(b) multiple shipments of identical goods within any period specified in the written or electronic certification, not exceeding 12 months from the date of the certification.
5. Each Party shall provide that a certification shall be valid for four years after the date it was issued.
6. Each Party shall allow an importer to submit a certification in the language of the importing Party or the exporting Party. In the latter case, the customs authority of the importing Party may require the importer to submit a translation of the certification in the language of the importing Party.
Article 4.16. Obligations Relating to Importations
1. Each Party shall grant any claim for preferential tariff treatment made in accordance with this Chapter, unless the Party issues a written determination that the claim is invalid as a matter of law or fact.
2. A Party may deny preferential tariff treatment to a good if the importer fails to comply with any requirement in this Chapter.
3. Neither Party may subject an importer to any penalty for making an invalid claim for preferential tariff treatment if the importer:
(a) did not engage in negligence, gross negligence, or fraud in making the claim and pays any customs duty owing; or
(b) on becoming aware that such a claim is not valid, promptly and voluntarily corrects the claim and pays any customs duty owing.
4. Each Party may require that an importer who claims preferential tariff treatment for a good imported into its territory:
(a) declare in the importation document that the good is originating;
(b) have in its possession at the time the declaration referred to in subparagraph (a) is made, a written or electronic certification as described in Article 4.15, if the certification forms the basis for the claim;
(c) provide a copy of the certification, on request, to the importing Party’s customs authority, if the certification forms the basis for the claim;
(d) when the importer has reason to believe that the declaration in subparagraph (a) is based on inaccurate information, correct the importation document and pay any customs duty owing;
(e) when a certification by a producer or exporter forms the basis for the claim, either provide or have in place, at the importer’s option, an arrangement to have the
producer or exporter provide, on request of the importing Party’s customs authority, all information relied on by such producer or exporter in making such certification; and
(f) demonstrate, on request of the importing Party’s customs authority, that the good is originating under Article 4.1, including that the good satisfies the requirements of Article 4.12.
5. Each Party shall provide that, where a good was originating when it was imported into its territory, but the importer of the good did not make a claim for preferential tariff treatment at the time of importation, that importer may, no later than one year after the date of importation, make a claim for preferential tariff treatment and apply for a refund of any excess duties paid as the result of the good not having been accorded preferential tariff treatment on presentation to its customs authority of:
(a) a written declaration, stating that the good was originating at the time of importation;
(b) on request of its customs authority, a copy of a written or electronic certification if a certification forms the basis for the claim, or other information demonstrating that the good was originating; and
(c) such other documentation relating to the importation of the good as its customs authority may require.
6. Each Party may provide that the importer is responsible for complying with the requirements of paragraph 4, notwithstanding that the importer may have based its claim for preferential tariff treatment on a certification or information that an exporter or producer provided.
7. Nothing in this Article shall prevent a Party from taking action under Article 3.21 (Customs Cooperation).
Article 4.17. Exceptions
Neither Party may require a certification or information demonstrating that a good is originating where:
(a) the customs value of the importation does not exceed US$1,500 or the equivalent amount in Panamanian currency, or such higher amount as may be established by the importing Party, unless the importing Party considers the importation to be part of a series of importations carried out or planned for the purpose of evading compliance with the certification requirements; or
(b) it is a good for which the importing Party does not require the importer to present a certification or information demonstrating origin.
Article 4.18. Obligations Relating to Exportations
1. Each Party shall provide that:
(a) an exporter or a producer in its territory that has provided a written or electronic certification in accordance with Article 4.15 shall, on request, provide a copy to the appropriate authority of the Party;
(b) a false certification by an exporter or a producer in its territory that a good to be exported to the territory of the other Party is originating shall be subject to penalties equivalent to those that would apply to an importer in its territory that makes a false statement or representation in connection with an importation, with appropriate modifications; and
(c) when an exporter or a producer in its territory has provided a certification and has reason to believe that the certification contains or is based on incorrect information, the exporter or producer shall promptly notify in writing every person to whom the exporter or producer provided the certification of any change that could affect the accuracy or validity of the certification.
2. Neither Party may impose penalties on an exporter or a producer for providing an
incorrect certification if the exporter or producer voluntarily notifies in writing all persons to whom it has provided the certification that it was incorrect.
Article 4.19. Record Keeping Requirements
1. Each Party shall provide that an exporter or a producer in its territory that provides a certification in accordance with Article 4.15 shall maintain, for a minimum of five years from the date the certification was issued, all records and documents necessary to demonstrate that a good for which the producer or exporter provided a certification was an originating good, including records and documents concerning:
(a) the purchase of, cost of, value of, and payment for, the exported good;
(b) the purchase of, cost of, value of, and payment for all materials, including indirect materials, used in the production of the exported good; and
(c) the production of the good in the form in which it was exported.
2. Each Party shall provide that an importer claiming preferential tariff treatment for a good imported into the Party’s territory shall maintain, for a minimum of five years from the date of importation of the good:
(a) in cases where the importer bases its claim on its certification or knowledge that the good is an originating good, all records and documents necessary to demonstrate that the good qualified for the preferential tariff treatment; and
(b) in cases where the importer bases its claim on a certification of the exporter or producer, a copy of the certification that served as the basis for the claim.
Article 4.20. Verification
1. For purposes of determining whether a good imported into its territory from the territory of the other Party is an originating good, the importing Party shall ensure that its customs authority or other competent authority may conduct a verification by means of:
(a) written requests for information from the importer, exporter, or producer;
(b) written questionnaires to the importer, exporter, or producer;
(c) visits to the premises of an exporter or producer in the territory of the other Party, to review the records referred to in Article 4.19 or observe the facilities used in the production of the good, in accordance with the framework that the Parties develop pursuant to Article 4.21.2;
(d) for a textile or apparel good, the procedures set out in Article 3.21 (Customs Cooperation); or
(e) such other procedures as the Parties may agree.
2. A Party may deny preferential tariff treatment to an imported good where:
(a) the exporter, producer, or importer fails to respond to a written request for information or questionnaire within a reasonable period, as established in the importing Party’s law;
(b) after receipt of a written notification for a verification visit to which the Parties have agreed, the exporter or producer does not provide its written consent within a reasonable period, as established by the importing Party’s law; or
(c) the Party finds a pattern of conduct indicating that an importer, exporter, or producer has provided false or unsupported declarations that a good imported into its territory is an originating good.
3. A Party conducting a verification shall provide the importer a determination, in writing,
of whether the good is originating. The Party’s determination shall include factual findings and the legal basis for the determination.
4. If an importing Party makes a determination under paragraph 3 that a good is not originating, the Party shall not apply that determination to an importation made before the date of the determination where:
(a) the customs authority of the exporting Party issued an advance ruling regarding the tariff classification or valuation of one or more materials used in the good under Article 5.10 (Advance Rulings);
(b) the importing Party’s determination is based on a tariff classification or valuation for such materials that is different than that provided for in the advance ruling referred to in subparagraph (a); and
(c) the customs authority issued the advance ruling before the importing Party’s determination.
5. Where an importing Party determines through verification that an importer, exporter, or producer has engaged in a pattern of conduct in providing false or unsupported statements, declarations, or certifications that a good imported into its territory is originating, the Party may suspend preferential tariff treatment to identical goods covered by subsequent statements, declarations, or certifications by that importer, exporter, or producer until the importing Party determines that the importer, exporter, or producer is in compliance with this Chapter.
Article 4.21. Common Guidelines
1. The Parties shall agree on and publish common guidelines for the interpretation, application, and administration of this Chapter and the relevant provisions of Chapter Three (National Treatment and Market Access for Goods) and shall endeavor to do so by the date of entry into force of this Agreement. The Parties may agree to modify the common guidelines.
2. The Parties shall endeavor to develop a framework for conducting verifications pursuant to Article 4.20.1(c).
Article 4.22. Application of Certain Provisions
Panama may delay giving effect to:
(a) Article 4.15.1(a) as it relates to electronic certifications; and
(b) Article 4.15.1(b),
for a period of no longer than three years beginning on the date of entry into force of this Agreement.
Article 4.23. Definitions
For purposes of this Chapter:
adjusted value means the value determined in accordance with Articles 1 through 8, Article 15, and the corresponding interpretative notes of the Customs Valuation Agreement, adjusted, if necessary, to exclude any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation;
class of motor vehicles means any one of the following categories of motor vehicles:
(a) motor vehicles classified under subheading 8701.20, motor vehicles for the transport of 16 or more persons classified under subheading 8702.10 or 8702.90, and motor vehicles classified under subheading 8704.10, 8704.22, 8704.23, 8704.32, or 8704.90, or heading 87.05 or 87.06;
(b) motor vehicles classified under subheading 8701.10 or 8701.30 through 8701.90;
(c) motor vehicles for the transport of 15 or fewer persons classified under subheading 8702.10 or 8702.90, and motor vehicles classified under subheading 8704.21 or 8704.31; or
(d) motor vehicles classified under subheading 8703.21 through 8703.90;
fungible goods or materials means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical;
Generally Accepted Accounting Principles means recognized consensus or substantial authoritative support given in the territory 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. Generally Accepted Accounting Principles may encompass broad guidelines for general application, as well as detailed standards, practices, and procedures;
good means any merchandise, product, article, or material;
goods wholly obtained or produced entirely in the territory of one or both of the Parties means:
(a) plants and plant products harvested or gathered in the territory of one or both of the Parties;
(b) live animals born and raised in the territory of one or both of the Parties;
(c) goods obtained in the territory of one or both of the Parties from live animals;
(d) goods obtained from hunting, trapping, fishing, or aquaculture conducted in the territory of one or both of the Parties;
(e) minerals and other natural resource not included in subparagraphs (a) through (d) extracted or taken from the territory of one or both of the Parties;
(f) fish, shellfish, and other marine life taken from the sea, seabed, or subsoil outside the territory of one or both of the Parties by vessels registered or recorded with a Party and flying its flag;
(g) goods produced on board factory ships from the goods referred to in subparagraph (f), provided such factory ships are registered or recorded with that Party and fly its flag;
(h) goods taken by a Party or a person of a Party from the seabed or subsoil outside territorial waters, provided that a Party has rights to exploit such seabed or subsoil;
(i) goods taken from outer space, provided they are obtained by a Party or a person of a Party and not processed in the territory of a non-Party;
(j) waste and scrap derived from
(i) manufacturing or processing operations in the territory of one or both of the Parties, or
(ii) used goods collected in the territory of one or both of the Parties, provided such goods are fit only for the recovery of raw materials;
(k) recovered goods derived in the territory of one or both of the Parties from used goods, and utilized in the territory of one or both of the Parties in the production of remanufactured goods; and
(l) goods produced in the territory of one or both of the Parties exclusively from goods referred to in subparagraphs (a) through (j), or from their derivatives, at any stage of production;
identical goods means goods that are the same in all respects relevant to the particular rule of origin that qualifies the goods as originating;
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 good;
(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;
material means a good that is used in the production of another good, including a part or an ingredient;
material that is self-produced means an originating material that is produced by a producer of a good and used in the production of that good;
model line means a group of motor vehicles having the same platform or model name;
net cost means total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost;
net cost of the good means the net cost that can be reasonably allocated to the good under one of the following methods:
(a) by calculating the total cost incurred with respect to all goods produced by that producer, subtracting any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost of all such goods, and then reasonably allocating the resulting net cost of those goods to the good;
(b) calculating the total cost incurred with respect to all goods produced by that producer, reasonably allocating the total cost to the good, and then subtracting any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the portion of the total cost allocated to the good; or
(c) reasonably allocating each cost that forms part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs,
provided that the allocation of all such costs is consistent with the provisions regarding the reasonable allocation of costs set out in Generally Accepted Accounting Principles;
non-allowable interest costs means interest costs incurred by a producer that exceed 700 basis points above the yield on debt obligations of comparable maturities issued by the central level of government of the Party in which the producer is located;
non-originating good or non-originating material means a good or material that is not originating under this Chapter;
packing materials and containers for shipment means the goods used to protect a good during its transportation and does not include the packaging materials and containers in which a good is packaged for retail sale;
producer means a person who engages in the production of a good in the territory of a Party; production means growing, mining, harvesting, fishing, raising, trapping, hunting,
manufacturing, processing, assembling, or disassembling a good;
reasonably allocate means to apportion in a manner appropriate under Generally Accepted Accounting Principles;
recovered goods means materials in the form of individual parts that are the result of: (a) the disassembly of used goods into individual parts; and (b) cleaning, inspecting, testing, or other processes as necessary for improvement to sound working condition;
remanufactured goods means goods classified under Harmonized System Chapter 84, 85, 87, or 90, or heading 94.02, except goods classified under heading 84.18 or 85.16, that:
(a) are entirely or partially comprised of recovered goods; and
(b) have a similar life expectancy and enjoy a factory warranty similar to such a new good;
total cost means all product costs, period costs, and other costs for a good incurred in the territory of one or both of the Parties;
used means used or consumed in the production of goods; and
value means the value of a good or material for purposes of calculating customs duties or for purposes of applying this Chapter.
Chapter Five . Customs Administration and Trade Facilitation
Article 5.1. Publication
1. Each Party shall publish, including on the Internet, its customs laws, regulations, and general administrative procedures.
2. Each Party shall designate or maintain one or more inquiry points to address inquiries by interested persons concerning customs matters and shall make available on the Internet information concerning the procedures for making such inquiries.
3. To the extent possible, each Party shall publish in advance any regulations of general application governing customs matters that it proposes to adopt and provide interested persons the opportunity to comment prior to their adoption.
Article 5.2. Release of Goods
1. Each Party shall adopt or maintain simplified customs procedures for the efficient release of goods in order to facilitate bilateral trade.
2. Pursuant to paragraph 1, each Party shall adopt or maintain procedures that:
(a) provide for the release of goods from customs within a period no greater than that required to ensure compliance with its customs laws and, to the extent possible, within 48 hours of the goods’ arrival;
(b) allow goods to be released at the point of arrival, without temporary transfer to warehouses or other facilities; and
(c) allow importers to withdraw goods from customs before and without prejudice to the final determination by its customs authority of the applicable customs duties, taxes, and fees. (1)
Article 5.3. Automation
Each Party’s customs authority shall endeavor to use information technology that expedites procedures for releasing goods from customs. When deciding on the information technology to be used for this purpose, each Party shall:
(a) use, to the extent possible, international standards;
(b) make electronic systems accessible to the trading community;
(c) provide for electronic submission and processing of information and data before arrival of the shipment to allow for the release of goods on arrival;
(d) employ electronic or automated systems for risk analysis and targeting;
(e) work towards developing electronic systems that are compatible with the other Party’s systems in order to facilitate government to government exchange of bilateral trade data; and
(f) work towards developing with the other Party a set of common data elements and processes in accordance with World Customs Organization (WCO) Customs Data Model and related WCO recommendations and guidelines.
Article 5.4. Risk Management
Each Party shall endeavor to adopt or maintain risk management systems that enable its customs authority to focus its inspection activities on high-risk goods and that simplify the clearance and movement of low-risk goods through customs, while respecting the confidential nature of the information it obtains through such activities.
Article 5.5. Cooperation
1. With a view to facilitating the effective operation of this Agreement, each Party shall endeavor to provide the other Party with advance notice of any significant modification of administrative policy or other similar development related to its laws or regulations governing importations that is likely to substantially affect the operation of this Agreement.
2. The Parties shall cooperate in achieving compliance with their respective laws and regulations pertaining to: