CCRFTA Rules of Origin Regulations (SOR/2002-395)

De Minimis

• 3 (1) A good shall be considered to originate in the territory of a CCRFTA country where the value of all non-originating materials that are used in the production of the good and that do not undergo an applicable change in tariff classification as a result of production occurring entirely in the territory of one or both of the CCRFTA countries is not more than 10 per cent of the transaction value of the good, adjusted to an F.O.B. basis, provided that

  • (a) if the good is subject to a regional value-content requirement, the value of those non-originating materials shall be taken into account in calculating the regional value content of the good; and

  • (b) the good satisfies all other applicable requirements of these Regulations.

• (2) Except as provided in Schedule I, subsection (1) does not apply to a non-originating material that is used in the production of a good of any of Chapters 1 through 21, unless the non-originating material is of a different subheading than the good for which origin is being determined under this section.

• (3) A good of any of Chapters 50 through 63 that does not originate in the territory of a CCRFTA country because certain fibres or yarns that are used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification as a result of production occurring entirely in the territory of one or both of the CCRFTA countries shall be considered to originate in the territory of a CCRFTA country if

  • (a) the total weight of all those fibres or yarns is not more than 10 per cent of the total weight of that component; and

  • (b) the good satisfies all other applicable requirements of these Regulations.

• (4) For purposes of subsection (3),

  • (a) the component of a good that determines the tariff classification of that good shall be identified in accordance with the General Rules for the Interpretation of the Harmonized System; and

  • (b) where the component of the good that determines the tariff classification of the good is a blend of two or more yarns or fibres, all yarns and fibres used in the production of the component shall be taken into account in determining the weight of fibres and yarns in that component.

PART 3Regional Value Content

• 4 (1) Except as provided in subsections (2) and (3), the regional value content of a good shall be calculated on the basis of the following transaction value method:

  RVC = (TV - VNM) ÷ TV × 100

  where

  RVC

  is the regional value content of the good, expressed as a percentage;

  TV

  is the transaction value of the good, adjusted to an F.O.B. basis; and

  VNM

  is the value of non-originating materials used by the producer in the production of the good, determined in accordance with section 5.

• (2) For an automotive good of headings 87.01 through 87.02, subheadings 8703.21 through 8703.90 or headings 87.04 through 87.08, the regional value content shall be calculated on the basis of the following net cost method:

  RVC = (TV - VNM) ÷ TV × 100

  where

  RVC

  is the regional value content of the good, expressed as a percentage;

  NC

  is the net cost of the good calculated in accordance with subsection (6); and

  VNM

  is the value of non-originating materials used by the producer in the production of the good, determined in accordance with section 5.

• (3) For an automotive good of subheadings 8407.31 through 8407.34 or subheading 8703.10, the regional value content of a good shall be calculated, at the choice of the exporter or producer of the good, on the basis of either the transaction value method set out in subsection (1) or the net cost method set out in subsection (2).

• (4) For purposes of calculating the regional value content of a good under subsection (1) or (2), the value of non-originating materials used by a producer in the production of the good shall not include

  • (a) the value of any non-originating materials used by another producer in the production of originating materials that are subsequently acquired and used by the producer of the good in the production of that good; or

  • (b) the value of any non-originating materials used by the producer in the production of an originating intermediate material.

• (5) For purposes of subsection (4), where an originating intermediate material is used by the producer of the good with non-originating materials (whether or not those non-originating materials are produced by that producer) in the production of the good, the value of those non-originating materials shall be included in the value of non-originating materials.

• (6) For purposes of subsection (2), the net cost of a good may be calculated, at the choice of the producer of the good, by

  • (a) calculating the total cost incurred with respect to all goods produced by that producer, subtracting any excluded costs that are included in that total cost and reasonably allocating the remainder to the good;

  • (b) calculating the total cost incurred with respect to all goods produced by that producer, reasonably allocating that total cost to the good and subtracting any excluded costs that are included in the amount allocated to that good; or

  • (c) reasonably allocating each cost that forms part of the total cost incurred with respect to the good so that the aggregate of those costs does not include any excluded costs.

• (7) For purposes of calculating net cost under subsection (6), excluded costs that are included in the value of a material that is used in the production of the good shall not be subtracted from or otherwise excluded from the total cost.

PART 4Materials

General

• 5 (1) Except in the case of intermediate materials, for purposes of calculating the regional value content of a good, the value of a material that is used in the production of the good shall be

  • (a) the transaction value, determined in accordance with Article 1 of the Customs Valuation Agreement;

  • (b) the value determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement, where, with respect to the transaction in which the producer acquired the material, there is no transaction value under, or the transaction value is unacceptable, under Article 1 of the Customs Valuation Agreement.

• (2) The value of a material referred to in subsection (1) shall

  • (a) include the costs of freight, insurance and packing and all other costs incurred in transporting the material to the place of importation if they are not included under paragraph (1)(a) or (b); and

  • (b) in the case of a domestic transaction, be determined in accordance with the principles of the Customs Valuation Agreement in the same manner as an international transaction, with such modifications as the circumstances may require.

Intermediate Materials

• (3) The value of an intermediate material shall be, at the choice of the producer of the good,

  • (a) the total cost incurred with respect to all goods produced by the producer that can be reasonably allocated to that intermediate material; or

  • (b) the sum of all costs that comprise the total cost incurred with respect to that intermediate material that can be reasonably allocated to that intermediate material.

Indirect Materials

• (4) For purposes of determining whether a good is an originating good, an indirect material that is used in the production of the good shall be considered to be an originating material, regardless of where that indirect material is produced.

Packaging Materials and Containers for Retail Sale

• (5) Packaging materials and containers in which a good is packaged for retail sale, if classified under the Harmonized System with the good that is packaged therein, shall be disregarded for purposes of determining whether all of the non-originating materials used in the production of the good undergo an applicable change in tariff classification.

• (6) Where packaging materials and containers in which a good is packaged for retail sale 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 shall be taken into account as originating materials or non-originating materials, as the case may be, for purposes of calculating the regional value content of the good.

Packing Materials and Containers for Shipment

• (7) Packing materials and containers in which the good is packed for shipment shall be disregarded for purposes of determining whether

  • (a) the non-originating materials used in the production of the good undergo an applicable change in tariff classification, and

  • (b) the good satisfies a regional value-content requirement.

Fungible Goods and Fungible Materials

• (8) For purposes of determining whether a good is an originating good,

  • (a) where originating materials and non-originating materials that are fungible materials are used in the production of the good, the determination of whether the materials are originating materials may be made on the basis of any of the applicable inventory management methods set out in Schedule 2; and

  • (b) where originating goods and non-originating goods that are fungible goods are physically combined or mixed in inventory and prior to exportation do not undergo production or any other operation in the territory of the CCRFTA country in which they were physically combined or mixed in inventory, other than unloading, reloading or any other operation necessary to preserve the goods in good condition or to transport the goods for exportation to the territory of the other CCRFTA country, the determination of whether the good is an originating good may be made on the basis of any of the applicable inventory management methods set out in Schedule 2.

Sets or Assortments of Goods

• (9) Except as provided in Schedule 1, a set or assortment, as defined in Rule 3 of the General Rules for the Interpretation of the Harmonized System, shall be considered as originating, provided that:

  • (a) all the component products, including packaging materials and containers, are originating; or

  • (b) where the set or assortment contains non-originating component products, including packaging materials and containers,

    • (i) at least one of the component products, or all the packaging materials and containers for the set, is originating, and

    • (ii) the regional value content of the set or assortment is not less than 50 per cent under the transaction value method.

• (10) For purposes of paragraph (9)(b), the value of packaging materials and containers for the set shall be taken into account as originating materials or non-originating materials, as the case may be, for purposes of calculating the regional value content of the set.

Accessories, Spare Parts and Tools

• (11) Accessories, spare parts or tools that are delivered with a good and form part of the good’s standard accessories, spare parts or tools are originating materials if the good is an originating good, and shall be disregarded for purposes of determining whether all the non-originating materials used in the production of the good undergo an applicable change in tariff classification provided that

  • (a) the accessories, spare parts or tools are not invoiced separately from the good, whether or not each is listed or detailed on the invoice; and

  • (b) the quantities and value of the accessories, spare parts or tools are customary for the good.

• (12) Where a good is subject to a regional value-content requirement, the value of accessories, spare parts or tools that are delivered with that good and form part of the good’s standard accessories, spare parts or tools shall 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.

PART 5Other Provisions

Accumulation

6 For purposes of determining whether a good is an originating good, an exporter or producer of a good may choose to accumulate the production, by one or more producers in the territory of one or both of the CCRFTA countries, of materials that are incorporated into that good so that the production of the materials shall be considered to have been performed by that exporter or producer provided that

• (a) all non-originating materials used in the production of the good undergo the applicable change in tariff classification specified in Schedule 1 and the good satisfies any applicable regional value-content requirement entirely in the territory of one or both of the CCRFTA countries; and

• (b) the good satisfies all other applicable requirements of these Regulations.

Transshipment

7 A good is not an originating good by reason of having undergone production that occurs entirely in the territory of one or both of the CCRFTA countries that would enable the good to qualify as an originating good if, subsequent to that production,

• (a) the good does not remain under customs control while outside the territories of the CCRFTA countries;

• (b) the good enters into trade or consumption in the territory of a country other than a CCRFTA country; or

• (c) the good undergoes further production or any other operation outside the territories of the CCRFTA countries, other than unloading, reloading or any other operation necessary to preserve the good in good condition or to transport the good to the territory of a CCRFTA country.

Non-qualifying Operations

8 Except in the case of sets or as provided in Schedule 1, a good is not an originating good merely by reason of

• (a) a disassembly of the good into parts;

• (b) a change in the end use of the good;

• (c) the mere separation of one or more individual materials or components from an artificial mixture;

• (d) the mere dilution with water or another substance that does not materially alter the characteristics of the good;

• (e) the removal of dust or damaged parts from, oiling, or applying anti-rust paint or protective coatings to, the good;

• (f) any testing or calibration, division of loose shipments, grouping into packages or attaching identifying labels, markings or signs to the good or its packaging; or

• (g) the packaging or repackaging of the good.