Comparative Study On The Rules Of Origin Between China And The Republic Of Korea(ROK)

With the development of economic globalization, more and more countries arepromoting the free trade strategy. Nevertheless, the Doha Round of World TradeOrganization (WTO) fails to yield expected results. Neighboring countries andcountries with mutual-benefiting economic policies take to the Free Trade Agreement(FTA) as a favorable way to promote economic integrity. It is against such backdropthat the FTA strategy between China and ROK unveils its certain.During the negotiations of FTA, the clarification of the Rules of Origin is of vitalimportance to the implementation of the FTA. Because, only with the Rules of Originclearly defined in the first place, can the two sides decide the items entitled to tariffpreference and exemption, which will vary according to the differentiation of thedefinition of Rules of Origin. In order to provide preferential tariff and exemption tothe FTA member countries, first and foremost, we must clarify the subjects ofpreferential tariff. There are plenty of books and papers focusing on the research ofthe Rules of Origin, but very few on that of the China and ROK FTA specifically. Thispaper concentrates on the area and is of great theoretical and practical value to theongoing China-ROK FTA negotiations and the improvement of the Rules of Originbetween the two sides.Within the context of China-ROK FTA negotiations, the paper elaborates on thedefinition, classification, meaning of the Rules of Origin as well as the generalprinciple for clarifying it. The paper analyzes the regulations and features of the Rulesof Origin of China and ROK and compares the regulations, criteria and process for theRules of Origin which are designated in the FTAs signed respectively by China andROK with other countries. It further explores the economic effect caused by thevaried Rules of Origin in the FTAs of China and ROK. Based on the aboveexplanations, the paper also puts forward a plan to resolve the problems concerningthe Rules of Origin of the two countries as well as some advice on cooperation in related businesses in the FTA negotiations.By comparing the Rules of Origin designated in the FTAs which were signedrespectively by China and ROK with other countries, we could find that the twocountries apply different criteria in clarifying the Rules of Origin. ROK has appliedthe criterion of change of tariff classification, whereas china has applied the advalorem percentage criterion at the early days of signing FTA and adapted to thecriterion of change of tariff in recent years. Besides, differences could be found in theprocedures of certifying and confirming the Country of Origin of the two sides. Thosevariations could expose influence to the bilateral trades and lead to different economiceffects. In order to address the issues, China and ROK need to amend related laws andrules, simplify relevant regulations and procedures and establish a committee onRules of Origin.In order to promote the bilateral cooperation in this area, the paper offers someideas and suggestions on compromising the criterion of change of tariff classificationand ad valorem percentage criterion, introducing the article of oversea processing andsimplifying the procedures of issuing the certificate of country of origin.