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 the commercial distribution, agency, dealership or representation in the territory of that Party of goods of the other Party.
Article 2.9. IMPORT 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 "Import Licensing Agreement"). For this purpose, the Agreement on Import Licensing and its interpretative notes are incorporated into and form an integral part of this Agreement, 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 60 days prior to their entry into force. A notification provided under this Article shall:
(a) shall include the information set out in Article 5 of the Import Licensing Agreement; and
(b) shall be without prejudice to whether the import licensing procedure is consistent 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.
Article 2.10. ADMINISTRATIVE BURDENS AND FORMALITIES
1. Each Party shall ensure, in accordance with Article VIII of the GATT 1994 and its interpretative notes, that all fees and charges of whatever nature (other than customs duties, charges equivalent to an internal tax or other internal charges applied pursuant to Article III: 2 of GATT 1994, and antidumping 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, nor a tax on imports or exports for fiscal purposes. For this purpose, Article VIII of the GATT 1994 and its interpretative notes are incorporated into this Agreement and form an integral part thereof, mutatis mutandis.
2. No Party shall require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party.
3. Each Party shall make available and maintain, through the Internet, an up-to-date list of fees or charges imposed in connection with importation or exportation.
Article 2.11. TAXES AND OTHER CHARGES ON EXPORTS
Except as provided in Annex 2-C, 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 the GATT 1994, its interpretative notes, and the Understanding on the Interpretation of Article XVII of the GATT 1994, which are incorporated into and form an integral part of this Agreement, mutatis mutandis.
Article 2.13. CUSTOMS VALUATION
1. The Customs Valuation Agreement and any successor agreement shall govern the customs valuation rules applied by the Parties in their reciprocal trade. To this effect, the Customs Valuation Agreement and any successor agreement are incorporated into and form an integral part of this Agreement, mutatis mutandis.
2. The customs legislation of each Party shall comply with Article VII of the GATT 1994 and the 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 shall work together towards an agreement in the WTO to eliminate such subsidies and to prevent their reintroduction in any form.
2. Neither Party may adopt or maintain any export subsidy on any agricultural good destined for the territory of the other Party.
3. Notwithstanding the provisions of the preceding paragraph, if a Party maintains, introduces or reintroduces an export subsidy on a good listed in Annex 2-B, the importing Party shall request in writing to the exporting Party the initiation of consultations to verify the existence or non-existence of the export subsidy. If, after 90 days of the request for consultations, the existence of the subsidy is confirmed and the exporting Party does not suspend the subsidy, the importing Party may increase the rate of duty on imports to the applied MFN tariff rate for the period during which the export subsidy is maintained. In order for the additional duty to be eliminated, the other Party shall provide detailed information on the applied subsidy demonstrating that it complies with the provisions of this Article. The foregoing is without prejudice to the right of the Parties to make use of the mechanism provided for in Chapter 18 (Dispute Settlement).
Section G. INSTITUTIONAL PROVISIONS
Article 2.16. COMMITTEE ON TRADE IN GOODS
1. The Parties hereby establish the 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 Commerce, Industry and Tourism of Colombia and of the Ministry of Foreign Trade of Costa Rica, or their successors.
3. The functions of the Committee shall include, inter alia:
(a) monitoring the implementation and administration of this Chapter;
(b) reporting to the Commission on the implementation and administration of this Chapter, as appropriate;
(c) promoting trade in goods between the Parties, including through consultations on the expansion and acceleration of tariff elimination under this Agreement, and other matters as appropriate;
(d) address obstacles to trade in goods between the Parties, in particular those relating to the application of nontariff measures, and, as appropriate, submit such matters to the Commission for its consideration;
(e) provide the Commission with advice and recommendations on technical assistance needs in matters relating to this Chapter;
(f) review the conversion to the Harmonized System nomenclature in force to ensure that the obligations of each Party under this Agreement are not altered, and conduct consultations to resolve any conflicts between:
(i) the Harmonized System nomenclature in force and Annex 2-B; and
(ii) domestic nomenclatures and Annex 2-B;
(g) consult and make best efforts to resolve any differences that may arise between the Parties on matters relating to the classification of goods under the Harmonized System;
(h) establish 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. The first meeting of the Committee shall be held no later than one year after the date of entry into force of this Agreement. By mutual agreement, the Parties may hold extraordinary meetings.
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. Unless otherwise agreed by the Parties, the Committee shall be of a permanent nature and shall develop its working rules.
