Canada

CUSTOMS TARIFF

CIFTA Rules of Origin Regulations

P.C. 1996-2075 December 30, 1996

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to paragraph 13(2)(a.1)^a of the Customs Tariff^b, hereby makes the annexed CIFTA Rules of Origin Regulations. a S.C. 1994, c. 47, s. 75(1) b R.S., c. 41 (3rd Supp.)

CIFTA RULES OF ORIGIN REGULATIONS

INTERPRETATION

1. The definitions in this section apply in these Regulations.

“adjusted to an F.O.B. basis” means, with respect to the value of a good, adjusted by

(a)

deducting

(i)

the costs of transporting the good after it is shipped from the point of direct shipment,

(ii)

the costs of unloading, loading, handling and insurance that are associated with that transportation, and

(iii) the cost of packing materials and containers, where those costs are included in the transaction value of the good, and

(b)

adding

(i)

the costs of transporting the good from the place of production to the point of direct shipment,

(ii)

the costs of loading, unloading, handling and insurance that are associated with that transportation, and

(iii) the costs of loading the good for shipment at the point of direct shipment, where those costs are not included in the transaction value of the good. (rajustée en fonction d’une base FAB)

“Agreement” means the Canada-Israel Free Trade Agreement. (Accord)

“alteration” means a modification, other than a repair, that does not include an operation or process that either destroys the essential characteristics of a good or creates a new or commercially different good. (modification)

“category of identical or similar materials” means those materials that are identical materials or similar materials with respect to each other and that are used in the production of the good for which origin is being determined under these Regulations, and includes a category consisting of a single material if no other material used in the production of the good is an identical material or a similar material with respect to that single material. (catégorie de matières identiques ou similaires) “CIFTA country” means Canada or Israel or another CIFTA beneficiary. (pays ALÉCI)

“Customs Valuation Code” 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. (Code de la valeur en douane)

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

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

“identical materials” means materials that are the same in all respects, including physical characteristics, quality and reputation but excluding minor differences in appearance. (matières identiques)

“indirect material” means a good used in the production, testing or inspection of another good but not physically incorporated into the other good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of another 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 good;

(g)

catalysts and solvents; and

(h)

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

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

“minor processing” means, with respect to a good,

(a)

mere dilution with water or any other substance that does not materially alter the characteristics of the good;

(b)

cleaning, including removal of rust, grease, paint or any other coating;

(c)

applying any preservative or decorative coating, including any lubricant, protective encapsulation, preservative or decorative paint, or metallic coating;

(d)

trimming, filing or cutting off small amounts of excess material;

(e)

packing or repacking of the good for transport, storage or sale;

(f)

packaging or repackaging of the good for retail sale or relabelling of the good in one or more official languages of a party to the Agreement; or

(g)

repairs or alterations, washing, laundering or sterilizing. (traitement mineur)

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

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

“originating good” means a good that qualifies as originating under these Regulations. (produit originaire) “originating material” means a material that qualifies as originating under these Regulations. (matière originaire)

“point of direct shipment” means the location from which a producer of a good normally ships that good to the buyer of the good. (point d’expédition directe)

“packaging materials and containers” means materials and containers in which a good is packaged for retail sale. (matières de conditionnement et contenants)

“packing materials and containers” means materials and containers that are used to protect a good during transportation, but does not include packaging materials and containers. (matières d’emballage et contenants)

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

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

“repair” means the adjustment of a machine, instrument, electrical device or other article, including replacing or refitting parts to restore the article to its original operating condition. (réparation)

“similar materials” means materials that, although not alike in all respects, have similar characteristics and component materials that enable the materials to perform the same functions and to be commercially interchangeable when used in the production of a good. (matières similaires)

“tariff provision” means a heading, subheading or tariff item. (poste tarifaire)

“territory” means, with respect to Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international law and its domestic law, Canada may exercise rights with respect to the seabed and subsoil and their natural resources; (territoire)

“used” means used or consumed in the production of a good. (utilisé) SOR/2002-252, s. 1.

ORIGINATING GOODS

2. (1) Except as otherwise provided in these Regulations, a good originates in a CIFTA country where

(a)

the good is

(i)

a mineral good extracted in the territory of one or more of the CIFTA countries,

(ii)

a vegetable or other good harvested in the territory of one or more of the CIFTA countries,

(iii) a live animal born and raised in the territory of one or more of the CIFTA countries,

(iv)

a good obtained from hunting, trapping or fishing in the territory of one or more of the CIFTA countries,

(v)

a fish, shellfish or other marine life taken from the sea by a vessel registered or recorded with a CIFTA country and flying that country’s flag,

(vi)

a good produced on board a factory ship from a good referred to in subparagraph (v), where that factory ship is registered or recorded with a CIFTA country and flies that country’s flag,

(vii) a good taken by a CIFTA country or a person of a CIFTA country from or beneath the seabed outside the territorial waters of that country, where a CIFTA country has the right to exploit that seabed,

(viii) a good taken from outer space, where the good is obtained by a CIFTA country or a person of a CIFTA country and does not undergo production outside the territory of any of the CIFTA countries,

(ix)

waste and scrap derived from

(A)

production in the territory of one or more of the CIFTA countries, or

(B)

used goods collected in the territory of one or more of the CIFTA countries, where those goods are fit only for the recovery of raw materials, or

(x)

a good produced in the territory of one or more of the CIFTA countries exclusively from a good referred to in any of subparagraphs (i) through (ix), or from its derivatives, at any stage of production;

(b)

each non-originating material used in the production of the good undergoes a change in tariff classification specified in the rule set out in Schedule I for the tariff provision under which the good is classified, and the good satisfies any other applicable requirement specified in that rule, as a result of production occurring entirely in the territory of one or more of the CIFTA countries;

(c)

the good satisfies, as a result of production occurring entirely in the territory of one or more of the CIFTA countries, the applicable requirements specified in the rule set out in Schedule I for the tariff provision under which the good is classified, where no change in tariff classification is specified in that rule;

(d)

the good is produced entirely in the territory of one or more of the CIFTA countries exclusively from originating materials; or

(e)

except in the case of a good of any of Chapters 61 through 63, the good is produced entirely in the territory of one or more of the CIFTA countries, but one or more of the non-originating materials that are used in the production of the good do not undergo a change in tariff classification because

(i)

the heading under which the good is classified provides for both the good and its parts and is not further subdivided into subheadings, or

(ii)

the subheading under which the good is classified provides for both the good and its parts, and at least one category of identical or similar materials of that heading or subheading consists entirely of originating materials.

(2)

For the purposes of determining whether a good is an originating good under paragraph (1)(e),

(a)

only those parts that are classified under the same heading, subheading or tariff item as the good shall be considered as parts for the purposes of determining whether at least one category of identical or similar materials consists entirely of originating materials; and

(b)

the determination of whether a heading or subheading provides for both a good and its parts shall be made on the basis of the nomenclature of the heading or subheading and the relevant Section or Chapter Notes, in accordance with the General Rules for the Interpretation of the Harmonized System.

(3)

Paragraph (1)(e) does not apply for purposes of determining whether a part provided for in a heading referred to in subparagraph (1)(e)(i) or in a subheading referred to in subparagraph (1)(e)(ii) is an originating good.

DE MINIMIS

3. (1) For the purposes of this section and section 4, "de minimis content”, in respect of a good, means the value of all the non-originating materials used in the production of the good that do not, as a result of production occurring entirely in the territory of one or more of the CIFTA countries, undergo a change in tariff classification specified in the rule set out in Schedule I for the tariff provision under which the good is classified.

(2)

Subject to subsections (3) and (4), a good originates in a CIFTA country where the de minimis content of the good is not more than 10 per cent of the value of the

good, adjusted to an F.O.B. basis, and the good satisfies any other applicable requirement specified in the rule set out in Schedule I for the tariff provision under which the good is classified as a result of production occurring entirely in the territory of one or more of the CIFTA countries.

(3)

Subsection (2) does not apply in respect of

(a)

a non-originating material of Chapter 4 or of any of tariff item Nos. 1901.90.51, 1901.90.52, 1901.90.53, 1901.90.54 and 1901.90.59 that is used in the production of a good of Chapter 4 or of any of tariff item Nos. 1901.20.11, 1901.20.12, 1901.20.21, 1901.20.22, 1901.90.51, 1901.90.52, 1901.90.53, 1901.90.54 and 1901.90.59, heading No. 21.05 and tariff items Nos. 2106.90.31, 2106.90.32, 2106.90.93, 2106.90.94, 2202.90.41, 2202.90.42, 2202.90.43, 2202.90.49, 2309.90.31, 2309.90.33 and 2309.90.35;

(b)

a non-originating material of any of subheading Nos. 0201.10 through 0201.30 and 0202.10 through 0202.30 that is used in the production of a good in Chapter 16;

(c)

a printed circuit assembly (PCA) that is a non-originating material used in the production of a good, where a Chapter Note set out in Schedule I requires that the PCA be disregarded for the purposes of applying the rule set out in that Schedule for the tariff provision under which the good is classified;

(d)

a non-originating material used in the production of a good of any of Chapters 1 through 19, heading Nos. 20.01 through 20.08, subheading No. 2009.90, heading Nos. 21.01 through 21.05, subheading No. 2106.10, tariff item No. 2106.90.92, heading No. 22.01, tariff item No. 2202.90.32 and heading Nos. 22.03 through 22.07, unless that non-originating material is of a different subheading than the good for which origin is being determined;

(e)

a non-originating material of any of Chapters 50 through 64 that is used in the production of a good of any of Chapters 50 through 64; and

(f)

a non-originating material used in the production of a good of any of subheading Nos. 3824.90, 8406.10 through 8406.82, 8415.10 through 8415.83, 8418.10 through 8418.69, 8421.12, 8422.11, 8450.11 through 8450.20, 8451.21 through 8451.29, heading Nos. 84.56 through 84.61, 84.62 through 84.63, subheading Nos 8477.10 through 8477.20, 8477.30, heading Nos. 84.83, 85.01, subheading Nos. 8502.11 through 8502.39, 8516.31, 8516.33, 8516.40, tariff item No. 8516.60.20, subheading Nos. 8516.72, 8526.10 and 8540.71 through 8540.79.

(4)

Where Schedule I sets out alternative rules for a good, subsection (2) applies only if the determination of whether the good is an originating good is being made under the first rule specified for that good.

4. (1) For the purposes of subsection 3(2), the de minimis content of a good shall be calculated as follows:

DMC = ^VNM /VG × 100

where DMCis the de minimis content of the good, expressed as a percentage; VNMis the value of all the non-originating materials used in the production of the good,

determined in accordance with subsection (2) or (3), that do not undergo a change in tariff classification specified in the rule set out in Schedule I for the tariff provision under which the good is classified; and

VGis the value of the good, determined in accordance with subsection (4), adjusted to an

F.O.B. basis.

(2)

For the purposes of subsection (1), the value of a non-originating material

(a)

shall be

(i)

the transaction value of the material, determined in accordance with Article 1 of the Customs Valuation Code with respect to the transaction in which the producer of the good acquired the material, or

(ii)

determined in accordance with Articles 2 through 7 of the Customs Valuation Code, where there is no transaction value or the transaction value of the material is unacceptable under Article 1 of that Code; and

(b)

if not included under paragraph (a), shall include freight, insurance, packing and all other costs incurred in transporting the material to the point of importation.

(3)

For the purposes of subsection (1), where identical materials or fungible materials are used in the production of the good, the value of non-originating materials may be determined, at the choice of the producer of the good, by one of the methods set out in Schedule II.

(4)

For the purposes of subsection (1), the value of a good shall be

(a)

the transaction value of the good, determined in accordance with Article 1 of the Customs Valuation Code with respect to the transaction in which the producer of the good sold the good; or

(b)

determined in accordance with Articles 2 through 7 of the Customs Valuation Code, where there is no transaction value or the transaction value of the good is unacceptable under Article 1 of that Code.

(5)

For the purposes of subsections (2) and (4), the principles of the Customs Valuation Code shall apply to domestic transactions, with such modifications as the circumstances may require.

(6)

For the purposes of determining transaction value under subsections (2) and (4),

Article 8(2) of the Customs Valuation Code does not apply. SOR/2002-252, s. 2.

ACCESSORIES, SPARE PARTS AND TOOLS, INDIRECT MATERIALS, PACKAGING MATERIALS AND CONTAINERS AND PACKING MATERIALS AND CONTAINERS

5. For the purposes of determining whether a good is an originating good, the following materials shall be deemed to be originating materials:

(a)

accessories, spare parts or tools delivered with the good that form part of the good’s standard accessories, spare parts or tools, where the accessories, spare parts or tools are not invoiced separately from the good and the quantities and value of the accessories, spare parts or tools are customary for the good;

(b)

indirect materials used in the production of the good;

(c)

packaging materials and containers in which the good is packaged for retail sale, where the packaging materials and containers are classified with the good that is packaged within; and

(d)

packing materials and containers in which the good is packed for shipment.

NON-QUALIFYING OPERATIONS

6. A good is not an originating good merely by reason of

(a)

any work, process or practice in respect of which it may be demonstrated, on the basis of a preponderance of evidence, that the object was to circumvent these Regulations;

(b)

minor processing; or

(c)

a change in tariff classification that is the result of

(i)

a change in the end use of the good, or

(ii)

collecting parts so that the collection of parts is classified as if it were an assembled good under Rule 2(a) of the General Rules for the Interpretation of the Harmonized System.

CONDITIONS GOVERNING SHIPMENT

7. An originating good that is exported from a CIFTA country shall maintain its originating status only if

(a)

the good is shipped from a CIFTA country to another CIFTA country without being shipped through another country;

(b)

the good is shipped through a country other than the United States or a CIFTA country and

(i)

the good does not undergo further production or any other operation in the territory of the country through which the good is shipped, other than unloading, splitting up of loads, reloading or any other operation necessary to preserve it in good condition or to ship it to a CIFTA country, and

(ii)

the good remains under customs control in any country through which the good is shipped to a CIFTA country;

(c)

except for a good listed in any of Chapters 50 through 63 of the List of Tariff Provisions, the good is shipped through the United States and

(i)

the good does not undergo further production in the territory of the United States, other than minor processing, or

(ii)

any processing that occurs in the territory of the United States with respect to that good does not increase the transaction value of the good by greater than 10%; or

(d)

the good is a good that is listed in any of Chapters 50 through 63 of the List of Tariff Provisions and that is shipped through the United States and

(i)

the good does not undergo further production or any other operation in the territory of the United States, while in transit, other than unloading, splitting up of loads, reloading or any other operation necessary to preserve it in good condition or to ship it to a CIFTA country, and

(ii)

the good remains under customs control in the United States while in transit to a

CIFTA country. SOR/2002-252, s. 3.

NON-PARTY MATERIALS

8. (1) A good that would qualify for preferential tariff treatment under the

Agreement on the Establishment of a Free Trade Area between the Government of the United States of America and the Government of Israel, dated April 22, 1985, if it were imported into Israel, is considered to be an originating material under these Regulations when used in the production in the territory of Canada of a good that is exported to Israel.

(2) A good that would be entitled to the benefit of the United States Tariff under section 3 of the NAFTA Tariff Preference Regulations if it were imported into Canada is considered to be an originating material under these Regulations when used in the production in the territory of Israel or another CIFTA beneficiary of a good that is exported to Canada.

FUNGIBLE MATERIALS AND FUNGIBLE GOODS

9. For the purposes of determining whether a material is an originating material or a good is an originating good,

(a)

where originating materials and non-originating materials that are fungible materials are used in the production of the good, the determination of whether the material is an originating material may, at the choice of the producer of the good, be made on the basis of any of the inventory management methods set out in Part I of Schedule III;

(b)

where originating goods and non-originating goods that are fungible goods are physically combined or mixed in inventory in a CIFTA country and, before exportation to another CIFTA country, do not undergo production or any other operation in the territory of the CIFTA country in which they were physically combined or mixed in inventory, other than unloading, reloading or any other operation necessary to preserve them in good condition or to ship them to another CIFTA country, the

determination of whether the good is an originating good may, at the choice of the exporter of the good, be made on the basis of any of the inventory management methods set out in Part II of Schedule III; and

(c)

where originating goods and non-originating goods that are fungible goods are physically combined or mixed in inventory in a CIFTA country and, before acquisition by a person in that country, do not undergo production or any other operation in the territory of that country, other than unloading, reloading or any other operation necessary to preserve them in good condition or to ship them to that person, the determination of whether the good is an originating good may, at the choice of the person who physically combined or mixed the goods in inventory, be made on the basis of any of the inventory management methods set out in Part II of Schedule III.

SELF-PRODUCED MATERIALS

10. For the purposes of determining whether a good is an originating good, the producer of the good may designate any material that the producer produces and that is used in the production of the good as a material to be taken into account as an originating material or non-originating material, as the case may be, in determining whether the good satisfies the requirements of section 2 or for the purposes of the calculation in section 4.

COMING INTO FORCE

*

11. These Regulations come into force on the day on which section 45 of the Canada-Israel Free Trade Agreement Implementation Act, being chapter 33 of the Statutes of Canada, 1996, comes into force.

* [Note: Regulations in force January 1, 1997, see SI/97-9.]

SCHEDULE I

(Sections 2 and 3)

SPECIFIC RULES OF ORIGIN

For the purposes of this Schedule,

(a)

the specific rule, or specific set of rules, that applies to a particular tariff provision is set out immediately adjacent to that tariff provision;

(b)

a rule applicable to a tariff item shall take precedence over a rule applicable to the heading or subheading which is parent to that tariff item; and

(c)

a requirement of a change in tariff classification applies only to non-originating material.

SECTION I

SECTION II

SECTION IV

MINERAL PRODUCTS (Chapters 25-27)

Chapter Salt; Sulphur; Earths and Stone; Plastering Materials, Lime and Cement 25

A change to a heading No. of this chapter from any other heading No., including another heading No. within this chapter.

Chapter Ores, Slag and Ash 26

A change to a subheading No. of this chapter from any other subheading No., including another subheading No. within this chapter.

Chapter Mineral Fuels, Mineral Oils and Products of Their Distillation;

SECTION VI

SECTION VII

SECTION VIII

RAW HIDES AND SKINS, LEATHER, FURSKINS AND ARTICLES THEREOF; SADDLERY AND HARNESS; TRAVEL GOODS, HANDBAGS AND SIMILAR CONTAINERS; ARTICLES OF ANIMAL GUT (OTHER THAN SILK-WORM GUT) (Chapters 41-43)

Chapter Raw Hides and Skins, (Other than Furskins) and Leather 41

41.01-A change to any of these heading Nos. from any other chapter.

SECTION IX

WOOD AND ARTICLES OF WOOD; WOOD CHARCOAL: CORK AND ARTICLES OF CORK; MANUFACTURES OF STRAW, OF ESPARTO OR OF OTHER PLAITING MATERIALS; BASKETWARE AND WICKERWORK (Chapters 44-46)

Chapter Wood and Articles of Wood; Wood Charcoal 44

A change to a heading No. of this chapter from any other heading No., including another heading No. within this chapter.

Chapter Cork and Articles of Cork 45

A change to a subheading No. of this chapter from any other subheading No., including another subheading No. within this chapter.

SECTION X

PULP OF WOOD OR OF OTHER FIBROUS CELLULOSIC MATERIAL; WASTE AND SCRAP OF PAPER OR PAPERBOARD; PAPER AND PAPERBOARD AND ARTICLES THEREOF (Chapters 47-49)

Chapter Pulp of Wood or of Other Fibrous Cellulosic Material; Waste and Scrap 47 of Paper or Paperboard

A change to a subheading No. of this chapter from any other subheading No., including another subheading No. within this chapter.

Chapter Paper and Paperboard; Articles of Paper Pulp, of Paper or of 48 Paperboard

A change to a heading No. of this chapter from any other heading No., including another heading No. within this chapter.

Chapter Printed Books, Newspaper, Pictures and Other Products of the 49 Printing Industry; Manuscripts, Typescripts and Plans

A change to this chapter from any other chapter.

SECTION XI

SECTION XII

FOOTWEAR, HEADGEAR, UMBRELLAS, SUN UMBRELLAS, WALKING-STICKS, SEAT-STICKS, WHIPS, RIDING-CROPS AND PARTS THEREOF; PREPARED FEATHERS AND ARTICLES MADE THEREWITH; ARTIFICIAL FLOWERS; ARTICLES

SECTION XIII

SECTION XIV

NATURAL OR CULTURED PEARLS, PRECIOUS OR SEMI-PRECIOUS STONES, PRECIOUS METALS, METALS CLAD WITH PRECIOUS METAL, AND ARTICLES THEREOF; IMITATION JEWELLERY; COIN (Chapter 71)

Chapter Natural or Cultured Pearls, Precious or Semi-Precious Stones, Precious 71 Metals, Metals clad with Precious Metal, and Articles Thereof; Imitation Jewellery; Coin

71.01-A change to any of these heading Nos. from any other heading No., including

SECTION XV

BASE METALS AND ARTICLES OF BASE METAL (Chapters 72-83)

SECTION XVI

MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES (Chapters 84-85)

8406.10-A change to any of these subheading Nos. from any other subheading No. 8406.82 outside this group, except from tariff item No. 8406.90.22 or 8406.90.32.

8406.90

8406.90.22

SECTION XVII

VEHICLES, AIRCRAFT, VESSELS AND ASSOCIATED TRANSPORT EQUIPMENT (Chapters 86-89)

SECTION XIX

ARMS AND AMMUNITION; PARTS AND ACCESSORIES THEREOF (Chapter 93)

SECTION XX

MISCELLANEOUS MANUFACTURED ARTICLES (Chapters 94-96)

SECTION XXI

WORKS OF ART, COLLECTORS’ PIECES AND ANTIQUES (Chapter 97)

METHODS FOR DETERMINING THE VALUE OF NON-ORIGINATING MATERIALS WHERE IDENTICAL MATERIALS OR FUNGIBLE MATERIALS ARE USED IN THE PRODUCTION OF THE GOOD

Interpretation

1. The definitions in this section apply in this Schedule.

“FIFO method” means the method by which the value of non-originating materials, determined in accordance with subsection 4(2) of these Regulations, first received in materials inventory, is considered to be the value of non-originating materials used in the production of the good first shipped to the buyer of the good. (méthode PEPS)

“LIFO method” means the method by which the value of non-originating materials, determined in accordance with subsection 4(2) of these Regulations, last received in materials inventory, is considered to be the value of non-originating materials used in the production of the good first shipped to the buyer of the good. (méthode DEPS)

“materials inventory” means, with respect to a single plant of the producer of a good, an inventory of non-originating materials that are identical materials or fungible materials and that are used in the production of the good. (stock de matières)

“rolling average method” means the method by which the value of non-originating materials used in the production of a good that is shipped to the buyer of the good is based on the average value, calculated in accordance with section 4, of the non-originating materials in materials inventory. (méthode de la moyenne mobile)

General

2. The methods for determining the value of non-originating materials that are identical materials or fungible materials and that are referred to in subsection 4(3) of these Regulations are the following:

(a)

FIFO method;

(b)

LIFO method; and

(c)

rolling average method.

3.

(1)

Where a producer of a good chooses, with respect to non-originating materials that are identical materials or fungible materials, any of the methods referred to in section 2, the producer may not use another of those methods with respect to any other non-originating materials that are identical materials or fungible materials, as the case may be, and that are used in the production of that good or in the production of any other good with respect to which a calculation under subsection 4(1) of these Regulations has been made.

(2)

Where a producer of a good produces the good in more than one plant, the method chosen by the producer shall be used with respect to all plants of the producer in which the good is produced.

(3)

The method chosen by the producer to determine the value of non-originating materials may be chosen at any time during the producer’s fiscal year and may not be changed during that fiscal year.

Average Value for Rolling Average Method

4.

(1)

The average value of non-originating materials that are identical materials or fungible materials and that are used in the production of a good that is shipped to the buyer of the good is calculated by dividing

(a)

the total value of non-originating materials that are identical materials or fungible materials, as the case may be, and that were in materials inventory before the shipment of the good, determined in accordance with subsection 4(2) of these Regulations,

by

(b)

the total units of those non-originating materials in materials inventory prior to the shipment of the good.

(2)

The average value calculated under subsection (1) is applied to the remaining units of non-originating materials in materials inventory.

SCHEDULE III

(Section 9)

INVENTORY MANAGEMENT METHODS