(a) the Parties recognise the differences of legal systems regarding conformity assessment between the Parties and agree to explore the possibilities of mutual recognition of conformity assessment procedures in accordance with the TBT Agreement;
(b) the Parties shall exchange information on conformity assessment systems with a view to promoting the recognition of conformity assessment procedures between the Parties; and
(c) a Party shall give favourable consideration to a request by the other Party to recognise the conformity assessment procedures conducted by bodies in the other Party's territory through a mutual recognition agreement or arrangement.
10. With a view to increasing mutual understanding of their respective systems and facilitating access to their respective markets, the Parties shall in particular strengthen co-operation in the following areas, including but not limited to:
(a) strengthening co-operation, communication and co-ordination while participating in the activities of international standardisation bodies and the WTO TBT Committee;
(b) intensifying communication between administrative organisations of each other and exchanging promptly information in the respect of technical regulations, standards, conformity assessment procedures and each other's good regulatory practice; and
(c) with a view to implementing the requirements of this Article, expeditiously broadening the information exchange in respect of technical regulations, standards and conformity assessment procedures, and give favourable consideration to any written request for consultation.
11. Without prejudice to paragraph 3, upon written request of a Party, the Parties shall hold expert consultations as soon as possible to address any matter that may arise from the application of specific technical regulations, standards and conformity assessment procedures and that according to a Party has created or is likely to create an obstacle to trade between the Parties, with a view to finding an appropriate solution in conformity with the TBT Agreement.
12. In order to permit the efficient use of resources, the Parties shall, to the extent possible, endeavour to use modern technological means of communication, such as electronic communication, video or telephone conference. If necessary, the findings of expert consultations shall be reported to the FTA Joint Commission established under Chapter 10.
Chapter 3. Rules of Origin
Article 21. Definitions
For the purposes of this Chapter:
(a) "Customs Valuation Agreement" means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
(b) "CIF" means the value of the good imported, inclusive of the costs of freight and insurance up to the port or place of entry into the country of importation;
(c) "FOB" means the value of the good free on board, independent of the means of transportation, at the port or site of final shipment abroad;
(d) "material" means a good or product that is used in the production or transformation of another good, including a part or an ingredient;
(e) "production" means growing, raising, mining, harvesting, fishing, trapping, hunting, manufacturing, processing, or assembling a good; and
(f) "producer" means a person who grows, raises, mines, harvests, fishes, traps, hunts, manufactures, processes or assembles a good.
Article 22. Originating Goods
For the purposes of this Agreement, a good shall be considered as originating in a Party when:
(a) the good is wholly obtained or produced entirely in the territory of a Party, within the meaning of Article 23; or
(b) the good is produced entirely in the territory of one or both Parties, exclusively from materials whose origin conform to the provisions of this Chapter; or
(c) the good is produced in the territory of one or both Parties, using non-originating materials that conform to a change in tariff classification, a regional value content, a process requirement or other requirements specified in Annex IV, and the good meets the other applicable provisions of this Chapter.
Article 23. Wholly Obtained Goods
For the purpose of sub-paragraph (a) of Article 22, the following shall be considered as wholly obtained in a Party:
(a) mineral products extracted from the soil or from the seabed of a Party;
(b) plants and plant products harvested in a Party;
(c) live animals, born and raised in a Party;
(d) products from live animals referred to in paragraph (c);
(e) products obtained by hunting, trapping or fishing in inland waters conducted in a Party;
(f) products of sea fishing and other products taken from the territorial sea of a Party;
(g) products of sea fishing and other products taken beyond the territorial sea of a Party, including the exclusive economic zone of that Party, by a vessel registered in a Party and flying the flag of that Party;
(h) products manufactured on board a factory ship registered in a Party and flying the flag of that Party, exclusively from products referred to in sub-paragraphs (f) and (g);
(i) products extracted from the seabed or beneath the seabed outside the territorial sea of a Party, provided that they have sole rights to exploit such seabed;
(j) used articles collected in a Party fit only for the recovery of raw materials;
(k) waste and scrap resulting from manufacturing operations conducted in a Party and are fit only for the recovery of raw materials; and (l) products manufactured in a Party exclusively from products specified in sub-paragraphs (a) to (k).
