Packaging materials and containers in which a good is packaged for retail sale shall, if classified with the good, 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) and, if the good is subject to a regional value content requirement, the value of such packaging materials and containers 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.10. Packing Materials and Containers for Shipment
Packing materials and containers in which a good is packed for shipment shall be disregarded in determining whether:
(a) the non-originating materials used in the production of the good undergo an applicable change in tariff classification set out in Annex IV.1 (Specific Rules of Origin); and
(b) the good satisfies a regional value-content requirement.
Article IV.11. Transshipment
A good shall not be considered to be an originating good by reason of having undergone production that satisfies the requirements of Article IV.1 if, subsequent to that production, the good:
(a) undergoes further production or any other operation outside the territories of the Parties, other than unloading, reloading or any other operation necessary to preserve it in good condition or to transport the good to the territory of a Party;
(b) does not remain under customs control while outside the territories of the Parties; or
(c) enters into trade or consumption in the territory of a non-Party.
Article IV.12. Non-Qualifying Operations
Except for sets of Article IV.6 or of Annex IV.1 (Specific Rules of Origin) or except as specified in a product-specific rule of origin of Annex IV.1 (Specific Rules of Origin) applicable to the good, a good shall not be considered to be an originating good merely by reason of :
(a) disassembly of the good into its parts;
(b) achange in the end use of the good;
(c) the mere separation of one or more individual materials or components from an artificial mixture;
(d) mere dilution with water or another substance that does not materially alter the characteristics of the good;
(e) removal of dust or damaged parts from, oiling, or applying anti-rust paint or protective coatings to, the good;
(f) testing or calibration, division of loose shipments, grouping into packages, or attaching identifying labels, markings or signs to the good or its packaging; or
(g) packaging or repackaging of the good.
Article IV.13. Interpretation and Application
For purposes of this Chapter:
(a) the basis for tariff classification in this Chapter is the Harmonized System (4),
(b) where applying Article IV.1(d), the determination of whether a heading or subheading under the Harmonized System provides for both a good and the materials that are used in the production of the good shall be made on the basis of the nomenclature of the heading or subheading and the relevant Section or Chapter Notes, in accordance with the General Rules for the Interpretation of the Harmonized System;
(c) in applying the Customs Valuation Agreement under this Chapter:
(i) the principles of the Customs Valuation Agreement shall apply to domestic transactions, with such modifications as may be required by the circumstances, as would apply to international transactions;
(ii) the provisions of this Chapter shall take precedence over the Customs Valuation Agreement to the extent of any difference; and
(iii) the definitions in Article IV.15 shall take precedence over the definitions in the Customs Valuation Agreement to the extent of any difference; and
(d) all costs referred to in this Chapter shall be recorded and maintained in accordance with the Generally Accepted Accounting Principles applicable in the territory of the Party in which the good is produced.
Article IV.14. Consultation and Modifications
1. The Parties shall consult regularly to ensure that this Chapter is administered effectively, uniformly and consistently with the spirit and objectives of this Agreement, and shall cooperate in the administration of this Chapter in accordance with Chapter V (Customs Procedures).
2. Should problems arise between the Parties concerning the interpretation of the provisions of this Chapter, the Parties agree to consult with each other on the establishment and implementation, through their respective laws or regulations, of Uniform Regulations regarding the interpretation, application and administration of this Chapter.
3. A Party that considers that this Chapter requires modification to take into account developments in production processes or other matters may submit a proposed modification along with supporting rationale and any studies to the other Party for consideration and any appropriate action under Chapter III (National Treatment and Market Access of Goods).
