Common use of Substantial Transformation Clause in Contracts

Substantial Transformation. 1. A product obtained using non-originating materials shall be considered to have undergone substantial transformation if the requirements specified in Annex II are fulfilled. 2. For the purpose of paragraph 1, the operations provided for in Article 3.6 are considered as insufficient to obtain originating status. 3. Where Annex II refers to a percentage of the value of non-originating material (VNM), it shall mean the maximum percentage of the VNM allowed in relation to the ex-works price of a product. That percentage shall be calculated as follows: VNM% = VNM x 100 4. VNM shall be determined on the basis of the customs value at the time of importation of the non-originating materials, including materials of undetermined origin. If such value is unknown and cannot be ascertained, the first ascertainable price paid or payable for the materials in a Party shall be applied. 5. If a product which has acquired originating status in accordance with paragraph 1 in a Party is further processed in that Party and used as material in the manufacture of another product, no account shall be taken of the non-originating components of that material in the determination of the originating status of the product.

Substantial Transformation. 1. A product obtained using non-originating materials shall be considered to have undergone substantial transformation if the requirements specified in Annex II are fulfilled. 2. For the purpose of paragraph 1, the operations provided for in Article 3.6 are considered as insufficient to obtain originating status. 3. Where Annex II refers to a percentage of the value of non-originating material (VNM), it shall mean the maximum percentage of the VNM allowed in relation to the ex-works price of a product. That percentage shall be calculated as follows: VNM% = VNM VNM/exworks price x 100 4. VNM shall be determined on the basis of the customs value at the time of importation of the non-originating nonoriginating materials, including materials of undetermined origin. If such value is unknown and cannot be ascertained, the first ascertainable price paid or payable for the materials in a Party shall be Partyshallbe applied. 5. If a product which has acquired originating status in accordance with paragraph 1 in a Party is further processed in that Party and used as material in the manufacture of another product, no account shall be taken of the non-non- originating components of that material in the determination of the originating status of the product.

Substantial Transformation. 1. A product obtained using non-originating non­originating materials shall be considered to have undergone substantial transformation if the requirements specified in Annex II are fulfilled. 2. For the purpose of paragraph 1, the operations provided for in Article 3.6 are considered as insufficient to obtain originating status. 3. Where Annex II refers to a percentage of the value of non-originating non­originating material (VNM), it shall mean the maximum percentage of the VNM allowed in relation to the ex-works ex­works price of a product. That percentage shall be calculated as follows: VNM% = VNM x 100 4. VNM shall be determined on the basis of the customs value at the time of importation of the non-originating non­originating materials, including materials of undetermined origin. If such value is unknown and cannot be ascertained, the first ascertainable price paid or payable for the materials in a Party shall be applied. 5. If a product which has acquired originating status in accordance with paragraph 1 in a Party is further processed in that Party and used as material in the manufacture of another product, no account shall be taken of the non-originating non­originating components of that material in the determination of the originating status of the product.