(e) consulting on and endeavouring to resolve any differences that may arise among the Parties on matters related to the classification of goods under the HS;
(f) reviewing data on trade in goods in relation the implementation of this Chapter;
(g) assessing matters that relate to trade in goods and undertaking any additional work that the Joint Committee may assign to it; and
(h) reviewing and monitoring any other matter related to the implementation of this Chapter.
Article 2.19. Rendez-vous Clause
1. The Parties agree to enter into negotiations on market access for goods, to eliminate or reduce customs duties on originating goods of the Parties within the institutional structures of the East African Community.
2. On the basis of entering into negotiations as set out in paragraph 1, the Parties agree to review this Chapter with the view to introduce new articles on tariff reduction or eUmination, acceleration or improvement of Schedule of Tariff Commitments or any related matter that may arise from the outcomes of the negotiations on market access for goods, as indicated in paragraph 1.
3. The results of negotiations pursuant to paragraphs 1 and 2 shall come into force in accordance with Article 17.3 (Amendments) of this Agreement.
Chapter 3. RULES OF ORIGIN
Article 3.1. Definitions
For the purposes of this Chapter:
aquaculture refers to the farming of aquatic organisms including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from seedstock such as eggs, fry, fingerlings and larvae, by intervention in the rearing or growth processes to enhance production, such as, inter a/ia, regular stocking, feeding, protection from predators;
competent authority refers to
(a) in the case of the UAE, the Ministry of Economy or any other agency notified from time to time; and
(b) in the case of Kenya, the Customs and Border Control Department or any other agency notified from time to time.
consignment means products which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice;
customs authority refers to:
(a) in the case of the UAE, the Federal Authority for Identity, Citizenship, Customs and Port Security;
(b) in the case of Kenya, the Customs and Border Control Department.
Ex-Works price is the price paid for the good ex-works to the manufacturer in the Party in whose undertaking the last working or processing is carried out, provided the price includes the value of all the materials used, minus any internal taxes which are, or may be, repaid when the good obtained is exported;
generally accepted accounting principles refers to the recognised consensus or substantial authoritative support in the territory of a Party, with respect to the recording of revenues, expenses, costs, assets, and liabilities, the disclosure of information and the preparation of financial statements. These standards may encompass broad guidelines of general application as well as detailed standards, practices and procedures;
good refers to any article of trade including materials and products;
manufacture refers to any kind of working or processing, including assembly or specific operations;
material refers to any ingredient, raw material, compound or part, etc., used in the production of a good;
non-originating materials or non-originating goods refers to any materials or goods whose country of origin is a country other than the Parties (imported non-originating), any materials or goods whose origin cannot be determined (undetermined origin) or a materials or goods that does not qualify as originating under this Chapter;
originating goods or originating material refers to goods or materials that qualify as originating under this Chapter;
product refers to that which is obtained by growing, raising, mining, harvesting, fishing, aquaculture, trapping, hunting, extracting or manufacturing, even if it is intended for later use in another manufacturing operation;
production refers to growing, raising, mining, harvesting, fishing, aquaculture, trapping, hunting, manufacturing, processing, assembling a good; and
value of non-originating materials is the customs value as determined in accordance with the WTO Agreement on Customs Valuation inclusive of the cost of insurance and freight up to the port of importation of the non-originating materials at the time of importation or the earliest ascertained price paid or payable in the Party where the production takes place for all non-originating materials, parts or produce that are acquired by the producer in the production of the good. When the producer of a good acquires non-originating materials within that Party the value of such materials shall not include freight, insurance, packing costs and any other costs incurred in transporting the material from the supplier's warehouse to the producer's location.
Section A. Origin Determination
Article 3.2. Originating Goods
For the purpose of implementing this Agreement, goods shall be considered as originating in territory of a Party, if:
(a) goods are wholly obtained there according to Article 3.3;
(b) goods are not wholly obtained or produced entirely there, provided that the good has undergone sufficient working or processing according to Article 3.4; or
(c) goods produced entirely there exclusively from originating materials. and the goods satisfied all other applicable requirements of this Chapter.
Article 3.3. Wholly Obtained Goods
For the purposes of Article 3.2.(a), the following goods shall be deemed to be wholly obtained in the territory of a Party:
(a) plant and plant products grown, collected and harvested there;
(b) Live animals born and raised there;
(c) products obtained from live animals there;
(d) products from slaughtered animals born and raised there;
(e) mineral product and natural resources extracted or taken from that Party's soil, subsoil, waters, seabed or beneath tbe seabed;
(f) product obtajned from bunting, trapping, collecting, capturing, fishing or aquaculture conducted there;
(g) product of sea fishing and other marine products taken from outside the territorial waters of the Parties by a vessel and/or produced or obtained by a factory ship registered, recorded, listed or licensed with a Party and flying its flag;
(h) product, other than products of sea fishing and other marine products, taken or extracted from the seabed, ocean floor or the subsoil of the continental shelf or the exclusive economic zone of either of the Parties, by a Party or a person of a Party provided that the Party or Person of a Party bas the right to exploit such seabed, ocean floor, or subsoil in accordance to international law;
(i) raw materials recovered from used goods collected there;
(j) waste or scrap resulting from utilization, consumption or manufacturing operations conducted there, fit only for recovery of raw materials;
(k) product produced or obtained there exclusively from product referred to in subparagraphs (a) through (j), or from their derivatives, at any stage of production.
Article 3.4. Sufficient Working or Processing
For the purposes of Article 3.2. (b), a good shall be deemed to have undergone sufficient working or processing transformation if the good satisfies the applicable rule set out in the Product Specific Rules (PSRs) in Annex 3A (Product Specific Rules). (1)
Article 3.5. Intermediate Goods
If a good which has acquired originating status in a Party in accordance with Article 3.4 is used in the manufacture of another product, the conditions applicable to the product in which it is incorporated do not apply to it, and no account shall be taken of the non-originating materials which may have been used in its manufacture.
Article 3.6. Cumulation
1. For the purposes of determining whether a good qualifies as an originating good of a Party, an originating good of the other Party which is used as a material in the production of the good in the former Party may be considered to be an originating material of the former Party.
2. The Joint Committee may agree to review this Article with a view to providing for other forms of cumulation for the purpose of qualifying goods as originating goods under this agreement.
Article 3.7. Tolerance
Notwithstanding Article 3.4, a good will be considered to have undergone a change in tariff classification if:
(a) the value of all non-originating materials that are used in the production of the good and that do not undergo the applicable change in tariff classification does not exceed 15% of the Ex-Works price of the good;
(b) paragraph (a) shall not allow to exceed any of the percentages given in Annex 3A (Product Specific Rules) for the maximum value of non-originating materials; and
(c) the good meets all other applicable requirements of this Chapter for quaLifying as an originating product.
Article 3.8. Insufficient Operations
1. Whether or not the reqwrements of Article 3.4 are satisfied, a good shall not be considered to be originating in the territory ofa Party if the following operations are undertaken exclusively by itself or in combination in the territory of that Party:
(a) slaughter of animals;
(b) operations to ensure the preservation of products in good condition during transport and storage such as drying, freezing, ventilation, chilling and like operations;
(c) sifting, simple classifying or sorting, washing, cutting, slitting, bending, coiling or uncoiling, sharpening, simple grinding, slicing;
(d) cleaning, including removal of oxide, oil, paint or other coverings;
(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;
(i) simple assembly of parts of products to constitute a complete good or disassembly of products into parts;
(j) changes of packing, unpacking or repacking operations, and breaking up and assembly of consignments;
(k) affixing or printing marks, labels, logos and other like distingwshing signs on goods or their packaging;
(l) husking, partial or total bleaching, polishing and glazing of cereals and rice; and
(m) mere dilution with water or another substance that does not materially alter the characteristics of the goods.
2. For the purposes of paragraph 1, the term "simple" will be defined as following:
(a) "Simple" generally describes an activity which does not need special skills, machines, apparatus or equipment especially produced or installed for carrying out the activity.
(b) "Simple mixing" generally describes an activity which does not need special skills, machine, apparatus or equipment especially produce or install for carrying out the activity. However, simple mixing does not include chemical reaction. Chemical reaction means a process (including a biochemical process) which results in a molecule with a new structure by breaking intramolecular bonds and by forming new intramolecular bonds, or by altering the spatial arrangement of atoms in a molecule.
Article 3.9. Indirect Materials
1. In determining whether a good is an originating good, any indirect mate.rial as defined in paragraph 2 shall be disregarded.
2. For the purpose of paragraph 1, the term "indirect materials" means goods used in the production, testing or inspection of another good but not physically incorporated into the good, or goods used in the maintenance of buildings or the operation of equipment associated with the production of another good, including:
(a) fuel and energy;
(b) tools, dies, and molds;
(c) spare parts and materials used in the maintenance of equipment;
(d) lubricants, greases, compounding materials, and other materials used in production or used to operate equipment;
(e) gloves, glasses, footwear, clothing, and safety equipment and supplies;
(f) equipment, devices, supplies used for testing or inspecting the goods;
(g) catalysts and solvents; and
(h) any other material that is not incorporated into the good but for which the use in the production of the good can reasonably be demonstrated to be a part of that production.
Article 3.10. Unit of Qualification
The unit of qualification for the application of the provisions of this Chapter shall be the particular good which is considered as the basic unit when determining classification using the nomenclature of the Harmonized System. It follows that:
(a) when a good composed of a group or assembly of articles is classified under the terms of the Harmonized System in a single beading, the whole constitutes the unit of qualification;
(b) when a consignment consists of a number of identical goods classified under the same heading of the Harmonized System, each good must be taken individually when applying the provisions of this Chapter.
2. Where, under General Rule 5 for the Interpretation of tbe Harmonized System, packaging is included with the good for classification purposes, it shall be included for the purposes of determining origin.
Article 3.11. Accessories, Spare Parts, Tools
Accessories, spare parts, tools, and instructional or other information materials delivered with a good that form part of the goad's standard accessories, spare parts, tools, and instructional or other information materials shall be regarded as a part of the good, and shall be disregarded in determining the origin of the good, provided that:
(a) The accessories, spare parts, tools, and 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, and instructional or other information materials presented with the good are customary for the good.
Article 3.12. Packaging Materials and Containers for Retail Sale
Each Party shall provide that packaging materials and containers in which a good is packaged for retail sale, if classified with the good, according to General Rule 5 for the Interpretation of the Harmonized System, shall be disregarded in determining the origin of the good.
Article 3.13. Packaging Materials and Containers for Shipment
Each Party shall provide that packing materials and containers for shipment are disregarded in determining whether a good is originating.
Article 3.14. Fungible Goods and Materials
1. Each Party shall provide that the determination of whether fungible goods or materials are originating shall be made through physical segregation of each good or material, or, in case of any difficulty, through the use of any inventory management method, such as averaging, last-in, first-out, or first-in, first out, recognised in the generally accepted accounting principles of the Party in which the production is performed, or otherwise accepted by the Party in which the production is performed.
2. Each Party shall provide that an inventory management method selected under paragraph 1 for a particular fungible goods or materials shall continue to be used for those fungible goods or materials throughout the fiscal year of the Party that selected the inventory management method.
Article 3.15. Sets of Goods
Sets, as defined in General Rule 3 for the Interpretation of the Harmonized System, shall be regarded as originating when all component goods are originating. Nevertheless, when a set is composed of originating and non-originating products, the set as a whole shall be regarded as originating, provided that the value of non-originating products does not exceed 15% of the Ex-Works price of the set.
Section B. Territoriality and Transit
Article 3.16. Principle of Territoriality
1. The conditions for acquiring originating status set out in Article 3.2 should be fulfilled without interruption in the territory of one or both of the Parties.
2. Where originating goods exported from the territory of a Party to a non-Party, return to the exporting Party, they must be considered as non-originating, unless it can be demonstrated to the satisfaction of the customs authorities that:
(a) the returning goods are the same as those exported; and
(b) they have not undergone any operation beyond that necessary to preserve them in good condition while in that non-Party or while being exported.
Article 3.17. Outward Processing
1. Notwithstanding Article 3.16, the acquisition of originating status set out in Article 3.2 shall not be affected by working or processing done outside a Party on materials exported from a Party and subsequently re-imported there, provided:
(a) the said materials are wholly obtained in any of the Parties or have undergone working or processing beyond the operations referred to in Article 3.8 prior to being exported; and
(b) it can be demonstrated to the satisfaction of the customs authorities that:
(i) the re-imported goods have been obtained by working or processing the exported materials;
(ii) the total added value acquired outside a Party by applying the provisions of this Article does not exceed 15% of the Ex-Works price of the end product for wh.ich originating status is claimed.
(c) The conditions set out in Article 3. 7 shall not apply to the said material as referred to in subparagraph (a);
(d) factual information relevant to this Aiticle will be indicated in the Certificate of Origin, in accordance with Annex 3B (Certificate of Origin) or, in the case of an origin declaration made out by an approved exporter as per Article 3.25 (Origin Declaration), on the same document where the origin declaration is made out.
2. For the purposes of applying the provisions of paragraph 1, 'total added value' shall be taken to mean all costs arising outside the Parties, including the value of the materials incorporated there.
Article 3.18. Transit and Transshipment
1. Each Party shall provide that an originating good retains its originating status if the good has been transported directly to the importing Party without passing through the territory of a non-Party and constjtuting one single consignment which is not to be split up.
2. Notwithstanding paragraph 1, each Party shall provide that an originating good retains its originating status if transited or is stored in a temporary warehousing through one or more intermediate non-Parties, provided that the good:
(a) transit entry is justified for geographical reason or by consideration related exclusively to transport requirements;
(b) remained under customs control in the territory of a non-Party;
(c) has not entered into trade or consumption there; and
(d) has not undergone any operation there other than unloading, reloading, repackaging, labelling or any operation required to keep them in good condition.
3. An importer shall upon request supply appropriate evidence to the customs authorities of the importing Party that the conditions set out in paragraph 2 have been fulfilled.
Article 3.19. Special Economic Zones or Free Zones
1. Both Parties shall take all necessary steps to ensure that originating goods traded under cover of a proof of origin which in the course of transport use a free zone situated in their territory, are not substituted by other goods and do not undergo handling other than normal operations designed to prevent their deterioration.
2. Goods produced or manufactured in a free zone situated within a Party, shall be considered as originating goods in that Party when exported to the other Party provided that the treatment or processing is in conformity with the provisions of this chapter and supported by a proof or origin.
Article 3.20. Third Party Invoicing
1. The customs authority in the importing Party shall not reject a certificate of origin only for the reason that the invoice was not issued by the exporter or producer of a good provided that the good meets the requirements in this Chapter.
2. The exporter of the goods shall indicate "third party invoicing" and such information as name and country of the company issuing the invoice shall appear in the appropriate field as detailed in Annex 3B (Certificate of Origin). or, in the case of an origin declaration made out by an approved exporter as per Article 3.25 (Origin Declaration), on the document where the origin declaration is made out.
Section C. Origin Certification
Article 3.21. Proof of Origin
1. Goods originating in a Party shall, on importation into the other Party, benefit from preferential tariff treatment under this Agreement on the basis of a Proof of Origin.
2. Any of the following shall be considered as a Proof of Origin:
(a) a paper format Certificate of Origin in soft or bard copy issued by a competent authority as per Article 3 .23;
(b) an Electronic Certificate of Origin (E-Certificate) issued by a competent authority and exchanged by a mutually developed electronic system as per Article 3.24;
(c) an origin declaration made out by an approved exporter as per Article 3.25. 3. Each Party shall provide that a Proof of Origin shall be completed in the English language and shall remain valid for one year from the date on which it is issued.
Article 3.22. Exemptions from Proof of Origin
1. The following goods shall be admitted as originating products without requiring submission of a Proof of Origin:
(a) originating products sent as small packages from private persons in a Party to private persons in another Party or forming part of traveller's personal luggage; and
(b) imports which are occasional and consist of originating products for the personal use of the recipient or travellers or their families shall not be considered as commercial imports by way of trade.
2. The total value of the products referred to in paragraph 1, may not exceed five hundred United States Dollars (USD 500) in the case of small packages or one thousand two hundred Unites States Dollars (USD 1,200) in the case of products fanning part of traveller's personal luggage as the case may be.