Indirect materials shall be considered as originating materials irrespective of the place of their production.
Article 4.10. Goods and Fungible Materials
1. Where originating and non-originating fungible goods are physically mixed or combined in inventory, the origin of these goods may be determined on the basis of the physical segregation of each fungible good or material, or through the use of any inventory management method, such as average, last-in-first-out (LIFO) or first-in-first-out (FIFO), recognized in the Generally Accepted Accounting Principles of the Party where production takes place or otherwise accepted by the Party where production takes place.
2. The inventory management method selected in accordance with paragraph 1 for a particular commodity or consumable shall continue to be used for that commodity or consumable throughout the period or fiscal year.
Article 4.11. Sets
1. Aset or assortment of goods which are classified in accordance with rule 3 of the General Rules for the Interpretation of the Harmonized System, as well as goods whose description according to the nomenclature of the Harmonized System is specifically that of a set or assortment,
shall qualify as originating, provided that each of the goods contained in that set complies with the rules of origin set out in this Chapter and Annex 4.1.
2. Notwithstanding paragraph 1, a set of goods shall be considered originating if the value of all the non-originating goods used in the formation of the set does not exceed twenty percent (20%) in the case of Ecuador and fifteen percent (15%) of the transaction value of the good, determined in accordance with Article 4.2, in the case of Chile. (4)
Article 4.12. Transit and Transshipment
Each Party shall provide that a good shall not lose its originating status if:
(a) does not undergo further processing, or undergo any other operation, outside the territory of the Parties, except unloading, reloading, fractionation or any other operation necessary to maintain the good in good condition or to transport it to the territory of a Party;
(b) remains under the control of the customs authorities in the territory of a non-Party; and,
(c) a good originating in the exporting Party is transported through one or more non-Parties, in which case the customs authority of the importing Party may require importers claiming preferential tariff treatment for the good to submit:
(i) acopy of the transport document; or,
(ii) a certificate or any other information given by the customs authority of such non-Parties or other authorized entities to support the fact that the goods have been in transit.
Article 4.13. Exhibitions
1. The preferential tariff treatment provided for in this Agreement shall be accorded to originating goods that are consigned for exhibition in a non-Party and sold after the exhibition for importation into one of the Parties, when the following conditions are fulfilled to the satisfaction of the customs authorities of the importing Party:
(a) that an exporter has shipped these goods from one Party to the non-Party where the exhibition took place;
(b) the goods have been sold or otherwise disposed of by the exporter to a person of a Party;
(c) the goods have been shipped during the exhibition or immediately thereafter in the same condition in which they were shipped to the exhibition;
(d) that from the time the goods were sent to the exhibition, they have not been used for any purpose other than for their presentation at the exhibition; and
(e) the goods have remained under the control of the Customs authorities of the non-Party during the exhibition.
2. For the purposes of paragraph 1, a certificate of origin shall be issued in accordance with the provisions of Section B of this Chapter and submitted to the customs authorities of the importing Party, stating the name and address of the exhibition. Additional documentary evidence relating to the exhibition may be required if deemed necessary.
3. Where a good originating in the exporting Party is imported after an exhibition in a non-Party, the customs authority of the importing Party may require importers claiming preferential tariff treatment for the good to submit:
(a) a copy of the transport document; or, (b) a certificate or any other information given by the customs authority of such non-Parties or other authorized entities to support the fact that the goods have been in transit.
Section B. Origin Procedures Article
Article 4.14. Certification of Origin
1. The customs authority of the importing Party may grant preferential tariff treatment based on a written or electronic certificate of origin issued by the competent authority of the exporting Party.
2. The certificate of electronic 5origin must be digitally signed.
3. The competent authority of the exporting Party may delegate the issuance of the certificate of origin to other public or private entities.
4. The competent authority or qualified entities may examine in their territory the originating status of the goods and their compliance with the requirements of this Chapter. For this purpose, they may request any supporting evidence, carry out inspections at the exporterâs or producer's premises or carry out any other control they deem appropriate.
5. The Parties shall keep in force before the General Secretariat of ALADI the list of official agencies or public or private entities authorized to issue certificates of origin and the record of the autographic or electronic signatures of the officials accredited for such purpose.
6. The certificate of origin shall serve to certify that a good exported from the territory of one Party to the territory of another Party qualifies as originating. Such certificate may be modified by the Commission. The single form of the certificate of origin is set out in Annex 4.2.
7. The certificate of origin shall be valid for one year from the date on which it was issued.
5 The Parties shall implement a system of electronic certification of origin referred to in this Article no later than two (2) years after the entry into force of the Agreement. In addition, both Parties shall evaluate the feasibility of the customs office of import receiving a copy of the electronic certificate of origin directly from the competent authority. Upon implementation of the electronic certification of origin system, the Parties shall recognize electronic signatures as valid.
Article 4.15. Billing by a Non-Party Operator
When a good is invoiced by an operator of a non-Party, the following legend shall be indicated in the "Remarks" field of the certificate of origin: "Transaction invoiced by an operator of a non-Party".
Article 4.16. Exceptions
The certificate of origin will not be required when:
(a) the customs value of the importation does not exceed one thousand dollars of the United States of America (US$ 1000) or the equivalent amount in the currency of the importing Party at the time the customs declaration is filed, or such greater amount as may be established by the importing Party, unless the importing Party considers the importation to be part of a series of importations made or planned for the purpose of evading compliance with the laws of the Party governing claims for preferential tariff treatment under this Agreement; or,
(b) is a good for which the importing Party does not require the importer to provide certification or information demonstrating origin.
Article 4.17. Obligations Relating to Imports
1. The customs authority of each Party shall require that an importer claiming preferential tariff treatment for a good:
(a) declare in writing on the import document required by your legislation, on the basis of a certificate of origin, that a good qualifies as an originating good;
(b) has the certificate of origin in his possession at the time the declaration is made;
(c) provide, if requested by the customs authority, the certificate of origin or copies thereof; and,
(d) immediately files a corrected declaration and pays the corresponding duty when the importer has reason to believe that the certificate of origin on which the customs declaration is based contains incorrect information. The importer may not be penalized when he voluntarily lodges the corrected goods declaration before the customs authority has initiated the exercise of its verification and control powers or before the customs authorities notify the revision, in accordance with the legislation of each Party.
2. If an importer in its territory fails to comply with any of the requirements set out in this Chapter, the customs authority shall deny preferential tariff treatment.
3. In the case of Ecuador, when the importer requests preferential tariff treatment without a certificate of origin, it will be subject to the procedures of domestic legislation.
Article 4.18. Duty Drawback
Where the importer has not requested preferential tariff treatment for the goods imported into its territory that he has qualified as originating, the importer may, no later than one year after the date of importation, apply to the customs authority of the importing Party for a refund of the excess customs duties paid because the importer has failed to
requested preferential tariff treatment for that good, in accordance with the procedure established in each Party.
Article 4.19. Obligations Relating to Exports
1. Each Party shall provide that:
(a) where an exporter has reason to believe that the certificate of origin contains incorrect information, he shall immediately inform the competent authority or qualified entities in writing of any change which may affect the accuracy or validity of the certificate of origin; and
(b) if an exporter has furnished a false certificate or false information and therewith exported goods qualifying as originating goods into the territory of the other Party, he shall be subject to penalties similar to those that would be imposed on an importer in its territory for contravening its customs laws and regulations by making false declarations and statements in connection with an importation.
2. No Party shall impose penalties on an exporter for providing incorrect information if he voluntarily communicates this in writing to the competent authority or qualified entities before the customs authority of the importing Party has initiated the exercise of its verification and control powers or before the customs authority notifies the review, in accordance with each Party's legislation.
Article 4.20. Record-Keeping Requirements
1. The competent authority or qualified entities shall keep a copy of the certificate of origin for at least five years from the date of issue. Such a file shall include all the background information on which the certificate was issued.
2. An exporter applying for a certificate of origin under Article 4.14 must retain for at least five years from the date of issuance of such certificate, all records necessary to demonstrate that the good was originating, including records relating to:
(a) the purchase, costs, value and payment for the exported goods;
(b) the purchase, costs, value and payment of all materials, including indirect materials, used in the production of the exported merchandise; and,
(c) the production of the goods in the form in which they are exported from its territory.
3. An importer requesting preferential tariff treatment for a good shall retain, for a minimum of five years from the date of importation of the good, the documentation required by the customs authority, including a copy of the certificate of origin.
Article 4.21. Procedures for Verification of Origin
1. The importing Party may request information on the origin of a good from the competent authority of the exporting Party.
2. The importing Party may require the importer to submit information relating to the importation of the good for which preferential tariff treatment was claimed.
3. For purposes of determining whether an imported good qualifies as originating, the importing Party may verify the origin of the good, through the competent authority of the exporting Party, by the following procedures:
(a) written requests for information or questionnaires to the exporter or producer of the good in the territory of the other Party, which shall specifically identify the good being verified;
(b) verification visits to the premises of the exporter or producer of the good in the territory of the other Party for the purpose of examining the records and documents referred to in Article 4.20 and inspecting the facilities and materials used in the production of the good; or,
(c) any other procedure agreed by the Parties.
4. For the purposes of this Article, any written communication sent by the importing Party to the exporter or producer for verification of origin through the competent authority of the exporting Party shall be considered valid if it is made by means of:
(a) certified mail or other forms with acknowledgement of receipt confirming receipt of documents or communications; or,
(b) in such other manner as the Parties may agree. 5. In accordance with paragraph 3, requests for information or written questionnaires shall contain: (a) the name, title and address of the importing Party requesting the information;
(b) the name and address of the exporter or producer from whom the information and documentation is requested;
(c) description of the information and documents required; and, (d) legal basis for requests for information or questionnaires.
6. An exporter or producer that receives a questionnaire or request for information pursuant to paragraph 3(a) shall duly complete and return the questionnaire or respond to the request for information within 30 days of the date of receipt. During the above period, the exporter or producer may make a written request for an extension to the customs authority of the importing Party, not to exceed 30 days. Such request shall not have the effect of denying preferential tariff treatment.
7. The importing Party may request, through the competent authority of the exporting Party, additional information through a subsequent questionnaire or request to the exporter or producer, even if it has received the completed questionnaire or the requested information referred to in paragraph 3(a). In this case the exporter or producer shall have 30 days to respond to such a request.
8. If the exporter or producer fails to duly complete a questionnaire, return it, or provide the requested information within the period set forth in paragraphs 6 and 7, the importing Party may deny preferential tariff treatment to the goods subject to verification by sending to the importer and to the competent authority of the exporting Party, a determination of origin including the facts and legal basis for that decision.
9. Prior to conducting a verification visit and in accordance with paragraph 3(b), the importing Party shall notify in writing its intention to conduct the verification visit. The notification shall be sent to the competent authority of the exporting Party by mail or any other means that provides a record of receipt of the notification. The importing Party shall require the written consent of the exporter or producer to be visited in order to conduct the verification visit.
10. Pursuant to paragraph 3(b), the notification of intent to conduct the verification visit of origin referred to in paragraph 9 shall contain:
(a) the name, title and address of the importing Party making the notification; (b) the name of the exporter or producer to be visited; (c) the date and place of the proposed verification visit;
(d) the purpose and scope of the proposed verification visit, including the specific reference of the merchandise to be verified;
(e) the names and positions of the officials who will carry out the verification visit; and,
(f) the legal basis for the verification visit.
11. If the exporter or producer of a good does not consent in writing to the visit within 30 days of the date of receipt of the notification referred to in paragraph 9, the importing Party may deny preferential tariff treatment to such good by notifying the importer and the competent authority of the exporting Party in writing of its determination, including the facts and legal basis for its determination.
12. The importing Party shall not deny preferential tariff treatment to a good if, within 15 days of the date of receipt of the notification, the producer or exporter, on a single occasion, requests a postponement of the proposed verification visit, with appropriate justifications, for a period of not more than 30 days from the date proposed under paragraph 10(c), or for such longer period as the customs authority of the importing Party and the competent authority of the exporting Party may agree.
13. Pursuant to paragraph 3(b), the importing Party shall allow an exporter or producer who is subject to a verification visit to designate up to two observers to be present during the visit and to act solely in that capacity. Failure to designate observers shall not be grounds for postponement of the visit.
14. In verifying compliance with any requirement set out in Section A of this Chapter, the importing Party shall adopt, where applicable, the Generally Accepted Accounting Principles applied in the territory of the exporting Party.
15. The importing Party may deny preferential tariff treatment to a good subject to a verification of origin where the exporter or producer of the good fails to make available to the importing Party the records and documents referred to in Article 4.20.
16. When the verification visit has been concluded, the importing Party may draw up a record of the visit, which shall include the facts established by it. The exporter or producer subject to the visit may sign this record.
17. Within 90 days of the conclusion of the verification of origin, the importing Party shall issue a determination of origin, including the facts and legal basis for such determination, and shall notify the importer and the competent authority of the exporting Party.
18. Upon expiration of the time limit set forth in the preceding paragraph, without the importing Party having issued a determination of origin, the competent authority of the exporting Party may resort to the dispute settlement mechanism.
19. Where the importing Party determines through a verification of origin that an exporter or producer has more than once provided false or unfounded statements or information to the competent authority of the exporting Party that a good qualifies as originating, the importing Party may suspend preferential tariff treatment to identical goods exported by that person. The customs authority of the importing Party shall grant preferential tariff treatment to the goods upon compliance with this Chapter.
Article 4.22. Sanctions
Each Party shall impose criminal, civil or administrative penalties for violations of its laws and regulations relating to the provisions of this Chapter.
Article 4.23. Confidentiality
1. Any information which is by its nature confidential or which is provided on a confidential basis for the purposes of this Chapter shall be treated as strictly confidential by the relevant authorities and shall not be disclosed by them without the express permission of the person or institution which provided the information, subject to the exceptions set out in paragraph 2.
2. Without prejudice to the domestic law of each Party, confidential information obtained under this Chapter may be disclosed only to judicial authorities and to authorities responsible for customs or tax matters, as appropriate.
Article 4.24. Committee on Rules of Origin
1. The Parties establish the Committee on Rules of Origin, composed of representatives of each Party, which shall have jurisdiction over the provisions of this Chapter.
2. The Committee on Rules of Origin shall meet at the request of either Party. 3. Without prejudice to the provisions of Article 4.25, the Committee shall have the following functions:
(a) propose to the Commission the adoption of origin practices and guidelines to facilitate trade between the Parties;
(b) propose solutions to the Commission on issues related to:
(i) interpretation and application of this Chapter;
(ii) other matters relating to practices or procedures adopted by the Parties under this Chapter;
(c) submit the report to the Commission, setting forth its findings and recommendations, when, at the request of the Commission and upon request of a Party, a proposal is made to amend this Chapter; and
(d) any other matter that the Committee considers relevant.
Article 4.25. Consultations and Modifications
1. The Parties shall consult regularly to ensure that this Chapter is administered effectively, uniformly and in accordance with the spirit and objectives of this Agreement and shall cooperate in the administration of this Chapter.
2. A Party that considers that one or more of the provisions of this Chapter requires amendment may submit a proposal for consideration by the other Party.
3. The Committee on Origin shall consider proposed modifications to the rules of origin arising from changes in production processes, amendments to the Harmonized System, other matters related to the determination of the origin of a good, or other matters related to this Chapter.
4. The Originating Committee shall meet to consider the proposals within 60 days from the date of receipt of the communication or on such other date as the Committee may decide.
5. The Originating Committee shall provide a report to the Commission, setting out its findings and recommendations.
6. Upon receipt of the report, the Commission may take appropriate action in accordance with Article 13.2.
Article 4.26. Definitions
For purposes of this Chapter:
Customs Valuation Agreement means the Agreement on Implementation of Article Vil of the General Agreement on Tariffs and Trade 1994, which forms part of the WTO Agreement;
Competent authority means the authority which, according to the respective laws of each Party, is responsible for issuing the certificate of origin or for delegating the issuance to qualified entities.
(a) in the case of Chile, the General Directorate of International Economic Relations; and,
(b) in the case of Ecuador, the Ministry of Industries and Competitiveness.
CIF means the value of the imported goods including insurance and freight costs to the port or place of introduction into the country of importation by whatever means of transport;
Shipping containers and packing materials means goods used to protect merchandise during transportation and does not include containers and materials in which merchandise is packaged for retail sale.
Exporter means the person who makes an export.
FOB means the value of the goods free on board, whatever the means of transport, at the place of shipment abroad.
Importer means the person who makes an import.
Material means a good or any material, substance, ingredient, part or component used or consumed in the production or transformation of another good.
Material produced in-house means material that is produced by the producer of a good and used in the production of that good.
Indirect Material means a good used in the production, verification, or inspection of another good, but not physically incorporated therein; or a good that is used in the maintenance of buildings or in the operation of equipment related to the production of another good, including:
(a) fuel, energy, solvents and catalysts;
(b) equipment, apparatus and attachments used for the verification or inspection of goods;
(c) gloves, goggles, footwear, clothing, safety equipment and attachments;
(d) tools, dies and moulds;
(e) spare parts and materials used in the maintenance of equipment and buildings;
(f) lubricants, greases, composites and other materials used in the production, operation of equipment or maintenance of buildings; and,
(g) any other material which is not incorporated in the goods, but the use of which in the production of the goods can be shown to be part of that production.
Identical goods means goods that are alike in all respects, including physical characteristics, quality and merchantability. Minor differences in appearance do not prevent goods that otherwise conform to the definition from being considered identical.
Expendable goods or materials means goods or materials which are interchangeable for commercial purposes, the properties of which are essentially identical and which cannot be distinguished from one another by simple visual examination.
Non-originating good or non-originating material means a good or material that does not meet the requirements of this Chapter to be considered originating.
Goods wholly obtained or produced entirely in the territory of one or the other Party, means:
(a) minerals extracted or obtained in the territory of either Party;
(b) products of the plant kingdom harvested, collected or gathered in the territory of either Party;
(c) live animals born and bred in the territory of one or the other Party;
(d) goods obtained from live animals in the territory of either Party;
(e) goods obtained from hunting, trapping, fishing, aquaculture, gathering or capture in the territory of one or the other Party;
(f) fish, crustaceans and other marine species taken from the sea outside the territory of the Parties by fishing vessels registered or recorded in a Party and flying the flag of that Party or by fishing vessels leased or chartered by enterprises established in the territory of a Party;
(g) goods obtained or produced on board factory ships exclusively from the goods identified in subparagraph (f), provided that the factory ships are registered or recorded in a Party and that they fly the flag of that Party or are leased or chartered by enterprises established in the territory of a Party;
(h) goods taken from the seabed or subsoil outside the territorial waters of a Party, by a Party ora person of a Party, provided that the Party has rights to exploit that seabed or subsoil;
(i) wastes and residues derived from: