1. The Parties shall cooperate for purposes of:
(a) enforcing or assisting in the enforcement of their respective measures affecting trade in textile or apparel goods;
(b) verifying and ensuring the accuracy of claims of origin;
(c) enforcing, or assisting in the enforcement of, measures implementing international agreements affecting trade in textile or apparel goods; and
(d) preventing circumvention of international agreements affecting trade in textile or apparel goods.
2. (a) Except as provided in subparagraphs (b) and (c), Korea shall obtain and update annually, through its competent authority, (2) the following information concerning each person engaged in the production of textile or apparel goods in its territory:
(i) the name and address of the person, including the location of all textile or apparel facilities owned or operated by that person in the territory of Korea;
(ii) the telephone number, facsimile number, and e-mail address of the person;
(iii) in the case of an enterprise, the names and nationalities of the owners, directors, and corporate officers, and their positions within the enterprise;
(iv) the number of employees the person employs and their occupations;
(v) a general description of the textile or apparel goods the person produces and the person's production capacity;
(vi) the number and type of machines the person uses to produce textile or apparel goods;
(vii) the approximate number of hours the machines operate per week;
(viii) the identity of any supplier to that person of textile or apparel goods, or fabrics, yarns, or fibers used in the production of those goods; and
(ix) the name of, and contact information for, each of the person's customers in the United States.
Korea shall provide this information to the United States annually, beginning within one year of the date this Agreement enters into force.
(b) Korea shall not be required to obtain and provide to the United States the information specified in subparagraph (a) with respect to any person that is engaged solely in the production of:
(i) textile or apparel goods, or fibers, yarns, or fabrics used in the production of those goods, that are not exported to the United States; or
(ii) with respect to goods classified under HS Chapter 61 or 62 that are exported to the United States, goods not used in the component that determines the tariff classification of the good, other than fabric used as visible lining material that satisfies the requirements of
(A) Chapter Rule 1 for Chapter 61 of Annex 4-A, in the case of a good classified under HS Chapter 61; or
(B) Chapter Rule 1 for Chapter 62 of Annex 4-A, in the case of a good classified under HS Chapter 62.
(c) Korea shall not be required to obtain and provide to the United States the information specified in subparagraph (a)(vii) through (ix) with respect to any small- or medium-sized enterprise that does not contract directly for the sale of its goods with an importer in the United States. (3)
(d) Korea may obtain the information required under subparagraph (a) from a representative industry association, provided that Korea takes appropriate steps to verify the accuracy of the information.
(e) Article 7.6 (Confidentiality) shall apply to any information provided in accordance with this paragraph that Korea designates as confidential.
3. On the request of the importing Party, the exporting Party shall conduct a verification for purposes of enabling the importing Party to determine that a claim of origin for a textile or apparel good is accurate. The exporting Party shall conduct such a verification, regardless of whether an importer claims preferential tariff treatment for the good. The exporting Party also may conduct such a verification on its own initiative.
4. On the request of a Party, the other Party shall endeavor to examine transshipped textile or apparel goods.(4)
5. Where the importing Party has a reasonable suspicion that a person of the exporting Party is engaging in unlawful activity relating to trade in textile or apparel goods, the exporting Party shall conduct, on the request of the importing Party, a verification for purposes of enabling the importing Party to determine that the person is complying with applicable customs measures affecting trade in textile or apparel goods, including measures that the exporting Party adopts and maintains pursuant to this Agreement and measures of either Party implementing any other international agreement regarding trade in textile or apparel goods, or to determine that a claim of origin regarding a textile or apparel good exported or produced by that person is accurate. For purposes of this paragraph, reasonable suspicion means a suspicion based on relevant factual information of the type set forth in Article 7.5 (Cooperation) or factors that indicate:
(a) circumvention by an enterprise of applicable customs measures affecting trade in textile or apparel goods, including measures adopted to implement this Agreement; or
(b) the existence of conduct that would facilitate the violation of measures relating to other international agreements affecting trade in textile or apparel goods or that would otherwise facilitate the nullification or impairment of rights or benefits accruing to a Party under those agreements.
