We answer your common questions about FTAs and how to apply them.
There are three basic components in an FTA: trade in goods, trade in services and investment protection in foreign countries. Additional chapters covered may include intellectual property protection, government procurement, electronic commerce, and other cooperative measures.
Once an FTA has been concluded and signed, it typically has to undergo a domestic ratification process, i.e. formal approval from the Cabinet/Parliament before the commitments of the FTA enter into force.
Yes. Singapore's FTAs contain provisions for reviews to be conducted periodically, e.g. at least every two or three years. Such reviews provide opportunities to improve the commitments in these agreements to facilitate businesses. For any further queries, please reach out to us at go.gov.sg/helloesg.
Harmonized System Code (HS Code) is a six digit code system set up by the World Trade Organisation (WTO) to standardise classification of products. Beyond the six-digit level, countries are free to introduce national distinctions for tariffs and many other purposes.
For example, Roasted Malt with the HS Code "11- 07- 2000".
• Chapter = "11"
• Heading = "1107"
• Sub-heading = "110720"
To find out what is your product’s HS Code, please refer here.
Please also note that HS Codes are reviewed by the World Customs Organisation once every five years.
In the event your importing country does not accept your HS code, you may wish to email Singapore Customs here or call 6355 2000 for clarification.
No, in most countries, there are additional domestic taxes, e.g. sales tax, value-added taxes or luxury taxes. These are domestic taxes which are not discriminatory in nature and are not covered in Singapore's FTAs.
Rules of Origin are a set of criteria which determine a product's originating status in the respective FTA. It is to ensure that only goods originating from the FTA partner countries involved will benefit from tariff concessions.
Rules of Origin are classified into two criteria:
I. Wholly Obtained:
Goods obtained or produced entirely within a FTA Partner Country. Some examples are mineral products extracted from the soil or from the seabed, vegetables harvested and live animals born and raised in the FTA Partner Country.
II. Undergone Substantial Transformation:
Rules of Origin (ROO) for a product may vary across the different FTAs.
You can obtain ROO information from the sources below:
Value Content or Value Add is one of the criteria to qualify a product under Substantial Transformation. A certain proportion of the cost for the final product has to be originating from one or many FTA partner countries.
Different FTAs use different formula to calculate Value Content. Some of the common formulas used are Ex-Factory Cost, Ex-Factory Price and Free-On-Board (FOB) price. The formula for Ex-Factory Cost, Ex-Factory Price and FOB is as follow.
For Ex-Factory Cost VC (%) = (Local material cost + Direct labour cost + direct overhead cost) / (Total material + Direct labour cost + direct overhead cost) x 100 %
For Ex-Factory Price VC (%) = (Local material cost + Direct labour cost + direct overhead cost + profit) / (Total material + Direct labour cost + direct overhead cost + profit) x 100 %
For FOB price VC (%) = (Local material cost + Direct labour cost + direct overhead cost + profit + Inland Transport) / (Total material + Direct labour cost + direct overhead cost + profit + Inland Transport) x 100 %
Local material cost refers to cost of materials used in the product which originates from the country of export. Local material cost is to be supported by relevant Preferential Certificate of Origin.
Total material cost refers to cost of all materials used in the product. For further information, please email Singapore Customs here or call 6355 2000.
In Single Country or Local Value Content, only material originating from the manufacturing country is considered.
In Regional Value Content, materials originating from all FTA partner countries are considered. The RVC formula can be found in the Rules of Origin chapter text of the various FTAs.
To verify that a raw material originates from a FTA partner country, the manufacturer should request for the same type of Preferential Certificate of Origin for the raw materials from his supplier.
Change in Tariff Classification is one of the criteria to qualify a product under Substantial Transformation.
Under CTC, the HS Code for the final product and the HS Code for its non-originating raw materials have to be different at the FTA specified Tariff Classification to be deemed originating.
The main 3 types of CTC are:
Process rule is one of the criteria to qualify a product under Substantial Transformation. Under process rule, non-originating raw materials have to undergo an FTA specified process to be deemed originating. For example,
Singapore Customs is the Authorised Body in Singapore for FTA documentary application. Please click here for more information.