page 32 USMCA
(1) does not exceed 10 percent of the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good; or
(2) does not exceed 10 percent of the total cost of the good;
(B) the good meets all other applicable requirements of this note; and
(C) the value of such nonoriginating materials is included in the value of nonoriginating materials for any applicable regional value content requirement for the good.
(ii) Exceptions for dairy and other products.—Subdivision (e)(i) does not apply to the following:
(A) a nonoriginating material of headings 0401 through 0406, or a nonoriginating dairy preparation containing over 10 percent by dry weight of milk solids of subheading 1901.90 or 2106.90, used or consumed in the production of a good of headings 0401 through 0406;
(B) a nonoriginating material of headings 0401 through 0406, or nonoriginating dairy preparations containing over 10 percent by dry weight of milk solids of subheading 1901.90 or 2106.90, used or consumed in the production of any of the following goods:
(1) infant preparations containing over 10 percent by dry weight of milk solids, of subheading 1901.10;
(2) mixes and doughs containing over 25 percent by dry weight of butterfat, not put up for retail sale, ofsubheading 1901.20;
(3) a dairy preparations containing over 10 percent by dry weight of milk solids, of subheading 1901.90 or 2106.90;
(4) a good of heading 2105;
(5) beverages containing milk of subheading 2202.90;
(6) animal feeds containing over 10 percent by dry weight of milk solids of subheading 2309.90.
(C) A nonoriginating material or heading 0805, or any of subheadings 2009.11 through 2009.39, used or consumed in the production of a good of subheadings 2009.11 through 2009.39, or a fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, of subheading 2106.90 or 2202.90.
(D) A nonoriginating material of chapter 9 used or consumed in the production of instant coffee, not flavored, of subheading 2101.11.
(E) A nonoriginating material of chapter 15 used or consumed in the production of a good of heading 1501 through 1508, 1512, 1514 or 1515.
(F) A nonoriginating material of heading 1701 used or consumed in the production of a good of any of headings 1701 through 1703.
(G) A nonoriginating good of chapter 17 or heading 1805 used in the production of a good of subheading 1806.10.
(H) Nonoriginating peaches, pears, or apricots of chapter 8 or 20, used in the production of a good of heading 2008.
(I) A nonoriginating single juice ingredient of heading 2009 used or consumed in the production of a good of—
(1) subheading 2009.90, or tariff item 2106.90.54 (concentrated mixtures of fruit or vegetable juice, fortified with minerals or vitamins); or
(2) tariff items 2202.99.37 (mixtures of fruit or vegetable juices, fortified with minerals or vitamins).
page 33 USMCA
(J) A nonoriginating material of any of headings 2203 through 2208 used or consumed in the production of a good provided for under heading 2207 or 2208.
(iii) Goods provided for under chapters 1 through 27.—Subparagraph (i) of this subdivision does not apply to a nonoriginating material used or consumed in the production of a good provided for in chapters 1 through 27 unless the nonoriginating material is provided for in a different subheading than the subheading of the good for which origin is being determined.
(iv) Textile or apparel goods.
(A) Goods classified under chapters 50 through 60.—Except as provided in subparagraph (C) below, a textile or apparel good provided for in any of chapters 50 through 60 or heading 9619 that is not an originating good because certain nonoriginating materials used in the production of the good do not undergo an applicable change in tariff classification set forth in subdivision (o) of this note, shall be considered to be an originating good if the total weight of all such materials, including elastomeric yarns, is not more than 10 percent of the total weight of the good and the good meets all other applicable requirements of this note.
(B) Goods classified under chapters 61 through 63.—Except as provided in subparagraph (C) below, a textile or apparel good provided for in chapter 61, 62 or 63 that is not an originating good 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 forth in subdivision (o) of this note shall be considered to be an originating good if the total weight of all such fibers or yarns in the component, including elastomeric yarns, is not more than 10 percent of the total weight of the component and the good meets all other applicable requirements of this note.
(C) Goods containing nonoriginating elastomeric yarns.
(1) Goods classified under chapters 50 through 60 or heading 9619.—A textile or apparel good described in subparagraph (A) above and containing nonoriginating elastomeric yarns shall be considered to be an originating good only if the nonoriginating elastomeric yarns contained in the good do not exceed 7 percent of the total weight of the good.
(2) Goods classified under chapters 61 through 63.—A textile or apparel good described in subparagraph (B) shall be considered to be an originating good only if the nonoriginating elastomeric yarns contained in the component of the good that determines the tariff classification of the good do not exceed 7 percent of the total weight of the component.
(f) Fungible goods and materials.
(i) Fungible materials used in production.—Subject to subparagraph (f)(iii) below, if originating and nonoriginating fungible materials are used or consumed in the production of a good, the determination of whether the materials are originating may be made on the basis of any of the inventory management methods set forth in regulations implementing this note.
(ii) Fungible goods commingled and exported.—Subject to subparagraph (f)(iii) below, if originating and nonoriginating fungible goods are commingled and exported in the same form, the determination of whether the goods are originating may be made on the basis of any of the inventory management methods set forth in regulations implementing this note. An importer may claim that a fungible material or good is originating if the importer, producer, or exporter has physically segregated each fungible material or good as to allow their specific identification.
(iii) Use of inventory management method.—A person that selects an inventory management method for purposes of paragraph (f)(i) or (f)(ii) of this subdivision shall use that inventory management method throughout the fiscal year of the person.
(g) Accessories, spare parts, tools and instructional or other information materials.
(i) In general.—Subject to paragraph (g)(ii) below, accessories, spare parts, tools or instructional or other information materials delivered with a good shall—
(A) be treated as originating if the good is an originating good;
(B) be disregarded in determining whether a good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries or satisfies a process or change in tariff classification set forth in subdivision (o) of this note; and
page 34 USMCA
(C) be taken into account as originating or nonoriginating materials, as the case may be, in calculating any applicable regional value content of the good set forth in subdivision (o) of this note.
(ii) Conditions.—Paragraph (g)(i) of this subdivision shall apply only if—
(A) the accessories, spare parts, tools or instructional or other information materials are classified with and delivered with, but not invoiced separately from, the good; and
(B) the types, quantities and value of the accessories, spare parts, tools or instructional or other information materials are customary for the good.
(h) [Format adjusted for alignment.]
(i) Packing materials and containers for shipment.—Packing materials and containers for shipment shall be disregarded in determining whether a good is an originating good.
(ii) Packaging materials and containers for retail sale.-- Packaging materials and containers in which a good is packaged for retail sale, if classified with the good, shall be disregarded in determining whether all of the nonoriginating materials used in the production of the good undergo the applicable process or change in tariff classification requirement set forth in subdivision (o) of this note, or whether the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries. If the good is subject to a regional value content requirement set forth in that Annex, the value of such packaging materials and containers shall be taken into account as originating or nonoriginating materials, as the case may be, in calculating the regional value content of the good.
(iii) Indirect materials.—An indirect material shall be treated as an originating material without regard to where it is produced.
(iv) Transit and transshipment.—A good that has undergone production necessary to qualify as an originating good under subdivision (b) of 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 a USMCA country, other than—
(1) unloading, reloading, separation from a bulk shipment, storing, labeling or marking, as required by a USMCA country, or
(2) any other operation necessary to preserve the good in good condition or to transport the good to the territory of the importing USMCA country; or
(B) does not remain under the control of customs authorities in a country other than a USMCA country.
(i) Goods classifiable as goods put up in sets.-- Notwithstanding the rules set forth in subdivision (o) of this note, goods classifiable as goods put up in sets for retail sale as provided for in rule 3 of the general rules of interpretation of the tariff schedule 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 10 percent of the value of the set. [Compiler's note: numbering of subdivisions as set forth in proclaimed text.]
(j) Nonqualifying operations.—A good shall not be considered to be an originating good merely by reason of—
(i) mere dilution with water or another substance that does not materially alter the characteristics of the good; or
(ii) any production or pricing practice with respect to which it may be demonstrated, by a preponderance of the evidence, that the object of the practice was to circumvent the requirements of this note.
(k) Special rules for automotive goods.
page 35 USMCA
(i) An automotive good and other motor vehicles and parts described herein shall be subject to applicable requirements set forth in this paragraph, including, with respect to a passenger vehicle or light truck that has been authorized to use the alternative staging regime described under subparagraph (viii), applicable requirements for the duration of the alternative staging period specified in the approval.
(ii) Definitions.—In this subdivision:
(A) Advanced technology vehicle.—The term “advanced technology vehicle” means:
(1) an electric vehicle, including a hybrid electric vehicle, a fuel cell vehicle or other type of advanced propulsion vehicle (e.g., zero emission vehicle); or
(2) an autonomous vehicle of headings 8703 or 8704 classified as a Level 4 or Level 5 automated vehicle in accordance with SAE International SAEJ3016-2016 (Taxonomy and Definitions for Terms Related to Driving Automation Systems for On-Road Motor Vehicles), as amended;
(B) Alternative staging regime.—The term “alternative staging regime” means the application, pursuant to subdivision (k)(viii) of this note, of the requirements of article 8 of the automotive appendix to the production of covered vehicles to allow producers of such vehicles to bring such production into compliance with the requirements of Article 2 through 7, inclusive, of that appendix, under the terms provided in applicable regulations.
(C) Alternative staging regime period.—The term “alternative staging regime period” means the period during which the alternative staging regime is in effect.
