summary of the Regional Comprehensive Economic Partnership Agreement” , of Nguyen Thi Thu Trang, Phung Thi Lan
In 2021, authors Phuong, Nguyen Thị Thuy Dung, and Nguyen Thanh Tra compiled a comprehensive handbook that outlines the key components of the Regional Comprehensive Economic Partnership (RCEP) They focused on commitments that significantly impact businesses and provided an analysis of how these elements influence Vietnamese enterprises.
5 The article “ASEAN Rules of Origin: Lessons and Recommendations for
In their 2009 article "Best Practice," Erlinda M Medalla and Jenny Balboa examined ASEAN's implementation of rules of origin, evaluating the associated costs and the extent of liberalization They provided recommendations aimed at simplifying the application of these rules, reforming state procedures, and enhancing the efficiency of their implementation.
6 The article “Restrictiveness of RCEP Rules of Origin: Implications for Global Value Chains in East Asia” , of Archanun Kohpaiboon and Juthathip
In their 2022 study, Jongwanich and colleagues examined the stringent rules of origin within the RCEP and other significant East Asian free trade agreements, aiming to enhance the efficiency of current global value chains Consequently, they proposed two policy recommendations to optimize the implementation of RCEP's rules of origin.
In his 2011 book, "World Trends in Preferential Origin Certification and Verification," Atsushi Tanaka addresses the complexities of proof of origin and the inspection processes involved He highlights the significant challenges faced by customs authorities, including noncompliance with certification requirements, insufficient procedures for verifying the origin of goods, and a lack of capacity To tackle these issues, Tanaka proposes essential solutions aimed at improving the effectiveness of origin certification and verification in customs operations.
In their 2017 book, "Rules of Origin: Can the Noodle Bowl of Trade Agreements Be Untangled?", Wayne Crook and Jenny Gordon underscore the critical role of rules of origin in free trade agreements They argue that these rules often serve protectionist purposes and identify prevalent issues in determining the origin of goods, which undermine the effectiveness of such agreements The authors propose several strategies to enhance the clarity and functionality of rules of origin, aiming to improve the overall impact of free trade agreements.
In her 2011 report titled "Rules of Origin and Origin Procedures Applicable to Exports from Least Developed Countries," Mina Mashayekhi evaluated the application of rules of origin for exports from less developed countries to larger markets The report examined the management of origin determination, procedures for granting origin, and the certification and inspection processes for imported goods Additionally, it analyzed legal regulations surrounding origin and provided recommendations to simplify the application of these rules.
10 The report “Regional Comprehensive Economic Partnership (RCEP):
Implications, Challenges and Future Growth of East Asia and ASEAN” , of
In 2022, Fukunari Kimura, Shandre Mugan Thangavelu, and Dionisius Narjoko explored the inception of the Regional Comprehensive Economic Partnership (RCEP), highlighting its distinctions from other free trade agreements The report also examines the significant impact RCEP has on East Asia, emphasizing its role in enhancing regional economic integration and cooperation.
In his 2015 article "Mega-Regional Trade Deals in the Asia-Pacific: Choosing between the TPP and RCEP?" published in the Journal of Contemporary Asia, Jeffrey D Wilson explores the trade policy choices emerging from significant regional negotiations He analyzes the evolution of the Asia-Pacific trading system following the introduction of the TPP and RCEP, highlighting four critical issues: trade policy ambitions, the role of ASEAN, US-China trade tensions, and defensive concerns These insights are crucial for informing the decisions of regional governments.
Research on the Regional Comprehensive Economic Partnership (RCEP) and its rules of origin is prevalent; however, there is a notable gap in studies examining the relationship between RCEP's rules of origin and those in other modern free trade agreements that Vietnam engages in, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam Free Trade Agreement (EVFTA) This article aims to fill that gap by providing recommendations to enhance Vietnamese trade law regarding the determination of goods' origin By analyzing the correlations among these significant trade agreements, the study seeks to improve the practical application of trade laws, ultimately aiding Vietnam in achieving greater efficiency in its international integration efforts.
Purpose of the research, object of the research, scope of the research
This thesis investigates the alignment between Vietnam's existing commercial law regarding rules of origin and the provisions in modern trade agreements like RCEP, EVFTA, and CPTPP The aim is to identify discrepancies and propose solutions to enhance Vietnam's commercial law in this area.
This graduation thesis investigates the rules of origin for goods outlined in the Regional Comprehensive Economic Partnership (RCEP) and compares them with similar provisions in modern regional free trade agreements that Vietnam is part of, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam Free Trade Agreement (EVFTA).
The scope of the research in this thesis is the content and compatibility of the rules of origin of goods provided in RCEP, CPTPP, EVFTA and Vietnamese commercial law
This thesis focuses on the analysis and application of rules of origin for goods in the context of trade activities involving Vietnam and other member countries of RCEP, CPTPP, and EVFTA.
This thesis examines the content and effects of rules of origin from 2012 to 2022, particularly highlighting the significant influence of the Regional Comprehensive Economic Partnership (RCEP) on the regional economy during this timeframe.
Methods of the research
The main research methods applied are:
The analysis and synthesis method involves examining previous studies to highlight the significance and functions of rules of origin in regional free trade agreements that significantly affect Vietnam, including the CPTPP, EVFTA, and RCEP.
The comparative law method serves as the primary research approach for this graduation thesis, focusing on the analysis of concepts, legal provisions, and relevant content concerning the origin of goods as recognized by laws outlined in global free trade agreements.
Meaning of the research
This graduation thesis aims to clarify the legal aspects concerning the rules of origin in the new-generation free trade agreements to which Vietnam is a party.
The RCEP establishes a systematic approach to the rules of origin for goods, focusing on two key aspects: the methodology for determining the origin of products and the procedures for certifying their origin.
This article analyzes the rules of origin for goods outlined in the RCEP, comparing them with those in the CPTPP and EVFTA By identifying correlations among these agreements, it aims to highlight the common principles governing the rules of origin in the new generation of free trade agreements to which Vietnam is a party.
This article analyzes the Vietnamese commercial law regarding rules of origin for goods, comparing it with established norms in international trade agreements It highlights commonalities and identifies areas for improvement, offering recommendations to enhance the current legal framework.
Structure of the graduation thesis
Besides the Declaration of authorship, the Abbreviations, the Introduction, the Conclusion, the List of references, the thesis is structured by 03 chapters with the following contents:
Chapter 1 Rules of origin in the Regional Comprehensive Economic Partnership Agreement
Chapter 2 The rules for determining the origin of goods
Chapter 3 Procedure for certification of origin
RULES OF ORIGIN IN THE REGIONAL COMPREHENSIVE
Overview of the rules of origin of goods
The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement established on November 15, 2020, involving ten ASEAN member countries, including Vietnam, along with five additional nations: Australia, South Korea, New Zealand, Japan, and China.
The RCEP Agreement consists of 20 chapters and appendices, incorporating both traditional elements like trade in goods and rules of origin, as well as some new content However, critics point out that it falls short in essential areas such as environmental standards, labor rights, and regulations concerning state-owned enterprises Consequently, the RCEP's scope is more limited compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European-Vietnam Free Trade Agreement (EVFTA).
This graduation thesis will first explore key concepts related to the rules of origin in the Regional Comprehensive Economic Partnership (RCEP) Agreement, including their categorization, core content, and significance in determining the origin of goods This foundational analysis will facilitate a comprehensive comparison and evaluation of the subsequent sections of the thesis.
1.1.1 The concept and categorization of origin of goods
In recent years, the expansion of globalization has led to a significant increase in free trade agreements (FTAs) As nations increasingly participate in multilateral trade associations at various levels—whether bilateral, regional, or global—the landscape of international trade continues to evolve.
1 East Asia Business Council, 2021, “The e-Book on Interpretation and Utilization of RCEP Agreement”, p.4
The e-Book on Interpretation and Utilization of the RCEP Agreement highlights a significant shift in global trade dynamics, emphasizing the importance of reducing protectionist barriers to enhance market access and gain a competitive edge over non-FTA rivals As governments strive to foster stronger export and import relations through various incentives, accurately determining the origin of goods becomes essential Therefore, establishing the origin of products is a critical component of the global trading system.
1.1.1.1 The concept of the origin of goods
The terms "origin" and "origin of goods" are frequently encountered in international trade, yet they lack a consistent and comprehensive definition in economic or commercial dictionaries This thesis aims to outline several key definitions as established in significant international conventions.
The Chapter 1 of Annex K of Revised Kyoto Convention 1976 (amended in
The term "country of origin of goods" refers to the nation where products are produced or manufactured, as defined by specific criteria for customs tariffs, quantitative restrictions, and other trade-related measures (2008).
According to Article 3(b) of the World Trade Organization's Agreement on Rules of Origin, the origin of goods is defined as either the country where the goods were entirely produced or, in cases involving multiple countries, the nation where the final significant transformation of the goods took place.
The European Commission defines the origin of goods as their "economic nationality" in trade, which serves as the basis for determining the applicable customs tariff treatment.
According to Article 3(14) of the 2005 Vietnamese Commercial Law, the term "origin of goods" refers to the country or territory where the goods are entirely produced or where the final significant processing occurs, especially when multiple countries or territories are involved in the production process.
The origin of goods is a crucial concept in various regulations, emphasizing the connection between goods and their manufacturing or processing locations It typically refers to the country or territory where the goods are produced, often termed their "nationality." However, since goods can be created through contributions from multiple countries or territories, determining their origin can be complex and inconsistent To address this challenge, Free Trade Agreements (FTAs) establish specific rules of origin that member countries agree upon, ensuring accurate identification of goods' origins.
1.1.1.2 The categorization of the origin of goods 4
The classification of the origin of goods typically relies on two main criteria: (i) the whole obtained criterion and (ii) the substantial or sufficient transformation criterion These criteria guide the assessment of a product's origin, ensuring accurate categorization based on its production processes.
3 European Commision, “Rules of origin”, Link: , access on 18 March 2023
4 Wayne Crook and Jenny Gordon, 2017, “Rules of Origin: can the noodle bowl of trade agreements be untangled?”, p.6
To qualify under the “wholly obtained” criterion, a good must fulfill at least one of the following conditions: it must be naturally occurring, consist of live animals born and raised in the country, be plants sourced from the country, or be minerals extracted entirely within a single country This criterion also encompasses goods produced solely from wholly obtained materials, as well as scrap and waste generated from manufacturing, processing, or consumption activities.
To be considered in accordance with the “substantial/sufficient transformation” criterion, a good must meet the criteria set when being assessed by specific methods as follows:
A change in tariff classification occurs when a product meets the "substantial/sufficient transformation" criterion, allowing it to be classified under a different heading or subheading than any non-originating materials used For instance, the Harmonized System (HS) Code for coffee that is not roasted and not decaffeinated is 0901.11.00, while the code for coffee that is not roasted and decaffeinated is 0901.12.00.
(ii) Value added (ad valorem percentages): a good meeting
The "substantial/sufficient transformation" criterion is met when the value added of a product rises to a specified ad valorem percentage This threshold is defined by the maximum allowance for non-originating materials or the minimum domestic content requirement.
(iii) Technical requirement: a good meeting the “substantial/sufficient transformation” criterion when it has undergone specified manufacturing or processing operations
Basic contents of the rules of origin of goods in the Regional Comprehensive
The rules of origin of goods are one of the highlights of RCEP and these rules will be clarified with the following contents:
16 Nguyen Hoang Tuan, 2017, “Rules of origin with the application of preferential tariffs of Vietnam in the ASEAN Economic Community”, pp.46-54
1.2.1 Determining the origin of goods
Under the RCEP Agreement's rules of origin, a good is deemed to originate if it satisfies one of three criteria: (i) it is wholly obtained in a partner country (WO); (ii) it is produced exclusively from materials sourced in one or more member countries (PE); or (iii) it incorporates non-originating materials but complies with the Product-Specific Rules (SPRs) Each condition has specific terms and requirements that must be met.
According to Article 3(3) of the RCEP Agreement, goods are considered wholly obtained or produced when they meet specific criteria, primarily applicable to unprocessed food This includes plants and plant products grown and harvested in a member nation, such as fruits, vegetables, and seaweed; live animals born and raised in the country; goods derived from these animals; and resources obtained through hunting, fishing, or farming within a member state Additionally, minerals and other natural substances extracted from the soil, waters, and seabed of the member country also qualify under this definition.
Goods are deemed to be originating when they are composed entirely of ingredients sourced from one or more member countries These products are generally regarded in the same manner as wholly obtained items, as they fulfill the wholly obtained rule of origin when all inputs are entirely sourced from those member countries.
To determine the origin of goods, they must satisfy the Product-Specific Rules outlined in Annex 3A of the RCEP Agreement, a process known as substantial transformation This approach ensures that the origin classification accurately represents the actual production process of each product.
Article 3(2) of the RCEP Agreement outlines the primary criteria for determining whether a product meets the requirements of Product Specific Rules (PSRs) These criteria include the Change in Tariff Classification (CTC) and the Regional Value Content (RVC).
CTC requirements are applicable solely to non-originating materials as outlined in the RCEP Agreement, which specifies three levels of transformation: the two-digit level (referred to as "CC"), the four-digit level ("CTH"), and the six-digit level ("CTSH").
RVC requirements shall be calculated by using either of the Indirect/Build- Down formula and Direct/Build-Up formula as specified in Article 3.5 of RCEP Agreement
Cost x100 FOB in these formulas:
+ RVC is the regional value content of a good, expressed as a percentage;
+ VNM is the value of non-originating materials used in the production of the good;
18 Sections 5 and 6 of Annex 3A of RCEP Agreement
19 Section 7 of Annex 3A of RCEP Agreement
+ FOB is the value of the good free on board, including the cost of transportation (regardless of mode of transportation) to the port or location of final shipment overseas;
+ VOM is the economic value of originating materials, parts, or produce obtained or generated by oneself and employed in the manufacture of the good;
+ Direct Labour Cost includes wages, remuneration, and other employee benefits;
+ Direct Overhead Cost is the total overhead expense
Under the RCEP Agreement's rules of origin, goods and materials that meet specific origin criteria and are utilized as inputs in the production of another product in a member country are deemed to originate from that country, provided the finished product has undergone sufficient processing or transformation there This principle reflects the cumulation rule established within the agreement.
