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Also known as the absorption principle or intermediate materials provision.
Once a part or intermediate material obtains originating status under an FTA, it is considered to be 100% originating when used for further processing even if inputs used for the production of this part or intermediate material were not originating. Once the originating status is obtained, the non-originating inputs are fully absorbed and not taken into account. In other words, the value of non-originating materials used in the production of the good will be disregarded once this good obtains originating status.
Example:
Part A is made of non-originating materials. The rule of origin for this part requires a change in tariff classification (CTC rule). The rule of origin is met and part A is considered originating. It is then used to manufacture the final product B which will be exported to an FTA partner. The rule of origin for the final product B requires non-originating materials not to exceed 40% of the value of the product (VA rule). For the calculation of regional value content part A is treated as 100% originating based on the roll-up principle as all the non-originating materials used to produce it were absorbed once part A obtained originating status.
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