(ii) be without prejudice as to whether the import licensing procedure is consistent with this Agreement.
(b) Before applying any new or modified import licensing procedure, a Party shall publish the new procedure or modification on an official government Internet site or in a single official journal. To the extent possible, the Party shall do so at least 20 days before the new procedure or modification takes effect.
3. Neither Party may apply an import licensing procedure to a good of the other Party unless the Party has complied with the requirements of paragraph 2 with respect to that procedure.
Article 2.10. ADMINISTRATIVE FEES AND FORMALITIES
1. Each Party shall ensure, in accordance with Article VIII:1 of GATT 1994 and its interpretive notes, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charge applied consistently with Article I:2 of GATT 1994, and antidumping and countervailing duties) imposed on or in connection with importation or exportation are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes.
2. Neither Party may require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party.
3. Each Party shall make available and maintain through the Internet a current list of the fees and charges it imposes in connection with importation or exportation.
4. Neither Party may adopt or maintain a merchandise processing fee on originating goods.
Article 2.11. EXPORT DUTIES, TAXES, OR OTHER CHARGES
Neither Party may adopt or maintain any duty, tax, or other charge on the export of any good to the territory of the other Party, unless the duty, tax, or charge is also adopted or maintained on the good when destined for domestic consumption.
Article 2.12. ENGINE DISPLACEMENT TAXES
1. Korea:
(a) shall amend the Special Consumption Tax, established under Article 1 of the Special Consumption Tax Act, to provide that:
(i) vehicles with engines of 1000 cubic centimeters (ccs) or less are not taxed, vehicles with engines of between 1001 ccs and 2000 ccs are taxed at a single rate of no more than 5 percent, (3) and vehicles with engines of more than 2000 ccs are taxed at a single rate of no more than 8 percent; and
(ii) within 3 years of the date this Agreement enters into force, vehicles with engines of more than 1000 ccs are taxed at a single rate of no more than 5 percent;
(b) shall amend the Annual Vehicle Tax, established under Article 196-5 of the Local Tax Act, to provide that vehicles with engines of 1000 ccs or less are taxed at a single rate of no more than 80 Korean won per cc, vehicles with engines of between 1001 ccs and 1600 ccs are taxed at a single rate of no more than 140 Korean won per cc, and vehicles with engines of more than 1600 ccs are taxed at a single rate of no more than 200 Korean won per cc; and
(c) may not modify its Subway Bonds or Regional Development Bonds (4) so as to increase the existing disparity in bond purchase rates between categories of vehicles.
2. Korea shall make the rate reduction prescribed by paragraph 1(a)(ii) for vehicles with engines of more than 2000 ccs in three equal annual stages. Each annual stage of reduction made after the date this Agreement enters into force shall take effect on January 1 of the relevant year.
3. Korea may not adopt new taxes based on vehicle engine displacement or modify an existing tax to increase the disparity in tax rates between categories of vehicles.
4. The Parties recognized that consumers in Korea are eligible for a refund of approximately 80 percent (5) of Subway Bonds and Regional Development Bonds immediately on the purchase of a new motor vehicle. Korea will take steps to promote public awareness of these refund programs, including by ensuring that information on how to obtain a refund is made publicly available, including on the Internet.
Section E. Other Measures
Article 2.13. DISTINCTIVE PRODUCTS
1. Korea shall recognize Bourbon Whiskey and Tennessee Whiskey, which is a straight Bourbon Whiskey authorized to be produced only in the State of Tennessee, as distinctive products of the United States. Accordingly, Korea shall not permit the sale of any product as Bourbon Whiskey or Tennessee Whiskey, if it has not been manufactured in the United States in accordance with the laws and regulations of the United States governing the manufacture of Bourbon Whiskey and Tennessee Whiskey.
2. The United States shall recognize Andong Soju and Gyeongju Beopju as distinctive products of Korea. Accordingly, the United States shall not permit the sale of any product as Andong Soju or Gyeongju Beopju, if it has not been manufactured in Korea in accordance with the laws and regulations of Korea governing the manufacture of Andong Soju and Gyeongju Beopju.
3. Promptly after this Agreement enters into force, each Party shall notify the other Party of its existing laws and regulations governing the manufacture of these products, and thereafter shall notify the other Party of any modifications it makes to those laws and regulations.
4. For greater certainty, nothing in this Article shall be construed to create or confer any right relating to a trademark or geographical indication.
Section F. Institutional Provisions
Article 2. COMMITTEE ON TRADE IN GOODS
1. The Parties hereby establish a Committee on Trade in Goods, comprising representatives of each Party. 2. The Committee shall meet on the request of a Party or the Joint Committee to consider any matter arising under this Chapter, Chapter Six (Rules of Origin and Origin Procedures), or Chapter Seven (Customs Administration and Trade Facilitation).
3. The Committee's functions shall include:
(a) promoting trade in goods between the Parties, including through consultations on accelerating tariff elimination under this Agreement and other issues as appropriate; and
(b) addressing tariff and non-tariff barriers to trade in goods between the Parties and, if appropriate, referring such matters to the Joint Committee for its consideration.
4. The Committee shall also:
(a) discuss and endeavor to resolve any difference that may arise between the Parties on matters related to the classification of goods under the Harmonized System;
(b) review conversion to the Harmonized System 2007 nomenclature and its subsequent revisions to ensure that each Party's obligations under this Agreement are not altered, and consult to resolve any conflicts between,
(i) the Harmonized System 2007 or subsequent nomenclature and Annex 2-B; and
(ii) Annex 2-B and national nomenclatures; and
(c) discuss any matter arising under Article 7.2 (Release of Goods) or 7.5 (Cooperation), including procedures for the expedited release of goods and matters related to risk management.
The Committee may convene a subcommittee on customs matters to assist the Committee in its work under this paragraph.
Section G. Definitions
Article 2.15. DEFINITIONS
For purposes of this Chapter:
AD Agreement means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
advertising films and recordings means recorded visual media or audio materials, consisting essentially of images and/or sound, showing the nature or operation of goods or services offered for sale or lease by a person established or resident in the territory of a Party, provided that such materials are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public;
commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than the amount specified in a Party's laws, regulations, or procedures governing temporary admission, or so marked, torn, perforated, or otherwise treated that they are unsuitable for sale or use except as commercial samples;
consular transactions means requirements that goods of a Party intended for export to the territory of the other Party must first be submitted to the supervision of the consul of the importing Party in the territory of the exporting Party for the purpose of obtaining consular invoices or consular visas for commercial invoices, certificates of origin, manifests, shippers' export declarations, or any other customs documentation required on or in connection with importation;
consumed means
(a) actually consumed; or
(b) further processed or manufactured so as to result in a substantial change in the value, form, or use of the good or in the production of another good;
duty-free means free of customs duty;
goods intended for display or demonstration includes their component parts, ancillary apparatus, and accessories;
goods temporarily admitted for sports purposes means sports requisites for use in sports contests, demonstrations, or training in the territory of the Party into whose territory such goods are admitted;
import licensing means an administrative procedure requiring the submission of an application or other documentation (other than that generally required for customs clearance purposes) to the relevant administrative body as a prior condition for importation into the territory of the importing Party;
performance requirement means a requirement that:
(a) a given level or percentage of goods or services be exported;
(b) domestic goods or services of the Party granting a waiver of customs duties or an import license be substituted for imported goods;
(c) a person benefiting from a waiver of customs duties or an import license purchase other goods or services in the territory of the Party granting the waiver of customs duties or the import license, or accord a preference to domestically produced goods;
(d) a person benefiting from a waiver of customs duties or an import license produce goods or supply services, in the territory of the Party granting the waiver of customs duties or the import license, with a given level or percentage of domestic content; or
(ce) relates in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows;
but does not include a requirement that an imported good be: (63) subsequently exported;
(g) used as a material in the production of another good that is subsequently exported;
(h) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported; or
(i) substituted by an identical or similar good that is subsequently exported;
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, tourist promotional materials, and posters, that are used to promote, publicize, or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge; and
SCM Agreement means the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement.
Chapter Three. AGRICULTURE
Article 3.1. SCOPE AND COVERAGE
1. This Chapter applies to measures adopted or maintained by a Party relating to trade in agricultural goods. (1)
2. In addition, Article 3.2 shall apply with respect to all goods included in Appendix 2-B-1 of a Party's Schedule to Annex 2-B (Tariff Elimination), whether or not those goods are agricultural goods.
Article 3.2. ADMINISTRATION AND IMPLEMENTATION OF TARIFF-RATE QUOTAS
1. Each Party shall implement and administer the tariff-rate quotas set out in Appendix 2-B-1 of its Schedule to Annex 2-B (Tariff Elimination) (TRQs) in accordance with Article XII of GATT 1994, including its interpretive notes, and the Import Licensing Agreement.
2. Each 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;
(b) any person of a Party that fulfills the importing Party's legal and administrative requirements shall be eligible to apply and to be considered for a quota allocation under the Party's TRQs. Unless the Parties otherwise agree, any processor, retailer, restaurant, hotel, food service distributor or institution, or other person is eligible to apply and to be considered to receive a quota allocation. Any fees charged for services related to an application for a quota allocation shall be limited to the actual cost of the service rendered;
(c) except as specified in Appendix 2-B-1 of its Schedule to Annex 2-B, it does not allocate any portion of a quota to a producer group, condition access to a quota allocation on the purchase of domestic production, or limit access to a quota allocation to processors; and
(d) it allocates quotas in commercially viable shipping quantities and, to the maximum extent possible, in the amounts that importers request. Except as otherwise provided in each TRQ provision and the applicable tariff line in Appendix 2-B-1 of a Party's Schedule to Annex 2-B, each quota allocation shall be valid for any item or mixture of items subject to a particular TRQ, regardless of the item's or mixture's specification or grade, and shall not be conditioned on the item's or mixture's intended end-use or package size.
3. Each Party shall identify the entities responsible for administering its TRQs.
4. Each Party shall make every effort to administer its TRQs in a manner that allows importers to fully utilize quota quantities.
5. Neither Party may condition application for, or utilization of, quota allocations under a TRQ on the re-export of a good.
6. On the written request of either Party, the Parties shall consult regarding a Party's administration of its TRQs.
7. Except as otherwise provided in Appendix 2-B-1 of its Schedule to Annex 2-B, each Party shall make the entire quota quantity established in that Appendix available to quota applicants beginning on the date the Agreement enters into force during the first year, and on the first business day of each year thereafter. Over the course of each year, the importing Party's administering authority shall publish, in a timely fashion on its designated publicly available Internet site, utilization rates and remaining available quantities for each TRQ.
Article 3.3. AGRICULTURAL SAFEGUARD MEASURES
1. Notwithstanding Article 2.3 (Elimination of Customs Duties), a Party may apply a measure in the form of a higher import duty on an originating agricultural good listed in that Party's Schedule to Annex 3-A, consistent with paragraphs 2 through 8 if the aggregate volume of imports of that good in any year exceeds a trigger level as set out in its Schedule to Annex 3-A (trigger level).
2. The duty under 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 this Agreement enters into force, or the tariff rate set out in its Schedule to Annex 3-A.
3. The duties each Party applies under paragraph 1 shall be set according to its Schedule to Annex 3-A.
4. Neither Party may apply or maintain an agricultural safeguard measure under this Article and at the same time apply or maintain, with respect to the same good:
(a) a safeguard measure under Chapter Ten (Trade Remedies); or
(b) a measure under Article XIX of GATT 1994 and the Safeguards Agreement.
5. A Party shall implement any agricultural safeguard measure in a transparent manner. Within 60 days after imposing an agricultural safeguard measure, the Party applying the measure shall notify the other Party in writing and provide the other Party with relevant data concerning the measure. On the written request of the exporting Party, the Parties shall consult regarding application of the measure.
6. The Joint Committee or the Committee on Agricultural Trade established under Article 3.4 may review and discuss the implementation and operation of this Article.
7. Neither Party may apply or maintain an agricultural safeguard measure on an originating agricultural good:
(a) if the period specified in the agricultural safeguard provisions of the Party's Schedule to Annex 3-A has expired; or
(b) if the measure increases the in-quota duty on a good subject to a TRQ set out in Appendix 2-B-1 of its Schedule to Annex 2-B.
8. Originating agricultural goods from either Party shall not be subject to any duties applied pursuant to any agricultural safeguard measure taken under the Agriculture Agreement.
Article 3.4. COMMITTEE ON AGRICULTURAL TRADE
1. Not later than 90 days after the date this Agreement enters into force, the Parties shall establish a Committee on Agricultural Trade, comprising representatives of each Party.
2. The Committee shall provide a forum for:
(a) monitoring and promoting cooperation on the implementation and administration of this Chapter;
(b) consulting on matters related to this Chapter in coordination with other committees, subcommittees, working groups, or other bodies established under this Agreement; and
(c) undertaking any additional work that the Joint Committee may assign.
3. The Committee shall meet at least once a year unless the Parties otherwise agree. Meetings of the Committee shall be chaired by the representatives of the Party hosting the meeting.
Article 3.5. DEFINITIONS
For purposes of this Chapter:
Agriculture Agreement means the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement; and
agricultural goods means those goods referred to in Article 2 of the Agriculture Agreement.
Chapter Four. TEXTILES AND APPAREL
Article 4.1. BILATERAL EMERGENCY ACTIONS
1. If, as a result of the reduction or elimination of a duty under this Agreement, a textile or apparel good benefiting from preferential tariff treatment under this Agreement is being imported into the territory of a Party in such increased quantities, in absolute terms or relative to the domestic market for that good, and under such conditions as to cause serious damage, or actual threat thereof, to a domestic industry producing a like or directly competitive good, the importing Party may, to the extent and for such time as may be necessary to prevent or remedy such damage and to facilitate adjustment by the domestic industry:
(a) suspend the further reduction of any rate of customs duty on the good provided for under this Agreement; or
(b) increase the rate of customs duty on the good to a level not to exceed the lesser of
(i) the most-favored-nation (MFN) applied rate of duty on the good in effect at the time the action is taken; and
(ii) the MFN applied rate of duty on the good in effect on the date this Agreement enters into force.
2. In determining serious damage, or actual threat thereof, the importing Party:
(a) shall examine the effect of increased imports of the good from the exporting Party on the particular industry, as reflected in changes in such relevant economic variables as output, productivity, utilization of capacity, inventories, market share, exports, wages, employment, domestic prices, profits, and investment, none of which is necessarily decisive; and
(b) shall not consider changes in technology or consumer preference as factors supporting a determination of serious damage or actual threat thereof.
3. The importing Party may take an emergency action under this Article only following an investigation. The importing Party shall:
(a) carry out any investigation under this Article in accordance with procedures it has established; and
(b) transmit its procedures to the other Party on the date this Agreement enters into force or before it initiates an investigation under this Article.
4. The importing Party shall deliver to the exporting Party, without delay, written notice of its intent to take emergency action and, on the request of the exporting Party, shall enter into consultations with that Party regarding the matter.
5. An importing Party:
(a) may not maintain an emergency action for a period exceeding two years except that the period may be extended by up to two years;
(b) may not take or maintain an emergency action against a good beyond ten years after the date the Party must eliminate its customs duties on that good pursuant to this Agreement;
(c) may not take an emergency action more than once against the same good of the other Party; and
(d) shall, on termination of the emergency action, apply to the good that was subject to the emergency action the rate of customs duty that would have been in effect but for the action.
6. The Party taking an emergency action under this Article shall provide to the exporting Party mutually agreed trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the emergency action. Such concessions shall be limited to textile or apparel goods, unless the Parties otherwise agree. If the Parties are unable to agree on compensation within 30 days of the application of an emergency action, the Party against whose good the emergency action is taken may take tariff action having trade effects substantially equivalent to the trade effects of the emergency action taken under this Article. The tariff action may be taken against any goods of the Party taking the emergency action. The Party taking the tariff action shall apply the tariff action only for the minimum period necessary to achieve the substantially equivalent trade effects. The importing Party's obligation to provide trade compensation and the exporting Party's right to take tariff action shall terminate on the date the emergency action terminates.
7. Neither Party may take or maintain, with respect to the same good at the same time, an emergency action under this Article and:
(a) a safeguard measure under Chapter Ten (Trade Remedies); or
(b) a measure under Article XIX of GATT 1994 and the Safeguards Agreement.
Article 4.2. RULES OF ORIGIN AND RELATED MATTERS
Application of Chapter Six
1. Except as provided in this Chapter, including Annexes 4-A and 4-B, Chapter Six (Rules of Origin and Origin Procedures) applies to textile or apparel goods.
2. The rules of origin set forth in this Agreement shall not apply in determining the country of origin of a textile or apparel good for non-preferential purposes.
Consultations
3. On the request of either Party, the Parties shall consult to consider whether the rules of origin applicable to a particular textile or apparel good should be revised to address issues of availability of supply of fibers, yarns, or fabrics in the territories of the Parties.
4. In the consultations referred to in paragraph 3, each Party shall consider all data presented by the other Party that demonstrate substantial production in its territory of a particular fiber, yarn, or fabric. The Parties shall consider that there is substantial production if a Party demonstrates that its domestic producers are capable of supplying commercial quantities of the fiber, yarn, or fabric in a timely manner.
5. The Parties shall endeavor to conclude consultations within 60 days after delivery of a request under paragraph 3. If the Parties agree in the consultations to revise a rule of origin, the revision shall supersede any prior rule of origin for such good when approved by the Parties in accordance with Article 24.2 (Amendments).
Transitional Procedures for Goods Containing Fibers, Yarns, and Fabrics Not Available in Commercial Quantities
6. Annex 4-B sets out provisions applicable to certain goods containing fibers, yarns, or fabrics that are not available in commercial quantities in a timely manner in a Party's territory.
De Minimis
7. A textile or apparel good that is not an originating good because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification set out in Annex 4-A shall nonetheless be considered to be an originating good if the total weight of all such fibers or yarns in that component is not more than seven percent of the total weight of that component. Notwithstanding the preceding sentence, a good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed and finished in the territory of a Party. (1)
Treatment of Sets
8. Notwithstanding the specific rules of origin set out in Annex 4-A, textile or apparel goods classifiable under General Rule of Interpretation 3 of the Harmonized System as goods put up in sets for retail sale shall not be regarded as originating goods unless each of the goods in the set is an originating good or the total value of the non-originating goods in the set does not exceed ten percent of the customs value of the set.