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(3) a “nonoriginating good or nonoriginating material” is a good or material, as the case may be, that does not qualify as originating under this note.
(D) For the purposes of this note, the term “production” means growing, mining, harvesting, fishing, raising, trapping, hunting, manufacturing, processing, assembling or disassembling a good; and the term “producer” means a person who engages in the production of a good in the territory of Colombia or of the United States.
(iii) Transit and transshipment. A good that has undergone production necessary to qualify as an originating good under this note shall not be considered to be an originating good if, subsequent to that production, the good--
(A) undergoes further production or any other operation outside the territory of Colombia or of the United States, other than unloading, reloading or any other operation necessary to preserve the good in good condition or to transport the good to the territory of Colombia or of the United States, or
(B) does not remain under the control of customs authorities in the territory of a country other than Colombia or the United States.
(iv) Goods classifiable as goods put up in sets. Notwithstanding the rules set forth in subdivision (o) of this note, goods classifiable under general rule of interpretation 3 of the tariff schedule as goods put up in sets for retail sale shall not be considered to be originating goods unless--
(A) each of the goods in the set is an originating good, or
(B) the total value of the nonoriginating goods in the set does not exceed--
(1) in the case of textile or apparel goods, 10 percent of the adjusted value of the set, or
(2) in the case goods, other than textile or apparel goods, 15 percent of the adjusted value of the set.
(d) Textile and apparel articles.
(i) For purposes of this note, a textile or apparel good provided for in chapters 42, 50 through 63, 66, 70 and 94 of the tariff schedule is an originating good if:
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note as a result of production occurring entirely in the territory of Colombia or of the United States, or both, or the good otherwise satisfies the applicable requirements of this note where a change in tariff classification for each nonoriginating material is not required, and
(B) the good satisfies any other applicable requirements of this note.
The provisions of subdivision (o) of this note shall not apply in determining the country of origin of a textile or apparel good for nonpreferential purposes.
(ii) Subject to the provisions of subdivision (iii) below, a textile or apparel good that is not an originating good under the terms of this note because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification, set out in subdivision (o) of this note, shall nonetheless be considered to be an originating good if--
(A) the total weight of all such fibers or yarns in that component is not more than 10 percent of the total weight of that component; or
(B) the article contains nylon filament yarn (other than elastomeric yarn) that is classifiable in subheading 5402.11.30, 5402.11.60, 5402.19.30, 5402.19.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.45.10, 5402.45.90, 5402.51.00 or 5402.61.0 of the tariff schedule and that is a product of Israel, Canada or Mexico.
Notwithstanding the preceding sentence, a textile or apparel good provided for in the tariff schedule chapters enumerated in subdivision (d)(i) of this note and containing elastomeric yarns in the component of the good that determines the tariff classification
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of the good shall be considered to be an originating good only if such yarns are wholly formed in the territory of Colombia or of the United States, or both. For purposes of this subdivision, in the case of a good that is a yarn, fabric or fiber, the term “component of the good that determines the tariff classification of the good” means all of the fibers in the good.
(iii) For purposes of this note--
(A) with respect to a textile or apparel good provided for in the tariff schedule chapters enumerated above, the term “wholly” means that the good is entirely of the named material, and
(B) when used in reference to elastomeric yarns, the term “wholly formed” means that all production processes and finishing operations, starting with the extrusion of all filaments, strips, films or sheets, or the spinning of all fibers into yarn, or both, and ending with a finished yarn or plied yarn took place in the territory of Colombia or of the United States. For purposes of this note, the term “elastomeric yarns” does not include latex.
(e) De minimis amounts of nonoriginating materials.
(i) Except as provided in subdivision (ii) below, a good (other than a textile or apparel good described in subdivision (d) above) that does not undergo a change in tariff classification pursuant to subdivision (o) of this note is an originating good if–
(A) (1) the value of all nonoriginating materials that are used in the production of the good and that do not undergo the applicable change in tariff classification set forth in such subdivision (o) does not exceed 10 percent of the adjusted value of the good;
(2) the value of such nonoriginating materials is included in the value of nonoriginating materials for any applicable regional value-content requirement for the good under this note; and
(3) the good meets all other applicable requirements of this note; or
(B) the good meets the requirements set forth in subdivision (e)(ii)(B) of this note.
