Common use of Intermediate Material Clause in Contracts

Intermediate Material. 1. For purposes of calculating the regional value content under article 6-04, the producer of a good may designate as an intermediate material, except the elements listed in Annex 2 to the arts and the goods falling within heading 87.06, intended for use in a motor vehicles covered under paragraph 3 of Article 6 and 15, of his own manufacture any material that is used in the production of a good provided that such material satisfies the requirements in article 6-03. 2. Where an intermediate material is subject to a regional value content in accordance with the annex to article 6-03, it shall be calculated on the basis of the net cost method set out in article 6 - 3. For purposes of calculating the regional value content of the good or the value of an intermediate material shall be the total cost that can reasonably be allocated to that intermediate material in accordance with the annex to article 6-04. 4. If a material designated as an intermediate material is subject to a regional value content, any other material of his own that manufacture is subject to a regional value content, used in the production of intermediate material that may itself be designated by the producer as an intermediate material. 5. Where there is a good referred to in paragraph 2 of Article 6 and 15 as an intermediate material, such designation shall only apply to the calculation of the net cost of the good; and the value of the non-originating materials shall be determined in accordance with paragraph 2 of Article 6 and 15.