Article 24. Change In Tariff Classification
A change in tariff classification under Annex IV requires that the non-originating materials used in the production of the goods undergo a change of tariff classification as a result of processes performed in the territory of one or both Parties.
Article 25. Regional Value Content
1. For the purpose of sub-paragraph (c) of Article 22, the regional value content of a good shall be calculated on the basis of the following method:
RVC = V-VNM / V x 100 %
where:
(a) "RVC" means the regional value content expressed as a percentage;
(b) "V" means the value of the good, as defined in the WTO Customs Valuation Agreement, adjusted on a FOB basis; and
(c) "VNM" means the value, as defined in the WTO Customs Valuation Agreement, of the non-originating materials, adjusted on a CIF basis.
2. The value of the non-originating materials used by the producer in the production of a good shall not include, for purposes of calculating the regional value content of the good, pursuant to paragraph 1, the value of non-originating materials used to produce originating materials that are subsequently used in the production of the good.
Article 26. Accumulation
Where originating goods or materials of a Party are incorporated into a good in the other Party, the goods or materials so incorporated shall be regarded to be originating in the latter Party.
Article 27. Operations That Do Not Confer Origin
1. The following operations shall be considered as insufficient working or processing to confer the status of originating goods:
(a) preserving operations to ensure that the goods remain in good condition during transport and storage;
(b) breaking-up and assembly of packages;
(c) washing, cleaning, removal of dust, oxide, oil, paint or other coverings;
(d) ironing or pressing of textiles;
(e) simple painting and polishing operations;
(f) husking, partial or total bleaching, polishing, and glasing of cereals and rice;
(g) operations to color sugar or form sugar lumps;
(h) peeling, stoning and shelling, of fruits, nuts and vegetables;
(i) sharpening, simple grinding or simple cutting;
(j) sifting, screening, sorting, classifying, grading, matching (including the making-up of sets of articles);
(k) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;
(l) affixing or printing marks, labels, logos and other like distinguishing signs on goods or their packaging;
(m) simple mixing of goods, whether or not of different kinds;
(n) simple assembly of parts of articles to constitute a complete article or disassembly of goods into parts;
(o) operations whose sole purpose is to ease port handling;
(p) slaughtering of animals; and (q) a combination of two or more operations specified in sub-paragraphs (a) to (p).
2. For purposes of this Article:
(a) "simple" generally describes activities which need neither special skills nor special machines, apparatus or equipment specially produced or installed for carrying out the activity; and
(b) "simple mixing" generally describes activities which need neither special skills nor machines, apparatus or equipment especially produced or installed for carrying out the activity. However, simple mixing does not include chemical reaction.
Article 28. De Minimis
A good that does not meet tariff classification change requirements, pursuant to the provisions of Annex IV, shall nonetheless be considered to be an originating good, if:
(a) the value of all non-originating materials determined pursuant to Article 25, including materials of undetermined origin, that do not meet the tariff classification change requirement does not exceed 10% of the FOB value of the given good; and
(b) the good meets all the other applicable criteria of this Chapter.
Article 29. Accessories, Spare Parts, and Tools
Accessories, spare parts, or tools presented with the good upon importation shall be disregarded when determining the origin of the good, provided that: (a) the accessories, spare parts, or tools are classified with and not invoiced separately from the good; and (b) the quantities and the value of said accessories, spare parts, or tools are the normal ones for the good.
Article 30. Packing and Containers for Transportation
Containers and packing materials used for the transport of goods shall not be taken into account in determining the origin of the goods.
Article 31. Packaging Materials and Containers for Retail Sale
Where goods are subject to a change in tariff classification criterion set out in Annex IV, the origin of the packaging materials and containers in which goods are packaged for retail sale shall be disregarded in determining the origin of the goods, provided that the packaging materials and containers are classified with the goods. However, if the goods are subject to a Regional Value Content requirement, the value of the packaging materials and containers used for retail sale shall be taken into account as originating materials or non-originating materials as the case may be when determining the origin of the goods.
Article 32. Neutral Elements
1. In order to determine whether a good originates, the origin of the neutral elements defined in paragraph 2 shall not be taken into account.
2. "Neutral elements" mean articles used in the production of a good which are not physically incorporated into or form part of the good, including:
(a) fuel, energy, catalysts and solvents;
(b) equipment, devices, and supplies used for testing or inspecting the good;
(c) gloves, glasses, footwear, clothing, safety equipment and supplies;
(d) tools, dies and moulds;
(e) spare parts and materials used in the maintenance of equipment and buildings;
(f) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings; and (g) 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.
Article 33. Direct Transport
1. Preferential tariff treatment provided for in this Agreement shall be applied to goods which satisfy the requirements of this Chapter and are directly transported between the Parties.
2. Notwithstanding paragraph 1, the following shall be considered as transported directly from the exporting Party to the importing Party:
(a) goods that are transported without passing through a non-Party; and
(b) goods whose transport involves transit through one or more non-Parties with or without trans-shipment or temporary storage in such non-Parties, provided that:
(i) the transit is justified by geographical reasons or by consideration related exclusively to transport requirements;
(ii) the goods do not enter into trade or consumption there; and
(iii) the goods do not undergo subsequent production or any operation there other than unloading, reloading, splitting-up of consignments or any other operation necessary to preserve them in good condition, provided that the goods remain under customs control during transit through non-Parties.
3. Compliance with the provisions set out in paragraph 2 shall be authenticated by presenting to the customs authorities of the importing Party either with customs documents of the non-Parties or with any other documents to the satisfaction of the customs authorities of the importing Party.
Article 34. Definitions
For purposes of this Section:
(a) "authorised body" means any body designated under the domestic law of a Party or by the governmental authority of a Party to issue a Certificate of Origin; and
(b) "competent authority" means:
(i) in the case of China, the General Administration of Customs is responsible for the organisation and implementation of the Rules of Origin under this Agreement in accordance with domestic laws, the General Administration of Quality Supervision, Inspection and Quarantine is responsible for the administration of issuance of the Certificate of Origin in accordance with domestic laws; and
(ii) in the case of Iceland, the Directorate of Customs.
Article 35. Documentary Evidence of Origin
To qualify for preferential tariff treatment under this Agreement, either of the following documents shall be submitted to the customs of the importing Party upon importation:
(a) a Certificate of Origin referred to in Article 36; or
(b) a Declaration of Origin referred to in Article 37.
Article 36. Procedure for the Issue of a Certificate of Origin
1. A Certificate of Origin as set out in Annex V shall be issued by the authorised bodies of a Party on application by the exporter, subject to the condition that the goods concerned fulfil the requirements of this Chapter.
2. The Certificate of Origin shall:
(a) contain a unique certificate number;
(b) cover one or more goods under one consignment;
(c) state the basis on which the goods are deemed to qualify as originating for the purposes of this Chapter;
(d) contain security features, such as specimen signatures or stamps as advised to the importing Party by the exporting Party; and
(e) be completed in English by typing. 3. The Certificate of Origin shall be issued before or at the time of exportation of the goods in question. It shall be valid for one year from the date of issuance in the exporting Party.
4. Each Party shall inform the customs authority of the other Party of the name of each authorised body, as well as relevant contact details, and shall provide details of any security features for relevant forms and documents used by each authorised body, prior to the issuance of any certificates by that body. Any change in the information provided above shall be promptly notified to the customs authority of the other Party.
5. If the Certificate of Origin has not been issued before or at the time of exportation due to force majeure, or involuntary errors, omissions or other valid causes, the Certificate of Origin may be issued retrospectively but no longer than one year from the date of shipment, bearing the words "ISSUED RETROACTIVELY" or "ISSUED RETROSPECTIVELY", which shall be inserted in the "Remarks" box of the Certificate of Origin.
6. In the event of theft, loss or damage of a Certificate of Origin, the exporter or manufacturer may make a written request to the authorised bodies of the exporting Party for issuing a certified copy, provided that the exporter or manufacturer makes sure that the original copy previously issued has not been used. The certified copy shall bear the words "CERTIFIED TRUE COPY of the original certificate of origin number ___ dated ___", which shall be inserted in the "Remarks" box of the Certificate of Origin. If the importing customs authority ascertains that the original copy has been used, the certified copy shall be invalid and vice versa.
Article 37. Declaration of Origin
1. An approved exporter under Article 38 in a Party may, for the purposes of obtaining preferential tariff treatment in the other Party, complete a Declaration of Origin in the version provided in Annex VI.
2. A Declaration of Origin shall be completed only by an approved exporter within the meaning of Article 38.
3. A Declaration of Origin shall be produced only if the good concerned can be considered as an originating good of a Party according to the provisions of this Chapter.
4. Where the approved exporter in the customs territory of the exporting Party is not the producer of the product, a Declaration of Origin for the product may be completed by the approved exporter in accordance with the laws and regulations of the exporting Party.
5. A Declaration of Origin shall be completed prior to the importation in the importing Party of the products to which it relates.
6. A Declaration of Origin shall be valid for 12 months from the date of issuance.
Article 38. Approved Exporter
1. The importing Party shall grant preferential tariff treatment to the goods covered by a Declaration of Origin completed by the approved exporter of the exporting Party. The format of the Declaration of Origin is set out in Annex VI.
2. The Approved exporter authorised by the exporting Party to complete a Declaration of Origin shall be given a unique authorisation number required to be marked on the Declaration of Origin when in use. The use of such number shall be closely monitored and supervised by the exporting Party.
3. Each Party shall provide the other Party with detailed information on the approved exporters, such as the names, registration numbers and contact details of the approved exporters and specimen of the stamp used by the exporters, prior to the actual exportation of their goods. Any change in the information above shall be promptly notified to the other Party.
4. Before 31 March each year a Party shall provide the other Party with information on the name and registration number of each approved exporter, along with corresponding serial numbers of all the Declarations of Origin completed in the preceding year. If any discrepancies are discovered because of this information, a Party shall inform the other Party of such discrepancies fur further investigation or clarification on behalf of that Party.
Article 39. Waiver of Certificate of Origin or Declaration of Origin
1. For the purpose of granting preferential treatment under this Chapter, a Party may waive the requirements for the presentation of a Certificate of Origin or Declaration of Origin and grant preferential tariff treatment to:
(a) any consignment of originating products of a value not exceeding US$ 600 or its equivalent amount in the Party's currency; or
(b) other originating products as provided under its domestic legislation.
2. Waivers provided for in paragraph 1 shall not be applicable when it is established by the customs authorities of the importing Party that the importation forms part of a series of importations that may reasonably be considered to have been undertaken or arranged for the purpose of avoiding the submission of Certificate of Origin or Declaration of Origin.
Article 40. Obligations Regarding Importations
The importer claiming preferential tariff treatment for a good under this Agreement shall:
(a) make a written statement in the customs declaration, on his own initiative, indicating that the good qualifies as an originating good;
(b) possess a valid Certificate of Origin or Declaration of Origin, at the time the import customs declaration referred to in sub-paragraph (a) is made; and
(c) submit the original Certificate of Origin or Declaration of Origin, and other documentary evidence related to the importation of the goods, upon request of the customs authority of the importing Party.
Article 41. Refund of Import Duties or Deposits
1. If a good is imported into the territory of a Party without the submission of a Certificate of Origin or a Declaration of Origin under this Agreement, the customs authority of the importing Party may, where applicable, impose the applied non-preferential customs duty, or require payment of a deposit or guarantee equivalent to the full amount of the customs duty on that good, provided that the importer formally declare to the customs authority upon importation that the good in question qualifies as an originating good.
2. The importer may apply for a refund of any excess customs duties imposed or deposit paid within the period specified in the legislation of the importing Party.
Article 42. Preservation of Documents
1. Each Party shall require its producers, exporters and importers to retain documents that prove the originating status of the goods as well as the fulfilment of the other requirements of this Chapter for at least three years.
2. Each Party shall require that its authorised bodies retain copies of Certificates of Origin and other documentary evidence of origin for at least three years.
Article 43. Verification
1. For the purpose of determining the authenticity or accuracy of the Certificate of Origin or the Declaration of Origin, the originating status of the goods concerned, or the fulfilment of the other requirements of this Chapter, the customs authority of the importing Party may conduct origin verification by means of a request to the competent authority of the exporting Party, or such other procedures as the customs authorities of the Parties may jointly decide.
2. The customs authority of the importing Party requesting a verification to the competent authority of exporting Party shall specify the reasons, and provide any documents and information justifying the verification.
3. The competent authority of the exporting Party to whom a request for verification is made under paragraph 1, shall respond to the verification request within six months from the date of the receipt of the request.