Title FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF SINGAPORE AND THE REPUBLIC OF PANAMA
Preamble
The Government of the Republic of Panama and the Government of the Republic of Singapore (“the Parties”)
Conscious of the friendship and growing economic ties between them;
Considering the Joint Press Statement issued on 17 February, 2004, in Singapore, by Panama’s Vice-President and Singapore’s Minister for Trade and Industry, recording their intention to conclude a bilateral free trade agreement between Panama and Singapore;
Desiring to provide a platform from which to unlock the benefits of deeper economic ties between two strategically located trading centres, each serving the Americas and the Asia-Pacific region;
Desiring to improve the efficiency and competitiveness of their goods and services sectors and to promote and expand trade and investment flows between them;
Desiring to promote greater synergy between their respective economies with complementary strengths in certain sectors;
Recognising that strengthening of their closer economic partnership will bring economic and social benefits and improve living standards;
Building on their rights, obligations and undertakings under the World Trade Organization, and other multilateral, regional and bilateral agreements;
Considering that the expansion of their domestic market, through economic integration, is vital for accelerating their economic development;
Recognising the need for good corporate governance and a predictable, transparent and consistent business environment to enable business to conduct transactions freely, use resource efficiently and take investment and planning decisions with certainty; and
Conscious that a frameworks of rules for trade in goods, services, and investment will contribute to the promotion of closer links with other economies in the Americas and Asia-Pacific regions;
Have agreed as follows:
Chapter 1. OBJECTIVES, ESTABLISHMENT OF A FREE TRADE AREA AND DEFINITIONS
Article 1.1. Objectives
1. The objectives of the Parties in concluding this Agreement are:
(a) to establish a free trade area that will promote market opportunities for goods, services and investment between them;
(b) to strengthen the relationship between them, through the conclusion of a free trade agreement, which addresses their economic interest and the evolution of the multilateral trading system;
(c) to establish a cooperative framework for further promote and enhance the economic, trade and investment cooperation between them;
(d) to liberalise and promote trade in goods and services between them and to establish a transparent, predictable and facilitative investment regime;
(e) to improve the efficiency and competitiveness of their goods and services sectors and expand trade and investment between them;
(f) to establish a framework of transparent rules to govern and regulate trade and investment between them;
(g) to maximise opportunities for cooperation between them in logistics sectors and in services, such as telecommunication, maritime and banking;
(h) to promote and facilitate cooperation activities between them;
(i) to facilitate and enhance economic cooperation and integration with other economies in the Americas and the Asia-Pacific region; and
(j) to build upon their commitments at the World Trade Organization, and to support its efforts to create a predictable, and more free and open global trading environment.
Article 1.2. Establishment of a Free Trade Area
1. The Parties to this Agreement, consistent with Article XXIV of the General Agreement on Tariffs and Trade 1994 and Article V of the General Agreement on Trade in Services, hereby establish a free trade area.
2. The Parties reaffirm their existing rights and obligations with respect to each other under existing bilateral and multilateral agreements to which both Parties are party, including the WTO Agreement.
3. This Agreement shall not be construed to derogate from any international legal obligations between the Parties that entitles goods or services, or suppliers of goods or services, or investors or investments of investors, to treatment more favourable than that accorded by this Agreement.
Article 1.3 . Definitions of General Application
Microsoft Word - Singapore Consolidated Text Feb 06 - for printing.doc
Unless otherwise provided for this Agreement, the following definitions shall apply:
1. Customs Valuation Agreement means the Agreement on
Implementation of Article VII of the General Agreement on Tariffs and Trade
1994, which is part of the WTO Agreement;
2. days means calendar days, including weekends and holidays;
3. enterprise any entity constituted or organized, under applicable law, whether or not for profit, and whether privately-owned or governmentally- owned, including any corporation, trust, partnership, sole proprietorship, joint venture, or other association;
4. enterprise of a Party means an enterprise constituted or organized, under the law of a Party;
5. GATS means the General Agreement on Trade in Services, which is part of the WTO Agreement;
6. GATT 1994 means the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
7. 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 (1);
8. measure includes any law, regulation, rule, procedure or administrative
action adopted or maintained by a Party;
9. national means a natural person who has the nationality of a Party according to Annex 1A;
10. natural person of a Party means a natural person that resides in the territory of the Party or elsewhere and who under the law of that Party is a national of that Party or has the right of permanent residence in that Party;
11. originating goods means goods qualifying under the rules of origin
set out in Chapter 3 (Rules of Origin);
12. Party means any country for which this Agreement is in force;
13. Person means a natural person or an enterprise;
14. Person of a Party means a natural person or an enterprises of a Party;
15. Territory means for a Party the territory of that Party as set out in Annex 1A;
16. TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property which is part of the WTO Agreement; and
17. WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on April 15, 1994.
Article 1.4 . Extent of Obligations
1. Each Party is fully responsible for the observance of all the provisions of this Agreement. 2. In fulfilling its obligations and commitments under this Agreement, each Party shall ensure their observance by regional and local governments and authorities in its territory as well as their observance by non-governmental bodies in the exercise of powers delegated by central, regional or local governments and authorities within its territory.
Annex 1A. Country-Specific Definitions
For purposes of this Agreement, unless otherwise specified:
(1) National means:
(a) with respect to Panama, any person who is a citizen within the meaning of its Constitution and domestic laws; and
(b) with respect to Singapore, any person who is a citizen within the meaning of its Constitution and domestic laws.
(2) Territory means:
(a) with respect to Panama: the land, maritime and air space under its sovereignty, as well as its exclusive economic zone and its continental shelf within which it exercises its sovereign rights and jurisdiction in accordance with international law and its domestic law;
(b) with respect to Singapore: its land territory, internal waters and territorial sea as well as and any maritime area situated beyond the territorial sea which has been or might in future be designated under its national law, in accordance with international law, as an area within which Singapore may exercise sovereign rights or jurisdiction with regard to the sea, sea-bed, the subsoil and the natural resources.
Chapter 2. Trade In Goods
Article 2.1 . Scope and Coverage
This Chapter applies to trade in goods of a Party, unless otherwise provided.
Article 2.2 . National Treatment
1. 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.
2. 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 . Customs Duties Elimination Schedule
1. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with Annex 2.3 (Customs Duties Elimination Schedule).
2. During the customs duties elimination process, the Parties agree to apply to originating goods traded between them, the lesser of the customs duties resulting from a comparison between the rate established in accordance with Annex 2.3 (Customs Duties Elimination Schedule) and the existing rate pursuant to Article II of GATT 1994.
3. Each Party shall not increase an existing customs duty or introduce a new customs duty on the importation of originating goods from the territory of the other Party.
4. Upon request by any Party, the Parties shall consult to consider accelerating the elimination of customs duties as set out in Annex 2.3 (Customs Duties Elimination Schedule) or incorporating into one Party’s schedule, goods that are not subject to the elimination schedule. Further commitments between the Parties to accelerate the elimination of a customs duty on a good or to include a good in Annex 2.3 (Customs Duties Elimination Schedule) shall supercede any duty rate or staging category determined pursuant to their Schedules. These commitments shall enter into force on such dates as may be agreed between the Parties after they have exchanged notification certifying that they have completed their necessary internal legal procedures.
Article 2.4. Export Duties
A Party shall not adopt or maintain any duty, tax or other charge on the exportation of goods 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 2.5. Customs Valuation
The Parties shall determine the customs value of goods traded between them in accordance with the provisions of Article VII of GATT 1994 and the WTO Agreement on Implementation of Article VII of GATT 1994.
Article 2.6 . Customs Processing Fees
After two years of the entry into force of this Agreement, neither Party shall apply an existing customs processing fee, nor shall the Parties adopt new customs processing fees on originating goods from the territory of the other Party.
Article 2.7. Temporary Admission of Goods
1. Each Party shall grant duty-free temporary admission for the following
goods, imported by or for the use of a resident of the other Party:
(a) professional equipment, including software and broadcasting and cinematographic equipment, necessary for carrying out the business activity, trade or profession of a business person who qualifies for temporary entry pursuant to the laws of the importing country; and
(b) goods intended for display or demonstration at exhibitions, fairs or similar events, including commercial samples for the solicitation of orders, and advertising firms.
2. A Party shall not condition the duty-free temporary admission of a good referred to in paragraph 1, other than to require that such good:
(a) be used solely by or under the personal supervision of a resident of the other Party in the exercise of the business activity, trade or profession of that person;
(b) not be sold, leased or consumed 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 upon exportation of the good;
(d) be capable of identification when exported;
(e) be exported within 3 months or such other period of time as is reasonably related to the purpose of the temporary admission
(f) be imported in no greater quantity than is reasonable for their intended use; and
(g) be otherwise admissible into the Party’s territory under its laws.
3. If any condition that a Party imposes under paragraph 2 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on entry or final importation of the good, and any other charges or penalties provided for under its domestic law.
4. Each Party shall, at the request of the person concerned and for reasons deemed valid by the Customs authorities, extend the time limit for temporary admission beyond the period initially fixed.
5. Each Party shall permit temporarily admitted goods to be exported through a customs port other than that through which they were imported.
6. Each Party shall relieve the importer of liability for failure to export a temporarily admitted good under presentation of satisfactory proof to Customs authorities that the good has been destroyed within the original time limit for temporary admission or any lawful extension. Prior approval will have to be sought from the Customs authorities of the importing Party before the good can be destroyed.
Article 2.8. Re-Entry of Repaired or Altered Goods
1. A Party shall not apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been exported temporarily 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. A Party shall not apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair or alteration.
3. For the purposes of this Article:
(a) the repair or alterations shall not destroy the essential
characteristics of a good or change it into a different commercial
item;
(b) operations carried out to transform an unfinished good into a finished good shall not be considered repairs or alterations; and
(c) parts or pieces of the goods may be subject to repairs or alterations.
Article 2.9 . Non-Tariff Measures
1. Neither 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 under paragraph 1 and that they are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to trade between the Parties.
Article 2.10 . Subsidies and Countervailing Measures
1. The Parties agree to prohibit export subsidies on all goods, including agriculture goods.
2. Notwithstanding paragraph 1, the Parties reaffirm their commitment to abide by the provisions of Article VI and XVI of the GATT 1994, the WTO Agreement on Subsidies and Countervailing Measures, and the WTO Agreement on Agriculture.
Article 2.11 . Anti-dumping
1. With respect to the application of anti-dumping measures, the Parties reaffirm their commitment to the provisions of the Anti-Dumping Agreement.
2. Notification procedures shall be as follows:
(a) immediately following the acceptance of a properly documented application from an industry in one Party for the initiation of an anti-dumping investigation in respect of goods from the other Party, the Party that has accepted the properly documented application shall immediately inform the other Party of such acceptance; and
(b) where a Party considers that in accordance with Article 5 of the Anti-Dumping Agreement there is sufficient evidence to justify the initiation of an anti-dumping investigation, it shall give written notice to the other Party in accordance with Article 12.1 of that Agreement, and observe the requirements of Article 17.2 of that Agreement concerning consultations;
3. At the first session of the Administrative Commission convened pursuant to Article 17.1.3 (Administrative Commission of the Agreement), the Parties shall, in the course of reviewing the general implementation and functioning of this Agreement, consider and review this Article, and shall include a consideration of any recommendation by the WTO Committee on Anti-Dumping Practices.
Article 2.12. Bilateral Safeguard Measures
1. If as a result of the reduction or elimination of a customs duty under this
Agreement, an originating good of the one Party is being imported into the
territory of the other Party in such increased quantities, in absolute terms or
relative to domestic production, and under such conditions that the imports of
such originating good from the exporting Party constitute a substantial cause
of serious injury to a domestic industry producing a like or directly competitive
good of the importing Party, such Party may:
(a) suspend the further reduction of any rate of customs duty on the good provided for under this Agreement; or
(b) increase the rate of customs duty on the good to a level not to exceed the lesser of:
(i) the MFN applied rate of duty on the good in effect at the time the action is taken, or
(ii) the MFN applied rate of duty on the good in effect on the day immediately preceding the date of entry into force of this Agreement.
2. The following conditions and limitations shall apply with regard to an investigation or a measure described in paragraph 1:
(a) a Party shall notify the other Party in writing upon initiation of an investigation described in paragraph 2(c) and shall consult with the other Party as far in advance of taking any such measure as practicable, with a view to reviewing the information arising from the investigation, exchanging views on the measure and reaching an agreement on compensation as set out in paragraph 4;
(b) any safeguard measure shall be taken no later than 1 year after the date of the initiation of the investigation;
(c) a Party shall take a measure only following an investigation by that Party’s competent authorities in accordance with Articles 3 and 4.2(c) of the Agreement on Safeguards; and to this end, Articles 3 and 4.2(c) of the Agreement on Safeguards are incorporated into and made a part of this Agreement, mutatis mutandis;
(d) in the investigation described in sub-paragraph (c), a Party shall comply with the requirements of Article 4.2(a) of the Agreement on Safeguards; and to this end, Article 4.2(a) is incorporated into and made a part of this Agreement, mutatis mutandis;
(e) no measures may be maintained against a good:
(i) except to the extent and for such time as may be necessary to prevent or remedy serious injury and to facilitate adjustment; and
(ii) for a period exceeding one year, except in the case provided for under paragraph 3; or
(iii) beyond the expiration of the transition period, except with the consent of the Party against whose originating good the measure is taken;
(f) no measure under this Article may be applied more than once against the same good;
(g) where the expected duration of the measure is over one year, the importing Party shall progressively liberalize it at regular intervals during the period of application;
(h) the transition period means two years beginning from the date of entry into force of this Agreement, except where the tariff elimination for the good against which the action is taken occurs over a longer period of time, in which case, the transition period shall be the period of staged tariff elimination for that good; and
(i) on the termination of a safeguard measure, the rate of duty shall immediately be the rate which would have been in effect but for the measure.
3. If the competent authorities of a Party determine, in conformity with the procedures set out in paragraph 2, that a safeguard measure continues to be necessary to prevent or remedy serious injury and to facilitate adjustment and that there is evidence that the industry is adjusting, the Party may extend the application of the safeguard measure for an additional two years.
4. The Party proposing to take or taking a measure described in paragraph 1 shall endeavour to provide to the other Party mutually agreed trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the measure. If the Parties are unable to agree on compensation within 30 days from the date the Party announces a decision to take the measure, the Party against whose good the measure is taken may take action having trade effects substantially equivalent to the measure described in paragraph 1. The Party taking the action shall apply the action only for the minimum period necessary to achieve the substantially equivalent effects, and in any event, only while the measure under paragraph 1 is being applied.
5. For the purpose of this Article:
(a) domestic industry means the producers as a whole of the like or directly competitive product operating in the territory of a Party, or those whose collective output of the like or directly competitive product constitutes a major proportion of the total domestic production of that product;
(b) serious injury means a significant overall impairment in the position of a domestic industry, except that where an originating good is being imported into the territory of a Party in increased quantities relative to domestic production, “serious injury” shall be found to exist only when the difference between the volume of domestic production and the volume of imports of such originating good decreases over three consecutive years; and
(c) substantial cause means a cause which is important and not less than any other cause.
Article 2.13 . Global Safeguard Measures
Each Party retains its rights and obligations under Article XIX of GATT 1994 and the Agreement on Safeguards. This Agreement does not confer any additional rights or obligations on the Parties with regard to global safeguard measures, except that a Party taking a global safeguard measure may exclude imports of an originating good from the other Party if such imports are not a substantial cause of serious injury or threat thereof.
Article 2.14. Transparency
Article X of GATT 1994 is incorporated into and shall form part of this Agreement.
Article 2.15. Committee on Trade In Goods and Rules of Origin
1. The Administrative Commission may establish an ad hoc Committee on
Trade in Goods and Rules of Origin to perform the following functions:
(a) to oversee and review the implementation of this Chapter and Chapter 3 (Rules of Origin), and to ensure that the benefits of trade arising from these Chapters accrue to both Parties equitably; and
(b) to provide advice to the Parties on matters relating to Trade in Goods and Rules of Origin, which may include identification and recommendation of measures to promote and facilitate improved market access and to accelerate the tariff elimination and reduction process.
2. Within the scope of this Chapter, if a Party concludes a preferential agreement with a non-Party under Article XXIV of GATT 1994, it shall, upon request from the other Party, afford adequate opportunity to negotiate any additional benefits granted within the Trade in Goods chapter of that preferential agreement.
Article 2.16. Definition
For the purposes of this Chapter:
1. Anti-Dumping Agreement means the Agreement on Implementation of Article VI of GATT 1994, which is part of the WTO Agreement;
2. Customs duties means 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 GATT 1994 in respect of the like domestic good or in respect of goods from which the imported good has been manufactured or produced in whole or in part;
(b) anti-dumping or countervailing duty that is applied pursuant to a Party’s domestic law; and
(c) fee or other charge in connection with importation commensurate with the cost of services rendered.
3. global safeguard measure means a measure applied under Article XIX of GATT 1994 and the WTO Agreement on Safeguards;
4. MFN means “most-favoured nation” treatment in accordance with Article I of GATT 1994; and
5. Safeguards Agreement means the Agreement on Safeguards, which is part of the WTO Agreement.
Chapter 3. Rule of Origin
Section A. Origin Determination
Article 3.1 . Originating Goods
For the purposes of this Agreement, goods shall be deemed originating and
eligible for preferential treatment if they conform to the origin requirement
under any of the following conditions:
(a) goods wholly produced or obtained in the territory of the exporting Party; or
(b) goods not wholly produced or obtained in the territory of the exporting Party, provided that the said goods are eligible under Article 3.3; or
(c) as otherwise provided for under this Chapter.
Article 3.2. Wholly Obtained or Produced Goods
Goods wholly obtained or produced entirely in the territory of one or both of
the Parties means goods that are:
(a) mineral goods extracted or taken from that Party’s soil, waters, seabed or beneath the seabed;
(b) plants and plant products harvested in the territory of that Party;
(c) live animals born and raised in the territory of that Party;
(d) goods obtained from animals referred to in sub-paragraph (c);
(e) goods obtained from hunting, trapping, fishing, or aquaculture conducted in the territory of that Party;
(f) goods (fish, shellfish, and other marine life) taken from outside its Economic Exclusive Zone as defined in the United Nations Convention on the Law of the Sea by vessels registered, licensed or recorded with a Party, and entitled to fly its flag;
(g) goods produced and/or made on board a factory ship exclusively from products referred to in sub-paragraph (f), provided such factory ship is registered, licensed or recorded with a Party, and entitled to fly its flag;
(h) goods taken by a Party, or a person of a Party, from the seabed or beneath the seabed outside its Economic Exclusive Zone, provided that the Party has rights as defined in the United Nations Convention on the Law of the Sea to exploit such seabed;
(i) waste and scrap derived from:
(i) production in the territory of that Party; or
(ii) used goods, collected in the territory of that Party, provided such goods are fit only for the recovery for raw materials;
(j) recovered goods derived in the territory of a Party from used goods;
(k) a good production in the territory of that Party exclusively from goods referred to in sub-paragraphs (a) through (j) above, or from their derivatives, at any stage of production.
Article 3.3. Not Wholly Obtained or Produced Goods
1. For the purposes of this Agreement, a good, which has undergone sufficient production in the territory of a Party, as provided under this Article, shall be treated as an originating good of that Party.
2. A good is considered to have undergone sufficient production in the
territory of a Party if:
(a) if satisfies the product-specific rule as set out in Annex 3A (Product-Specific Rules;)
(b) where there is no product-specific rule set out in Annex 3A (Product-Specific Rules), fulfils a qualifying value content of not less than 35% determined in accordance with Article 3.4.
Article 3.4. Qualifying Value Content
1. For the purpose of Article 3.3, the following formula for qualifying value content shall be applied:
F.O.B. – N.Q.M. x 100% ≥ 35% F.O.B.
where:
(a) F.O.B. is the Free-On-Board value, which refers to the value of a good payable by the buyer to the seller, regardless of the mode of shipment, not including any internal excise taxes, reduced, exempted, or repaid when the good is exported; and
(b) N.Q.M. is the non-qualifying value of materials used by the producer in the production of the good, calculated in accordance with paragraph 2.
2. For the purpose of calculating the non-qualifying value of materials pursuant to paragraph 2(b), the following formula shall be applied:
N.Q.M. = T.V.M. – Q.V.M.
where:
(a) T.V.M. is the total value of materials; and
(b) Q.V.M. is the qualifying value of materials, which is the value of the materials that can be attributed to one or both the Parties.
3. For the purpose of paragraph 2:
(a) The qualifying value of materials shall be:
(i) the total value of the material if the material satisfies the requirements of paragraph 3(b); or
(ii) the value of the material that can be attributed to one or both of the Parties if the material does not satisfy the requirements of paragraph 3(b); and
(b) For the purposes of paragraph 3(a), a material shall be considered to have satisfied the requirements of this paragraph if:
(i) the content of the value of the material that can be attributed to the one or both of the Parties is not less than 35% of the total value of the material; and
(ii) the material has undergone its last production or operation in the territory of either Party.
4. The value of a material used in the production of a good in the territory of a Party shall be the C.I.F. value and shall be determined in accordance with the Agreement on Customs Valuation, or if this is not known and cannot be ascertained, the first ascertainable price paid for the material in the Party.
Article 3.5. De Minimis
1. A good shall be considered to be an originating good if the value of all non-originating materials used in the production of that good that do not satisfy the requirement of change in tariff classification set out in Annex 3A (Product-Specific Rules) is not more than ten percent (10%) of the F.O.B. value of the good.
2. For a good provided for in Chapters 50 through 63 of the Harmonised System, the percentage indicated in the paragraph 1 refers to the weight of fibres or yarns with respect to the weight of the good being produced.
3. Paragraph 1 does not apply to a non-originating material used in the production of goods provided for in the Harmonised System headings of 04.01, 04.02, 04.06, 09.01, 16.01, 16.02, 17.02, 20.09, 22.02, 23.01 and in the Harmonised System subheadings of 2101.11, 2101.12, and 2103.20 unless the non-originating material is provided for in a different subheading than the good for which origin is being determined under this Article.
Article 3.6. Accumulation
1. Each Party shall provide that originating goods or materials of a Party, incorporated into a good in the territory of the other Party, shall be considered to originate in the territory of the other Party.
2. Each Party shall provide that a good is originating where the good is produced in the territory of one or both Parties at different stages undertaken by one or more producers, provided that the good satisfies the requirements in Article 3.2 and all other applicable requirements in this Chapter.
Article 3.7. Accessories, Spare Parts, Tools
Each Party shall provide that accessories, spare parts, or tools delivered with
a good that form part of the good's standard accessories, spare parts, or
tools, shall be treated as originating goods if the good is an originating good,
and shall be disregarded in determining whether all the non-originating
materials used in the production of the good undergo the applicable change in
tariff classification, provided that:
(a) the accessories, spare parts, or tools are not invoiced separately from the good;
(b) the quantities and value of the accessories, spare parts, or tools are customary for the good; and
(c) if the good is subject to a qualifying value content, the value of the accessories, spare parts, or tools shall be taken into account as originating or non-originating materials, as the case may be, in calculating the qualifying value content of the good.
Article 3.8. Packaging Materials and Containers for Retail Sale
Each Party shall provide that packaging materials and containers in which a good is packaged for retail sale, if classified with the good, shall be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable change in tariff classification set out in Annex 3A (Product-Specific Rules) and, if the good is subject to a qualifying value content requirement, the value of such packaging materials and containers shall be taken into account as originating or non- originating materials, as the case may be, in calculating the qualifying value content of the good.
Article 3.9. Packing Materials and Containers for Shipment
Each Party shall provide that packing materials and containers in which a good is packed for shipment shall be disregarded in determining whether a good is originating.
Article 3.10. Fungible Goods and Materials
1. Each Party shall provide that the determination of whether fungible goods or materials are originating goods shall be made either by physical segregation of each good or material or through the use of any inventory management method, such as averaging, last-in, first-out, or first-in, first out, recognized in the generally accepted accounting principles of the Party in which the production is performed or otherwise accepted by the Party in which the production is performed.
2. Each Party shall provide that an inventory management method selected under paragraph 1 for particular fungible goods or materials shall continue to be used for those fungible goods or materials throughout the fiscal year of the person that selected the inventory management method.
Article 3.11. Indirect Materials
1. Each Party shall provide that an indirect material shall be treated as an originating material without regard to where it is produced and its value shall be the cost registered in the accounting records of the producer of the good.
2. For the purposes of this article, 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 molds;
(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 used 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.
Section B. Consignment Criteria
Article 3.12. Third Country Transportation
A good shall not be considered to be an originating good if the good undergoes subsequent production or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good to the territory of a Party.
Section C. Consultation and Modifications
Article 3.13. Committee on Trade In Goods and Rules of Origin
1. The Administrative Commission may establish an ad hoc Committee on Trade in Goods and Rules of Origin to perform the following functions:
(a) to oversee and review the implementation of this Chapter and
Chapter 2 (Trade in Goods), and to ensure that the benefits of
trade arising from these Chapters accrue to both parties
equitably;
(b) to provide advice to the Parties on matters relating to Trade in Goods and Rules of Origin, which may include identification and recommendation of measures to promote and facilitate improved market access and to accelerate the tariff elimination and reduction process; and
(c) review the rules set out in this Chapter as and when necessary upon the request of either Party and make such modifications as may be agreed upon.