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

Further Requirements Related to the RVC for Passenger Vehicles, Light Trucks and Parts Thereof

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:Passenger vehicle or light truck — parts

  (4) In addition to other applicable requirements set out in these Regulations, a passenger vehicle or light truck is only originating if the parts listed in column 1 of Table A.2 used in its production are originating. The VNM for such parts must be calculated in accordance with subsections (7) and (8), or, at the choice of the vehicle producer or exporter, subsections (9) to (11). The net cost of a part must be calculated in accordance with section 7 without regard to the VNM calculation method chosen.

• Marginal note:RVC requirement — passenger vehicle or light truck

  (5) Except for an advanced battery of subheading 8507.60, a part listed in column 1 of Table A.2 that is for use in a passenger vehicle or light truck must meet the RVC requirement of section 13 or Schedule 1 to be considered originating.

• Marginal note:Advanced batteries

  (6) An advanced battery of subheading 8507.60 that is for use in a passenger vehicle or light truck is originating if it meets the applicable change in tariff classification or RVC requirements set out in Schedule 1.

• Marginal note:VNM determination

  (7) For the purpose of subsections (4) to (6), when calculating the RVC of a part listed in column 1 of Table A.2, the VNM must be determined, at the choice of the vehicle producer or exporter, by taking into consideration

  • (a) the VNM used in the production of the part; or

  • (b) the value of non-originating components that are listed in column 2 of Table A.2 that are used in the production of the part.

• Marginal note:Materials not listed in column 2

  (8) For the purposes of an RVC calculation for a good listed in column 1 of Table A.2, based on paragraph (7)(b), any non-originating materials used in the production of the good that are not listed in column 2 of Table A.2 may be disregarded. For greater certainty, any non-originating parts listed in column 2 of Table A.2 must be included in the VNM calculation and any parts not listed in column 2 of Table A.2 — or materials or components used to produce such parts — are not to be part of the VNM calculation.

• Marginal note:Non-application

  (9) Subsections (7) and (8) do not apply when calculating the RVC of a part listed in column 1 of Table A.2 traded on its own. The rules for such parts are listed in section 13 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

  • (a) the sum of the value of all non-originating materials used in the production of the parts listed under column 1 of table A.2; or

  • (b) the sum of the value of the non-originating components that are listed in column 2 of Table A.2 that are used in the production of the parts listed in column 1 of Table A.2.

• 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:

  • (a) 66% under the net cost method or 76% under the transaction value method, beginning on July 1, 2020 and ending on June 30, 2021;

  • (b) 69% under the net cost method or 79% under the transaction value method, beginning on July 1, 2021 and ending on June 30, 2022;

  • (c) 72% under the net cost method or 82% under the transaction value method, beginning on July 1, 2022 and ending on June 30, 2023; and

  • (d) 75% under the net cost method or 85% under the transaction value method, beginning on July 1, 2023.

• Marginal note:Requirements — parts listed in Table B

  (14) Despite the RVC requirements set out in Schedule 1, a material listed in Table B is considered originating if it satisfies the applicable change in tariff classification requirement or the applicable RVC requirement provided in Schedule 1.

• 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:

  • (a) 62.5% under the net cost method or 72.5% under the transaction value method, beginning on July 1, 2020 and ending on June 30, 2021;

  • (b) 65% under the net cost method or 75% under the transaction value method, beginning on July 1, 2021 and ending on June 30, 2022;

  • (c) 67.5% under the net cost method or 77.5% under the transaction value method, beginning on July 1, 2022 and ending on June 30, 2023; and

  • (d) 70% under the net cost method or 80% under the transaction value method, beginning on July 1, 2023.

• Marginal note:Requirements — parts listed in Table C

  (16) Despite the RVC requirements set out in Schedule 1, a material listed in Table C is originating if it meets the applicable change in tariff classification requirement or the applicable RVC requirement provided in Schedule 1.

• 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:

  • (a) 62% under the net cost method or 72% under the transaction value method, beginning on July 1, 2020 and ending on June 30, 2021;

  • (b) 63% under the net cost method or 73% under the transaction value method, beginning on July 1, 2021 and ending on June 30, 2022;

  • (c) 64% under the net cost method or 74% under the transaction value method, beginning on July 1, 2022 and ending on June 30, 2023; and

  • (d) 65% under the net cost method or 75% under the transaction value method, beginning on July 1, 2023.

• Marginal note:Non-application

  (18) For greater certainty, subsections (13), (15) and (17) do not apply to aftermarket parts.

Further RVC Requirements — Heavy Trucks and Parts Thereof

Marginal note:RVC — VNM

• 15 (1) The VNM used by the producer in the production of a heavy 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.

• Marginal note:RVC thresholds

  (2) Despite the Product Specific Rules of Origin in Schedule 1, the following RVC thresholds apply to parts listed in Table D that are for use in a heavy truck:

  • (a) 60% under the net cost method or 70% under the transaction value method if the corresponding rule includes a transaction value method, beginning on July 1, 2020 and ending on June 30, 2024;

  • (b) 64% under the net cost method or 74% under the transaction value method if the corresponding rule includes a transaction value method, beginning on July 1, 2024 and ending on June 30, 2027; and

  • (c) 70% under the net cost method or 80% under the transaction value method if the corresponding rule includes a transaction value method, beginning on July 1, 2027.

• Marginal note:RVC thresholds

  (3) Despite the Product Specific Rules of Origin in Schedule 1, the following RVC thresholds apply to parts listed in Table E that are for use in a heavy truck:

  • (a) 50% under the net cost method or 60% under the transaction value method if the corresponding rule includes a transaction value method, beginning on July 1, 2020 and ending on June 30, 2024;

  • (b) 54% under the net cost method or 64% under the transaction value method if the corresponding rule includes a transaction value method, beginning on July 1, 2024 and ending on June 30, 2027; and

  • (c) 60% under the net cost method or 70% under the transaction value method if the corresponding rule includes a transaction value method, beginning on July 1, 2027.

• Marginal note:RVC requirement — engines, gear box, chassis

  (4) Despite section 13 or Schedule 1, an engine of heading 84.07 or 84.08, a gear box (transmission) of subheading 8708.40 or a chassis classified in 8708.99,that is for use in a heavy truck, is originating only if it satisfies the applicable RVC requirement in subsection (2).

Averaging for Passenger Vehicles, Light Trucks and Heavy Trucks

Marginal note:Categories

• 16 (1) For the purposes of calculating the RVC of a passenger vehicle, light truck or heavy truck, the calculation may be averaged over the producer’s 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;

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

  • (d) any other category as the CUSMA countries may decide.

• Marginal note:Vehicles — same model line or class

  (2) For the purposes of paragraph (1)(c), vehicles within the same model line or class may be averaged separately if such vehicles are subject to different RVC requirements.

• Marginal note:Information requirements

  (3) If a producer chooses to use averaging for the purposes of calculating RVC, the producer must state the category it has chosen and

  • (a) if the category referred to in paragraph (1)(a) is chosen, state the model line, model name, class of passenger vehicle, light truck or heavy truck and tariff classification of the motor vehicles in that category and the location of the plant at which the motor vehicles are produced;

  • (b) if the category referred to in paragraph (1)(b) is chosen, state the model name, class of passenger vehicle, light truck or heavy truck and tariff classification of the motor vehicles in that category and the location of the plant at which the motor vehicles are produced;

  • (c) if the category referred to in paragraph (1)(c) is chosen, state the model line, model name, class of motor vehicle and tariff classification of the passenger vehicle, light truck or heavy truck in that category and the locations of the plants at which the motor vehicles are produced; and

  • (d) if the category referred to in paragraph (1)(d) is chosen, state the model lines, model names, classes of motor vehicles and tariff classifications of the passenger vehicles, light trucks or heavy trucks and the location of the plants at which the motor vehicles are produced and the CUSMA country or countries to which the vehicles are exported.

• Marginal note:Averaging period

  (4) If the fiscal year of a producer begins after July 1, 2020, but before July 1, 2021, the producer may calculate its RVC for passenger vehicles, light trucks, heavy trucks, other vehicles, core parts listed in Table A.2 used in the production of passenger vehicles, light trucks or heavy trucks, an automotive good listed in Tables A.1, B, C, D or E, steel and aluminum purchasing requirement and LVC, for the period beginning on July 1, 2020 and ending at the end of the following fiscal year.

• Marginal note:Optional transitional period

  (5) A producer may calculate its RVC

  • (a) for passenger vehicles, light trucks, other vehicles, core parts listed in Table A2 that are used in the production of passenger vehicles, or light trucks, an automotive good listed in Tables A.1, B, and C and the steel and aluminum purchasing and labour value content requirements for passenger vehicles and light trucks for the following periods:

    • (i) beginning on July 1, 2020 and ending on June 30, 2021,

    • (ii) beginning on July 1, 2021 and ending on June 30, 2022,

    • (iii) beginning on July 1, 2022 and ending on June 30, 2023

    • (iv) beginning on July 1, 2023 until the end of the producer’s fiscal year; and

  • (b) for heavy trucks, an automotive good listed in Tables D or E and the steel and aluminum purchasing and labour value content requirements for heavy trucks,

    • (i) beginning on July 1, 2023 and ending on June 30, 2024,

    • (ii) beginning on July 1, 2024 and ending on June 30, 2025,

    • (iii) beginning on July 1, 2025 and ending on June 30, 2026,

    • (iv) beginning on July 1, 2026 and ending on June 30, 2027, and

    • (v) beginning on July 1, 2027 until the end of the producer’s fiscal year.

• Marginal note:Timely filing of choice to average

  (6) If a producer chooses to average its RVC calculations the producer must notify the customs administration of the CUSMA country to which passenger vehicles, light trucks, heavy trucks or other vehicles are to be exported by July 31, 2020 and subsequently at least 10 days before the first day of the producer’s fiscal year during which the vehicles will be exported or such shorter period as the customs administration may accept.

• Marginal note:No modification or rescission

  (7) The producer may not modify or rescind the category of passenger vehicles, light trucks, heavy trucks or other vehicle or the period that they have notified the customs authority they intend to use for their averaged RVC calculation.

• Marginal note:Net costs and VNM included — RVC

  (8) For purposes of sections 13 to 15, if a producer chooses to average its net cost calculation, the net costs incurred and the VNM used by the producer, with respect to

  • (a) all passenger vehicles, light trucks or heavy trucks that fall within the category chosen by the producer and that are produced during the fiscal year, or partial fiscal year if the producer’s fiscal year begins after July 1, 2020, and

  • (b) those passenger vehicles, light trucks or heavy trucks to be exported to the territory of one or more of the CUSMA countries that fall within the category chosen by the producer and that are produced during the fiscal year or, or partial fiscal year if the producer’s fiscal year begins after July 1, 2020

  must be included in the calculation of the RVC under any of the categories set out in subsection (1).

• Marginal note:Averaging based on estimated costs

  (9) If the producer of a passenger vehicle, light truck, heavy truck or other vehicle has calculated the RVC of the motor vehicle on the basis of estimated costs, including standard costs, budgeted forecasts or other similar estimating procedures, before or during the producer’s fiscal year, the producer must conduct an analysis at the end of the producer’s fiscal year of the actual costs incurred over the period with respect to the production of the motor vehicle. If the motor vehicle does not satisfy the RVC requirement on the basis of the actual costs, the producer must immediately inform any person to whom the producer has provided a Certificate of Origin for the motor vehicle, or a written statement that the motor vehicle is an originating good, that the motor vehicle is a non-originating good.

• Marginal note:Averaging period

  (10) Subject to subsection (11), for the purpose of calculating the RVC for an automotive good listed in Tables A.1, B, C, D or E, produced in the same plant, a core part listed in Table A.2, or when treating the parts listed in column 1 of Table A.2 as a super-core, for use in a passenger vehicle or light truck, the calculation may be averaged

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

  • (b) over any quarter or month;

  • (c) over the fiscal year of the producer of the automotive material; or

  • (d) over any of the categories in paragraph (1)(a) to (d).

• Marginal note:Condition

  (11) The calculation may be averaged under subsection (10) provided that the good was produced during the fiscal year, quarter or month forming the basis for the calculation in which

  • (a) the average in paragraph (10)(a) is calculated separately for those goods sold to one or more passenger vehicle, light truck or heavy truck producer; or

  • (b) the average in paragraph (10)(a) or (b) is calculated separately for those goods that are exported to the territory of another CUSMA country.

• Marginal note:Example

  (12) The following example is an “example” as referred to in subsection 1(4):

  • Subsection 16(4)

    The agreement enters into force on July 1, 2020. A producer’s fiscal year begins on January 1, 2021. The producer may calculate their RVC over the 18-month period beginning on July 1, 2020 and ending on December 31, 2021.