Following the Hong Kong Ministerial Declaration in 2004 that encouraged developing countries to provide commercially meaningful market access to the Least Developed Countries (LDCs) under the Duty-Free Quota-Free (DFQF) Programme. China implemented this DFQF scheme from 1 July 2010.
China’s DFQF Programme covers products of 4788 tariff lines at the 8-digit level, accounting for 60 per cent of all tariff lines of China. To download the China DFQF communication to WTO in December 2011 in this regard, click here.
In order to be eligible for duty free benefits in China under DFQF, export goods from the LDCs will have to comply with the following rules of origin:
(a) Entirely obtained from or manufactured in the beneficiary country; or
(b) Incompletely obtained from or manufactured in the beneficiary country but where the final substantial transformation is completed.
There are different criteria on the determination of methods (substantial transformation, change in tariff item classification, advalorem percentage etc.). For example, the criterion of “ad valorem percentage” means that, following the manufacturing and processing in the beneficiary country using materials which do not originate from the said country, the value added portion may not be less than 40 per cent of the resulting goods.
For more details and updated information on China DFQF issues, visit www.english.mofcom.gov.cn.