Title
FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF MALDIVES
Preamble
PREAMBLE
The Government of the People’s Republic of China (“China”) and the Government of the Republic of Maldives (“Maldives”), hereinafter collectively referred to as “the Parties”:
INSPIRED by their longstanding friendship and growing economic and trade relationship;
DESIRING to strengthen their cooperation on jointly building the 21st-Century Maritime Silk Road through fostering closer economic and trade ties between the Parties;
RECOGNIZING that the strengthening of their economic partnership through a free trade agreement, which removes barriers to the trade in goods, trade in services and investment flows, will produce mutual benefits for the Parties, including creation of new employment opportunities and improvement of the general welfare of the Parties;
BUILDING on their rights, obligations and undertakings under the Marrakesh Agreement Establishing the World Trade Organization and other multilateral, regional and bilateral agreements and arrangements;
UPHOLDING the rights of their governments to regulate in order to meet national policy objectives, and to preserve their flexibility to safeguard public welfare; and
RESOLVED to create an expanded market for goods and services in their territories through establishing clear rules governing their trade which will ensure a predictable, transparent and consistent commercial framework for business operations;
HAVE AGREED as follows:
Body
Chapter 1. GENERAL PROVISIONS
Article 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 2. Relation to other Agreements
1. The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and other existing agreements to which the Parties are party.
2. In the event of any inconsistency between this Agreement and any other multilateral or bilateral agreement to which the Parties are party, the Parties shall immediately consult with a view to finding a mutually satisfactory solution.
Article 3. Geographical Applicability
1. 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. This Agreement shall apply to the territory of Maldives, which shall encompass the land, air space, sea and seabed within the archipelagic baselines of the Maldives drawn in accordance with its domestic law and international law, and includes the territorial waters, the seabed and air space thereof beyond the said baselines, where it may exercise sovereign rights or jurisdiction in accordance with its domestic law 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.
Chapter 2. GENERAL DEFINITIONS
Article 4. General Definitions
For the purposes of this Agreement, unless otherwise specified:
customs duty includes any duty or charge of any kind imposed in connection with the importation of a good, but does not include:
any charge equivalent to an internal tax imposed consistently with Article III:2 of GATT 1994;
any anti-dumping or countervailing duty applied consistently with the provisions of Article VI of GATT 1994, the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, or the WTO Agreement on Subsidies and Countervailing Measures; and
any fee or other charge in connection with importation commensurate with the cost of services rendered;
Customs Valuation Agreement means the Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
days mean calendar days;
existing means in effect on the date of entry into force of this Agreement;
GATS means the General Agreement on Trade in Services, which is part of the WTO Agreement;
GATT 1994 means the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
measure includes any law, regulation, procedure, requirement or practice;
this Agreement means the Free Trade Agreement between the Government of the People’s Republic of China and the Government of the Republic of Maldives;
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 3. TRADE IN GOODS
Article 5. Definitions
For the purposes of this Chapter, unless otherwise specified:
base rate of customs duty means the most-favored-nation (MFN) import customs duty rate applied on 1 January 2014 provided by each Party;
goods mean domestic products as these are understood in GATT 1994 and includes originating goods;
goods and products shall be understood to have the same meaning, unless the context otherwise requires; and
originating means qualifying under the rules of origin set out in Chapter 4 (Rules of Origin and Origin Implementation Procedures);
Article 6. Scope
Except as otherwise provided, this Chapter shall apply to trade in goods between the Parties.
Article 7. 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, the provisions of Article III of GATT 1994 and its interpretative notes are incorporated into and shall form part of this Agreement, mutatis mutandis.
Article 8. Elimination of Customs Duties
1. Except as otherwise provided in this Agreement, no Party may increase any base rate of customs duty, or adopt any new customs duty, on an originating good of the other Party.
2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods of the other Party in accordance with Annex 1.
Article 9. Accelerated Elimination of Customs Duties
1. At the request of a Party, the Parties shall consult to consider accelerating the elimination of customs duties on originating goods as set out in their Schedules in Annex 1.
2. An agreement by the Parties to accelerate the 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 elimination of customs duties on originating goods of the other Party set out in its Schedule in Annex 1. A Party considering doing so shall inform the other Party as early as practicable before the new rate of customs duty takes effect.
