(i) the Implementing Procedures referred to in Section 11 of Annex 3; and
(ii) any necessary decisions; and
(e) carrying out other functions as the Parties may agree.
3. The Joint Committee:
(a) shall be composed of representatives of the Governments of the Parties; and
(b) may establish, and delegate its responsibilities to, Sub-Committees.
4. The Joint Committee shall establish its rules and procedures.
5. The Joint Committee shall meet:
(a) once a year at the request of either Party or at such times as may be agreed by the Parties; and
(b) at such venues as may be agreed by the Parties.
Article 15. Communications
1, Each Party shall designate a contact point to facilitate communications between the Parties on any matter
relating to this Agreement.
2. Unless otherwise provided for in this Agreement, any formal communication and notification between the Parties under this Agreement shall be made through the contact points referred to in paragraph 1.
Chapter 2. Trade In Goods
Article 16. Definitions
For the Purposes of this Chapter:
(a) the term "bilateral safeguard measure" means a bilateral safeguard measure provided for in paragraph 2 of Article 23;
(b) the term "customs duty" means any customs duty, import duty or a charge of any kind imposed in connection with the importation of a good, but does not include any:
(i) charge equivalent to an internal tax imposed consistently with the provisions of paragraph 2 of Article II and paragraph 2 of Article III of the GATT 1994;
(ii) anti-dumping or countervailing duty applied pursuant to a Party's law and applied consistently with the provisions of Article VI of the GATT 1994, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 in Annex 1A to the WTO Agreement (hereinafter referred to as "the Agreement on Anti- Dumping"), and the Agreement on Subsidies and Countervailing Measures in Annex 1A to the WTO Agreement; or
(iii) fees or other charges that shall be limited in amount to the approximate cost of services rendered;
Note 1: Customs duty for India refers to basic customs duty as specified in the First Schedule to the Customs Tariff Act, 1975 of India.
Note 2: Nothing in this subparagraph, including its notes, shall be construed so as to derogate from any rights and obligations of each Party under the GATT 1994,
(c) the term "domestic industry" means the producers as a whole of the like or directly competitive goods operating in a Party, or those whose collective output of the like or directly competitive goods constitutes a major proportion of the total domestic production of those goods;
(d) the term "provisional bilateral safeguard measure" means a provisional bilateral safeguard measure provided for in subparagraph 8(a) of Article 23;
(e) the term "serious injury" means a significant overall impairment in the position of a domestic industry; and
(f) the term "threat of serious injury" means serious injury that, on the basis of facts and not merely on allegation, conjecture or remote possibility, is clearly imminent.
Article 17. Classification of Goods
The classification of goods in trade between the Parties shall be in conformity with the Harmonized System.
Article 18. National Treatment
Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of the GATT 1994.
Article 19. Elimination of Customs Duties
1. Except as otherwise provided for in this Agreement, each Party shall eliminate or reduce its customs duties on originating goods of the other Party designated for such purposes in its Schedule in Annex 1, in accordance with the terms and conditions set out in such Schedule.
2. In cases where its most-favoured-nation applied rate of customs duty on a particular good is lower than the rate of customs duty to be applied in accordance with paragraph 1 on the originating good which is classified under the same tariff line as that particular good, each Party shall apply the lower rate with respect to that originating good.
Article 20. Customs Valuation
For the purpose of determining the customs value of imported goods from a Party into the other Party, provisions of Part I of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 in Annex 1A to the WTO Agreement (hereinafter referred to as "the Agreement on Customs Valuation"), shall apply mutatis mutandis.
Article 21. Export Subsidies and Domestic Support
Neither Party shall introduce or maintain any export subsidies or domestic support, which are inconsistent with its obligations under the WTO Agreement, on any agricultural good which is listed in Annex 1 to the Agreement on Agriculture in Annex 1A to the WTO Agreement (hereinafter referred to as "the Agreement on Agriculture").
Article 22. Import and Export Restrictions
1. Each Party shall not introduce or maintain any prohibition or restriction other than customs duties on the importation of any good of the other Party or on the exportation or sale for export of any good destined to the other Party, which is inconsistent with its obligations under the relevant provisions of the WTO Agreement.
