Loading (50 kb)...'

(continued)
($20) x DCR ($23/
$35)]
IOAG (Good A) =
$19.72
Indirect Overhead
Allocated to Good
B
IOAG (Good B) =
[IO ($50) x DCR
($12/$35)] - [EC
($20) x DCR ($12/
$35)]
IOAG (Good B) =
$10.28








SCHEDULE VIII
VALUE OF MATERIALS
SECTION 1.
Definitions.
(1) For purposes of
this Schedule,
unless otherwise
stated,
``buying
commissions''
means fees paid by
a producer to that
producer's agent
for the agent's
services in
representing the
producer in the
purchase of a
material;
``customs
administration''
refers to the
customs
administration of
the NAFTA country
into whose
territory the
good, in the
production of
which the material
being valued is
used, is imported;
``materials of the
same class or
kind'' means, with
respect to
materials being
valued, materials
that are within a
group or range of
materials that
(a) is produced
by a particular
industry or
industry sector,
and
(b) includes
identical
materials or
similar
materials;
``producer'' refers
to
(a) in the case
of section
10(1)(b)(i) of
these
Regulations, the
producer of the
listed material,
and
(b) in any other
case, the
producer who
used the
material in the
production of a
good that is
subject to a
regional value-
content
requirement;
``seller'' refers
to a person who
sells the material
being valued to
the producer.
Interpretation
(2) Where it is to
be determined
under section 9(3)
of these
Regulations
whether the
customs value of a
material was
determined in a
manner consistent
with this Schedule
for purposes of
section 9(2) (c)
or (d) of these
Regulations, a
reference in this
Schedule to
``producer'' shall
be read as a
reference to
``person other
than the producer
who imports the
traced material
from outside the
territories of the
NAFTA countries.
SECTION 2.
(1) Except as
provided under
subsections (2)
and (3), the
transaction value
of a material
under Article
402(9)(a) of the
Agreement, as
implemented by
section 7(1)(b)
and sections 9(5)
and 10(2) of this
appendix, shall be
the price actually
paid or payable
for the material
determined in
accordance with
section 4 and
adjusted in
accordance with
section 5.
(2) There is no
transaction value
for a material
where the material
is not the subject
of a sale.
(3) The transaction
value of a
material is
unacceptable where
(a) there are
restrictions on
the disposition
or use of the
material by the
producer, other
than
restrictions
that
(i) are imposed
or required by
law or by the
public
authorities in
the territory
of the NAFTA
country in
which the
producer of
the good or
the seller of
the material
is located,
(ii) limit the
geographical
area in which
the material
may be used,
or
(iii) do not
substantially
affect the
value of the
material;
(b) the sale or
price actually
paid or payable
is subject to a
condition or
consideration
for which a
value cannot be
determined with
respect to the
material;
(c) part of the
proceeds of any
subsequent
disposal or use
of the material
by the producer
will accrue
directly or
indirectly to
the seller, and
an appropriate
addition to the
price actually
paid or payable
cannot be made
in accordance
with section
5(1)(d); and
(d) except as
provided in
section 3, the
producer and the
seller are
related persons
and the
relationship
between them
influenced the
price actually
paid or payable
for the
material.
(4) The conditions
or considerations
referred to in
subsection (3)(b)
include the
following
circumstances:
(a) the seller
establishes the
price actually
paid or payable
for the material
on condition
that the
producer will
also buy other
materials or
goods in
specified
quantities;
(b) the price
actually paid or
payable for the
material is
dependent on the
price or prices
at which the
producer sells
other materials
or goods to the
seller of the
material; and
(c) the price
actually paid or
payable is
established on
the basis of a
form of payment
extraneous to
the material,
such as where
the material is
a semi-finished
material that
has been
provided by the
seller to the
producer on
condition that
the seller will
receive a
specified
quantity of the
finished
material from
the producer.
(5) For purposes of
subsection (3)(b),
conditions or
considerations
relating to the
use of the
material shall not
render the
transaction value
unacceptable, such
as where the
producer
undertakes on the
producer's own
account, even
though by
agreement with the
seller, activities
relating to the
warranty of the
material used in
the production of
a good.
(6) Where objective
and quantifiable
data do not exist
with regard to the
additions required
to be made to the
price actually
paid or payable
under section
5(1), the
transaction value
cannot be
determined under
the provisions of
section 2(1). For
an illustration of
this, a royalty is
paid on the basis
of the price
actually paid or
payable in a sale
of a liter of a
particular good
that is produced
by using a
material that was
purchased by the
kilogram and made
up into a
solution. If the
royalty is based
partially on the
purchased material
and partially on
other factors that
have nothing to do
with that
material, such as
when the purchased
material is mixed
with other
ingredients and is
no longer
separately
identifiable, or
when the royalty
cannot be
distinguished from
special financial
arrangements
between the seller
and the producer,
it would be
inappropriate to
add the royalty
and the
transaction value
of the material
could not be
determined.
However, if the
amount of the
royalty is based
only on the
purchased material
and can be readily
quantified, an
addition to the
price actually
paid or payable
can be made and
the transaction
value can be
determined.
SECTION 3.
(1) In determining
whether the
transaction value
is unacceptable
under section
2(3)(d), the fact
that the seller
and the producer
are related
persons shall not
in itself be
grounds for the
customs
administration to
render the
transaction value
unacceptable. In
such cases, the
circumstances
surrounding the
sale shall be
examined and the
transaction value
shall be accepted
provided that the
relationship
between the seller
and the producer
did not influence
the price actually
paid or payable.
Where the customs
administration has
reasonable grounds
for considering
that the
relationship
between the seller
and the producer
influenced the
price, the customs
administration
shall communicate
the grounds to the
producer, and that
producer shall be
given a reasonable
opportunity to
respond to the
grounds
communicated by
the customs
administration. If
that producer so
requests, the
customs
administration
shall communicate
in writing the
grounds on which
it considers that
the relationship
between the seller
and the producer
influenced the
price actually
paid or payable.
(2) Subsection (1)
provides that,
where the seller
and the producer
are related
persons, the
circumstances
surrounding the
sale shall be
examined and the
transaction value
shall be accepted
as the value
provided that the
relationship
between the seller
and the producer
did not influence
the price actually
paid or payable.
It is not intended
under subsection
(1) that there
should be an
examination of the
circumstances in
all cases where
the seller and the
producer are
related persons.
Such an
examination will
only be required
where the customs
administration has
doubts that the
price actually
paid or payable is
acceptable because
of the
relationship
between the seller
and the producer.
Where the customs
administration
does not have
doubts that the
price actually
paid or payable is
acceptable, it
shall accept that
price without
requesting further
information. For
an illustration of
this, the customs
administration may
have previously
examined the
relationship
between the seller
and the producer,
or it may already
have detailed
information
concerning the
relationship
between the seller
and the producer,
and may already be
satisfied from
that examination
or information
that the
relationship
between them did
not influence the
price actually
paid or payable.
(3) In applying
subsection (1),
where the seller
and the producer
are related
persons and the
customs
administration has
doubts that the
transaction value
is acceptable
without further
inquiry, the
customs
administration
shall give the
producer an
opportunity to
supply such
further
information as may
be necessary to
enable it to
examine the
circumstances
surrounding the
sale. In such a
case, the customs
administration
shall examine the
relevant aspects
of the sale,
including the way
in which the
seller and the
producer organize
their commercial
relations and the
way in which the
price actually
paid or payable by
that producer for
the material being
valued was arrived
at, in order to
determine whether
the relationship
between the seller
and the producer
influenced that
price actually
paid or payable.
Where it can be
shown that the
seller and the
producer buy from
and sell to each
other as if they
were not related
persons, the price
actually paid or
payable shall be
considered as not
having been
influenced by the
relationship
between them. For
an illustration of
this, if the price
actually paid or
payable for the
material had been
settled in a
manner consistent
with the normal
pricing practices
of the industry in
question or with
the way in which
the seller settles
prices for sales
to unrelated
buyers, the price
actually paid or
payable shall be
considered as not
having been
influenced by the
relationship
between the
producer and the
seller. For
another
illustration of
this, where it is
shown that the
price actually
paid or payable
for the material
is adequate to
ensure recovery of
the total cost of
producing the
material plus a
profit that is
representative of
the seller's
overall profit
realized over a
representative
period of time,
such as on an
annual basis, in
sales of materials
of the same class
or kind, the price
actually paid or
payable shall be
considered as not
having been
influenced by the
relationship
between the seller
and the producer.
(4) In a sale
between a seller
and a producer who
are related
persons, the
transaction value
shall be accepted
and determined in
accordance with
section 2(1),
wherever the
seller or the
producer
demonstrates that
the transaction
value of the
material in that
sale closely
approximates one
of the following
test values that
occurs at or about
the same time as
the sale and is
chosen by the
seller or the
producer:
(a) the
transaction
value in sales
to unrelated
buyers of
identical
materials or
similar
materials, as
determined in
accordance with
section 2(1);
(b) the value of
identical
materials or
similar
materials, as
determined in
accordance with
section 9; or
(c) the value of
identical
materials or
similar
materials, as
determined in
accordance with
section 10.
(5) In applying a
test value
referred to in
subsection (4),
due account shall
be taken of
demonstrated
differences in
commercial levels,
quantity levels,
the value of the
elements specified
in section 5(1)(b)
and the costs
incurred by the
seller in sales to
unrelated buyers
that are not
incurred by the
seller in sales by
the seller to a
related person.
(6) The application
of a test value
referred to in
subsection (4)
shall be used at
the initiative of
the seller, or at
the initiative of
the producer with
the consent of the
seller, and shall
be used only for
comparison
purposes to
determine whether
the transaction
value of the
material is
acceptable. The
test value shall
not be used as the
transaction value
of that material.
(7) Subsection (4)
provides an
opportunity for
the seller or the
producer to
demonstrate that
the transaction
value closely
approximates a
test value
previously
accepted by the
customs
administration of
the NAFTA country
in which the
producer is
located, and is
therefore
acceptable under
subsection (1).
Where the
application of a
test value under
subsection (4)
demonstrates that
the transaction
value of the
material being
valued is
acceptable, the
customs
administration
shall not examine
the question of
influence in
regard to the
relationship
between the seller
and the producer
under subsection
(1). Where the
customs
administration
already has
sufficient
information
available, without
further inquiries,
that the
transaction value
closely
approximates one
of the test values
determined under
subsection (4),
the seller or the
producer is not
required to apply
a test value to
demonstrate that
the transaction
value is
acceptable under
that subsection.
(8) A number of
factors must be
taken into
consideration for
the purpose of
determining
whether the
transaction value
of the identical
materials or
similar materials
closely
approximates the
transaction value
of the material
being valued.
These factors
include the nature
of the material,
the nature of the
industry itself,
the season in
which the material
is sold, and
whether the
difference in
values is
commercially
significant. Since
these factors may
vary from case to
case, it would be
impossible to
apply an
acceptable
standardized
difference such as
a fixed amount or
fixed percentage
difference in each
case. For an
illustration of
this, a small
difference in
value in a case
involving one type
of material could
be unacceptable,
while a large
difference in a
case involving
another type of
material might be
acceptable for the
purposes of
determining
whether the
transaction value
closely
approximates a
test value set out
in subsection (4).
SECTION 4.
(1) The price
actually paid or
payable is the
total payment made
or to be made by
the producer to or
for the benefit of
the seller of the
material. The
payment need not
necessarily take
the form of a
transfer of money:
it may be made by
letters of credit
or negotiable
instruments.
Payment may be
made directly or
indirectly to the
seller. For an
illustration of
this, the
settlement by the
producer, whether
in whole or in
part, of a debt
owed by the
seller, is an
indirect payment.
(2) Activities
undertaken by the
producer on the
producer's own
account, other
than those for
which an
adjustment is
provided in
section 5, shall
not be considered
to be an indirect
payment, even
though the
activities might
be regarded as
being for the
benefit of the
seller.
(3) The transaction
value shall not
include charges
for construction,
erection,
assembly,
maintenance or
technical
assistance related
to the use of the
material by the
producer, provided
that they are
distinguished from
the price actually
paid or payable.
(4) The flow of
dividends or other
payments from the
producer to the
seller that do not
relate to the
purchase of the
material are not
part of the
transaction value.
SECTION 5.
(1) In determining
the transaction
value of the
material, the
following shall be
added to the price
actually paid or
payable:
(a) to the extent
that they are
incurred by the
producer with
respect to the
material being
valued and are
not included in
the price
actually paid or
payable,
(i) commissions
and brokerage
fees, except
buying
commissions,
and
(ii) the costs
of containers
which, for
customs
purposes, are
classified
with the
material under
the Harmonized
System;
(b) the value,
reasonably
allocated in
accordance with
subsection (12),
of the following
elements where
they are
supplied
directly or
indirectly to
the seller by
the producer
free of charge
or at reduced
cost for use in
connection with
the production
and sale of the
material, to the
extent that the
value is not
included in the
price actually
paid or payable:
(i) a material,
other than an
indirect
material, used
in the
production of
the material
being valued,
(ii) tools,
dies, molds
and similar
indirect
materials used
in the
production of
the material
being valued,
(iii) an
indirect
material,
other than
those referred
to in
subparagraph
(ii) or in
paragraphs
(c), (e) or
(f) of the
definition
``indirect
material'' set
out in Article
415 of the
Agreement, as
implemented by
section 2(1)
of this
appendix, used
in the
production of
the material
being valued,
and
(iv)
engineering,
development,
artwork,
design work,
and plans and
sketches
performed
outside the
territory of
the NAFTA
country in
which the
producer is
located that
are necessary
for the
production of
the material
being valued;
(c) the royalties
related to the
material, other
than charges
with respect to
the right to
reproduce the
material in the
territory of the
NAFTA country in
which the
producer is
located that the
producer must
pay directly or
indirectly as a
condition of
sale of the
material, to the
extent that such
royalties are
not included in
the price
actually paid or
payable; and
(d) the value of
any part of the
proceeds of any
subsequent
disposal or use
of the material
that accrues
directly or
indirectly to
the seller.
