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  1. CUSMA Rules of Origin Regulations - SOR/2020-155 (SCHEDULE 6 : Value of Materials)
    CUSMA Rules of Origin Regulations

    [...]

    [...]

    • 2 (1) Except as otherwise provided in subsection (2), the transaction value of a material under paragraph 8(1)(b) of these Regulations is the price actually paid or payable for the material determined in accordance with section 3 and adjusted in accordance with section 4.

    • [...]

    • (4) The conditions or considerations referred to in paragraph (3)(b) include the following circumstances:

      • [...]

      • (c) the price actually paid or payable is established on the basis of a form of payment extraneous to the material, such as if the material is a semi-finished material that is provided by the seller to the producer on condition that the seller will receive a specified quantity of the finished material from the producer.

    • (5) For the purposes of paragraph (3)(b), conditions or considerations relating to the use of the material must not render the transaction value unacceptable, such as if the producer undertakes on the producer’s own account, even though by agreement with the seller, activities relating to the warranty of the material used in the production of a good.

    • (6) If objective and quantifiable data do not exist with regard to the additions required to be made to the price actually paid or payable under subsection 4(1), the transaction value cannot be determined under the provisions of subsection 2(1). For an illustration of this, a royalty is paid on the basis of the price actually paid or payable in a sale of a litre of a particular good that is produced by using a material that was purchased by the kilogram and made up into a solution. If the royalty is based partially on the purchased material and partially on other factors that have nothing to do with that material, such as when the purchased material is mixed with other ingredients and is no longer separately identifiable, or when the royalty cannot be distinguished from special financial arrangements between the seller and the producer, it would be inappropriate to add the royalty and the transaction value of the material could not be determined. However, if the amount of the royalty is based only on the purchased material and can be readily quantified, an addition to the price actually paid or payable can be made and the transaction value can be determined.

    • [...]

    • (2) Activities undertaken by the producer on the producer’s own account, other than those for which an adjustment is provided in section 4, must not be considered to be an indirect payment, even though the activities might be regarded as being for the benefit of the seller.

    • 4 (1) In determining the transaction value of the material, the following must be added to the price actually paid or payable:

      • [...]

      • (c) the royalties related to the material, other than charges with respect to the right to reproduce the material in the territory of the CUSMA country in which the producer is located that the producer must pay directly or indirectly as a condition of sale of the material to the extent that such royalties are not included in the price actually paid or payable; and

    • [...]

    • (4) Additions must not be made to the price actually paid or payable for the purpose of determining the transaction value except as provided in this section.

    • [...]

    • (9) Except as provided in subsections (11) and (12), the value of the elements referred to in subparagraphs (1)(b)(ii) to (iv) is

      [...]

    • 5 (1) If there is no transaction value under subsection 2(2) or the transaction value is unacceptable under subsection 2(3), the value of the material, referred to in subparagraph 8(1)(b)(ii) of these Regulations, is the transaction value of identical materials sold, at or about the same time as the material being valued was shipped to the producer, to a buyer located in the same country as the producer.

    • (2) In applying this section, the transaction value of identical materials in a sale at the same commercial level and in substantially the same quantity of materials as the material being valued must be used to determine the value of the material. If no such sale is found, the transaction value of identical materials sold at a different commercial level or in different quantities, adjusted to take into account the differences attributable to the commercial level or quantity, must be used, provided that such adjustments can be made on the basis of evidence that clearly establishes that the adjustment is reasonable and accurate, whether the adjustment leads to an increase or a decrease in the value.

    • (3) A condition for an adjustment under subsection (2) to take into account different commercial levels or different quantities is that the adjustment be made only on the basis of evidence that clearly establishes that the adjustment is reasonable and accurate. For an illustration of this, a bona fide price list contains prices for different quantities. If the material being valued consists of a shipment of 10 units and the only identical materials for which a transaction value exists involved a sale of 500 units, and it is recognized that the seller grants quantity discounts, the required adjustment may be accomplished by resorting to the seller’s bona fide price list and using the price applicable to a sale of 10 units. This does not require that sales had to have been made in quantities of 10 as long as the price list has been established as being bona fide through sales at other quantities. In the absence of such an objective measure, however, the determination of a value under this section is not appropriate.

    • 6 (1) If there is no transaction value under subsection 2(2) or the transaction value is unacceptable under subsection 2(3), and the value of the material cannot be determined under section 5, the value of the material, referred to in subparagraph 8(1)(b)(ii) of these Regulations is the transaction value of similar materials sold, at or about the same time as the material being valued was shipped to the producer, to a buyer located in the same country as the producer.

    • (2) In applying this section, the transaction value of similar materials in a sale at the same commercial level and in substantially the same quantity of materials as the material being valued must be used to determine the value of the material. If no such sale is found, the transaction value of similar materials sold at a different commercial level or in different quantities, adjusted to take into account the differences attributable to the commercial level or quantity, must be used, provided that such adjustments can be made on the basis of evidence that clearly establishes that the adjustment is reasonable and accurate, whether the adjustment leads to an increase or a decrease in the value.

    • (3) A condition for an adjustment under subsection (2) to take into account different commercial levels or different quantities is that the adjustment be made only on the basis of evidence that clearly establishes that the adjustment is reasonable and accurate. For an illustration of this, a bona fide price list contains prices for different quantities. If the material being valued consists of a shipment of 10 units and the only similar materials for which a transaction value exists involved a sale of 500 units, and it is recognized that the seller grants quantity discounts, the required adjustment may be accomplished by resorting to the seller’s bona fide price list and using the price applicable to a sale of 10 units. This does not require that sales had to have been made in quantities of 10 as long as the price list has been established as being bona fide through sales at other quantities. In the absence of such an objective measure, however, the determination of a value under this section is not appropriate.

    [...]

    • 8 (1) Under this section, if identical materials or similar materials are sold in the territory of the CUSMA country in which the producer is located, in the same condition as the material was in when received by the producer, the value of the material, referred to in subparagraph 8(1)(b)(ii) of these Regulations must be based on the unit price at which those identical materials or similar materials are sold, in the greatest aggregate quantity by the producer or, if the producer does not sell those identical materials or similar materials, by a person at the same commercial level as the producer, at or about the same time as the material being valued is received by the producer, to persons located in that territory who are not related persons to the seller, subject to deductions for the following:

      • (a) either the amount of commissions usually earned or the amount generally reflected for profit and general expenses, in connection with sales, in the territory of that CUSMA country, of materials of the same class or kind as the material being valued; and

    • (2) If neither identical materials nor similar materials are sold at or about the same time the material being valued is received by the producer, the value must, subject to the deductions provided for under subsection (1), be based on the unit price at which identical materials or similar materials are sold in the territory of the CUSMA country in which the producer is located, in the same condition as the material was in when received by the producer, at the earliest date within 90 days after the day on which the material being valued was received by the producer.

    • (3) For the purposes of subsection (1) unit price at which those identical materials or similar materials are sold, in the greatest aggregate quantity means the price at which the greatest number of units is sold in sales between persons who are not related persons. For an illustration of this, materials are sold from a price list which grants favourable unit prices for purchases made in larger quantities.

      [...]

      As another illustration of this, two sales occur. In the first sale 500 units are sold at a price of 95 currency units each. In the second sale 400 units are sold at a price of 90 currency units each. In this illustration, the greatest number of units sold at a particular price is 500; therefore, the unit price in the greatest aggregate quantity is 95.

    • [...]

    • (5) The amount generally reflected for profit and general expenses referred to in paragraph (1)(a) must be taken as a whole. The figure for the purpose of deducting an amount for profit and general expenses must be determined on the basis of information supplied by or on behalf of the producer unless the figures provided by the producer are inconsistent with those usually reflected in sales, in the country in which the producer is located, of materials of the same class or kind as the material being valued. If the figures provided by the producer are inconsistent with those figures, the amount for profit and general expenses must be based on relevant information other than that supplied by or on behalf of the producer.

    • [...]

    • (7) In determining either the commissions usually earned or the amount generally reflected for profit and general expenses under this section, the question as to whether certain materials are materials of the same class or kind as the material being valued must be determined on a case-by-case basis with reference to the circumstances involved. Sales in the country in which the producer is located of the narrowest group or range of materials of the same class or kind as the material being valued, for which the necessary information can be provided, must be examined. For the purposes of this section, materials of the same class or kind includes materials imported from the same country as the material being valued as well as materials imported from other countries or acquired within the territory of the CUSMA country in which the producer is located.

    • 9 (1) Under this section, the value of a material, referred to in subparagraph 8(1)(b)(ii) of these Regulations, is the sum of

      • (a) the cost or value of the materials used in the production of the material being valued as determined on the basis of the costs that are recorded on the books of the producer of the material,

      • (b) the cost of producing the material being valued as determined on the basis of the costs that are recorded on the books of the producer of the material, and

      • (c) an amount for profit and general expenses equal to that usually reflected in sales

        • (i) if the material being valued is imported by the producer into the territory of the CUSMA country in which the producer is located, to persons located in the territory of the CUSMA country in which the producer is located by producers of materials of the same class or kind as the material being valued who are located in the country in which the material is produced, and

        • (ii) if the material being valued is acquired by the producer from another person located in the territory of the CUSMA country in which the producer is located, to persons located in the territory of the CUSMA country in which the producer is located by producers of materials of the same class or kind as the material being valued who are located in the country in which the producer is located.

    • (2) The value referred to in subsection (1) must include the following costs, to the extent they are not already included under paragraph (1)(a) or (b) and, provided that the elements are supplied directly or indirectly to the producer of the material being valued free of charge or at a reduced cost for use in the production of that material:

      • (a) the value of the elements referred to in subparagraph 4(1)(b)(i) as determined in accordance with subsections 4(6) and (7); and

      • (b) the value of the elements referred to in subparagraphs 4(1)(b)(ii) to (iv) as determined in accordance with subsection 4(9) and reasonably allocated to the material in accordance with subsection 4(13).

    • (3) For the purposes of paragraphs (1)(a) and (b), if the costs recorded on the books of the producer of the material relate to the production of other goods and materials as well as to the production of the material being valued, the costs referred to in paragraphs (1)(a) and (b) with respect to the material being valued must be those costs recorded on the books of the producer of the material that can be reasonably allocated to that material in accordance with Schedule 5.

    • (4) The amount for profit and general expenses referred to in paragraph (1)(c) must be determined on the basis of information supplied by or on behalf of the producer of the material being valued unless the profit and general expenses figures that are supplied with that information are inconsistent with those usually reflected in sales by producers of materials of the same class or kind as the material being valued who are located in the country in which the material is produced or the producer is located, as the case may be. The information supplied must be prepared in a manner consistent with Generally Accepted Accounting Principles of the country in which the material being valued is produced. If the material is produced in the territory of a CUSMA country, the information must be prepared in accordance with the Generally Accepted Accounting Principles set out in the publications listed for that territory in Schedule 10.

    • [...]

    • (6) For the purposes of subsection (4), the amount for profit and general expenses must be taken as a whole. If, in the information supplied by or on behalf of the producer of a material, the profit figure is low and the general expenses figure is high, the profit and general expense figures taken together may nevertheless be consistent with those usually reflected in sales of materials of the same class or kind as the material being valued. If the producer of a material can demonstrate that it is taking a nil or low profit on its sales of the material because of particular commercial circumstances, its actual profit and general expense figures must be taken into account, provided that the producer of the material has valid commercial reasons to justify them and its pricing policy reflects usual pricing policies in the branch of industry concerned. Such a situation might occur if producers have been forced to lower prices temporarily because of an unforeseeable drop in demand or if the producers sell the material to complement a range of materials and goods being produced in the country in which the material is sold and accept a low profit to maintain competitiveness. This is also the case where a material is being launched and the producer accepts a nil or low profit to offset high general expenses associated with the launch.

    • (7) If the figures for the profit and general expenses supplied by or on behalf of the producer of the material are inconsistent with those usually reflected in sales of materials of the same class or kind as the material being valued that are made by other producers in the country in which that material is sold, the amount for profit and general expenses may be based on relevant information other than that supplied by or on behalf of the producer of the material.

    • (8) The question as to whether certain materials are of the same class or kind as the material being valued is determined on a case-by-case basis with reference to the circumstances involved. For the purpose of determining the amount for profit and general expenses usually reflected under the provisions of this section, sales of the narrowest group or range of materials of the same class or kind as the material being valued, for which the necessary information can be provided, must be examined. For the purposes of this section, the materials of the same class or kind must be from the same country as the material being valued.

    • [...]

