restriction means any limitation, whether made effective through quotas, licenses, permits, minimum or maximum price requirements or any other means;
total export shipments means the total shipments from total supply to users located in the territory of the other Party; and
total supply means shipments to domestic users and foreign users from:
a) domestic production;
b) domestic inventory; and
c) other imports, as appropriate.
Annex 602.3. Reservations and Special Provisions
Reservations
1. The Mexican State reserves to itself the following strategic activities, including investment in such activities and the provision of services in such activities:
a) exploration and exploitation of crude oil and natural gas; refining or processing of crude oil and natural gas; and production of artificial gas, basic petrochemicals and their feedstocks and pipelines;
b) foreign trade; transportation, storage and distribution, up to and including the first hand sales of the following goods:
(i) crude oil,
(ii) natural and artificial gas,
(iii) goods covered by this Chapter obtained from the refining or processing of crude oil and natural gas, and
(iv) basic petrochemicals;
c) the supply of electricity as a public service in Mexico, including, except as provided in paragraph 5, the generation, transmission, transformation, distribution and sale of electricity; and
d) exploration, exploitation and processing of radioactive minerals, the nuclear fuel cycle, the generation of nuclear energy, the transportation and storage of nuclear waste, the use and reprocessing of nuclear fuel and the regulation of their applications for other purposes and the production of heavy water.
In the event of an inconsistency between this paragraph and another provision of this Agreement, this paragraph shall prevail to the extent of that inconsistency.
2. Pursuant to Article 1101(2), (nvestment-Scope and Coverage), private investment is not permitted in the activities listed in paragraph 1. Chapter Twelve (CrossBorder Trade in Services) shall only apply to activities involving the provision of services covered in paragraph 1 when Mexico permits a contract to be granted in respect of such activities and only to the extent of that contract.
Trade in Natural Gas and Basic Petrochemicals
3. Where end-users and suppliers of natural gas or basic petrochemical goods consider that cross-border trade in such goods may be in their interests, each Party shall permit such end-users and suppliers, and any state enterprise of that Party as may be required under its domestic law, to negotiate supply contracts.
Each Party shall leave the modalities of the implementation of any such contract to the endusers, suppliers, and any state enterprise of the Party as may be required under its domestic law, which may take the form of individual contracts between the state enterprise and each of the other entities. Such contracts may be subject to regulatory approval.
Performance Clauses
4. Each Party shall allow its state enterprises to negotiate performance clauses in their service contracts.
Activities and Investment in Electricity Generation Facilities
a) Production for Own Use
An enterprise of another Party may acquire, establish, and/or operate an electrical generating facility in Mexico to meet the enterprise's own supply needs. Electricity generated in excess of such needs must be sold to the Federal Electricity Commission (Comisi n Federal de Electricidad) (CFE) and CFE shall purchase such electricity under terms and conditions agreed to by CFE and the enterprise.
b) Co-generation
An enterprise of another Party may acquire, establish, and/or operate a co-generation facility in Mexico that generates electricity using heat, steam or other energy sources associated with an industrial process. Owners of the industrial facility need not be the owners of the co-generating facility. Electricity generated in excess of the industrial facility's supply requirements must be sold to CFE and CFE shall purchase such electricity under terms and conditions agreed to by CFE and the enterprise.
c) Independent Power Production
An enterprise of another Party may acquire, establish, and/or operate an electricity generating facility for independent power production (IPP) in Mexico. Electricity generated by such a facility for sale in Mexico shall be sold to CFE and CFE shall purchase such electricity under terms and conditions agreed to by CFE and the enterprise. Where an IPP located in Mexico and an electric utility of another Party consider that cross-border trade in electricity may be in their interests, each relevant Party shall permit these entities and CFE to negotiate terms and conditions of power purchase and power sale contracts. The modalities of implementing such supply contracts are left to the end users, suppliers and CFE and may take the form of individual contracts between CFE and each of the other entities. Each relevant Party shall determine whether such contracts are subject to regulatory approval.
Chapter Seven. AGRICULTURE AND SANITARY AND PHYTOSANITARY MEASURES
Section A. Agriculture
Article 701. Scope and Coverage
1. This Section applies to measures adopted or maintained by a Party relating to agricultural trade.
2. In the event of any inconsistency between this Section and another provision of this Agreement, this Section shall prevail to the extent of the inconsistency.
Article 702. International Obligations
1. Annex 702.1 applies to the Parties specified in that Annex with respect to agricultural trade under certain agreements between them.