7. All decisions of the Committee shall be taken by mutual agreement.
8. The Parties establish the Ad-Hoc Working Group on Trade in Agricultural Goods, which shall report to the Committee. 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 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 duty;
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; 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, publicize 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, perforated or otherwise treated in a manner that disqualifies them for sale or for any use other than as samples;
goods for exhibition or demonstration include their components, ancillary apparatus and accessories;
advertising films and recordings means visual media or recorded audio materials consisting essentially of images and/or sound showing the nature or performance 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 to:
(a) export a specified volume or percentage of goods or services;
(b) to replace imported goods or services with goods or services of the Party granting the exemption from customs duties or import licenses;
(c) 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) a person benefiting from a customs duty exemption or import license produces goods or services in the territory of the Party granting the customs duty exemption or 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 a requirement that an imported good be:
(f) subsequently exported;
(g) used as a material in the production of another good that is subsequently exported;
(h) substituted for an identical or similar good used as a material in the production of another good that is subsequently exported; or
(i) substituted for 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 shall mean the requirements that goods of one Party, intended 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) it is wholly obtained or wholly produced in the territory of one or both of the Parties, as defined in Article 3.2;
(b) it is produced in the territory of one or both of the 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-A; or
(c) is produced in the territory of one or both of the Parties exclusively from originating materials,
and complies 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 one or both Parties:
(a) plants and plant products harvested or collected in the territory of one or both Parties;
(b) live animals born and raised in the territory of one or both Parties;
(c) goods obtained from live animals raised in the territory of one or both Parties;
(d) goods obtained from hunting, trapping, fishing or aquaculture in the territory of one or both Parties;
(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 recorded in a Party and flying its flag, exclusively from the goods referred to in paragraph (e);
(g) minerals and other inanimate natural resources extracted from the soil, waters, seabed or subsoil in the territory of one or both Parties;
(h) commodities, other than fish, crustaceans, and other living marine species, obtained or taken 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 one or both of the Parties; or
(ii) used goods collected in the territory of one or both Parties,
(ii) used goods collected in the territory of one or both Parties, provided that such waste or scrap serves only for the recovery of raw materials; and
(j) goods produced in one or both Parties exclusively from goods referred to in paragraphs (a) through (i).
Article 3.3. REGIONAL VALUE CONTENT
1. The regional value content (hereinafter referred to as "RVC") of a good shall be calculated on the basis of the following method:
RVC = TV - VMN / TV x 100
where:
RCV: is the regional value content, expressed as a percentage;
TV: is the transaction value of the good, adjusted on an FOB basis; and
VMN: is the value of non-originating materials.
2. The value of non-originating materials shall be:
(a) the transaction value adjusted on a CIF basis 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 processing or transformation took place. Where 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 Customs Valuation Agreement.
Article 3.4. MINIMUM OPERATIONS OR PROCESSES
1. The operations or processes which, individually or in combination with each other, do not confer origin on 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;
(d) slaughtering of animals;
(e) washing, cleaning and removal of dust, rust, oil, paint or other coatings;
(f) ironing or pressing of textile products;
(g) simple (1) painting and polishing operations;
(h) husking, total or partial bleaching, polishing and glazing of cereals and rice;
(i) simple packaging in bottles, cans, jars, flasks, bags, cases and boxes and placing on cardboard or boards, and any other simple packaging operation;
(j) affixing of marks, labels, logos and other similar distinctive signs on the goods or on their packaging;
(k) simple mixing of products; mixing of sugar with any material; the operations of coloring or flavoring of sugar or sugar lumps; the total or partial milling of sugar crystals;
(l) simple assembly of parts of goods to constitute a complete good or the disassembly of goods into their parts;
(m) shelling, de-seeding and peeling of fruits, nuts and vegetables;
(n) sharpening, simple grinding or simple cutting; or
(o) sifting, screening, sorting, classifying, grading, grading, preparation (including formation of sets of articles).
2. The provisions of this Article shall prevail over the specific rules of origin contained in Annex 3-A.
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. CUMULATION
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. Where each Party has established a preferential trade agreement with the same country or group of non-Party countries, the 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.
4. For the application of paragraph 3, each Party shall have agreed equivalent provisions to those set out in that paragraph with the non-Party country or group of countries, as well as such conditions as the Parties deem necessary for the purposes of its application.
Article 3.7. DE MINIMIS
1. A good shall be considered to be originating if the value of all non-originating materials used in its production that do not comply with the change in tariff classification pursuant to Annex 3-A does not exceed 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. Paragraph 1 shall not apply to non-originating materials used in the production of goods classified in Chapters 1 through 24 of the Harmonized System, unless they are classified in a subheading other than that of the goods whose origin is determined under this Article.
4. Paragraph 1 shall not apply to non-originating materials classified in Chapter 15 of the Harmonized System that are used in the production of goods classified in headings 15.01 to 15.08 or 15.11 to 15.15 of the Harmonized System.
5. 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-A shall be considered an originating good if the total weight of all such fibers or yarns in that component does not exceed 10% of the total weight of such component.
6. In all cases, the good shall comply with all other applicable requirements of this Chapter.
Article 3.8. FUNGIBLE GOODS AND MATERIALS
In order to determine whether a good is originating, any good or fungible material shall be determined by:
(a) a physical separation of the goods or materials; or
(b) an inventory management method 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 fungible good or material shall continue to be used for that good or material during the taxable year of the person who selected the inventory management method.