Title
ECONOMIC COMPLEMENTATION AGREEMENT N°65 CHILE - ECUADOR
Preamble
The Government of the Republic of Ecuador and the Government of the Republic of Chile, hereinafter referred to as the Parties, considering:
The will to strengthen the special ties of friendship, solidarity and cooperation between their peoples;
The importance of strengthening the Latin American Integration Association (ALADI) and achieving the objectives set out in the 1980 Treaty of Montevideo, through the conclusion of bilateral and multilateral agreements as broad as possible;
Ecuador's participation in the Cartagena Agreement and the commitments derived from it for this country;
The coincidences in the guidelines of the trade policies of the two countries, both in terms of tariffs and in the basic orientations of their economic policies;
The advantages of offering economic agents clear and predictable rules for the development of trade in goods and services, as well as for the flow of investments;
The relevance that an adequate cooperation in the commercial, industrial and service areas can have in the development of both countries;
The development of their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization and the 1980 Treaty of Montevideo, as well as other bilateral and multilateral integration and cooperation instruments to which they are party;
The convenience of achieving a more active participation of economic agents, both public and private of both countries, in the efforts aimed at increasing reciprocal exchange, tending to a commercial balance;
The importance of promoting trade conditions, based on equity and solidarity, to achieve the improvement of the social development of peoples;
The creation of new employment opportunities, the improvement of working conditions and living standards in their respective territories;
The importance of undertaking all of the above in a manner consistent with the protection and conservation of the environment;
Have agreed:
Body
Chapter 1. INITIAL PROVISIONS
Article 1.1. Objectives
1. The Parties agree to establish this Economic Complementarity Agreement in accordance with the provisions of the Treaty of Montevideo of 1980 and Article XXIV of GATT 1994.
2. The objectives of this Agreement, developed more specifically through its principles and rules, including those of national treatment, most-favoured-nation treatment and transparency, are as follows:
(a) to intensify economic and trade relations between the Parties, and to stimulate the expansion and diversification of trade between them;
(b) eliminate barriers to trade and facilitate the cross-border movement of goods and services between the Parties;
(c) promote conditions of fair competition in trade between the Parties;
(d) establish effective procedures for the implementation and enforcement of this Agreement, for its joint administration, and for the prevention and resolution of disputes;
(e) establish guidelines for further cooperation between the Parties, as well as at the regional and multilateral levels, aimed at extending and enhancing the benefits of this Agreement;
(f) substantially increase investment opportunities in the territories of the Parties, allowing for an intensive use of their markets, and strengthening their competitive capacity in world trade.
3. The Parties shall interpret and apply the provisions of this Agreement in the light of the objectives set out in paragraph 2 and in accordance with applicable rules of international law.
Chapter 2. GENERAL DEFINITIONS
Article 2.1. Definitions of General Application
For purposes of this Agreement and unless otherwise specified:
Anti-Dumping Agreement means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, which forms part of the WTO Agreement;
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, dated 15 April 1994;
SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measures, which is part of the WTO Agreement;
TBT Agreement means the Agreement on Technical Barriers to Trade, which is part of the WTO Agreement;
Subsidies Agreement means the Agreement on Subsidies and Countervailing Measures, which is part of the WTO Agreement;
ALADI stands for the Latin American Integration Association, instituted by the Treaty of Montevideo in 1980;
Customs duty includes any import tax or duty and any charge of any kind levied in connection with the importation of a good, including any form of surcharge or surcharge in connection with such importation, but does not include any:
(a) charge equivalent to an internal tax imposed pursuant to Article III.2 of the GATT 1994, with respect to like, directly competitive, or substitute goods of the Party, or with respect to goods from which the imported good was manufactured or produced in whole or in part;
(b) anti-dumping or countervailing duty;
(c) tariff surcharges applied in accordance with Article 6.1 of this Agreement, Article XIX of GATT 1994 and the WTO Agreement on Safeguards; and,
(d) duty or other import-related charges commensurate with the cost of services rendered;
Customs authority means the authority which, under the respective laws of each Party, is responsible for administering and enforcing the relevant customs laws and regulations:
(a) in the case of Chile, to the National Customs Service; and,
(b) in the case of Ecuador, to the Ecuadorian Customs Corporation;
Commission means the Economic and Trade Commission established in Article 13.1;
Days means calendar, running or calendar days;
Business means any entity organized or organized under applicable law, whether or not for profit and whether privately or governmentally owned, including any partnership, trust, joint venture, sole proprietorship, other association, and a branch of a corporation;
Enterprise of a Party means an enterprise incorporated or organized under the laws of a Party;
State Enterprise means an enterprise that is owned or controlled by a Party through ownership rights;
Existing means in effect on the date of entry into force of this Agreement;
GATT 1994 means General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
Levy means customs duty; Measure means any law, rule, regulation, procedure, requirement or practice; Originating good means a good or product that complies with the rules of origin set out in Chapter 4;
National means a natural person who has the nationality of a Party in accordance with its Political Constitution or a permanent resident of a Party;
WTO stands for the World Trade Organization;
Party means any State for which this Agreement has entered into force;
Heading means the first four digits of the Harmonized System tariff classification code;
Person means a natural person or a company;
Person of a Party means a national or company of a Party;
Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes and Chapter Notes, as adopted and
implemented by the Parties in their respective customs tariff laws;
Subheading means the first six digits of the Harmonized System tariff classification code;
Territory means:
(a) with respect to Chile, the land, maritime and air space under its sovereignty and the exclusive economic zone and continental shelf over which it exercises sovereign rights and jurisdiction in accordance with international law and its internal legislation; and,
(b) with respect to Ecuador, the continental territory and adjacent islands; the Galapagos Archipelago; the subsoil; the territorial sea and other maritime spaces; and the respective air spaces, over which it exercises sovereignty and jurisdiction in accordance with international law and its internal legislation.
