In the past few years, we have almost been consumed with origin issues. Although the problem mainly revolves around the certification of origin documents, these years have shown us that the origin aspect of customs is as important as other technical issues.

Origin refers to the economic nationality of goods. In customs, taxes can vary depending on the origin country of the goods. Therefore, determining the origin country of the products we import and export is a critically important issue in trade.

The origin of goods is determined by origin rules. These rules are specified in our Customs Law and Regulations. Although these rules are fundamental, bilateral or multilateral trade agreements or specific regulations like GSP may establish different origin rules for the goods covered by these agreements or regulations.

The origin rules in trade agreements are actually quite clearly defined, and there are no ambiguous rules that cause hesitation. Therefore, if we are trading with a country with which we have signed a Free Trade Agreement (FTA), determining the origin rules and identifying the origin country of our products is not difficult.

The challenging part is the origin rules in our own legislation, i.e., the Customs Law and Regulations, in the absence of an Agreement or similar arrangement. While origin rules are specifically determined for a few types of goods in our Customs Regulation, in cases other than these goods (excluding textile products), the rule to be considered is the "Last Substantial Processing or Working" rule.

In practical terms, if we want to issue a Certificate of Origin in our exports, the rule we will base our determination on is often these five words.

So what is this "last substantial processing or working"? The answer is not found in our regulations. Everyone you ask will provide a different and personal interpretation. It is therefore a matter open to significant interpretation.

The European Union has tried to clarify this concept somewhat by establishing product-specific list rules, but unfortunately, these rules are not binding for our country. In fact, they are not even binding for the EU itself.

It would be highly beneficial for our Ministry of Commerce to prepare a guide to assist producers and exporters in understanding the meaning of this concept.

Until such a guide is created, as someone who has researched and pondered this issue for many years, I share my opinion on the last substantial processing and working. I would appreciate it if you could add your comments if you have any.

???? The last substantial processing rule should be evaluated on a case-by-case basis.

???? Ensure that the process is not listed in the non-originating processes or working list in Article 34 of the Customs Regulation.

???? There should be a significant qualitative change in the characteristics of the final product; merely changing the presentation of the goods for their intended use should not be considered substantial.

???? The process or working should be something that can be performed by individuals with technical training; activities such as simple assembly that can be performed by untrained workers should not be considered substantial.

???? When assessing economic necessity, Article 20 of the Customs Law should be taken into account, and the process should not create an impression of circumventing measures applied to certain countries.

???? According to the generally accepted tolerance approach, if the inputs whose HTS codes remain unchanged are below 10% of the ex-factory price of the final product, it is advisable not to consider them in the evaluation.

???? The processing should be done in facilities equipped for this purpose.

???? The list rules, although not legally binding, should be reviewed as they can serve as a guide. If the EU list rule is not met, strict interpretation should be avoided, and the other elements mentioned above should be considered.

???? If the process is deemed not substantial, it should be considered whether the manufactured goods could be evaluated as a "new product" with different characteristics and functions from the inputs. If so, rather than relying on the substantial processing rule, the fact that a "new product" has been manufactured could be a rule we can defend for establishing origin.