2. In the event that a Party introduces a prohibition or restriction otherwise justified under the relevant provisions of the WTO Agreement with respect to the exportation of a good to the other Party, the former Party shall, upon the request of the other Party, provide to the other Party, as soon as possible after the prohibition or restriction is introduced, relevant information, which shall include a description of the good involved and the introduced prohibition or restriction, the actual date of introduction of such prohibition or restriction, unless the sharing of such information is considered by the former Party as prejudicial to public interest.
Article 23. Bilateral Safeguard Measures
1. Notwithstanding any provisions of this Chapter but subject to the provisions of this Article, each Party may apply a bilateral safeguard measure, to the extent necessary to prevent or remedy the serious injury toa domestic industry of that Party and to facilitate adjustment, if an originating good of the other Party, as a result of the elimination or reduction of a customs duty in accordance with Article 19, is being imported into the former Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions that the imports of that originating good constitute a substantial cause of serious injury, or threat thereof, to the domestic industry of the former Party.
2. A Party may, as a bilateral safeguard measure:
(a) suspend the further reduction of any rate of customs duty on the originating good provided for in this Chapter; or
(b) increase the rate of customs duty on the originating good to a level not to exceed the lesser of:
(i) the most-favoured-nation applied rate of customs duty in effect on the day when the bilateral safeguard measure is taken; and
(ii) the most-favoured-nation applied rate of customs duty in effect on the day immediately preceding the date of entry into force of this Agreement.
3. (a) A Party may apply a bilateral safeguard measure only after an investigation has been carried out by the competent authorities of that Party in accordance with the same procedures as those provided for in Article 3 and subparagraph 2(c) of Article 4 of the Agreement on Safeguards in Annex 1A to the WTO Agreement (hereinafter referred to as "the Agreement on Safeguards").
(b) The investigation referred to in subparagraph (a) shall in all cases be completed as early as possible and in no case later than one year from the date of initiation.
(c) In the investigation referred to in subparagraph (a) to determine whether increased imports of an originating good have caused or are threatening to cause serious injury to a domestic industry under the terms of this Article, the competent authorities of the Party who carry out the investigation shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that domestic industry, in particular, the rate and amount of the increase in imports of the originating good in absolute and relative terms, the share of the domestic market taken by the increased imports of the originating good, and the changes in the level of sales, production, productivity, capacity utilisation, profits and losses, and employment.
(d) The determination that increased imports of an originating good have caused or are threatening to cause serious injury to a domestic industry shall not be made unless the investigation referred to in subparagraph (a) demonstrates, on the basis of objective evidence, the existence of the causal link between increased imports of the originating good and serious injury or threat thereof. When factors other than the increased imports of the originating good are causing injury to the domestic industry at the same time, such injury shall not be attributed to the increased imports of the originating good.
4. The following conditions and limitations shall apply with regard to a bilateral safeguard measure:
(a) A Party shall immediately deliver a written notice to the other Party upon:
(i) initiating an investigation referred to in subparagraph 3(a) relating to serious injury, or threat thereof, and the reasons for it; and
(ii) taking a decision to apply or extend a bilateral safeguard measure.
(b) The Party making the written notice referred to in subparagraph (a) shall provide the other Party with all pertinent information, which shall include:
(i) in the written notice referred to in subparagraph (a) (i), the reason for the initiation of the investigation, a precise description of the originating good subject to the investigation and its subheading of the Harmonized System, the period subject to the investigation and the date of initiation of the investigation; and
(ii) in the written notice referred to in subparagraph (a) (ii), evidence of serious injury or threat thereof caused by the increased imports of the originating good, a precise description of the originating good subject to the proposed bilateral safeguard measure and its subheading of the Harmonized System, a precise description of the bilateral safeguard measure, and the proposed date of the introduction and expected duration of the bilateral safeguard measure.
(c) A Party proposing to apply or extend a bilateral safeguard measure shall provide adequate opportunity for prior consultations with the other Party with a view to reviewing the information arising from the investigation referred to in subparagraph 3(a), exchanging views on the bilateral safeguard measure and reaching an agreement on compensation set out in paragraph 5.
(d) No bilateral safeguard measure shall be maintained except to the extent and for such time as may be necessary to prevent or remedy serious injury and to facilitate adjustment, provided that such time shall not exceed a period of three years. However, in highly exceptional circumstances, a bilateral safeguard measure may be extended, provided that the total duration of the bilateral safeguard measure, including such extensions, shall not exceed five years. In order to facilitate adjustment in a situation where the expected duration of a bilateral safeguard measure is over one year, the Party maintaining the bilateral safeguard measure shall progressively liberalise the bilateral safeguard measure at regular intervals during the period of application.
(e) No bilateral safeguard measure shall be applied again to the import of a particular originating good which has been subject to such a bilateral safeguard measure, for a period of time equal to that during which such measure had been previously applied, provided that the period of non-application is at least one year.
(f) Upon the termination of a bilateral safeguard measure, the rate of customs duty for an originating good subject to the measure shall be the rate which would have been in effect but for the bilateral safeguard measure.
5. (a) A Party proposing to apply or extend a bilateral safeguard measure shall provide to the other Party mutually agreed adequate means of trade compensation in the form of concessions whose value is substantially equivalent to that of the additional customs duties expected to result from the bilateral safeguard measure.
(b) If the Parties are unable to agree on the compensation within 30 days after the commencement of the consultations pursuant to subparagraph 4(c), the Party against whose originating good the bilateral safeguard measure is applied shall be free to suspend the application of concessions under this Agreement, which are substantially equivalent to the bilateral safeguard measure. The Party exercising the right of suspension may suspend the application of concessions only for the minimum period necessary to achieve the substantially equivalent effects and only while the bilateral safeguard measure is maintained.
(c) (i) The right to claim the trade compensation which is agreed on by the Parties under subparagraph (a) and the right of suspension provided for in subparagraph (b) shall not be exercised for the first two years that a bilateral safeguard measure is in effect, provided that the bilateral safeguard measure has been taken as a result of an absolute increase in imports and that such bilateral safeguard measure conforms to the provisions of this Article.
(ii) The two years period mentioned in subparagraph (i) may be extended by one year, provided that the Party applying the bilateral safeguard measure provides to the other Party, evidence that the bilateral safeguard measure continues to be necessary to prevent or remedy serious injury caused by an absolute increase in imports and that the industry concerned is adjusting.
6. Nothing in this Chapter shall prevent a Party from applying safeguard measures to an originating good of the other Party in accordance with:
(a) Article XIX of the GATT 1994 and the Agreement on Safeguards; or
(b) Article 5 of the Agreement on Agriculture.
7. Each Party shall ensure the consistent, impartial and reasonable administration of its laws and regulations relating to bilateral safeguard measures.
8. (a) In critical circumstances, where delay would cause damage which it would be difficult to repair, a Party may take a provisional bilateral safeguard measure, which shall take the form of the measure set out in subparagraph 2(a) or (b), pursuant to a preliminary determination that there is clear evidence that increased imports of an originating good of the other Party have caused or are threatening to cause serious injury to a domestic industry.
(b) A Party shall deliver a written notice to the other Party prior to applying a provisional bilateral safeguard measure. Consultations between the Parties on the application of the provisional bilateral safeguard measure shall be initiated immediately after the provisional bilateral safeguard measure is taken.
(c) The duration of a provisional bilateral safeguard measure shall not exceed 200 days. During that period, the pertinent requirements of paragraph 3 shall be met. The duration of the provisional bilateral safeguard measure shall be counted as a part of the period referred to in subparagraph 4(d).
(d) Subparagraph 4(f) and paragraph 7 shall be applied mutatis mutandis to a provisional bilateral safeguard measure. The customs duty imposed as a result of the provisional bilateral safeguard measure shall be refunded if the subsequent investigation referred to in subparagraph 3(a) does not determine that increased imports of an originating good of the other Party have caused or threatened to cause serious injury to a domestic industry.
9. A written notice referred to in subparagraphs 4(a) and 8(o) and any other communication between the Parties shall be done in the English language.
10. The Parties shall review the provisions of this Article after 10 years of the date of entry into force ofthis Agreement, or earlier as may be agreed by the Parties.
Article 24. Anti-Dumping Investigation
When the authority of a Party competent for initiating investigation under Article 5 of the Agreement on Anti- Dumping received a written application by or on behalf of its domestic industry for the initiation of the investigation in respect of a good from the other Party, the former Party shall, at least 10 working days in advance of the initiation of such investigation, notify the other Party, and provide it with the full text, of such application. The other Party may inform the exporters, foreign producers and relevant trade associations known to the other Party of that notification and of the information included in that application. Due regard shall be paid to the requirement for the protection of confidential information, as provided for in paragraph 5 of Article 6 of the Agreement on Anti-Dumping.
Article 25. Restrictions to Safeguard the Balance of Payments
1. Nothing in this Chapter shall be construed to prevent a Party from taking any measure for balance-of-payments purposes. A Party taking such measure shall do so in accordance with the conditions established under Article XII of the GATT 1994 and the Understanding on the Balance- of-Payments Provisions of the General Agreement on Tariffs and Trade 1994 in Annex 1A to the WTO Agreement.
2. Nothing in this Chapter shall preclude the use by a Party of exchange controls or exchange restrictions in accordance with the Articles of Agreement of the International Monetary Fund.
Chapter 3. Rules of Origin
Article 26. Definitions
For the Purposes of this Chapter:
(a) the term "exporter" means a natural or juridical person located in an exporting Party who exports a good from the exporting Party;
(b) the term "factory ships of the Party" or "vessels of the Party" respectively means factory ships or vessels:
(i) which are registered in the Party;
(ii) which sail under the flag of the Party;
(iii) which are owned to an extent of at least 50 percent by nationals of the Parties, or by a juridical person with its head office in either Party, of which the representatives, chairman of the board of directors, and the majority of the members of such board are nationals of the Parties, and of which at least 50 percent of the equity interest is owned by nationals or juridical persons of the Parties;
(iv) of which at least 50 percent of the total of the master and officers are nationals of the Parties; and
(v) of which at least 25 percent of the crew are nationals of the Parties;
(c) the term "fungible originating goods of a Party" or "fungible originating materials of a Party" respectively means originating goods or materials of a Party that are interchangeable for commercial purposes, whose properties are essentially identical;
(d) the term "Generally Accepted Accounting Principles" means the recognised consensus or substantial authoritative support within a Party at a particular time as to which economic resources and obligations should be recorded as assets and liabilities, which changes in assets and liabilities should be recorded, how the assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed, and which financial statements should be prepared. These standards may be broad guidelines of general application as well as detailed practices and procedures;
(e) the term "good" means any merchandise, product, article or material;
(f) the term "importer" means a natural or juridical person who imports a good into the importing Party;
(g) the term "indirect materials" means goods used in the production, testing or inspection of another good but not physically incorporated into the good, or goods used in the maintenance of buildings or the operation of equipment associated with the production of another good, including:
(i) fuel and energy;
(ii) tools, dies and moulds;
(iii) spare parts and goods used in the maintenance of equipment and buildings;
(iv) lubricants, greases, compounding materials and other goods used in production or used to operate equipment and buildings;
(v) gloves, glasses, footwear, clothing, safety equipment and supplies;
(vi) equipment, devices and supplies used for testing or inspection;
(vii) catalysts and solvents; and
(viii) any other goods that are not incorporated into another good but whose use in the production of the good can reasonably be demonstrated to be a part of that production;
(h) the term "materials" means any matter or substance consumed in the production of a good, physically incorporated into a good, or used in the production of another good;
(i) the term "non-originating material" means any materials whose country of origin is other than the Parties (imported non-originating) and any material whose origin cannot be determined (undetermined origin) under this Chapter;
(j) the term "originating material" means any material that qualifies as originating under this Chapter; and
(k) the term "production" means a method of obtaining goods including manufacturing, assembling, processing, raising, growing, breeding, mining, extracting, harvesting, fishing, trapping, gathering, collecting, hunting and capturing.
Article 27. Originating Goods
Except as otherwise provided for in this Agreement, a good shall qualify as an originating good of a Party where:
(a) the good is wholly obtained or produced entirely in the Party, as provided for in Article 28; or
(b) the good is not wholly obtained or produced in the Party, provided that the good satisfies the requirements of Article 29.
Article 28. Wholly Obtained or Produced Goods
For the purposes of subparagraph (a) of Article 27, the following goods shall be considered as being wholly obtained or produced in a Party:
(a) live animals born and raised in the Party;
(b) animals obtained by hunting, trapping, fishing, gathering or capturing in the Party;
(c) goods obtained from live animals in the Party;
(d) plants and plant products harvested, picked or gathered in the Party;
Note: For the purposes of this subparagraph, the term "plant" refers to all plant life, including fruit, flowers, vegetables, trees, seaweed, fungi and live plants.
(e) minerals and other naturally occurring substances, not included in subparagraphs (a) through (d), extracted or taken in the Party;
(f) goods of sea-fishing and other goods taken by vessels of the Party from the sea outside the territorial seas of the Parties;
(g) goods produced on board factory ships of the Party, outside the territorial seas of the Parties from the goods referred to in subparagraph (f);
(h) goods taken from the sea-bed or subsoil beneath the sea-bed outside the territorial sea of the Party, provided that the Party has rights to exploit such sea-bed or subsoil in accordance with the provisions of the United Nations Convention on the Law of the Sea, done at Montego Bay, December 10, 1982;
(i) articles collected in the Party which can no longer perform their original purpose in the Party nor are capable of being restored or repaired and which are fit only for disposal or for the recovery of parts or raw materials;
(j) scrap and waste derived from manufacturing or processing operations or from consumption in the Party and fit only for disposal or for the recovery of raw materials;
(k) parts or raw materials recovered in the Party from articles which can no longer perform their original purpose nor are capable of being restored or repaired; and
(l) goods obtained or produced in the Party exclusively from the goods referred to in subparagraphs (a) through (k).
Article 29. Goods Produced Using Non-Originating Materials
1, For the purposes of subparagraph (b) of Article 27, a good shall qualify as an originating good of a Party if:
(a) the good has a qualifying value content, calculated using the formula set out in Article 30, of not less than 35 percent; and
(b) all non-originating materials used in the production of the good have undergone in the Party a change in tariff classification at the six-digit level (i.e. a change in tariff subheading) of the Harmonized System.
Note: For the purposes of this subparagraph, "Harmonized System" is that on which the product specific rules set out in Annex 2 are based.
2. Notwithstanding paragraph 1, a good subject to product specific rules shall qualify as an originating good of a Party if it satisfies the applicable product specific rules set out in Annex 2.
3. For the purposes of subparagraph 1(b) and the relevant product specific rules set out in Annex 2, the rule requiring that the materials used have undergone a change in tariff classification or a specific manufacturing or processing operation, shall apply only to non-originating materials.
Article 30. Calculation of Qualifying Value Content
1. For the purposes of calculating the qualifying value content of a good, one or the other of the following formulas shall be applied:
(a) Q.V.C = F.O.B. - V.N.M. / F.O.B. x 100
Where:
Q.V.C. is the qualifying value content of a good, expressed as a percentage;
F.O.B. is, except as provided for in paragraph 2, the free-on-board value of a good payable by the buyer of the good to the seller of the good, regardless of the mode of shipment, not including any internal excise taxes reduced, exempted, or repaid when the good is exported; and
V.N.M. is the value of non-originating materials used in the production of a good;
(b) Q.V.C. = V.O.M. + Direct Labour Cost + Direct Overhead Cost + Profit / F.O.B. x 100
Where:
V.O.M. is the value of originating material used in the production of the good.
Note: For the purpose of calculating the qualifying value content of a good, the Generally Accepted Accounting Principles in the exporting Party shall be applied.
2. F.O.B. referred to in paragraph 1 shall be the value:
(a) adjusted to the first ascertainable price paid for a good from the buyer to the producer of the good, if there is free-on-board value of the good, but it is unknown and cannot be ascertained; or
(b) determined in accordance with Articles 1 through 8 of the Agreement on Customs Valuation, if there is no free-on-board value of a good.