Title

Agreement between Japan and the Republic of the Philippines for an Economic Partnership 

Preamble

Preamble Japan and the Republic of the Philippines (hereinafter referred to in this Agreement as "the Philippines"),
Cognizant of their warm relations and strong economic and political ties, including shared perceptions on various issues, that have developed through many years of fruitful and mutually beneficial cooperation;
Recognizing that a dynamic and rapidly changing global environment brought about by globalization and technological progress presents many new economic and strategic challenges and opportunities to the Parties;
Acknowledging that encouraging innovation and competition and improving their attractiveness to capital and human resources can enhance their ability to respond to such new challenges and opportunities;
Recognizing that the economic partnership of the Parties would create larger and new markets, and would improve their economic efficiency and consumer welfare, enhancing the attractiveness and vibrancy of their markets, and expanding trade and investment not only between them but also in the region;
Reaffirming that such partnership will provide a useful framework for enhanced regulatory cooperation between the Parties to meet new challenges posed by emerging market developments and to improve their market infrastructure;
Recognizing the importance of the implementation of measures by the Governments of the Parties in accordance with their respective laws and regulations;
Bearing in mind their rights and obligations under other international agreements to which they are parties,in particular those of the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh, April 15,1994;
Recalling Article XXIV of the General Agreement on tariffs and Trade 1994 and Article V of the General Agreement on Trade in Services, respectively in Annex 1Aand Annex 1B to the above-mentioned Agreement; Reaffirming the importance of the multilateral trading system embodied by the World Trade Organization;
Recognizing the catalytic role which regional and bilateral trade agreements that are consistent with the rules of the World Trade Organization can play in accelerating global and regional trade and investment liberalization and rule-making;
Realizing that enhancing economic ties between the parties would strengthen Japan's involvement in Southeast Asia; Observing in particular that such ties would help catalyze trade and investment liberalization in Asia-Pacific;
Bearing in mind the Framework for Comprehensive Economic Partnership between Japan and the Association of Southeast Asian Nations, signed in Bali, Indonesia on October 8, 2003;
Convinced that stronger economic linkages between the Parties would provide greater opportunities, larger economies of scale and a more predictable environment for economic activities not only for Japanese and Philippine businesses but also for other businesses in Asia; and Determined to create a legal framework for an economic partnership between the Parties; HAVE AGREED as follows:

Body

Chapter 1. General Provisions

Article 1. Objectives

The objectives of this Agreement are to:
(a) liberalize and facilitate trade in goods and services between the Parties;
(b) facilitate the mutual recognition of the results of conformity assessment procedures for products or processes;
(c) increase investment opportunities and strengthen protection for investments and investment activities in the Parties;
(d) enhance protection of intellectual property and strengthen cooperation in the field thereof to promote trade and investment between the Parties; (e) promote transparency in government procurement in the Parties; 
(f) promote competition by addressing anticompetitive activities and cooperate in the field of competition;
(g) establish a framework for further bilateral cooperation and improvement of business environment;
(h) promote transparency in the implementation of laws and regulations respecting matters covered by this Agreement; and
(i) create effective procedures for the implementation and operation of this Agreement and for the resolution of disputes.

Article 2. General Definitions

For the purposes of this Agreement, unless otherwise specified:
(a) the term "Area" means: with respect to Japan, the territory of Japan, and the exclusive economic zone and the continental shelf with respect to which Japan exercises sovereign rights or jurisdiction in accordance with its laws and regulations and international law; and with respect to the Philippines, the national territory as defined in Article I of its Constitution. The term "national territory" also includes the exclusive economic zone and the continental shelf to which the Philippines exercises sovereign rights or jurisdiction in accordance with its laws and regulations and international law; Note: Nothing in this subparagraph shall affect the rights and obligations of the Parties under international law, including those under the United Nations Convention on the Law of the Sea.
(b) the term "existing" means in effect on the date of entry into force of this Agreement;
(c) the term "GATS" means the General Agreement on Trade in Services in Annex 1B to the Marrakesh Agreement Establishing the World Trade Organization;
(d) the term "GATT 1994" means the General Agreement on Tariffs and Trade 1994 in Annex 1A to the Marrakesh Agreement Establishing the World Trade Organization. For the purposes of this Agreement, references to articles in GATT 1994include the interpretative notes;
(e) the term "Harmonized System (HS)" means the Harmonized Commodity Description and Coding System set out in the Annex to the International Convention on the Harmonized Commodity Description and Coding System and adopted and implemented by the Parties in their respective domestic laws;
(f) the term "juridical person" means any legal entity duly constituted or otherwise organized under applicable law, whether for profit or otherwise, and whether privately-owned orgovernmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;
(g) the term "measure" means any measure by a Party,whether in the form of a law, regulation, rule,procedure, decision, administrative action or any other form;
(h) the term "person" means either a natural per sonor a juridical person; and
(i) the term "WTO Agreement" means the Marrakesh Agreement Establishing the World TradeOrganization.

Article 3. Transparency

1. Each Party shall promptly publish, or otherwise make publicly available, its laws, regulations, administrative procedures and administrative rulings and judicial decisions of general application as well as international agreements to which the Party is a party, respecting any matter covered by this Agreement.
2. Each Party shall make publicly available the names and addresses of competent authorities responsible for laws,regulations, administrative procedures and administrative rulings, referred to in paragraph 1 above (hereinafter referred to in this Chapter as "the competent authorities").
3. Each Party shall, upon request by the other Party, within a reasonable period of time, respond to specific questions from, and provide information to, the other Party, to the extent possible in English, with respect to matters referred to in paragraph 1 above.

Article 4. Review of Laws and Regulations

Each Party shall examine the possibility of amendingor repealing laws and regulations that pertain to or affectthe implementation and operation of this Agreement, if thecircumstances or objectives giving rise to their adoptionno longer exist or if such circumstances or objectives canbe addressed in a less trade-restrictive manner.

Article 5. Public Comment Procedures

The Government of each Party shall, in accordance withthe laws and regulations of the Party, endeavor to provide,except in cases of emergency or of purely minor nature, areasonable opportunity for comments by the public beforethe adoption, amendment or repeal of regulations of generalapplication that affect any matter covered by thisAgreement.

Article 6. Administrative Procedures

1. Where measures are to be adopted which pertain to or affect the implementation and operation of this Agreement,the competent authorities of a Party shall, in accordance with the laws and regulations of the Party:
(a) inform the applicant within a reasonable period of time of the decision concerning an application considered complete under the laws and regulations of the Party, taking into account the established standard period of time referred to in paragraph 3 below; and
(b) provide, without undue delay, information concerning the status of the application, at the request of the applicant.
2. The competent authorities shall, in accordance with the laws and regulations of the Party, establish standards for taking measures in response to submitted applications.The competent authorities shall:
(a) make such standards as specific as possible; and
(b) make such standards publicly available except when it would extraordinarily raise administrative difficulties for the Party.
3. The competent authorities shall, in accordance with the laws and regulations of the Party:
(a) endeavor to establish standard periods of time between receipt of applications by the competent authorities and measures taken in response to submitted applications; and
(b) make such periods of time publicly available, if it is established.
4. Where measures are to be adopted by the competent authorities which pertain to or affect the implementation and operation of this Agreement and which impose obligations on or restrict rights of a person, such competent authorities shall, prior to any final decision,when time, the nature of the measures and public interest permit and in accordance with the laws and regulations of the Party, provide that person with:
(a) a reasonable notice, including a description of the nature of the measure, specific provisions upon which such measure will be based, and the facts which may be a cause of taking such measure; and
(b) a reasonable opportunity to present facts and arguments in support of the position of such person.

Article 7. Review and Appeal

1. Each Party shall ensure that judicial remedies are available under its laws and regulations for the impartial and independent review and, where warranted, correction of actions taken by relevant authorities regarding matters covered by this Agreement.
2. Each Party shall ensure that the parties to any such judicial remedies are provided with the right to:
(a) a reasonable opportunity to support or defend their respective positions; and (b) a decision based on the evidence and submissions of record.
3. Each Party shall ensure, subject to appeal or further review as provided in its laws and regulations, that decisions referred to in paragraph 2(b) above with respect to the actions referred to in paragraph 1 above are implemented by the competent authorities.

Article 8. Measures Against Corruption

Each Party shall ensure that measures and efforts areundertaken to prevent and combat corruption regardingmatters covered by this Agreement in accordance with itslaws and regulations.

Article 9. Confidential Information

1. Unless otherwise provided for in this Agreement, nothing in this Agreement shall be construed to require a Party to provide confidential information, the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice legitimate commercial interests of particular juridical persons, public or private.
2. Each Party shall, in accordance with its laws and regulations, maintain the confidentiality of information provided as confidential by the other Party pursuant to this Agreement.

Article 10. Taxation

1. Except as otherwise provided for in this Agreement,nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of either Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency. Note: The term "tax convention" means a convention for the avoidance of double taxation.

Article 11. Relation to other Agreements

1. The Parties reaffirm their rights and obligations under the WTO Agreement or any other agreements to which both Parties are parties.
2. In the event of any inconsistency between this Agreement and the WTO Agreement, the WTO Agreement shallprevail to the extent of the inconsistency.
3. In the event of any inconsistency between this Agreement and the Treaty of Amity, Commerce and Navigation between Japan and the Republic of the Philippines, this Agreement shall prevail to the extent of the inconsistency.
4. In the event of any inconsistency between this Agreement and any agreements other than the WTO Agreement and the Treaty of Amity, Commerce and Navigation between Japan and the Republic of the Philippines, to which both Parties are parties, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution, taking into consideration general principles of international law.
5. In the event of an amendment of the agreements to which both Parties are parties and which are referred to in this Agreement, relevant principles of international law, including those in the Vienna Convention on the Law of Treaties, shall apply.
In the event of the amendment of the agreements referred to in this paragraph, the Parties may consult with each other as necessary.

Article 12. Implementing Agreement

The Governments of the Parties shall conclude a separate agreement setting forth the details and proceduresfor the implementation of this Agreement (hereinafterreferred to in this Agreement as "the ImplementingAgreement").

Article 13. Joint Committee

1. The Joint Committee composed of representatives of the Governments of the Parties shall be established under this Agreement.
2. The functions of the Joint Committee shall be:
(a) reviewing the implementation and operation of this Agreement and, when necessary, making appropriate recommendations to the Parties;
(b) considering and recommending to the Parties any amendments to this Agreement;
(c) supervising and coordinating the work of all Sub-Committees established under this Agreement;
(d) adopting;
(i) the Operational Procedures on Trade in Good sand Rules of Origin referred to in Article 25 and the Operational Procedures on Mutual Recognition referred to in Article 65;
(ii) the Rules of Procedure referred to in Article 159; and
(iii) any necessary decisions; and
(e) performing other functions as the Parties may agree.
3. The Joint Committee may:
(a) establish Sub-Committees and delegate its responsibilities thereto; and
(b) take such other action in the exercise of its functions as the Parties may agree.
4. The following Sub-Committees shall be established on the date of entry into force of this Agreement:
(a) Sub-Committee on Trade in Goods
(b) Sub-Committee on Rules of Origin
(c) Sub-Committee on Customs Procedures
(d) Sub-Committee on Mutual Recognition
(e) Sub-Committee on Trade in Services
(f) Sub-Committee on Investment
(g) Sub-Committee on Movement of Natural Persons
(h) Sub-Committee on Intellectual Property
(i) Sub-Committee on Government Procurement
(j) Sub-Committee on Improvement of the Business Environment
(k) Sub-Committee on Cooperation Other Sub-Committees may be established as the Parties may agree.
5. The details of the Sub-Committees may be specified in the Implementing Agreement.
6. The Joint Committee shall convene once a year alternately in Japan and the Philippines, unless the Parties agree otherwise.

Article 14. Communications

Each Party shall designate a contact point tofacilitate communications between the Parties on any matterrelating to this Agreement.

Chapter 2. Trade In Goods

Article 15. Definitions

For the purposes of this Chapter:
(a) the term "customs value of goods" means the value of goods for the purposes of levying ad valoremcustoms duties on imported goods; (b) the term "domestic industry" means the producers as a whole of the like or directly competitive goods operating in a Party, or those whose collective output of the like or directly competitive goods constitutes a major proportion of the total domestic production of those goods; (c) the term "emergency measure" means an emergency measure provided for in paragraph 1 of Article 22;
(d) the term "originating goods" means goods which qualify as originating goods under the provisions of Chapter 3;
(e) the term "other duties or charges" means those provided for in subparagraph 1(b) of Article IIof the GATT 1994;
(f) the term "provisional emergency measure" means a provisional emergency measure provided for insubparagraph 4(a) of Article 22;
(g) the term "serious injury" means a significant overall impairment in the position of a domesticindustry; and
(h) the term "threat of serious injury" means seriousinjury that, on the basis of facts and not merelyon allegation, conjecture or remote possibility,is clearly imminent.

Article 16. Classification of Goods

The classification of goods in trade between theParties shall be in conformity with the Harmonized System.

Article 17. National Treatment

Each Party shall accord national treatment to thegoods of the other Party in accordance with Article III ofthe GATT 1994.

Article 18. Elimination of Customs Duties

1. Except as otherwise provided for in this Agreement, each Party shall eliminate or reduce its customs duties on originating goods of the other Party designated for such purposes in its Schedule in Annex 1, in accordance with the terms and conditions set out in such Schedule.
2. On the request of either Party, the Parties shall negotiate on issues such as improving market access conditions on originating goods designated for negotiation in the Schedule in Annex 1, in accordance with the terms and conditions set out in such Schedule.
3. Each Party shall eliminate other duties or charges of any kind imposed on or in connection with the importation of originating goods of the other Party, customs duties of which shall be eliminated or reduced in accordance with paragraph 1 above, if any. Neither Party shall introduce other duties or charges of any kind imposed on or in connection with the importation of those originating goods of the other Party.
4. Nothing in this Article shall prevent a Party from imposing, at any time, on the importation of any goods of the other Party:
(a) a charge equivalent to an internal tax imposed consistently with the provisions of paragraph 2of Article III of the GATT 1994, in respect of the like domestic product or in respect of an article from which the imported product has been manufactured or produced in whole or in part;
(b) any anti-dumping or countervailing duty applied consistently with the provisions of Article VI of the GATT 1994, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 and the Agreement on Subsidies and Countervailing Measures in Annex 1A to the WTO Agreement respectively; and
(c) fees or other charges commensurate with the cost of services rendered.

Article 19. Customs Valuation

For the purposes of determining the customs value ofgoods traded between the Parties, provisions of Part I ofthe Agreement on Implementation of Article VII of theGeneral Agreement on Tariffs and Trade 1994 in Annex 1A tothe WTO Agreement (hereinafter referred to in thisAgreement as "the Agreement on Customs Valuation") shallapply mutatis mutandis.

Article 20. Export Duties

Each Party shall exert its best efforts to eliminateits duties on goods exported from the Party to the otherParty.

Article 21. Non-tariff Measures

Each Party shall not introduce or maintain any non-tariff measures on the importation of any good of the otherParty or on the exportation or sale for export of any gooddestined for the other Party which are inconsistent withits obligations under the WTO Agreement.

Article 22. Emergency Measures

1. Subject to the provisions of this Article, each Party may, as an emergency measure, to the minimum extent necessary to prevent or remedy the serious injury to a domestic industry of that Party and to facilitateadjustment:
(a) suspend the further reduction of any rate ofcustoms duty on the originating good provided forin this Chapter; or
(b) increase the rate of customs duty on theoriginating good to a level not to exceed thelesser of:
(i) the most-favored-nation applied rate ofcustoms duty in effect on the day when theemergency measure is taken; and
(ii) the most-favored-nation applied rate ofcustoms duty in effect on the dayimmediately preceding the date of entry intoforce of this Agreement; if an originating good of the other Party, as a result ofthe elimination or reduction of a customs duty inaccordance with Article 18, is being imported into theformer Party in such increased quantities, in absoluteterms or relative to domestic production, and under suchconditions that the imports of that originating goodconstitute a substantial cause of serious injury, or threatthereof, to a domestic industry of the former Party.
2. Each Party shall not apply emergency measures on anoriginating good imported up to the limit of quotaquantities granted under tariff rate quotas applied inaccordance with Schedule in Annex 1.
3. (a) A Party may take an emergency measure only after an investigation has been carried out by thecompetent authorities of that Party in accordancewith the procedures provided for in each Party'srelevant domestic laws and regulations that areconsistent with Article 3 and paragraph 2 ofArticle 4 of the Agreement on Safeguards in Annex1A to the WTO Agreement (hereinafter referred toin this Chapter as "the Agreement onSafeguards").
(b) The investigation referred to in subparagraph (a)above shall in all cases be completed within one (1) year following its date of initiation.
4. (a) In critical circumstances, where delay would cause damage which it would be difficult torepair, a Party may take a provisional emergencymeasure, which shall take the form of the measureset out in subparagraph 1(a) or (b) above,pursuant to a preliminary determination thatthere is clear evidence that increased imports ofan originating good have caused or arethreatening to cause serious injury to a domesticindustry.
(b) The Party shall deliver a written notice to theother Party prior to applying a provisionalemergency measure. Consultations between the Parties on the application of the provisionalemergency measure shall be initiated immediatelyafter the provisional emergency measure is taken.
(c) The duration of the provisional emergency measureshall not exceed two hundred (200) days. During that period, the pertinent requirements ofparagraph 3 above shall be met. The duration of the provisional emergency measure shall becounted as a part of the period referred to insubparagraph 5(e) below.
(d) Paragraph 2 and subparagraph 5(g) of this Articleshall be applied mutatis mutandis to the provisional emergency measure. The customs duty imposed as a result of the provisional emergencymeasure shall be refunded if the subsequentinvestigation referred to in subparagraph 3(a)above does not determine that increased importsof the originating good have caused or threatenedto cause serious injury to a domestic industry.
5. The following conditions and limitations shall applywith regard to an emergency measure:
(a) A Party shall immediately deliver a writtennotice to the other Party upon:
(i) initiating an investigation referred to insubparagraph 3(a) above relating to seriousinjury, or threat thereof, and the reasonsfor it; and (ii) taking a decision to apply or extend anemergency measure.
(b) The Party making the written notice referred toin subparagraph (a) above shall provide the otherParty with all pertinent information, which shallinclude:
(i) in the written notice referred to in subparagraph (a)(i) above, the reason forthe initiation of the investigation, aprecise description of the originating good subject to the investigation and its subheading of the Harmonized System, theperiod subject to the investigation and the date of initiation of the investigation; and
(ii) in the written notice referred to in subparagraph (a)(ii) above, evidence of serious injury or threat thereof caused by the increased imports of an originating good, a precise description of the originating good subject to the proposed emergency measure and its subheading of the Harmonized System, a precise description of the emergency measure, the proposed date of its introduction and its expected duration. (c) When the Party provides the other Party with pertinent information that includes confidential information, the other Party may only disclosenon-confidential part, summary or version there of to the public.
(d) A Party proposing to apply or extend an emergency measure shall provide adequate opportunity for prior consultations with the other Party with a view to reviewing the information arising from the investigation referred to in subparagraph3(a) above, exchanging views on the emergency measure and reaching an agreement on compensation set out in paragraph 6 below.
(e) No emergency measure shall be maintained except to the extent and for such period as may benecessary to prevent or remedy serious injury and to facilitate adjustment, provided that suchperiod shall not exceed three (3) years.However, in very exceptional circumstances, an emergency measure may be maintained for up to atotal maximum period of four (4) years. In order to facilitate adjustment in a situation where the expected duration of an emergency measure is over one (1) year, the Party maintaining the emergencymeasure shall progressively liberalize theemergency measure at regular intervals during theperiod of application.
(f) No emergency measure shall be applied again tothe import of a particular originating good whichhas been subject to such an emergency measure,for a period of time equal to the duration of theprevious emergency measure or one (1) year,whichever is longer.
(g) Upon the termination of an emergency measure, therate of customs duty shall be the rate whichwould have been in effect but for the emergencymeasure.
6. (a) A Party proposing to apply or extend an emergency measure shall provide to the other Party mutuallyagreed adequate means of trade compensation inthe form of concessions of customs duties whose levels are substantially equivalent to the valueof the additional customs duties expected toresult from the emergency measure.
(b) If the Parties are unable to agree on thecompensation within thirty (30) days after thecommencement of the consultations pursuant tosubparagraph 5(d) above, the Party against whoseoriginating good the emergency measure is takenshall be free to suspend the application ofconcessions of customs duties under this Agreement, which are substantially equivalent tothe emergency measure. The Party exercising the right of suspension may suspend the applicationof concessions of customs duties only for theminimum period necessary to achieve thesubstantially equivalent effects and only whilethe emergency measure is maintained.
(c) The right of suspension provided for insubparagraph (b) above shall not be exercised forthe first twelve (12) months that an emergencymeasure is in effect, provided that the emergencymeasure has been taken as a result of an absolute increase in imports and that such an emergencymeasure conforms to the provisions of thisArticle.
7. Written notice referred to in subparagraphs 4(b) and5(a) above and any other communication, including in theform of documents, between the Parties shall be made inEnglish.
8. Each Party shall ensure the consistent, impartial andreasonable administration of its laws and regulationsrelating to the emergency measure and the provisionalemergency measure.
9. Each Party shall ensure equitable, timely, transparentand effective procedures relating to the emergency measureand the provisional emergency measure.
10. Notwithstanding subparagraph 1(b) and 4(a) above, if adecision to apply an emergency measure or a preliminarydetermination to apply a provisional emergency measure istaken by the last day of the seventh year, each Party mayincrease the rate of customs duty on the originating goodup to the level of the rate of customs duty which isapplied on a non-discriminatory basis to the members of theWorld Trade Organization in effect on the day when theemergency measure or the provisional emergency measure istaken, provided that such an emergency measure or such a provisional emergency measure shall satisfy the conditionset out in subparagraph 1(b) above at the latest as fromthe first day of the eighth year. Note: For the purpose of this paragraph, the term "year"means, with respect to the first year, the periodfrom the date of entry into force of this Agreementuntil the coming March 31 and, with respect to eachsubsequent year, the period of twelve (12) monthswhich starts on April 1 of that year.
11. Each Party may take safeguard measures to theoriginating goods in accordance with:
(a) Article XIX of the GATT 1994 and the Agreement onSafeguards, provided that the originating good isthe subject of the concession of that Party underthe GATT 1994 and, by such a safeguard measure,that Party suspends the obligation of that Partyunder the GATT 1994 or withdraws or modifies the concession of that Party under the GATT 1994; or (b) Article 5 of the Agreement on Agriculture inAnnex 1A to the WTO Agreement (hereinafterreferred to in this Chapter as "the Agreement onAgriculture"), provided that the originating goodis the subject of the concession of that Partyunder the GATT 1994 and, by such a safeguardmeasure, that Party imposes the additional dutyunder Article 5 of the Agreement on Agriculture.
12. The Parties shall review the provisions of thisArticle, if necessary, after ten (10) years of the date ofentry into force of this Agreement.

Article 23. General and Security Exceptions

For the purposes of this Chapter, Article XX and XXIof the GATT 1994 respectively, shall apply mutatis mutandis.

Article 24. Restrictions to Safeguard the Balance of Payments

1. Nothing in this Chapter shall be construed to prevent a Party from taking any measure for balance-of-payments purposes. A Party taking such measure shall do so in accordance with the conditions established under Article XII and Section B of Article XVIII of the GATT 1994 and the Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994 in Annex 1A to the WTO Agreement.
2. Nothing in this Chapter shall preclude the use by a Party of exchange controls or exchange restrictions in accordance with the Articles of Agreement of the International Monetary Fund.

Article 25. Operational Procedures on Trade In Goods and Rules of Origin

Upon the date of entry into force of this Agreement,the Joint Committee shall adopt the Operational Procedureson Trade in Goods and Rules of Origin that provide detailedregulations pursuant to which the customs authorities, thecompetent governmental authorities defined in Article 28and the relevant authorities of the Parties shall implementtheir functions under this Chapter and Chapter 3.

Article 26. Sub-committee on Trade In Goods

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Trade in Goods (hereinafter referred to in this Article as "the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) reviewing the implementation and operation of this Chapter;
(b) reporting the findings of the Sub-Committee to the Joint Committee; and
(c) performing other functions which may be delegated by the Joint Committee pursuant to Article 13.
3. (a) The Sub-Committee shall establish a Special Sub-Committee on Iron and Steel Products and a Special Sub-Committee on Automobile and their Parts. The Sub-Committee may establish any other Special Sub-Committees, if necessary.
(b) The functions of the Special Sub-Committee shall be:
(i) analyzing relevant matters on the relevant goods and its sector, including trade in such goods;
(ii) reporting the findings of the Special Sub-Committees, through the Sub-Committee, to the Joint Committee;
(iii) with regard to the Special Sub-Committee on Iron and Steel Products, reviewing the issues related to implementation of tariff elimination commitment on Iron and Steel Products; and
(iv) with regard to the Special Sub-Committee on Automobile and their Parts, reviewing the issues related to implementation of tariff elimination commitment on Automobile and their Parts.
4. The Sub-Committee and the Special Sub-Committee shall be composed of representatives of the Governments of the Parties. The Sub-Committee and the Special Sub-Committeemay invite representatives of relevant entities other than the Governments of the Parties, including those from private sectors, with the necessary expertise relevant to the issues to be discussed.

Article 27. Cooperation In Relation to Export

The Parties shall cooperate with each other on theutilization of appropriate mechanism on the conformancewith the importing Party's safety and environmentalstandards, such as roadworthiness and vehicle emissionstandards, of used four-wheeled motor vehicles as may beagreed by the Parties, exported from the exporting Party.

Chapter 3. Rules of Origin

Article 28. Definitions

For the purposes of this Chapter:
(a) the term "competent governmental authority" means the authority that, according to the legislation of each Party, is responsible for the issuing of the certificate of origin or for the designation of the certification entities or bodies. In the case of Japan, the Ministry of Economy, Trade and Industry, and in the case of the Philippines, the Bureau of Customs;
(b) the term "customs authority" means the authority that, according to the legislation of each Party or non-Parties, is responsible for the administration and enforcement of its customs laws and regulations. In the case of Japan, the Ministry of Finance, and in the case of the Philippines, the Bureau of Customs;
(c) the term "exporter" means a person located in an exporting Party who exports a good from the exporting Party;
(d) the term "factory ships of the Party" and"vessels of the Party" respectively means factory ships and vessels:
(i) which are registered in the Party;
(ii) which sail under the flag of the Party;
(iii) which are owned to an extent of at least sixty (60) percent by nationals of the Party, or by a juridical person with its head office in the Party, of which there presentatives, chairman of the board of directors, and the majority of the members of such boards are nationals of the Party, and of which at least sixty (60) percent of the equity interest is owned by nationals or juridical persons of the Party;
(iv) of which the master and officers are all nationals of the Party; and
(v) of which at least seventy five (75) percent of the crew are nationals of the Party;
(e) the term "fungible originating goods of a Party"or "fungible originating materials of a Party"respectively means originating goods or materials of a Party that are interchangeable for commercial purposes, whose properties are essentially identical;
(f) the term "Generally Accepted Accounting Principles" means the recognized consensus or substantial authoritative support within a Party at a particular time as to which economic re sources and obligations should be recorded as assets and liabilities, which changes in assets and liabilities should be recorded, how the assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed, and which financial statements should be prepared. These standards may be broad guidelines of general application as well as detailed practices and procedures;
(g) the term "importer" means a person who imports a good into the importing Party;
(h) the term "indirect material" means a good used in the production, testing or inspection of another good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of another good, including:
(i) fuel and energy;
(ii) tools, dies and molds;
(iii) spare parts and goods used in the maintenance of equipment and buildings;
(iv) lubricants, greases, compounding materials and other goods used in production or used to operate equipment and buildings;
(v) gloves, glasses, footwear, clothing, safety
equipment and supplies;
(vi) equipment, devices and supplies used for testing or inspecting the good;
(vii) catalysts and solvents; and
(viii) any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be a part of that production;
(i) the term "material" means a good that is used in the production of another good;
(j) the term "originating material of a Party" means an originating good of a Party which is used in the production of another good in the Party, including that which is considered as an originating material of the Party pursuant to paragraph 1 of Article 30;
(k) the term "packing materials and containers for shipment" means goods that are used to protect a good during transportation, other than packaging materials and containers for retail sale referred to in Article 38;
(l) the term "preferential tariff treatment" means the rate of customs duties applicable to an originating good of the exporting Party in accordance with paragraph 1 of Article 18; and
(m) the term "production" means methods of obtaining goods including manufacturing, assembling, processing, raising, growing, breeding, mining, extracting, harvesting, fishing, trapping, gathering, collecting, hunting and capturing.

Article 29. Originating Goods

1. Except as otherwise provided for in this Chapter, a good shall qualify as an originating good of a Party where:
(a) the good is wholly obtained or produced entirely in the Party, as defined in paragraph 2 below;
(b) the good is produced entirely in the Party exclusively from originating materials of the Party; or
(c) the good satisfies the product specific rules setout in Annex 2, as well as all other applicable requirements of this Chapter, when the good is produced entirely in the Party using non-originating materials.
2. For the purposes of subparagraph 1(a) above, the following goods shall be considered as being wholly obtained or produced entirely in a Party:
(a) live animals born and raised in the Party;
(b) animals obtained by hunting, trapping, fishing, gathering or capturing in the Party;
(c) goods obtained from live animals in the Party;
(d) plants and plant products harvested, picked or gathered in the Party;
(e) minerals and other naturally occurring substances, not included in subparagraphs (a)through (d) above, extracted or taken in the Party;
(f) goods of sea-fishing and other goods taken by vessels of the Party from the sea outside the territorial sea of a Party;
(g) goods produced on board factory ships of the Party from the goods referred to in subparagraph (f) above;
(h) goods taken from the seabed or subsoil beneath the seabed outside the territorial sea of the Party, provided that the Party has rights over such seabed or subsoil in accordance with its laws and regulations and international law; Note: Nothing in this subparagraph shall affect the rights and obligations of the Parties under international law, including those under the United Nations Convention on the Law of the Sea.
(i) articles collected in the Party which can no longer perform their original purpose in the Party nor are capable of being restored or repaired and which are fit only for disposal or for the recovery of parts or raw materials;
(j) scrap and waste derived from manufacturing or processing operations or from consumption in the Party and fit only for disposal or for the recovery of raw materials;
(k) parts or raw materials recovered in the Party from articles which can no longer perform their original purpose nor are capable of being restored or repaired; and
(l) goods obtained or produced in the Party exclusively from the goods referred to in subparagraphs (a) through (k) above.
3. For the purposes of subparagraph 1(c) above, the product specific rules set out in Annex 2 requiring that the materials used undergo a change in tariff classification or a specific manufacturing or processing operation shall apply only to non-originating materials.
4. (a) For the purposes of subparagraph 1(c) above, the product specific rules set out in Annex 2 using the value-added method require that the qualifying value content of a good, calculated in accordance with subparagraph (b) below, is not less than the percentage specified by the rulefor the good.
(b) For the purposes of calculating the qualifying value content of a good, the following formula shall be applied: F.O.B. - V.N.M. Q.V.C. = --------------- × 100 F.O.B. Where: Q.V.C. is the qualifying value content of a good, expressed as a percentage; F.O.B. is, except as provided for in paragraph 5below, the free-on-board value of a good payable bythe buyer of the good to the seller of the good, regardless of the mode of shipment, not including any internal excise taxes reduced, exempted, or repaid when the good is exported; and V.N.M. is the value of non-originating materials used in the production of a good.
5. F.O.B. referred to in subparagraph 4(b) above shall be the value:
(a) adjusted to the first ascertainable price paid for the good from the buyer to the producer of the good, if there is free-on-board value of a good, but it is unknown and cannot be ascertained; or
(b) determined in accordance with Articles 1 through8 of the Agreement on Customs Valuation, if there is no free-on-board value of the good.
6. For the purposes of calculating the qualifying value content of a good under subparagraph 4(b) above, the value of a non-originating material used in the production of the good in a Party:
(a) shall be determined in accordance with the Agreement on Customs Valuation, and shall include freight, insurance where appropriate, packing and all the other costs incurred in transporting the material to the importation port in the Party where the producer of the good is located; or
(b) if such value is unknown and cannot be ascertained, shall be the first ascertainable price paid for the material in the Party, but may exclude all the costs incurred in the Party in transporting the material from the warehouse of the supplier of the material to the place where the producer is located such as freight, insurance and packing as well as any other known and ascertainable cost incurred in the Party.
7. For the purposes of calculating the qualifying value content of a good under subparagraph 4(b) above in determining whether the good qualifies as an originating good of a Party, V.N.M. of the good shall not include the value of non-originating materials used in the production of originating materials of the Party which are used in the production of the good.
8. For the purposes of subparagraph 5(b) or 6(a) above,in applying the Agreement on Customs Valuation to determine the value of a good or non-originating material, the Agreement on Customs Valuation shall apply mutatis mutandis to domestic transactions or to the cases where there is no transaction of the good or non-originating material.

Article 30. Accumulation

1. For the purposes of determining whether a good qualifies as an originating good of a Party, an originating good of the other Party which is used as a material in the production of the good in the former Party may be considered as an originating material of the former Party.
2. For the purposes of calculating the qualifying value content of a good under subparagraph 4(b) of Article 29 in determining whether the good qualifies as an originating good of a Party, the value of a non-originating material produced in either Party and to be used in the production of the good may be limited to the value of non-originatingmaterials used in the production of such non-originatingmaterial, provided that the good qualifies as an originating good of that Party under subparagraph 1(c) of Article 29.

Article 31. De Minimis

For the application of the product specific rules setout in Annex 2, non-originating materials used in theproduction of a good that do not satisfy an applicable rulefor the good shall be disregarded, provided that thetotality of such materials does not exceed specificpercentages in value, weight or volume of the good and suchpercentages are set out in the product specific rule forthe good.

Article 32. Non-qualifying Operations

A good shall not be considered to satisfy the requirement of change in tariff classification or specific manufacturing or processing operation set out in Annex 2merely by reason of:
(a) operations to ensure the preservation of products in good condition during transport and storage(such as drying, freezing, keeping in brine) and other similar operations;
(b) changes of packaging and breaking up and assembly of packages;
(c) disassembly;
(d) placing in bottles, cases, boxes and other simple packaging operations;
(e) collection of parts and components classified as a good pursuant to Rule 2(a) of the General Rules for the Interpretation of the Harmonized System;
(f) mere making-up of sets of articles; or
(g) any combination of operations referred to in subparagraphs (a) through (f) above.

Article 33. Consignment Criteria

1. An originating good of the other Party shall be deemed to meet the consignment criteria when it is:
(a) transported directly from the other Party; or
(b) transported through one or more non-Parties for the purpose of transit or temporary storage in warehouses in such non-Parties, provided that it does not undergo operations other than unloading, reloading or any other operation necessary to preserve it in good condition.
2. If the originating good of the other Party does not meet the consignment criteria referred to in paragraph 1above, that good shall not be considered as the originating good of the other Party.

Article 34. Unassembled or Disassembled Goods

1. Where a good satisfies the requirements of the relevant provisions of Articles 29 through 32 and is imported into a Party from the other Party in a disassembled form but is classified as an assembled good pursuant to Rule 2(a) of the General Rules for the Interpretation of the Harmonized System, such a good shall be considered as an originating good of the other Party.
2. A good assembled in a Party from unassembled or disassembled materials, which were imported into the Party and classified as an assembled good pursuant to Rule 2(a)of the General Rules for the Interpretation of the Harmonized System, shall be considered as the originating good of the Party, provided that the good would have satisfied the applicable requirements of the relevant provisions of Articles 29 through 32 had each of the non-originating materials among the unassembled or disassembled materials been imported into the Party separately and not as an unassembled or disassembled form.

Article 35. Fungible Goods and Materials

1. For the purposes of determining whether a good qualifies as an originating good of a Party, where fungible originating materials of the Party and fungible non-originating materials that are commingled in an inventory are used in the production of the good, the origin of the materials may be determined pursuant to an inventory management method set out in the Operational Procedures on Trade in Goods and Rules of Origin referred to in Article 25.
2. Where fungible originating goods of a Party and fungible non-originating goods are commingled in an inventory and, prior to exportation do not undergo any production process or any operation in the Party where they were commingled other than unloading, reloading or anyother operation necessary to preserve them in good condition, the origin of the good may be determined pursuant to an inventory management method set out in the Operational Procedures on Trade in Goods and Rules of Origin referred to in Article 25.
3. Once an inventory management method set out in paragraphs 1 and 2 above has been chosen, it shall be used through all the fiscal year or period.

Article 36. Indirect Materials

Indirect materials shall be, without regard to wherethey are produced, considered to be originating materialsof a Party where a good is produced.

Article 37. Accessories, Spare Parts and Tools

1. In determining whether all the non-originatingmaterials used in the production of a good undergo the applicable change in tariff classification or a specific manufacturing or processing operation set out in Annex 2,accessories, spare parts or tools delivered with the good that form part of the good's standard accessories, spare parts or tools, shall be disregarded, provided that:
(a) the accessories, spare parts or tools are not invoiced separately from the good, without regard of whether they are separately described in the invoice; and
(b) the quantities and value of the accessories, spare parts or tools are customary for the good.
2. If the good is subject to a qualifying value content requirement, the value of the accessories, spare parts or tools shall be taken into account as the value of originating materials of a Party where the good is produced or non-originating materials, as the case may be, in calculating the qualifying value content of the good.

Article 38. Packaging Materials and Containers for Retail Sale

1. In determining whether all the non-originatingmaterials used in the production of a good undergo the applicable change in tariff classification or a specific manufacturing or processing operation set out in Annex 2,packaging materials and containers for retail sale, whichare classified with the good pursuant to Rule 5 of the General Rules for the Interpretation of the Harmonized System, shall be disregarded.
2. If the good is subject to a qualifying value contentre quirement, the value of such packaging materials and containers for retail sale shall be taken into account as the value of originating materials of a Party where the good is produced or non-originating materials, as the case may be, in calculating the qualifying value content of the good.

Article 39. Packing Materials and Containers for Shipment

Packing materials and containers for shipment shall be:
(a) disregarded in determining whether all the non-originating materials used in the production of a good undergo the applicable change in tariff classification or a specific manufacturing or processing operation set out in Annex 2; and
(b) without regard to where they are produced, considered to be originating materials of a Party where the good is produced, in calculating the qualifying value content of the good.

Article 40. Claim for Preferential Tariff Treatment

1. The importing Party shall require a certificate of origin for an originating good of the exporting Party from importers who claim the preferential tariff treatment for the good.
2. Notwithstanding paragraph 1 above, the importing Party shall not require a certificate of origin from importers for:
(a) an importation of a consignment of originating goods of the exporting Party whose aggregate customs value does not exceed two hundred (200)United States dollars or its equivalent amount in the Party's currency, or such higher amount as it may establish; or
(b) an importation of an originating good of the exporting Party, for which the importing Party has waived the requirement for a certificate of origin.
3. Where an originating good of the exporting Party is imported through one or more non-Parties, the importing Party may require importers, who claim the preferential tariff treatment for the good, to submit:
(a) a copy of through bill of lading; or
(b) a certificate or any other information given by the customs authorities of such non-Parties or other relevant entities, which evidences that it has not undergone operations other than unloading, reloading or any other operation necessary to preserve it in good condition in those non-Parties.

Article 41. Certificate of Origin

1. The certificate of origin referred to in paragraph 1of Article 40 shall be issued by the competent governmental authority of the exporting Party on request having been made in writing by the exporter or its authorized agent.Such certificate of origin shall include minimum data specified in Annex 3.
2. For the purposes of this Article, the competent governmental authority of the exporting Party may designate other entities or bodies to be responsible for the issuance of the certificate of origin, under the authorization given in accordance with the applicable laws and regulations of the exporting Party.
3. Where the competent governmental authority of the exporting Party designates other entities or bodies to carry out the issuance of the certificate of origin, the exporting Party shall notify in writing the other Party of its designees.
4. For the purposes of this Chapter, upon the entry into force of this Agreement, the Parties shall establish a format of the certificate of origin in English in the Operational Procedures on Trade in Goods and Rules of Origin referred to in Article 25.
5. The certificate of origin shall be completed in English.
6. The issued certificate of origin shall be applicable to a single importation of an originating good of the exporting Party into the importing Party and be valid for 6months from the date of issuance or such longer period in accordance with that Party's laws and regulations.
7. Where the exporter is not the producer of a good, the exporter may request a certificate of origin on the basis of: (a) a declaration provided by the exporter to the competent governmental authority or its designees based on the information provided by the producer of the good to that exporter; or (b) a declaration voluntarily provided by the producer of the good directly to the competent governmental authority or its designees by the request of the exporter.
8. The certificate of origin shall be issued only after the exporter who requests a certificate of origin, or the producer of a good in the exporting Party referred to in subparagraph 7(b) above, proves to the competent governmental authority or its designees that the good to be exported qualifies as an originating good of the exporting Party.
9. The competent governmental authority of the exporting Party shall provide the other Party with specimen signatures and impressions of stamps used in the offices of the competent governmental authority or its designees.
10. Each Party shall ensure that the competent governmental authority or its designees shall keep a record of the certificates of origin issued for a period of five (5) years after the date on which the certificate was issued. Such record will include all antecedents, which were presented to prove the qualification as an originating good of the exporting Party.

Article 42. Obligations Regarding Exportations

1. Each Party shall, in accordance with its laws and regulations, ensure that the exporter to whom a certificate of origin has been issued, or the producer of a good in the exporting Party referred to in subparagraph 7(b) of Article41, shall notify in writing the competent governmental authority of the exporting Party or its designees without delay when he knows that such good does not qualify as an originating good of the exporting Party.
2. Each Party shall encourage that the exporter to whom a certificate of origin has been issued, or the producer of a good in the exporting Party referred to in subparagraph7(b) of Article 41, keep the records relating to the origin of a good for five (5) years after the date on which the certificate of origin was issued.

Article 43. Request for Checking of Certificate of Origin

1. For the purposes of determining whether a good imported from the other Party under preferential tariff treatment qualifies as an originating good of the other Party, the customs authority of the importing Party may request information relating to the origin of the good from the competent governmental authority of the exporting Party on the basis of a certificate of origin.
2. For the purposes of paragraph 1 above, the competent governmental authority of the exporting Party shall, in accordance with its laws and regulations, provide the information requested in a period not exceeding three (3)months after the date of the receipt of the request. If the customs authority of the importing Party considers necessary, it may require additional information relating to the origin of the good. If additional information is requested by the customs authority of the importing Party, the competent governmental authority of the exporting Party shall, in accordance with its laws and regulations, provide the information requested in a period not exceeding two (2) months after the date of the receipt of the request.
3. For the purposes of paragraph 2 above, the competent governmental authority of the exporting Party may request the exporter to whom a certificate of origin has been issued, or the producer of the good in the exporting Party referred to in subparagraph 7(b) of Article 41, to provide the former with the information requested.

Article 44. Verification Visit

1. If the customs authority of the importing Party is not satisfied with the outcome of the request for checking pursuant to Article 43, it may request the exporting Party to:
(a) collect and provide the information relating to the origin of the good and check, for that purpose, the facilities used in the production of the good, through a visit by its competent governmental authority along with the customs authority of the importing Party to the premises of the exporter to whom a certificate of origin has been issued, or the producer of the good in the exporting Party referred to in subparagraph7(b) of Article 41; and
(b) provide information relating to the origin of the good in the possession of the competent governmental authority or its designee.
2. (a) In cases where the customs authority of the importing Party considers as exceptional, that customs authority may, before or during the request for checking referred to in Article 43,put forward the exporting Party a request referred to in paragraph 1 above. (b) Where the request referred to in subparagraph (a)above is made, Article 43 shall not be applied.
3. When requesting the exporting Party to conduct a visit pursuant to paragraph 1 or 2 above, the importing Party shall deliver a written communication with such request to the exporting Party at least forty (40) days in advance of the proposed date of the visit, the receipt of which is to be confirmed by the latter Party. The competent governmental authority of the exporting Party shall request the written consent of the exporter, or the producer of the good in the exporting Party whose premises are to be visited.
4. The communication referred to in paragraph 3 above shall include:
(a) the identity of the customs authority issuing the communication;
(b) the name of the exporter, or the producer of the good in the exporting Party whose premises are requested to be visited;
(c) the proposed date and place of the visit;
(d) the object and scope of the proposed visit, including specific reference to the good subject of the verification referred to in the certificate of origin; and
(e) the names and titles of the officials of the customs authority of the importing Party to be present during the visit.
5. The exporting Party shall respond in writing to the importing Party, within thirty (30) days of the receipt of the communication referred to in paragraph 3 above, if it accepts or refuses to conduct a visit requested pursuant to paragraph 1 or 2 above. 6. The competent governmental authority of the exporting Party shall, in accordance with its laws and regulations, provide within forty five (45) days or any other mutually agreed period from the last day of the visit, to the customs authority of the importing Party the information obtained pursuant to paragraph 1 or 2 above.

Article 45. Determination of Origin and Preferential Tariff Treatment

1. The customs authority of the importing Party may deny preferential tariff treatment to a good for which an importer claims preferential tariff treatment where the good does not qualify as an originating good of the exporting Party or where the importer fails to comply with any of the relevant requirements of this Chapter.
2. The competent governmental authority of the exporting Party shall, when it cancels the decision to issue the certificate of origin, promptly notify the cancellation to the exporter to whom the certificate of origin has been issued, and to the customs authority of the importing Party except where the certificate has been returned to the competent governmental authority. The customs authority of the importing Party may determine that the good does not qualify as an originating good of the exporting Party and may deny preferential tariff treatment where it receives the notification.
3. The customs authority of the importing Party may determine that a good does not qualify as an originating good of the exporting Party and may deny preferential tariff treatment, and a written determination thereof shall be sent to the competent governmental authority of the exporting Party:
(a) where the competent governmental authority of the exporting Party fails to respond to the request within the period referred to in paragraph 2 of Article 43 or paragraph 6 of Article 44;
(b) where the exporting Party refuses to conduct a visit, or that Party fails to respond to the communication referred to in paragraph 3 of Article 44 within the period referred to in paragraph 5 of Article 44; or
(c) where the information provided to the customs authority of the importing Party pursuant to Article 43 or 44, is not sufficient to prove that the good qualifies as an originating good of the exporting Party.
4. After carrying out the procedures outlined in Article43 or 44 as the case may be, the customs authority of the importing Party shall provide the competent governmental authority of the exporting Party with a written determination of whether or not the good qualifies as an originating good of the exporting Party, including findings of fact and the legal basis for the determination. The competent governmental authority of the exporting Party shall inform such determination by the customs authority of the importing Party to the exporter, or the producer of the good in the exporting Party, whose premises were subject to the visit referred to in Article 44.

Article 46. Confidentiality

1. Each Party shall maintain, in accordance with its laws and regulations, the confidentiality of information provided to it as confidential pursuant to this Chapter,and shall protect, in accordance with its laws and regulations, that information from disclosure that could prejudice the competitive position of the persons providing the information.
2. Information obtained by the customs authority of the importing Party pursuant to this Chapter:
(a) may only be used by such authority for the purposes of this Chapter; and
(b) shall not be used by the importing Party in any criminal proceedings carried out by a court or a judge, unless the information is requested to the other Party and provided to the former Party, through the diplomatic channels or other channels established in accordance with the applicable laws of the requested Party.

Article 47. Penalties, Sanctions or other Measures

Each Party shall ensure, in accordance with its laws and regulations, that appropriate penalties, sanctions or other measures are maintained or established against its exporters to whom a certificate of origin has been issued and its producers of the goods in the exporting Party referred to in subparagraph 7(b) of Article 41:
(a) for providing false declaration or documents to its competent governmental authority or its designees prior to the issuance of certificate of origin; and
(b) for failing to notify in writing to the competent governmental authority of the exporting Party or its designees without delay after having known that such good does not qualify as an originating good of the exporting Party.

Article 48. Miscellaneous

1. Communications, including in the form of documents, between the importing Party and the exporting Party shall be made in English.
2. For the application of the relevant product specific rules set out in Annex 2 and the determination of origin, the Generally Accepted Accounting Principles in the exporting Party shall be applied.

Article 49. Sub-committee on Rules of Origin

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Rules of Origin (hereinafter referred to in this Article as "the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) reviewing and making appropriate recommendations, as needed, to the Joint Committee on:
(i) the implementation and operation of this Chapter;
(ii) any amendments to Annexes 2 and 3, proposed by either Party; and
(iii) the Operational Procedures on Trade in Goods and Rules of Origin referred to in Article 25;
(b) considering any other matter as the Parties may agree related to this Chapter;
(c) reporting the findings of the Sub-Committee to the Joint Committee; and
(d) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.

Chapter 4. Customs Procedures

Article 50. Scope and Coverage

1. This Chapter shall apply to customs proceduresrequired for the clearance of goods traded between theParties.
2. This Chapter shall be implemented by the Parties inaccordance with the laws and regulations in force in eachParty and within the available resources of theirrespective customs authorities.

Article 51. Definitions

For the purposes of this Chapter:
(a) the term "customs authority" means the customs authority as defined in subparagraph (b) of Article 28; and
(b) the term "customs laws" means such laws and regulations administered and enforced by the customs authority of each Party concerning the importation, exportation, and transit of goods, as they relate to customs duties, charges, and other taxes, or to prohibitions, restrictions, and other similar controls with respect to the movement of controlled items across the boundary of the customs territory of each Party.

Article 52. Transparency

1. Each Party shall ensure that all relevant information of general application pertaining to its customs laws is readily available to any interested person.
2. When information that has been made available must be amended due to changes in its customs laws, each Party shall, wherever possible, continue to make the revised information publicly available prior to the entry into force of the changes.
3. At the request of the interested person, each Party shall provide, as quickly and as accurately as possible, information relating to the specific matters raised by the interested person and pertaining to its customs laws. Each Party shall supply not only the information specifically requested but also any other pertinent information which it considers the interested person should be made aware of. Each Party shall endeavor to provide such information in language mutually understandable within its available resources.

Article 53. Customs Clearance

1. Both Parties shall make cooperative efforts for simplification and harmonization of their customs procedures by observing the following principles:
(a) the application of customs procedures in a predictable, consistent and transparent manner;
(b) cooperation wherever appropriate with other national authorities, customs authorities of non-Parties and the trading communities; and
(c) the provision to affected parties of easily accessible processes of administrative and judicial review.
2. For the accomplishment of the purpose of paragraph 1above, each Party shall:
(a) make use of information and communications technology;
(b) reduce and simplify import and export documentation requirements; and
(c) harmonize its customs procedures, as far as possible, with relevant international standards and recommended practices such as those made under the auspices of the World Customs Organization.

Article 54. Goods In Transit

Each Party shall continue to facilitate customs clearance of goods in transit from or to the other Party in accordance with paragraph 3 of Article V of the GATT 1994.

Article 55. Cooperation and Exchange of Information

1. The Parties shall cooperate and exchange information with each other, in the fields of customs procedures, including their enforcement against trafficking of prohibited goods and importation and exportation of goods suspected of infringing intellectual property rights.
2. For the effective implementation of paragraph 1 above, the Parties shall cooperate and exchange information, as provided for in the Implementing Agreement.
3. Article 9 shall not apply to the exchange of information under this Article.

Article 56. Sub-committee on Customs Procedures

1. For the purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Customs Procedures (hereinafter referred to in this Article as "the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) reviewing the implementation and operation of this Chapter;
(b) reporting the findings of the Sub-Committee to the Joint Committee;
(c) identifying areas to be improved for facilitating trade between the Parties; and
(d) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.
3. The composition of the Sub-Committee shall be specified in the Implementing Agreement.
4. The Sub-Committee shall meet at such venue and times as may be agreed by the Parties.

Chapter 5. Paperless Trading

Article 57. Cooperation on Paperless Trading between the Parties

The Parties, recognizing that trading using electronic filing and transfer of trade-related information and electronic versions of documents such as bills of lading, invoices, letters of credit and insurance certificates, as an alternative to paper-based methods (hereinafter referred to in this Chapter as "paperless trading"), will significantly enhance the efficiency of trade through reduction of cost and time, shall cooperate through the exchange of views and information on realizing and promoting paperless trading between them.

Article 58. Cooperation on Paperless Trading between Private Entities

The Parties shall encourage cooperation between the irrelevant private entities engaging in activities related top aperless trading. Such cooperation may include the setting up and operation by such private entities of facilities (hereinafter referred to in this Chapter as "the facilities") that provide efficient and secured flow of electronic trade-related information and electronic versions of documents between juridical persons of the Parties.

Article 59. Review of Realization of Paperless Trading

The Parties shall review, at such frequency as the Parties may agree on, the progress made in realizing paperless trading in which electronic trade-related information and electronic versions of relevant documents exchanged between enterprises of the Parties through the facilities may be used as supporting documents by the trade regulatory bodies of the respective Parties.

Chapter 6. Mutual Recognition

Article 60. General Obligations

1. Each Party shall, in accordance with the provisions of this Chapter, permit participation of conformity assessment bodies of the other Party, in the system of the former Party providing for conformity assessment procedures and shall accept the results of conformity assessment procedures required by its applicable laws, regulations and administrative provisions specified in the relevant Sectoral Annex, including certificates of conformity, that are conducted by the conformity assessment bodies of the other Party registered by the Registering Authority of the former Party.
2. Where a license is required by a Party in addition to certificates of conformity referred to in paragraph 1above, for using marks of conformity, such license shall be issued immediately and unconditionally upon submission of application for a license so as not to be used as a means of avoiding obligations referred to in paragraph 1 above.

Article 61. Scope and Coverage

1. This Chapter applies to registration of conformity assessment bodies and conformity assessment procedures for products or processes covered by the Sectoral Annex. The Sectoral Annex shall be attached to this Agreement as Annex4 and may consist of Part 1 and Part 2.
2. Part 1 of the Sectoral Annex shall include, inter alia, provisions on scope and coverage.
3. Part 2 of the Sectoral Annex shall set out the following matters:
(a) the applicable laws, regulations and administrative provisions of each Party stipulating the products covered by this Chapter;
(b) the applicable laws, regulations and administrative provisions of each Party stipulating the technical requirements covered by this Chapter and the conformity assessment procedures covered by this Chapter to satisfy such requirements;
(c) the applicable laws, regulations and administrative provisions of each Party stipulating the criteria for registration of conformity assessment bodies; and
(d) the list of Registering Authorities.

Article 62. Definitions

1. For the purposes of this Chapter:
(a) the term "certificates of conformity" means documents issued by registered or accredited conformity assessment bodies as a result of conformity assessment procedures, stating that products or processes fulfill relevant technical requirements set out in the applicable laws,regulations and administrative provisions of a Party specified in the relevant Sectoral Annex;
(b) the term "conformity assessment bodies" means bodies which conduct conformity assessment procedures;
(c) the term "conformity assessment bodies of the other Party" means conformity assessment bodies located in the other Party;
(d) the term "conformity assessment procedures" means procedures to determine, directly or indirectly,whether products or processes fulfill relevant technical requirements set out in the applicable laws, regulations and administrative provisions of a Party specified in the relevant Sectoral Annex;
(e) the term "criteria for registration" means the criteria which conformity assessment bodies of a Party are required to fulfill in order to be registered or accredited by the Registering Authority of the other Party, and other relevant conditions which conformity assessment bodies registered or accredited by the Registering Authority of the other Party are required to continuously fulfill after the registration or accreditation, as set out in the applicable laws,regulations and administrative provisions of that other Party specified in the relevant Sectoral Annex;
(f) the term "entities of the other Party" means entities located in the other Party;
(g) the term "Registering Authority" means an authority of a Party which is authorized to register or accredit the conformity assessment bodies of the other Party and withdraw such registration or accreditation in accordance with the applicable laws, regulations and administrative provisions of the former Party specified in the relevant Sectoral Annex; and
(h) the term "registration" means the registration or accreditation of conformity assessment bodies of a Party by the Registering Authority of the other Party pursuant to the applicable laws,regulations and administrative provisions of that other Party specified in the relevant Sectoral Annex.
2. Any term used in this Chapter, unless otherwise defined herein, has the meaning assigned to it in the ISO/IEC Guide 2: 1996 Edition, "Standardization and related activities – General vocabulary".

Article 63. Registration and Withdrawal of Registration of Conformity Assessment Bodies

1. (a) The Registering Authority of a Party shall register the conformity assessment bodies of the other Party in accordance with the applicable laws, regulations and administrative provisions of the former Party specified in the relevant Sectoral Annex, where the conformity assessment bodies which apply for registration fulfill the criteria for registration of the former Party set out in its applicable laws, regulations and administrative provisions specified in the relevant Sectoral Annex.
(b) The Registering Authority of a Party may withdraw the registration of the conformity assessment bodies of the other Party, where the conformity assessment bodies no longer fulfill the criteria for registration of the former Party set out inits applicable laws, regulations and administrative provisions specified in the relevant Sectoral Annex.
2. (a) For the purposes of confirming the fulfillment of the criteria for registration by conformity assessment bodies of the other Party, the Registering Authority of a Party may:
(i) make inquiries by means of written questionnaires to the conformity assessment bodies of the other Party or during the visit referred to in subparagraph (ii)below;
(ii) conduct visit on the premises of the conformity assessment bodies of the other Party on the condition that such other Party do not object to such visit and the conformity assessment bodies concerned give consent to such visit and, if such other Party so requests, officials of the Registering Authority of such other Party join the visit; and
(iii) have its officials to accompany conformity assessment bodies of the other Party applying for registration as an observer where those bodies carry out, as part of the conformity assessment procedures, conformity assessment activities at the premises of entities of the other Party subject to such activities on the condition that such other Party do not object to such accompaniment and the entities and conformity assessment bodies concerned give consent to such accompaniment and, if such other Party so requests, officials of the Registering Authority of such other Party join the accompaniment. Note: If no objection is communicated to the Registering Authority concerned within ten (10) days or a period specified by such Registering Authority, whichever is longer, from the receipt of the request for the visit or the accompaniment, as the case may be, it shall be understood that no objection was made.
(b) The Registering Authority of a Party shall immediately communicate to the other Party whenever it sends questionnaires referred to in subparagraph (a)(i) above.
(c) The visit and accompaniment referred to in subparagraphs (a)(ii) and (a)(iii) above respectively shall be carried out in a manner not inconsistent with the laws and regulations of the Party where the visit and accompaniment take place. (d) The Party shall use the information obtained by its Registering Authority in connection with such inquiries, visit or accompaniment as an observer only for the purposes referred to in subparagraph (a) above.
3. The Registering Authority of a Party may withdraw the registration of the conformity assessment bodies of the other Party, where the inquiries specified in subparagraph 2(a)(i) above are not responded to without valid reasons or are responded to falsely, or the other Party object to the visit or the conformity assessment bodies concerned do not give consent referred to in subparagraph 2(a)(ii) above, or the visit specified in subparagraph 2(a)(ii) above is refused, obstructed or evaded.

Article 64. Sub-committee on Mutual Recognition

1. For purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Mutual Recognition (hereinafter referred to in this Article as"the Sub-Committee") shall be established pursuant to Article 13.
2. The functions of the Sub-Committee shall be:
(a) exchanging information on standards and conformity assessment procedures;
(b) reviewing the implementation and operation of this Chapter;
(c) examining the possibility of negotiating on additional products or processes for mutual recognition;
(d) discussing any issues related to this Chapter,including ways to promote cooperation on standards and conformity assessment procedures between the Parties in view of the effective implementation and operation of this Chapter;
(e) reporting the findings of the Sub-Committee to the Joint Committee; and
(f) performing other functions as may be delegated by the Joint Committee pursuant to Article 13.

Article 65. Operational Procedures on Mutual Recognition

Upon the date of entry into force of this Agreement,the Joint Committee shall adopt the Operational Procedures on Mutual Recognition that provide detailed regulations pursuant to which the Registering Authorities shall implement their functions under this Chapter.

Article 66. General Exceptions

Nothing in this Chapter shall be construed to limit the authority of a Party to take measures it considers appropriate, for protecting health, safety or the environment or prevention of deceptive practices.

Article 67. Miscellaneous Provisions

1. Nothing in this Chapter shall be construed to authorize a Party to take compulsory measures against the conformity assessment bodies of the other Party or entities of the other Party subject to conformity assessment procedures, or against their representatives, employees and other personnel. It is confirmed that each Party shall not impose any criminal, civil or administrative penalty on the conformity assessment bodies of the other Party or entities of the other Party subject to conformity assessment procedures, or on their representatives, employees and other personnel in connection with this Chapter.
2. Nothing in this Chapter shall be construed so as to oblige a Party to accept the standards of the other Party.
3. Nothing in this Chapter shall be construed so as to affect the rights and obligations that either Party has as a party to the Agreement on Technical Barriers to Trade in Annex 1 A to the WTO Agreement.

Article 68. Confidentiality

1. Each Party shall maintain, in accordance with its laws and regulations, the confidentiality of information provided to it as confidential pursuant to this Chapter and shall protect that information from disclosure that could prejudice the competitive position of the persons providing the information.
2. Information obtained pursuant to this Chapter shall not be used by a Party in any criminal proceedings carried out by a court or a judge, unless the information is requested to the other Party and provided to the former Party, through the diplomatic channels or other channels established in accordance with the applicable laws of the requested Party.

Article 69. Sectoral Annex

If a Party introduces new or additional conformity assessment procedures within the same product coverage to satisfy the technical requirements set out in the applicable laws, regulations and administrative provisions specified in the relevant Sectoral Annex, Part 2 of the Sectoral Annex shall be amended to set out the applicable laws, regulations and administrative provisions stipulating such new or additional conformity assessment procedures, in accordance with the procedures set out in paragraph 2 of Article 163.

Chapter 7. Trade In Services