What is PSR?

PSR (Product Specific Rules) refers to product-specific origin criteria applied to individual items under Free Trade Agreements (FTAs). Instead of relying solely on general rules, PSRs specify the exact requirements a product must meet to be considered as originating and to qualify for preferential tariffs.

Why is PSR Important in International Trade?

As global trade integration deepens, FTAs become more numerous and complex. PSR ensures:

• Transparency and consistency in origin determination
• Flexibility for businesses to choose applicable rules
• Maximized tax benefits for exports

Common Types of PSR Criteria

PSR typically includes one or a combination of the following:

RVC – Regional Value Content

RVC refers to the percentage of value added within FTA member countries, calculated based on the FOB value of the goods. There are two main calculation methods:

• Indirect RVC: RVC = [(FOB – VNM) / FOB] x 100%
  
• Direct RVC: RVC = (VOM / FOB) x 100%
  

Where:

• VNM: Value of non-originating materials
• VOM: Value of originating materials + labor + other direct costs + profit
• FOB: Free on Board (export value of the goods)
  

✅ Advantage: Easy to calculate; common in food, textile, and handicraft industries.

>> Read More: What is RVC? Definition, Meaning, and Application in FTAs

 CTC – Change in Tariff Classification

Goods are considered originating if their HS Code changes compared to the non-originating inputs. There are three levels of change:

• CC: Change in Chapter (first 2 digits)
• CTH: Change in Heading (first 4 digits)
• CTSH: Change in Subheading (first 6 digits)
  

✅ Note: Applies only to non-originating materials.

>> Read More: What is CTC? The Tariff Classification Change Rule in Determining Origin

SP – Specific Process

Requires goods to undergo one or more specific production processes in the exporting country.

✅ Advantage: Stable rule, not affected by input value or material fluctuations.

>> Read More: What is the SP (Specific Process) Criterion?

Which PSR Rule Can Businesses Choose?

Most FTAs allow businesses to choose between RVC, CTC, SP, or a combination. Choosing the right rule helps:

• Increase the chance of qualifying for preferential origin
• Shorten processing time
• Optimize production costs

Origin Certification Systems under PSR

There are three common methods:

Example

Product: Biscuits exported to Malaysia (HS Code: 1905.31)

Indirect RVC Calculation:

RVC = (20 – 6 – 3 – 1.5)/20 x 100% = 47.5%

✅ Conclusion: RVC > 40% ⇒ Biscuits qualify for ATIGA preferential tariffs.

What Should Businesses Do?

• Clearly understand PSR requirements under each FTA your business is involved in.
• Proactively build production processes that meet origin criteria.
• Carefully consult each FTA’s PSR list when planning exports.

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