402) If tariff shift is used, certain tariff code headings and subheadings are excluded from the calculation; (403) those same tariff code headings and subheadings are required to be taken into account when using the regional value content focused value method.
Those familiar with NAFTA rules of origin would note the major differences between NAFTA and TPP rules of origin when determining regional value content.
Another difference between NAFTA and TPP is between applicable percentages when using regional value content.
475) The study concludes that the lowering of the regional value content under TPP as compared to NAFTA will contribute to a rise in the exports of United States autos but a decline in exports of United States auto parts to Canada and Mexico.
Korea Free Trade Agreement, Rules of Origin, A Regional Value Content Ride, Export.
Figure 3 provides an example of regional value content calculations using the builddown method, which is one of the two methods reportedly preferred by automakers based on the adjusted value of an automobile.
The KORUS FTA allows motor vehicle producers to average their content over their fiscal year when calculating their regional value content under the net cost method for automotive goods.
The KOREU FTA requires importers of automotive products to use a different method for calculating regional value content than is allowed under the KORUS FTA, known as the ex-works price method.
This roughly corresponds to the 55% regional value content rule in the KORUS FTA build-down method described above, which incorporates a similar subset of costs to the ex-works price method.
Notwithstanding these differences, administration experts assert that the regional value content requirements in the KORUS and KOREU FTA are roughly equivalent.
As North Korea is not a party to the KORUS FTA, the North Korean inputs would not be counted as regional value content under the rules discussed in a previous section of this report.
Sample Regional Value Content Calculation Description Dollar Value A Value of Originating Materials (VOM) $6,500 B Value of Non-originating Materials (VNM) $12,000 C Total Unit Product Costs (A+B) $18,500 D Selling, General, and Administrative $7,000 Expenses (SG&A) E Total Unit Cost before Profit (C+D) $25,500 F Profit (10%) $2,550 G Adjusted Value (E+F, equals Customs $28,050 value less international freight) RVC by Build-Down Method (G-B)/G 57.