Free trade agreement utilization and program optimization
What the exam tests
This domain tests how to find, compare, and capture FTA savings while managing compliance cost. It covers tariff differentials, eligibility, rule comparison, sourcing changes, cumulation, post-entry claims, and program governance.
Optimization levers
Compare MFN and preferential rates by HS line and shipment volume. Map each product to every available FTA and compare PSRs; one agreement may allow CTH while another requires RVC 50%. Use cumulation, de minimis, and supplier shifts to meet the easiest rule. File post-entry refund claims where permitted and track expiry dates. Weigh duty savings against documentation, system, and audit costs.
Worked example
A component has MFN duty of 8% and an FTA rate of 0. Annual import value is 5 million. The FTA requires RVC 50%; the current RVC is 45%. Replacing an imported input with an originating supplier raises RVC to 55% and adds 50,000 in annual cost. Duty savings are 400,000, so the net benefit is 350,000 before compliance cost. The claim is viable if supplier declarations and records are maintained.
Traps
Optimizing for one FTA while ignoring a better rule elsewhere; missing retroactive refund windows; assuming a zero tariff means zero compliance cost; changing suppliers without revalidating origin.