FAQ: Free Trade Agreements

Step 1: Find out the FTA which Singapore has with the country of your interest here

Step 2: Find out the Harmonised System (HS) code of your product here

Step 3: Check that the product is offered tariff concessions under the FTA

Step 4: Check that your product satisfies the Rule of Origin in order to qualify under the FTA

Step 5: Comply with documentary requirements

Step 1: Find out the savings each FTA is able to provide.

Step 2: Find out if your product is able to meet the Rules of Origin.

Step 3: Select the FTA which your product is able to meet the Rules of Origin and provides you with the most savings.

The Harmonized System Code (HS Code) is a six-digit code system set up by the World Trade Organisation (WTO) to standardise classification of products. Beyond the six-digit level, countries are free to introduce national distinctions for tariffs and many other purposes.

For example, Roasted Malt has the HS Code "11- 07- 2000".

• Chapter = "11"
• Heading = "1107"
• Sub-heading = "110720"

Please also note that HS Codes are reviewed by the World Customs Organisation once every five years.

In the event your importing country does not accept your HS code, you may wish to email Singapore Customs here or call +65 6355 2000 for clarification.

Rules of Origin are a set of criteria which determine a product's originating status in the respective FTA. It is to ensure that only goods originating from the FTA partner countries involved will benefit from tariff concessions.

Rules of Origin are classified into two criteria:

I. Wholly Obtained:

Goods obtained or produced entirely within a FTA Partner Country. Some examples are mineral products extracted from the soil or from the seabed, vegetables harvested and live animals born and raised in the FTA Partner Country.

II. Undergone Substantial Transformation:

• Satisfies Local or Regional Value Content i.e. certain proportion of the cost for the final product has to originate from one or more FTA partner countries.
• Change in Tariff Classification i.e. The Harmonised System Code between the final product and its raw materials which are not originating within the FTA, have to be different at a specified Tariff Classification.
• Process Rule i.e. Raw materials not originating within the FTA have to undergo a specific set of processes.

Rules of Origin (ROO) for a product may vary across the different FTAs. You can obtain ROO information from the sources below:

• Rules of Origin and Product Specific Rule (PSR) documents from the legal text section of respective FTAs
• Email Singapore Customs here or call +65 6355 2000

Value Content or Value Add is one of the criteria to qualify a product under Substantial Transformation. A certain proportion of the cost for the final product has to be originating from one or more FTA partner countries.

Different FTAs use different formulas to calculate Value Content. Some of the common formulas used are Ex-Factory Cost, Ex-Factory Price and Free-On-Board (FOB) price. The formulas for Ex-Factory Cost, Ex-Factory Price and FOB are as follows:

Ex-Factory Cost
VC (%) = (Local material cost + Direct labour cost + direct overhead cost) / (Total material + Direct labour cost + direct overhead cost) x 100 %

Ex-Factory Price
VC (%) = (Local material cost + Direct labour cost + direct overhead cost + profit) / (Total material + Direct labour cost + direct overhead cost + profit) x 100 %

FOB price
VC (%) = (Local material cost + Direct labour cost + direct overhead cost + profit + Inland Transport) / (Total material + Direct labour cost + direct overhead cost + profit + Inland Transport) x 100 %

Local material cost refers to the cost of materials used in the product which originate from the country of export. Local material cost is to be supported by a relevant Preferential Certificate of Origin.

Total material cost refers to the cost of all materials used in the product.

For further information, please email Singapore Customs here or call +65 6355 2000.

In Single Country or Local Value Content, only material originating from the manufacturing country is considered.

In Regional Value Content, materials originating from all FTA partner countries are considered. The RVC formula can be found in the Rules of Origin chapter text of the various FTAs.

To verify that a raw material originates from a FTA partner country, the manufacturer should request for the same type of Preferential Certificate of Origin for the raw materials from his supplier.

A change in Tariff Classification is one of the criteria to qualify a product under Substantial Transformation.

Under CTC, the HS Code for the final product and the HS Code for its non-originating raw materials have to be different at the FTA specified Tariff Classification to be deemed originating.

The main 3 types of CTC are:

• Change in Chapter (First two digits) e.g. HS 03 (input) to HS 16 (product)
• Change in Heading (First four digits) e.g. HS 1107 (input) to HS 1103 (product)
• Change in Sub-Heading (First six digits) e.g. HS 551311 (input) to HS 551321 (product)

A Process Rule is one of the criteria to qualify a product under Substantial Transformation. Under Process Rule, non-originating raw materials have to undergo an FTA specified process to be deemed originating. For example: