1. Except as otherwise provided in this Agreement, neither Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994, including its interpretative notes, and to this end Article XI of the GATT 1994 and its interpretative notes, or any equivalent provision of a successor agreement to which both Parties are party, are 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, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.
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, nothing in this Agreement shall be construed to prevent the Party from:
(a) limiting or prohibiting the importation from the territory of the other Party of such good of that non-Party; or
(b) requiring as a condition of export of such 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 consult 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 shall not apply to the measures set out in Annex II.2 (Exceptions to Articles III.2 and III.7).
Article III.8. Wine and Distilled Spirits
1. Neither Party may adopt or maintain any measure requiring that distilled spirits imported from the territory of the other Party for bottling be blended with any distilled spirits of the Party.
2. Annex III.8 (Wine and Distilled Spirits) applies to other measures relating to wine and distilled spirits.
Article III.9. Geographical Indications
The Parties shall protect the geographical indications for their products according to their rights and obligations set out in the Agreement on Trade Related Intellectual Property Rights, Annex 1C of the WTO Agreement, and any successor agreement to which both Parties are party.
Article III.10. Export Taxes
Subject to the provisions in Annex II.10 (Export Taxes), neither Party may adopt or maintain any duty, tax or other charge on the export of any good to the territory of the other Party, unless such duty, tax or charge is adopted or maintained on any such good when destined for domestic consumption.
Article III.11. Other Export Measures
1. Except as set out in Annex III.2 (Exceptions to Articles III.2 and III.7), a Party may adopt or maintain a restriction otherwise justified under Articles XI.2 (a) or XX (g), (i) or (j) of the GATT 1994 with respect to the export of a good of the Party to the territory of the other Party, only if:
(a) the restriction does not reduce the proportion of the total export shipments of the specific good made available to the other Party relative to the total supply of that good of the Party maintaining the restriction as compared to the proportion prevailing in the most recent 36-month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties may agree;
(b) | the Party does not impose a higher price for exports of a good to the other Party than the price charged for such good when consumed domestically, by means of any measure, such as licenses, fees, taxation and minimum price requirements. The foregoing provision does not apply to a higher price that may result from a measure taken pursuant to subparagraph (a) that only restricts the volume of exports; and
(c) the restriction does not require the disruption of normal channels of supply to the other Party or normal proportions among specific goods or categories of goods supplied to the other Party.
2. The Parties shall cooperate in the maintenance and development of effective controls on the export of each other's goods to a non-Party in implementing this Article.
Article III.12. Export Subsidies on Agricultural Goods
1. The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods and shall cooperate in an effort to achieve such an agreement.
2. Notwithstanding any other provisions of this Agreement, the Parties agree to eliminate, as of the date of entry into force of this Agreement, any form of export subsidy for agricultural goods destined for the other Party, and to prevent the reintroduction of such subsidies in any form.
Article III.13. Domestic Support for Agricultural Goods
2. The Parties recognize that domestic support measures can be of crucial importance to their agricultural sectors but may also have distorting effects on the production and trade of agricultural goods.
3. The Parties agree to cooperate in the WTO negotiations on agriculture to achieve:
(a) the maximum possible reduction or elimination of production and trade-distorting domestic support, including support under "production limiting" or "blue box" programs;
(b) an overall limit on the amount of domestic support of all types ("green", "blue" and "amber");
(c) a review of the criteria for the "green box" category to ensure that "green" support does not distort production and trade; and
(d) agreement that "green box" support should not be countervailable.
3. Pending the elimination of trade-distorting domestic support measures, if either Party maintains such a measure which the other Party considers to be distortive of bilateral trade under this Agreement, the Party applying the measure shall, at the request of the other Party, consult with a view to making a best efforts endeavour to avoid nullification or impairment of concessions granted under this Agreement.
