1. 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.
2. Where a Party requests information from the other Party on individual cases of state trading enterprises, the manner of their operation and the effect of their operations on bilateral trade, the requested Party shall have regard to the need to ensure maximum transparency possible without prejudice to Article XVII:4(d) of GATT 1994 on confidential information.
Article 2.12. 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. To the extent possible, each Party should allow a reasonable interval between the publication of any such measures and their effective date.
Article 2.13. Establishment of Working Group
1. Pursuant to Article 2.16.3(c), the Parties hereby establish a working group under the auspices of the Committee on Trade in Goods, comprising relevant and competent officials of each Party, to conduct consultations on matters related to non-tariff measures.
2. The working group shall 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. The results of the consideration and recommendations of the working group shall be submitted to the Committee on Trade in Goods for consideration and/or action.
Article 2.14. Tariff Rate Quota (trq) Administration
1. A Party that has established TRQs as set out in Annex 2-A shall implement and administer these TRQs in accordance with Article XIII of GATT 1994 and, for greater certainty, its interpretative notes, the Import Licensing Agreement, and any other WTO Agreement.
2. A Party shall ensure that its TRQ administration measures and implementation are consistent, transparent and are not adopted or maintained to create discrimination against the other Party.
Article 2.15. Designation of Testing Laboratories
Taking into consideration the regulations and requirements of respective legal framework, the competent authorities are encouraged to have discussions on the mutual recognition of the testing results by designating testing laboratories in the other Party in the fields of foods and cosmetics.
Section F. : 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. The Committee shall meet at least once a year to consider matters arising under this Chapter, and may meet more frequently as the Parties may agree.
3. The Committee's functions shall include, inter alia: (a) promoting trade in goods between the Parties, including through consultations on accelerating reduction or 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) establishing working groups, if necessary, and monitoring the work of the working groups established under the auspices of the Committee; and
(d) exchanging information on matters related to subparagraphs (a) through (c) 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.
Chapter 3. Rules of Origin and Origin Implementation Procedures
Section A. Rules of Origin
Article 3.1. Definitions
For the purposes of this Chapter:
aquaculture means the farming of aquatic organisms, including fish, mollusks, crustaceans, other aquatic invertebrates and aquatic plants, from seedstock such as eggs, fry, fingerlings, and larvae, by intervention in the rearing or growth processes to enhance production, such as regular stocking, feeding, or protection from predators;
authorized body means any body designated under domestic laws and regulations of the exporting Party to issue a Certificate of Origin;
CIF means the value of the imported good inclusive of the cost of insurance and freight up to the port or place of entry in the country of importation. The valuation shall be made in accordance with the Customs Valuation Agreement;
FOB means the value of the good free on board, regardless of the mode of transportation, inclusive of the cost of transport to the port or site of final shipment abroad. The valuation shall be made in accordance with the Customs Valuation Agreement;
fungible materials means materials which are interchangeable for commercial purposes, whose properties are essentially identical, and between which it is impractical to differentiate by a mere visual examination;
Generally Accepted Accounting Principles means the recognized accounting standards or consensus or substantial authoritative support given in a Party with respect to the recording of revenues, expenses, costs, assets and liabilities, the disclosure of information and the preparation of financial statements. Those standards may encompass broad guidelines of general applications as well as detailed standards, practices and procedures;
good means any merchandise, product, article, or material;
Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, and Chapter Notes;
material means any ingredient, part, component, subassembly and/or good that were physically incorporated into another good or were subject to the production of another good;
neutral elements means a good used in the production, testing or inspection of another good but not physically incorporated into the good;
non-originating goods or non-originating materials means goods or materials that do not qualify as originating under this Chapter, and includes goods or materials of undetermined origin;
originating goods or originating materials means goods or materials which qualify as originating in accordance with the provisions of this Chapter;
packing materials and containers for shipment means goods used to protect a good during its transportation other than containers or packaging materials used for retail sale;
producer means a person who engages in the production of a good in the territory of a Party;
production means any kind of working or processing, including growing, raising, mining, harvesting, fishing, aquaculture, farming, trapping, hunting, capturing, gathering, collecting, breeding, extracting, manufacturing, or assembling a good.
Article 3.2. Originating Goods
Except as otherwise provided in this Chapter, a good shall be considered as originating in a Party where:
(a) the good is wholly obtained or produced entirely in a Party as specified in Article 3.4;
(b) the good is produced entirely in a Party, exclusively from originating materials; or
(c) the good is produced entirely in a Party using non-originating materials and conforms to Annex 3-A;
and the good meets the other applicable provisions of this Chapter.
Article 3.3. Treatment of Certain Goods
1. Notwithstanding the provisions of Article 3.2, goods listed in Annex 3-B which have undergone working or processing on materials exported from a Party, and subsequently re-imported to that Party for export to the other Party, in an area outside the territories of the Parties5 (hereinafter referred to as "Outward Processing Zone"), shall be considered as originating, provided that:
(a) total value of non-originating materials shall not exceed 40 percent of the FOB price of the final goods for which originating status is claimed; and
(b) the value of originating materials exported from the Party concerned shall not be less than 60 percent of the total value of materials used in the processing of those goods.
