3. Paragraphs 1 and 2 shall produce effects only in respect of those geographical indications and appellations of origin protected under the law of the other Party claiming protection and whose definition is consistent with paragraph 1 of Article 22 of TRIPS. Furthermore, in order to qualify for protection, each Party shall notify the other Party of the geographical indications and appellations of origin which, complying with the above requirements, shall be considered within the scope of protection.
4. This is without prejudice to the recognition that Parties may grant or have granted to geographical indications and appellations of origin, including homonyms, which legitimately belong to a non-Party.
Article 3.12. Distinctive Products
Chile shall recognise Molas as distinctive products of Panama. Accordingly, Chile shall not permit the importation, manufacture or sale of any product such as Molas unless they have been produced in Panama in accordance with the laws and regulations of Panama governing the production of Molas. The foregoing shall be without prejudice to any recognition that Chile may grant and that legitimately belongs to a non-Party with respect to Molas.
Article 3.13. Country of Origin Marking
1. Each Party shall apply to goods of the other Party, where appropriate, its country of origin marking legislation in accordance with Article IX of the GATT 1994. For this purpose, Article IX of the GATT 1994 is incorporated into and made an integral part of this Agreement.
2. Each Party shall accord to goods of the other Party treatment no less favourable than that it accords to goods of a non-Party with respect to the application of rules regarding country of origin marking in accordance with Article IX of the GATT 1994.
3. Each Party shall ensure that the establishment and enforcement of respective country
of origin marking laws shall not have the purpose or effect of creating unnecessary obstacles to trade between the Parties.
Section F. Agriculture
Article 3.14. Agricultural Export Subsidies
1. The Parties share the objective of achieving the multilateral elimination of export subsidies on agricultural goods and will work together towards an agreement in the World Trade Organisation to eliminate export subsidies, as well as the reintroduction of export subsidies in any form.
2. Neither Party shall introduce or maintain any export subsidy on any agricultural good destined for the territory of the other Party.
Section G. Institutional Arrangements
Article 3.15. Trade In Goods Committee
1. The Parties establish a Committee on Trade in Goods composed of representatives of each Party.
2. The Committee shall meet at the request of any Party or the Commission to consider any matter covered by this Chapter, Chapter 4 (Rules of Origin and Origin Procedures) and Chapter 5 (Customs Administration).
3. The functions of the Committee shall include:
(a) promoting trade in goods between the Parties, including consultations for the acceleration of tariff elimination and other matters as appropriate; and
(b) consider obstacles to trade in goods between the Parties, in particular those related to the application of non-tariff measures and, if necessary, refer these matters to the Commission for consideration.
4. To the extent that trade issues arise relating to specific matters, the parties may establish ad-hoc committees on matters relating to Chapter 4 (Rules of Origin and Origin Procedures) or Chapter 5 (Customs Administration), which shall report to the Committee on Trade in Goods.
5. In relation to the modality of meetings of the Committee on Trade in Goods, as well as for the ad-hoc Committees and contact points that are created, these may be through face- to-face or virtual meetings, such as video-conference or electronic communications.
Section H. Definitions
Article 3.16. Definitions
For the purposes of this Chapter:
Anti-Dumping Agreement means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, which forms part of the WTO Agreement;
Subsidies Agreement means the Agreement on Subsidies and Countervailing Measures, which is part of the WTO Agreement;
consumed means:
(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;
duty-free means free of customs duties;
import licence means administrative procedures that require the submission of an application or other documents (other than those generally required for customs clearance purposes) to the relevant administrative body as a condition precedent to importation into the territory of the importing Party;
printed advertising materials means goods classified in Chapter 49 of the Harmonised System (HS) including brochures, pamphlets, leaflets, loose sheets, trade catalogues, trade association yearbooks, tourist promotion materials and posters, used to promote, publish or advertise a good or service and distributed free of charge;
goods temporarily admitted for sporting purposes means sporting equipment for use in competitions, sporting events or training in the territory of the Party to which they are admitted;
agricultural goods means the goods referred to in Article 2 of the Agreement on Agriculture, which forms part of the WTO Agreement;
goods for display or demonstration include components, ancillary equipment and accessories;
commercial samples of negligible value means commercial samples valued, individually or in the aggregate shipped, at not more than one United States dollar or the equivalent amount in the currency of Chile, or which are marked, torn, punctured or otherwise treated in a manner that disqualifies them for sale or for any use other than as samples;
advertising films and recordings means visual media or recorded audio materials consisting essentially of images and/or sounds depicting the nature or functioning of goods or services offered for sale or hire by a person established or resident in the territory of a Party, provided that the films are suitable for exhibition to potential customers, but not for dissemination to the general public, and provided that they are temporarily admitted in packages each containing not more than one copy of each film or recording and not forming part of a larger consignment;
performance requirement means the requirement to:
(a) export a certain volume or percentage of goods or services;
(b) replace imported goods or services with goods or services of the Party granting the exemption from customs duties or import licensing;
(c) the person benefiting from the exemption from customs duties or the import licence purchases other goods or services in the territory of the Party granting the exemption, or gives preferences to goods or services produced in the country;
(d) the person benefiting from the exemption from customs duties or import licensing produces goods or services in the territory of the Party granting the exemption, with a given level or percentage of domestic content; or
(e) relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows;
export subsidies shall have the same meaning assigned to that term in Article 1(e) of the Agreement on Agriculture, which forms part of the WTO Agreement, including any amendments to that Article; and
consular transactions means the requirements that 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.
