19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 the extent that it is directly attributable to the goods under consideration. (6) In applying the Annex rules, a specific rule shall take precedence over a more general rule. (d) ANNEX RULES. (1) The President is authorized to proclaim, as a part of the Harmonized System, the rules set forth under the heading "Rules" in Annex 301.2 of the Agreement. For purposes of carrying out this paragraph (A) the phrase "headings 2207-2209” in paragraph 7 of section IV of such Annex 301.2 shall be treated as a reference to headings 22032209; and (B) the phrase "any other heading" in paragraph 11 of section XV in such Annex 301.2 shall be treated as a reference to any other heading of chapter 74 of the Harmonized System. (2) Subject to the consultation and lay-over requirements of section 103, the President is authorized to proclaim such modifications to the rules as may from time-to-time be agreed to by the United States and Canada. (e) AUTOMOTIVE PRODUCTS. 20 (1) The President is authorized to proclaim such lating to the administration of the Automotive Products Trade Act of 1965) in the general notes of the Harmo- (2) For purposes of administering the value re- content of vehicles of the same class, or of sister vehi- cles, assembled in the same plant as an alternative to the calculation of the value content of each vehicle. (f) DEFINITIONS.-For purposes of this section: (1) The term "Annex" means- (A) the interpretative guidelines set forth in subsection (c); and (B) the Annex rules. (2) The term "Annex rules" means the rules pro- claimed under subsection (d). (3) The term "direct cost of processing or direct in, or that can reasonably be allocated to, the produc- tion of goods, including- 21 (A) the cost of all labor, including benefits and on-the-job training, labor provided in connec tion with supervision, quality control, shipping, receiving, storage, packaging, management at the location of the process or assembly, and other like labor, whether provided by employees or independent contractors; (B) the cost of inspecting and testing the goods; (C) the cost of energy, fuel, dies, molds, tooling, and the depreciation and maintenance of ma chinery and equipment, without regard to whether they originate within the territory of a Party; costs; (D) development, design, and engineering (E) rent, mortgage interest, depreciation on buildings, property insurance premiums, maintenance, taxes and the cost of utilities for real property used in the production of goods; and (F) royalty, licensing, or other like payments for the right to the goods; but not including— (i) costs relating to the general expense of doing business, such as the cost of provid ing executive, financial, sales, advertising, 22 marketing, accounting and legal services, and insurance; (ii) brokerage charges relating to the importation and exportation of goods; (iii) the costs for telephone, mail, and other means of communication; (iv) packing costs for exporting the goods; (v) royalty payments related to a licensing agreement to distribute or sell the goods; (vi) rent, mortgage interest, depreciation on buildings, property insurance premiums, maintenance, taxes, and the cost of utilities for real property used by personnel charged with administrative functions; or (vii) profit on the goods. (4) The term "goods wholly obtained or produced in the territory of either Party or both Parties" means (A) mineral goods extracted in the territory of either Party or both Parties; (B) goods harvested in the territory of either Party or both Parties; (C) live animals born and raised in the terri tory of either Party or both Parties; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 (D) goods (fish, shellfish, and other marine life) taken from the sea by vessels registered or recorded with a Party and flying its flag; (E) goods produced on board factory ships from the goods referred to in subparagraph (D) provided such factory ships are registered or recorded with that Party and fly its flag; (F) goods taken by a Party or a person of a Party from the seabed or beneath the seabed outside territorial waters, provided that Party has rights to exploit such seabed; (G) goods taken from space, provided they are obtained by a Party or a person of a Party and not processed in a third country; (H) waste and scrap derived from manufacturing operations and used goods, provided they were collected in the territory of either Party or both Parties and are fit only for the recovery of raw materials; and (I) goods produced in the territory of either Party or both Parties exclusively from goods re ferred to in subparagraphs (A) to (H) inclusive or from their derivatives, at any stage of production. (5) The term "materials" means goods, other than those included as part of the direct cost of processing |