Global sourcing using local content tariff rules

Trade globalization has brought a surge in Free Trade Agreements (FTAs). Although trade agreements have been studied extensively from the economic point of view, there is very little operations management literature on the effect of FTAs at the firm level. In this work, we present a material sourcing model which can be used by companies. The model addresses local content or value-added requirements for trade concessions, and is motivated by the Japan-Singapore Economic Partnership Agreement FTA. We provide solution techniques for realistic problem sizes for the model which can be used by manufaturers located in any FTA country.

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