Chapter 4. RULES OF ORIGIN AND ORIGIN PROCEDURES
Section A. Rules of Origin
Article 4.1. Originating Goods
1. Except as otherwise provided in this Chapter, a good is an originating good when:
(a) the good is wholly obtained or produced entirely in the territory of one or both Parties;
(b) the good is produced entirely in the territory of one or both of the Parties and
(i) each of the non-originating materials used in the production of the good undergoes the corresponding change of tariff classification specified in the Annex 4.1 (specific rules of origin), or
(ii) the good otherwise meets the corresponding regional value content or other requirement specified in Annex 4.1 (Specific Rules of Origin), and the good satisfies all other applicable requirements of this chapter; or (c) the good is produced entirely in the territory of one or both Parties exclusively from originating materials.
Article 4.2. Regional Content Value
1. Where Annex 4.1 (Specific Rules of Origin) specifies a regional value content criterion for determining whether a good is originating, each Party shall provide that the person claiming preferential tariff treatment for the good may calculate the regional value content on the basis of one of the following methods:
(a) Reduction method
VCR = VA - VMN / VA x 100
(b) Augmentation method
VCR = VMO / VA x 100
where:
RCV is the regional content value expressed as a percentage; VAis the adjusted value;
VMN is the value of non-originating materials used by the producer in the production of the good; and
VMO is the value of the originating materials used by the producer in the production of the good.
Article 4.3. Value of Materials
1. Each Party shall provide that, for purposes of calculating the regional value content of a good and for purposes of applying the de minimis rule as set out in Article 4.7, the value of a material:
(a) in the case of a material imported by the producer of the good, is the adjusted value of the material in respect of that import;
(b) in the case of a material purchased in the territory where the good is produced, is the price actually paid or payable by the producer for the material, except for materials under subparagraph (c);
(c) in the case of a material supplied to the producer free of charge, or at a price reflecting a similar discount or rebate, is determined by the sum of:
(i) all costs incurred in the cultivation, production or manufacture of the material, including overheads, and
(ii) a profit amount; and
(d) in the case of a self-produced material, is determined by the sum of:
(i) all costs incurred in the production of the material, including overhead costs, and
(ii) an amount for utilities.
2. Each Party shall provide that a person claiming preferential tariff treatment for a good may adjust the value of materials as follows:
(a) for originating materials, the following costs must be added to the value of the material where they are not included in paragraph 1:
(i) the costs of freight, insurance, packaging, and all other costs incurred in transporting the material to the producer's location,
(ii) duties, taxes and customs brokers' fees paid in respect of the material in the territory of one or both Parties, except duties and taxes in respect of which exemption applies, refunded, refundable or otherwise recoverable, including credit for duties or taxes paid or payable, and
(iii) the cost of waste and scrap arising from the use of the material in the production of the good, less the value of renewable waste or by-products;
(b) in the case of non-originating materials, the following costs may be deducted from the value of the material if they are included in paragraph 1:
(i) the costs of freight, insurance, packaging, and all other costs incurred in transporting the material to the producer's location,
(ii) duties, taxes and customs brokers' fees paid in respect of the material in the territory of one or both Parties, except duties and taxes in respect of which exemption applies, refunded, refundable or otherwise recoverable, including credit for duties or taxes paid or payable,
(iii) the cost of waste and scrap arising from the use of the material in the production of the good, less the value of renewable waste or by-products, and
(iv) the cost of originating materials used in the production of non- originating materials in the territory of a Party.
Article 4.4. Accessories, Spare Parts and Tools
Each Party shall provide that accessories, spare parts or tools delivered with the good and forming part of the usual accessories, spare parts or tools of the good shall be considered to be an originating material in the production of the good, provided that:
(a) accessories, spare parts or tools are classified with the goods and are not separately invoiced; and
(b) the quantities and value of accessories, spare parts or tools are those customary for the goods.
Article 4.5. Expendable Goods and Materials
1. Each Party shall provide that a person claiming preferential tariff treatment for a good may claim that a fungible good or material is originating based either on a physical segregation of each fungible good or material or using any inventory management method, such as the average method, last-in-first-out method, or first-in-first-out method, recognised in the Generally Accepted Accounting Principles of the Party in which production takes place, or otherwise accepted by the Party in which production takes place.
2. Each Party shall provide that where an inventory management method is chosen in accordance with paragraph 1 for particular fungible goods or materials, it shall continue to be used for those goods or materials throughout the fiscal year of the person that chose the inventory management method.
Article 4.6. Cumulation
Each Party shall provide that goods or materials originating in a Party that are incorporated into a good in the territory of the other Party shall be considered to originate in the territory of that other Party.
Article 4.7. De Minimis
1. Each Party shall provide that a good that does not change tariff classification under Annex 4.1 (Specific Rules of Origin) shall nevertheless be considered to be originating if the value of all non-originating materials used in the production of the good and not subject to the required change in tariff classification does not exceed 10 percent of the adjusted value of the good, provided that the value of such non-originating materials is included in the value of the non-originating materials for any applicable regional value content requirement, and the good complies with all other applicable requirements of this Chapter.
2. Notwithstanding paragraph 1, a textile or apparel good that is not an originating good because certain fibres or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo the applicable change in tariff classification set out in Annex 4.1 (Specific Rules of Origin) shall nevertheless be considered an originating good if the total weight of all such fibres or yarns in that component does not exceed 10 percent of the total weight of that component.
Article 4.8. Indirect Materials Used In Production
Each Party shall provide that an indirect material shall be considered an originating material irrespective of where it is produced.
Article 4.9. Packaging Materials and Retail Containers
Each Party shall provide that packaging materials and containers in which a good is packaged for retail sale shall, if classified with the good, not be considered in determining whether all non-originating materials used in the production of the good are subject to the applicable change in tariff classification set out in Annex 4.1 (Specific Rules of Origin) and, if the good is subject to a regional value content requirement, the value of such packaging materials and containers shall be considered as originating or non-originating material, as appropriate, in calculating the regional value content of the good.
Article 4.10. Packaging Materials and Containers for Shipment
Containers and packing materials in which a good is packed exclusively for the purpose of transport shall not be taken into account for the determination of the origin of the goods.
Article 4.11. Transit and Transhipment
1. Each Party shall provide that a good shall not be considered an originating good if it undergoes further production or any other operation outside the territories of the Parties, other than unloading, reloading, transhipment or any other process necessary to preserve the good in good condition or to transport the good into the territory of a Party.
2. The importing Party may require a person claiming that a good is originating to demonstrate to the satisfaction of the importing Party's customs authorities that any subsequent operations carried out outside the territories of the Parties meet the requirements of paragraph 1.
Article 4.12. Goods Sets
1. Each Party shall provide that if goods are classified as a set as a result of the application of rule 3 of the general rules of interpretation of the Harmonised System (HS), the set is originating only if each good in the set is originating and both the set and the goods comply with all other applicable requirements in this Chapter.
2. Notwithstanding paragraph 1, a set of goods is originating if the value of all the non- originating goods in the set does not exceed 15 per cent of the adjusted value of the set.
Article 4.13. Exhibitions
1. Originating products, sent for exhibition in a country other than Chile or Panama and sold or otherwise disposed of during, at the time of or after the exhibition for importation into Chile or Panama shall benefit on importation from the provisions of the present Agreement provided it is shown to the satisfaction of the customs authorities of the importing country that:
(a) these products were consigned by an exporter from Chile or Panama to the country of exhibition and have been exhibited there;
(b) the goods have been sold or otherwise disposed of by the exporter (exhibitor) to a consignee in Chile or Panama;
(c) the products have been shipped during or immediately after the exhibition in the same condition in which they were shipped to the exhibition;
(d) since the time the products were consigned for exhibition, they have not been used for any purpose other than for display at the exhibition; and
(e) the products have remained under customs control during the exhibition.
2. A certificate of origin shall be issued or made out in accordance with the provisions of Article 4.14 (Certificate and declaration of origin) and submitted to the customs authorities of the importing country. It shall contain the name and address of the exhibition and the name of the exhibitor. Where necessary, further documentary evidence of the conditions under which they have been exhibited may be required.