(ii) Subdivision (e)(i) does not apply to–
(A) a nonoriginating material provided for in chapter 4 of the tariff schedule, or a nonoriginating dairy preparation containing over 10 percent by weight of milk solids provided for in subheading 1901.90 or 2106.90 that is used in the production of a good provided for in chapter 4;
(B) a nonoriginating material provided for in chapter 4 of the tariff schedule, or a nonoriginating dairy preparation containing over 10 percent by weight of milk solids provided for in subheading 1901.90, that is used in the production of any of the following goods:
(1) infant preparations containing over 10 percent by weight of milk solids, the foregoing provided for in subheading 1901.10;
(2) mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale, the foregoing provided for in subheading 1901.20;
(3) dairy preparations containing over 10 percent by weight of milk solids, the foregoing provided for in subheading 1901.90 or 2106.90;
(4) goods provided for in heading 2105;
(5) beverages containing milk, the foregoing provided for in subheading 2202.90; or
(6) animal feeds containing over 10 percent by weight of milk solids, the foregoing provided for in subheading 2309.90;
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(C) a nonoriginating material provided for in heading 0805, or in any of subheadings 2009.11 through 2009.39, that is used in the production of a good provided for in any of subheadings 2009.11 through 2009.39, or in fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, provided for in subheading 2106.90 or 2202.90;
(D) a nonoriginating material provided for in heading 0901 or 2101 that is used in the production of a good provided for in heading 0901 or 2101;
(E) a nonoriginating material provided for in chapter 15 that is used in the production of a good provided for in any of headings 1501 through 1508, or any of headings 1511 through 1515;
(F) a nonoriginating material provided for in heading 1701 that is used in the production of a good provided for in any of headings 1701 through 1703;
(G) a nonoriginating material provided for in chapter 17 that is used in the production of a good provided for in subheading 1806.10;
(H) except as provided in subdivisions (A) through (G) above and subdivision (o) of this note, a nonoriginating material used in the production of a good provided for in any of chapters 1 through 24, unless the nonoriginating material is provided for in a different subheading than the good for which origin is being determined under this note;
(I) a nonoriginating material that is a textile or apparel good.
(iii) For the purposes of this note, the term “adjusted value” means the value determined in accordance with Articles 1 through 8, Article 15 and the corresponding interpretive notes of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section 101(d)(8) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(8)), adjusted, if necessary, to exclude any costs, charges or expenses incurred for transportation, insurance and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation.
(f) Accumulation.
(i) For purposes of this note, originating materials from the territory of Colombia or the United States that are used in the production of a good in the territory of the other country shall be considered to originate in the territory of such other country.
(ii) A good that is produced in the territory of Colombia or of the United States, or both, by one or more producers, is an originating good if the good satisfies all of the applicable requirements of this note.
(g) Regional value content.
(i) For purposes of subdivision (b)(ii)(B) of this note, the regional value content for a good referred to in subdivision (o) of this note, except for goods to which subdivision (h) applies, shall be calculated by the importer, exporter or producer of the good, on the basis of the build-down method described in subdivision (g)(i)(A) or the build-up method described in (g)(i)(B) of this note.
(A) For the build-down method, the regional value content of a good may be calculated on the basis of the formula RVC = ((AV - VNM) / AV) X 100, where RVC is the regional value content, expressed as a percentage; AV is the adjusted value of the good; and VNM is the value of nonoriginating materials that are acquired and used by the producer in the production of the good, but does not include the value of a material that is self-produced; or
(B) For the build-up method, the regional value content of a good may be calculated on the basis of the formula RVC = (VOM / AV) X 100, where RVC is the regional value content, expressed as a percentage; AV is the adjusted value of the good; and VOM is the value of originating materials that are acquired or self-produced, and used by the producer in the production of the good.
(ii) Value of materials.
(A) For the purpose of calculating the regional value content of a good under subdivision (g)(i) and for purposes of applying the de minimis provisions of subdivision (e) of this note, the value of a material is:
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(1) in the case of a material that is imported by the producer of the good, the adjusted value of the material;
(2) in the case of a material acquired in the territory in which the good is produced, the value, determined in accordance with Articles 1 through 8, Article 15 and the corresponding interpretive notes, of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section 101(d)(8) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(8)), as set forth in regulations promulgated by the Secretary of the Treasury providing for the application of such Articles in the absence of an importation by the producer; or
(3) in the case of a material that is self-produced, the sum of–
(I) all expenses incurred in the production of the material, including general expenses, and
(II) an amount for profit equivalent to the profit added in the normal course of trade.
