(k) goods means both materials and products being manufactured, even if it is intended for later use in another manufacturing operation;
(l) indirect material/neutral elements means goods used in the production, testing or inspection of goods but not physically incorporated into the goods, or goods used in the maintenance of buildings or the operation of equipment associated with the production of goods as referred to in Article 3.6 (Indirect Material/Neutral Elements);
(m) material means a good or any matter or substance such as raw materials, ingredients, parts, components, sub-components or sub-assemblies that are used or consumed in the production of goods or transformation of another good or are subject to a process in the production of another good;
(n) originating goods or originating material means goods or material that qualifies as originating in accordance with the provisions of this Chapter;
(o) product specific rules means rules that specify that the materials have undergone a change in tariff classification or a specific manufacturing or processing operation, or satisfy a Qualifying Value Content (QVC) criterion or a combination of any of these criteria; and
(p) production means methods of obtaining goods including, but not limited to, growing, raising, mining, harvesting, fishing, farming, trapping, hunting, capturing, aquaculture, gathering, collecting, breeding, extracting, manufacturing, processing or assembling a good.
2. For the purposes of this Article, where the last working or processing has been subcontracted to a manufacturer, the term âmanufacturerâ may refer to the enterprise that has employed the subcontractor.
Article 3.2. Origin Criteria
Except as otherwise provided for in this Chapter, a good shall qualify as an originating good of a Party where:
(a) the good is wholly obtained or produced entirely in the Party, as provided in Article 3.3 (Wholly Obtained or Produced Goods);
(b) the good is produced entirely in the Party exclusively from originating materials of the Parties; or
(c) the good is produced from non-originating materials in the Party, provided that the good has satisfied the requirements set out in Article 3.4 (Goods not Wholly Produced or Obtained).
Additionally, the good shall meet all applicable requirements of this Chapter.
Article 3.3. Wholly Obtained or Produced Goods
The following goods shall be considered as wholly obtained or produced entirely in the territory of a Party:
(a) plants, plant goods, and vegetable goods grown and harvested there;
(b) live animals born and raised there;
(c) goods obtained from live animals referred to in subparagraph (b);
(d) goods obtained from hunting, trapping, fishing, farming, aquaculture, gathering or capturing conducted there;
(e) goods from slaughtered animals born and raised there; (f) mineral products extracted from its soil or seabed;
(g) goods of sea-fishing and other marine life taken by vessels of that Party (1), and other goods taken by that Party or a person of that Party, from the waters, seabed, or subsoil beneath the seabed outside the territorial sea of the Parties and non-Parties, in accordance with international law, provided that, in case of goods of sea-fishing and other marine life taken from the exclusive economic zone of any Party or non-Party, that Party or person of that Party has the rights to exploit (2) such exclusive economic zone, and in case of other goods, that Party or person of that Party has rights to exploit such seabed and subsoil beneath the seabed, in accordance with international law;
(h) goods of sea-fishing and other marine life taken by vessels of that Party from the high seas in accordance with international law;
(i) goods processed or made on board any factory ships of that Party (3), exclusively from the goods referred to in subparagraph (g) or (h);
(j) waste or scrap derived from:
(i) production carried out there, or
(ii) used goods collected or salvaged there, provided that the waste or scrap is fit only for the recovery of raw materials; and
(k) goods produced or obtained there exclusively from goods referred to in subparagraph (a) through (j) or from their derivatives.
Article 3.4. Goods Not Wholly Produced or Obtained
1. For the purposes of subparagraph (c) of Article 3.2 (Origin Criteria),except for those goods covered under paragraph 2, a good shall be treated as an originating good:
(a) if the goods have a qualifying value content of not less than 40 per cent calculated using the formula set out in Article 3.5 (Qualifying Value Content (QVC)); or
(b) if all non-originating materials used in the production of the goods have undergone a change in tariff classification (hereinafter referred to as "CTC") at four-digit level (i.e. a change in tariff heading) of the HS.
2. Notwithstanding paragraph 1, goods listed in Annex 3B (Product Specific Rules) shall qualify as originating goods if the goods satisfy the product specific tules set out therein.
Article 3.5. Qualifying Value Content (QVC)
1. The QVC of a good shall be calculated as follows:
QVC = FOB - VNM / FOB x 100
Where:
(a) "QVC" is the qualifying value content of the good, expressed as a percentage;
(b) "FOB" is the FOB value as defined in subparagraph (h) of Article 3.1 (Definitions); and
(c) "VNM" is the materials, which do not qualify as originating in any Party within the meaning of Article 3.2 (Origin Criteria) and the materials of undetermined origin.
2. For the purposes of calculating the QVC provided in paragraph 1, VNM shall be:
(a) the CIF value at the time of importation of the goods; or
(b) the earliest ascertained price paid for the goods of undetermined origin in the territory of the Party where the working or processing takes place.
3. All costs considered for the calculation of the QVC shall be recorded and maintained in conformity with the Generally Accepted Accounting Principles applicable in the territory of the Party where the good is produced.
Article 3.6. Indirect Material/Neutral Elements
Any indirect material used in the production of a good but not incorporated into the good shall be treated as an originating material, irrespective of whether it originates from a non-Party. Such indirect materials include:
(a) fuel, energy, catalysts, and solvents;
(b) equipment, devices, and supplies used for testing or inspection of the goods;
(c) gloves, glasses, footwear, clothing, and 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 materials which 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 3.7. Minimal Operations and Processes That Do Not Confer Origin
1. Without prejudice to paragraph 2, the following operations shall be considered as insufficient working or processing to confer the status of originating goods, whether or not the requirements set out in Article 3.4 (Goods not Wholly Produced or Obtained) are satisfied:
(a) operations to ensure the preservation of goods in good condition during transport and storage;
(b) sifting, classifying, washing, cutting, slitting, bending, coiling, uncoiling, sharpening, simple grinding, or slicing;
(c) changes of packing, unpacking or repacking operations, and breaking up or assembly of consignments;
(d) cleaning, including removal of dust, paint, oil or other coverings and simple removal of oxide;
(e) simple painting and polishing operations;
(f) testing or calibration;
(g) placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards, and all other simple packaging operations;
(h) simple mixing of goods, whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in this Chapter to enable them to be considered as originating goods;
(i) simple assembly of parts of articles to constitute a complete article or simple disassembly of goods into parts;
(j) slaughtering (4) of animals;
(k) affixing or printing marks, labels, logos, and other like distinguishing signs on goods or their packaging;
(l) husking, partial or total bleaching, polishing, and glazing of cereals and rice;
(m) mere making-up of sets of goods;
(n) ironing or pressing of textiles and textile articles;
(o) operations to colour sugar or form sugar lumps;
(p) simple peeling, stoning, and shelling;
(q) a combination of two or more of the operations specified in subparagraphs (a) through (p).
2. For the purposes of paragraph 1, operations shall be considered simple when neither special skills nor machines, apparatus, or tools especially produced or installed for those operations are required for their performance. However, simple mixing does not include chemical reaction. âChemical reactionâ means a process (including a bio-chemical process) which results in a molecule with a new structure by breaking intra molecular bonds and by forming new intra molecular bonds, or by altering the spatial arrangement of atoms in a molecule.
Article 3.8. Cumulation of Origin
For the purposes of determining whether a good qualifies as an originating good of a Party, the originating materials from the territory of the Party within the meaning of Article 3.2 (Origin Criteria), incorporated in the production of a good in the territory of the other Party, shall be considered to originate in the territory of the other Party. The finished good to be exported shall comply with Article 3.4 (Goods not Wholly Produced or Obtained).
Article 3.9. De Minimis
1. A good that does not undergo a change in tariff classification shall be considered as originating if:
(a) the value of all non-originating materials used in its production that do not undergo the required change in tariff classification do not exceed 10 per cent of the FOB value of the good; and
(b) the good meets all other applicable criteria set forth in this Chapter for qualifying as originating goods.
2. The value of non-originating materials referred to in paragraph 1 shall, however, be included in the value of non-originating materials for any applicable QVC requirement for the good.
Article 3.10. Fungible Goods or Materials
Each Party shall provide that a fungible good or material is treated as originating based on the:
(a) physical segregation of each fungible good or material; or
(b) use of any inventory management method recognised in the Generally Accepted Accounting Principles if the fungible goods or materials are commingled, provided that the inventory management method selected is used throughout the fiscal year of the person that selected the inventory management method.
Article 3.11. Accessories, Spare Parts, Tools, and Instructional or other Information Materials
1. If the goods are subject to the requirements of a change in tariff classification or specific manufacturing or processing operation, the origin of accessories, spare parts, tools, instructional, or other information materials delivered with a good that form part of the good's standard accessories, spare parts, or tools, shall be regarded as a part of the good, and shall be disregarded in determining whether or not all the non-originating materials used in the production of the originating goods undergo the applicable change in tariff classification provided that:
(a) the accessories, spare parts, tools, instructional or other information materials are classified with, and not invoiced separately from, the good; and
(b) the quantities and value of the accessories, spare parts, tools, instructional or other information materials are customary for the good.
2. If the goods are subject to the QVC requirement, the value of the accessories, spare parts, tools, and instructional or information materials shall be taken into account as the value of originating or non-originating materials, as the case may be, in calculating the QVC of the goods.
Article 3.12. Treatment of Packages, Packing Materials, and Containers
1. For packages and packing materials for retail sale:
(a) if a good is subject to the QVC requirement as set out in Annex 3B (Product Specific Rules), the value of the packages and packing materials for retail sale shall be taken into account in determining the origin of that good as originating or non-originating, as the case may be, provided that the packages and packing materials are considered to be forming a whole with the good; and
(b) if a good is subject to the change in tariff classification criterion as set out in Annex 3B (Product Specific Rules), packages and packing materials classified together with the packaged good shall not be taken into account in determining origin.
2. The containers and packing materials exclusively used for the transport of a good shall not be taken into account for determining the origin of the said good.
Article 3.13. Direct Consignment
1. The goods shall be deemed as directly consigned from the exporting Party to the importing Party:
(a) if the goods are transported without passing through the territory of any non-Party; or
(b) if the goods are transported for the purposes of transit through a non- Party with or without transshipment or temporary storage in such non-Party, provided that:
(i) the goods have not entered into trade or consumption in the territory of the non-Party;
(ii) the transit entry is justified for geographical reason or by consideration related to transport requirements; and.
(iii) the goods have not undergone any operation in the territory of the non-Party other than unloading, reloading or any operation required to keep the goods in good condition.
2. The directly consigned goods shall retain their originating status.
3. In cases where the originating goods of the exporting Party are imported through one or more non-Parties, the customs authority of the importing Party may require importers, who claim the preferential tariff treatment for the goods, to submit the following documentation to the customs authority of the importing Party:
(a) a Through Bill of Lading or similar documents used in multimodal transportation; and
(b) supporting documents (5), in evidence that the requirements of subparagraphs 1(b)(i) through (iii) are being complied with.
Article 3.14. Sets
Sets, as defined in General Interpretative Rule 3 of the HS, shall be regarded as originating when all component goods are originating goods. When a set is composed of originating and non-originating goods, the set as a whole shall be regarded as originating, provided that the value of the non-originating goods does not exceed 15 per cent of the FOB price of the set.
Section II. OPERATIONAL CERTIFICATION PROCEDURES
Article 3.15. General Requirements for Certificate of Origin
1. Goods originating in Sri Lanka shall, on importation into Thailand, and goods originating in Thailand shall, on importation into Sri Lanka, benefit from preferential tariff treatment under this Agreement upon submission of a Certificate of Origin.
2. Acclaim that goods are eligible for preferential tariff treatment under this Agreement shall be supported by a Certificate of Origin issued by the competent authority of the exporting Party.
3. Originating goods within the meaning of this Chapter shall, in the cases specified in Article 3.23 (Waiver of Certificates of Origin), benefit from preferential tariff treatment under this Agreement without it being necessary to submit the Certificate of Origin referred to in paragraph 1.
Article 3.16. Issuance of the Certificate of Origin
1. The Certificate of Origin shall be issued before or at the time of exportation whenever the goods to be exported can be considered as originating in that Party subject to this Chapter. The exporter or producer shall submit an application for the Certificate of Origin together with appropriate supporting documents proving that the goods to be exported qualify for the issuance of a Certificate of Origin.
2. Incases where a Certificate of Origin has not been issued before or at the time of exportation due to involuntary errors or omissions or other valid causes, the Certificate of Origin may be issued retrospectively but no later than one year from the date of shipment.
Article 3.17. Validity of Certificates of Origin
1. The issued Certificate of Origin shall be applicable to a single importation of an originating good of the exporting Party into the importing Party and be valid for twelve months from the date of issuance.
2. The Certificate of Origin shall be submitted to customs authorities at the time the declaration of the goods is made.
3. Certificates of Origin which are submitted to the customs authorities of the importing Party after the period of validity specified in paragraph 1 may be accepted for the purposes of applying preferential treatment, where the failure to submit these documents within such period is due to exceptional circumstances. (6)
4. In cases of belated submission of Certificates of Origin in circumstances other than those provided for in paragraph 3, the customs authorities of the importing Party may accept the Certificates of Origin where the goods have been imported before the expiry of the period of validity specified in paragraph 1 in accordance with domestic laws and regulations. (7)
5. The Parties, to the extent possible, shall implement an electronic system for issuance of Certificate of Origin.
Article 3.18. Certificate of Origin
1. The Certificate of Origin shall:
(a) be in a format to be determined by the Parties;
(b) contain information specified in the minimum information requirements as set out in Annex 3A (Minimum Information Requirements for the Certificate of Origin);
(c) be in writing, or any other medium including electronic format as notified by the exporting Party; and
(d) specify that the good is originating and meets the requirements of this Chapter.
2. The Certificate of Origin shall be forwarded by the exporter to the importer for submission to the customs authority at the port or place of importation. The copy shall be retained by the competent authority in the exporting Party.
3. The Certificate of Origin shall be in the English language.
4. Each Certificate of Origin shall bear a serial reference number separately given by each place or office of issuance.
5. Each Certificate of Origin shall bear an authorised signature and official seal and shall be applied manually or electronically.
6. Each Party shall provide the other Party with the list of names, addresses, specimen signatures, and specimen of official seals of its competent authorities, in hard copy or soft copy format through the diplomatic channel or by any other channel mutually agreed by both Parties. Any change in names, addresses, signatures or seals shall be promptly informed in the same manner and shall be acknowledged by the customs authorities of the other Party before the signatures become effective.
Article 3.19. Application for Certificate of Origin
1. At the time of carrying out the formalities for exporting the goods under preferential treatment, the exporter or its authorised representative shall submit an application in writing or by electronic means for the Certificate of Origin together with all supporting documents specified by the issuing authority proving that the goods to be exported fulfill the originating criteria under this Agreement.
2. For the purposes of determining originating status, the competent authorities shall have the right to request supporting documentary evidence or to carry out check(s) considered appropriate in accordance with the laws and regulations of the Party.
Article 3.20. Obligations of the Competent Authority
The competent authority shall carry out proper examination upon each application for the Certificate of Origin to ensure, to the best of its ability, that:
(a) the application and the Certificate of Origin are duly completed and manually or electronically signed by the authorised signatory;
(b) the origin of the good is in conformity with this Agreement;
(c) other statements on the Certificate of Origin correspond to the supporting documentary evidence submitted;
(d) description, quantity, and weight of goods, marks, and number of packages, number, and kinds of packages, as specified, conform to the goods to be exported; and
(e) multiple items declared on the same Certificate of Origin shall be allowed, provided that each item qualifies separately in its own right.
Article 3.21. Treatment of Erroneous Declaration In the Certificate of Origin
Neither erasures nor superimpositions shall be allowed on the Certificate of Origin. Any alteration shall be made on the request by the exporter to issue a new Certificate of Origin to replace the erroneous one. The new Certificate of Origin shall take effect from the date of issuance of the original Certificate of Origin.