3. Paragraph 1 shall apply to all international exhibitions, fairs or similar events of an international character for commercial, industrial, agricultural, cultural or crafts purposes, excluding events organised by an enterprise, in particular for the purpose of selling or promoting foreign products.
Section B. Originating Procedures
Article 4.14. Certificate and Declaration of Origin
1. Upon entry into force of this Agreement, the Parties shall establish a single form for the certificate of origin and for the declaration of origin in accordance with Article 4.20.2 (Invoicing by a Non-Party Operator and Uniform Regulations).
2. The certificate of origin referred to in paragraph 1 shall serve to certify that goods exported from the territory of one Party to the territory of the other Party qualify as originating. The certificate shall be valid for 2 years from the date of signature.
3. Each Party shall:
(a) require exporters in its territory to complete and sign a certificate of origin for any export of goods for which an importer may claim preferential tariff treatment on importation into the territory of the other Party,
(b) provide that, if he is not the producer of the goods, the exporter in his territory may complete and sign the certificate of origin on the basis of:
(i) its knowledge as to whether the good qualifies as originating;
(ii) its reasonable reliance on the producer's written declaration that the good qualifies as originating, or
(iii) the origin declaration referred to in paragraph 1.
4, The producers of the goods shall complete and sign the origin declaration referred to in paragraph 1 and provide it voluntarily to the exporter. The declaration shall be valid for two years from the date of signature.
5. Each Party shall provide that the certificate of origin may cover the importation of one or more identical goods, or a number of imports of identical goods, within the period specified in the certificate.
6. For originating goods that are imported into the territory of a Party on or after the date of entry into force of this Agreement, each Party shall accept the certificate of origin that was completed and signed prior to that date by the exporter.
Article 4.15. Obligations In Respect of Imports
1. Each Party shall require an importer located in its territory that requests preferential tariff treatment with respect to a good imported into its territory from the territory of the other Party to:
(a) declare in writing, on the import document required under its legislation, on the basis of a valid certificate of origin, that the goods qualify as originating;
(b) has the certificate of origin in his possession at the time of making the declaration referred to in subparagraph (a);
(c) provide a copy of the certificate of origin to the customs authorities of that Party, upon request; and
(d) submit a corrected declaration without delay and pay the relevant duties, in cases where the importer has reason to believe that the certificate of origin on which the declaration is based contains incorrect information. If the importer complies with these obligations, he shall not be penalised.
2. Each Party shall provide that, where an importer located in its territory fails to comply with the requirements of this Chapter, it shall deny preferential tariff treatment with respect to goods imported from the territory of the other Party.
3. Each Party shall provide that an importer claiming preferential tariff treatment with respect to a good imported into its territory shall maintain in its territory, for a period of 5 years from the date of importation of the good or for such longer period as the Party may establish, such documentation, including a certificate of origin, as the Party may require in connection with the importation of the good.
Article 4.16. Drawback of Customs Duties
Each Party shall provide that, in cases where no claim for preferential tariff treatment has been made for a good imported into the territory of the other Party that has qualified as originating, the importer of the good may, within a period not exceeding one year from the date of importation, apply for a refund of customs duties overpaid because preferential tariff treatment was not granted to the good, provided that the application is accompanied by:
(a) a written declaration stating that the goods qualified as originating at the time of importation;
(b) the certificate of origin; and
(c) any additional documentation related to the importation of a good, as required by the customs authority.
Article 4.17. Obligations In Respect of Exports
1. Each Party shall provide that its exporter or producer, who has completed and signed a certificate or declaration of origin, shall furnish a copy of the certificate or declaration of origin to its customs authority on request.
2. Each Party shall provide that an exporter or producer in its territory that has completed and signed a certificate or declaration of origin, and has reason to believe that such certificate or declaration contains incorrect information, shall promptly notify in writing any change that may affect its accuracy or validity, as the case may be, to its customs authorities and to any person to whom the certificate or declaration of origin has been given. Upon fulfilment of this obligation, neither the exporter nor the producer shall be liable to penalties for presenting an incorrect certificate or declaration of origin.
3. Each Party shall provide that the customs authorities of the exporting Party shall notify in writing the customs authorities of the importing Party of the notification referred to in paragraph 2.
4, Each Party shall provide that an exporter or producer located in its territory that completes and signs a certificate or declaration of origin shall retain in that territory, for a period of 5 years from the date of signature of the certificate or declaration of origin or for such longer period as the Party may establish, records relating to the origin of the good for which preferential tariff treatment was claimed in the territory of the other Party, including records relating to:
(a) the acquisition, costs, value and payment of the goods being exported from its territory;
(b) the acquisition, costs, value and payment for all materials, including indirect materials used in the production of the good being exported from its territory; and