Tolerance

In certain cases, the tolerance rule allows limited use of non-originating materials that would otherwise not be permitted under the product-specific rule, subject to the conditions and limits laid down in the relevant arrangement. This tolerance rule generally allows the use of a specific percentage of non-originating materials even if restricted by a change in tariff classification rule or a specific production process requirement.

The product can still be considered as satisfying the applicable rule of origin if the value of the non-originating materials does not exceed a specific percentage (usually 10 or 15%) of:

• the value of the ex-works price of the final product, or
• the weight of the final product

In general tolerance is applied as follows:

• If the ‘change of tariff classification’ rule is applied, the tolerance allows the use of non-originating materials that have the same tariff headings as the final product – provided that the value of these materials does not exceed the tolerance threshold.
• If the ‘manufacture from certain products’ rule is applied, the tolerance allows the use of non-originating materials that represent a later stage of production – provided that their value does not exceed the tolerance threshold.
• Where the list rule stipulates that materials used in the production have to be wholly obtained, the tolerance applies to the sum of those materials. However, tolerance is not to be applied to wholly obtained products within the meaning of the provision on 'Wholly obtained products' in the preferential trade arrangements.
• If the product-specific rule of origin already contains a maximum percentage based on the value or weight of the product, the tolerance rule cannot be used to increase that percentage. In this case the maximum percentage defined in the product-specific rules of origin applies.

Specific tolerance rules apply to textiles and textile articles of HS Chapters 50 to 63 instead of the general tolerance rule. Those rules are generally included in the introductory notes to the product-specific rules of origin in each agreement.