USMCA Calculating the High-Wage Assembly Expenditures Credit
Section 810.300 High-Wage Assembly Expenditures Credit
This section describes the requirements for calculating the high-wage assembly expenditures credit, the third high-wage component of the LVC requirements. Consistent with Article 7 of the Automotive Appendix, § 810.300(a) explains that a producer may receive a credit of five percent towards the total LVC requirement if it demonstrates that it operates, or has a long term contract with, a qualified assembly plant. An assembly plant qualifies a producer for the high-wage assembly expenditures credit if it is a North American high-wage engine assembly plant, transmission assembly plant, or advanced battery assembly plant that meets certain minimum annual production capacity requirements. Five percent is the only possible assembly expenditures credit that producers may receive; producers may not receive a credit of less than five percent if they qualify for the high-wage assembly expenditures credit and may not receive a credit of greater than five percent if they identify more than one qualified assembly plant.
Subsections 810.300(a)(1)-(3) explain the three types of assembly plants that may qualify a producer for the high-wage assembly expenditures credit. Qualified assembly plants may be engine, transmission, or advanced battery assembly plants, must be “high-wage,” and must meet certain levels of minimum annual production capacities of originating parts. As detailed in § 810.300(c), these minimum annual production capacity levels are set forth in Article 7 of the Automotive Appendix and in the Uniform Regulations. The required minimum annual production capacity levels are not included in this section because they are outside of the Department’s authority and are instead within CBP’s purview. Thus, producers should consult the Uniform Regulations and CBP guidance to ensure that relevant assembly plants meet the required minimum annual production capacity levels required for the producer to qualify for the high-wage assembly expenditures credit.
Subsection 810.300(b) further explains that in order to be considered “high-wage” for purposes of the high-wage assembly expenditures credit, an assembly plant must have an average hourly base wage rate of at least US$16 per hour for the entire plant. This requirement is consistent with Article 7 of the Automotive Appendix, which requires an assembly plant to have an average production wage of at least US$16 per hour to qualify for the high-wage assembly expenditures credit. To ensure consistency across calculations for the LVC requirements, the average production wage for the high-wage assembly expenditures credit is determined by calculating the average hourly base wage rate in the same manner as for the high-wage material and manufacturing expenditures credit, as detailed in § 810.105.
Subsection 810.300(d) clarifies that the definition of “long term contract” for purposes of this section is set forth in the Uniform Regulations. See Uniform Regulations, Part IV, Sec. 18, ¶¶ 12-14.
Subsection 810.300(e) allows a producer to use an assembly plant that it relied on to satisfy the high-wage material and manufacturing expenditures component of the LVC requirement to also qualify for the high-wage assembly expenditures credit if that assembly plant meets the requirements of § 810.300(a). The Department recognizes that an assembly plant used by a producer to meet the high-wage material and manufacturing expenditures component could also be a qualified plant for purposes of the high-wage assembly expenditures component. Therefore, this section permits producers to use the same plant for both high-wage components if all requirements are met.
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