Article 3.9. Compensation
A Party applying a bilateral safeguard measure shall, in consultation with the other Party, provide mutually agreed trade liberalising compensation in the form of concessions that have substantially equivalent trade effects or are equivalent to the value of the additional duties expected to result from the bilateral safeguard measure. The Party shall provide an opportunity for such consultations no later than 30 days after the application or the extension of the bilateral safeguard measure.
If the consultations under paragraph 1 do not result in the Parties agreeing on trade liberalising compensation within 30 days, the Party whose goods are subject to the bilateral safeguard measure may suspend the application of substantially equivalent concessions to the trade of the Party applying the bilateral safeguard measure. This action shall be applied only for the minimum period necessary to achieve the substantially equivalent effects.
The right to take action referred to in paragraph 2 shall not be exercised for the first two years that the measure is in effect, which includes the period of time that any provisional bilateral safeguard measure has been in effect.
Article 3.10. Agricultural Safeguards
Originating agricultural goods from a Party shall not be subject to any duties applied by a Party pursuant to a special safeguard taken under the Agreement on Agriculture.
Article 3.11. Dispute Settlement
Neither Party shall have recourse to dispute settlement under Chapter 13 (Dispute Settlement) for any matter arising under Section A or B.
Chapter 4. RULES OF ORIGIN
Article 4.1. Definitions and Interpretation
For the Purposes of this Chapter:
(a) aquaculture including mariculture, means the farming of aquatic organisms including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants from seed stock, including seed stock imported from non-parties, such as eggs, fry, fingerlings, or larvae, by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding, or protection from predators;
(b) CIF value or Cost, Insurance and Freight value means the price actually paid or payable to the exporter for a good when the good is loaded out of the carrier, at the port of importation, including the cost of the good, insurance, and freight necessary to deliver the good to the named port of destination;
(c) competent authority means for India, the Department of Commerce;
(d) customs administration means:
(i) for Australia, the Department of Home Affairs and its successors;
(ii) for India, the Central Board of Indirect Taxes and Customs (CBIC);
(e) FOB value or Free-On-Board value means the price actually paid or payable to the exporter for a good when the good is loaded onto the carrier at the named port of exportation, including the cost of the good and all costs necessary to bring the good onto the carrier;
(f) fungible goods or materials means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical;
(g) Generally Accepted Accounting Principles means those principles recognised by consensus or with substantial authoritative support in the territory 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. These principles may encompass broad guidelines for general application, as well as detailed standards, practices and procedures;
(h) indirect materials means a material used in the production, testing or inspection of a good but not physically incorporated into the good; or a material used in the maintenance of buildings or the operation of equipment, associated with the production of a good, including:
(i) fuel, energy, catalysts and solvents;
(ii) equipment, devices and supplies used to test or inspect the good;
(iii) gloves, glasses, footwear, clothing, safety equipment and supplies;
(iv) tools, dies and moulds;
(v) spare parts and materials used in the maintenance of equipment and buildings;
(vi) lubricants, greases, compounding materials and _ other materials used in production or used to operate equipment and buildings; and
(vii), any other material that is not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production;
(i) issuing body or authority (as appropriate) means the body or authority designated by each Party for issuance of Certificates of Origin, as notified from time to time;
(j) material means a good that is consumed in the production, physically incorporated or used in the production of another good;
(k) non-originating good or non-originating material means a good or material that does not qualify as originating in accordance with this Chapter, which includes a good or material of undetermined origin;
(l) originating good or originating material means a good or material that qualifies as originating in accordance with this Chapter;
(m) packing materials and containers for transportation and shipment means goods used to protect another good during its transportation, but does not include the packaging materials or containers in which a good is packaged for retail sale;
(n) producer means a person who engages in the production of a good;
(o) production means operations including growing, cultivating, raising, mining, harvesting, fishing, trapping, hunting, capturing, collecting, breeding, extracting, aquaculture, gathering, manufacturing, processing or assembling a good;
(p) preferential tariff treatment means the customs duty rate applicable to an originating good, pursuant to each Partyâs Schedule in Annex 2A (Tariff Commitments);
(q) QVC is the qualifying value content of a good, expressed as a percentage;
(r) value of non-originating materials is the value of non-originating materials, including materials of undetermined origin, used in the production of the good; and
(s) value of originating materials is the value of originating materials used in the production of the good in the territory of one or both Parties.
2. For the purposes of this Chapter:
(a) the basis for tariff classification is the Harmonized System; and
(b) any cost and value 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 4.2. Originating Goods
Except as otherwise provided in this Chapter, a good shall be regarded as originating if it is:
(a) wholly obtained or produced in the territory of one or both of the Parties, as provided for in Article 4.4 (Wholly Obtained or Produced Goods); or
(b) produced entirely in the territory of one or both of the Parties, using non-originating materials, provided the good satisfies all applicable requirements of Article 4.3 (Goods not Wholly Produced or Obtained) or Annex 4B (Product Specific Rules of Origin).
Article 4.3. Goods Not Wholly Produced or Obtained
1. For goods that do not have originating status under subparagraph (a) of Article 4.2 (Originating Goods) and are not covered under Annex 4B (Product Specific Rules of Origin), a good shall be considered originating if all non-originating materials have undergone at least a change in tariff sub-heading (CTSH) level of the Harmonized System, and the QVC of the good is not less than 35 per cent of the FOB value as per build-up formula or 45 per cent of the FOB value calculated as per build-down formula under Article 4.6 (Calculation of Qualifying Value Content), provided that the final production process of the manufacture of the good is performed within the territory of the exporting Party.
2. Upon the entry into force of this Agreement, the Parties shall enter into negotiations, on a without prejudice basis, on the following:
(a) a Product Specific Rules Schedule that shall contain product specific rules for all tariff lines in the Harmonized System; and
(b) appropriate amendments to this Chapter relevant to that Schedule including:
(i) a provision that would confer origin on goods produced entirely in the territory of one or both of the Parties, exclusively from originating materials; and
(ii) a provision that would regard a good or material as originating if it is produced in the territory of one or both of the Parties by one or more producers, provided that it satisfies the requirements of Article 4.2 (Originating Goods) and all other applicable requirements in this Chapter.
Upon the conclusion of the negotiations referred to paragraph 2, the Parties agree to incorporate the negotiated Product Specific Rules Schedule in Annex 4B (Product Specific Rules of Origin) and make any appropriate amendments to this Chapter, in accordance with Article 14.3 (Amendments - Final Provisions).
Article 4.4. Wholly Obtained or Produced Goods
For the purposes of subparagraph (a) of Article 4.2 (Originating Goods), the following goods shall be considered to be wholly obtained or produced in the territory of one or both of the Parties if they are:
(a) plant and plant goods, including fruit, flowers, vegetables, trees, seaweed, fungi, algae and live plants grown and harvested, picked, or gathered there;
(b) live animals born and raised there;
(c) goods obtained from live animals born and raised there;
(d) goods obtained by hunting, trapping, fishing, aquaculture, gathering, or capturing there;
(e) minerals and other naturally occurring substances, not included in subparagraphs (a) to (d), extracted or taken from the soil or waters, seabed or subsoil beneath the seabed there;
(f) fish, shellfish, and other marine life extracted or taken from the sea, seabed or subsoil beyond the outer limits of the territories of each Party and, in accordance with international law, outside the territorial sea of non-parties by vessels that are registered, listed or recorded with a Party and entitled to fly the flag of that Party;
(g) goods produced on board a factory ship registered, listed or recorded with a Party and entitled to fly the flag of that Party from the goods referred to in subparagraphs (f);
(h) goods other than fish, shellfish and other marine life extracted or taken from the sea-bed or subsoil beneath the sea-bed outside the territorial sea of a Party, provided that the Party has rights to exploit such sea- bed or subsoil beneath the sea-bed in accordance with relevant international law;
(i) waste and scrap derived from production or consumption there, provided that such goods are fit only for the recovery of raw materials, or for recycling purposes; and
(j) goods produced in the territory of one or both Parties solely from products referred to in subparagraphs (a) to (i) or from their derivatives at any stage of production.
Article 4.5. Accumulation
Goods and materials originating exclusively in the territory of a Party under the terms of this Agreement, and incorporated in the production of a good in the territory of the other Party shall be considered to originate in the territory of the other Party.
Article 4.6. Calculation of Qualifying Value Content
1. Where a qualifying value content requirement is specified in this Chapter, including related Annexes, to determine whether a good is originating, the qualifying value content shall be calculated using one of the following methods:
(a) Build-Down Formula based on the value of non-originating materials
[QVC = FOB Value - Value of Non Originating materials/FOB Value x 100]
(b) Build-up Formula: based on the value of originating materials
[QVC = Value of Originating materials / FOB Value x 100]
2. All values for the purposes of calculating qualifying value content shall be determined in accordance with the Customs Valuation Agreement.
3. All costs shall be recorded and maintained in conformity with the Generally Accepted Accounting Principles applicable in the territory of a Party where the good is produced.
4. If a non-originating material is used in the production of a good, the following may be added to the value of originating materials in determining whether the good meets the QVC requirement:
(a) the value of production of the non-originating materials undertaken in the territory of one or both Parties; and
(b) the value of originating materials used in the production of the non- originating material in the territory of one or both Parties by one or more producers.
5. The value of the materials used in production shall be:
(a) for imported materials, the CIF value;
(b) for materials obtained within the territory of a Party:
(i) the price paid or payable by the producer in the Party where the producer is located;
(ii) the value as determined for an imported material in subparagraph (a); or
(iii) the earliest ascertainable price paid or payable in the territory of the Party; and
(c) for materials that are self-produced, all the costs incurred in the production of the material, which includes general expenses.
6. For originating materials, the following expenses may be added to the value of the material, if not included under paragraph 5:
(a) the costs of freight, insurance, packing, and other transport-related costs incurred in transporting the good to the location of the producer of the good;
(b) duties, taxes, and customs brokerage fees on the material, paid in the territory of a Party, other than duties that are waived, refunded, refundable, or otherwise recoverable, which includes 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 reusable scrap or by- product.
7. For non-originating materials or materials of undetermined origin, the following expenses may be deducted from the value of the material:
(a) the costs of freight, insurance, packing, and other transport-related costs incurred in transporting the good to the location of the producer of the good;
(b) duties, taxes, and customs brokerage fees on the material, paid in the territory of a Party, other than duties that are waived, refunded, refundable, or otherwise recoverable, which includes 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 reusable scrap or by- product.
8. Where the expenses listed in paragraphs 5 through 7 are unknown or evidence is not available, then no adjustment is allowed for those costs.
Article 4.7. Minimal Operations
1. Notwithstanding any provisions of this Chapter, the following operations when undertaken on non-originating materials to produce a good shall be considered as insufficient working or processing to confer on that good the status of an originating good:
(a) preserving operations to ensure that the good remains in good condition for the purposes of transport or storage;
(b) packaging or presenting goods for transportation or sale;
(c) simple (1) processes, consisting of sifting, screening, sorting, classifying, sharpening, cutting, slitting, grinding, bending, coiling, or uncoiling;
(d) for textiles: attaching accessory articles such as straps, beads, cords, rings and eyelets; ironing or pressing of textiles;
(e) affixing or printing of marks, labels, logos, or other like distinguishing signs on goods or their packaging;
(f) mere dilution with water or another substance that does not materially alter the characteristics of the good;
(g) disassembly of products into parts;
(h) slaughtering (2) of animals;
(i) simple painting and polishing operations;
(j) simple peeling, stoning, or shelling;
(k) simple mixing (3) of goods, whether or not of different kinds; or
(I) any combination of two or more operations referred to in subparagraphs (a) through (k).
2. All operations carried out in a Party on a given good shall be considered together when determining whether the working or processing undergone by that good is to be regarded as insufficient within the meaning of paragraph 1.
Article 4.8. De Minimis
1. A good, except for those falling within Chapters 50 through 63 of the Harmonized System, that does not satisfy a change in tariff classification pursuant to Annex 4B (Product Specific Rules of Origin) shall nonetheless be an originating good if the value of non-originating materials used in the production of the good does not exceed 10 per cent of the FOB value of the good as defined under Article 4.1 (Definitions and Interpretation) and the good meets all of the other applicable requirements in this Chapter.
2. A good classified in Chapters 50 through 63 of the Harmonized System that does not qualify as originating good because certain non-originating materials used in the production of the good do not fulfil the requirements set out in Annex 4B (Product Specific Rules of Origin), shall nonetheless be an originating good if the total weight of all such material does not exceed 10 per cent of the total weight of that good.
3. If a good described in paragraph 1 or 2 is also subject to a qualifying value content requirement, the value of those non-originating materials shall be included in the value of non-originating materials for the applicable qualifying value content requirement.
Article 4.9. Treatment of Packaging Materials and Containers for Retail Sale
1. Packaging materials and containers in which a good is packaged for retail sale, if classified with the good, shall be disregarded in determining whether the non-originating materials used in the production of the good have satisfied the applicable process or change in tariff classification requirement set out in Annex 4B (Product Specific Rules of Origin), or whether the good is wholly obtained or produced.
2. If the good referred to in paragraph 1 is subject to the qualifying value content requirement, the value of such packaging materials and containers shall be taken into account as value of the originating or non-originating materials, as the case may be, in calculating the qualifying value content of the good.
Article 4.10. Treatment of Packing Materials and Containers for Transportation and Shipment
Packing materials and containers for transportation and shipment of a good shall not be taken into account in determining whether the good is originating.
Article 4.11. Accessories, Spare Parts and Tools
1. The origin of the accessories, spare parts or tools presented with a good:
(a) shall be disregarded if the good is subject to a change in tariff classification requirement or production process requirements for origin specified in Annex 4B (Product Specific Rules of Origin), and
(b) shall be taken into account as originating or non-originating materials, as the case may be, in calculating the qualifying value content of the good, if the good is subject to a qualifying value content requirement.
2. Paragraph 1 of this Article shall only apply where:
(a) the accessories, spare parts, tools and instructional or other information materials presented with the good are not invoiced separately from the originating good; and
(b) the quantities and value of the accessories, spare parts, tools and instructional or other information materials presented with the good are customary for that good.
Article 4.12. Indirect Materials
An indirect material shall be considered to be originating without regard to where it is produced.
Article 4.13. Fungible Goods
1. Fungible goods or materials shall be treated as originating based on the:
(a) physical separation of the good or material; or
(b) use of any inventory management method recognised in the Generally Accepted Accounting Principles of the Party where the production is performed, if originating and non-originating fungible goods or materials are comingled, provided that the inventory management method selected is used throughout the fiscal year of the person that selected the inventory management method.
2. An inventory management system under subparagraph 1 (a) must ensure that no more goods or materials receive originating status than would have been the case if the fungible goods or materials had been physically segregated.
Article 4.14. Consignment
1. A good shall retain its originating status as determined under Article 4.2 (Originating Goods) if either of the following conditions have been met:
(a) the good has been transported directly from the exporting Party to the importing Party; or
(b) the good has been transported through one or more non-Parties provided that the good has not undergone any subsequent production or other operation outside the territories of the Parties other than unloading, reloading, storing, repacking, relabelling in accordance with the laws and regulations of the importing Party, splitting up of loads, consolidation of loads or any other operation necessary to preserve it in good condition or to transport the good to the territory of a Party and the good has remained under customs control in the non-Parties.
2. Compliance with subparagraph 1(b) shall be evidenced by presenting the customs administration of the importing Party either with customs documents of the non-Parties, or with any other appropriate documentation on request of the customs administration of the importing Party.
3. Appropriate documentation referred to in paragraph 2 may include commercial shipping or freight documents such as airway bills, bills of lading, multimodal or combined transport documents, a copy of the original commercial invoice in respect of the good, financial records, a non- manipulation certificate, or other relevant supporting documents as may be requested by the customs administration of the importing Party.
Article 4.15. Certificate of Origin
1. The Certificate of Origin shall be issued by an issuing body or authority, as appropriate, of an exporting Party, upon an application by an exporter, producer, or their authorised representative. It shall bear an authorised signature and official seal of the issuing body or authority, as appropriate. The signature and seal shall be applied manually or electronically. A Certificate of Origin shall:
(a) be in writing or electronic format;
(b) be in the English language;
(c) specify that the good is originating and meets the requirements of this Chapter;
(d) contain information, as set out in Annex 4A (Minimum Information Requirements) and presented in the same format as provided for in Annex 4A (Minimum Information Requirements);
(e) remain valid for 12 months from the date on which it is completed or issued;
(f) apply to single importation of one or multiple goods provided that each good qualifies as an originating good separately in its own right; and