De Minimis / Tolerance |
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Also known as tolerance rule.
The provision is a relaxation of the rules of origin under certain conditions. It allows a small amount of non-originating materials to be used in the production of the good without affecting its originating status. The provision acts as the relaxation of the rules of origin and the threshold is usually set at around 5-15%.
Many agreements set different de minimis requirements for different Chapters of the HS classification.
De minimis is usually applied in the context of the change in tariff classification rule of origin as its utilisation under the value added criterion is prohibited by definition: de minimis threshold cannot be used to increase the value added threshold.
Examples:
A good is subject to a 60% value added calculations rule which requires originating materials to constitute at least 60% of the total value of the product. The tolerance rule under the agreement is set at 10%. The rule cannot be applied to mean that this threshold can be reduced by 10%.
A good is subject to a change in tariff classification rule. It complies with the rule but 5% of the non-originating materials have not gone through a change in tariff classification. The tolerance rule under the agreement is set at 10%. Tolerance can be applied and the 5% is allowed for the purpose of determining origin.
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