Origin Calculation - Free Trade Agreement Management

Overview

There are more than 500 notified free trade agreements (FTAs) around the world to enhance trade among the participants and offer potential duty savings to companies yielding a competitive advantage. However, companies can only leverage such potential savings and competitive advantages by complying with a number of complex rules of origin and maintaining detailed documentation. FTAs should be used as a strategic management tool. This requires companies to establish processes for the calculation of the origin of goods which conform to applicable laws and auditing requirements in order to avoid possible fines and future unplanned costs.

This is where MIC's Origin Calculation System (MIC OCS) supports you! It provides the necessary tools for an optimized free trade agreement management along the entire process for a multitude of FTAs worldwide (e.g. CETA, NAFTA / USMCA, JEFTA, ASEAN, EU-MERCOSUR, etc.). Starting with automated solicitation of supplier declarations using an innovative supplier web portal followed by an optimized calculation of the origin of goods based on multi-level bills of materials, resulting in the creation of the appropriate certificate of origin documentation. Each process step is traceable via a complete audit trail. Changes in the originating status of the goods are reliably detected, affected goods are recalculated and thus compliance is maintained, all on an ongoing basis.

MIC OCS helps to ensure that you enjoy the benefits offered by FTAs in order to keep or improve your competitive position.

Efficient management of supplier declarations

Long-term and purchase order-based supplier declarations
Easy assignment and maintenance of suppliers as well as workflow-based allocation of suppliers to selected team members
Global standardization of the supplier declaration management process
Automatic collection of key information for supplier declarations through ERP/host system(s) integration
Manual and/or automated requests for supplier declarations - via web, e-mail or paper
Web portal for direct data entry and/or file uploads by the supplier, including the option for the supplier to expire or modify specific part origin information and to enter additional key information (e.g. export control classification, tariff number)
Automated, intelligent follow-up process that includes a reminder mechanism
Prioritization of supplier requests based on the part value and/or frequency of use in different bills of material

Compliant eligibility for free trade agreements

User accessible configuration of the specific rules of origin for individual FTAs
Automatic application of the tolerance (“de minimis”) for tariff shift rules
Option for use of accumulation rules, as allowed by the individual agreements
Multiple of FTAs (CETA, NAFTA / USMCA, JEFTA, ASEAN, EU-MERCOSUR, EU, Asia-Pacific region, South America, etc.) already in productive use for the origin calculation process
Support of the American Automobile Labelling Act (AALA)
Bundling of FTAs in the form of a master FTA (e.g. one EU master FTA for many similar EU FTAs) allowing one calculation to cover multiple agreements
Flexible and customized adjustment of rules of origin (e.g. increase of the percentage of the regional value rule for risk reduction)

Optimized origin of goods calculation

Top-down, bottom-up and accumulation (advantage calculation)
Determination of the preferential origin of goods as well as the origin under commercial law (for individual products or product ranges)
High performance calculation of the origin of goods for both flat and multi-level bill of materials
Configurable defaults and tolerance thresholds are available
Calculation of the threshold value (minimum sales price)
Support of min/max price logic
Cross-plant and cross-system calculation for the origin of goods

Automated issuance of supplier declarations for customers

Automatic re-calculation in the event of changes to supplier declarations, including reissuing documents when a change to originating status occurs
Transaction-based calculation for configurable bill of materials
Consideration of different validity periods for documents under different agreements

Reduction of manual data collection & process redundancy

Direct transfer of multi-level bills of materials from ERP systems as well as from engineering or production systems
Upload of supplier information, part data and prices directly from purchasing, ERP and/or warehouse management systems (e.g. SAP S/4HANA)
Integration with other MIC modules for full process functionality
Return interfaces of the calculation results to ERP systems for subsequent processes (e.g. invoice printing)
Preference copy solution for intra-company shipments

Detailed documentation

Detailed reports for each origin calculation
Search and analysis of non-certified products
Complete archive for audit purposes
Data & predictive analytics to identify cost saving opportunities
Manufacturing site and sourcing simulations to support cost optimization and competitive advantage

Benefits of optimized free trade agreement management