CUSMA Rules of Origin Regulations — CUSMA Rules of Origin Regulations
Example 1 (subsection (1)): Producer A, located in CUSMA country A, imports unfinished bearing rings provided for in subheading 8482.99 into CUSMA country A from the territory of a non-CUSMA country. Producer A further processes the unfinished bearing rings into finished bearing rings, which are of the same subheading. The finished bearing rings of Producer A do not satisfy an applicable change in tariff classification and therefore do not qualify as originating goods. The net cost of the finished bearing rings (per unit) is calculated as follows: Product costs: Value of originating materials $0.15 Value of non-originating materials $0.75 Other product costs $0.35 Period costs (including $0.05 in excluded costs): $0.15 Other costs: $0.05 Total cost of the finished bearing rings, per unit: $1.45 Excluded costs (included in period costs): $0.05 Net cost of the finished bearing rings, per unit: $1.40 Producer A sells the finished bearing rings to Producer B, who is located in CUSMA country A, for $1.50 each. Producer B further processes them into bearings and intends to export the bearings to CUSMA country B. Although the bearings satisfy the applicable change in tariff classification, the bearings are subject to a regional value content requirement. Situation A Producer B does not choose to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. The net cost of the bearings (per unit) is calculated as follows: Product costs: Value of originating materials $0.45 Value of non-originating materials (value, per unit, of the bearing rings purchased from Producer A) $1.50 Other product costs $0.75 Period costs (including $0.05 in excluded costs): $0.15 Other costs: $0.05 Total cost of the bearings, per unit: $2.90 Excluded costs (included in period costs): $0.05 Net cost of the bearings, per unit: $2.85 Under the net cost method, the regional value content of the bearings is RVC = (NC − VNM) ÷ NC × 100 = ($2.85 − $1.50) ÷ $2.85 × 100 = 47.4% Therefore, the bearings are non-originating goods. Situation B Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. Producer A provides a statement described in paragraph (2)(a) to Producer B. The net cost of the bearings (per unit) is calculated as follows: Product costs: Value of originating materials ($0.45 + $0.15) $0.60 Value of non-originating materials (value, per unit, of the unfinished bearing rings imported by Producer A) $0.75 Other product costs ($0.75 + $0.35) $1.10 Period costs (($0.15 + $0.15), including $0.10 in excluded costs): $0.30 Other costs ($0.05 + $0.05): $0.10 Total cost of the bearings, per unit: $2.85 Excluded costs (included in period costs): $0.10 Net cost of the bearings, per unit: $2.75 Under the net cost method, the regional value content of the bearings is RVC = (NC − VNM) ÷ NC × 100 = ($2.75 − $0.75) ÷ $2.75 × 100 = 72.7% Therefore, the bearings are originating goods. Situation C Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. Producer A provides to Producer B a statement described in paragraph (2)(b) that specifies an amount equal to the net cost minus the value of non-originating materials used to produce the finished bearing rings ($1.40 - $0.75 = $0.65). The net cost of the bearings (per unit) is calculated as follows: Product costs: Value of originating materials ($0.45 + $0.65) $1.10 Value of non-originating materials ($1.50 − $0.65) $0.85 Other product costs $0.75 Period costs (including $0.05 in excluded costs): $0.15 Other costs: $0.05 Total cost of the bearings, per unit: $2.90 Excluded costs (included in period costs): $0.05 Net cost of the bearings, per unit: $2.85 Under the net cost method, the regional value content of the bearings is RVC = (NC − VNM) ÷ NC × 100 = ($2.85 − $0.85) ÷ $2.85× 100 = 70.2% Therefore, the bearings a