Title
FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND HONG KONG, CHINA
Preamble
Iceland, the Principality of Liechtenstein, the Kingdom of Norway, the Swiss Confederation (hereinafter referred to as the "EFTA States") on the one part, and the Hong Kong Special Administrative Region of the People's Republic of China (hereinafter referred to as "Hong Kong, China"), on the other, hereinafter individually referred to as a "Party" or collectively as the "Parties":
RECOGNISING the common wish to strengthen the links between the EFTA States on the one part and Hong Kong, China on the other by establishing closer and lasting trade and investment relations;
REAFFIRMING their commitment to democracy, the rule of law, human rights and fundamental political and economic freedoms in accordance with their obligations under international law, and principles and objectives set out in the United Nations Charter and the Universal Declaration of Human Rights;
REAFFIRMING their commitment to pursue the objective of sustainable development and recognising the interdependence and mutual supportiveness of trade, environment and labour policies in this respect;
RECALLING their rights and obligations under multilateral environmental agreements applicable to them, and the respect for the fundamental principles and rights at work, including the principles set out in the relevant International Labour Organisation Conventions applicable to them;
AIMING to create new employment opportunities, raise the living standards of their people and improve their living conditions through liberalising trade and improving levels of protection of health and safety and of the environment;
DESIRING to create favourable conditions for the development and diversification of trade between them and for the promotion of commercial and economic co-operation in areas of common interest on the basis of equality, mutual benefit, non-discrimination and international law;
RECOGNISING the importance of trade facilitation in promoting efficient and transparent procedures to reduce costs and to enhance predictability for the trading communities of the Parties;
DETERMINED to promote and further strengthen the multilateral trading system, building on their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organisation (hereinafter referred to as the "WTO") and the other agreements negotiated thereunder, thereby contributing to the harmonious development and expansion of world trade;
DETERMINED to implement this Agreement in line with the objectives to preserve and protect the environment through sound environmental management and to promote an optimal use of the world's resources in accordance with the objective of sustainable development;
AFFIRMING their commitment to prevent and combat corruption in international trade and investment and to promote the principles of transparency and good governance;
ACKNOWLEDGING the importance of good corporate governance and corporate social responsibility for sustainable development, and affirming their aim to encourage enterprises to take into account internationally recognised guidelines and principles where appropriate;
CONVINCED that this Agreement will enhance the competitiveness of their firms in global markets and create conditions encouraging economic, trade and investment telations between them;
HAVE AGREED, in pursuit of the above, to conclude the following Free Trade Agreement (hereinafter referred to as "this Agreement"):
Body
Chapter 1. GENERAL PROVISIONS
Article 1.1. Objectives
1. The Parties hereby establish a free trade area in accordance with the provisions of this Agreement and the complementary agreements on agriculture, concurrently concluded between the EFTA States and Hong Kong, China.
2. The objectives of this Agreement are:
(a) to achieve the liberalisation of trade in goods, in conformity with Article XXIV of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as the "GATT 1994");
(b) to achieve the liberalisation of trade in services, in conformity with Article V of the General Agreement on Trade in Services (hereinafter referred to as the "GATS");
(c) to mutually enhance investment opportunities;
(d) to facilitate and expand trade in goods and services;
(e) to ensure adequate and effective protection of intellectual property rights, in accordance with international standards applicable to the Parties;
(f) to improve access to each other's government procurement markets on a mutual basis;
(g) to promote competition in their economies, particularly as it relates to economic relations between the Parties;
(h) to develop international trade in such a way as to contribute to the objective of sustainable development and to ensure that this objective is integrated and reflected in the Parties' trade relationship; and
(i) to contribute thereby to the harmonious development and expansion of world trade.
Article 1.2. Geographical Scope
1. This Agreement shall, except as otherwise specified In Annex IV, apply:
(a) for an EFTA State:
i) to its land territory, internal waters, and territorial sea, and the air- space above, in accordance with international law; and
(ii) beyond the territorial sea, with respect to measures taken in the exercise of its sovereign right or jurisdiction in accordance with international law;
(b) for Hong Kong, China: to the land and sea comprised within the boundary of the Hong Kong Special Administrative Region only, including Hong Kong Island, Kowloon, the New Territories, and the waters of Hong Kong.
2. This Agreement shall not apply to the Norwegian territory of Svalbard, with the exception of trade in goods.
Article 1.3. Trade and Economic Relations Governed by this Agreement
1. This Agreement shall apply to the trade and economic relations between, on the one side, the individual EFTA States and, on the other side, Hong Kong, China, but not to the trade relations between individual EFTA States, unless otherwise provided for in this Agreement.
2. As a result of the Customs Treaty of 29 March 1923 between Switzerland and Liechtenstein, Switzerland shall represent Liechtenstein in matters covered thereby.
Article 1.4. Relationship to other International Agreements
1. The Parties confirm their rights and obligations under the Marrakesh Agreement establishing the WTO (hereinafter referred to as the "WTO Agreement") and the other agreements negotiated thereunder to which they are a party and any other international agreements to which they are a party or which are applicable to a Party. If a Party considers that there is an inconsistency between this Agreement and any other international agreements to which they are a party or which are applicable to a Party, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution in accordance with customary rules of public international law.
2. If a Party considers that the maintenance or establishment of customs unions, free trade areas, arrangements for frontier trade or other preferential agreements by another Party has the effect of altering the trade regime provided for by this Agreement, it may request consultations with that Party. That Party shall afford adequate opportunity for consultations with the requesting Party. (1)
Article 1.5. Regional and Local Government
Each Party shall take every available measure to ensure the observance of all obligations and commitments under this Agreement by its respective regional and local governments and authorities, and by non-governmental bodies in the exercise of governmental powers delegated to them by central, regional and local governments or authorities.
Article 1.6. Transparency
1. The Parties shall publish, make publicly available, or, if not publicly available, provide upon request, their laws, regulations, judicial decisions, administrative rulings of general application as well as their respective international agreements, that are relevant to this Agreement.
2. The Parties shall promptly respond to specific questions and provide, upon request, information to each other on matters referred to in paragraph 1.
3. Nothing in this Agreement shall require any Party to disclose information, in particular confidential information, that would impede law enforcement or violate domestic law, or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of any economic operator.
4. In case of any inconsistency between the provisions of this Article and provisions relating to transparency in other Chapters of this Agreement, the latter shall prevail to the extent of the inconsistency.
Article 1.7. Confidentiality
Where a Party provides information to another Party in accordance with this Agreement and designates the information as confidential, (2) the Party receiving the information shall treat the information as confidential in accordance with its domestic law and practice. Such information shall be used only for the purpose for which the information is provided, and shall not be otherwise disclosed without the specific written permission of the Party providing the information.
Chapter 2. TRADE IN GOODS
Article 2.1. Scope
1. This Chapter applies to trade between the Parties relating to:
(a) products classified under Chapters 25 to 97 of the Harmonized Commodity Description and Coding System (HS), excluding products listed In Annex I;
(b) processed agricultural products specified in Annex II, with due regard to the arrangements provided for in that Annex; and
(c) fish and other marine products as provided for in Annex HI. 2. Hong Kong, China and each EFTA State have concluded agreements on trade in agricultural products on a bilateral basis. These agreements form part of the instruments establishing a free trade area between the EFTA States and Hong Kong, China.
Article 2.2. Rules of Origin
The rules of origin and methods of administrative co-operation are set out in Annex IV.
Article 2.3. Elimination of Customs Duties
1. Upon entry into force of this Agreement, the Parties shall abolish all customs duties on imports and exports of products originating in an EFTA State or in Hong Kong, China as set out in paragraph 1 of Article 2.1. No new customs duties shall be introduced.
2. Customs duties include any duty or charge of any kind imposed in connection with the importation or exportation of a product, including any form of surtax or surcharge, but does not include any charge covered by Articles IIT and VIII of the GATT 1994.
Article 2.4. Import and Export Restrictions
The rights and obligations of the Parties in respect of export and import restrictions shall be governed by Article XI of the GATT 1994, which is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.5. Internal Taxation and Regulations
1. The Parties commit themselves to apply any internal taxes and other charges and regulations in accordance with Article II of the GATT 1994.
2. Exporters may not benefit from repayment of indirect taxes in excess of the amount of indirect taxes levied on products exported to one of the Parties.
Article 2.6. Sanitary and Phytosanitary Measures
1. The rights and obligations of the Parties in respect of sanitary and phytosanitary measures shall be governed by the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (hereinafter referred to as the "SPS Agreement").
2. The Parties shall strengthen their co-operation in the field of sanitary and phytosanitary measures, with a view to increasing the mutual understanding of their respective systems and facilitating access to their respective markets.
3. Without prejudice to paragraph 1, the Parties agree to hold ad hoc consultations where a Party considers that another Party has taken measures which are likely to create, or have created, an obstacle to trade, in order to find an appropriate solution in conformity with the SPS Agreement. Such consultations may be conducted in person or via videoconference, teleconference, or any other agreed method. The Joint Committee established pursuant to Article 9.1 (hereinafter referred to as the "Joint Committee") shall be informed of the commencement and results of such consultations. (3)
4. The Parties shall exchange names and addresses of designated contact points for matters relating to sanitary and phytosanitary measures in order to facilitate communication and the exchange of information.
Article 2.7. Technical Regulations
1. The rights and obligations of the Parties in respect of technical regulations, standards and conformity assessment procedures shall be governed by the WTO Agreement on Technical Barriers to Trade (hereinafter referred to as the "TBT Agreement").
2. The Parties shall strengthen their co-operation in the field of technical regulations, standards and conformity assessment procedures, with a view to increasing the mutual understanding of their respective systems and facilitating access to their respective markets.
3. Without prejudice to paragraph 1, the Parties agree to hold ad hoc consultations where a Party considers that another Party has taken measures which are likely to create, or have created, an obstacle to trade, in order to find an appropriate solution in conformity with the TBT Agreement. Such consultations may be conducted in person or via videoconference, teleconference, or any other agreed method. The Joint Committee shall be informed of the commencement and results of such consultations. (4)
4. The Parties shall exchange names and addresses of designated contact points for matters relating to technical barriers to trade in order to facilitate communication and the exchange of information.
Article 2.8. Trade Facilitation
The Parties shall facilitate trade in accordance with the provisions set out in Annex V.
Article 2.9. Sub-Committee on Rules of Origin, Customs Procedures and Trade Facilitation
1. A Sub-Committee of the Joint Committee on Rules of Origin, Customs Procedures and Trade Facilitation (hereinafter referred to as the "Sub-Committee") is hereby established.
2. The mandate of the Sub-Committee is set out in Annex VI.
Article 2.10. State Trading Enterprises
The rights and obligations of the Parties in respect of state trading enterprises shall be governed by Article XVII of the GATT 1994 and the Understanding on the Interpretation of Article XVII of the GATT 1994, which are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.11. Subsidies and Countervailing Measures
1. Hong Kong, China and Norway shall not apply countervailing measures as provided for under Article VI of the GATT 1994 and Part V of the WTO Agreement on Subsidies and Countervailing Measures (hereinafter referred to as the "SCM Agreement") in relation to products originating in a Party referred to in this paragraph.
2. Subject to paragraph 1, the rights and obligations between Hong Kong, China and Norway in respect of subsidies shall be governed by Article XVI of the GATT 1994 and the SCM Agreement.
3. The rights and obligations of Hong Kong, China, Switzerland, Liechtenstein and Iceland relating to subsidies and countervailing measures in respect of products originating in a Party referred to in this paragraph shall be governed by Articles VI and XVI of the GATT 1994 and the SCM Agreement, except as provided for in paragraphs 4 and 5.
4. Before any investigation is initiated by a Party referred to in paragraph 3 to determine the existence, degree and effect of any alleged subsidy in another Party, as provided for in Article 11 of the SCM Agreement, the Party considering initiating an investigation shall notify in writing the Party whose products are subject to an investigation and allow for 45 days, or a longer period if agreed by the Parties, for consultations with that Party with a view to finding a mutually acceptable solution. (5)
5. An investigation referred to in paragraph 4 shall only be initiated when domestic producers expressly supporting an application pursuant to Article 11 of the SCM Agreement account for at least 50 per cent of the total production of the like products produced by the domestic industry.
Article 2.12. Anti-dumping
A Party shall not apply anti-dumping measures as provided for under Article VI of the GATT 1994 and the WTO Agreement on Implementation of Article VI of the GATT 1994 in relation to products originating in another Party.
Article 2.13. Global Safeguard Measures
1. Hong Kong, China and Norway shall not initiate or take safeguard measures as provided for under Article XIX of the GATT 1994 and the WTO Agreement on Safeguards (hereinafter referred to as the "Safeguards Agreement") in relation to products originating in a Party referred to in this paragraph.
2. The rights and obligations of Hong Kong, China, Switzerland, Liechtenstein and Iceland in respect of global safeguards shall be governed by Article XIX of the GATT 1994 and the Safeguards Agreement in relation to products originating in a Party referred to in this paragraph. In taking global safeguard measures, a Party shall, consistent with its obligations under the WTO Agreements, exclude imports of originating products from another Party referred to in this paragraph, in particular if such imports do not in and of themselves cause or threaten to cause serious injury.
Article 2.14. Bilateral Safeguard Measures
1. Where, as a result of the reduction or elimination of a customs duty under this Agreement, any product originating in Hong Kong, China or in Switzerland or in Iceland is being imported into another Party referred to in this paragraph in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to constitute a substantial cause of serious injury or threat thereof to the domestic industry of like or directly competitive products in the importing Party, the importing Party may take bilateral safeguard measures to the minimum extent necessary to remedy or prevent the injury, subject to the provisions of paragraphs 2 to 10.
2. Bilateral safeguard measures shall only be taken upon clear evidence that increased imports have caused or are threatening to cause serious injury pursuant to an investigation in accordance with the procedures laid down in the Safeguards Agreement.
3. The Party intending to take a bilateral safeguard measure under this Article shall immediately, and in any case before taking a measure, make notification to the other Parties referred to in paragraph 1. The notification shall contain all pertinent information, which shall include evidence of serious injury or threat thereof caused by increased imports, a precise description of the product concerned, and the proposed measure, as well as the proposed date of introduction, expected duration and timetable
for the progressive removal of the measure. A Party that may be affected by the measure shall be simultaneously offered compensation in the form of substantially equivalent trade liberalisation in relation to the imports from any such Party.
4. If the conditions set out in paragraph 1 are met, the importing Party may take measures consisting in an increase of the rate of customs duty for the product to a level not exceeding the lesser of:
(a) the MFN rate of duty applied at the time the action is taken; or
(b) the MFN rate of duty applied on the day immediately preceding the date of the entry into force of this Agreement.
5. Bilateral safeguard measures shall be taken for a period not exceeding one year. In very exceptional circumstances, after review by the Parties referred to in paragraph 1, measures may be taken up to a total maximum period of three years. In order to facilitate adjustment in a situation where the expected duration of a safeguard measure is more than one year, the Party applying the measure shall progressively liberalise it at regular intervals during the period of application. No measures shall be applied to the import of a product, which has previously been subject to such a measure.
6. The Parties concerned shall, within 30 days from the date of notification referred to in paragraph 3, examine the information provided under paragraph 3 in order to facilitate a mutually acceptable resolution of the matter. In the absence of such resolution, the importing Party may adopt a bilateral safeguard measure pursuant to paragraph 4 to remedy the problem, and, in the absence of mutually agreed compensation, the Party against whose product the bilateral safeguard measure is taken may take compensatory action. The safeguard measure and the compensatory action shall be immediately notified to the other Parties referred to in paragraph 1. In the selection of the safeguard measure and the compensatory action, priority must be given to the action which least disturbs the functioning of this Agreement. The compensatory action shall normally consist of a suspension of concessions, having substantially equivalent trade effects or being substantially equivalent to the value of the additional duties expected to result from the bilateral safeguard measure, under any part of this Agreement. The Party taking compensatory action shall apply the action only for the minimum period necessary to achieve the substantially equivalent trade effects and, in any event, only while the measure under paragraph 4 is being applied.
7. Upon termination of the measure, the rate of customs duty shall be the rate which would have been in effect but for the measure.
8. In critical circumstances, where delay would cause damage which would be difficult to repair, a Party referred to in paragraph 1 may take a provisional bilateral safeguard measure pursuant to a preliminary determination that there is clear evidence that increased imports constitute a substantial cause of serious injury, or threat thereof, to its domestic industry. The Party intending to take such a measure shall immediately notify the other Parties referred to in paragraph 1. Within 30 days of the date of the notification, the pertinent procedures set out in paragraphs 2 to 6, including those for compensatory action, shall be initiated. Any compensation shall be based on the total period of application of the provisional bilateral safeguard measure and of the bilateral safeguard measure.
