Title
FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF PAKISTAN
Preamble
The Government of the People's Republic of China ("China") and the Government of the Islamic Republic of Pakistan ("Pakistan") hereinafter referred to as "the Parties";
Committed to strengthening the special bonds of friendship and cooperation between their countries;
Building on their respective rights and obligations under the WTO Agreement and other multilateral, regional and bilateral instruments of cooperation;
Resolved to promote reciprocal trade through the establishment of clear and mutually advantageous trade rules and the avoidance of trade barriers;
Recognizing that this Agreement should be implemented with a view toward raising the standard of living, creating new job opportunities, and promoting sustainable development in a manner consistent with environmental protection and conservation;
and Committed to promoting the public welfare within each of their countries;
Have agreed as follows:
Body
Chapter I. Initial Provisions
Article 1. Establishment of a Free Trade Area
The Parties to this Agreement, consistent with Article XXIV of the General Agreement on Tariffs and Trade 1994, hereby establish a free trade area.
Article 2. Objectives
1. The objectives of this Agreement are to:
(a) strengthen the mutual friendship between the Parties;
(b) encourage expansion and diversification of trade between the Parties;
(c) eliminate barriers to trade in, and facilitate the cross-border movement of, goods between the Parties;
(d) provide fair conditions of competition for trade between the Parties;
(e) establish a framework for further bilateral economic 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 3. Relation to other Agreements
The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and other agreements to which both Parties are parties.
Article 4. Application of this Agreement
The free trade area to which this Agreement applies consists of the territory of the parties with the exception of any part thereof which constitute separate customs territories.
Chapter II. General Definitions
Article 5. Definitions of General Application
For purposes of this Agreement, unless otherwise specified:
days mean calendar days;
GATT 1994 means the General Agreement on Tariffs and Trade 1994;
territory means:
(a) with respect to China, the territory of the People's Republic of China, including land territory, internal waters, territorial sea and any maritime areas beyond the territorial sea that, in accordance with international law and its domestic law, China may exercise sovereign rights or jurisdiction with respect to the sea, seabed and subsoil and their natural resources.
(b) with respect to Pakistan, 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 Pakistan may exercise defacto and de jure sovereign rights or jurisdiction with regard to the sea, sea-bed, the subsoil and the natural resources;
WTO means the World Trade Organization;
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on April 15, 1994; and
CPFTA means the Free Trade Agreement between the Government of the People's Republic of China and the Government of the Islamic Republic of Pakistan.
Chapter III. National Treatment and Market Access for Goods
Article 6. Scope and Coverage
Except as otherwise provided, this Chapter applies 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 the GATT 1994, including its interpretative notes, and to this end Article III of GATT 1994, and its interpretative notes, are incorporated into and made part of this Agreement, mutatis mutandis.
Article 8. Tariff Elimination
1. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its import customs duties on goods originating in the territory of another Party in accordance with Annex 1.
2. If a Party reduces its applied most favored nation import customs duty rate after the entry into force of this Agreement and before the end of the tariff elimination period, the tariff elimination schedule (Schedule) of that Party shall apply to the reduced rate.
3． On the request of either Party, the Parties shall consult to consider accelerating the elimination of import customs duties set out in their Schedules. An agreement between the Parties to accelerate the elimination of an import customs duty on a good shall supersede any duty rate or staging category determined pursuant to their Schedules for such good when approved by each Party in accordance with their respective applicable legal procedures.
1. Review and Modification of Tariff Reduction Modality and the Lists shall be as follows:
(a) Tariff Reduction Modality and the lists shall be reviewed and modified every five years by the Committee on Trade in Goods.
(b) The review shall be undertaken on the basis of friendly consultation and accommodation of the concerns of the Parties.
(c) The first review and modification shall be undertaken either at the end of the fourth year or at the beginning of the fifth year of entry into force of this Agreement.
(d) Either party may request for an additional review at any time after coming into force of this Agreement. Such a request shall be favorably considered by the other Party.
Article 9. Administrative Fees and Formalities
1. Each Party shall ensure, in accordance with Article VIII:1 of the GATT 1994 and its interpretive notes, that all fees and charges of whatever character (other than import customs duties, charges equivalent to an internal tax or other internal charge applied consistently with Article III:2 of the GATT 1994, and antidumping and countervailing duties) imposed on or in connection with importation or exportation are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes.
2. Each Party shall make available through the Internet or a comparable computer-based telecommunications network a list of the fees and charges and changes thereto levied by the central/federal Government, as the case may be, thereof in connection with importation or exportation.
Article 10. Special Requirements Related to Border Measures
1. Each Party shall provide that any right holder initiating procedures for suspension by the customs authorities of the release of suspected counterfeit trademark or pirated copyright goods (1) into free circulation is required to provide adequate evidence to satisfy the competent authorities that, under the relevant laws of the Party of importation, there is prima facie an infringement of the right holder's intellectual property right and to supply sufficient information to make the suspected goods reasonably recognizable to the customs authorities. The sufficient information required shall not unreasonably deter recourse to these procedures.
2. Each Party shall provide the competent authorities with the powers to require an applicant to provide a reasonable security or equivalent assurance sufficient to protect the defendant and the competent authorities and to prevent abuse. Such security or equivalent assurance shall not unreasonably deter recourse to these procedures.
3. Where the competent authorities have made a determination that goods are counterfeit or pirated, a Party shall grant the competent authorities the right to inform the right holder, at the right holder's request, of the names and addresses of the consignor, the importer, and the consignee, and of the quantity of the goods in question.
4. Each Party shall provide that the competent authorities are permitted to initiate border measures ex officio, without the need for a formal complaint from a person or right holder. Such measures shall be used when there is reason to believe or suspect that goods being imported, or destined for export are counterfeit or pirated.
Article 11. Committee on Trade In Goods
1. The Parties hereby establish a Committee on Trade in Goods, comprising representatives at the level of joint secretary, director general or deputy director general respectively.
2. The Committee shall meet on the request of either Party or the Commission established under Chapter XI of this Agreement to consider any matter arising under this Chapter, Chapter IV and Chapter V.
3. The Committee's functions shall include:
(a) promoting trade in goods between the Parties, including through consultations on accelerating tariff elimination under this Agreement and other issues as appropriate;
(b) addressing barriers to trade in goods between the Parties, especially those related to the application of non-tariff measures, and, if appropriate, referring such matters to the Commission established under Chapter XI of this Agreement for its consideration;
(c) monitoring and evaluating the implementation of schedule of tariff reduction as provided in Annex I of this Agreement; and (d) any other issue related to trade in goods, referred to the Committee by either Party.
4. The Committee may establish working groups to deliberate on any matter if required.
Chapter IV. Rules of Origin
Article 12. Definitions
For the purposes of these Rules:
(a) "CIF value" means the price actually paid or payable to the exporter for the good when the good is unloaded from the carrier, at the port of importation. The value includes the cost of the good, insurance and freight necessary to deliver the good to the named port of destination.
(b)"Customs Valuation Agreement" means the WTO Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994.
(c) "FOB value" means the price actually paid or payable to the exporter for the good when the good is loaded into the carrier at the named port of exportation. The value includes the cost of the good and all costs necessary to bring the good into the carrier.
(d) "Materials" include ingredients, parts, components, subassembly and/or goods that were physically incorporated into another good or were subject to a process in the production of another good.
(e) "Originating goods" means products that qualify as originating in accordance with the provisions of Article 13.
(f) "Product Specific Rules" are rules that specify that the materials have undergone a change in tariff classification or a specific manufacturing or processing operation, or satisfy an ad valorem criterion or a combination of any of these criteria.
(g) "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:
(i) Fuel and energy;
(ii) Tools, dies, and moulds;
(iii) Parts and materials used in the maintenance of equipment and buildings;
(iv) Lubricants, greases, compounding materials, and other materials used in production or used to operate equipment and buildings;
(v) Gloves, glasses, footwear, clothing, safety equipment, and supplies;
(vi) Equipment, devices, and supplies used for testing or inspecting the goods;
(vii) Catalysts and solvents; and 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 part of that production;
(h) "Non-originating material" used in production means any material whose country of origin is other than that of the Parties and any material whose origin cannot be determined;
(i) "Production" includes methods of obtaining goods including manufacturing, producing, assembling, processing, raising, growing, breeding, mining, extracting, harvesting, fishing, trapping, gathering, collecting, hunting and capturing.
Article 13. Origin Criteria
For the purposes of this Agreement, products imported by a Party shall be deemed to be originating and eligible for preferential concessions if they conform to the origin requirements under any one of the following:
(a) products which are wholly obtained or produced as set out and defined in Article 14; or
(b) products not wholly obtained or produced provided that the said products are eligible under Article 15, Article 16 or Article 17.
Article 14. Wholly Obtained or Produced Products
Within the meaning of Article 13 (a), the following shall be considered as wholly produced or obtained in a Party:
(a) Plant and plant products harvested, picked or gathered there;
(b) Live animals born and raised there;
(c) Products obtained from live animals referred to in paragraph (b) above;
(d) Products obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted there;
(e) Minerals and other naturally occurring substances, not included in paragraphs (a) to (d) above, extracted or taken from its soil, waters, seabed or beneath their seabed;
(f) Products taken from the waters, seabed or beneath the seabed outside the territorial waters of that Party; provided that that Party has the rights to exploit such waters, seabed and beneath the seabed in accordance with international law;
(g) Products of sea fishing and other marine products taken from the high seas by vessels registered with a Party or entitled to fly the flag of that Party;
(h) Products processed and/or made on board factory ships registered with a Party or entitled to fly the flag of that Party, exclusively from products referred to in paragraph (g) above;
(i) Parts or raw materials recovered there from articles which can no longer perform their original purpose nor are capable of being restored or repaired;
(j) Articles collected there which can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for disposal or recovery of parts of raw materials, or for recycling purposes;
(k) Waste and scrap resulting from manufacturing operations conducted there; and
(l) Goods obtained or produced in a Party solely from products referred to in paragraphs (a) to (k) above.
Article 15. Not Wholly Produced or Obtained Products
(a) For the purposes of Article 13(b), a product shall be deemed to be originating if not less than 40% of its content originates from a Party.
(b) For the purposes of calculating the originating value content the following method shall apply: Value of Non-originating materials x 100% (c) The value of the non-originating materials shall be:
(i) the CIF value at the time of importation of the materials; or
(ii) the earliest ascertained price paid for the materials of undetermined origin in the territory of the Party where the working or processing takes place.
Article 16. Cumulative Rule of Origin
Unless otherwise provided for, products which comply with origin requirements provided for in Article 13 and which are used in the territory of a Party as materials for a finished product eligible for preferential treatment under the Agreement shall be considered as products originating in the territory of the Party where working or processing of the finished product has taken place provided that the aggregate China-Pakistan originating content on the final product is not less than 40%.
Article 17. Product Specific Rules
Products which have undergone sufficient transformation in a Party shall be treated as originating goods of that Party. Products which satisfy the Product Specific Criteria as annexed to these Rules shall be considered as goods to which sufficient transformation has been carried out in a Party.
Article 18. Minimal Operations and Processes
The following operations or processes shall be considered as minimal operations and shall not be taken into account in determining the origin of a product in terms of Article 13:
(a) Operations to ensure the preservation of products in good condition during transport and storage (such as drying, freezing, keeping in brine, ventilation, spreading out, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations);
(b) Simple operations consisting of removal of dust, sifting or screening, sorting, classifying, matching (inkling the making-up of sets of articles), washing, painting, cutting;
(c) Changes of packing and breaking up and assembly of consignments;
(d) Simple cutting, slicing and repacking or placing in bottles, flasks, bags, boxes, fixing on cards or boards and all other simple packing operations;
(e) Affixing of marks, labels or other like distinguishing signs on products or their packaging;
(f) Simple mixing of products whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in this Chapter to enable them to be considered as originating products;
(g) Simple assembly of parts of products to constitute a complete product;
(h) Disassembly;
(i) Slaughter of animals;
(j) Mere dilution with water or another substance that does not materially alter the characteristics of the goods; and
(k) A combination of two or more operations referred to in paragraphs (a) to (j).
Article 19. Direct Consignment
The following shall be considered as consigned directly from the exporting Party to the importing Party:
(a) If the products are transported without passing through the territory other than China and Pakistan;
(b) The products whose transport involves transit through one or more intermediate non-CPFTA countries with or without transshipment or temporary storage in such countries, provided that:
(i) the transit entry is justified for geographical reason or by consideration related exclusively to transport requirements;
(ii) the products have not entered into trade or consumption there; and
(iii) the products have not undergone any operation there other than unloading and reloading or any operation required to keep them in good condition.
Article 20. Treatment of Packing
(a) Where for purposes of assessing customs duties, a Party treats products separately from their packing; it may also, in respect of its imports consigned from another Party, determine separately the origin of such packing.
(b) Where paragraph (a) above is not applied, packing shall be considered as forming a whole with the products and no part of any packing required for their transport or storage shall be considered as having been imported from outside the CPFTA when determining the origin of the products as a whole.
Article 21. Accessories, Spare Parts and Tools
The origin of accessories, spare parts, tools and instructional or other information materials presented with the goods therewith shall be neglected in determining the origin of the goods, provided that such accessories, spare parts, tools and information materials are classified and collected customs duties with the goods by the importing member state.
Article 22. Treatment of Indirect Materials
Unless otherwise provided, for the purpose of determining the origin of goods, the origin of indirect materials as defined in Article 12 (h), or the materials used in its manufacture which do not remain in the goods or form part of the goods, shall not be taken into account.
Article 23. Certificate of Origin
A claim that products shall be accepted as eligible for preferential concession shall be supported by a Certificate of Origin issued by a government authority designated by the exporting Party and notified to the other Party to the Agreement in accordance with the operational certification procedures, as set out in Annex II.
Article 24. Review and Modification
These rules may be reviewed and modified as and when necessary upon request of a Party and may be open to such reviews and modifications as may be agreed upon by both Parties.
Chapter V. Trade Remedies
Article 25. Anti-dumping and Countervailing Measures
1. The Parties maintain their rights and obligations under the Agreement on Implementation of Article VI of the GATT 1994 and the Agreement on Subsidies and Countervailing Measures, which are parts of the WTO Agreement.
2. Antidumping actions taken pursuant to Article VI of GATT l994 and the Agreement on Implementation of Article VI of the GATT 1994 or countervailing actions taken pursuant to Article VI of GATT l994 and the Agreement on Subsidies and Countervailing Measures shall not be subject to Chapter X (Dispute Settlement) of this Agreement.