(b) be used only by or under the personal supervision of that person in the exercise of the business activity, trade, profession or sport of that person;
(c) not be sold or leased while in its territory;
(d) be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the good;
(e) be capable of identification when exported;
(f) be exported on the departure of that person or within such other period as is reasonably related to the purpose of the temporary admission; or
(g) be admitted in no greater quantity than is reasonable for its intended use.
3. A Party may not impose a condition on the the duty-free temporary admission of a good referred to in paragraph 1(d), other than to require that the good:
(a) be imported solely for soliciting orders for:
(i) a good of the other Party or a non-Party, or
(ii) a service provided from the territory of the other Party or a non- Party;
(b) not be sold, leased or used for anything other than exhibition or demonstration while in its territory;
(c) be capable of identification when exported;
(d) be exported within a period that is reasonably related to the purpose of the temporary import;
(e) be imported in no greater quantity than is reasonable for its intended use; or
(f) be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the good.
4. Where a good is temporarily admitted duty-free under paragraph 1 and a condition a Party imposes under paragraphs 2 or 3 has not been fulfilled, the Party may impose:
(a) the customs duty and any other charge that would be owed on entry or final importation of the good; and
(b) any applicable criminal, civil or administrative penalties that the circumstances may warrant.
5. Except as otherwise provided in this Agreement, a Party may not:
(a) prevent a vehicle or container used in international traffic that enters its territory from the territory of the other Party from departing its territory on a route that is reasonably related to the economic and prompt departure of that vehicle or container;
(b) require a security or impose a penalty or charge solely by reason of a difference between the port of entry and the port of departure of a vehicle or container;
(c) impose a condition on the release of an obligation, including a security, that it imposes in respect of the entry of a vehicle or container into its territory on exiting through a particular port of departure; or
(d) require that the vehicle or carrier bringing a container from the territory of the other Party into its territory be the same vehicle or carrier taking such container to the territory of the other Party.
6. For purposes of paragraph 5, "vehicle" means truck, truck tractor, tractor, trailer unit or trailer, locomotive, or railway car or other railroad equipment.
Article 2.06. Duty-Free Entry of Certain Commercial Samples and Printed Advertising Material
1. A Party shall grant duty-free entry to a commercial sample of negligible value, and to printed advertising material, imported from the territory of the other Party, regardless of their origin, but may require that:
(a) the sample be imported solely for the solicitation of orders for:
(i) a good of the other Party or a non-Party, or
(ii) a service provided from the territory of the other Party or a non- Party; or
(b) the advertising material be imported in a packet containing no more than one copy of the material and that neither the materials nor the packet form part of a larger consignment.
Article 2.07. Good Re-Entered after Repair or Alteration
1. A Party may not apply a customs duty to a good, regardless of its origin, that re- enters its territory after that good has been temporarily exported from its territory to the territory of the other Party for repair or alteration, regardless of whether such repair or alteration could be performed in its territory.
2. A Party may not apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair or alteration.
3. For purposes of this Article, repair or alteration does not include an operation or process that:
(a) destroys the essential characteristics of a good or creates a new or commercially different good; or
(b) transforms an unfinished good into a finished good.
4. Paragraph 1 does not cover a good imported in bond, into foreign trade zones, or in similar status, that is exported for repair and not re-imported in bond, into foreign trade zones, or in similar status.
Section III. Non-Tariff Measures
Article 2.08. Import and Export Restrictions
1. Except as otherwise provided in this Agreement, a Party may not adopt or maintain a prohibition or restriction on the importation of a good of the other Party or on the exportation or sale for export of a good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994, and to this end Article XI of the GATT 1994 is incorporated into and made a part of this Agreement.
2. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit:
(a) an export price requirement in a circumstance in which another form of restriction is prohibited; and,
(b) an import price requirement, except as permitted in enforcement of countervailing and antidumping orders and undertakings.
3. In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, this Agreement does not prevent the Party from:
(a) limiting or prohibiting the importation from the territory of the other Party a good of that non-Party; or
(b) requiring as a condition of export of a good of the Party to the territory of the other Party that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.
4. In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on request of the other Party, shall discuss with a view to avoiding undue interference with or distortion of pricing, marketing and distribution arrangements in the other Party.
5. Paragraphs 1 through 4 do not apply to a measure set out in Annex 2.03.
Article 2.09. Distilled Spirits
A Party may not adopt or maintain a measure requiring that distilled spirits imported from the territory of the other Party for bottling be blended with distilled spirits of the Party.
Article 2.10. Export Taxes
A Party may not adopt or maintain a duty, tax or other charge on the export of a good to the territory of the other Party unless the duty, tax or charge is adopted or
maintained on the good when destined for domestic consumption.
Article 2.11. Customs User Fees and Similar Charges
1. No Party may adopt or maintain a fee or charge on or in connection with importation of a good of the other Party that is not commensurate with the cost of services rendered.
2. Paragraph 1 does not prevent a Party from imposing a customs duty or a charge set out in paragraphs (a), (b), or (d) of the definition of "customs duty".
3. The Parties affirm that nothing in this Article modifies Article VII of GATT 1994 as it applies between them.
Article 2.12. Customs Valuation
The Customs Valuation Agreement governs the customs valuation rules applied by the Parties to their reciprocal trade.
Section IV. Agriculture
Article 2.13. Agricultural Export Subsidies
1. The Parties share the objective of the multilateral elimination of agricultural export subsidies and shall work together toward an agreement in the WTO to eliminate those subsidies and avoid their reintroduction in any form.
2. A Party shall not adopt or maintain agricultural export subsidies on an agricultural good originating in or shipped from its territory that is exported directly or indirectly to the territory of the other Party.
3. If a Party adopts or maintains an export subsidy on an agricultural good that is exported to the other Party, the Party applying the measure, at the request of the other Party, shall discuss with a view to agreeing on specific measures that either Party may adopt to counter the effects of the export subsidy, including an increase of the rate of duty on such imports up to the applied Most-Favoured-Nation (MEN) tariff rate.
Article 2.14. Domestic Support Measures for Agricultural Products
1. The Parties agree to cooperate in the WTO agricultural negotiations in order to achieve a substantial reduction of production and trade-distorting domestic support measures.
2. If a Party adopts or maintains a domestic support measure that the other Party considers to distort bilateral trade covered by this Agreement, the Party applying the measure, at the request of the other Party, shall consult with a view to avoiding the nullification and impairment of the concessions granted under this Agreement. Those consultations shall be deemed to satisfy the requirement of Article 22.05 (Dispute Settlement - Consultations).
Article 2.15. State Trading Enterprises
1. Except as provided in Article 14.04 (Competition Policy, Monopolies And State Enterprises - State Enterprises), the rights and obligations of the Parties with respect to state trading enterprises shall be governed by Article XVII of the GATT 1994 and the Understanding on the Interpretation of Article XVII of the GATT 1994, which are incorporated into and made part of this Agreement.
2. The Parties agree to cooperate in the WTO negotiations to ensure transparency regarding the operation and maintenance of state trading enterprises.
Article 2.16. Tariff-Rate Quotas - Pork and Beef
1. Notwithstanding the staging categories in Panama's Schedule to Annex 2.04, on originating goods for the items listed below in paragraph 2, upon entry into force of this Agreement, Panama shall provide immediate duty-free access on 200MT subject to a 2% increase per year.
2. Paragraph 1 applies to the following pork tariff lines in the Arancel de Importación de la Repiblica de Panama: 0203.11.10, 0203.11.20, 0203.12.10, 0203.12.90, 0203.19.10, 0203.19.20, 0203.19.90, 0203.21.10, 0203.21.20, 0210.11.11, 0210.11.19, 0210.11.90, 0210.19.10, 0210.19.21, 0210.19.29, 1602.49.13, 1602.49.14, 1602.49.19 and 1602.49.90.
3. Notwithstanding the staging categories in Panamaâs Schedule to Annex 2.04, on originating goods for the items listed below in paragraph 4, upon entry into force of this Agreement, Panama shall provide immediate duty-free access on 450MT of WTO in-quota quantities.
4. Paragraph 3 applies to the following pork tariff lines in the Arancel de Importación de la Repiblica de Panama: 0203.11.10, 0203.11.20, 0203.12.10, 0203.12.90, 0203.19.10, 0203.19.20, 0203.19.90, 0203.21.10, 0203.21.20, 0203.22.10, 0203.22.90, 0203.29.10, 0203.29.20, 0203.29.90, 0210.11.11, 0210.11.19, 0210.11.90, 0210.19.10, 0210.19.21, 0210.19.29, 0210.19.90, 1602.41.11, 1602.41.19, 1602.42.10, 1602.42.90, 1602.49.13 and 1602.49.19.
5. Notwithstanding the staging categories in Panamaâs Schedule to Annex 2.04 on originating goods for the items listed below in paragraph 6, upon entry into force of this Agreement, Panama shall provide immediate duty-free access on 200 MT.
6. Paragraph 5 applies to the following beef tariff lines in the Arancel de Importacion de la Republica de Panamd: 0201.20.00a, 0201.30.00a, 0202.20.00a and 0202.30.00a.
Article 2.17. Administration and Implementation of Tariff-Rate Quotas
1. Panama shall implement and administer its TRQs in accordance with Article XII of the GATT 1994, and the WTO Agreement on Import Licensing Procedures.
