(a) the commercial samples be imported only for the solicitation of orders for goods, or services provided from the territory, of the other Party or a non-party; or (b) the printed advertising materials be imported in packets, each of which contains no more than one copy of the material, and that neither the materials nor the packets form part of a larger consignment.
Article 2.6. Goods Re-entered after Repair or Alteration
1. Except as provided in Annex 2-E, a Party shall not apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported from its territory to the territory of the other Party for repair or alteration, regardless of whether the repair or alteration could be performed in its territory. (2)
2. A Party shall not apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair or alteration.
Article 2.7. Import and Export Restrictions
1. Except as otherwise provided in this Agreement, a Party shall not adopt or maintain a prohibition or restriction on the importation of a good of the other Party, or on the exportation or sale for export of a good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994 and, for greater certainty, its interpretative notes, and to this end Article XI of the GATT 1994 and, for greater certainty, its interpretative notes, or an equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made a part of this Agreement.
2. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.
3. If a Party adopts or maintains a prohibition or restriction on the importation from, or exportation to, a non-party of a good, this Agreement is not to be construed to prevent the Party from:
(a) limiting or prohibiting the importation from the territory of the other Party of a good of that non-party; or
(b) requiring as a condition of export of a good of the Party to the territory of the other Party, that the good not be re-exported to the non-party, directly or indirectly, without being consumed in the territory of the other Party.
4. If a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-party, on request of the other Party, the Parties shall consult with a view to avoiding undue interference with, or distortion of, pricing, marketing, and distribution arrangements in the other Party.
5. Paragraphs 1 through 4 do not apply to the measures set out in Annex 2-A.
Article 2.8. Export Duties, Taxes or other Charges
A Party shall not adopt or maintain duties, taxes, or other charges on the export of a good to the territory of the other Party, unless the duties, taxes, or charges are also adopted or maintained on the good when destined for domestic consumption.
Article 2.9. Most-favoured-nation Treatment for Internal Taxes and Emissions Regulations
With respect to internal taxes and emissions regulations related to automotive goods, each Party shall accord to the products originating in the other Party no less favourable treatment than that accorded to the like products originating in a non-party, including as provided in any free trade agreement with that non-party.
Article 2.10. Customs User Fees
1. A Party shall not adopt or maintain a customs user fee or other similar charge in connection with importation of a good of the other Party that is not commensurate with the cost of services rendered.
2. The Parties affirm that nothing in this Article modifies Article VIII of GATT 1994 as it applies between them.
Article 2.11. Customs Valuation Agreement
The Customs Valuation Agreement or any successor agreement to which both Parties are party shall govern the customs valuation rules applied by the Parties to their reciprocal trade.
Article 2.12. Agricultural Safeguard Measures
1. Notwithstanding Article 2.3 , a Party may impose an agricultural safeguard measure in the form of a higher import duty, consistent with paragraphs 2 through 7, on an originating agricultural good listed in its Schedule to Annex 2-F, if the aggregate volume of imports of a good in a year exceeds a trigger level as set out in its Schedule to Annex 2-F.
2. The duty pursuant to paragraph 1 shall not exceed the lesser of the prevailing most-favoured-nation (MFN) applied rate, or the MFN applied rate of duty in effect on the day immediately preceding the date of entry into force of this Agreement, or the tariff rate set out in its Schedule to Annex 2-F.
3. The duty imposed pursuant to paragraph 1 shall be set according to the Party's Schedule to Annex 2-F and shall only be maintained until the end of the year, as defined in Annex 2-D, in which it has been imposed.
4. A Party shall not apply or maintain an agricultural safeguard measure and at the same time apply or maintain, with respect to the same good:
(a) a safeguard measure under Chapter Seven (Trade Remedies);
(b) a measure under Article XIX of GATT 1994 and the Safeguards Agreement; or
(c) a measure under any agricultural safeguard provisions of the WTO Agreement on Agriculture.
5. Each Party shall implement an agricultural safeguard measure in a transparent manner. Within 60 days after imposing a measure, the Party applying the measure shall notify the other Party in writing and shall provide it with relevant data concerning the measure. On the written request of the exporting Party, the Parties shall consult regarding the application of the measure.
6. The implementation and operation of this Article may be the subject of discussion and review in the Committee on Trade in Goods or in a sub-committee established under Article 2.14.
7. A Party shall not apply or maintain an agricultural safeguard measure on an originating agricultural good:
(a) after the expiration of the period specified in the agricultural safeguard provisions of the Party's Schedule to Annex 2-F; and
(b) that increases the in-quota duty on a good subject to a tariff rate quota (hereinafter referred to as "TRQ").
Article 2.13. Administration and Implementation of Trqs
1. A Party that has established TRQs as set out in Annex 2-G shall implement and administer these TRQs in accordance with Article XIII of GATT 1994 and, for greater certainty, its interpretive notes, and the WTO Agreement on Import Licensing Procedures, and any other WTO agreement.
2. A Party shall ensure that:
(a) its procedures for administering its TRQs are transparent, made available to the public, timely, non-discriminatory, responsive to market conditions, minimally burdensome to trade, and reflect end user preferences; and
(b) an enterprise or a person of a Party that fulfils the importing legal and administrative requirements shall be eligible to apply and to be considered for a quota allocation under the TRQs.
3. Over the course of each year, the administering authority of a Party shall publish, in a timely fashion on its designated publicly available Internet site, administration procedures, utilisation rates, and remaining available quantities for each of the TRQs.
4. A Party shall notify the other Party of new or modified administration of TRQs established in Annex 2-G prior to its application.
5. A Party shall make every effort to administer its TRQs in a manner that allows importers to fully utilise them. On the written request of a Party, the Parties shall discuss a Party's administration of its TRQs at the next meeting of Committee on Trade in Goods to arrive at a mutually satisfactory agreement. The Parties shall consider prevailing supply and demand conditions in the discussions.
Article 2.14. Committee on Trade In Goods
1. The Parties hereby establish a Committee on Trade in Goods, composed of representatives of each Party.
2. The Committee shall meet periodically, and at any other time at the request of either Party or the Commission, to ensure the effective implementation and administration of this Chapter. In this regard, the Committee shall:
(a) monitor the implementation and administration by the Parties of this Chapter;
(b) at the request of either Party, review proposed modifications of or additions to this Chapter;
(c) recommend to the Commission modifications of or additions to this Chapter, and to other provisions of this Agreement to conform with any change to the Harmonized System;
(d) consider any tariff or non-tariff issue raised by either Party (3) ; and
(e) consider any other matter relating to the implementation and administration by the Parties of this Chapter raised by:
(i) a Party; or
(ii) any sub-committee established pursuant to paragraph 4.
3. If the Committee fails to resolve a matter referred to it within 30 days of such referral, either Party may request a meeting of the Commission under Article 20.1 (Joint Commission).
4. Upon written request of a Party, a sub-committee shall be established and convene a meeting of relevant officials from each Party within 90 days or at a mutually agreed time for discussions with a view to resolving issues resulting from the implementation and administration of this Chapter and its Annexes. The sub-committee may refer to the Committee any matter for its consideration.
5. Each Party shall to the extent practicable, take all necessary measures to implement modifications of, or additions to, this Chapter within 180 days of the date on which the Commission agrees on the modification or addition.
6. This Chapter is not to be construed to prevent a Party from issuing a determination of origin or an advance ruling relating to a matter under consideration by the Committee or from taking other action it considers necessary, pending a resolution of the matter under this Agreement.
7. The Parties hereby establish a Sub-Committee on Trade in Forest Products as set out in Annex 2-B.
8. The Parties hereby establish a Sub-Committee on Trade in Automotive Goods as set out in Annex 2-C.
Article 2.15. Definitions
For the purposes of this Chapter:
advertising films and recordings means recorded visual media or audio materials, consisting essentially of images or sound, showing the nature or operation of a good or service offered for sale or lease by a person established or resident in the territory of a Party, provided that those materials are of a kind suitable for exhibition to a prospective customer but not for broadcast to the general public, and provided that they are imported in a packet that contains no more than one copy of each film or recording and that does not form part of a larger consignment;
agricultural goods means the products listed in Annex 1 of the WTO Agreement on Agriculture with any subsequent changes agreed in the WTO to be automatically effective for this Agreement;
automotive good means all forms of motor vehicles, systems, and parts thereof falling under Chapters 40, 84, 85, 87, and 94 of the Harmonized System, except for the following goods:
(a) tractors (in HS 8701.10, 8701.20, 8709.11, 8709.19, and 8709.90);
(b) snow mobiles and golf carts (in HS 8703.10); and
(c) construction machinery (in HS 8413.40, 8425.11, 8425.19, 8425.31, 8425.39, 8425.41, 8425.42, 8425.49, 8426.11, 8426.12, 8426.19, 8426.20, 8426.30, 8426.41, 8426.49, 8426.91, 8426.99, 8427.20, 8428.10, 8428.20, 8428.31, 8428.32, 8428.33, 8428.39, 8428.40, 8428.60, 8428.90, 8429.11, 8429.19, 8429.20, 8429.30, 8429.40, 8429.51, 8429.52, 8429.59, 8430.10, 8430.20, 8430.31, 8430.39, 8430.41, 8430.49, 8430.50, 8430.61, 8430.69, 8431.10, 8431.31, 8431.39, 8431.41, 8431.42, 8431.43, 8431.49, 8474.10, 8474.20, 8474.31, 8474.32, 8474.39, 8474.80, 8474.90, 8479.10, 8701.30, 8704.10, 8705.10, 8705.20, 8705.40, and 8705.90);
commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than US$1, or the equivalent amount in the currency of a Party, or so marked, torn, perforated or otherwise treated that they are unsuitable for sale or for use except as commercial samples;
consumed means:
(a) actually consumed; or
(b) further processed or manufactured so as to result in a substantial change in value, form, or use of the good or in the production of another good;
duty-free means free of customs duties;
goods imported for sports purposes means sports requisites for use in sports contests, demonstrations, or training in the territory of the Party into whose territory the goods are imported;
goods intended for display or demonstration includes their component parts, ancillary apparatus, and accessories;
goods of a Party means domestic products as understood in the GATT 1994 or goods as the Parties may agree, and includes originating goods of that Party;
printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, and tourist promotional materials and posters, that are used to promote, publicise, or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge;
repair or alteration does not include an operation or process that either destroys the essential characteristics of a good or creates a new or commercially different good (4) ; and
tariff elimination schedule means the provisions of Annex 2-D.
Chapter Three. Rules of Origin
Article 3.1. Originating Goods
Except as otherwise provided in this Chapter, a good is originating under this Agreement if: (a) the good satisfies one of the following conditions:
(i) the good is wholly obtained or produced entirely in the territory of one or both of the Parties as defined in Article 3.2;
(ii) the good has undergone sufficient production as defined in Article 3.3; or
(iii) the good is produced entirely in the territory of one or both of the Parties, exclusively from originating materials; and
(b) the good satisfies all other applicable requirements under this Chapter.
Article 3.2. Wholly Obtained
The following goods are considered wholly obtained and therefore originating in the territory of one or both of the Parties:
(a) mineral goods and other non-living natural resources extracted or taken from the territory of one or both of the Parties;
(b) vegetable goods grown and harvested in the territory of one or both of the Parties;
(c) live animals born and entirely raised in the territory of one or both of the Parties;
(d) goods obtained from live animals referred to in subparagraph (c) in the territory of one or both of the Parties;
(e) goods obtained from hunting, trapping, or fishing conducted within the land territory, internal waters, and the outer limit of the territorial sea of one or both of the Parties;
(f) fish, shellfish, and other marine life taken from the sea, seabed, ocean floor, or subsoil outside the territorial seas of one or both of the Parties by a vessel registered, recorded, or listed with a Party and entitled to fly its flag;
(g) goods produced on board a factory vessel from the fish, shellfish, or other marine life referred to in subparagraph (f), provided that the factory vessel is registered, recorded, or listed with a Party and entitled to fly its flag;
(h) goods, other than fish, shellfish, and other marine life, taken or extracted from the seabed, ocean floor, or subsoil, outside the territory of one or both of the Parties by a Party or a person of a Party, provided that the Party or person of the Party has rights to exploit that seabed, ocean floor, or subsoil in accordance with Part XI of UNCLOS;
(i) goods taken from outer space, provided they are obtained by a Party or a person of a Party and not processed in the territory of a non-party;
(j) waste and scrap resulting from production conducted in the territory of one or both of the Parties;
(k) components recovered from used goods collected in the territory of one or both of the Parties, provided that the used goods are fit only for such recovery and the components recovered therefrom have undergone a process necessary to ensure their good working condition; and
(l) goods produced entirely in the territory of one or both of the Parties exclusively from goods referred to in subparagraphs (a) through (k), or from their derivatives, at any stage of production.
Article 3.3. Sufficient Production
1. A good is considered to have undergone sufficient production and therefore is originating when the conditions set out for that good in Annex 3-A are fulfilled entirely in the territory of one or both of the Parties and all other applicable requirements of this Chapter are satisfied.
2. Notwithstanding Annex 3-A and except for a good of Chapters 1 through 21, headings 39.01 through 39.15 or Chapters 50 through 63 of the Harmonized System, a good is considered to have undergone sufficient production and therefore is originating, provided that:
(a) the good cannot satisfy the conditions in Annex 3-A because both the good and one or more of the non-originating materials used in the production of that good are classified in the same subheading, or heading that is not further subdivided into subheadings; and
(b) the value of the non-originating materials classified in the same subheading, or heading that is not further subdivided into subheadings, as the good does not exceed 55 percent of the transaction value or ex-works price of the good.
Article 3.4. Value Test
1. Except as provided in paragraphs 2 and 3, where Annex 3-A specifies a value test to determine whether a good is originating, the good is originating provided that the value of non-originating materials used in the production of the good does not exceed a given percentage of the transaction value or ex-works price of the good as specified in Annex 3-A.
2. For the purposes of a good of headings 87.01 through 87.08, at the choice of an exporter or a producer of such goods, the good is originating provided that the value of non-originating materials used in the production of the good does not exceed the given percentage of either the transaction value or ex-works price of the good, or the net cost of the good.
3. Notwithstanding paragraph 2, for the purposes of a good of headings 87.01 through 87.06, at the choice of an exporter or a producer of such goods, the good is originating provided that the value of originating materials used in the production of the good is not less than a given percentage of the transaction value or ex-works price of the good.
4. For the purposes of calculating the net cost of a good under paragraph 2, the producer of the good may:
(a) calculate the total cost incurred with respect to all goods produced by that producer, subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost of all those goods, and then reasonably allocate the resulting net cost of those goods to the good;
(b) Calculate the total cost incurred with respect to all goods produced by that producer, reasonably allocate the total cost to the good, and then subtract (b) any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in the portion of the total cost allocated to the good; or
(c) reasonably allocate each cost that forms part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, or non-allowable interest costs.
5. For the purposes of calculating the net cost of a good of headings 87.01 through 87.05 under paragraph 4, the producer may average its calculation over its fiscal year using any one of the following categories, on the basis of either all motor vehicles in the category or only those motor vehicles in the category that are exported to the territory of the other Party:
(a) the same model line of motor vehicles in the same class of vehicles produced in the same plant in the territory of a Party;
(b) the same model line of motor vehicles produced in the same plant in the territory of a Party; (c) the same model line of motor vehicles produced in the territory of a Party;
(d) the same class of motor vehicles produced in the same plant in the territory of a Party; or
(e) any other category as the Parties may agree.
6. For the purposes of calculating the net cost under paragraph 4 for a good of headings 87.06 through 87.08 produced in the same plant, the producer may:
(a) average its calculation,
(i) over the fiscal year of the motor vehicle producer to whom the good is sold;
(ii) over any quarter or month, provided that the good was produced during the quarter or month forming the basis for the calculation; or
(iii) over the automotive material producer's fiscal year;
(b) calculate the average referred to in subparagraph (a) separately for any or all goods sold to one or more motor vehicle producers; or
(c) calculate the average in subparagraph (a) or (b) separately for those goods that are exported to the territory of the other Party.
Article 3.5. Materials Used In Production
1. If a non-originating material undergoes sufficient production in the territory of one or both of the Parties, the resulting good is originating and no account shall be taken of the non-originating material contained therein when that good is used in the subsequent production of another good.
2. Except as provided in Article 3.6.2, the "value of non-originating materials", including, for the purposes of this definition, non-originating component goods and non-originating packaging materials and containers as referred to in Article 3.12 and in Annex 3-A, means:
(a) the transaction value or the customs value of the materials at the time of their importation into a Party, adjusted, if necessary, to include freight, insurance, packing, and all other costs incurred in transporting the materials to the place of importation; or
(b) in the case of domestic transactions, the value of the materials determined in accordance with the principles of the Customs Valuation Agreement in the same manner as international transactions, with such modifications as may be required .
3. Except as provided in Article 3.6.2, the "value of originating materials" means the price paid or payable for the material by the producer in the Party where the producer is located, in accordance with the Generally Accepted Accounting Principles applicable in the territory of the Party where the good is produced. If there is no price paid or payable, the "value of originating materials" will be the value as determined under paragraph 2(b).
Article 3.6. Self-produced Materials
1. For the purposes of determining the origin of a good, a producer of a good may, at the producer's choice, designate any self-produced material as a material to be taken into account as an originating or non-originating material, as the case may be, in determining whether the good satisfies the applicable requirements of the rules of origin.
2. The value of a self-produced material shall be:
(a) the total cost incurred with respect to all goods produced by the producer of the good that can be reasonably allocated to that self-produced material; or
(b) the sum of all costs that comprise the total cost incurred with respect to that self-produced material that can be reasonably allocated to that self-produced material.
Article 3.7. Accumulation
1. For the purposes of determining whether a good is an originating good, a good originating in the territory of one or both of the Parties shall be considered as originating in the territory of either of the Parties.
2. For the purposes of determining whether a good is an originating good, the production of the good in the territory of one or both of the Parties by one or more producers is, at the choice of the exporter or producer of the good for which preferential tariff treatment is claimed, considered to have been performed in the territory of either of the Parties by that exporter or producer, if:
(a) all non-originating materials used in the production of the good undergo sufficient production as defined in Article 3.3, entirely in the territory of one or both of the Parties; and
(b) the good satisfies all other applicable requirements of this Chapter.
3. The Parties may agree to review this Article with a view to providing for other forms of cumulation, such as cross-cumulation or pan-free-trade-agreement-cumulation for the purpose of qualifying goods as originating goods under this Agreement.
Article 3.8. De Minimis
1. Notwithstanding Article 3.3 and except for a good of Chapters 50 through 63 of the Harmonized System, a good is considered originating, where the value of all non-originating materials used in the production of the good, which do not undergo the applicable change in tariff classification or fulfil any other condition set out in Annex 3-A, does not exceed 10 percent of the transaction value or ex-works price of the good, provided that:
(a) if the rule of Annex 3-A applicable to the good contains a percentage for the maximum value of non-originating materials, the value of those non-originating materials shall be included in calculating the value of non-originating materials; and
(b) the good satisfies all other applicable requirements of this Chapter.
2. A good of Chapters 50 through 60 of the Harmonized System, that does not originate because certain non-originating yarns used in the production of the good do not fulfil the conditions set out for that good in Annex 3-A , is considered originating if the total weight of all such yarns does not exceed 10 percent of the total weight of that good.
3. A good of Chapters 61 through 63 of the Harmonized System, that does not originate because certain non-originating yarns used in the production of the component of the good that determines the tariff classification of that good do not fulfil the conditions set out for that good in Annex 3-A, is considered originating if the total weight of all such yarns in that component does not exceed 10 percent of the total weight of that component.
4. Except as provided in Annex 3-A, paragraph 1 does not apply to a non-originating material used in the production of a good provided for in Chapters 1 through 21 of the Harmonized System unless the non-originating materials are provided for in a different subheading from that of the good for which the origin is being determined under this Article.