Definition: Substantial transformation criterion

Category: Customs terminology

The term "substantial transformation criterion" means the criterion according to which origin is determined by regarding as the country of origin the country in which the last substantial manufacturing or processing, deemed sufficient to give the commodity its essential character, has been carried out (Kyoto Convention, annex D.1, definition (c)).

In practice the "substantial transformation criterion" can be expressed:

- by a rule requiring a change of tariff heading in a specified nomenclature with lists of exceptions, and/or
- by a list of manufacturing or processing operations which confer, or do not confer, upon the goods the origin of the country in which those operations were carried out, and/or
- by the ad valorem percentage rule, where either the percentage value of the materials utilized or the percentage of the value added reaches a specified level” (Kyoto Convention,
annex D.1, note to standard 3). http://ec.europa.eu/eurostat/ramon/statmanuals/files/SeriesF_87_EN.pdf