Chapter-- Four Rules of Origin

Chapter-- Four Rules of Origin and Origin Procedures

Section A:  Rules of Origin
 
Article 4.1: Originating Goods
 
Except as otherwise provided in this Chapter, each Party shall provide that a good is
originating where:
 
(a) it is a good wholly obtained or produced entirely in the territory of one or more of
the Parties;
 
(b) it is produced entirely in the territory of one or more of the Parties and  
 
(i) each of the non-originating materials used in the production of the good
undergoes an applicable change in tariff classification specified in Annex
4.1, or  
 
(ii) the good otherwise satisfies any applicable regional value content or other
requirements specified in Annex 4.1,  
 
and the good satisfies all other applicable requirements of this Chapter; or
 
(c) it is produced entirely in the territory of one or more of the Parties exclusively
from originating materials.  
 
Article 4.2:  Regional Value Content
 
1. Where Annex 4.1 specifies a regional value content test to determine whether a good is
originating, each Party shall provide that the importer, exporter, or producer may use a
calculation of regional value content based on one or the other of the following methods:  
 
(a) Method Based on Value of Non-Originating Materials (“Build-down Method”)
 
RVC = AV - VNM x 100
 AV
 
(b) Method Based on Value of Originating Materials (“Build-up Method”)
 
 RVC =    VOM x 100
AV
where,
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RVC is the regional value content, expressed as a percentage;
 
AV is the adjusted value;
 
VNM is the value of non-originating materials that are acquired and used by the
producer in the production of the good; VNM does not include the value of a
material that is self-produced; and
 
VOM is the value of originating materials acquired or self-produced, and used by the
producer in the production of the good.
 
2. Each Party shall provide that 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 Party where the good is produced.
 
3. Where Annex 4.1 specifies a regional value content test to determine if an automotive
good1 is originating, each Party shall provide that the importer, exporter, or producer may use a
calculation of the regional value content of that good as provided in paragraph 1 or based on the
following method:
 
Method for Automotive Products (“Net Cost Method”)
 
RVC = NC - VNM x 100
NC
 
where,
 
RVC is the regional value content, expressed as a percentage;
 
NC is the net cost of the good; and
 
VNM is the value of non-originating materials acquired and used by the producer in the
production of the good; VNM does not include the value of a material that is self-
produced.
 
4. Each Party shall provide that, for purposes of the regional value content method in
paragraph 3, the importer, exporter, or producer may use a calculation averaged over the
producer’s fiscal year, using any one of the following categories, on the basis of all motor
                                                 
1
  Paragraph 3 applies solely to goods classified under the following headings and subheadings:  8407.31 through
8407.34 (engines), 8408.20 (diesel engines for vehicles), 84.09 (parts of engines), 87.01 through 87.05 (motor
vehicles), 87.06 (chassis), 87.07 (bodies), and 87.08 (motor vehicle parts).  
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vehicles in the category or only those motor vehicles in the category that are exported to the
territory of one or more of the other Parties:
 
(a) the same model line of motor vehicles in the same class of vehicles produced in
the same plant in the territory of a Party;
 
(b) the same class of motor vehicles produced in the same plant in the territory of a
Party; or
 
(c) the same model line of motor vehicles produced in the territory of a Party.
 
5. Each Party shall provide that, for purposes of calculating regional value content under
paragraph 3 for automotive materials2 produced in the same plant, an importer, exporter, or
producer may use a calculation:
 
(a) averaged:
 
(i)  over the fiscal year of the motor vehicle producer to whom the good is
sold;
 
(ii) over any quarter or month; or
 
(iii) over its fiscal year,
 
provided that the good was produced during the fiscal year, quarter, or month
forming the basis for the calculation;
 
(b) in which the average in subparagraph (a) is calculated separately for such goods
sold to one or more motor vehicle producers; or
 
(c) in which the average in subparagraph (a) or (b) is calculated separately for those
goods that are exported to the territory of one or more of the Parties.
 
                                                 
2
  Paragraph 5 applies solely to automotive materials classified under the following headings and subheadings:  
8407.31 through 8407.34 (engines), 8408.20 (diesel engines for vehicles), 84.09 (parts of engines), 87.06 (chassis),
87.07 (bodies), and 87.08 (motor vehicle parts).
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Article 4.3:  Value of Materials
 
Each Party shall provide that, for purposes of Articles 4.2 and 4.6, the value of a material
shall be:
 
(a) for a material imported by the producer of the good, the adjusted value of the
material;
 
(b) for a material acquired in the territory where the good is produced, the value,
determined in accordance with Articles 1 through 8, Article 15, and the
corresponding interpretative notes of the Customs Valuation Agreement in the
same manner as for imported goods, with such reasonable modifications as may
be required due to the absence of an importation; or  
 
(c) for a material that is self-produced,  
 
(i)  all the 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.
 
Article 4.4:  Further Adjustments to the Value of Materials
 
1. Each Party shall provide that, for originating materials, the following expenses, where
not included under Article 4.3, may be added to the value of the material:
 
(a) the costs of freight, insurance, packing, and all other costs incurred in transporting
the material within a Party’s territory or between the territories of two or more
Parties to the location of the producer;
 
(b)  duties, taxes, and customs brokerage fees on the material paid in the territory of
one or more of the Parties, other than duties and taxes that are waived, refunded,
refundable, or otherwise recoverable, including credit against duty or tax paid or
payable; and
 
(c)  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-product.
 
2. Each Party shall provide that, for non-originating materials, the following expenses,
where included under Article 4.3, may be deducted from the value of the material:
 
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(a) the costs of freight, insurance, packing, and all other costs incurred in transporting
the material within a Party’s territory or between the territories of two or more
Parties to the location of the producer;
 
(b) duties, taxes and customs brokerage fees on the material paid in the territory of
one or more of the Parties, other than duties and taxes that are waived, refunded,
refundable, or otherwise recoverable, including credit against duty or tax paid or
payable;
 
(c) 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-product; and
 
(d) the cost of originating materials used in the production of the non-originating
material in the territory of a Party.
 
Article 4.5:  Accumulation  
 
1. Each Party shall provide that originating goods or materials of one or more of the Parties,
incorporated into a good in the territory of another Party, shall be considered to originate in the
territory of that other Party.
 
2. Each Party shall provide that a good is originating where the good is produced in the
territory of one or more of the Parties by one or more producers, provided that the good satisfies
the requirements in Article 4.1 and all other applicable requirements in this Chapter.   
 
Article 4.6:  De Minimis
 
1. Except as provided in Annex 4.6, each Party shall provide that a good that does not
undergo a change in tariff classification pursuant to Annex 4.1 is nonetheless originating if the
value of all non-originating materials used in the production of the good and that do not undergo
the applicable change in tariff classification does not exceed ten percent of the adjusted value of
the good, provided that the value of such non-originating materials shall be included in the value
of non-originating materials for any applicable regional value content requirement and that the
good meets all other applicable requirements in this Chapter.   
 
2. With respect to a textile or apparel good, Article 3.25.7 (Rules of Origin and Related
Matters) applies in place of paragraph 1.
 
Article 4.7:  Fungible Goods and Materials
 
1. Each Party shall provide that an importer may claim that a fungible good or material is
originating where the importer, exporter, or producer has:   
 
(a) physically segregated each fungible good or material; or  
 
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(b) used any inventory management method, such as averaging, last-in-first-out
(LIFO) or first-in-first-out (FIFO), recognized in the Generally Accepted
Accounting Principles of the Party in which the production is performed or
otherwise accepted by the Party in which the production is performed.
 
2. Each Party shall provide that the inventory management method selected under paragraph
1 for a particular fungible good or material shall continue to be used for that good or material
throughout the fiscal year of the person that selected the inventory management method.
 
Article 4.8:  Accessories, Spare Parts, and Tools
 
1. Each Party shall provide that a good’s standard accessories, spare parts, or tools delivered
with the good shall be treated as originating goods if the good is an originating good and shall be
disregarded in determining whether all the non-originating materials used in the production of
the good undergo the applicable change in tariff classification, provided that:
 
(a) the accessories, spare parts, or tools are classified with and not invoiced
separately from the good, regardless of whether they appear specified or
separately identified in the invoice itself; and
 
(b) the quantities and value of the accessories, spare parts, or tools are customary for
the good.
 
2. If a good is subject to a regional value content requirement, the value of accessories,
spare parts, or tools shall be taken into account as originating or non-originating materials, as the
case may be, in calculating the regional value content of the good.
 
Article 4.9:  Packaging Materials and Containers for Retail Sale
 
Each Party shall provide that packaging materials and containers in which a good is
packaged for retail sale shall, if classified with the good, be disregarded in determining whether
all the non-originating materials used in the production of the good undergo the applicable
change in tariff classification set out in Annex 4.1 and, if the good is subject to a regional value
content requirement, the value of such packaging materials and containers shall be taken into
account as originating or non-originating materials, as the case may be, in calculating the
regional value content of the good.
 
Article 4.10:  Packing Materials and Containers for Shipment
 
Each Party shall provide that packing materials and containers for shipment shall be
disregarded in determining whether a good is originating.
 
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Article 4.11:  Indirect Materials Used in Production
 
Each Party shall provide that an indirect material shall be considered to be an originating
material without regard to where it is produced.
 
Article 4.12: Transit and Transshipment
 
 Each Party shall provide that a good shall not be considered to be an originating good if the
good:
 
(a) undergoes subsequent production or any other operation outside the territories of
the Parties, 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 a
Party; or
 
(b) does not remain under the control of customs authorities in the territory of a non-
Party.   
 
Article 4.13:  Sets of Goods
 
1. Each Party shall provide that if goods are classified as a set as a result of the application
of rule 3 of the General Rules of Interpretation of the Harmonized System, the set is originating
only if each good in the set is originating and both the set and the goods meet all other applicable
requirements in this Chapter.   
 
2. Notwithstanding paragraph 1, a set of goods is originating if the value of all the non-
originating goods in the set does not exceed 15 percent of the adjusted value of the set.
 
3. With respect to a textile or apparel good, Article 3.25.9 (Rules of Origin and Related
Matters) applies in place of paragraphs 1 and 2.   
 
Article 4.14:  Consultation and Modifications  
 
1. The Parties shall consult regularly to ensure that this Chapter is administered effectively,
uniformly, and consistently with the spirit and objectives of this Agreement, and shall cooperate
in the administration of this Chapter.
 
2. A Party that considers that a specific rule of origin set out in Annex 4.1 requires
modification to take into account developments in production processes, lack of supply of
originating materials, or other relevant factors may submit a proposed modification along with
supporting rationale and any studies to the Commission for consideration.
 
3. On submission by a Party of a proposed modification under paragraph 2, the Commission
may refer the matter to an ad hoc working group within 60 days or on such other date as the
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Commission may decide.  The working group shall meet to consider the proposed modification
within 60 days of the date of referral or on such other date as the Commission may decide.   
 
4. Within such period as the Commission may direct, the working group shall provide a
report to the Commission, setting out its conclusions and recommendations, if any.
 
5. On receipt of the report, the Commission may take appropriate action under Article
19.1.3(b) (The Free Trade Commission).
 
6. With respect to a textile or apparel good, paragraphs 1 through 3 of Article 3.25 (Rules of
Origin and Related Matters) apply in place of paragraphs 2 through 5.
 
 
Section B:  Origin Procedures
 
Article 4.15:  Obligations Relating to Importations
 
1. Each Party shall grant any claim for preferential tariff treatment made in accordance with
this Chapter, unless the Party issues a written determination that the claim is invalid as a matter
of law or fact.  
 
2. A Party may deny preferential tariff treatment to a good if the importer fails to comply
with any requirement in this Chapter.   
 
3. No Party may subject an importer to any penalty for making an invalid claim for
preferential tariff treatment if the importer:
 
(a) did not engage in negligence, gross negligence, or fraud in making the claim and
pays any customs duty owing; or
 
(b) on becoming aware that such a claim is not valid, promptly and voluntarily
corrects the claim and pays any customs duty owing.  
 
4. Each Party may require that an importer who claims preferential tariff treatment for a
good imported into its territory:  
 
(a) declare in the importation document that the good is originating;
 
(b) have in its possession at the time the declaration referred to in subparagraph (a) is
made a written or electronic certification as described in Article 4.16, if the
certification forms the basis for the claim;  
 
(c) provide a copy of the certification, on request, to the importing Party’s customs
authority, if the certification forms the basis for the claim;
 
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(d) when the importer has reason to believe that the declaration in subparagraph (a) is
based on inaccurate information, correct the importation document and pay any
customs duty owing;
 
(e) when a certification by a producer or exporter forms the basis for the claim, either
provide or have in place, at the importer’s option, an arrangement to have the
producer or exporter provide, on request of the importing Party’s customs
authority, all information relied on by such producer or exporter in making such
certification; and
 
(f) demonstrate, on request of the importing Party’s customs authority, that the good
is originating under Article 4.1, including that the good satisfies the requirements
of Article 4.12.  
 
5. Each Party shall provide that, where a good was originating when it was imported into its
territory, but the importer of the good did not make a claim for preferential tariff treatment at the
time of importation, that importer may, no later than one year after the date of importation, make
a claim for preferential tariff treatment and apply for a refund of any excess duties paid as the
result of the good not having been accorded preferential tariff treatment on presentation to its
customs authority of:
 
(a) a written declaration, stating that the good was originating at the time of
importation;  
 
(b) on request of its customs authority, a copy of a written or electronic certification
if a certification forms the basis for the claim, or other information demonstrating
that the good was originating; and
 
(c) such other documentation relating to the importation of the good as its customs
authority may require.
 
6. Each Party may provide that the importer is responsible for complying with the
requirements of paragraph 4, notwithstanding that the importer may have based its claim for
preferential tariff treatment on a certification or information that an exporter or producer
provided.
 
7. Nothing in this Article shall prevent a Party from taking action under Article 3.24.6
(Customs Cooperation).
 
Article 4.16:  Claims of Origin  
 
1. Each Party shall provide that an importer may make a claim for preferential tariff
treatment based on either:
 
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(a) a written or electronic3 certification by the importer, exporter, or producer; or
 
(b) the importer’s knowledge that the good is an originating good, including
reasonable reliance on information in the importer’s possession that the good is an
originating good.4
 
2. Each Party shall provide that a certification need not be made in a prescribed format,
provided that the certification is in written or electronic form, including but not limited to the
following elements:  
 
(a) the name of the certifying person, including as necessary contact or other
identifying information;
 
(b) tariff classification under the Harmonized System and a description of the good;
 
(c) information demonstrating that the good is originating;  
 
(d) date of the certification; and  
 
(e) in the case of blanket certification issued as set out in paragraph 4(b), the period
that the certification covers.
 
3. Each Party shall provide that a certification by the producer or exporter of the good may
be completed on the basis of:
 
(a) the producer’s or exporter’s knowledge that the good is originating; or  
 
(b) in the case of an exporter, reasonable reliance on the producer’s written or
electronic certification that the good is originating.
 
No Party may require an exporter or producer to provide a written or electronic certification to
another person.  
 
4.  Each Party shall provide that a certification may apply to:
 
(a) a single shipment of a good into the territory of a Party; or
 
                                                 
3
  Each Central American Party and the Dominican Republic shall authorize importers to provide electronic
certifications beginning no later than three years after the date of entry into force of this Agreement.
4
  Each Central American Party and the Dominican Republic shall implement subparagraph (b) no later than three
years after the date of entry into force of this Agreement.  
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(b) multiple shipments of identical goods within any period specified in the written or
electronic certification, not exceeding 12 months from the date of the
certification.  
 
5. Each Party shall provide that a certification shall be valid for four years after the date it
was issued.  
 
6. Each Party shall allow an importer to submit a certification in the language of the
importing Party or the exporting Party.  In the latter case, the customs authority of the importing
Party may require the importer to submit a translation of the certification in the language of the
importing Party.  
 
Article 4.17:  Exceptions
 
No Party may require a certification or information demonstrating that the good is
originating where:
 
(a) the customs value of the importation does not exceed 1,500 U.S. dollars or the
equivalent amount in the currency of the importing Party, or such higher amount
as may be established by the importing Party, unless the importing Party
considers the importation to be part of a series of importations carried out or
planned for the purpose of evading compliance with the certification
requirements; or
 
(b) it is a good for which the importing Party does not require the importer to present
a certification or information demonstrating origin.  
 
Article 4.18:  Obligations Relating to Exportations
 
1. Each Party shall provide that:
 
(a) an exporter or a producer in its territory that has provided a written or electronic
certification in accordance with Article 4.16 shall, on request, provide a copy to
the appropriate authority of the Party;  
 
(b) a false certification by an exporter or a producer in its territory that a good to be
exported to the territory of another Party is originating shall be subject to
penalties equivalent to those that would apply to an importer in its territory that
makes a false statement or representation in connection with an importation, with
appropriate modifications; and
 
(c) when an exporter or a producer in its territory has provided a certification and has
reason to believe that the certification contains or is based on incorrect
information, the exporter or producer shall promptly notify in writing every
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person to whom the exporter or producer provided the certification of any change
that could affect the accuracy or validity of the certification.
 
2. No Party may impose penalties on an exporter or a producer for providing an incorrect
certification if the exporter or producer voluntarily notifies in writing all persons to whom it has
provided the certification that it was incorrect.
 
Article 4.19:  Record Keeping Requirements
 
1. Each Party shall provide that an exporter or a producer in its territory that provides a
certification in accordance with Article 4.16 shall maintain, for a minimum of five years from the
date the certification was issued, all records and documents necessary to demonstrate that a good
for which the producer or exporter provided a certification was an originating good, including
records and documents concerning:   
 
(a) the purchase of, cost of, value of, and payment for, the exported good;
 
(b) the purchase of, cost of, value of, and payment for, all materials, including
indirect materials, used in the production of the exported good; and
 
(c) the production of the good in the form in which it was exported.
 
2. Each Party shall provide that an importer claiming preferential tariff treatment for a good
imported into the Party’s territory shall maintain, for a minimum of five years from the date of
importation of the good, all records and documents necessary to demonstrate the good qualified
for the preferential tariff treatment.   
 
Article 4.20:  Verification
 
1. For purposes of determining whether a good imported into its territory from the territory
of another Party is an originating good, each Party shall ensure that its customs authority or other
competent authority may conduct a verification by means of:  
 
(a) written requests for information from the importer, exporter, or producer;  
 
(b) written questionnaires to the importer, exporter, or producer;
 
(c) visits to the premises of an exporter or producer in the territory of the other Party,
to review the records referred to in Article 4.19 or observe the facilities used in
the production of the good, in accordance with the framework that the Parties
develop pursuant to Article 4.21.2;  
 
(d) for a textile or apparel good, the procedures set out in Article 3.24 (Customs
Cooperation); or
 
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(e) such other procedures to which the importing and exporting Parties may agree.
 
2. A Party may deny preferential tariff treatment to an imported good where:  
 
(a) the exporter, producer, or importer fails to respond to a written request for
information or questionnaire within a reasonable period, as established in the
importing Party’s law;  
 
(b) after receipt of a written notification for a verification visit to which the importing
and exporting Parties have agreed, the exporter or producer does not provide its
written consent within a reasonable period, as established by the importing
Party’s law; or
 
(c) the Party finds a pattern of conduct indicating that an importer, exporter, or
producer has provided false or unsupported declarations that a good imported into
its territory is an originating good.
 
3. Except as provided in Article 3.24.6(d) (Customs Cooperation), a Party conducting a
verification shall provide the importer a determination, in writing, of whether the good is
originating.  The Party’s determination shall include factual findings and the legal basis for the
determination.  
 
4. If an importing Party makes a determination under paragraph 3 that a good is not
originating, the Party shall not apply that determination to an importation made before the date
of the determination where:
 
(a) the customs authority of the exporting Party issued an advance ruling regarding
the tariff classification or valuation of one or more materials used in the good
under Article 5.10 (Advance Rulings);
 
(b) the importing Party’s determination is based on a tariff classification or valuation
for such materials that is different than that provided for in the advance ruling
referred to in subparagraph (a); and
 
(c) the customs authority issued the advance ruling before the importing Party’s
determination.  
 
5. Where an importing Party determines through verification that an importer, exporter, or
producer has engaged in a pattern of conduct in providing false or unsupported statements,
declarations, or certifications that a good imported into its territory is originating the Party may
suspend preferential tariff treatment to identical goods covered by subsequent statements,
declarations, or certifications by that importer, exporter, or producer until the importing Party
determines that the importer, exporter, or producer is in compliance with this Chapter.
 
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Article 4.21:  Common Guidelines
 
1. The Parties shall agree on and publish common guidelines for the interpretation,
application, and administration of this Chapter and the relevant provisions of Chapter Three
(National Treatment and Market Access for Goods) and shall endeavor to do so by the date of
entry into force of this Agreement.  The Parties may agree to modify the common guidelines.  
 
2. The Parties shall endeavor to develop a framework for conducting verifications pursuant
to Article 4.20.1(c).
 
Article 4.22:  Definitions
 
For purposes of this Chapter:
adjusted value means the value determined in accordance with Articles 1 through 8, Article 15,
and the corresponding interpretative notes of the Customs Valuation Agreement, 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;
 
class of motor vehicles means any one of the following categories of motor vehicles:
 
(a) motor vehicles provided for in subheading 8701.20, motor vehicles for the
transport of 16 or more persons provided for in subheading 8702.10 or 8702.90,
and motor vehicles of subheading 8704.10, 8704.22, 8704.23, 8704.32, or
8704.90, or heading 87.05 or 87.06;
 
(b) motor vehicles provided for in subheading 8701.10 or 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, and motor vehicles of subheading 8704.21 or 8704.31; or
 
(d) motor vehicles provided for in subheadings 8703.21 through 8703.90;
 
fungible goods or materials means goods or materials that are interchangeable for commercial
purposes and whose properties are essentially identical;
 
Generally Accepted Accounting Principles means recognized consensus or substantial
authoritative support given in the territory of a Party with respect to the recording of revenues,
expenses, costs, assets, and liabilities, the disclosure of information, and the preparation of
financial statements.  Generally Accepted Accounting Principles may encompass broad
guidelines for general application, as well as detailed standards, practices, and procedures;
 
good means any merchandise, product, article, or material;
 
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goods wholly obtained or produced entirely in the territory of one or more of the Parties
means:
 
(a) plants and plant products harvested or gathered in the territory of one or more of
the Parties;
 
(b) live animals born and raised in the territory of one or more of the Parties;
 
(c) goods obtained in the territory of one or more of the Parties from live animals;
 
(d) goods obtained from hunting, trapping, fishing, or aquaculture conducted in the
territory of one or more of the Parties;
 
(e) minerals and other natural resources not included in subparagraphs (a) through (d)
extracted or taken from the territory of one or more of the Parties;
 
(f) fish, shellfish, and other marine life taken from the sea, seabed, or subsoil outside
the territory of one or more of the Parties by vessels registered or recorded with a
Party and flying its flag;
 
(g) goods produced on board factory ships from the goods referred to in subparagraph
(f), provided such factory ships are registered or recorded with that Party and fly
its flag;
 
(h) goods taken by a Party or a person of a Party from the seabed or subsoil outside
territorial waters, provided that a Party has rights to exploit such seabed or
subsoil;
 
(i)  goods taken from outer space, provided they are obtained by a Party or a person
of a Party and not processed in the territory of a non-Party;
 
(j) waste and scrap derived from
 
(i) manufacturing or processing operations in the territory of one or more of
the Parties, or
 
(ii) used goods collected in the territory of one or more of the Parties,
provided such goods are fit only for the recovery of raw materials;  
 
(k) recovered goods derived in the territory of one or more of the Parties from used
goods, and utilized in the territory of one or more of the Parties in the production
of remanufactured goods; and  
 
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(l) goods produced in the territory of one or more of the Parties exclusively from
goods referred to in subparagraphs (a) through (j), or from their derivatives, at
any stage of production;
 
identical goods means “identical goods” as defined in the Customs Valuation Agreement;
 
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, including:
 
(a) fuel and energy;
 
(b) tools, dies, and molds;
 
(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 good;
 
(g) catalysts and solvents; and
 
(h) any other goods that are not incorporated into the good but whose use in the
production of the good can reasonably be demonstrated to be a part of that
production;
 
material means a good that is used in the production of another good, including a part or an
ingredient;
 
material that is self-produced means an originating material that is produced by a producer of a
good and used in the production of that good;
 
model line means a group of motor vehicles having the same platform or model name;
 
net cost means 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;
 
net cost of the good means the net cost that can be reasonably allocated to the good under one of
the following methods:
 
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(a) by calculating the total cost incurred with respect to all goods produced by that
producer, subtracting any 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 of all such goods, and then reasonably allocating the
resulting net cost of those goods to the good;  
 
(b) calculating the total cost incurred with respect to all goods produced by that
producer, reasonably allocating the total cost to the good, and then subtracting
any sales promotion, marketing and after-sales service costs, royalties, shipping
and packing costs, and non-allowable interest costs that are included in the
portion of the total cost allocated to the good; or
 
(c) reasonably allocating each cost that forms part of the total cost incurred with
respect to the good so that the aggregate of these costs does not include any sales
promotion, marketing, and after-sales service costs, royalties, shipping and
packing costs, and non-allowable interest costs,
 
provided that the allocation of all such costs is consistent with the provisions regarding the
reasonable allocation of costs set out in Generally Accepted Accounting Principles;
 
non-allowable interest costs means interest costs incurred by a producer that exceed 700 basis
points above the yield on debt obligations of comparable maturities issued by the central level of
government of the Party in which the producer is located;
 
non-originating good or non-originating material means a good or material that is not
originating under this Chapter;
 
packing materials and containers for shipment means the goods used to protect a good during
its transportation and does not include the packaging materials and containers in which a good is
packaged for retail sale;
 
producer means a person who engages in the production of a good in the territory of a Party;  
 
production means growing, mining, harvesting, fishing, raising, trapping, hunting,
manufacturing, processing, assembling, or disassembling a good;
 
reasonably allocate means to apportion in a manner appropriate under Generally Accepted
Accounting Principles;
 
recovered goods means materials in the form of individual parts that are the result of: (a) the
disassembly of used goods into individual parts; and (b) cleaning, inspecting, testing, or other
processes as necessary for improvement to sound working condition;
 
remanufactured goods means goods classified under Harmonized System chapter 84, 85, or 87
or heading 90.26, 90.31, or 90.32, except goods classified under heading 84.18 or 85.16, that:
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(a) are entirely or partially comprised of recovered goods; and
 
(b) have a similar life expectancy and enjoy a factory warranty similar to such a new
good;
 
total cost means all product costs, period costs, and other costs for a good incurred in the
territory of one or more of the Parties;
 
used means used or consumed in the production of goods; and
 
value means the value of a good or material for purposes of calculating customs duties or for
purposes of applying this Chapter.
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Annex 4.6
 
Exceptions to Article 4.6
 
 
Article 4.6 shall not apply to:  
 
(a) a non-originating material classified under chapter 4 of the Harmonized System,
or a non-originating dairy preparation containing over ten percent by weight of
milk solids classified under subheading 1901.90 or 2106.90, that is used in the
production of a good classified under chapter 4 of the Harmonized System;
 
(b) a non-originating material classified under chapter 4 of the Harmonized System,
or a non-originating dairy preparation containing over ten percent by weight of
milk solids classified under subheading 1901.90, that is used in the production of
the following goods:  infant preparations containing over ten percent in weight of
milk solids classified under subheading 1901.10; mixes and doughs, containing
over 25 percent by weight of butterfat, not put up for retail sale, classified under
subheading 1901.20; dairy preparations containing over ten percent by weight of
milk solids, classified under subheading 1901.90 or 2106.90; heading 21.05;
beverages containing milk classified under subheading 2202.90; or animal feeds
containing over ten percent by weight of milk solids classified under subheading
2309.90;
 
(c) a non-originating material classified under heading 08.05 or subheadings 2009.11
through 2009.30 that is used in the production of a good classified under
subheadings 2009.11 through 2009.30, or in fruit or vegetable juice of any single
fruit or vegetable, fortified with minerals or vitamins, concentrated or
unconcentrated, classified under subheading 2106.90 or 2202.90;  
 
(d) a non-originating material classified under heading 09.01 or 21.01, that is used in
the production of a good classified under heading 09.01 or 21.01;   
 
(e) a non-originating material classified under heading 10.06 that is used in the
production of a good classified under heading 11.02 or 11.03 or subheading
1904.90;  
 
(f) a non-originating material classified under chapter 15 of the Harmonized System
that is used in the production of a good classified under chapter 15 of the
Harmonized System;
 
(g) a non-originating material classified under heading 17.01 that is used in the
production of a good classified under heading 17.01 through 17.03;
 
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(h) a non-originating material classified under chapter 17 of the Harmonized System
that is used in the production of a good classified under subheading 1806.10; or
 
(i) except as provided under subparagraph (a) through (h) and in the specific rules of
origin under Annex 4.1, a non-originating material used in the production of a
good classified under chapter 1 through 24 of the Harmonized System unless the
non-originating material is classified under a different subheading than the good
for which origin is being determined.