B229 – North American Free Trade Agreement (NAFTA) Origin Verification Questionnaire Regional Value Content – Transaction Value Method

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General Information

Purpose

The purpose of this questionnaire is to request that you provide Canada Border Services Agency (CBSA) with the information that you used to determine your eligibility for the North American Free Trade Agreement (hereinafter referred to as "the NAFTA"). This information is required to conduct a verification of origin of specified goods imported into Canada, pursuant to Article 506(1) of the NAFTA, for which a claim for preferential tariff treatment was made on the basis that the goods originate in the NAFTA territory as a result of meeting a rule of origin under paragraphs 4(2)(b) or (c), or subsection 4(4), of the NAFTA Rules of Origin Regulations (hereinafter referred to as "the Regulations"), requiring that the regional value content based on the transaction value of the good minus the value of non-originating materials divided by the transaction value of the good is not less than a specified percentage (e.g. 60%).

Subsection 6(6) of the Regulations outlines the situations when the transaction value method for calculating the regional value content cannot be used and the net cost method must be used. The net cost method must be used where:

If the net cost method is used, the NAFTA Origin Verification Questionnaire, Regional Value Content — Net Cost Method, form B 228 E, must be completed.

The CBSA may further verify the origin of the goods and/or determine the accuracy of any or all of the information provided in the completed questionnaire by sending a subsequent verification questionnaire or verification letter, and/or conducting a verification visit in accordance with Article 506(1) of the NAFTA.

Where materials used in the production of a good are obtained from suppliers in respect of which the exporter/producer claims that such materials are originating, it is incumbent upon that exporter/producer to substantiate the basis on which that claim was made. The exporter/producer may substantiate such a claim on the basis of a written representation from the supplier of the materials that the materials qualify as originating in respect of which the exporter/producer may be reasonably entitled to rely. As part of the overall verification process, the suppliers of those materials may be requested to complete a verification questionnaire and/or be the subject of a verification visit by the CBSA.

A failure to maintain records, relating to the origin of the goods that are the subject of the verification, for five years after the date on which the Certificate of Origin was signed, or a denial of access to such records may, pursuant to Article V(4) of the Uniform Regulations for the Interpretation, Application and Administration of Chapters Three (National Treatment and Market Access for Goods) and Five (Customs Procedures) of the NAFTA, result in a denial of preferential tariff treatment to the goods.

This questionnaire must be completed and returned by the date specified in the covering letter accompanying the questionnaire. Where the CBSA does not receive the completed questionnaire within the specified time period, it may, subject to Paragraphs 16 through 18 of Article VI of the Uniform Regulations for the Interpretation, Application and Administration of Chapters Three (National Treatment and Market Access for Goods) and Chapter Five (Customs Procedures) of the NAFTA, deny preferential tariff treatment to the goods that are the subject of the verification of origin.

This questionnaire will, pursuant to Article VI(31)(a) of the Uniform Regulations for the Interpretation, Application and Administration of Chapter Three (National Treatment and Market Access for Goods) and Chapter Five (Customs Procedures) of the NAFTA, in addition to verifying the origin of the goods, also be used to verify the applicable rate of customs duty applied to an originating good in accordance with the rules set out in Annex 302.2 of the NAFTA.

Questionnaire

The questionnaire is divided into three sections.

Section A, entitled Transaction Value Method, is required to be completed in all cases where exported goods are claimed to originate in the territory of the NAFTA countries as a result of meeting a rule of origin under paragraphs 4(2)(b) or (c), or subsection 4(4) of the Regulations, where the transaction value method is being used to determine the regional value content of the goods. A general information form is also included such that CBSA may obtain additional information about the goods that are the subject of the origin verification.

Section B, entitled Intermediate Material, is required to be completed only where the producer of the good designates as an intermediate material, in accordance with subsection 7(4) of the Regulations, any self produced material that is used in the production of the good. Where more than one intermediate material is designated, a separate set of Section B forms are required to be completed for each intermediate material designated. Instructions on the Section B summary form should be followed to carry forward totals to the Section A forms.

Section C, entitled de minimis Calculation, is required to be completed by the exporter/producer of the goods only where preferential tariff treatment was claimed on the basis that the goods qualify as originating goods pursuant to section 5 (de minimis provision) of the Regulations.

Where there is insufficient space in this questionnaire to adequately respond to a request for information, photocopy and attach the relevant page appropriately numbered and cross referenced.

Additional Information

For additional information and/or clarification regarding the completion of this questionnaire, please contact the CBSA official identified in the covering letter accompanying the questionnaire.

