(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.
Section D. Non-Tariff Measures
Article 207. Import and Export Restrictions
1. Except as otherwise provided in this Agreement, no 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, and to this end Article XI of the GATT 1994 is incorporated into and made a part of this Agreement, mutatis mutandis.
2. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, subject to Article XI:2 of the GATT 1994, a Party from adopting or maintaining: (a) export and import price requirements, except as permitted in enforcement of countervailing and antidumping duty orders and undertakings; or (b) voluntary export restraints inconsistent with Article VI of the GATT 1994, as implemented under Article 18 of the SCM Agreement and Article 8.1 of the AD Agreement.
3. Paragraphs 1 and 2 do not apply to the measures set out in Annex 202.2. 4. 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, no provision of 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 of that non-Party; or
(b) requiring as a condition of export of such good of the Party 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.
5. 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 the request of a Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing, or distribution arrangements in the other Party.
6. No Party may, as a condition for engaging in importation or for the import of a good, require a person of the other Party to establish or maintain a contractual relationship with a distributor in its territory.
7. Nothing in paragraph 6 prevents a Party from requiring the designation of an agent for the purpose of facilitating communications between regulatory authorities of the Party and a person of the other Party.
8. For purposes of paragraph 6, "distributor" means a person of a Party who is responsible for the commercial distribution, concession, or representation in the territory of that Party of goods of the other Party.
Article 208. Import Licensing
1. No Party may adopt or maintain a measure that is inconsistent with the Import Licensing Agreement.
2. Each Party shall notify the other Party of any existing import licensing procedures promptly after entry into force of this Agreement.
3. Each Party shall publish any new import licensing procedure and any modification to its existing import licensing procedures or list of products, whenever practicable 21 days prior to the effective date of the requirement but in all events no later than such effective date.
4. Each Party shall notify the other Party of any other new import licensing procedures and any modification to its existing import licensing procedures within 60 days of publication. Such publication shall be in accordance with the procedures as set out in the Import Licensing Agreement.
5. Notification provided under paragraphs 2 and 4 shall:
(a) include the information specified in Article 5 of the Import Licensing Agreement; and
(b) be without prejudice as to whether the import licensing procedure is consistent with this Agreement.
Article 209. Administrative Fees and Formalities
1. Each Party shall ensure, in accordance with Article VIII:1 of the GATT 1994, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charge applied consistently with Article III:2 of the GATT 1994, and antidumping and countervailing duties) imposed on or in connection with importation or exportation are limited to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes.
2. No Party may require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party. 3. Each Party shall make available and maintain through the Internet a current list of the fees and charges it imposes in connection with importation or exportation.
Article 210. Export Taxes
No 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 also adopted or maintained on any such good when destined for domestic consumption.
Article 211. Customs Valuation
The Customs Valuation Agreement shall govern the customs valuation rules applied by the Parties to their reciprocal trade.
Section E. Geographical Indications for Wines and Spirits
Article 212. Geographical Indications for Wines and Spirits
Pursuant to Part II, Section 3 of the TRIPS Agreement and as set out in Annex 212, each Party shall provide the legal means to protect geographical indications for wines and spirits.
Section F. Agriculture
Article 213. Scope and Coverage
1. This section applies to the measures adopted or maintained by the Parties related to agricultural goods.
2. For agricultural goods, in the event of any inconsistency between this Section and any other Section or Chapter of this Agreement, this Section shall prevail to the extent of the inconsistency.
Article 214. Administration and Implementation of Tariff-rate Quotas
1. Each Party shall implement and administer its TRQs in accordance with Article XIII of the GATT 1994 and the Import Licensing Agreement.
2. Each Party shall ensure that:
(a) its procedures for administering its TRQs are transparent, made available to the public, timely, non-discriminatory, responsive to market conditions and minimally burdensome to trade;
(b) subject to subparagraph (c), any person of a Party that fulfills that Party's legal and administrative requirements shall be eligible to apply and to be considered for an import license or an in-quota quantity allocation under the Party's TRQs;
(c) it does not, under its TRQs:
(i) allocate any portion of an in-quota quantity to a producer or a producer's group,
(ii) condition access to an in-quota quantity on purchase of domestic production,
(iii) limit access to an in-quota quantity only to processors, or
(iv) allocate any portion of an in-quota quantity to a distributor or a distributor's group;
(d) only national governments, sub-national governments or state enterprises administer its TRQs, and that such administration is not delegated to other persons except as otherwise provided in this Agreement; and
(e) it allocates in-quota quantities under its TRQs in commercially viable shipping quantities and, to the maximum extent possible, in the amounts that importers request.
3. Each Party shall make every effort to administer its TRQs in a manner that allows importers to fully utilize them.
4. No Party may condition application for or use of an in-quota quantity allocation under a TRQ on the re-export of an agricultural good.
5. No Party may count food aid or other non-commercial shipments in determining whether an in-quota quantity under a TRQ has been filled.
6. On request of the exporting Party, the importing Party shall consult with the exporting Party regarding the administration of the importing Party's TRQs and licenses. Such consultations shall be deemed to satisfy the requirements of Article 2104 (Dispute Settlement - Consultations).
Article 215. Agricultural Export Subsidies
1. The Parties share the objective of the multilateral elimination of agricultural export subsidies and shall work together toward an agreement in the WTO to eliminate those subsidies and avoid its reintroduction in any form.
2. A Party shall not maintain, introduce or reintroduce agricultural export subsidies on any agricultural good originating in or shipped from its territory that are exported directly or indirectly to the territory of the other Party.
3. If either Party maintains, introduces or re-introduces an export subsidy on a product that is exported to the other Party, the Party applying the measure shall, at the request of the other Party, consult with a view to agreeing on specific measures that the Parties may adopt to counter the effects of such export subsidy, including an increase of the rate of duty on such imports up to the applied Most-Favoured Nation (MFN) tariff. Such consultations shall be deemed to satisfy the requirements of Article 2104 (Dispute Settlement - Consultations).
Article 216. State Trading Enterprises
1. The rights and obligations of the Parties with respect to state trading enterprises shall be governed by Article XVII of the GATT 1994 and the Understanding on the Interpretation of Article XVII of the GATT 1994, which are incorporated into and made part of this Agreement, mutatis mutandis.
2. The Parties agree to cooperate in the WTO negotiations to ensure transparency regarding the operation and maintenance of state trading enterprises.
Article 217. Domestic Support Measures for Agricultural Products
1. The Parties agree to cooperate in the WTO agricultural negotiations in order to achieve a substantial reduction of production and trade-distorting domestic support measures.
2. If either Party maintains, introduces or re-introduces a domestic support measure that the other Party considers to distort bilateral trade covered by this Agreement, the Party applying the measure shall, at the request of the other Party, consult with a view to avoiding the nullification and impairment on the concessions granted under this Agreement. Such consultations shall be deemed to satisfy the requirements of Article 2104 (Dispute Settlement - Consultations).
Article 218. Price Band System
Except as otherwise provided in this Agreement, Peru may maintain its Price Band System established in the D.S. N° 115-2001-EF and its amendments, with respect to the products subject to the application of the system as set out in Annex 218.
Section G. Institutional Provisions
Article 219. Committee on Trade In Goods
1. The Parties hereby establish a Committee on Trade in Goods, comprising representatives of each Party.
2. The Committee shall meet on the request of a Party or the Commission to consider matters under this Chapter, Chapter Three (Rules of Origin) and Chapter Four (Origin Procedures and Trade Facilitation).
3. The Committee's functions shall include, inter alia:
(a) promoting trade in goods between the Parties, including through consultations on accelerating tariff elimination under this Agreement and other issues as appropriate;
(b) addressing barriers to trade in goods between the Parties, especially those related to the application of non-tariff measures, and, if appropriate, referring such matters to the Commission for its consideration;
(c) providing to the Committee on Trade-Related Cooperation advice and recommendations on technical assistance needs regarding matters relating to this Chapter, Chapter Three (Rules of Origin) Chapter Four (Origin Procedures and Trade Facilitation) and Chapter Seven (Emergency Action and Trade Remedies);
(d) reviewing future amendments to the Harmonized System to ensure that each Party's obligations under this Agreement are not altered and consulting to resolve any conflicts between:
(i) subsequent amendments to Harmonized System 2007 and Annex 203.2, or
(ii) Annex 203.2 and national nomenclatures; and
(e) consulting on and endeavouring to resolve any difference that may arise between the Parties on matters related to the classification of goods under the Harmonized System.
Article 220. Agricultural Sub-committee
1. At the request of a Party, the Parties shall establish a Sub-Committee on Agriculture comprising representatives of both Parties.
2. The Sub-Committee shall have the following functions:
(a) monitoring and promoting cooperation on the implementation and administration of Section F, in a way that real access to agricultural goods is ensured;
(b) providing a forum for the Parties to consult on issues resulting from the implementation and administration of this Agreement for agricultural goods;
(c) consulting the Parties on matters related to Section F in coordination with other committees, sub-committees and other working groups established in this Agreement;
(d) evaluating agricultural trade development under this Agreement, its impacts in the agricultural sector of each party and the operation of the Agreement's tools, and recommending any necessary actions to the Committee on Trade in Goods;
(e) submitting to the Committee on Trade in Goods for its consideration any matter arising under this article;
(f) reporting to the Committee on Trade in Goods any matter relating to Section F; and
(g) undertaking any additional work that the Committee on Trade in Goods may assign.
3. The Sub-Committee shall meet within 60 days of a request by a Party or as otherwise agreed by the Parties. The meetings of the Sub-Committee shall be presided by the representatives of the hosting Party of the meeting. The Sub-Committee shall inform the Committee on Trade in Goods of the results of its meetings.
4. All the decisions taken by the Sub-Committee shall be reached by consensus.
Section H. Definitions
Article 221. Definitions
For purposes of this Chapter:
AD Agreement means the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994;
advertising films and recordings means recorded visual media or audio materials, consisting essentially of images and/or sound, showing the nature or operation of goods or services offered for sale or lease by a person established or resident in the territory of a Party, provided that such materials are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public;
agricultural export subsidies means export subsidies defined in Article 1(e) of the WTO Agreement on Agriculture;
agricultural goods means those goods referred to in Article 2 of the WTO Agreement on Agriculture;
commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than one U.S. dollar, or the equivalent amount in the currency of the other Party, or so marked, torn, perforated or otherwise treated that they are unsuitable for sale or use except as commercial samples;
consular transactions means requirements that goods of a Party intended for export to the territory of the other Party must first be submitted for the supervision of the consul of the importing Party in the territory of the exporting Party for the purpose of obtaining consular invoices or consular visas for commercial invoices, certificates of origin, manifests, shippers' export declarations or any other customs documentation required on or in connection with importation;
consumed means
(a) actually consumed; or
(b) further processed or manufactured so as to result in a substantial change in the value, form or use of the good or in the production of another good;
customs duty includes any customs or import duty and a charge of any kind imposed in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but does not include any:
(a) charge equivalent to an internal tax imposed consistently with Article III:2 of the GATT 1994, in respect of like, directly competitive or substitutable goods of the Party, or in respect of goods from which the imported good has been manufactured or produced in whole or in part;
(b) antidumping or countervailing duty that is applied pursuant to a Party's domestic law; or
(c) fee or other charge in connection with importation commensurate with the cost of services rendered. duty-free means free of customs duty;
goods admitted for sports purposes means sports requisites for use in sports contests, demonstrations or training in the territory of the Party into whose territory such goods are temporarily admitted;
goods intended for display or demonstration includes their component parts, ancillary apparatus and accessories;
import licensing means an administrative procedure requiring the submission of an application or other documentation, other than that generally required for customs clearance purposes, to the relevant administrative body as a prior condition for importation into the territory of the importing Party;
Import Licensing Agreement means the WTO Agreement on Import Licensing Procedures;
printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials and posters, that are used to promote, publicize or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge;
SCM Agreement means the WTO Agreement on Subsidies and Countervailing Measures; and
TRQ means a tariff rate quota set out in Annex 203.2, subparagraphs 1(j) through (n).
Chapter Three. Rules of Origin
Article 301. Originating Goods
Except as otherwise provided in this Chapter, a good shall originate in the territory of a Party where:
(a) the good is wholly obtained or produced entirely in the territory of one or both of the Parties, as defined in Article 318;
(b) the good fulfills the requirements set out for that good in Annex 301 as a result of production occurring entirely in the territory of one or both of the Parties;
(c) the good is produced entirely in the territory of one or both of the Parties, exclusively from originating materials; or
(d) except as provided in Annex 301 or except for a good of Chapters 01 through 21, headings 39.01 through 39.15 or Chapters 50 through 63 of the Harmonized System, the good is produced entirely in the territory of one or both of the Parties but one or more of the non-originating materials used in the production of the good cannot satisfy the requirements set out in Annex 301 because both the good and the non-originating materials are classified in the same subheading, or heading that is not further subdivided into subheadings, provided that the value of the non-originating materials classified as or with the good does not exceed 55 per cent of the transaction value of the good; and the good satisfies all the other applicable requirements of this Chapter.
Article 302. Minimal Operations
Except for sets or assortments of goods referred to in Article 310 or Annex 301, a good shall not be considered to be an originating good merely by reason of one or more of the following operations:
(a) packaging, re-packaging or breaking up for retail sale of the good;
(b) oiling, or applying anti-rust paint or protective coatings to the good; or
(c) disassembly of the good into its parts.
Article 303. Value Test
1. Except as provided in paragraph 2, where the applicable rule of origin in Annex 301 for the tariff provision under which a good is classified specifies a value test, the value test shall be satisfied provided the value of non-originating materials used in the production of the good does not exceed a given percentage of the transaction value of the good.
2. For purposes of a good classified under headings 87.01 through 87.08, at the choice of an exporter or a producer of such good, the value test shall be satisfied provided the value of non-originating materials used in the production of the good does not exceed a given percentage of either the transaction value or the net cost of the good.
3. The value of non-originating materials used by the producer in the production of a good shall not, for purposes of satisfying the value test under either paragraph 1 or 2, include the value of non-originating materials used to produce originating materials that are subsequently used in the production of the good.(1)
4. For purposes of calculating the net cost of a good under paragraph 2, the producer of the good may:
(a) calculate the total cost incurred with respect to all goods produced by that producer, subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, as well as non-allowable interest costs that are included in the total cost of all such goods, and then reasonably allocate the resulting net cost of those goods to the good;
(b) calculate the total cost incurred with respect to all goods produced by that producer, reasonably allocate the total cost to the good, and then subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in the portion of the total cost allocated to the good; or
(c) reasonably allocate each cost that forms part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, or non-allowable interest costs. (2)
Article 304. Value of Materials
1. For purposes of Articles 303 and 307, the value of non-originating materials, including non-originating component goods referred to in Article 310, shall be:
(a) the transaction value or the customs value of the materials at the time of their importation into a Party, adjusted, if necessary, to include freight, insurance, packing and all other costs incurred in transporting the materials to the place of importation; or
(b) in the case of domestic transactions, the value of the materials determined in accordance with the principles of the Customs Valuation Agreement in the same manner as international transactions, with such modifications as may be required by the circumstances.
2. Notwithstanding paragraph 1, the value of an intermediate material shall be:
(a) the total cost incurred with respect to all goods produced by the producer of the good that can be reasonably allocated to that intermediate material; or
(b) the sum of all costs that comprise the total cost incurred with respect to that intermediate material that can be reasonably allocated to that intermediate material.
Article 305. Intermediate Materials Used In Production
1. If a non-originating material satisfies the requirements set out in Article 301 in the territory of one or both of the Parties, the resulting good shall be considered as originating and no account shall be taken of the non-originating material contained therein when that good is used in the subsequent production of another good.
2. For purposes of determining the origin of a good, a producer of a good may designate any intermediate material as a material to be taken into account as an originating or non-originating material, as the case may be, in determining whether the good satisfies the applicable requirements of the rules of origin.
Article 306. Accumulation
1. For purposes of determining whether a good is an originating good, a good originating in the territory of one or both of the Parties shall be considered as originating in the territory of either of the Parties.
2. For purposes of determining whether a good is an originating good, the production of the good in the territory of one or both of the Parties by one or more producers shall, at the choice of the exporter or producer of the good for which preferential tariff treatment is claimed, be considered to have been performed in the territory of either of the Parties by that exporter or producer, provided that:
(a) all non-originating materials used in the production of the good satisfy the requirements set out in Annex 301 entirely in the territory of one or both of the Parties; and
(b) the good satisfies all other applicable requirements of this Chapter.
3. Subject to paragraph 4, where each Party has a trade agreement that, as contemplated by the WTO Agreement, concerns the establishment of a free trade area, with the same non-Party, the territory of the non-Party shall be deemed to form part of the territory of the free trade area established by this Agreement, for purposes of determining whether a good is an originating good under this Agreement.
4. A Party shall give effect to paragraph 3 only once provisions with effect equivalent to paragraph 3 are in force between each Party and the non-Party. The Parties may agree to limit such provisions to specified goods or to apply under specified conditions.
Article 307. De Minimis
1. Except as provided in paragraphs 2 through 4, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in Annex 301 does not exceed 10 per cent of the transaction value of the good, provided that: