Title
INTERIM AGREEMENT ON TRADE BETWEEN THE EUROPEAN UNION, OF THE ONE PART, AND THE COMMON MARKET OF THE SOUTH, THE ARGENTINE REPUBLIC, THE FEDERATIVE REPUBLIC OF BRAZIL, THE REPUBLIC OF PARAGUAY AND THE ORIENTAL REPUBLIC OF URUGUAY, OF THE OTHER PART
Preamble
THE EUROPEAN UNION, hereinafter referred to as "the Union" or the "EU",
of the one part, and
THE ARGENTINE REPUBLIC,
THE FEDERATIVE REPUBLIC OF BRAZIL,
THE REPUBLIC OF PARAGUAY,
THE ORIENTAL REPUBLIC OF URUGUAY,
State Parties to the Common Market of the South signatories of this Agreement, hereinafter referred to as "Signatory MERCOSUR States", and
THE COMMON MARKET OF THE SOUTH, hereinafter referred to as "MERCOSUR",
of the other part,
hereinafter jointly referred to as "the Parties",
for the purposes of this Agreement MERCOSUR refers to the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay,
CONSIDERING the important and longstanding trade and investment relations between the Parties;
REAFFIRMING their commitment to further strengthen, liberalise and diversify their trade and investment relations;
RECOGNISING that the provisions of this Agreement maintain the right of the Parties to regulate within their territories in conformity with their internal legislation to achieve legitimate policy objectives, such as public health, safety, environment, education, public morals, and the promotion and protection of cultural diversity, among others;
BUILDING UPON the rights and obligations of the Parties in the World Trade Organisation;
REAFFIRMING their commitment to strengthen and develop the multilateral trading system through the application of transparent, equitable and non-discriminatory rules, with a view to the promotion of increasingly dynamic and open international trade which ensures a larger participation of developing countries in international trade, investment and technology flows;
REAFFIRMING their commitment to promote international trade in such a way as to contribute to sustainable development in its economic, social and environment dimensions, involving all relevant stakeholders, including civil society and the private sector, and to implement this agreement in a manner consistent with their respective laws and international commitments on labour and environmental matters;
RECOGNISING the interim character of this Agreement, which will strengthen bilateral economic and trade relations between the Parties, which will be subsumed under the EU–MERCOSUR Partnership Agreement and which will hence cease to apply upon the entry into force of theEU–MERCOSUR Partnership Agreement;
REAFFIRMING the Parties' right to exploit their natural resources in accordance with their own environmental policies, and sustainable development goals;
DESIRING to improve the competitiveness of their enterprises, by providing them with a predictable legal framework for their trade and investment relations, with special attention to micro, small and medium enterprises;
REAFFIRMING the need to promote the respect of internationally recognised guidelines and principles of corporate social responsibility and responsible business conduct, including the Organisation of Economic Cooperation and Development (hereinafter referred to as "OECD") Guidelines for Multinational Enterprises, amongst enterprises operating in their territories;
REAFFIRMING their commitment to promote comprehensive economic and social development with the objective of raising living standards, eradicating poverty, and enhancing the levels of labour and environmental protection in their respective territories;
CONSIDERING the importance of their respective regional integration processes for the promotion of economic and social development at the regional and global levels, for the strengthening of ties between their peoples and for international stability;
RECOGNISING the differences in economic and social development between and within the Parties;
RECOGNISING the specific challenges and difficulties faced by Paraguay as a landlocked developing country;
HAVE AGREED AS FOLLOWS:
Body
CHAPTER 1
INITIAL PROVISIONS
ARTICLE 1.1
Establishment of a free trade area and relation to the WTO Agreement
1. The Parties to this Agreement hereby establish a free trade area, in conformity with Article XXIV of the GATT 1994 and Article V of the GATS.
2. The Parties affirm their rights and obligations with respect to each other under the WTO Agreement.
3. Nothing in this Agreement shall be construed as requiring a Party to act in a manner inconsistent with its obligations under the WTO Agreement.