Article 10. Import and Export Restrictions
The rights and obligations of the Parties in respect of import and export restrictions shall be governed by Article XI of GATT 1994, which is hereby incorporated into and made part of this Agreement.
Article 11. Administrative Fees and Formalities
1. Each Party 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. Each Party shall make available through the Internet or a comparable computer-based telecommunications network a current list of the fees and charges it imposes in connection with importation or exportation.
Article 12. Non-Tariff Measures
1. No Party shall adopt or maintain any non-tariff measures on the importation of any good of the other Party or on the exportation of any good destined for the territory of the other Party, except in accordance with its WTO rights and obligations or in accordance with other provisions of this Agreement.
2. Each Party shall ensure the transparency of its non-tariff measures permitted in paragraph 1 and that any such measures are not prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to trade between the Parties.
3. Each 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 WTO Agreement on Import Licensing Procedures.
4. Promptly after the date of entry into force of this Agreement, each Party shall notify the other Party of its existing import licensing regimes and related licensing procedures. Thereafter each Party shall notify the other Party of any new import licensing procedure and any modification to its existing import licensing procedures before it takes effect.
Article 13. State Trading Enterprises
Nothing in this Agreement shall be construed to prevent a Party from maintaining or establishing a state trading enterprise in accordance with Article XVII of GATT 1994.
Article 14. Contact Points
Each Party shall designate one or more contact points to facilitate communications between the Parties on any matter covered by this Chapter, and shall provide details of such contact points to the other Party. The Parties shall notify each other promptly of any amendments to the details of their contact points.
Article 15. Committee on Trade In Goods
1. The Parties hereby establish a Committee on Trade in Goods, comprising representatives of each Party, under the FTA Joint Commission.
2. The Committee shall meet on the request of a Party to consider any matter arising under this Chapter, Chapters 6 (Technical Barriers to Trade and Sanitary and Phytosanitary Measures) and 7 (Trade Remedies).
3. The Committee’s functions shall include:
(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; and
(b) addressing barriers to trade in goods between the Parties, especially those related to the application of non-tariff measures.
Chapter 4. RULES OF ORIGIN AND ORIGIN IMPLEMENTATION PROCEDURES
Section A. Rules of Origin
Article 16. Definitions
For the purposes of this Chapter:
aquaculture means 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 regular stocking, feeding, protection from predators, etc.;
CIF means the value of the imported good inclusive of the cost of insurance and freight up to the port or place of entry in the country of importation;
FOB means the value of the exported good free on board inclusive of the cost of transport to the port or site of final shipment abroad;
fungible materials mean materials which are interchangeable for commercial purposes, whose properties are essentially identical, and between which it is impractical to differentiate by a mere visual examination;
generally accepted accounting principles mean the recognized accounting standards 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. Those standards may encompass broad guidelines of general applications as well as detailed standards, practices and procedures;
good means any merchandise, product, article, or material;
Harmonized System means the Harmonized Commodity Description and Coding System of the World Customs Organization;
materials mean ingredients, parts, components, subassemblies and/or goods that were physically incorporated into another good or were subject to a process in the production of another good;
neutral elements mean the goods used in the production, testing or inspection of
another good but not physically incorporated into the good by themselves.
non-originating goods or non-originating materials mean goods or materials that do not qualify as originating under this Chapter and goods or materials of undetermined origin;
originating materials or originating goods mean materials or goods which qualify as originating in accordance with the provisions of this Chapter; and
production means methods of obtaining goods, including growing, raising, mining, harvesting, fishing, aquaculture, farming, trapping, hunting, capturing, gathering, collecting, breeding, extracting, manufacturing, processing or assembling a good, etc..
Article 17. Originating Goods
Except as otherwise provided in this Chapter, the following goods shall be considered as originating in a Party:
(a) goods wholly obtained or produced in a Party as defined in Article 18;
(b) goods produced in a Party exclusively from originating materials; or
(c) goods produced from non-originating materials in a Party, provided that the goods conform to a regional value content not less than 40%, except for the goods listed in Annex 2 which must comply with the requirements specified therein.
Article 18. Goods Wholly Obtained or Produced
For the purposes of Article 17(a), the following goods shall be considered as wholly obtained or produced entirely in a Party:
(a) live animals born and raised in a Party;
(b) goods obtained from live animals referred to in subparagraph (a);
(c) plant and plant products grown, and harvested, picked or gathered in a Party;
(d) goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted in a Party;
(e) minerals and other naturally occurring substances not included in subparagraphs (a) through (d) above, extracted or taken from its soil, waters, seabed or subsoil beneath the seabed;
(f) goods extracted from the waters, seabed or subsoil beneath the seabed outside the territorial waters of a Party, provided that the Party has rights to exploit such waters, seabed or subsoil beneath the seabed in accordance with relevant international law and domestic law of that Party;
(g) goods of sea fishing and other marine products taken from the sea outside the territorial waters of a Party by a vessel registered in a Party and flying the flag of that Party;
(h) goods processed or made on board factory ships registered in a Party and flying the flag of that Party, exclusively from goods referred to in subparagraph (d) and (g) above;
(i) scrap and waste derived from manufacturing or processing operations consumption in a Party, fit only for the recovery of raw materials or for recycling purposes;
(j) used goods consumed and collected in a Party, fit only for the recovery of raw materials; or
(k) goods produced entirely in a Party exclusively from goods referred to in subparagraphs (a) to (j) above.
Article 19. Regional Value Content
1. The Regional Value Content criterion (RVC) shall be calculated as follows:
RVC = FOB - VNM / FOB ×100%
Where:
RVC is the regional value content, expressed as a percentage; VNM is the value of the non-originating materials.
2. VNM shall be determined according to the following circumstances:
(a) in case of the imported non-originating materials, VNM shall be the CIF value of the materials at the time of importation;
(b) in case of the non-originating materials obtained in a Party, VNM shall be the earliest ascertainable price paid or payable for the non-originating materials in that Party. The value of such non-originating materials shall not include freight, insurance, packing costs and any other costs incurred in transporting the materials from the supplier’s warehouse to the producer’s location.
3. If a product which has acquired originating status in accordance with paragraph 1 in a Party is further processed in that Party and used as material in the manufacture of another product, no account shall be taken of the non-originating components of that material in the determination of the originating status of the product.
Article 20. Accumulation
Where originating goods or materials of a Party are incorporated into a good in the other Party, the goods or materials so incorporated shall be regarded to be originating in the latter Party.
Article 21. Minimal Operations or Processes
1. Notwithstanding Article 17(c), a good shall not be considered as originating, if it has only undergone one or more of the following operations or processes:
(a) preservation operations to ensure the goods remain in good condition during transport and storage;
(b) simple assembly of parts of articles to constitute a complete article, or disassembly of products into parts;
(c) packing, unpacking or repacking operations for the purposes of sale or presentation;
(d) slaughtering of animals;
(e) washing, cleaning, removal of dust, oxide, oil, paint or other coverings;
(f) ironing or pressing of textiles;
(g) simple painting and polishing operations;
(h) husking, partial or total bleaching, polishing, and glazing of cereals and rice;
(i) operations to colour sugar or form sugar lumps;
(j) peeling, stoning and shelling of fruits, nuts and vegetables;
(k) sharpening, simple grinding or simple cutting;
(l) sifting, screening, sorting, classifying, grading, matching (including the making-up of sets of articles);
(m) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and other similar packaging operations;
(n) affixing or printing marks, labels, logos or other like distinguishing signs on products or their packaging;
(o) simple mixing of goods, whether or not of different kinds;
(p) operations whose sole purpose is to ease port handling; and
(q) a combination of two or more operations specified in subparagraphs (a) to (p).
2. For the purposes of this Article:
(a) “simple” generally describes activities which need neither special skills nor special machines, apparatus or equipment specially produced or installed for carrying out the activity; and
(b) “simple mixing” generally describes activities which need neither special skills nor machines, apparatus or equipment especially produced or installed for carrying out the activity. However, simple mixing does not include chemical reaction.
Article 22. De Minimis
A good that does not meet the change in tariff classification required in Annex 2 is nonetheless originating, if the value of non-originating material that have been used in the production of the good and do not undergo the applicable change in tariff classification does not exceed 10% of the FOB value of the given good. The value of the said non-originating material shall be determined pursuant to Article 19.2.
Article 23. Fungible Materials
Where originating and non-originating fungible materials are used in the production of a good, the following methods shall be adopted in determining whether the materials used are originating:
(a) physical separation of the materials; or