A circuit board exported to the EU uses imported chips worth 9% of the ex-works price — does it lose EVFTA preference? The answer lies in the tolerance (de minimis) provision of EVFTA Protocol 1: non-originating materials remain acceptable within 10% of the ex-works price, even where the product rule would otherwise disallow them.
1. How the 10% tolerance works for electronics
Product-specific origin rules for electronics typically require a change of HS classification or cap the value of non-originating materials (e.g. at 40–50%). The tolerance provision adds flexibility: materials failing the rule may still be used, provided their total value does not exceed 10% of the ex-works price of the finished good. In electronics — where a single imported component (chip, display) can break the whole origin formula — that 10% is often the line between keeping and losing the preference.
2. Exclusions businesses often forget
Tolerance does not apply everywhere: (a) it cannot override rules requiring all materials to be originating for certain product groups; (b) textiles have their own weight-based tolerance; (c) the base is the ex-works price, not FOB or CIF — the wrong base means the wrong ratio. In post-clearance checks, EU customs may demand the detailed material-value calculation; a business that kept no worksheet cannot defend its preference under verification.
3. Putting it into origin management
Electronics exporters should: maintain an origin calculation sheet per product code, updated whenever a component supplier changes; set an internal alert threshold at 8% instead of 10% for a safety margin against exchange-rate and chip-price swings; and retain calculation records at least for the period during which either side’s customs may request verification. Tolerance is a safety valve — not a strategy: supply-chain design should still prioritise originating materials.
Conclusion
The EVFTA’s 10% tolerance is a safety valve for electronics using imported components — but it only rescues businesses that calculate and document. Without a worksheet, the duty preference is a promise that cannot be proven.
Frequently Asked Questions
For electronics, what value is the EVFTA 10% tolerance calculated on?
The ex-works price of the finished product — not FOB or CIF. The total value of materials failing the origin rule must not exceed 10% of the ex-works price.
Does tolerance apply to all products?
No. It cannot override rules requiring all materials to be originating for certain product groups, and textiles have their own weight-based tolerance.
How does EU customs check tolerance claims?
In post-clearance verification, EU customs may demand the detailed material-value calculation. A business that kept no worksheet cannot defend its preference.
What internal threshold should businesses set?
An internal alert around 8% rather than 10%, leaving a safety margin against exchange-rate and component-price swings, with the worksheet updated whenever a supplier changes.
This article has been quality-reviewed by the FLAW AI Legal Council