Information Technology Goods. Example when using a material covered by the Attachment except for HS 8541.10 through 8542.90 (subparagraph (f)(i) of Part 1 of Annex 2) Company A produces washing machines in Japan and plans to export them to Indonesia under the Agreement. The PSRs for washing machines (HS8450.11) under the Agreement are: A change to subheading 8401.10 through 8485.90 from any other subheading; or No required change in tariff classification to subheading 8401.10 through 8485.90, provided that there is a qualifying value content of not less than 40 percent. Company A decided to choose the 40% value-added rule in this case. Company A’s manufacturing costs of the washing machine Material/Parts Sources Originating Status Value US$ Parts a Japan originating 100 Parts b (switch) Japan considered as originating 40 Parts c China non-originating 50 Parts d India non-originating 120 Parts e S. Korea non-originating 100 Other Costs N/A N/A 90 F.O.B. Price -- -- 500 Company A obtains Parts b (switch, HS8536.50) covered by the Attachment from Company B in Japan. No production data is available proving that Parts qualifies as an originating material of Japan. But if Company A obtains information which proves that Parts b (switch) was assembled in Japan, Parts b may be considered as an originating material of Japan pursuant to subparagraph (f)(i) of Part 1 of Annex 2, and the calculation of Q.V.C. of the washing machine is: $500－$270 (Parts c, d and e) Q.V.C.= × 100＝46%≧40% $500 The above calculation shows that the washing machine qualifies as an originating good of Japan. Appendix 3
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