Section B-2. Safeguard Measures
Article 2.21. DEFINITIONS
For the purposes of Section B-2:
domestic industry means the producers as a whole of the like or directly competitive goods operating in the territory of a Party, or those whose collective output of the like or directly competitive goods constitutes a major proportion of the total domestic production of those goods;
serious injury means a significant overall impairment in the position of a domestic industry;
threat of serious injury means serious injury that, on the basis of facts and not merely on allegation, conjecture or remote possibility, is clearly imminent; and
transition period means a period for a good from the date of entry into force of this Agreement until ten years from the date of completion of tariff elimination or completion of tariff reduction, as the case may be for each good.
Article 2.22. BILATERAL SAFEGUARD MEASURES
During the transition period only, if as a result of the reduction or elimination of a customs duty (3) under this Agreement, an originating good of the other Party is being imported into the territory of a Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions that the imports of such good from the other Party alone (4) constitute a substantial cause of serious injury or threat thereof to domestic industry producing a like or directly competitive good, the Party may:
(a) suspend further reduction of any rate of customs duty on the good provided for under this Agreement; or
(b) increase the rate of customs duty on the good to a level not to exceed the lesser of:
(i) the MFN applied rate of customs duty on the good in effect at the time the measure is taken; and
(ii) the MFN applied rate of customs duty on the good in effect on the day immediately preceding the date of entry into force of this Agreement.
Article 2.23. CONDITIONS AND LIMITATIONS ON IMPOSITION OF a BILATERAL SAFEGUARD MEASURE
The following conditions and limitations shall apply to an investigation or a measure described in Article 2.22:
(a) a Party shall immediately deliver written notice to the other Party upon:
(i) initiating an investigatory process relating to serious injury or threat thereof and the reasons for it;
(ii) making a finding of serious injury or threat thereof caused by increased imports; and
(iii) taking a decision to apply a safeguard measure;
(b) in making the notification referred to in subparagraph (a), the Party proposing to apply a safeguard measure shall provide the other Party with all pertinent information, which shall include evidence of serious injury or threat thereof caused by the increased imports, precise description of the good involved and the proposed measure, proposed date of introduction and expected duration;
(c) a Party proposing to apply a safeguard measure shall provide adequate opportunity for prior consultations with the other Party as far in advance of taking any such measure as practicable, with a view to reviewing the information arising from the investigation, exchanging views on the measure and reaching an agreement on the compensation set out in Article 2.25. The Parties shall in such consultations, review, inter alia, the information provided under subparagraph (b), to determine:
(i) compliance with Section B-2;
(ii) whether any proposed measure should be taken; and
(iii) the appropriateness of the proposed measure, including consideration of alternative measures;
(d) a Party shall apply a measure only following an investigation by its competent authorities in accordance with Articles 3 and 4.2(c) of the Safeguards Agreement, and to this end, Articles 3 and 4.2(c) of the Safeguards Agreement are incorporated into and made a part of this Agreement, mutatis mutandis;
(e) in undertaking the investigation described in subparagraph (d), a Party shall comply with the requirements of Articles 4.2(a) and (b) of the Safeguards Agreement, and to this end, Articles 4.2(a) and (b) are incorporated into and made a part of this Agreement, mutatis mutandis;
(f) the investigation shall in all cases be completed within one year following its date of initiation;
(g) no measure shall be maintained:
(i) except to the extent and for such time as may be necessary to remedy serious injury and to facilitate adjustment; or
(ii) for a period exceeding two years, except that in exceptional circumstances, the period may be extended by up to additional two years, to a total of four years from the date of first imposition of the measure if the investigating authorities determine in conformity with procedures set out in subparagraphs (a) through (f), that the safeguard measure continues to be necessary to prevent or remedy serious injury and to facilitate adjustment and that there is evidence that the industry is adjusting;
(h) no bilateral safeguard measure shall be taken against a particular good while a global safeguard measure in respect of that good is in place; in the event that a global safeguard measure is taken in respect of a particular good, any existing bilateral safeguard measure which is taken against that good shall be terminated;
(i) upon the termination of the safeguard measure, the rate of customs duty shall be the rate which would have been in effect but for the measure; and
(j) no measures shall be applied again to the import of a good which has previously been subject to such a measure for a period of time equal to that during which such measure had been previously applied, provided that the period of non-application is at least two years.
Article 2.24. PROVISIONAL MEASURES
In critical circumstances, where delay would cause damage which would be difficult to repair, a Party may take a measure described in Article 2.22 on a provisional basis pursuant to a preliminary determination that there is clear evidence that imports from the other Party have increased as the result of the reduction or elimination of a customs duty under this Agreement, and such imports constitute a substantial cause of serious injury, or threat thereof, to the domestic industry. The duration of such provisional measure shall not exceed 200 days, during which time the requirements of Articles 2.23(d) and (e) shall be met. Any tariff increases shall be promptly refunded if the investigation provided for in Article 2.23(d) does not result in a finding that the requirements of Article 2.22 are met. The duration of any provisional measure shall be counted as part of the period described in Article 2.23(g)(ii).
Article 2.25. COMPENSATION
1. The Party proposing to apply a measure described in Article 2.22 shall provide to the other Party mutually agreed adequate means of trade liberalising compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the measure. If the Parties are unable to agree on compensation within 30 days in the consultations under Article 2.23(c), the Party against whose originating goods the measure is applied may take action having trade effects substantially equivalent to the measure applied under this Article. This action shall be applied only for the minimum period necessary to achieve the substantially equivalent effects.
2. The right to take action referred to in the second sentence of paragraph 1 shall not be exercised for:
(a) the first two years that the measure is in effect; and
(b) the first three years that the measure is in effect where it has been extended beyond two years in accordance with Article 2.23(g)(ii);
provided that the measure described in Article 2.22 has been taken as a result of an absolute increase in imports and that such a measure conforms to the provisions of this Section.
Article 2.26. ADMINISTRATION OF EMERGENCY ACTION PROCEEDINGS
1. Each Party shall ensure the consistent, impartial and reasonable administration of its laws, regulations, decisions and rulings governing all safeguard investigation proceedings.
2. Each Party shall entrust determinations of serious injury or threat thereof in safeguard investigation proceedings to a competent investigating authority, subject to review by judicial or administrative tribunals, to the extent provided for in its laws. Negative injury determinations shall not be subject to modification, except by such review.
3. Each Party shall adopt or maintain equitable, timely, transparent and effective procedures for safeguard investigation proceedings.
Article 2.27. GLOBAL SAFEGUARD MEASURES
Each Party retains its rights and obligations under Article XIX of GATT 1994 and the Safeguards Agreement. This Agreement does not confer any additional rights or impose any additional obligations on the Parties with regard to measures taken pursuant to Article XIX of GATT 1994 and the Safeguards Agreement, except that a Party taking a safeguard measure under Article XIX of GATT 1994 and the Safeguards Agreement may, to the extent consistent with the obligations under the WTO Agreement, exclude imports of an originating good of the other Party if such imports are not a substantial cause of serious injury or threat thereof.
Section C. Technical Regulations and SPS Measures
Article 2.28. TECHNICAL REGULATIONS AND SPS MEASURES
1. Each Party reaffirms its rights and obligations under the TBT Agreement and the SPS Agreement.
2. For exchange of information, bilateral consultation, and mutual cooperation to facilitate bilateral trade, while respecting each other's legitimate rights to adopt measures to protect human, animal and plant life or health, both Parties shall:
(a) in respect of TBT matters:
(i) exchange information on technical regulations, standards and conformity assessment procedures in the Parties;
(ii) address any TBT issues to identify a practical solution with a view to facilitating bilateral trade;
(iii) explore developing possible mutual recognition agreements or arrangements on technical regulations, standards and conformity assessment procedures between the Parties for mutual benefit and facilitating access to each other's market;
(iv) undertake consultation no later than one year from the date of entry into force of this Agreement with a view to arriving at mutual recognition agreements or arrangements for conformity assessment of the sectors listed in Annex 2-B within three years after the start of the consultation. The aforementioned period of consultation may be extended, as necessary. Any legitimate delay or failure to reach and conclude agreements or arrangements, including on the basis of science and risk-based assessment, shall not be regarded as a breach of a Party's obligations under this subparagraph. The Parties may undertake a joint study through their technical bodies, as necessary, before starting aforementioned consultation. In this case, the time-frame of the consultation may be modified accordingly. The Parties may, after mutual consultation, agree to include more sectors in Annex 2-B;
(v) strengthen cooperation between the Parties at relevant international and regional fora on standards and conformity assessment and promote the use of international standards and conformity assessinent guidelines, as appropriate, as a basis for the development of national technical regulations; and
(vi) work towards framing guidelines for the recognition of suppliersâ declaration on conformity assessment and standards in a manner consistent with international norms;
(b) in respect of SPS matters:
(i) exchange information on such matters as occurrences of specific SPS incidents in the Parties and change or introduction of their SPS- related regulations or standards, which may, directly or indirectly, affect trade in goods between the Parties;
(ii) identify and consult, based on the SPS Agreement and relevant international standards, guidelines and recommendations, on specific issues that may arise from the application of SPS measures, including acceptance of equivalence of the other Party's SPS measures and recognition of pest or disease free areas and areas of low-pest or disease prevalence as per the relevant provisions of the SPS Agreement. These shall be done in terms of the exporting Party objectively demonstrating to the importing Party that its measures achieve the importing Party's appropriate level of sanitary or phytosanitary protection and that the concerned areas are, and are likely to remain, pest- or disease-free areas or areas of low pest or disease prevalence, respectively. Reasonable access shall be given, upon request, to the importing Party for inspection, testing and other relevant procedures;
(iii) explore areas and forms of technical cooperation including personnel training and joint research in respect of mutually agreed SPS issues; and
(iv) identify other functions as mutually agreed upon by the Parties.
3. The Parties shall establish a Joint Working Group to address specific TBT or SPS issues, including works enumerated in paragraph 2. The Joint Working Group shall endeavour to resolve the issues raised before it within a reasonable period of time based on science and risk-based assessment.
4. Notwithstanding Article 14.3.1 (Choice of Forum), any dispute regarding TBT or SPS matters arising under this Article shall not be brought to dispute settlement under this Agreement unless the Parties otherwise agree.
Chapter THREE. RULES OF ORIGIN
Article 3.1. DEFINITIONS
For the purposes of this Chapter:
carrier means any vehicle for air, sea, and land transport;
CIF value means the price actually paid or payable to the exporter for a good when the good is loaded out of the carrier, at the port of importation, including the cost of the good, insurance, and freight necessary to deliver the good to the named port of destination. The valuation shall be made in accordance with the Customs Valuation Agreement;
FOB value means the price actually paid or payable to the exporter for a good when the good is loaded onto the carrier at the named port of exportation, including the cost of the good and all costs necessary to bring the good onto the carrier. The valuation shall be made in accordance with the Customs Valuation Agreement;
fungible materials means materials being of the same kind and commercial quality, possessing the same technical and physical characteristics, and which once they are incorporated into the finished product cannot be distinguished from one another for origin purposes by virtue of any markings, etc;
Generally Accepted Accounting Principles means recognised consensus or substantial authoritative support given in the territory of a Party with respect to the recording of tevenues, expenses, costs, assets, and liabilities, the disclosure of information, and the preparation of financial statements. Generally Accepted Accounting Principles may encompass broad guidelines for general application, as well as detailed standards, practices, and procedures; Good means any merchandise, product, article or material; indirect materials means goods used in the production, testing or inspection of a good but not physically incorporated into the good, or goods used in the maintenance of buildings or the operation of equipment associated with the production of a good, including:
(a) fuel and energy;
(b) tools, dies and moulds;
(c) parts including spare parts and materials used in the maintenance of equipment and buildings;
(d) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings;
(e) gloves, glasses, footwear, clothing, safety equipment and supplies;
(F) equipment, devices and supplies used for testing or inspecting the good;
(g) catalysts and solvents; and
(h) any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be a part of that production;
materials means ingredients, raw materials, parts, components, subassemblies and goods that are used in the production of another good and physically incorporated into another good;
non-originating materials used in production means any materials whose country of origin is other than the Parties (imported non-originating) and any materials whose origin cannot be determined (undetermined origin);
originating materials means materials that qualify as originating under this Chapter;
packing materials and containers for shipment means goods used to protect a good during its transportation, different from those containers or materials used for its retail sale;
producer means a person who grows, mines, raises, harvests, fishes, reproduces and breeds, traps, hunts, manufactures, processes, assembles or disassembles a good;
production means method of obtaining goods including growing, raising, mining, extracting, harvesting, fishing, producing, reproducing and breeding, trapping, gathering, collecting, hunting and capturing, manufacturing, processing, assembling or disassembling a good; and
used means utilised or consumed in the production of goods.
Article 3.2. ORIGINATING GOODS
For the purposes of this Agreement, goods shall be deemed originating and eligible for preferential tariff treatment if they are consigned according to Article 3.15 and conform to the origin requirements under any of the following conditions:
(a) goods wholly obtained or produced in the territory of the exporting Party, in accordance with Article 3.3; or
(b) goods not wholly obtained or produced in the territory of the exporting Party, provided that the said products are eligible under Article 3.4.
Article 3.3. WHOLLY OBTAINED OR PRODUCED
Within the meaning of Article 3.2(a), the following goods shall be considered as being wholly obtained or produced in the territory of a Party:
(a) raw or mineral goods extracted from its territory;
(b) plants and plant products harvested, picked or gathered after being grown there;
(c) live animals born and raised there;
(d) goods obtained from animals referred to in subparagraph (c);
(e) goods obtained by hunting or trapping within the land territory, or fishing or aquaculture conducted within the internal waters or within the territorial sea of the Party;
(f) goods of sea-fishing and other goods taken from the sea outside the territorial sea of a Party by vessels registered or recorded with a Party and flying its flag;
(g) goods produced on board factory ships from the goods referred to in subparagraph (f), provided that such factory ships are registered or recorded with a Party and fly its flag;
(h) goods taken by a Party or a person of a Party from the seabed or beneath the seabed outside territorial sea of a Party, provided that the Party has rights to exploit such seabed or beneath the seabed in accordance with the 1982 United Nations Convention on the Law of the Sea;
(i) articles collected there, including waste and scrap derived from production there, which can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for disposal or recovery of parts or raw materials, or for recycling purposes; and
(j) goods produced there exclusively from goods referred to in subparagraphs (a) through (i) or from their derivatives, at any stage of production.
Article 3.4. NOT WHOLLY OBTAINED OR PRODUCED
1. Except as under Article 3.14 and provided that the final process of manufacturing is performed within the territory of the exporting Party, goods would be considered as originating within the meaning of Article 3.2(b),
(a) which satisfy the Product Specific Rules provided in Annex 3-A;
(b) except for goods covered under subparagraph (a) as provided for in Annex 3-A, if;
(i) the regional value content is not less than 35 percent of the FOB value; and
(ii) the goods have undergone a change in tariff classification in a subheading, at the six digit level, of the HS from tariff classification in which all the non-originating materials used in their manufacture are classified;
2. When a regional value content is required to determine an originating good, the regional value content of a good shall be calculated on the basis of the following method:
RVC = FOB value - VNM / FOB value x 100
where,
RVC is the regional value content, expressed as a percentage;
FOB value is the value of the good as defined in Article 3.1;
VNM means the value of non-originating materials specified in paragraph 4.
3. For the purpose of paragraph 2, if the material does not satisfy the requirements of paragraph 1, the non-qualifying value of the materials shall be that proportion which cannot be attributed to one or both of the Parties, provided that the requirements of Article 3.6 at each stage of value accumulation are satisfied.
4. The value of the non-originating materials used in the production of a good shall be:
(a) for imported materials, the CIF value as defined in Article 3.1; or
(b) for materials of undetermined origin, the earliest price as ascertained to have been paid for in the territory of the Party where the working or processing takes place, in accordance with the Customs Valuation Agreement.
5. For the value of non-originating materials, the following expenses, where included under paragraph 4, may be deducted from the value of the non-originating materials:
(a) inland transportation costs incurred to transport the materials to the location of the producer; and
(b) duties, taxes and customs brokerage fees on the material paid in the territory of one or both of the Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duties or taxes paid or payable.
Article 3.5. INDIRECT MATERIALS
In order to determine whether a good originates in a Party, the origin of the indirect materials shall not be taken into account.
Article 3.6. NON-QUALIFYING OPERATIONS
1. Notwithstanding any provision in this Chapter, a good shall not be considered to have satisfied the requirements for an originating good in Article 3.4 merely by reason of going through the following operations or processes:
(a) preserving operations (1) to ensure that the products remain in good condition during transport;
(b) changes of packaging or packing, and breaking-up and assembly of packages;
(c) washing, cleaning or removal of dust, oxide, oil, paint or other coverings;
(d) simple (2) painting and polishing operations;
(e) sifting, screening, sorting, classifying, grading or matching, including the making-up of sets of articles;
(f) simple combining operations, labelling, pressing, cleaning or dry cleaning, packaging operations, or any combination thereof;
(g) cutting to length or width and hemming, or stitching or overlocking of fabrics which are readily identifiable as being intended for a particular commercial use;
(h) trimming and/or joining together by sewing, looping, linking or attaching accessory articles such as straps, bands, beads, cords, rings and eyelets;
(i) one or more finishing operations on yarns, fabrics or other textile articles, such as bleaching, waterproofing, decating, shrinking, mercerizing, or similar operations;
(j) busking, partial or total bleaching, polishing, and glazing of cereals and tice;
(k) operations to colour sugar or form sugar lumps;
(l) a peeling, stoning and unshelling;
(m) unflaking, crushing, squeezing, slicing, macerating and removal of bones;
(n) sharpening, simple grinding or simple cutting and repackaging;
(o) simple (3) placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;
(p) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;
(q) simple mixing (4) of products, whether or not of different kinds;
(r) simple (5) assembly of parts of articles to constitute a complete article or disassembly of products into parts;
(s) simple (6) testing or calibrations;
(t) mere dilution with water or another substance that does not materially alter the characteristics of the goods;
(u) slaughtering of animals; or