Title
FREE TRADE AGREEMENT BETWEEN THE UNITED MEXICAN STATES AND THE REPUBLICS OF COSTA RICA, EL SALVADOR, GUATEMALA, HONDURAS AND NICARAGUA
Preamble
The Government of the United Mexican States (hereinafter "Mexico") and the Governments of the Republics of Costa Rica (hereinafter "Costa Rica"), El Salvador (hereinafter "El Salvador"), Guatemala (hereinafter "Guatemala"), Honduras (hereinafter "Honduras") and Nicaragua (hereinafter "Nicaragua"),
DECIDED TO:
STRENGTHEN the special bonds of friendship, solidarity and cooperation among their peoples;
TO REACH a better balance in their trade relations, through clear and mutually beneficial rules for their commercial exchange;
CONTRIBUTE to harmonious development, the expansion of world trade and the broadening of international cooperation;
PROPOSE a larger and more secure market for goods and services produced in their respective territories while recognizing the differences in their levels of development and the size of their economies;
CONTRIBUTE to the competitiveness of the service sector by creating business opportunities in the free trade zone;
ENSURE a predictable business framework for planning productive activities and investment;
DEVELOP their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organization, as well as other bilateral and multilateral integration and cooperation instruments;
PROMOTE trade facilitation by promoting efficient and transparent customs procedures that reduce costs and ensure predictability for importers and exporters;
STRENGTHEN the competitiveness of its companies in global markets;
STIMULATE creativity and innovation by promoting trade in goods and services protected by intellectual property rights;
RECOGNIZE the importance of transparency in international trade;
PROMOTE new opportunities for the economic and social development of their states;
PRESERVE its ability to safeguard the public welfare;
RECOGNIZE this Treaty as a tool that can contribute to improving living standards, creating new job opportunities and promoting sustainable development;
REAFFIRM regional economic integration, which is one of the essential instruments for Central America and Mexico to advance in their economic and social development; and
CONVERGE the free trade agreements in force between Central America and Mexico, in order to establish a single regulatory framework to facilitate trade between the Parties and adapt the provisions that regulate their commercial exchange;
HAVE AGREED AS FOLLOWS:
Body
Chapter I. Initial Provisions
Article 1.1. Establishment of the Free Trade Area
The Parties establish a free trade area in accordance with Article XXIV of GATT 1994 and Article V of GATS.
Article 1.2. Objectives
1. The objectives of this Treaty, developed more specifically through its principles and rules, including those of national treatment, most-favored-nation treatment and transparency, are as follows:
(a) stimulate the expansion and diversification of trade in goods and services between the Parties;
(b) promote conditions of fair competition within the free trade zone;
(c) eliminate barriers to trade and facilitate the movement of goods and services between the Parties;
(d) facilitate the movement of capital and business persons between the territories of the Parties;
(e) increase investment opportunities in the territories of the Parties;
(f) adequately and effectively protect and enforce intellectual property rights in the territory of each Party;
(g) establish guidelines for bilateral, regional and multilateral cooperation aimed at extending and enhancing the benefits of this Agreement; and
(h) create effective procedures for the implementation and enforcement of this Agreement, for its joint administration and for the settlement of disputes.
2. The Parties shall interpret and apply the provisions of this Agreement in the light of the objectives set forth in paragraph 1 and in accordance with the applicable rules of international law.
Article 1.3. Relationship to other International Treaties
1. The Parties confirm the rights and obligations existing between them under the WTO Agreement and other treaties to which they are party.
2. In case of incompatibility between the provisions of the treaties referred to in paragraph 1 and the provisions of this Treaty, the latter shall prevail to the extent of the incompatibility.
Article 1.4. Scope of Application
Except as otherwise provided herein, the provisions of this Agreement apply between Mexico and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, considered individually. This Agreement does not apply between Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.
Article 1.5. Enforcement of the Treaty
Each Party shall ensure, in accordance with its constitutional requirements, compliance with the provisions of this Agreement in its territory, at the federal or central, state or departmental and municipal levels, as appropriate, except as otherwise provided in this Agreement. Article 1.6: Succession of Treaties
Any reference to any other international treaty shall be understood to be made in the same terms to a successor treaty to which the Parties are parties.
Chapter II. General Definitions
Article 2.1. Definitions of General Application
For the purposes of this Agreement, unless otherwise provided, the following definitions shall apply:
Antidumping Agreement: the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
Customs Valuation Agreement: the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, including its interpretative notes, which forms part of the WTO Agreement;
SPS Agreement: the Agreement on the Application of Sanitary and Phytosanitary Measures, which is part of the WTO Agreement;
TBT Agreement: the Agreement on Technical Barriers to Trade, which is part of the WTO Agreement;
Agreement on Agriculture: the Agreement on Agriculture, which is part of the WTO Agreement;
WTO Agreement: the Marrakesh Agreement Establishing the World Trade Organization, dated April 15, 1994;
TRIPS Agreement: the Agreement on Trade-Related Aspects of Intellectual Property Rights, which is part of the WTO Agreement;
Agreement on Safeguards: the Agreement on Safeguards, which is part of the WTO Agreement;
Agreement on Subsidies and Countervailing Measures: the Agreement on Subsidies and Countervailing Measures, which is part of the WTO Agreement;
GATS: the General Agreement on Trade in Services, which is part of the WTO Agreement;
customs duty: any import tax or duty and a charge of any kind applied in connection
with the importation of goods, including any form of surcharge or additional charge on imports, except any:
(a) charge equivalent to an internal tax established in accordance with Article IIIl:2 of the GATT 1994, with respect to like, directly competitive, or substitute goods of the Party, or with respect to goods from which the imported good has been manufactured or produced, in whole or in part, the imported good;
(6) antidumping duty or countervailing measure that is applied in accordance with a Party's domestic law;
(c) duty or other charge related to the importation, proportional to the cost of the services rendered; and
(d) any premium offered or collected on imported goods, derived from any bidding system, with respect to the administration of quotas or contingents;
MFN customs tariff: the Most Favored Nation customs tariff;
Central America: the Republics of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua;
Management Committee: the Management Committee established in accordance with Article 19.1 (Management Committee);
days: calendar days; enterprise: an entity incorporated or organized under applicable law, whether or not for profit and whether privately or governmentally owned, including companies, foundations, partnerships, trusts, participations, sole proprietorships, joint ventures or other associations;
State enterprise: an enterprise that is owned or controlled by a Party through equity participation;
enterprise of a Party: an enterprise incorporated or organized under the domestic law of a Party;
existing: in force at the entry into force of this Treaty;
tariff item: the breakdown of a Harmonized System tariff classification code to more than 6 digits;
GATT 1994: the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
government at the central level:
(a) in the case of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, the national government; and
(b) In the case of Mexico, the government at the federal level;
government at the local level:
(a) in the case of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, the municipalities; and
(b) for the case of Mexico, the municipalities; government at the regional level:
(a) for Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, "government at the regional level" does not apply;
(b) in the case of Mexico, a state of the United Mexican States.
measure: any law, regulation, procedure, provision, requirement or administrative practice, among others;
commodity: products or goods as understood in GATT 1994, whether originating or not;
goods of a Party: domestic products as understood in the GATT 1994, such goods as the Parties may agree, and includes originating goods. A good of a Party may incorporate materials from another Party and non-Party States;
originating good or originating material: a good or material that qualifies as originating in accordance with the provisions of Chapter IV (Rules of Origin);
national: a natural person who has the nationality of a Party in accordance with its applicable legislation;
Party: any State with respect to which this Agreement has entered into force; Exporting Party: the Party from whose territory a good or service is exported;
Importing Party: the Party into whose territory a good or service is imported;
heading: the first 4 digits of the Harmonized System tariff classification code; person: a natural or natural person, or a company;
person of a Party: a national or company of a Party;
Tariff Treatment Program: the one established in Article 3.4 (Tariff Treatment); Harmonized System: the Harmonized Commodity Description and Coding System in force, including its General Rules of Interpretation and its section, chapter and subheading legal notes, as adopted and applied by the Parties in their respective
national legislation;
subheading: the first 6 digits of the Harmonized System tariff classification code; and
territory: for each Party, as defined in Annex 2.1.
Chapter III. National Treatment and Market Access of Goods
Article 3.1. Definitions
For the purposes of this Chapter, the following definitions shall apply:
customs authority: the competent authority which, in accordance with the national legislation of each Party, is responsible for the administration of customs laws and regulations;
consumed:
(a) actually consumed; or
(b) processed or manufactured so as to result in a substantial change in the value, form or use of a good or in the production of another good;
quota or quota: import volume of a good in a specific period, which is subject to a preferential tariff;
Customs processing fee: fee or charge collected by the customs authority, related to the services rendered in customs operations;
material: "material" as defined in Chapter IV (Rules of Origin);
agricultural goods: goods included in the Harmonized System, as listed in Annex I of the Agreement on Agriculture Harmonized System, listed in Annex I of the Agreement on Agriculture;
industrial goods: goods included in the Harmonized System that are not considered agricultural;
samples without commercial value: those goods whose use or sample is intended to serve as a demonstration or other similar purpose and which lack any commercial value, either because it has no commercial value due to its quantity, weight, volume or other conditions of presentation, or because it has been deprived of that value by physical operations of rendering it useless, thus avoiding any possibility of being marketed;
consular transactions or requirements: requirements whereby goods of one Party destined for export to the territory of the other Party must first be submitted to the supervision of the consul of the importing Party in the territory of the exporting Party for the purpose of obtaining consular invoices or consular visas for commercial invoices, certificates of origin, manifests,
Shipper's export declarations or any other customs documents required for or in connection with importation;
export subsidies: those subsidies or subsidies contingent upon the export of agricultural goods, including those listed in Article 9 of the Agreement on Agriculture.
Section A. Trade In Goods
Article 3.2. Scope of Application
Except as otherwise provided in this Agreement, this Chapter applies to trade in goods between the Parties.
Article 3.3. National Treatment
1. Each Party shall accord national treatment to goods of the other Party in accordance with Article Ill of the GATT 1994, including its interpretative notes. For this purpose, Article Ill of the GATT 1994 and its interpretative notes are incorporated into this Agreement and form an integral part thereof mutatis mutandis.
2. The provisions of paragraph 1 mean, with respect to a government at the central, regional or local level, treatment no less favorable than the most favorable treatment accorded by that government at the central, regional or local level to any like, directly competitive or substitutable good, as the case may be, of the Party of which they are a constituent.
3. Paragraphs 1 and 2 do not apply to the measures listed in Annex 3.3 and 3.9.
Article 3.4. Tariff Treatment
1. Upon entry into force of this Agreement, each Party undertakes to ensure duty-free access to its respective market for originating goods imported from the other Party, with the exception of those included in Annex 3.4.
2. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any new customs duty, on an originating good. (1)
3. Following a unilateral reduction of a customs duty, a Party may increase that customs duty applicable to an originating good to the level set outin accordance with Annex 3.4.
4. Notwithstanding any other provision of this Agreement, with respect to the excluded goods contained in Annex 3.4, any Party may maintain or adopt a prohibition or restriction, or a customs duty, on the importation of such goods, in accordance with its rights and obligations under the WTO Agreement.
5. The Parties may examine, in accordance with the procedures established in this Agreement, the possibility of improving the tariff conditions of access to the market for originating goods included in Annex 3.4. Agreements to this effect shall be adopted by decisions of the Administrative Commission. (2)
6. The agreement adopted by the Parties based on paragraph 5 shall prevail over any customs duty applicable to an originating good in accordance with Annex 3.4.
7. Except as otherwise provided in this Agreement, each Party may adopt or maintain measures, in its domestic legislation, to allocate the tariff-rate quotas set out in Annex 3.4, provided that such measures do not have trade-restrictive effects on imports.
8. A Party may request consultations on the application of the measures referred to in paragraph 7 from the other Party applying or proposing to apply them on imports.
9. Paragraphs 1, 2 and 6 shall not prevent a Party from increasing a customs import tariff where such an increase is authorized by the WTO Dispute Settlement Body.
Article 3.5. Customs Duty Drawback Programs on Exported Goods, Customs Duty Deferral Programs, and Customs Duty Exemption Programs Applied to Exported Goods
1. In matters of drawback and exemption from customs duties, the Parties shall retain their rights and obligations in accordance with their national legislation and the WTO Agreement.
2. Where 25 percent of the domestic industry of a Party considers itself affected by the duty drawback and exemption mechanisms established in the other Party, the Parties shall consult with a view to reaching a mutually satisfactory solution.
Article 3.6. Temporary Importation of Goods
1. Each Party shall authorize the temporary importation free of customs duty of the goods listed below that are imported from the territory of the other Party into its territory, regardless of their origin, and that like, directly competitive or substitute goods are available in the territory of that Party:
(a) vehicles entering the customs territory for tourism purposes;
(b) goods to be exhibited at international fairs, exhibitions, conventions or congresses;
(c) equipment, vehicles, animals and other merchandise owned by circuses or similar public spectacles;
(d) press, radio and television broadcasting equipment and material; cinematographic equipment and material; and equipment and material necessary for the exercise of a person's art, craft, profession and occupation;
(e) goods to attend situations caused by catastrophes or natural phenomena, including medical-surgical and laboratory equipment and material, for non-profit activities;
(f) goods used to be exhibited and to support an activity of strengthening and dissemination of the arts, and those qualified as educational, religious and cultural by the competent authority;
(g) goods that serve as technological support or complement of scientific research, authorized by the competent authority, including the personal implements of scientists;
(h) machinery, equipment, apparatus, tools and instruments to be used in the execution of works or rendering of public services that are introduced directly by contractors, under special laws or administrative contracts;
(i) goods that the Party imports temporarily for the fulfillment of its purposes;
(j) special materials , transport elements or reusable containers, used for the handling and protection of goods;
(k) the units and means of transport subject to customs controls of any kind; and the parts, pieces and equipment destined for their repair, which must be incorporated in the transport units. Replaced parts, pieces and spare parts shall be destroyed under control of the customs authority.
The parts, pieces and equipment related to this subsection shall be subject to the requirements and conditions established by the customs authority for their temporary importation.
Vehicles and transport units may not be used for internal transport within the customs territory, except as established for transit by sea or air;
(I) those used for the demonstration of products and their characteristics, quality tests, exhibition, advertising, publicity, propaganda and others, provided they are not commercialized;
(m) cinematographic films, magnetic tapes, magnetized films and other sound and image supports, for the purpose of being soundtracked, dubbed, exhibited or reproduced, provided they are authorized by the copyright holder;
(n) those intended for air services of companies with an operating certificate or provisional registration granted by the aeronautical authority of the importing Party; and