4. No Party may require that, as a condition of an import commitment or for the importation of a good, a person of the other Party establish or maintain a contractual or other relationship with a distributor in its territory.
5. For the purposes of paragraph 4, distributor means a person of a Party who is responsible for commercial distribution, agency, dealership or representation in the territory of that Party, of goods of the other Party.
Article 2.9. Import and Export Licensing
1. No Party shall maintain or adopt a measure that is inconsistent with the WTO Agreement on Import Licensing Procedures (hereinafter referred to as the WTO Import Licensing Agreement). For this purpose, the WTO Agreement on Import Licensing and its interpretative notes are incorporated into this Agreement and form an integral part thereof, mutatis mutandis.
2. Upon entry into force of this Agreement, each Party shall notify the other Party of any existing import licensing procedures.
3. Each Party shall notify the other Party of any new import licensing procedures and any modifications to its existing import licensing procedures within sixty (60) days prior to their effectiveness. A notification provided under this Article:
(a) shall include the information set forth in Article 5 of the WTO Import Licensing Agreement; and
(b) shall not prejudge whether the import licensing procedure is compatible with this Agreement.
4. No Party may apply an import licensing procedure to a good of the other Party without having provided a notification in accordance with paragraph 2 or 3, as appropriate.
5. With the objective of seeking greater transparency in reciprocal trade, the Party that establishes procedures for the processing of export licenses shall notify the other Party in a timely manner.
Article 2.10. Administrative Burdens and Formalities
1. Each Party shall ensure, in accordance with Article VII of the GATT 1994 and its interpretative notes, that all fees and charges of any nature (other than customs duties, charges equivalent to an internal tax or other internal charges applied in accordance with Article II:2 of GATT 1994, and anti-dumping and countervailing duties), imposed on or in connection with importation or exportation, shall be limited to the approximate cost of services rendered and shall not represent an indirect protection to domestic goods or a tax on imports or exports for fiscal purposes. For this purpose, Article VIII of GATT 1994 and its interpretative notes are incorporated into this Agreement and form an integral part thereof, mutatis mutandis.
2. Neither Party shall require consular transactions, including related fees and charges, in connection with the importation of any goods of the other Party.
3. Each Party shall make available and maintain, through the Internet, an updated list of fees or charges imposed in connection with importation or exportation.
Article 2.11. Export Taxes
Neither Party shall adopt or maintain a tax, levy or other charge on the exportation of any good to the territory of the other Party.
Section E. Other Measures
Article 2.12. 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 form an integral part of this Agreement, mutatis mutandis.
Article 2.13. Customs Valuation
1. The WTO Customs Valuation Agreement and any successor agreement shall govern the customs valuation rules applied by the Parties in their trade with each other. To this end, the WTO Customs Valuation Agreement and any successor agreement are incorporated into and form an integral part of this Agreement, mutatis mutandis.
2. Each Party's customs legislation shall comply with Article VII of the GATT 1994 and the WTO Customs Valuation Agreement.
Section F. Agriculture
Article 2.14. Scope and Coverage
This Section applies to measures adopted or maintained by a Party relating to trade in agricultural goods.
Article 2.15. Agricultural Export Subsidies
1. The Parties share the objective of the multilateral elimination of export subsidies on agricultural goods and should work together towards an agreement in the WTO to eliminate such subsidies and prevent their reintroduction in any form.
2. Neither Party may adopt or maintain any export subsidy on any agricultural commodity destined for the territory of the other Party.
3. If a Party considers that the other Party has failed to comply with its obligations under this Agreement, to maintain, introduce or reintroduce an export subsidy, such Party may request consultations with the other Party in accordance with Chapter 18 (Dispute Settlement) with the objective of taking measures to counteract the effect of such export subsidies and to achieve a mutually satisfactory solution.
Section G. Institutional Arrangements Rule
Article 2.16. Committee on Trade In Goods
1. The Parties establish a Committee on Trade in Goods (hereinafter referred to as the Committee), composed of representatives of each Party.
2. The meetings of the Committee, and of any Ad-hoc working group, shall be chaired by representatives of the Ministry of Foreign Trade and Tourism of Peru and the Ministry of Commerce and Industries of Panama, or their respective successors.
3. The functions of the Committee shall include:
(a) monitor the implementation and administration of this Chapter;
(b) report to the Commission on the implementation and administration of this Chapter, as appropriate;
(c) promote trade in goods between the Parties, including through consultations on the acceleration of tariff elimination under this Agreement, and such other matters as may be appropriate;
(d) address obstacles to trade in goods between the Parties, especially those related to the application of non-tariff measures and, if appropriate, submit these matters to the Commission for its consideration;
(e) provide the Trade Capacity Building Committee with advice and recommendations on technical assistance needs in matters relating to this Chapter;
(f) review the conversion to the 2007 Harmonized System nomenclature and subsequent revisions to ensure that each Party's obligations under this Agreement are not altered, and consult to resolve any conflicts between:
(i) the Harmonized System of 2007 or later nomenclatures and Annex 2.3 (Tariff Elimination Program); and
(ii) Annex 2.3 (Tariff Elimination Program) and national nomenclatures;
(g) consult and use their best efforts to resolve any differences that may arise between the Parties on related matters with the classification of goods under the Harmonized System;
(h) establishing Ad-hoc working groups with specific mandates; and
(i) to deal with any other matter related to this Chapter.
4. Unless otherwise agreed by the Parties, the Committee shall meet at least once a year, on the date and according to the agenda previously agreed by the Parties. The Parties shall determine those cases in which extraordinary meetings may be held.
5. The meetings may be held by any means agreed upon by the Parties. When they are face-to-face, they shall be held alternately in the territory of each Party, and it shall be the responsibility of the host Party to organize the meeting.
6. All decisions of the Committee shall be made by mutual agreement.
7. The Parties establish the Ad-hoc Working Group on Trade in Agricultural Goods, which shall report to the Committee on Trade in Goods. For the purpose of discussing any matter related to market access for agricultural goods, this group shall meet at the request of a Party no later than thirty (30) days after the request is made.
Section H. Definitions
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;
duty-free means free of customs duties;
export license means an administrative procedure that requires the submission of an application or other documents (other than those generally required for customs clearance purposes) to the relevant administrative body as a condition precedent to export into the territory of the exporting Party;
import license means an administrative procedure that requires the submission of an application or other documents (other than those generally required for customs clearance purposes) to the relevant administrative body as a condition precedent to importation into the territory of the importing Party;
printed advertising materials means those goods classified in Chapter 49 of the Harmonized System including brochures, leaflets, printed matter, loose sheets, trade catalogs, yearbooks published by trade associations, tourist promotion materials and posters, used to promote, advertise or advertise a good or service, with the intention of advertising a good or service, and which are distributed free of charge;
goods temporarily admitted for sporting purposes means sporting equipment for use in sporting competitions, events or training in the territory of the Party into which they are admitted;
agricultural goods means those goods referred to in Article 2 of the WTO Agreement on Agriculture;
commercial samples of negligible value means commercial samples valued, individually or in the aggregate shipped, at not more than one United States dollar (US$ 1) or the equivalent amount in the currency of the other Party, or which are marked, torn, punctured or otherwise treated in a manner that disqualifies them for sale or for any use other than as samples;
goods intended for exhibition or demonstration include their components, auxiliary apparatus and accessories;
recycled goods means goods made entirely from goods that have reached the end of their useful life and have undergone a production process resulting in a new good;
advertising films and recordings means visual media or recorded audio materials consisting essentially of images and/or sound showing the nature or operation of goods or services 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; performance requirement means a requirement of:
(a) export a certain volume or percentage of goods or services;
(b) replace imported goods with goods or services of the Party granting the exemption from customs duties or import license;
(c) that a person benefiting from a customs duty exemption or import license purchases other goods or services in the territory of the Party granting the customs duty exemption or import license, or grants a preference to domestically produced goods;
(d) that a person benefiting from an exemption from customs duties or import license produces goods or services in the territory of the Party granting the exemption from customs duties or the import license, with a certain level or percentage of domestic content; or
(e) relate 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 the requirement that an imported good be:
(f) subsequently exported;
(g) used as material in the production of other merchandise that is subsequently exported;
(h) replaced by an identical or similar good used as a material in the production of another good that is subsequently exported; or,
(i) replaced by an identical or similar good that is subsequently exported;
export subsidies shall have the meaning assigned to that term in Article 1(e) of the WTO Agreement on Agriculture, including any modification of that Article; and
consular transactions means the requirements whereby goods of one Party destined for export to the territory of the other Party must first be presented 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, shipper's export declarations or any other customs documents required for or in connection with importation.
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 Is Originating When:
(a) is wholly obtained or wholly produced in the territory of a Party, as defined in Article 3.2;
(b) is produced in the territory of one or both Parties from non-originating materials that comply with the change in tariff classification, regional value content, or other specific rules of origin contained in Annex 3 (Specific Rules of Origin); or
(c) is produced in the territory of one or both Parties exclusively from originating materials, and comply with the other provisions of this Chapter.
Article 3.2. Wholly Obtained or Wholly Produced Goods
For purposes of Article 3.1(a), the following goods shall be considered to be wholly obtained or wholly produced in the territory of a Party:
(a) plants and plant products harvested or collected in the territory of a Party;
(b) live animals born and raised in the territory of a Party;
(c) goods obtained from live animals raised in the territory of a Party;
(d) goods obtained from hunting, trapping, fishing or aquaculture in the territory of a Party;
(e) fish, crustaceans and other marine species taken from the sea or seabed, outside the territory of a Party, by a vessel registered or recorded in a Party and flying its flag;
(f) goods produced on board factory ships registered or registered in a Party and flying its flag, exclusively from the goods referred to in subparagraph (e);
(g) minerals and other inanimate natural resources extracted from the soil, waters, seabed or subsoil in the territory of a Party;
(h) goods other than fish, crustaceans and other living marine species, obtained or extracted by a Party from marine waters, seabed or subsoil outside the territory of a Party, provided that Party has rights to exploit such marine waters, seabed or subsoil;
(i) wastes and residues 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 or scrap is used only for the recovery of raw materials; and
(j) goods produced in a Party exclusively from the materials referred to in subparagraphs (a) through (i).
Article 3.3. Regional Content Value
1. The regional value content (hereinafter RVC) of a good shall be calculated on the basis of the following method:
RCV = FOB - VMN / FOB x 100
where:
RCV: is the regional content value, expressed as a percentage;
FOB: is the free on board value of the goods, in accordance with the Article 3.35; and
VMN: is the value of non-originating materials.
2. The value of non-originating materials shall be:
(a) the CIF value at the time of importation of the material; or
(b) the first determinable price paid or payable for the non-originating materials, in the territory of the Party where the process was carried out, or transformation. When the producer of a good acquires non-originating materials within that Party, the value of such materials 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.
3. The values referred to above shall be determined in accordance with the WTO Customs Valuation Agreement.
Article 3.4. Minimum Operations or Processes
1. The operations or processes that, individually or in combination, do not confer origin to a good are the following:
(a) operations to ensure the preservation of goods in good condition during transportation and storage;
(b) grouping or splitting of packages; (c) packing, unpacking or repacking operations for retail sale; or
(d) slaughter of animals.
2. The provisions of this article shall prevail over the specific rules of origin contained in Annex 3 (Specific Rules of Origin).
Article 3.5. Intermediate Material
When an intermediate material is used in the production of a good, no account shall be taken of the non-originating materials contained in such intermediate material for purposes of determining the origin of the good.
Article 3.6. Accumulation
1. Goods or materials originating in the territory of a Party, incorporated in a good in the territory of the other Party, shall be considered originating in the territory of that other Party.
2. A good shall be considered originating when it is produced in the territory of one or both Parties by one or more producers, provided that the good meets the requirements set out in Article 3.1 and all other applicable requirements of this Chapter.
3. Materials from Costa Rica, El Salvador, Guatemala or Honduras, incorporated in a good produced in the territory of the exporting Party, shall be considered originating in such Party, provided that there is a trade agreement in force between Peru and such countries and they comply with the specific rules of origin established in this Agreement.
