Will the WonderWidgets qualify for NAFTA treatment

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Reference no: EM132254717

A Mexican company imports specialty widget brackets from Poland and uses them to manufacture finished WonderWidgets that are shipped into Texas for distribution to Wal-Mart retail outlets across the United States. The widget brackets cost 50 cents each. The other components-all from internal Mexican sources-cost another 50 cents each. Other costs of production (excluding sales, marketing, and shipping) add another 50 cents, so that the total cost of production of the finished WonderWidgets is $1.50. The Mexican company sells the finished WonderWidgets to Wal-Mart for $2 each. According to NAFTA, widgets (including WonderWidgets) must be composed of at least 68% regional value content under the net cost method or 73% regional value content under the transaction value method. Will the WonderWidgets qualify for NAFTA treatment under either method? Why (or why not)? What difference would it probably make whether they qualify or not?

Reference no: EM132254717

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