Rules of oriin of goods, preferential ornon-preferential, are not substantively regulated by the international law. Thus, each state may apply its own rules of origin to imported goods. The United States has been applying the non-preferential rules based on the “substantial transformation” criterion. According to this criterion, a country in which substantial change in name, character or use of non-originating materials occurred will be determined as originating country. Hence, if goods produced at the “Kaesung Industrial Complex” are exoirted to the United States, they will normally be determined as products originating in North Korea. In order for South Korea to qualify as the origin of such goods, they should be substantially transformed in South Korea using materials produced in the Complex. Further to this, certain processing pricedures required under relevant US statutes must be performed in South Korea, when it comes to textile and apparel goods. Preferential rules of origin in the United Sates are various and complicated. For each category of beneficiary state or region, different preferential rules apply. Usually, they require certain minimum ratio of locally-produced materials and/or direct processing cost-added over the appraised value of the final product. Despite the fact that this requirement is satisfied, certain product categories may be excluded from the benefit of preferential duty, depending upon the specific statute to be applied. In addition, ``non-conforming manufacturing procedure`` rule and/or ``de minimis`` rule may apply in certain cases under the specific statutes. Origin of goods produced at Kaesung lndustrial Complex, expored to the United Sates, will be determined in accordance with such respective prefcrential rules in cach case. In general, the origin of such goods will be determined as North Korea in most cases, given that, for the purpose of application of preferential duties, relcvant US laws tend to impose stricter conditions than those for the non-preferential puposes. Since North Korean goods, being subject to import control measures by the US Government, are accorded with no preferential duty bencfits in the US marker, a desirablc policy focus in a short term will be to export goods produced at the Complex to other markets, such as China, Russia, Southeast and Southwest Asia, Middle East, or many developing countries, in whivh North Korean goods are not discriminated against. In the longer term, efforts should be made to reduce such discriminations and to bring the North Korean economy into the WTO umbrella.