2. Prior to adopting pursuant to an intergovernmental commodity agreement, a measure that may affect trade in an agricultural good between the Parties, the Party proposing to adopt the measure shall consult with the other Parties with a view to avoiding nullification or impairment of a concession granted by that Party in its Schedule to Annex 302.2.
3. Annex 702.3 applies to the Parties specified in that Annex with respect to measures adopted or maintained pursuant to an intergovernmental coffee agreement.
Article 703. Market Access
1. The Parties shall work together to improve access to their respective markets through the reduction or elimination of import barriers to trade between them in agricultural goods.
Customs Duties, Quantitative Restrictions, and Agricultural Grading and Marketing Standards
2. Annex 703.2 applies to the Parties specified in that Annex with respect to customs duties and quantitative restrictions, trade in sugar and syrup goods, and agricultural grading and marketing standards.
Special Safeguard Provisions
3. Each Party may, in accordance with its Schedule to Annex 302.2, adopt or maintain a special safeguard in the form of a tariff rate quota on an agricultural good listed in its Section of Annex 703.3. Notwithstanding Article 302.2, a Party may not apply an over-quota tariff rate under a special safeguard that exceeds the lesser of:
a) the most-favored-nation (MEN) rate as of July 1, 1991; and
b) the prevailing MFN rate. 4. No Party may, with respect to the same good and the same country, at the same time:
a) apply an over-quota tariff rate under paragraph 3; and
b) take an emergency action covered by Chapter Eight (Emergency Action).
Article 704. Domestic Support
The Parties recognize that domestic support measures can be of crucial importance to their agricultural sectors but may also have trade distorting and production effects and that domestic support reduction commitments may result from agricultural multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT). Accordingly, where a Party supports its agricultural producers, that Party should endeavor to work toward domestic support measures that:
a) have minimal or no trade distorting or production effects; or
b) are exempt from any applicable domestic support reduction commitments that may be negotiated under the GATT.
The Parties further recognize that a Party may change its domestic support measures, including those that may be subject to reduction commitments, at the Party's discretion, subject to its rights and obligations under the GATT.
Article 705. Export Subsidies
1. The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods and shall cooperate in an effort to achieve an agreement under the GATT to eliminate those subsidies.
2. The Parties recognize that export subsidies for agricultural goods may prejudice the interests of importing and exporting Parties and, in particular, may disrupt the markets of importing Parties. Accordingly, in addition to the rights and obligations of the Parties specified in Annex 702.1, the Parties affirm that it is inappropriate for a Party to provide an export subsidy for an agricultural good exported to the territory of another Party where there are no other subsidized imports of that good into the territory of that other Party.
3. Except as provided in Annex 702.1, where an exporting Party considers that a non- Party is exporting an agricultural good to the territory of another Party with the benefit of export subsidies, the importing Party shall, on written request of the exporting Party, consult with the exporting Party with a view to agreeing on specific measures that the importing Party may adopt to counter the effect of any such subsidized imports. If the importing Party adopts the agreed-upon measures, the exporting Party shall refrain from applying, or immediately cease to apply, any export subsidy to exports of such good to the territory of the importing Party.
4. Except as provided in Annex 702.1, an exporting Party shall deliver written notice to the importing Party at least three days, excluding weekends, prior to adopting an export subsidy measure on an agricultural good exported to the territory of another Party. The exporting Party shall consult with the importing Party within 72 hours of receipt of the importing Party's written request, with a view to eliminating the subsidy or minimizing any adverse impact on the market of the importing Party for that good. The importing Party shall, when requesting consultations with the exporting Party, at the same time, deliver written notice to a third Party of the request. A third Party may request to participate in such consultations.
5. Each Party shall take into account the interests of the other Parties in the use of any export subsidy on an agricultural good, recognizing that such subsidies may have prejudicial effects on the interests of the other Parties.
6. The Parties hereby establish a Working Group on Agricultural Subsidies, comprising representatives of each Party, which shall meet at least semi-annually or as the Parties may otherwise agree, to work toward elimination of all export subsidies affecting agricultural trade between the Parties. The functions of the Working Group shall include:
a) monitoring the volume and price of imports into the territory of any Party of agricultural goods that have benefitted from export subsidies;
b) providing a forum for the Parties to develop mutually acceptable criteria and procedures for reaching agreement on the limitation or elimination of export subsidies for imports of agricultural goods into the territories of the Parties; and
c) reporting annually to the Committee on Agricultural Trade, established under Article 706, on the implementation of this Article.