If the ratio of raw materials fails to satisfy the criteria for transferring commodity codes, the De Minimis regulation will be utilized to assess originating goods Consequently, a product can still be classified as an originating good if it adheres to all other relevant requirements.
Non-originating materials utilized in the production of goods that do not meet the required change in tariff classification must not account for more than 10% of the FOB value for products classified under Chapters 01 to 97 of the HS Code.
(ii) The weight of all non-originating materials used in the manufacture of the goods that did not undergo the applicable change in tariff classification does not
21 Article 3.7 of RCEP Agreement exceed 10% of the total weight of the good (in case goods classified in Chapters 50 through 63 of the HS Code)
1.2.2 Procedure for certification of origin
The RCEP Agreement outlines two methods for determining the certificate of origin for goods: (i) obtaining a certificate of origin from a third party and (ii) self-certification of origin These methods will be further explained below.
A third-party certificate of origin (C/O) serves as proof of the origin of goods and is issued by the relevant authority in an exporting member country upon request from exporters, producers, or their authorized representatives The C/O must adhere to a specific format set by member countries, include a unique identification number, be presented in English, and feature an authorized signature and official seal from the issuing authority, which can be applied either manually or electronically Additionally, details such as names, addresses, specimen signatures, and impressions of official seals must be submitted electronically to the RCEP Secretariat for distribution to other member countries If a member country has its own secure website with relevant C/O information accessible to others, it is exempt from submitting this data to the RCEP Secretariat.
Self-certification of origin is a process that certifies the origin of goods through a declaration of origin This declaration can be issued by an approved exporter or any exporter or producer, as outlined in Article 3.16 of the RCEP Agreement To comply with the RCEP Agreement, the declaration of origin must be completed according to Annex 3B, be in English, and include specific required information.
23 Article 3.17 of RCEP Agreement name and signature of the certifying person and bear the date on which it was completed.
The summary of Chapter 1
On the basis of studying theoretical issues about the rules of origin of goods, we have proposed, analyzed and clarified the following contents in Chapter 1:
- Analyzing and clarifying theoretically the basic contents of the origin of goods, rules of origin, certificates of origin, and the role of rules of origin
- Synthesizing the general contents of the origin of goods specified in the RCEP Agreement
This will provide a basis for further analysis, comparison, and evaluation of the graduation thesis's subsequent contents.
THE RULES FOR DETERMINING THE ORIGIN OF GOODS
The comparison with the European-Vietnam Free Trade Agreement
Under the rules of origin outlined in Protocol 1, a good is deemed to be originating if it satisfies one of two criteria: (i) it is entirely produced within a Member State, or (ii) it is manufactured in a Party using non-originating materials, as long as those materials have undergone sufficient processing, commonly known as basic manufacturing and processing.
Goods are deemed entirely sourced from a member country when they meet the criteria outlined in Article 4 of Protocol 1 This applies primarily to products such as mineral resources extracted from the earth or seabed, as well as plants and vegetables that are cultivated, harvested, or gathered within the country, and live animals that are born and raised there.
Goods are not classified as wholly obtained based on key criteria, which include: (i) Change in Tariff Classification (CTC), (ii) Regional Value Content (RVC), and (iii) Specific Processes (SP) Detailed regulations regarding the origin of these goods can be found in Annex I and Annex II of Protocol 1, including the specific provisions related to "Insufficient Working or Processing."
Article 6 of the Protocol 1 is a remarkable content because it is not shown in either the RCEP Agreement or the CPTPP
Products will be deemed to originate from the exporting member country if they are produced there using materials sourced from another member country, as long as the processing or working done in the exporting country exceeds the operations specified in Article 6 of Protocol 1.
If the raw material ratio fails to meet the commodity code transfer criteria, an alternative regulation will apply to determine originating goods A product can still qualify as an originating good if it fulfills all other relevant requirements and adheres to the specified maximum value or weight percentages for non-originating materials outlined in Annex II of Protocol 1.
For products classified under Chapters 2 and 4 to 24 of the HS Code, excluding processed fishery products from Chapter 16, a fee of 10% of the product's weight or ex-works price applies.
(ii) 10% of the ex-works price of the product for other products (except for products classified in Chapters 50 to 63 of the HS Code)
When comparing the regulations on determining the origin of goods in the RCEP Agreement and the CPTPP, it is evident that both agreements share similar fundamental methods However, the EVFTA presents distinct provisions in its specific regulations regarding the determination of goods' origin.
