Article 2.11. IMPORT LICENSING PROCEDURE
No Party shall maintain or adopt any measure that is inconsistent with the WTO Agreement on Import Licensing Procedures (hereinafter referred to as the "Import Licensing Agreement") and the same is incorporated into this Agreement mutatis mutandis.
Article 2.12. CUSTOMS VALUATION
Article VII of GATT 1994, its Interpretative Notes and the Customs Valuation Agreement and its modifications and amendments constitute the customs valuation rules applied by the Parties in their reciprocal trade.
Section D. AGRICULTURE
Article 2.13. SCOPE
1. This Section applies to measures adopted or maintained by the Parties relating to trade between them in agricultural goods covered by Annex I referred to in Article 2 of the WTO Agreement on Agriculture.
2. The particular provisions of this Section shall prevail over the provisions of this Chapter or any other Chapter of this Agreement.
Article 2.14. EXPORT SUBSIDIES
1. The Parties reaffirm the commitment to eliminate and not to introduce or reintroduce any form of export subsidies and will work together, in the WTO, towards a modalities agreement with a view to achieving this objective.
2. From the entry into force of this Agreement, the Parties may not maintain, introduce or reintroduce export subsidies on any agricultural good destined for the territory of the other Party, included in Annex 2-B (Tariff Elimination Program).
3. Notwithstanding the preceding paragraph, if a Party maintains, introduces or reintroduces an export subsidy on a good listed in Annex 2-B (Tariff Elimination Program) to the other Party, the affected Party may increase the applied rate of duty on imports up to the MEN tariff rate for the period during which the export subsidy is maintained. For the additional tariff to be eliminated, the other Party shall provide detailed information on the applied subsidy that demonstrates that it complies with the provisions of this Article.
Article 2.15. AGRICULTURAL SUBCOMMITTEE
1. The Parties shall establish an Agricultural Subcommittee composed of representatives of both Parties.
2. The Agricultural Subcommittee shall have the following functions:
(a) monitor and promote cooperation in the implementation and administration of this Section to facilitate trade in agricultural commodities between the Parties;
(b) consult between the Parties on matters related to this Section, in coordination with other committees, subcommittees, working groups, or other bodies established in this Agreement;
(c) evaluate the development of agricultural trade under this Agreement, and the impact on the agricultural sector of each of the Parties, as well as the operation of the instruments of the Agreement, in order to recommend the corresponding actions to the Committee on Trade in Goods;
(d) to perform any additional work that the Committee on Trade in Goods may assign to it;
(e) report for consideration by the Committee on Trade in Goods the results of its work; and
(f) to prepare proposals and present recommendations concerning the agricultural area in relation to the deepening of the tariff elimination program, among others, through the inclusion of goods that have been excluded from Annex 2- B of this Agreement, at the request of the Committee on Trade in Goods and/or mandate of the Free Trade Commission as set forth in Article 2.4.3.
3. The Agricultural Subcommittee shall meet at least once a year. When special circumstances arise, the Parties shall meet by mutual agreement no later than 30 days after the request of one of them. The meetings of the Agricultural Sub-Committee shall be chaired by representatives of the Party hosting the meeting.
4. All decisions of the Agricultural Subcommittee shall be made by consensus.
Section E. COMMODITY TRADING COMMITTEE
Article 2.16. COMMODITY TRADING COMMITTEE
1. The Parties establish the Committee on Trade in Goods composed of representatives of each Party.
2. The Committee shall meet periodically, and at any other time at the request of either Party or the Commission, to ensure the effective implementation and administration of this Chapter and Chapter 7 (Trade Defense). In this regard, the Committee shall:
(a) review, at the request of either Party, a proposed amendment or addition to this Chapter and Chapter 7 (Trade Defense), and make appropriate recommendations to the Commission;
(b) consider tariff or non-tariff issues raised by either Party or by the Agricultural Subcommittee, and make appropriate recommendations to the Free Trade Commission;
(c) to request the Agricultural Subcommittee to prepare proposals and submit recommendations concerning the agricultural sector in relation to the deepening of the tariff elimination program, among others, through the inclusion of goods that have been excluded from this Agreement; and
(d) review, within a timely manner, amendments to the Harmonized System with a view to reflecting these amendments in Annex 2-B (Tariff Elimination) and Annex 3-A (Specific Rules of Origin).
3. If the Committee fails to resolve the matter referred to it in accordance with paragraph 2 within 60 days of the referral, either Party may request a meeting of the Free Trade Commission in accordance with the provisions of Article 23.1 (Free Trade Commission).
4. Each Party shall, to the extent possible, take the necessary measures to implement the revision of this Chapter and Chapter 7 (Trade Defense) within 180 days from the date on which the Commission accepts the amendment or addition, or within such other period as the Parties may agree.
Article 2.17. DEFINITIONS
For the purposes of this Chapter:
Consumed Means:
(a) actually consumed; or
(b) processed or manufactured so as to result in a substantial change in the value, form or use of a good or in the production of another good;
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;
duty-free means free of customs duties; printed advertising material means those goods classified in Chapter 49 of the Harmonized System, which include brochures, leaflets, commercial catalogs, loose sheets, yearbooks published by a trade association, tourist promotion materials or posters that are:
(a) used to promote, advertise or advertise a good or service;
(b) intended for the purpose of advertising a good or service; and
(c) distributed free of charge;
agricultural goods means the goods listed in Annex 1 of the WTO Agreement on Agriculture;
goods for exhibition or demonstration means goods that temporarily enter the territory of a Party for exhibition or demonstration purposes. It includes the components, auxiliary apparatus and accessories of the good;
goods imported temporarily for sporting purposes means a sporting good for use in sporting competitions, demonstrations or training in the territory of the Party into which the good is imported;
commercial sample of negligible value means a commercial sample having a value, individually or in the aggregate shipped, of not more than one United States dollar or in the equivalent amount in the currency of either Party, or which is so marked, broken, punctured or otherwise treated as to be unsuitable for sale or for use other than as a commercial sample; advertising films and recordings means visual media or audio materials consisting essentially of images or sound depicting the nature or operation of a commodity or service 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, and provided that they are imported in packages containing not more than one copy of each film or recording, provided that the materials and packages are not part of a larger consignment;
export subsidies shall have the meaning assigned to that term in Article 1(e) of the Agreement on Agriculture, including any modification of that Article.
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, each Party shall treat a good as originating when:
(a) is wholly obtained or produced entirely in the territory of one or both Parties;
(b) is produced entirely in the territory of one or both Parties; and
(i) each of the non-originating materials used in the production of the good undergoes the applicable change in tariff classification specified in Annex 3-A (Specific Rules of Origin); or
(ii) the good otherwise satisfies any applicable regional value content requirements or other requirements specified in Annex 3-A (Specific Rules of Origin); or
(c) is produced entirely in the territory of one or both Parties, exclusively from originating materials; and
complies with the other applicable requirements of this Chapter.
Article 3.2. REGIONAL CONTENT VALUE
1, The regional value content of the goods shall be calculated in accordance with the following formula:
VCR = [(VT - VMN) / VT] * 100
where:
RCA: is the regional content value, expressed as a percentage;
VT: is the transaction value of the good adjusted on an FOB basis, except as provided in paragraph 2. If such value does not exist or cannot be determined in accordance with the principles and rules of Article 1 of the Customs Valuation Agreement, it shall be calculated in accordance with the principles and rules of Articles 2 to 7 of the Customs Valuation Agreement; and
VMN: is the transaction value of the non-originating materials adjusted on a CIF basis, except as provided for in paragraph 5. If such value cannot be determined in accordance with the principles and rules of Article 1 of the Customs Valuation Agreement, it shall be calculated in accordance with the principles and rules of Articles 2 to 7 of the said Agreement.
2. When the producer of a good does not export it directly, the value shall be adjusted to the point at which the buyer receives the good within the territory where the producer is located.
3. When origin is determined by the regional value content method, the percentage required shall be specified in Annex 3-A (Specific Rules of Origin).
4. All 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.
5. When the producer of the good acquires a non-originating material within the territory of the Party where it is located, the value of the non-originating material shall not include 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.
6. For purposes of calculating the regional value content, the value of non-originating materials used 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 purchased and used in the production of that good; or
(b) the producer of the goods in the production of an original material of his own manufacture.
7. When Annex 3-A (Specific Rules of Origin) specifies a regional value content test under the Net Cost formula, it shall be calculated based on the following formula:
"Net Cost Method"
VCR = [(CN - VMN) / CN] * 100 where:
RCA: is the regional value content expressed as a percentage;
NC: is the net cost of the good; and
VMN: is the value of non-originating materials acquired and used by the producer in the production of the good; the value of non-originating materials does not include the value of a self-produced material.
8. Each Party shall provide that for purposes of the method of calculating the regional value content pursuant to paragraphs 1 and 7, the exporter or producer may average the calculation in the fiscal year with respect to all motor vehicles in the category, or only motor vehicles in the category that are exported to the territory of one or more of the Parties, using any of the following categories:
(a) includes vehicles for the transport of passengers up to 16 persons, including the driver; and vehicles for the transport of goods of a total weight with a maximum load less than or equal to 3.2 tons (or 7,040 American pounds), as well as their chassis with cabins;
(b) includes vehicles with bodywork for the transport of more than 16 passengers, including the driver;
(c) includes other vehicles not included in categories (a) and (b).
Article 3.3. ACCUMULATION
1. Each Party shall provide that goods or materials originating in a Party, incorporated into a good in the territory of the other Party, shall be considered as originating in the territory of the other Party.
2. Each Party shall provide that a good is originating when the good is produced in the territory of one or both Parties by one or more producers, provided that the good meets the requirements of Article 3.1 and the other applicable requirements of this Chapter.
3. Where each Party has established a trade agreement with the same non-Party in accordance with the provisions of the WTO, for purposes of determining whether a good is originating under this Agreement, a material that is produced in the territory of such non-Party shall be considered to be produced in the territory of one or both Parties if it complies with the applicable rules of origin of this Agreement; and such other conditions as the Parties may establish, in accordance with the following paragraphs.
4. For the application of paragraph 3, each Party may agree equivalent or reciprocal conditions to those indicated in that paragraph with the non-Party, in order for materials from one or both Parties to be considered originating under the trade agreements established with a non-Party.
5. The Parties may establish such additional conditions as they deem necessary for the implementation of paragraph 3.
6. A Party shall apply paragraph 3 only when provisions with equivalent effect to those of that paragraph are in force between each Party and the non-Party.
7. The Free Trade Commission shall establish the goods, the participating countries and the conditions for the application of this Article.
8. The provisions of this Article shall only apply to the goods and materials incorporated in the Tariff Elimination Program.
9. Two years after the date of entry into force of this Agreement or such other date as the Parties may determine, the Parties shall enter into discussions for the implementation of paragraph 3.
Article 3.4. DE MINIMIS
1, A good shall be considered originating if:
(a) the value of all non-originating materials used in the production of this good, which do not meet the tariff classification change requirement set out in Annex 3-A (Specific Rules of Origin), does not exceed ten percent (10%) of the transaction value of the good determined in accordance with Article 3.2; and (b) the merchandise complies with the other applicable provisions of this Chapter.
2. In the case of goods classified in Chapters 50 to 63 of the Harmonized System (HS), the percentage referred to in paragraph 1 shall refer to the weight of the fibers and yarns with respect to the weight of the goods produced.
3. Paragraph 1 does not apply to a non-originating material that is used in the production of goods of Chapters 01 through 24 and heading 25.01 of the Harmonized System (HS), unless the non-originating material is classified in a subheading other than that of the good for which origin is being determined under this Article.
4. Notwithstanding paragraph 3, paragraph 1 shall not apply to products of Chapter 15 of the Harmonized System (HS) that are used in the production of a good classified in headings 15.01 to 15.08 and 15.11 to 15.15.
Article 3.5. INSUFFICIENT WORKING OR PROCESSING OPERATIONS
The following operations shall be considered as insufficient working or processing to confer originating status, whether or not the requirements of Article 3.1 are satisfied:
(a) conservation operations to ensure that the products remain in good condition during transport and storage;
(b) divisions and groupings of packages;
(c) washing, cleaning; removal of dust, rust, oil, paint or other coatings;
(d) ironing or pressing of textiles;
(e) simple painting and polishing operations;
(f) shelling, partial or total whitening, polishing, and glazing of cereals and rice;
(g) operations for coloring or adding flavorings to sugar or making sugar lumps; total or partial milling of sugar crystals;
(h) shelling, seed extraction and peeling of fruits, nuts and vegetables;
(i) sharpening, simple grinding or simple cutting;
(j) sieving, screening, selection, sorting, grading, grading, preparation (including formation of article sets);
(k) simple packaging in bottles, cans, jars, bags, pouches, cases, boxes, placing on cards or boards and other simple packaging operations;
(l) placement of trademarks, labels, logos and other similar distinctive signs on the products or their packaging;
(m) simple mixture of products, whether or not of different kinds; mixture of sugar with other material;
(n) simple assembly of parts of articles to form a complete article or the disassembly of products into parts;
(o) slaughter of animals; or
(p) combination of two or more of the operations indicated in subparagraphs (a) through (o).
Article 3.6. EXPENDABLE GOODS AND MATERIALS
1. Each Party shall provide that a fungible material or good is originating when the importer, exporter or producer has:
(a) physically segregated for each commodity or consumable; or (b) used any inventory management method, such as average, last-in-first-out (LIFO) or first-in-first-out (FIFO), recognized in the Generally Accepted Accounting Principles of the Party where the production takes place; or has been otherwise accepted by the Party where the production takes place. 2. Each Party shall provide that where an inventory management method is chosen, as set out in paragraph 1, for certain fungible goods or materials, it shall continue to be used for those goods or materials throughout the fiscal year of the person who chose the inventory management method.
Article 3.7. ACCESSORIES, SPARE PARTS AND TOOLS
Each Party shall provide that accessories, spare parts or tools delivered with the good and forming part of the usual accessories, spare parts or tools of the good shall be considered as an originating material in the production of the good, provided that:
(a) accessories, spare parts or tools are classified with the merchandise and are not invoiced separately; and
(b) the quantities and value of accessories, spare parts or tools are those customary for the goods.
Article 3.8. RETAIL CONTAINERS AND PACKAGING MATERIALS
1. Where the containers and packaging materials in which a good is presented for retail sale are classified in the Harmonized System (HS) with the good they contain, they shall be disregarded in determining whether all non-originating materials used in the production of the good comply with the corresponding change in tariff classification set out in Annex 3-A (Specific Rules of Origin).
2. When the good is subject to a Regional Value Content requirement, containers and packing materials shall be considered as originating or non-originating, as the case may be, in calculating the Regional Value Content of the good.
3. When the products qualify as wholly obtained, the packaging shall not be taken into account for the purpose of determining origin.
Article 3.9. PACKING MATERIALS AND SHIPPING CONTAINERS
Containers and packing materials in which a good is packed exclusively for transport shall not be taken into account in determining the origin of the good.
Article 3.10. INDIRECT MATERIALS USED IN PRODUCTION
Each Party shall provide that an indirect material shall be considered an originating material irrespective of the place of its production.
Article 3.11. TRANSIT AND TRANSSHIPMENT
An originating good that is exported from the territory of a Party shall maintain its originating status only if the good:
(a) does not undergo further processing or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation, other than unloading, reloading, or any other operation necessary to maintain it in good condition or to transport it to the territory of a Party; and
(b) remains under the control of the customs authority while outside the territory of the Parties.
Article 3.12. SETS OR ASSORTMENTS
1. Each Party shall provide that if goods are classified as a set as a result of the application of Harmonized System (HS) General Interpretative Rule 3, the set shall be considered originating only if:
(a) each commodity in the set is originating; and
(b) both the set and the goods comply with the other applicable requirements of this Chapter.
2. Notwithstanding paragraph 1, a set of goods is originating if the value of all non- originating goods in the set does not exceed 15 percent of the transaction value of the set.
Article 3.13. CONSULTATIONS AND MODIFICATIONS
1. The Parties shall cooperate in the administration of this Chapter and shall consult regularly to ensure that it is administered effectively, uniformly and consistently with the spirit and objectives of this Agreement.
2. A Party that considers that this Chapter requires modification to take into account changes in production processes or other matters may submit a proposal for modification, together with any studies and supporting reasons, to the other Party for its consideration. Such Party may include in its proposal any action to be taken by the Committee on Rules and Procedures of Origin, Trade Facilitation, Technical Cooperation and Mutual Assistance in Customs Matters.
Section B. CUSTOMS PROCEDURES
Article 3.14. CERTIFICATION OF ORIGIN
1. Each Party shall provide that an importer may apply for preferential tariff treatment based on a written or electronic Certificate of Origin issued by the competent authority of the exporting Party at the request of the exporter or producer. The unique format of the Certificate of Origin and instructions are set out in Annex 3-B (Certificate of Origin), which may be modified by agreement between the Parties.
2. Each Party shall provide that when the exporter is not the producer of the good, he shall complete or fill out and sign the certificate of origin on the basis of:
(a) its knowledge of whether the good qualifies as originating; or
(b) the certificate of origin completed and signed by the producer of the goods and voluntarily provided to the exporter.
3. The competent authority of the exporting Party shall ensure that the good to which a Certificate of Origin applies meets all the requirements set forth in this Chapter and Annex 3- A (Specific Rules of Origin).