Regional Value Content

Regional value content in Global Commerce Policy

In this regard, regional value content is: a concept used in the administration of rules of origin under NAFTA. The main method used in NAFTA for assessing whether a good qualifies for preferential admission is the change in tariff classification based on the Harmonized System. The entries on trade policy are here. In some cases, especially chemical and automotive products, NAFTA requires a specified minimum North American content expressed as a percentage. This is the regional value content. Two calculation methods are used. The first is the transaction value formula based on the price actually paid for a good. The second is the net cost formula (total cost minus the cost of sales promotion, packaging and shipping, after-sales service, etc.). The minimum level for the former is usually 60% and for the latter 50%. The higher value for the transaction value formula is due to the broader nature of this cost.[1]

Regional value contentin the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Regional value content” entry (OAS)

See Also