CUSMA Rules of Origin Regulations — *
Example 3: Average method Good A is subject to an applicable regional value content requirement. Producer A is using the transaction value method to determine the regional value content of Good A. Producer A determines the average value of non-originating Material A and the ratio of originating Material A to total value of originating Material A and non-originating Material A in the following table. Material Inventory Sales (Receipts of Material A) (Non-Originating Material) (Shipments of Good A) Date (m/d/y) Quantity (units) Total Value ($) Unit Cost * ($) Quantity (units) Total Value ($) Ratio Quantity (units) Receipt 12/18/20 100 (O 1 ) 100 1.00 Receipt 12/27/20 100 (N 2 ) 110 1.10 100 110.00 NEW AVG INV VALUE 200 (OI 3 ) 210 1.05 100 105.00 0.50 Receipt 01/01/21 1,000 (O) 1,000 1.00 NEW AVG INV VALUE 1,200 1,210 1.01 100 101.00 0.08 Receipt 01/05/21 1,000 (N) 1,100 1.10 1,000 1,100.00 NEW AVG INV VALUE 2,200 2,310 1.05 1,100 1,155.00 0.50 Shipment 01/10/21 (100) (105) 1.05 (50) (52.50) 100 Receipt 01/10/21 1,000 (O) 1,050 1.05 NEW AVG INV VALUE 3,100 3,255 1.05 1,050 1,102.50 0.34 Shipment 01/15/21 (700) (735) 1.05 (238) (249.90) 700 Receipt 01/16/21 2,000 (N) 2,200 1.10 2,000 2,200.00 NEW AVG INV VALUE 4,400 4,720 1.07 2,812 3,008.84 0.64 Shipment 01/20/21 (1,000) (1,070) 1.07 (640) (684.80) 1,000 Shipment 01/23/21 (900) (963) 1.07 (576) (616.32) 900 NEW AVG INV VALUE 2,500 2,687 1.07 1,596 1,707.24 0.64 * Unit cost is determined in accordance with section 8 of these Regulations. 1 “O” denotes originating materials. 2 “N” denotes non-originating materials. 3 “OI” denotes opening inventory. By applying the average method (1) before the shipment of the 100 units of Material A on 01/10/21, the ratio of units of originating Material A to total units of Material A in materials inventory was 0.50 (1,100 units ÷ 2,200 units) and the ratio of units of non-originating Material A to total units of Material A in materials inventory was 50% (1,100 units ÷ 2,200 units); based on those ratios, 50 units (100 units × 0.50) of originating Material A and 50 units (100 units × 0.50) of non-originating Material A are considered to have been used in the production of the 100 units of Good A shipped on 01/10/21; therefore, the value of non-originating Material A used in the production of those goods is considered to be $52.50 [100 units × $1.05 (average unit value) × 50%]; and the ratios are applied to the units of Material A remaining in materials inventory after the shipment: 1,050 units (2,100 units × 0.50) are considered to be originating materials and 1,050 units (2,100 units × 0.50) are considered to be non-originating materials; (2) before the shipment of the 700 units of Good A on 01/15/21, the ratio of units of originating Material A to total units of Material A in materials inventory was 66% (2,050 units ÷ 3,100 units) and the ratio of units of non-originating Material A to total units of Material A in materials inventory was 34% (1,050 units ÷ 3,100 units); based on those ratios, 462 units (700 units × 0.66) of originating Material A and 238 units (700 units × 0.34) of non-originating Material A are considered to have been used in the production of the 700 units of Good A shipped on 01/15/21; therefore, the value of non-originating Material A used in the production of those goods is considered to be $249.90 [700 units × $1.05 (average unit value) × 34%]; and the ratios are applied to the units of Material A remaining in materials inventory after the shipment: 1,584 units (2,400 units × 0.66) are considered to be originating materials and 816 units (2,400 units × 0.34) are considered to be non-originating materials; (3) before the shipment of the 1,000 units of Material A on 01/20/21, the ratio of units of originating Material A to total units of Material A in materials inventory was 36% (1,584 units ÷ 4,400 units) and the ratio of units of non-originating Material A to total units of Material A in materials inventory was 64% (2,816