What is regional value content?
Regional value content is how much of a product's value was added in the trade area. Some rules ask for a minimum, often somewhere between 35 and 60 percent. Others cap how much the imported materials can be worth.
An example
A product sells for 100 and uses 35 worth of materials from outside the area. Take the 35 away and you're left with 65 out of 100, so the regional value content is 65 percent. That's the build-down method.
The build-up method counts the other way, adding up the value of the materials that do originate. Some agreements also use net cost, which leaves out things like marketing and royalties before doing the sum.
The European way round
The EU and the UK usually write the test as a cap. The imported materials can't be worth more than, say, 50 percent of the price the product leaves the factory at.
Which value to use
Each agreement says what to measure against, whether that's the transaction value, the FOB value or the ex-works price. Use the wrong one and the percentage can tip either way.
Where you'll find it. The article it's in, agreement by agreement.
- USMCAValuation, Article 4.5
- CAFTA-DRValuation, Article 4.3
- CPTPPValuation, Article 3.5
- RCEPValuation, Article 3.5
- ATIGAValuation, Article 29
- ACFTAValuation, Article 5
- PEM ConventionValuation, Article 1
- EU–Korea FTAValuation, Article 1
- EU–Vietnam FTAValuation, Article 1
- UK–Vietnam FTAValuation, Article 1
- US–Australia FTAValuation, Article 5.5
- KORUSValuation, Article 6.3
- US–Singapore FTAValuation, Article 3.6
- Canada–Colombia FTAValuation, Article 304
- Canada–Indonesia CEPAValuation, Article 3.1
- Canada–Korea FTAValuation, Article 3.5
- Canada–Ukraine FTAValuation, Article 3.1
- EU GSPValuation, Article 37
- UK DCTSValuation, Regulation 9
- Canada GPTValuation, Memorandum D11-4-4, paragraph 3