This guidance is an explanation of UK-New Zealand FTA Chapter 3: Rules of Origin and Origin Procedures
The UK-New Zealand Free Trade Agreement (FTA) will remove tariffs on all UK goods, making it easier for businesses to sell to New Zealand. To qualify for zero tariffs, you will need to prove that your goods originate in the UK.
A good shall be regarded as originating if it is:
- wholly obtained or produced in the territory of the UK, New Zealand or both countries. Generally, wholly obtained or produced goods refer to agricultural goods and natural resources;
- produced entirely in the territory of the UK, New Zealand or both countries, exclusively from originating materials; or
- produced entirely in the territory of the UK, New Zealand or both countries using “non-originating materials” – from outside the UK and New Zealand – provided the good satisfies the applicable requirements of the Product-Specific Rules of the agreement, explained below.
Product specific rules
Make sure you check the Product-Specific Rules of the UK-New Zealand FTA to understand how your product can qualify as originating from the UK and qualify for zero tariffs.
Different goods will have their own product-specific rules which allow a good containing third country materials and inputs to count as originating, but only if those materials or inputs have undergone certain changes.
For many product-specific rules, the trade agreement gives businesses the choice of more than one way to prove that their product is originating.
Once a good qualifies for originating status, it is considered 100% originating. This means that if that good is then used in the production of another product, its full value is considered originating, and no account is taken of any non-originating materials used within it towards the new product. For example, if a UK-manufactured engine contains 30% of non-originating materials but qualifies as originating from the UK under the Product-Specific Rules, the entire engine can be counted towards the car’s originating content; the company producing the car does not have to consider the non-originating materials in the engine.
If a UK business uses originating materials from New Zealand to produce a good, those materials count towards the originating material in that good when exported to New Zealand.
Examples of product specific rules
Regional Value Content (RVC)
Products with a Regional Value Content (RVC) rule allow for the incorporation of materials and inputs from countries other than the UK and New Zealand – non-originating materials – up to a certain percentage of the total value of the good.
One of the specific rules for 8531.10 (“Burglar or fire alarms and similar apparatus”) under the Product-Specific Rules of the UK-New Zealand FTA is RVC40.
If using the build-down method, at least 40% of the value of the product needs to be added in the UK or New Zealand for that product to qualify as originating.
If using the build-up method, materials originating from the UK or New Zealand need to make up at least 40% of the final value of the product for it to qualify as originating.
The way that RVC rules are calculate can vary across different trade agreements. Make sure you review the UK-New Zealand FTA to correctly calculate the value of originating content or materials in your product so it qualifies for zero tariffs once exported to New Zealand.
Change of tariff classification rules
Some product-specific rules allow for a final product to count as originating if the non-originating materials/inputs were processed in the UK and the final product is a different classification to the non-originating inputs (change in HS code). These rules are called changes in tariff classification – where a good moves from one commodity code to another, as a result of processing.
There are three levels of change in tariff classification, which explain the degree to which non-originating materials must have been changed in order for the final product to count as originating: Change in Chapter rules, Change in Tariff Heading rules and Change in Tariff Subheading rules.
CC – Change in Chapter
All non-originating materials used in the production of a product must have undergone working sufficient to change the first two digits (or “Chapter”) of their HS code before the product can qualify for zero tariffs.
The specific rule for 2009.50 (“Tomato juice”) under the Product-Specific Rules of the UK-New Zealand FTA is CC. A UK business is selling tomato juice to New Zealand. The business imports tomatoes (classified under HS Code 0702.00) from Morocco, which would count as non-originating under the UK-New Zealand FTA. However, by processing these tomatoes in the UK, the final product is classified under a different chapter – 2009.50 – meaning the business can export the tomato juice to New Zealand as originating from the UK and qualify for zero tariffs.
CTH – Change in Tariff Heading
All non-originating materials used in the production of a product must have undergone working sufficient to change any of the first four digits (or “Tariff Heading”) of their HS code before the product can qualify for zero tariffs.