ARTICLE 1.2
Objectives
The provisions of this Agreement aim at:
(a) a modern and mutually advantageous trade agreement which creates a predictable framework to boost trade and economic activity, while promoting and protecting our shared values and perspectives on the role of government in society, and retaining the right of the Parties to regulate at all levels of government to achieve public policy objectives;
(b) the development of international trade and of trade between the Parties in a way as to contribute to sustainable development in its economic, social and environmental dimensions, consistent with, and supportive of, their respective international obligations, in these fields;
(c) the promotion of a more sustainable, equitable and inclusive economy so as to raise standards of living, reduce poverty and create new employment opportunities;
(d) the consolidation, increase and diversification of trade in agricultural and non-agricultural goods between the Parties, through the reduction or the elimination of tariff and non-tariff barriers to trade and the further integration in the global value chains;
(e) the facilitation of trade in goods through, in particular, the application of the agreed provisions regarding customs and trade facilitation, standards, technical regulations and conformity assessment procedures as well as sanitary and phytosanitary measures;
(f) the liberalisation and facilitation of trade in services, and the development of an environment conducive to an increase in investment flows, competitiveness, and economic growth and, in particular, to the improvement of conditions of establishment of businesses between the Parties;
(g) the free movement of capital relating to direct investment and of current payments in accordance with Chapter 10;
(h) the effective, transparent and competitive opening of government procurement markets of the Parties;
(i) the promotion of innovation and creativity by ensuring an adequate and effective level of protection and of enforcement of intellectual property rights, in accordance with international rules in force between the Parties, so as to ensure the balance between the rights of the right‑holders and the public interest;
(j) the conduct of economic activities, in particular those regarding the relations between the Parties, in conformity with the principle of free and undistorted competition;
(k) the establishment of a framework for the participation of civil society, including employers, unions, labour and business organisations and environmental groups to support the effective implementation of this Agreement;
(l) the establishment of an expeditious and effective dispute settlement mechanism; and
(m) a transparent and predictable regulatory environment and efficient procedures for economic operators, especially small and medium-sized enterprises (hereinafter referred to as "SMEs"), while preserving the ability of the Parties to adopt and apply their own laws and regulations that regulate economic activity in the public interest, and to achieve legitimate public policy objectives such as the protection and promotion of public health, social services, public education, safety, the environment, public morals, social or consumer protection, privacy and data protection and the promotion and protection of cultural diversity.
ARTICLE 1.3
General definitions
Unless otherwise specified, for the purposes of this Agreement:
(a) "agricultural good" means a product listed in Annex 1 to the Agreement on Agriculture;
(b) "customs duty" means any duty or charge of any kind imposed on or in connection with the importation of a good, including any form of surtax or surcharge imposed on or in connection with such importation 1 , but does not include any:
(i) internal taxes or other internal charges imposed consistently with Article III of GATT 1994;
(ii) antidumping or countervailing duties applied in accordance with Articles VI and XVI of GATT 1994 and the WTO Agreement on the Implementation of Article VI of GATT 1994 and the SCM Agreement in conformity with Chapter 8;
(iii) measures applied in accordance with Article XIX of GATT 1994 and with the Safeguards Agreement, or other safeguard measures applied pursuant to Chapter 8;
(iv) measures authorised by the WTO Dispute Settlement Body or under Chapter 21;
(v) fee or other charge, imposed consistently with Article VIII of GATT 1994; or
(vi) measures adopted to safeguard a Party's external financial position and its balance of payments, in conformity with Article XII of GATT 1994 and the Understanding on Balance of Payments Provisions of GATT 1994.
(c) "CPC" means the Provisional Central Product Classification (Statistical Papers Series M No. 77, Department of International Economic and Social Affairs, Statistical Office of the United Nations, New York, 1991);
(d) "days" means calendar days, including weekends and holidays;
(e) "EU–MERCOSUR Partnership Agreement" means the Partnership Agreement between the European Union and its Member States, of the one part, and the Common Market of the South, the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and the oriental Republic of Uruguay, of the other part, to be concluded;
(f) "existing" means in effect on the date of entry into force of this Agreement;
(g) "good of a Party" means a domestic good as that is understood in the GATT 1994, and includes originating goods of that Party;
(h) "Harmonized System" or "HS" means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, and Chapter Notes, done at Brussels on 14 June 1983;
(i) "heading" means the first four digits in the tariff classification number under the Harmonized System;
(j) "juridical person" means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;
(k) "measure" includes any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action, requirement or practice 2 ;
(l) "natural person of a Party" means, for the European Union, a national of a Member State of the European Union, and for MERCOSUR, a national of a Signatory MERCOSUR State, in accordance with their respective applicable legislation;
(m) "person" means a natural person or a juridical person;
(n) "sanitary or phytosanitary measure" means any measure as defined in Annex A to the SPS Agreement;
(o) "third country" means a country or territory outside the territorial scope of application of this Agreement;
(p) "UNCLOS" means the United Nations Convention on the Law of the Sea, done at Montego Bay on 10 December 1982; and
(r) "WTO" means the World Trade Organization.
