Export subsidies means subsidies contingent upon export performance including the export subsidies listed in Article 9 (Export Subsidy Commitments) of the WTO Agreement on Agriculture; any subsequent changes agreed to in the WTO would be automatically incorporated into this Agreement;
Goods imported 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 imported;
Goods intended for display or demonstration includes their component parts, ancillary apparatus and accessories;
Printed advertising materials means the brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials and posters, that are used to promote, publicise or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge, classified in Chapter 49 of the Harmonised System; and
Repair or alteration does not include an operation or process that either destroys the essential characteristics of a good or creates a new or commercially different good.
Article III.02. Scope of Application
This chapter shall apply to the trade in goods between the Parties.
Section I. National Treatment
Article III.03. National Treatment
1. Each Party shall accord national treatment to the goods of the other Party, in accordance with Article III (National Treatment on Internal Taxation and Regulation) of the GATT 1994, including its interpretative notes. To this end, Article III (National Treatment on Internal Taxation and Regulation) of the GATT 1994, including its interpretative notes and any other equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made part of this Agreement.
2. The provisions of paragraph 1 regarding national treatment shall mean, in relation to a Party, including its departments, municipalities or provinces, a treatment no less favourable than the most favourable treatment accorded by that Party, including its departments, municipalities or provinces, to any, directly competitive or substitutable goods of domestic origin.
Section II. Tariffs
Article III.04. Tariff Elimination
1. Except as otherwise provided in this Agreement, neither Party may increase any existing customs duty, or adopt a new customs duty, on an originating good.
2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with the Tariff Elimination Schedule established in Annex III.04.2.
3. Upon the request of any Party, the Parties shall consult to consider the possibility of accelerating the elimination of customs duties set out in Annex III.04.2 or incorporating into one Party’s Tariff Elimination Schedule goods not subject to the elimination schedule. An agreement between the Parties to accelerate the elimination of a customs duty on a good or to include a good in a Party’s elimination schedule shall supersede any duty rate or staging category determined pursuant to their Schedules for such good when approved by each such Party in accordance with its applicable legal procedures.
4. The agreement adopted based on paragraph 3, regarding the accelerated elimination of a customs duty for an originating good, shall prevail over any customs duty or tariff elimination schedule set out in the Annexes to this Article.
5. Notwithstanding paragraphs 1 and 2, any Party may maintain or increase a customs duty as authorised by the Dispute Settlement Understanding of the WTO, or any other agreement under the WTO Agreement.
6. Originating goods produced in free trade zones in the territory of a Party shall be subject to the most favoured nation treatment (MFN tariff) when imported into the territory of the other Party, except for the products included in Annex III.04.6, which shall benefit from the Tariff Elimination Schedule.
7. The Parties agree that, from the date of entry into force of this Agreement, and in accordance with the functions assigned to the Joint Council in Article I.06.8(a), upon request of either Party, the Joint Council may meet with the purpose of including other goods into Annex III.04.6.
Article III.05. Temporary Admission of Goods
1. Each Party shall grant temporary duty-free admission for:
(a) professional equipment necessary for carrying out the business activity, trade or profession of a business person who qualifies for temporary entry pursuant to Chapter XI (Temporary Entry);
(b) equipment for the press or for sound or television broadcasting and cinematographic equipment;
(c) goods imported for sports purposes and goods intended for display or demonstration; and
(d) commercial samples and advertising films;
Imported from the territory of the other Party regardless of their origin and regardless of whether like, directly competitive or substitutable goods are available in the territory of the Party.
2. Except as otherwise provided in this Agreement, neither Party may condition the temporary duty-free admission of a good referred to in paragraph 1(a), (b) or
(c) , other than to require that such good:
(a) be imported by a national or resident of the other Party who seeks temporary entry;
(b) be used solely by or under the personal supervision of such person in the exercise of the business activity, trade or profession of that person;
(c) not be sold or leased while in its territory;
(d) be accompanied by a bond in an amount no greater than hundred and ten percent (110%) of the charges that would otherwise be owed on entry or final importation, or by another form of security, releasable on exportation of the good;
(e) be capable of identification when exported;
(f) be exported on the departure of that person or within such other period of time as is reasonably related to the purpose of the temporary admission; and
(g) be imported in no greater quantity than is reasonable for its intended use.
3. Except as otherwise provided in this Agreement, neither Party may condition the temporary duty-free admission of a good referred to in paragraph 1(d), other than to require that such good:
(a) be imported solely for the solicitation of orders for goods, or services provided from the territory, of the other Party or non-Party;
(b) not be sold, leased or put to any use other than exhibition or demonstration while in its territory;
(c) be capable of identification when exported;
(d) be exported within such period as is reasonably related to the purpose of the temporary admission; and
(e) be imported in no greater quantity than is reasonable for its intended use.
4. When a good is temporarily admitted duty-free under paragraph 1 and does not fulfill all the required conditions set out in paragraphs 2 and 3, the importing Party may impose:
(a) the customs duty and any other charge on the good that would be owed on entry or final importation of such good; and
(b) any criminal, civil or administrative sanction that the circumstances determine.
5. Subject to Chapters IX (Services) and X (Investment):
(a) each Party shall allow a container used in international traffic that enters its territory from the territory of the other Party to exit its territory on any route that is reasonably related to the economic and prompt departure of such container;
(b) neither Party may require any bond or impose any penalty or charge solely by reason of any difference between the port of entry and the port of departure of a container;
(c) neither Party may condition the release of any obligation, including any bond, that it imposes in respect of the entry of a container into its territory on its exit through any particular port of departure; and
(d) neither Party may require that the carrier bringing a container from the territory of the other Party into its territory be the carrier that takes such container to the territory of the other Party.
Article III.06. Duty-Free Entry of Certain Commercial Samples and Printed Advertising Materials
Each Party shall grant duty-free entry to commercial samples of negligible value and to printed advertising materials imported from the territory of another Party, regardless of their origin, but may require that:
(a) such samples be imported solely for the solicitation of orders for goods or services provided from the territory of the other Party or non-Party; or
(b) such advertising materials be imported in packets each of which contains no more than one copy of each such material and that neither such materials nor packets form part of a larger consignment.
Article III.07. Goods Re-Entered after Repair, Renovation or Improvement
Where a non-originating good is exported by a Party to the territory of the other Party for repair, renovation or improvement, that good on its re-entry shall be granted treatment as an originating good if the value of the non-originating materials used in the repair, renovation or improvement did not exceed sixty five percent (65%) of the cost of repair, renovation or improvement. This treatment is subject to the condition that the essential character of the good is not altered.
The temporary admission of a good exported by a Party to the territory of the other Party for repair, renovation or improvement shall be allowed without the payment of customs duty for that period of time as stated in the national law of that Party.
Article III.08. Customs Valuation
The Customs Valuation Agreement and any successor agreement shall govern the customs valuation rules applied by the Parties to their reciprocal trade.
Section III. Non-tariff Measures
Article III.09. Import and Export Restrictions
1. Subject to this Article and the Parties rights set out in Article XX (General Exceptions) and Article XXI (Security Exceptions) of the GATT 1994, the Parties shall eliminate immediately all non-tariff barriers upon entry into force of this Agreement.
2. Except where otherwise provided in this Agreement, the Parties undertake not to apply restrictions with respect to trade under this Agreement.
3. The Parties affirm that the GATT 1994 rights and obligations prohibit, in any circumstances in which any form of restriction is prohibited, export price requirements and, except as permitted in the enforcement of countervailing and antidumping orders and undertakings, import price requirements.
4. Where one of the Parties maintains a prohibition or restriction on the importation or exportation of goods originating in the other Party, that Party shall establish that the measure is compatible with this Agreement or the WTO Agreement as the case may require.
5. The Parties agree not to introduce any new prohibition or restriction on the importation or exportation of goods originating in the other Party, after the entry into force of this Agreement.
Article III.10. Customs User Fees
Customs User Fees shall be applied according to the internal legislation of each Party.
Article III.11. Consular Fees
Upon entry into force of this Agreement, no Party shall require consular fees or duties, nor shall require consular formalities for originating goods of the other Party.
Article III.12. Marks of Origin
The Parties confirm their rights and obligations under Article IX (Marks of origin) of the GATT 1994 and any successor agreement.
Article III.13. Support, Internal Aid and Subsidies to Exports
The Parties hereby reaffirm their rights and obligations derived from the relevant WTO Agreements in all that pertains to support, internal aid, and subsidies to exports.
Article III.14. Export Competition and Domestic Support for Agricultural Goods
1. To the extent possible, the Parties share the objective of the progressive reduction and elimination of all forms of trade distorting export competition measures on agricultural goods and shall pursue expansion in the scope of coverage of disciplines in this area.
2. The Parties share, to the extent possible, the objective of achieving the maximum possible reduction or elimination of domestic support measures that distort production and trade of agricultural goods.
3. To the extent possible, the Parties agree to cooperate within the Agriculture Negotiations in the WTO to achieve the effective implementation of Special and Differential Treatment Provisions for developing countries and a review of the criteria for the "green box category to ensure that it does not distort production and trade.
Article III.15. Export Taxes
Except as set out in Annex III.15 neither Party may adopt or maintain any duty, tax or other charge on the export of any good to the territory of the other Party.
Article III.16. Safeguard Measures
1. The Parties reaffirm their rights and obligations under Article XIX (Emergency Action on Imports of Particular Products) of the GATT 1994, the WTO Agreement on Safeguards, and any other successor agreement.
2. The Parties shall, within one (1) year of the entry into force of this Agreement, meet to review this Article.
Article III.17. Consultations and Committee on Market Access
1. The Parties hereby establish a Committee on Market Access, comprising representatives of each Party.
2. The Committee on Market Access shall meet periodically, and at any other time on the request of either Party or the Council, to ensure the effective implementation and administration of Chapter III (National Treatment and Access of Goods to the Market), Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VII (Sanitary and Phytosanitary Measures), Chapter VIII (Technical Barriers to Trade) and any Uniform Regulations. In this regard, the Committee on Market Access shall:
(a) monitor the implementation and administration by the Parties of Chapter III (National Treatment and Access of Goods to the Market), Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VII (Sanitary and Phytosanitary Measures), Chapter VIII (Technical Barriers to Trade) and any Uniform Regulations to ensure their uniform interpretation;
(b) at the request of either Party, review any proposed modification of or addition to Chapter III (National Treatment and Access of Goods to the Market), Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VII (Sanitary and Phytosanitary Measures), Chapter VIII (Technical Barriers to Trade) or any Uniform Regulations;
(c) recommend to the Council any modification of or addition to Chapter III (National Treatment and Access of Goods to the Market), Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VII (Sanitary and Phytosanitary Measures), Chapter VIII (Technical Barriers to Trade) or any Uniform Regulations and to any other provision of this Agreement as may be required to conform with any change to the Harmonized System; and
(d) consider any other matter relating to the implementation and administration by the Parties of Chapter III (National Treatment and Access of Goods to the Market), Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VII (Sanitary and Phytosanitary Measures), Chapter VIII (Technical Barriers to Trade) and any Uniform Regulations referred to it by a Party; and
(e) recommend to the Council the establishment of subcommittees or technical groups, where appropriate.
3. Each Party shall to the greatest extent practicable, take all necessary measures to implement any modification of or addition to Chapter III (National Treatment and Access of Goods to the Market), Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VII (Sanitary and Phytosanitary Measures), Chapter VIII (Technical Barriers to Trade) and any Uniform Regulations within one hundred and eighty (180) days after the Council agrees on such modification or addition, or in such time as the relevant amendment to the legislation may be enacted.
4. The Parties shall convene on the request of either Party a meeting of their officials responsible for customs, immigration, inspection of food and agricultural products, border inspection facilities, and regulation of transportation for the purpose of addressing issues related to movement of goods through the Parties' ports of entry.
5. Nothing in Chapter III (National Treatment and Access of Goods to the Market) shall be construed to prevent a Party from issuing a determination of origin or an advance ruling relating to a matter under consideration by the Committee on Market Access or from taking such other action as it considers necessary, pending a resolution of the matter under this Agreement.
Chapter IV. Rules of Origin
Article IV.01. Definitions
For the purposes of this Chapter:
F.O.B. means free on board regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer;
Generally accepted accounting principles means the principles used in the territory of each Party, which provide substantial authoritative support with regard to the recording of income, costs, expenses, assets and liabilities involved in the disclosure of information and preparation of financial statements. These indicators may be broad guidelines of general application, as well as those standards, practices and procedures usually employed in accounting;
Good means any merchandise, product, article or material;
Goods wholly obtained or produced entirely in the territory of one or both
Parties means:
(a) minerals and other natural resources extracted or taken from the territory of one or both Parties;
(b) plants and plant products harvested in the territory of one or both Parties;
(c) live animals born and raised in the territory of one or both Parties;
(d) goods obtained from live animals in the territory of one or both of the Parties;
(e) goods obtained from hunting, trapping, fishing, gathering or capturing in the territory of one or both Parties;
(f) goods (fish, shellfish and other marine life) taken from the sea, seabed or subsoil outside the territory of one or both of the Parties by a vessel registered, recorded or listed with a Party, or leased by a company established in the territory of a Party, and entitled to fly its flag;
(g) goods produced on board a factory ship from the goods referred to in subparagraph (f), provided such factory ship is registered, recorded or listed with a Party, or leased by a company established in the territory of a Party, and entitled to fly its flag;
(h) goods, other than fish, shellfish and other marine life, taken or extracted from the seabed or the subsoil, in the area outside the continental shelf and the exclusive economic zone of either of the Parties or of any other State as defined in the United Nations Convention on the Law of the Sea, by a vessel registered, recorded or listed with a Party and entitled to fly its flag, or by a Party or person from a Party;
(i) waste and scrap derived from:
i) production in the territory of one or both Parties; or
ii) used goods collected in the territory of one or both Parties, provided such goods are fit only for the recovery of raw materials; and
iii) goods produced in the territory of one or both Parties exclusively from goods referred to in subparagraphs (a) through (i), or from their derivatives, at any stage of production;
Indirect material means a good used in the production, testing or inspection of a good, but that is not physically incorporated in that good; or a good that is used in the maintenance of buildings or the operation of equipment related to 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 process, equipment operation or maintenance of buildings;
(e) gloves, glasses, footwear, clothing, safety equipment and supplies;
(f) equipment, apparatus and accessories used for the verification or inspection of goods;
(g) catalysts and solvents; and
(h) any other goods that are not incorporated in 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 means a good that is used in the production of another good;
Non-originating good or non-originating material means a good or a material that does not qualify as originating under this Chapter;
Production means growing, mining, extracting, harvesting, fishing, trapping, gathering, collecting, capturing, hunting, manufacturing or processing of a good;
Producer means a person who grows, mines, extracts, harvests, fishes, traps, gathers, collects, captures, hunts, manufactures or processes a good;
Related person means a related person as defined in the Customs Valuation Agreement and in accordance with the domestic law of each Party;
Transaction value means:
(a) the price actually paid or payable for a good or material with respect to a transaction by the producer of the good according to the principles of Article 1 of the Customs Valuation Agreement, adjusted in accordance with the principles of Article 8.1, 8.3 and 8.4 of said Agreement, where the good or material is sold for export; or
(b) where there is no transaction value or the transaction value is unacceptable under Article 1 of the Customs Valuation Agreement, the value determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement; and
Used means employed, used or consumed in the production of goods.
Article IV.02. Application Instruments
For the purposes of this Chapter:
(a) the basis for tariff classification is the Harmonized System; and
(b) all costs referred to in this Chapter shall be recorded and maintained in accordance with the generally accepted accounting principles applicable in the territory of the Party in which the good is produced.
Article IV.03. Originating Goods
1. Except as otherwise provided in this Chapter, a good shall be deemed to originate in the territory of a Party where:
(a) it is wholly obtained or produced entirely in the territory of one or both Parties as defined in Article IV.01;
(b) it is produced entirely in the territory of one or both Parties exclusively from originating materials under this Chapter; or
(c) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification as set out in Annex IV.03 as a result of production occurring entirely in the territory of one or both of the Parties, or the good otherwise satisfies the applicable requirements of that Annex where no change in tariff classification is required, and the good satisfies all other applicable requirements of this Chapter.
2. For the purpose of this Chapter, the production of a good from non-originating materials that comply with a change of tariff classification and other requirements, according to the provisions of Annex IV.03, shall be done entirely in the territory of one or both Parties.
Article IV.04. Value of Non-originating Materials
The value of a material used in the production of a good shall:
(a) be the transaction value of the material determined in accordance with Article 1 of the Customs Valuation Agreement;
(b) in the event that there is no transaction value or the transaction value of the material is unacceptable under Article 1 of the Customs Valuation Agreement, be determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement;
(c) where not covered under subparagraph (a) or (b), include freight, insurance, packing and all other costs incurred in transporting the material to the place of importation; or
(d) in the case of a domestic transaction, be determined in accordance with the principles of the Customs Valuation Agreement in the same manner as an international transaction, with such adjustments as may be required by the circumstances.
Article IV.05. De Minimis
1. Except as provided in paragraphs 2 and 3 a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in Annex IV.03 does not exceed seven percent (7%) of the transaction value of the good adjusted on an F.O.B. basis, provided that the good satisfies all other applicable requirements of this Chapter.
2. Except as specified in a product-specific rule of origin of Annex IV.03 applicable to a good, paragraph 1 does not apply to a non-originating material used in the production of a good included in Chapters 1 through 24 of the Harmonized System, unless the non-originating material is provided for in a different subheading from the good for which origin is being determined under this Article.