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(continued)
material that is
designated as an
intermediate
material must
qualify as an
originating
material under
these
Regulations;
(b) the
designation of a
self-produced
material as an
intermediate
material shall
be made solely
at the choice of
the producer of
that self-
produced
material; and
(c) except as
otherwise
provided in
section 14(4),
the proviso set
out in
subsection (4)
does not apply
with respect to
an intermediate
material used by
another producer
in the
production of a
material that is
subsequently
acquired and
used in the
production of a
good by the
producer
referred to in
subsection (4).
Valuation of an
intermediate
material
(6) The value of an
intermediate
material shall be,
at the choice of
the producer of
the good,
(a) the total
cost incurred
with respect to
all goods
produced by the
producer that
can be
reasonably
allocated to
that
intermediate
material in
accordance with
Schedule VII; or
(b) the aggregate
of each cost
that forms part
of the total
cost incurred
with respect to
that
intermediate
material that
can be
reasonably
allocated to
that
intermediate
material in
accordance with
Schedule VII.
Calculation of
total cost
(7) Total cost
under subsection
(6) consists of
the costs referred
to in section
2(6), and is
calculated in
accordance with
that section and
section 2(7).
Rescission of a
designation during
course of
verification;
option to designate
another
intermediate
material
(8) Where a
producer of a good
designates a self-
produced material
as an intermediate
material under
subsection (4) and
the customs
administration of
a NAFTA country
into which the
good is imported
determines during
a verification of
origin of the good
that the
intermediate
material is a non-
originating
material and
notifies the
producer of this
in writing before
the written
determination of
whether the good
qualifies as an
originating good,
the producer may
rescind the
designation, and
the regional value
content of the
good shall be
calculated as
though the self-
produced material
were not so
designated.
(9) A producer of a
good who rescinds
a designation
under subsection
(8)
(a) shall retain
any rights of
review and
appeal under
Article 510 of
the Agreement,
as implemented
in each NAFTA
country, with
respect to the
determination of
the origin of
the intermediate
material as
though the
producer did not
rescind the
designation; and
(b) may, not
later than 30
days after the
customs
administration
referred to in
subsection (8)
notifies the
producer in
writing that the
self-produced
material
referred to in
paragraph (a) is
a non-
originating
material,
designate as an
intermediate
material another
self-produced
material that is
incorporated
into the good,
subject to the
proviso set out
in subsection
(4).
(10) Where a
producer of a good
designates another
self-produced
material as an
intermediate
material under
subsection (9)(b)
and the customs
administration
referred to in
subsection (8)
determines during
the verification
of origin of the
good that that
self-produced
material is a non-
originating
material,
(a) the producer
may rescind the
designation, and
the regional
value content of
the good shall
be calculated as
though the self-
produced
material were
not so
designated;
(b) the producer
shall retain any
rights of review
and appeal under
Article 510 of
the Agreement,
as implemented
in each NAFTA
country, with
respect to the
determination of
the origin of
the intermediate
material as
though the
producer did not
rescind the
designation; and
(c) the producer
may not
designate
another self-
produced
material that is
incorporated
into the good as
an intermediate
material.
Indirect Materials;
deemed originating;
value as recorded
on books of
producer
(11) For purposes
of determining
whether a good is
an originating
good, an indirect
material that is
used in the
production of the
good
(a) shall be
considered to be
an originating
material,
regardless of
where that
indirect
material is
produced; and
(b) if the good
is subject to a
regional value-
content
requirement, for
purposes of
calculating the
net cost under
the net cost
method, the
value of the
indirect
material shall
be the costs of
that material
that are
recorded on the
books of the
producer of the
good.
Packaging Materials
and Containers;
origin disregarded
for tariff change
rules
(12) Packaging
materials and
containers, if
classified under
the Harmonized
System with the
good that is
packaged therein,
shall be
disregarded for
purposes of
(a) determining
whether all of
the non-
originating
materials used
in the
production of
the good undergo
an applicable
change in tariff
classification;
and
(b) determining
under section
5(1) the value
of non-
originating
materials that
do not undergo
an applicable
change in tariff
classification.
Actual originating
status considered
for RVC
requirement;
valuation of
packaging
(13) Where
packaging
materials and
containers are
classified under
the Harmonized
System with the
good that is
packaged therein
and that good is
subject to a
regional value-
content
requirement, the
value of those
packaging
materials and
containers shall
be taken into
account as
originating
materials or non-
originating
materials, as the
case may be, for
purposes of
calculating the
regional value
content of the
good.
(14) For purposes
of subsection
(13), where
packaging
materials and
containers are
self-produced
materials, the
producer may
choose to
designate those
materials as
intermediate
materials under
subsection (4).
Packing materials
and containers;
disregarded for
tariff change rule
and for RVC
requirement; value
as recorded on
books
(15) For purposes
of determining
whether a good is
an originating
good, packing
materials and
containers in
which the good is
packed
(a) shall be
disregarded for
purposes of
determining
whether
(i) the non-
originating
materials used
in the
production of
the good
undergo an
applicable
change in
tariff
classification
, and
(ii) the good
satisfies a
regional value-
content
requirement;
and
(b) if the good
is subject to a
regional value-
content
requirement, the
value of the
packing
materials and
containers shall
be the costs
thereof that are
recorded on the
books of the
producer of the
good.
Fungible materials;
fungible commingled
goods; inventory
management methods
for determining
whether originating
(16) Subject to
subsection (16.1),
for purposes of
determining
whether a good is
an originating
good,
(a) where
originating
materials and
non-originating
materials that
are fungible
materials
(i) are withdrawn
from an
inventory in one
location and
used in the
production of
the good, or
(ii) are
withdrawn from
inventories in
more than one
location in the
territory of one
or more of the
NAFTA countries
and used in the
production of
the good at the
same production
facility,
the determination
of whether the
materials are
originating
materials may be
made on the
basis of any of
the applicable
inventory
management
methods set out
in Schedule X;
and
(b) where
originating
goods and non-
originating
goods that are
fungible goods
are physically
combined or
mixed in
inventory and
prior to
exportation do
not undergo
production or
any other
operation in the
territory of the
NAFTA country in
which they were
physically
combined or
mixed in
inventory, other
than unloading,
reloading or any
other operation
necessary to
preserve the
goods in good
condition or to
transport the
goods for
exportation to
the territory of
another NAFTA
country, the
determination of
whether the good
is an
originating good
may be made on
the basis of any
of the
applicable
inventory
management
methods set out
in Schedule X.
(16.1) Where
fungible materials
referred to in
subsection (16)(a)
and fungible goods
referred to in
subsection (16)(b)
are withdrawn from
the same
inventory, the
inventory
management method
used for the
materials must be
the same as the
inventory
management method
used for goods,
and where the
averaging method
is used, the
respective
averaging periods
for fungible
materials and
fungible goods are
to be used.
(16.2) A choice of
inventory
management methods
under subsection
(16) shall be
considered to have
been made when the
customs
administration of
the NAFTA country
into which the
good is imported
is informed in
writing of the
choice during the
course of a
verification of
the origin of the
good.
Accessories, spare
parts and tools;
deemed originating
for tariff change
rule; actual origin
applicable for RVC
requirement
(17) Accessories,
spare parts or
tools that are
delivered with a
good and form part
of the good's
standard
accessories, spare
parts or tools are
originating
materials if the
good is an
originating good,
and shall be
disregarded for
purposes of
determining
whether all the
non-originating
materials used in
the production of
the good undergo
an applicable
change in tariff
classification or
determining under
section 5(1) the
value of non-
originating
materials that do
not undergo an
applicable change
in tariff
classification,
provided that
(a) the
accessories,
spare parts or
tools are not
invoiced
separately from
the good; and
(b) the
quantities and
value of the
accessories,
spare parts or
tools are
customary for
the good, within
the industry
that produces
the good.
(18) Where a good
is subject to a
regional value-
content
requirement, the
value of
accessories, spare
parts and tools
that are delivered
with that good and
form part of the
good's standard
accessories, spare
parts or tools
shall be taken
into account as
originating or non-
originating
materials, as the
case may be, in
calculating the
regional value
content of the
good.
(19) For purposes
of subsection
(18), where
accessories, spare
parts and tools
are self-produced
materials, the
producer may
choose to
designate those
materials as
intermediate
materials under
subsection (4).
Examples
illustrating the
provisions on
materials
(20) Each of the
following examples
is an ``Example''
as referred to in
section 2(4).








