China Customs Revises Hong Kong CEPA Ad Valorem Definition

On March 28, China’s General Administration of Customs decided to revise Article 6 of the “Provisions on the Implementation of the Rules of Origin for Trade in Goods under the Closer Economic Partnership Arrangement (CEPA) between Mainland China and Hong Kong (haiguanzongshuNo.107, modified under No. 142 and No. 198),” which is effective from April 1, 2012.

First, the definition of “ad valorem percentage” in the fourth paragraph of Article 6 has been revised from:

“The percentage between the total value of the raw materials, components, and labor obtained entirely in Hong Kong and product development cost, and the FOB price of the export products.”

To:

“The percentage between the total value of the raw materials and components originating in Hong Kong, labor arising in Hong Kong, and product development cost, and the FOB price of exports of the export products.

Second, a new paragraph has been added to Article 6 of the regulations:

“If raw materials or components originating from the mainland are used and they constitute part of the export products in Hong Kong, when calculating the ad valorem percentage of the export product, the raw materials or components from mainland should be deemed to be originating from Hong Kong. The ad valorem percentage of the export product should be greater than or equal to 30 percent, and greater than or equal to 15 percent excluding the price of the raw materials or components from mainland.”

The revised regulations took effect from April 1, 2012.

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