1. Each Party shall provide that the regional value content of the goods shall be calculated by the exporter or producer of the good in accordance with the following formula:
RCV = [(MV-VMN)/MV] *100
where:
RCV is the regional content value, expressed as a percentage;
MV is the transaction value of the good adjusted on an FOB basis, except as provided in paragraph 2 determined in accordance with Articles 1 through 8 and Article 15 of the Customs Valuation Agreement; and
VMN is the transaction value of non-originating materials adjusted on a CIF basis, except as provided in paragraph 4 determined in accordance with the provisions of Articles 1 through 8 and Article 15 of the Customs Valuation Agreement.
2. When a good is not exported directly by its producer, the value will be adjusted to the point at which the buyer receives the good within the territory where the producer is located.
3. 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.
4. 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 place where the producer is located.
5. For purposes of calculating the regional value content, the value of the non- originating materials used by the producer in the production of a good shall not include the value of the 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 a commodity in the manufacture of a self-produced material.
6. Where Annex 4.3 specifies a regional value content test to determine whether a good a of the automotive industry (1) is originating, each Party shall provide that the importer, exporter, or producer may use the regional value content calculation for that good based on the following method:
Automobile industry merchandise method ("Net Cost Method")
RVC = CN-VMN/CN *100
where:
RCV is the regional content value expressed as a percentage;
CN is the net cost of goods; and
VMN is the value of non-originating materials acquired and used by the producer in the production of the good.
7. Each Party shall provide that for purposes of the method of calculating the regional value content pursuant to paragraph 6, the exporter or producer may use a calculation averaged over the producer's fiscal year, using any of the following categories, either on the basis of all motor vehicles in the category or only motor vehicles in the category that are exported to the territory of one or more of the Parties:
(a) the same model line in motor vehicles of the same class of vehicles produced in the same plant in the territory of a Party;
(b) the same class of motor vehicles produced in the same plant in the territory of a Party; or
(c) the same model line in motor vehicles produced in the territory of a Party.
8. Each Party shall provide that for purposes of calculating the regional value content under paragraph 6 for automotive goods (2) that are produced in the same plant, an exporter or producer may use the calculation:
(a) averaged:
(i) in the tax year of the producer of the motor vehicle to whom the goods are sold;
(ii) in any quarterly or monthly period; or
(iii) in its own fiscal year, provided that the merchandise was produced during a fiscal year, quarter or month used as the basis for the calculation;
(b) in which the average of subparagraph (a) is calculated separately for such goods sold to one or more producers of motor vehicles; or
(c) in which the average in subparagraph (a) or (b) is calculated separately for those goods that are exported to the territory of one or more of the Parties.
Article 4.8. De Minimis
1.A good shall be considered originating if the value of all non-originating materials used in the production of this good that do not meet the change in tariff classification requirement set out in Annex 4.3 does not exceed ten percent (10%) of the transaction value of the good determined in accordance with Article 4.7.
2. In the case of goods classified in Chapters 50 to 63 of the Harmonized System, the percentage referred to in paragraph 1 shall refer to the weight of the fibers or yarns in relation to the weight of the goods produced.
3. Paragraph 1 shall not apply to a non-originating material:
(a) that is used in the production of goods falling within Chapters 1 through 24 of the Harmonized System, unless the non-originating material falls within a subheading other than that of the good for which origin is being determined in accordance with this Article; or
(b) classified in Chapter 15 of the Harmonized System that is used in the production of a good classified in heading 15.11 or subheading 1513.21 or 1513.29.
Article 4.9. Goods and Fungible Materials
1. When originating and non-originating fungible goods or fungible materials are used in the production of an originating good or fungible material, the origin of this good or fungible material may be determined either by physical segregation of each good or material, or by the application of one of the following inventory management methods:
(a) First In, First Out (FIFO);
(b) Last In, First Out (UEPS); or (c) Averages.
2. Each Party shall provide that the inventory management method selected pursuant to paragraph 1 for a particular good or fungible material shall continue to be used for that good or fungible material throughout the fiscal year of the person that selected the inventory management method.
Article 4.10. Sets or Assortments of Merchandise
1. A set or assortment of goods that are classified in accordance with rule 3 of the General Rules for the Interpretation of the Harmonized System, as well as goods whose description under 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 or assortment complies with the rules of origin set out in this Chapter and Annex 4.3.
2. Notwithstanding paragraph 1, a set or assortment of goods shall be considered originating if the value of all non-originating goods used in the formation of the set or assortment does not exceed fifteen percent (15%) of the transaction value of the good, determined in accordance with Article 4.7.
Article 4.11. Accessories, Spare Parts and Tools
1. Accessories, spare parts or tools delivered with the good as a customary part of the good shall be considered parts of the good and shall be disregarded in determining whether all non-originating materials used in the production of a good comply with the applicable change in tariff classification set out in Annex 4.3, provided that:
(a) accessories, spare parts or tools are not invoiced separately from the merchandise; and
(b) the quantity and value of these accessories, spare parts or tools are those customary for the goods.
For those accessories, spare parts or tools that do not comply with the aforementioned conditions, the provisions of this Chapter shall apply to each of them.
2. When the good is subject to a regional value content requirement, the value of 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 4.12. Retail Containers and Retail Packaging Materials
1. Where the containers and packaging 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 4.3.
2. When 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 4.13. Containers and Packing Materials for Shipment
Containers and packing materials in which the good is packed for transportation shall not be taken into account for purposes of determining whether a good is originating.
Article 4.14. Transit and Transshipment
Each Party shall provide that a good that is the subject of a transit or transshipment operation shall not be considered originating if the good:
(a) undergoes further processing or is subject to any other operation within the territory of a non-Party, except unloading, reloading or any other operation necessary to maintain the good in good condition or to transport it to the territory of a Party; or
(b) does not remain under the control of the customs authority.
Article 4.15. Committee of Origin
1. The Parties establish the Committee of Origin, composed of two (2) representatives of each of them, one titular and one alternate, which shall have as its competence the present Chapter and Chapter 5 (Customs Procedures Related to the Origin of Goods).
2. The Origin Committee shall meet in ordinary session once (1) a year and in extraordinary session as often as necessary at the request of the Administrative Commission or any Party.
3. The Origin Committee shall have, in addition to the functions established in Article 17.5 (Technical Committees), the following functions:
(a) to develop no later than one hundred eighty (180) days after the entry into force of this Agreement or on such other date as the Parties may agree, the rules of procedure for the operation of the Committee of Origin, which may be modified by agreement of the Parties;
(b) to attend, analyze and study matters related to the interpretation, application and administration of the chapters under its jurisdiction in order to reach agreements on:
(i) matters related to rulings of origin or advance rulings;
(ii) modifications to the specific rules of origin;
(iii) modifications to the certificate of origin format and instructions to referred to in Article 5.2 (Certification of Origin);
(iv) new provisions or changes adopted by a Party concerning rules of origin or customs procedures relating to the origin of goods, for compliance with this Agreement; or
(v) any other matter deemed relevant by the Committee; and (c) to attend to any other matter agreed upon by the Parties.
Article 4.16. Consultations and Modifications
1. The Parties shall consult regularly to ensure that this Chapter and Chapter 5 (Customs Procedures Relating to the Origin of Goods) are administered effectively, uniformly and in accordance with the spirit and objectives of this Agreement and shall cooperate in the administration of this Chapter and Chapter 5 (Customs Procedures Relating to the Origin of Goods).
2. A Party that considers that one or more of the provisions of this Chapter or Chapter 5 (Customs Procedures Relating to the Origin of Goods) require Modification to take into account developments in production processes, shortages of originating materials or other relevant factors, may submit a proposal for modification, together with supporting reasons and studies, for consideration by the Commission.
3. Upon submission by a Party of a proposed modification pursuant to paragraph 2, the Commission may refer the matter to the Committee of Origin within sixty (60) days or such other date as the Commission may decide. The Origin Committee shall meet to consider the proposed modification within sixty (60) days of the referral or on such other date as the Commission may decide.
4. Within such period, as the Commission may direct, the Originating Committee shall provide a report to the Commission, setting forth its findings and recommendations, if any.
