U.S.-Oman Free Trade Agreement
Rules of Origin
Origin rules are used to determine in which country an imported product is manufactured and whether it qualifies for preferential treatment. The U.S. Oman FTA rules of origin are designed to ensure that only products that wholly originate in, or have undergone significant processing in, the United States or Oman will enjoy preferential tariff treatment. For U.S. goods to be eligible for preferential treatment when exported to Oman, they must meet the following requirements:
- Goods must be made entirely in the United States and/or Oman, and be either 1) wholly the growth, product, or manufacture of the United States or Oman or 2) if any third-country materials are used - for goods not subject to the specific rules of origin found in Annex 3-A (textile and apparel products) or Annex 4-A (certain edible products)– these materials must be “substantially transformed” by manufacturing or processing into a new or different article of commerce in the territory of one or both of the FTA Parties and must contain not less than 35% U.S. and/or Oman content. Goods covered by the specific rules of origin found in Annex 3-A or Annex 4-A must satisfy the relevant rules found in those Annexes. These rules generally require that the goods undergo a specified change in tariff heading.
- Goods must be imported into Oman directly from the United States.
Wholly the Growth, Product or Manufacture Requirement
Relatively few products, other than agricultural, fishery, and mining products, are wholly obtained in a single country. Examples of agricultural goods wholly obtained in the United States include animals that are born and raised or hunted in the United States, products obtained from live animals in the United States (e.g., eggs), or plant products harvested in the United States. Other wholly obtained products include mineral products that are mined in the United States or scrap and waste from manufacturing or processing that is fit only for recovery of raw materials. Very few U.S. manufactured goods fall into the wholly obtained category.
Substantial Transformation Requirement
U.S. goods exported to Oman must be manufactured entirely in the United States. If any foreign materials are used to manufacture a good in the United States, those materials must undergo a substantial transformation during the production process. Except for goods covered by the rules in Annex 3-A and Annex 4-A (as noted above), any foreign input (except goods of Omani origin) used in the manufacture of a good must undergo a substantial transformation that has given it a new “name, character, or use.”
Examples of a substantial transformation include:
Wood => Wood table
Glass sheet => Car Windshield
Some examples of manufacturing that do not meet the substantial transformation qualification include:
Blank ceramic vase => Hand-painted vase
Unfinished wood chairs => Finished wood chairs
35% U.S./Oman Content Requirement
Goods not covered by the rules in Annex 3-A and Annex 4-A must also meet the thirty-five percent origin requirement to qualify for preferential treatment under the FTA. Under this requirement, 35% of the appraised value of the good imported into Oman must be attributable to the cost or value of materials of U.S. and/or Omani origin and/or the direct costs of processing the product in the United States and/or Oman. (Unlike the U.S.-Jordan FTA, a U.S. exporter may apply the full value of components imported from Oman, as long as the components themselves originate, toward satisfying the 35% value-content requirement.)
It is important to note that the cost or value of materials incorporated in the imported good may be counted toward the 35% domestic content requirement only if such materials are produced in the United States and/or Oman. Materials will be considered produced in the United States and/or Oman if the materials are wholly the growth, product, or manufacture of one or both of the Parties; or the materials are substantially transformed in the United States into a new and different article of commerce, which is then incorporated into the finished good.
For more information about what may be included when calculating the cost or value of the materials used and the direct costs of processing operations please see Chapter 4 of the Agreement.
Certain Product-Specific Rules of Origin
The U.S.-Bahrain FTA also contains a limited number of product-specific requirements (certain edible products as well as textile and apparel goods) that may be found in Annex 3-A of Chapter 3 and Annex 4-A of Chapter 4 of the Agreement.
Prepared by the International Trade Administration
Trade Information Center