basic-guide-to-exporting_Latest_eg_main_086196

The original ROOs are listed in an annex or in the chapter titled “Rules of Origin” of a particularFTA. They may be found at 1.usa.gov/1ph6Np9. Another source is export.gov/fta; click on the FTAcountry you are shipping to and select the “Rules of Origin” link. You may need to consult the mostrecent rules as opposed to the original ones because the HS codes tend to be revised every fewyears, necessitating the need to adjust the rules.Categories of Rules of OriginProduct-specific ROOs are based on changes in tariff classification, RVC, or both. They explain howgoods that contain nonoriginating, non-FTA materials or components may still qualify for FTAbenefits, an important feature, since many popularly traded items contain inputs from differentcountries other than those involved in the FTA.Product-Specific Rules of Origin Based on Tariff ShiftSome product-specific ROOs use a tariff classification change test to determine if a significantchange has occurred within the FTA region for the product to qualify for the FTA benefit.Generally, under such a rule, a good qualifies as originating in the FTA region if its final productionprocess takes place within the FTA region and if that results in a significant change in componentsor materials nonoriginating in FTA country.Percentage-Based Rules: Doing the MathRegional Value Content–Based RuleRVC-based rules require that a good include a certain percentage of FTA content. You cancalculate RVC-based rules four ways. Which you use depends on the product and on the FTA.RVC-based rules are net cost (NC), transaction value (TV), builddown, and buildup.The net cost rule calculates the RVC as the net cost of the goods minus the value ofnonoriginating materials expressed as a percentage.Net Cost MethodRVC = (NC − VNM × 100) / NC• The transaction value rule calculates the RVC as the transaction value of the goods minus thevalue of the nonoriginating material expressed as a percentage.Transaction Value MethodRVC = (TV − VNM × 100) / TV• RVC = Regional value content, expressed as a percentage• TV = Transaction value of the good adjusted to FOB (amount paid or payable)• NC = Net cost (amount to produce a good)• VNM = Value of nonoriginating materials used by the producer in the production of the goodChapter 18: Rules of Origin for FTAs205