Title
COMPREHENSIVE ECONOMIC COOPERATION AGREEMENT BETWEEN THE GOVERNMENT OF MALAYSIA AND THE GOVERNMENT OF THE REPUBLIC OF INDIA
Preamble
The Government of Malaysia and the Government of the Republic of India, hereinafter referred to as "the Parties":
RECOGNISING their long-standing friendship, strong economic ties and close cultural links;
RECALLING the Joint Communiqué issued in 23 January 2010 in New Delhi, India by the Prime Ministers of the Republic of India and Malaysia and the Agreement Towards Implementing Comprehensive Economic Cooperation Agreement between the Government of Malaysia and the Government of Republic of India signed on 27 October 2010 in Kuala Lumpur, Malaysia;
RECALLING FURTHER the recommendations in the Joint Study Group Report which served as the framework for negotiations on the Comprehensive Economic Cooperation Agreement ("the Agreement") between the two countries;
CONSIDERING that the expansion of the domestic markets of the two countries, through economic integration, is vital for accelerating their economic development;
AIMING to enhance economic and social benefits, improve living standards and ensure high and steady growth in real incomes in their respective territories through the expansion of trade and investment flows;
DESIRING to promote mutually beneficial economic relations;
BUILDING on their respective rights, obligations and undertakings as developing country members of the World Trade Organization, and under other multilateral, regional and bilateral agreements and arrangements;
REAFFIRMING their right to pursue economic philosophies suited to their respective development goals and their right to regulate activities to realise their national policy objectives;
CONSCIOUS that this Agreement would contribute to the promotion of closer links with other economies in the Southeast Asian region;
DESIRING to promote greater regional economic integration and believing that their cooperative framework could serve as a basis for future integration with other countries in the Southeast Asian region;
HAVE AGREED AS FOLLOWS:
Body
Chapter 1. INITIAL PROVISIONS AND GENERAL DEFINITIONS
Article 1.1. Objectives
The Objectives of this Agreement Are:
(a) to strengthen and enhance the economic, trade and investment cooperation between the Parties;
(b) to liberalise and promote trade in goods in accordance with Article XXIV of the WTO General Agreement on Trade and Tariffs 1994;
(c) to liberalise and promote trade in services in accordance with Article V of the WTO General Agreement on Trade in Services, including promotion of mutual recognition of professions;
(d) to establish a transparent, predictable and facilitative investment regime;
(e) to improve the efficiency and competitiveness of their manufacturing and services sectors and to expand trade and investment between the Parties;
(f) to explore new areas of economic cooperation and develop appropriate measures for closer economic cooperation between the Parties;
(g) to facilitate and enhance regional economic cooperation and integration; and
(h) to build upon their commitments at the World Trade Organization.
Article 1.2. General Application
For the purposes of Chapters 2 through 11 (Trade in Goods, Rules of Origin, Customs Cooperation, Trade Remedies, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Trade in Services, Movement of Natural Persons, Investment and Economic Cooperation) and the Annexes thereto, all Chapters of general application shall apply, unless otherwise provided.
Article 1.3. Non-Discrimination
Each Party shall ensure that any changes to domestic laws, procedures or regulations, ef cetera, undertaken as a result of that Partyâs international agreement or treaty with a non-Party in which the other Party is not a party to such international agreement or treaty, do not adversely affect the exports of the other Party.
Article 1.4. General Definitions
For the purposes of this Agreement, unless otherwise specified:
(a) days means calendar days, including weekends and holidays;
(b) GATT 1994 means the WTO General Agreement on Tariffs and Trade 1994;
(c) GATS means the WTO General Agreement on Trade in Services; goods means any merchandise, product, article or material;
(d) Harmonized System ("HS") means the Harmonized Commodity Description and Coding System defined in the International Convention on the Harmonized Commodity Description and Coding System, including all legal notes thereto, as may be amended, adopted and implemented by the Parties in their respective laws;
(e) measure means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form;
(f) measures by Parties means measures taken by:
(i) central, regional, or local governments and authorities; and
(ii) non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities;
(g) originating goods means goods that qualify as originating in accordance with Article 3.2 (Origin Criteria);
(h) Parties means the Governments of the Republic of India and Malaysia collectively;
(i) Party means the Governments of the Republic of India or Malaysia respectively;
(i) territory means:
(i) in respect of Malaysia,
(AA) the territories of the Federation of Malaysia;
(BB) the territorial waters of Malaysia and the seabed and subsoil of the territorial waters, and the air space above such areas over which Malaysia has sovereignty; and
(CC) any area extending beyond the limits of the territorial waters of Malaysia, and the seabed and subsoil of any such area, in accordance with the laws of Malaysia and international law as an area over which Malaysia has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or non-living, as well as jurisdiction with regard to the establishment and use of artificial islands, installations and structures, marine scientific research and the protection and preservation of the marine environment;
(ii) in respect of India, the territory of the Republic of India including its territorial waters and the airspace above it and other maritime zones including the Exclusive Economic Zone and continental shelf over which Republic of India has sovereignty, sovereign rights or exclusive jurisdiction in accordance with its laws in force, the United Nations Convention on the Law of the Sea, 1982 and international law;
(I) WTO means the World Trade Organization; and
(m) WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.
2. In this Agreement, all words in the singular shall include the plural and all words in the plural shall include the singular, unless otherwise indicated in the context.
Chapter 2. TRADE IN GOODS
Article 2.1. Definition and Interpretation
For the purposes of this Chapter, applied MFN tariff rates shall include in- quota rates, and shall refer to respective applied rate of the Republic of India and Malaysia as of 1 July 2008, except for products identified as Special Products in the Schedules of Tariff Commitments set out in Annex 2-1.
Article 2.2. Scope
Except as otherwise provided, this Chapter shall apply to trade in goods and all other matters relating thereto between the Parties.
Article 2.3. Classification of Goods
For the purposes of this Agreement, the classification of goods in trade between the countries of the Parties shall be in conformity with the Harmonized System.
Article 2.4. National Treatment on Internal Taxation and Regulations
Each Party shall accord national treatment to the goods of the other Party in accordance with Article Ill of GATT 1994, which shall apply, mutatis mutandis, to this Chapter.
Article 2.5. Tariff Reduction and Elimination
1. Except as otherwise provided for in this Chapter, each Party shall gradually liberalise, where applicable, applied MFN tariff rates on originating goods of the other Party in accordance with its Schedule of Tariff Commitments as set out in Annex 2-1.
2. Nothing in this Chapter shall preclude any Party from unilaterally accelerating the reduction and/or elimination of the applied MFN tariff rates on originating goods of the other Party as set out in its Schedule of Tariff Commitments in Annex 2-1.
Article 2.6. Customs Valuation
For the purposes of determining the customs value of goods traded between the countries of the Parties, provisions of Part | of the WTO Agreement on Implementation of Article VIl of GATT 1994, as may be amended shall apply, mutatis mutandis, to this Agreement.
Article 2.7. Administrative Fees and Formalities
Each Party Reaffirms Its Commitments Under Article VIII.1 of GATT 1994.
Article 2.8. Rules of Origin
The Rules of Origin and Operational Certification Procedures applicable to the goods covered under this Chapter are set out in Chapter 3 (Rules of Origin) and its Annexes.
Article 2.9. Non-Tariff Measures
1. The Parties shall not institute or maintain any non-tariff measure on the importation of goods from the other Party or on the exportation or sale for export of goods destined for the territory of the other Party, except in accordance with its WTO rights and obligations or other provisions in this Agreement.
2. Each Party shall ensure the transparency of its non-tariff measures allowed under paragraph 1 of this Article and their full compliance with its obligations under the WTO Agreement with a view to minimising possible distortions to trade to the maximum extent possible.
Article 2.10. Modification of Concessions
1. The Parties shall not nullify or impair any of the concessions made by them under this Chapter, except as provided in the Agreement.
2. The Parties may, by negotiation and agreement, modify or withdraw any concession made under this Chapter. In such negotiations and agreement, which may include provision for compensatory adjustment with respect to other goods, the Party concerned shall maintain a general level of reciprocal and mutually advantageous concessions not less favourable to trade than that provided in this Chapter prior to such agreement.
Article 2.11. Regional and Local Governments
In fulfilling its obligations and commitments under this Agreement, each Party shall, in accordance with the provisions of Article XXIV.12 of GATT 1994 and the Understanding on the Interpretation of Article XXIV of GATT 1994, take such reasonable measures as may be available to it to ensure observance by regional and local governments and authorities within its territory.
Article 2.12. Implementation
The Sub-Committee on Trade in Goods established under Article 15.2 (Sub- Committees) shall consider matters relating to the implementation of this Chapter.
Chapter 3. RULES OF ORIGIN
Article 3.1. Definitions
For the purposes of this Chapter:
(a) carrier means any vehicle for transportation by air, sea and land;
(b) CIF value means the price actually paid or payable to the exporter for a good including the cost of the good, insurance, and freight necessary to deliver the good to the named port of destination. The valuation shall be made in accordance with the WTO Agreement on Implementation of Article VII of GATT 1994;
(c) FOB value means the price actually paid or payable to the exporter for a good when the good is loaded onto the carrier at the named port of exportation, including the cost of the good and all costs necessary to bring the good onto the carrier. The valuation shall be made in accordance with the WTO Agreement on Implementation of Article VII of GATT 1994;
(d) identical and interchangeable materials means materials being of the same kind and commercial quality, possessing the same technical and physical characteristics, and which, once they are incorporated into the finished good cannot be distinguished from one another for origin purposes by virtue of any markings, et cetera;
(e) materials means ingredients, raw materials, parts, components, sub- assemblies or goods that are used in the production of another good or are physically incorporated into another good;
(f) originating goods means goods that qualify as originating in accordance with the provisions of Article 3.2 (Origin Criteria);
(g) Product Specific Rules are rules which specify that the materials have undergone a change in tariff classification or a_ specific manufacturing or processing operation, or satisfy qualifying value content criterion, or a combination of any of these criteria, as provided in Annex 3-1 (Product Specific Rules); and
(h) production means methods of obtaining goods including growing, planting, mining, harvesting, raising, breeding, extracting, gathering, collecting, capturing, fishing, trapping, hunting, manufacturing, producing, processing, assembling or disassembling a good.
Article 3.2. Origin Criteria
For the purposes of this Chapter, goods imported by a Party which are consigned directly within the meaning of Article 3.8 (Direct Consignment), shall be deemed to be originating and eligible for preferential tariff treatment if they conform to the origin requirements under any one of the following:
(a) goods which are wholly obtained or produced in the territory of the exporting Party as set out and defined in Article 3.3 (Wholly Obtained or Produced Goods); or
(b) goods not wholly obtained or produced in the territory of the exporting Party provided the said goods are eligible under Articles 3.4 (Not Wholly Obtained or Produced Goods) or 3.5 (Cumulative Rule of Origin).
Article 3.3. Wholly Obtained or Produced Goods
Within the meaning of paragraph (a) of Article 3.2 (Origin Criteria), the following good shall be deemed as being wholly obtained or produced in the territory of a Party:
(a) plant (1) and plant products grown, planted and harvested there;
(b) live animals (2) born and raised there;
(c) products (3) obtained from live animals referred to in paragraph (b);
(d) goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted there;
(e) minerals and other naturally occurring substances, not included in paragraphs (a) to (d), extracted or taken from its soil, waters, seabed or beneath their seabed;
(f) goods taken from the waters, seabed or beneath the seabed outside the territorial waters of that Party, provided that, the Party has the rights to exploit such waters, seabed and beneath the seabed in accordance with the United Nations Convention on the Law of the Sea, 1982;
(g) goods of sea-fishing and other marine goods taken from the high seas by vessels registered with a Party and entitled to fly the flag of that Party;
(h) goods processed or made on board factory ships registered with a Party and entitled to fly the flag of that Party, exclusively from goods referred to in paragraph (g) above;
(i) articles collected there which can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for disposal or recovery of parts of raw materials, or for recycling purposes (4); and
(j) goods obtained or produced in the territory of a Party solely from goods referred to in paragraphs (a) to (i).
Article 3.4. Not Wholly Obtained or Produced Goods
1. For the purposes of paragraph (b) of Article 3.2 (Origin Criteria), a good shall be deemed to be originating:
(a) when such goods satisfy the criteria under the Product Specific Rules provided in Annex 3-1; or
(b) when:
(i) all non-originating materials used in the production of the goods have undergone a change in tariff classification in a sub-heading at the six digit level of the HS; and
(ii) qualifying value content of the goods is not less than thirty five per cent of the FOB value,
provided that the final process of manufacturing is performed within the territory of the exporting Party.
2. For the purposes of this Article, the formulae for calculating the qualifying value content are as follows (5):
(a) Direct Method:
Originating Material Cost + Direct Labour Cost + Direct Overhead Cost + Other Cost + Profit / FOB Price x 100 % > 35%
(b) Indirect Method:
Value of imported non-originating materials + Value of materials of undetermined origin / FOB Price x 100 % < 65%
3. The value of the non-originating materials shall be:
(a) the CIF value at the time of importation of the materials, parts or produce; or
(b) the earliest ascertained price paid for the materials, parts or produce of undetermined origin in the territory of the Party where the working or processing takes place.
4. The method of calculating the FOB value is as set out in Annex 3-2 (Method of Calculation of FOB Value).
Article 3.5. Cumulative Rule of Origin
Unless otherwise provided for, goods which comply with the origin requirements provided for in Article 3.2 (Origin Criteria) and which are used in the territory of a Party as materials for a finished good eligible for preferential tariff treatment under this Agreement shall be considered to be originating in the territory of the latter Party where working or processing of the finished goods has taken place.
Article 3.6. De Minimis
1. A good that does not undergo a change in tariff classification pursuant to Article 3.4 (Not Wholly Obtained or Produced Goods) and Annex 3-1 (Product Specific Rules) in the final process of production shall be deemed as originating if:
(a) for goods except for those falling within Chapters 1 through 14 and Chapters 50 through 63 of the HS, the value of all non-originating materials used in its production, which do not undergo the required change in tariff classification, does not exceed ten percent of the FOB value of the good;
(b) for goods falling within Chapters 50 through 63 of the HS, the total weight of non-originating basic textile materials used in its production, which do not undergo the required change in tariff classification, does not exceed eight percent of the total weight of all the basic textile materials used; and
(c) the good meets all other applicable criteria set forth in this Chapter for qualifying as an originating good.
2. The value of such non-originating materials shall be included in the value of non-originating materials for any applicable qualifying value content requirement for the good.
Article 3.7. Minimal Operations and Processes
1. Notwithstanding any provisions in this Chapter, a good shall not be considered 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 goods in good condition during transport and storage including, but not limited to, drying, freezing, keeping in brine, ventilation, spreading out, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations;
(b) simple (6) operations consisting of removal of dust, sifting or screening, sorting, classifying, matching including the making-up of sets of articles, washing, painting, cutting;
(c) changes of packing and breaking up and assembly of consignments;
(d) simple (7) cutting, slicing and repacking or placing in bottles, flasks, bags, boxes, fixing on cards or boards, and all other simple packing operations;
(e) affixing of marks, labels or other like distinguishing signs on goods or their packaging;
(f) simple (8) mixing of goods whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in this Chapter to enable them to be considered as originating goods;
(g) simple (9) assembly of parts of goods to constitute a complete good;
(h) disassembly;
(i) slaughter which means the mere killing of animals; and
(j) mere dilution with water or another substance that does not materially alter the characteristics of the goods.
2. For textiles and textile goods, an article or material shall not be considered to be originating in the territory of a Party by virtue of merely having undergone any of the following: