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CCFTA Rules of Origin Regulations (SOR/97-340)

Regulations are current to 2020-09-09

CCFTA Rules of Origin Regulations

SOR/97-340

CUSTOMS ACT

CUSTOMS TARIFF

Registration 1997-07-05

Regulations Respecting the Uniform Interpretation, Application and Administration of the Rules of Origin under the Canada-Chile Free Trade Agreement

P.C. 1997-971 1997-07-04

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister of National Revenue, pursuant to subsections 13(2)Footnote a and 95(2.1)Footnote b of the Customs TariffFootnote c and subsection 164(1.2)Footnote d of the Customs ActFootnote e, hereby makes the annexed Regulations Respecting the Uniform Interpretation, Application and Administration of the Rules of Origin under the Canada-Chile Free Trade Agreement.

Short Title

 These Regulations may be cited as the CCFTA Rules of Origin Regulations.

PART IGeneral

Definitions and Interpretation

  •  (1) For purposes of these Regulations,

    accessories, spare parts or tools that are delivered with a good and form part of the good’s standard accessories, spare parts or tools

    accessories, spare parts or tools that are delivered with a good and form part of the good’s standard accessories, spare parts or tools means goods that are delivered with a good, whether or not they are physically affixed to that good, and that are used for the transport, protection, maintenance or cleaning of the good, for instruction in the assembly, repair or use of that good, or as replacements for consumable or interchangeable parts of that good; (accessoires, pièces de rechange ou outils qui sont livrés avec le produit et qui en font normalement partie)

    adjusted to an F.O.B. basis

    adjusted to an F.O.B. basis means, with respect to a good, adjusted by

    • (a) deducting

      • (i) the costs of transporting the good after it is shipped from the point of direct shipment,

      • (ii) the costs of loading, unloading, handling and insurance that are associated with that transportation, and

      • (iii) the cost of packing materials and containers,

      where those costs are included in the transaction value of the good, and

    • (b) adding

      • (i) the costs of transporting the good from the place of production to the point of direct shipment,

      • (ii) the costs of loading, unloading, handling and insurance that are associated with that transportation, and

      • (iii) the costs of loading the good for shipment at the point of direct shipment,

      where those costs are not included in the transaction value of the good; (rajusté en fonction d’une base FAB)

    after-market parts

    after-market parts means goods that are not for use as original equipment in the production of motor vehicles and that are goods of a tariff provision listed in Schedule IV; (pièces destinées au marché du service après-vente)

    Agreement

    Agreement means the Canada-Chile Free Trade Agreement; (Accord)

    applicable change in tariff classification

    applicable change in tariff classification means, with respect to a non-originating material used in the production of a good, a change in tariff classification specified in a rule set out in Schedule I for the tariff provision under which the good is classified; (changement de classement tarifaire applicable)

    CCFTA country

    CCFTA country means Canada or Chile; (pays ALÉCC)

    costs incurred in packing

    costs incurred in packing means, with respect to a good or material, the value of the packing materials and containers in which the good or material is packed for shipment and the labour costs incurred in packing it for shipment, but does not include the costs of preparing and packaging it for retail sale; (frais engagés pour emballer)

    days

    days means calendar days, and includes weekends and holidays; (jours)

    direct labour costs

    direct labour costs means costs, including fringe benefits, that are associated with employees who are directly involved in the production of a good; (coûts de la main-d’oeuvre directe)

    direct material costs

    direct material costs means the value of materials, other than indirect materials and packing materials and containers, that are used in the production of a good; (coûts des matières directes)

    direct overhead

    direct overhead means costs, other than direct material costs and direct labour costs, that are directly associated with the production of a good; (frais généraux directs)

    enterprise

    enterprise means any entity constituted or organized under applicable laws, whether or not for profit and whether privately owned or governmentally owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association; (entreprise)

    excluded costs

    excluded costs means sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs; (coûts exclus)

    fiscal year

    fiscal year means

    • (a) in the case of Canada, the period for which the annual financial statements of an enterprise are prepared that is not greater than

      • (i) twelve consecutive months,

      • (ii) 52 consecutive weeks with one extra day added to the last week, or

      • (iii) 52 or 53 consecutive weeks, and

    • (b) in the case of Chile, the period beginning on January 1 and ending on December 31 of the same year, except in the following cases:

      • (i) where an enterprise is authorized by the Servicio de Impuestos Internos to initiate activities after January 1 in a year, the period beginning on the date on which the certificate to initiate activities is issued by the Servicio de Impuestos Internos and ending on December 31 in that year, and

      • (ii) where an enterprise terminates its activities before December 31, the period beginning on January 1 in that year and ending on the date on which a notice to terminate activities is filed with the Servicio de Impuestos Internos; (exercice)

    fit only for the recovery of raw materials

    fit only for the recovery of raw materials means, with respect to waste and scrap, neither fit for nor capable of being restored to the use for which it, or any of its parts, was originally produced; (ne peut servir qu’à la récupération de matières premières)

    fungible goods

    fungible goods means goods that are interchangeable for commercial purposes and the properties of which are essentially identical; (produits fongibles)

    fungible materials

    fungible materials means materials that are interchangeable for commercial purposes and the properties of which are essentially identical; (matières fongibles)

    Harmonized System

    Harmonized System means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes and Chapter Notes, as set out in

    • (a) in the case of Canada, the Customs Tariff, and

    • (b) in the case of Chile, the Arancel Aduanero; (Système harmonisé)

    identical goods

    identical goods means, with respect to a good, goods that

    • (a) are the same as that good in all respects, including physical characteristics, quality and reputation but excluding minor differences in appearance,

    • (b) were produced in the same country as that good, and

    • (c) were produced

      • (i) by the producer of that good, or

      • (ii) by another producer, where no goods that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that good; (produits identiques)

    identical materials

    identical materials means, with respect to a material, materials that

    • (a) are the same as that material in all respects, including physical characteristics, quality and reputation but excluding minor differences in appearance,

    • (b) were produced in the same country as that material, and

    • (c) were produced

      • (i) by the producer of that material, or

      • (ii) by another producer, where no materials that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that material; (matières identiques)

    indirect material

    indirect material means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, and includes

    • (a) fuel and energy;

    • (b) tools, dies and moulds;

    • (c) spare parts and materials used in the maintenance of equipment and buildings;

    • (d) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings;

    • (e) gloves, glasses, footwear, clothing, safety equipment and supplies;

    • (f) equipment, devices and supplies used for testing or inspecting the other goods;

    • (g) catalysts and solvents; and

    • (h) any other goods that are not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be part of that production; (matière indirecte)

    interest costs

    interest costs means all costs paid or payable by a person to whom credit is, or is to be advanced, for the advancement of credit or the obligation to advance credit; (frais d’intérêt)

    intermediate material

    intermediate material means a self-produced material that is used in the production of a good and is designated as an intermediate material under subsection 7(4); (matière intermédiaire)

    location of the producer

    location of the producer means

    • (a) where the warehouse or other receiving station at which a producer receives materials for use by the producer in the production of a good is located within a radius of 75 km from the place at which the producer produces the good, the location of that warehouse or other receiving station, and

    • (b) in any other case, the place at which the producer produces the good in which a material is to be used; (emplacement du producteur)

    material

    material means a good that is used in the production of another good, and includes a part or ingredient; (matière)

    month

    month means a calendar month; (mois)

    motor vehicle

    motor vehicle means a motor vehicle of any of headings 87.01 and 87.02, subheadings 8703.21 through 8703.90 and headings 87.04 and 87.05; (véhicule automobile)

    motor vehicle assembler

    motor vehicle assembler means a producer of motor vehicles and any related person with whom, or joint venture in which, the producer participates with respect to the production of motor vehicles; (monteur de véhicules automobiles)

    national

    national has the same meaning as in Article B-01 of the Agreement; (ressortissant)

    national government

    national government means

    • (a) with respect to Canada, the Government of Canada, and

    • (b) with respect to Chile, the Government of the Republic of Chile; (gouvernement national)

    net cost method

    net cost method means the method of calculating the regional value content of a good that is set out in subsection 6(3); (méthode du coût net)

    non-allowable interest costs

    non-allowable interest costs means interest costs incurred by a producer on the producer’s debt obligations that are more than 700 basis points above the yield on debt obligations of comparable maturities issued by the national government of the country in which the producer is located; (frais d’intérêt non admissibles)

    non-originating good

    non-originating good means a good that does not qualify as originating under these Regulations; (produit non originaire)

    non-originating material

    non-originating material means a material that does not qualify as originating under these Regulations; (matière non originaire)

    original equipment

    original equipment means a material that is incorporated into a motor vehicle before the first transfer of title or consignment of the motor vehicle to a person who is not a motor vehicle assembler, and that is a good of a tariff provision listed in Schedule IV; (élément d’origine)

    originating good

    originating good means a good that qualifies as originating under these Regulations; (produit originaire)

    originating material

    originating material means a material that qualifies as originating under these Regulations; (matière originaire)

    other costs

    other costs means, with respect to total cost, all costs that are not product costs or period costs; (autres coûts)

    packaging materials and containers

    packaging materials and containers means materials and containers in which a good is packaged for retail sale; (matières de conditionnement et contenants)

    packing materials and containers

    packing materials and containers means materials and containers that are used to protect a good during transportation, but does not include packaging materials and containers; (matières d’emballage et contenants)

    payments

    payments means, with respect to royalties and sales promotion, marketing and after-sales service costs, the costs expensed on the books of a producer, whether or not an actual payment is made; (paiements)

    period costs

    period costs means costs, other than product costs, that are expensed in the period in which they are incurred; (coûts non incorporables)

    person

    person means a natural person or an enterprise; (personne)

    person of a CCFTA country

    person of a CCFTA country has the same meaning as person of a Party in Article B-01 of the Agreement; (personne d’un pays ALÉCC)

    point of direct shipment

    point of direct shipment means the location from which a producer of a good normally ships that good to the buyer of the good; (point d’expédition directe)

    producer

    producer means a person who grows, mines, harvests, fishes, traps, hunts, manufactures, processes or assembles a good; (producteur)

    product costs

    product costs means costs that are associated with the production of a good, and includes the value of materials, direct labour costs and direct overhead; (coûts incorporables)

    production

    production means growing, mining, harvesting, fishing, trapping, hunting, manufacturing, processing or assembling a good; (production)

    related person

    related person means a person related to another person on the basis that

    • (a) they are officers or directors of one another’s businesses,

    • (b) they are legally recognized partners in business,

    • (c) they are employer and employee,

    • (d) any person directly or indirectly owns, controls or holds 25 per cent or more of the outstanding voting stock or shares of each of them,

    • (e) one of them directly or indirectly controls the other,

    • (f) both of them are directly or indirectly controlled by a third person, or

    • (g) they are members of the same family (members of the same family are natural or adopted children, brothers, sisters, parents, grandparents or spouses); (personne liée)

    reusable scrap or by-product

    reusable scrap or by-product means waste and spoilage that is generated by the producer of a good and that is used in the production of a good or sold by that producer; (déchets récupérables ou sous-produits)

    right to use

    right to use, for purposes of the definition of royalties, includes the right to sell or distribute a good; (droit d’utiliser)

    royalties

    royalties means payments of any kind, including payments under technical assistance agreements or similar agreements, made as consideration for the use of, or right to use, any copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, secret formula or process, excluding those payments under technical assistance agreements or similar agreements that can be related to specific services such as

    • (a) personnel training, without regard to where performed, and

    • (b) if performed in the territory of one or both of the CCFTA countries, engineering, tooling, die-setting, software design and similar computer services, or other services; (redevances)

    sales promotion, marketing and after-sales service costs

    sales promotion, marketing and after-sales service costs means the following costs related to sales promotion, marketing and after-sales service:

    • (a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstration materials; exhibits; sales conferences, trade shows and conventions; banners; marketing displays; free samples; sales, marketing and after-sales service literature (product brochures, catalogues, technical literature, price lists, service manuals, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; entertainment;

    • (b) sales and marketing incentives; consumer, retailer or wholesaler rebates; merchandise incentives;

    • (c) salaries and wages, sales commissions, bonuses, benefits (for example, medical, insurance, pension), travelling and living expenses, membership and professional fees, for sales promotion, marketing and after-sales service personnel;

    • (d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training of customers’ employees, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

    • (e) product liability insurance;

    • (f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

    • (g) telephone, mail and other communications, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

    • (h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centres;

    • (i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after-sales service offices and distribution centres, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; and

    • (j) payments by the producer to other persons for warranty repairs; (frais de promotion des ventes, de commercialisation et de service après-vente)

    self-produced material

    self-produced material means a material that is produced by the producer of a good and used in the production of that good; (matière auto-produite)

    shipping and packing costs

    shipping and packing costs means the costs incurred in packing a good for shipment and shipping the good from the point of direct shipment to the buyer, excluding the costs of preparing and packaging the good for retail sale; (frais d’expédition et d’emballage)

    similar goods

    similar goods means, with respect to a good, goods that

    • (a) although not alike in all respects to that good, have similar characteristics and component materials that enable the goods to perform the same functions and to be commercially interchangeable with that good,

    • (b) were produced in the same country as that good, and

    • (c) were produced

      • (i) by the producer of that good, or

      • (ii) by another producer, where no goods that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that good; (produits similaires)

    similar materials

    similar materials means, with respect to a material, materials that

    • (a) although not alike in all respects to that material, have similar characteristics and component materials that enable the materials to perform the same functions and to be commercially interchangeable with that material,

    • (b) were produced in the same country as that material, and

    • (c) were produced

      • (i) by the producer of that material, or

      • (ii) by another producer, where no materials that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that material; (matières similaires)

    subject to a regional value-content requirement

    subject to a regional value-content requirement means, with respect to a good, that the provisions of these Regulations that are applied to determine whether the good is an originating good include a regional value-content requirement; (assujetti à une prescription de teneur en valeur régionale)

    tariff provision

    tariff provision means a heading, subheading or tariff item; (poste tarifaire)

    territory

    territory means, with respect to

    • (a) Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international law and its domestic law, Canada may exercise rights with respect to the seabed and subsoil and their natural resources, and

    • (b) Chile, the land, maritime and air space under its sovereignty, and the exclusive economic zone and the continental shelf over which it exercises sovereign rights and jurisdiction in accordance with international law and its domestic law; (territoire)

    total cost

    total cost means the total of all product costs, period costs and other costs incurred in the territory of one or both of the CCFTA countries; (coût total)

    transaction value method

    transaction value method means the method of calculating the regional value content of a good that is set out in subsection 6(2); (méthode de la valeur transactionnelle)

    used

    used means employed, utilized or consumed in the production of a good; (utilisé)

    verification of origin

    verification of origin means a verification of origin of goods under

    • (a) in the case of Canada, paragraph 42.1(1)(a) of the Customs Act, and

    • (b) in the case of Chile, Article E-06 of the Agreement. (vérification de l’origine)

  • (2) For purposes of the definitions similar goods and similar materials, the quality of the goods or materials, their reputation and the existence of a trademark are among the factors to be considered in determining whether goods or materials are similar.

  • (3) In these Regulations,

    • (a) chapter, unless otherwise indicated, refers to a chapter of the Harmonized System;

    • (b) heading refers to any four-digit number in the Harmonized System;

    • (c) subheading refers to any six-digit number in the Harmonized System;

    • (d) tariff item refers to any eight-digit number

      • (i) in the case of Canada, in the Harmonized System, and

      • (ii) in the case of Chile, in the Harmonized System or in the table of “Tariff Items for Canada-Chile Free Trade Agreement” following Section II of Annex-01 of the Agreement;

    • (e) any reference to a tariff item in Chapter D of the Agreement that includes letters shall be reflected as the appropriate eight-digit number

      • (i) in the case of Canada, in the Harmonized System, and

      • (ii) in the case of Chile, in the table of “Tariff Items for Canada-Chile Free Trade Agreement” following Section II of Annex D-01 of the Agreement;

    • (f) books refers to,

      • (i) with respect to the books of a person who is located in a CCFTA country,

        • (A) books and other documents that support the recording of revenues, expenses, costs, assets and liabilities and that are maintained in accordance with Generally Accepted Accounting Principles set out in the publications listed in Schedule XI with respect to the territory of the CCFTA country in which the person is located, and

        • (B) financial statements, including note disclosures, that are prepared in accordance with Generally Accepted Accounting Principles set out in the publications listed in Schedule XI with respect to the territory of the CCFTA country in which the person is located, and

      • (ii) with respect to the books of a person who is located outside the territories of the CCFTA countries,

        • (A) books and other documents that support the recording of revenues, expenses, costs, assets and liabilities and that are maintained in accordance with generally accepted accounting principles applied in that location or, where there are no such principles, in accordance with the International Accounting Standards, and

        • (B) financial statements, including note disclosures, that are prepared in accordance with generally accepted accounting principles applied in that location or, where there are no such principles, in accordance with the International Accounting Standards; and

    • (g) incorporated refers to the physical incorporation of a material into a good, and includes the physical incorporation of a material into another material before that other material or any subsequently produced material is used in the production of the good.

  • (4) Where an example, referred to as an Example, is set out in these Regulations, the example is for purposes of illustrating the application of a provision, and where there is any inconsistency between the example and the provision, the provision prevails to the extent of the inconsistency.

  • (5) Except as otherwise provided, references in these Regulations to domestic laws of the CCFTA countries apply to those laws as they are currently in effect and as they may be amended or superseded.

  • (6) For purposes of subsections 5(8), 6(11) and 7(6),

    • (a) total cost consists of all product costs, period costs and other costs that are recorded, except as otherwise provided in subparagraphs (b)(i) and (ii), on the books of the producer without regard to the location of the persons to whom payments with respect to those costs are made;

    • (b) in calculating total cost,

      • (i) the value of materials, other than intermediate materials, indirect materials and packing materials and containers, shall be the value determined in accordance with subsections 7(1) and (2),

      • (ii) the value of intermediate materials used in the production of the good or material with respect to which total cost is being calculated shall be calculated in accordance with subsection 7(6),

      • (iii) the value of indirect materials and the value of packing materials and containers shall be the costs that are recorded on the books of the producer for those materials, and

      • (iv) product costs, period costs and other costs, other than costs referred to in subparagraphs (i) and (ii), shall be the costs thereof that are recorded on the books of the producer for those costs;

    • (c) total cost does not include profits that are earned by the producer, regardless of whether they are retained by the producer or paid out to other persons as dividends, or taxes paid on those profits, including capital gains taxes;

    • (d) all currency conversion gains and losses related to the production of the good shall be taken into account in calculating total cost; and

    • (e) the value of materials with respect to which production is accumulated under section 12 shall be determined in accordance with that section.

  • (7) For purposes of calculating total cost under subsections 5(8) and 7(6),

    • (a) where the regional value content of the good is calculated on the basis of the net cost method and the producer has elected under subsection 6(15), 10(1), (3) or (6) or 11(1) to calculate the regional value content over a period, the total cost shall be calculated over that period; and

    • (b) in any other case, the producer may elect that the total cost be calculated over

      • (i) a month,

      • (ii) any of the four quarters that fall within the fiscal year of the producer of the good,

      • (iii) either of the two periods of six consecutive months that fall within the fiscal year of the producer of the good, or

      • (iv) the fiscal year of the producer of the good.

  • (8) An election made under paragraph (7)(b) may not be rescinded or modified with respect to the good or material, or the period, with respect to which the election is made.

  • (9) Where a producer chooses a month, a quarter or a six month period under paragraph (7)(b) with respect to a good or material, the producer shall be considered to have chosen under that paragraph a period or periods of the same duration for the remainder of the producer’s fiscal year with respect to that good or material.

  • (10) With respect to a good exported to a CCFTA country, an election to average is considered to have been made

    • (a) in the case of an election referred to in subsection 10(1), (3) or (6), if the election is received by the customs administration of that CCFTA country; and

    • (b) in the case of an election referred to in subsection (7), 6(15) or 11(1), if the customs administration of that CCFTA country is informed in writing during the course of a verification of the origin of the good that the election has been made.

 
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