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

Alternative Staging Regime

Marginal note:Eligible vehicles

• 19 (1) For the purposes of this section, eligible vehicles are passenger vehicles or light trucks for which an alternative staging regime has been approved by the CUSMA countries.

• Marginal note:Applicable requirements

  (2) Despite sections 13 to 18, eligible vehicles are subject to the requirements set out in subsection (4) from July 1, 2020 until June 30, 2025 or any other period provided for in the producer’s approved alternative staging regime. Eligible vehicles are also subject to any other applicable requirements established in these Regulations.

• Marginal note:Non-eligible vehicles

  (3) Passenger vehicles or light trucks that are not eligible vehicles may qualify as originating under the rules of origin established in sections 13 to 18 and any other applicable requirements established in these Regulations.

• Marginal note:Requirements

  (4) Eligible vehicles are considered originating if they meet the following requirements:

  • (a) an RVC of not less than 62.5 percent, under the net cost method;

  • (b) for parts listed in Table A.1,

    • (i) an RVC of not less than 62.5%, if the net cost method is used,

    • (ii) an RVC of not less than 72.5%, if the transaction value method is used and the corresponding rule includes a transaction value method, and

    • (iii) in the case of a lithium-ion batteries of subheading 8507.60, a change from within subheading 8507.60 or from any other subheading for lithium-ion batteries of 8507.60;

  • (c) at least 70% of a vehicle producer’s purchases of steel and at least 70% of a vehicle producer’s purchases of aluminum, by value, must qualify as originating under the rules of origin established in Schedule 1 unless the producer has been exempted from this requirement under an approved alternative staging regime; and

  • (d) an LVC of at least 25%, consisting of at least 10 percentage points of high-wage material and manufacturing expenditures, no more than 10 percentage points of high-wage technology expenditures and no more than five percentage points of high-wage assembly expenditures.

• Marginal note:Exemption — core parts

  (5) Eligible vehicles are exempt from the core parts requirement set out in section 14.

• Marginal note:Methods and calculations

  (6) All methods and calculations for the requirements applicable to eligible vehicles are to be based on the applicable provisions in these Regulations.

• Marginal note:Transitional

  (7) Vehicles that are presently covered under the alternative staging regime described in Article 403.6 of the North American Free Trade Agreement as of November 30, 2019 may continue to use this regime, including any regulations that were in effect prior to entry into force of the Agreement, according to each CUSMA country’s approval process for use of the alternative staging regime. After the expiration of the period under the Article 403.6 alternative staging period, such vehicles will be eligible for preferential treatment under the requirements described in subsection (4), until the end of the alternative staging period described in subsection (2). For greater certainty, such vehicles will also be eligible for preferential tariff treatment under the other rules of origin set forth in these Regulations.

RVC for Other Vehicles

Marginal note:VNM

• 20 (1) The VNM used by the producer in the production of other vehicles and parts thereof shall 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.

• Marginal note:RVC requirements

  (2) Despite section 13 and Schedule 1, the RVC requirement is 62.5% under the net cost method for

  • (a) a motor vehicle for the transport of 15 or fewer persons of subheading 8702.10 or 8702.90;

  • (b) a passenger vehicle with a compression-ignition engine as the primary motor of propulsion of subheading 8703.21 through 8703.90;

  • (c) a three or four-wheeled motorcycle of subheading 8703.21 through 8703.90;

  • (d) a motorhome or entertainer coach of subheading 8703.21 through 8703.90;

  • (e) an ambulance, a hearse or a prison van of subheading 8703.21 through 8703.90;

  • (f) a vehicle solely or principally for off-road use of subheading 8703.21 through 8703.90;

  • (g) a vehicle of subheading 8704.21 or 8704.31 that is solely or principally for off-road use; and

  • (h) a good of heading 84.07 or 84.08 or subheading 8708.40, that is for use in a motor vehicle referred to in paragraphs (a) to (g).

• Marginal note:RVC requirements

  (3) Despite section 13 and Schedule 1, the RVC requirement is 60% under the net cost method for

  • (a) a good that is:

    • (i) a motor vehicle of heading 87.01, except for subheading 8701.20;

    • (ii) a motor vehicle for the transport of 16 or more persons of subheading 8702.10 or 8702.90;

    • (iii) a motor vehicle of subheading 8704.10;

    • (iv) a motor vehicle of subheading 8704.22, 8704.23, 8704.32, or 8704.90 that is solely or principally for off-road use;

    • (v) a motor vehicle of heading 87.05; or,

    • (vi) a good of heading 87.06 that is not for use in a passenger vehicle, light truck, or heavy truck;

  • (b) a good of heading 84.07 or 84.08 or subheading 8708.40 that is for use in a motor vehicle in paragraph (a); or

  • (c) except for a good in paragraph (b) or of subheading 8482.10 through 8482.80, 8483.20 or 8483.30, a good in Table F that is subject to an RVC requirement and that is for use in a motor vehicle in paragraphs (2)(a) to (g) or (3)(a).

• Marginal note:RVC calculation

  (4) For the purpose of calculating the RVC under the net cost method for a good that is a motor vehicle referred to in paragraphs (2)(a) to (g) or (3)(a), a good listed in Table F for use as original equipment in the production of a good in paragraphs (2)(a) to (g) or a component listed in Table G for use as original equipment in the production of the motor vehicle in paragraph (3)(a), the VNM used by the producer in the production of the good is the sum of

  • (a) for each material used by the producer listed in Table F or Table G, whether or not produced by the producer, at the choice of the producer and determined in accordance with section 7, either

    • (i) the value of such material that is non-originating, or

    • (ii) the VNM used in the production of such material; and

  • (b) the value of any other non-originating material used by the producer that is not listed in Table F or Table G, determined in accordance with section 7.

• Marginal note:VNM

  (5) For greater certainty, despite subsection (4), for the purposes of a good that is a motor vehicle provided for in paragraphs (2)(a) through (g) or (3)(a), the VNM is the sum of the values of all non-originating materials used by the producer in the production of the vehicle.

• Marginal note:Averaging calculation

  (6) For the purpose of calculating the RVC of a motor vehicle covered by subsection (2) or (3), the producer may average its calculation over its fiscal year using any one of the following categories on the basis of either all motor vehicles in the category or only those motor vehicles in the category that are exported to the territory of one or more of the other CUSMA countries:

  • (a) the same model line of motor vehicles in the same class of vehicles produced in the same plant in the territory of a CUSMA country;

  • (b) the same class of motor vehicles produced in the same plant in the territory of a CUSMA country; or

  • (c) the same model line of motor vehicles produced in the territory of a CUSMA country.

• Marginal note:Averaging calculation

  (7) For the purpose of calculating the RVC for a good listed in Table F or a component or material listed in Table G, produced in the same plant, the producer of the good may

  • (a) average its calculation

    • (i) over the fiscal year of the motor vehicle producer to whom the good is sold,

    • (ii) over any quarter or month, or

    • (iii) over its fiscal year, if the good is sold as an aftermarket part;

  • (b) calculate the average referred to in paragraph (a) separately for a good sold to one or more motor vehicle producers; or

  • (c) with respect to any calculation under this subsection, calculate the average separately for goods that are exported to the territory of one or more of the CUSMA countries.

• Marginal note:RVC requirement

  (8) The RVC requirement for a motor vehicle identified in subsection (2) or (3) is

  • (a) 50% for five years after the date on which the first motor vehicle prototype is produced in a plant by a motor vehicle assembler, if

    • (i) it is a motor vehicle of a class or marque or, except for a motor vehicle identified in subsection (3), size category and underbody, not previously produced by the motor vehicle assembler in the territory of any of the CUSMA countries,

    • (ii) the plant consists of a new building in which the motor vehicle is assembled, and

    • (iii) the plant contains substantially all new machinery that is used in the assembly of the motor vehicle; or

  • (b) 50% for two years after the date on which the first motor vehicle prototype is produced at a plant following a refit, if it is a different motor vehicle of a class, or marque, or, except for a motor vehicle identified in subsection (3), size category and underbody, than was assembled by the motor vehicle assembler in the plant before the refit.