Confidentiality

The CBSA shall, in accordance with Article 507 of the NAFTA, protect the confidentiality of all confidential business information submitted in this questionnaire, and all shall not, under any circumstances, disclose such information to a third party without prior consultation with your company.

Currency

All currencies reflected in this questionnaire shall, where the value of a good or a material is expressed in a currency other than the currency of the country in which the producer is located, be converted to the currency of the country in which the producer is located in accordance with section 3 of the Regulations. Please identify the currency used to complete the questionnaire.

Definitions

The following definitions contained in this questionnaire are intended for reference purposes only. In the event of any inconsistency with the definitions set out in section 2 or any section of the Regulations, the definitions and/or section set out in the Regulations shall take precedence.

"applicable change in tariff classification"
means, with respect to a non-originating material used in the production of a good, a change in tariff classification specified in a rule set out in Schedule I of the Regulations for tariff provision under which the good is classified.
"FOB"
means free on board, regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer.
"fungible goods or fungible materials"
means goods or materials that are interchangeable for commercial purposes and the properties of which are essentially identical.
"Harmonized System"
means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes and Chapter Notes, as adopted and implemented by Canada under the Customs Tariff.
"intermediate material"
means a self-produced material that is used in the production of a good and is designated as an intermediate material under subsection 7(4) of the Regulations.
"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 a good using one of the methods as set out in Schedule VII of the Regulations.
"non-allowable interest costs"
means interest costs incurred by a producer on the producer's debt obligations that are more than 700 basis points above the yield on debt obligations of comparable maturities issued by the federal government of the country in which the producer is located.
"non-originating good or non-originating material"
means a good or material that does not qualify as originating under the Regulations.
"related person"
means a person related to another person on the basis that:
  • (a) they are officers or directors of one another's businesses;
  • (b) they are legally recognized partners in business;
  • (c) they are employer and employee;
  • (d) any person directly or indirectly owns, controls or holds 25 per cent or more of the outstanding voting stock or shares of each of them;
  • (e) one of them directly or indirectly controls the other;
  • (f) both of them are directly or indirectly controlled by a third person; or
  • (g) they are members of the same family (members of the same family are natural or adopted children, brothers, sisters, parents, grandparents, or spouses).
"royalties"
means payments of any kind, including payments under technical assistance agreements, or similar agreements, made as consideration for the use of, or right to use, any copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, secret formula or process, excluding those payments under technical assistance agreements or similar agreements that can be related to specific services such as:
  • (a) personnel training, without regard to where performed; and
  • (b) if performed in the territory of one or more of the NAFTA countries, engineering, tooling, die-setting, software design and similar computer services, or other services.
"sales promotion, marketing and after-sales service costs"
means the following costs related to sales promotion, marketing and after-sales service:
  • (a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstration materials; exhibits; sales conferences, trade shows and conventions; banners; marketing displays; free samples; sales, marketing and after-sales service literature (product brochures, catalogues, technical literature, price lists, service manuals, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; entertainment;
  • (b) sales and marketing incentives; consumer, retailer or wholesaler rebates; merchandise incentives;
  • (c) salaries and wages, sales commissions, bonuses, benefits (for example, medical, insurance, pension), travelling and living expenses, membership and professional fees, for sales promotion, marketing and after-sales service personnel;
  • (d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training of customers' employees, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
  • (e) product liability insurance;
  • (f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
  • (g) telephone, mail and other communications, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
  • (h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centres;
  • (i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after- sales service offices and distribution centres, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; and
  • (j) payments by the producer to other persons for warranty repairs.
"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.
"tariff classification"
refers to the tariff classification, to the 6th or 8th digit level, as applicable, based on the Harmonized System of tariff classification and statistical coding.
"territory"
means, with respect to:
  • (a) 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;
  • (b) Mexico,
    • (i) the states of the Federation and the Federal District,
    • (ii) the islands, including the reefs and keys, in adjacent seas,
    • (iii) the islands of Guadalupe and Revillagigedo situated in the Pacific Ocean,
    • (iv) the continental shelf and the submarine shelf of such islands, keys and reefs,
    • (v) the waters of the territorial seas, in accordance with international law, and its interior maritime waters,
    • (vi) the space located above the national territory, in accordance with international law, and
    • (vii) any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the United Nations Convention on the Law of the Sea, and its domestic law, Mexico may exercise rights with respect to the seabed and subsoil and their natural resources; and
  • (c) the United States,
    • (i) the customs territory of the United States, which includes the 50 states, the District of Columbia and Puerto Rico,
    • (ii) the foreign trade zones located in the United States and Puerto Rico, and
    • (iii) any areas beyond the territorial seas of the United States within which, in accordance with international law and its domestic law, the United States may exercise rights with respect to the seabed and subsoil and their natural resources.
"total cost"
means the total of all product costs, period costs and other costs incurred in the territory of one or more of the NAFTA countries. Note: Please refer to subsection 6(12) of the Regulations for further details and to section 2 of the Regulations for definitions of product costs, period costs and other costs.
"transaction value method"
means the method of calculating the regional value content of a good as set out in subsection 6(2) of the Regulations.

Completion of the Origin Verification Questionnaire Regional Value Content – Section A – Transaction Value Method

The information requested in the questionnaire may be received by the CBSA in any other suitable format. For example, a bill of materials indicating the origin of materials, tariff classification, whether or not a change in tariff classification has been satisfied, and the respective supplier names and addresses will be acceptable to CBSA instead of reproducing the information in the questionnaire. All information should be certified.

Step 1 — Confirm the Tariff Classification and the Applicable Rule of Origin for the Good Produced

Confirm the tariff classification (to the 6th or 8th digit level, as required by the applicable rule of origin) of the good produced. Refer to Schedule I of the Regulations to verify the applicable rule of origin.

Step 2 — Complete the Transaction Value Method — Transaction Value of the Good Form

(A) Complete the top part of the form (name of producer, address, telephone number, facsimile number, name of good produced and the period covered). The tariff classification section should contain the tariff classification (6th or 8th digit level, as applicable) of the good as established in Step 1.

(B) List the components and values that form the Transaction Value of the Good. The transaction value of the good is determined in accordance with Schedule II of the Regulations with respect to the transaction in which the producer of the good sold the good, adjusted to an FOB basis. The transaction value of the good shall be the price actually paid or payable for the good plus additions if they are not already included in the price paid or payable and minus deductions if they are already included in the price paid or payable, up to the point they are included.

Some of the additions are selling commissions and brokerage fees, packaging costs, assists, royalty and licence fees related to the sale of the goods, excluding royalty paid for the right to reproduce the good in the territory of one or more of the NAFTA countries, subsequent proceeds and transportation, insurance, and associated costs up to the producer's point of direct shipment.

Some of the deductions are duties and taxes paid in the country in which the buyer is located with respect to the good and charges for construction, erection and assembly, maintenance or technical assistance related to the good undertaken after the good has been sold to the buyer.

Adjusted to an FOB basis means, with respect to a good, adjusted by:

If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross referenced.

(C) Add the column on the Transaction Value Method — Transaction Value of a Good form and carry forward this total to box A on the Transaction Value Method — Summary form.

Step 3 — Complete the Transaction Value Method — Value of Materials Form

(A) Complete the top part of the form.

(B) List all materials and the respective supplier names and addresses. List all suppliers when there is more than one supplier for a particular material. If the material is a non-originating material or a material of unknown origin, list the tariff classification (to the 6th or 8th digit level, as applicable) for that material in the space provided.

Note 1: Materials purchased from manufacturers or suppliers in the territory are not necessarily originating materials (materials claimed to be originating must qualify as originating under the Regulations). Any written representations obtained from suppliers of materials that a material qualifies as an originating material must be kept on file for purposes of verification.

Note 2: Where originating and non-originating fungible materials are used in the production of a good and the producer or the person from whom the producer acquired the materials chooses, pursuant to subsection 7(16) of the Regulations, to determine whether the materials are originating materials on the basis of any of the applicable inventory management methods set out in Schedule X of the Regulations, such producer or person must maintain sufficiently detailed records to support the application of the method chosen. The CBSA may, where a producer fails to maintain the records necessary to support the application of the inventory management method, consider all fungible materials as non-originating materials.

(C) Indicate in the column provided, under the category "originating", "non-originating" or "origin unknown", the value of each material determined in accordance with subsection 7(1) of the Regulations.

Value of a material, except as otherwise provided for non-originating materials used in the production of a light-duty automotive good or a heavy-duty automotive good, and except in the case of indirect materials, intermediate materials, packing materials and containers and self-produced packaging materials and containers, shall be:

Location of the producer means:

It is important that the value of a material be placed in the correct column as either "originating", "non-originating" or "origin unknown".

Note: Value of Material totals carried forward from the Intermediate Material — Summary form(s) should be included on the Transaction Value Method — Value of Materials form and cross referenced to the appropriate Intermediate Material — Summary form.

If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross referenced. A running total should be carried forward to each additional Transaction Value Method — Value of Materials form.

(D) Indicate in the column provided whether or not the change in tariff classification for the non-originating materials or materials of unknown origin used in the production of the good has been satisfied. The value of the materials will remain non-originating or origin unknown for the purpose of the regional value content calculation.

(E) Add each column of Value of Materials and carry forward the totals to the appropriate columns in box B on the Transaction Value Method — Summary form.

Step 4 — Complete the Transaction Value Method — Summary Form

(A) Complete the top part of the form.

(B) Ensure that the Transaction Value of the Good from the Transaction Value Method — Transaction Value of the Good form and the Value of Materials from the Transaction Value Method — Value of Materials form have been carried forward correctly to the Transaction Value Method — Summary form.

(C) Subtract the value in box B(2) and the value in box B(3) from the value in box A and put the total in box C.

(D) Divide the value in box C by the value in box A. Multiply this by 100 to obtain the regional value content of the good produced. Place this percentage in box D.

(E) Complete the certification. This questionnaire must be completed, signed and dated by the exporter or producer of the goods or by the supplier of a material used in the production of the goods, as the case may be.

Step 5 — Complete the Transaction Value Method — General Information Form

Completion of the Origin Verification Questionnaire Regional Value Content – Section B – Intermediate Material

General Instructions

Section B is to be completed only where the producer of the good designates as an intermediate material, any self produced material that is used in the production of the good, and the specific rule of origin for that intermediate material contains a regional value-content requirement. If the rule of origin for the intermediate material contains only the tariff classification change requirement, do not proceed with this section. In this case, carry forward the costs to section A in the originating or non-originating materials column as appropriate.

Note 1: Pursuant to subsection 7(5) of the Regulations, in order to qualify as originating, a self produced material that is designated as an intermediate material must qualify as an originating material under the Regulations.

Step 1 — Confirm the Tariff Classification and the Applicable Rule of Origin for the Intermediate Material

Confirm the tariff classification (to the 6th or 8th digit level, as required by the applicable rule of origin) of the intermediate material. Refer to Schedule I of the Regulations to verify the applicable rule of origin.

Step 2 — Complete the Intermediate Material — Value of Materials Form

(A) Complete the top part of the form (name of producer, address, telephone number, facsimile number, name of good produced, tariff classification of the good produced, name of the intermediate material, tariff classification of the intermediate material and the period covered). The tariff classification of the intermediate material should contain the tariff classification as established in Step 1.

(B) List all materials and the respective supplier names and addresses. List all suppliers when there is more than one supplier for a particular material. If the material is a non-originating material or a material of unknown origin, list the tariff classification (to the 6th digit or 8th digit levels, as required by the rule of origin applicable to the intermediate material) for that material in the space provided.

Note 1: Materials purchased from manufacturers or suppliers in the territory are not necessarily originating materials (materials claimed to be originating must qualify as originating under the Regulations). Any written representations obtained from suppliers of materials that a material qualifies as an originating material must be kept on file for purposes of verification.

Note 2: Where originating and non-originating fungible materials are used in the production of a good and the producer or the person from whom the producer acquired the materials chooses, pursuant to subsection 7(16) of the Regulations, to determine whether the materials are originating materials on the basis of any of the applicable inventory management methods set out in Schedule X of the Regulations, such producer or person must maintain sufficiently detailed records to support the application of the method chosen. The CBSA may, where a producer fails to maintain the records necessary to support the application of the inventory management method, consider all fungible materials as non-originating materials.

(C) Indicate in the column provided, under the category "originating", "non-originating" or "origin unknown", the value of each material determined in accordance with section 7 of the Regulations. A running total should be carried forward to each additional Intermediate Material — Value of Materials form.

It is important that the value of a material be placed in the correct column as either "originating", "non-originating" or "origin unknown".

(D) Indicate in the column provided whether or not the change in tariff classification for the non-originating materials or materials of unknown origin used in the production of the good has been satisfied.

(E) Add each column of Intermediate Materials — Value of Materials on the Intermediate Materials — Value of Materials form. Carry forward the totals to the appropriate columns in box A on the Intermediate Material — Summary form.

Step 3 — Complete the Intermediate Material — Net Cost of the Good Form

Note: For purposes of this questionnaire, all costs associated with the value of materials are reflected under Step 2 of Section B and are thus not to be included in the calculation required under this Step.

(A) Complete the top part of the form.

(B) Complete the section identifying the major cost categories e.g. labour, overhead, etc. (see Note 1 below) which total the amount claimed for the Net Cost of the Good, as well as the section identifying the country in which the production took place, and the section for the corresponding unit costs.

In order to calculate the Net Cost of the Good, the producer may (in accordance with subsections 6(11), 6(12) and 6(13) of the Regulations):

Note 1: The information could also be submitted by responsibility cost centre, rather than by major cost categories.

If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross referenced.

(C) Add all costs and carry forward the Intermediate Material — Net Cost of the Good to box B on the Intermediate Material — Summary form.

Step 4 — Complete the Intermediate Material — Summary Form

(A) Complete the top part of the form.

(B) Ensure that the totals from the Intermediate Material — Value of Materials form and the Intermediate Material — Net Cost of the Good form have been carried forward correctly.

(C) Add the value in box A(4) to the value in box B and put the total in box C.

(D) Subtract the value in box A(2) and the value in box A(3) from the value in box C and put the total in box D.

(E) Divide the value in box D by the value in box C. Multiply this by 100 to obtain the regional value content of the intermediate material produced. Place this percentage in box E.

The intermediate material is considered to originate in the territory if it meets the specific rule of origin in Schedule I of the Regulations applicable to the intermediate material, and any other general rules that may be applicable.

Where the rule of origin is met, check the appropriate box under E(1), and carry forward the Intermediate Material — Value of Materials to Section A as follows:

The Aggregate Total Intermediate Material — Value of Materials (box A(4)) to the Transaction Value Method — Value of Materials form in the column for originating materials.

Note 1: Since the formula for the determination of the regional value content of the good using the transaction value method only requires the transaction value of the good and the value of non-originating materials, no other carry forward values are necessary.

If the rule of origin is not met, check the appropriate box under E(2) and carry forward the Intermediate Material — Value of Materials to Section A as follows:

The Intermediate Materials — Value of Materials should be carried forward to the Transaction Value Method — Value of Materials form so that the values are put in the appropriate column which designates origin. That is, the value in A(1) of the Intermediate Material — Summary form should be carried forward to the column for originating materials in the Transaction Value Method — Value of Materials form. The value in A(2) of the Intermediate Material — Summary form should be carried forward to the column for non-originating materials in the Transaction Value Method — Value of Materials form and the value in A(3) of the Intermediate Material — Summary form should be carried forward to the column for origin of materials unknown in the Transaction Value Method — Value of Materials form.

Completion of the Origin Verification Questionnaire Regional Value Content – Section C – de minimis Calculation

General Instructions

Section C is required to be completed by the exporter/producer of the goods only where preferential tariff treatment was claimed on the basis that the goods qualify as originating pursuant to section 5 (de minimis provision) of the Regulations.

de minimis means that a good shall be considered to originate in the territory of a NAFTA country where the value of all non originating materials that are used in the production of the good and that do not undergo an applicable change in tariff classification as the result of production occurring entirely in the territory of one or more of the NAFTA countries is not more than seven per cent (7%):

provided that

Note 1: A good that is subject to a regional value-content requirement shall be considered to originate in the territory of a NAFTA country and shall not be required to satisfy that requirement where:

Note 2: Please note that the de minimis provision does not apply to:

Complete the De Minimis Calculation Form

(A) Complete the general information section of the form (name of producer, address, telephone number, facsimile number, name of the good produced and the tariff classification of the good (to the 6th or 8th digit level, as applicable)).

(B) Complete the Non-Originating Materials That Do Not Undergo An Applicable Tariff Classification Change section of this form.

List all non-originating materials and their values which are used in the production of the good that do not undergo an applicable change in tariff classification as a result of production. All materials for which the origin is unknown must be considered to be non-originating and be included in this section if they do not undergo an applicable change in tariff classification.

(C) Total the Value of Non-Originating Materials That Do Not Undergo An Applicable Tariff Classification Change and place this figure in box (A).

(D) Complete the De Minimis calculation on the form.

For all chapters excluding Chapters 50 to 63 of the Harmonized System:

(E) Complete the certification section of the de minimis calculation form. This form must be completed, signed and dated by the exporter or producer of the goods or by the supplier of a material used in the production of the goods, as the case may be.

Origin Verification Questionnaire Regional Value Content – Section A – Transaction Value Method

Protected B when completed

Transaction Value of the Good

Value of Materials

Summary

General Information

Origin Verification Questionnaire Regional Value Content – Section B – Intermediate Material

Protected B when completed

Value of Materials

Net Cost of the Good

Summary

Origin Verification Questionnaire Regional Value Content – Section C – de minimis Calculation

Protected B when completed

General Information

Non-Originating Materials That Do Not Undergo an Applicable Tariff Classification Change

de minimis Calculation

All Chapters Excluding Chapters 50 to 63 of the Harmonized System:

Certification

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