Article 3.16. Definitions
For the purposes of this chapter, the following definitions shall apply:
Import Licensing Agreement means the WTO Agreement on Import Licensing Procedures;
SCM Agreement means the WTO Agreement on Subsidies and Countervailing Measures;
goods temporarily admitted for sporting purposes means sporting requirements for use in sporting competitions, demonstrations or training in the territory of the Party into whose territory such goods are admitted;
consular transactions means any requirement that goods of one Party destined for export to the territory of another Party must first be submitted 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, shippers' export declarations or any other customs documentation required on or in connection with importation;
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;
import licensing procedure means an administrative procedure that requires the submission of an application or other documentation, other than that generally required for customs clearance purposes, to the relevant administrative agency of the importing Party as a precondition for importation into the territory of the importing Party;
duty-free means exempt from customs duties;
originating good means a good that qualifies as an originating good under Chapter 4 (Rules of Origin and Implementation Procedures).
Chapter 4. Rules of Origin and Application Procedures
Section A. Rules of Origin
Article 4.1. Definitions
For the purposes of this chapter, the following definitions shall apply:
Aquaculture means the rearing of aquatic organisms, including fish, mollusks, crustaceans, other aquatic invertebrates and aquatic plants, from seed such as eggs, minnows, fry and larvae, by intervening in the rearing or growth processes to improve production, such as regular seeding, feeding or protection from predators;
authorized body means any governmental authority or other entity authorized under the laws or regulations of a Party or recognized by a Party as competent to issue a Certificate of Origin;
Agreement on Customs Valuation means the Agreement on Implementation of Article VII of GATT 1994, which is part of the WTO Agreement;
CIF means the value of the imported merchandise, including the cost of insurance and freight to the port or place of entry in the country of importation;
competent authority means:
For China: General Administration of Customs;
For Ecuador: The Ministry of Production, Foreign Trade, Investment and Fisheries, or the authority designated by national legislation;
FOB means the value of the goods exported free on board, including the cost of transportation to the port or place of final shipment abroad;
fungible materials means materials that are interchangeable for commercial purposes, whose properties are essentially identical and between which it is impractical to differentiate by mere visual examination;
generally accepted accounting principles means the recognized accounting standards of a Party with respect to the recording of revenues, expenses, costs, assets and liabilities, the disclosure of information and the preparation of financial statements. Such standards may include broad guidelines of general application as well as detailed standards, practices and procedures;
commodity means a product or material;
materials means ingredients, parts, components, assemblies and/or goods that were physically incorporated into another product or underwent a process in the production of another product;
originating materials means materials that qualify as originating materials in accordance with this Chapter,
product means a product that is being produced, even if it is intended for later use in another production operation, and
production means any method of obtaining goods, including, but not limited to growing, raising, mining, harvesting, fishing, aquaculture, farming, trapping, hunting, trapping, gathering, gathering, raising, breeding, extracting, manufacturing, processing or assembling a good.
Article 4.2. Originating Goods
Except as otherwise provided in this Chapter and subject to the condition that a good meets all other applicable requirements of this Chapter, the following goods shall be considered as originating in a Party:
(a) goods wholly obtained or produced in a Party as defined in Article 4.3 (Goods Wholly Obtained);
(b) goods produced in a Party exclusively from materials originating in one or both Parties; or
(c) goods produced in a Party, using non-originating materials, that meet a regional value content of not less than 40%, except goods listed in Annex 4 (Product Specific Rules of Origin), which must meet the requirements specified therein.
Article 4.3. Wholly Obtained Goods
For purposes of Article 4.2(a), the following goods shall be considered to be wholly obtained or produced in a Party:
(a) live animals born and raised in a Party;
(b) goods obtained from live animals referred to in subparagraph (a) in a Party;
(c) plants and plant products grown, harvested, collected or gathered in a Party;
(d) goods obtained from hunting, trapping, fishing, aquaculture, gathering or capture carried out in a Party;
(e) minerals and other natural substances not included in subparagraphs (a) to (d), extracted or obtained from its soil, waters, seabed or subsoil beneath the seabed;
(f) goods extracted from the waters, seabed or subsoil beneath the seabed outside the territorial waters of a Party, provided that the Party has the right to exploit such waters, seabed or subsoil beneath the seabed in accordance with international law and its domestic law;
(g) maritime fishery goods and other marine products taken from the sea outside the territorial waters of a Party by a vessel registered in a Party and flying the flag of that Party;
(h) goods processed or manufactured on board factory ships registered in a Party and flying the flag of that Party, exclusively from goods referred to in subparagraph (g);
(i) scrap and waste derived from manufacturing operations in a Party that are suitable only for the recovery of raw materials;
(j) used goods consumed and collected there that are suitable only for the recovery of raw materials; or
(k) goods produced entirely in a Party exclusively from the goods referred to in subparagraphs (a) through (j).
Article 4.4. Regional Content Value
1. The Regional Content Value (RCV) criterion will be calculated as follows:
RCV = V - VNM/V x 100%
where:
RCV is the regional content value, expressed as a percentage;
V is the value of the product, as defined in the Customs Valuation Agreement, adjusted on an FOB basis; and
VMN is the value of non-originating materials, including materials of undetermined origin, as defined in paragraph 2.
2. The value of non-originating materials shall be:
(a) the value of the materials, as defined in the Customs Valuation Agreement, adjusted on a CIF basis; or
(b) the first allocable price paid or payable for the non-originating materials in a 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 any other costs incurred in transporting the material from the supplier's warehouse to the producer's location.
3. The value of non-originating materials used by the producer in the manufacture of a product shall not include, for the purposes of calculating the regional value content of the product in accordance with paragraph 1, the value of non-originating materials used to produce originating materials that are subsequently used in the manufacture of the product.
Article 4.5. De Minimis
A good that does not meet the requirements for a change in tariff classification, in accordance with Annex 4 (Product Specific Rules of Origin), shall be considered originating provided that:
(a) the value of all non-originating materials, determined in accordance with Article 4.4 (Regional Value Content), including materials of undetermined origin, which do not meet the change in tariff classification requirement, does not exceed 10% of the FOB value of the good; and
(b) the good meets all other applicable criteria of this Chapter.
Article 4.6. Accumulation
Materials originating in a Party that are used in the production of a good in the other Party shall be considered as originating in the latter Party.
Article 4.7. Minimum Operations or Processes
1. Notwithstanding the provisions of Article 4.2 (c), a good shall not be considered originating if it has undergone only one or more of the following operations or processes:
(a) conservation operations to ensure that goods remain in good condition during transport and storage;
(b) the simple assembly of parts of articles to constitute a complete article, or the disassembly of products into parts;
(c) packing, unpacking or repacking operations for the purpose of sale or presentation;
(d) slaughter of animals;
(e) washing, cleaning, removal of dust, rust, oil, paint or other coatings;
(f) ironing or pressing of textiles;
(g) simple painting and polishing operations;
(h) dehulling, partial or total whitening, polishing and glazing of cereals and rice;
(i) operations to color sugar or form sugar lumps;
(j) peeling, stoning and shelling fruits, nuts and vegetables;
(k) sharpening, simple grinding or simple cutting;
(l) sifting, screening, sorting, classifying, grading, grading, matching (including the making up of sets of articles), cutting, slashing, folding, rolling or unrolling;
(m) simple placing in bottles, cans, jars, bags, cases, boxes, fixing on cardboard or boards and other similar packaging operations;
(n) placing or printing trademarks, labels, logos or other similar distinctive signs on the products or their packaging;
(o) the simple mixing of goods, even of different kinds;
(p) mere dilution with water or other substance that does not materially alter the characteristics of the goods; or
(q) operations whose sole purpose is to facilitate port handling.
2. All operations in the production of a particular good carried out in a Party shall be taken into account in determining whether the working or process undergone by that good is considered to be minimum operations or processes referred to in paragraph 1.
Article 4.8. Fungible Materials
When both originating and non-originating fungible materials are used in the production of a good, the following methods shall be adopted to determine whether the materials used are originating:
(a) physical separation of materials; or
(b) an inventory management method recognized in the generally accepted accounting principles of the exporting Party, provided that the selected inventory management method is used for at least 12 continuous months.
Article 4.9. Neutral Elements
1. In determining whether a good is originating, no account shall be taken of any neutral element as defined in paragraph 2.
2. Neutral items means a good used in the production, testing or inspection of another good, but not physically incorporated into that good itself, including:
(a) fuel, energy, catalysts and solvents;
(b) plant, equipment and machinery, including devices and supplies used to test or inspect the goods;
(c) gloves, goggles, footwear, clothing, 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, composites 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 shown to be part of that production.
Article 4.10. Packing , Packaging and Containers
1. Containers and packaging materials used for the transport of goods shall not be taken into account in determining the originating status of the goods.
2. The originating status of the packaging materials and containers in which the goods are put up for retail sale shall not be taken into account in determining the originating status of the goods, provided that the packaging materials and containers are classified with the goods.
3. Notwithstanding paragraph 2, where goods are subject to a regional value content requirement, the value of packaging materials and containers used for retail sale shall be taken into account as originating or non-originating materials, as the case may be, in calculating the regional value content of the goods.
Article 4.11. Accessories, Spare Parts and Tools
1. The accessories, spare parts or tools presented and classified with the goods shall be considered part of the goods, provided that:
(a) are invoiced together with the goods; and
(b) their quantities and values are commercially customary for the goods.
2. When a good is subject to a tariff classification change criterion set out in Annex 4 (Product Specific Rules of Origin), the accessories, spare parts or tools described in paragraph 1 shall not be taken into account in determining the origin of the good.
3. Where a good is 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 good.
Article 4.12. Games
Sets, as defined in General Rule 3 of the Harmonized System, shall be regarded as originating when all component products are originating. However, when a set is composed. of originating and non-originating products, the set as a whole shall be considered originating, provided that the value of the non-originating products does not exceed 15% of the total value of the set, determined in accordance with Article 4.4 (Regional Content Value).
Article 4.13. Direct Shipment
1. Preferential tariff treatment under this Agreement shall be accorded only to originating products transported directly between the Parties.
2. Notwithstanding the provisions of paragraph 1, goods whose transportation involves transit through one or more non-Parties, with or without transshipment or temporary storage of up to 6 months in such non-Parties, shall continue to be considered as transported directly between the Parties, provided that:
(a) the entry in transit of the goods is justified for geographical reasons or fora consideration related exclusively to transport requirements;
(b) the goods are not subjected to any operation other than unloading and reloading, or any operation necessary to keep them in good condition; and
(c) the goods remain under customs control during transit in those non-Parties.
3. Compliance with paragraph 2 shall be evidenced by presenting to the customs authority of the importing Party, cither customs documents from non-Parties, or any other document to the satisfaction of the customs authority of the importing Party.
Section B. Implementation Procedures
Article 4.14. Certificate of Origin
1. A Certificate of Origin, as set out in Annex 5 (Certificate of Origin), shall be issued by the authorized agencies of a Party upon application by the exporter or producer, provided that the goods may be considered as originating in that Party in accordance with this Chapter.
2. The Certificate of Origin shall:
(a) contain a unique certificate number;
(b) cover one or more goods in the same shipment;
(c) indicate the basis on which the goods are considered to qualify as originating for the purposes of this Chapter;
(d) contain security features, such as specimen signatures or seals, as advised to the importing Party by the exporting Party; and
(e) completed in English.
3. The Certificate of Origin shall be issued before or at the time of shipment. It shall be valid for 1 year from the date of issue in the exporting Party.
4. Each Party shall inform the customs authority of the other Party of the name of each authorized body, as well as the relevant contact details, and provide details of the security features for the relevant forms and documents used by cach authorized body, prior to the issuance of any Certificate of Origin by that body. Any changes to the information provided above shall be promptly notified to the customs authority of the other Party.
5. A Certificate of Origin may be issued retrospectively within 1 year from the date of shipment, with the words "ISSUED RETROSPECTIVELY" and remains valid for 1 year from the date of shipment, if not issued prior to or at the time of shipment due to force majeure, inadvertent errors, omissions or other valid causes.
6. In cases of theft, loss or accidental destruction of a Certificate of Origin, the exporter or producer may submit a written request to the authorized agencies of the exporting Party for the issuance of a certified copy. The certified copy shall bear the words "CERTIFIED AUTHENTIC COPY of the original dated Certificate of Origin number". The certified copy shall be valid for the period of validity of the original Certificate of Origin.
Article 4.15. Retention of Documents of Origin
1. Each Party shall require its producers, exporters and importers to keep documents in any medium that allows prompt retrieval, including in digital or written form, that demonstrate the originating status of the goods, as well as compliance with the other requirements of this Chapter, for at least 3 years or any longer time in accordance with that Party's domestic legislation.
2. Each Party shall require its authorized agencies to retain copies of Certificates of Origin and other related supporting documents in any medium that permits prompt retrieval, including in digital or written form, for at least 3 years or longer in accordance with that Party's domestic law.
Article 4.16. Obligations In Respect of Imports
Except as otherwise provided in this chapter, an importer claiming preferential tariff treatment shall:
(a) indicate in the customs declaration that the merchandise qualifies as originating;
(b) possess a valid Certificate of Origin at the time the customs import declaration referred to in subparagraph (a) is made; and
(c) present the valid Certificate of Origin and other documentary evidence related to the importation of the goods, at the request of the customs administration of the importing Party.
Article 4.17. Refund of Import or Bonded Customs Duties
1. Where a Certificate of Origin is not presented to the customs office of importation at the time of importation in accordance with Article 4.16 (Obligations with Respect to Imports), at the request of the importer, the customs authorities of the importing Party may impose the non-preferential customs duties applied, or require a security equivalent to the full amount of the customs duties on that good, provided that the importer formally declares to the customs authority at the time of importation that the good in question qualifies as originating.
2. The importer may request reimbursement of any excess customs duties imposed or security paid provided that he is able to present all necessary documentation required in Article 4.16 (Obligations in Respect of Imports) and within the time limit specified in the legislation of the importing Party.
Article 4.18. Verification of Origin
1. For purposes of determining the authenticity or accuracy of the Certificate of Origin, the originating status of the goods in question, or compliance with the other requirements of this Chapter, the customs authority of the importing Party may conduct a verification of origin based on a risk analysis and at random or when the customs authority of the importing Party has reasonable doubt, by:
(a) requests for additional information to the importer;
(b) requests to the customs authority of the exporting Party to verify the origin of a product;
(c) such other procedures as the customs authorities of the Parties may jointly decide; or
(d) conduct a verification visit to the exporting Party, when necessary, in a manner to be jointly determined by the customs authorities of the Parties.
2. The customs authority of the importing Party requesting the verification from the exporting Party shall specify the reasons and provide all documents and information justifying the verification.
3. The importer or the exporting Party referred to in paragraph 1 that receives a request for verification shall respond to the request promptly and shall respond within 3 months, starting from the date of submission of the request for verification. At the request of the exporting Party, the period referred to above may be extended for a further 3 months.
4. Ifthe customs authority of the importing Party decides to suspend the granting of preferential treatment to the goods in question while awaiting the results of the verification, the goods shall be released upon presentation of security, unless otherwise provided for in the domestic legislation of the importing Party.