CE CE Free Trade Agreements & Preferential Programs 2

Question 1

Under USMCA, what is 'regional value content' (RVC) and how is it calculated?

Accepted Answer

The percentage of a product's value that must originate in the USMCA region, calculated using either the transaction value or net cost method

Answer

RVC requires that a specified percentage of a product's value come from North America; it can be calculated using the transaction value method or the net cost method depending on the product.

Question 2

What is the African Growth and Opportunity Act (AGOA) and how does it affect U.S. exporters?

Accepted Answer

A U.S. law granting eligible sub-Saharan African countries duty-free access to the U.S. market, not directly a benefit for U.S. exporters but creates commercial relationships

Answer

AGOA extends duty-free access to the U.S. for eligible African nations; while primarily benefiting African exporters, it fosters trade relationships and may include reciprocal market access benefits for U.S. exporters.

Question 3

What is 'cumulation' in FTA rules of origin and how can it benefit exporters?

Accepted Answer

It allows producers to count inputs from other FTA partner countries toward the origin content requirement, making it easier to qualify for preferences

Answer

Cumulation allows a product to incorporate materials or processing from multiple FTA partner countries and still count toward the origin threshold, giving manufacturers more sourcing flexibility.

Question 4

What is the U.S.-Korea Free Trade Agreement (KORUS FTA) and which sectors benefit most for U.S. exporters?

Accepted Answer

A bilateral FTA between the U.S. and South Korea eliminating most tariffs; U.S. agricultural, automotive, and manufactured goods exporters benefit significantly

Answer

KORUS FTA (effective 2012) eliminated tariffs on most U.S. goods entering South Korea, with significant gains for agricultural products, automotive parts, and industrial machinery exporters.

Question 5

What is 'tariff engineering' and is it legal under U.S. trade law?

Accepted Answer

Legally modifying a product's design or composition to achieve a lower tariff classification; it is legal if the changes are genuine

Answer

Tariff engineering—making genuine product modifications to achieve a more favorable tariff classification—is a legal tax planning strategy, provided the changes are real and not merely cosmetic fraud.

(CE) Certified Exporter Practice Test

(CE) Certified Exporter Practice Test

CE CE Free Trade Agreements & Preferential Programs 2