Example 1: section
7(2), Customs
Value not
Determined in a
Manner Consistent
with Schedule VIII
Producer A,
located in NAFTA
country A, imports
material A into
NAFTA country A.
Producer A
purchased material
A from a middleman
located in country
B. The middleman
purchased the
material from a
manufacturer
located in country
B. Under the laws
in NAFTA country A
that implement the
Agreement on
Implementation of
Article VII of the
General Agreement
on Tariffs and
Trade, the customs
value of material
A was based on the
price actually
paid or payable by
the middleman to
the manufacturer.
Producer A uses
material A to
produce Good C,
and exports Good C
to NAFTA country
D. Good C is
subject to a
regional value-
content
requirement.
Under section 4(1)
of Schedule VIII,
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.
Section 1 of that
Schedule defines
producer and
seller for
purposes of the
Schedule. A
producer is the
person who uses
the material in
the production of
a good that is
subject to a
regional value-
content
requirement. A
seller is the
person who sells
the material being
valued to the
producer.
The customs value
of material A was
not determined in
a manner
consistent with
Schedule VIII
because it was
based on the price
actually paid or
payable by the
middleman to the
manufacturer,
rather than on the
price actually
paid or payable by
Producer A to the
middleman. Thus,
section 7(2)
applies and
material A is
valued in
accordance with
Schedule VIII.
Example 2: section
7(5), Value of
Intermediate
Materials
A producer located
in a NAFTA country
produces Good B,
which is subject
to a regional
value-content
requirement under
section 4(2)(b).
The producer also
produces Material
A, which is used
in the production
of Good B. Both
originating
materials and non-
originating
materials are used
in the production
of Material A.
Material A is
subject to a
change in tariff
classification
requirement under
section 4(2)(a).
The costs to
produce Material A
are the following:





------------------------------------------------------------------------

Product costs:
Value of originating materials......................... $1.00
Value of non-originating materials..................... 7.50
Other product costs.................................... 1.50
Period costs (including $0.30 in royalties)................ 0.50
Other costs................................................ 0.10
------------
Total cost of Material A................................... $10.60
------------------------------------------------------------------------







The producer
designates
Material A as an
intermediate
material and
determines that,
because all of the
non-originating
materials that are
used in the
production of
Material A undergo
an applicable
change in tariff
classification set
out in Schedule I,
Material A would,
under paragraph
4(2)(a) qualify as
an originating
material. The cost
of the non-
originating
materials used in
the production of
Material A is
therefore not
included in the
value of non-
originating
materials that are
used in the
production of Good
B for the purpose
of determining the
regional value
content of Good B.
Because Material A
has been
designated as an
intermediate
material, the
total cost of
Material A, which
is $10.60, is
treated as the
cost of
originating
materials for the
purpose of
calculating the
regional value
content of Good B.
The total cost of
Good B is
determined in
accordance with
the following
figures:





------------------------------------------------------------------------

Product costs:
Value of originating materials
_intermediate materials............................ $10.60
_other materials................................... 3.00
Value of non-originating materials..................... 5.50
Other product costs.................................... 6.50
Period costs............................................... 2.50
Other costs................................................ 0.10
------------
Total cost of Good B....................................... $28.20
------------------------------------------------------------------------







Example 3: section
7(5), Effects of
the Designation of
Self-produced
Materials on Net
Cost
The ability to
designate
intermediate
materials helps to
put the vertically
integrated
producer who is
self-producing
materials that are
used in the
production of a
good on par with a
producer who is
purchasing
materials and
valuing those
materials in
accordance with
subsection 7(1).
The following
situations
demonstrate how
this is achieved:
Situation 1
A producer located
in a NAFTA country
produces Good B,
which is subject
to a regional
value-content
requirement of 50
percent under the
net cost method.
Good B satisfies
all other
applicable
requirements of
these Regulations.
The producer
purchases Material
A, which is used
in the production
of Good B, from a
supplier located
in a NAFTA
country. The value
of Material A
determined in
accordance with
subsection 7(1) is
$11.00. Material A
is an originating
material. All
other materials
used in the
production of Good
B are non-
originating
materials. The net
cost of Good B is
determined as
follows:





------------------------------------------------------------------------

Product costs:
Value of originating materials (Material A)............ $11.00
Value of non-originating materials..................... 5.50
Other product costs.................................... 6.50
Period costs: (including $0.20 in excluded costs).......... 0.50
Other costs................................................ 0.10
------------
Total cost of Good B....................................... $23.60
============
Excluded costs: (included in period costs)................. -0.20
------------
Net cost of Good B......................................... $23.40
------------------------------------------------------------------------







The regional value
content of Good B
is calculated as
follows:









The regional value
content of Good B
is 76.5 percent,
and Good B,
therefore,
qualifies as an
originating good.
Situation 2
A producer located
in a NAFTA country
produces Good B,
which is subject
to a regional
value-content
requirement of 50
percent under the
net cost method.
Good B satisfies
all other
applicable
requirements of
these Regulations.
The producer self-
produces Material
A which is used in
the production of
Good B. The costs
to produce
Material A are the
following:





------------------------------------------------------------------------

Product costs:
Value of originating materials......................... $1.00
Value of non-originating materials..................... 7.50
Other product costs.................................... 1.50
Period costs: (including $0.20 in excluded costs).......... 0.50
Other costs................................................ 0.10
------------
Total cost of Material A................................... $10.60
------------------------------------------------------------------------







Additional costs
to produce Good B
are the following:





------------------------------------------------------------------------

Product costs:
Value of originating materials......................... $0.00
Value of non-originating materials..................... 5.50
Other product costs.................................... 6.50
Period costs: (including $0.20 in excluded costs).......... 0.50
Other costs................................................ 0.10
------------
Total additional costs..................................... $12.60
------------------------------------------------------------------------







The producer does
not designate
Material A as an
intermediate
material under
subsection 7(4).
The net cost of
Good B is
calculated as
follows:






----------------------------------------------------------------------------------------------------------------
Costs of Material
A (not designated
as an Additional Costs Total
intermediate to Produce Good B
material)
----------------------------------------------------------------------------------------------------------------
Product costs:
Value of originating materials........................... $1.00 $0.00 $1.00
Value of non-originating materials....................... 7.50 5.50 13.00
Other product costs...................................... 1.50 6.50 8.00
Period costs (including $0.20 in excluded costs)............. 0.50 0.50 1.00
Other costs.................................................. 0.10 0.10 0.20
--------------------------------------------------
Total cost of Good B......................................... $10.60 $12.60 $23.20
==================================================
Excluded costs (in period costs)............................. 0.20 0.20 -0.40
--------------------------------------------------
Net cost of Good B (total cost minus excluded costs)......... ................. ................. $22.80
----------------------------------------------------------------------------------------------------------------







The regional value
content of Good B
is calculated as
follows:









The regional value
content of Good B
is 42.9 percent,
and Good B,
therefore, does
not qualify as an
originating good.
Situation 3
A producer located
in a NAFTA country
produces Good B,
which is subject
to a regional
value-content
requirement of 50
percent under the
net cost method.
Good B satisfies
all other
applicable
requirements of
these Regulations.
The producer self-
produces Material
A, which is used
in the production
of Good B. The
costs to produce
Material A are the
following:





------------------------------------------------------------------------

Product costs:
Value of originating materials......................... $1.00
Value of non-originating materials..................... 7.50
Other product costs.................................... 1.50
Period costs: (including $0.20 in excluded costs).......... 0.50
Other costs................................................ 0.10
------------
Total cost of Material A................................... $10.60
------------------------------------------------------------------------







Additional costs
to produce Good B
are the following:





------------------------------------------------------------------------

Product costs:
Value of originating materials......................... $0.00
Value of non-originating materials..................... 5.50
Other product costs.................................... 6.50
Period costs: (including $0.20 in excluded costs).......... 0.50
Other costs................................................ 0.10
------------
Total additional costs..................................... $12.60
------------------------------------------------------------------------







The producer
designates
Material A as an
intermediate
material under
subsection 7(4).
Material A
qualifies as an
originating
material under
paragraph 4(2)(a).
Therefore, the
value of non-
originating
materials used in
the production of
Material A is not
included in the
value of non-
originating
materials for the
purposes of
calculating the
regional value
content of Good B.
The net cost of
Good B is
calculated as
follows:






----------------------------------------------------------------------------------------------------------------
Costs of
Material A Additional
(designated Costs to
as an Produce Total
intermediate Good B
material)
----------------------------------------------------------------------------------------------------------------
Product costs:
Value of originating materials...................................... $10.60 $0.00 $10.60
Value of non-originating materials.................................. ............ 5.50 5.50
Other product costs................................................. ............ 6.50 6.50
Period costs (including $0.20 in excluded costs)........................ ............ 0.50 0.50
Other costs............................................................. ............ 0.10 0.10
---------------------------------------
Total cost of Good B.................................................... $10.60 $12.60 $23.20
=======================================
Excluded costs (in period costs)........................................ ............ .20 -0.20
------------
Net cost of Good B (total cost minus excluded costs).................... ............ ........... $23.00
----------------------------------------------------------------------------------------------------------------







The regional value
content of Good B
is calculated as
follows:









The regional value
content of Good B
is 76.1 percent,
and Good B,
therefore,
qualifies as an
originating good.
Example 4:
Originating
Materials Acquired
from a Producer
Who Produced Them
Using Intermediate
Materials
Producer A,
located in NAFTA
country A,
produces switches.
In order for the
switches to
qualify as
originating goods,
Producer A
designates
subassemblies of
the switches as
intermediate
materials. The
subassemblies are
subject to a
regional value-
content
requirement. They
satisfy that
requirement, and
qualify as
originating
materials. The
switches are also
subject to a
regional value-
content
requirement, and,
with the
subassemblies
designated as
intermediate
materials, are
determined to have
a regional value
content of 65
percent.
Producer A sells
the switches to
Producer B,
located in NAFTA
country B, who
uses them to
produce switch
assemblies that
are used in the
production of Good
B. The switch
assemblies are
subject to a
regional value-
content
requirement.
Producers A and B
are not
accumulating their
production within
the meaning of
section 14.
Producer B is
therefore able,
under section
7(4), to designate
the switch
assemblies as
intermediate
materials.
If Producers A and
B were
accumulating their
production within
the meaning of
section 14,
Producer B would
be unable to
designate the
switch assemblies
as intermediate
materials, because
the production of
both producers
would be
considered to be
the production of
one producer.
Example 5: Single
Producer and
Successive
Designations of
Materials Subject
to a Regional
Value-Content
Requirement as
Intermediate
Materials
Producer A,
located in NAFTA
country, produces
Material X and
uses Material X in
the production of
Good B. Material X
qualifies as an
originating
material because
it satisfies the
applicable
regional value-
content
requirement.
Producer A
designates
Material A as an
intermediate
material.
Producer A uses
Material X in the
production of
Material Y, which
is also used in
the production of
Good B. Material Y
is also subject to
a regional value-
content
requirement. Under
the proviso set
out in section
7(4), Producer A
cannot designate
Material Y as an
intermediate
material, even if
Material Y
satisfies the
applicable
regional value-
content
requirement,
because Material X
was already
designated by
Producer A as an
intermediate
material.
Example 6: Single
Producer and
Multiple
Designations of
Materials as
Intermediate
Materials
Producer X, who is
located in NAFTA
country X, uses
non-originating
materials in the
production of self-
produced materials
A, B, and C. None
of the self-
produced materials
are used in the
production of any
of the other self-
produced
materials.
Producer X uses
the self-produced
materials in the
production of Good
O, which is
exported to NAFTA
country Y.
Materials A, B and
C qualify as
originating
materials because
they satisfy the
applicable
regional value-
content
requirements.
Because none of
the self-produced
materials are used
in the production
of any of the
other self-
produced
materials, then
even though each
self-produced
material is
subject to a
regional value-
content
requirement,
Producer X may,
under section
7(4), designate
all of the self-
produced materials
as intermediate
materials. The
proviso set out in
section 7(4) only
applies where self-
produced materials
are used in the
production of
other self-
produced materials
and both are
subject to a
regional value-
content
requirement.
Example 7: section
7(17)
The following are
examples of
accessories, spare
parts or tools
that are delivered
with a good and
form part of the
good's standard
accessories, spare
parts or tools:
(a) consumables
that must be
replaced at
regular
intervals, such
as dust
collectors for
an air-
conditioning
system,
(b) a carrying
case for
equipment,
(c) a dust cover
for a machine,
(d) an
operational
manual for a
vehicle,
(e) brackets to
attach equipment
to a wall,
(f) a bicycle
tool kit or a
car jack,
(g) a set of
wrenches to
change the bit
on a chuck,
(h) a brush or
other tool to
clean out a
machine, and
(i) electrical
cords and power
bars for use
with electronic
goods.
Example 8: Value of
Indirect Materials
that are Assists
Producer A,
located in a NAFTA
country, produces
Good A that is
subject to a
regional value-
content
requirement. The
producer chooses
that the regional
value content of
that good be
calculated using
the net cost
method. Producer A
buys Material X
from Producer B,
located in a NAFTA
country, and uses
it in the
production of Good
A. Producer A
provides to
Producer B, at no
charge, tools to
be used in the
production of
Material X. The
tools have a value
of $100 which is
expensed in the
current year by
Producer A.
Material X is
subject to a
regional value-
content
requirement which
Producer B chooses
to calculate using
the net cost
method. For
purposes of
determining the
value of non-
originating
materials in order
to calculate the
regional value
content of
Material X, the
tools are
considered to be
an originating
material because
they are an
indirect material.
However, pursuant
to section 7(11)
they have a value
of nil because the
cost of the tools
with respect to
Material X is not
recorded on the
books of Producer
B.
It is determined
that Material X is
a non-originating
material. The cost
of the tools that
is recorded on the
books of producer
A is expensed in
the current year.
Pursuant to
section 5 of
Schedule VIII, the
value of the tools
(see section
5(1)(b)(ii) of
Schedule VIII)
must be included
in the value of
Material X by
Producer A when
calculating the
regional value
content of Good A.
The cost of the
tools, although
recorded on the
books of producer
A, cannot be
included as a
separate cost in
the net cost of
Good A because it
is already
included in the
value of Material
X. The entire cost
of Material X,
which includes the
cost of the tools,
is included in the
value of non-
originating
materials for
purposes of the
regional value
content of Good A.








PART V
AUTOMOTIVE GOODS
SECTION 8.
DEFINITIONS AND
INTERPRETATION
For purposes of
this part,
``after-market
parts'' means
goods that are not
for use as
original equipment
in the production
of light-duty
vehicles or heavy-
duty vehicles and
that are
(a) goods
provided for in
a tariff
provision listed
in Schedule IV,
or
(b) automotive
component
assemblies,
automotive
components, sub-
components or
listed
materials;
``class of motor
vehicles'' means
any one of the
following
categories of
motor vehicles:
(a) motor
vehicles
provided for in
any of
subheading
8701.20, tariff
items 8702.10.30
and 8702.90.30
(vehicles for
the transport of
16 or more
persons),
subheadings
8704.10,
8704.22,
8704.23, 8704.32
and 8704.90 and
headings 8705
and 8706,
(b) motor
vehicles
provided for in
any of
subheadings
8701.10 and
8701.30 through
8701.90,
(c) motor
vehicles
provided for in
any of tariff
items 8702.10.60
and 8702.90.60
(vehicles for
the transport of
15 or fewer
persons) and
subheadings
8704.21 and
8704.31, and
(d) motor
vehicles
provided for in
any of
subheadings
8703.21 through
8703.90;
``complete motor
vehicle assembly
process'' means
the production of
a motor vehicle
from separate
constituent parts,
which parts
include the
following:
(a) a structural
frame or
unibody,
(b) body panels,
(c) an engine, a
transmission and
a drive train,
(d) brake
components,
(e) steering and
suspension
components,
(f) seating and
internal trim,
(g) bumpers and
external trim,
(h) wheels, and
(i) electrical
and lighting
components;
``first prototype''
means the first
motor vehicle that
(a) is produced
using tooling
and processes
intended for the
production of
motor vehicles
to be offered
for sale, and
(b) follows the
complete motor
vehicle assembly
process in a
manner not
specifically
designed for
testing
purposes;
``floor pan of a
motor vehicle''
means a component,
comprising a
single part or two
or more parts
joined together,
with or without
additional
stiffening
members, that
forms the base of
a motor vehicle,
beginning at the
firewall or
bulkhead of the
motor vehicle and
ending
(a) where there
is a luggage
floor panel in
the motor
vehicle, at the
place where that
luggage floor
panel begins,
and
(b) where there
is no luggage
floor panel in
the motor
vehicle, at the
place where the
passenger
compartment of
the motor
vehicle ends;
``heavy-duty
automotive good''
means a heavy-duty
vehicle or a heavy-
duty component;
``heavy-duty
component'' means
an automotive
component or
automotive
component assembly
that is for use as
original equipment
in the production
of a heavy-duty
vehicle;
``marque'' means a
trade name used by
a marketing
division of a
motor vehicle
assembler that is
separate from any
other marketing
division of that
motor vehicle
assembler;
``model line''
means a group of
motor vehicles
having the same
platform or model
name;
``model name''
means the word,
group of words,
letter, number or
similar
designation
assigned to a
motor vehicle by a
marketing division
of a motor vehicle
assembler
(a) to
differentiate
the motor
vehicle from
other motor
vehicles that
use the same
platform design,
(b) to associate
the motor
vehicle with
other motor
vehicles that
use different
platform
designs, or
(c) to denote a
platform design;
``new building''
means a new
construction to
house a complete
motor vehicle
assembly process,
where that
construction
includes the
pouring or
construction of a
new foundation and
floor, the
erection of a new
frame and roof,
and the
installation of
new plumbing and
electrical and
other utilities;
``plant'' means a
building, or
buildings in close
proximity but not
necessarily
contiguous,
machinery,
apparatus and
fixtures that are
under the control
of a producer and
are used in the
production of any
of the following:
(a) light-duty
vehicles and
heavy-duty
vehicles,
(b) goods of a
tariff provision
listed in
Schedule IV, and
(c) automotive
component
assemblies,
automotive
components, sub-
components and
listed
materials;
``platform'' means
the primary load-
bearing structural
assembly of a
motor vehicle that
determines the
basic size of the
motor vehicle, and
is the structural
base that supports
the driveline and
links the
suspension
components of the
motor vehicle for
various types of
frames, such as
the body-on-frame
or space-frame,
and monocoques;
``received in the
territory of a
NAFTA country''
means, with
respect to section
9(2), the location
at which a traced
material arrives
in the territory
of a NAFTA country
and is documented
for any customs
purpose, which, in
the case of a
traced material
imported into
(a) Canada,
(i) where the
traced
material is
imported on a
vessel, as
defined in
section 2 of
the Reporting
of Imported
Goods
Regulations,
is the
location at
which the
traced
material is
last unloaded
from the
vessel and
reported,
under section
12 of the
Customs Act,
to a customs
office,
including
reported for
transportation
under bond by
a conveyance
other than
that vessel,
and
(ii) in any
other case, is
the location
at which the
traced
material is
reported,
under section
12 of the
Customs Act,
to a customs
office,
including
reported for
transportation
under bond,
(b) Mexico,
(i) where the
traced
material is
imported on a
vessel, the
location at
which the
traced
material is
last unloaded
from the
vessel and
reported for
any customs
purpose, and
(ii) in any
other case,
the location
at which the
traced
material is
reported for
any customs
purpose, and
(c) the United
States, is the
location at
which the traced
material is
entered for any
customs purpose,
including
entered for
consumption,
entered for
warehouse or
entered for
transportation
under bond, or
admitted into a
foreign trade
zone;
``refit'' means a
closure of a plant
for a period of at
least three
consecutive months
that is for
purposes of plant
conversion or
retooling;
``size category'',
with respect to a
light-duty
vehicle, means
that the total of
the interior
volume for
passengers and the
interior volume
for luggage is
(a) 85 cubic feet
(2.38 m\3\) or
less,
(b) more than 85
cubic feet (2.38
m\3\) but less
than 100 cubic
feet (2.80
m\3\),
(c) 100 cubic
feet (2.80 m\3\)
or more but not
more than 110
cubic feet (3.08
m\3\),
(d) more than 110
cubic feet (3.08
m\3\) but less
than 120 cubic
feet (3.36
m\3\), or
(e) 120 cubic
feet (3.36 m\3\)
or more;
``traced material''
means a material,
produced outside
the territories of
the NAFTA
countries, that is
imported from
outside the
territories of the
NAFTA countries
and is, when
imported, of a
tariff provision
listed in Schedule
IV;
``underbody'' means
the floor pan of a
motor vehicle.
SECTION 9. LIGHT-
DUTY AUTOMOTIVE
GOODS
VNM determined by
tracing of certain
non-originating
materials
(1) For purposes of
calculating the
regional value
content of a light-
duty automotive
good under the net
cost method, the
value of non-
originating
materials used by
the producer in
the production of
the good shall be
the sum of the
values of the non-
originating
materials that are
traced materials
and are
incorporated into
the good.
Valuation of traced
materials for VNM
in the RVC
(2) Except as
otherwise provided
in subsections (3)
and (6) through
(8), the value of
each of the traced
materials that is
incorporated into
a good shall be
(a) where the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries and
has or takes
title to it at
the time of
importation, the
sum of
(i) the customs
value of the
traced
material,
(ii) where not
included in
that customs
value, any
freight,
insurance,
packing and
other costs
that were
incurred in
transporting
the traced
material to
the first
place at which
it was
received in
the territory
of a NAFTA
country, and
(iii) where not
included in
that customs
value, the
costs referred
to in
subsection
(4);
(b) where the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries and
does not have or
take title to it
at the time of
importation, the
sum of
(i) the customs
value of the
traced
material,
(ii) where not
included in
that customs
value, any
freight,
insurance,
packing and
other costs
that were
incurred in
transporting
the traced
material to
the place at
which it was
when the
producer takes
title in the
territory of a
NAFTA country,
and
(iii) where not
included in
that customs
value, the
costs referred
to in
subsection
(4);
(c) where a
person other
than the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries and
that person has
or takes title
to the material
at the time of
importation, if
the producer has
a statement that
(i) is signed
by the person
from whom the
producer
acquired the
traced
material,
whether in the
form in which
it was
imported into
the territory
of a NAFTA
country or
incorporated
into another
material, and
(ii) states
(A) the
customs
value of the
traced
material,
(B) where not
included in
that customs
value, any
freight,
insurance,
packing and
other costs
that were
incurred in
transporting
the traced
material to
the first
place at
which it was
received in
the
territory of
a NAFTA
country, and
(C) where not
included in
that customs
value, the
costs
referred to
in
subsection
(4),
the sum of the
customs value of
the traced
material, the
freight,
insurance,
packing and
other costs
referred to in
subparagraph
(ii)(B) and the
costs referred
to in
subparagraph
(ii)(C);
(d) where a
person other
than the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries and
that person does
not have or take
title to the
material at the
time of
importation, if
the producer has
a statement that
(i) is signed
by the person
from whom the
producer
acquired the
traced
material,
whether in the
form in which
it was
imported into
the territory
of a NAFTA
country or
incorporated
into another
material, and
(ii) states
(A) the
customs
value of the
traced
material,
(B) where not
included in
that customs
value, any
freight,
insurance,
packing and
other costs
that were
incurred in
transporting
the traced
material to
the place at
which it was
located when
the first
person in
the
territory of
a NAFTA
country
takes title,
and
(C) where not
included in
that customs
value, the
costs
referred to
in
subsection
(4),
the sum of
the customs
value of the
traced
material,
the freight,
insurance,
packing and
other costs
referred to
in
subparagraph
(ii)(B) and
the costs
referred to
in
subparagraph
(ii)(C);
(e) where a
person other
than the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries and
the producer
acquires the
traced material
or a material
that
incorporates the
traced material
from a person in
the territory of
a NAFTA country
who has title to
it, if the
producer has a
statement that
(i) is signed
by the person
from whom the
producer
acquired the
traced
material or
the material
that
incorporates
it, and
(ii) states the
value of the
traced
material or a
material that
incorporates
the traced
material,
determined in
accordance
with
subsection
(5), with
respect to a
transaction
that occurs
after the
customs value
of the traced
material was
determined,
the value of the
traced material
or the material
that
incorporates the
traced material,
determined in
accordance with
subsection (5),
with respect to
the transaction
referred to in
that statement;
(f) where a
person other
than the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries, and
the producer
acquires a
material that
incorporates
that traced
material and the
acquired
material was
produced in the
territory of a
NAFTA country
and is subject
to a regional
value-content
requirement, if
the producer has
a statement that
(i) is signed
by the person
from whom the
producer
acquired that
material, and
(ii) states
that the
acquired
material is an
originating
material and
states the
regional value
content of the
material,
an amount equal
to VM x (1 -
RVC)
where
VM is the
value of the
acquired
material,
determined
in
accordance
with
subsection
(5), with
respect to
the
transaction
in which the
producer
acquired
that
material,
and
RVC is the
regional
value
content of
the acquired
material,
expressed as
a decimal;
(g) where a
person other
than the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries, and
the producer
acquires a
material that
incorporates
that traced
material and the
acquired
material was
produced in the
territory of a
NAFTA country
and is subject
to a regional
value-content
requirement, if
the producer has
a statement that
(i) is signed
by the person
from whom the
producer
acquired that
material, and
(ii) states
that the
acquired
material is an
originating
material but
does not state
any value with
respect to the
traced
material,
an amount equal
to VM x (1 -
RVCR)
where
VM is the
value of the
acquired
material,
determined
in
accordance
with
subsection(5), with (continued)