6. The exporting Party, through its competent authorities, shall permit the importing Party, through its competent authorities, to assist in a verification conducted pursuant to paragraph 3 or 5, including by conducting, along with the competent authorities of the exporting Party, visits in the territory of the exporting Party to the premises of an exporter, producer, or any other person that may have evidence that is relevant to the verification. Any such visit should occur without providing prior notification to the exporter, producer, or other person. (5) The exporting Party shall seek permission to conduct the site visit from the person at the time of the visit. If an exporter, producer, or other person refuses to consent to a visit by the appropriate officials of the importing Party, the importing Party may consider that the verification cannot be completed and the determination described in paragraph 3 or 5 cannot be made and may take appropriate action as described in paragraph 10.
7. Each Party shall provide to the other Party, consistent with its law, production, trade, and transit documents, and other information necessary to conduct a verification under paragraph 3 or 5. Each Party shall consider any documents or information exchanged between the Parties in the course of such a verification to have been designated as confidential within the meaning of Article 7.6 (Confidentiality). Notwithstanding the preceding sentence and Article 7.6, a governmental entity of a Party may share information provided to it under this Article with other governmental entities of that Party for a purpose set forth in paragraph 1.
8. While a verification is being conducted, the importing Party may, consistent with its law, take appropriate action, which may include suspending the application of preferential tariff treatment to:
(a) the textile or apparel good for which a claim of origin has been made, in the case of a verification under paragraph 3; or
(b) any textile or apparel goods exported or produced by the person subject to a verification under paragraph 5, where the suspicion of unlawful activity relates to those goods. (6)
9. The Party conducting a verification under paragraph 3 or 5 shall provide the other Party with a written report on the results of the verification, which shall include all documents and facts supporting any conclusion that the Party reaches. Article 7.6 (Confidentiality) shall apply to any information contained in the report that the Party providing the report designates as confidential.
10. (a) If the importing Party is unable to make the determination described in paragraph 3 within 12 months after its request for a verification, or makes a negative determination, it may, consistent with its law, take appropriate action, including denying preferential tariff treatment to the textile or apparel good subject to the verification, and to similar goods exported or produced by the person that exported or produced the good.
(b) If the importing Party is unable to make one of the determinations described in paragraph 5 within 12 months after its request for a verification, or makes a negative determination, it may, consistent with its law, take appropriate action, including denying preferential tariff treatment to any textile or apparel good exported or produced by the person subject to the verification.
11. Before taking any action under paragraph 10, the importing Party shall notify the exporting Party. The importing Party may continue to take action under paragraph 10 until it receives information sufficient to enable it to make the determination described in paragraph 3 or 5, as the case may be. A Party may, consistent with its law, make public the identity of a person that the Party has determined to be engaged in circumvention as provided under this Article or that has failed to demonstrate that it produces, or is capable of producing, textile or apparel goods.
12. On the request of either Party, the Parties shall consult to resolve any technical or interpretive difficulties that may arise under this Article or to discuss ways to improve the effectiveness of their cooperative efforts. In addition, either Party may request technical or other assistance from the other Party in implementing this Article. The Party receiving a request under this paragraph shall make every effort to respond favorably and promptly to it.
13. Any request for cooperation under this Article shall be made in writing and shall include a brief statement of the matter at issue and the cooperation requested.
Article 4.4. COMMITTEE ON TEXTILE AND APPAREL TRADE MATTERS
The Parties hereby establish a Committee on Textile and Apparel Trade Matters comprising representatives of each Party. The Committee shall meet on the request of either Party or the Joint Committee to consider any matter arising under this Chapter.
Article 4.5. DEFINITIONS for Purposes of this Chapter:
Agreement on Textiles and Clothing means the Agreement on Textiles and Clothing, contained in Annex 1A to the WTO Agreement;
claim of origin means a claim that a textile or apparel good is an originating good or a good of a Party;
exporting Party means the Party from whose territory a textile or apparel good is exported;
importing Party means the Party into whose territory a textile or apparel good is imported;
small- or medium-sized enterprise means an enterprise that employs fewer than 50 employees;
textile or apparel good means a good listed in the Annex to the Agreement on Textiles and Clothing; and
transshipped means the removal of a good from the conveyance on which it was brought into the territory of a Party and the placement of the good on the same or another conveyance for the purpose of taking it out of the territory of the Party.
Chapter Five. PHARMACEUTICAL PRODUCTS AND MEDICAL DEVICES
Article 5.1. GENERAL PROVISIONS
The Parties recognize that while there are differences between each Party's health care system, the Parties share a commitment to promoting the development of and facilitating access to high-quality patented and generic pharmaceutical products and medical devices, as a means of continuing to improve the health of their nationals. In pursuing these objectives, the Parties affirm the importance of:
(a) adequate access to pharmaceutical products and medical devices in providing high quality health care;
(b) patented and generic pharmaceutical products and medical devices in reducing other more costly medical expenditures;
(c) sound economic incentives and competitive markets for the efficient development of and access to patented and generic pharmaceutical products and medical devices;
(d) appropriate government support of research and development in academic and commercial laboratories, intellectual property protections, and other incentives for innovation in the research and development of pharmaceutical products and medical devices;
(e) promoting innovation and timely and affordable access to safe and effective pharmaceutical products and medical devices through transparent and accountable procedures, without impeding a Party's ability to apply appropriate standards of quality, safety, and efficacy;
(f) ethical practices by pharmaceutical and medical device manufacturers and suppliers and by health care providers on a global basis in order to achieve open, transparent, accountable, and reasonable health care decision-making; and
(g) cooperation between the Parties, including each Party's regulatory authorities, to improve the safety and efficacy of pharmaceutical products and medical devices.
Article 5.2. ACCESS TO INNOVATION
To the extent that health care authorities at a Party’s central level of government operate or maintain procedures for listing pharmaceutical products, medical devices, or indications for reimbursement, or setting the amount of reimbursement for indications for reimbursement, or setting the amount of reimbursement for pharmaceutical products or medical devices, under health care programs operated by its central level of government, (1) the Party shall:
(a) ensure that the procedures, rules, criteria, and guidelines that apply to the listing of pharmaceutical products, medical devices, or indications for reimbursement, or setting the amount of reimbursement for pharmaceutical products or medical devices are fair, reasonable, and non-discriminatory;
(b) ensure that the Party's determination, if any, of the reimbursement amount for a pharmaceutical product or medical device, once approved by the appropriate regulatory authority as safe and effective, is based on competitive market-derived prices; or if its determination is not based on competitive market-derived prices, then that Party shall:
(i) appropriately recognize the value of the patented pharmaceutical product or medical device in the amount of reimbursement it provides;
(ii) permit a manufacturer of the pharmaceutical product or medical device to apply, based on evidence of safety or efficacy, for an increased amount of reimbursement over that provided for comparator products, if any, used to determine the amount of reimbursement; and
(iii) permit a manufacturer of the pharmaceutical product or medical device, after a decision on a reimbursement amount is made, to apply for an increased amount of reimbursement for the product based on evidence the manufacturer provides on the product's safety or efficacy; and
(c) permit a manufacturer of the pharmaceutical product or medical device to apply for reimbursement of additional medical indications for the product, based on evidence the manufacturer provides on the product's safety or efficacy.
Article 5.3. TRANSPARENCY
1. Each Party shall ensure that its laws, regulations, and procedures of general application respecting any matter related to the pricing, reimbursement, or regulation of pharmaceutical products or medical devices are promptly published or otherwise made available in such a manner as to enable interested persons and the other Party to become acquainted with them.
2. To the extent possible, each Party shall:
(a) publish in advance any such measures that it proposes to adopt; and
(b) provide interested persons and the other Party a reasonable opportunity to comment on such proposed measures.
3. With respect to proposed regulations of general application of its central level of government respecting any matter related to the pricing, reimbursement, or regulation of pharmaceutical products or medical devices that are published in accordance with paragraph 2(a), each Party:
(a) shall publish the proposed regulations, including an explanation of the purpose of those regulations, in a single official journal of national circulation,â and encourage their distribution through additional outlets;
(b) should in most cases publish the proposed regulations not less than 60 days before the date public comments are due; and
(c) shall, at the time it adopts final regulations, address in writing significant, substantive comments received from interested persons during the comment period and explain any substantive revision it made to the proposed regulations.
4. To the extent possible, each Party should allow reasonable time between publication of final regulations of general application of its central level of government respecting any matter related to the pricing, reimbursement, or regulation of pharmaceutical products or medical devices and their effective date.
5. To the extent that health care authorities at a Party's central level of government operate or maintain procedures for listing pharmaceutical products, medical devices, or indications for reimbursement, or setting the amount of reimbursement for pharmaceutical products or medical devices, under health care programs operated by its central level of government, a Party shall:
(a) ensure that consideration of all formal requests for the pricing or approval of pharmaceutical products or medical devices for reimbursement is completed within a reasonable, specified period;
(b) disclose to applicants within a reasonable, specified period all procedural tules, methodologies, principles, criteria (including those used, if any, to determine comparator products), and guidelines used to determine pricing and reimbursement of pharmaceutical products or medical devices;
(c) afford applicants timely and meaningful opportunities to provide comments at relevant points in the pricing and reimbursement decision- making processes for pharmaceutical products or medical devices;
2 Notwithstanding subparagraph (a), health care authorities at a Party's central level of government that are not authorized under the Party's law to publish their regulations in the official journal shall publish their proposed regulations, including explanations of the purpose of the proposed regulations, on prominent locations on their official Internet sites.
(d) within a reasonable, specified period, provide applicants with meaningful, detailed written information regarding the basis for recommendations or determinations of the pricing and reimbursement of pharmaceutical products or medical devices, including citations to any expert opinions or academic studies relied upon in making such recommendations or determinations;
(e) make available an independent review process that may be invoked at the request of an applicant directly affected by a recommendation or determination;
(f) make all reimbursement decision-making bodies open to all stakeholders, including innovative and generic companies; and
(g) make publicly available the membership list of all committees related to pricing or reimbursement of pharmaceutical products or medical devices.
6. Each Party shall ensure that all measures of general application respecting any matter related to the pricing, reimbursement, or regulation of pharmaceutical products or medical devices are administered in a reasonable, objective, and impartial manner.
Article 5.4. DISSEMINATION OF INFORMATION
Each Party shall permit a pharmaceutical manufacturer to disseminate through the manufacturer's official Internet site registered in the Party's territory and through medical journal Internet sites registered in the Party's territory, that include direct links to the manufacturer's official Internet site, truthful and not misleading information regarding the manufacturer's pharmaceutical product, provided that the product has marketing approval in the Party's territory and the information includes a balance of risks and benefits and is limited to indications for which the Party's competent regulatory authorities have granted market approval for that product.
Article 5.5. ETHICAL BUSINESS PRACTICES
1. Each Party shall adopt or maintain appropriate measures to prohibit pharmaceutical product or medical device manufacturers and suppliers from providing improper inducements to health care professionals or institutions for the listing, purchasing, or prescribing of pharmaceutical or medical device products eligible for reimbursement under health care programs operated by its central level of government.
2. Each Party shall adopt or maintain appropriate penalties and procedures to enforce the measures that it adopts or maintains in conformity with paragraph 1.
Article 5.6. REGULATORY COOPERATION
1. Consistent with Article 9.8 (Committee on Technical Barriers to Trade), a Party will facilitate consideration of a request to recognize the results of conformity assessment procedures conducted by bodies in the other Party's territory, including a request for the negotiation of an agreement with respect to Good Manufacturing Practices, Good Laboratory Practices, and marketing approval of generic drugs.
2. The Parties shall report on the feasibility and appropriateness of granting any such request to the Medicines and Medical Devices Committee and to the Committee on Technical Barriers to Trade established under Article 9.8.
Article 5.7. MEDICINES AND MEDICAL DEVICES COMMITTEE
1, The Parties hereby establish a Medicines and Medical Devices Committee.
2. The functions of the Committee shall be to:
(a) monitor and support the implementation of this Chapter;
(b) promote discussion and mutual understanding of issues related to this Chapter; and
(c) explore opportunities for collaboration on issues related to this Chapter.
3. The Committee shall:
(a) comprise officials of central level government agencies responsible for central level health care programs and other appropriate central level government officials, and shall be co-chaired by health and trade officials of each Party;
(b) meet at least once a year unless the Parties otherwise agree; and
(c) report the results of each meeting to the Joint Committee.
4. The Committee may establish, and determine the scope and mandate of, working groups to address technical aspects of issues related to this Chapter, including those related to regulatory cooperation.
Article 5.8. DEFINITIONS
For purposes of this Chapter:
health care authorities at a Party's central level of government means entities that are part of or have been established by a Party's central level of government to operate or administer its health care programs;
health care programs operated by a Party's central level of government means health care programs in which the health care authorities of a Party's central level of government make the decisions regarding matters to which this Chapter applies; (3) and
pharmaceutical product or medical device means a pharmaceutical, biologic, medical device, or diagnostic product.
Chapter Six. RULES OF ORIGIN AND ORIGIN PROCEDURES
Section A. Rules of Origin
Article 6.1. ORIGINATING GOODS (1)
Except as otherwise provided in this Chapter, each Party shall provide that a good is originating where it is:
(a) a good wholly obtained or produced entirely in the territory of one or both of the Parties;
(b) produced entirely in the territory of one or both of the Parties and (i) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in Annex 4-A (Specific Rules of Origin for Textile or Apparel Goods) or Annex 6-A, or
(ii) the good otherwise satisfies any applicable regional value content or other requirements specified in Annex 4-A or Annex 6-A,
and the good satisfies all other applicable requirements of this Chapter; or
(c) produced entirely in the territory of one or both of the Parties exclusively from originating materials.
Article 6.2. REGIONAL VALUE CONTENT.
1. Where Annex 6-A specifies a regional value content test to determine whether a good is originating, each Party shall provide that the importer, exporter, or producer may calculate regional value content based on one or the other of the following methods:
(a) Method Based on Value of Non-Originating Materials (Build-down Method)
RVC = AV - VNM/AV x 100
(b) Method Based on Value of Originating Materials (Build-up Method)
RVC= VOM/AV x 100
where,
RVC is the regional value content, expressed as a percentage;
AV is the adjusted value of the good;
VNM is the value of non-originating materials, other than indirect materials, acquired and used by the producer in the production of the good; VNM does not include the value of a material that is self-produced; and
VOM is the value of originating materials, other than indirect materials, acquired or self-produced and used by the producer in the production of the good.
2. Each Party shall provide that all costs considered for the calculation of regional value content 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.
3. Where Annex 6-A specifies a regional value content test to determine if an automotive good (2) is originating, each Party shall provide that the importer, exporter, or producer may calculate the regional value content of that good as provided in paragraph 1 or based on the following method:
Net Cost Method (for Automotive Goods)
RVC = NC - VNM/NC x 100
where,
RVC is the regional value content, expressed as a percentage;
NC is the net cost of the good; and
VNM is the value of non-originating materials, other than indirect materials, acquired and used by the producer in the production of the good; VNM does not include the value of a material that is self-produced.
4. Each Party shall provide that, for purposes of the regional value content method in paragraph 3, the importer, exporter, or producer may use a calculation averaged over the producer's fiscal year, using any one of the following categories, on the basis of all motor vehicles in the category or only those motor vehicles in the category that are exported to the territory of the other Party: