1. No Party may apply a customs duty to a good, regardless of its origin, that has been re- entered into its territory after been temporarily exported from its territory to the territory of the other Party for repair or alteration, regardless of whether such repairs or alterations could have been carried out in the territory of the Party from which the good was exported for repair or alteration.
2. Neither Party may apply a customs duty to a good that, regardless of its origin, is temporarily admitted from the territory of the other Party for the purpose of being repaired or altered.
3. For the purposes of this article, repair or alteration does not include an operation or process that:
(a) destroys the essential characteristics of a good or creates a new or commercially different good; or
(b) transforms an unfinished good into a finished good.
Section D. Non-Tariff Measures
Article 2.7. Import and Export Restrictions
1. Except as otherwise provided in this Agreement, no Party may adopt or maintain any non-tariff measure that prohibits or restricts the importation of any good of the other Party or the exportation or sale for export of any good destined for the territory of the other , except as provided in Article XI of the GATT 1994 and its interpretative notes, and to this end, Article XI of the GATT 1994 and its interpretative notes are incorporated into and made an integral part of this Agreement, mutatis mutandis.
2. The Parties understand that the rights and obligations of the GATT 1994 embodied in paragraph 1 prohibit, in any circumstances in which any other type of restriction is prohibited, a Party from adopting or maintaining:
(a) export and import price requirements, except as permitted for the enforcement of antidumping and countervailing duty provisions and undertakings;
(b) granting import licenses conditional on compliance with a performance requirement; or
(c) voluntary export restrictions incompatible with Article VI of GATT 1994, implemented under Article 18 of the WTO Subsidies Agreement and Article 8.1 of the WTO Antidumping Agreement.
3. Paragraphs 1 and 2 shall not apply to measures set forth in Annex 2.2.
4. No Party may require that, as a condition of an import commitment or for the importation of a good, a person of the other Party establish or maintain a contractual or other relationship with a distributor in its territory.
5. For the purposes of paragraph 4, distributor means a person of a Party who is responsible for the commercial distribution, agency, dealership or representation in the territory of that Party of goods of the other Party.
Article 2.8. Import and Export Licensing
1. No Party shall maintain or adopt a measure that is inconsistent with the WTO Agreement on Import Licensing Procedures (hereinafter referred to as the "Agreement", "WTO Import Licensing Agreement"). For this purpose, the WTO Import Licensing Agreement and its interpretative notes are incorporated into this Agreement and form an integral part thereof, mutatis mutandis.
2. Upon entry into force of this Agreement, each Party shall notify the other Party of any existing import and export licensing procedures.
3. With the objective of seeking greater transparency in reciprocal trade, the Party that establishes procedures for the processing of export licenses shall notify the other Party in a timely manner.
Article 2.9. Administrative Burdens and Formalities
1. Each Party shall ensure, in accordance Article VIII of the GATT 1994 and its interpretative notes, that all fees and charges of any nature (other than customs duties, charges equivalent to an internal tax or other internal charges applied in accordance with Article III.2 of the GATT 1994, and anti-dumping and countervailing duties), imposed on or in connection with importation or exportation, are limited to the approximate cost of services rendered and do not represent indirect protection. of GATT 1994, and antidumping and countervailing duties), imposed on or in connection with importation or exportation, shall be limited to the approximate cost of services rendered and shall not represent an indirect protection to domestic goods, nor a tax on imports or exports for fiscal purposes. For this purpose, Article VIII of GATT 1994 and its interpretative notes are incorporated into this Agreement and form an integral part thereof, mutatis mutandis.
2. Neither Party shall require consular transactions, including related fees and charges, in connection with the importation of any goods of the other Party.
3. Each Party shall make available and maintain, through the Internet, to the extent practicable, an up-to-date list of fees or charges imposed in connection with importation or exportation.
Section E. Other Measures
Article 2.10. State Trading Enterprises
1. The rights and obligations of the Parties with respect to state trading enterprises shall be governed by Article XVII of GATT 1994, its interpretative notes and the Understanding on the Interpretation of Article XVII of GATT 1994, which are incorporated into and form an integral part of this Agreement, mutatis mutandis.
Article 2.11. Customs Valuation
1. The WTO Customs Valuation Agreement and any successor agreement shall govern the customs valuation rules applied by the Parties in their reciprocal trade. For this purpose, the WTO Customs Valuation Agreement and any successor agreement are incorporated into and form an integral part of this Agreement, mutatis mutandis. 2. Each Party's customs legislation shall comply with Article VII of the GATT 1994 and the WTO Customs Valuation Agreement.
Section F. Agriculture
Article 2.12. Scope and Coverage
This Section applies to measures adopted or maintained by a Party relating to trade in agricultural goods.
Article 2.13. Agricultural Export Subsidies
1. The Parties share the objective of the multilateral elimination of export subsidies on agricultural goods and should work together towards an agreement in the WTO to eliminate such subsidies and prevent their reintroduction in any form.
2. Neither Party may adopt or maintain any export subsidy on any agricultural commodity destined for the territory of the other Party.
Section G. Institutional Arrangements
Article 2.14. Committee on Trade In Goods
1. The Parties establish a Committee on Trade in Goods (hereinafter "the Committee"), composed of representatives of each Party.
2. The meetings of the Committee and of any ad hoc Working Group shall be chaired by representatives of the Ministry of Production, Foreign Trade, Investment and Fisheries of Ecuador and the Ministry of Foreign Trade of Costa Rica, or their successors.
3. The functions of the Committee shall include:
(a) monitor the implementation and administration of this Chapter;
(b) report to the Commission on the implementation and administration of this Chapter, as appropriate;
(c) promote trade in goods between the Parties, including through consultations on the acceleration of tariff elimination under this Agreement, and such other matters as may be appropriate;
(d) address obstacles to trade in goods between the Parties, especially those related to the application of non-tariff measures and, if appropriate, submit these matters to the Commission for its consideration;
(e) provide the Commission with advice and recommendations on technical assistance in matters relating to this Chapter,
(f) consult and make best efforts to resolve any differences that may arise between the Parties on matters relating to the classification of goods under the Harmonized System;
(g) establishing ad-hoc Working Groups with specific mandates; and
(h) to deal with any other matter related to this Chapter.
4. Unless otherwise agreed by the Parties, the Committee shall meet every two years in ordinary session, on a date mutually agreed by the Parties. The Parties shall determine those cases in which extraordinary meetings may be held.
5. The meetings may be held in person or by any technological means. When they are face-to-face, they shall be held alternately in the territory of each Party, and the host Party shall be responsible for organizing and chairing the meeting, unless they agree otherwise. The first meeting of the Committee shall be held no later than one year after the date of entry into force of this Agreement.
6. Unless otherwise agreed by the Parties, the Committee shall be of a permanent nature and shall develop its working rules.
Section H. Definitions
Article 2.15. Definitions
For the purposes of this Chapter:
Duty-free means free of customs duties;
export license means an administrative procedure that requires the submission of an application or other documents (other than those generally required for customs clearance purposes) to the relevant administrative body, as a condition precedent to exportation in the territory of the exporting Party;
import license means an administrative procedure that requires the submission of an application or other documents (other than those generally required for customs clearance purposes) to the relevant administrative body, as a condition precedent to importation into the territory of the importing Party;
agricultural goods means those goods referred to in Article 2 of the WTO Agreement on Agriculture;
goods temporarily admitted for sporting purposes means sporting equipment for use in sporting competitions, events or training in the territory of the Party into which they are admitted;
goods intended for exhibition or demonstration include their components, auxiliary apparatus and accessories;
recycled goods means goods made entirely goods that have reached the end of their useful life and have undergone a production process resulting in a new good;
advertising films and recordings means visual media or recorded audio materials consisting essentially of images or sound depicting the nature or operation of goods or services offered for sale or hire by a person established or resident in the territory of a Party, provided that such materials are suitable for exhibition to potential customers, but not for dissemination to the general public;
performance requirement means a requirement of: (a) export a certain volume or percentage of goods or services;
(b) replace imported goods with goods or services of the Party granting the exemption from customs duties or import license;
(c) that a person benefiting from a customs duty exemption or import license purchases other goods or services in the territory of the Party granting the customs duty exemption or import license, or grants a preference to domestically produced goods;
(d) that a person benefiting from a customs duty exemption or import license produces goods or services in the territory of Party granting the customs duty exemption or import license, or import, with a certain level or percentage of domestic content; or
(e) relate in any way the volume or value imports to the volume or value of exports or to the amount of foreign exchange inflows,
but does not include the requirement that an imported good be:
(f) subsequently exported;
(g) used as material at the production of another merchandise which is subsequently exported;
(h) replaced by an identical or similar good used as a material in the production of another good that is subsequently exported; or
(i) replaced by an identical or similar good that is subsequently exported;
consular transactions means the requirements whereby goods of one Party, intended for export to the territory of the other Party, must first be presented to the supervision of the consul of the importing Party in the territory of the exporting Party, for the purpose of obtaining consular invoices or consular visas for commercial invoices, certificates of origin, manifests, shippers export declarations or any other customs documents required for or in connection with importation.
