CCRFTA Rules of Origin Regulations (SOR/2002-395)

PART 1Interpretation

• 1 (1) The following definitions apply in these Regulations.

  Agreement

  Agreement means the Canada — Costa Rica Free Trade Agreement. (Accord)

  CCRFTA country

  CCRFTA country means Canada or Costa Rica. (pays ALÉCCR)

  Customs Valuation Agreement

  Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 set out in Annex 1A of the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations. (Accord sur la valeur en douane)

  excluded costs

  excluded costs means sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs. (coûts exclus)

  fungible goods

  fungible goods means goods that are interchangeable for commercial purposes and the properties of which are essentially identical. (produits fongibles)

  fungible materials

  fungible materials means materials that are interchangeable for commercial purposes and the properties of which are essentially identical. (matières fongibles)

  identical goods

  identical goods means, with respect to a good, goods that

  • (a) are the same as that good in all respects, including physical characteristics, quality and reputation but excluding minor differences in appearance;

  • (b) were produced in the same country as that good; and

  • (c) were produced

    • (i) by the producer of that good, or

    • (ii) by another producer, where no goods that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that good. (produits identiques)

  indirect material

  indirect material means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, and includes

  • (a) fuel and energy;

  • (b) tools, dies and moulds;

  • (c) spare parts and materials used in the maintenance of equipment and buildings;

  • (d) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings;

  • (e) gloves, glasses, footwear, clothing, safety equipment and supplies;

  • (f) equipment, devices and supplies used for testing or inspecting the other goods;

  • (g) catalysts and solvents; and

  • (h) any other goods that are not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be part of that production. (matière indirecte)

  intermediate material

  intermediate material means a material that is produced by a producer of a good and is used in the production of that good. (matière intermédiaire)

  material

  material means a good that is used in the production of another good, and includes a part or ingredient. (matière)

  net cost

  net cost means the total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost. (coût net)

  net cost of a good

  net cost of a good means the net cost that can be reasonably allocated to a good using one of the methods set out in subsection 4(6). (coût net d’un produit)

  non-allowable interest costs

  non-allowable interest costs means interest costs incurred by a producer that are more than 700 basis points above the applicable national government interest rate identified for comparable maturities. (frais d’intérêt non admissibles)

  non-originating good

  non-originating good means a good that does not qualify as originating under these Regulations. (produit non originaire)

  non-originating material

  non-originating material means a material that does not qualify as originating under these Regulations. (matière non originaire)

  originating good

  originating good means a good that qualifies as originating under these Regulations. (produit originaire)

  originating material

  originating material means a material that qualifies as originating under these Regulations. (matière originaire)

  producer

  producer means a person who grows, mines, harvests, fishes, hunts, manufactures, processes or assembles a good. (producteur)

  production

  production means growing, mining, harvesting, fishing, trapping, hunting, manufacturing, processing or assembling a good. (production)

  royalties

  royalties means payments of any kind, including payments under technical assistance or similar agreements, made as consideration for the use or right to use any copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, secret formula or process, excluding those payments under technical assistance or similar agreements that can be related to specific services such as

  • (a) personnel training, without regard to where performed; and

  • (b) if performed in the territory of one or both of the CCRFTA countries, engineering, tooling, die-setting, software design and similar computer services, or other services. (redevances)

  sales promotion, marketing and after-sales service costs

  sales promotion, marketing and after-sales service costs, means the following costs related to sales promotion, marketing and after-sales service:

  • (a) sales and marketing promotion, media advertising, advertising and market research, promotional and demonstration materials, exhibits, sales conferences, trade shows and conventions; banners, marketing displays, free samples, sales, marketing and after-sales service literature (product brochures, catalogues, technical literature, price lists, service manuals, sales aid information), establishment and protection of logos and trademarks, sponsorships, wholesale and retail restocking charges, entertainment;

  • (b) sales and marketing incentives, consumer, retailer or wholesaler rebates; merchandise incentives;

  • (c) salaries and wages, sales commissions, bonuses, benefits (for example, medical, insurance, pension), travelling and living expenses, membership and professional fees, for sales promotion, marketing and after-sales service personnel;

  • (d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training of customers’ employees, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

  • (e) product liability insurance;

  • (f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

  • (g) telephone, mail and other communications, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

  • (h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centres;

  • (i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after-sales service offices and distribution centres, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; and

  • (j) payments by the producer to other persons for warranty repairs. (frais de promotion des ventes, de commercialisation et de service après-vente)

  shipping and packing costs

  shipping and packing costs means the costs incurred in packing a good for shipment and shipping the good from the point of direct shipment to the buyer, excluding the costs of preparing and packaging the good for retail sale. (frais d’expédition et d’emballage)

  similar goods

  similar goods means with respect to a good, goods that

  • (a) although not alike in all respects to that good, have similar characteristics and component materials that enable the goods to perform the same functions and to be commercially interchangeable with that good;

  • (b) were produced in the same country as that good; and

  • (c) were produced

    • (i) by the producer of that good, or

    • (ii) by another producer, where no goods that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that good. (produits similaires)

  tariff provision

  tariff provision means a heading or subheading. (poste tarifaire)

  territory

  territory has the meaning assigned in subsection 2(1) of the Canada — Costa Rica Free Trade Implementation Act. (territoire)

  total cost

  total cost means the total of all product costs, period costs and other costs incurred in the territory of one or both of the CCRFTA countries. (coût total)

  transaction value

  transaction value means

  • (a) the price actually paid or payable for a good or material with respect to a transaction of the producer of the good, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the Customs Valuation Agreement, regardless of whether the good or material is sold for export; or

  • (b) where there is no transaction value or the transaction value is unacceptable under Article 1 of the Customs Valuation Agreement, the value determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement. (valeur transactionnelle)

  used

  used means used or consumed in the production of a good. (utilisé)

• (2) In these Regulations,

  • (a) chapter, unless otherwise indicated, refers to a chapter of the Harmonized System;

  • (b) heading refers to any four-digit number in the Harmonized System; and

  • (c) subheading refers to any six-digit number in the Harmonized System.

• (3) For purposes of applying the Customs Valuation Agreement under these Regulations, the principles of the Customs Valuation Agreement shall apply to domestic transactions, with such modifications as the circumstances may require.

• (4) All costs referred to in these Regulations shall be recorded and maintained in accordance with the Generally Accepted Accounting Principles applicable in the territory of the CCRFTA country in which the good is produced.

PART 2Originating Goods

General

• 2 (1) Except as otherwise provided in these Regulations, a good originates in the territory of a CCRFTA country where the good is

  • (a) a mineral good or other non-living natural resource extracted in or taken from the territory of one or both of the CCRFTA countries;

  • (b) a vegetable harvested in the territory of one or both of the CCRFTA countries;

  • (c) a live animal born and raised entirely in the territory of one or both of the CCRFTA countries;

  • (d) a good obtained from a live animal in the territory of one or both of the CCRFTA countries;

  • (e) a good obtained from hunting or fishing in the territory of one or both of the CCRFTA countries;

  • (f) fish, shellfish or other marine life taken from the sea, seabed or subsoil outside the territory of one or both of the CCRFTA countries by a vessel registered, recorded or listed with a CCRFTA country, or leased by a company established in the territory of a CCRFTA country, and entitled to fly its flag, or by a vessel not exceeding 15 tons gross tonnage that is licensed by a CCRFTA country;

  • (g) a good produced on board a factory ship from a good referred to in paragraph (f), if the factory ship is registered, recorded or listed with a CCRFTA country, or leased by a company established in the territory of a CCRFTA country, and entitled to fly its flag;

  • (h) a good, other than fish, shellfish or other marine life, taken or extracted from the seabed or the subsoil of the continental shelf or the exclusive economic zone of either of the CCRFTA countries;

  • (i) a good, other than fish, shellfish or other marine life, taken or extracted from the seabed or the subsoil, in the area outside the continental shelf and the exclusive economic zone of either of the CCRFTA countries or of any other State as defined in the United Nations Convention on the Law of the Sea, by a vessel registered, recorded or listed with a CCRFTA country and entitled to fly its flag, or by a CCRFTA country or person from a CCRFTA country;

  • (j) a good taken from outer space, where the good is obtained by a CCRFTA country or a person of a CCRFTA country and is not processed outside the territories of the CCRFTA countries;

  • (k) waste and scrap derived from

    • (i) production in the territory of one or both of the CCRFTA countries, or

    • (ii) waste and scrap derived from used goods collected in the territory of one or both of the CCRFTA countries, where that waste and scrap is fit only for the recovery of raw materials; or

  • (l) a good produced in the territory of one or both of the CCRFTA countries exclusively from a good referred to in any of paragraphs (a) through (k), or from the derivatives of such a good, at any stage of production.

• (2) A good originates in the territory of a CCRFTA country if each of the non-originating materials used in the production of the good undergoes the applicable change in tariff classification as a result of production that occurs entirely in the territory of one or both of the CCRFTA countries and if the applicable rule in Schedule I for the tariff provision under which the good is classified specifies

  • (a) only a change in tariff classification, and the good satisfies all other applicable requirements of these Regulations; or

  • (b) both a change in tariff classification and a regional value-content requirement and the good satisfies all other applicable requirements of these Regulations.

• (3) A good originates in the territory of a CCRFTA country where the good is produced entirely in the territory of one or both of the CCRFTA countries exclusively from originating materials.

• (4) A good originates in the territory of a CCRFTA country where, except in the case of a good of any of Chapter 39 or Chapters 50 through 63,

  • (a) the good is produced entirely in the territory of one or both of the CCRFTA countries;

  • (b) one or more of the non-originating materials used in the production of the good do not undergo an applicable change in tariff classification because both the good and the non-originating materials are classified in the same subheading, or heading that is not further subdivided into subheadings;

  • (c) each of the non-originating materials that is used in the production of the good and is not referred to in subparagraph (b) undergoes an applicable change in tariff classification or satisfies any other applicable requirement set out in Schedule I;

  • (d) the regional value content of the good, calculated in accordance with section 4, is not less than 35 per cent where the transaction value method is used, or is not less than 25 per cent where the net cost method is used, unless the applicable rule in Schedule I for the tariff provision under which the good is classified specifies a different regional value-content requirement, in which case that regional value-content requirement shall apply; and

  • (e) the good satisfies all other applicable requirements of these Regulations.

• (5) For purposes of paragraph (4)(b), the determination of whether a heading or subheading for both a good and the materials that are used in the production of the good shall be made on the basis of the nomenclature of the heading or subheading and the relevant Section of Chapter Notes in accordance with the General Rules for the Interpretation of the Harmonized System.