(iii) the production of the good in the form in which it is exported from its territory;
(b) an importer who claims preferential tariff treatment for a good imported into that Party's territory shall maintain a copy of the Certificate of Origin and other documentation relating to the importation for at least five years from the date of importation of the good; and
(c) the certifying authority of the exporting Party that has issued a Certificate of Origin shall maintain all documentation relating to the issuance of the Certificate for a minimum period of five years from the issuing date of the Certificate.
2. A Party may deny the preferential tariff treatment to an imported good subject to an origin verification, if the exporter, producer or importer of the good who should maintain records or documents in accordance with paragraph 1:
(a) does not have the records or documents for determining the origin of the good, in accordance with the provisions of this Chapter; or
(b) denies access to the records or documents.
Article 4.18. Confidentiality
1. Each Party shall maintain the confidentiality of confidential information collected pursuant to this Chapter and shall protect that information from disclosure, in accordance with its legislation.
2. The confidential information collected pursuant to this Chapter may only be disclosed to those authorities responsible for the administration and enforcement of determinations of origin, and for customs and revenue matters in accordance with each Partyâs legislation.
Article 4.19. Origin Verifications
1. The importing Party, through its competent authority, may request information about the origin of a good from the certifying authority of the exporting Party. The competent authority of the importing Party may also request its embassy in the territory of the other Party for assistance in those matters.
2. For purposes of determining whether a good imported into its territory from the territory of the other Party under preferential tariff treatment according to this agreement qualifies as originating, a Party may verify the origin of the good through its competent authority by means of:
(a) written questionnaires or requests for information sending directly to the exporter or producer in the territory of the other Party;
(b) verification visits to the premises of the exporter or producer in the territory of the other Party to review the records and documents referred to in Article 4.17, and to inspect the materials and facilities used in the production of the good in question; or
(c) other procedures as the Parties may agree to.
3. For the purposes of this Article, the questionnaires, requests, official letters, determinations of origin, notifications or any other written communications sent by the Competent Authority to the exporter, producer or importer, for origin verification, shall be considered valid, provided that they are done by the following means:
(a) certified mails with receipts of acknowledgement or other ways that confirm that the exporter, producer or importer has received the documents;
(b) official communications through the embassies of the Parties whenever the competent authority requires; or
(c) any other way as the Parties may agree to.
4. In a written questionnaire or request for information referred to in paragraph 2 a) it shall:
(a) indicate the time period, which shall be no less than 30 days from the date of receipt, that the exporter or producer has to duly complete and return the questionnaire or provide the information requested; and
(b) include the notification of intention to deny the preferential tariff treatment, in case the exporter or producer does not duly complete and return the questionnaire or provide the information requested within such time period.
5. The exporter or producer who receives a questionnaire or request for information according to paragraph 2 a) shall duly complete and return the questionnaire or respond to the request for information within the time period established in paragraph 4 a) from the date of receipt. During that time period, the exporter or producer may make a written request of extension to the competent authority of the importing Party for an extension of no more than 30 days. Such request shall not have the consequence of denial of the preferential tariff treatment.
6. Each Party shall provide that, even though the answered questionnaire or information requested referred to in paragraph 5 has been received within the specified period of time provided in paragraph 4 and 5, it may still ask through its competent authority for additional information from the exporter or producer, by means of a subsequent questionnaire or request of information. In such cases the exporter or producer shall answer the questionnaire or respond to the request within 30 days from the date of receipt.
7. In case the exporter or producer does not duly complete a questionnaire, or does not return the questionnaire or provide the information requested within the time period established in paragraphs 4 a), 5 and 6 above, the importing Party may deny the preferential tariff treatment to the goods subject to verification, by issuing a written determination of origin, including facts and the legal basis for that determination, to the importer, exporter or producer.
8. Prior to conducting a verification visit according to paragraph 2 b), the importing Party shall, through its competent authority, provide a written notification of its intention to conduct the visit. The notification shall be sent to the exporter or producer to be visited, to the certifying authority and the competent authority of the Party in whose territory the visit will be conducted, and, if necessary, to the Embassy of the other Party in the territory of the importing Party. The competent authority of the importing Party shall request the written consent from the exporter or producer to be visited.
9. The notification referred to in paragraph 8 shall include:
(a) the name of the competent authority that sends the notification;
(b) the name of the exporter or producer to be visited;
(c) the date and place of the proposed verification visit;
(d) the objective and scope of the verification visit, including the specific reference to the goods subject to verification;
(e) the names and positions of the officers conducting the verification visit; and
(f) the legal basis for carrying out the verification visit.
10. Any modification of the information referred to in the preceding paragraph shall also be notified according to paragraph 8.
11. If the exporter or producer has not given his written consent to a proposed verification visit within the 30 days of the written notification as provided in paragraph 8 and 9, the importing Party may deny the preferential tariff treatment to the good or goods by notifying in writing the importer, exporter or producer a determination, including facts and the legal basis for such denial.
12. Each Party shall provide that, when an exporter or producer receives a notification as provided in paragraph 8 and 9, that exporter or producer may, within 15 days of receipt of the notification, notify in writing the Competent Authority of the importing Party, its certifying authority and competent authority, to postpone only for once the proposed verification visit for a period no longer than 60 days from the date the notification was received, or for a longer period as the Parties may agree to.
13. The Parties shall not deny the preferential tariff treatment to a good solely because a verification visit is postponed according to paragraph 12.
14. Each Party shall permit an exporter or producer who is the subject of a verification visit to designate two observers to be present during the visit, provided that the observers do not participate in a manner other than as observers. Nevertheless, the failure of designating the observers by the exporter or producer shall not be a cause for postponing the visit.
15. Each Party shall require that an exporter or a producer provides the records and documents referred to in paragraph 1 a) of Article 4.17 to the competent authority of the importing Party conducting a verification visit. If the records and documents are not in the possession of the exporter or producer, he shall request the producer or supplier of the materials to deliver them to the competent authority mentioned above.
16. When the competent authority of the importing Party verifies whether the regional value content, the de minimis calculation or any other requirements established under this Chapter has been fulfilled, it shall adopt, where applicable, the generally accepted accounting principles applied in the territory of the Party from which the good under verification was exported.
17. Once the verification visit has been concluded, the competent authority of the importing Party shall make a report of the visit, which shall include the facts confirmed by it. The exporter or producer may sign on this report.
18. Within a period of 120 days from the conclusion of the process of any of the verification methods provided in paragraph 2, the competent authority shall issue a written determination of origin, including the facts, results and the legal basis for such determination, and sent to the importer, exporter or producer of the good subject to verification according to paragraph 3, to determine whether or not the good qualified as originating.
19. Where through a verification the importing Party determines that an exporter or a producer has provided more than one time false or unfounded information in the Certificate of Origin or stating that a good qualifies as originating, the importing Party may suspend the preferential tariff treatment to the identical goods imported, exported or produced by that person, until it is confirmed that such person has been in compliance with all the requirements under this Chapter. The suspension and resumption of the preferential tariff treatment shall be accompanied by a written notification, including facts and the legal basis, to the importer, exporter or producer.
20. When the competent authority of the importing Party determines that a good imported into its territory does not qualify as originating, according to the tariff classification or the value applied by the Party to one or more materials used in the production of the good, which differs from the classification or the value applied to the materials by the Party from which the good was exported, that Party shall provide that its origin determination shall not take effect until it has been notified in writing to the certifying authority of the exporting Party, to the importer of the good, to the person that has filled and signed the Certificate of Origin, as well as to the producer of the good.
21. A Party shall not apply a determination issued under paragraph 20 to an importation made before the date of entry into force of the determination where:
(a) the competent authority of that Party from whose territory the good was exported, had issued a determination on the tariff classification or on the value of the materials, on which a person is entitled to rely; and
(b) the determination mentioned in the preceding subparagraph was issued prior to the notification of the origin verification.
Article 4.20. Advance Rulings
1. Each Party shall, through its competent authority, expeditiously provides a written advance ruling, prior to the importation of a good into its territory. The advance ruling shall be issued in response to a written application made by an importer in its territory or an exporter or producer in the territory of the other Party, based on the facts and circumstances showed by such importer, exporter or producer of the good, with respect to:
(a) whether the good qualifies as originating according to this Chapter;
(b) whether the non-originating materials used in the production of the good have undergone the applicable changes on tariff classification established in Annex 4.02;
(c) whether the good fulfills the requirement of regional value content established in this Chapter and in Annex 4.02; and
(d) whether the method applied by an exporter or producer in the territory of the other Party, according to the norms and principles of the Customs Valuation Agreement, to calculate the transaction value of a good or of the materials used in the production of the good, with respect to which an advance ruling is being requested, is adequate for demonstrating whether the good satisfies a regional value content requirement according to this Chapter and in Annex 4.02.
2. Each Party shall establish directives for the issuance of advance rulings, including:
(a) the obligation of the importer to provide reasonable information required to process an application for such ruling;
(b) the mandate of the competent authority to ask at any time for additional information from the person who applies for an advance ruling, while evaluating such application;
(c) the obligation of the competent authority to issue an advance ruling within a maximum period of 120 days, once all the necessary information has been collected from the applicant; and
(d) the obligation of the competent authority to issue an advance ruling ina completed, well-founded, and reasoned manner.-
3. Each Party shall apply an advance ruling to the imports concerned, from the date on which the ruling is issued or a later date indicated in the ruling, unless such ruling has been modified or revoked according to paragraph 5.
4. Each Party shall provide any person who applies an advance ruling the same treatment, including the same interpretation and application of the provisions of this Chapter, regarding the determination of origin as provided for any other person, to whom an advance ruling has been issued, whenever the facts and circumstances are identical in all substantial aspects.
5. An advance ruling may be modified or revoked by the issuing competent authority:
(a) where it is based on an error: (i) in fact,
(ii) in the tariff classification of the good or materials which is the subject of the ruling, or
(iii) in the application of the regional value content requirement according to this Chapter;
(b) where the ruling is not in accordance with the interpretation agreed by the Parties with respect to this Chapter ;
(c) where there is a change in the facts or circumstances on which the ruling is based;
(d) for the purpose of conforming with a modification of this Chapter; or
(e) for the purpose of complying with an administrative decision independent from the issuing authority, or a judicial decision or to adjust to a change in the national legislation of the Party that issued the advance ruling.
6. Each Party shall provide that any modification or revocation of an advance ruling shall enter into force from the date on which the modification or revocation is issued, or on such later date as may be specified therein, and shall not be applied to the importation of a good having occurred prior to that date, unless the person to whom the advance ruling was issued has not acted according to its terms and conditions. Nevertheless the effective date of modification or revocation of the advance ruling can be postponed for a period not exceeding 30 days when the advance ruling was based on an error by the competent authority.
7. Each Party shall provide that, when its competent authority verifies the origin of a good with respect to which an advance ruling has been issued, that authority shall evaluate whether:
(a) the exporter or producer has complied with the terms and conditions of the advance ruling;
(b) the operations of the exporter or producer are consistent with the facts and circumstances on which the advance ruling is based; and
(c) the data and calculations used in the application of criteria or methods to calculate the regional value content are correct in all substantial aspects.
8. Each Party shall provide that, when its competent authority determines that any of the requirements established in paragraph 7 has not been fulfilled, that authority may modify or revoke the advance ruling as the circumstances warrant.
9. Each Party shall provide that, where a person to whom an advance ruling has been issued demonstrates that he had acted with reasonable care and in good faith while stating the facts and circumstances on which the ruling was based, that person shall not be penalized whenever the issuing authority determines that the ruling was based on incorrect information.
10. Each Party shall provide that, where an advance ruling has been issued to a person who had falsely stated or omitted substantial facts or circumstances on which the ruling was based, or has not acted in accordance with the terms and conditions of the ruling, the competent authority may apply measures against that person according to the legislation of each Party.
11. The Parties shall provide that the holder of an advance ruling may use it solely while the facts or circumstances on which the ruling was based are maintained. In case those facts or circumstances have changed, the holder of the ruling shall be allowed to present information necessary for the issuing authority to modify or revoke it according to paragraph 5.
12. Any good subject to an origin verification or a request of review or appeal in the territory of one of the Parties, shall not be the subject of an advance ruling.
Article 4.21. Penalties
Each Party shall establish or maintain measures imposing criminal, civil or administrative penalties for violations of its laws and regulations related to the provisions of this Chapter.
Article 4.22. Review and Appeal
1. Each Party according to its domestic legislation shall grant the exporters or producers of the other Party the same rights to review and appeal the determinations of origin and the advance rulings issued to its importers.
2. The rights referred to in paragraph 1 include access to an administrative review, independent from the official or office responsible for the determination or advance ruling under review, and a judicial review of the determination or ruling as the final instance, according to the legislation of each Party.
Article 4.23. Definitions
For purposes of this Chapter:
certifying authority means in the case of the Republic of China (Taiwan), the Bureau of Foreign Trade (BOFT), Ministry of Economic Affairs (MOEA), or its successor, or other agencies as authorized by BOFT or their successors; in the case of the Republic of Nicaragua, the Centro de Tramite de las Exportaciones ( CETREX ) , Ministerio de Fomento, Industria y Comercio (MIFIC ) or its successor, or other agencies as authorized by MIFIC or their successor ;
CIF means value of the imported good, including the costs of insurance and freight to the port or place of entry in the importing country;
commercial imports means the importation of a good into the territory of a Party for the purpose of selling or using it for business, industrial or other similar purposes;
competent authority means in the case of the Republic of China (Taiwan), the Customs Authority under the Ministry of Finance, or its successor; in the case of the Republic of Nicaragua, the Direccion General de Servicios Aduaneros (DGA), or its successor;
confidential information means that information of a confidential nature that has not previously been published, is not available to third parties, or is otherwise not public knowledge;
determination of origin means a decision issued as a result of an origin verification procedure that determines whether a good qualifies as originating;
exporter means a person located in the territory of a Party from which the good is exported and who is under the obligation of keeping all records referring to Article 4.17 in the territory of that Party;
FOB means free on board, regardless of the mode of transportation, at the point of final shipment by the seller to the buyer;
fungible goods means goods that are interchangeable for commercial purposes and whose properties are essentially identical and thus impossible to distinguish by simple visual inspection;
Generally Accepted Accounting Principles means the principles used in the territory of each Party, which provide substantial authorized support with respect to recording of revenues, costs, expenses, assets and liabilities involved in the disclosure of information and preparation of financial statements. Generally Accepted Accounting Principles may encompass broad guidelines for general application, as well as detailed standards, practices and procedures;
goods wholly obtained or produced entirely in the territory of one or both of the Parties means:
(a) mineral goods extracted or taken in the territory of one or both Parties;
(b) vegetable products harvested, picked or gathered in the territory of one or both Parties;
(c) live animals born and raised in the territory of one or both Parties;
(d) goods obtained by hunting, trapping, fishing, gathering or capturing in the territory of one or both Parties;
(e) fish, shellfish and other marine species taken from the sea in territorial waters and marine zones outside the jurisdiction of the Parties, by vessels registered or recorded with a Party and flying its flag or by vessels hired by firms established in the territory of a Party;
(f) goods produced on board factory ships from the goods referred to in subparagraph e), provided that such factory ships are registered or recorded with that Party and fly its flag or by factory ships hired by firms established in the territory of that Party;
(g) goods taken by a Party or a person of a Party from the seabed or beneath the seabed outside the territorial waters of that Party, provided that Party has rights to exploit such seabed or beneath the seabed; and
(h) waste and scrap derived from:
(i) production in the territory of one or both Parties, or
(ii) used goods collected in the territory of one or both Parties, provided that such goods are fit only for the recovery of raw materials; or
(i) goods produced in the territory of one or both Parties exclusively from goods referred to in subparagraphs a) through h) above;
identical goods means "identical goods", as defined in the Customs Valuation Agreement;
importer means a person located in the territory of a Party from which the good is imported and who is under the obligation of keeping all records referring to Article 4.17 in that Party's territory;
indirect material means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, including:
(a) fuel, energy, catalysts and solvents;
(b) equipment, devices and supplies used for testing or inspecting the goods;
(c) gloves, glasses, footwear, clothing and safety equipment and supplies;
(d) tools, dies and molds;
(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 or maintain buildings; and
(g) any other good or material that is 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;
material means a good used in the production or transformation of another good, including components, inputs, raw material, spare parts and parts;
origin verification process means an administrative process that begins with the initial notification of the verification procedure on the part of the competent authority of a Party and concludes with the final decision on determination of origin;
preferential tariff treatment means the application of the corresponding rate of customs duty for an originating good in accordance with the Customs Tariff Elimination Schedule.
producer means a person located in the territory of a Party and who is under the obligation of keeping all records referring to Article 4.17 in that Party's territory;
production means growing, mining, harvesting, birth and breeding, hunting, manufacturing, processing or assembling a good;
transaction value of a good means the price actually paid or payable for a good with respect to a transaction of the producer of the good pursuant to the principles of Article 1 of the Customs Valuation Agreement, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of said Agreement, regardless of whether the good is sold for export. For the purposes of this definition, the seller referred to in the Customs Valuation Agreement shall be the producer of the good;
transaction value of a material means the price actually paid or payable for a material with respect to a transaction of the producer of the good pursuant to the principles of Article 1 of the Customs Valuation Agreement, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of said Agreement, regardless of whether the material is sold for export. For purposes of this definition, the seller referred to in the Customs Valuation Agreement shall be the producer of the material; and
value means the value of a good or material for purposes of calculating customs duties or for purposes of applying this Chapter.
Chapter 5. Trade Facilitation
Article 5.01. Objectives and Principles
1. With the objective of facilitating trade under this Agreement and cooperating in pursuing trade facilitation initiatives on a multilateral and bilateral basis, the Parties agree to administer their import and export processes for goods traded under this Agreement, so as to ensure that:
(a) procedures be efficient in order to reduce costs for importers and exporters, and simplified where appropriate to achieve said efficiency;
(b) procedures be based on international trade instruments or standards to which the Parties have in place in their legislation;
(c) import and export procedures be transparent to ensure predictability for importers and exporters;
(d) measures to facilitate trade also support mechanisms to protect human, animal or plant life or health through effective enforcement of and compliance with national requirements;
(e) the personnel and procedures involved in those processes reflect high standards of integrity;
(f) the development of significant modifications to procedures used by either Party be carried out in consultations with representatives of the trade community of that Party in accordance with their legislation;
(g) procedures be based to the extent possible on risk assessment principles in order to focus compliance efforts on transactions that warrant attention, thereby promoting effective use of resources and providing incentives for voluntary compliance with the obligations of by importers and exporters; and
(h) the Parties encourage cooperation, technical assistance and exchange of information, including information on best practices, for the purpose of promoting the implementation of and compliance with the trade facilitation measures agreed upon under this Agreement.
Article 5.02. Specific Obligations
1. The Parties confirm their rights and obligations under Article V (Freedom of Transit), Article VIII (Fees and Formalities Connected with Imports and Exports) and Article X (Publication and Implementation of Trade Regulations) of the GATT of 1994 and any successor agreement thereof.
2. Each Party shall endeavor to expedite procedures for the release of merchandise, particularly of those not subject to restrictions or controls.
3. The Parties recognize that the release of certain goods or under certain circumstances involving goods subject to quotas or human, animal, plant life or health related, or public safety requirements, may require submission of more extensive information before or upon arrival of such goods, to enable their customs authorities to examine the goods to be released.
4. The Parties shall facilitate and simplify the formalities and procedures to release low-risk goods and improve clearance control of high-risk goods. For such purposes, the Parties shall base their inspection and release procedures, as well as post-entry verification procedures, on risk assessment principles thus ensuring compliance with all importation requirements. This shall not preclude the Parties from conducting quality control and compliance reviews that may require more extensive inspections.
5. For purposes of facilitating trade, the Parties shall ensure coordinated procedures and activities among the various agencies that require compliance with goods importation and exportation requirements, directly or on their behalf by their customs authorities. In this respect, each Party shall undertake, to the extent possibly, all steps necessary to harmonize the data requirements of such agencies, with a view toward enabling importers and exporters to submit all required data to a single entity.
6. The Parties shall adopt or maintain simplified clearance procedures for low- value goods, for which the revenue associated with such imports is not considered significant by the Party that implements such expedited procedures.
7. The Parties shall endeavor to achieve common processes and simplification of the required data for the release of goods, and it shall apply, where appropriate, the international standards in force. To this end, each Party shall endeavor to establish the means for electronic exchange of information between its customs authorities and the trading community in order to set up expedited release procedures. For the purposes of this Article, the Parties shall use formats based on international standards for electronic exchange of data.
8. The Parties shall set up formal consultation mechanisms with their own trade and business community to promote greater cooperation and the electronic exchange of data.
9. The Parties shall ensure expeditious review of any administrative action or official decision taken in respect of the importation or exportation of goods, in conformity with their respective laws, by an administrative, arbitration or judicial bodies independent of the authority that adopted the action or decision and is competent to maintain, modify or revoke such action or decision. Prior to requiring a person to seek redress at a more formal or judicial level, the Parties shall provide an administrative recourse to appeal or review, independent of the official or, where applicable, the office responsible for the original action or decision.
10. The Parties shall expeditiously publish or otherwise make available, including through electronic means, their laws, regulations, judicial decisions and administrative rulings or policies of general application relating to their requirements for imported or exported goods. They shall also make available administrative notices such as general agency requirements related to customs operations and entry procedures, operation schedule and inquiry points to request information.
11. Each Party, in accordance with its laws, shall designate as strictly confidential all business information that is of a confidential nature or provided on a confidential basis with due explanation.
Article 5.03. Cooperation
1. The Parties recognize that technical cooperation is an essential element to facilitate compliance with the obligations set forth in this Agreement and reach a higher degree of trade facilitation.