(B) The value of materials may be further adjusted as follows:
(1) for originating materials, the following expenses, if not included in the value of an originating material calculated under subdivision (A) above, may be added to the value of the originating material:
(I) the costs of freight, insurance, packing and all other costs incurred in transporting the material within or between the territory of Colombia or of the United States, or both, to the location of the producer;
(II) duties, taxes and customs brokerage fees on the material paid in the territory of Colombia or of the United States, or both, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable; and
(III) the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or byproducts; and
(2) for non-originating materials, if included the value of a nonoriginating material calculated under subdivision (A) above, the following expenses may be deducted from the value of the nonoriginating material:
(I) the costs of freight, insurance, packing and all other costs incurred in transporting the material within or between the territory of Colombia or of the United States, or both, to the location of the producer;
(II) duties, taxes and customs brokerage fees on the material paid in the territory of Colombia or of the United States, or both, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable;
(III) the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or by-products; or
(IV) the cost of originating materials used in the production of the nonoriginating material in the territory of Colombia or of the United States, or both.
(C) All costs considered for the calculation of regional value content shall be recorded and maintained in conformity with the generally accepted accounting principles applicable in the territory of the country in which the good is produced (whether Colombia or the United States). The term “generally accepted accounting principles”--
(1) means the recognized consensus or substantial authoritative support given in the territory of Colombia or of the United States, as the case may be, with respect to the recording of revenues, expenses, costs, assets and liabilities, the disclosure of information and the preparation of financial statements, and
(2) may encompass broad guidelines for general application as well as detailed standards, practices and procedures.
(h) Automotive goods.
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(i) For purposes of subdivision (b)(ii)(B) of this note, the regional value content of an automotive good referred to in subdivision (o) of this note may be calculated by the importer, exporter or producer of the good on the basis of the following net cost method, RVC = ((NC - VNM) / NC) X 100, where RVC is the regional value content, expressed as a percentage; NC is the net cost of the automotive good; and VNM is the value of nonoriginating materials that are acquired and used by the producer in the production of the automotive good, but does not include the value of a material that is self-produced.
(ii) For purposes of this subdivision, the term “automotive good” means a good provided for in any of subheadings 8407.31 through 8407.34, subheading 8408.20, heading 8409 or any of headings 8701 through 8708.
(iii) For purposes of determining the regional value content under subdivision (h)(i) of this note for an automotive good that is a motor vehicle provided for in any of headings 8701 through 8705, an importer, exporter or producer may average the amounts calculated under the net cost formula contained in subdivision (h)(i), over the producer’s fiscal year–
(A) with respect to all motor vehicles in any one of the categories described in subdivision (h)(iv), or
(B) with respect to all motor vehicles in any such category that are exported to the territory of Colombia or of the United States.
(iv) A category is described in this subdivision if it–
(A) is the same model line of motor vehicles, is in the same class of motor vehicles and is produced in the same plant in the territory of Colombia or of the United States, as the good described in subdivision (h)(iii) for which regional value content is being calculated;
(B) is the same class of motor vehicles, and is produced in the same plant in the territory of Colombia or of the United States, as the good described in subdivision (h)(iii) for which regional value content is being calculated; or
(C) is the same model line of motor vehicles produced in the territory of Colombia or of the United States as the good described in subdivision (h)(iii) for which regional value content is being calculated.
For purposes of this subdivision, the term “model line of motor vehicles” means a group of motor vehicles having the same platform or model name.
(v) The term “class of motor vehicles” means any one of the following categories of motor vehicles:
(A) motor vehicles provided for in subheading 8701.20, 8704.10, 8704.22, 8704.23, 8704.32 or 8704.90, or heading 8705 or 8706, or motor vehicles for the transport of 16 or more persons provided for in subheading 8702.10 or 8702.90;
(B) motor vehicles provided for in subheading 8701.10 or any of subheadings 8701.30 through 8701.90;
(C) motor vehicles for the transport of 15 or fewer persons provided for in subheading 8702.10 or 8702.90, or motor vehicles provided for in subheading 8704.21 or 8704.31; or
(D) motor vehicles provided for in any of subheadings 8703.21 through 8703.90.
(vi) For purposes of determining the regional value content under subdivision (h) of this note for automotive materials provided for in any of subheadings 8407.31 through 8407.34, in subheading 8408.20 or in heading 8409, 8706, 8707 or 8708, that are produced in the same plant, an importer, exporter or producer may–
(A) average the amounts calculated under the net cost formula contained in subdivision (h)(i) over–
(1) the fiscal year of the motor vehicle producer to whom the automotive goods are sold,
(2) any quarter or month, or
(3) the fiscal year of the producer of such goods,
if the goods were produced during the fiscal year, quarter or month that is the basis for the calculation;