CUSMA Rules of Origin Regulations — 7
spect 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 5, to Good A and Good B. Example 6 (paragraph (11)(b)): A producer in a CUSMA country produces Good A and Good B during the producer’s fiscal year. In order to calculate the regional value content of Good A and Good B, the producer uses the following figures that are recorded on the producer’s books and incurred with respect to 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 Under paragraph (11)(b), the total cost of Good A and Good B is then reasonably allocated, in accordance with Schedule 5, to those goods. The costs are allocated in the following manner: Allocated to Good A Allocated to Good B Total cost ($9,000 for both Good A and Good B) $5,220 $3,780 The excluded costs ($1,200) that are included in the total cost allocated to Good A and Good B, in accordance with Schedule 5, are subtracted from that amount. Total excluded costs: Excluded cost allocated to Good A ($) Excluded cost allocated to Good B ($) Sales promotion, marketing and after-sale service costs $500 290 210 Royalties $200 116 84 Shipping and packing costs $500 290 210 Net cost (total cost minus excluded costs): $4,524 $3,276 Therefore the net cost of Good A is $4,524 and the net cost of Good B is $3,276. Example 7 (paragraph (11)(c)): A producer located in a CUSMA country produces Good C and Good D. The following costs are recorded on the producer’s books for the months of January, February and March, and each cost that forms part of the total cost is reasonably allocated, in accordance with Schedule 5, to Good C and Good D. Total cost: Good C and Good D (in thousands of dollars) Allocated to Good C (in thousands of dollars) Allocated to Good D (in thousands of dollars) Product costs: Value of originating materials 100 0 100 Value of non-originating materials 900 800 100 Other product costs 500 300 200 Period costs (including $420 in excluded costs): 5,679 3,036 2,643 Minus excluded costs 420 300 120 Other costs: 0 0 0 Total cost (aggregate of product costs, period costs and other costs): 6,759 3,836 2,923 Example 8 (subsection (12)): Producer A, located in a CUSMA country, produces Good A that is subject to a regional value content requirement. The producer chooses to calculate the regional value content of that good using the net cost method. Producer A buys Material X from Producer B, located in a CUSMA country. Material X is a non-originating material and is used in the production of Good A. Producer A provides Producer B, at no charge, with moulds to be used in the production of Material X. The cost of the moulds that is recorded on the books of Producer A has been expensed in the current year. Pursuant to subparagraph 4(1)(b)(ii) of Schedule 6, the value of the moulds is included in the value of Material X. Therefore, the cost of the moulds that is recorded on the books of Producer A and that has been expensed in the current year cannot be included as a separate cost in the net cost of Good A because it has already been included in the value of Material X. Example 9 (subsection (12)): Producer A, located in a CUSMA country, produces Good A that is subject to a regional value content requirement. The producer chooses to calculate the regional value content of that good using the net cost method and averages the calculation over the producer’s fiscal year under subsection (15). Producer A determines that during that fiscal year Producer A incurred a gain on foreign currency conversion of $10,000 and a loss on foreign currency conversion of $8,000, resulting in a net gain of $2,000. Producer A also determines that $7,000 of the gain on foreign currency conv