Regional value content and valuation methods
What the exam tests
This domain tests RVC formulas, valuation bases, and allowable adjustments. You must know build-down and build-up methods, the treatment of non-originating materials, and when a net-cost method applies.
Formulas and bases
Build-down RVC = (FOB - VNM) / FOB x 100. Build-up RVC = VOM / FOB x 100. VNM is the value of non-originating materials, normally customs value at importation or earliest ascertainable price; VOM is the value of originating materials. USMCA uses a net-cost method for certain vehicles: (net cost - VNM) / net cost x 100. Use the agreement's defined value, not accounting book value, and keep freight and indirect costs consistent with the chosen formula.
Worked example
A machine has FOB 250,000 and VNM 110,000. Build-down RVC = (250,000 - 110,000) / 250,000 = 56%. The PSR threshold is 50%, so it qualifies. If the agreement excludes international freight from VNM and 10,000 of the reported VNM is freight, adjusted VNM is 100,000 and RVC is 60%. The adjustment must be documented.
Traps
Using ex-works instead of FOB; counting freight twice; using purchase price when the rule requires customs value; mixing build-up and build-down inputs; rounding before comparing to the threshold; ignoring currency conversion rules.