Formulas for Trade Agreement Qualification

Formulas are critical to qualifying your finished goods for trade agreements. Some formulas ship with GTM, some are part of the qualification logic, and some you may need to create.

Formulas that Ship with GTM

GTM ships with certain formulas to simplify the configuration. The formulas can be specified on certain Rules of Origin Rule Types including those related to HS Inclusion, Third Country Check, Fifty/Fifty, De Minimis, various Regional Value Content Methods And No Tariff Shift. 

For example, the Rules of Origin Rule Type called RVC – NC can be configured with a formula like REGIONAL VALUE CONTENT METHOD – NET COST:

• RVC_NC = ((NC-VNM)/NC)*100 where NC is the net cost and VNM is the value of non-originating material

Note: If you create your own formula for a Rules of Origin Rules Type, you can create it using formula expressions and add it to the appropriate trade agreement. When the qualification engine runs, it will first look to see if there is a formula specified on the trade agreement and use it. If not, it will use the formula associated with the rules of origin rule type.  

Formulas You Can Create

Following are some formulas that are shipped with GTM. You can reference them when creating your own formulas. The formulas shipped with GTM include:

• EXTENDED VALUE – This formula is used to calculate the extended cost of the finished good. This value is used in the qualification engine to calculate other values. A sample of this formula could be: 
  
  EV=MATERIAL_FG+RESOURCE_FG+MATERIAL_OVERHEAD_FG+OVERHEAD_FG+OUTSIDE_PROCESSING_FG where MATERIAL_FG, RESOURCE_FG, MATERIAL_OVERHEAD_FG and OVERHEAD_FG are values on the item, trade item structure, or trade transaction.
• COMPONENT EXTENDED VALUE – This is the formula that is used to calculate the extended cost of each component in the finished good. A sample of this formula could be:
  
  EV=((MATERIAL+RESOURCE+MATERIAL_OVERHEAD+OVERHEAD+OUTSIDE_PROCESSING)*QUANTITY) where MATERIAL, RESOURCE, MATERIAL_OVERHEAD, OVERHEAD and OUTSIDE_PROCESSING are values on the item, trade item structure component, or trade transaction.

Note: The formulas for Extended Value and Component Extended Value need to be added as reference numbers on the trade agreement. See the ‘Trade Agreement Configuration’ section for more detail.

Formulas that are Part of the Logic 

There are certain formulas that are part of the logic and depend on other data in GTM. GTM can calculate the following values within the engine: 

• Value of Originating Material
• Value of Non-originating Material
• No Tariff Shift
• De Minimis