Product-specific rules of origin under the AfCFTA

Product-specific rules of origin

The product-specific rules of origin specify the minimum level of working or processing that must be done in an AfCFTA member country for a product to be considered as originating from that country. This ensures that only genuinely originating African products benefit from AfCFTA preferential tariffs.

The product-specific rules of origin are defined using:

• Change in tariff classification (CTC) – This specifies that the input materials and the finished product must fall under different tariff codes. For example, a rule may state that non-originating fabrics of chapters 50-63 must undergo a change to chapter 61 or 62 to be considered originating.

 

• Regional value content (RVC) – This specifies a minimum percentage of local value that must be added through production activities in the AfCFTA region. For example, a rule may require 40% RVC for a product to be considered originating.

 

• Specific production process – Some rules specify a specific production process that must be undertaken, like weaving or spinning of fabrics.

 

• Combination of the above – Multiple criteria may be used for a single product.

The specific rules of origin vary by product and aim to ensure sufficient local value addition in Africa to warrant preferential treatment. In some cases, originating status depends on the use of originating inputs. For instance, a Tanzanian toy manufacturer, depending on the exact materials and production process involved likely would need to meet an RVC threshold or undergo a tariff classification change to plastics used in toys to qualify their products as originating from Tanzania under AfCFTA.

The AfCFTA secretariat is working to develop a harmonised schedule of product-specific rules of origin covering all tradable products within Africa. But for now, each State Party applies its own rules of origin criteria based on international best practices. These rules determine whether Tanzanian exporters like the toy manufacturer can consider their products as actually originating from Tanzania under AfCFTA. 

AfCFTA State Parties ensure that products meet product-specific rules of origin through the following:

1. Requiring supporting documents from exporters – As part of the Certificate of Origin application, exporters must submit documents like invoices, and production records that prove the inputs used and production process undertaken. This allows the issuing authority to verify that the product has met the applicable rule of origin criteria.

 

2. Conducting audits of exporters – The issuing authority in State Parties (member countries like GCCI in Ghana) may conduct on-site audits of exporters to inspect production processes, verify input materials and confirm that documented information matches reality. This helps detect any misrepresentations.

 

3. Imposing penalties for false declarations – Member countries impose penalties on exporters that make false declarations about the origin of their products. This deters companies from fraudulently claiming preferential tariff treatment under AfCFTA.

 

4. Allowing post-export verification – Customs authorities in importing member countries are allowed to conduct random post-export verifications by requesting information or conducting visits to ensure the declared origin is accurate. Exporters must cooperate with these verifications.

 

5. Applying regional cumulation – By allowing products originating in other AfCFTA members to qualify as inputs, regional cumulation incentivises traceability and compliance with the rules of origin within the continental supply chain.

 

6. Cooperation between member states – Member countries and their designated authorities like customs agencies cooperate to share information, conduct joint verifications and ensure consistent application of the product-specific rules of origin.

In the toy manufacturer example, the issuing authority in Tanzania may audit the company’s production records, and inspect their factory and inputs to validate that the plastics used actually confer originating status under the applicable rule of origin for toys. If false declarations are discovered, penalties would apply. These verification and compliance measures aim to ensure only genuinely qualifying products benefit from preferential treatment under AfCFTA.

Hope this helps explain how State Parties like Tanzania could ensure exporters comply with product-specific rules of origin to obtain Certificates of Origin!