Outward processing |
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Outward processing provision is an exemption from the principle of territoriality.
It allows a good to be temporarily removed from the FTA territory and processed in the third party country without affecting the origin determination of the final product. No account is taken of the fact that the good has left the territory of an FTA during the production process.
It is applied under FTAs as an exception and is usually restricted to a specific list of goods, third party locations and processing agreed by both parties.
Example:
An FTA allows products classified under a specific HS heading (see HS Classification) to be taken out of the territory of the FTA parties and submitted to a specific type of processing in an free trade zone. When the good returns to the FTA territory, the processing undertaken in the free trade zone does not affect the origin determination: all processing which took place within the FTA territory prior to that is counted towards the originating status.
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