5. Upon receipt of the report, the Commission may take appropriate action in accordance with Article 17.1 (2) (c) or (3) (b) (Treaty Administrative Commission).
Article 4.17. Transitional Rules of Origin Applicable between the Republic of Colombia and the Republic of Honduras
The rules of origin for goods classified in Chapters 50 to 63 of the Harmonized System, applicable between the Republic of Colombia and the Republic of Honduras, are those set forth in Annex 4.17 and shall remain in force until the implementation of the provisions contained in Article 4.6 (4).
Chapter 5. CUSTOMS PROCEDURES RELATED TO THE ORIGIN OF GOODS
Article 5.1. Definitions
1. For the Purposes of this Chapter:
competent authority means:
(a) With respect to the Republic of El Salvador, the Ministry of Economy, which is responsible for the administration and the Directorate General of Customs of the Ministry of Finance, which is responsible for carrying out the procedures of verification of origin and issuance of advance rulings;
(b) with respect to the Republic of Guatemala, the Ministry of Economy;
(c) with respect to the Republic of Honduras, the Secretariat of State in the Offices of Industry and Commerce; and
(d) with respect to the Republic of Colombia, the Ministry of Commerce, Industry and Tourism or the National Tax and Customs Directorate;
or their successors;
valid certificate of origin means a certificate of origin issued in the format referred to in Article 5.2(2), completed, dated, and signed by the producer or exporter of a good in the territory of a Party, in accordance with the provisions of this Chapter and the instructions for completing the certificate;
exporter means a person who makes an export and is located in the territory of a Party;
importer means a person who makes an importation and is located in the territory of a Party;
identical goods means goods that are alike in all respects, without regard to minor differences in appearance that are not relevant to determining the origin of the goods, in accordance with Chapter 4 (Rules of Origin); and
origin determination means the written legal document issued by the competent
authority as a result of a procedure that verifies whether a good qualifies as originating, in accordance with Chapter 4 (Rules of Origin).
2. The definitions set forth in Chapter 4 (Rules of Origin) are incorporated into this Chapter.
Article 5.2. Certification of Origin
1. The importer may request preferential tariff treatment based on a written or electronic certificate of origin (1) , issued by the exporter or producer.
2. The Parties shall establish a single format for the certificate of origin, which shall enter into force on the same date of this Agreement and shall serve to certify that a good exported from the territory of one Party to the territory of the other Party qualifies as originating and may be modified by agreement between the Parties.
3. The exporter or producer who completes and signs a certificate of origin shall do so in terms of a sworn statement, undertaking to assume any administrative, civil or criminal liability, when false or incorrect information has been included in the certificate of origin.
4. Each Party shall provide that when the exporter is not the producer of the good, he shall complete and sign the certificate of origin on the basis of:
(a) its knowledge as to whether the good qualifies as originating; or
(b) the certification of origin completed and signed by the producer of the merchandise and voluntarily provided to the exporter.
5. Each Party shall provide that a certificate of origin may apply to:
(a) a single shipment of a good or goods into the territory of a Party; or
(b) several shipments of identical goods to be made within any period set forth in the certificate of origin, not to exceed one (1) year from the date of certification.
6. Each Party shall provide that the customs authority of the importing Party shall accept a certificate of origin valid for a period of one (1) year from the date on which the certificate was signed and stamped by the exporter or producer.
7. Each Party shall provide that preferential tariff treatment shall not be denied solely because the good covered by a certificate of origin is invoiced by an enterprise located in the territory of a non-Party.
Article 5.3. Exceptions
No Party shall require a certification or information demonstrating that a good is originating when:
(a) the customs value of the importation does not exceed one thousand five hundred dollars of the United States of America (US$ 1,500.00) or the equivalent amount in the currency of the importing Party or such greater amount as may be established by the importing Party, unless the importing Party considers that the importation is 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 5.4. Obligations Relating to Imports
1. Each Party shall require that an importer claiming preferential tariff treatment for a good imported into its territory from the territory of the other Party:
(a) declare in writing on the import document required by its legislation, based on a valid certificate of origin, that a good qualifies as an originating good;
(b) has the certificate of origin in its possession at the time the declaration is made;
(c) provide, if requested by the customs authority, the certificate of origin ora copy thereof; and
(d) immediately present a corrected import document and pay the corresponding duty, when the importer has reason to believe that the certificate of origin on which the import document is based has incorrect information. The importer may not be penalized when he voluntarily presents the corrected import document before the customs authority has initiated its verification and control powers or before the customs authority notifies the revision, in accordance with the legislation of each Party.