(2) The additions
referred to in
subsection (1)
shall be made to
the price actually
paid or payable
under this section
only on the basis
of objective and
quantifiable data.
(3) Where objective
and quantifiable
data do not exist
with regard to the
additions required
to be made to the
price actually
paid or payable
under subsection
(1), the
transaction value
cannot be
determined under
section 2(1).
(4) No additions
shall be made to
the price actually
paid or payable
for the purpose of
determining the
transaction value
except as provided
in this section.
(5) The amounts to
be added under
subsection (1)(a)
shall be those
amounts that are
recorded on the
books of the
producer.
(6) The value of
the elements
referred to in
subsection
(1)(b)(i) shall be
(a) where the
elements are
imported from
outside the
territory of the
NAFTA country in
which the seller
is located, the
customs value of
the elements,
(b) where the
producer, or a
related person
on behalf of the
producer,
purchases the
elements from an
unrelated person
in the territory
of the NAFTA
country in which
the seller is
located, the
price actually
paid or payable
for the
elements,
(c) where the
producer, or a
related person
on behalf of the
producer,
acquires the
elements from an
unrelated person
in the territory
of the NAFTA
country in which
the seller is
located other
than through a
purchase, the
value of the
consideration
related to the
acquisition of
the elements,
based on the
cost of the
consideration
that is recorded
on the books of
the producer or
the related
person, or
(d) where the
elements are
produced by the
producer, or by
a related
person, in the
territory of the
NAFTA country in
which the seller
is located, the
total cost of
the elements,
determined in
accordance with
subsection (7),
and shall include
the following
costs, that are
recorded on the
books of the
producer or the
related person
supplying the
elements on behalf
of the producer,
to the extent that
such costs are not
included under
paragraph (a)
through (d):
(e) the costs of
freight,
insurance,
packing, and all
other costs
incurred in
transporting the
elements to the
location of the
seller,
(f) duties and
taxes paid or
payable with
respect to the
elements, other
than duties and
taxes that are
waived,
refunded,
refundable or
otherwise
recoverable,
including credit
against duty or
tax paid or
payable,
(g) customs
brokerage fees,
including the
cost of in-house
customs
brokerage
services,
incurred with
respect to the
elements, and
(h) the cost of
waste and
spoilage
resulting from
the use of the
elements in the
production of
the material,
minus the value
of reusable
scrap or by-
product.
(7) For the
purposes of
subsection (6)(d),
the total cost of
the elements
referred to in
subsection
(1)(b)(i) shall be
(a) where the
elements are
produced by the
producer, at the
choice of the
producer,
(i) the total
cost incurred
with respect
to all goods
produced by
the producer,
calculated on
the basis of
the costs that
are recorded
on the books
of the
producer, that
can be
reasonably
allocated to
the elements
in accordance
with Schedule
VII, or
(ii) the
aggregate of
each cost
incurred by
the producer
that forms
part of the
total cost
incurred with
respect to the
elements,
calculated on
the basis of
the costs that
are recorded
on the books
of the
producer, that
can be
reasonably
allocated to
the elements
in accordance
with Schedule
VII; and
(b) where the
elements are
produced by a
person who is
related to the
producer, at the
choice of the
producer,
(i) the total
cost incurred
with respect
to all goods
produced by
that related
person,
calculated on
the basis of
the costs that
are recorded
on the books
of that
person, that
can be
reasonably
allocated to
the elements
in accordance
with Schedule
VII, or
(ii) the
aggregate of
each cost
incurred by
that related
person that
forms part of
the total cost
incurred with
respect to the
elements,
calculated on
the basis of
the costs that
are recorded
on the books
of that
person, that
can be
reasonably
allocated to
the elements
in accordance
with Schedule
VII.
(8) Except as
provided in
subsections (10)
and (11), the
value of the
elements referred
to in subsections
(1)(b)(ii) through
(iv) shall be
(a) the cost of
those elements
that is recorded
on the books of
the producer; or
(b) where such
elements are
provided by
another person
on behalf of the
producer and the
cost is not
recorded on the
books of the
producer, the
cost of those
elements that is
recorded on the
books of that
other person.
(9) Where the
elements referred
to in subsections
(1)(b)(ii) through
(iv) were
previously used by
or on behalf of
the producer, the
value of the
elements shall be
adjusted downward
to reflect that
use.
(10) Where the
elements referred
to in subsections
(1)(b)(ii) and
(iii) were leased
by the producer or
a person related
to the producer,
the value of the
elements shall be
the cost of the
lease that is
recorded on the
books of the
producer or that
related person.
(11) No addition
shall be made to
the price actually
paid or payable
for the elements
referred to in
subsection
(1)(b)(iv) that
are available in
the public domain,
other than the
cost of obtaining
copies of them.
(12) The producer
shall choose the
method of
allocating to the
material the value
of the elements
referred to in
subsections
(1)(b)(ii) through
(iv), provided
that the value is
reasonably
allocated to the
material in a
manner appropriate
to the
circumstances. The
methods the
producer may
choose to allocate
the value include
allocating the
value over the
number of units
produced up to the
time of the first
shipment or
allocating the
value over the
entire anticipated
production where
contracts or firm
commitments exist
for that
production. For an
illustration of
this, a producer
provides the
seller with a mold
to be used in the
production of the
material and
contracts with the
seller to buy
10,000 units of
that material. By
the time the first
shipment of 1,000
units arrives, the
seller has already
produced 4,000
units. In these
circumstances, the
producer may
choose to allocate
the value of the
mold over 4,000
units or 10,000
units but shall
not choose to
allocate the value
of the elements to
the first shipment
of 1,000 units.
The producer may
choose to allocate
the entire value
of the elements to
a single shipment
of material only
where that single
shipment comprises
all of the units
of the material
acquired by the
producer under the
contract or
commitment for
that number of
units of the
material between
the seller and the
producer.
(13) The addition
for the royalties
referred to in
subsection (1)(c)
shall be the
payment for the
royalties that is
recorded on the
books of the
producer, or where
the payment for
the royalties is
recorded on the
books of another
person, the
payment for the
royalties that is
recorded on the
books of that
other person.
(14) The value of
the proceeds
referred to in
subsection (1)(d)
shall be the
amount that is
recorded for such
proceeds on the
books of the
producer or the
seller.
SECTION 6.
(1) If there is no
transaction value
under section 2(2)
or the transaction
value is
unacceptable under
section 2(3), the
value of the
material, referred
to in Article
402(9)(b) of the
Agreement, as
implemented by
section
7(1)(b)(ii) of
part IV of this
appendix, shall be
the transaction
value of identical
materials sold, at
or about the same
time as the
material being
valued was shipped
to the producer,
to a buyer located
in the same
country as the
producer.
(2) In applying
this section, the
transaction value
of identical
materials in a
sale at the same
commercial level
and in
substantially the
same quantity of
materials as the
material being
valued shall be
used to determine
the value of the
material. Where no
such sale is
found, the
transaction value
of identical
materials sold at
a different
commercial level
or in different
quantities,
adjusted to take
into account the
differences
attributable to
the commercial
level or quantity,
shall be used,
provided that such
adjustments can be
made on the basis
of evidence that
clearly
establishes that
the adjustment is
reasonable and
accurate, whether
the adjustment
leads to an
increase or a
decrease in the
value.
(3) A condition for
adjustment under
subsection (2)
because of
different
commercial levels
or different
quantities is that
such adjustment be
made only on the
basis of evidence
that clearly
establishes that
an adjustment is
reasonable and
accurate. For an
illustration of
this, a bona fide
price list
contains prices
for different
quantities. If the
material being
valued consists of
a shipment of 10
units and the only
identical
materials for
which a
transaction value
exists involved a
sale of 500 units,
and it is
recognized that
the seller grants
quantity
discounts, the
required
adjustment may be
accomplished by
resorting to the
seller's bona fide
price list and
using the price
applicable to a
sale of 10 units.
This does not
require that sales
had to have been
made in quantities
of 10 as long as
the price list has
been established
as being bona fide
through sales at
other quantities.
In the absence of
such an objective
measure, however,
the determination
of a value under
this section is
not appropriate.
(4) If more than
one transaction
value of identical
materials is
found, the lowest
such value shall
be used to
determine the
value of the
material under
this section.
SECTION 7.
(1) If there is no
transaction value
under section 2(2)
or the transaction
value is
unacceptable under
section 2(3), and
the value of the
material cannot be
determined under
section 6, the
value of the
material, referred
to in Article
402(9)(b) of the
Agreement, as
implemented by
section
7(1)(b)(ii) of
part IV of this
appendix, shall be
the transaction
value of similar
materials sold, at
or about the same
time as the
material being
valued was shipped
to the producer,
to a buyer located
in the same
country as the
producer.
(2) In applying
this section, the
transaction value
of similar
materials in a
sale at the same
commercial level
and in
substantially the
same quantity of
materials as the
material being
valued shall be
used to determine
the value of the
material. Where no
such sale is
found, the
transaction value
of similar
materials sold at
a different
commercial level
or in different
quantities,
adjusted to take
into account the
differences
attributable to
the commercial
level or quantity,
shall be used,
provided that such
adjustments can be
made on the basis
of evidence that
clearly
establishes that
the adjustment is
reasonable and
accurate, whether
the adjustment
leads to an
increase or a
decrease in the
value.
(3) A condition for
adjustment under
subsection (2)
because of
different
commercial levels
or different
quantities is that
such adjustment be
made only on the
basis of evidence
that clearly
establishes that
an adjustment is
reasonable and
accurate. For an
illustration of
this, a bona fide
price list
contains prices
for different
quantities. If the
material being
valued consists of
a shipment of 10
units and the only
similar materials
for which a
transaction value
exists involved a
sale of 500 units,
and it is
recognized that
the seller grants
quantity
discounts, the
required
adjustment may be
accomplished by
resorting to the
seller's bona fide
price list and
using the price
applicable to a
sale of 10 units.
This does not
require that sales
had to have been
made in quantities
of 10 as long as
the price list has
been established
as being bona fide
through sales at
other quantities.
In the absence of
such an objective
measure, however,
the determination
of a value under
this section is
not appropriate.
(4) If more than
one transaction
value of similar
materials is
found, the lowest
such value shall
be used to
determine the
value of the
material under
this section.
SECTION 8.
If there is no
transaction value
under section 2(2)
or the transaction
value is
unacceptable under
section 2(3), and
the value of the
material cannot be
determined under
section 6 or 7,
the value of the
material, referred
to in Article
402(9)(b) of the
Agreement, as
implemented by
section
7(1)(b)(ii) of
part IV of this
appendix, shall be
determined under
section 9 or, when
the value cannot
be determined
under that
section, under
section 10 except
that, at the
request of the
producer, the
order of
application of
sections 9 and 10
shall be reversed.
SECTION 9.
(1) Under this
section, if
identical
materials or
similar materials
are sold in the
territory of the
NAFTA country in
which the producer
is located, in the
same condition as
the material was
in when received
by the producer,
the value of the
material, referred
to in Article
402(9)(b) of the
Agreement, as
implemented by
section
7(1)(b)(ii) of
part IV of this
appendix, shall be
based on the unit
price at which
those identical
materials or
similar materials
are sold, in the
greatest aggregate
quantity by the
producer or, where
the producer does
not sell those
identical
materials or
similar materials,
by a person at the
same trade level
as the producer,
at or about the
same time as the
material being
valued is received
by the producer,
to persons located
in that territory
who are not
related to the
seller, subject to
deductions for the
following:
(a) either the
amount of
commissions
usually earned
or the amount
generally
reflected for
profit and
general
expenses, in
connection with
sales, in the
territory of
that NAFTA
country, of
materials of the
same class or
kind as the
material being
valued; and
(b) taxes, if
included in the
unit price,
payable in the
territory of
that NAFTA
country, which
are either
waived, refunded
or recoverable
by way of credit
against taxes
actually paid or
payable.
(2) If neither
identical
materials nor
similar materials
are sold at or
about the same
time the material
being valued is
received by the
producer, the
value shall,
subject to the
deductions
provided for under
subsection (1), be
based on the unit
price at which
identical
materials or
similar materials
are sold in the
territory of the
NAFTA country in
which the producer
is located, in the
same condition as
the material was
in when received
by the producer,
at the earliest
date within 90
days after the
date the material
being valued was
received by the
producer.
(3) The expression
``unit price at
which those
identical
materials or
similar materials
are sold, in the
greatest aggregate
quantity'' in
subsection (1)
means the price at
which the greatest
number of units is
sold in sales
between unrelated
persons. For an
illustration of
this, materials
are sold from a
price list which
grants favorable
unit prices for
purchases made in
larger quantities.






----------------------------------------------------------------------------------------------------------------
Total quantity
Sale quantity Unit price Number of sales sold at each
price
----------------------------------------------------------------------------------------------------------------
1-10 units.............................. 100 10 sales of 5 units...................... 65
........... 5 sales of 3 units....................... ..............
11-25 units............................. 95 5 sales of 11 units...................... 55
........... 1 sale of 20 units....................... ..............
Over 25 units........................... 90 1 sale of 30 units....................... 80
........... 1 sale of 50 units....................... ..............
----------------------------------------------------------------------------------------------------------------







The greatest
number of units
sold at a
particular price
is 80; therefore,
the unit price in
the greatest
aggregate quantity
is 90.
As another
illustration of
this, two sales
occur. In the
first sale 500
units are sold at
a price of 95
currency units
each. In the
second sale 400
units are sold at
a price of 90
currency units
each. In this
illustration, the
greatest number of
units sold at a
particular price
is 500; therefore,
the unit price in
the greatest
aggregate quantity
is 95.
(4) Any sale to a
person who
supplies, directly
or indirectly,
free of charge or
at reduced cost
for use in
connection with
the production of
the material, any
of the elements
specified in
section 5(1)(b),
shall not be taken
into account in
establishing the
unit price for the
purposes of this
section.
(5) The amount
generally
reflected for
profit and general
expenses referred
to in subsection
(1)(a) shall be
taken as a whole.
The figure for the
purposes of
deducting an
amount for profit
and general
expenses shall be
determined on the
basis of
information
supplied by or on
behalf of the
producer unless
the figures
provided by the
producer are
inconsistent with
those usually
reflected in
sales, in the
country in which
the producer is
located, of
materials of the
same class or kind
as the material
being valued.
Where the figures
provided by the
producer are
inconsistent with
those figures, the
amount for profit
and general
expenses shall be
based on relevant
information other
than that supplied
by or on behalf of
the producer.
(6) For the
purposes of this
section, general
expenses are the
direct and
indirect costs of
marketing the
material in
question.
(7) In determining
either the
commissions
usually earned or
the amount
generally
reflected for
profit and general
expenses under
this section, the
question as to
whether certain
materials are
materials of the
same class or kind
as the material
being valued shall
be determined on a
case-by-case basis
with reference to
the circumstances
involved. Sales in
the country in
which the producer
is located of the
narrowest group or
range of materials
of the same class
or kind as the
material being
valued, for which
the necessary
information can be
provided, shall be
examined. For the
purposes of this
section,
``materials of the
same class or
kind'' includes
materials imported
from the same
country as the
material being
valued as well as
materials imported
from other
countries or
acquired within
the territory of
the NAFTA country
in which the
producer is
located.
(8) For the
purposes of
subsection (2),
the earliest date
shall be the date
by which sales of
identical
materials or
similar materials
are made, in
sufficient
quantity to
establish the unit
price, to other
persons in the
territory of the
NAFTA country in
which the producer
is located.
SECTION 10.
(1) Under this
section, the value
of a material,
referred to in
Article 402(9)(b)
of the Agreement,
as implemented by
section
7(1)(b)(ii) of
part IV of this
appendix, shall be
the sum of
(a) the cost or
value of the
materials used
in the
production of
the material
being valued, as
determined on
the basis of the
costs that are
recorded on the
books of the
producer of the
material,
(b) the cost of
producing the
material being
valued, as
determined on
the basis of the
costs that are
recorded on the
books of the
producer of the
material, and
(c) an amount for
profit and
general expenses
equal to that
usually
reflected in
sales
(i) where the
material being
valued is
imported by
the producer
into the
territory of
the NAFTA
country in
which the
producer is
located, to
persons
located in the
territory of
the NAFTA
country in
which the
producer is
located by
producers of
materials of
the same class
or kind as the
material being
valued who are
located in the
country in
which the
material is
produced, and
(ii) where the
material being
valued is
acquired by
the producer
from another
person located
in the
territory of
the NAFTA
country in
which the
producer is
located, to
persons
located in the
territory of
the NAFTA
country in
which the
producer is
located by
producers of
materials of
the same class
or kind as the
material being
valued who are
located in the
country in
which the
producer is
located,
(d) the value of
elements
referred to in
section
5(1)(b)(i),
determined in
accordance with
section 5(6),
and
(e) the value of
elements
referred to in
sections
5(1)(b)(ii)
through (iv),
determined in
accordance with
section 5(8) and
reasonably
allocated to the
material in
accordance with
section 5(12).
(2) For purposes of
subsections (1)(a)
and (b), where the
costs recorded on
the books of the
producer of the
material relate to
the production of
other goods and
materials as well
as to the
production of the
material being
valued, the costs
referred to in
subsections (1)(a)
and (b) with
respect to the
material being
valued shall be
those costs
recorded on the
books of the
producer of the
material that can
be reasonably
allocated to that
material in
accordance with
Schedule VII.
(3) The amount for
profit and general
expenses referred
to in subsection
(1)(c) shall be
determined on the
basis of
information
supplied by or on
behalf of the
producer of the
material being
valued unless the
profit and general
expenses figures
that are supplied
with that
information are
inconsistent with
those usually
reflected in sales
by producers of
materials of the
same class or kind
as the material
being valued who
are located in the
country in which
the material is
produced or the
producer is
located, as the
case may be. The
information
supplied shall be
prepared in a
manner consistent
with generally
accepted
accounting
principles of the
country in which
the material being
valued is
produced. Where
the material is
produced in the
territory of a
NAFTA country, the
information shall
be prepared in
accordance with
the Generally
Accepted
Accounting
Principles set out
in the authorities
listed for that
NAFTA country in
Schedule XII.
(4) For purposes of
subsection (1)(c)
and subsection
(3), general
expenses means the
direct and
indirect costs of
producing and
selling the
material that are
not included under
subsections (1)(a)
and (b).
(5) For purposes of
subsection (3),
the amount for
profit and general
expenses shall be
taken as a whole.
Where, in the
information
supplied by or on
behalf of the
producer of a
material, the
profit figure is
low and the
general expenses
figure is high,
the profit and
general expense
figures taken
together may
nevertheless be
consistent with
those usually
reflected in sales
of materials of
the same class or
kind as the
material being
valued. Where the
producer of a
material can
demonstrate that
it is taking a nil
or low profit on
its sales of the
material because
of particular
commercial
circumstances, its
actual profit and
general expense
figures shall be
taken into
account, provided
that the producer
of the material
has valid
commercial reasons
to justify them
and its pricing
policy reflects
usual pricing
policies in the
branch of industry
concerned. For an
illustration of
this, such a
situation might
occur where
producers have
been forced to
lower prices
temporarily
because of an
unforeseeable drop
in demand, or
where the
producers sell the
material to
complement a range
of materials and
goods being
produced in the
country in which
the material is
sold and accept a
low profit to
maintain
competitiveness. A
further
illustration is
where a material
was being launched
and the producer
accepted a nil or
low profit to
offset high
general expenses
associated with
the launch.
(6) Where the
figures for the
profit and general
expenses supplied
by or on behalf of
the producer of
the material are
not consistent
with those usually
reflected in sales
of materials of
the same class or
kind as the
material being
valued that are
made by other
producers in the
country in which
that material is
sold, the amount
for profit and
general expenses
may be based on
relevant
information other
than that supplied
by or on behalf of
the producer of
the material.
(7) Where a customs
administration
uses information
other than that
supplied by or on
behalf of the
producer of the
material for the
purposes of
determining the
value of a
material under
this section, the
customs
administration
shall communicate
to the producer,
if that producer
so requests, the
source of such
information, the
data used and the
calculations based
upon such data,
subject to the
provisions on
confidentiality
under Article 507
of the Agreement,
as implemented in
each NAFTA
country.
(8) Whether certain
materials are of
the same class or
kind as the
material being
valued shall be
determined on a
case-by-case basis
with reference to
the circumstances
involved. For
purposes of
determining the
amount for profit
and general
expenses usually
reflected under
the provisions of
this section,
sales of the
narrowest group or
range of materials
of the same class
or kind, which
includes the
material being
valued, for which
the necessary
information can be
provided, shall be
examined. For the
purposes of this
section, the
materials of the
same class or kind
must be from the
same country as
the material being
valued.
SECTION 11.
(1) Where there is
no transaction
value under
section 2(2) or
the transaction
value is
unacceptable under
section 2(3), and
the value of the
materials cannot
be determined
under sections 6
through 10, the
value of the
material, referred
to in Article
402(9)(b) of the
Agreement, as
implemented by
section
7(1)(b)(ii) of
part IV of this
appendix, shall be
determined under
this section using
reasonable means
consistent with
the principles and
general provisions
of this Schedule
and on the basis
of data available
in the country in
which the producer
is located.
(2) The value of
the material
determined under
this section shall
not be determined
on the basis of
(a) a valuation
system which
provides for the
acceptance of
the higher of
two alternative
values;
(b) a cost of
production other
than the value
determined in
accordance with
section 10;
(c) minimum
values;
(d) arbitrary or
fictitious
values;
(e) where the
material is
produced in the
territory of the
NAFTA country in
which the
producer is
located, the
price of the
material for
export from that
territory; or
(f) where the
material is
imported, the
price of the
material for
export to a
country other
than to the
territory of the
NAFTA country in
which the
producer is
located.
(3) To the greatest
extent possible,
the value of the
material
determined under
this section shall
be based on the
methods of
valuation set out
in sections 2
through 10, but a
reasonable
flexibility in the
application of
such methods would
be in conformity
with the aims and
provisions of this
section. For an
illustration of
this, under
section 6, the
requirement that
the identical
materials should
be sold at or
about the same
time as the time
the material being
valued is shipped
to the producer
could be flexibly
interpreted.
Similarly,
identical
materials produced
in a country other
than the country
in which the
material is
produced could be
the basis for
determining the
value of the
material, or the
value of identical
materials already
determined under
section 9 could be
used. For another
illustration,
under section 7,
the requirement
that the similar
materials should
be sold at or
about the same
time as the
material being
valued are shipped
to the producer
could be flexibly
interpreted.
Likewise, similar
materials produced
in a country other
than the country
in which the
material is
produced could be
the basis for
determining the
value of the
material, or the
value of similar
materials already
determined under
the provisions of
section 9 could be
used. For a
further
illustration,
under section 9,
the ninety days
requirement could
be administered
flexibly.
SCHEDULE IX
METHODS FOR
DETERMINING THE
VALUE OF NON-
ORIGINATING
MATERIALS THAT ARE
IDENTICAL MATERIALS
AND THAT ARE USED
IN THE PRODUCTION
OF A GOOD
Definitions and
Interpretation
SECTION 1.
Definitions.
For purposes of
this Schedule,
``FIFO method''
means the method
by which the value
of non-originating
materials first
received in
materials
inventory,
determined in
accordance with
section 7 of this
appendix, is
considered to be
the value of non-
originating
materials used in
the production of
the good first (continued)