CUSMA Rules of Origin Regulations (SOR/2020-155)

Marginal note:Treatment of recovered materials used in production of remanufactured good

• 4 (1) A recovered material derived in the territory of one or more of the CUSMA countries is treated as originating provided that

  • (a) it is the result of a disassembly process of a used good into individual parts;

  • (b) it has undergone certain processing such as cleaning, inspection, testing or other improvement processing to ensure sound working condition; and

  • (c) it is used in the production of and incorporated into a remanufactured good.

• Marginal note:Recovered material not used in remanufactured good

  (2) In the case that the recovered material is not used or incorporated in the production of a remanufactured good, it is originating only if it satisfies the requirements of section 3 and it satisfies all other applicable requirements of these Regulations.

• Marginal note:Requirements of Schedule 1

  (3) A remanufactured good is originating in the territory of a CUSMA country only if it satisfies the applicable requirements established in Schedule 1 and satisfies all other applicable requirements of these Regulations.

• Marginal note:Examples

  (4) Each of the following examples is an “Example” as referred to in subsection 1(4).

  • Example 1:

    In July 2023, Producer A located in a CUSMA country manufactures water pumps of subheading 8413.30 for use in automotive engines. In addition to selling new water pumps, Producer A also sells water pumps that incorporate used parts.

    To obtain the used parts, Producer A disassembles used water pumps in a CUSMA country and cleans, inspects, and tests the individual parts. Accordingly, these parts qualify as recovered materials.

    • The water pumps that Producer A manufactures incorporate the recovered materials, have the same life expectancy and performance as new water pumps and are sold with a warranty that is similar to the warranty for new water pumps. The water pumps therefore qualify as remanufactured goods and the recovered materials are treated as originating materials when determining whether the good qualifies as an originating good.
    • In this case, because the water pumps are for use in an automotive good, the provisions of Part 6 apply. Because the water pump is a part listed in Table B of Part 6, the RVC required is 70% under the net cost method or 80% under the transaction value method.
    • The producer chooses to calculate the regional value content of the good under the net cost method as follows:
    • Water pump net cost =$ 1,000
    • Value of originating recovered materials =$600
    • Value other originating materials =$20
    • Value of non-originating materials =$280

    RVC	=	(NC − VNM) ÷ NC × 100
    	=	($1,000 − $280) ÷ $1,000 × 100 = 72%

    The remanufactured water pumps are originating goods because their regional value content exceeds the 70% requirement by net cost method.

  • Example 2:

    Producer A, located in a CUSMA country, uses recovered materials derived in the territory of a CUSMA country in the production of self-propelled bulldozers classified in subheading 8429.11.

    In the production of the bulldozers, Producer A uses recovered engines classified in heading 84.07. The engines are recovered materials because they are disassembled from used bulldozers in a CUSMA country and then subject to cleaning, inspecting and technical tests to verify that they are in sound working condition.

    In addition to the recovered materials, other non-originating materials classified in subheading 8413.91 are also used in the production of the bulldozers.

    Producer A’s bulldozers are considered a remanufactured good because they are classified in a tariff provision set out in the definition of remanufactured good, are partially composed of recovered materials, have a similar life expectancy and perform the same as or similar to new self-propelled bulldozers and have a factory warranty similar to new self-propelled bulldozers.

    Once the recovered engines are used in the production of, and incorporated into, the remanufactured bulldozers, the recovered engines would be treated considered as originating materials for the purpose of determining if the remanufactured bulldozers are originating.

    The rule of origin set out in Schedule 1 for subheading 8429.11 specifies a change in tariff classification from any other subheading.

    In this case, because the recovered engines are treated as originating materials, and the non-originating materials, classified in subheading 8413.91, satisfy the requirements set out in Schedule 1, the remanufactured bulldozers are originating goods.