Article IV.15. Definitions for Purposes of this Chapter:
F.O.B. means free on board, regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer;
fungible goods or fungible materials means goods or 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, which 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 indicators may be broad guidelines of general application, as well as those standards, practices and procedures usually employed in accounting;
goods wholly obtained or produced entirely in the territory of one or both of the Parties means:
(a) minerals and other non-living natural resources extracted in or taken from the territory of one or both of the Parties;
(b) vegetable goods harvested in the territory of one or both of the Parties;
(c) live animals born and raised entirely in the territory of one or both of the Parties;
(d) goods obtained from live animals in the territory of one or both of the Parties;
(e) goods obtained from hunting or fishing in the territory of one or both of the Parties;
(f) goods (fish, shellfish and other marine life) taken from the sea, seabed or subsoil outside the territory of one or both of the Parties by a vessel registered, recorded or listed with a Party, or leased by a company established in the territory of a Party, and entitled to fly its flag or by a vessel not exceeding 15 tons gross tonnage that is licensed by a Party;
(g) goods produced on board a factory ship from the goods referred to in subparagraph (f), provided such factory ship is registered, recorded or listed with a Party, or leased by a company established in the territory of a Party, and entitled to fly its flag;
(h) goods, other than fish, shellfish and other marine life, taken or extracted from the seabed or the subsoil of the continental shelf or the exclusive economic zone of either of the Parties;
(i) goods, other than fish, shellfish and other marine life, taken or extracted from the seabed or the subsoil, in the area outside the continental shelf and the exclusive economic zone of either of the Parties or of any other State as defined in the United Nations Convention on the Law of the Sea, by a vessel registered, recorded or listed with a Party and entitled to fly its flag, or by a Party or person from a Party;
(j) goods taken from outer space, provided they are obtained by a Party or a person of a Party and not processed in a non-Party;
(k) waste and scrap derived from:
(i) production in the territory of one or both of the Parties; or
(ii) used goods collected in the territory of one or both of the Parties, provided such goods are fit only for the recovery of raw materials; and
(iii) goods produced in the territory of one or both of the Parties exclusively from goods referred to in subparagraphs (a) through (k), or from their derivatives, at any stage of production;
identical or similar goods means "identical goods" and "similar goods", respectively, as defined in the Customs Valuation Agreement;
indirect material means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good 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) spare parts and materials used in the maintenance of equipment and buildings;
(d) lubricants, greases, compounding materials and other materials used in the 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 goods;
(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;
intermediate material means a material that is produced by a producer of a good and used in the production of that good;
material means a good that is used in the production of another good, and includes a part or an ingredient;
net cost means total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost;
net cost of a good means the net cost that can be reasonably allocated to a good using one of the methods set out in Article IV.2.5;
non-allowable interest costs means interest costs incurred by a producer that exceed 700 basis points above the applicable national government interest rate identified for comparable maturities;
non-originating good or non-originating material means a good or material that does not qualify as originating under this Chapter;
producer means a person who grows, mines, harvests, fishes, hunts, manufactures, processes or assembles a good;
production means growing, mining, harvesting, fishing, trapping, hunting, manufacturing, processing or assembling a good;
reasonably allocate means to apportion in a manner appropriate to the circumstances;
royalties means payments of any kind, including payments under technical assistance or similar agreements, made as consideration for the use or right to use any copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, secret formula or process, excluding those payments under technical assistance or similar agreements that can be related to specific services such as:
(a) personnel training, without regard to where performed; and
(b) if performed in the territory of one or both of the Parties, engineering, tooling, die-setting, software design and similar computer services, or other services;
sales promotion, marketing and after-sales service costs means the following costs related to sales promotion, marketing and after-sales service:
(a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstration materials; exhibits; sales conferences, trade shows and conventions; banners; marketing displays; free samples; sales, marketing and after-sales service literature (product brochures, catalogues, technical literature, price lists, service manuals, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; entertainment;
(b) sales and marketing incentives; consumer, retailer or wholesaler rebates; merchandise incentives;
(c) salaries and wages; sales commissions; bonuses; benefits (for example, medical, insurance, pension); traveling and living expenses; membership and professional fees; for sales promotion, marketing and after-sales service personnel;
(d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training of customersâ employees, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
(e) product liability insurance;
(f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
(g) telephone, mail and other communications, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
(h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centres;
(i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after-sales service offices and distribution centres, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; and
(j) payments by the producer to other persons for warranty repairs;
shipping and packing costs means the costs incurred in packing a good for shipment and shipping the good from the point of direct shipment to the buyer, excluding costs of preparing and packaging the good for retail sale;
total cost means all product costs, period costs and other costs incurred in the territory of one or both of the Parties;
transaction value means:
(a) the price actually paid or payable for a good or material with respect to a transaction of the producer of the good, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the Customs Valuation Agreement, regardless of whether the good or material is sold for export; or
(b) where there is no transaction value or the transaction value is unacceptable under Article 1 of the Customs Valuation Agreement, the value determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement; and
used means used or consumed in the production of goods.
Chapter V. Customs Procedures
Section I. Certification of Origin
Article V.1. Certificate of Origin
1. The Parties shall establish, by the date of entry into force of this Agreement, a Certificate of Origin for the purpose of certifying that a good being exported from the territory of a Party into the territory of the other Party qualifies as an originating good, and may thereafter revise the Certificate of Origin by agreement.
2. Each Party may require that a Certificate of Origin for a good imported into its territory be completed in the language required under its law.
3. Each Party shall:
(a) require an exporter in its territory to complete and sign a Certificate of Origin for any exportation of a good for which an importer may claim preferential tariff treatment upon importation of the good into the territory of the other Party; and
(b) provide that where an exporter in its territory is not the producer of the good, the exporter may complete and sign a Certificate of Origin on the basis of:
(i) its knowledge of whether the good qualifies as an originating good;
(ii) its reasonable reliance on the producer's written declaration that the good qualifies as an originating good; or
(iii) acompleted and signed Certificate of Origin for the good voluntarily provided to the exporter by the producer.
4. Nothing in paragraph 3 shall be construed to require a producer to provide a Certificate of Origin to an exporter.
5. Each Party shall provide that a Certificate of Origin that has been completed and signed by an exporter or a producer in the territory of the other Party that is applicable to:
(a) a single importation of one or more goods into the Party's territory; or
(b) multiple importations of identical goods into the Party's territory to be made by the same importer, that occur within a specified period, not exceeding 12 months, set out therein by the exporter or producer;
shall be accepted by its customs administration for 4 years after the date on which the Certificate of Origin was signed.
6. For any originating good that is imported into the territory of a Party on or after the date of entry into force of this Agreement, each Party shall accept a Certificate of Origin that has been completed and signed prior to that date by the exporter or producer of that good.
Article V.2. Obligations Regarding Importations
1. Except as otherwise provided in this Chapter, each Party shall require an importer in its territory that claims preferential tariff treatment for a good imported into its territory from the territory of the other Party to:
(a) make a written declaration, based on a valid Certificate of Origin, that the good qualifies as an originating good;
(b) have the Certificate of Origin in its possession at the time the declaration is made;
(c) provide, on the request of that Party's customs administration, a copy of the Certificate of Origin; and
(d) promptly make a corrected declaration in a manner required by the customs administration of the importing Party and pay any duties owing where the importer has reason to believe that a Certificate of Origin on which a declaration was based contains information that is not correct.
2. Each Party shall provide that, where an importer in its territory claims preferential tariff treatment for a good imported into its territory from the territory of the other Party:
(a) the Party may deny preferential tariff treatment to the good if the importer fails to comply with any requirement under this Chapter; and
(b) the importer shall not be subject to penalties for the making of an incorrect declaration, if it voluntarily makes a corrected declaration pursuant to paragraph 1(d).
3. Each Party shall provide that, where a good would have qualified as an originating good when it was imported into the territory of that Party but no claim for preferential tariff treatment was made at that time, the importer of the good may, no later than 4 years after the date on which the good was imported, apply for a refund of any excess duties paid as the result of the good not having been accorded preferential tariff treatment, on presentation of:
(a) a written declaration that the good qualified as an originating good at the time of importation;
(b) a copy of the Certificate of Origin; and
(c) such other documentation relating to the importation of the good as that Party may require.
Article V.3. Exceptions
Each Party shall provide that a certificate of origin shall not be required for:
(a) a commercial importation of a good whose value does not exceed US$1,000 or its equivalent amount in the Party's currency, or such higher amount as it may establish, except that it may require that the invoice accompanying the importation include a statement certifying that the good qualifies as an originating good;
(b) a non-commercial importation of a good whose value does not exceed US$1,000 or its equivalent amount in the Party's currency, or such higher amount as it may establish; or
(c) an importation of a good for which the Party into whose territory the good is imported has waived the requirement for a Certificate of Origin;
provided that the importation does not form part of a series of importations that may reasonably be considered to have been undertaken or arranged for the purpose of avoiding the certification requirements of Articles V.1 and V.2.
Article V.4. Obligations Regarding Exportations
1. Each Party shall provide that:
(a) an exporter in its territory, or a producer in its territory that has provided a copy of a Certificate of Origin to that exporter pursuant to Article V.1.3(b)(ii), shall provide a copy of the Certificate of Origin to its customs administration on request; and
(b) an exporter or a producer in its territory that has completed and signed a Certificate of Origin, and that has reason to believe that the Certificate of Origin contains information that is not correct, shall promptly notify in writing all persons to whom the Certificate of Origin was given by the exporter or producer of any change that could affect the accuracy or validity of the Certificate of Origin.
2. Each Party:
(a) shall provide that a false certification by an exporter or a producer in its territory that a good to be exported to the territory of the other Party qualifies as an originating good shall have the same legal consequences, with appropriate modifications, as would apply to an importer in its territory for a contravention of its customs laws and regulations regarding the making of a false statement or representation; and
(b) may apply such measures as the circumstances may warrant where an exporter or a producer in its territory fails to comply with any requirement of this Chapter.
3. Neither Party may impose penalties on an exporter or a producer in its territory that voluntarily provides written notification pursuant to paragraph (1)(b) with respect to the making of an incorrect certification.
Section II. Administration and Enforcement
Article V.5. Records
Each Party shall provide that:
(a) an exporter or a producer in its territory that completes and signs a Certificate of Origin shall maintain in its territory, for 5 years after the date on which the Certificate of Origin was signed or for such longer period as the Party may specify, all records relating to the origin of a good for which preferential tariff treatment was claimed in the territory of the other Party, including records associated with:
(i) the purchase of, cost of, value of, and payment for, the good that is exported from its territory;
(ii) the purchase of, cost of, value of, and payment for, all materials, including indirect materials, used in the production of the good that is exported from its territory; and
(iii) the production of the good in the form in which the good is exported from its territory; and
(b) an importer claiming preferential tariff treatment for a good imported into the Party's territory shall maintain in that territory, for 5 years after the date of importation of the good or for such longer period as the Party may specify, such documentation, including a copy of the Certificate of Origin, as the Party may require relating to the importation of the good.
Article V.6. Origin Verifications
1. For purposes of determining whether a good imported into its territory from the territory of the other Party qualifies as an originating good, a Party may, through its customs administration, conduct a verification solely by means of:
(a) written questionnaires to an exporter or a producer in the territory of the other Party;
(b) visits to the premises of an exporter or a producer in the territory of the other Party to review the records referred to in Article V.5(a) and observe the facilities used in the production of the good; or
(c) such other procedures as the Parties may agree.
2. An exporter or producer who receives a questionnaire pursuant to paragraph 1(a) shall be given not less than 30 days from the date of receipt to provide responses and return the form. During that period, the exporter or producer may submit a written request to the importing Party, asking for a single extension of this deadline for a period not to exceed an additional 30 days.
3. Where an exporter or producer fails to return a duly completed questionnaire within the above-mentioned period or extension, the importing Party may deny preferential tariff treatment to the good in question.