(D) Automotive appendix.—The term “automotive appendix” means the Appendix to Annex 4-B of the USMCA (relating to the product-specific rules of origin for automotive goods, as reflected in subdivision (o) of this note).
(E) Automotive good.—The term “automotive good” means—
(1) a covered vehicle; or
(2) a part, component or material listed in table A.1, A.2, B, C, D or E of the automotive appendix, subject to any provisions that may be included in regulations issued by the Secretary of the Treasury.
(F) Automotive rules of origin.—The term “automotive rules of origin” means the rules of origin for automotive goods set forth in the automotive appendix.
(G) Class of motor vehicles.—The term “class of motor vehicles” means one of the following categories of motor vehicles:
(1) motor vehicles of subheading 8701.20, motor vehicles for the transport of 16 or more persons of subheadings 8702.10 or 8702.90, or motor vehicles of subheadings 8704.10, 8704.22, 8704.23, 8704.32 or 8704.90, or headings 8705 or 8706;
(2) motor vehicles of subheadings 8701.10 or 8701.30 through 8701.90;
(3) motor vehicles for the transport of 15 or fewer persons of subheading 8702.10 or 8702.90, or motor vehicles of subheadings 8704.21 or 8704.31; or
(4) motor vehicles of subheadings 8703.21 through 8703.90.
(H) Commissioner.—The term “Commissioner” means the Commissioner of U.S. Customs and Border Protection.
(I) Covered vehicle.—The term “covered vehicle” means a passenger vehicle, light truck or heavy truck.
(J) Interagency committee.—The term “interagency committee” means the interagency committee established under section 202A(b)(1) of the USMCA Implementation Act.
(K) Model line.—The term “model line” means a group of motor vehicles having the same platform or model name.
page 36 USMCA
(L) Motor vehicle assembler.—The term “motor vehicle assembler” means a producer of motor vehicles and any related persons or joint ventures in which the producer participates.
(M) New building.—The term “new building” means a new construction, including at least the pouring or construction of new foundation and floor, the erection of a new structure and roof, and installation of new plumbing, electrical and other utilities to house a complete vehicle assembly process.
(N) Passenger vehicle; light truck; heavy truck.—For purposes of this note, the term “passenger vehicle”, “light truck” and “heavy truck” have the meanings given those terms herein. For purposes of this note, the term “off-road use”refers to vehicle that does not meet U.S. federal safety and emissions standards permitting unrestricted on-road use, or the equivalent Mexican and Canadian on-road standards.
(1) Passenger vehicle.—The term “passenger vehicle” means a vehicle of subheading 8703.21 through 8703.90,except for:
(I) a vehicle with a compression-ignition engine classified in subheadings 8703.31 through 8703.33 or a vehicle of subheading 8703.90 with both a compression-ignition engine and an electric motor for propulsion;
(II) a three or four-wheeled motorcycle;
(III) an all-terrain vehicle, meaning a vehicle that does not meet U.S. federal safety and emissions standards permitting unrestricted on-road use or the equivalent Mexican and Canadian on-road standards; or
(IV) a motorhome or entertainer coach, meaning a vehicle built on a self-propelled motor vehicle chassis that is solely or principally designed as temporary living quarters for recreational, camping, entertainment, corporate or seasonal use.
(2) Light truck.—The term “light truck” means a vehicle of subheading 8704.21 or 8704.31, except for a vehicle that is solely or principally for off-road use.
(3) Heavy truck.—The term “heavy truck” means a vehicle of subheading 8701.20, 8704.22, 8704.23, 8704.32, 8704.90 or 8706, except for a vehicle that is solely or principally for off-road use. For purposes of this note, a “good of heading 8706” means a chassis fitted with engines for a vehicle under subheading 8701.20, 8704.22, 8704.23, 8704.32 or 8704.90, except for a vehicle that is solely or principally designed for off-road use.
(O) Refit.—The term “refit” means a plant closure, for purposes of plant conversion or retooling, that lasts at least three months.
(P) Super-core.—The term “super-core” means the parts listed in the left column of Table A.2 of the automotive appendix, which are considered as a single part for the purposes of performing a regional value content calculation in accordance with the provisions of this note and of article 5.2 of the USMCA automotive appendix concerning averaging.
(iii) Staging of regional value content requirements.---
(A) Notwithstanding subdivision (o) of this note, the regional value content requirement for a passenger vehicle or a light truck is:
(1) 66 percent under the net cost method, beginning on July 1, 2020;
(2) 69 percent under the net cost method, beginning on July 1, 2021;
(3) 72 percent under the net cost method, beginning on July 1, 2022; and
(4) 75 percent under the net cost method, beginning on July 1, 2023, and thereafter.
(B) Notwithstanding subdivision (o) of this note, the regional value content requirement for a part listed in Table A.1 of the automotive appendix that is for use in a passenger vehicle or light truck is: