(b) import licensing conditioned on the fulfillment of a performance requirement; or
(c) voluntary export restraints inconsistent with Article VI of GATT 1994, as implemented under Article 18 of the SCM Agreement and Article 8.1 of the AD Agreement.
3. Neither Party may, as a condition for engaging in importation or for the importation of a good, require a person of the other Party to establish or maintain a contractual or other relationship with a distributor in its territory.
4. For greater certainty, paragraph 3 does not prevent a Party from requiring a person referred to in that paragraph to designate an agent for the purposes of facilitating communications between its regulatory authorities and that person.
5. For the purposes of paragraph 3, distributor means a person of a Party who is responsible for the commercial distribution, agency, concession, or representation in the territory of that Party of goods of the other Party.
6. Paragraphs 1 and 2 shall not apply to the measures set out in Annex 2-A.
Article 2.10. IMPORT LICENSING
1. Neither Party may adopt or maintain a measure that is inconsistent with the Import Licensing Agreement.
2. (a) After the date of entry into force of this Agreement, each Party shall promptly notify the other Party of any existing import licensing procedures. The notification shall:
(i) include the information specified in Article 5 of the Import Licensing Agreement; and
(ii) be without prejudice as to whether the import licensing procedure is consistent with this Agreement.
(b) Before applying any new or modified import licensing procedure, a Party shall publish the new procedure or modification on an official government Internet site. To the extent possible, the Party shall do so at least 30 days before the new procedure or modification takes effect.
3. Neither Party may apply an import licensing procedure to a good of the other Party unlessit has complied with the requirements of paragraph 2 with respect to that procedure.
Article 2.11. ADMINISTRATIVE FEES AND FORMALITIES
1. Each Party shall ensure that all fees and charges imposed in connection with importation and exportation shall be consistent with their obligations under Article VIII:1 of GATT 1994 and its interpretive notes, which are hereby incorporated into and made part of this Agreement, mutatis mutandis.
2. Neither Party may require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party.
3. Each Party shall make available and maintain through the internet an updated list of the fees and charges it imposes in connection with importation or exportation.
Article 2.12. EXPORT DUTIES, TAXES, OR OTHER CHARGES
Except as otherwise provided in this Agreement, 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, unless the duty, tax, or charge is also adopted or maintained on the good when destined for domestic consumption. This paragraph shall not apply to the measures set out in Annex 2-C.
Article 2.13. STATE TRADING ENTERPRISES
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 made part of this Agreement, mutatis mutandis.
Article 2.14. TRADE RELATED NON-TARIFF MEASURES
1. Each Party shall ensure the transparency of its non-tariff measures affecting trade between the Parties and that any such measures are not prepared, adopted or applied with the view to or with the effect of creating unnecessary obstacles to trade between the Parties.
2. The Committee on Trade in Goods shall review the non-tariff measure referred to in paragraph 1(1), consider approaches that may better facilitate trade between the Parties and present to the Parties the results of its consideration, including any recommendation, preferably within 12 months. If necessary, the results of the consideration and recommendations of the Committee on Trade in Goods shall be submitted to the Joint Committee for consideration and/or action during their next meeting.
Article 2.15. TARIFF RATE QUOTA (TRQ) ADMINISTRATION
1. Each Party shall implement and administer tariff-rate quotas (hereinafter referred to as the “TRQs”) set out in Appendix 2-B-1 of its Schedule to Annex 2-B in accordance with Article XIII of GATT 1994, including its interpretive notes, and the Import Licensing Agreement.
2. Each Party shall ensure that:
(a) its procedures for administering its TRQs are transparent, made available to the public, timely, non-discriminatory, responsive to market conditions, minimally burdensome to trade, and reflect end-user preferences; and
(b) any person of a Party that fulfills the importing Party’s legal and administrative requirements shall be eligible to apply and to be considered for a TRQ allocation by the Party.
3. Each Party shall make every effort to administer its TRQs in a manner that allows importers to fully utilise the TRQs quantities.
4. On the written request of either Party, the Parties shall consult regarding a Party’s administration of its TRQs.
Section E. Institutional Provisions
Article 2.16. COMMITTEE ON TRADE IN GOODS
1. The Parties hereby establish a Committee on Trade in Goods (hereinafter referred to as the “Committee”), comprising representatives of each Party.
2. Unless the Parties otherwise agree, the Committee shall meet at least once a year or upon request of a Party or the Joint Committee to consider matters arising under this Chapter and Chapter 7 (Trade Remedies). Meetings may be conducted in person or by any technological means available to the Parties.
3. The Committee’s functions shall include:
(a) monitoring the correct application and administration of this Chapter and Chapter 7 (Trade Remedies);
(b) promoting trade in goods between the Parties, including through consultations on accelerating elimination of customs duties under this Agreement and other issues as appropriate;
(c) 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 Committee for its consideration;
(d) providing a forum for discussion or the exchange of information on matters related to this Chapter and Chapter 7 (Trade Remedies), which may, directly or indirectly affect trade between the Parties with a view to minimizing their negative effects on trade and seeking mutually acceptable alternatives;
(e) making recommendations to the Joint Committee with regards to matters of its competence; and
(f) carrying out other functions as may be assigned by the Joint Committee or agreed by the Parties.
Section F. Definitions
Article 2.17. DEFINITIONS
For the 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;
consumed means:
(a) actually consumed; or
(b) further processed or manufactured so as to result in a substantial change in the value, form or use of the good or in the production of another good;
duty-free means free of customs duty;
goods intended for display or demonstration includes their component parts, ancillary apparatus and accessories;
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;
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 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 shall be treated as originating in a Party where the good is:
(a) wholly obtained or produced entirely in the territory of a Party;
(b) produced entirely in the territory of a Party, exclusively from originating materials under this Chapter; or
(c) produced entirely in the territory of a Party using non-originating materials, satisfying the requirements under Annex 3-A, and the good shall satisfy all the other applicable requirements of this Chapter.
Article 3.2. WHOLLY OBTAINED OR PRODUCED GOODS
For the purposes of Article 3.1(a), the following goods are wholly obtained or produced entirely in the territory of a Party:
(a) live animals born and raised in the territory of a Party;
(b) goods obtained from live animals referred to in subparagraph (a) in the territory of a Party;
(c) goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted within the land territory, the internal waters or within the territorial sea of a Party;
(d) goods of sea-fishing and other marine products taken from the waters, seabed or subsoil outside the territorial sea of a Party by vessels registered or recorded with a Party and flying the flag of that Party;
(e) goods produced or processed on board factory ships registered or recorded with a Party and flying the flag of that Party, exclusively from goods referred to in subparagraph (d);
(f) plants and plant products grown and harvested, picked, or gathered in the territory of a Party;
(g) mineral goods and other naturally occurring substances extracted from the soil, waters, seabed, or beneath the seabed of a Party;
(h) goods taken or extracted by a Party or a person of a Party from the seabed or beneath the seabed outside the territorial sea of a Party, provided that the Party has rights to exploit such waters, seabed or subsoil;
(i) waste and scrap derived from:
(i) manufacturing operations conducted in the territory of a Party; or
(ii) used goods collected in the territory of a Party, provided that such waste and scrap is fit only for the recovery of raw materials; and
(j) goods produced exclusively from goods specified in subparagraphs (a) through (i)
Article 3.3. REGIONAL VALUE CONTENT (RVC)
1. The regional value content of a good shall be calculated on the basis of one of the following methods:
(a) Method Based on Value of Non-Originating Materials (Build-down Method)
FOB – VNM
RVC = ------------------- x 100
FOB
(b) Method Based on Value of Originating Materials (Build-up Method)
VOM
RVC = ----------- x 100
FOB
where:
RVC is the regional value content, expressed as a percentage;
FOB is the free on board value of the good;
VNM is the value of the non-originating materials; and
VOM is the value of the originating materials.
2. The value of the non-originating materials shall be:
(a) in the case of a material imported directly by the producer of a good, the CIF value at the time of importation of the material;
(b) in the case of a material acquired by the producer in the territory where the good is produced, the transaction value, without considering the costs of freight, insurance, packing, and the other costs incurred in the transportation of the material from the warehouse of the supplier to the place where the producer is; or
(c) in the case of a self-produced material or where the relationship between the producer of the good and the seller of the material influences the price actually paid or payable for the material, the sum of all costs incurred in the production of the material, including general expenses. Additionally, it will be possible to add an amount for profit equivalent to the profit added in the normal course of trade.
3. The values referred to in this Article shall be determined in accordance with the Customs Valuation Agreement.
Article 3.4. INTERMEDIATE MATERIALS
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 purposes of determining the originating status of the subsequently produced good.
Article 3.5. NON-QUALIFYING OPERATIONS
1. The following operations shall be considered to be non-qualifying operations to confer the status of originating goods, whether or not the requirements under this Chapter are satisfied:
(a) operations to ensure the preservation of goods in good condition during transport and storage;
(b) changes of packing or breaking-up or assembly of packages;
(c) washing, cleaning, removal of dust, oxide, oil, paint, or other coverings;
(d) ironing or pressing of textiles;
(e) simple painting and polishing operations;
(f) husking, partial or total bleaching, polishing, and glazing of cereals and rice;
(g) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards, and all other simple packing operations;
(h) simple mixing of products, whether or not of different kinds;
(i) simple assembly of parts of articles to constitute a complete article or disassembly of products into parts;
(j) slaughter of animals;
(k) drying, salting (or keeping in brine), refrigeration or freezing;
(l) affixing marks, labels, logos, and other like distinguishing signs on the good or its packaging;
(m) peeling, stoning, and shelling of fruits, nuts, and vegetables;
(n) sharpening, simple grinding, or simple cutting;
(o) sifting, screening, sorting, classifying, grading; or
(p) a combination of two or more operations specified in subparagraphs (a) through (o).
2. The provisions of this Article shall not apply to originating goods produced with originating materials of the Parties.
3. For the purposes of this Article:
(a) simple means activities which need neither special skills nor machines, apparatus or equipment especially produced or installed for carrying out the activity; and
(b) simple mixing means activities which need neither special skills nor machines, apparatus, or equipment especially produced or installed for carrying out the activity but does not include chemical reaction.
Article 3.6. ACCUMULATION.
1. Originating goods or materials from the territory of Costa Rica, El Salvador, Honduras, Nicaragua, Panama or Korea, which are used in the territory of Costa Rica, El Salvador, Honduras, Nicaragua, Panama or Korea as a material for a finished good, shall be considered to be originating from the territory of the latter where the working or processing of the finished good has taken place. (1) (2)
2. Korea and at least one of the Republics of Central America may consider the possibility of developing protocols of Rules of Origin for the purposes of accumulating origin with third countries (3) with which both Parties have trade agreements.
Article 3.7. DE MINIMIS
A good that does not satisfy a change in tariff classification requirement pursuant to Annex 3-A will nonetheless be considered to be originating if:
(a) for a good, other than that provided for in Chapters 01 through 24 and Chapter 50 through 63 of the HS, the value of all non-originating materials used in the production of the good that did not undergo the required change in tariff classification does not exceed 10 percent of the FOB value of the good;
(b) for a good provided for in Chapters 15 through 24 of the HS, the value of all non-originating materials used in the production of the good that did not undergo the required change in tariff classification does not exceed 10 percent of the FOB value of the good, provided that the non-originating material is provided for in a different subheading from that of the good for which the origin is being determined under this subparagraph; or
(c) for a good provided for in Chapters 50 through 63 of the HS, the weight of all non-originating materials used in its production that did not undergo the required change in tariff classification does not exceed 10 percent of the total weight of the good.
Article 3.8. FUNGIBLE GOODS OR MATERIALS
1. In determining whether a good or material is originating for the purposes of granting preferential tariff treatment, any fungible goods or materials shall be distinguished by:
(a) physically separating each fungible good or material; or
(b) using any inventory management method, such as averaging, last-in-firstout (LIFO) or first-in-first-out (FIFO), recognized in the generally accepted accounting principles of a 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 or material shall continue to be used for that good or material throughout the fiscal year of the person that selected the inventory management method
Article 3.9. SETS
A set, as defined in General Rule 3 of the HS, shall be regarded as originating when all the components of the set are originating. Nevertheless, when a set is composed of originating and non-originating goods, the set as a whole shall be regarded as originating, provided that the value of the non-originating goods does not exceed 15 percent of the total value of the set, determined in accordance with Article 3.3.
Article 3.10. 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: