---
kind: "section"
citation: "19 U.S.C. § 4531"
title: "19"
title_heading: "Customs Duties"
number: "4531"
heading: "Rules of origin"
release: "119-102"
url: "https://uscodex.org/usc/19/4531"
units:
  - "Chapter 29 — United States–mexico–canada Agreement Implementation"
  - "Subchapter II — Customs Provisions"
---

# §4531. Rules of origin

- (a) **Definitions—** In this section:
  - (1) **Aquaculture—** The term “aquaculture” means the farming of aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates, and aquatic plants from seed stock such as eggs, fry, fingerlings, or larvae, by intervention in the rearing or growth processes to enhance [production](#a-16) such as regular stocking, feeding, or protection from predators.
  - (2) **Customs Valuation Agreement—** The term “Customs Valuation Agreement” means the [Agreement](/usc/19/2518.md?p=1) on Implementation of Article VII of the General [Agreement](/usc/19/2518.md?p=1) on Tariffs and Trade 1994 referred to in [section 3511(d)(8) of this title](/usc/19/3511.md?p=d-8).
  - (3) **Fungible good or fungible material—** The term “fungible good” or “fungible material” means a good or [material](#a-7), as the case may be, that is interchangeable with another good or [material](#a-7) for commercial purposes and the properties of which are essentially identical to such other good or [material](#a-7).
  - (4) **Good wholly obtained or produced entirely in the territory of one or more USMCA countries—** The term “good wholly obtained or produced entirely in the territory of one or more USMCA countries” means any of the following:
    - (A) A mineral good or other naturally occurring substance extracted or taken from the [territory](#a-24) of one or more [USMCA countries](#a-27).
    - (B) A plant, plant good, vegetable, or fungus grown, cultivated, harvested, picked, or gathered in the [territory](#a-24) of one or more [USMCA countries](#a-27).
    - (C) A live animal born and raised in the [territory](#a-24) of one or more [USMCA countries](#a-27).
    - (D) A good obtained in the [territory](#a-24) of one or more [USMCA countries](#a-27) from a live animal.
    - (E) An animal obtained by hunting, trapping, fishing, gathering, or capturing in the [territory](#a-24) of one or more [USMCA countries](#a-27).
    - (F) A good obtained in the [territory](#a-24) of one or more [USMCA countries](#a-27) from [aquaculture](#a-1).
    - (G) A fish, shellfish, or other marine life taken from the sea, seabed, or subsoil outside the [territory](#a-24) of one or more [USMCA countries](#a-27) and outside the territorial sea of any country that is not a [USMCA country](#a-27) by—
      - (i) a vessel that is registered or recorded with a [USMCA country](#a-27) and flying the flag of that country; or
      - (ii) a vessel that is documented under the laws of the United States.
    - (H) A good produced on board a factory ship from goods referred to in [subparagraph (G)](#a-4-G), if such factory ship—
      - (i) is registered or recorded with a [USMCA country](#a-27) and flies the flag of that country; or
      - (ii) is a vessel that is documented under the laws of the United States.
    - (I) A good, other than a good referred to in [subparagraph (G)](#a-4-G), that is taken by a [USMCA country](#a-27), or a person of a [USMCA country](#a-27), from the seabed or subsoil outside the [territory](#a-24) of a [USMCA country](#a-27), if that [USMCA country](#a-27) has the right to exploit such seabed or subsoil.
    - (J) Waste and scrap derived from—
      - (i) [production](#a-16) in the [territory](#a-24) of one or more [USMCA countries](#a-27); or
      - (ii) used goods collected in the [territory](#a-24) of one or more [USMCA countries](#a-27), if such goods are fit only for the recovery of raw [materials](#a-7).
    - (K) A good produced in the [territory](#a-24) of one or more [USMCA countries](#a-27) exclusively from goods referred to in any of [subparagraphs (A) through (J)](#a-4-A..a-4-J), or from their derivatives, at any stage of [production](#a-16).
  - (5) **Indirect material—** The term “indirect material” means a [material](#a-7) used or consumed in the [production](#a-16), testing, or inspection of a good but not physically incorporated into the good, or a [material](#a-7) used or consumed in the maintenance of buildings or the operation of equipment associated with the [production](#a-16) of a good, including—
    - (A) fuel and energy;
    - (B) tools, dies, and molds;
    - (C) spare parts and [materials](#a-7) used or consumed in the maintenance of equipment or buildings;
    - (D) lubricants, greases, compounding [materials](#a-7), and other [materials](#a-7) used or consumed in [production](#a-16) or to operate equipment or 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 [material](#a-7) that is not incorporated into the good, if the use of the [material](#a-7) in the [production](#a-16) of the good can reasonably be demonstrated to be a part of that [production](#a-16).
  - (6) **Intermediate material—** The term “intermediate material” means a [material](#a-7) that is self-produced, used or consumed in the [production](#a-16) of a good, and designated as an intermediate material pursuant to [subsection (d)(9)](#d-9).
  - (7) **Material—** The term “material” means a good that is used or consumed in the [production](#a-16) of another good and includes a part or an ingredient.
  - (8) **Net cost—** The term “net cost” means [total cost](#a-25-A) minus [sales promotion, marketing, and after-sales service costs](#a-21), [royalties](#a-20), [shipping and packing costs](#a-23), and [nonallowable interest costs](#a-10) that are included in the [total cost](#a-25-A).
  - (9) **Net cost of a good—** The term “net cost of a good” means the [net cost](#a-8) that can be reasonably allocated to a good using one of the methods set forth in [subsection (d)(7)](#d-7).
  - (10) **Nonallowable interest costs—** The term “nonallowable interest costs” means interest costs incurred by a [producer](#a-15) that exceed 700 basis points above the applicable official interest rate for comparable maturities of the country in which the [producer](#a-15) is located.
  - (11) **Nonoriginating good or nonoriginating material—** The term “nonoriginating good” or “nonoriginating material” means a good or [material](#a-7), as the case may be, that does not qualify as originating under this section.
  - (12) **Originating good; originating material—** The term “originating good” or “originating material” means a good or [material](#a-7), as the case may be, that qualifies as originating under this section.
  - (13) **Packaging materials and containers—** The term “packaging materials and containers” means [materials](#a-7) and containers in which a good is packaged for retail sale.
  - (14) **Packing materials and containers—** The term “packing materials and containers” means [materials](#a-7) and containers that are used to protect a good during transportation.
  - (15) **Producer—** The term “producer” means a person who engages in the [production](#a-16) of a good.
  - (16) **Production—** The term “production” means—
    - (A) growing, cultivating, raising, mining, harvesting, fishing, trapping, hunting, capturing, breeding, extracting, manufacturing, processing, or assembling a good; or
    - (B) the farming of aquatic organisms through [aquaculture](#a-1).
  - (17) **Reasonably allocate—** The term “reasonably allocate” means to apportion in a manner appropriate to the circumstances.
  - (18) **Recovered material—** The term “recovered material” means a [material](#a-7) in the form of individual parts that are the result of—
    - (A) the disassembly of a used good into individual parts; and
    - (B) the cleaning, inspecting, testing, or other processing that is necessary for improvement to sound working condition of such individual parts.
  - (19) **Remanufactured good—** The term “remanufactured good” means a good classified in the [HTS](/usc/19/4502.md?p=2) under any of [chapters 84 through 90](/usc/19/ch84..90.md) or under heading 9402, other than a good classified under heading 8418, 8509, 8510, 8516, or 8703 or subheading 8414.51, 8450.11, 8450.12, 8508.11, or 8517.11, that—
    - (A) is entirely or partially composed of [recovered materials](#a-18);
    - (B) has a life expectancy similar to, and performs in a manner that is the same as or similar to, such a good when new; and
    - (C) has a factory warranty similar to that applicable to such a good when new.
  - (20) **Royalties—** The term “royalties” means payments of any kind, including payments under technical assistance or similar [agreements](/usc/19/2518.md?p=1), made as consideration for the use of, or right to use, a copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, or secret formula or secret process, excluding payments under technical assistance or similar [agreements](/usc/19/2518.md?p=1) that can be related to a specific service such as—
    - (A) personnel training, without regard to where the training is performed; or
    - (B) if performed in the [territory](#a-24) of one or more [USMCA countries](#a-27), engineering, tooling, die-setting, software design and similar computer services, or other services.
  - (21) **Sales promotion, marketing, and after-sales service costs—** The term “sales promotion, marketing, and after-sales service costs” means the costs related to sales promotion, marketing, and after-sales service for the following:
    - (A) Sales and marketing promotion, media advertising, advertising and market research, promotional and demonstration [materials](#a-7), exhibits, sales conferences, trade shows, conventions, banners, marketing displays, free samples, sales, marketing, and after-sales service literature (product brochures, catalogs, technical literature, price lists, service manuals, and sales aid information), establishment and protection of logos and trademarks, sponsorships, wholesale and retail charges, and entertainment.
    - (B) Sales and marketing incentives, consumer, retailer, or wholesaler rebates, and merchandise incentives.
    - (C) Salaries and wages, sales commissions, bonuses, benefits (such as medical, insurance, and pension benefits), traveling and living expenses, and membership and professional fees for sales promotion, marketing, and after-sales service personnel.
    - (D) Product liability insurance.
    - (E) Rent and depreciation of sales promotion, marketing, and after-sales service offices and distribution centers.
    - (F) Payments by the [producer](#a-15) to other persons for warranty repairs.
    - (G) If the costs are identified separately for sales promotion, marketing, or after-sales service of goods on the financial statements or cost accounts of the [producer](#a-15), the following:
      - (i) Property insurance premiums, taxes, utilities, and repair and maintenance of sales promotion, marketing, and after-sales service offices and distribution centers.
      - (ii) Recruiting and training of sales promotion, marketing, and after-sales service personnel, and after-sales training of customers’ employees.
      - (iii) Office supplies for sales promotion, marketing, and after-sales service of goods.
      - (iv) Telephone, mail, and other communications.
  - (22) **Self-produced material—** The term “self-produced material” means a [material](#a-7) that is produced by the [producer](#a-15) of a good and used in the [production](#a-16) of that good.
  - (23) **Shipping and packing costs—** The term “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.
  - (24) **Territory—** The term “territory”, with respect to a [USMCA country](#a-27), has the meaning given that term in section C of [chapter 1](/usc/19/ch1.md) of the [USMCA](/usc/19/4502.md?p=9).
  - (25) **Total cost—**
    - (A) **In general—** The term “total cost”—
      - (i) means all [product costs](#a-25-B-iii), [period costs](#a-25-B-ii), and [other costs](#a-25-B-i) for a good incurred in the [territory](#a-24) of one or more [USMCA countries](#a-27); and
      - (ii) does not include—
        - (I) profits that are earned by the [producer](#a-15) of the good, regardless of whether the costs are retained by the [producer](#a-15) or paid out to other persons as dividends; or
        - (II) taxes paid on those profits, including capital gains taxes.
    - (B) **Other definitions—** In this paragraph:
      - (i) **Other costs—** The term “other costs” means all costs recorded on the books of the [producer](#a-15) that are not [product costs](#a-25-B-iii) or [period costs](#a-25-B-ii), such as interest.
      - (ii) **Period costs—** The term “period costs” means costs, other than [product costs](#a-25-B-iii), that are expensed in the period in which they are incurred, such as selling expenses and general and administrative expenses.
      - (iii) **Product costs—** The term “product costs” means costs that are associated with the [production](#a-16) of a good, including the [value](#a-28) of [materials](#a-7), direct labor costs, and direct overhead.
  - (26) **Transaction value—** The term “transaction value” means the price—
    - (A) actually paid or payable for a good or [material](#a-7) with respect to a transaction of a [producer](#a-15); and
    - (B) adjusted in accordance with the principles set forth in paragraphs 1, 3, and 4 of article 8 of the [Customs Valuation Agreement](#a-2).
  - (27) **USMCA country—** The term “USMCA country” means the United States, Canada, or [Mexico](/usc/19/4502.md?p=5) for such time as the [USMCA](/usc/19/4502.md?p=9) is in force with respect to Canada or [Mexico](/usc/19/4502.md?p=5), and the United States applies the [USMCA](/usc/19/4502.md?p=9) to Canada or [Mexico](/usc/19/4502.md?p=5).
  - (28) **Value—** The term “value” means the value of a good or [material](#a-7) for purposes of calculating customs duties or applying this section.
- (b) **Application and interpretation—** In this section:
  - (1) **Tariff classification—** The basis for any tariff classification is the [HTS](/usc/19/4502.md?p=2).
  - (2) **Reference to HTS—** Whenever in this section there is a reference to a chapter, heading, or subheading, that reference shall be a reference to a chapter, heading, or subheading of the [HTS](/usc/19/4502.md?p=2).
  - (3) **Cost or value—** Any cost or [value](#a-28) referred to in this section with respect to a good shall be recorded and maintained in accordance with the generally accepted accounting principles applicable in the [territory](#a-24) of the [USMCA country](#a-27) in which the good is produced.
- (c) **Originating goods—**
  - (1) **In general—** For purposes of this Act and for purposes of implementing the [preferential tariff treatment](/usc/19/4502.md?p=7) provided for under the [USMCA](/usc/19/4502.md?p=9), except as otherwise provided in this section, a good is an [originating good](#a-12) if—
    - (A) the good is a [good wholly obtained or produced entirely in the territory of one or more USMCA countries](#a-4);
    - (B) the good is produced entirely in the [territory](#a-24) of one or more [USMCA countries](#a-27) using [nonoriginating materials](#a-11), if the good satisfies all applicable requirements set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9); or
    - (C) the good is produced entirely in the [territory](#a-24) of one or more [USMCA countries](#a-27), exclusively from [originating materials](#a-12);
    - (D) except for a good provided for under any of [chapters 61 through 63](/usc/19/ch61..63.md)—
      - (i) the good is produced entirely in the [territory](#a-24) of one or more [USMCA countries](#a-27);
      - (ii) one or more of the [nonoriginating materials](#a-11) provided for as parts under the [HTS](/usc/19/4502.md?p=2) and used in the [production](#a-16) of the good do not satisfy the requirements set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9) because—
        - (I) both the good and its [materials](#a-7) are classified under the same subheading or under the same heading that is not further subdivided into subheadings; or
        - (II) the good was imported into the [territory](#a-24) of a [USMCA country](#a-27) in an unassembled form or a disassembled form but was classified as an assembled good pursuant to [rule 2(a)](/usc/19/2.md) of the General Rules of Interpretation of the [HTS](/usc/19/4502.md?p=2); and
      - (iii) the regional [value](#a-28) content of the good is not less than 60 percent if the [transaction value](#a-26) method is used, or not less than 50 percent if the [net cost](#a-8) method is used and the good satisfies all other applicable requirements of this section; or
    - (E) the good itself, as imported, is listed in table 2.10.1 of the [USMCA](/usc/19/4502.md?p=9) and is imported into the [territory](#a-24) of the United States from the [territory](#a-24) of a [USMCA country](#a-27).
  - (2) **Remanufactured goods—** For purposes of determining whether a [remanufactured good](#a-19) is an [originating good](#a-12), a [recovered material](#a-18) derived in the [territory](#a-24) of one or more [USMCA countries](#a-27) shall be treated as originating if the [recovered material](#a-18) is used or consumed in the [production](#a-16) of, and incorporated into, the [remanufactured good](#a-19).
  - (3) **Special rule for foreign-trade zones—** [Paragraph (1)(B)](#c-1-B) shall not apply to a good produced in a foreign-trade zone or subzone established pursuant to the Act of June 18, 1934 (commonly known as the “Foreign Trade Zones Act”) ([19 U.S.C. 81a](/usc/19/81a.md) et seq.) that is entered for consumption in the customs [territory](#a-24) of the United States.
- (d) **Regional value content—**
  - (1) **In general—** Except as provided in [paragraph (5)](#d-5), for purposes of subparagraphs [(B)](#c-1-B) and [(D)](#c-1-D) of subsection (c)(1), the regional [value](#a-28) content of a good shall be calculated, at the choice of the [importer](/usc/19/1641.md?p=i-4-A), exporter, or [producer](#a-15) of the good, on the basis of—
    - (A) the [transaction value](#a-26) method described in [paragraph (2)](#d-2); or
    - (B) the [net cost](#a-8) method described in [paragraph (3)](#d-3).
  - (2) **Transaction value method—**
    - (A) **In general—** An [importer](/usc/19/1641.md?p=i-4-A), exporter, or [producer](#a-15) of a good may calculate the regional [value](#a-28) content of the good on the basis of the following [transaction value](#a-26) method:

      | rvc | = | tv–vnm | × | 100 |
      | --- | --- | --- | --- | --- |
      | tv |  |  |  |  |
      |  |  |  |  |  |

    - (B) **Definitions—** In this paragraph:
      - (i) **RVC—** The term “RVC” means the regional [value](#a-28) content of the good, expressed as a percentage.
      - (ii) **TV—** The term “TV” means the [transaction value](#a-26) of the good, adjusted to exclude any costs incurred in the international shipment of the good.
      - (iii) **VNM—** The term “VNM” means the [value](#a-28) of [nonoriginating materials](#a-11) used by the [producer](#a-15) in the [production](#a-16) of the good.
  - (3) **Net cost method—**
    - (A) **In general—** An [importer](/usc/19/1641.md?p=i-4-A), exporter, or [producer](#a-15) of a good may calculate the regional [value](#a-28) content of the good on the basis of the following [net cost](#a-8) method:

      | rvc | = | nc–vnm | × | 100 |
      | --- | --- | --- | --- | --- |
      | nc |  |  |  |  |
      |  |  |  |  |  |

    - (B) **Definitions—** In this paragraph:
      - (i) **NC—** The term “NC” means the [net cost](#a-8) of the good.
      - (ii) **RVC—** The term “RVC” means the regional [value](#a-28) content of the good, expressed as a percentage.
      - (iii) **VNM—** The term “VNM” means the [value](#a-28) of [nonoriginating materials](#a-11) used by the [producer](#a-15) in the [production](#a-16) of the good.
  - (4) **Value of nonoriginating materials—**
    - (A) **In general—** The [value](#a-28) of [nonoriginating materials](#a-11) used by the [producer](#a-15) in the [production](#a-16) of a good shall not, for purposes of calculating the regional [value](#a-28) content of the good under paragraph [(2)](#d-2) or [(3)](#d-3), include the [value](#a-28) of [nonoriginating materials](#a-11) used or consumed to produce [originating materials](#a-12) that are subsequently used or consumed in the [production](#a-16) of the good.
    - (B) **Special rule for certain components—** The following components of the [value](#a-28) of [nonoriginating materials](#a-11) used by the [producer](#a-15) in the [production](#a-16) of a good may be counted as originating content for purposes of determining whether the good meets the regional [value](#a-28) content requirement set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9):
      - (i) The [value](#a-28) of processing the [nonoriginating materials](#a-11) undertaken in the [territory](#a-24) of one or more [USMCA countries](#a-27).
      - (ii) The [value](#a-28) of any [originating materials](#a-12) used or consumed in the [production](#a-16) of the [nonoriginating materials](#a-11) undertaken in the [territory](#a-24) of one or more [USMCA countries](#a-27).
  - (5) **Net cost method required in certain cases—** An [importer](/usc/19/1641.md?p=i-4-A), exporter, or [producer](#a-15) of a good shall calculate the regional [value](#a-28) content of the good solely on the basis of the [net cost](#a-8) method described in [paragraph (3)](#d-3) if the rule for the good set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9) includes a regional [value](#a-28) content requirement not based on the [transaction value](#a-26) method described in [paragraph (2)](#d-2).
  - (6) **Net cost method allowed for adjustments—**
    - (A) **In general—** If an [importer](/usc/19/1641.md?p=i-4-A), exporter, or [producer](#a-15) of a good calculates the regional [value](#a-28) content of the good on the basis of the [transaction value](#a-26) method described in [paragraph (2)](#d-2) and a [USMCA country](#a-27) subsequently notifies the [importer](/usc/19/1641.md?p=i-4-A), exporter, or [producer](#a-15), during the course of a verification conducted in accordance with chapter [5](/usc/19/ch5.md) or [6](/usc/19/ch6.md) of the [USMCA](/usc/19/4502.md?p=9), that the [transaction value](#a-26) of the good or the [value](#a-28) of any [material](#a-7) used in the [production](#a-16) of the good must be adjusted or is unacceptable under article 1 of the [Customs Valuation Agreement](#a-2), the [importer](/usc/19/1641.md?p=i-4-A), exporter, or [producer](#a-15) may calculate the regional [value](#a-28) content of the good on the basis of the [net cost](#a-8) method.
    - (B) **Review of adjustment—** Nothing in [subparagraph (A)](#d-6-A) shall be construed to prevent any review or appeal available in accordance with [article 5](/usc/19/3602.md?p=h-1).15 of the [USMCA](/usc/19/4502.md?p=9) with respect to an adjustment to or a rejection of—
      - (i) the [transaction value](#a-26) of a good; or
      - (ii) the [value](#a-28) of any [material](#a-7) used in the [production](#a-16) of a good.
  - (7) **Calculating net cost—** The [producer](#a-15) of a good may, consistent with regulations implementing this section, calculate the [net cost](#a-8) of the good under [paragraph (3)](#d-3) by—
    - (A) calculating the [total cost](#a-25-A) incurred with respect to all goods produced by that [producer](#a-15), subtracting any sales promotion, marketing, and after-sales services costs, [royalties](#a-20), [shipping and packing costs](#a-23), and [nonallowable interest costs](#a-10) that are included in the [total cost](#a-25-A) of those goods, and then reasonably allocating the resulting [net cost](#a-8) of those goods to the good;
    - (B) calculating the [total cost](#a-25-A) incurred with respect to all goods produced by that [producer](#a-15), reasonably allocating the [total cost](#a-25-A) to the good, and subtracting any [sales promotion, marketing, and after-sales service costs](#a-21), [royalties](#a-20), [shipping and packing costs](#a-23), and [nonallowable interest costs](#a-10), that are included in the portion of the [total cost](#a-25-A) allocated to the good; or
    - (C) reasonably allocating each cost that is part of the [total cost](#a-25-A) incurred with respect to the good so that the aggregate of those costs does not include any [sales promotion, marketing, and after-sales service costs](#a-21), [royalties](#a-20), [shipping and packing costs](#a-23), and [nonallowable interest costs](#a-10).
  - (8) **Value of materials used in production—** For purposes of calculating the regional [value](#a-28) content of a good under this subsection, applying the de minimis rules under [subsection (f)](#f), and calculating the [value](#a-28) of nonoriginating components in a set under [subsection (m)](#m), the [value](#a-28) of a [material](#a-7) used in the [production](#a-16) of a good is—
    - (A) in the case of a [material](#a-7) that is imported by the [producer](#a-15) of the good, the [transaction value](#a-26) of the [material](#a-7) at the time of importation, including the costs incurred in the international shipment of the [material](#a-7);
    - (B) in the case of a [material](#a-7) acquired in the [territory](#a-24) in which the good is produced—
      - (i) the price paid or payable by the [producer](#a-15) in the [USMCA country](#a-27) where the [producer](#a-15) is located;
      - (ii) the [value](#a-28) as determined under [subparagraph (A)](#d-8-A), as set forth in regulations prescribed by the Secretary of the Treasury providing for the application of [transaction value](#a-26) in the absence of an importation by the [producer](#a-15); or
      - (iii) the earliest ascertainable price paid or payable in the [territory](#a-24) of the country; or
    - (C) in the case of a [self-produced material](#a-22), the sum of—
      - (i) all expenses incurred in the [production](#a-16) of the [material](#a-7), including general expenses; and
      - (ii) an amount for profit equivalent to the profit added in the normal course of trade or equal to the profit that is usually reflected in the sale of goods of the same class or kind as the [material](#a-7).
  - (9) **Intermediate materials—**
    - (A) **In general—** Any [self-produced material](#a-22) that is used in the [production](#a-16) of a good may be designated by the [producer](#a-15) of the good as an [intermediate material](#a-6) for purposes of calculating the regional [value](#a-28) content of the good under paragraph [(2)](#d-2) or [(3)](#d-3).
    - (B) **Materials used in production of intermediate materials—** If a [self-produced material](#a-22) is designated as an [intermediate material](#a-6) under [subparagraph (A)](#d-9-A) for purposes of calculating a regional [value](#a-28) content requirement, no other [self-produced material](#a-22) subject to a regional [value](#a-28) content requirement used or consumed in the [production](#a-16) of that [intermediate material](#a-6) may be designated by the [producer](#a-15) as an [intermediate material](#a-6).
  - (10) **Further adjustments to value of materials—** The following expenses, if included in the [value](#a-28) of a [nonoriginating material](#a-11) calculated under [paragraph (8)](#d-8), may be deducted from the [value](#a-28) of the [nonoriginating material](#a-11):
    - (A) The costs of freight, insurance, packing, and all other costs incurred in transporting the [material](#a-7) to the location of the [producer](#a-15).
    - (B) Duties, taxes, and customs brokerage fees on the [material](#a-7) paid in the [territory](#a-24) of one or more [USMCA countries](#a-27), other than duties or 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](#a-7) in the [production](#a-16) of the good, less the [value](#a-28) of renewable scrap or byproducts.
- (e) **Accumulation—**
  - (1) **Producers—** A good that is produced in the [territory](#a-24) of one or more [USMCA countries](#a-27), by one or more [producers](#a-15), is an [originating good](#a-12) if the good satisfies the requirements of [subsection (c)](#c) and all other applicable requirements of this section.
  - (2) **Originating materials used in production of goods of a USMCA country—** [Originating materials](#a-12) from the [territory](#a-24) of one or more [USMCA countries](#a-27) that are used in the [production](#a-16) of a good in the [territory](#a-24) of another [USMCA country](#a-27) shall be considered to originate in the [territory](#a-24) of such other [USMCA country](#a-27).
  - (3) **Production undertaken on nonoriginating materials used in the production of goods—** In determining whether a good is an [originating good](#a-12) under this section, [production](#a-16) undertaken on [nonoriginating material](#a-11) in the [territory](#a-24) of one or more [USMCA countries](#a-27) by one or more [producers](#a-15) shall contribute to the originating status of the good, regardless of whether that [production](#a-16) is sufficient to confer originating status to the [nonoriginating material](#a-11).
- (f) **De minimis amounts of nonoriginating materials—**
  - (1) **In general—** Except as provided in [paragraphs (2) through (4)](#f-2..f-4), a good that does not undergo a change in tariff classification or satisfy a regional [value](#a-28) content requirement set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9) is an [originating good](#a-12) if—
    - (A) the [value](#a-28) of all [nonoriginating materials](#a-11) that are used in the [production](#a-16) of the good, and do not undergo the applicable change in tariff classification set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9)—
      - (i) does not exceed 10 percent of the [transaction value](#a-26) of the good, adjusted to exclude any costs incurred in the international shipment of the good; or
      - (ii) does not exceed 10 percent of the [total cost](#a-25-A) of the good;
    - (B) the good meets all other applicable requirements of this section; and
    - (C) the [value](#a-28) of such [nonoriginating materials](#a-11) is included in the [value](#a-28) of [nonoriginating materials](#a-11) for any applicable regional [value](#a-28) content requirement for the good.
  - (2) **Exceptions for dairy and other products—** [Paragraph (1)](#f-1) does not apply to the following:
    - (A) A [nonoriginating material](#a-11) 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](#a-16) of a good of headings 0401 through 0406.
    - (B) A [nonoriginating material](#a-11) of headings 0401 through 0406, or 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](#a-16) of any of the following goods:
      - (i) Infant preparations containing over 10 percent by dry weight of milk solids, of subheading 1901.10.
      - (ii) Mixes and doughs containing over 25 percent by dry weight of butterfat, not put up for retail sale, of subheading 1901.20.
      - (iii) A dairy preparation containing over 10 percent by dry weight of milk solids, of subheading 1901.90 or 2106.90.
      - (iv) A good of heading 2105.
      - (v) Beverages containing milk of subheading 2202.90.
      - (vi) Animal feeds containing over 10 percent by dry weight of milk solids of subheading 2309.90.
    - (C) A [nonoriginating material](#a-11) of heading 0805, or any of subheadings 2009.11 through 2009.39, used or consumed in the [production](#a-16) 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](#a-11) of [chapter 9](/usc/19/ch9.md) used or consumed in the [production](#a-16) of instant coffee, not flavored, of subheading 2101.11.
    - (E) A [nonoriginating material](#a-11) of [chapter 15](/usc/19/ch15.md) used or consumed in the [production](#a-16) of a good of any of headings 1501 through 1508[^1] 1512, 1514, or 1515.
    - (F) A [nonoriginating material](#a-11) of heading 1701 used or consumed in the [production](#a-16) of a good of any of headings 1701 through 1703.
    - (G) A [nonoriginating material](#a-11) of [chapter 17](/usc/19/ch17.md) or heading 1805 used in the [production](#a-16) of a good of subheading 1806.10.
    - (H) Nonoriginating peaches, pears, or apricots of chapter [8](/usc/19/ch8.md) or [20](/usc/19/ch20.md), used in the [production](#a-16) of a good of heading 2008.
    - (I) A nonoriginating single juice ingredient of heading 2009 used or consumed in the [production](#a-16) of a good of—
      - (i) subheading 2009.90, or tariff item 2106.90.54 (concentrated mixtures of fruit or vegetable juice, fortified with minerals or vitamins); or
      - (ii) tariff item 2202.99.37 (mixtures of fruit or vegetable juices, fortified with minerals or vitamins).
    - (J) A [nonoriginating material](#a-11) of any of headings 2203 through 2208 used or consumed in the [production](#a-16) of a good provided for under heading 2207 or 2208.
  - (3) **Goods provided for under chapters 1 through 27—** [Paragraph (1)](#f-1) does not apply to a [nonoriginating material](#a-11) used or consumed in the [production](#a-16) of a good provided for in [chapters 1 through 27](/usc/19/ch1..27.md) unless the [nonoriginating material](#a-11) is provided for in a different subheading than the subheading of the good for which origin is being determined.
  - (4) **Textile or apparel goods—**
    - (A) **Goods classified under chapters 50 through 60—** Except as provided in [subparagraph (C)](#f-4-C), a [textile or apparel good](/usc/19/4002.md?p=5) provided for in any of [chapters 50 through 60](/usc/19/ch50..60.md) or heading 9619 that is not an [originating good](#a-12) because certain [nonoriginating materials](#a-11) used in the [production](#a-16) of the good do not undergo an applicable change in tariff classification set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9), shall be considered to be an [originating good](#a-12) if the total weight of all such [materials](#a-7), 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 section.
    - (B) **Goods classified under chapters 61 through 63—** Except as provided in [subparagraph (C)](#f-4-C), a [textile or apparel good](/usc/19/4002.md?p=5) provided for in chapter 61, 62, or 63 that is not an [originating good](#a-12) because certain fibers or yarns used in the [production](#a-16) 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 Annex 4–B of the [USMCA](/usc/19/4502.md?p=9) shall be considered to be an [originating good](#a-12) 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 section.
    - (C) **Goods containing nonoriginating elastomeric yarns—**
      - (i) **Goods classified under chapters 50 through 60 or heading 9619—** A [textile or apparel good](/usc/19/4002.md?p=5) described in [subparagraph (A)](#f-4-A) containing nonoriginating elastomeric yarns shall be considered to be an [originating good](#a-12) only if the nonoriginating elastomeric yarns contained in the good do not exceed 7 percent of the total weight of the good.
      - (ii) **Goods classified under chapters 61 through 63—** A [textile or apparel good](/usc/19/4002.md?p=5) described in [subparagraph (B)](#f-4-B) containing nonoriginating elastomeric yarns shall be considered to be an [originating good](#a-12) 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 good.
- (g) **Fungible goods and materials—**
  - (1) **Fungible materials used in production—** Subject to [paragraph (3)](#g-3), if originating and nonoriginating [fungible materials](#a-3) are used or consumed in the [production](#a-16) of a good, the determination of whether the [materials](#a-7) are originating may be made on the basis of any of the inventory management methods set forth in regulations implementing this section.
  - (2) **Fungible goods commingled and exported—** Subject to [paragraph (3)](#g-3), if originating and nonoriginating [fungible goods](#a-3) 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 section.
  - (3) **Use of inventory management method—** A person that selects an inventory management method for purposes of paragraph [(1)](#g-1) or [(2)](#g-2) shall use that inventory management method throughout the fiscal year of the person.
- (h) **Accessories, spare parts, tools, and instructional or other information materials—**
  - (1) **In general—** Subject to [paragraph (2)](#h-2), accessories, spare parts, tools, or instructional or other information [materials](#a-7) delivered with a good shall—
    - (A) be treated as originating if the good is an [originating good](#a-12);
    - (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](#a-4) or satisfies a process or change in tariff classification set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9); and
    - (C) be taken into account as originating or [nonoriginating materials](#a-11), as the case may be, in calculating any applicable regional [value](#a-28) content of the good set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9).
  - (2) **Conditions—** [Paragraph (1)](#h-1) shall apply only if—
    - (A) the accessories, spare parts, tools, or instructional or other information [materials](#a-7) are classified with and delivered with, but not invoiced separately from, the good; and
    - (B) the types, quantities, and [value](#a-28) of the accessories, spare parts, tools, or instructional or other information [materials](#a-7) are customary for the good.
- (i) **Packaging materials and containers for retail sale—** [Packaging materials and containers](#a-13) 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](#a-11) used in the [production](#a-16) of the good undergo the applicable process or change in tariff classification requirement set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9), or whether the good is a [good wholly obtained or produced entirely in the territory of one or more USMCA countries](#a-4). If the good is subject to a regional [value](#a-28) content requirement set forth in that Annex, the [value](#a-28) of such [packaging materials and containers](#a-13) shall be taken into account as originating or [nonoriginating materials](#a-11), as the case may be, in calculating the regional [value](#a-28) content of the good.
- (j) **Packing materials and containers for shipment—** [Packing materials and containers](#a-14) for shipment shall be disregarded in determining whether a good is an [originating good](#a-12).
- (k) **Indirect materials—** An [indirect material](#a-5) shall be treated as an [originating material](#a-12) without regard to where it is produced.
- (l) **Transit and transshipment—** A good that has undergone [production](#a-16) necessary to qualify as an [originating good](#a-12) under [subsection (c)](#c) shall not be considered to be an [originating good](#a-12) if, subsequent to that [production](#a-16), the good—
  - (1) undergoes further [production](#a-16) or any other operation outside the [territory](#a-24) of a [USMCA country](#a-27), other than—
    - (A) unloading, reloading, separation from a bulk shipment, storing, labeling, or marking, as required by a [USMCA country](#a-27); or
    - (B) any other operation necessary to preserve the good in good condition or to transport the good to the [territory](#a-24) of the importing [USMCA country](#a-27); or
  - (2) does not remain under the control of customs authorities in a country other than a [USMCA country](#a-27).
- (m) **Goods classifiable as goods put up in sets—**
  - (1) **Goods other than textile or apparel goods—** Notwithstanding the rules set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9), goods classifiable as goods put up in sets for retail sale as provided for in [rule 3](/usc/19/3.md) of the General Rule of Interpretation of the [HTS](/usc/19/4502.md?p=2) shall not be considered to be [originating goods](#a-12) unless—
    - (A) each of the goods in the set is an [originating good](#a-12); or
    - (B) the total [value](#a-28) of the [nonoriginating goods](#a-11) in the set does not exceed 10 percent of the [value](#a-28) of the set.
  - (2) **Textile or apparel goods—** Notwithstanding the rules set forth in Annex 4–B of the [USMCA](/usc/19/4502.md?p=9), goods classifiable as goods put up in sets for retail sale as provided for in [rule 3](/usc/19/3.md) of the General Rule of Interpretation of the [HTS](/usc/19/4502.md?p=2) shall not be considered to be [originating goods](#a-12) unless—
    - (A) each of the goods in the set is an [originating good](#a-12); or
    - (B) the total [value](#a-28) of the [nonoriginating goods](#a-11) in the set does not exceed 10 percent of the [value](#a-28) of the set.
- (n) **Nonqualifying operations—** A good shall not be considered to be an [originating good](#a-12) merely by reason of—
  - (1) mere dilution with water or another substance that does not materially alter the characteristics of the good; or
  - (2) any [production](#a-16) 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 this section.
- (o) **Effective date—**
  - (1) **In general—** This section shall—
    - (A) take effect on the date on which the [USMCA](/usc/19/4502.md?p=9) enters into force; and
    - (B) apply with respect to a good entered for consumption, or withdrawn from warehouse for consumption, on or after that date.
  - (2) **Transition from NAFTA treatment—** Section 202 of the North American Free [Trade Agreement](/usc/19/2504.md?p=c-4-A) Implementation Act ([19 U.S.C. 3332](https://uscode.house.gov/view.xhtml?req=(/us/usc/t19/s3332))),[^2] as in effect on the day before the date on which the [USMCA](/usc/19/4502.md?p=9) enters into force, shall continue to apply on and after that date with respect to a good entered for consumption, or withdrawn from warehouse for consumption, before that date.

## Footnotes

[^1]: So in original. Probably should be followed by a comma.
[^2]: See References in Text note below.

## Source credit

(Pub. L. 116–113, title II, § 202, Jan. 29, 2020, 134 Stat. 20; Pub. L. 116–260, div. O, title VI, § 601(b), Dec. 27, 2020, 134 Stat. 2150.)

## Notes

### Editorial Notes

### References in Text

The Harmonized Tariff Schedule of the United States or HTS, referred to in subsecs. (a)(19), (b)(1), (2), (c)(1)(D)(ii), and (m), is not set out in the Code. See Publication of Harmonized Tariff Schedule note set out under section 1202 of this title.

This Act, referred to in subsec. (c)(1), is Pub. L. 116–113, Jan. 29, 2020, 134 Stat. 11, known as the United States-Mexico-Canada Agreement Implementation Act. For complete classification of this Act to the Code, see Short Title note set out under section 4501 of this title and Tables.

Act of June 18, 1934, referred to in subsec. (c)(3), is act June 18, 1934, ch. 590, 48 Stat. 998, popularly known as the Foreign Trade Zones Act, which is classified generally to chapter 1A (§ 81a et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 81a of this title and Tables.

Section 202 of the North American Free Trade Agreement Implementation Act, referred to in subsec. (o)(2), is section 202 of Pub. L. 103–183, title II, Dec. 8, 1993, 107 Stat. 2069, which was classified to section 3332 of this title prior to repeal by Pub. L. 116–113, title VI, § 601, Jan. 29, 2020, 134 Stat. 78, effective on the date the USMCA entered into force (July 1, 2020).

### Amendments

2020—Subsec. (c)(3). Pub. L. 116–260, § 601(b)(1), added par. (3).

Subsec. (f)(2)(E). Pub. L. 116–260, § 601(b)(2), substituted “any of headings 1501 through 1508” for “heading 1507, 1508,”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2020 Amendment

Amendment by Pub. L. 116–260 effective July 1, 2020, see section 601(h) of div. O of Pub. L. 116–260, set out as a note under section 81c of this title.