Loading (50 kb)...'

(continued)
respect to
the
transaction
in which the
producer
acquired
that
material,
and
RVCR is the
regional
value-
content
requirement
for the
acquired
material,
expressed as
a decimal;
(h) 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
(i)
incorporates
that traced
material,
(ii) was
produced in
the territory
of a NAFTA
country, and
(iii) with
respect to
which an
amount was
determined in
accordance
with paragraph
(f) or (g),
if the producer
of the good has
a statement
signed by the
person from whom
the producer
acquired that
material that
states that
amount, the
amount as
determined in
accordance with
paragraph (f) or
(g), as the case
may be; and
(i) where a
person other
than the
producer imports
the traced
material from
outside the
territories of
the NAFTA
countries and
the producer
does not have a
statement
described in any
of paragraphs
(c) through (h),
the value of the
traced material
or any material
that
incorporates it,
determined in
accordance with
subsection (5)
with respect to
the transaction
in which the
producer
acquires the
traced material
or any material
that
incorporates it.
Value of traced
material if customs
value is not in
accordance with
Schedule VIII
(3) For purposes of
subsections (2)
(a) through (d),
where the customs
value of the
traced material
referred to in
those paragraphs
was not determined
in a manner
consistent with
Schedule VIII, the
value of the
material shall be
the sum of
(a) the value of
the material
determined in
accordance with
Schedule VIII
with respect to
the transaction
in which the
person who
imported the
material from
outside the
territories of
the NAFTA
countries
acquired it; and
(b) where not
included in that
value, the costs
referred to in
subsections
(2)(a) (ii) and
(iii),
subsections
(2)(b) (ii) and
(iii),
subsections
(2)(c)(ii) (B)
and (C) or
subsections
(2)(d)(ii) (B)
and (C), as the
case may be.
Additional costs
included in traced
value if not
already included in
customs value
(4) The costs
referred to in
subsections (2)
(a) through (d)
and subsection (3)
are the following:
(a) duties and
taxes paid or
payable with
respect to the
material in the
territory of one
or more of the
NAFTA countries,
other than
duties and taxes
that are waived,
refunded,
refundable or
otherwise
recoverable,
including credit
against duty or
tax paid or
payable; and
(b) customs
brokerage fees,
including the
cost of in-house
customs
brokerage
services,
incurred with
respect to the
material in the
territory of one
or more of the
NAFTA countries.
Value of traced
material determined
under Schedule VIII
if value is not
customs value
(5) For purposes of
subsections (2)
(e) through (g)
and (i) and
subsections (6)
and (7), the value
of a material
(a) shall be the
transaction
value of the
material,
determined in
accordance with
section 2(1) of
Schedule VIII
with respect to
the transaction
referred to in
that paragraph
or subsection,
or
(b) shall be
determined in
accordance with
sections 6
through 11 of
Schedule VIII,
where, with
respect to the
transaction
referred to in
that paragraph
or subsection,
there is no
transaction
value for the
material under
section 2(2) of
that Schedule,
or the
transaction
value of the
material is
unacceptable
under section
2(3) of that
Schedule,
and, where not
included under
paragraph (a) or
(b), shall include
taxes, other than
duties paid on an
importation of a
material from a
NAFTA country,
paid or payable
with respect to
the material in
the territory of
one or more of the
NAFTA countries,
other than taxes
that are waived,
refunded,
refundable or
otherwise
recoverable,
including credit
against tax paid
or payable.
(6) Where it is
determined, during
the course of a
verification of
origin of a light-
duty automotive
good with respect
to which the
producer of that
good has a
statement referred
to in subsection
(2) (f) or (g),
that the acquired
material referred
to in that
statement is not
an originating
material, the
value of the
acquired material
shall, for
purposes of
subsection (2), be
determined in
accordance with
subsection (5)
with respect to
the transaction in
which that
producer acquired
it.
Effect on value of
traced material if
value on a
statement cannot be
verified
(7) Where any
person who has
information with
respect to a
statement referred
to in any of
subsections (2)(c)
through (h) does
not allow a
customs
administration to
verify that
information during
a verification of
origin, the value
of the material
with respect to
which that person
did not allow the
customs
administration to
verify the
information may be
determined by that
customs
administration in
accordance with
subsection (5)
with respect to
the transaction in
which that person
sells, or
otherwise
transfers to
another person,
that material or a
material that
incorporates that
material.
Use of value of VNM
as determined under
section 12(3) for
traced material
incorporated into
another material
(8) Where a traced
material is
incorporated into
a material
produced in the
territory of a
NAFTA country and
that material is
incorporated into
a light-duty
automotive good,
the statement
referred to in
subsection (2)(c),
(d) or (e) may
state the value of
non-originating
materials,
determined in
accordance with
section 12(3),
with respect to
the material that
incorporates the
traced material.
Interpretations and
clarifications for
provisions
applicable to
tracing rules for
light-duty
automotive goods
(9) For purposes of
this section,
(a) where a
producer, in
accordance with
section 7(4),
designates as an
intermediate
material any
self-produced
material used in
the production
of a light-duty
automotive good,
(i) the
designation
applies solely
to the
calculation of
the net cost
of that good,
and
(ii) the value
of a traced
material that
is
incorporated
into that good
shall be
determined as
though the
designation
had not been
made;
(b) the value of
a material not
listed in
Schedule IV,
when imported
from outside the
territories of
the NAFTA
countries,
(i) shall not
be included in
the value of
non-
originating
materials that
are used in
the production
of a light-
duty
automotive
good, and
(ii) shall be
included in
calculating
the net cost
of a light-
duty
automotive
good that
incorporates
that material;
(c) except as
otherwise
provided in
section 12(10),
this section
does not apply
with respect to
after-market
parts;
(d) the costs
referred to in
subsections
(2)(a)(ii) and
(b)(ii),
subsections
(2)(c)(ii)(B)
and (d)(ii)(B)
and subsections
(4) and (5)
shall be the
costs referred
to in those
paragraphs that
are recorded on
the books of the
producer of the
light-duty
automotive good;
(e) for purposes
of calculating
the regional
value content of
a light-duty
automotive good,
the producer of
that good may
choose to treat
any material
used in the
production of
that good as a
non-originating
material, and
the value of
that material
shall be
determined in
accordance with
subsection (5)
with respect to
the transaction
in which the
producer
acquired it; and
(f) any
information set
out in a
statement
referred to in
subsection (2)
that concerns
the value of
materials or
costs shall be
in the same
currency as the
currency of the
country in which
the person who
provided the
statement is
located.
Examples of
application of
tracing for light-
duty automotive
goods
(10) Each of the
following examples
is an ``Example''
as referred to in
section 2(4).








Example 1:
Nuts and bolts
provided for in
heading 7318 are
imported from
outside the
territories of the
NAFTA countries
and are used in
the territory of a
NAFTA country in
the production of
a light-duty
automotive good
referred to in
section 9(1).
Heading 7318 is
not listed in
Schedule IV so the
nuts and bolts are
not traced
materials.
Because the nuts
and bolts are not
traced materials
the value, under
section 9(1), of
the nuts and bolts
is not included in
the value of non-
originating
materials used in
the light-duty
automotive good
even though the
nuts and bolts are
imported from
outside the
territories of the
NAFTA countries.
The value, under
section 9(9)(b),
of the nuts and
bolts is included
in the net cost of
the light-duty
automotive good
for the purposes
of calculating,
under section
9(1), regional
value content of
the motor vehicle.
Example 2:
A rear view mirror
provided for in
subheading 7009.10
is imported from
outside the
territories of the
NAFTA countries
and is used in the
territory of a
NAFTA country as
original equipment
in the production
of a light-duty
vehicle.
Subheading 7009.10
is listed in
Schedule IV. The
rear view mirror
is a traced
material. For
purposes of
calculating, under
section 9(1),
regional value
content of the
light-duty
vehicle, the value
of the mirror is
included in the
value of non-
originating
materials in
accordance with
sections 9(2)
through (9).
Example 3:
Glass provided for
in heading 7005 is
imported from
outside the
territories of the
NAFTA countries
and is used in the
territory of NAFTA
country A in the
production of a
rear view mirror.
The rear view
mirror is a non-
originating good
because it fails
to satisfy the
applicable change
in tariff
classification.
That rear view
mirror is exported
to NAFTA country B
where it is used
as original
equipment in the
production of a
light-duty
vehicle. Even
though the rear
view mirror is a
non-originating
material and is
provided for in a
tariff item listed
in Schedule IV, it
is not a traced
material because
it was not
imported from
outside the
territories of the
NAFTA countries.
For purposes of
calculating, under
section 9(1), the
regional value
content of a light-
duty vehicle in
which the rear
view mirror is
incorporated, the
value of the rear
view mirror, under
section 9(1), is
not included in
the value of non-
originating
materials used in
the production of
the light-duty
vehicle.
Even though the
glass provided for
in heading 7005
that was used in
the production of
the rear view
mirror and
incorporated into
the light-duty
vehicle was
imported from
outside the
territories of the
NAFTA countries,
the glass is not a
traced material
because heading
7005 is not listed
in Schedule IV.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty vehicle
that incorporates
the glass, the
value of the glass
is not included in
the value of non-
originating
materials used in
the production of
the light-duty
vehicle. The value
of the rear view
mirror would be
included in the
net cost of the
light-duty
vehicle, but the
value of the
imported glass
would not be
separately
included in the
value of non-
originating
materials of the
light-duty
vehicle.
Example 4:
An electric motor
provided for in
subheading 8501.10
is imported from
outside the
territories of the
NAFTA countries
and is used in the
territory of a
NAFTA country in
the production of
a seat frame
provided for in
subheading
9401.90. The seat
frame, with the
electric motor
attached, is sold
to a producer of
seats provided for
in subheading
9401.20. The seat
producer sells the
seat to a producer
of light-duty
vehicles. The seat
is to be used as
original equipment
in the production
of that light-duty
vehicle.
Subheadings
8501.10 and
9401.20 are listed
in Schedule IV;
subheading 9401.90
is not. The
electric motor is
a traced material;
the seat is not a
traced material
because it was not
imported from
outside the
territories of the
NAFTA countries.
The seat is a
light-duty
automotive good
referred to in
section 9(1). For
purposes of
calculating, under
section 9(1), the
regional value
content of the
seat, the value of
traced materials
incorporated into
it is included in
the value of non-
originating
materials used in
the production of
the seat. The
value of the
electric motor is
included in that
value. (However,
the value of the
motor would not be
included
separately in the
net cost of the
seat because the
value of the motor
is included as
part of the cost
of the seat
frame.)
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty
vehicle, the value
of the electric
motor is included
in the value of
non-originating
materials used in
the production of
the light-duty
vehicle, even if
the seat is an
originating
material.
Example 5:
Cast blocks, cast
heads and
connecting rod
assemblies
provided for in
heading 8409 are
imported from
outside the
territories of the
NAFTA countries by
an engine
producer, who has
title to them at
the time of
importation, and
are used by the
producer in the
territory of NAFTA
country A in the
production of an
engine provided
for in heading
8407. After the
regional value
content of the
engine is
calculated, the
engine is an
originating good.
It is not a traced
material because
it was not
imported from
outside the
territories of the
NAFTA countries.
The engine is
exported to NAFTA
country B, to be
used as original
equipment by a
producer of light-
duty vehicles.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty vehicle
that incorporates
the engine,
because heading
8409 is listed in
Schedule IV and
because the cast
blocks, cast heads
and connecting rod
assemblies were
imported into the
territory of a
NAFTA country and
are incorporated
into the light-
duty vehicle, the
value of those
materials, which
are traced
materials, is
included in the
value of non-
originating
materials used in
the production of
the light-duty
vehicle, even
though the engine
is an originating
material.
The producer of
the light-duty
vehicle did not
import the traced
materials.
However, because
that producer has
a statement
referred to in
section 9(2)(c)
and that statement
states the value
of non-originating
materials of the
traced materials
in accordance with
section 12(2), the
producer of the
light-duty vehicle
may, in accordance
with section 9(8),
use that value as
the value of non-
originating
materials of the
light-duty vehicle
with respect to
that engine.
Example 6:
Aluminum ingots
provided for in
subheading 7601.10
and piston
assemblies
provided for in
heading 8409 are
imported from
outside the
territories of the
NAFTA countries by
an engine producer
and are used by
that producer in
the territory of
NAFTA country A in
the production of
an engine provided
for in heading
8407. The aluminum
ingots are used by
the producer to
produce an engine
block; the piston
assembly is then
incorporated into
the engine block
and the producer
designates, in
accordance with
section 7(4), a
short block
provided for in
heading 8409 as an
intermediate
material. The
intermediate
material qualifies
as an originating
material. The
engine that
incorporates the
short block is
exported to NAFTA
country B and used
as original
equipment in the
production of a
light-duty
vehicle. The
piston assemblies
provided for in
heading 8409 are
traced materials;
neither the engine
nor the short
block are traced
materials because
they were not
imported from
outside the
territories of the
NAFTA countries.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
engine, the value
of the piston
assemblies is
included, under
section
9(9)(a)(ii), in
the value of non-
originating
materials, even if
the intermediate
material is an
originating
material. However,
the value of the
aluminum ingots is
not included in
the value of non-
originating
materials because
subheading 7601.10
is not listed in
Schedule IV. The
value of the
aluminum ingots
does not need to
be included
separately in the
net cost of the
engine because
that value is
included in the
value of the
intermediate
material, and the
total cost of the
intermediate
material is
included in the
net cost of the
engine.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty vehicle
that incorporates
the engine (and
the piston
assemblies), the
value of the
piston assemblies
incorporated into
that light-duty
vehicle is
included in the
value of non-
originating
materials of the
light-duty
vehicle.
Example 7:
An engine provided
for in heading
8407 is imported
from outside the
territories of the
NAFTA countries.
The producer of
the engine,
located in the
country from which
the engine is
imported, used in
the production of
the engine a
piston assembly
provided for in
heading 8409 that
was produced in a
NAFTA country and
is an originating
good. The engine
is used in the
territory of a
NAFTA country as
original equipment
in the production
of a light-duty
vehicle. The
engine is a traced
material.
For purposes of
calculating, under
section 9(1), the
regional value
content of a light-
duty vehicle that
incorporates that
engine, the value
of the engine is
included in the
value of non-
originating
materials of that
light-duty
vehicle. The value
of the piston
assembly, which
was, before its
exportation to
outside the
territories of the
NAFTA countries,
an originating
good, shall not be
deducted from the
value of non-
originating
materials used in
the production of
the light-duty
vehicle. Under
section 18
(transshipment),
the piston
assembly is no
longer considered
to be an
originating good
because it was
used in the
production of a
good outside the
territories of the
NAFTA countries.
Example 8:
A wholesaler,
located in City A
in the territory
of a NAFTA
country, imports
from outside the
territories of the
NAFTA countries
rubber hoses
provided for in
heading 4009,
which is listed in
Schedule IV. The
wholesaler takes
title to the goods
at the
wholesaler's place
of business in
City A. The
customs value of
the imported goods
is $500. All
freight, taxes and
duties associated
with the good to
the wholesaler's
place of business
total $100; the
cost of the
freight, included
in that $100, from
the place where it
was received in
the territory of a
NAFTA country to
the location of
the wholesaler's
place of business
in City A is $25.
The wholesaler
sells the rubber
hoses for $650 to
a producer of
light-duty
vehicles who uses
the goods in the
territory of a
NAFTA country as
original equipment
in the production
of a light-duty
vehicle. The light-
duty vehicle
producer pays $50
to have the goods
shipped from the
location of the
wholesaler's place
of business in
City A to the
location at which
the light-duty
vehicle is
produced.
The rubber hoses
are traced
materials and they
are incorporated
into a light-duty
automotive good.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty
vehicle,
(1) if the
wholesaler takes
title to the
goods before the
first place at
which they were
received in the
territory of a
NAFTA country,
then the value
of non-
originating
materials, where
the light-duty
vehicle producer
has a statement
referred to in
section 9(2)(c),
would not
include the cost
of freight from
the place where
they were
received in the
territory of a
NAFTA country to
the location of
the wholesaler's
place of
business: in
this situation,
the value of non-
originating
materials would
be $575;
(2) if the
producer has a
statement
referred to in
section 9(2)(d)
that states the
customs value of
the traced
material and,
where not
included in that
price, the cost
of taxes,
duties, fees and
transporting the
goods to the
place where
title is taken,
the light-duty
vehicle producer
may use those
values as the
value of non-
originating
materials with
respect to the
goods: in this
situation, the
value of non-
originating
materials would
be $600; or
(3) if the
wholesaler is
unwilling to
provide the
light-duty
vehicle producer
with such a
statement, the
value of non-
originating
materials with
respect to the
traced materials
will be the
value of the
materials with
respect to the
transaction in
which the
producer
acquired them,
as provided for
in section
9(2)(i), in this
instance $650;
the costs of
transporting the
goods from the
location of the
wholesaler's
place of
business to the
location of the
producer will be
included in the
net cost of the
goods, but not
in the value of
non-originating
materials.
Example 9:
A wholesaler,
located in City A
in the territory
of a NAFTA
country, imports
from outside the
territories of the
NAFTA countries
rubber hose
provided for in
heading 4009,
which is listed in
Schedule IV. The
wholesaler sells
the good to a
producer located
in the territory
of the NAFTA
country who uses
the hose to
produce a power
steering hose
assembly, also
provided for in
heading 4009. The
power steering
hose assembly is
then sold to a
producer of light-
duty vehicles who
uses that good in
the production of
a light-duty
vehicle. The
rubber hose is a
traced material;
the power steering
hose assembly is
not a traced
material because
it was not
imported from
outside the
territories of the
NAFTA countries.
The wholesaler who
imported the
rubber hose from
outside the
territories of the
NAFTA countries
has title to it at
the time of
importation. The
customs value of
the good is $3,
including freight
and insurance and
all other costs
incurred in
transporting the
good to the first
place at which it
was received in
the territory of
the NAFTA country.
Duties and fees
and all other
costs referred to
in section 9(4),
paid by the
wholesaler with
respect to the
good, total an
additional $1. The
wholesaler sells
the good to the
producer of the
power steering
hose assemblies
for $5, not
including freight
to the location of
that producer. The
power steering
hose producer pays
$2 to have the
good delivered to
the location of
production. The
value of the power
steering hose
assembly sold to
the light-duty
vehicle producer
is $10, including
freight for
delivery of the
goods to the
location of the
light-duty vehicle
producer.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty
vehicle:
(1) if the motor
vehicle producer
has a statement
referred to in
section 9(2)(c)
from the
producer of the
power steering
hose assembly
that states the
customs value of
the imported
rubber hose
incorporated in
the power
steering hose
assembly, and
the value of the
duties, fees and
other costs
referred to in
section 9(4),
the producer may
use those values
as the value of
non-originating
materials with
respect to that
traced good: in
this situation,
that value would
be the customs
value of $3 and
the cost of
duties and fees
of $1, provided
that the
wholesaler has
provided the
producer of the
power steering
hose assembly
with the
information
regarding the
customs value of
the imported
good and the
other costs;
(2) if the light-
duty vehicle
producer has a
statement from
the producer of
the power
steering hose
assembly that
states the value
of the imported
hose, with
respect to the
transaction in
which the power
steering hose
assembly
producer
acquires the
imported hose
from the
wholesaler, the
light-duty
vehicle producer
may include that
value as the
value of non-
originating
materials, in
accordance with
section 9(2)(e):
in this
situation, that
value is $5; and
the $2 cost of
transporting the
good from the
location of the
wholesaler to
the location of
the producer,
because that
cost is
separately
identified,
would not be
included in the
value of non-
originating
materials of the
light-duty
vehicle;
(3) if the light-
duty vehicle
producer has a
statement
referred to in
section 9(2)(f)
signed by the
producer of the
power steering
hose assembly,
the light-duty
vehicle producer
may use the
formula set out
in section
9(2)(f) to
calculate the
value of non-
originating
materials with
respect to that
acquired
material: in
this situation,
assuming the
regional value
content is 55
per cent, the
value of non-
originating
materials would
be $4.50; and
because the cost
of
transportation
from the
location of the
producer of the
power steering
hose assembly to
the location of
the light-duty
vehicle producer
is included in
the purchase
price and not
separately
identified, it
may not be
deducted from
the purchase
price, because
the formula
referred to in
section 9(2)(f)
does not allow
for the
deduction of
transportation
costs that would
otherwise not be
non-originating;
(4) if the light-
duty vehicle
producer has a
statement
referred to in
section 9(2)(g)
signed by the
producer of the
power steering
hose assembly,
the light-duty
vehicle producer
may use the
formula set out
in section
9(2)(g) to
calculate the
value of non-
originating
materials with
respect to that
acquired
material: in
this situation,
assuming the
regional value-
content
requirement is
50 per cent, the
value of non-
originating
materials would
be $5; and
because the cost
of
transportation
from the
location of the
producer of the
power steering
hose assembly to
the location of
the light-duty
vehicle producer
is included in
the purchase
price and not
separately
identified, it
may not be
deducted from
the purchase
price, because
the formula
referred to in
section 9(2)(g)
does not allow
for the
deduction of
transportation
costs that would
otherwise not be
non-originating;
or
(5) if the light-
duty vehicle
producer does
not have a
statement
referred to in
any of sections
9(2)(c) through
(h) from the
producer of the
power steering
hose assembly,
the light-duty
vehicle producer
includes in the
value of non-
originating
materials of the
vehicles the
value,
determined in
accordance with
section 9(2)(i),
of the power
steering hose
assembly: in
this situation,
that amount
would be $10,
the cost to the
producer of
acquiring that
material.
Example 10:
A producer of
light-duty
vehicles located
in City C in the
territory of a
NAFTA country
imports from
outside the
territories of the
NAFTA countries
rubber hose
provided for in
heading 4009,
which is listed in
Schedule IV, and
uses that good as
original equipment
in the production
of a light-duty
vehicle.
The rubber hose
arrives at City A
in the NAFTA
country, but the
producer of the
light-duty vehicle
does not have
title to the good;
it is transported
under bond to City
B, and on its
arrival in City B,
the producer of
the light-duty
vehicle takes
title to it and
the good is
received in the
territory of a
NAFTA country. The
good is then
transported to the
location of the
light-duty vehicle
producer in City
C.
The customs value
of the imported
good is $4, the
transportation and
other costs
referred to in
subparagraph
9(2)(b)(ii) to
City A are $3 and
to City B are $2,
and the cost of
duties, taxes and
other fees
referred to in
section 9(4) is
$1. The cost of
transporting the
good from City B
to the location of
the producer in
City C is $1. The
rubber hose is
traced material.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty
vehicle, the
value, under
section 9(2)(b),
of non-originating
materials of that
vehicle is the
customs value of
the traced
material and,
where not included
in that value, the
cost of taxes,
duties, fees and
the cost of
transporting the
traced material to
the place where
title is taken. In
this situation,
the value of non-
originating
materials would be
the customs value
of the traced
material, $4, the
cost of duties
taxes and other
fees, $1, the cost
of transporting
the material to
City A, $3, and
the cost of
transporting that
material from City
A to City B, $2,
for a total of
$10. The $1 cost
of transporting
the good from City
B to the location
of the producer in
City C would not
be included in the
value of non-
originating
materials of the
light-duty vehicle
because a person
of a NAFTA country
has taken title to
the traced
material.
Example 11:
A radiator
provided for in
subheading 8708.91
is imported from
outside the
territories of the
NAFTA countries by
a producer of
light-duty
vehicles and is
used in the
territory of a
NAFTA country as
original equipment
in the production
of a light-duty
vehicle.
The radiator is
transported by
ship from outside
the territories of
the NAFTA
countries and
arrives in the
territory of the
NAFTA country at
City A. The
radiator is not,
however, unloaded
at City A and
although the
radiator is
physically present
in the territory
of the NAFTA
country, it has
not been received
in the territory
of a NAFTA
country.
The ship sails in
territorial waters
from City A to
City B and the
radiator is
unloaded there.
The light-duty
vehicle producer
files, from City C
in the same
country, the entry
for the radiator;
the radiator
enters the
territory of the
NAFTA country at
City B.
Subheading 8708.91
is listed in
Schedule IV. The
radiator is a
traced material.
For purposes of
calculating, under
section 9(1), the
regional value
content of the
light-duty
vehicle, the value
of the radiator is
included in the
value of non-
originating
materials of the
light-duty
vehicle. The costs
of any freight,
insurance, packing
and other costs
incurred in
transporting the
radiator to City B
are included in
the value of non-
originating
materials of the
light-duty
vehicle, including
the cost of
transporting the
radiator from City
A to City B. The
costs of any
freight,
insurance, packing
and other costs
that were incurred
in transporting
the radiator from
City B to the
location of the
producer are not
included in the
value of non-
originating
materials of the
light-duty
vehicle.
Example 12:
Producer X,
located in NAFTA
country A,
produces a car
seat of subheading
No. 9401.20 that
is used in the
production of a
light-duty
vehicle. The only
non-originating
material used in
the production of
the car seat is an
electric motor of
subheading No.
8501.20 that was
imported by
Producer X from
outside the
territories of the
NAFTA countries.
The electric motor
is a material of a
tariff provision
listed in Schedule
IV and thus is a
traced material.
Producer X sells
the car seat as
original equipment
to Producer Y, a
light-duty vehicle
producer, located
in NAFTA country
B. The car seat is
an originating
good because the
non-originating
material in the
car seat (the
electric motor)
undergoes the
applicable change
in tariff
classification set
out in a rule that
specifies only a
change in tariff
classification.
Consequently,
Producer X does
not choose to
calculate the
regional value
content of the car
seat in accordance
with section
12(1).
For purposes of
determining, under
section 9(1), the
value of non-
originating
materials used in
the production of
the light-duty
vehicle that
incorporates the
car seat, the
value of the
electric motor is
included even
though the car
seat qualifies as
an originating
material.
Producer X
provides Producer
Y with a statement
described in
section 9(2)(c),
with the value of
non-originating
material used in
the production of
the car seat
determined in
accordance with
section 12(3), as
is permitted by
section 9(8).
Producer Y uses
that value as the
value of non-
originating
materials used in
the production of
the light-duty
vehicle with
respect to the car
seat.
Example 13:
This example has
the same facts as
in Example 12,
except that the
car seat does not
qualify as an
originating good
under the rule
that specifies
only a change in
tariff
classification.
Instead, it
qualifies as an
originating good
under a rule that
specifies a
regional value-
content
requirement and a
change in tariff
classification.
For purposes of
that rule,
Producer X chose
to calculate the
regional value
content of the car
seat in accordance
with section 12(1)
over a period set
out in section
12(5)(a) and using
a category set out
in section
12(4)(a).
For purposes of
the statement
described in
section 9(2)(c),
Producer X
determined, as is
permitted under
section 9(8), the
value of non-
originating
material used in
the production of
the car seat in
accordance with
section 12(3) over
a period set out
in section
12(5)(a) and using
a category set out
in section
12(4)(e).








