(f) De minimis amounts of nonoriginating materials
(1) In general Except as provided in paragraphs (2) and (3), a good that does not undergo a change in tariff classification pursuant to Annex 4.1 of the Agreement is an originating good if
(A) the value of all nonoriginating materials that
(i) are used in the production of the good, and
(ii) do not undergo the applicable change in tariff classification (set out in Annex 4.1 of the Agreement),
does not exceed 10 percent of the adjusted value of the good;
(B) the good meets all other applicable requirements of this section; and
(C) the value of such nonoriginating materials is included in the value of nonoriginating materials for any applicable regional value-content requirement for the good.
(2) Exceptions Paragraph (1) does not apply to the following:
(A) A nonoriginating material provided for in chapter 4, or a nonoriginating dairy preparation containing over 10 percent by weight of milk solids provided for in subheading 1901.90 or 2106.90, that is used in the production of a good provided for in chapter 4.
(B) A nonoriginating material provided for in chapter 4, or a nonoriginating dairy preparation containing over 10 percent by weight of milk solids provided for in subheading 1901.90, that is used in the production of the following goods:
(i) Infant preparations containing over 10 percent by weight of milk solids provided for in subheading 1901.10.
(ii) Mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale, provided for in subheading 1901.20.
(iii) Dairy preparations containing over 10 percent by weight of milk solids provided for in subheading 1901.90 or 2106.90.
(iv) Goods provided for in heading 2105.
(v) Beverages containing milk provided for in subheading 2202.90.
(vi) Animal feeds containing over 10 percent by weight of milk solids provided for in subheading 2309.90.
(C) A nonoriginating material provided for in heading 0805, or any of subheadings 2009.11 through 2009.39, that is used in the production of a good provided for in any of subheadings 2009.11 through 2009.39, or in fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, provided for in subheading 2106.90 or 2202.90.
(D) A nonoriginating material provided for in heading 0901 or 2101 that is used in the production of a good provided for in heading 0901 or 2101.
(E) A nonoriginating material provided for in heading 1006 that is used in the production of a good provided for in heading 1102 or 1103 or subheading 1904.90.
(F) A nonoriginating material provided for in chapter 15 that is used in the production of a good provided for in chapter 15.
(G) A nonoriginating material provided for in heading 1701 that is used in the production of a good provided for in any of headings 1701 through 1703.
(H) A nonoriginating material provided for in chapter 17 that is used in the production of a good provided for in subheading 1806.10.
(I) Except as provided in subparagraphs (A) through (H) and Annex 4.1 of the Agreement, a nonoriginating material used in the production of a good provided for in any of chapters 1 through 24, unless the nonoriginating material is provided for in a different subheading than the good for which origin is being determined under this section.
(3) Textile or apparel goods
(A) In general Except as provided in subparagraph (B), a textile or apparel good that is not an originating good because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification, set out in Annex 4.1 of the Agreement, shall be considered to be an originating good if
(i) the total weight of all such fibers or yarns in that component is not more than 10 percent of the total weight of that component; or
(ii) the yarns are those described in section
3203 (b)(3)(B)(vi)(IV) of this title (as in effect on August 2, 2005).
(B) Certain textile or apparel goods
A textile or apparel good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed in the territory of a CAFTADR country.
(C) Yarn, fabric, or fiber
For purposes of this paragraph, in the case of a good that is a yarn, fabric, or fiber, the term component of the good that determines the tariff classification of the good means all of the fibers in the good.
(n) Definitions In this section:
(1) Adjusted value The term adjusted value means the value determined in accordance with Articles 1 through 8, Article 15, and the corresponding interpretive notes of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section
3511 (d)(8) of this title, adjusted, if necessary, to exclude any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation.
(2) CAFTA–DR country The term CAFTADR country means
(A) the United States; and
(B) Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua, for such time as the Agreement is in force between the United States and that country.
(3) Class of motor vehicles The term class of motor vehicles means any one of the following categories of motor vehicles:
(A) Motor vehicles provided for in subheading 8701.20, 8704.10, 8704.22, 8704.23, 8704.32, or 8704.90, or heading 8705 or 8706, or motor vehicles for the transport of 16 or more persons provided for in subheading 8702.10 or 8702.90.
(B) Motor vehicles provided for in subheading 8701.10 or any of subheadings 8701.30 through 8701.90.
(C) Motor vehicles for the transport of 15 or fewer persons provided for in subheading 8702.10 or 8702.90, or motor vehicles provided for in subheading 8704.21 or 8704.31.
(D) Motor vehicles provided for in any of subheadings 8703.21 through 8703.90.
(4) Fungible good or fungible material
The term fungible good or fungible material means a good or material, as the case may be, that is interchangeable with another good or material for commercial purposes and the properties of which are essentially identical to such other good or material.
(5) Generally accepted accounting principles
The term generally accepted accounting principles means the recognized consensus or substantial authoritative support in the territory of a CAFTADR country with respect to the recording of revenues, expenses, costs, assets, and liabilities, the disclosure of information, and the preparation of financial statements. The principles may encompass broad guidelines of general application as well as detailed standards, practices, and procedures.
(6) Goods wholly obtained or produced entirely in the territory of one or more of the CAFTA–DR countries The term goods wholly obtained or produced entirely in the territory of one or more of the CAFTADR countries means
(A) plants and plant products harvested or gathered in the territory of one or more of the CAFTADR countries;
(B) live animals born and raised in the territory of one or more of the CAFTADR countries;
(C) goods obtained in the territory of one or more of the CAFTADR countries from live animals;
(D) goods obtained from hunting, trapping, fishing or aquaculture conducted in the territory of one or more of the CAFTADR countries;
(E) minerals and other natural resources not included in subparagraphs (A) through (D) that are extracted or taken in the territory of one or more of the CAFTADR countries;
(F) fish, shellfish, and other marine life taken from the sea, seabed, or subsoil outside the territory of one or more of the CAFTADR countries by vessels registered or recorded with a CAFTADR country and flying the flag of that country;
(G) goods produced on board factory ships from the goods referred to in subparagraph (F), if such factory ships are registered or recorded with that CAFTADR country and fly the flag of that country;
(H) goods taken by a CAFTADR country or a person of a CAFTADR country from the seabed or subsoil outside territorial waters, if a CAFTADR country has rights to exploit such seabed or subsoil;
(I) goods taken from outer space, if the goods are obtained by a CAFTADR country or a person of a CAFTADR country and not processed in the territory of a country other than a CAFTADR country;
(J) waste and scrap derived from
(i) manufacturing or processing operations in the territory of one or more of the CAFTADR countries; or
(ii) used goods collected in the territory of one or more of the CAFTADR countries, if such goods are fit only for the recovery of raw materials;
(K) recovered goods derived in the territory of one or more of the CAFTADR countries from used goods, and used in the territory of a CAFTADR country in the production of remanufactured goods; and
(L) goods produced in the territory of one or more of the CAFTADR countries exclusively from
(i) goods referred to in any of subparagraphs (A) through (J), or
(ii) the derivatives of goods referred to in clause (i),
at any stage of production.
(7) Identical goods The term identical goods means identical goods as defined in the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section
3511 (d)(8) of this title;
(8) Indirect material The term indirect material means a good used in the production, testing, or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, including
(A) fuel and energy;
(B) tools, dies, and molds;
(C) spare parts and materials used in the maintenance of equipment or buildings;
(D) lubricants, greases, compounding materials, and other materials used in production or used 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 goods that are not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production.
(9) Material
The term material means a good that is used in the production of another good, including a part or an ingredient.
(10) Material that is self-produced
The term material that is self-produced means an originating material that is produced by a producer of a good and used in the production of that good.
(11) Model line
The term model line means a group of motor vehicles having the same platform or model name.
(12) Net cost
The term 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.
(13) Nonallowable interest costs
The term nonallowable interest costs means interest costs incurred by a producer that exceed 700 basis points above the applicable official interest rate for comparable maturities of the CAFTADR country in which the producer is located.
(14) Nonoriginating good or nonoriginating material
The terms nonoriginating good and nonoriginating material mean a good or material, as the case may be, that does not qualify as originating under this section.
(15) Packing materials and containers for shipment
The term packing materials and containers for shipment means the goods used to protect a good during its transportation and does not include the packaging materials and containers in which a good is packaged for retail sale.
(16) Preferential tariff treatment
The term preferential tariff treatment means the customs duty rate, and the treatment under article 3.10.4 of the Agreement, that are applicable to an originating good pursuant to the Agreement.
(17) Producer
The term producer means a person who engages in the production of a good in the territory of a CAFTADR country.
(18) Production
The term production means growing, mining, harvesting, fishing, raising, trapping, hunting, manufacturing, processing, assembling, or disassembling a good.
(19) Reasonably allocate
The term reasonably allocate means to apportion in a manner that would be appropriate under generally accepted accounting principles.
(20) Recovered goods The term recovered goods means materials in the form of individual parts that are the result of
(A) the disassembly of used goods into individual parts; and
(B) the cleaning, inspecting, testing, or other processing that is necessary for improvement to sound working condition of such individual parts.
(21) Remanufactured good The term remanufactured good means a good that is classified under chapter 84, 85, or 87, or heading 9026, 9031, or 9032, other than a good classified under heading 8418 or 8516, and that
(A) is entirely or partially comprised of recovered goods; and
(B) has a similar life expectancy and enjoys a factory warranty similar to such a new good.
(22) Total cost
The term total cost means all product costs, period costs, and other costs for a good incurred in the territory of one or more of the CAFTADR countries.
(23) Used
The term used means used or consumed in the production of goods.