9. Any provisional bilateral safeguard measure shall be terminated within 200 days at the latest. The period of application of any such provisional bilateral safeguard measure shall be counted as part of the duration, and any extension thereof, under paragraph 5, of the measure set out in paragraph 4. Any tariff increases shall be promptly refunded if the investigation described in paragraph 2 does not result in a finding that the conditions of paragraph 1 are met.
10. Five years after the date of entry into force of this Agreement, the Parties referred to in paragraph 1 shall review whether there is a need to maintain the possibility to take bilateral safeguard measures between them. Following the review, these Parties, by consensus, may notify to the Joint Committee that this Article ceases to apply. This Article will be of no application as of the date set out in the notification.
11. A Party shall not simultaneously apply this Article and Article 2.13 to the import of the same product.
Article 2.15. General Exceptions
The rights and obligations of the Parties in respect of general exceptions shall be governed by Article XX of the GATT 1994, which is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.16. Security Exceptions
The rights and obligations of the Parties in respect of security exceptions shall be governed by Article XXI of the GATT 1994, which is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.17. Balance of Payments
1. The Parties shall endeavour to avoid the imposition of restrictive measures for balance of payments purposes.
2. A Party in serious balance of payments difficulties, or under imminent threat thereof, may, in accordance with the conditions established under the GATT 1994 and the WTO Understanding on the Balance-of-Payments Provisions of the GATT 1994, adopt trade restrictive measures, which shall be of limited duration and non-discriminatory, and shall not go beyond what is necessary to remedy the balance of payments situation.
3. The Party introducing a measure under this Article shall notify the other Parties thereof within 14 days after such a measure is taken.
Chapter 3. TRADE IN SERVICES
Article 3.1. Scope and Coverage
1. This Chapter applies to measures by the Parties affecting trade in services and taken by central, regional or local governments and authorities as well as by non- governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities. It applies to all services sectors.
2. Notwithstanding paragraph 1, in respect of air transport services, this Chapter shall not apply to measures affecting air traffic rights, however granted, or measures affecting services directly related to the exercise of air traffic rights, except as provided for in paragraph 3 of the Annex on Air Transport Services to the GATS. The definitions of paragraph 6 of the Annex on Air Transport Services to the GATS are hereby incorporated and made part of this Chapter.
3. Articles 3.4 to 3.6 shall not apply to laws, regulations or requirements governing the procurement by governmental agencies of services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of services for commercial sale.
Article 3.2. Incorporation of Provisions from the GATS
Wherever a provision of this Chapter provides that a provision of the GATS is incorporated into and made part of this Chapter, the term "Member" used in the GATS provision shall be understood as meaning "Party" and the term "territory" used in the GATS provision shall be understood as meaning "Area".
Article 3.3. Definitions
For the purposes of this Chapter:
(a) the following definitions of Article I of the GATS are hereby incorporated into and made part of this Chapter:
(i) “trade in services”;
(ii) “services”; and
(iii) “a service supplied in the exercise of governmental authority”;
(b) “service supplier” means any person that supplies, or seeks to supply, a service; (6)
(c) “natural person of another Party” means:
(i) with respect to the EFTA States: a permanent resident of the Hong Kong Special Administrative Region of the People’s Republic of China under its domestic law who resides in the Area of any Party;
(ii) with respect to Hong Kong, China: a natural person who under the domestic law of an EFTA State is a national or a permanent resident of that EFTA State who resides in the Area of any Party;
(d) “juridical person of another Party” means a juridical person which is either:
(i) constituted or otherwise organised under the domestic law of that other Party, and is engaged in substantive business operations in the Area of:
(A) any Party; or
(B) any Member of the WTO and is owned or controlled by natural persons of that other Party or by juridical persons that meet all the conditions of subparagraph (i) (A); or
(ii) in the case of the supply of a service through commercial presence, owned or controlled by:
(A) natural persons of that other Party; or
Article 3.4. Most-Favoured-Nation Treatment
1. Without prejudice to measures taken in accordance with Article VII of the GATS, and subject to Article 3.17, each Party shall accord immediately and unconditionally, with respect to any measure covered by this Chapter, to services and service suppliers of any other Party treatment no less favourable than the treatment it accords to like services and service suppliers of any non-party.