Section IV. Consultations
Article III.14. 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 IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VI (Emergency Action), Chapter IX (Trade Facilitation and Additional Provisions) and any Uniform Regulations. In this regard, the Committee shall:
(a) monitor the implementation and administration by the Parties of this Chapter, Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VI (Emergency Action), Chapter IX (Trade Facilitation and Additional Provisions) and any Uniform Regulations to ensure their uniform interpretation;
(b) at the request of either party, review any proposed modification of or addition to this Chapter, Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VI (Emergency Action), Chapter IX (Trade Facilitation and Additional Provisions) or any Uniform Regulations;
(c) recommend to the Commission any modification of or addition to this Chapter, Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VI (Emergency Action), Chapter IX (Trade Facilitation and Additional Provisions) or any Uniform Regulations and to any other provision of this Agreement as may be required to conform with any change to the Harmonized System; and
(d) consider any other matter relating to the implementation and administration by the Parties of this Chapter, Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VI (Emergency Action), Chapter IX (Trade Facilitation and Additional Provisions) and any Uniform Regulations referred to it by:
(i) a Party;
(ii) the Customs Sub-Committee established under Article V.13 (The Customs 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 Commission under Article XIII.1 (The Free Trade Commission).
4. The Parties hereby establish a Sub-Committee on Agriculture that shall:
(a) provide a forum for the Parties to consult on issues relating to market access for agricultural goods;
(b) monitor the implementation and administration of this Chapter, Chapter IV (Rules of Origin), Chapter VI (Emergency Action), Chapter IX (Trade Facilitation and Additional Provisions) and any Uniform Regulations as they affect agricultural goods;
(c) meet periodically or whenever so requested by either Party;
(d) refer to the Committee any matter under sub-paragraph (b) on which it has been unable to reach agreement;
(e) submit to the Committee for its consideration any agreement reached under this paragraph;
(f) report to the Committee; and
(g) follow-up and promote cooperation in matters relating to agricultural goods.
5. Each Party shall to the greatest extent practicable, take all necessary measures to implement any modification of or addition to this Chapter, Chapter IV (Rules of Origin), Chapter V (Customs Procedures), Chapter VI (Emergency Action), Chapter IX (Trade Facilitation and Additional Provisions) and any Uniform Regulations within 180 days of the date on which the Commission agrees on the modification or addition.
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, and regulation of transportation for the purpose of addressing issues related to movement of goods through the Partiesâ ports of entry.
7. Nothing in this Chapter shall be construed to prevent a Party from issuing a determination of origin or an advance ruling relating to a matter under consideration by the Committee or from taking such other action as it considers necessary, pending a resolution of the matter under this Agreement.
Article III.15. Customs Valuation Agreement
The Customs Valuation Agreement and any successor Agreement shall govern the customs valuation rules applied by the Parties to their reciprocal trade. The Parties agree that they will not make use in their reciprocal trade of the options and reservations permitted under Article 20 and paragraphs 2, 3 and 4 of Annex III of the Customs Valuation Agreement.
Section V. Definitions
Article III.16. Definitions
For Purposes of this Chapter:
advertising films means recorded visual media, with or without sound-tracks, consisting essentially of images showing the nature or operation of goods or services offered for sale or lease by a person established or resident in the territory of any Party, provided that the films are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public, and provided that they are imported in packets that each contain no more than one copy of each film and that do not form part of a larger consignment;
agricultural goods means the products listed in Annex 1 of the WTO Agreement on Agriculture with any subsequent changes agreed in the WTO to be automatically effective for this Agreement.
commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than one U.S. dollar, or the equivalent amount in the currency of either of the Parties, or so marked, torn, perforated or otherwise treated that they are unsuitable for sale or for use except as commercial samples;
consumed means:
(a) actually consumed; or
(b) further processed or manufactured so as to result in a substantial change in value, form or use of the good or in the production of another good;
customs duty includes any customs or import duty and a charge of any kind imposed in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but does not include any:
(a) charge equivalent to an internal tax imposed consistently with Article III:2 of the GATT 1994, or any equivalent provision of a successor agreement to
which both Parties are party, in respect of like, directly competitive or substitutable goods of the Party, or in respect of goods from which the imported good has been manufactured or produced in whole or in part;
(b) antidumping measure or countervailing duty that is applied pursuant to a Party's domestic law and not applied inconsistently with Chapter VII (Antidumping Measures);
(c) fee or other charge in connection with importation commensurate with the cost of services rendered; and
(d) premium offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions, tariff rate quotas or tariff preference levels;
distilled spirits include distilled spirits and distilled spirit-containing beverages; duty-free means free of customs duties;
export subsidies means subsidies contingent on export performance as defined in Article 1.(e) of the WTO Agreement on Agriculture, with any subsequent changes agreed in the WTO to be automatically effective for this Agreement;
goods imported for sports purposes means sports requisites for use in sports contests, demonstrations or training in the territory of the Party into whose territory such goods are imported;
goods intended for display or demonstration includes their component parts, ancillary apparatus and accessories;
printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials and posters, that are used to promote, publicize or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge;
repair or alteration does not include an operation or process that either destroys the essential characteristics of a good or creates anew or commercially different good; (7)
total export shipments means all shipments from total supply to users located in the territory of the other Party;
total supply means all shipments, whether intended for domestic or foreign users, from:
(a) domestic production;
(b) domestic inventory; and
(c) other imports as appropriate.
Chapter IV. Rules of Origin
Article IV.1. Originating Goods
Except as otherwise provided in this Chapter, a good shall originate in the territory of a Party where:
(a) the good is wholly obtained or produced entirely in the territory of one or both of the Parties, as defined in Article IV.15;
(b) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification as set forth in Annex IV.1 (Specific Rules of Origin) as a result of production occurring entirely in the territory of one or both of the Parties, or the good otherwise satisfies the applicable requirements of that Annex where no change in tariff classification is required, and the good satisfies all other applicable requirements of this Chapter;
(c) the good is produced entirely in the territory of one or both of the Parties exclusively from originating materials; or
(d) except for a good of Chapter 39 or Chapter 50 through 63 or except as provided in Annex IV.1 (Specific Rules of Origin), the good is produced entirely in the territory of one or both of the Parties but one or more of the non-originating materials used in the production of the good cannot undergo a change in tariff classification because both the good and the non-originating materials are classified in the same subheading, or heading that is not further subdivided into subheadings, provided that the regional value-content of the good, determined in accordance with Article IV.2, is not lower than 35 per cent when the transaction value method is used, or 25 per cent when the net cost method is used, and the good meets the other applicable requirements of this Chapter.
Article IV.2. Regional Value-content
1. Except as provided in paragraph 5, each Party shall provide that the regional value content of a good shall be calculated, at the choice of the exporter or producer of the good, on the basis of either the transaction value method set out in paragraph 2 or, for an automotive good of subheading 8407.31 through 8407.34 or heading 87.01 through 87.08, the net cost method set out in paragraph 3.
2. Each Party shall provide that an exporter or producer may calculate the regional value content of a good on the basis of the following transaction value method:
RVC = TV-VNM/TV x 100
where:
RVC is the regional value content, expressed as a percentage;
TV is the transaction value of the good, adjusted to an F.O.B. basis; and
VNM is the value of non-originating materials used by the producer in the production of the good, in accordance with paragraph 6 of this Article.
3. Each Party shall provide that an exporter or a producer may calculate the regional value content of an automotive good of subheading 8407.31 through 8407.34 or heading 87.01 through 87.08 on the basis of the following net cost method:
RVC = NC-VNM/NC x 100
where:
RVC is the regional value content, expressed as a percentage;
NC is the net cost of the good; and
VNM is the value of non-originating materials used by the producer in the production of the good, in accordance with paragraph 6 of this Article.
4. The value of non-originating materials used by the producer in the production of a good shall not, for purposes of calculating the regional value content of the good under paragraph 2 or 3, include the value of non-originating materials used to produce originating materials that are subsequently used in the production of the good. (1)
5. For purposes of calculating the net cost of a good under paragraph 3, the producer of the good may:
(a) calculate the total cost incurred with respect to all goods produced by that producer, subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, as well as non-allowable interest costs that are included in the total cost of all such goods, and then reasonably allocate the resulting net cost of those goods to the good;
(b) calculate the total cost incurred with respect to all goods produced by that producer, reasonably allocate the total cost to the good, and then subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in the portion of the total cost allocated to the good; or
(c) reasonably allocate each cost that forms part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, or non-allowable interest costs. (2)
6. Except as provided in paragraph 7, the value of a material used in the production of a good shall:
(a) be the transaction value of the material determined in accordance with Article 1 of the Customs Valuation Agreement;
(b) in the event that there is no transaction value or the transaction value of the material is unacceptable under Article 1 of the Customs Valuation Agreement, be determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement;
(c) where not covered under subparagraph (a) or (b), include freight, insurance, packing and all other costs incurred in transporting the material to the place of importation; or
(d) inthe case of a domestic transaction, be determined in accordance with the principles of the Customs Valuation Agreement in the same manner as an international transaction, with such modifications as may be required by the circumstances.
7. The value of an intermediate material shall be:
(a) the total cost incurred with respect to all goods produced by the producer of the good that can be reasonably allocated to that intermediate material; or
(b) the sum of all costs that comprise the total cost incurred with respect to that intermediate material that can be reasonably allocated to that intermediate material.
8. The value of an indirect material shall be based on the Generally Accepted Accounting Principles applicable in the territory of the Party in which the good is produced.
Article IV.3. Accumulation
For purposes of determining whether a good is an originating good, the production of the good in the territory of one or both of the Parties by one or more producers shall, at the choice of the exporter or producer of the good for which preferential tariff treatment is claimed, be considered to have been performed in the territory of either of the Parties by that exporter or producer, provided that:
(a) all non-originating materials used in the production of the good undergo an applicable tariff classification change set forth in Annex IV.1 (Specific Rules of Origin), and the good satisfies any applicable regional value content requirement, entirely in the territory of one or both of the Parties; and
(b) the good satisfies all other applicable requirements of this Chapter.
Article IV.4. De Minimis
1. Except as provided in paragraphs 2 and 3, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in Annex IV.1 (Specific Rules of Origin) is not more than 10 per cent of the transaction value of the good, adjusted to an F.O.B. basis, provided that:
(a) if the good is subject to a regional value-content requirement, the value of such non-originating materials shall be taken into account in calculating the regional value content of the good; and
(b) the good satisfies all other applicable requirements of this Chapter.
2. Except as specified in a product-specific rule of origin of Annex IV.1 (Specific Rules of Origin) applicable to a good, paragraph 1 does not apply to a non-originating material used in the production of a good of Chapter 1 through 24 of the Harmonized System unless the non-originating material is provided for in a different subheading from the good for which origin is being determined under this Article.
3. A good of Chapter 50 through 63 of the Harmonized System that is not originating because certain fibres or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification set out in Annex IV.1 (Specific Rules of Origin), shall nonetheless be considered as originating if the total weight of all such fibres or yarns in that component is not more than 10 per cent of the total weight of that component. (3)
Article IV.5. Fungible Goods and Materials
For purposes of determining whether a good is an originating good:
(a) where originating and non-originating fungible materials are used in the production of a good, the determination of whether the materials are originating need not be made through the identification of any specific fungible material, but may be determined on the basis of any of the inventory management methods set out in Annex IV.5 (Inventory Management Methods); and
(b) where originating and non-originating fungible goods are physically combined or mixed in inventory and, prior to their exportation, do not undergo any production or any other operation in the territory of the Party in which they were physically combined or mixed in inventory, other than unloading, reloading, or any other operation necessary to preserve the goods in good condition or to transport the goods for exportation to the other Party's territory, the determination may be made on the basis of any of the inventory management methods set out in Annex IV.5 (Inventory Management Methods).
Article IV.6. Sets or Assortments of Goods
1. Except as provided in Annex IV.1 (Specific Rules of Origin), a set or assortment as defined in Rule 3 of the General Rules for the Interpretation of the Harmonized System, shall be considered as originating, provided that:
(a) all the component products, including packaging materials and containers, are originating; or
(b) where the set or assortment contains non-originating component products, including packaging materials and containers:
(i) at least one of the component products, or all the packaging materials and containers for the set, is originating; and
(ii) the regional value content of the set or assortment is not less than 50 per cent under the transaction value method.
2. For purposes of subparagraph 1(b), the value of packaging materials and containers for the set shall be taken into account as originating or non-originating materials, as the case may be, in calculating the regional value content of the set.
Article IV.7. Accessories, Spare Parts and Tools
Accessories, spare parts and tools delivered with the good that form part of the good's standard accessories, spare parts or tools, shall be considered as originating if the good originates and shall be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable change in tariff classification set out in Annex IV.1 (Specific Rules of Origin), provided that:
(a) the accessories, spare parts and tools are not invoiced separately from the good, whether or not each is listed or detailed on the invoice;
(b) the quantities and value of the accessories, spare parts or tools are customary for the good; and
(c) if the good is subject to a regional value content requirement, the value of the accessories, spare parts or tools shall be taken into account as originating or non-originating materials, as the case may be, in calculating the regional value content of the good.
Article IV.8. Indirect Materials
An indirect material shall be considered as originating without regard to where it is produced.