(e) fish, crustaceans, mollusks and other marine species taken from the sea or seabed, outside the territory of a Party, by vessels registered or recorded in a Party and flying the flag of that Party;
(f) goods produced on board factory ships provided that they are registered or recorded in a Party and flying the flag of that Party, exclusively from the goods referred to in subparagraph (e);
(g) minerals and other inanimate natural resources extracted from the soil, waters, seabed or subsoil in the territory of a Party;
(h) commodities, other than fish, crustaceans, mollusks, and other living marine species, obtained or removed by a Party from marine waters, seabed, or subsoil outside the territory of a Party, provided that Party has rights to exploit such marine waters, seabed, or subsoil in accordance with international law;
(i) wastes and residues derived from:
(i) production operations conducted in the territory of a Party; or
(ii) used goods collected in the territory of a Party, provided that such waste or scrap is used only for the recovery of raw materials; and (iii) wastes and residues from the production operations conducted in the territory of a Party.
(j) goods produced in the territory of a Party exclusively from the goods referred to in subparagraphs (a) through (i).
Article 4.4. Regional Value Content
1. Except as provided in paragraph 5, each Party shall provide that the regional value content of a good shall be calculated, at the option of the exporter or producer of the good, in accordance with the transaction value method set out in paragraph 2 or the net cost method set out in paragraph 4.
2. The regional value content value of a good based on the transaction value method shall be calculated in accordance with the following formula:
RVC = TV - VMN / TV x 100
where:
RVC: is the regional value content expressed as a percentage;
TT: is the transaction value of a good adjusted on an FOB basis, except as provided in paragraph 3; and
VMN: is the value of non-originating materials used by the producer in the production of the good, determined in accordance with Article 4.5.
3. For purposes of paragraph 2, where the producer of the good does not export the good directly, the transaction value shall be adjusted to the point at which the buyer receives the good within the territory where the producer is located.
4. To calculate the regional value content of a good in accordance with the net cost method, the following formula shall be applied:
RVC = NC - VMN / NC x 100
where:
RVC: is the regional value content expressed as a percentage;
NC: is the net cost of the good; and
VMN: is the value of non-originating materials used by the producer in the production of the good determined in accordance with Article 4.5.
5. Each Party shall provide that an exporter or producer shall calculate the regional value content of a good exclusively in accordance with the net cost method referred to in paragraph 4 where there is no transaction value or the transaction value cannot be determined in accordance with the principles of Article 1 of the Customs Valuation Agreement.
Article 4.5. Value of Materials
1. The value of a material:
(a) shall be the transaction value of the material; or
(b) where there is no transaction value or the transaction value of the material cannot be determined in accordance with the principles of Article 1 of the Customs Valuation Agreement, shall be calculated in accordance with the principles of Articles 2 through 7 of that Agreement.
2. Where not considered in subparagraphs 1 (a) or 1 (b), the value of a material shall include:
(a) freight, insurance, packing costs and all other costs incurred in transporting the material to the port of importation in the territory of the Party where the producer of the good is located, except as provided in paragraph 3, and.
(b) the costs of waste and scrap resulting from the use of the material in the production of the good, less any recovery of these costs, provided that the recovery does not exceed 30% of the value of the material, determined in accordance with paragraph 1.
3. Where the producer of the good acquires a non-originating material within the territory of the Party where it is located, the value of the non-originating material shall not include: freight, insurance, packing costs and all other costs incurred in transporting the material from the supplier's warehouse to the producer's location.
4. For goods classified in headings 8701 through 8708, a producer may average the regional value content of any or all goods falling within the same subheading that are produced in the same plant or in different plants within the territory of a Party, either on the basis of all goods produced by the producer or only those goods that are exported to the other Party:
(a) in its fiscal year or period, or.
(b) in any monthly, bimonthly, quarterly, quarterly, four-monthly, or semiannual period.
Article 4.6. Minimum Operations or Processes
Notwithstanding the provisions of Annex 4.2 the operations or practices which, individually or in combination, do not confer origin to a good are the following:
(a) dilution in water or other substance that does not materially alter the characteristics of the good;
(b) operations intended to ensure the preservation of the goods in good condition during transport or storage, such as aeration, refrigeration, freezing, drying or addition of substances, stabilizers or preservatives;
(c) sifting, shelling, splitting, dividing, painting, sorting, grading, grading, washing or cutting;
(d) folding, rolling or unrolling, sharpening or grinding;
(e) packing, repacking, wrapping, repacking, wrapping or repacking for retail sale or packaging for transport;
(f) the application of marks, labels, logos or other similar distinctive signs on goods or their containers; and
(g) cleaning, including the removal of rust, grease, paint or other coatings.
Article 4.7. Intermediate Material
1. For purposes of calculating the regional value content under Article 4.4, the producer of a good may designate as an intermediate material any self-produced material used in the production of the good, provided that such material is an originating good under Article 4.2.
2. Where the intermediate material is subject to a regional value content in accordance with Annex 4.2, the regional value content shall be calculated on the basis of the net cost method set out in Article 4.4.
3. For the purposes of calculating the regional value content of the good, the value of the intermediate material shall be the total cost that may reasonably be assigned to that intermediate material.
4. If a material designated as an intermediate material is subject to a regional value content, no other self-produced material subject to a regional value content used in the production of that intermediate material may, in turn, be designated by the producer as an intermediate material.
5. Except where two or more producers cumulate their production under Article 4.8, the restriction set out in paragraph 4 shall not apply to an intermediate material used by another producer in the production of a material that is subsequently acquired and used in the production of a good by the producer referred to in paragraph 4.
Article 4.8. Cumulation
1. 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, provided that they comply with the applicable provisions of this Chapter.
2. Each Party shall provide that a good shall be considered originating when it is produced in the territory of one or both Parties by one or more producers, provided that the good meets the requirements of Article 4.2 and the other applicable requirements of this Chapter.
Article 4.9. De Minimis
1. A good that does not comply with the applicable change in tariff classification set out in Annex 4.2 shall be considered to be originating if:
(a) the value of all non-originating materials used in its production that do not comply with the change in tariff classification pursuant to Annex 4.2 does not exceed 10% of the FOB value of the good. The good shall comply with all other applicable criteria set out in this Chapter, or
(b) where the good referred to in paragraph 1 is subject to a regional value content requirement, the value of all non-originating materials shall be included in the calculation of the regional value content of the good.
2. Paragraph 1 shall not apply to:
(a) goods covered by Chapters 50 through 63 of the Harmonized System, and.
(b) a non-originating material that is used in the production of goods falling within Chapters 01 through 24 of the Harmonized System, unless the non-originating material falls within a subheading other than that of the good for which origin is being determined under this Article.
3. A good classified in Chapters 50 through 63 of the Harmonized System, produced in the territory of a Party, shall be considered originating if the weight of all non-originating fibers or yarns of the component that determines the tariff classification of the good, that do not meet the applicable tariff classification change requirement, does not exceed 7% of the total weight of the good.
Article 4.10. Fungible Goods or Materials
1. For purposes of determining whether a good is originating, where originating and non-originating fungible materials that are physically mixed or combined in inventory are used in the production of the good, the origin of the materials may be determined by one of the inventory management methods set out in paragraph 3.
2. When originating and non-originating fungible goods are physically mixed or combined in inventory, and prior to their exportation they do not undergo any production process or any other operation in the territory of the Party in which they were physically mixed or combined, other than unloading, reloading or any other movement necessary to maintain the goods in good condition or to transport them to the territory of the other Party, the origin of the good may be determined from one of the inventory management methods set out in paragraph 3.
3. The applicable inventory management methods for fungible materials or goods shall be as follows:
(a) "PEPS" (first-in-first-out) is the inventory management method whereby the origin of the number of units of the expendable materials or goods first received into inventory is considered to be the origin, in equal number of units, of the expendable materials or goods first removed from inventory;
(b) "LIFO" (last-in-first-out) is the method of inventory management whereby the origin of the number of units of the expendable materials or commodities last received into inventory is considered as the origin, in equal number of units, of the expendable materials or commodities first removed from inventory; or
(c) "averaging" is the method of inventory management whereby, except as provided in paragraph 4, the determination of whether fungible materials or goods are originating is made through the application of the following formula:
PMO = TMO / TMOYN x 100
where:
PMO: is the average of the originating fungible materials or goods;
TMO: is the total number of units of the originating materials or consumables in the pre-departure inventory; and
TMOYN: is the sum total of units of the originating and non-originating fungible materials or goods that are part of the pre-departure inventory;
(d) any other that the Parties may agree.
4. For the case in which the good is subject to a regional value content requirement, the determination of the non-originating fungible materials shall be made through the application of the following formula:
PMN = TMN / TMOYN x 100
where:
PMN: is the average of the non-originating materials;
TMN: is the total value of non-originating fungible materials forming part of the pre-departure inventory; and
TMOYN: is the total value of originating and non-originating fungible materials forming part of the pre-departure inventory.
5. The inventory management method selected, in accordance with paragraph 3, for a particular commodity or fungible material shall continue to be used for those commodities or materials during the taxable year of the person who selected the inventory management method.
Article 4.11. Accessories, Spare Parts and Tools
1. Accessories, spare parts, tools, and other instructional or informational materials delivered with the good shall be disregarded in determining whether all non-originating materials used in the production of the good meet the applicable change in tariff classification, provided that:
(a) the accessories, spare parts, tools, and other instructional or informational materials are classified with the good and have not been separately invoiced, regardless of whether each is separately identified on the invoice itself; and
(b) the quantities and value of such accessories, spare parts, tools, and other instructional or informational materials are customary for the good.
2. If a good is subject to a regional value content requirement, the value of the accessories, spare parts, tools, and other instructional or informational materials described in paragraph 1 shall be considered as originating or non-originating materials, as the case may be, in calculating the regional value content of the good.
Article 4.12. Retail Containers and Packaging Materials
1. Where the containers and packaging materials in which a good is presented for retail sale are classified together with the good they contain, they shall be disregarded in determining whether all non-originating materials used in the production of the good comply with the applicable change in tariff classification set out in Annex 4.2.
2. Where the good is subject to a regional value content requirement, retail containers and packaging materials classified together with the good shall be considered as originating or non-originating, as the case may be, in calculating the regional value content of the good.
3. Where a good is wholly obtained or wholly produced in accordance with Article 4.3 or is produced exclusively from originating materials in accordance with Article 4.2, containers and packaging materials classified together with the packaged good shall not be taken into account in the determination of origin.
Article 4.13. Packing Materials and Shipping Containers
Each Party shall provide that packaging materials and shipping containers shall not be taken into account in determining whether a good is originating.
Article 4.14. Indirect Materials
Indirect materials shall be considered as originating regardless of the place of their production.
Article 4.15. Third Country Goods
1. The Parties shall consider goods originating in a free zone (1) located in the territory of one of the Parties that comply with the origin provisions in accordance with the treaties or trade agreements in force between a Party and a third country non-Party (2) , shall not lose that status provided that: (i) it is proven that the same have remained under customs control and supervision, even when operations such as transshipment, storage, deconsolidation or splitting of shipments, sales, packing, packaging, wrapping, making of promotional packages, labeling of packaging, or consolidation have taken place; (ii) the merchandise is not the object of production in such zones; (iii) such operations are carried out in accordance with such treaties or trade agreements; and (iv) the other applicable provisions thereof are complied with. Customs control and supervision may be evidenced by means of a document issued by the customs authorities of the free zone. (3)
2. An invoice relating to third country goods exported pursuant to a trade treaty or agreement referred to in paragraph 1 may be issued by a logistics operator established in a free zone located in the territory of one of the Parties, provided that it is issued in compliance with the provisions of the applicable trade treaty or agreement permitting invoicing in third countries.
3. In case of discrepancy between the provisions of this Article and the applicable provisions of the treaties or trade agreements referred to in paragraph 1, the provisions of such treaties or trade agreements shall prevail.
Article 4.16. Sets of Goods
1. If goods are classified as a set as a result of the application of Rule 3 of the General Rules for the Interpretation of the Harmonized System, the set shall be considered as originating only if each good in the set is originating and both the set and the goods comply with all other applicable requirements of this Chapter.
2. Notwithstanding paragraph 1, a set of goods shall be originating if the value of all the non-originating goods in the set does not exceed 10% of the value of the set.
3. The provisions of this Article shall prevail over the specific rules of origin set out in Annex 4.2.
Article 4.17. Transshipment and Direct Shipment or International Transit
1. An originating good shall not lose its originating status when it is exported from one Party to the other Party and during its transportation it passes through the territory of any other non-Party, provided that the following requirements are met:
(a) the transit is justified by geographical reasons or by considerations relating to logistical operations for international trade and transport;
(b) during transit or transshipment it is not transformed or subjected to operations other than loading, unloading, splitting of consignments, storage, packing, wrapping, packaging, repacking, labeling, reloading, handling or any other operation necessary to ensure its preservation; and
(c) remains under the control or supervision of the customs authority in the territory of the non-Party.
2. Compliance with the provisions set forth in subparagraph 1(c) shall be evidenced by the presentation to the customs authority of the importing Party of:
(a) in the case of transit or transshipment, the transport documents, such as the air waybill, bill of lading, consignment note or multimodal transport documents, evidencing transportation from the country of origin to the importing Party, as the case may be; or
(b) in the case of storage, the transport documents, such as the air waybill, bill of lading, consignment note or multimodal transport documents, evidencing transportation from the country of origin to the importing Party, as the case may be, and the documents issued by the customs authority of the country where the storage takes place.
Section B. Customs Procedures
Article 4.18. Certification of Origin
1. The certificate of origin and the declaration of origin shall have a single format established in Annex 4.18, which may be issued in written or electronic form (4). The certificate of origin shall be duly completed in accordance with its instructions. These forms may be modified by the Commission.
2. The certificate of origin referred to in paragraph 1 shall serve to certify that a good exported from the territory of one Party to the territory of the other Party qualifies as originating. The certificate of origin shall be valid for a maximum of 1 year from the date of its issuance.
3. The importer may request preferential tariff treatment based on a certificate of origin issued by the competent authority of the exporting Party, at the request of the exporter.
4. For the purposes of issuing the certificate of origin, the competent authority shall review in its territory the documentation determining the originating status of the goods. If the competent authority considers it appropriate, it may request any supporting evidence, make inspection visits to the exporter's or producer's facilities or carry out any other control it deems appropriate.
5. Each Party shall provide that the certificate of origin may cover:
(a) a single shipment of one or more goods into the territory of a Party, or.
(b) several shipments of identical goods to be made within any period set out in the written or electronic certification, not to exceed 12 months from the date of issuance.
Article 4.19. Duplicate Certificate of Origin
1. In case of theft, loss or destruction of a certificate of origin, the exporter may apply in writing to the competent authority for a duplicate of the original, which shall be made on the basis of the documents in the possession of the competent authority.
2. The phrase "Duplicate of certificate of origin No .... with date of issue ......" shall be entered in the "Remarks" field. The validity of the said certificate of origin shall be counted from the date of issue of the original certificate of origin.
Article 4.20. Obligations Regarding Imports
1. Each Party shall require an importer claiming preferential tariff treatment for a good imported into its territory from the territory of the other Party to:
(a) declare in writing, on the import document provided for in its domestic legislation, on the basis of a valid certificate of origin, that the good qualifies as originating;
(b) presents the valid certificate of origin at the time of making the declaration referred to in subparagraph (a);
(c) has in its possession, as the case may be, the documents evidencing compliance with the requirements established in Article 4.17 (2).
2. When a certificate of origin is not accepted by the customs authority of the importing Party because it contains omissions in its completion or errors of form that create doubts as to the accuracy of the certificate, such authority may request the importer to present the certificate of origin in which the irregularities detected are corrected within 20 working days from the day following the day of notification of the request.
3. Each Party shall provide that, where an importer in its territory fails to comply with any of the requirements set out in this Chapter, the importing Party shall deny the preferential tariff treatment requested for the good imported from the territory of the other Party.
4. Each Party shall provide that, where the importer has not requested preferential tariff treatment for a good imported into its territory that it has qualified as originating, the importer may, within 1 year from the date of importation, request a refund of the excess customs duties paid, provided that the request is accompanied by:
(a) a written declaration, stating that the merchandise qualified as originating at the time of importation;
(b) the certificate of origin, and
(c) any other documentation related to the importation of the good, as required by the importing Party.
Article 4.21. Obligations Regarding Exports
1. Each Party shall provide that its exporter or producer that has signed a certificate or declaration of origin and has reason to believe that such certificate or declaration contains incorrect information shall promptly communicate, in writing, any change that may affect the accuracy or validity of the certificate or declaration of origin to all persons to whom it has delivered such certificate or declaration of origin, as the case may be, and to its competent authority. In cases where the said communication is made prior to the customs authority of the importing Party having initiated the exercise of its powers of verification in accordance with its national legislation, the exporter or the producer may not be penalized for having submitted an incorrect certificate or declaration, respectively.
2. Each Party shall provide that the competent authority of the exporting Party shall notify the competent authority of the importing Party in writing of the notification referred to in paragraph 1.
3. Each Party shall provide that false certification by an exporter or producer in its territory that a good to be exported to the territory of another Party qualifies as originating shall have the same legal consequences, with such modifications as the circumstances may require, as those that would apply to an importer in its territory who makes false declarations or representations in contravention of its customs laws and regulations.
Article 4.22. Record Keeping Requirements
1. The competent authority shall keep a copy of the certificate of origin for at least 5 years from the date of its issuance. Such file shall include all the background information on which the certificate of origin was issued.
2. An exporter applying for a certificate of origin in accordance with Article 4.18 shall keep for at least 5 years from the date of issuance of such certificate, all records and documents necessary to demonstrate that the good was originating.
3. An importer claiming preferential tariff treatment for a good shall retain for a minimum of 5 years from the date of importation of the good, the documents related to the importation, including the certificate of origin.
4. The records and documents referred to in paragraphs 1 through 3 may be maintained in paper or electronic form, in accordance with the national legislation of each Party.
Article 4.23. Exceptions to the Obligation to Present the Certificate of Origin
1. The Parties shall not require a certificate of origin in the case of:
(a) an importation of goods the customs value of which does not exceed the amount of one thousand dollars of the United States of America (US$ 1,000.00) or its equivalent in the national currency of the importing Party or such greater amount as the importing Party may establish, or
(b) an importation of goods for which the importing Party has waived the requirement to present the certificate of origin.