Rules of Origin
To benefit from reduced tariffs under the NZ-China FTA, products must qualify as 'originating' from either China or New Zealand, under the Rules of Origin (ROO) set out in the FTA. Any products traded between the two countries that do not meet the ROO will be subject to normal tariffs.
In general a product can qualify as 'originating' under the NZ-China FTA if:
- it is wholly obtained or wholly produced in either China or New Zealand, or
- it is produced entirely in either or both China and New Zealand, from materials that conform to the provisions of the ROO Chapter (Chapter 4 of the FTA), or
- the good is manufactured in either or both China and New Zealand using inputs from other countries, and meets the product-specific ROO in Annex 5 of the FTA, and the other requirements specified in the ROO Chapter.
Wholly obtained or produced
Typically these goods are natural resource-based goods such as farming or fishing products. Goods that apply to this category are listed in Chapter 4 of the FTA.
Produced entirely from originating materials
These are goods produced entirely in either or both China and New Zealand, exclusively from originating materials, with no imported material content. Materials originating in China that are used in the production of goods in New Zealand are deemed to be originating materials (and vice versa).
Product specific rules
For products that contain third-party inputs, the FTA predominantly uses a change of tariff classification (CTC) approach to determine origin. Under the CTC approach, a good will qualify in principle as originating if all third-party inputs used in the production of that good have undergone a specified change of tariff classification. Annex 5 to the FTA details the precise form of CTC that will apply to a particular good.
For some products there are additional regional value content (RVC) rules where the product must meet CTC plus an additional RVC requirement. For example, certain machine tools must meet a CTC rule plus 40% RVC. A small number of chemical products have a stand-alone RVC requirement and ships and boats have an alternative RVC requirement.
Some agricultural products must be wholly obtained from a party in order to qualify for tariff preference into the other country. For example, some meat products (fresh, chilled or frozen beef and lamb) must come only from animals born and raised in a party in order to qualify for preference.
For any good to qualify for preference it must be consigned directly between the two countries. If transport involves transit through one or more non-parties the goods must not enter trade or commerce there or undergo anything more than simple logistical processes such as unloading and reloading, repacking, or any operation required to keep them in good condition.
- Page last updated: 14 January 2014