Firstly, the rules of origin of goods specified in Protocol 1 of the EVFTA
The agreement outlines specific criteria for "Insufficient Working or Processing," a provision included in the RCEP Agreement but absent in the CPTPP This discrepancy may arise from the CPTPP negotiations, where participating countries considered and excluded basic processing steps related to Specific Product Requirements (SPRs).
Protocol 1 of the EVFTA Agreement differs from RCEP and CPTPP by not providing a specific formula for calculating the RVC value Instead, it includes two annexes that detail the CTC, RVC, and SP criteria for determining the origin of various goods.
Thirdly, Protocol 1 issued together with the EVFTA Agreement is different from the RCEP Agreement in terms of rules of origin in that the EVFTA provides
“Territorial Requirements” 32 , accordingly, the territorial factor and the movement of goods are considered to determine the origin of goods.
Some proposes for Vietnam to effectively apply the rules
This article analyzes the current Vietnamese legal provisions regarding the determination of goods' origin and compares them with similar regulations in the RCEP Agreement, CPTPP, and EVFTA, which are the "new generation" free trade agreements (FTAs) that Vietnam is part of This comparison aims to highlight the prevailing trends in global trade concerning rules of origin Each signed FTA has prompted Vietnam's competent authorities to issue legal documents that guide the implementation of these origin regulations, such as Circular No 03/2019/TT-BCT, which outlines the rules of origin for the CPTPP.
31 Hanoi Department of Industry and Trade, 2020, “Guidelines for the application of rules of origin in new generation trade agreements”, p.56
Vietnam's legal framework regarding rules of origin is guided by several key documents, including Circular no 11/2020/TT-BCT for the EVFTA and Circular no 05/2022/TT-BCT for the RCEP Additionally, other legal texts, such as Decree no 31/2018/ND-CP and Circular no 05/2018/TT-BCT, address specific aspects of goods' origin To effectively integrate into the global economy amidst the rise of new-generation free trade agreements, Vietnam must swiftly enhance its legal system to address existing challenges.
Conflicting regulations pose significant challenges in the practical application of trade laws, particularly regarding the CTC criteria Evidence of this conflict is found between Decree no 31/2018/ND-CP, which outlines guidelines for foreign trade management, and Circular no 05/2018/TT-BCT on the origin of goods Specifically, Decree no 31/2018/ND-CP states in Article 3.9 that the CTC criterion is determined by changes in HS codes for goods produced from non-originating materials, whereas Article 6.2.a of Circular no 05/2018/TT-BCT presents differing stipulations, highlighting the inconsistency in regulatory frameworks.
The Circular 05/2018/TT-BCT defines the Change in Tariff Classification (CTC) as a criterion based on the alteration of two-digit, four-digit, or six-digit HS headings of a product compared to non-originating materials While this regulation aligns closely with the provisions of new generation Free Trade Agreements (FTAs), it is evident that Decree 31/2018/ND-CP holds a higher legal status, resulting in inconsistencies within current legal frameworks To address this issue, we recommend two solutions: first, to merge the definitions from both regulations to form a comprehensive and coherent definition that aligns with various international agreements, as their contents are not conflicting The revised regulations will define CTC as the change in HS code.
The export or import duty schedule defines a good produced in a specific country or region using non-originating materials, which may result in a change in the HS heading classification by two, four, or six digits compared to the non-originating materials utilized in its production This definition aligns with the CTC guidelines outlined in Circular No [insert number].
To enhance the current regulatory framework for determining the origin of goods in Vietnam, it is essential to align domestic laws with international agreements, particularly those outlined in 05/2018/TT-BCT We recommend adopting the first of the two proposed solutions for a comprehensive understanding of the Certificate of Origin (CTC) A thorough review of existing regulations is necessary to eliminate any overlaps or conflicts, ensuring that legal documents are compatible and applicable in practice As Vietnam engages in numerous Free Trade Agreements (FTAs), especially "new generation" agreements like RCEP, clarity in domestic law is crucial for effectively implementing international commitments This process may involve amending, supplementing, or consolidating regulations to meet the evolving demands of free trade.
Certain provisions in Article 6.3 of Circular no 05/2018/TT-BCT do not align with international standards, particularly regarding "Local Value Content" (LVC) The formulas used to determine LVC mirror the Regional Value Content (RVC) criteria found in agreements like RCEP, CPTPP, and EVFTA, which may lead to confusion in establishing the origin of goods, especially those outside the WO group that require SPRs To address this, it is proposed that a clear definition of LVC be established, indicating it as a percentage of value contribution calculated through a specific formula, facilitating comparison with existing origin criteria This clarification will help readers understand that LVC and RVC, while differing in terminology, serve the same purpose in origin determination, with LVC focusing on "local" and RVC on "regional." Therefore, alongside the need for systematic regulations in domestic legal documents, Vietnamese legislators must ensure that the legal framework aligns with international practices to simplify compliance, especially as the number of FTAs increases, which may complicate the legal landscape.
