Title
FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF NICARAGUA
Preamble
PREAMBLE
The Governments of the People’s Republic of China (“China”) and the Republic of Nicaragua (“Nicaragua”), hereinafter referred to collectively as “the Parties”:
Inspired by their growing friendship and bilateral economic and trade relationship;
Recalling the Early Harvest Arrangement for the Free Trade Agreement
between the Government of the People’s Republic of China and the Government of the Republic of Nicaragua signed in July 12, 2022;
Desiring to strengthen their economic partnership and further liberalise bilateral trade and promote investment to bring economic and social benefits;
Building on their rights, obligations and undertakings under the Marrakesh Agreement Establishing the World Trade Organization;
Recognising that the strengthening of their economic partnership through a Free Trade Agreement will produce mutual benefits for the Parties;
Resolved to establish transparent and predictable rules governing the trade and investment between the Parties;
Considering the different levels of social and economic development of the Parties;
Reaffirming their commitment to pursue the objective of sustainable development;
Protect and preserve the environment and enhance the means for doing so,
including through the conservation of natural resources in their respective territories;
Desiring to create favourable conditions for the promotion of commercial and economic cooperation in areas of common interest;
Create new employment opportunities, strengthen labor cooperation, and improve the overall quality of life for their respective citizens;
Upholding the rights of their governments to regulate in order to meet
national policy objectives, and to preserve their flexibility to safeguard the public welfare;
Have agreed as follows:
Body
Chapter 1. INITIAL PROVISIONS AND DEFINITIONS
Article 1.1. Establishment of a Free Trade Area
The Parties, consistent with Article XXIV of GATT 1994 and Article V of GATS, hereby establish a free trade area.
Article 1.2. Objectives
1. The objectives of this Agreement are to:
(a) encourage expansion and diversification of trade between the Parties;
(b) facilitate trade in goods and services by promoting conditions of fair competition in the free trade area;
(c) promote conditions of fair competition in the free trade zone.
(d) establish comprehensible rules in order to ensure a regulated and transparent environment for the trade of goods and services between the Parties;
(e) increase investment opportunities in the territories of the Parties;
(f) ensure an adequate and effective protection of intellectual property rights in the territories of the Parties, taking into consideration the economic situation and the social or cultural need of each Party; as well as to promote technological innovation and the transfer and dissemination of technology between the Parties;
(g) confirm their commitment to the promotion of trade and reaffirm their aspiration to achieve an appropriate balance between the economic, social and environmental components of sustainable development;
(h) create effective procedures for the implementation and application of this Agreement, for its joint administration, and for the resolution of disputes; and
(i) establish a framework for further bilateral cooperation to expand and enhance the benefits of this Agreement.
2. The Parties shall interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1 and in accordance with customary rules of interpretation of Public International Law.
Article 1.3. Relation to other Agreements
1. The Parties confirm their rights and obligations under the WTO Agreement and the other agreements negotiated thereunder to which both Parties are party, and any other international agreement to which both Parties are party.
2. In the event of any inconsistency between this Agreement and any other agreement to which the Parties are party, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution in accordance with customary rules of interpretation of public international law.
Article 1.4. Geographical Applicability (1)
1. With regard to China, this Agreement shall apply to the entire customs territory of China, including land territory, territorial airspace, internal waters and territorial sea as well as their bed and subsoil, and any area beyond its territorial sea within which it may exercise sovereign rights and/or jurisdiction in accordance with international law and its domestic law.
2. With regard to Nicaragua, the territory of the Republic of Nicaragua, in accordance with its national legislation and international law.
3. Each Party is fully responsible for the observance of all provisions of this Agreement and shall take such reasonable measures as may be available to it to ensure their observance by local governments and authorities in its territory.
Article 1.5. General Definitions
For the purposes of this Agreement, unless otherwise specified:
Agreement on Safeguards means Agreement on Safeguards; contained in Annex 1A to the WTO Agreement;
customs administration means:
(a) for China, the General Administration of Customs of the People’s Republic of China (GACC) or its successor; and
(b) for Nicaragua, the General Directorate of Customs Services (la Dirección General de Servicios Aduaneros (DGA)) or its successor;
customs duty includes any duty or charge of any kind imposed in connection with the importation of a good, but does not include:
(a) any charge equivalent to an internal tax imposed consistently with Article III.2 of GATT 1994;
(b) any anti-dumping or countervailing duty applied consistently with the provisions of Article VI of GATT 1994, Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement or the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement any duty applied consistently with Article XIX of GATT 1994 and Agreement on Safeguards; and
(c) any fee or other charge in connection with importation commensurate with the cost of services rendered;
Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
days means calendar days;
enterprise means any entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association or similar organisation;
enterprise of a Party means an enterprise constituted or organized under the laws of a Party, and a branch located in the territory of a Party and carrying out business activities there;
existing means in effect on the date of entry into force of this Agreement;
FTA Joint Commission means the China-Nicaragua Free Trade Agreement Joint Commission established under Article 20.1 (FTA Joint Commission);
GATS means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;
GATT 1994 means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
goods of a Party means domestic products as these are understood in the GATT 1994 or such goods as the Parties may agree, and includes originating goods of that Party;
Harmonized System or HS means the Harmonized Commodity Description and
Coding System, as adopted and administered by the World Customs Organization, set out in the Annex to the International Convention on the Harmonized Commodity Description and Coding System, done at Brussels on 14 June 1983, as may be amended, adopted and implemented by the Parties in their respective law;
measure includes any law, regulation, procedure, requirement or practice;
national means:
for China, a natural person who has the nationality of China according to the Laws of China; and
for Nicaragua, a Nicaraguan (nicaragüense) as defined in Article 15 of the Political Constitution of the Republic of Nicaragua (Constitución Política de la República de Nicaragua);
originating means qualifying under the provisions of origin set out in Chapter 3 (Rules of Origin and Implementation Procedures);
Party means any State for which this Agreement is in force;
person means a natural person or an enterprise;
TRIPS Agreement means the Agreement on Trade-related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement;
WTO means the World Trade Organization; and
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994.
Chapter 2. TRADE IN GOODS
Article 2.1. Scope
Except as otherwise provided in this Agreement, this Chapter applies to trade in goods between the Parties.
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 interpretative notes. To this end, Article III of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.3. Elimination of Customs Duties
1. Except as otherwise provided in this Agreement, each Party shall, upon entry into force of this Agreement, progressively eliminate its customs duties on originating goods of the other Party in accordance with its Schedule in Annex 2-A.
2. Except as otherwise provided in this Agreement, neither Party may increase any existing import customs duty, or adopt any new customs duty, on an originating good of the other Party.
3. If a Party reduces its applied most-favoured-nation customs duty rate after the entry into force of this Agreement, that duty rate shall apply as regards trade covered by this Agreement if and for as long as it is lower than the customs duty rate calculated in accordance with its Schedule to Annex 2-A.
Article 2.4. Acceleration of Tariff Commitments
1. At the request of either Party, the Parties shall consult to consider accelerating the elimination of customs duties on originating goods as set out in their Schedules in Annex 2-A.
2. Notwithstanding the provisions of Article 20.1 (FTA Joint Commission), an agreement by the Parties to accelerate the reduction and elimination of customs duties on originating goods shall supersede any duty rate determined pursuant to their Schedules for such good and shall enter into force following approval by each Party in accordance with their respective applicable legal procedures.
3. A Party may at any time accelerate unilaterally the reduction and elimination of customs duties on originating goods of the other Party set out in its Schedule in Annex 2-A. A Party considering doing so shall inform the other Party as early as practicable before the new rate of customs duty takes effect.
4. For greater certainty, a Party may:
(a) raise a customs duty to the level set out in its Schedule in Annex 2-A following a unilateral reduction for the respective year. A Party considering doing so shall inform the other Party as early as practicable before the new rate of customs duty takes effect; or
(b) maintain or increase a customs duty as authorized by the Dispute Settlement Body of the WTO.
Article 2.5. Temporary Admission of Goods
1. Each Party shall grant duty-free temporary admission for the following goods, regardless of their origin:
(a) professional equipment, such as equipment used for scientific research, pedagogical or medical activities, the press or television and cinematographic purposes, necessary of a person who qualifies for temporary entry, pursuant to the domestic laws of the importing Party;
(b) goods intended for display or demonstration at exhibitions, fairs, meetings, or similar events;
(c) commercial samples; and
(d) goods admitted for sports purposes.
2. Each Party shall, at the request of the person concerned and for reasons its customs authority considers valid, extend the time limit for temporary admission beyond the period initially fixed in accordance with its domestic law.
3. Neither Party may condition the duty-free temporary admission of a good referred to in paragraph 1, other than to require that the good:
(a) be used solely by or under the personal supervision of a national or resident of the other Party in the exercise of the business activity, trade, profession, or sport of that person;
(b) not be sold or leased while in its territory;
(c) be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the good;
(d) be capable of identification when exported;
(e) be exported on the departure of the person referenced in subparagraph (a), or within such other period related to the purpose of the temporary admission as the Party may establish, or within 6 months, unless extended;
(f) be admitted in no greater quantity than is reasonable for its intended use; and
(g) be otherwise admissible into the Party’s territory under its domestic law.
4. If any condition that a Party imposes under paragraph 3 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on the good plus any other charges or penalties provided for under its domestic law.
5. Each Party shall permit a good temporarily admitted under this Article to be exported through a customs port other than that through which it was admitted.
6. Each Party shall provide that its customs administration or other competent authority shall relieve the importer or another person responsible for a good admitted under this Article from any liability for failure to re-export the good on presentation of proof to the satisfaction of the customs administration of the importing Party that the good has been destroyed by reason of force majeure.
Article 2.6. Import and Export Restrictions
1. Unless otherwise provided in this Agreement, neither Party shall adopt or maintain any prohibition or restriction or measure having equivalent effect, including quantitative restrictions, on the importation of a good originating in the territory of the other Party, or on the exportation or sale for export of a good destined for the territory of the other Party except in accordance with its rights and obligations under the GATT 1994. To this end, Article XI of GATT 1994, including its interpretive notes, is incorporated into and made part of this Agreement, mutatis mutandis.
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, 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;
(b) import licensing conditioned on the fulfillment of a performance requirement; or
(c) voluntary export restraints inconsistent with Article VI of GATT 1994, as implemented under Article 18 of the SCM Agreement and Article 8.1 of the AD Anti-dumping Agreement.
3. Neither Party may, as a condition for engaging in importation or for the importation of a good, require a person of the other Party to establish or maintain a contractual or other relationship with a distributor in its territory.
4. For greater certainty, paragraph 3 does not prevent a Party from requiring a person referred to in that paragraph to designate an agent for the purposes of facilitating communications between its regulatory authorities and that person.
5. For the purposes of paragraph 3, distributor means a person of a Party who is responsible for the commercial distribution, agency, concession, or representation in the territory of that Party of goods of the other Party.
6. Paragraph 1 shall not apply to the measures set out in Annex 2-B of this Article.
Article 2.7. Tariff-Rate Quota
1. For products in respect of which China establishes a Tariff-Rate Quota (hereinafter referred to as “TRQ”) in its Schedule to Annex 2-A, China shall apply in-quota tariff rates at 15% to imports of such products of Nicaraguan origin up to the quantity for each year as specified in Annex 2-C after the entry into force of this Agreement.
2. Imports of such products of Nicaraguan origin in excess of the specified quantity in Annex 2-C in any given calendar year shall be subject to tariff rates at 50%.
Article 2.8. Tariff-Rate Quota Administration
1. A Party shall implement and administer TRQ set out in its Schedule to Annex 2-A in accordance with Article XIII of GATT 1994, including its interpretive notes, and the Agreement on Import Licensing Procedures (hereinafter referred to as the “Import Licensing Agreement”), contained in Annex 1 A to the WTO Agreement.
2. A Party shall ensure that:
(a) its procedures for administering its TRQ are transparent, timely, non-discriminatory, responsive to market conditions, minimally burdensome to trade, and reflect end-user preferences; and
(b) any person of a Party that fulfills the importing Party’s legal and administrative requirements shall be eligible to apply and to be considered for a TRQ allocation by the Party.
3. Each Party shall make every effort to administer its TRQ in a manner that allows importers to fully utilise the TRQ quantities.
4. On the written request of a Party, the other Party shall consult with the requesting Party regarding the administration of its TRQ.
Article 2.9. Import Licensing Procedures
A Party shall ensure that import licensing regimes applied to goods originating in the other Party are applied in accordance with the WTO Agreement, and in particular, with the provisions of the Import Licensing Agreement.
Article 2.10. Administrative Fees and Formalities
1. The Parties shall ensure, in accordance with Article VIII.1 of GATT 1994 and its interpretative notes, 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 GATT 1994, and anti-dumping and countervailing duties) imposed on or in connection with importation or exportation are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation on imports or exports for fiscal purposes.
2. Neither Party may require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party.
3. The Parties shall make available through the Internet or a comparable computer-based telecommunications network a current list of the fees and charges they impose in connection with importation or exportation.
Article 2.11. Agricultural Export Subsidies
1. The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods, and shall work together toward an agreement in the WTO to eliminate those subsidies and prevent their reintroduction in any form.
2. Neither Party shall maintain, introduce or reintroduce any export subsidy on any agricultural good destined to the territory of the other Party.
Article 2.12. Committee on Trade In Goods
1. The Parties hereby establish a Committee on Trade in Goods (hereinafter referred to as the “Committee”), comprising representatives of each Party.
2. The Committee shall meet at least once a year to consider matters arising under this Chapter, and may meet more frequently as the Parties may agree.
3. The Committee’s functions shall include, inter alia:
(a) promoting trade in goods between the Parties, including through consultations on accelerating elimination of customs duties 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 FTA Joint Commission for its consideration;
(c) reviewing future amendments to the Harmonized System to ensure that each Party’s obligations under this Agreement are not altered, and consulting in order to resolve any conflicts between:
(i) subsequent amendments to Harmonized System 2022 and Annex 2-A (Schedule of Tariff Commitments); or
(ii) Annex 2-A and national nomenclatures;
(d) consulting on and endeavouring to resolve any dispute that may arise among the Parties on matters related to the classification of goods under the Harmonized System;
(e) establishing working groups, if necessary, and monitoring the work of the working groups established under the auspices of the Committee; and