Chapter 3. Rules of Origin and Origin Procedures
Section A. Rules of Origin
Article 3.1. Originating Goods
Except as otherwise provided in this Chapter, a good is originating when:
(a) is wholly obtained or wholly produced in the territory of one or both Parties, as defined in Article 3.2;
(b) is produced in the territory of one or both Parties exclusively from originating materials; or
(c) is produced in the territory of one or both Parties from non-originating materials resulting from a production or transformation process that complies with a change in tariff classification, regional value content or other requirements, as specified in Annex 3.1,
and with the other provisions of this Chapter.
Article 3.2. Wholly Obtained or Wholly Produced Goods
For the purposes of subparagraph (a) of Article 3.1, the following goods shall be considered to be wholly obtained or wholly produced in the territory of one or both Parties:
(a) plants and plant products harvested or collected in the territory of one or both Parties;
(b) live animals born and raised in the territory of one or both Parties;
(c) goods obtained from live animals raised in the territory of one or both Parties;
(d) goods obtained from hunting, trapping, fishing or aquaculture in the territory of one or both Parties;
(e) fish, crustaceans and other marine species taken from the sea or seabed, outside the territory of a Party, by a vessel registered or recorded in a Party and flying its flag;
(f) goods produced on board factory ships registered or registered in a Party and flying its flag, exclusively from the goods referred to in subparagraph (e);
(g) minerals and other inanimate natural resources extracted from the soil, waters, seabed or subsoil in the territory of one or both Parties;
(h) goods other than fish, crustaceans and other living marine species, obtained or extracted by a Party from marine waters, seabed or subsoil outside the territory of a Party, provided that Party has rights to exploit such marine waters, seabed or subsoil;
(i) wastes and derived from:
(i) manufacturing operations conducted in the territory of one or both Parties; or
(ii) used goods collected in the territory of one or both Parties,
provided that such waste or scrap is used only for recovery of raw materials; and
(j) goods produced in one or both Parties exclusively from the materials referred to in subparagraphs (a) through (i).
Article 3.3. Regional Content Value
1. The regional value content (hereinafter "RVC") of a good shall be calculated on the basis of the following method:
VCR = VM - VMN / VM x 100
where:
RCA: is the regional content value, expressed as a percentage;
VM: Is the value of the good, adjusted on an FOB basis, in accordance with Article 3.34; and
VMN: is the value of non-originating materials.
2. The value of non-originating materials shall be:
(a) the CIF value at the time importation of the material; or
(b) the first determinable price paid or payable for the non-originating materials in the territory of the Party where the processing or transformation took place. When the producer of a good acquires non-originating materials within that Party, the value of such materials shall not freight, insurance, packing costs and all other costs incurred in transporting the material from the supplier's warehouse to the place where the producer is located.
3. The values referred to above shall be determined in accordance with the WTO Customs Valuation Agreement.
4. When a good is not exported directly by its producer, the value shall be adjusted to the point at which the buyer receives the good within the territory of Party where the producer is located.
5. All records of costs considered for the calculation of regional value content shall be recorded and maintained in accordance with Generally Accepted Accounting Principles applicable in the territory of the Party where the good is produced.
6. For purposes of calculating the regional value content, the value of non-originating materials used by the producer in the production of a good shall not include the value of non- originating materials used by:
(a) another producer in the production of an originating material that is acquired and used by the producer of the good in the production of that good, or
(b) the producer of the goods in the production of an original material of his own manufacture.
Article 3.4. Minimum Operations or Processes
1. The operations or processes that, individually or in combination, do not confer origin to a good are the following:
(a) operations to ensure the preservation of goods in good condition during transportation and storage;
(b) grouping or splitting of packages;
(c) packing, unpacking or repacking operations for retail sale;
(d) packaging in bottles, cans, jars, bags, cases and boxes and placing on cardboard or boards, and any other packaging operation;
(e) the affixing or printing of trademarks, labels, logos and other similar distinctive signs on the products or their packaging; or
(f) slaughter of animals.
2. The provisions of this article shall prevail over the specific rules of origin contained in Annex 3.1.
Article 3.5. Intermediate Material
When an intermediate material is used in the production of a good, no account shall be taken of the non-originating materials contained in such intermediate material for purposes of determining the origin of the good.
Article 3.6. Accumulation
1. Goods or materials originating in the territory of a Party, incorporated in a good in the territory of the other Party, shall be considered originating in the territory of that other Party.
2. A good shall be considered originating when it is produced in the territory of one or both Parties by one or more producers, provided that the good meets the requirements set out in Article 3.2 and all other applicable requirements of this Chapter.
3. Where each Party has established a preferential trade agreement with the same country or group of non-Party countries, goods or materials originating in such country or group of non-Party countries, incorporated in a good or material in the territory of a Party, may be considered as originating in the territory of that Party, provided that:
(a) the applicable rules of origin for that good or material under this Agreement are complied with;
(b) each Party has with the non-Party or group of non-Parties administrative cooperation agreements that ensure the proper implementation of paragraph 3; and
(c) the Commission shall establish, by means of a decision, the necessary conditions for its application.
Article 3.7. De Minimis
1. A good will be considered originating if the value of all the materials not used in the manufacture of the good is less than or equal to the value of all the materials used in the manufacture of the good.
The value of the originating products used in its production, which do not comply with the change of tariff classification in accordance with Annex 3.1, does not exceed 10% of the FOB value of the good.
2. Where the good referred to in paragraph 1 is subject to a change in tariff classification and regional value content requirement, the value of all non-originating materials shall be included in the calculation of the regional value content of the good.
3. In such a case, the good shall be considered originating if the total weight of all non- originating fibers or yarns of the component that determines the tariff classification of the good, which do not meet the change in tariff classification requirement set out in Annex 3.1, does not exceed 10% of the total weight of the good.
4. In all cases, the merchandise shall comply with all other applicable requirements of this Chapter.
Article 3.8. Goods and Fungible Materials
1. For the purpose of determining whether a good is originating, any good or fungible material shall be distinguished by:
(a) a physical separation of the goods or materials; or
(b) an inventory management method, such as average, last-in-first-out (LIFO) or first-in-first-out (FIFO), as recognized in the Generally Accepted Accounting Principles of the exporting Party.
2. The inventory management method selected, in accordance with paragraph 1, for a particular commodity or expendable material will continue to be used for those commodities or materials during the taxable year of the person who selected the inventory management method.
Article 3.9. Accessories, Spare Parts and Tools
1. Accessories, spare parts or tools delivered with the good shall be treated as originating if the good is originating and shall be disregarded in determining whether all non-originating materials used in the production of the good undergo the corresponding change in tariff classification, provided that:
(a) the accessories, spare parts or tools are classified with the merchandise and have not been invoiced separately, regardless of whether each is separately identified on the invoice itself; and
(b) the quantities and value of such accessories, spare parts or tools are those customary for the goods.
2. If a good is subject to a regional value content requirement, the value the accessories, spare parts or tools described in paragraph 1 shall be considered as originating or non- originating materials, as the case may be, when calculating the regional value content of the good.
Article 3.10. Sets or Assortments of Goods
1. If goods are classified as a set as a result of the application of Rule 3 of the General Rules of Interpretation of the Harmonized System, the set shall be considered as originating only if each good in the set is originating, and both the set and the goods comply all other applicable requirements of this Chapter.
2. Notwithstanding paragraph 1, a set or assortment of goods is originating if the value of all non-originating goods in the set or assortment does not exceed 15% of the FOB value of the set or assortment.
Article 3.11. Retail Containers and Packaging Materials
1. When retail containers and packaging materials are classified in the Harmonized System with the good they contain, the origin of the goods shall not be taken into account in determining the origin of the good.