Indonesia's additional rules of origin under RCEP
Indonesia is a country that applies differentiated tariff treatment to certain RCEP partners or groups of partners. In addition to the separate tariff schedules for each partner or group of partners, Annex I of the RCEP Agreement also contains a Sub-Annex listing certain groups of goods subject to differentiated preferential tariff commitments that must comply with additional rules of origin, in addition to the general rules of origin. This means that imported goods listed in the Sub-Annex to Indonesia's Tariff Schedule must not only satisfy the rules of origin applicable to those goods, as set out in Annex 3A - Product Specific Rules of Origin under Chapter 3 on Rules of Origin, but must also comply with the relevant additional rules of origin provided in that Sub-Annex.
Additional rules of origin
The additional rules of origin are prescribed uniformly among the countries in RCEP that maintain differentiated preferential tariff commitments, including Indonesia. Specifically, these rules require that the value content of the exporting country, including the value of materials, labor, profits, and the like, account for at least 20% of the total value of the goods.
Indonesia's additional rules of origin apply from the first year onward and, in most cases, remain applicable for a period of 15 years. Details of the implementation schedule for Indonesia's additional rules of origin are set out in Indonesia's Sub-Annex to Annex I.
Applicable preferential tariff rate
Where the goods satisfy both conditions (i) and (ii) below:
(i). They have undergone substantial processing in the exporting country in cases where the goods are produced entirely from originating materials within the RCEP region, meaning that only minimal operations, as provided in the Agreement, are carried out in other member countries, if any; and
(ii).They satisfy the additional rules of origin as provided in the Sub-Annex to Indonesia's Tariff Schedule.
In this case, the applicable preferential tariff rate is the rate that Indonesia grants to the exporting RCEP country.
Where the goods do NOT satisfy either of conditions (i) and (ii) above:
In this case, the applicable preferential tariff rate shall be the rate that Indonesia grants to the RCEP member country contributing the highest value share of the originating materials used to produce those goods.
Source: Center for WTO and International Trade - VCCI