2. Each Party shall provide that if an importer in its territory fails to comply with any of the requirements set out in this Chapter, it shall be denied the preferential tariff treatment provided in this Agreement for a good imported from the territory of the other Party.
3. Each Party shall provide that, where the importer has not requested preferential tariff treatment for the good imported into its territory that has qualified as originating, the importer may, no later than one (1) year after the date of importation, request a refund of the excess customs duties paid for not having requested preferential tariff treatment for that good, provided that the request is accompanied by:
(a) a written statement indicating that the good qualifies as originating at the time of importation;
(b) the certificate of origin or its copy; and
(c) any other documentation related to the importation of the goods, as may be required by the customs authority.
Article 5.5. Obligations Relating to Exports
1. Each Party shall provide that:
(a) the exporter or producer who has issued a certificate of origin shall deliver a copy of such certificate to his competent authority upon request;
(b) an exporter or producer who has issued a certificate of origin and has reason to believe that such certificate contains incorrect information, the exporter or producer shall immediately inform in writing all persons to whom he has delivered such certificate of any change which may affect the accuracy or validity of such certificate; and
(c) if its exporter or producer furnished a false certificate or false information, and therewith exported goods qualifying as originating goods into the territory of the other Party, it shall be subject to penalties similar to those that would apply to 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 or producer for providing an incorrect certificate, if the exporter or producer voluntarily communicates in writing that it was incorrect, to all persons to whom he has provided the certificate.
Article 5.6. Records
1. Each Party shall provide that an exporter or producer issuing a certificate of origin shall retain, for a period of at least five (5) years from the date of signature of the certificate, all accounting records and documentation relating to the origin of the goods, including those relating to:
(a) the purchase, costs, value and payment of the merchandise exported from its territory;
(b) the purchase, cost, value and payment of all materials, including indirect materials, used in the production of the merchandise exported from its territory; and
(c) the production of the goods in the form in which they are exported from its territory.
2. Each Party shall provide that an importer claiming preferential tariff treatment for a good imported into the territory of that Party shall maintain a copy of the certificate of origin and related import documentation for a period of at least five (5) years from the date of importation of the good.
Article 5.7. Verification of Origin Procedures
1. The importing Party, through its competent authority, may request information on the origin of a good from the competent authority of the exporting Party.
2. For purposes of determining whether a good imported into its territory from the territory of the other Party qualifies as originating, the importing Party may verify the origin of the good through its competent authority, by means of the following procedures:
(a) written requests for information addressed to the importer in its territory or to the exporter or producer of the good in the territory of the other Party, in which the good subject to verification shall be specifically indicated;
(b) written questionnaires addressed to the importer in its territory or to the exporter or producer of the merchandise in the territory of the other Party, in which the merchandise subject to verification shall be specifically indicated;
(c) 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 accounting records and related documentation referred to in Article 5.6 (1) and inspecting the facilities and materials used in the production of the good; or
(d) any other procedure agreed upon by the Parties.
3. For the purposes of this Article, questionnaires, requests, official letters, rulings of origin, notifications or any other written communication made directly by the competent authority of the importing Party to the importer, exporter or producer and to the competent authority of the exporting Party for the verification of origin, shall be considered valid, if they are made by means of:
(a) certified mail with a return receipt requested or other forms confirming receipt by the importer, exporter or producer of the documents or communications referred to in this paragraph; or
(b) any other form agreed upon by the Parties.
4. In accordance with paragraph 2 (a) and (b), requests for information or written questionnaires shall contain:
(a) the name or identification of the competent authority requesting the information;
(b) the name and address of the importer, exporter or producer from whom the information and documentation is requested;
(c) adescription of the information and documents required; and (d) the legal basis for requests for information or questionnaires.