Change in Tariff Classification (CTC) is one of the substantial transformation criteria in rules of origin. It means that after processing in the exporting country, the first few digits (usually 4 or 6 digits) of the product's HS code (Harmonized System customs commodity code) change, thereby conferring originating status. Usage scenarios: commonly used in origin determination under free trade agreements (such as RCEP and China-ASEAN), especially for products with simple processing procedures but a change in code. Notes: it is necessary to confirm the specific level of code change required by the agreement (chapter, heading, or subheading); not all code changes satisfy the rules of origin; and it should also be assessed together with other criteria (such as regional value content). Difference from other terms: unlike "Regional Value Content" (ad valorem percentage), CTC is a qualitative criterion; it is also different from "Specific Processing Operations," which target specific manufacturing processes. Foreign trade practitioners should accurately understand HS code changes to avoid invalid certificates of origin caused by classification errors.
📝 Examples
1. Clothing exported from China to ASEAN, after processing with imported fabrics, changes its HS code from 5208 (woven fabrics of cotton) to 6203 (men's suits), satisfying the change in tariff classification, and can apply for a China-ASEAN FTA certificate of origin. (Note: the first 4 digits of the code change, meeting the agreement standard.)
2. A company produces plastic parts; the raw material HS code is 3901 (polymers of ethylene in primary forms), and the finished product code is 3926 (other articles of plastics). Because of the change in heading, it obtains originating status and enjoys RCEP tariff preferences. (Note: the heading-level change must be checked against the specific RCEP rules.)
💡 Foreign Trade Tips
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