The Rules of origin are the criteria needed to determine the origin of a product in line with the trade preference agreements set out by two countries or groups of countries. The standard duty rate is based on the GATT/WTO principle of Most Favoured Nation (MFN).
"Most favoured nation" (MFN) is one of the cornerstones of the World Trade Organisation’s trade law.
· MFN status is granted by governments on certain countries goods with the intension that a set level of customs duty will remain stable and non-discriminate.
MFN duty rates are the standard rate with preferential trade rates offering partner countries access to lower tariffs than the MFN rate.
Third Country Duty in the UK Tariff this is how most favoured nation (MFN) is referred as.
Rules of Origin allow countries to trade preferentially with other countries with products that are not wholly produced in the country. They reduce the Most Favoured Nation (MFN) rate of import duty if the rules are met and they also allow a percentage of non-originating materials in the product.
It is important to note that there’s a difference between Free Trade Agreement and Preferential Trade Agreement.
Non preferential rules are used for all kinds of commercial and government policy measures, for example: To support boycotts and trade embargoes, to establish whether additional customs duties have to be paid, e.g. anti-dumping duties (ADD) and countervailing duties (CVD), etc.
Preferential Origin is the origin of a product to comply with a trade agreement between two countries or customs union such as the EU.
If you want to learn more about Rules of Origin and how to classify your goods, Preferential or Non-Preferential origin or the different types of origin, amongst others, join us in our Rules of Origin training on 7th February 2023.
For further support contact GMCC’s International Trade Team at exportbritain@gmchamber.co.uk