The specific rule for HS code 1806.10 (“Cocoa powder, containing added sugar or other sweetening matter”) under the Product-Specific Rules of the UK-New Zealand FTA is CTH. A UK business is selling cocoa powder with added sugar to New Zealand. The business imports cocoa beans (classified under HS Code 1801.00) from Ecuador, which would count as non-originating under the UK-New Zealand FTA. However, by processing these beans in the UK, the final product is classified under a different tariff heading – 1806.10 – meaning the business can export the cocoa powder to New Zealand as originating from the UK and qualify for zero tariffs.
CTSH – Change in Tariff Subheading
All non-originating materials used in the production of that product must have undergone working sufficient to change any of the six digits (or “Tariff Subheading”) of their HS code before the product can qualify for zero tariffs.
One of the specific rules for HS code 8516.72 (“Other electro-thermic appliances: toasters”) under the Product-Specific Rules of the UK-New Zealand FTA is CTSH. A UK business is selling toasters to New Zealand. The business imports parts (classified under HS Code 8516.90) from the European Union, which would count as non-originating under the UK-New Zealand FTA. However, by using the parts in manufacturing taking place in the UK, the final product is classified under a different tariff subheading – 8516.72 – meaning the business can export the toaster to New Zealand as originating from the UK and qualify for zero tariffs.
Specific processing rules
Some product-specific rules in the UK-New Zealand FTA require non-originating materials to undergo specific types of processing before the product into which they are incorporated can qualify for zero tariffs when sold to New Zealand. These include certain chemicals – under Chapters 27 through to 40 of the Product-Specific Rules of the agreement.
Businesses working in the chemical or allied industries should familiarise themselves with the notes in Section VI of the Product-Specific Rules to ensure they understand how to meet the requirements for declaring origin.
There are certain tolerances available under the UK-New Zealand FTA, whereby a product containing non-originating materials that does not satisfy its change in tariff classification requirements set out in the Product-Specific Rules can still qualify for zero tariffs as originating from the UK if the following criteria are met:
For chapters 1-24, 50-63:
- The value of the non-originating materials does not exceed 15% of the value of the good; or the total weight of these materials does not exceed 15% of the net weight of the good (not including the weight of packaging).
For chapters 25-49, 64-97:
- The value of the non-originating materials does not exceed 15% of the value of the good.
These tolerances only apply to change of tariff classification rules under these specific chapters. Where an RVC rule applies, you cannot use the tolerance to reduce the required percentage threshold of originating materials in your product. For example, you cannot use the tolerance to reduce a RVC40 requirement to RVC30.
How to declare
Claiming for preferential tariff treatment
An importer of goods into New Zealand may make a claim for preferential tariff treatment based on a proof of origin – either an origin declaration or importer’s knowledge.
The origin declaration may be completed by the UK exporter or producer and must fulfil the minimum data elements for an Origin Declaration. By completing the declaration, the exporter or producer is declaring that the good is originating and they possess evidence to demonstrate this. If an exporter or producer provides an origin declaration, they should keep it and any records demonstrating the good’s originating status for four years. All records can be kept in any medium, including electronic, provided they allow for prompt retrieval.
Additional guidance is available for completing Origin Declarations. An optional Origin Declaration Template is available for traders to use.
Importer’s knowledge may be used by the importer in New Zealand, removing the need for an origin declaration, provided that the importer is in possession of documentation demonstrating the good’s originating status at the time the claim is made.
Waiver of origin declaration
The requirement for relying on a proof of origin is waived for low value shipments.
In the UK, a proof of origin is not required if the customs value of the imported good does not exceed 1,000 Pound Sterling, so long as the import does not form part of a series of importations. The UK-New Zealand agreement specifies that a good imported in New Zealand does not require an origin declaration if its customs value does not exceed 2,000 New Zealand dollars, or such higher amount as established by New Zealand.
Shipping your product
Your products with UK origin will remain eligible for zero tariffs if they are transported straight to New Zealand without passing through another country.
If your product is transported through another country on the way to New Zealand, it will retain its originating status and eligibility for zero tariffs provided it is not released into free circulation, and provided it does not undergo any further production, except for operations necessary to preserve its good condition and transport the good to its final destination, such as the separation of the product from a bulk shipment, repacking or labelling.