4. For goods classified in Chapters 50 through 63 of the Harmonized System, paragraph 3 shall apply only when the applied customs duty is zero percent (0%) for both the cumulated materials and the final good, in accordance with the tariff elimination program established in this Agreement, as well as in the tariff elimination programs established in the trade agreements of the countries mentioned in paragraph 3 with the importing Party of the final good with which the exporting Party cumulates origin.
5. Materials that are excluded from the tariff elimination program granted by the importing Party to the countries involved in the cumulation may not be subject to the provisions set forth in paragraph 3.
6. Where each Party has established a preferential trade agreement with the same country or group of non-Party countries, goods or materials of such country or group of non-Party countries incorporated in the territory of a Party may be considered as originating in the territory of that Party, provided that the rules of origin applicable to such good or material under this Agreement are complied with.
7. For the application of paragraph 6, each Party shall have agreed with the non Party or group of non-Parties on provisions equivalent to those indicated in that paragraph, as well as on such conditions as the Parties deem necessary for the purposes of its application.
Article 3.7. De Minimis
1. A good shall be considered originating if the value of all non-originating materials used in its production, which do not comply with the change in tariff classification pursuant to Annex 3 (Specific Rules of Origin), does not exceed ten percent (10%) of the FOB value of the good.
2. Where the good referred to in paragraph 1 is subject to a change in tariff classification and regional value content requirement, the value of all non-originating materials shall be included in the calculation of the regional value content of the good.
3. Notwithstanding paragraph 1, a good of the textile and apparel sector classified in Chapters 50 through 63 of the Harmonized System that is non-originating because certain fibers or yarns used in the production of the component of the good that determines its tariff classification do not undergo the change in tariff classification set out in Annex 3 (Specific Rules of Origin), shall be considered an originating good if the total weight of all such fibers or yarns in that component does not exceed ten percent (10%) of the total weight of such component.
4. In all cases, the merchandise shall comply with all other applicable requirements of this Chapter.
Article 3.8. Goods and Fungible Materials
1. For the purpose of determining whether a good is originating, any good or fungible material shall be distinguished by:
(a) a physical separation of the goods or materials; or
(b) a method of inventory management recognized in the Generally Accepted Accounting Principles of the exporting Party.
2. The inventory management method selected, in accordance with paragraph 1, for a particular commodity or expendable material will continue to be used for those commodities or materials during the taxable year of the person who selected the inventory management method.
Article 3.9. Accessories, Spare Parts and Tools
1. Accessories, spare parts or tools delivered with the good shall be treated as originating if the good is originating and shall be disregarded in determining whether all non-originating materials used in the production of the good undergo the corresponding change in tariff classification, provided that:
(a) the accessories, spare parts or tools are classified with the merchandise and have not been invoiced separately, regardless of whether each is identified separately on the invoice itself; and
(b) the quantities and value of such accessories, spare parts or tools are those customary for the goods.
2. If a good is subject to a regional value content requirement, the value of the accessories, spare parts or tools described in paragraph | shall be considered as originating or non-originating materials, as the case may be, when calculating the regional value content of the good.
Article 3.10. Sets or Assortments of Goods
1. If goods are classified as a set as a result of the application of Rule 3 of the General Rules of Interpretation of the Harmonized System, the set shall be considered as originating only if each good in the set is originating, and both the set and the goods comply with all other applicable requirements of this Chapter.
2. Notwithstanding paragraph 1, a set or assortment of goods is originating if the value of all the non-originating goods in the set or assortment does not exceed fifteen percent (15%) of the FOB value of the set or assortment.
Article 3.11. Retail Containers and Packaging Materials
1. Where retail containers and packaging materials are classified with the merchandise, the origin of such containers and packaging materials shall not be taken into account in determining the origin of the merchandise.
2. Where goods are subject to a regional value content requirement, the value of packaging materials and retail containers shall be taken into account in determining the origin of the goods, as the case may be.
Article 3.12. Containers and Packing Materials for Shipment
Containers and packing materials for shipment shall not be taken into account in determining the origin of the goods.