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

PART 1Fungible Materials

Definitions

• 1 The following definitions apply in this Part.

  average method

  average method means the method by which the origin of fungible materials withdrawn from materials inventory is based on the ratio, calculated under section 5, of originating materials and non-originating materials in materials inventory. (méthode de la moyenne)

  FIFO method

  FIFO method means the method by which the origin of fungible materials first received in materials inventory is considered to be the origin of fungible materials first withdrawn from materials inventory. (méthode PEPS)

  LIFO method

  LIFO method means the method by which the origin of fungible materials last received in materials inventory is considered to be the origin of fungible materials first withdrawn from materials inventory. (méthode DEPS)

  materials inventory

  materials inventory means,

  • (a) with respect to a producer of a good, an inventory of fungible materials that are used in the production of the good; and

  • (b) with respect to a person from whom the producer of the good acquired those fungible materials, an inventory from which fungible materials are sold or otherwise transferred to the producer of the good. (stock de matières)

  opening inventory

  opening inventory means the materials inventory at the time an inventory management method is chosen. (stock d’ouverture)

  origin identifier

  origin identifier means any mark that identifies fungible materials as originating materials or non-originating materials. (identificateur d’origine)

General

• 2 The following inventory management methods may be used for determining whether fungible materials referred to in paragraph 8(18)(a) of these Regulations are originating materials:

  • (a) specific identification method;

  • (b) FIFO method;

  • (c) LIFO method; and

  • (d) average method.

• 3 A producer of a good, or a person from whom the producer acquired the fungible materials that are used in the production of the good, may choose only one of the inventory management methods referred to in section 2 and, if the average method is chosen, only one averaging period in each fiscal year of that producer or person in respect of the materials inventory.

Specific Identification Method

• • 4 (1) Except as otherwise provided under subsection (2), if the producer or person referred to in section 3 chooses the specific identification method, the producer or person must physically segregate, in materials inventory, originating materials that are fungible materials from non-originating materials that are fungible materials.

  • (2) If originating materials or non-originating materials that are fungible materials are marked with an origin identifier, the producer or person need not physically segregate those materials under subsection (1) if the origin identifier remains visible throughout the production of the good.

Average Method

• 5 If the producer or person referred to in section 3 chooses the average method, the origin of fungible materials withdrawn from materials inventory is determined on the basis of the ratio of originating materials and non-originating materials in materials inventory that is calculated under sections 6 to 8.

• • 6 (1) Except as otherwise provided in sections 7 and 8, the ratio is calculated with respect to a one- or three-month period, at the choice of the producer or person, by dividing

    • (a) the sum of

      • (i) the total units of originating materials or non-originating materials that are fungible materials and that were in materials inventory at the beginning of the preceding one- or three-month period, and

      • (ii) the total units of originating materials or non-originating materials that are fungible materials and that were received in materials inventory during that preceding one- or three-month period,

    by

    • (b) the sum of

      • (i) the total units of originating materials and non-originating materials that are fungible materials and that were in materials inventory at the beginning of the preceding one- or three-month period, and

      • (ii) the total units of originating materials and non-originating materials that are fungible materials and that were received in materials inventory during that preceding one- or three-month period.

  • (2) The ratio calculated with respect to a preceding one- or three-month period under subsection (1) is applied to the fungible materials remaining in materials inventory at the end of the preceding one- or three-month period.

• • 7 (1) If the good is subject to a regional value content requirement and the regional value content is calculated under the net cost method and the producer or person chooses to average over a period under subsection 7(15), 16(1) or (10) of these Regulations, the ratio is calculated with respect to that period by dividing

    • (a) the sum of

      • (i) the total units of originating materials or non-originating materials that are fungible materials and that were in materials inventory at the beginning of the period, and

      • (ii) the total units of originating materials or non-originating materials that are fungible materials and that were received in materials inventory during the period,

    by

    • (b) the sum of

      • (i) the total units of originating materials and non-originating materials that are fungible materials and that were in materials inventory at the beginning of the period, and

      • (ii) the total units of originating materials and non-originating materials that are fungible materials and that were received in materials inventory during the period.

  • (2) The ratio calculated with respect to a period under subsection (1) is applied to the fungible materials remaining in materials inventory at the end of the period.

• • 8 (1) If the good is subject to a regional value content requirement and the regional value content is calculated under the transaction value method or the net cost method, the ratio is calculated with respect to each shipment of the good by dividing

    • (a) the total units of originating materials or non-originating materials that are fungible materials and that were in materials inventory prior to the shipment,

    by

    • (b) the total units of originating materials and non-originating materials that are fungible materials and that were in materials inventory prior to the shipment.

  • (2) The ratio calculated with respect to a shipment of a good under subsection (1) is applied to the fungible materials remaining in materials inventory after the shipment.

Manner of Dealing with Opening Inventory

• • 9 (1) Except as otherwise provided under subsections (2) and (3), if the producer or person referred to in section 3 has fungible materials in opening inventory, the origin of those fungible materials is determined by

    • (a) identifying, on the books of the producer or person, the latest receipts of fungible materials that add up to the amount of fungible materials in opening inventory;

    • (b) determining the origin of the fungible materials that make up those receipts; and

    • (c) considering the origin of those fungible materials to be the origin of the fungible materials in opening inventory.

  • (2) If the producer or person chooses the specific identification method and has, in opening inventory, originating materials or non-originating materials that are fungible materials and that are marked with an origin identifier, the origin of those fungible materials is determined on the basis of the origin identifier.

  • (3) The producer or person may consider all fungible materials in opening inventory to be non-originating materials.

PART 2Fungible Goods

Definitions

• 10 The following definitions apply in this Part.

  average method

  average method means the method by which the origin of fungible goods withdrawn from finished goods inventory is based on the ratio, calculated under section 14, of originating goods and non-originating goods in finished goods inventory. (méthode de la moyenne)

  FIFO method

  FIFO method means the method by which the origin of fungible goods first received in finished goods inventory is considered to be the origin of fungible goods first withdrawn from finished goods inventory. (méthode PEPS)

  finished goods inventory

  finished goods inventory means an inventory from which fungible goods are sold or otherwise transferred to another person. (stock de produits finis)

  LIFO method

  LIFO method means the method by which the origin of fungible goods last received in finished goods inventory is considered to be the origin of fungible goods first withdrawn from finished goods inventory. (méthode DEPS)

  opening inventory

  opening inventory means the finished goods inventory at the time an inventory management method is chosen. (stock d’ouverture)

  origin identifier

  origin identifier means any mark that identifies fungible goods as originating goods or non-originating goods. (identificateur d’origine)

General

• 11 The following inventory management methods may be used for determining whether fungible goods referred to in paragraph 8(18)(b) of these Regulations are originating goods:

  • (a) specific identification method;

  • (b) FIFO method;

  • (c) LIFO method; and

  • (d) average method.

• 12 An exporter of a good, or a person from whom the exporter acquired the fungible good, may choose only one of the inventory management methods referred to in section 11 and, if the average method is chosen, only one averaging period in each fiscal year of that exporter or person in respect of each finished goods inventory of the exporter or person.

Specific Identification Method

• • 13 (1) Except as provided under subsection (2), if the exporter or person referred to in section 12 chooses the specific identification method, the exporter or person must physically segregate, in finished goods inventory, originating goods that are fungible goods from non-originating goods that are fungible goods.

  • (2) If originating goods or non-originating goods that are fungible goods are marked with an origin identifier, the exporter or person need not physically segregate those goods under subsection (1) if the origin identifier is visible on the fungible goods.

Average Method

• • 14 (1) If the exporter or person referred to in section 12 chooses the average method, the origin of each shipment of fungible goods withdrawn from finished goods inventory during a one- or three-month period, at the choice of the exporter or person, is determined on the basis of the ratio of originating goods and non-originating goods in finished goods inventory for the preceding one- or three-month period that is calculated by dividing

    • (a) the sum of

      • (i) the total units of originating goods or non-originating goods that are fungible goods and that were in finished goods inventory at the beginning of the preceding one- or three-month period, and

      • (ii) the total units of originating goods or non-originating goods that are fungible goods and that were received in finished goods inventory during that preceding one- or three-month period,

    by

    • (b) the sum of

      • (i) the total units of originating goods and non-originating goods that are fungible goods and that were in finished goods inventory at the beginning of the preceding one- or three-month period, and

      • (ii) the total units of originating goods and non-originating goods that are fungible goods and that were received in finished goods inventory during that preceding one- or three-month period.

  • (2) The ratio calculated with respect to a preceding one- or three-month period under subsection (1) is applied to the fungible goods remaining in finished goods inventory at the end of the preceding one- or three-month period.

Manner of Dealing with Opening Inventory

• • 15 (1) Except as otherwise provided under subsections (2) and (3), if the exporter or person referred to in section 12 has fungible goods in opening inventory, the origin of those fungible goods is determined by

    • (a) identifying, on the books of the exporter or person, the latest receipts of fungible goods that add up to the amount of fungible goods in opening inventory;

    • (b) determining the origin of the fungible goods that make up those receipts; and

    • (c) considering the origin of those fungible goods to be the origin of the fungible goods in opening inventory.

  • (2) If the exporter or person chooses the specific identification method and has, in opening inventory, originating goods or non-originating goods that are fungible goods and that are marked with an origin identifier, the origin of those fungible goods is determined on the basis of the origin identifier.

  • (3) The exporter or person may consider all fungible goods in opening inventory to be non-originating goods.