(ii) be without prejudice as to whether the import licensing procedure is consistent with this Agreement.
(b) Before applying any new or modified import licensing procedure, a Party shall publish the new procedure or modification on an official government website. To the extent possible, that Party shall do so at least 20 days before the new procedure or modification takes effect.
Article 2.10. Administrative Fees and Formalities
Each Party shall ensure that all fees and charges imposed in connection with importation and exportation shall be consistent with their obligations under Article VIII:1 of GATT 1994 and its interpretative notes, which are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.11. Trade Related Non-Tariff Measures
Each Party shall ensure the transparency of its non-tariff measures affecting trade between the Parties and that any 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 2.12. Administration and Implementation of Tariff Rate Quotas
1. A Party that has established tariff rate quotas (hereinafter referred to as “TRQs”) as set out in Appendix 2-A-1 shall implement and administer these TRQs in accordance with Article XIII of GATT 1994 and, for greater certainty, its interpretative notes, and the Import Licensing Agreement, and any other relevant WTO Agreement.
2. A Party shall ensure that the administration measures and implementation of its TRQs are consistent, transparent and are not adopted or maintained to create discrimination against the other Party. Accordingly, a Party shall ensure all fees and charges in connection with importation through the TRQ system are commensurate with the cost of services rendered.
Section E. General and Institutional Provisions
Article 2.13. Measures to Safeguard the Balance of Payments
Where a Party is in serious balance of payments and external financial difficulties or threat thereof, it may, in accordance with GATT 1994, which includes the Understanding on Balance-of-Payments Provisions of GATT 1994, adopt restrictive import measures. In adopting such measures, the Party shall immediately consult with the other Party.
Article 2.14. Committee on Trade In Goods
1. The Parties hereby establish a Committee on Trade in Goods (hereinafter referred to as the “Committee”), comprising representatives of each Party.
2. The Committee shall meet upon request of a Party or the Joint Committee to consider matters arising under this Chapter.
3. The Committee’s functions shall include:
(a) promoting trade in goods between the Parties, including through consultations on accelerating the reduction or elimination of customs duties under this Agreement and other issues as appropriate;
(b) considering issues relating to non-tariff measures and addressing barriers to trade in goods between the Parties with a view to ensuring WTO rights and obligations and facilitating trade between the Parties, and, if appropriate, referring such matters to the Joint Committee for its consideration;
(c) reviewing the amendments to the Harmonized System to ensure that each Party’s obligations under this Agreement are not altered, and consulting to resolve any conflicts between:
(i) such amendments to the Harmonized System and Annex 2-A; or
(ii) Annex 2-A and national nomenclatures;
(d) consulting on and endeavoring to resolve any difference that may arise between the Parties on matters related to the classification of goods under the Harmonized System; and
(e) providing a forum for discussion or the exchange of information on matters related to subparagraphs (a) through (d), which may, directly or indirectly affect trade between the Parties, with a view to minimizing their negative effects on trade and seeking mutually acceptable alternatives.
Section F. Definitions
Article 2.15. Definitions
For the purposes of this Chapter:
commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than the amount specified in a Party’s laws, regulations, or procedures governing temporary admission, or so marked, torn, perforated, or otherwise treated that they are unsuitable for sale or use except as commercial samples;
consumed means:
(a) actually consumed; or
(b) further processed or manufactured so as to result in a substantial change in the value, form, or use of the good or in the production of another good;
duty-free means free of customs duty;
goods intended for display or demonstration includes their component parts,
ancillary apparatus, and accessories;
goods temporarily admitted for sports purposes means sports requisites for use in sports contests, demonstrations, or training in the territory of the Party into whose territory such goods are admitted;
import licensing means an administrative procedure requiring the submission of an application or other documentation (other than that generally required for customs clearance purposes) to the relevant administrative body as a prior condition for importation into the territory of the importing Party;
Import Licensing Agreement means the Agreement on Import Licensing Procedures, in Annex 1A to the WTO Agreement;
performance requirement means a requirement that:
(a) a given level or percentage of goods be exported;
(b) domestic goods of the Party granting an import license be substituted for imported goods;
(c) a person benefiting from an import license purchase other goods or services in the territory of the Party granting the import license, or accord a preference to domestically produced goods;
(d) a person benefiting from an import license produce goods or supply services, in the territory of the Party granting the import license, with a given level or percentage of domestic content; or
(e) relates in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows;
but does not include a requirement that an imported good be:
(f) subsequently exported;
(g) used as a material in the production of another good that is subsequently exported;
(h) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported; or
(i) substituted by an identical or similar good that is subsequently exported; and
printed advertising materials means selected goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials, and posters, that are used to promote, publicize, or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge.
Chapter 3. RULES OF ORIGIN AND ORIGIN PROCEDURES
Section A. Rules of Origin
Article 3.1. Origin Criteria
1. For the purposes of this Agreement, a good imported into the territory of a Party shall be deemed to be originating and eligible for preferential tariff treatment if it conforms to the origin requirements under any one of the following:
(a) a good which is wholly obtained or produced entirely in the territory of the exporting Party as set out and defined in Article 3.2;
(b) a good not wholly obtained or produced in the territory of the exporting Party, provided that the good is eligible under Article 3.3 or 3.4 or 3.5 or 3.6; or
(c) a good which is produced entirely in the territory of the exporting Party exclusively from originating materials.
2. Except as provided for in Article 3.6, the conditions for acquiring originating status set out in this Chapter must be fulfilled without interruption in the territory of the exporting Party.
Article 3.2. Wholly Obtained or Produced Goods
Within the meaning of subparagraph 1(a) of Article 3.1, the following goods shall be considered to be wholly obtained or produced in the territory of a Party:
(a) plants and plant products grown and harvested there;
(b) live animals born and raised there;
(c) goods obtained from live animals referred to in subparagraph (b);
(d) goods obtained from hunting or trapping within the land territory, or fishing or aquaculture conducted within the internal waters or within the territorial sea of that Party;
(e) minerals and other naturally occurring substances, not included in sub paragraphs (a) through (d), extracted or taken from the soil, waters, seabed or beneath the seabed in that Party;
(f) products of sea-fishing and other marine products taken by vessels registered with the Party and entitled to fly its flag, and other products taken by the Party or a person of that Party, from the waters, seabed or beneath the seabed outside the territorial seas of the Party, provided that the Party has the rights to exploit (1) the natural resources of such waters, seabed and beneath the seabed under international law；(2)
(g) goods produced and/or made on board factory ships registered with a Party and entitled to fly its flag, exclusively from products referred to in subparagraph (f);
(h) goods taken from outer space provided that they are obtained by the Party or a person of that Party;
(i) articles collected from there which can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for the disposal or recovery of parts of raw materials, or for recycling purposes;
(j) waste and scrap derived from:
(i) production there; or
(ii) used goods collected there, provided that such goods are fit only for the recovery of raw materials; and
(k) goods obtained or produced in the territory of the Party solely from goods referred to in subparagraphs (a) through (j).
Article 3.3. Not Wholly Obtained or Produced Goods
1. For the purposes of subparagraph 1(b) of Article 3.1, goods which are not wholly obtained, as provided for in Annex 3-A, shall be deemed to be originating when the conditions set out in the Annex 3-A are satisfied.
2. The formula for calculating the regional value content (hereinafter referred to as „‟RVC‟‟) will be either (3):
(a) Direct / Build-Up Method
VOM
RVC = ----------------------- x 100%
FOB
VOM means value of originating materials, which includes the value of originating material cost, labor cost, overhead cost, profit and other costs, where:
(i) material cost is the value of originating materials, parts or goods that are acquired or self-produced by the producer in the production of the good;
(ii) labor cost includes wages, remuneration and other employee benefits;
(iii) overhead cost is the total overhead expense; and
(iv) other costs are the costs incurred in placing the good in the ship or other means of transport for export including, but not limited to, domestic transport costs, storage and warehousing, port handling, brokerage fees and service charges.
or
(b) Indirect / Build-Down Method
FOB - VNM
RVC = ------------------------- x 100%
FOB
VNM means value of non-originating materials, which shall be:
(i) the CIF value at the time of importation of the materials, parts or goods; or
(ii) the earliest ascertained price paid for the materials, parts or goods of undetermined origin in the territory of the Party where the working or processing has taken place.
3. For the purposes of paragraph 1 and the relevant Product Specific Rules set out in Annex 3-A, the rules requiring that the materials that are used have undergone a change in tariff classification, or a specific manufacturing or processing operation, shall apply only to non-originating materials.
4. When an originating good is used in the subsequent production of another good, no account shall be taken of the non-originating materials contained in the originating good for the purposes of determining the originating status of the subsequently produced good.
Article 3.4. Product Specific Rules
For the purposes of Article 3.1, goods which satisfy the Product Specific Rules provided in Annex 3-A shall be considered to be originating in the territory of the Party where working or processing of the goods has taken place.
Article 3.5. Treatment for Certain Goods
Notwithstanding Articles 3.1, 3.3 and 3.4, certain goods shall be considered to be originating even if the production process or operation has been undertaken in the Gaeseong Industrial Complex located in the Korean Peninsula, on materials exported from a Party and subsequently re-imported to that Party provided that the conditions set out in Annex 3-B are fulfilled.
Article 3.6. Accumulation
Unless otherwise provided for in this Chapter, a good originating in the territory of a Party, which is used in the territory of the other Party as material for a finished good eligible for preferential tariff treatment, shall be considered to be originating in the territory of the latter Party where working or processing of the finished good has taken place. (4)
Article 3.7. Non-Qualifying Operations
1. Notwithstanding any provision in this Chapter, 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) preserving operations to ensure that the good remains in good condition during transport and storage;
(b) changes of packaging, breaking-up and assembly of packages;
(c) simple (5) washing, cleaning, removal of dust, oxide, oil, paint or other coverings;
(d) ironing or pressing of textiles;
(e) simple (5) painting and polishing operations;
(f) husking, partial or total bleaching, polishing and glazing of cereals and rice;
(g) operations to color sugar or form sugar lumps;
(h) simple (5) peeling, stoning, or un-shelling; (6)
(i) sharpening, simple grinding or simple cutting;
(j) sifting, screening, sorting, classifying, grading, or matching;
(k) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;
(l) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;
(m) simple mixing (7) of products, whether or not of different kinds;
(n) simple assembly of parts of articles to constitute a complete article or disassembly of products into parts;
(o) simple (5) testing or calibrations; or
(p) slaughtering of animals. (8)
2. A good originating in the territory of a Party shall retain its initial originating status, when exported from the other Party, where operations undertaken have not gone beyond those referred to in paragraph 1.
Article 3.8. Direct Transport
1. Preferential tariff treatment shall be applied to a good satisfying the requirements of this Chapter and which is transported directly between the territories of the Parties.
2. Notwithstanding paragraph 1, a good of which transport involves transit through one or more non-Parties, other than the territories of the Parties, shall be considered to be transported directly, provided that:
(a) the transit is justified for geographical reason or by consideration related exclusively to transport requirement;
(b) the good has not entered into trade or consumption there; and
(c) the good has not undergone any operation other than unloading and reloading or any operation required to keep it in good condition.
Article 3.9. De Minimis
1. A good that does not undergo a change in tariff classification shall be considered as originating if:
(a) for a good, other than that provided for in Chapters 50 through 63 of the Harmonized System, the value of all non-originating materials used in its production that do not undergo the required change in tariff classification does not exceed 10 percent of the FOB value of the good; and
(b) for a good provided for in Chapters 50 through 63 of the Harmonized System, the weight of all non-originating materials used in its production that do not undergo the required change in tariff classification does not exceed 10 percent of the total weight of the good, or the value of all non- originating materials used in the production of the good that do not undergo the required change in tariff classification does not exceed 10 percent of the FOB value of the good;
and the good specified in subparagraphs (a) and (b) meets all other applicable criteria set out in this Chapter for qualifying as an originating good.
2. The value of non-originating materials referred to in paragraph 1 shall, however, be included in the value of non-originating materials for any applicable RVC requirement for the good.
Article 3.10. Treatment of Packaging and Packing Materials
1. (a) If a good is subject to the RVC criterion as set out in Article 3.3 and Annex 3-A, the value of the packaging and packing materials for retail sale shall be taken into account in the determination of its origin, where the packaging and packing materials are considered to be forming a whole with the good.
(b) If a good is subject to a criterion other than the RVC criterion as set out in Article 3.3 and Annex 3-A, the packaging and packing materials for retail sale shall, if classified together with the packaged good, be disregarded in determining whether all the non-originating materials used in the production of the good satisfy the applicable requirements set out in Article 3.3 and Annex 3-A.
2. Packing materials and containers for transportation of a good shall not be taken into account in determining the origin of the good.
Article 3.12. Neutral Elements
In order to determine whether a good originates, it shall not be necessary to determine the origin of the following which might be used in its production and not incorporated into the good:
(a) fuel and energy;
(b) tools, dies and moulds;
(c) spare parts and materials used in the maintenance of equipment and buildings;
(d) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings;
(e) gloves, glasses, footwear, clothing, safety equipment and supplies;
(f) equipment, devices and supplies used for testing or inspecting the good; and
(g) any other good that is not incorporated into the good but of which use in the production of the good can reasonably be demonstrated to be a part of that production.