SECTION 10. HEAVY-
DUTY AUTOMOTIVE
GOODS
Determining VNM for
the calculation of
the RVC for heavy-
duty automotive
goods
(1) Except as
otherwise provided
in subsections (3)
through (8) and
section 12(10)(a),
for purposes of
calculating the
regional value
content of a heavy-
duty automotive
good under the net
cost method, the
value of non-
originating
materials used by
the producer of
the good in the
production of the
good shall be the
sum of
(a) for each
listed material
that is a non-
originating
material, is a
self-produced
material and is
used by the
producer in the
production of
the good, at the
choice of the
producer, either
(i) the total
cost incurred
with respect
to all goods
produced by
the producer
that can be
reasonably
allocated to
that listed
material in
accordance
with Schedule
VII,
(ii) the
aggregate of
each cost that
forms part of
the total cost
incurred with
respect to
that listed
material that
can be
reasonably
allocated to
that listed
material in
accordance
with Schedule
VII, or
(iii) the sum
of
(A) the
customs
value of
each non-
originating
material
imported by
the producer
and used in
the
production
of the
listed
material,
and, where
not included
in that
customs
value, the
costs
referred to
in
subsections
(2)(c)
through (f),
and
(B) the value
of each non-
originating
material
that is not
imported by
the producer
of the
listed
material and
is used in
the
production
of the
listed
material,
determined
in
accordance
with
subsection
(2) with
respect to
the
transaction
in which the
producer of
the listed
material
acquired it;
(b) for each
listed material
that is a non-
originating
material, is
produced in the
territory of a
NAFTA country
and is acquired
and used by the
producer in the
production of
the good, at the
choice of the
producer, either
(i) the value
of that non-
originating
listed
material,
determined in
accordance
with
subsection
(2), with
respect to the
transaction in
which the
producer
acquired the
listed
material, or
(ii) where the
producer of
the good has a
statement
described in
clause (A) or
(B) with
respect to
each material
that is a non-
originating
material used
in the
production of
that listed
material, the
sum of
(A) the
customs
value of
each non-
originating
material
imported by
the producer
of the
listed
material and
used in the
production
of that
listed
material,
and, where
not included
in that
customs
value, the
costs
referred to
in
subsections
(2)(c)
through (f),
if the
producer of
the good has
a statement
signed by
the producer
of the
listed
material
that states
the customs
value of
that non-
originating
material and
the costs
referred to
in
subsections
(2)(c)
through (f)
that the
producer of
the listed
material
incurred
with respect
to the non-
originating
material,
and
(B) the value
of each non-
originating
material
that is not
imported by
the producer
of the
listed
material,
and is
acquired and
used in the
production
of the
listed
material,
determined
in
accordance
with
subsection
(2) with
respect to
the
transaction
in which the
producer of
the listed
material
acquired
that non-
originating
material, if
the producer
of the good
has a
statement
signed by
the producer
of the
listed
material
that states
the value of
the acquired
material,
determined
in
accordance
with
subsection
(2) with
respect to
the
transaction
in which the
producer of
the listed
material
acquired the
non-
originating
material;
(c) for each
listed material,
automotive
component
assembly,
automotive
component or sub-
component that
is imported from
outside the
territories of
the NAFTA
countries, and
is used by the
producer in the
production of
the good,
(i) where it is
imported by
the producer,
the customs
value of that
non-
originating
listed
material,
automotive
component
assembly,
automotive
component or
sub-component,
and, where not
included in
that customs
value, the
costs referred
to in
subsections
(2)(c) through
(f), and
(ii) where it
is not
imported by
the producer,
the value of
that non-
originating
listed
material,
automotive
component
assembly,
automotive
component or
sub-component,
determined in
accordance
with
subsection (2)
with respect
to the
transaction in
which the
producer
acquired it;
(d) for each
automotive
component
assembly,
automotive
component or sub-
component that
is an
originating
material and is
acquired and
used by the
producer in the
production of
the good, at the
choice of the
producer,
(i) the sum of
(A) the value
of each non-
originating
listed
material
used in the
production
of the
originating
material,
determined
under
paragraphs
(a) and (b),
(B) the value
of each non-
originating
material
incorporated
into the
originating
material,
determined
under
paragraph
(c),
(C) the value
of each non-
originating
listed
material
used in the
production
of a
material
referred to
in paragraph
(e) that is
used in the
production
of the
originating
material,
determined
under
paragraphs
(a) and (b),
and
(D) where the
value of a
non-
originating
listed
material
referred to
in clause
(C), and
used in the
production
of a non-
originating
automotive
component
assembly,
automotive
component or
sub-
component
that is used
in the
production
of the
originating
material, is
not included
under clause
(C), the
value of
that
automotive
component
assembly,
automotive
component or
sub-
component,
determined
under
paragraph
(e)(ii),
if the producer
has a
statement,
signed by the
person from
whom the
originating
material was
acquired, that
states the sum
of the values,
as determined
by the
producer of
the
originating
material under
paragraphs
(a), (b), (c)
and (e) of
each non-
originating
material
referred to in
any of clauses
(A) through
(D) that is
incorporated
into that
originating
material;
(ii) an amount
equal to the
number
resulting from
applying the
following
formula:
VM x (1 - RVC)
where
VM is the
value of
the
acquired
material,
determined
in
accordance
with
subsection
(2), with
respect to
the
transactio
n in which
the
producer
of the
good
acquired
that
material,
and
RVC is the
regional
value
content of
the
acquired
material,
expressed
as a
decimal,
if the material
is subject to
a regional
value-content
requirement
and the
producer has a
statement,
signed by the
person from
whom the
producer
acquired that
material, that
states that
the acquired
material is an
originating
material and
states the
regional value
content of the
material,
(iii) an amount
equal to the
number
resulting from
applying the
following
formula:
VM x (1 - RVCR)
where
VM is the
value of
the
acquired
material,
determined
in
accordance
with
subsection
(2), with
respect to
the
transactio
n in which
the
producer
of the
good
acquired
that
material,
and
RVCR is the
regional
value-
content
requiremen
t for the
acquired
material,
expressed
as a
decimal,
if the material
is subject to
a regional
value-content
requirement
and the
producer has a
statement,
signed by the
person from
whom the
producer
acquired that
material, that
states that
the acquired
material is an
originating
material but
does not state
the value of
non-
originating
materials with
respect to
that acquired
material; or
(iv) the value
of that
automotive
component
assembly,
automotive
component or
sub-component
determined in
accordance
with
subsection (2)
with respect
to the
transaction in
which the
producer
acquired the
material;
(e) for each
automotive
component
assembly,
automotive
component or sub-
component that
is a non-
originating
material
produced in the
territory of a
NAFTA country
and that is
acquired by the
producer and
used by the
producer in the
production of
the good, at the
choice of the
producer, either
(i) the sum of
the values of
the non-
originating
materials
incorporated
into that non-
originating
material that
is acquired by
the producer,
determined
under
paragraphs
(a), (b), (c),
(d) and (f),
if the
producer has a
statement,
signed by the
person from
whom the non-
originating
material was
acquired, that
states the sum
of the values
of the non-
originating
materials
incorporated
into that non-
originating
material,
determined by
the producer
of the non-
originating
material in
accordance
with
paragraphs
(a), (b), (c),
(d) and (f),
or
(ii) the value
of that non-
originating
automotive
component
assembly,
automotive
component or
sub-component,
determined in
accordance
with
subsection (2)
with respect
to the
transaction in
which the
producer
acquired the
material; and
(f) for each non-
originating
material that is
not referred to
in paragraph
(a), (b), (c) or
(e) and that is
used by the
producer in the
production of
the good,
(i) where it is
imported by
the producer,
the customs
value of that
non-
originating
material, and,
where not
included in
that customs
value, the
costs referred
to in
subsections
(2)(c) through
(f), and
(ii) where it
is not
imported by
the producer,
the value of
that non-
originating
material,
determined in
accordance
with
subsection (2)
with respect
to the
transaction in
which the
producer
acquired the
material.
Application of
Schedule VIII to
determine VNM;
additional costs to
be included
(2) For purposes of
subsection
(1)(a)(ii)(B),
subsection
(1)(b)(i),
subsection
(1)(b)(ii)(B),
subsections
(1)(c)(ii),
(1)(d)(ii) through
(iv), (1)(e)(ii)
and subsection
(1)(f)(ii), the
value of a
material
(a) shall be the
transaction
value of the
material,
determined in
accordance with
section 2(1) of
Schedule VIII
with respect to
the transaction
referred to in
that clause,
subparagraph or
paragraph, or
(b) where, with
respect to the
transaction
referred to in
that clause,
subparagraph, or
paragraph, there
is no
transaction
value for the
material under
section 2(2) of
Schedule VIII or
the transaction
value of the
material is
unacceptable
under section
2(3) of that
Schedule, shall
be determined in
accordance with
sections 6
through 11 of
that Schedule,
and shall include
the following
costs where they
are not included
under paragraph
(a) or (b):
(c) the costs of
freight,
insurance and
packing, and all
other costs
incurred in
transporting the
material to thelocation of the (continued)