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U.S.-Korea Free Trade Agreement
Rules of Origin
Step 3: Identify the Rule of Origin under KORUS
The rules of origin define which products qualify for the FTA-negotiated preferential tariff rate (FTA rate) under KORUS.
Broadly speaking, products that are originating in either the United States or Korea are eligible for the FTA rate – although only the Korean Customs Service can definitively make a determination about FTA eligibility for imports into Korea. A product is originating under KORUS if it is a) wholly obtained or produced entirely in the United States or Korea, b) produced entirely in the United States and Korea and each of the non-originating materials (inputs) that are part of the good (product) being exported have met the relevant product-specific rule of origin; or c) produced entirely in the U.S. or Korea from originating materials (inputs). A simplistic illustration of this might be a wooden chair, which to be originating could be a) made in the United States from U.S. wood; b) made in the United States from Argentine wood, but because the wood has been transformed into a chair, it now meets the rule of origin for a chair; or c) made in the United States from Korean wood.
Product specific rules are listed by HS Code in Annex 6-A of the Agreement or Annex 4-A (textiles and apparel). If your product is produced in the United States or Korea and contains non-originating inputs (non-US and non-Korean content, including content from an unknown origin), you will need to look at the specific rule of origin for your product to determine whether it is originating under KORUS. There is a limited de minimis exception (Article 6.6) available for most products where the non-originating inputs do not exceed 10 percent of the adjusted value of the product. However, there are restrictions on this exception for various agricultural products (listed in Annex 6-B) and a different rule applies for textiles and apparel products (Article 4.2.7).
Although rules of origin under KORUS differ by product, they typically fall within three general categories, consisting of:
3) A combination of change in tariff classification and regional value content.
Note: The information presented on this website is meant to serve as a general guide. Only the agreement text and the customs regulations issued to implement the agreement are definitive. For complex issues or where interpretation is required, U.S. exporters should seek legal assistance or an advance ruling from the Korean Customs Service.