Chapter 3. NATIONAL TREATMENT AND MARKET ACCESS
Article 3.1. National Treatment
Each Party shall accord national treatment to goods of the other Party in accordance with Article III of the GATT 1994, including its interpretative notes, and to that end Article III of the GATT 1994 and its interpretative notes are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 3.2. Reduction of Customs Duties on Third Countries
1. Taking into account that the schedules of the Economic Complementation Agreement No. 32 for the Establishment of an Expanded Economic Space between Chile and Ecuador are fulfilled, the Parties agree not to apply new customs duties to reciprocal trade of goods.
2. If at any time a Party reduces its most-favored-nation tariffs on a good or goods listed in Annex 3.1, it shall apply such tariffs to reciprocal trade.
Article 3.3. Tax Relief Programme
1. The Parties shall meet within three months of the date of entry into force of this Agreement to consider special programs to incorporate the goods listed in Annex 3.1 into a tariff reduction program. They may also, at any time, accelerate the tariff reduction schedule for such products or groups of products as they may mutually agree.
2. If at any time the Parties incorporate any good listed in Annex 3.1 into a drawback program and a Party reduces its Most-Favored-Nation tariffs, the reciprocal trade charge shall be adjusted in accordance with the proportionalities established for the affected good or goods.
Article 3.4. Export Taxes
No Party may adopt or maintain any tariff, tax, or other charge on exports of any good to the territory of the other Party unless such tariff, tax, or charge is adopted or maintained on any good for domestic consumption, subject to the exceptions provided in Article 3.6.
Article 3.5. Fees and other Charges
The fees and other charges referred to in subparagraph (d) of the definition of customs tariff in Article
2.1 shall be limited to the approximate cost of the services rendered and must not constitute an indirect protection for internal goods or a tax on imports or exports for fiscal purposes.
Article 3.6. Import and Export Restrictions
Except as otherwise provided in this Agreement, no Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except as provided for in Articles XI, XX and XXI of the GATT 1994, including their respective interpretative notes. For this purpose, Article XI of the GATT 1994 and its respective interpretative notes are incorporated into and made an integral part of this Agreement, mutatis mutandis.
Article 3.7. Agricultural Export Subsidies
1. The Parties share the objective of the multilateral elimination of export subsidies on agricultural goods and will work together towards an agreement in the WTO to eliminate such export subsidies, as well as to prevent their reintroduction in any form.
2. No Party shall introduce or maintain any export subsidy on any agricultural good that is inconsistent with the regulations of the WTO Agreements, particularly the Agreement on Agriculture.
Article 3.8. Exceptions to National Treatment and Import and Export Restrictions
The provisions of Articles 3.1 and 3.6 shall not apply to the measures set out In Annex 3.2.
Article 3.9. Committee on Trade In Goods
1. The Parties establish a Committee on Trade in Goods, composed of representatives of each Party.
2. The Committee shall meet at the request of any Party or the Commission to consider any matter covered under this Chapter and the release program.
3. The functions of the Committee shall include:
(a) promote trade in goods between the Parties, including consultations for the acceleration of tariff elimination under this Agreement and other matters as appropriate; and
(b) consider obstacles to trade in goods between the Parties, in particular those related to the application of non-tariff measures, and, if necessary, submit these matters to the Commission for consideration.
Chapter 4. RULES OF ORIGIN
Section A. Rules of Origin
Article 4.1. Originating Goods
Except as otherwise provided In this Chapter, a good shall be considered to be originating when:
(a) the good is wholly obtained or produced entirely in the territory of one or the other Party, as defined in Article 4.26;
(b) the good is produced in the territory of either Party exclusively from materials that qualify as originating under the provisions of this Chapter; or
(c) the good is produced in the territory of either Party from non-originating materials that result from a production or transformation process conferring a new individuality characterized by a change in tariff classification, regional value content, or other requirements as specified in Annex 4.1, and the good complies with the other applicable provisions of this Chapter.
Article 4.2. Regional Content Value
1. The regional value content of the goods shall be calculated according to the following formula:
VCR = VT - VMN / VT x 100
where:
RCV is the regional content value, expressed as a percentage; VT is the transaction value of the good adjusted on an FOB basis, except as provided in paragraph 3. Where no such value exists or cannot be determined in accordance with the principles of Article 1 of the Customs Valuation Agreement, it shall be calculated in accordance with that agreement; and
If such a value does not exist or cannot be determined in accordance with the principles of Article 1 of the Customs Valuation Agreement, it shall be calculated in accordance with that Agreement.
2. For purposes of calculating the regional content value, the percentage shall be forty percent (40%) for Ecuador and fifty percent (50%) for Chile. (2)
3. When a good is not exported directly by its producer, the value shall be adjusted to the point at which the buyer receives the good within the territory of the Party where the producer is located.
4. All records of costs considered for the calculation of regional value content shall be recorded and maintained in accordance with Generally Accepted Accounting Principles applicable in the territory of the Party where the good is produced.
5. Where the producer of a good acquires a non-originating material within the territory of a Party where it is located, the value of the non-originating material shall not include freight, insurance, packing costs, and all other costs incurred in transporting the material from the supplier's warehouse to the producer's location.
6. For purposes of calculating regional value content, the value of non-originating materials used by the producer in the production of a good shall not include the value of non-originating materials used by:
(a) another producer in the production of an originating material that is acquired and used by the producer of the good in the production of that good; or,
(b) the producer of the goods in the production of a self-produced originating material.
Article 4.3. Non-Originating Transactions
1. The following processes or operations do not confer origin, individually or in combination with each other:
(a) preservation of the goods in good condition during transport or storage, such as ventilation, aeration, refrigeration, freezing;
(b) facilitation of shipment or transport;
(c) packaging, wrapping, or packaging of goods for retail sale;
(d) fractionation in lots or volumes; and,
(e) affixing marks, labels and other similar distinctive signs on the goods or their packaging;
2. Likewise, the following processes or working operations shall be considered insufficient to confer the status of originating goods:
(a) filtration or dilution in water or other solvents that does not alter the characteristics of the goods;
(b) disassembly of goods into their parts;
(c) laying or drying;
(d) dusting, washing, shaking, shelling, peeling, shelling, shelling, threshing, grading, sorting, sifting, screening, sieving, filtering, painting, simple cutting, trimming;
(e) cleaning, including removal of rust, grease and paint or other coatings;
(f) joining, assembling or division of goods into packages;
(g) simple mixing of products, understood as activities that do not require special skills or machines, apparatus or equipment specially made or installed to carry out such activity. However, simple mixing does not include chemical reaction;
(h) slaughter of animals; and,
(i) application of oil and protective coatings.
Article 4.4. Cumulation
1. Originating materials or goods originating in either Party incorporated in the production of goods in the territory of the other Party shall be considered as originating in the territory of the latter Party.
2. For the purposes of the cumulation referred to in the preceding paragraph, materials originating in Bolivia, Colombia and Peru shall also be considered as originating in the exporting Party, for which it shall apply:
(a) in the case of Chile, the respective bilateral agreement signed with such countries; and,
(b) in the case of Ecuador, the respective regulations of the Andean Community.
Article 4.5. De Minimis
A good shall be considered originating if the value of all non-originating materials used in the production of that good that do not meet the change in tariff classification requirement set out in Annex 4.1 does not exceed fifteen percent (15%) in the case of Ecuador and ten percent (10%) of the transaction value of the good determined under Article 4.2 and the good complies with the other applicable provisions of this Chapter. (3)
Article 4.6. Accessories, Spare Parts and Tools
1. Accessories, spare parts, or tools delivered with the good as a normal part of the good shall be disregarded in determining whether all non-originating materials used in the production of the good comply with the applicable change in tariff classification set out in Annex 4.1, provided that:
(a) accessories, spare parts or tools are classified together with the merchandise and are not invoiced separately; and,
(b) the quantity and value of these accessories, spare parts or tools are those customary for the goods.
2. For those accessories, spare parts or tools that do not comply with the above conditions, the provisions of this Chapter shall apply to each of them.
3. Where the good is subject to a regional value content requirement, accessories, spare parts or tools shall be considered as originating or non-originating materials, as the case may be, in calculating the regional value content of the good.
Article 4.7. Retail Containers and Packaging Materials
1. Where the containers and packing materials in which a good is presented for retail sale are classified in the Harmonized System with the good they contain, they shall be disregarded in determining whether all non-originating materials used in the production of the good comply with the applicable change in tariff classification set out in Annex 4.1.
2. Where the good is subject to a regional value content requirement, the value of such containers and packing materials shall be taken into account as originating or non-originating material, as the case may be, in calculating the regional value content of the good.
Article 4.8. Containers and Packing Materials for Shipment
Containers and packing materials in which the merchandise is packed exclusively for transportation shall not be taken into account for purposes of determining whether the merchandise is originating.