The summary of Chapter 2
Through reviewing the regulations related to the method of determining the origin of goods in the CPTPP and EVFTA, we have come up with the following contents in Chapter 2:
This article synthesizes and analyzes the criteria for determining the origin of goods under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and compares these provisions with those outlined in the Regional Comprehensive Economic Partnership (RCEP) Agreement The comparison highlights key differences and similarities in the rules of origin, providing insights into how these agreements impact international trade dynamics.
This article synthesizes, analyzes, and compares the criteria for determining the origin of goods under the EVFTA, RCEP Agreement, and CPTPP By examining the relevant provisions of these trade agreements, it highlights the similarities and differences in their approaches to origin determination, offering insights into how these frameworks impact international trade.
This article synthesizes and analyzes various regulations under current Vietnamese law regarding the criteria for determining the origin of goods It compares these provisions with relevant sections of the RCEP Agreement, CPTPP, and Protocol 1 of the EVFTA The aim is to identify discrepancies and suggest improvements to enhance the effectiveness of Vietnamese law in alignment with international standards.
PROCEDURE FOR CERTIFICATION OF ORIGIN
The comparison with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
Under the TPP Agreement's rules of origin, countries can utilize two methods for certifying the origin of goods: (i) obtaining a certificate of origin from a competent authority and (ii) self-certification of origin These options provide flexibility in determining the origin of products.
A certificate of origin (C/O) is an official document issued by a competent authority, confirming the origin of goods based on an application from an exporter, producer, or importer This certificate must be in writing, which can include electronic formats, and it does not follow a predetermined layout Additionally, it should clearly state that the goods originate from a specific country and comply with the standards outlined in Chapter 3 of the TPP Agreement, specifically Annex 3B, which establishes minimum data standards.
Secondly, self-certification of origin is a method of certifying the origin of goods by using a certificate of origin completed by an approved exporter 35
33 Section B of Chapter 3 of TPP Agreement
35 Section 5 of Annex 3A of Chapter 3 of TPP Agreement
The regulations concerning the certification of origin in the RCEP Agreement and the CPTPP share similarities in form, but differ significantly in self-certification processes The RCEP Agreement encompasses a broader range of implementing subjects, including approved exporters and any exporter or producer, whereas the CPTPP restricts this to approved exporters only Additionally, while the CPTPP specifies the Certificate of Origin (C/O) as proof, the RCEP Agreement includes a declaration of origin as an alternative Lastly, the transition period for implementing the self-certification mechanism is longer under the RCEP Agreement, allowing 10 to 20 years for Vietnam, compared to the CPTPP's 5 to 10 years.
The comparison with the European-Vietnam Free Trade Agreement
Under Protocol 1, Article 38, the certification of goods' origin can be established in two ways: through a certificate of origin issued by an authorized authority or via self-certification by the exporter.
A certificate of origin, issued by the relevant authorities of the exporting member country, serves as proof of origin and is provided upon request by the exporter or their authorized representative Additionally, in certain circumstances outlined in Article 17 of Protocol 1.39, a certificate of origin may be issued after the products have been exported.
Secondly, self-certification of origin is a method of certifying the origin of goods using a declaration of origin as proof of origin This declaration of origin can
36 Articles 3.16(2) and 3.16(3) of RCEP Agreement
37 Section 2 of Annex 3A of Chapter 3 of TPP Agreement
According to Article 16 of Protocol 1, self-certification of origin can be issued by an approved exporter or any exporter for consignments valued at EUR 6,000 or less To utilize this self-declaration method, entities authorized to self-declare must adhere to the guidelines outlined in Article 19 of Protocol 1.
The certification of origin mechanisms in the RCEP Agreement, CPTPP, and EVFTA are fundamentally similar, with key differences in the subjects allowed to implement self-certification The RCEP Agreement encompasses the broadest range of subjects, permitting both approved exporters and any exporter or producer In contrast, the EVFTA restricts self-certification to two groups: approved exporters and any exporters for consignments valued at EUR 6,000 or less The CPTPP, however, limits self-certification to approved exporters only.
The RCEP Agreement uniquely includes provisions for Back-to-Back Proof of Origin, distinguishing it from the CPTPP and EVFTA Unlike RCEP, the CPTPP relies on self-certification of origin among its member countries, which eliminates the need for Back-to-Back C/O regulations Similarly, the EVFTA does not address Back-to-Back C/O due to the absence of an intermediary member country within its framework.
Some proposes for Vietnam to effectively apply the rules
This article examines the regulations on certification of origin mechanisms in Free Trade Agreements (FTAs) like the RCEP Agreement, CPTPP, and EVFTA to highlight the evolving trends in modern international trade.
42 Hanoi Department of Industry and Trade, 2020, “Guidelines for the application of rules of origin in new generation trade agreements”, p.141
In 2020, the Hanoi Department of Industry and Trade provided guidelines aimed at enhancing the application of rules of origin in new generation trade agreements These recommendations focus on improving the existing Vietnamese legal framework to align with the ongoing international integration process.
Vietnamese law outlines two primary methods for the certification of the origin of goods, aligning with the provisions of analyzed Free Trade Agreements (FTAs) These methods include: (i) obtaining a Certificate of Origin from the Ministry of Industry and Trade or an authorized agency, and (ii) self-certification of origin by the producer.
Regarding the provisions on the procedure for certification of origin of goods of the current Vietnamese law, we find that there are some incomplete issues, specifically as follows:
Vietnamese law currently lacks specific guidelines for self-certification of origin, only providing a general definition that states it involves producers certifying that their goods meet originating criteria under applicable laws The Ministry of Industry and Trade is responsible for establishing selection criteria for traders, procedures for self-certification, and the duties and obligations of traders involved in this process, as well as overseeing inspections and sanctions for any violations However, there is no detailed guidance available in any circular, leaving the provisions related to self-certification of origin somewhat ambiguous.
44 Articles 13 and 16 of Decree no 31/2018/ND-CP
45 Article 25 Decree no 31/2018/ND-CP
46 Article 3.7 of Decree no 31/2018/ND-CP
47 Article 3.8 of Decree no 31/2018/ND-CP
Article 25 of Decree no 31/2018/ND-CP highlights the limitations of Vietnam's certification of origin process, which does not align with the evolving trends in international trade As Vietnam embraces self-certification of goods' origin, particularly under the commitments of RCEP and CPTPP, it is essential to implement domestic regulations that facilitate efficient control by authorities while empowering approved businesses to actively market their products globally To enhance the legal framework, it is crucial to incorporate provisions regarding self-certification procedures, eligible entities, inspection processes, penalties for inaccuracies, and essential content in certification declarations Ultimately, to align domestic regulations with global trade trends, legislators must develop a supportive legal system that promotes self-certification of origin, especially given the time constraints imposed by the RCEP and CPTPP agreements.
Vietnamese law lacks specific regulations defining the criteria for accurately identifying goods as "made in Vietnam." According to Decree No 31/2018/ND-CP, the concept of origin labeling remains ambiguous, leading to challenges in determining the true origin of products in circulation.
The term "Vietnamese goods" encompasses various interpretations, including products originating from Vietnam that benefit from preferential tariffs, those manufactured within the country, and branded goods associated with Vietnam Determining the criteria for "made in Vietnam" can involve regulations on geographical indications under the Intellectual Property Law or national trademark symbols as outlined in Decision No 984/QD-BCT The lack of clear regulations defining "made in Vietnam" poses challenges for entities required to self-certify their product origins Therefore, Vietnamese lawmakers must establish specific criteria to clarify which goods qualify as "made in Vietnam," promoting transparency and supporting trade while safeguarding environmental, public health, and consumer interests To address these issues, we recommend introducing regulations on specific Local Value Content (LVC) criteria, ensuring that only goods meeting these standards are classified as "made in Vietnam."
To ensure that products labeled as “made in Vietnam” meet quality standards, it is essential to impose penalties on businesses that mislabel goods This measure protects consumers from confusion when selecting products and supports Vietnam's commitments in new generation free trade agreements regarding self-certification of goods' origin Therefore, enhancing the legal framework for origin certification requires not only amendments to commercial law but also considerations in related legal areas such as intellectual property and consumer protection.
49 Article 14 of Decision no 984/QD-BCT promulgating the regulation on the development and implementation of the national trademark program.
The summary of Chapter 3
In Chapter 3, we analyze the regulations governing the certification of goods' origin within the frameworks of the CPTPP and EVFTA, highlighting key insights and procedural guidelines.
This article synthesizes and analyzes the procedures for certifying the origin of goods under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), while also comparing these provisions with those outlined in the Regional Comprehensive Economic Partnership (RCEP) Agreement By examining the similarities and differences in certification processes, the article highlights the implications for trade facilitation and compliance for member countries.
This article synthesizes, analyzes, and compares the procedures for certifying the origin of goods under the EVFTA, RCEP Agreement, and CPTPP By examining the distinct provisions of each trade agreement, it highlights the similarities and differences in their certification processes, providing insights into how these frameworks impact international trade and compliance for businesses.
