Article 2.12. State Trading Enterprises
The rights and obligations of the Parties in respect of state trading enterprises shall be governed by Article XVII of the GATT 1994, its interpretative notes and the Understanding on the Interpretation of Article XVII of the GATT 1994, which are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Section E. Other Measures
Article 2.13. Agricultural Safeguard Measures
1. Notwithstanding Article 2.3, a Party may apply a measure in the form of a higher import duty on an originating agricultural good listed in that Party's Schedule set out in Annex 2-B, consistent with this Article, if the aggregate volume of imports of that good in any year exceeds a trigger level as set out in its Schedule included in Annex 2-B.
2. The higher import duty under paragraph 1 shall not exceed the lesser of: (a) the prevailing MFN applied rate;
(b) the MFN applied rate of duty in effect on the day immediately preceding the date of entry into force of this Agreement; or
(c) the duty rate set out in its Schedule included in Annex 2-B.
3. Neither Party shall apply or maintain an agricultural safeguard measure under this Article and at the same time apply or maintain, with respect to the same good:
(a) a bilateral safeguard measure under Chapter 7 (Trade Remedies); or
(b) a measure under Article XIX of the GATT 1994 and the Safeguards Agreement
4. A Party shall implement any agricultural safeguard measure in a transparent manner. Within 60 days after imposing an agricultural safeguard measure, the Party applying the measure shall notify the other Party in writing and provide the other Party with relevant data concerning the measure. Upon written request of the exporting Party, the Parties shall consult regarding the application of the measure.
5. The Committee on Trade in Goods established under Article 2.16 may review and discuss the implementation and operation of this Article.
6. Neither Party shall apply or maintain an agricultural safeguard measure on an originating agricultural good if the period specified in the agricultural safeguard provisions of the Party's Schedule set out in Annex 2-B has expired.
Article 214. Agricultural Export Subsidies
Neither Party shall introduce or reintroduce an export subsidy on an agricultural good destined for the territory of the other Party (1).
Article 2.15. Andean Price Band System
Colombia may maintain the Andean Price Band System established in 1994 by Decision 371 of the Andean Community and its modifications with respect to the goods listed in Annex 2 C.
Section F. Institutional Provisions
Article 2.16. Committee on Trade In Goods
1. The Parties hereby establish a Committee on Trade in Goods, comprising representatives of each Party.
2. The Committee shall meet on request of a Party or the Joint Commission to consider matters arising under this Chapter and Chapter 7 (Trade Remedies).
3. The Committee's functions shall include, inter alia:
(a) promoting trade in goods between the Parties, including through consultations on accelerating elimination of customs duties 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 Joint Commission for its consideration;
(c) reviewing the amendments to the Harmonized System to ensure that each Party's obligations under this Agreement are not altered, and consulting to resolve any conflicts between:
(i) such amendments to the Harmonized System and Annex 2-A; or
(ii) Annex 2-A and national nomenclatures; and (d) consulting on and endeavoring to resolve any difference that may arise among the Parties on matters related to the classification of goods under the Harmonized System.
4. The Parties hereby establish an ad-hoc Working Group on Trade in Agricultural Goods. In order to address any obstacle to the trade of agricultural goods between the Parties, the ad-hoc Working Group shall meet upon request of a Party. The ad-hoc Working Group shall report to the Committee on Trade in Goods.
Section G. Definitions
Article 2.17. Definitions
For purposes of this Chapter:
advertising films and recordings means recorded visual media or audio materials, consisting essentially of images and/or sound, showing the nature or operation of goods or services offered for sale or lease by a person established or resident in the territory of a Party, provided that such materials are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public;
commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than the amount specified in a Party's laws, regulations, or procedures governing temporary admission, or so marked, torn, perforated, or otherwise treated that they are unsuitable for sale or use except as commercial samples;
consular transactions means requirements that goods of a Party intended for export to the territory of the other Party must first be submitted 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 documentation required on or in connection with importation;
duty-free means free of customs duty;
goods admitted for sports purposes means sports requisites for use in sports contests, demonstrations, or training in the territory of the Party into whose territory such goods are admitted;
goods intended for display or demonstration includes their component parts, ancillary apparatus, and accessories;
import licensing means an administrative procedure requiring the submission of an application or other documentation (other than that generally required for customs clearance purposes) to the relevant administrative body as a prior condition for importation into the territory of the importing Party;
performance requirement means a requirement that:
(a) a given level or percentage of goods or services be exported;
(b) domestic goods or services of the Party granting a waiver of customs duties or an import license be substituted for imported goods;
(c) a person benefiting from a waiver of customs duties or an import license purchase other goods or services in the territory of the Party granting the waiver of customs duties or the import license, or accord a preference to domestically produced goods;
(d) a person benefiting from a waiver of customs duties or an import license produce goods or supply services, in the territory of the Party granting the waiver of customs duties or the import license, with a given level or percentage of domestic content; or
(e) relates in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows;
but does not include a requirement that an imported good be:
(f) subsequently exported;
(g) used as a material in the production of another good that is subsequently exported;
(h) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported; or
(i) substituted by an identical or similar good that is subsequently exported; and
printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials, and posters, that are used to promote, publicize, or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge.
Chapter Three. 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 shall be treated as originating under this Agreement where:
(a) the good satisfies one of the following conditions:
(i) the good is wholly obtained or produced entirely in the territory of one or both of the Parties within the meaning of Article 3.2;
(ii) the good satisfies all applicable requirements set out in Annex 3-A, as a result of processes performed entirely in the territory of one or both of the Parties; or
(iii) the good is produced entirely in the territory of one or both of the Parties, exclusively from originating materials; and
(b) the good satisfies all other applicable requirements under this Chapter.
Article 3.2. Wholly Obtained or Produced Goods
For purposes of Article 3.1(a), the following goods shall be considered to be wholly obtained or produced entirely in the territory of one or both of the Parties:
(a) mineral goods and other natural resources extracted or taken from the territory of one or both of the Parties;
(b) vegetable goods grown and harvested in the territory of one or both of the Parties;
(c) live animals born and raised in the territory of one or both of the Parties;
(d) goods obtained from live animals born and raised in the territory of one or both of the Parties;
(e) goods obtained from hunting or trapping within the land territory, or fishing or aquaculture conducted within the territory of one or both of the Parties (1);
(f) fish, shellfish, and other marine life taken from the sea, seabed, ocean floor, or subsoil, outside the territory of the Parties by a vessel registered or recorded with a Party and entitled to fly its flag;
(g) goods produced on board a factory ship from the fish, shellfish, or other marine life referred to in subparagraph (f), provided that such a factory ship is registered or recorded with a Party and entitled to fly its flag;
(h) goods, other than fish, shellfish, and other marine life, taken or extracted from the seabed, ocean floor, or subsoil, outside the territory of one or both of the Parties by a Party or a person of a Party, provided that the Party or the person of the Party has a right to exploit such seabed, ocean floor, or subsoil;
(i) goods taken from outer space, provided that 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) production 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 that such waste and scrap is fit only for the recovery of raw materials; and
(k) goods produced entirely in the territory of one or both of the Parties exclusively from goods referred to in this Article or from their derivatives.
Article 3.3. Regional Value Content
1. Where Annex 3-A specifies a regional value content requirement, the regional value content shall be calculated in accordance with one of the following methods:
(a) Build-down Method
RVC = AV – VNM / AV x 100
(b) Build-up Method
RVC = VOM / AV x 100
where,
RVC is the regional value content, expressed as a percentage;
AV is the adjusted value of the good;
VNM is the value of non-originating materials, other than indirect materials, acquired and used by the producer in the production of the good;
VNM does not include the value of a material that is self-produced; and
VOM is the value of originating materials used in the production of the good, as determined in Article 3.4.
2. All costs considered for the calculation of the regional value content shall be recorded and maintained in conformity with the Generally Accepted Accounting Principles applicable in the territory of the Party where the good is produced.
3. All values for the purpose of calculating the regional value content shall be determined pursuant to the Customs Valuation Agreement. For this purpose, the Customs Valuation Agreement shall apply, mutatis mutandis, to domestic transactions.
4. Where Annex 3-A specifies a regional value content requirement to determine if an automotive good (2) is originating, each Party shall provide that the exporter or producer may calculate the regional value content of that good as provided in paragraph 1 or based on the following method:
Net Cost Method (for Automotive Goods)
RVC = NC – VNM / NC x 100
where,
RVC is the regional value content, expressed as a percentage;
NC is the net cost of the good; and
VNM is the value of non-originating materials, other than indirect materials, acquired and used by the producer in the production of the good;
VNM does not include the value of a material that is self-produced.
5. Each Party shall provide that, for purposes of the regional value content method in paragraph 4, the exporter or producer may use a calculation averaged over the producer's fiscal year, using any one of the following categories, on the basis of all motor vehicles in the category or only those motor vehicles in the category that are exported to the territory of the other Party:
(a) the same model line of motor vehicles in the same class of vehicles produced in the same plant in the territory of a Party;
(b) the same class of motor vehicles produced in the same plant in the territory of a Party; or
(c) the same model line of motor vehicles produced in the territory of a Party.
Article 3.4. Value of Materials
1. Subject to paragraphs 2 and 3, the value of a material referred to in Article 3.3 shall be:
(a) for a material imported directly by the producer of a good, the CIF value at the time of importation of the material;
(b) for a material acquired by the producer in the territory where the good is produced, the value, determined in accordance with Articles 1 through 8, Article 15, and the corresponding interpretative notes of the Customs Valuation Agreement, i.e., in the same manner as for imported goods, with such reasonable modifications as may be required due to the absence of an importation by the producer; or
(c) for a material that is self-produced, the sum of all costs incurred in the production of the material, including general expenses, and an amount for profit equivalent to the profit added in the normal course of trade.
2. For purposes of paragraph 1, the following, where included under paragraph 1, may be deducted from the value of the non-originating materials:
(a) the costs of freight (3), insurance, packing, and all other costs incurred in transporting the material within a Party's territory or between the territories of the Parties to the location of the producer;
(b) duties, taxes, and customs brokerage fees on the material paid in the territory of one or both of the Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duty or tax paid or payable;
(c) the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or by-product; and
(d) the cost of processing incurred in the territory of one or both of the Parties in the production of the non-originating material.
3. For purposes of paragraph 1, the following, where not included under paragraph 1, may be added to the value of the originating materials:
(a) the costs of freight, insurance, packing, and all other costs incurred in transporting the material within a Party's territory or between the territories of the Parties to the location of the producer;
(b) duties, taxes, and customs brokerage fees on the material paid in the territory of one or both of the Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including 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 renewable scrap or by-product.
Article 3.5. Intermediate Goods
1. When an originating good is used in the subsequent production of another good, no account shall be taken of the non-originating materials contained in the originating good for the purpose of determining the originating status of the subsequently produced good. (4)
2. When a non-originating good is used in the subsequent production of another good, notwithstanding Article 3.4, an account shall be taken only of the non-originating materials contained in the non-originating good for the purpose of determining the originating status of the subsequently produced good.
Article 3.6. Accumulation
1. Originating goods or materials of a Party, incorporated into a good in the territory of the other Party, shall be considered to be originating in the territory of the other Party.
2. A good is originating where the good is produced in the territory of one or both of the Parties by one or more producers, provided that the good satisfies the requirements in Article 3.1 and all other applicable requirements in this Chapter.
Article 3.7. De Minimis
1. A good that does not satisfy a change in tariff classification requirement pursuant to Annex 3-A is nonetheless originating if the value of all non-originating materials that have been used in the production of the good and that do not undergo the applicable change in tariff classification does not exceed 10 percent of the adjusted value of the good, provided that:
(a) the value of such non-originating materials shall be included in the value of non-originating materials for any applicable regional value content requirement; and
(b) the good meets all other applicable requirements in this Chapter.
2. Paragraph 1 shall not apply to non-originating materials used in the production of goods classified in Chapters 1 through 24 of the HS, unless they are classified in a different subheading from that of the goods for which the origin is being determined under this Article.
3. Notwithstanding paragraph 2, paragraph 1 shall not apply to non-originating materials classified in Chapter 15 of the HS that are used in the production of goods classified under headings 15.01 through 15.08 or 15.11 through 15.15 of the HS.
4. Paragraph 1 shall not apply to goods classified in Chapters 50 through 63 of the HS. A good classified in Chapters 50 through 63 of the HS, produced in the territory of a Party, shall be considered to be an originating good if the total weight of all non-originating fibers or yarns used in the production of the component that determines the tariff classification of the good, that do not undergo the applicable change in tariff classification, does not exceed ten percent of the weight of the good.
Article 3.8. Fungible Goods
1. In determining whether a good is originating for the purpose of preferential tariff treatment, any fungible goods shall be distinguished by:
(a) physical segregation of the goods; or
(b) any inventory management method, such as averaging, last-in-first-out ("LIFO") or first-in-first-out ("FIFO"), recognized in the Generally Accepted Accounting Principles of the Party in which the production is performed or otherwise accepted by the Party in which the production is performed.
2. The inventory management method selected under paragraph 1 for a particular fungible good shall continue to be used for that good throughout the fiscal year of the person that selected the inventory management method.
Article 3.9. Accessories, Spare Parts, and Tools
The origin of the accessories, spare parts, or tools delivered with a good at the time of importation:
(a) shall be disregarded if the good is subject to a change in tariff classification requirement; and
(b) shall be taken into account as originating or non-originating materials, as the case may be, in calculating the regional value content of the good, if the good is subject to a regional value content requirement;
provided that:
(a) the accessories, spare parts, or tools are not invoiced separately from the good, regardless of whether they appear specified or separately identified in the invoice itself; and
(b) the quantities and value of the accessories, spare parts, or tools are customary for the good.
Article 3.10. Sets of Goods
Notwithstanding the rules set out in Annex 3-A, a set or assortment of goods, as referred to in General Rule 3 of the HS, shall be regarded as originating, provided that:
(a) all the component goods, including packaging materials and containers, are originating; or
(b) where the set or assortment of goods contains non-originating component goods, including packaging materials and containers, the value of the non-originating goods, including any non-originating packaging materials and containers for the set or assortment of goods, does not exceed 15 percent of the adjusted value of the set or assortment of goods.