ARTICLE 1.4
WTO Agreements
(a) "ADA" means the Agreement on Implementation of Article VI of GATT 1994;
(b) "Agreement on Agriculture" means the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement;
(c) "DSU" means the Understanding on Rules and Procedures Governing the Settlement of Disputes, contained in Annex 2 of the WTO Agreement;
(d) "GATS" means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;
(e) "GATT 1994" means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
(f) "Safeguards Agreement" means the Agreement on Safeguards, contained in Annex 1A to the WTO Agreement;
(g) "SCM Agreement" means the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement;
(h) "SPS Agreement" means the Agreement on the Application of Sanitary and Phytosanitary Measures, contained in Annex 1A to the WTO Agreement;
(i) "TBT Agreement" means the Agreement on Technical Barriers to Trade, contained in Annex 1 to the WTO Agreement;
(j) "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement; and
(k) "WTO Agreement" means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.
ARTICLE 1.5
Parties
1. The European Union shall be responsible for the fulfilment of the commitments in this Agreement.
2. Save where otherwise provided, each of the Signatory MERCOSUR States of this Agreement shall be responsible for the fulfilment of the commitments in this Agreement.
ARTICLE 1.6
Regional integration
1. While recognising the differences in their respective regional integration processes, and without prejudice to the commitments undertaken under this Agreement, the Parties shall foster conditions which facilitate the movement of goods and services between and within the two regions.
2. With respect to movement of goods, pursuant to paragraph 1:
(a) goods originating in a Signatory MERCOSUR State that are released for free circulation in the European Union shall benefit from free movement of goods within the territory of the European Union under the conditions established by the Treaty on the Functioning of the European Union;
(b) the Signatory MERCOSUR States shall apply to goods originating in the European Union that are imported in its territory from another Signatory MERCOSUR State, customs procedures that are no less favourable than those applicable to goods originating in that Signatory MERCOSUR State.
The treatment referred to under points (a) and (b) of this paragraph does not include tariff treatment for goods, which is governed by Chapter 2;
(c) the Signatory MERCOSUR States shall periodically review their customs procedures with a view to facilitating the movement of goods of the European Union between their territories and to avoiding duplication of procedures and controls when practicable and in accordance with the evolution of their integration process; and
(d) the benefits of MERCOSUR's harmonisation of technical regulations and conformity assessment procedures, SPS requirements and approval procedures, including import certificates and controls, shall be extended under non-discriminatory conditions to goods originating in the European Union if they have been imported in compliance with the laws and regulations of the importing Signatory MERCOSUR State.
3. With respect to movement of services, pursuant to paragraph 1:
(a) Member States of the European Union shall endeavour to facilitate, as appropriate, the freedom to provide services within the territory of the European Union to enterprises owned or controlled by natural or juridical persons of a Signatory MERCOSUR State and established in a Member State of the European Union; and
(b) the Signatory MERCOSUR States shall endeavour to facilitate, as appropriate, the freedom to provide services between their territories to enterprises owned or controlled by natural or juridical persons of a Member State of the European Union and established in a Signatory MERCOSUR State.
ARTICLE 1.7
References to laws and other agreements
1. Unless otherwise specified, where reference is made to laws and regulations of a Party, those laws and regulations shall be understood to include amendments thereto.
2. Unless otherwise specified, any reference, or incorporation by means of a reference in this Agreement to other agreements or legal instruments in whole or in part shall be construed as including related annexes, protocols, footnotes, interpretative notes and explanatory notes.
3. Unless otherwise specified, where international agreements are referred to or incorporated into this Agreement, in whole or in part, they shall be understood to include amendments thereto or their successor agreements entering into force for both Parties on or after the date of signature of this Agreement. If any matter arises regarding the implementation or application of the provisions of this Agreement as a result of such amendments or successor agreements, the Parties may, on request of either Party, consult with each other via the Trade Council with a view to finding a mutually satisfactory solution to this matter as necessary. As a result of such consultation, the Parties may, by decision in the Trade Council, amend this Agreement accordingly.
4. Paragraph 3 applies mutatis mutandis, if the amendment or successor agreement of an international agreement referred to or incorporated into this Agreement in whole or in part, has entered into force for the European Union and one or more Signatory MERCOSUR States.
CHAPTER 2
TRADE IN GOODS
ARTICLE 2.1
Objective and scope
1. The Parties shall establish a free trade area for goods over a transitional period starting on the date of entry into force of this Agreement.
2. Except as otherwise provided in this Agreement, the provisions of this Chapter apply to trade in goods of a Party.
SECTION A
CUSTOM DUTIES
ARTICLE 2.2
National treatment
Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994, including its Notes and Supplementary Provisions. To that end, Article III of GATT 1994 and its Notes and Supplementary Provisions are incorporated into and made part of this Agreement, mutatis mutandis.
ARTICLE 2.3
Definitions
For the purposes of this Chapter, "originating good" means a good qualifying as originating in a Party under the rules of origin set out in Chapter 3.
ARTICLE 2.4
Reduction and elimination of customs duties
1. Except as otherwise provided for in this Agreement, each Party shall reduce or eliminate its customs duties on originating goods in accordance with Annex 2-A.
2. The classification of goods in trade between the Parties shall be in accordance with each Party's respective tariff nomenclature in conformity with the Harmonized System. Each Party shall specify in its respective Appendix to Annex 2-A the version of the Harmonized System used to this end.
3. A Party may create a new tariff line. In that event and in so far as trade between the Parties is concerned, the customs duty applicable to the corresponding goods under the new tariff line shall be equal to or lower than the customs duty applicable to the corresponding goods under the original tariff line specified in Annex 2-A and the agreed tariff concession shall remain unchanged.
4. For each good originating in the other Party, the base rate of customs duties on imports to which the successive reductions apply under paragraph 1 is specified in Annex 2-A.
5. Without prejudice to paragraphs 1 and 3, for a period of 2 (two) years from the date of entry into force of this Agreement, the European Union shall not increase the customs duties applied on 31 December 2017 on goods originating in Paraguay that are classified under the following tariff lines set out in Appendix 2-A-1 as "PY" goods: 20019030, 21012098, 21069098 and, 33021029. For the purposes of this paragraph, "goods originating in Paraguay" means goods that conform to the origin requirements under Subsections 2 and 3 of Section 2 of Chapter 1 of Title II of Commission Delegated Regulation (EU) 2015/2446 of 28 July of 2015 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code 3 and Subsections 3 to 9 of Section 2 of Chapter 2 of Title II of Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code 4 .
6. Except as otherwise provided for in this Agreement, a Party shall not introduce new customs duties or increase customs duties which are already applied in accordance with the base rates set out in Annex 2-A on trade in originating goods between the Parties as from the date of entry into force of this Agreement. For greater certainty, a Party may increase a customs duty applicable to trade between the Parties as set out in Annex 2-A that has been unilaterally reduced to the level set out in that Annex for the respective year following that unilateral reduction.
7. If a Party reduces its most-favoured-nation applied rate of customs duty to a level below the base rate for a particular tariff line specified in Annex 2-A, that duty rate shall be deemed to replace the base rate in Annex 2-A, if, and for as long as it is lower than the base rate, for the purposes of the calculation of the preferential rate for that tariff line. In this regard, the Party shall apply the tariff reduction to the most-favoured-nation applied rate to calculate the applicable rate of customs duty, maintaining at all times the relative margin of preference for any tariff line. Such relative margin of preference for a tariff line shall correspond to the difference between the base rate set out in Annex 2-A and the applied duty rate for that tariff line in accordance with Annex 2-A divided by that base rate and shall be expressed as a percentage.
8. Each Party may accelerate the elimination of customs duties on originating goods of the other Party, or otherwise improve the conditions of market access for originating goods of the other Party, if its general economic situation and the situation of the economic sector concerned so permit.
9. As from 3 (three) years after the date of entry into force of this Agreement, on request of either Party, the Subcommittee on trade in goods, referred to in Article 2.14, shall consider measures providing for improved market access. The Trade Council shall have the power to adopt decisions to amend Annex 2-A. Such decisions shall supersede any duty rate or staging category determined in Annex 2-A for such originating goods.
ARTICLE 2.5
Goods re-entered after repair
1. For the purposes of this Article, "repair" means any processing operation undertaken on a good to remedy operating defects or material damage and entailing the re-establishment of the good to its original function or to ensure its compliance with technical requirements for its use, without which the good could no longer be used in the normal way for the purposes for which it was intended. Repair of a good includes restoration and maintenance but does not include an operation or process that:
(a) destroys the essential characteristics of a good or creates a new or commercially different good;
(b) transforms an unfinished good into a finished good; or
(c) is used to improve the technical performance of a good.
2. A Party shall not apply customs duties to a good, regardless of its origin, that re-enters that Party's customs territory after hat good has been temporarily exported from its customs territory to the customs territory of the other Party for repair, regardless of whether such repair could have been performed in the customs territory of the Party from which the goods were exported for repair as defined in paragraph 1.
3. Paragraph 2 does not apply to a good imported in bond into free-trade zones or zones of similar status, that is exported for repair and is not re-imported in bond into free-trade zones or zones of similar status.
4. A Party shall not apply customs duties to a good, regardless of its origin, imported temporarily from the customs territory of the other Party for repair.
SECTION B
NON-TARIFF MEASURES