3. For the purposes of paragraph 1, the value of a material used in a production of a good in a Party:
(a) shall be the CIF value; or
(b) shall be the first ascertainable price paid for the material in the Party, but may exclude all the costs incurred in the Party in transporting the material from the warehouse of the supplier of the material to the place where the producer is located such as freight, insurance and packing as well as any other known and ascertainable cost incurred in the Party.
Note: For the purposes of this paragraph, the term "CIF value" means the customs value of the imported good in accordance with the Agreement on Customs Valuation and includes freight and insurance where appropriate, packing and all other costs incurred in transporting the material to the importation port in the Party where the producer of the good is located.
4. For the purposes of subparagraph 2(b) or 3(a), in applying the Agreement on Customs Valuation to determine the value Agreement of a good or non-originating material, the on Customs Valuation shall apply mutatis mutandis to domestic transactions or to the cases where there is no domestic transaction of the good or non-originating material.
Article 31. Accumulation
For the purposes of determining whether a good qualifies as an originating good of a Party, an originating good of the other Party which is used as a material in the production of the good in the former Party may be considered as an originating material of the former Party, provided that such good has undergone its last production process in the former Party which goes beyond the operations provided for in Article 33.
Article 32. De Minimis
Non-originating materials used in the production of a good that do not satisfy an applicable rule for the good shall be disregarded, provided that the totality of such materials does not exceed specific percentages in value or weight of the good. Such percentages shall be:
(a) in the case of a good classified under Chapters 15 through 24 (except 1604.20, 1605.20, 1605.90, 2101.11, 2101.20, 2106.10, 2106.90, 2207.10 and 2207.20), 2501.00, 2906.11, 2918.14, 2918.15, 2940.00, 3505.10, 3505.20, 3809.10 and 3824.60 of the Harmonized System, 7 percent in value of the good;
(b) in the case of a good classified under Chapters 28 through 49 (except 2905.44, 2906.11, 2918.14, 2918.15, 2940.00, 3502.11, 3502.19, 3505.10, 3505.20, 3809.10, 3824.60, 4601.29, 4601.94 and 4602.19) and 64 through 97 of the Harmonized System, 10 percent in value of the good; and
(c) in the case of a good classified under Chapters 50 through 63 (except 5001.00, 5003.00, heading 51.02, 51.03, 52.01 through 52.03, 53.01 and 53.02) of the Harmonized System, 7 percent in weight of the good.
Note 1: For the purposes of this Article, the term "value of the good" means the free-on-board value of the good referred to in paragraph 1 of Article 30 or the value set out in paragraph 2 of that Article.
Note 2: For the purposes of this Article, "Harmonized System" is that on which the product specific rules set out in Annex 2 are based.
Note 3: This Article shall not be applied in calculating the qualifying value content set out in Article 30.
Article 33. Non-Qualifying Operations
A good shall not be considered to be an originating good of the exporting Party merely by reason of having undergone the following:
(a) operations to ensure the preservation of products in good condition during transport and storage (such as drying, freezing, keeping in brine, removal of damaged parts) and other similar operations;
(b) changes of packaging and breaking up and assembly of packages;
(c) disassembly;
(d) placing in bottles, cases, boxes and other simple packaging operations;
(e) collection of parts and components classified as a good pursuant to Rule 2(a) of the General Rules for the Interpretation of the Harmonized System;
(f) simple operations consisting of removal of dust, sifting or screening, sorting, classifying, matching (including the making-up of sets of articles), washing, painting;
(g) simple cutting, slicing and repacking or placing in bottles, flasks, bags or boxes, fixing on cards or boards, and all other simple packing operations;
(h) affixing or printing marks, labels and other like distinguishing signs on products or their packaging;
(i) simple mixing of products whether or not of different kinds;
(j) simple assembly of parts of goods to constitute a complete product;
(k) slaughter of animals;
(l) mere dilution with water or another substance that does not materially alter the characteristics of the goods; or
(m) any combination of operations referred to in subparagraphs (a) through (1).
Note: For the purposes of this Article, an operation is described as "simple" if neither special skills nor machines, apparatus or equipment especially produced or installed for carrying it out are needed.
Article 34. Consignment Criteria
1. An originating good of the other Party shall be deemed to meet the consignment criteria when it is:
(a) transported directly from the other Party; or
(b) transported through one or more non-Parties for the purpose of transit or temporary storage in warehouses in such non-Parties, provided that it does not undergo operations other than unloading, reloading and any other operation to preserve it in good condition.
2. If an originating good of the other Party does not meet the consignment criteria referred to in paragraph 1, the good shall not be considered as an originating good of the other Party.
Article 35. Unassembled or Disassembled Goods
Where a good satisfies the requirements of the relevant provisions of Articles 27 through 33 and is imported into a Party from the other Party in an unassembled or disassembled form but is classified as an assembled good pursuant to Rule 2(a) of the General Rules for the Interpretation of the Harmonized System, such a good shall be considered as an originating good of the other Party.
Article 36. Fungible Goods and Materials
1, For the purposes of determining whether a good qualifies as an originating good of a Party, where fungible originating materials of the Party and fungible non-originating materials that are mixed in an inventory are used in the production of the good, the origin of the materials may be determined pursuant to an inventory management method under the Generally Accepted Accounting Principles in the Party.
2. Where fungible originating goods of a Party and fungible non-originating goods are mixed in an inventory and, prior to exportation do not undergo any production process or any operation in the Party where they were mixed other than unloading, reloading or any other operation to preserve them in good condition, the origin of the good may be determined pursuant to an inventory management method under the Generally Accepted Accounting Principles in the Party.
Article 37. Indirect Materials
Indirect materials shall be, without regard to where they are produced, considered to be originating materials of a Party where the good is produced.
Article 38. Accessories, Spare Parts, Tools and Instructional or other Information Materials
1. In determining whether all the non-originating materials used in the production of a good undergo the applicable change in tariff classification or a specific manufacturing or processing operation, accessories, spare parts, tools and instructional or other information materials delivered with the good that form part of the good's standard accessories, spare parts, tools and instructional or other information materials, shall be disregarded, provided that:
(a) the accessories, spare parts, tools and instructional or other information materials are not invoiced separately from the good, without regard to whether they are separately described in the invoice; and
(b) the quantities and value of the accessories, spare parts, tools and instructional or other information materials are customary for the good.
2. If a good is subject to a qualifying value content requirement, the value of the accessories, spare parts, tools and instructional or other information materials shall be taken into account as the value of originating or non-originating materials, as the case may be, in calculating the qualifying value content of the good.
Article 39. Packing and Packaging Materials and Containers
1. Packing materials and containers for shipment that are used to protect a good during transportation shall not be taken into account in determining whether the good qualifies as an originating good of a Party.
2. With respect to packaging materials and containers that are used for retail sale of a good:
(a) such packaging materials and containers shall be disregarded in determining whether the good qualifies as an originating good of a Party, if they are classified with the good pursuant to Rule 5 of the General Rules for the Interpretation of the Harmonized System; and
(b) if the good is subject to a qualifying value content requirement, the value of such packaging materials and containers shall be taken into account as the value of originating materials of a Party where the good is produced or non- originating materials, as the case may be, in calculating the qualifying value content of the good.
Article 40. Operational Certification Procedures
The operational certification procedures set out in Annex 3 shall apply with respect to procedures regarding certificate of origin and related matters.
Article 41. Sub-Committee on Rules of Origin
1. For the purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Rules of Origin (hereinafter referred to in this Article as "the Sub-Committee") shall be established on the date of entry into force of this Agreement.
2. The functions of the Sub-Committee shall be:
(a) reviewing and making appropriate recommendations, as necessary, to the Joint Committee on:
(i) the implementation and operation of this Chapter;
(ii) any amendments to Annex 2 proposed by either Party; and
(iii) the Implementing Procedures referred to in Section 11 of Annex 3;
(b) considering any other matter, including development of an electronic system for facilitating the issuance and verification of certificate of origin, as the Parties may agree related to this Chapter;
(c) reporting the findings of the Sub-Committee to the Joint Committee; and
(d) carrying out other functions as may be delegated by the Joint Committee pursuant to Article 14.
Chapter 4. Customs Procedures
Article 42. Scope and Objectives
1. This Chapter shall apply to customs procedures required for the clearance of goods traded between the Parties.
2. This Chapter shall be implemented by the Parties in accordance with the laws and regulations of each Party and within the available resources of their respective customs authorities.
3. The objectives of this Chapter are to establish a framework to ensure transparency, consistency, fair and proper application of customs laws and prompt clearance of goods and to promote cooperation on customs matters, including the exchange of information, with a view to facilitating legitimate trade in goods between the Parties, preventing, investigating and repressing violation or attempted violation of customs laws, and meeting the needs of Governments of the Parties for the protection of society and revenue.
Article 43. Definition
For the purposes of this Chapter, the term "customs laws" means the statutory and regulatory provisions relating to the importation, exportation, movement or storage of goods, the administration and enforcement of which are specifically entrusted to the customs authority of each Party, and any regulations made by the customs authority of each Party under its statutory power.
Article 44. Transparency
1. Each Party shall ensure that all relevant information of general application pertaining to its customs laws is readily available to any interested person.
2. When information that has been made available must be revised due to changes in its customs laws, each Party shall make the revised information readily available sufficiently in advance of the entry into force of the changes to enable interested persons to take account of them, unless advance notice is precluded.
3. At the request of any interested person of the Parties, each Party shall provide, as quickly and accurately as possible, information relating to the specific customs matters raised by the interested person and pertaining to its customs laws. Each Party shall supply not only the information specifically requested but also any other pertinent information which it considers the interested person should be made aware of.
Article 45. Customs Clearance
1. Both Parties shall apply their respective customs procedures in a predictable, consistent, transparent and fair manner.
2. For prompt customs clearance of goods traded between the Parties, each Party shall:
(a) make use of information and communications technology;
(b) simplify its customs procedures;
(c) harmonise its customs procedures, to the extent possible, with relevant international standards and recommended practices such as those made under the auspices of the Customs Co-operation Council; and
(d) promote cooperation, wherever appropriate, between its customs authority and:
(i) other national authorities of the Party; and
(ii) the trading communities of the Party.
3. Each Party shall provide affected parties with easily accessible processes of administrative and judicial review in relation to the action concerning the customs matters taken by the Party.
Article 46. Temporary Admission and Goods In Transit
1. Each Party shall continue to facilitate the procedures for the temporary admission of goods traded between the Parties in accordance with the terms and conditions provided for in the Customs Convention on the A.T.A. Carnet for the Temporary Admission of Goods (hereinafter referred to as "the A.T.A. Convention").
2. Each Party shall continue to facilitate customs clearance of goods in transit from or to the other Party in accordance with paragraph 3 of Article V of the GATT 1994.
3. The Parties shall endeavour to promote, through seminars and courses, the use of A.T.A. carnets pursuant to the A.T.A. Convention for the temporary admission of goods and the facilitation of customs clearance of goods in transit in the Parties or non-Parties.
4. For the purposes of this Article, the term âtemporary admissionâ means customs procedures under which certain goods may be brought into a customs territory conditionally, relieved totally or partially from the payment of customs duties. Such goods shall be imported for a specific purpose, and shall be intended for re- exportation within a specified period and without having undergone any change except normal depreciation due to the use made of them.
Article 47. Advance Rulings
Where a written application is made in accordance with relevant laws or procedures adopted or maintained by the importing Party and the importing Party has no reasonable grounds to deny the issuance, the importing Party shall endeavour to, prior to the importation of the good, issue a written advance ruling concerning the tariff classification, the customs valuation and the origin of the good, as well as the qualification of the good as an originating good of the exporting Party under the provisions of Chapter 3.
Article 48. Cooperation and Exchange of Information
1. The Parties shall cooperate and exchange information with each other on customs matters, including specific cases, such as:
(a) customs procedures;
(b) customs valuation within the meaning of the Agreement on Customs Valuation;
(c) enforcement against the trafficking of prohibited goods and the importation of goods suspected of infringing intellectual property rights;
(d) prevention, investigation and repression of violation or attempted violation of customs laws; and
(e) trade statistics data relating to customs clearance of goods and conveyances related to goods, exported from a Party to the other Party.
2. Such cooperation and exchange of information shall be implemented as provided for in the Implementing Agreement.
3. Paragraph 4 of Article 9 shall not apply to the exchange of information under this Article.
Article 49. Sub-Committee on Customs Procedures
1. For the purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Customs Procedures (hereinafter referred to in this Article as "the Sub-Committee") shall be established on the date of entry into force of this Agreement.
2. The functions of the Sub-Committee shall be:
(a) reviewing the implementation and operation of this Chapter;
(b) identifying areas, relating to this Chapter, to be improved for facilitating trade between the Parties;
(c) reporting its findings to the Joint Committee;
(d) for the purposes set out in paragraph 1, reviewing and making appropriate recommendations, as necessary, to the Joint Committee on the provisions of the Implementing Procedures referred to in Section 11 of Annex 3 concerning documents required by the customs authority under paragraph 4 of Section 2 of Annex 3; and
(e) carrying out other functions as may be delegated by the Joint Committee pursuant to Article 14.
3. The Sub-Committee shall meet at such venues and times as may be agreed by the Parties.
4, The composition of the Sub-Committee shall be specified in the Implementing Agreement.
Chapter 5. Technical Regulations, Standards and Conformity Assessment Procedures, and Sanitary and Phytosanitary Measures
Article 50. Scope
This Chapter shall apply to technical regulations, standards and conformity assessment procedures as defined in the Agreement on Technical Barriers to Trade in Annex 1A to the WTO Agreement (hereinafter referred to as "the TBT Agreement") and sanitary and phytosanitary (hereinafter referred to as "SPS") measures under the Agreement on the Application of Sanitary and Phytosanitary Measures in Annex 1A to the WIO Agreement (hereinafter referred to as "the SPS Agreement"), that may, directly or indirectly, affect trade in goods between the Parties.
Article 51. Reaffirmation of Rights and Obligations
The Parties reaffirm their rights and obligations relating to technical regulations, standards and conformity assessment procedures under the TBT Agreement, and their rights and obligations relating to SPS measures under the SPS Agreement.
Article 52. Enquiry Points
Each Party shall designate an enquiry point which is able to answer all reasonable enquiries from the other Party regarding technical regulations, standards and conformity assessment procedures, and SPS measures and, if appropriate, to provide their relevant information.
Article 53. Sub-Committee on Technical Regulations, Standards and Conformity Assessment Procedures, and SPS Measures
1. For the purposes of the effective implementation and operation of this Chapter, a Sub-Committee on Technical Regulations, Standards and Conformity Assessment Procedures, and SPS Measures (hereinafter referred to in this Chapter as "the Sub-Committee") shall be established on the date of entry into force of this Agreement.
2. The functions of the Sub-Committee shall be:
(a) exchanging information on technical regulations, standards and conformity assessment procedures, and SPS measures, and where necessary, coordinating the exchange of information on generic medicine provided for in Article 54;
(b) undertaking consultations on issues related to technical regulations, standards and conformity assessment procedures;
(c) undertaking science-based consultations to identify and address specific issues that may arise from the application of SPS measures;
(d) consulting cooperative efforts between the Parties in international fora in relation to technical regulations, standards and conformity assessment procedures, and SPS measures;
(e) holding discussions on the participation of each Party in the existing frameworks for mutual recognition in technical regulations, standards and conformity assessment procedures under international agreements;
(f) discussing Mutual Recognition Arrangements (hereinafter referred to in this Chapter as "MRAS") pursuant to Article 55 and other technical cooperation in relation to technical regulations, standards and conformity assessment procedures, and SPS measures;
(g) reviewing the implementation and operation of this Chapter;
(h) reporting, where appropriate, its findings to the Joint Committee; and
(i) carrying out other functions as may be delegated by the Joint Committee pursuant to Article 14.
3. The Sub-Committee shall meet at such venues and times as may be agreed upon by the Parties, unless otherwise provided for in this Chapter.
4. The Sub-Committee shall be composed of representatives of the Governments of the Parties.
5. The Parties shall determine in advance the agenda for the individual meeting of the Sub-Committee, with a view to ensuring appropriate participation of relevant experts.
Article 54. Cooperation on Generic Medicine
1. The Parties shall exchange information on their respective regulatory measures concerning generic medicine, with a view to promoting cooperation between the Parties in the field of pharmaceuticals and building mutual confidence in the regulatory measures of each Party.
2. For the purposes of this Article, the term "generic medicine" means drugs approved by the competent authority of a Party under the laws and regulations of the Party as equivalent, in terms of active ingredients, dosages, usages and indications, to the drugs approved preceding the former drugs.
3. Applications by a person of a Party for registration and other approvals required for release of a generic medicine in the market of the other Party shall be considered by the relevant authorities of the other Party. Such applications shall be accorded, in the relevant procedure, treatment no less favourable than that accorded to like applications by its own person, where they fulfil all the requirements under the laws and regulations of the other Party. Such procedure shall be completed within a reasonable period of time from the date of such application.
Article 55. Mutual Recognition
1. The Parties shall, through the Sub-Committee, discuss the feasibility of MRAs in such sectors as electrical products, telecommunications terminal equipment and radio equipment and other sectors as may be mutually agreed by the Parties. In elaborating MRAs, the Parties shall confirm the economic benefits of such arrangements and, where necessary, the equivalence of the technical regulations of both Parties.
2. The Sub-Committee shall meet within three months from the date of entry into force of this Agreement, in order to discuss the feasibility of MRAs in sectors referred to in paragraph 1, and shall endeavour to arrive at a conclusion about such feasibility within six months. The Parties shall endeavour to reach a conclusion of MRAs under paragraph 1 within a reasonable period of time, normally not exceeding three years, from the date of such conclusion about the feasibility.
Article 56. Non-Application of Chapter 14
The dispute settlement procedures provided for in Chapter 14 shall not apply to this Chapter, unless otherwise agreed by the Parties.
Chapter 6. Trade In Services
Article 57. Scope
1. This Chapter shall apply to measures by a Party affecting trade in services.
2. This Chapter shall not apply to:
(a) in respect of air transport services, measures affecting traffic rights, however granted; or to measures affecting services directly related to the exercise of traffic rights, other than measures affecting:
(i) aircraft repair and maintenance services;
(ii) the selling and marketing of air transport services; and