basic-guide-to-exporting_Latest_eg_main_086196

Our assumed value of nonoriginating materials in this case is $500. Plugging this intothe builddown formula:RVC = ($1,000 − $500)/$1,000 × 100 = 50%We can see that the percentage is greater than the 45 percent required by the rule.Therefore, the good qualifies as originating.If instead, we use the buildup formula (i.e., (Value of originating materials/Adjustedvalue) × 100):Note: Certain expense may be added (since some are able to be deducted fromnonoriginating materials covered above) to the value of originating materials.For more information on valuing materials, refer to Article 5.4 and 5.5 of the U.S.–Australia FTA.RVC = $500/$1,000 × 100 = 50%The RVC is again 50 percent and is greater than the 35 percent required by the rule.With either method, the good specified in this example qualifies as originating underthe U.S.–Australia FTA.Rules of Origin Are Product- and FTA-Specific, but Some GeneralCategories ApplyFor given product nonoriginating inputs to qualify for particular FTA benefits, theproduct may need to comply with a tariff classification change (TS)–based ROO or anRVC-based rule or both (TS and RVC). Note: These rules apply only to foreign, non-FTAagreement content, and each rule is product-specific, according to the product andthe HS number.NAFTA, Chile, Singapore, Australia, CAFTA-DR, Colombia, Panama, Korea, andPeru FTAsAll apply TS- and/or RVC-based rules of origin. The TS-based rules vary among FTAs,but the principle of the tariff classification change test remains the same. However,the applicable RVC-based rules may be net cost–, transaction value–, builddown-,or buildup-based, depending on a particular FTA and the particular product. Forexample, to qualify a product for NAFTA, an exporter may need to apply eitherthe net cost–based RVC rule (requires minimum 50 percent FTA-origin content) ortransaction value–based ROO (requires minimum of 60 percent FTA-origin content).Chile, Singapore, Australia, CAFTA-DR, Peru, Colombia, Korea, andPanama FTAsApply the buildup rule (the total value of the originating materials must be greaterthan 35 percent) or the builddown rule (the subtracted value of the nonoriginatingmaterials must be greater than 45 percent).208U.S. Commercial Service • A Basic Guide to Exporting