Global trade of finished goods as well as global sourcing of components and raw material is increasing. As a consequence, multinational corporations need to be aware of the benefits and drawbacks of global procurement and production when designing their supply chain. Thereby, custom duties can be an important driver. In this context free trade agreements and their value-content requirements are gaining importance. In this article the mechanisms of free trade agreements and the opportunities and risks for supply chain management are presented. In addition to the qualitative description of the effects of free trade agreements on the supply chain structure, an illustrative example based on the automotive industry is provided. The article concludes with an outlook on potential solution strategies.
