Title
FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF GEORGIA
Preamble
The Governments of the People's Republic of China ("China") and Georgia ("Georgia"), hereinafter referred to collectively as "the Parties":
Inspired by their longstanding friendship and growing bilateral economic and trade relationship since the establishment of diplomatic relations in 1992;
Recalling the Trade and Economic Cooperation Agreement between the People's Republic of China and Republic of Georgia adopted in June 1993 with the objective of strengthening the comprehensive and stable economic and trade relationship between the Parties;
Building on their rights, obligations and undertakings under the Marrakesh Agreement Establishing the World Trade Organization;
Upholding the rights of their governments to regulate in order to meet national policy objectives, and to preserve their flexibility to safeguard public welfare;
Desiring to strengthen their economic partnership and further liberalise bilateral trade and promote investment to bring economic and social benefits, to create new opportunities for employment, to improve the living standards of their peoples, and to protect health, safety and environment;
Reaffirming their commitment to pursue the objective of sustainable development;
Resolved to create an expanded market for goods and services through establishing clear rules governing their trade which will ensure a predictable, transparent and consistent commercial framework for business operations;
Desiring to create favourable conditions for the development and diversification of trade between them and for the promotion of commercial and economic cooperation in areas of common interest;
Recognising that the strengthening of their economic partnership through a free trade agreement, which removes barriers to trade in goods and services, will produce mutual benefits for the Parties; and
Convinced that this Agreement will enhance the competitiveness of their firms in global markets and create conditions encouraging economic and trade relations between them; Have agreed as follows:
Body
Chapter 1. INITIAL PROVISIONS AND DEFINITIONS
Article 1.1. ESTABLISHMENT OF A FREE TRADE AREA
The Parties, consistent with Article XXIV of GATT 1994 and Article V of GATS, hereby establish a free trade area.
Article 1.2. RELATION TO OTHER AGREEMENTS
The Parties confirm their rights and obligations under the WTO Agreement and the other agreements negotiated thereunder to which both Parties are party, and any other international agreement to which both Parties are party.
Article 1.3. GEOGRAPHICAL APPLICABILITY （1）
1. With regard to China, this Agreement shall apply to the entire customs territory of China, including land territory, territorial airspace, internal waters and territorial sea as well as their bed and subsoil, and any area beyond its territorial sea within which it may exercise sovereign rights and/or jurisdiction in accordance with international law and its domestic law;
2. With regard to Georgia, this Agreement shall apply to the entire territory of Georgia as defined by Georgian legislation, including land territory, its subsoil and the air space above it, internal waters and territorial sea, the sea bed, its subsoil and the air space above them, in respect of which Georgia exercises sovereignty, as well as the contiguous zone, the exclusive economic zone and continental shelf adjacent to its territorial sea, in respect of which Georgia exercises its sovereign rights and/or jurisdiction in accordance with the international law.
3. Each Party is fully responsible for the observance of all provisions of this Agreement and shall take such reasonable measures as may be available to it to ensure their observance by local governments and authorities in its territory.
Article 1.4. GENERAL DEFINITIONS
For the purposes of this Agreement, unless otherwise specified:
(a) days means calendar days;
(b) existing means in effect on the date of entry into force of this Agreement;
(c) GATS means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;
(d) GATT 1994 means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
(e) measure includes any law, regulation, procedure, requirement or practice;
(f) WTO means the World Trade Organization; and
(g) WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994.
Chapter 2. TRADE IN GOODS
Article 2.1. SCOPE
This Chapter applies to trade in goods between the Parties.
Article 2.2. DEFINITIONS
For the purposes of this Chapter:
(a) Agreement on Import Licensing Procedures means the Agreement on Import Licensing Procedures contained in Annex 1A to the Marrakesh Agreement Establishing the World Trade Organization Agreement;
(b) Customs duty means any customs or import duty and a charge of any kind, including any form of surtax or surcharge, imposed in connection with the importation of a good, but does not include any:
(i) Charge equivalent to an internal tax imposed consistently with the provisions of paragraph 2 of Article III of the GATT 1994, in respect of the like goods or, directly competitive or substitutable goods of the Party or in respect of goods from which the imported goods have been manufactured or produced in whole or in part;
(ii) Anti-dumping or countervailing duty applied pursuant to a Party's law and applied consistently with the provisions of Article VI of the GATT 1994, the Agreement on the Implementation of Article VI of the GATT 1994 and the Agreement on Subsidies and Countervailing Measures; or
(iii) fees or other charges commensurate with the cost of services rendered.
Article 2.3. NATIONAL TREATMENT ON INTERNAL TAXATION AND REGULATION
Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994. To this end, Article III of GATT 1994 is incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.4. ELIMINATION OF CUSTOMS DUTIES
1. Except as otherwise provided in this Agreement, the Parties shall eliminate its customs duties on originating goods (as defined in Article 3.2) originating in the other Party, as from the date of entry into force of this Agreement in accordance with its Schedule to Annex I (Schedules in Relation to Article 2.4 (Elimination of Customs Duties)).
2. Neither Party shall increase any existing customs duty or introduce a new customs duty on imports of an originating good of the other Party other than in accordance with this Agreement.
Article 2.5. CLASSIFICATION OF GOODS
The classification of goods in trade between the Parties shall be that set out in each Party's respective tariff nomenclature in conformity with the 2012 Harmonised System and subsequent amendments thereto.
Article 2.6. NON-TARIFF MEASURES
Unless otherwise provided in this Agreement, neither Party shall adopt or maintain any prohibition or restriction or measure having equivalent effect, including quantitative restrictions, on the importation of a good originating in the territory of the other Party, or on the exportation or sale for export of a good destined for the territory of the other Party except in accordance with Article XI of GATT 1994. To this end, Article XI of GATT 1994 is incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.7. IMPORT LICENSING
Each Party shall ensure that import licensing regimes applied to goods originating in the other Party are applied in accordance with the WTO Agreement, and in particular, with the provisions of the Agreement on Import Licensing Procedures.
Article 2.8. ADMINISTRATIVE FEES AND FORMALITIES
Each Party shall ensure, in accordance with Article VIII:1 of GATT 1994, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charges applied consistently with Article III:2 of GATT 1994, and antidumping and countervailing duties applied in accordance with Article VI and XVI of the GATT 1994, the Agreement on the Implementation of Article VI of the GATT 1994 and the Agreement on Subsidies and Countervailing Measures), imposed on or in connection with importation or exportation, are limited in Amount to the approximate cost of services rendered and do not represent indirect Protection of domestic products or a taxation of imports or exports for fiscal purposes.
Article 2.9. ADMINISTRATION OF TRADE REGULATIONS
1. In accordance with Article X of GATT 1994, each Party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, judicial decisions and administrative rulings pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing, inspection, exhibition, processing, mixing or other use.
2. In accordance with Article VIII of GATT 1994, neither Party shall impose substantial penalties for minor breaches of customs regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in customs documentation, which is easily rectified and obviously made without fraudulent intent or gross negligence, shall be greater than necessary to serve merely as a warning.
Article 2.10. DISPUTE SETTLEMENT
The dispute settlement provisions in Chapter 13 (Dispute Settlement) shall apply to any matter arising under this Chapter.
Chapter 3. RULES OF ORIGIN
Section 1. Rules of Origin
Article 3.1. DEFINITIONS
For the purposes of this Chapter:
"Customs value" means the value as determined in accordance with the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (Customs Valuation Agreement);
"Ex-works price" means the price paid for the product ex-works to the producer located in a Party in whose undertaking the last working or processing is carried out, provided that the price includes the value of all the materials used, wage and any other cost, and profit minus any internal taxes returned or repaid when the product obtained is exported;
"Fungible materials" means materials which are interchangeable for commercial purposes, whose properties are essentially identical, and between which it is impractical to differentiate by a mere visual examination;
"Generally accepted accounting principles" means the recognized accounting standards 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. Those standards may encompass broad guidelines of general applications as well as detailed standards, practices and procedures;
"Good" means product or material;
"Product" means a product being produced, even if it is intended for later use in another production operation;
"Materials" means ingredients, parts, components, subassemblies and/or goods that were physically incorporated into another product or were subject to a process in the production of another product;
"Production" means any methods of obtaining goods including, but not limited to, growing, raising, mining, harvesting, fishing, aquaculture, farming, trapping, hunting, capturing, gathering, collecting, breeding, extracting, manufacturing, processing or assembling a good;
"Originating materials" means materials which qualify as originating in accordance with the provisions of this Chapter;
"Harmonized System" means the International Convention on the Harmonised
Commodity Description and Coding System of 1983 and subsequent amendments thereto.
Article 3.2. ORIGINATING GOODS
Except as otherwise provided in this Chapter, the following goods shall be considered as originating in a Party:
(a) Goods wholly obtained or produced in a Party as defined in Article 3.3 (Goods Wholly Obtained or Produced );
(b) Goods produced in a Party exclusively from originating materials; or
(c) Goods produced from non-originating materials in a Party, provided that the goods conform to a regional value content of no less than 40%, except for the goods listed in the Annex II-A (PSR) which must comply with the requirements specified therein.
Article 3.3. GOODS WHOLLY OBTAINED OR PRODUCED
For the purpose of subparagraph (a) of Article 3.2 (Originating Goods), the following goods shall be considered as wholly obtained in a Party:
(a) Live animals born and raised in a Party;
(b) Goods obtained from live animals referred to in subparagraph (a);
(c) Plant products grown, and harvested, picked or gathered in a Party;
(d) Goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted in a Party;
(e) Minerals and other naturally occurring substances not included in subparagraphs (a) through (d) above, extracted or taken from its soil, waters, seabed or subsoil beneath the seabed;
(f) Goods extracted from the waters, seabed or subsoil beneath the seabed outside the territorial waters of a Party, provided that the Party has rights to exploit such waters, seabed or subsoil beneath the seabed in accordance with relevant international agreements to which that Party is a party;
(g) Goods of sea fishing and other marine products taken from the sea outside the territorial waters of a Party by a vessel registered in a Party and flying the flag of that Party;
(h) goods processed or made on board factory ships registered in a Party and flying the flag of that Party, exclusively from goods referred to in subparagraph (g) above;
(i) scrap and waste derived from processing operations in a Party, fit only for the recovery of raw materials;
(j) used goods collected in a Party which fit only for the recovery of raw materials; or
(k) goods produced entirely in a Party exclusively from goods referred to in subparagraphs (a) to (j) above.
Article 3.4. REGIONAL VALUE CONTENT (RVC)
1. The Regional Value Content (RVC) shall be calculated as follows:
RV= Ex-works Price –VNM / Ex-works price x 100%
Where:
RVC is the regional value content, expressed as a percentage; and
VNM is the value of the non-originating materials.
2. VNM shall be determined on the basis of the customs value at the time of importation of the non-originating materials, including materials of undetermined origin. If such value is unknown and cannot be ascertained, the first ascertainable price paid or payable for the materials in a Party shall be applied.
3. If a product which has acquired originating status in accordance with paragraph 1 in a Party is further processed in that Party and used as material in the manufacture of another product, no account shall be taken of the non-originating components of that material in the determination of the originating status of the product.
Article 3.5. ACCUMULATION
Originating materials of a Party, used in the production of a good in the other Party, shall be considered to be originating in the latter Party.
1. Notwithstanding Article 3.2 (c), a good shall not be considered as originating, if it has only undergone one or more of the following operations or processes:
2. All operations in the production of a given good carried out in a Party shall be taken into account when determining whether the working or process undergone by that good is considered as minimal operations or processes referred to in paragraph 1.
Article 3.6. MINIMAL OPERATIONS OR PROCESSES
(a) preservation operations to ensure during transport and storage; the goods remain in good condition
(b) simple assembly of parts of articles to constitute a complete article, or disassembly of products into parts;
(c) packing, unpacking presentation; or repacking operations for purposes of sale or
(d) slaughtering of animals.
(e) washing, cleaning, removal of dust, oxide, oil, paint or other coverings;
(f) ironing or pressing of textiles;
(g) simple painting and polishing operations;
(h) husking, partial or total bleaching, polishing, and glazing of cereals and rice;
(i) operations to colour sugar or form sugar lumps;
(j) peeling, stoning and shelling, of fruits, nuts and vegetables;
(k) sharpening, simple grinding or simple cutting;
(l) sifting, screening, sorting, classifying, grading, matching; (including the making-up of sets of articles), cutting, slitting, bending, coiling, or uncoiling;
(m) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and other similar packaging operations;
(n) affixing or printing marks, labels, logos or other like distinguishing signs on products or their packaging;
(o) simple mixing of goods, whether or not of different kinds;
(p) mere dilution with water or another substance that does not materially alter the characteristics of the goods; or
(q) operations whose sole purpose is to ease port handling.
Article 3.7. DE MINIMIS
A good that doesn't meet the change in tariff classification required in Annex II-A (PSR) is nonetheless originating, if the value of non-originating material that have been used in the production of the good and do not undergo the applicable change in tariff classification does not exceed 10% of the ex-works price of the given good. The value of the said non-originating material shall be determined pursuant to paragraph 2 of Article 3.4 (Regional Value Content).
Article 3.8. FUNGIBLE MATERIALS
Where originating and non-originating fungible materials are used in the production of a good, the following methods shall be adopted in determining whether the materials used are originating:
(a) Physical separation of the materials; or
(b) Anil inventory management method recognized in the generally accepted accounting principles of the exporting Party, and should be used for at least one fiscal year.
Article 3.9. NEUTRAL ELEMENTS
1. In determining whether a good is an originating good, any neutral elements as defined in paragraph 2 shall be disregarded.
2. Neutral elements means a good used in the production, testing or inspection of another good but not physically incorporated into that good by themselves, including:
(a) Fuel, energy, catalysts and solvents;
(b) Equipment, devices and supplies used for testing or inspecting the goods;
(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 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.
Article 13.10. PACKING, PACKAGES AND CONTAINERS
1. Containers and packing materials used for the transport of goods shall not be taken into account in determining the origin of the goods.
The origin of the packaging materials and containers in which goods are packaged for retail sale shall be disregarded in determining the origin of the goods, provided that the packaging materials and containers are classified with the goods.
3. Notwithstanding paragraph 2, where goods are subject to a regional value content requirement, the value of the packaging materials and containers used for retail sale shall be taken into account as originating materials or non-originating materials, as the case may be, in calculating the regional value content of the goods.
Article 13.11. ACCESSORIES, SPARE PARTS AND TOOLS
1. Accessories, spare parts, or tools presented and classified with the good shall be considered as part of the good, provided that:
(a) They are invoiced together with the good; and
(b) Their quantities and values are commercially customary for the good.
2. Where a good is subject to change in tariff classification criterion set out in Annex II-A (PSR), accessories, spare parts, or tools described in paragraph 1 shall be disregarded when determining the origin of the good.
3. Where a good is subject to a regional value content requirement, the value of the accessories, spare parts or tools described in paragraph 1 shall be taken into account as originating materials or non-originating materials, as the case may be, in calculating the regional value content of the good.
Article 3.12. SETS
Sets, as defined in General Rule 3 of the Harmonised System, shall be regarded as originating when all component products are originating. Nevertheless, 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 the non-originating products does not exceed 15 % of the ex-works price of the set.
Article 3.13. DIRECT CONSIGNMENT
1. Preferential tariff treatment under this Agreement shall only be granted to Originating products which are transported directly between the Parties.
2. Notwithstanding paragraph 1, goods whose transport involves transit through one or more Non-Parties with or without trans-shipment or temporary storage of up to 3 months in such Non-Parties, shall still be considered as directly transported between the Parties, provided that:
(a) The transit entry of goods is justified for geographical reason or by consideration related exclusively to transport requirements;
(b) The goods do not undergo any other operation there other than unloading and reloading, or any operation required to keep them in good condition; and
(c) The goods remain under customs control during transit in those non-parties.
3. Compliance with the provisions set out in paragraph 2 shall be evidenced by presenting the customs authorities of the importing Party either with customs documents of the non-Parties, or with any other documents to the satisfaction of the customs authorities of the importing Party.