For the purposes of this Chapter:
aquaculture refers to the farming of aquatic organisms including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from seedstock including seed stock imported from non-parties, such as eggs, fry, fingerlings and larvae, parr, smolts, or other immature fish at post-larval stage, by intervention in the rearing or growth processes to enhance production, such as regular stocking, feeding, and protection from predators;
change in tariff classification means a change at the two-digit, four-digit, or six-digit level of the Harmonized System;
competent authority refers to:
(a) for the UAE, to the Ministry of Economy or any other agency notified from time to time; and
(b) for Australia, the Department of Foreign Affairs and Trade or its successor, or any other agency, or any entity authorised to issue a Certificate of Origin; as notified from time to time;
consignment means products which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice;
customs value refers to the value as determined in accordance with the Customs Valuation Agreement;
fungible goods or materials means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical, irrespective of minor differences in appearance that are not relevant to a determination of origin;
Generally Accepted Accounting Principles means the recognised consensus or substantial authoritative support in the territory of a Party, with respect to the recording of revenues, expenses, costs, assets, and liabilities, the disclosure of information the preparation of financial statements. These principles may encompass broad guidelines of general application as well as detailed standards, practices and procedures;
good refers to any article product, material or merchandise;
indirect material means a material used in the production, testing, or inspection of a good but not physically incorporated into the good; or a material used in the maintenance of buildings or the operation of equipment, associated with the production of a good, including:
(a) fuel, energy, catalysts, and solvents;
(b) equipment, devices, and supplies used to test or inspect the good;
(c) gloves, glasses, footwear, clothing, safety equipment, and supplies;
(d) tools, dies, and moulds;
(e) spare parts and materials used in the maintenance of equipment and buildings;
(f) lubricants, greases, compounding materials, and other materials used in production or used to operate equipment and buildings; and
(g) any other material that is not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production;
material refers to any ingredient, raw material, compound or part used in the production of a good and physically incorporated into it;
non-originating good or non-originating material refers to goods or materials that do not qualify as originating in accordance with this Chapter;
originating good or originating material refers to goods or materials that qualify as originating in accordance with this Chapter;
packing materials and containers for shipment means goods used to protect another good during its transportation, but does not include the packaging materials or containers in which a good is packaged for retail sale;
person of a Party means a natural person or juridical person:
(a) natural person is defined in accordance with Article 9.1 (Definitions) of Chapter 9 (Trade in Services);
(b) juridical person means any entity constituted or organised under applicable law of a Party, whether or not for profit, and whether privately or governmentally owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association or similar organisation;
preferential tariff treatment means the customs duty rate applicable to an originating good, pursuant to each Party’s Schedule set out in Annex 2A (Schedules of Tariff Commitments);
producer means a person who engages in the production of a good;
product refers to that which is obtained by growing, cultivating, raising, mining, harvesting, fishing, aquaculture, trapping, hunting, capturing, collecting, breeding, gathering, extracting or working, assembling or manufacturing, even if it is intended for later use in another manufacturing operation; and
production refers to operations including growing, cultivating raising, mining, harvesting, fishing, aquaculture, trapping, hunting, capturing, collecting, breeding, extracting, gathering, manufacturing, working, processing, and other specific operations, including assembling.
Section A. Origin Determination
Article 3.2. Originating Goods
1. For the purpose of implementing this Agreement, except as otherwise provided in this Chapter, a good shall be regarded as originating if it is:
(a) wholly obtained in the territory of the Parties, as established in Article 3.3 (Wholly Obtained or Produced Goods);
(b) goods produced in the territory of one or both of the Parties exclusively from originating materials; or
(c) produced entirely in the territory of one or both of the Parties using non- originating materials, provided the goods satisfy all applicable requirements of Annex 3A (Product Specific Rules Schedule).
2. In each case provided in paragraph 1, the goods satisfy all other applicable requirements of this Chapter.
Article 3.3. Wholly Obtained or Produced Goods
1. For the purposes of paragraph 1(a) of Article 3.2 (Originating Goods), the following goods shall be deemed to be wholly obtained or produced in the territory of a Party:
(a) plants and plant products or fungus grown, collected, harvested, cultivated, picked, or gathered there;
(b) live animals born and raised there;
(c) products obtained from live animals there;
(d) mineral products or natural resources extracted or taken from that Party’s soil, subsoil, waters, seabed or beneath the seabed;
(e) products obtained by hunting, trapping, collecting, capturing, fishing or aquaculture conducted there; but not beyond the outer limits of a Party’s territorial sea;
(f) products of sea fishing and other marine products taken from outside the territorial waters of the Parties by a vessel registered, recorded, listed or licensed with a Party and flying its flag;
(g) products made on board a factory ship registered, recorded, listed or licensed with a Party and flying its flag, exclusively from products referred to in subparagraph (h);
(h) products, other than products of sea fishing and other marine products, taken or extracted by a Party or a person of a Party from the seabed, ocean floor or the subsoil of the continental shelf or the exclusive economic zone of any of the Parties, provided that the Party or person of the Party has the right to exploit such seabed, ocean floor, or subsoil in accordance with international law; (1)
(i) a good that is:
(i) waste or scrap derived from production there; or
(ii) waste or scrap derived from used goods collected there, provided that those goods are fit only for the recovery of raw materials; and
(j) products produced or obtained there exclusively from products referred to in subparagraphs (a) through (j), or from their derivatives, at any stage of production.
2. Where Annex 3A (Product Specific Rules Schedule) provides a choice of rule between a Qualifying Value Content (QVC) based rule of origin, a change in tariff classification based rule of origin, a specific process of production, or a combination of any of these, a Party shall permit the producer or exporter of the good to decide which rule to use in determining if the good is an originating good.
Article 3.4. Qualifying Value Content
1. Each Party shall provide that a QVC requirement specified in this Chapter, including related Annexes, to determine whether a good is originating, is calculated using one of the following methods as follows:
(a) Indirect (Build-Down) Method: based on the value of non-originating materials
QVC = ExWorks Value or FOB Value − VNM / Exworks Value or FOB Value × 100
or
(b) Direct (Build-Up) Method: based on the value of originating materials
QVC = VOM + Direct Labour Cost + Direct Overhead Cost + Profit + Other Costs / ExWorks or FOB Value × 100
where:
QVC is the qualifying value content of a good, expressed as a percentage.
2. For the purposes of the product specific rules of origin, the following definitions apply:
Value of Non–Originating Materials (VNM) is the customs value of the non- originating materials at the time of importation, inclusive cost of insurance and freight up to the port of importation, or the earliest ascertained price paid or payable in the Party where the production takes place for all non-originating materials, parts or produce that are acquired by the producer in the production of the good. When the producer of a good acquires non-originating materials within that Party the value of such materials shall not include freight, insurance, packing costs and any other costs incurred in transporting the material from the supplier’s warehouse to the producer’s location;
Value of Originating Materials (VOM) is the value of originating materials, parts, or produce acquired or self-produced, and used in the production of the good;
Free-On-Board (FOB) Value means the price actually paid or payable to the exporter for a good when the good is loaded onto the carrier at the named port of exportation, including the cost of the good and all costs necessary to bring the good onto the carrier;
Ex-Works Price means the price paid for the good ex-works to the manufacturer in the Party in who’s undertaking the last working or processing is carried out, provided the price includes the value of all the materials used, minus any internal taxes which are, or may be, repaid when the good obtained is exported;
Direct Labour Cost includes wages, remuneration, and other employee benefits;
Direct Overhead Cost is the total overhead expense; and
Other Costs are the costs incurred in placing the good in the ship or other means of transport for export including, but not limited to, domestic transport costs, storage and warehousing, port handling, brokerage fees and service charges. This cost is only applicable when calculating QVC on FOB basis.
3. Each Party shall provide that all costs considered for the calculation of QVC are recorded and maintained in conformity with the Generally Accepted Accounting Principles applicable in the territory of a Party where the good is produced.
Article 3.5. Accumulation
1. An originating good or material of one Party shall be considered originating in the territory of the other Party when used in the production of a good in the territory of the other Party.
2. The Joint Committee may agree to review this Article with a view to providing for other forms of accumulation for the purpose of qualifying goods as originating goods under this Agreement, including cumulation of production.
Article 3.6. De Minimis
1. A good that does not satisfy the requirements pursuant to Annex 3A (Product Specific Rules Schedule) shall nonetheless be treated as an originating good if:
(a) for a good classified in Chapters 01-49 and 64-97 of the HS Code, the value of non-originating materials that have been used in the production of the good and did not undergo the applicable change in tariff classification does not exceed 10 per cent of the FOB or 15 per cent of the Ex-Works value of the good. The value of those non-originating materials shall be determined pursuant to paragraph 1 of Article 3.4 (Qualifying Value Content); or
(b) for a good classified in Chapters 50 through 63 of the HS Code, the weight of all non-originating materials used in its production that did not undergo the required change in tariff classification does not exceed 10 per cent of the total weight of the good or the value of those materials does not exceed 10 per cent of the FOB or 15 per cent of the Ex-Works value of the good;
and the good meets all other applicable criteria of this Chapter.
2. Notwithstanding paragraph 1, the value of such non-originating materials shall, however, be included in the value of non-originating materials for any applicable QVC requirement for the good.
Article 3.7. Insufficient Working or Processing
1. Where a claim for origin is based solely on QVC, a good shall not be considered to be originating in the territory of a Party if the following operations are undertaken exclusively by itself or in combination in the territory of that Party:
(a) operations to ensure the preservation of products in good condition during transport and storage such as drying, freezing, ventilation, chilling and like operations;
(b) sifting, washing, cutting, slitting, bending, coiling or uncoiling, sharpening, simple grinding, slicing;
(c) cleaning, including removal of oxide, oil, paint or other coverings;
(d) simple painting and polishing operations;
(e) testing or calibration;
(f) placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and packaging operations;
(g) simple mixing of goods, whether or not of different kinds;
(h) simple assembly of parts of products to constitute a complete good or disassembly of products into parts;
(i) changes of packing, unpacking or repacking operations, and breaking up and assembly of consignments;
(j) affixing or printing marks, labels, logos and other like distinguishing signs on goods or their packaging;
(k) husking, partial or total bleaching, polishing and glazing of cereals and rice; and
(l) mere dilution with water or another substance that does not materially alter the characteristics of the goods.
2. For the purposes of paragraph 1, the terms “simple” and “simple-mixing” are defined as follows:
(a) “simple” generally describes an activity which does not need special skills, machines, apparatus or equipment specially produced or installed for carrying out the activity.
(b) “simple mixing” generally describes an activity which does not need special skills, machine, apparatus or equipment specially produced or installed for carrying out the activity. However, simple mixing does not include a chemical reaction.
Article 3.8. Indirect Materials
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 accordance with the Generally Accepted Accounting Principles in the records of the producer of the good.
Article 3.9. Accessories, Spare Parts, Tools
1. Accessories, spare parts, tools, and instructional or other information materials delivered with a good that form part of the good’s standard accessories, spare parts, tools, and instructional or other information materials shall be regarded as a part of the good, and shall be disregarded in determining whether or not all the non-originating materials used in the production of the originating goods undergo the applicable change in tariff classification provided that:
(a) the accessories, spare parts, tools, and instructional or other information materials are classified with and not invoiced separately from the good; and
(b) the quantities and value of the accessories, spare parts, tools, and instructional or other information materials presented with the good are customary for the good.
2. Notwithstanding paragraph 1, for goods that are subject to QVC requirement, the value of the accessories, spare parts, tools and instructional or other information materials shall be taken into account as originating or non-originating materials, as the case may be, in calculating the QVC of the goods.
Article 3.10. Packaging Materials and Containers for Retail Sale
1. Each Party shall provide that packaging materials and containers in which a good is packaged for retail sale, if classified with the good, according to Rule 5 of the General Rules for the Interpretation of the Harmonized System, shall be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable process or change in tariff classification requirement set out in Annex 3A (Product Specific Rules Schedule) or whether the good is wholly obtained or produced.
2. If the good is subject to QVC 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 QVC of the good.
Article 3.11. Unit of Qualification
The unit of qualification for the application of the provisions of this Chapter shall be the particular product which is considered as the basic unit when determining classification using the nomenclature of the Harmonized System. Accordingly, it follows that:
(a) when a product composed of a group or assembly of articles is classified under a single heading, the whole constitutes the unit of qualification;
(b) when a consignment consists of a number of identical products classified under the same heading, each product shall be taken individually into account when in determining whether it qualifies as an originating good.
Article 3.12. Packaging Materials and Containers for Transportation and Shipment
Each Party shall provide that packing materials and containers for transportation and shipment are disregarded in determining whether a good is originating.
Article 3.13. Fungible Goods and Materials
Each Party shall provide that the determination of whether fungible goods or materials are originating goods shall be made either:
(a) by physical segregation of each of the goods or materials; or
(b) by the use of an inventory management method recognised in the generally accepted accounting principles of the Party in which the production is performed or otherwise accepted by that Party, provided that the inventory management method selected is used throughout the fiscal year of the person that selected the inventory management method.
Article 3.14. Article 3.14 Sets of Goods
Sets, as defined in General Rule 3 of the Harmonized System, shall be regarded as originating when all component goods are originating. However, when a set is composed of originating and non-originating products, the set as a whole shall be regarded as originating, provided that the value of non-originating products does not exceed 20% of the FOB value of the set.
Article 3.15. Intermediate Goods
1. If a good which has obtained originating status in a Party in accordance with Article 3.2 (Originating Goods) is used as a material in the manufacture of another good, no account shall be taken of the non-originating materials which may have been used in its manufacture.
2. If a non-originating material is used in the production of a good, the following may be counted as originating content in determining whether the resulting good meets a QVC requirement:
(a) the value of production of the non-originating material undertaken in the territory of one or both Parties by one or more producers; and
(b) the value of any originating material used in the production of the non- originating material undertaken in the territory of one or both Parties by one or more producers.
3. The customs authority of the importing Party may request that the importer provide evidence of compliance with the requirements set out in paragraph 2.
Article 3.16. Value of Materials Used In Production
For the purposes of this Chapter, the value of a material is:
(a) for a material imported by the producer of the good, the price actually paid or payable for the material at the time of importation or other value determined in accordance with the Customs Valuation Agreement, including the costs incurred in the international shipment of the material;
(b) for a material acquired in the territory where the good is produced:
(i) the price paid or payable by the producer in the Party where the producer is located;
(ii) the value as determined for an imported material in subparagraph (a); or
(iii) the earliest ascertainable price paid or payable in the territory of the Party; or
(c) for a material that is self-produced:
(i) the costs incurred in the production of the material, which includes general expenses; and
(ii) an amount equivalent to the profit added in the normal course of trade, or equal to the profit that is usually reflected in the sale of goods of the same class or kind as the self-produced material that is being valued.
Article 3.17. Further Adjustments to the Value of Materials
1. For an originating material, the following expenses may be added to the value of the material, if not included under Article 3.16 (Value of Materials Used in Production):
(a) the costs of freight, insurance, packing, and all other costs incurred to transport the material to the location of the producer of the good;
(b) duties, taxes, and customs brokerage fees on the material, paid in the territory of a Party, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, which include credit against duty or tax paid or payable; and
(c) the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of reusable scrap or by-product.
2. For a non-originating material or material of undetermined origin, the following expenses may be deducted from the value of the material:
(a) the costs of freight, insurance, packing, and all other costs incurred in transporting the material to the location of the producer of the good;
(b) duties, taxes, and customs brokerage fees on the material paid in the territory of one or both Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, which include credit against duty or tax paid or payable; and
(c) the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of reusable scrap or by-product.
3. For greater certainty, when a non-originating material is used in the production of a good, the values referred to in paragraphs 2(a) through 2(b) of Article 3.15 (Intermediate Goods) may be:
(a) deducted from the value of the non-originating material if calculating the QVC requirement using the Indirect Method; or
(b) included in the value of originating materials if calculating the QVC requirement using the Direct Method.
4. For the purposes of this Article, if a cost, expense, or value is unknown or documentary evidence of the amount of the adjustment is not available, then no adjustment is allowed for that cost, expense, or value.