A trade agreement reduces duty on goods originating in its member countries. Establishing where a product originates is a separate technical exercise, and it decides whether the agreement applies at all.
Shipping from a country is not origin
Goods dispatched from a member country may have been made elsewhere, and simply passing through does not confer origin.
Without a test, any agreement could be used by routing goods through the cheapest member, which would extend its benefits to every country outside it.
Rules of origin exist to prevent that, and they are the part of a trade agreement that determines how much of its headline benefit is usable in practice.
Wholly obtained goods are straightforward
Products grown, mined or harvested entirely within one country originate there without further analysis.
Fish caught by a vessel registered in a member country generally qualify too, and livestock born and raised in one place presents no difficulty.
Almost nothing manufactured falls into this category, which is why the interesting rules concern goods made from materials of several origins.
Substantial transformation is the usual test
Where inputs come from multiple countries, origin goes to the country where the last substantial transformation occurred.
Agreements define that in one of three ways: a change in tariff classification, a minimum share of local value added, or a specific processing operation.
Each definition suits different industries, which is why a single agreement will apply different tests to textiles, vehicles and electronics.
Cumulation lets partners pool inputs
Cumulation rules allow materials from one member country to count as local when processed in another.
Without it, a supply chain spread across several partners might fail every individual test despite being entirely inside the agreement's area.
How widely cumulation extends is one of the most negotiated features of any agreement, because it decides which existing supply chains keep working unchanged.
The claim rests on evidence
Preferential rates are claimed by the importer, usually with a declaration from the exporter, and the importer carries the liability if the claim is wrong.
Supporting records showing input origins and production steps must be kept for years and produced if an authority audits the claim.
Because the paperwork and record-keeping cost real money, smaller traders sometimes pay the standard duty rather than claim a preference they are entitled to, and the specifics differ by agreement and change over time.