CUSMA Rules of Origin Regulations — 7
se varies from 3 km to 130 km. The point of direct shipment for each of the goods is the warehouse. Example 3: Point of direct shipment (with respect to the definition adjusted to exclude any costs incurred in the international shipment of the good ) A producer has only one factory, located near the centre of one of the CUSMA countries, at which the producer manufactures office chairs. The office chairs are shipped from that factory to three warehouses leased by the producer, one on the west coast, one near the factory and one on the east coast. The office chairs are shipped to buyers from these warehouses, the shipping location depending on the shipping distance from the buyer. Buyers closest to the west coast warehouse are normally supplied by the west coast warehouse, buyers closest to the east coast are normally supplied by the warehouse located on the east coast and buyers closest to the warehouse near the factory are normally supplied by that warehouse. In this case, the point of direct shipment is the location of the warehouse from which the office chairs are normally shipped to customers in the location in which the buyer is located. Example 4 (subsection (3)): Net cost method A producer located in CUSMA country A sells Good A that is subject to a regional value content requirement to a buyer located in CUSMA country B. The producer of Good A chooses to calculate the regional value content of that good using the net cost method. All applicable requirements of these Regulations, other than the regional value content requirement, have been met. The applicable regional value content requirement is 50%. In order to calculate the regional value content of Good A, the producer first calculates the net cost of Good A. Under paragraph (11)(a), the net cost is the total cost of Good A (the aggregate of the product costs, period costs and other costs) per unit, minus the excluded costs (the aggregate of the sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs) per unit. The producer uses the following figures to calculate the net cost: Product costs: Value of originating materials $30.00 Value of non-originating materials $40.00 Other product costs $20.00 Period costs: $10.00 Other costs: $0.00 Total cost of Good A, per unit: $100.00 Excluded costs: Sales promotion, marketing and after-sales service costs $5.00 Royalties $2.50 Shipping and packing costs $3.00 Non-allowable interest costs $1.50 Total excluded costs: $12.00 The net cost is the total cost of Good A, per unit, minus the excluded costs. Total cost of Good A, per unit: $100.00 Excluded costs: - $12.00 Net cost of Good A, per unit: $88.00 The net cost ($88) and the value of non-originating materials ($40) are needed in order to calculate the regional value content. The producer calculates the regional value content of Good A under the net cost method in the following manner: RVC = (NC − VNM) ÷ NC × 100 = (88 - 40) ÷ 88 × 100 = 54.5% Therefore, under the net cost method, Good A qualifies as an originating good, with a regional value content of 54.5%. Example 5 (paragraph (11)(a)): A producer in a CUSMA country produces Good A and Good B during the producer’s fiscal year. The producer uses the following figures, which are recorded on the producer’s books and represent all of the costs incurred with respect to both Good A and Good B, to calculate the net cost of those goods: Product costs: Value of originating materials $2,000 Value of non-originating materials $1,000 Other product costs $2,400 Period costs (including $1,200 in excluded costs): $3,200 Other costs: $400 Total cost of Good A and Good B: $9,000 The net cost is the total cost of Good A and Good B, minus the excluded costs incurred with respect to those goods. Total cost of Good A and Good B: $9,000 Excluded costs: - $1,200 Net cost of Good A and Good B: $7,800 The net cost must then be reasonably allocated, in accordance with Schedule