Customs Declaration Codes 0, 1, 2 Explained: How Preferential Trade Agreement Indicators Affect Import Duty Benefits

Many international trade professionals have encountered this confusing situation:
two shipments exported to the same destination country, but the customs declaration shows different numbers in the product section — one marked as 1, another marked as 2.

Does it affect export tax rebates?
Can the overseas buyer still enjoy tariff reductions?
Why do freight agents say “it does not affect your export rebate”?

Today, we explain the meaning behind the customs declaration codes 0, 1, and 2 and how they influence international trade compliance.

1. What Do Customs Declaration Codes 0, 1, and 2 Mean?

The official name of this field is the
Preferential Trade Agreement Indicator.
It tells customs whether the exported goods are eligible for preferential tariff treatment under free trade agreements.

Code 0: Eligible for Preferential Tariff Benefits

Code 0 means the goods comply with the rules of origin requirements under a specific trade agreement and can apply for preferential tariff treatment.

The exporter can provide valid certificates of origin, such as:

• RCEP Certificate of Origin
• FORM E Certificate of Origin
• China-ASEAN Free Trade Agreement Certificate
• Other Free Trade Agreement Certificates

When the importer presents the certificate during customs clearance, the destination country may reduce or eliminate import duties.

Code 1: Not Applying for Preferential Tariff Benefits

Code 1 means the shipment will not use preferential tariff treatment.

There are two common situations:

• The goods do not meet the rules of origin requirements and cannot obtain a preferential certificate of origin.
• The goods qualify, but the importer chooses not to apply for the preferential tariff rate.

In this case, the importer normally pays the standard applicable import duty.

Code 2: Origin Benefit Status Not Confirmed

Code 2 means the exporter cannot confirm whether the goods qualify for preferential treatment.

This situation usually occurs when the company has not completed origin qualification calculations or is unsure whether the product meets the agreement requirements.

2. Does Code 1 or Code 2 Affect China’s Export Tax Rebate?

The answer is:
No, the preferential trade agreement indicator itself does not determine China’s export VAT rebate.

China export tax rebate verification mainly depends on:

• Export declaration value
• VAT invoices
• HS code accuracy
• Foreign exchange collection records

Customs does not decide export rebate eligibility based on whether the indicator is 0, 1, or 2.

However, It Can Directly Affect Overseas Import Costs

Although it does not affect China’s export rebate, incorrect declaration may create problems for overseas buyers.

• Incorrectly declaring 1 or 2 when the goods qualify for benefits may cause customers to lose tariff savings.
• Repeatedly using code 2 may increase customs inspection risks.
• Different declarations for identical products may create questions regarding origin authenticity.

3. Practical Declaration Guide by Situation

Situation 1: Customer Requires Preferential Tariff Benefits

If the exporter applies for RCEP, FORM E, or other certificates of origin:

Declaration Code: 0

Required documents:

• Valid Certificate of Origin
• Supporting origin documents if required

Situation 2: No Certificate of Origin or No Preferential Treatment Required

Declaration Code: 1

Applicable when:

• The product does not meet origin qualification rules
• The exporter does not apply for preferential treatment

Situation 3: Origin Qualification Is Still Uncertain

Declaration Code: 2

The exporter should later confirm:

• Raw material origin
• Regional value content
• Manufacturing process requirements

If qualified, a certificate of origin can be issued.
If not qualified, future shipments should use code 1.

4. Three Important Tips for Exporters

1. Do Not Always Copy Previous Declarations

Each shipment should be reviewed individually.
If the goods qualify for preferential treatment, use code 0 instead of automatically using code 2.

2. Keep Similar Shipments Consistent

For the same product shipped to the same country,
consistent declaration practices help avoid customs doubts.

3. Understand the Difference Between Export Rebate and Import Duty Reduction

China export tax rebate and overseas import duty benefits are completely different systems.
The declaration indicator may not affect your domestic rebate,
but it directly impacts your customer’s import cost.

Conclusion

The small numbers 0, 1, and 2 on a customs declaration form may look insignificant,
but they are closely connected with international trade benefits and customs compliance.

Professional exporters should not only focus on domestic tax rebates,
but also understand free trade agreement rules and help overseas customers reduce unnecessary import costs.

Correct declaration practices can improve customs efficiency,
reduce inspection risks,
and strengthen long-term international business relationships.