This article synthesizes and analyzes various regulations concerning the certification of the origin of goods under current Vietnamese law It compares these provisions with relevant sections of the RCEP Agreement, CPTPP, and Protocol 1 of the EVFTA, highlighting inconsistencies and areas for improvement in the legal framework.
Vietnam's ongoing international economic integration is intensifying, particularly as the country engages in new-generation regional free trade agreements This situation presents significant challenges for the Vietnamese economy, especially in balancing the influx of goods from trade partners with the protection of domestic products To comply with these agreements, Vietnam must carefully assess the origin of imported goods while reducing or eliminating tariffs Consequently, alongside reforming policies on preferential tariffs and goods circulation, it is crucial for Vietnam to enhance its legal frameworks regarding the determination of goods' origin to effectively implement its commitments in regional trade liberalization.
This graduation thesis systematically analyzes the rules of origin for goods under the RCEP, CPTPP, and EVFTA, which are vital for Vietnam's economic integration It identifies gaps in the current commercial law regarding the determination of goods' origin By objectively assessing these legal shortcomings, the thesis proposes solutions to enhance the legal framework, aiming to establish a modern legal system that aligns with Vietnam's deeper economic integration efforts.
The challenges highlighted in this thesis represent just the beginning; to fully realize the commitments of the RCEP and other new-generation free trade agreements, Vietnam must undertake comprehensive reforms These reforms should extend beyond legislative changes to encompass a wide range of socio-economic policies, ensuring optimal benefits from these agreements.
1 Circular no 03/2019/TT-BCT on rules of origin in CPTPP;
2 Circular no 05/2018/TT-BCT on origin of goods;
3 Circular no 05/2022/TT-BCT on rules of origin in RCEP;
4 Circular no 11/2020/TT-BCT on rules of origin in EVFTA;
5 Comprehensive and Progressive Agreement for Trans-Pacific Partnership;
6 Decision no 984/QD-BCT promulgating the regulation on the development and implementation of the national trademark program;
7 Decree no 31/2018/ND-CP on guidelines for the law on foreign trade management on terms of origin of goods;
8 European - Vietnam Free Trade Agreement;
9 Protocol 1 concerning the definition of the concept of "originating products" and methods of administrative cooperation (issued with the EVFTA);
10 Regional Comprehensive Economic Partnership Agreement;
11 Agreement on Rules of Origin of World Trade Organization;
1 Hanoi Department of Industry and Trade, 2020, “Guidelines for the application of rules of origin in new generation trade agreements”;
2 Kim Ngoc and Tran Ngoc Son, 2015, “Regional Comprehensive Economic Partnership Agreement: Opportunities and challenges for Vietnamese businesses”, Social Science Vietnam Journal, No 9(94);
3 Nguyen Hoang Tuan, 2017, “Rules of origin with the application of preferential tariffs of Vietnam in the ASEAN Economic Community”;
4 Nguyen Thi Thu Trang, Phung Thi Lan Phuong, Nguyen Thi Thuy Dung and Nguyen Thanh Tra, “Summary of the Regional Comprehensive Economic Partnership Agreement”, Business Handbook;
5 Tran Thi Hong Minh, Nguyen Anh Duong, Do Thi Le Mai, Nguyen Thi Phuong Loan and Pham Thien Hoang, “Effective implementation of the Regional Comprehensive Economic Partnership in association with improving the autonomy of the economy: Requirements for improving trade and investment institutions in Vietnam”, Australia Program for Support Vietnam's Economic Reform (Aus4Reform)
1 Archanun Kohpaiboon and Juthathip Jongwanich, 2022, “Restrictiveness of RCEP Rules of Origin: Implications for Global Value Chains in East Asia”;
2 Atsushi Tanaka, 2011, “World trends in preferential Origin certification and Verification”;
3 Cadot, A.Estevadeordal, A Suwa-Eisenmann and T Verdier, 2006, “The Origin of Goods: Rules of Origin in Regional Trade Agreements”, United Kingdom:
4 Chien-Huei Wu, 2019, “ASEAN at the Crossroads: Trap and Track between CPTPP and RCEP”, Journal of International Economic Law;
5 East Asia Business Council, 2021, “The e-Book on Interpretation and Utilization of RCEP Agreement”;
6 Erlinda M Medalla and Jenny Balboa, 2009, “ASEAN Rules of Origin: Lessons and Recommendations for Best Practice”;
7 Fukunari Kimura, Shandre Mugan Thangavelu and Dionisius Narjoko, 2022,
“Regional Comprehensive Economic Partnership (RCEP): Implications, Challenges and Future Growth of East Asia and ASEAN”;
8 La Nasa, 1995, “An Evaluation of the Uses and Importance of Rules of Origin, and the Effectiveness of the Uruguay Round’s Agreement on Rules of Origin in