2. The percentage of qualifying value content shall not be less than 40%, except for the goods listed in Annex 4-B (Product Specific Rules) as provided under subparagraph (c) of Article 4.2.
Article 4.5. Change In Tariff Heading
Change in tariff heading refers to the final good that is classified under a heading of the Harmonised System (HS) which must be different from the headings under which the non-originating materials used in the production process of the said good as provided under subparagraph (b) of Article 4.2.
Article 4.6. Indirect Materials
1. Any indirect material used in the production of a good shall be treated as originating materials, irrespective of whether such indirect material originates from a non-Party.
Article 4.7. Minimal Operations and Processes That Do Not Confer Origin
The following minimal operations or processes, undertaken exclusively by itself or in combination, do not confer origin:
(a) operations to ensure the preservation of products in good condition during transport and storage such as drying, freezing, ventilation, chilling and like operations;
(b) sifting, classifying, washing, cutting, slitting, bending, coiling or uncoiling, sharpening, simple grinding, slicing ;
(c) cleaning, including removal of oxide, oil, paint or other coverings;
(d) painting and polishing operations;
(e) testing or calibration;
(f) placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;
(g) simple mixing (4) of goods, whether or not of different kinds;
(h) simple assembly (5) of parts of products to constitute a complete good;
(i) changes of packing, unpacking or repacking operations, and breaking up and assembly of consignments;
(j) affixing or printing marks, labels, logos and other like distinguishing signs on goods or their packaging;
(k) mere dilution with water or another substance that does not materially alter the characteristics of the goods; and
(l) husking, partial or total bleaching, polishing and glazing of cereals and rice.
Article 4.8. Accumulation
An originating good of a Party which is used in the processing or production in the territory of the other Party as material for finished good, shall be deemed as a material originating in the territory of the latter Party where the working or processing of the finished goods has taken place.
Article 4.9. De Minimis
A good that does not undergo a change in tariff classification shall be considered as originating if:
(a) the value of all non-originating materials used in its production that do not undergo the required change in tariff classification do not exceed 10% of the FOB value of the good; and
(b) the good meets all other applicable criteria set forth in this Chapter for qualifying as an originating good.
Article 4.10. Fungible Goods and Materials
1. The determination of whether fungible goods or materials are originating goods shall be made either by physical segregation of each of the materials, or through the use of an inventory management method recognised in the generally accepted accounting principles of the Party in which the production is performed or otherwise accepted by that Party.
2. The method of inventory management chosen by the exporter must be maintained for at least one year.
Article 4.11. Accessories, Spare Parts, Tools and Instructional or Information Materials
1. Accessories, spare parts, tools, instructional or other information materials delivered with a good that form part of the good's standard accessories, spare parts, or tools, shall be regarded as a part of the good, 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, tools, instructional or other information materials are classified with and not invoiced separately from the good; and
(b) the quantities and value of the accessories, spare parts, tools, instructional or other information materials are customary for the good.
2. If the goods are subject to qualifying value content requirement, the value of the accessories, spare part, or tools shall be taken into account as originating or non-originating materials, as the case may be, in calculating the qualifying value content of the goods.
Article 4.12. Treatment of Packages, Packing Materials and Containers
1. If a good is subject to the qualifying value content provided in Article 4.4, the value of the packages and packing materials for retail sale, shall be taken into account in determining the origin of that good as originating or non-originating, as the case may be, provided that the packages and packing materials are considered to be forming a whole with the good.
2. If a good is subject to the change in tariff classification criterion provided in Article 4.5, packages and packing materials classified together with the packaged good, shall not be taken into account in determining origin.
3. Packing materials and containers used exclusively for the transportation of a good shall not be taken into account in determining the origin of such goods.
Article 4.13. Direct Consignment
1. A good shall be deemed as directly consigned from the exporting Party to the importing Party:
(a) if the goods are transported without passing through the territory of any non-Party; or
(b) if the goods are transported for the purpose of transit through a non-Party with or without transshipment or temporary storage in such non-Party, provided that:
(i) the transit is justified for geographical reasons or transport requirements;
(ii) the goods have not entered into trade or consumption in the territory of the non-Party; and
(iii) the goods have not undergone any operation in the territory of the non-Party other than unloading, reloading and splitting-up/bulk breaking or any operation required to keep the goods in good condition.
2. A directly consigned good shall retain its originating status.
3. In the case where an originating good of the exporting Party is imported through one or more non-Parties or after an exhibition in a non-Party, the Customs Authority of the importing Party may require importers, who claim the preferential tariff treatment for the good, to submit supporting documentation such as transport, customs documents or other documents.
Article 4.14. Certificate of Origin
A claim that goods are eligible for preferential treatment under this Agreement shall be supported by a Certificate of Origin in the form as prescribed in Annex 4-C (Form of Certificate of Origin), issued by the Competent Authority of the exporting Party.
Article 4.15. Committee on Rules of Origin and Customs Administration
1. For the purposes of the effective implementation and operation of this Chapter and Chapter 5 (Customs Administration), the Parties hereby establish a Committee on Rules of Origin and Customs Administration, comprising of representatives of each Party.
2. The functions of the Committee on Rules of Origin and Customs Administration shall be to:
(a) review the implementation and operation of this Chapter and Chapter 5 (Customs Administration);
(b) report its findings to the Joint Committee;
(c) identify areas, relating to this Chapter and Chapter 5 (Customs Administration), to be improved for facilitating trade in goods between the Parties; and
(d) carry out other functions as may be delegated by the Joint Committee in accordance with subparagraph 4(e) of Article 11.1.
3. The Committee on Rules of Origin and Customs Administration shall meet at such venues and times as may be agreed by the Parties.
Chapter 5. Customs Administration
Article 5.1. Definitions
For the purposes of this Chapter:
(a) Customs Authority means the authority that according to the legislation of each Party is responsible for the administration and enforcement of its customs laws:
(i) in the case of Chile, the Chile Customs Service; and
(ii) in the case of Malaysia, the Royal Malaysian Customs;
(b) customs laws means such laws and regulations administered and enforced by the customs authority of each Party concerning the importation, exportation, and transit of goods, relating to customs duties, charges and other taxes, or to prohibitions, restrictions and other similar controls with respect to the movement of controlled items across the boundary of the customs territory of each Party;
(c) information means any data, documents, reports and certified or authenticated copies thereof or other communications;
(d) Requesting Authority means the Customs Authority which requests assistance; and
(f) Requested Authority means the Customs Authority from which assistance is requested.
Article 5.2. Objectives
The objectives of this Chapter are to:
(a) simplify and harmonise customs procedures of the Parties;
(b) ensure consistency, predictability and transparency in the application of customs laws and regulations of the Parties;
(c) ensure efficient and expeditious release of goods;
(d) facilitate trade in goods between the Parties by the use of information and communications technology, taking into account international standards; and
(e) promote cooperation between the customs authorities with relevant international standards and recommended practices such as those made under the auspices of the Customs Cooperation Council.
Article 5.3. Scope and Coverage
1. This Chapter shall apply to customs procedures for goods traded between the Parties.
2. This Chapter shall be implemented by each Party in accordance with the laws and regulations in force in each Party and within the competence and available resources of the Customs Authority of each Party.
Article 5.4. Publication and Enquiry Points
1. For the purposes of this Chapter, each Party shall:
(a) publish, on the internet or in print form, all statutory and regulatory provisions and procedures applicable or enforced by its Customs Authority; and
(b) designate one or more enquiry points to address enquiries from the other Party concerning customs matters, and shall make available on the internet or print form, information concerning procedures for making such enquiries.
2. To the extent possible, each Party may have prior consultation on any related regulations of general application governing customs matters that it proposes to adopt and shall publish any regulations of general application governing customs matters as soon as it comes into force.
Article 5.5. Release of Goods
1. Each Party shall endeavour to apply customs procedures in a predictable, consistent and transparent manner for the efficient release of goods in order to facilitate trade between the Parties.
2. For the prompt release of goods traded between the Parties, each Party shall, to the extent possible:
(a) provide for the release of goods within a period no greater than that required to ensure compliance with its customs laws; and to the extent possible, within 48 hours of all relevant customs import;
(b) make use of information and communications technology;
(c) adopt or maintain procedures allowing, to the extent possible, goods to be released at the point of arrival, without temporary transfer to warehouses or other locations; and
(d) harmonise its customs procedures, as far as possible, with relevant international standards and best practices, such as those recommended by the World Customs Organization.
Article 5.6. Risk Management
1. In order to facilitate release of goods traded between the Parties, the Customs Authority of each Party shall use risk management methodology.
2. The Customs Authority of each Party shall exchange information, including best practices, on risk management techniques and other enforcement techniques. 3. Each Party shall endeavour to adopt or maintain risk management systems that enable its Customs Authority to concentrate inspection activities on high risk goods and that simplify the clearance and movement of low risk goods.
Article 5.7. Cooperation and Capacity Building
1. Each Party shall cooperate on capacity building, such as training, technical assistance, exchange of experts and any other forms of cooperation, as may be mutually agreed upon by the Parties, for trade facilitation.
2. To the extent permitted by their domestic laws and regulations, the Customs Authority of each Party shall assist each other in relation to:
(a) achieving compliance with their laws and regulations pertaining to the implementation and operation of the provisions of this Agreement; and such other customs matters as the Parties may agree;
(b) the implementation and operation of the Agreement on Customs Valuation;
(c) enforcement of prohibitions and restrictions on exports to and imports from their respective territories;
(d) joint efforts to combat customs fraud; and (e) cooperation in any other areas as may be mutually agreed upon by the Parties.
Article 5.8. Mutual Assistance
1. The Customs Authority of each Party shall, to the extent possible, provide the Customs Authority of the other Party, upon request or on its own initiative, with information which helps to ensure proper application of customs laws and the prevention of violation or attempted violation of customs laws.
2. To the extent permitted by their respective domestic laws, the customs authorities may provide each other with mutual assistance in order to prevent or investigate violations of customs laws or when information is required for use in judicial proceedings.
3. The request pursuant to paragraph 1 shall, wherever appropriate, specify:
(a) the verification procedures that the Requesting Authority has undertaken or attempted to undertake; and
(b) the specific information that the Requesting Authority requires, which may include:
(i) subject and reason for the request;
(ii) a brief description of the matter and the action requested; and
(iii) the names and addresses of the parties concerned with the proceedings, if known.
Article 5.9. Enforcement Against Illicit Trafficking
The Customs Authority of each Party shall, to the extent permitted by their laws and regulations, wherever possible, cooperate and exchange information in their enforcement against the trafficking of illicit drugs and other prohibited goods in their respective territories.
Article 5.10. Information and Communications Technology
The customs authorities of the Parties shall make cooperative efforts to promote the use of information and communications technology in their customs procedures including sharing best practices, for the purpose of improving their customs procedures.
Article 5.11. Confidentiality
1. Any information communicated under this Chapter shall be treated as confidential unless the Requested Authority consents in writing to the disclosure of such information.
2. The Requested Authority may limit the information communicated under this Chapter if the Requesting Authority is unable to give the assurance that the information is used solely for the purpose it was requested for.
3. If a Requesting Authority would be unable to comply with a similar request in case such a request was made by the Requested Authority, the Requesting Authority shall draw attention to that fact in its request. Execution of such a request shall be at the discretion of the Requested Authority
4. Any information communicated under this Chapter shall be used only by the Requesting Authority, solely for the purpose of administrative assistance according to the terms set out in this Chapter.
5. Any information in the possession of the requested customs administration and communicated under this Chapter, if required for use in judicial proceedings, shall only be disclosed in accordance with the laws and regulations of the respective Party.
6. Notwithstanding the provisions of this Chapter, if the communication of any information requested under this Chapter is prohibited by the laws or regulations, considered to be incompatible or prejudicial to the national interest or national security of the country of the Requested Authority, the Requested Authority shall not be required to provide such information or may provide such information subject to any terms, conditions or limitations it may prescribe.
Article 5.12. Review and Appeal
Each Party shall ensure that with respect to its determinations on customs matters, importers in its territory have access to:
(a) a level of administrative review independent of the office that issued the determinations; and
(b) judicial review of the determinations.
Article 5.13. Penalties
Each Party shall adopt or maintain measures that provide for the imposition of civil, administrative and, where appropriate, criminal sanctions for violations of its customs laws and regulations.
Article 514. Advance Rulings
1. Each Party shall issue, prior to the importation of a good into its territory, a written advance ruling at the written request of an importer in its territory, with regard to:
(a) tariff classification; and
(b) the application of customs valuation criteria for a particular case, in accordance with the application of the provisions set forth in the Agreement on Customs Valuation.
2. For the issuance of the written advance ruling, each Party will apply their domestic laws and procedures.
Chapter 6. Sanitary and Phytosanitary Measures
Article 6.1. Definitions
For the purposes of this Chapter:
(a) SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measures, contained in Annex 1A of the WTO Agreement;
(b) the definitions in Annex A of the SPS Agreement are incorporated into this Chapter and shall form part of this Chapter, mutatis mutandis; and
(c) the relevant definitions developed by the Codex Alimentarius Commission (hereinafter referred to as "Codex"), World Organisation for Animal Health (hereinafter referred to as "OIE") and the International Plant Protection Convention (hereinafter referred to as "IPPC") apply to the implementation of this Chapter.
Article 6.2. Objectives
The objectives of this Chapter are to:
(a) facilitate implementation of the SPS Agreement and applicable international standards, guidelines and recommendations developed by the relevant international organizations;
(b) facilitate bilateral trade in food, plants and animals, including their products, while protecting human, animal or plant life or health in the territory of each Party;
(c) increase mutual understanding of each Party's regulations and procedures relating to the implementation of sanitary and phytosanitary measures;
(d) provide a means to improve communication and cooperation on sanitary and phytosanitary issues; and
(e) provide means to resolve issues on sanitary and phytosanitary arising from the implementation of this Agreement.
Article 6.3. Scope and Coverage
This Chapter applies to all sanitary and phytosanitary measures of a Party that may, directly or indirectly, affect trade between the Parties.
Article 6.4. General Obligations
1. The Parties reaffirm their rights and obligations with respect to each other under the SPS Agreement.
2. The Parties shall cooperate in relevant international bodies engaged in work on sanitary and phytosanitary related issues, including the WTO SPS Committee, Codex, OIE and IPPC.