Title
FREE TRADE AGREEMENT BETWEEN THE UNITED MEXICAN STATES AND THE REPUBLICS OF EL SALVADOR, GUATEMALA AND HONDURAS
Preamble
PREAMBLE
The United Mexican States, the Republic of El Salvador, the Republic of Guatemala and the Republic of Honduras,
DECIDED TO:
STRENGTHEN the bonds of friendship and the spirit of cooperation existing between their peoples;
ACCELERATE and promote the revitalization of the American integration schemes;
ATTAIN a better balance in their trade relations;
CONTRIBUTE to harmonious development, the expansion of world trade and the broadening of international cooperation;
PROPRIATE a larger and more secure market for the goods produced and the reciprocal exchange of services in their territories;
RAISE the competitiveness of the services sector, in order to consolidate the competitiveness of the countries in the free trade zone;
REDUCE provisions in their reciprocal trade;
ESTABLISH a legal framework with clear and mutually beneficial rules for the promotion and protection of investments, as well as to facilitate the commercial exchange of their goods and services;
ENSURE a predictable business framework for planning productive activities and investment;
DEVELOP the provisions of the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement), as well as other bilateral and multilateral integration and cooperation instruments;
STRENGTHEN the competitiveness of its companies in world markets;
PROTECT intellectual property rights;
CREATE employment opportunities and improve living standards in their respective territories;
PROMOTE economic development in a manner consistent with environmental protection and conservation, as well as sustainable development;
PRESERVE its ability to safeguard the public welfare; and
ENCOURAGE the dynamic participation of the various economic agents, particularly the private sector, in efforts to deepen their economic relations;
CELEBRATE THIS FREE TRADE AGREEMENT
Body
Chapter I. INITIAL PROVISIONS
Article 1-01. Establishment of the Free Trade Zone.
The Parties establish a free trade area in accordance with the provisions of Article XXIV of GATT 1994 and Article V of GATS.
Article 1-02. Objectives
1. The objectives of this treaty, specifically developed through its principles and rules, are the following:
a) to stimulate the expansion and diversification of trade in goods and services between the Parties;
b) to promote conditions of free competition within the free trade area;
c) to eliminate barriers to trade and facilitate the movement of originating goods and services between the Parties;
d) eliminate barriers to the movement of capital and business persons between the territories of the Parties;
e) increase investment opportunities in the territories of the Parties;
f) to protect and enforce, in an adequate and effective manner, intellectual property rights in the territories of the Parties;
g) to establish guidelines for further cooperation between the Parties aimed at extending and enhancing the benefits of this treaty; and
h) create effective procedures for the implementation and enforcement of this treaty, for its joint administration and for the settlement of disputes.
2. The Parties shall interpret and apply the provisions of this treaty in the light of the objectives set forth in paragraph 1 and in accordance with the applicable rules of international law.
Article 1-03. Relationship with other Treaties and International Agreements
1. The Parties confirm the rights and obligations in force between them under the WTO Agreement and other treaties and agreements to which they are party.
2. In case of incompatibility between the provisions of the treaties and agreements referred to in paragraph 1 and the provisions of this treaty, the latter shall prevail to the extent of the incompatibility.
Article 1-04. Scope of Application
The provisions of this treaty apply between Mexico and El Salvador, Guatemala and Honduras. This treaty does not apply between El Salvador, Guatemala and Honduras.
Article 1-05. Compliance with the Treaty.
Each Party shall ensure, in accordance with its constitutional norms, compliance with the provisions of this treaty in its territory, at the federal or central, state or departmental and municipal levels, except as otherwise provided in this treaty.
Article 1-06. Succession of Treaties.
Any reference to any other treaty or international agreement shall be understood to be made in the same terms to a successor treaty or agreement to which the Parties are parties.
Article 1-07. Annexes.
The Annexes to this treaty constitute an integral part phereof.
Chapter II. GENERAL DEFINITIONS
Article 2-01. Definitions of General Application
For the purposes of this treaty, unless otherwise provided, the following definitions shall apply:
TRIPS Agreement: the Agreement on Trade-Related Aspects of Intellectual Property Rights, which is part of the WTO Agreement;
GATS: the General Agreement on Trade in Services, which is part of the WTO Agreement; WTO Agreement: the Marrakesh Agreement Establishing the World Trade Organization, dated April 15, 1994;
customs duty: any tax, duty or import tax and any charge of any kind applied in connection with the importation of goods, including any form of surcharge or additional charge on imports, except:
a) any charge equivalent to an internal tax established in accordance with Article III:2 of the GATT 1994, with respect to like goods, direct competitors or substitutes of the Party, or with respect to goods from which the imported good has been manufactured or produced in whole or in part;
b) any countervailing duty;
c) any duties or other charges related to importation, proportionate to the cost of services rendered; and
d) any premium offered or collected on imported goods, derived from any bidding system, with respect to the administration of quantitative import restrictions or tariff-quota or tariff preference quotas;
good: products or goods as understood in GATT 1994, whether originating or non-originating;
good of a Party: domestic products as understood in the GATT 1994, such goods as the Parties may agree, and includes originating goods. A good of a Party may incorporate materials from other countries;
originating good or originating material: a good or material that qualifies as originating in accordance with the provisions of Chapter VI;
Customs Valuation Code: the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, including its interpretative notes, which forms part of the WTO Agreement;
Commission: the Administrative Commission established in accordance with Article 18-01;
countervailing duty: "countervailing duty" as defined in Chapter IX;
days: calendar days;
enterprise: an entity incorporated or organized under applicable law, whether or not for profit and whether privately or governmentally owned, including companies, foundations, partnerships, trusts, participations, sole proprietorships, joint ventures or other associations;
State enterprise: an enterprise that is owned or controlled by a Party through equity participation;
enterprise of a Party: an enterprise incorporated or organized under the laws of a Party;
existing: in force at the entry into force of this treaty;
tariff item: the breakdown of a Harmonized System tariff classification code to more than six digits;
GATT 1994: the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
measure: any law, regulation, procedure, administrative provision or practice, among others;
national: a natural person who has the nationality of a Party in accordance with its applicable law;
Party: any State with respect to which this treaty has entered into force;
Exporting Party: the Party from whose territory a good or service is exported;
Importing Party: the Party into whose territory a good or service is imported;
heading: a Harmonized System tariff classification code at the four-digit level;
person: a natural or natural person, or a company;
person of a Party: a national or company of a Party;
Tariff Relief Program: the one established in paragraph 5 of Article 3 -04 and in paragraph 1 of Article 4 - 04;
Secretariat: the Secretariat established in accordance with Article 18-02;
SAC: the Central American Tariff System used by the member countries of the General Treaty for Central American Economic Integration, based on the Harmonized Commodity Description and Coding System;
Harmonized System: the Harmonized Commodity Description and Coding System in force, including its general rules and its section, chapter and subheading legal notes, as adopted by the Parties in their respective legislation;
subheading: a Harmonized System tariff classification code at the six-digit level;
territory: for each Party, as defined in Annex 2 -01.
Annex 2-01. Country- Specific Definitions
For the purposes of this treaty, unless otherwise provided, the following definitions shall apply:
territory:
a) or Mexico:
i) the states of the Federation and the Federal District;
ii) islands, including reefs and cays in adjacent seas;
iii) the islands of Guadalupe and Revillagigedo, located in the Pacific Ocean;
iv) the continental shelf and the submarine beds of islands, cays and reefs;
v) the waters of the territorial seas, to the extent and under the terms established by international law, and inland maritime waters;
vi) the space located on the national territory, with the extension and modalities established by international law itself; and
vii) any area beyond the territorial seas of Mexico within which Mexico may exercise rights over the seabed and subsoil and the natural resources contained therein, in accordance with international law, including the United Nations Convention on the Law of the Sea, as well as with its domestic law; and
b) o to El Salvador, Guatemala and Honduras: the land, maritime and air space of each Party, as well as their exclusive economic zones and continental shelves, over which they exercise sovereign rights and jurisdiction, in accordance with their legislation and international law.
Chapter III. NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS
Article 3-01. Definitions
For the purposes of this chapter, the following definitions shall apply:
industrial goods: a good that is not considered as agricultural, according to the definition in Chapter IV;
consumed:
a) actually consumed; or
b) processed or manufactured so as to result in a substantial change in the value, form or use of a good or in the production of another good;
material: "material" as defined in Chapter VI;
samples with no commercial value:
a) raw materials and goods whose dimensions, quantities, weight, volume or presentation are such as to indicate beyond doubt that they are not usable for anything other than demonstration or proof;
b) objects of common materials fixed on cards, supports or clearly presented as samples according to the uses of the trade;
c) raw materials and goods, as well as leftovers in these raw materials or goods, which have been rendered unusable for anything other than demonstration, by laceration, perforation, affixing of indelible marks or any other effective means to prevent any possibility of being marketed; and
d) goods not susceptible of being conditioned in the form of samples with no commercial value, according to the provisions of paragraphs a) to c), consisting of:
i) non-consumable goods, of a unit value of not more than 10 United States dollars, which are composed of unique specimens of each series or quality; and
ii) consumable goods of a unit value of not more than 10 United States dollars, even if composed in whole or in part of specimens of the same type or quality, provided that the quantity and manner of presentation of such samples preclude any possibility of commercialization.
Article 3-02. Scope of Application.
Except as otherwise provided in this treaty, this chapter applies to trade in goods between the Parties.
Article 3-03. National Treatment
1. Each Party shall accord national treatment to goods of another Party in accordance with Article III of the GATT 1994, including its interpretative notes. For this purpose, Article Ill of the GATT 1994 and its interpretative notes are incorporated into and made an integral part of this Agreement.
2. The provisions of paragraph 1 mean, with respect to a state, department or municipality, treatment no less favorable than the most favorable treatment accorded by that state, department or municipality to any like goods, direct competitors or substitutes, as the case may be, of the Party of which they are members.
3. Paragraphs 1 and 2 do not apply to the measures listed in annexes 3-03 and 3-09.
Article 3-04. Tariff Relief
1. Except as otherwise provided in this Agreement, no Party may increase any existing customs duties, or adopt any new customs duties, on originating goods subject to the Tariff Relief Program.(1) (2)
2. Notwithstanding any other provision of this Agreement, with respect to goods excluded from the Tariff Relief Program, any Party may maintain or adopt a prohibition or restriction, or a customs duty on the importation of such goods, in accordance with its rights and obligations under the WTO Agreement.
3. Once a year after the entry into force of this treaty, the Parties shall examine, through the Committee, the possibility of incorporating into the Tariff Relief Program the goods excluded from the same. The agreements by means of which these goods are incorporated into the Tariff Relief Program shall be adopted by the Parties in accordance with their legal procedures.
4. Paragraph 1 is not intended to prevent a Party from creating a new tariff split, provided that the customs duty applicable to the originating goods concerned is not higher than that applicable to the tariff item being split.
5. Except as otherwise provided in this Agreement, each Party shall eliminate its customs duties on originating goods in accordance with Annex 3 -04(5). (3)
6. At the request of either Party, consultations shall be held to examine the possibility of accelerating the elimination of customs duties provided for in the Tariff Dismantling Program.
7. Once approved by the Parties, in accordance with their legal procedures, the agreement adopted pursuant to paragraph 6 with respect to the accelerated elimination of the customs duty on an originating good shall prevail over any applicable customs duty or allowance category under the Tariff Relief Program for that good.
8. The Parties agree to fix the customs duties on the industrial goods contained in the Tariff Relief Program in terms of ad-valorem taxes.
Article 3-05. Duty Drawback Programs on Exported Goods, Duty Deferral Programs and Duty Exemption Programs Applied to Exported Goods.
1. In matters of drawback and exemption from customs duties, the Parties shall retain their rights and obligations in accordance with their legislation and the WTO Agreement.
2. When 25% of the domestic industry of a Party considers itself affected by the duty drawback and exemption mechanisms established in another Party, the Parties shall consult with a view to reaching a mutually satisfactory solution.
Article 3-06. Temporary Importation of Goods.
1. Each Party shall authorize the temporary importation without payment of customs duty of the goods listed below that are imported from the territory of another Party into its territory, regardless of their origin, and that like, directly competitive or substitute goods are available in the territory of that Party:
a) professional equipment necessary for the exercise of the activity, trade or profession of a business person;
b) press equipment or equipment for on-air transmission of radio or television signals and cinematographic equipment;
c) goods for sporting purposes or for exhibition or demonstration, including components, auxiliary apparatus and accessories; and
d) commercial samples and advertising films.
2. Except as otherwise provided in this treaty, the Parties may subject the temporary importation, without payment of customs duty, of a good of the type referred to in subparagraphs (a), (b) or (c) of paragraph 1 to any of the following conditions, without additional conditions being adopted, when: a) the good is imported by a national or resident of another Party;
b) the property is used exclusively by the visitor, or under his or her personal supervision, in the performance of his or her activity, trade or profession;
c) the good is not sold, leased or assigned in any other way while it remains in its territory under the temporary import regime;
d) the good is accompanied by a bond or guarantee not exceeding 110% of the charges that would be due, if any, for entry or final importation, or other form of security, refundable upon re-exportation of the good, except that no bond or guarantee may be required for customs duties on an originating good;
e) the good is capable of identification by any reasonable means established by the customs legislation of each Party;
f) the good is re-exported upon departure of that person or within the period corresponding to the purpose of the temporary importation;
g) the good is imported in quantities no greater than is reasonable in accordance with its intended use and in accordance with the customs legislation of each Party;
h) the good does not undergo any transformation or modification during the authorized import period, except for wear and tear due to normal use of the good; and
i) the good complies with the applicable sanitary and phytosanitary measures and standardization measures, in accordance with the provisions of Chapters V and XV, respectively.
3. Except as otherwise provided in this treaty, the Parties may subject the temporary importation, without payment of customs duty plus other charges levied on importation, of a good of the type referred to in subparagraph (d) of paragraph 1, to any of the following conditions, provided that no additional conditions may be adopted when: