This report explains methods for achieving rules of origin using RCEP's cumulation system and practical examples of internal system development through the EPA utilization case of Honma Golf (Minato-ku, Tokyo).
The company manufactures and sells golf-related products including golf clubs and golf wear, exporting not only within Japan but also to Asia, Europe, the United States, and other overseas markets. By export value, Korea accounts for the largest share, followed by China, Southeast Asia, the United States, and Europe. Their main product, golf clubs, are assembled at their own factory in Sakata City, Yamagata Prefecture, while soft goods products (golf wear, caddy bags, head covers, etc.) are produced through OEM in China.
EPA Utilization Initiatives
EPA utilization began at the request of a Thai importer. Although initially lacking knowledge, the company accumulated know-how while learning from partner trading companies and forwarders. Currently, they utilize the RCEP agreement for exports to Korea and the AJCEP agreement for exports to Thailand and Indonesia, benefiting from lower preferential tariff rates. Regarding rules of origin, since the HS codes for golf club parts and finished products do not change at the 4-digit level, they adopt the value-added criterion rather than the tariff classification change criterion.
Utilizing RCEP's Cumulation System
The company effectively utilizes RCEP's cumulation provisions for head components imported from China. Since China is an RCEP contracting party, they can treat the heads as originating materials and include them in the calculation of originating value-added to meet rules of origin. Furthermore, when importing heads via Hong Kong, they obtain certificates of non-manipulation to maintain originating status. Regarding the certification system, while they currently use third-party certification, they are considering switching to approved exporter self-certification or self-declaration systems due to mounting certificate issuance fees for 80-100 new products annually.
Internal System Challenges and Improvements
Ms. Meiko Miyakawa had been handling EPA utilization procedures alone for many years, but increasing certificate issuances made it difficult to respond, often resulting in retroactive issuances rather than immediate responses for new products. To address this challenge, internal training is underway to enable other export staff to handle EPA procedures, with expectations to issue certificates of origin simultaneously with exports starting with new products this fall. Establishing an immediate response system is expected to leverage EPA utilization as a negotiating tool for fee collection and increased transaction volumes.
The article demonstrates through practical examples how utilizing RCEP's cumulation system can meet rules of origin and how gradual internal system development can maximize EPA utilization benefits.