Title

AGREEMENT BETWEEN SINGAPORE AND THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU ON ECONOMIC PARTNERSHIP

Preamble

Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (hereinafter referred to as "Chinese Taipei"), hereinafter collectively referred to as "the Parties" and individually as "a Party";

Conscious of their bonds of longstanding friendship and strong trade and investment relationship;

Reaffirming their commitment to securing trade liberalisation and an outward-looking approach to trade and investment;

Convinced that their economic integration would generate larger economies of scale, provide greater work opportunities, and enhance transparency for economic activities for their businesses as well as for other businesses in the Asia-Pacific region;

Sharing the belief that an Economic Partnership Agreement between the Parties would improve their attractiveness to capital and human resources, and create larger and new markets, to expand trade and investment not only between them but also in the region;

Affirming their commitment to fostering the development of open market economy in the Asia-Pacific region, and to encouraging economic integration of Asian economies in order to further the liberalisation of trade and investment in the region;

Reaffirming that this Agreement shall contribute to the expansion and development of world trade under the multilateral trading system embodied in the Marrakesh Agreement Establishing the World Trade Organization (hereinafter referred to as the "WTO Agreement");

Building on their respective rights and obligations under the WTO Agreement and other multilateral, regional and bilateral instruments of cooperation; and

Resolved to promote reciprocal trade and investment, and to avoid circumvention of benefits of regional trade integration, through the establishment of clear and mutually advantageous trade rules, and industry as well as regulatory cooperation;

HAVE AGREED as follows:

Body

Chapter 1. GENERAL PROVISIONS

Article 1.1. ESTABLISHMENT OF FREE TRADE AREA

The Parties to this Agreement, consistent with Article XXIV of GATT 1994 and Article V of GATS, hereby establish a free trade area in accordance with the provisions of this Agreement.

Article 1.2. ENFORCEMENT

1. Each Party is fully responsible for the observance of all the provisions of this Agreement.

2. In fulfilling its obligations and commitments under this Agreement, each Party shall ensure their observance by all levels of its government and by non-governmental bodies in the exercise of governmental powers delegated by the government or authorities within its territory.

Article 1.3. OBJECTIVES

The objectives of this Agreement as elaborated more specifically through its principles and rules are to:

(a) liberalise and facilitate trade in goods and services and expand investment between the Parties;

(b) establish a cooperative framework for strengthening the economic relations between the Parties;

(c) establish a framework conducive for a more favourable environment for their businesses and promote conditions of fair competition in the free trade area;

(d) establish a framework of transparent rules to govern trade and investment between the Parties; and

(e) create effective procedures for the implementation and application of this Agreement.

Article 1.4. RELATION TO OTHER AGREEMENTS

1. The Parties reaffirm their existing rights and obligations with respect to each other under existing bilateral and multilateral agreements to which the Parties are party, including the WTO Agreement.

2. In the event of any inconsistency between this Agreement and other agreements to which the Parties are party, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution, taking into consideration customary rules of public international law.

3. Notwithstanding paragraph 2, if this Agreement explicitly contains provisions regarding such inconsistency as indicated in paragraph 2, those provisions shall apply.

Article 1.5. REFERENCE TO OTHER AGREEMENTS

1. For the purposes of this Agreement, any reference to articles in GATT 1994 or GATS includes the interpretative notes, where applicable.

2. Any reference in this Agreement to any other treaty or international agreement shall be made in the same terms to its successor treaty or international agreement to which the Parties are party.

Chapter 2. GENERAL DEFINITIONS

For the purposes of this Agreement, unless otherwise specified:

Agreement means the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership; APEC means the Asia-Pacific Economic Cooperation;

citizen means:

(a) with respect to Singapore, any natural person who is a citizen of Singapore within the meaning of its Constitution and its domestic laws; and

(b) with respect to Chinese Taipei, any natural person who has the citizenship of Chinese Taipei with personal identification registration with the authorities of Chinese Taipei in accordance with its domestic laws;

Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariff and Trade 1994, which is part of the WTO Agreement;

days means calendar days including weekends and holidays;

enterprise means any corporation, company, association, partnership, trust, joint venture, sole-proprietorship or other legally recognised entity that is duly incorporated, constituted, set up, or otherwise duly organised under the law of a Party, including branches, regardless of whether or not the entity is organised for pecuniary gain, privately or otherwise owned, or organised with limited or unlimited liability;

existing means in effect at the time of entry into force of this Agreement;

GATS means the General Agreement on Trade in Services, which is a part of the WTO Agreement;

GATT 1994 means the General Agreement on Tariffs and Trade 1994, which is a part of the WTO Agreement;

generally accepted accounting principles means the recognised consensus or substantial authoritative support in the territory 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. These standards may encompass broad guidelines of general application as well as detailed standards, practices and procedures;

Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes and Chapter Notes and amendments thereto;

measure means any law, regulation, procedure or administrative action, requirement or practice;

natural person of a Party means a citizen or permanent resident of a Party;

permanent resident means any person who has the right of permanent residence in the territory of a Party;

person means a natural person or an enterprise;

person of a Party means a citizen, permanent resident or an enterprise of a Party;

territory means:

(a) with respect to Singapore, its land territory, internal waters and territorial sea, as well as any maritime area situated beyond the territorial sea which has been or might in the future be designated under its national law, in accordance with international law, as an area within which Singapore may exercise sovereign rights or jurisdiction with regards to the sea, the sea-bed, the subsoil and the natural resources; and

(b) with respect to Chinese Taipei, in the context of this Agreement and consistent with Article XXIV of GATT 1994 and Article V of GATS the land and sea constituting the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu as applied in the WTO;

central level of government means:

(a) for Singapore, the national level of government; and

(b) for Chinese Taipei, the central level of government;

local level of government means:

(a) for Singapore, entities with sub-national legislative or executive powers under domestic law, including Town Councils and Community Development Councils; and

(b) for Chinese Taipei, a special municipality, county or city, and any other local governments in accordance with the provisions of its Local Government Act; and

WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.

Chapter 3. TRADE IN GOODS

Article 3.1. DEFINITIONS

For the purposes of this Chapter:

consular transactions means requirements that goods of a Party intended for export to the territory of the other 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;

customs duties includes any customs or import duty and a charge of any kind imposed in connection with the import of a good, including any form of surtax or surcharge in connection with such import, but does not include any:

(a) charge equivalent to an internal tax imposed consistently with Article III:2 of GATT 1994, including excise duties and goods and services tax or sales tax;

(b) anti-dumping or countervailing duty applied consistently with the provisions of GATT 1994, the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as “the Anti-Dumping Agreement”), and the WTO Agreement on Subsidies and Countervailing Measures; and

(c) fee or other charge in connection with importing commensurate with the cost of services rendered and do not represent a direct or indirect protection for domestic goods or a taxation of imports for fiscal purposes;

duty-free means free of customs duty; and

goods originating in the territories of the Parties means goods of the Parties that are treated as originating goods in accordance with Chapter 4 (Rules of Origin).

Article 3.2. Scope and Coverage

Except as otherwise provided, this Chapter applies to the trade in goods between the Parties.

Article 3.3. National Treatment

1. Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994.

2. To this end, Article III of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis.

Article 3.4. Elimination of Customs Duties

1. The provisions of this Chapter concerning the elimination of customs duties on imports shall apply to goods originating in the territories of the Parties.

2. Each Party shall eliminate its customs duties on originating goods of the other Party in accordance with the tariff schedules set out in Annexes 3A and 3B.

3. Each Party shall not increase an existing customs duty, introduce a new customs duty or impose an additional customs duty to that determined under paragraph 2, on the importation of originating goods.

4. Each Party shall refrain from applying any measure that reduces or nullifies the commitment of this Chapter. 5. The classification of goods in trade between the Parties shall be governed by each Party's respective tariff nomenclature in conformity with the Harmonized System.

Article 3.5. Export Duties

Each Party shall not adopt or maintain any duty, tax or other charge on the exportation of goods to the territory of the other Party.

Article 3.6. Administrative Fees and Formalities

Each Party shall ensure, in accordance with Article VIII:1 of GATT 1994, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charge applied consistently with Article III:2 of GATT 1994, and anti-dumping and countervailing duties) imposed on or in connection with import or export are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation on imports or exports for fiscal purposes.

Article 3.7. Consular Fees

1. No Party shall require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party. 2. Each Party shall make available and maintain through the Internet a current list of the fees and charges it imposes in connection with importation or exportation.

Article 3.8. Goods Re-entered after Repair and Alteration

1. A Party may not apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported from its territory to the territory of the other Party for repair or alteration, regardless of whether such repair or alteration could be performed in its own territory.

2. A Party may not apply a customs duty to a good, regardless of its origin, admitted temporarily from the territory of the other Party for repair or alteration. 3. For the purposes of this Article, repair and alteration does not include an operation or process that: (a) destroys a good's essential characteristics or creates a new or commercially different good; or (b) transforms an unfinished good into a finished good.

Article 3.9. Non-tariff Measures

1. Neither Party shall adopt or maintain any non-tariff measures that prohibit or restrict the importation of any good of the other Party or on the exportation of any good destined for the territory of the other Party, except in accordance with its WTO rights and obligations, or in accordance with other provisions of this Agreement.

2. Each Party shall ensure the transparency of its non-tariff measures permitted under paragraph 1 and that such measures are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to trade between the Parties.

Article 3.10. Publication

1. Each Party shall promptly publish the following information in the English language, in a non-discriminatory and convenient manner, in order to enable interested persons and the other Party to become acquainted with them:
(a) importation, exportation or transit procedures (including port, airport, and other entry-point procedures) and required forms and documents;
(b) applied rates of duties, taxes or charges of any kind imposed on or in connection with importation or exportation;
(c) rules for the classification or the valuation of products for customs purposes;
(d) laws, regulations and administrative rulings of general application relating to rules of origin;
(e) import, export or transit restrictions or prohibitions;
(f) relevant trade-related legislation;
(g) all fees and charges imposed on or in connection with importation, exportation or transit formalities;
(h) penalty provisions against breaches of import, export or transit formalities;
(i) appeal procedures;
(j) agreements or parts thereof with any non-Parties relating to the importation, exportation or transit of goods; and
(k) administrative procedures relating to the imposition of tariff quotas including quota size, in and out of quota rates, opening dates, allocation methods, licensing procedures and requirements, levels of utilisation, and additional terms and conditions, including any requirements imposed by government bodies or importing authorities.

Article 3.11. Import and Export Restrictions

Except as otherwise provided in this Agreement, no Party shall adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of GATT 1994 and its interpretative notes, and to this end Article XI of GATT 1994 and its interpretive notes are incorporated into and made a part of this Agreement, mutatis mutandis. (1)

Article 3.12. Subsidies and Countervailing Measures

1. The Parties reaffirm their commitment to abide by the provisions of Article VI and XVI of the GATT 1994, the WTO Agreement on Subsidies and Countervailing Measures, and the WTO Agreement on Agriculture.

2. Notwithstanding paragraph 1, the Parties agree to prohibit export subsidies on all goods, including agriculture goods.

Article 3.13. Anti-dumping

The Parties maintain their rights and obligations under Article VI of GATT 1994 and the Anti-Dumping Agreement, contained in Annex 1A to the WTO Agreement. For greater certainty, this paragraph applies, inter alia, to prohibitions or restrictions on the importation of remanufactured goods.

Article 3.14. Safeguard Measures

Bilateral Safeguard Measures
1. If, as a result of the reduction or elimination of a customs duty under this Agreement, originating goods of a Party are being imported into the territory of the other Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury (2) to a domestic industry producing like or directly competitive goods, the importing Party may:
(a) suspend further reduction of the rate of customs duty on the good concerned provided for under this Agreement; or
(b) increase the rate of customs duty on the good to a level which does not exceed the lesser of the most-favoured nation (hereinafter referred to as "MFN") applied rate of customs duty on the good in effect:
(i) at the time the measure is taken; or
(ii) on the day immediately preceding the date of entry into force of this Agreement.

2. A Party shall notify the other Party in writing of the initiation of an investigation described in paragraph 3 and consult with the other Party as far in advance of applying a bilateral safeguard measure as practicable, with a view to reviewing the information arising from the investigation and exchanging views on the measure.

3. A Party shall apply a bilateral safeguard measure only following an investigation by its competent authorities in accordance with Articles 3 and 4.2(c) of the Agreement on Safeguards and to this end, Articles 3 and 4.2(c) of the Agreement on Safeguards are incorporated into and made part of this Agreement, mutatis mutandis.

4. In the investigation described in paragraph 3, the Party shall comply with the requirements of Article 4.2(a) of the Agreement on Safeguards and to this end, Article 4.2(a) of the Agreement on Safeguards is incorporated into and made part of this Agreement, mutatis mutandis.

5. Each Party shall ensure that its competent authorities complete any such investigation within one year following the date of initiation.

6. Neither Party may apply a bilateral safeguard measure:
(a) except to the extent, and for such period of time, as may be necessary to prevent or remedy serious injury and to facilitate adjustment; or Serious injury and threat of serious injury shall be understood in accordance with Article 4.1(a) and (b) of the Agreement on Safeguards contained in Annex 1A to the WTO Agreement (hereinafter referred to as the "Agreement on Safeguards"). To this end, Article 4.1(a) and (b) of the Agreement on Safeguards is incorporated into and made part of this Agreement, mutatis mutandis.
(b) for a period exceeding three (3) years, except that the period may be extended by up to two (2) years if the competent authorities of the importing Party determine, in conformity with the procedures specified in this Article, that the measure continues to be necessary to prevent or remedy serious injury and to facilitate adjustment and that there is evidence that the industry is adjusting.

7. Upon the termination of the measure, the rate of customs duty shall be the rate which would have been in effect but for the measure.

8. Provisional Measure:
(a) In critical circumstances where delay would cause damage that would be difficult to repair, a Party may apply a bilateral safeguard measure on a provisional basis pursuant to a preliminary determination that there is clear evidence that imports of an originating good from the other Party have increased as the result of the reduction or elimination of a customs duty under this Agreement, and such imports cause serious injury, or threat thereof, to the domestic industry.
(b) The duration of any provisional measure shall not exceed two hundred (200) days, during which time the Party shall comply with the requirements of paragraphs 3 and 4. The Party shall promptly refund any tariff increased if the investigation described in paragraph 3 does not result in a finding that the requirements of paragraph 1 are met. The duration of any provisional measure shall be counted as part of the period prescribed by subparagraph 6(b).

9. Compensation:
(a) A Party applying a bilateral safeguard measure shall consult with the other Party in order to mutually agree on appropriate trade liberalising compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the safeguard measure. The Party shall provide an opportunity for such consultations no later than thirty (30) days after the application of the bilateral safeguard measure.
(b) If the consultations under subparagraph (a) do not result in an agreement on trade liberalising compensation within thirty (30) days after the consultations begin, the Party whose goods are subject to the safeguard measure may take action with respect to goods of the other Party that has trade effects substantially equivalent to the safeguard measure. The Party taking such action shall apply the action only for the minimum period necessary to achieve the substantially equivalent effects, and in any event, only while the measure under paragraph 1 is being applied.

Global Safeguard Measures
10. The Parties maintain their rights and obligations under Article XIX of GATT 1994 and the Agreement on Safeguards.

11. At the request of the other Party, the Party intending to take safeguard measures shall immediately provide written notification of all pertinent information on the initiation of a safeguard investigation, the provisional findings, and the final findings of the investigation.

12. No Party shall apply, with respect to the same good, at the same time:
(a) a bilateral safeguard measure; and
(b) a measure under Article XIX of GATT 1994 and the Agreement on Safeguards.

Article 3.15. Standstill

1. Between the time of the signing of the Agreement and the time when the Agreement comes into force, each Party shall not increase an existing customs duty or introduce a new customs duty on the importation of originating goods.

2. Paragraph 1 does not apply to automatic restoration of customs duty to its previous normal level in the context of the temporary tariff adjustments as provided for in the domestic customs regulations of the Parties.

Article 3.16. Committee on Trade In Goods

1. Parties hereby establish a Committee on Trade in Goods, comprising government representatives of the Parties. The Committee shall meet on the request of a Party to consider any matter arising under this Chapter and the Chapter on Rules of Origin.

2. The Committee's functions shall include:
(a) monitoring the implementation of this Chapter and Chapter 4 (Rules of Origin) and their Annexes;
(b) promoting trade in goods between the Parties, including through consultations on modifications to the rules of origin3, and other issues as appropriate; and
(c) such other activities as the Parties may agree.

3. As a result of the consultations under subparagraph 2(b), the Committee may, by decision, amend this Chapter, Chapter 4 (Rules of Origin) and the Annexes to the two aforementioned Chapters, as required. Such amendments shall be deemed to be made under paragraph 1 of Article 17.4 (Amendments) and shall enter into force in accordance with paragraph 2 of Article 17.4 (Amendments). For example, to take into account developments in production processes, lack of supply of originating materials, or other relevant factors.

Chapter 4. Rules of Origin

Section A. GENERAL RULES OF ORIGIN

Article 4.1. Definitions

For the purposes of this Chapter:
aquaculture means the farming of aquatic organisms including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from seedstock such as eggs, fry, fingerlings and larvae, by intervention in the rearing or growth processes to enhance production, such as regular stocking, feeding, or protection from predators;
CIF means the value of the good imported and includes the cost of insurance and freight up to the port or place of entry in the country or customs territory of importation. The valuation shall be made in accordance with the Customs Valuation Agreement;
customs value means:
(a) the price actually paid or payable for a good or material with respect to a transaction of the seller of the good, pursuant to the principles of Article 1 of the Customs Valuation Agreement, adjusted in accordance with Article 8 of the Customs Valuation Agreement; or
(b) in the event that there is no such value or such value of the good is unascertainable, the value determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement;
FOB means the value of the good free on board, independent of the means of transportation, at the port or site of final shipment abroad. The valuation shall be made in accordance with the Customs Valuation Agreement; fungible goods or materials means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical;
goods wholly obtained or produced entirely in a Party means:
(a) mineral goods extracted from the soil or seabed in the territory of a Party;
(b) agricultural and plant products grown and harvested, picked or gathered in the territory of a Party;
(c) live animals, born and raised in the territory of a Party;
(d) goods obtained from live animals in the territory of a Party;
(e) goods obtained from hunting, trapping, fishing, farming, gathering, capturing or aquaculture in the territory of a Party;
(f) goods (fish, shellfish, plant and other marine life) taken from the sea by a vessel registered or recorded with a Party;
(g) goods obtained or produced on board a factory ship registered or recorded with that Party, exclusively from products referred to in subparagraph (f);
(h) waste and scrap derived from production in the territory of a Party or used articles or goods collected in the territory of a Party, provided that such goods can no longer perform their original purposes nor are capable of being restored or repaired and are fit only for the recovery of raw materials;
(i) goods taken by a Party, or a person of a Party, from the seabed or beneath the seabed outside its territory, provided that the Party has rights under international law to exploit such seabed;
(j) recovered goods derived in the territory of a Party from used goods and utilised in the territory of the Party in the production of remanufactured goods; and
(k) goods produced entirely in the territory of a Party exclusively from goods referred to in subparagraphs (a) to (j) or from their derivatives, at any stage of production;
heading means the first four digits in the tariff classification under the Harmonized System; indirect material means a good used in the production, testing or inspection of another 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, safety equipment and supplies;
(d) tools, dies and moulds;
(e) spare parts and materials used in the maintenance of equipment and buildings;
(f) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings; and
(g) any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be a part of that production;
material means a good or any matter or substance that is used or consumed in the production of goods or transformation of another good;
minimal operations or processes means operations or processes which contribute minimally to the essential characteristics of the goods and which by themselves, or in combination, do not confer origin as provided for in Article 4.4 (Operations that do not Confer Origin);
packing materials and containers for shipment means goods used to protect a good during its transportation, other than containers and packaging materials used for retail sale;
production means methods of obtaining goods including, but not limited to growing, raising, mining, harvesting, fishing, farming, trapping, hunting, capturing, aquaculture, gathering, collecting, breeding, extracting, manufacturing, processing, assembling or disassembling a good; recovered goods means materials in the form of individual parts that result from:
(a) the complete disassembly of used goods into individual parts; and
(b) the cleaning, inspecting, or testing or other processing of those parts, and as necessary for improvement to sound working condition one or more of the following processes: welding, flame spraying, surface machining, knurling, plating, sleeving and rewinding in order for such parts to be assembled with other parts, including other recovered parts in the production of a remanufactured good, as listed within Annex 4A; remanufactured goods means an industrial good, listed within Annex 4A assembled in the territory of a Party, that:
(a) is entirely or partially composed of recovered goods;
(b) has the same life expectancy and meets the same performance standards as a new good; and
(c) enjoys the same factory warranty as such a new good; subheading means the first six digits in the tariff classification under the Harmonized System;
transaction value means the price paid or payable for a good as determined by the provisions of the Customs Valuation Agreement;
used means used or consumed in the production of goods; and
value means the value of a good or material, pursuant to the provisions of the Customs Valuation Agreement.

Article 4.2. Originating Goods

Unless otherwise indicated in this Chapter, a good shall be considered as originating in a Party when:
(a) the good is wholly obtained or produced entirely in the territory of one Party, pursuant to the definition in Article 4.1 (Definitions);
(b) the good is produced entirely in the territory of one or both Parties, exclusively from materials whose origin conforms to the provisions of this Chapter;
(c) the good is produced in the territory of one or both Parties, using non-originating materials that conform to a change in tariff classification, a regional value content, or other requirements specified in Annex 4B, and the good meets the other applicable provisions of this Chapter; or
(d) otherwise provided as an originating good under this Chapter.

Article 4.3. Regional Value Content

1. Where Annex 4B refers to a regional value content, each Party shall provide that the regional value content of a good shall be calculated on the basis of the following method:

              TV -VNM
RVC = ---------------x 100
                 TV

where: RVC is the regional value content expressed as a percentage; TV is the transaction value of the good, adjusted on an FOB basis, except as provided in paragraph 3. If no such value exists or cannot be determined, pursuant to the principles of Article 1 of the Customs Valuation Agreement, it shall be calculated pursuant to the principles of Articles 2 to 7 of that Agreement; and VNM is the transaction value of the non-originating materials, when they were first acquired or supplied to the producer of the goods, adjusted on a CIF basis, except as provided in paragraph 4. If such value does not exist or cannot be determined, pursuant to the principles of Article 1 of the Customs Valuation Agreement, it shall be calculated pursuant to that Agreement.

2. The value of the non-originating materials used by the producer in the production of a good shall not include, for purposes of calculating the regional value content, pursuant to paragraph 1, the value of non-originating materials used to produce the originating materials subsequently used in the production of the good.

3. When the producer of a good does not export it directly, the value shall be adjusted up to the point at which the purchaser receives the good within the territory of a Party where the producer is located.

4. When the producer of the good acquires a non-originating material in the territory of the Party where it is located, the value of such material 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.

Article 4.4. Operations That Do Not Confer Origin

1. A good shall not be considered to be originating in the territory of a Party if the following operations are undertaken exclusively by itself or in combination in the territory of that Party:
(a) operations to ensure the preservation of products in good condition during transport and storage (such as drying, freezing, ventilation, chilling, keeping in brine and like operations);
(b) simple operations consisting of sifting, classifying, washing, cutting, slitting, bending, coiling, or uncoiling, peeling, grinding, unshelling or unflaking, dehusking, deboning, crushing or squeezing, macerating; (4) 
(c) changes of packing and breaking up and assembly of consignments;
(d) packing, unpacking or repacking operations;
(e) affixing of marks, labels or other like distinguishing signs on products or their packaging;
(f) simple assembly or disassembly of parts or products to constitute a complete product unless it is for the production of a remanufactured good as listed within Annex 4A;
(g) simple mixing;
(h) simple making-up of sets of articles;
(i) slaughtering of animals;
(j) salifying or sweetening; (5) and
(k) simple dilution with water or with any other aqueous, ionised or salted solution.
2. For the purposes of this Article, the word "simple" generally refers to relevant activities which need neither professional skills nor specialised machines, apparatus or equipment particularly produced or installed for carrying out the activity.

Article 4.5. Accumulation

1. Originating materials from the territory of a Party incorporated in the production of a good in the territory of the other Party, shall be considered to originate in the territory of the other Party.

2. For the purpose of establishing that a good is originating, the producer of a good may accumulate one's production with the production, in the territory of one or both of the Parties by one or more producers, of materials incorporated in the production of the good, so that the production of those materials is considered as done by that producer, provided that the good complies with the criteria set out in Article 4.2 (Originating Goods).

Article 4.6. De Minimis

A good that does not conform to a change in tariff classification, pursuant to the provisions of Annex 4B, shall be considered to be originating if the value of all non-originating materials used in its production not meeting the change in tariff classification requirement does not exceed ten (10) percent of the transaction value of the given good pursuant to Article 4.3 (Regional Value Content), and the good meets all the other applicable criteria of this Chapter.

Article 4.7. Accessories, Spare Parts, and Tools

1. Accessories, spare parts, or tools provided with the good as part of the standard accessories, spare parts, or tools shall be regarded as originating goods and shall be disregarded in determining whether or not all the non-originating materials used in the production of the originating goods undergo the applicable change in tariff classification, provided that:
(a) the accessories, spare parts, or tools are not invoiced separately from the good; and
(b) the quantities and the value of those accessories, spare parts, or tools are the customary ones for the good.

2. If the goods are subject to a regional value content requirement, the value of the accessories, spare parts, or tools 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 4.8. Packaging Materials and Containers for Retail Sale

Packaging materials and containers in which goods are packaged for retail sale, if classified with the goods, shall be disregarded in determining whether all the non-originating materials used in the production of those goods have undergone the applicable change in tariff classification set out in Annex 4B. However, if the goods are subject to a regional value content requirement, the value of the packaging used for retail sale will be counted as originating or non-originating, as the case may be, in calculating the regional value content of the goods.

Article 4.9. Packing Materials and Containers for Shipment

Packing materials and containers in which a good is packed exclusively for transport shall not be taken into account for the purposes of establishing whether the good is originating.

Article 4.10. Indirect Materials

Indirect materials shall be considered to be originating materials without regard to where they are produced and its value shall be the cost registered in the accounting records of the producer of the good.

Article 4.11. Transit Through Non-parties

1. Preferential tariff treatment provided for in this Agreement shall be applied to goods that satisfy the requirements of this Chapter and which are directly transported among the Parties.

2. Notwithstanding paragraph 1, goods shall be authorised to transit through the territory of one or more non-Parties, and to remain stored for a reasonable period of time, which in no case shall be more than three (3) months from the date of entry of the goods into the territory of a non-Party respectively.

3. Goods shall be eligible for preferential tariff treatment in accordance with this Agreement if they are transported through the territory of one or more non-Parties, provided that the goods:
(a) did not undergo operations other than unloading, reloading, or any other operation necessary to preserve them in good condition; and
(b) did not enter the commerce of such non-Parties after the shipment from the Party and before the importation into the other Party.
4. Compliance with the provisions set out in paragraphs 2 and 3 shall be proved by means of supplying to the customs administration of the importing Party either customs documents of the non-Party or documents of the competent authorities, including commercial shipping or freight documents.

Article 4.12. Outward Processing

1. Notwithstanding the relevant provisions of Article 4.2 (Originating Goods) and the product specific requirements set out in Annex 4B, a good listed in Annex 4C shall be considered as originating even if it has undergone processes of production or operation outside the territory of a Party on a material exported from the Party and subsequently re-imported to the Party, provided that:
(a) the total value of non-originating inputs as set out in paragraph 2 does not exceed fifty-five (55) percent of the customs value of the final good for which originating status is claimed;
(b) the value of originating materials is not less than forty-five (45) percent of the customs value of the final good for which originating status is claimed;
(c) the materials exported from a Party shall have been wholly obtained or produced in the Party or have undergone therein, processes of production or operation going beyond the minimal operations or processes in Article 4.4 (Operations that do not Confer Origin), prior to being exported outside the territory of the Party;
(d) the producer of the exported material is the same producer of the final good for which originating status is claimed;
(e) the re-imported good has been obtained through processes of production or operation of the exported material; and
(f) the last process of production or operation (6) takes place in the territory of the Party.

2. For the purposes of subparagraph 1(a), the total value of non-originating inputs shall be the value of any non-originating materials added in a Party as well as the value of any materials added and all other costs accumulated outside the territory of the Party, including transportation costs.

3. For greater certainty, the verification procedures referred to in Article 4.18 (Verification of Origin) shall apply in order to ensure the proper application of this Article. Such procedures include the provision of information and supporting documentation, including that relating to the export of originating materials and the subsequent re-import of the goods subsequently exported as originating goods, by the exporting customs administration or exporter upon receipt of a written request from the customs administration of the importing Party through the customs administration of the exporting Party.

4. Upon the request of a Party, the list of products in Annex 4C may be modified by the Committee on Trade in Goods.

Article 4.13. Fungible Goods and Materials

1. Each Party shall provide that the determination of whether fungible goods or materials are originating goods shall be made either by physical segregation of each good or material, or through the use of any inventory management method, such as averaging, last-in, first-out, or first-in, first-out, recognised in the generally accepted accounting principles of the Party in which the production is performed or otherwise accepted by the Party in which the production is performed.

2. Once a particular inventory management method is selected under paragraph 1, that method shall continue to be used for those fungible goods or materials throughout the fiscal year of the person that selected the inventory management method.

Section B. CUSTOMS PROCEDURES RELATING TO ORIGIN

Article 4.14. Definitions

For the purposes of this Chapter: competent government authority means the government authority in each Party that is responsible for the verification of origin, as specified in Annex 4D. day means calendar days, including weekends and holidays, but for the calculation of time periods, where the last day falls on a non-working day, the last day will be extended to the next working day.

Article 4.15. Claims for Preferential Treatment

1. For the purpose of obtaining preferential tariff treatment in the other Party, a proof of origin in the form of a Declaration of Origin shall be completed in English and signed by an exporter or producer of a Party, certifying that a good qualifies as an originating good for which an importer may claim preferential treatment upon the importation of the good into the territory of the other Party.

2. The Declaration of Origin shall be in the template set out in Annex 4E, which may thereafter be revised by mutual consent of the Parties.

3. Each Party shall:
(a) require an exporter in its territory to complete and sign a Declaration of Origin for any exportation of good for which an importer may claim preferential tariff treatment upon importation of the good into the territory of the other Party; and
(b) provide that where an exporter in its territory is not the producer of the good, the exporter may complete and sign a Declaration of Origin on the basis of:
(i) his knowledge of whether the good qualifies as an originating good;
(ii) his reasonable reliance on the producer's written representation that the good qualifies as an originating good; or
(iii) a completed and signed certification for the good voluntarily provided to the exporter by the producer.

4. Nothing in paragraph 3 shall be construed to require a producer to provide a Declaration of Origin to an exporter.

5. Each Party shall provide that a Declaration of Origin that has been completed and signed by an exporter or producer in the territory of the other Party that is applicable to a single importation of one or more goods into the Party's territory shall be accepted by its customs administration for one (1) year from the date on which the Declaration of Origin was signed.

Article 4.16. Waiver of Declaration of Origin

Each Party shall provide that a Declaration of Origin shall not be required for the importation of any good whose custom value does not exceed US$1,000 or its equivalent amount in the Party's currency; or such higher amount as may be established by a Party which is importing, provided that the importation does not form part of a series of importations that may reasonably be considered to have been undertaken or arranged for the purpose of avoiding the declaration requirements.

Article 4.17. Record Keeping Requirement

1. Each Party shall provide that an exporter or a producer in its territory that completes and signs a Declaration of Origin shall maintain in its territory, for a period at least three (3) years after the date on which the Declaration of Origin was issued or signed, all records relating to the origin of a good for which preferential tariff treatment was claimed in the territory of the other Party, including records associated with: (a) the purchase of, cost of, value of, shipping of, and payment for, the good that is exported from its territory;
(b) the sourcing of, purchase of, cost of, value of, and payment for, all materials, including indirect materials, used in the production of the good that is exported from its territory; and
(c) the production of the good in the form in which the good is exported from its territory.

2. Each Party shall provide that an importer claiming preferential tariff treatment for a good imported into the Party's territory shall maintain in that territory, for a period of at least three (3) years after the date of importation of the good, such documentation, including a copy of the Declaration of Origin, as the Party may require relating to the importation of the good.

3. The records to be maintained may include electronic records and shall be maintained in accordance with the domestic laws and practices of each Party.

Article 4.18. Verification of Origin

1. For the purposes of determining whether a good imported into its territory from the territory of the other Party qualifies as an originating good, the importing Party may conduct verification by means of:
(a) request for information from the importer;
(b) written questionnaires or request for information to the exporter or producer of the good(s) in the territory of the other Party through the competent government authority of the exporting Party;
(c) request for assistance from the competent government authority of the exporting Party as provided for in paragraph 3 below; or
(d) verification visits to the premises of an exporter or a producer in the territory of the other Party, to observe the facilities and the production processes of the good and to review the records referring to origin including accounting files.

2. For the purpose of subparagraphs 1(a) and 1(b), the importer, exporter or producer:
(a) shall answer and return the request within a period of thirty (30) days from the date on which it was received;
(b) may have one opportunity, during the period established in subparagraph (a), to make a written request to the competent government authority of the importing Party for an extension of the answering period, for a period not exceeding thirty (30) days. For the exporter or producer, this written request will be made through the competent government authority of the exporting Party. In the case where the importer, exporter, or producer does not return the written request for the information made by the competent government authority of the importing Party within the given period or its extension, the importing Party may deny the preferential tariff treatment.

3. For the purpose of subparagraph 1(c), the customs administration of the importing Party:
(a) may request the competent government authority of the exporting Party to assist it in verifying:
(i) whether the goods declared in the Declaration of Origin qualify as originating goods; and/or
(ii) the accuracy of any information contained in the Declaration of Origin;
(b) shall provide the competent government authority of the other Party with:
(i) the reasons why such assistance is sought; (ii) the Declaration of Origin, or a copy thereof; and (iii) any information and documents as may be necessary for the purpose of providing such assistance.

4. To the extent allowed by its domestic law and practices, the competent government authority of the exporting Party shall fully cooperate in any action to verify the origin as established under subparagraph 1(b) and paragraph 3 above. In the absence of such cooperation, the importing Party shall determine the accuracy of the information contained in the Declaration of Origin with the best information available at that moment.

5. For the purpose of subparagraph 1(d), the competent government authority of the importing Party shall: (a) deliver, at least thirty (30) days prior to conducting a verification visit, a written notification of its intention to conduct the visit to the exporter or producer and to the competent government authority of the exporting Party; and (b) obtain the written consent of the exporter or producer.

6. Pursuant to paragraph 5, the exporter or producer may within fifteen (15) days of receiving the notification, request to the competent government authority of the importing Party for a postponement of the proposed verification visit, for a period not exceeding sixty (60) days. This extension shall be notified to the competent government authorities of the importing and exporting Parties.

7. A Party shall not deny preferential tariff treatment to a good solely because a verification visit was postponed pursuant to paragraph 6.

8. In the case, where an exporter or producer does not give its written consent to a proposed verification visit within thirty (30) days from the receipt of notification, the importing Party may deny preferential treatment to the good that is subject to verification.

9. After concluding the actions related to subparagraphs 1(a), 1(b), 1(c) or 1(d), and no later than fifteen (15) days after the outcome of the actions taken, the competent government authority of the importing Party shall provide a written determination of whether the good is originating and therefore eligible for preferential tariff treatment based on the relevant law and findings of fact. In respect of subparagraphs 1(a) or 1(b), the maximum time to be taken from the start of the verification to its conclusion should not exceed one hundred and twenty (120) days. In respect of subparagraphs 1(c) or 1(d), the maximum time to be taken from the start of the verification to its conclusion should not exceed one hundred and fifty (150) days.

10. When the customs administration has a reasonable doubt on the origin of the goods at the time of importation, the goods may be released by the customs administration of the importing Party on a security or upon payment of duties, pending the outcome of the origin verification, provided that they are not held to be subject to import prohibition or restriction and there is no suspicion of fraud. The relevant duties paid shall be refunded once the outcome of the origin verification confirmed that the good qualifies as an originating good.

11. The importing Party may deny preferential treatment to an importer on any subsequent import of a good when its competent government authority had already determined that an identical good was not eligible for that treatment, provided that such good is exported by the same exporter or produced by the same producer subject to verification, until the importing Party determines that the importer, exporter, or producer is in compliance with this Chapter.

Article 4.19. Obligations Relating to Importations

1. Any good that meets all the applicable requirements in this Chapter is eligible for preferential tariff treatment.

2. A Party may deny preferential tariff treatment under this Agreement to imported good(s) if the importer fails to comply with any requirement of this Chapter. Slight discrepancies as between the wording and details stated in the Declaration of Origin produced to the customs administration of the importing Party shall not, of itself, cause any claim for preferential tariff treatment to be denied.

3. Except as otherwise provided in this Chapter, each Party shall require an importer in its territory that claims preferential tariff treatment for a good imported into its territory from the territory of the other Party to:
(a) declare in the importation document that the good qualifies as an originating good, based on a Declaration of Origin;
(b) have the Declaration of Origin in its possession at the time the declaration is made;
(c) provide, on the request of that Party's customs administration, a copy of the Declaration of Origin; and
(d) promptly submit a corrected declaration in a manner required by the customs administration of the importing Party and pay any owed duties where the importer has reason to believe that a Declaration of Origin on which a declaration was based contains information that is not correct.

4. Each Party shall provide that, where a good qualified as originating when it was imported into the territory of that Party but no claim for preferential tariff treatment was made at that time, the importer of the good may, no later than one (1) year after the date on which the good was imported, apply for a refund of any excess duties paid as the result of the good not having been granted preferential tariff treatment, on presentation of:
(a) a written declaration that the good qualified as originating;
(b) a copy of the Declaration of Origin; and
(c) such other documentation relating to the importation of the good as the importing Party may require.

Article 4.20. Obligations Relating to Exportations

1. Each Party shall provide that an exporter or a producer in its territory shall submit a copy of the Declaration of Origin to its competent government authority upon request.

2. When an exporter or a producer in its territory has provided a Declaration of Origin and has reason to believe that such declaration contains or is based on incorrect information, the exporter or producer shall promptly notify in writing every person to whom the exporter or producer provided the declaration of any change that could affect the accuracy or validity of the declaration, provided that such notification is made before the initiation of audit procedures. Any penalty, if applicable, for providing an incorrect Declaration of Origin for preferential tariff treatment shall be subject to the domestic law of each Party that is dealing with the offence under its jurisdiction.