8. On written request of either Party, a Party applying or intending to apply measures pursuant to paragraph 7 shall consult to review the administration of those measures.
9. Paragraphs 1, 2 and 3 are not intended to prevent a Party from maintaining or raising acustoms duty that may be permitted under a dispute settlement ruling under the WTO Agreement or any other agreement negotiated under the WTO Agreement.
Article 3-05. Customs Valuation Code
The Customs Valuation Code shall govern the customs valuation rules applied by the Parties to their reciprocal trade. The Parties agree that they will not make use in their reciprocal trade of the options and reservations permitted under Article 20 and paragraphs 2, 3 and 4 of Annex Ill of the Customs Valuation Code.
Article 3-06. Temporary Admission of Goods
1. Each Party shall grant duty-free temporary admission, including exemption from fees as specified in Annex 3-06 for:
(a) professional equipment necessary for carrying out the business activity, trade or profession of a business person who qualifies for temporary entry pursuant to Chapter 13 (Temporary Entry for Business Persons);
(b) equipment for the press or for sound or television broadcasting and cinematographic equipment;
(c) goods imported for sports pumposes and goods intended for display or demonstration; and
(d) commercial samples and advertising films;
imported from the territory of the other Party, regardless of their origin and regardless of whether like, directly competitive or substitutable goods are available in the territory of the Party.
2. Except as otherwise provided in this Agreement, neither Party may condition the duty-free temporary admission of a good referred to in paragraph 1(a), (b) or (c), other than to require that such good:
(a) be imported by a national or resident of the other Party who seeks temporary entry;
(b) be used solely by or under the personal supervision of such person in the exercise of the business activity, trade or profession of that person;
(c) not be sold or leased while in its territory;
(d) be accompanied by a bond in an amount no greater than 110 per cent of the charges that would otherwise be owed on final importation, or by another form of security, releasable on exportation of the good, except that a bond for customs duties shall not be required for an originating good;
(e) be capable of identification when exported;
(f) be exported on the departure of that person or within such other period of time as is reasonably related to the purpose of the temporary admission; and
(g) be imported in no greater quantity than is reasonable for its intended use.
3. Except as otherwise provided in this Agreement, neither Party may condition the duty-free temporary admission of a good referred to in paragraph 1(d), other than to require that such good:
(a) be imported solely for the solicitation of orders for goods, or services provided from the territory, of the other Party or a non-Party;
(b) not be sold, leased or put to any use other than exhibition or demonstration while in its territory;
(c) be capable of identification when exported;
(d) be exported within such period as is reasonably related to the purpose of the temporary admission; and
(e) be imported in no greater quantity than is reasonable for its intended use.
4. Where a good is temporarily admitted duty free under paragraph 1 and any condition the Party imposes under paragraph 2 and 3 has not been fulfilled, a Party may impose:
(a) the customs duty and any other charge that would be owed on final importation of the good; and
(b) any applicable criminal, civil or administrative penalties that the circumstances may warrant.
5. Subject to Chapters 9 (Investment) and 10 (Cross-Border Trade in Services):
(a) each Party shall allow a vehicle or container used in international traffic that enters its territory from the territory of the other Party to exit its territory on any route that is reasonably related to the economic and prompt departure of such vehicle or container;
(b) neither Party may require any bond or impose any penalty or charge solely by reason of any difference between the port of entry and the port of departure of a vehicle or container;
(c) neither Party may condition the release of any obligation, including any bond, that it imposes in respect of the entry of a vehicle or container into its territory on its exit through any particular port of departure; and
(d) neither Party may require that the vehicle or carrier bringing a container from the territory of the other Party into its territory be the same vehicle or carrier that takes such container to the territory of the other Party.
6. For purposes of paragraph 5, "vehicle" means a truck, a truck tractor, tractor, trailer unit or trailer, a locomotive, or a railway car or other railroad equipment.
Article 3-07. Duty-Free Entry of Certain Commercial Samples and Printed Advertising Materials
Each Party shall grant duty-free entry to commercial samples of negligible value and to printed advertising materials imported from the territory of the other Party, regardless of their origin, but may require that:
(a) such samples be imported solely for the solicitation of orders for goods, or services provided from the territory, of the other Party ora non-Party; or
(b) such advertising materials be imported in packets that each contain no more than one copy of each such material and that neither such materials nor packets form part of a larger consignment.
Article 3-08. Goods Re-Entered after Repair or Alteration
1. Neither Party may apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been exported from its territory to the territory of the other Party for repair or alteration, regardless of whether such repair or alteration could be performed in its territory.
2. Neither Party may apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair or alteration.
Section D. Non-Tariff Measures
Article 3-09. Import and Export Restrictions
1. Except as otherwise provided in this Agreement, neither Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994, including its interpretative notes. To this end Article XI of the GATT 1994 and its interpretative notes are incorporated into and made a part of this Agreement.
2. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.
3. In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, nothing in this Agreement shall be construed to prevent the Party from:
(a) limiting or prohibiting the importation from the territory of the other Party of such good; or
(b) requiring as acondition of export of such good to the territory of the other Party, that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.
4. In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on request of the other Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing and distribution arrangements in the other Party.
5. Paragraphs 1 through 4 shall not apply to the measures set out in Annex 3- 09.
Article 3-10. Customs User Fees
Effective 30 June 1999, the Parties shall eliminate all their customs user fees on originating goods, including those established in Annex 3-10. From the time this Agreement comes into force until 30 June 1999, neither Party may increase or establish new customs user fees for originating goods.
Article 3-11. Export Taxes
Except as provided in Annex 3-11, 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 such duty, tax or charge is adopted or maintained on any such good when destined for domestic consumption.
Article 3-12. International Obligations
A Party, prior to adopting a measure under an inter-governmental agreement on commodities pursuant to Article XX(h) of the GATT 1994, which may affect the trade in commodities between the Parties, shall consult the other Party to prevent the nullification or impairment of a concession granted by that Party under Article 3- 04.
Article 3-13. Export Subsidies on Agricultural Goods
1. The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods and shall cooperate in an effort to achieve such an agreement under the framework of the WTO Agreement.
2. Effective 1 January 2003, neither Party shall introduce or maintain any export subsidy on agricultural goods in their reciprocal trade. As of that date, the Parties also renounce the rights conferred under the GATT 1994 to use export subsidies and the rights with respect to the use of such subsidies in their reciprocal trade that may arise from multilateral negotiations on trade in agriculture under the framework of the WTO Agreement.
3. Notwithstanding paragraph 2, if at the request of the importing Party, the Parties agree to an export subsidy on an agricultural good to the territory of the importing Party, the exporting Party may adopt or maintain such subsidy.
4. Where a Party considers that a non-Party is exporting an agricultural good to the territory of the other Party with the benefit of export subsidies, the importing Party shall, on written request of the other Party, consult with it with a view to agreeing on specific measures that the importing Party may adopt to counter the effect of any such subsidized imports. During the period before 1 January 2003, if the importing Party adopts the agreed-upon measures, the other Party shall refrain from applying, or immediately cease to apply, any export subsidy to exports of such good to the territory of the importing Party.
5. Until 1 January 2003, should a Party introduce, re-introduce or increase a subsidy on the export of an agricultural good, the other Party may increase the rate of duty applicable to such exports up to the level of the most-favoured-nation tariff.
Article 3-14. Domestic Support
With respect to domestic support for agricultural goods, the Parties shall comply with the Agreement on Agriculture, which forms part of the WTO Agreement.
Section E. Automotive Sector
Article 3-15. Automotive Sector
For trade in automotive vehicles, the Parties shall comply with the provisions of Annex 3-15.
Section F. Consultations
Article 3-16. 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 be established within three months after the date on which this Agreement comes into force. The Committee shall adopt its decisions by mutual agreement.
3. The Committee shall convene on the request of either Party or the Commission to oversee the effective implementation of this Chapter, Chapter 4 (Rules of Origin), Chapter 5 (Customs Procedures) and the Uniform Regulations.
4. The Committee shall:
(a) coordinate activities and oversee the functioning of the Sub- Committees on Non-Agricultural Goods, Agriculture, Rules of Origin and Customs, in accordance with paragraphs 5, 6 and 7 and Articles 4-18 (Sub-Committee on Rules of Origin) and 5-14 (Customs Sub- Committee), for which purpose it may meet with the chairs of those sub-committees;
(b) request periodic reports from the Sub-Committees on matters in their sphere of competence;
(c) at the request of either of the Parties, evaluate and recommend proposals for modifications, rectifications or additions to the applicable provisions for better application of paragraph 3;
(d) propose to the Commission the review of measures in effect in the Parties, necessary for application of the Chapters and Regulations mentioned in paragraph 3; and
(e) carry out the other tasks agreed on by the Parties or the Commission under this Agreement and other instruments deriving from it.
5. The Parties establish the following Sub-Committees: Non-Agricultural Goods, Agriculture, Rules of Origin and Customs, comprising representatives of each Party. The Sub-Committees shall:
(a) monitor application of the provisions of this Agreement linked, directly or indirectly, to their spheres of competence;
(b) recommend to the Committee the adoption of measures to further free trade between the Parties;
(c) report periodically to the Committee and, when pertinent, to related Sub-Committees, on the agreements reached and the activities performed in exercise of their functions;
(d) convene at least once a year and whenever so requested by a Party or the Commission;
(e) consider any maitter in their sphere of competence submitted or consulted by a Party, the Committee or another Sub-Committee;
(f) refer to the Committee any matter on which it has been unable to reach agreement within 60 days after it has begun to examine that matter; and
(g) carry out the other tasks referred to it by the Committee under this Agreement and other instruments deriving from it.
6. Notwithstanding paragraph 5, the Sub-Committee on Non-Agricultural Goods shall:
(a) support technical studies for the application of Article 3-17(5);
(b) carry out consultations and studies to include the non-agricultural goods listed in Annex 3-04(4) in the Tariff Reduction Programme;
(c) refer to the Committee matters that impede access by non- agricultural goods to the territory of the Parties, particularly relating to the application of non-tariff measures; and
(d) conduct studies to define the administrative processes of the quota- allocation mechanism established in Annex 3-15.
7. Notwithstanding paragraph 5, the Sub-Committee on Agriculture shall:
(a) support technical studies for the application of Article 3-17(5) with respect to agricultural goods;
(b) refer to the Committee difficulties in applying the provisions in its sphere of competence that affect trade in agricultural goods;
(c) promote trade in agricultural goods through consultations and studies to accelerate the elimination of tariffs on the agricultural goods in Annex 3-04(3) and to include the agricultural goods listed in Annex 3-03(4) in the Tariff Reduction Programme;
(d) refer to the Committee matters that impede access by agricultural goods to the territory of the Parties, particularly relating to the application of non-tariff measures; and
(e) conduct studies to define the administrative processes of the quota- allocation mechanism established in Annex 3-04(3).
Article 3-17. Information and Consultations
1. At the request of one Party, the other Party shall provide information and respond promptly to questions regarding any existing or planned measure related to the application of this Chapter.
2. If, during the Agreement, a Party considers that a measure in the other Party affects the effective application of this Chapter, that party may refer the matter to the Committee.
3. Within 30 days after submission of the request, the Committee may request technical reports from the competent authorities and takes steps to help resolve the matter.
4. If the Committee has met as established in Article 3-16 but fails to reach agreement within the established time or considers that the matter is outside its sphere of competence, either Party may request in writing that the Commission meet as established in Article 17-01 (Free Trade Commission).
5. The Parties undertake within a year after this Agreement comes into force to identify, in terms of tariff item and nomenclature under their respective tariffs, the measures, restrictions or prohibitions on the importation or exportation of goods for reasons of national security, public health, preservation of wildlife, the environment, animal health, standards, labels, international commitments, requirements of public order or any other regulation. The Parties shall update that information and communicate it to the Committee, whenever necessary.
Chapter 4. RULES OF ORIGIN
Article 4-01. Definitions
For the purposes of this Chapter:
direct costs and expenses of manufacture means the costs and expenses incurred during a period that are directly related to the good, but different from the cost or value of direct materials and the cost of direct labour;
F.O.B. means free on board, regardless of the mode of transportation, at the point of shipment abroad;
fungible goods or materials means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical, which cannot be differentiated by a simple visual examination;
Generally Accepted Accounting Principles means the recognized consensus or substantial authoritative support in the territory of a Party with respect to the recording of revenues, expenses, costs, assets and liabilities, disclosure of information and preparation of financial statements. These standards may be broad guidelines of general application as well as detailed standards, practices and procedures;
good means any merchandise, product, article or matter;
goods wholly obtained or produced entirely in the territory of one or both Parties means:
(a) mineral goods extracted in the territory of one or both Parties;
(b) vegetable goods harvested in the territory of one or both Parties;
(c) live animals born and raised in the territory of one or both Parties;
(d) goods obtained from hunting or fishing in the territory of one or both Parties;
(e) goods (fish, shellfish and other marine life) taken from the sea by vessels registered or recorded with a Party and flying its flag;
(f) goods produced on board factory ships from the goods referred to in subparagraph (e) provided such factory ships are registered or recorded with that Party and fly its flag;
(g) goods taken by a Party or a person of a Party from the seabed or marine subsoil outside territorial waters, provided that a Party has rights to exploit such seabed or marine subsoil;
(h) waste and scrap derived from:
(i) production in the territory of one or both Parties; or
(ii) used goods collected in the territory of one or both Parties, provided such goods are fit only for the recovery of raw materials; and
(i) goods produced in the territory of one or both Parties exclusively from goods referred to in subparagraphs (a) through (h), or from their derivatives, at any stage of production;
identical or similar goods means "identical goods" and "similar goods", respectively, as defined in the Customs Valuation Code;
indirect costs and expenses of manufacture means the costs and expenses incurred in a period, other than the direct costs and expenses of manufacture, the cost of direct labour, and the cost or value of direct materials;
indirect material means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, including:
(a) fuel and energy;
(b) tools, dies and moulds;
(c) spare parts and materials used in the maintenance of equipment and buildings;
(d) lubricants, greases, compounding materials and other materials used in production or to operate equipment and buildings;
(e) gloves, glasses, footwear, clothing, safety equipment and supplies;
(f) equipment, devices, and supplies used for testing or inspecting the goods;
(g) catalysts and solvents; and
(h) any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be a part of that production;
intermediate material means a material that is self-produced and used in the production of a good, and designated pursuant to Article 4-07;
location of the producer in relation to a good means the plant that produces such good;
material means a good that is used in the production of another good;
net cost means total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and repacking costs;
originating material means a material that qualifies as originating under this Chapter;
packing materials and containers for shipment means goods used to used to protect a good during transport, other than the packaging and materials for retail sale;
producer means a person who grows, mines, harvests, fishes, hunts, manufactures, processes or assembles a good;
production means growing, mining, harvesting, fishing, hunting, manufacturing, processing or assembling a good;
related person means a person related to another person on the basis that:
(a) they are officers or directors of one another's businesses;
(b) they are legally recognized partners in business;
(c) they are employer and employee;
(d) any person who directly or indirectly owns, controls or holds 25 per cent or more of the outstanding voting stock or shares of each of them;
(e) one of them directly or indirectly controls the other;
(f) both of them are directly or indirectly controlled by a third person;
(g) together they directly or indirectly control a third person; or