calendar year, on which the Agreement enters 
into force and ending on December 31 of that 
calendar year; and 
(B) the terms ‘‘year 2 of the Agreement’’, 
‘‘year 3 of the Agreement’’, ‘‘year 4 of the 
Agreement’’, ‘‘year 5 of the Agreement’’, ‘‘year 
6 of the Agreement’’, ‘‘year 7 of the Agree-
ment’’, ‘‘year 8 of the Agreement’’, and ‘‘year 
9 of the Agreement’’ mean the second, third, 
fourth, fifth, sixth, seventh, eighth, and ninth 
calendar years, respectively, in which the Agree-
ment is in force. 
SEC. 202. RULES OF ORIGIN. 
(a) APPLICATION
AND INTERPRETATION.—In this 
section: 
(1) TARIFF
CLASSIFICATION.—The basis for 
any tariff classification is the HTS. 
(2) REFERENCE
TO
HTS.—Whenever in this 
section there is a reference to a chapter, heading, or 
subheading, such reference shall be a reference to a 
chapter, heading, or subheading of the HTS. 
(3) COST OR VALUE.—Any cost or value re-
ferred to in this section shall be recorded and main-
tained in accordance with the generally accepted ac-
counting principles applicable in the territory of the 
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country in which the good is produced (whether 
Korea or the United States). 
(b) ORIGINATING GOODS.—For purposes of this Act 
and for purposes of implementing the preferential tariff 
treatment provided for under the Agreement, except as 
otherwise provided in this section, a good is an originating 
good if— 
(1) the good is a good wholly obtained or pro-
duced entirely in the territory of Korea, the United 
States, or both; 
(2) the good— 
(A) is produced entirely in the territory of 
Korea, the United States, or both, and— 
(i) each of the nonoriginating mate-
rials used in the production of the good 
undergoes an applicable change in tariff 
classification specified in Annex 4-A or 
Annex 6-A of the Agreement; or 
(ii) the good otherwise satisfies any 
applicable regional value-content or other 
requirements specified in Annex 4-A or 
Annex 6-A of the Agreement; and 
(B) satisfies all other applicable require-
ments of this section; or 
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(3) the good is produced entirely in the terri-
tory of Korea, the United States, or both, exclusively 
from materials described in paragraph (1) or (2). 
(c) REGIONAL VALUE-CONTENT.— 
(1) IN GENERAL.—For purposes of subsection 
(b)(2), the regional value-content of a good referred 
to in Annex 6-A of the Agreement, except for goods 
to which paragraph (4) applies, shall be calculated 
by the importer, exporter, or producer of the good, 
on the basis of the build-down method described in 
paragraph (2) or the build-up method described in 
paragraph (3). 
(2) BUILD-DOWN METHOD.— 
(A) IN GENERAL.—The regional value-con-
tent of a good may be calculated on the basis 
of the following build-down method: 
AV¥VNM 
RVC = ————— × 100 
AV 
(B) DEFINITIONS.—In subparagraph (A): 
(i) RVC.—The term ‘‘RVC’’ means 
the regional value-content of the good, ex-
pressed as a percentage. 
(ii) AV.—The term ‘‘AV’’ means the 
adjusted value of the good. 
(iii) VNM.—The term ‘‘VNM’’ means 
the value of nonoriginating materials, other 
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than indirect materials, that are acquired 
and used by the producer in the production 
of the good, but does not include the value 
of a material that is self-produced. 
(3) BUILD-UP METHOD.— 
(A) IN GENERAL.—The regional value-con-
tent of a good may be calculated on the basis 
of the following build-up method: 
VOM 
RVC = ————— × 100 
AV 
(B) DEFINITIONS.—In subparagraph (A): 
(i) RVC.—The term ‘‘RVC’’ means 
the regional value-content of the good, ex-
pressed as a percentage. 
(ii) AV.—The term ‘‘AV’’ means the 
adjusted value of the good. 
(iii) VOM.—The term ‘‘VOM’’ means 
the value of originating materials, other 
than indirect materials, that are acquired 
or self-produced, and used by the producer 
in the production of the good. 
(4) SPECIAL RULE FOR CERTAIN AUTOMOTIVE 
GOODS.— 
(A) IN GENERAL.—For purposes of sub-
section (b)(2), the regional value-content of an 
automotive good referred to in Annex 6-A of 
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the Agreement may be calculated by the im-
porter, exporter, or producer of the good on the 
basis of the build-down method described in 
paragraph (2), the build-up method described in 
paragraph (3), or the following net cost method: 
NC¥VNM 
RVC = ————— × 100 
NC 
(B) DEFINITIONS.—In subparagraph (A): 
(i) AUTOMOTIVE
GOOD.—The term 
‘‘automotive good’’ means a good provided 
for in any of subheadings 8407.31 through 
8407.34, subheading 8408.20, heading 
8409, or any of headings 8701 through 
8708. 
(ii) RVC.—The term ‘‘RVC’’ means 
the regional value-content of the auto-
motive good, expressed as a percentage. 
(iii) NC.—The term ‘‘NC’’ means the 
net cost of the automotive good. 
(iv) VNM.—The term ‘‘VNM’’ means 
the value of nonoriginating materials, other 
than indirect materials, that are acquired 
and used by the producer in the production 
of the automotive good, but does not in-
clude the value of a material that is self- 
produced. 
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(C) MOTOR VEHICLES.— 
(i) BASIS
OF
CALCULATION.—For 
purposes of determining the regional value- 
content under subparagraph (A) for an 
automotive good that is a motor vehicle 
provided for in any of headings 8701 
through 8705, an importer, exporter, or 
producer may average the amounts cal-
culated under the net cost formula con-
tained in subparagraph (A), over the pro-
ducer’s fiscal year— 
(I) with respect to all motor vehi-
cles in any one of the categories de-
scribed in clause (ii); or 
(II) with respect to all motor ve-
hicles in any such category that are 
exported to the territory of Korea or 
the United States. 
(ii) CATEGORIES.—A category is de-
scribed in this clause if it— 
(I) is the same model line of 
motor vehicles, is in the same class of 
motor vehicles, and is produced in the 
same plant in the territory of Korea 
or the United States, as the good de-
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scribed in clause (i) for which regional 
value-content is being calculated; 
(II) is the same class of motor 
vehicles, and is produced in the same 
plant in the territory of Korea or the 
United States, as the good described 
in clause (i) for which regional value- 
content is being calculated; or 
(III) is the same model line of 
motor vehicles produced in the terri-
tory of Korea or the United States as 
the good described in clause (i) for 
which regional value-content is being 
calculated. 
(D) OTHER
AUTOMOTIVE
GOODS.—For 
purposes of determining the regional value-con-
tent under subparagraph (A) for automotive 
materials provided for in any of subheadings 
8407.31 
through 
8407.34, 
in 
subheading 
8408.20, or in heading 8409, 8706, 8707, or 
8708, that are produced in the same plant, an 
importer, exporter, or producer may— 
(i) average the amounts calculated 
under the net cost formula contained in 
subparagraph (A) over— 
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