2. The Parties shall establish a Committee on Outward Processing Zones under the auspices of the Joint Commission to perform the following functions:
(a) monitor the implementation of paragraph 1 of this Article;
(b) report to the Joint Commission on its activities and provide recommendations to the Joint Commission as necessary;
(c) review and designate the expansion of the existing Outward Processing Zone and the additional Outward Processing Zones (6); and
(d) discuss other matters specifically mandated by theJoint Commission.
3. For greater certainty, except as otherwise provided in this Article, the relevant Articles in this Chapter shall be applied mutatis mutandisto the goods to which paragraph 1 of this Article applies.
Article 3.4. Goods Wholly Obtained or Produced
For the purpose of subparagraph (a) of Article 3.2,the following goods shall be considered as wholly obtained or produced entirely in a Party:
(a) live animals born and raised in a Party;
(b) goods obtained from live animals referred to in subparagraph (a) above;
(c) plants and plant products grown, and harvested, picked or gathered in a Party;
(d) goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted within the land territory, the internal waters or within the territorial sea of the Party;
(e) minerals and other natural resources not included in subparagraphs(a) through(d) above, extracted or taken from the soil, waters, seabed or subsoil of the Party;
(f) goods taken from the waters, seabed or subsoil outside the territorial sea of a Party, provided that the Party has rights to exploit such waters, seabed or subsoil;
(g) 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;
(h) 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 (g) above;
(i) scrap and waste derived from manufacturing or processing operations in a Party, which are fit only for the recovery of raw materials or which are to be utilized as raw material for the production of another good; or used goods consumed and collected in a Party provided that such goods are fit only for the recovery of raw materials; and
(j) goods obtained or produced in a Party exclusively from goods referred to in subparagraphs (a) through (i) above.
Article 3.5. Regional Value Content
1. For the purposes of the Regional Value Content (hereinafter referred to as "RVC") requirement provided in Annex 3-A, the RVC shall be calculated as follows:
RVC = FOB – VNM / FOB × 100
Where:
RVC is the regional value content, expressed as a percentage; and
VNM is the value of the non-originating materials.
2. VNM shall be determined according to the following circumstances:
(a) in case of the imported non-originating materials, VNM shall be the CIF value of the materials at the time of importation; and
(b) in case of the non-originating materials obtained in a Party, VNM shall be the earliest ascertainable price paid or payable for the non-originating materials used in the production of the goods in that Party. The value of such non-originating materials shall not include freight, insurance, packing costs and any other costs incurred in transporting the material from the supplier's warehouse to the producer's location.
3. If a product which has acquired originating status in a Party is used as material in the manufacture of another product in that Party, no account shall be taken of the non-originating components of that material in the determination of the originating status of the latter product.
Article 3.6. Accumulation
Where originating goods or materials of a Party are incorporated into a good in the other Party, the goods or materials so incorporated shall be regarded to be originating in the other Party.
Article 37. Minimal Operations or Processes
1. The following operations or processes which contribute minimally to the essential characteristics of the goods, either by themselves or in combination, do not confer origin whether or not the goods satisfy the product specific rules of origin as specified in Annex 3-A:
(a) operations to ensure the preservation of goods in good condition during transport and storage;
(b) simple assembly of parts of articles to constitute a complete article or disassembly of products into parts;
(c) change of packaging, breaking-up and assembly of package;
(d) washing, cleaning; removal of dust, oxide, oil, paint or other coverings;
(e) ironing or pressing of textiles;
(f) simple painting and polishing operations;
(g) husking, partial or total bleaching, polishing, and glazing of cereals and rice;
(h) operations to color or flavor sugar or form sugar lumps; partial or total milling of crystal sugar;
(i) peeling, stoning and shelling of fruits, nuts and vegetables;
(j) sharpening, simple grinding or simple cutting;
(k) sifting, screening, sorting, classifying, grading or matching (including the making-up of sets of articles), slitting, bending, coiling or uncoiling;
(l) simple placing in bottles, cans, flasks, bags, cases or boxes, fixing on cards or boards and all other simple packaging operations;
(m) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;
(n) simple mixing of products, whether or not of different kinds; mixing of sugar with any material;
(o) testing or calibrations;
(p) mere dilution with water or another substance that does not materially alter the characteristics of the goods;
(q) drying, salting (or keeping in brine), refrigeration or freezing;
(r) slaughter of animals; or
(s) a combination of two or more operations specified in subparagraphs (a) through (r).
2. All operations carried out in a Party on a good shall be considered together when determining whether the working or processing undergone by that good is to be regarded as minimal operations or processes within the meaning of paragraph 1.
3. The Parties may agree on other operation as minimal operations or processes.
Article 3.8. De Minimis
A good that does not satisfy a change in tariff classification requirement provided in Annex 3-A shall nevertheless be an originating good if:
(a) (i) for a good, other than that provided for in Chapters 15 through 24 and Chapters 50 through 63 of the HS Code, 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 per cent of the FOB value of the good;
(ii) for a good provided for in Chapters 15 through 24 of the HS Code, 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 per cent 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
(iii) for a good provided for in Chapter 50 through 63 of the HS Code, 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 per cent of the total weight of the good, or 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 per cent of the FOB value of the good; and
(b) the good meets all other applicable criteria of this Chapter.
Article 3.9. Fungible Materials
1. In determining whether a material used in the production is originating, any fungible materials shall be distinguished by:
(a) physically separating each fungible material; or
(b) using any inventory management method recognized in the Generally Accepted Accounting Principles of a Party in which the production is performed.
2. The inventory management method selected under paragraph 1 for a particular fungible material shall continue to be used for that material throughout the fiscal year.
Article 3.10. Neutral Elements
In determining whether a good is originating, the origin of the following neutral elements shall be disregarded:
(a) fuel, energy, catalysts and solvents;
(b) equipment, devices and supplies used for testing or inspecting the goods;
(c) gloves, glasses, footwear, clothing, safety equipment and supplies;
(d) tools, dies and moulds;
(e) spare parts and materials used in the maintenance of equipment and buildings;
(f) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings; and
(g) any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be a part of that production.
Article 3.11. Sets
1. Sets, as defined in General Rule 3 for the Interpretation of the Harmonized System, shall be regarded as originating when all the components of the sets are originating.
2. 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 as determined in accordance with Article 3.5, does not exceed 15 percent of the FOB value of the set.
Article 3.12. Packing Materials and Containers
1. Packing materials and containers used for the transport of goods shall not be taken into account in determining the origin of the goods.
2. Packaging materials and containers in which a good is packaged for retail sale shall, if classified with the good, be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable change in tariff classification in the product specific rules of origin. However, if the good is subject to a regional value content requirement, the value of the packaging materials and containers used for retail sale shall be taken into account as originating materials or non-originating materials as the case may be when determining the origin of the good.
Article 3.13. Accessories, Spare Parts and Tools
1. Accessories, spare parts, or tools delivered and presented with the good at the time of importation shall be disregarded when determining the origin of the good, provided that:
(a) the accessories, spare parts, or tools are classified with and not invoiced separately from the good; and
(b) the quantities and values of the said accessories, spare parts or tools are customary for the good.
2. Where the goods are subject to a regional value content requirement, the value of the accessories, spare parts or tools described in paragraph 1 shall be taken into account as originating materials or non-originating materials, as the case may be, in calculating the regional value content of the goods.
Article 3.14. Direct Transport
1. The originating goods of the Parties claiming for preferential tariff treatment shall be directly transported between the Parties.
2. Goods whose transport involves transit through one or more Non-Parties, with or without trans-shipment or temporary storage in such Non-Parties, shall be considered directly transported between the Parties, provided that:
(a) the transit entry of goods is justified for geographical reason or by consideration related exclusively to transport requirements;
(b) the goods do not enter into trade or consumption in the non-Party; and
(c) the goods do not undergo any other operation in the non-Party other than unloading, splitting up of loads for transport reasons, and reloading, or any operation necessary to preserve it in good condition.
In the case where the goods are temporarily stored in a Non-Party as provided in this paragraph, the goods shall remain under control of the customs authorities in that Non-Party during its stay. The stay of the goods in that Non-Party shall not exceed three months from the date of their entry. In the case of force majeure, the stay of the goods in that Non-Party may exceed three months but shall not exceed six months from the date of their entry.
3. For the purpose of paragraph 2 of this Article, the following documents shall be submitted to the customs authority of the importing Party upon import declaration of the goods:
(a) in the case of transit or trans-shipment, transport documents such as the airway bill, the bill of lading, or the multimodal or combined transport documents covering the whole transporting route from the exporting Party to the importing Party; and
(b) in the case of storage or devanning of the containers, transport documents such as the airway bill, the bill of lading, or the multimodal or combined transport documents covering the whole transporting route from the exporting Party to the importing Party, and supporting documents provided by the customs authority of a Non-Party. The importing customs authority may designate other competent agencies in such Non-Party to issue such supporting documents and inform the exporting customs authority of such designation.
Section B. Origin Implementation Procedures
Article 3.15. Certificate of Origin
1. A Certificate of Origin as set out in Annex 3-C shall be issued by the authorized bodies of the exporting Party, on application by the exporter, producer, or under the exporter's responsibility, by his authorized representative, in accordance with the domestic legislation, subject to the condition that the goods concerned fulfill the requirements of this Chapter.
2. A Certificate of Origin shall: