Special Rules – USMCA

Fungible Materials

Fungible materials are materials that are interchangeable for commercial purposes and the properties of which are essentially identical.  Examples include specific grades of grain, crude oils of similar quality and viscosity, natural gas suitable for transmission in a pipeline nd gasoline.

A producer who uses a combination of originating and non-originating fungible materials to produce a good has several options in deciding how to account for them in determining whether the good originates.  The most direct is to keep the two categories physically separate, or to keep them together and mark the individual items separately.  However, neither of these options will be practical or cost effective in most circumstances. 

The more practical alternative is generally to commingle the fungible materials without marking them and use one of the prescribed inventory management systems adapted from generally accepted accounting principles.  These systems are FIFO (first-in, first-out), LIFO (last-in, first out) and the average method.  All three use inventory accounting records to determine the origin of commingled fungible materials drawn from inventory.  The details of applying each method are found in [Section X] of the Uniform Regulations.

Fungible Goods

A producer who produces both originating and non-originating fungible goods and sells them together in commingled form has the same options as described above for fungible materials.