7. Notwithstanding any other provision of this Article:
a) if the importing and exporting Parties agree to an export subsidy for an agricultural good exported to the territory of the importing Party, the exporting Party or Parties may adopt or maintain such subsidy; and
b) each Party retains its rights to apply countervailing duties to subsidized imports of agricultural goods from the territory of a Party or non-Party.
Article 706. Committee on Agricultural Trade
1. The Parties hereby establish a Committee on Agricultural Trade, comprising representatives of each Party.
2. The Committee's functions shall include: a) monitoring and promoting cooperation on the implementation and administration of this Section;
b) providing a forum for the Parties to consult on issues related to this Section at least semi-annually and as the Parties may otherwise agree; and
c) reporting annually to the Commission on the implementation of this Section.
Article 707. Advisory Committee on Private Commercial Disputes Regarding Agricultural Goods
The Committee shall establish an Advisory Committee on Private Commercial Disputes regarding Agricultural Goods, comprising persons with expertise or experience in the resolution of private commercial disputes in agricultural trade. The Advisory Committee shall report and provide recommendations to the Committee for the development of systems in the territory of each Party to achieve the prompt and effective resolution of such disputes, taking into account any special circumstance, including the perishability of certain agricultural goods.
Article 708. Definitions
For purposes of this Section:
Agricultural Good Means a Good Provided for In Any of the Following:
Note: (For purposes of reference only, descriptions are provided next to the corresponding tariff provision.)
(a) Harmonized System (HS) Chapters 1 through 24 (other than a fish or fish product); or
(b) HS subheading 2905.43 manitol
HS subheading 2905.44 sorbitol
HS heading 33.01 essential oils
HS headings 35.01 to 35.05 albuminoidal substances, modified starches, glues
HS subheading 3809.10 finishing agents
HS subheading 3823.60 sorbitol n.e.p.
HS headings 41.01 to 41.03 hides and skins
HS heading 43.01 raw furskins
HS headings 50.01 to 50.03 raw silk and silk waste
HS headings 51.01 to 51.03 wool and animal hair
HS headings 52.01 to 52.03 raw cotton, cotton waste and cotton carded or combed
HS heading 53.01 raw flax
HS heading 53.02 raw hemp
customs duty means "customs duty" as defined in Article 318 (National Treatment and Market Access for Goods - Definitions);
duty-free means "duty-free" as defined in Article 318;
fish or fish product means a fish or crustacean, mollusc or other aquatic invertebrate, marine mammal, or a product thereof provided for in any of the following:
HS Chapter 03 fish and crustaceans, molluscs and other aquatic invertebrates
HS heading 05.07 tortoise-shell, whalebone and whalebone hair and those fish or crustaceans, molluscs or other aquatic invertebrates, marine mammals, and their products within this heading
HS heading 05.08 coral and similar materials
HS heading 05.09 natural sponges of animal origin
HS heading 05.11 products of fish or crustaceans, molluscs or other aquatic invertebrates; dead animals of Chapter 3
HS heading 15.04 fats and oils and their fractions, of fish or marine mammals
HS heading 16.03 "non-meat" extracts and juices
HS heading 16.04 prepared or preserved fish
HS heading 16.05 prepared preserved crustaceans, molluscs and other aquatic invertebrates;
HS subheading 2301.20 flours, meals, pellets of fish
material means "material" as defined in Article 415 (Rules of Origin - Definitions);
over-quota tariff rate means the rate of customs duty to be applied to quantities in excess of the quantity specified under a tariff rate quota;
sugar or syrup good means "sugar or syrup good" as defined in Annex 703.2; tariff item means a âtariff item" as defined in Annex 401; and tariff rate quota means a mechanism that provides for the application of a customs duty at a certain rate to imports of a particular good up to a specified quantity Gn- quota quantity), and at a different rate to imports of that good that exceed that quantity.
Section B. Sanitary and Phytosanitary Measures
Article 709. Scope and Coverage
In order to establish a framework of rules and disciplines to guide the development, adoption and enforcement of sanitary and phytosanitary measures, this Section applies to any such measure of a Party that may, directly or indirectly, affect trade between the Parties.
Article 710. Relation to other Chapters
Articles 301 (National Treatment) and 309 (Import and Export Restrictions), and the provisions of Article XX(b) of the GATT as incorporated into Article 2101(1) (General Exceptions), do not apply to any sanitary or phytosanitary measure.
Article 711. Reliance on Non-Governmental Entities
Each Party shall ensure that any non-governmental entity on which it relies in applying a sanitary or phytosanitary measure acts in a manner consistent with this Section.
Article 712. Basic Rights and Obligations
Right to Take Sanitary and Phytosanitary Measures
1. Each Party may, in accordance with this Section, adopt, maintain or apply any sanitary or phytosanitary measure necessary for the protection of human, animal or plant life or health in its territory, including a measure more stringent than an international standard, guideline or recommendation.
Right to Establish Level of Protection
2. Notwithstanding any other provision of this Section, each Party may, in protecting human, animal or plant life or health, establish its appropriate levels of protection in accordance with Article 715.
Scientific Principles
3. Each Party shall ensure that any sanitary or phytosanitary measure that it adopts, maintains or applies is:
a) based on scientific principles, taking into account relevant factors including, where appropriate, different geographic conditions;
b) not maintained where there is no longer a scientific basis for it; and c) based on a risk assessment, as appropriate to the circumstances. Non-Discriminatory Treatment
4. Each Party shall ensure that a sanitary or phytosanitary measure that it adopts, maintains or applies does not arbitrarily or unjustifiably discriminate between its goods and like goods of another Party, or between goods of another Party and like goods of any other country, where identical or similar conditions prevail.
Unnecessary Obstacles
5. Each Party shall ensure that any sanitary or phytosanitary measure that it adopts, maintains or applies is applied only to the extent necessary to achieve its appropriate level of protection, taking into account technical and economic feasibility.
Disguised Restrictions
6. No Party may adopt, maintain or apply any sanitary or phytosanitary measure with a view to, or with the effect of, creating a disguised restriction on trade between the Parties.
Article 713. International Standards and Standardizing Organizations
1. Without reducing the level of protection of human, animal or plant life or health, each Partyshall use, as a basis for its sanitary and phytosanitary measures, relevant international standards, guidelines or recommendations with the objective, among others, of making its sanitary and phytosanitary measures equivalent or, where appropriate, identical to those of the other Parties.
2. A Party's sanitary or phytosanitary measure that conforms to a relevant international standard, guideline or recommendation shall be presumed to be consistent with Article 712. A measure that results in a level of sanitary or phytosanitary protection different from that which would be achieved by a measure based on a relevant international standard, guideline or recommendation shall not for that reason alone be presumed to be inconsistent with this Section.
3. Nothing in Paragraph 1 shall be construed to prevent a Party from adopting, maintaining or applying, in accordance with the other provisions of this Section, a sanitary or phytosanitary measure that is more stringent than the relevant international standard, guideline or recommendation.
4. Where a Party has reason to believe that a sanitary or phytosanitary measure of another Party is adversely affecting or may adversely affect its exports and the measure is not based on a relevant international standard, guideline or recommendation, it may request, and the other Party shall provide in writing, the reasons for the measure.
5. Each Party shall, to the greatest extent practicable, participate in relevant international and North American standardizing organizations, including the Codex Alimentarius Commission, the International Office of Epizootics, the International Plant Protection Convention, and the North American Plant Protection Organization, with a view to promoting the development and periodic review of international standards, guidelines and recommendations.
Article 714. Equivalence
1. Without reducing the level of protection of human, animal or plant life or health, the Parties shall, to the greatest extent practicable and in accordance with this Section, pursue equivalence of their respective sanitary and phytosanitary measures.
2. Each importing Party:
a) shall treat a sanitary or phytosanitary measure adopted or maintained by an exporting Party as equivalent to its own where the exporting Party, in cooperation with the importing Party, provides to the importing Party scientific evidence or other information, in accordance with risk assessment methodologies agreed on by those Parties, to demonstrate objectively, subject to subparagraph (b), that the exporting Party's measure achieves the importing Party's appropriate level of protection;
b) may, where it has a scientific basis, determine that the exporting Party's measure does not achieve the importing Party's appropriate level of protection; and
c) shall provide to the exporting Party, on request, its reasons in writing for a determination under subparagraph (b).
3. For purposes of establishing equivalence, each exporting Party shall, on the request of an importing Party, take such reasonable measures as may be available to it to facilitate access in its territory for inspection, testing and other relevant procedures.
4. Each Party should, in the development of a sanitary or phytosanitary measure, consider relevant actual or proposed sanitary or phytosanitary measures of the other Parties.
Article 715. Risk Assessment and Appropriate Level of Protection
1. In conducting a risk assessment, each Party shall take into account:
a) relevant risk assessment techniques and methodologies developed by international or North American standardizing organizations;
b) relevant scientific evidence;
c) relevant processes and production methods;
d) relevant inspection, sampling and testing methods;