The U.S.-Singapore Free Trade Agreement (FTA) was largely modeled upon the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico. Thus, those familiar with NAFTA will recognize some aspects of the Rules of Origin section of the U.S.-Singapore FTA. There are, however, some important differences, which require the close attention of the US exporter.
How To Read the Rules of Origin
Rules of origin are written in terms of the Harmonized System (HS) of Tariff Classification. The HS classification system uses six to ten digit codes to identify goods. The first six digits of an HS number are harmonized among the majority of the world's countries. The last four digits are unique to each country. The vast majority of the product-specific rules of origin under the U.S.-Singapore FTA use the HS classification number. The United States uses Schedule B Numbers to classify exported products from the United States and these numbers are based on the international HS system. Therefore, the first step in interpreting the "rules" is to obtain the appropriate code for the good in question. Note: the first two digits of an HS number are referred to as a "chapter," the first four digits are called a "heading" (e.g., 1905), and the first six digits are called a "subheading" (e.g., 1905.90).
A rule of origin may consist of:
1. A change in tariff classification, i.e., tariff shift;
2. A regional value-content requirement;
3. Both a change in tariff classification and a regional value content requirement.
Note: It is necessary to refer to the rule associated with the product being exported. Regional value content can only be applied when it is allowed under a product-specific rule.
Example of a Simple Tariff Shift Rule
Rule of Origin: "Change to heading 1905 from any other chapter."
Products: Breads, pastries, cakes, biscuits (HS 1905.90)
Non-U.S. or Singapore input: Flour (classified in HS chapter 11), imported from Europe.
Explanation: For all products classified in HS headings 1905, all non-U.S. or Singapore inputs must be classified in an HS chapter other than HS chapter 19 in order for the product to obtain preferential duty treatment. These baked goods would qualify for tariff preference because the non-originating goods are classified outside of HS chapter 19. (The flour is in chapter 11).
However, if these products were produced with non-originating mixes, then these products would not qualify because mixes are classified in HS chapter 19, the same chapter as baked goods.
Prepared by the Trade Information Center