CUSMA Rules of Origin

Summary#

These are the final CUSMA Rules of Origin Regulations (SOR/2020-155) that implement how goods qualify as “originating” for the Canada–United States–Mexico Agreement (CUSMA). The regulations were registered on June 30, 2020 and published in the Canada Gazette on July 22, 2020. They say when and how producers, exporters and customs officials calculate regional content and origin tests; the rules come into force when section 186 of the Canada–United States–Mexico Agreement Implementation Act comes into force (or on registration day if that is later).

What it does#

• Sets the basic rule for origin: a good is “originating” if it meets the tests in the regulations (definitions, tariff-shift rules, or value tests).
• Gives two main ways to measure regional value content (RVC):
  • Transaction value method (a percentage of the sale price), and
  • Net cost method (a percentage of the producer’s net cost).
• Establishes a general de minimis rule: small amounts of non-originating inputs are allowed up to 10% in many cases.
• Lays out detailed rules for materials, valuation and record-keeping:
  • How to value imported, bought, or self‑produced materials.
  • How to convert currencies and handle inventory methods (FIFO, LIFO, averaging).
  • How to treat packaging, accessories, indirect materials and recovered parts.
• Provides specific origin rules and step-up schedules for motor vehicles and parts (long, product-specific tables):
  • Many vehicle/part RVC thresholds start at 60% or higher and phase up over time (for example, passenger vehicle RVCs reach 75% under the net cost method by July 1, 2023).
  • Textile and apparel de‑minimis and component rules are specially handled (e.g., 10% by weight limits with 7% elastomeric caps).
• Adds automotive-specific tests and new requirements:
  • A labour value content (LVC) test for passenger vehicles and trucks with staged targets for passenger vehicles (30%, 33%, 36%, 40%) and 45% for light/heavy trucks (includes sub-limits for high‑wage material, technology and assembly credits).
  • A steel and aluminum purchasing rule requiring at least 70% (by value) of a vehicle producer’s steel purchases and 70% of aluminum purchases to be originating for the period specified.
  • Special lists (Tables A–G and S) that identify core parts, principal parts and thresholds used in RVC calculations.
• Describes accumulation (counting qualifying inputs made anywhere in the three CUSMA countries), verification and documentary rules for claims of origin.

Who's affected#

• Manufacturers in Canada, the United States and Mexico who want their goods treated as CUSMA-originating. This especially includes:
  • The automotive industry (vehicle assemblers and parts suppliers). The regulations put many specific thresholds and staged increases directly on vehicle and parts origin tests.
  • Textile and apparel makers who rely on component or weight-based de‑minimis rules.
  • Producers who remanufacture parts or use recovered materials.
• Importers, exporters and their customs brokers who prepare origin declarations and Certificates of Origin.
• Steel and aluminum suppliers and service centres, because vehicle makers’ steel/aluminum sourcing affects vehicle origin.
• Accounting, purchasing and logistics teams. The rules require cost records, inventory methods and wage data for tests such as RVC and LVC.
• If it is unclear who is affected in a specific case (for example, a complex supply chain or specialty part), the regulations include technical examples and require that customs verifications be the final check.

Why it matters#

• Whether a good qualifies as “originating” determines if it can get CUSMA preferential tariff treatment (lower or zero duties) when traded within Canada, the United States and Mexico. That affects price competitiveness.
• The rules influence sourcing and factory choices. Firms may need to change suppliers, move production, or rework accounting and inventory systems to meet RVC, LVC and steel/aluminum sourcing thresholds.
• Automotive producers face stepped increases in regional content and labour requirements over time. That can shift where parts are made, who supplies them, and the cost of vehicles.
• The regulations require clear records and specific valuation methods. Businesses that want to claim origin must keep the documents and calculations that customs officials can check.
• For everyday consumers the impact is indirect: changes in where companies source parts or assemble goods can affect product availability, prices and where jobs are located.

If you want a quick look at the detailed numeric thresholds for vehicles (timelines and percentages) or at the core parts lists, those are in the regulatory text (Schedules and Tables). If you need help finding the exact RVC or LVC numbers for a particular product or tariff heading, tell me the product or tariff code and I can point to the relevant rule.