2. Panama shall ensure that:
(a) its procedures for administering its TRQs are transparent, made available to the public, timely, non-discriminatory, responsive to market conditions and minimally burdensome to trade;
(b) subject to subparagraph (c), a person of a Party that fulfills Panama's legal and administrative requirements for TRQs shall be eligible to apply and to be considered for an import license or an in-quota quantity allocation under Panama's TRQs;
(c) it does not, under its TRQs:
(i) allocate a portion of an in-quota quantity to a producer or a producer's group,
(ii) condition access to an in-quota quantity on purchase of domestic production, or
(iii) limit access to an in-quota quantity only to processors or to distributors;
(d) only its national government administers its TRQs and that this administration is not delegated to another person, except that activities related to the bidding process associated with Panama's TRQs may be carried out by a private entity, other than a producer group, under the supervision of its national government; and
(e) it allocates in-quota quantities under its TRQs in commercially viable shipping quantities and, to the maximum extent possible, in the amounts that importers request.
3. Panama shall make every effort to administer its TRQs in a manner that allows importers to fully utilize them.
4. Panama may not impose a condition on the application for or use of an in-quota quantity allocation under a TRQ on the re-export of an agricultural good.
5. Panama may not count food aid or other non-commercial shipments in determining whether an in-quota quantity under a TRQ has been filled.
6. Panama shall discuss with Canada, at Canada's request, Panama's administration of TRQs.
Article 2.18. Agricultural Safeguard Measures for Frozen Pork
1. Notwithstanding Article 2.04, Panama may adopt an agricultural safeguard measure in the form of an additional customs duty on an originating agricultural good listed in Annex 2.18, following the entry into force of the TPA, provided the conditions of this Article are fulfilled.
2. The total customs duties applied on a good, including the additional customs duty referred to in paragraph 1, shall not exceed the lesser of the amounts resulting from the application of:
(a) the applied MFN rate of duty at the time the measure is adopted; or
(b) the base rate set out in Panamaâs Schedule to Annex 2.04.
3. The additional customs duty referred to in paragraph 1 shall not exceed:
(a) for frozen pork hams and shoulders as listed in Annex 2.18:
(i) up to December 31st of the 13th year following the entry into force of the later of the TPA or this Agreement, 100% of the difference between the maximum amount permitted under paragraph 2 and the amount resulting from the applicable rate of duty in Panama's Schedule to Annex 2.04,
(ii) from January 1st of the 14th year following the entry into force of the later of the TPA or this Agreement through December 31 of the 15th year following its entry into force, 75% of the difference between the maximum amount permitted under paragraph 2 and the amount resulting from the applicable rate of duty in Panama's Schedule to Annex 2.04, and
(iii) for the period from January 1st of the 16th year following the entry into force of the later of the TPA or this Agreement to December 31st of the 18th year following its entry into force, 50% of the difference between the maximum amount permitted under paragraph 2 and the amount resulting from the applicable rate of duty in Panama's Schedule to Annex 2.04; and
(b) for frozen pork other than hams and shoulders as listed in Annex 2.18:
(i) up to December 31st of the 8th year following the entry into force of the later of the TPA or this Agreement, 100% of the difference between the maximum amount permitted under paragraph 2 and the applicable amount resulting from the rate of duty in Panama's Schedule to Annex 2.04,
(ii) from January 1st of the 9th year following the entry into force of the later of the TPA or this Agreement through December 31st of the 13th year following its entry into force, 75% of the difference between the maximum amount permitted under paragraph 2 and the amount resulting from the applicable rate of duty in Panama's Schedule to Annex 2.04, and
(iii) for the period from January 1st of the 14th year following the entry into force of the later of the TPA or this Agreement to December 31st of the 15th year following its entry into force, 50% of the difference between the maximum amount permitted under paragraph 2 and the amount resulting from the applicable rate of duty, in Panama's Schedule to Annex 2.04.
4. Panama may not adopt or maintain an agricultural safeguard measure on an originating good:
(a) after the expiration of the tariff elimination period set out in Panamaâs Schedule to Annex 2.04; or
(b) that increases the duty on an in-quota good subject to a TRQ.
5. Panama may adopt or maintain an agricultural safeguard measure during a calendar year on an originating agricultural good only where the quantity of imports of the good during that year exceeds the trigger volume for that good, set out in Annex 2.18.
6. Panama may not adopt or maintain an agricultural safeguard measure under this Article and at the same time adopt or maintain with respect to the same good:
(a) an emergency action pursuant to Chapter Eight (Emergency Action); or
(b) a measure pursuant to Article XIX of the GATT 1994 and the WTO Agreement on Safeguards.
7. Panama shall adopt an agricultural safeguard measure in a transparent manner. To this end, Panama shall notify Canada in writing and provide relevant information regarding the measure within 60 days of its adoption. Panama shall discuss with Canada on Canada's request regarding the adoption of the agricultural safeguard measure.
8. Panama may maintain an agricultural safeguard measure only until the end of the calendar year in which it applies the measure.
9. A Party may not adopt on an originating agriculture good that is subject to tariff elimination under Annex 2.04 a safeguard duty pursuant to Article 5 of the WTO Agreement on Agriculture.
10. For purposes of this Article and Annex 2.18, "agricultural safeguard measure" means a measure described in paragraph 1.
Section V. Consultations
Article 2.19. Consultations and Committee on Trade In Goods and Rules of Origin
1. The Parties hereby establish a Committee on Trade in Goods and Rules of Origin, comprising representatives of each Party.
2. The Committee shall meet periodically, and at any other time on the request of either Party or the Commission, to ensure the effective implementation and administration of this Chapter, Chapter Three (Rules of Origin), Chapter Four (Customs Procedures), Chapter Five (Trade Facilitation), Chapter Eight (Emergency Action) or any Uniform Regulations. In this regard, the Committee shall:
(a) monitor the implementation and administration by the Parties of this Chapter, Chapter Three (Rules of Origin), Chapter Four (Customs Procedures), Chapter Five (Trade Facilitation), Chapter Eight (Emergency Action) or any Uniform Regulations to ensure their uniform interpretation;
(b) review, at the request of either party, a proposed modification of or addition to this Chapter, Chapter Three (Rules of Origin), Chapter Four(Customs Procedures), Chapter Five (Trade Facilitation), Chapter Eight (Emergency Action) or any Uniform Regulations;
(c) review, in a timely manner, amendments to the Harmonized System with a view to reflecting these amendments in Annex 3.02 (Product-Specific Rules of Origin);
(d) recommend to the Commission a modification of or addition to this Chapter, Chapter Three (Rules of Origin), Chapter Four (Customs Procedures), Chapter Five (Trade Facilitation), Chapter Eight (Emergency Action), any Uniform Regulations or any other provision of this Agreement as may be required to conform with a change to the Harmonized System;
(e) consider a tariff or non-tariff issue raised by either Party; or
(f) consider any other matter relating to the implementation and administration by the Parties of this Chapter, Chapter Three (Rules of Origin), Chapter Four (Customs Procedures), Chapter Five (Trade Facilitation), Chapter Eight (Emergency Action) or any Uniform Regulations referred to it by:
i) a Party,
(ii) the Customs Procedures Sub-Committee established under Article 4.14 (Customs Procedures - Customs Procedures Sub- Committee), or
(iii) the Sub-Committee on Agriculture established under paragraph 4.
3. If the Committee fails to resolve a matter referred to it pursuant to paragraph 2(b) or (d) within 30 days of such referral, either Party may request a meeting of the Joint Commission under Article 21.01 (Administration of the Agreement - Joint Commission).
4. At the request of a Party, the Committee will establish a Sub-Committee on Agriculture that shall:
(a) meet within 90 days of a request by a Party;
(b) provide a forum for the Parties to discuss issues resulting from the implementation of this Agreement for agricultural goods;
(c) refer to the Committee a matter under subparagraph (b) on which it has been unable to reach an understanding; and
(d) report to the Committee for its consideration an understanding reached under this paragraph.
5. Each Party, to the maximum extent possible, shall take necessary measures to implement a revision to this Chapter, Chapter Three (Rules of Origin), Chapter Four (Customs Procedures), Chapter Five (Trade Facilitation) or Chapter Eight (Emergency Action) within 180 days of the date on which the Commission approves a revision.
6. The Parties shall convene on the request of either Party a meeting of their officials responsible for customs, immigration, inspection of food and agricultural products, border inspection facilities, or regulation of transportation as appropriate for the purpose of addressing issues related to movement of goods through the Parties' ports of entry.
Chapter Three. RULES OF ORIGIN
Article 3.01. Definitions
For purposes of this Chapter:
aquaculture means the farming of aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from seedstock such as eggs, fry, fingerlings and larvae, by intervention in the rearing or growth processes to enhance production, such as regular stocking, feeding or protection from predators;
customs value means the value as determined under the Customs Valuation Agreement;
fungible goods means goods that are interchangeable for commercial purposes and whose properties are essentially identical;
fungible materials means materials that are interchangeable for commercial purposes and whose properties are essentially identical;
Generally Accepted Accounting Principles means the principles used in the territory of each Party that provide substantial authorized support with regard to the recording of income, costs, expenses, assets and liabilities involved in the disclosure of information and preparation of financial statements; these principles may be broad guidelines of general application, as well as those standards, practices and procedures usually employed in accounting;
good includes a product, article or material;
good wholly obtained or produced entirely in the territory of one or both of the Parties means:
(a) a mineral or other non-living natural resource extracted in or taken from the territory of one or both of the Parties;