Regional Value Content (RVC) is a preferential origin test requiring that a specified percentage of the value of the finished good originate in the FTA region. RVC is used either as a standalone origin rule or in combination with a tariff shift requirement.
FTAs typically allow one or more of these calculation methods:
- Transaction Value Method: RVC = (Transaction Value − Value of Non-Originating Materials) ÷ Transaction Value × 100
- Net Cost Method: RVC = (Net Cost − Value of Non-Originating Materials) ÷ Net Cost × 100
- Build-Down Method (used in newer FTAs like USMCA): RVC = (Adjusted Value − Value of Non-Originating Materials) ÷ Adjusted Value × 100
- Build-Up Method: RVC = Value of Originating Materials ÷ Adjusted Value × 100
The required RVC percentage varies by FTA and product. USMCA's automotive rules use 75% RVC (net cost) for passenger vehicles and light trucks, phased in from the 62.5% NAFTA threshold. KORUS uses 35% build-up or 45% build-down. CAFTA-DR uses 35% or 45% depending on the calculation method.
USMCA's automotive RVC is paired with two additional requirements: Labor Value Content (40–45% of vehicle production must be done by workers earning at least $16/hour) and Steel and Aluminum Procurement (70% must be North American).
RVC calculations are detailed and require knowing:
- The HS classification and origin of every material
- Each non-originating material's customs value at the time of importation into the FTA region
- The transaction value or net cost of the finished good
Accumulation allows materials originating in one FTA party to be treated as originating when used in another FTA party — improving RVC calculations.