    • (3) To the greatest extent possible, the value of the material determined under this section must be based on the methods of valuation set out in sections 2 to 9, but a reasonable flexibility in the application of such methods would be in conformity with the aims and provisions of this section. For an illustration of this, under section 5, the requirement that the identical materials should be sold at or about the same time as the material being valued is shipped to the producer could be flexibly interpreted. Similarly, identical materials produced in a country other than the country in which the material is produced could be the basis for determining the value of the material or the value of identical materials already determined under section 8 could be used. For another illustration, under section 6, the requirement that the similar materials should be sold at or about the same time as the material being valued is shipped to the producer could be flexibly interpreted. Likewise, similar materials produced in a country other than the country in which the material is produced could be the basis for determining the value of the material or the value of similar materials already determined under the provisions of section 8 could be used. For a further illustration, under section 8, the 90-day requirement could be administered flexibly.


  2. CUSMA Rules of Origin Regulations - SOR/2020-155 (Section 14)
    CUSMA Rules of Origin Regulations
    Marginal note:Roll-up of originating materials

    • 14 (1) The VNM used by the producer in the production of a passenger vehicle, light truck and parts thereof must not, for the purposes of calculating the RVC of the good, include the VNM used to produce originating materials that are subsequently used in the production of the good. For greater certainty, if the production undertaken on non-originating materials results in the production of a good that qualifies as originating, no account shall be taken of the non-originating material contained therein if that good is used in the subsequent production of another good.

    • Marginal note:Core parts listed in Table A.1

      (2) A part listed in Table A.1 that is for use as original equipment in the production of a passenger vehicle or light truck, except for batteries of subheading 8507.60 that are used as the primary source of electrical power for the propulsion of an electric passenger vehicle or an electric light truck, is originating only if it satisfies the RVC requirement in this section, section 13 or Schedule 1.

    • Marginal note:Batteries

      (3) A battery of subheading 8507.60 that is used as the primary source of electrical power for the propulsion of an electric passenger vehicle or an electric light truck is originating if it meets the applicable requirements set out in this section or Schedule 1.

    • [...]

    • Marginal note:Super-core part

      (10) For the purpose of subsections (4) to (6) and as an alternative to determining the VNM based on the method in subsection (7), the RVC of the parts listed in column 1 of Table A.2 may be determined, at the choice of the vehicle producer or exporter, by treating these parts as a single part, which may be referred to as a super-core part, using the sum of the net cost of each part listed under column 1 of Table A.2 , and, when calculating the VNM, by taking into consideration

      [...]

    • Marginal note:Further production

      (11) If a non-originating material used in the production of a component listed in column 2 of Table A.2 undergoes further production such that it satisfies the requirements of these Regulations, the component is treated as originating when determining the originating status of the subsequently produced part listed in column 1 of Table A.2, regardless of whether that component was produced by the producer of the part.

    • Marginal note:Averaging

      (12) The RVC requirements for the parts listed in the left hand column 1 of Table A.2 may be averaged in accordance with section 16. Such an average may be calculated using the average RVC for each individual parts category in column 1 of Table A.2, or by calculating the average RVC for all parts in column 1 of Table A.2 by treating them as a single part, defined as a super-core. Once this average, by either methodology, exceeds the thresholds set out in subsection (13), all parts used to calculate this average are considered originating.

    • Marginal note:RVC thresholds — Tables A.1 and A.2

      (13) For the purposes of subsections (2), (7) and (10), the following RVC thresholds apply to parts for use as original equipment listed under Table A.1 and column 1 of Table A.2:

      [...]

    • [...]

    • Marginal note:RVC thresholds — Table B

      (15) For the purposes of subsection (14), the following RVC thresholds apply to parts for use as original equipment listed under Table B:

      [...]

    • [...]

    • Marginal note:RVC thresholds — Table C

      (17) For the purposes of subsection (16), the following RVC thresholds apply to parts for use as original equipment listed under Table C:

      [...]


  3. CUSMA Rules of Origin Regulations - SOR/2020-155 (Section 13)
    CUSMA Rules of Origin Regulations
    Marginal note:Product-specific rules of origin

    13 Except as provided for in section 19, the product-specific rule of origin for a good of headings 87.01 through 87.08 is set out in the following table:

    Harmonized system 2012 Description
    87.06

    • (1) For a good of heading 87.06 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For a good of heading 87.06 for use as original equipment in a heavy truck, no required change in tariff classification provided there is an RVC under the net cost method of not less than

      [...]

    • (3) For any other good of heading 87.06 for use as original equipment in any other vehicle or as an aftermarket part, no required change in tariff classification provided there is an RVC of not less than 60% under the net cost method.
    87.07

    • (1) For a good of heading 87.07 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For a good of heading 87.07 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of heading 87.07 for use as original equipment in any other vehicle or as an aftermarket part,

      [...]
    8708.10

    • (1) For a good of subheading 8708.10 for use as original equipment in a passenger vehicle or light truck,

      [...]

    • (2) For a good of heading 87.10 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.10 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.21

    • (1) For a good of subheading 8708.21 for use as original equipment in a passenger vehicle or light truck,

      [...]

    • (2) For a good of heading 87.21 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.21 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.29

    • (1) For a body stamping of subheading 8708.29 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification to a body stamping of subheading 8708.29, provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For any other good of subheading 8708.29 for use as original equipment in a passenger vehicle or light truck,

      [...]

    • (3) For a good of subheading 87.29 for use as original equipment in a heavy truck,

      [...]

    • (4) For any other good of subheading 8708.29 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.30

    • (1) For a good of subheading 8708.30 for use as original equipment in a passenger vehicle or light truck

      [...]

    • (2) For a good of heading 87.30 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.30 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.40

    • (1) For a good of subheading 8708.40 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification to subheading 8708.40, provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For a good of subheading 8708.40 for use as original equipment in a heavy truck

      [...]

    • (3) For a good of subheading 8708.40 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.50

    • (1) For a good of subheading 8708.50 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification to subheading 8708.50, provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For a good of subheading 8708.50 for use as original equipment in a heavy truck,

      [...]

    • (3) For a good of subheading 8708.50 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.70

    • (1) For a good of subheading 8708.70 for use as original equipment in a passenger vehicle or light truck,

      [...]

    • (2) For a good of heading 87.70 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.70 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.80

    • (1) For a good of subheading 8708.80 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification to subheading 8708.80, provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For a good of subheading 8708.80 for use as original equipment in a heavy truck

      [...]

    • (3) For any other good of subheading 8708.80 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.91

    • (1) For a good of subheading 8708.91 for use as original equipment in a passenger vehicle or light truck,

      [...]

    • (2) For a good of heading 8708.91 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.91 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.92

    • (1) For a good of subheading 8708.92 for use as original equipment in a passenger vehicle or light truck,

      [...]

    • (2) For a good of subheading 8708.92 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.92 for use as original equipment in any other vehicle or as an aftermarket part,

      [...]
    8708.93

    • (1) For a good of subheading 8708.93 for use as original equipment in a passenger vehicle or light truck

      [...]

    • (2) For a good of heading 8708.93 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.93 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.94

    • (1) For a good of subheading 8708.94 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification to subheading 8708.94, provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For a good of subheading 8708.94 for use as original equipment in a heavy truck,

      [...]

    • (5) For any other good of subheading 8708.94 for use as original equipment in any other vehicle or as an aftermarket part

      [...]
    8708.95

    • (1) For a good of subheading 8708.95 for use as original equipment in a passenger vehicle or light truck

      [...]

    • (2) For a good of heading 8708.95 for use as original equipment in a heavy truck,

      [...]

    • (3) For any other good of subheading 8708.95 for use as original equipment in any other vehicle or as an aftermarket part,

      [...]
    8708.99

    • (1) For a chassis frame of subheading 8708.99 for use as original equipment in a passenger vehicle or light truck, no required change in tariff classification to subheading 8708.99, provided there is an RVC under the net cost method of not less than

      [...]

    • (2) For a chassis of subheading 8708.99 for use as original equipment in a heavy truck, no required change in tariff classification to subheading 8708.99 provided there is an RVC under the net cost method of not less than

      [...]

    • (3) For any other good of subheading 8708.99 for use as original equipment in a passenger vehicle or light truck,
    8708.99.aa

    • (4) For any other good of subheading 8708.99 for use as original equipment in a heavy truck,

      [...]
    8708.99

    • [...]

    • (5) For any other good of subheading 8708.99 for use as original equipment in any other vehicle or as an aftermarket part

  4. CUSMA Rules of Origin Regulations - SOR/2020-155 (Section 9)
    CUSMA Rules of Origin Regulations
    Marginal note:Accumulation

    • 9 (1) Subject to subsections (2) to (5),

      • [...]

      • (b) an originating good or material of one or more of the CUSMA countries is considered as originating in the territory of another CUSMA country if it is used as a material in the production of a good in the territory of that other CUSMA country; and

    • [...]

    • (7) For the purposes of this section,

      • [...]

      • (c) any information set out in a statement referred to in any of subsections (2) to (5) that concerns the value of materials or costs must be in the same currency as the currency of the country in which the person who provided the statement is located.

    • Marginal note:Examples

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

      • [...]

        Producer A, located in CUSMA country A, imports unfinished bearing rings provided for in subheading 8482.99 into CUSMA country A from the territory of a non-CUSMA country. Producer A further processes the unfinished bearing rings into finished bearing rings, which are of the same subheading. The finished bearing rings of Producer A do not satisfy an applicable change in tariff classification and therefore do not qualify as originating goods.

        The net cost of the finished bearing rings (per unit) is calculated as follows:

        [...]

        Situation A

        Producer B does not choose to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. The net cost of the bearings (per unit) is calculated as follows:

        [...]

        Situation B

        Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. Producer A provides a statement described in paragraph (2)(a) to Producer B. The net cost of the bearings (per unit) is calculated as follows:

        [...]

        Situation C

        Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. Producer A provides to Producer B a statement described in paragraph (2)(b) that specifies an amount equal to the net cost minus the value of non-originating materials used to produce the finished bearing rings ($1.40 - $0.75 = $0.65). The net cost of the bearings (per unit) is calculated as follows:

        [...]

        Situation D

        Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. Producer A provides to Producer B a statement described in paragraph (2)(b) that specifies an amount equal to the value of other product costs used in the production of the finished bearing rings ($0.35). The net cost of the bearings (per unit) is calculated as follows:

        [...]

        Situation E

        Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. Producer A provides to Producer B a signed statement described in subsection (3) that specifies the value of non-originating materials used in the production of the finished bearing rings ($0.75). Producer B chooses to calculate the regional value content of the bearings under the transaction value method. The regional value content of the bearings (per unit) is calculated as follow:

        [...]

      • [...]

        However, Producer B can choose to accumulate the production of Producer A. The rule for heading 52.08, under which the cotton fabric is classified, does not exclude a change from heading 52.03, under which carded or combed cotton is classified. Therefore, under subsection (1), the change from carded or combed cotton provided for in heading 52.03 to the woven fabric of cotton provided for in heading 52.08 satisfies the applicable change of tariff classification for heading 52.08. The woven fabric of cotton is considered as an originating good.

        Producer B, in order to choose to accumulate Producer A’s production, must have a statement described in subparagraph (7)(a)(ii).


  5. CUSMA Rules of Origin Regulations - SOR/2020-155 (Section 8)
    CUSMA Rules of Origin Regulations
    Marginal note:Value of material used in production

    • 8 (1) Except as otherwise provided for non-originating materials used in the production of a good referred to in section 14 or subsection 15(1), and except in the case of indirect materials, intermediate materials and packing materials and containers, for the purpose of calculating the regional value content of a good and for the purposes of subsections 5(1) and (4), the value of a material that is used in the production of the good is

      • (a) except as otherwise provided in subsection (4), if the material is imported by the producer of the good into the territory of the CUSMA country in which the good is produced, the transaction value of the material at the time of importation, including the costs incurred in the international shipment of the material;

      • (b) if the material is acquired by the producer of the good from another person located in the territory of the CUSMA country in which the good is produced

        • [...]

        • (ii) the value as determined for an imported material in paragraph (a), or

      • (c) for a material that is self-produced

        • [...]

        • (ii) an amount equivalent to the profit added in the normal course of trade or equal to the profit that is usually reflected in the sale of goods of the same class or kind as the self-produced material that is being valued if no self-produced material that has been used in its production has been valued including the amount equivalent or equal to the profit according to this paragraph.

    • [...]

    • Marginal note:Designation of self-produced material as intermediate material

      (6) For the purpose of calculating the regional value content of a good, the producer of the good may designate as an intermediate material any self-produced material that is used in the production of the good, provided that, if an intermediate material is subject to a regional value content requirement, no other self-produced material that is subject to a regional value content requirement and is incorporated into that intermediate material is also designated by the producer as an intermediate material.

    • (7) For the purposes of subsection (6),

      • (a) in order to qualify as an originating material, a self-produced material that is designated as an intermediate material must qualify as an originating material under these Regulations;

      • (b) the designation of a self-produced material as an intermediate material is to be made solely at the choice of the producer of that self-produced material; and

      • (c) except as otherwise provided in subsection 9(6), the proviso set out in subsection (6) does not apply with respect to an intermediate material used by another producer in the production of a material that is subsequently acquired and used in the production of a good by the producer referred to in subsection (6).

    • [...]

    • Marginal note:Rescission of designation

      (10) If a producer of a good designates a self-produced material as an intermediate material under subsection (6) and the customs administration of a CUSMA country into which the good is imported determines during a verification of origin of the good that the intermediate material is a non-originating material and notifies the producer of this in writing before the written determination of whether the good qualifies as an originating good, the producer may rescind the designation in which case the regional value content of the good is to be calculated as though the self-produced material were not so designated.

    • Marginal note:Effect of rescission

      (11) A producer of a good who rescinds a designation under subsection (10) may, not later than 30 days after the day on which the customs administration referred to in subsection (10) notifies the producer in writing that the self-produced material is a non-originating material, designate as an intermediate material another self-produced material that is incorporated into the good, subject to the proviso set out in subsection (6).

    • Marginal note:Second rescission

      (12) If a producer of a good designates another self-produced material as an intermediate material under subsection (6) and the customs administration referred to in subsection (10) determines during the verification of origin of the good that that self-produced material is a non-originating material,

      • (a) the producer may rescind the designation in which case the regional value content of the good is to be calculated as though the self-produced material were not so designated; and

      • (b) the producer may not designate another self-produced material that is incorporated into the good as an intermediate material.

    • [...]

    • Marginal note:Value of packaging materials and containers — cases where taken into account

      (15) If packaging materials and containers are classified under the Harmonized System with the good that is packaged therein and that good is subject to a regional value content requirement, the value of those packaging materials and containers must be taken into account as originating materials or non-originating materials, as the case may be, for the purpose of calculating the regional value content of the good.

    • Marginal note:Packaging materials and containers — self-produced

      (16) For the purposes of subsection (15), if packaging materials and containers are self-produced materials, the producer may choose to designate those materials as intermediate materials under subsection (6).

    • [...]

    • Marginal note:Claim

      (20) An importer may claim that a fungible material or good is originating if the importer, producer or exporter has physically segregated each fungible material or good so as to allow its specific identification.

    • Marginal note:Choice of inventory management method

      (21) If fungible materials referred to in paragraph (18)(a) and fungible goods referred to in paragraph (18)(b) are withdrawn from the same inventory, the inventory management method used for the materials must be the same as the inventory management method used for the goods, and if the averaging method is used, the respective averaging periods for fungible materials and fungible goods are to be used.

    • [...]

    • Marginal note:Value for regional value content

      (25) If a good is subject to a regional value content requirement, the value of accessories, spare parts, tools, or instructional or other information materials is to be taken into account as originating materials or non-originating materials, as the case may be, in calculating the regional value content of the good.

    • Marginal note:Designation

      (26) For the purposes of subsection (25), if accessories, spare parts, tools or instructional or other information materials are self-produced materials, the producer may choose to designate those materials as intermediate materials under subsection (6).

    • [...]

    • Marginal note:Examples illustrating the provisions on materials

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

      • [...]

      • [...]

        The producer designates the chainring as an intermediate material and determines that, because all of the non-originating materials that are used in the production of the chainring undergo an applicable change in tariff classification set out in Schedule 1, the chainring would, under subsection 3(2) qualify as an originating material. The cost of the non-originating materials used in the production of the chainring is therefore not included in the value of non-originating materials that are used in the production of the bicycle for the purpose of determining the regional value content of the bicycle. Because the chainring is designated as an intermediate material, the total cost of the chainring, which is $10.60, is treated as the cost of originating materials for the purpose of calculating the regional value content of the bicycle. The total cost of the bicycle is determined in accordance with the following figures:

        [...]

      • [...]

        The ability to designate intermediate materials helps to put the vertically integrated producer who is self-producing materials that are used in the production of a good on par with a producer who is purchasing materials and valuing those materials in accordance with subsection (1). The following situations demonstrate how this is achieved:

        Situation A

        A producer located in a CUSMA country produces a bicycle that is subject to a regional value content requirement of 50% under the net cost method. The bicycle satisfies all other applicable requirements of these Regulations. The producer purchases a bicycle frame, which is used in the production of the bicycle, from a supplier located in a CUSMA country. The value of the frame determined in accordance with subsection (1) is $11.00. The frame is an originating material. All other materials used in the production of the bicycle are non-originating materials. The net cost of the bicycle is determined as follows:

        [...]

        The regional value content of the bicycle is calculated as follows:

        The regional value content of the bicycle is 76.5% and the bicycle, therefore, qualifies as an originating good.

        Situation B

        [...]

        The producer does not designate the bicycle frame as an intermediate material under subsection (6). The net cost of the bicycle is calculated as follows:

        Costs of the bicycle frame (not designated as an intermediate material) ($) Additional costs to produce the bicycle ($) Total ($)

        The regional value content of the bicycle is calculated as follows:

        The regional value content of the bicycle is 42.9% and the bicycle, therefore, does not qualify as an originating good.

        Situation C

        [...]

        The producer designates the frame as an intermediate material under subsection (6). The frame qualifies as an originating material under subsection 3(2). Therefore, the value of non-originating materials used in the production of the frame is not included in the value of non-originating materials for the purpose of calculating the regional value content of the bicycle. The net cost of the bicycle is calculated as follows:

        Costs of the bicycle frame (designated as an intermediate material) ($) Additional costs to produce the bicycle ($) Total ($)

        The regional value content of the bicycle is calculated as follows:

        The regional value content of the bicycle is 76.1% and the bicycle, therefore, qualifies as an originating good.

      • [...]

        Producer A, located in CUSMA country A, produces switches. In order for the switches to qualify as originating goods, Producer A designates subassemblies of the switches as intermediate materials. The subassemblies are subject to a regional value content requirement. They satisfy that requirement and qualify as originating materials. The switches are also subject to a regional value content requirement and, with the subassemblies designated as intermediate materials, are determined to have a regional value content of 65%.

        Producer A sells the switches to Producer B, located in CUSMA country B, who uses them to produce switch assemblies that are used in the production of Good B. The switch assemblies are subject to a regional value content requirement. Producers A and B are not accumulating their production within the meaning of section 9. Producer B is therefore able, under subsection (6), to designate the switch assemblies as intermediate materials.

        If Producers A and B were accumulating their production within the meaning of section 9, Producer B would be unable to designate the switch assemblies as intermediate materials because the production of both producers would be considered to be the production of one producer.

      • Example 5: Single producer and successive designations of materials subject to a regional value content requirement as intermediate materials

        Producer A, located in a CUSMA country, produces Material X and uses Material X in the production of Good B. Material X qualifies as an originating material because it satisfies the applicable regional value content requirement. Producer A designates Material X as an intermediate material.

        Producer A uses Material X in the production of Material Y, which is also used in the production of Good B. Material Y is also subject to a regional value content requirement. Under the proviso set out in subsection (6), Producer A cannot designate Material Y as an intermediate material, even if Material Y satisfies the applicable regional value content requirement, because Material X was already designated by Producer A as an intermediate material.

      • Example 6: Single producer and multiple designations of materials as intermediate materials

        [...]

        Producer X uses the self-produced materials in the production of Good O, which is exported to CUSMA country Y. Materials A, B and C qualify as originating materials because they satisfy the applicable regional value content requirements.

        Because none of the self-produced materials are used in the production of any of the other self-produced materials, then even though each self-produced material is subject to a regional value content requirement, Producer X may, under subsection (6), designate all of the self-produced materials as intermediate materials. The proviso set out in subsection (6) only applies if self-produced materials are used in the production of other self-produced materials and both are subject to a regional value content requirement.

      • [...]

        The following are examples of accessories, spare parts, tools, or instructional or other information materials that are delivered with a good and form part of the good’s standard accessories, spare parts, tools, or instructional or other information materials:

        • (a) consumables that must be replaced at regular intervals, such as dust collectors for an air-conditioning system;

      • [...]

        It is determined that the water flow sensor is a non-originating material. The cost of the moulds that is recorded on the books of Producer A is expensed in the current year. Under section 4 of Schedule 6, the value of the moulds (see subparagraph 4(1)(b)(ii) of Schedule 6) must be included in the value of the water flow sensor by Producer A when calculating the regional value content of the well-water pump. The cost of the moulds, although recorded on the books of producer A, cannot be included as a separate cost in the net cost of the well-water pump because it is already included in the value of the water flow sensor. The entire cost of the water flow sensor, which includes the cost of the moulds, is included in the value of non-originating materials for the purposes of calculating the regional value content of the well-water pump.


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