CUSMA Rules of Origin Regulations — 18
LVC requirements — passenger vehicles 18 (1) In addition to the requirements in sections 13 to 17 and Schedule 1, a passenger vehicle is originating only if the vehicle producer certifies that the passenger vehicle meets an LVC requirement of (a) 30%, consisting of at least 15 percentage points of high-wage material and labour expenditures, no more than 10 percentage points of technology expenditures and no more than 5 percentage points of high-wage assembly expenditures, beginning on July 1, 2020 and ending on June 30, 2021; (b) 33%, consisting of at least 18 percentage points of high-wage material and labour expenditures, no more than 10 percentage points of technology expenditures and no more than 5 percentage points of high-wage assembly expenditures, beginning on July 1, 2021 and ending on June 30, 2022; (c) 36%, consisting of at least 21 percentage points of high-wage material and labour expenditures, no more than 10 percentage points of technology expenditures and no more than 5 percentage points of high-wage assembly expenditures, beginning on July 1, 2022 and ending on June 30, 2023; and (d) 40%, consisting of at least 25 percentage points of high-wage material and labour expenditures, no more than 10 percentage points of technology expenditures and no more than 5 percentage points of high-wage assembly expenditures, beginning on July 1, 2023. LVC requirement — light trucks or heavy trucks (2) In addition to the requirements set out in sections 13 through 17 and Schedule 1, a light truck or heavy truck is originating only if the vehicle producer certifies that the truck meets an LVC requirement of 45%, consisting of at least 30 percentage points based on high-wage material and labour expenditures, no more than 10 percentage points based on technology expenditures and no more than 5 percentage points based on high-wage assembly expenditures. Calculation of LVC requirement (3) For purposes of an LVC calculation for a passenger vehicle, light truck or heavy truck, a producer must include (a) an amount for high-wage materials used in production; (b) an amount for high-wage labour costs incurred in the assembly of the vehicle; (c) an amount for high-wage transportation or related costs for shipping materials to the location of the vehicle producer, if not included in the amount for high-wage materials; (d) a credit for technology expenditures; or (e) a credit for high-wage assembly expenditures. High wage materials (4) The amount that may be included for high-wage materials used in production is the net cost or the annual purchase value of materials that undergo production in a qualifying-wage-rate production plant and that are used in the production of passenger vehicles, light trucks or heavy trucks in a plant located in the territory of a CUSMA country. Certification periods (5) A plant engaged in the production of vehicles or parts may be certified as a qualifying wage-rate vehicle assembly plant or a qualifying-wage-rate production plant based on the average wage paid to direct production workers at the plant from July 1, 2020 until December 31, 2020 or from July 1, 2020 until June 30, 2021. In subsequent periods, the certification of a qualifying-wage-rate production plant based on a period less than 12 months is valid for the following period of the same length. The certification of a qualifying-wage-rate production plant based on a 12-month period is valid for the following 12 months. LVC calculation (6) For the purpose of meeting the LVC requirement a producer must use one of the following formulas: (a) the requirement based on net cost is determined by the formula LVC = ( (HWLC + HWM) NC X 100) + HWTC + HWAC where HWLC is the sum of the high-wage labour costs incurred in the assembly of the vehicle; HWM is the sum or the high-wage material expenditures used in production; NC is the net cost of the vehicle; HWTC is the credit for high-wage technology expenditures; and HWAC is the credit for high-wage assembly expe