Title
Free Trade Agreement between the United Mexican States, the Republic of Colombia and the Republic of Venezuela
Preamble
The governments of the Republic of Venezuela, the United Mexican States and the Republic of Colombia,
WHEREAS:
The status of their countries as Contracting Parties to the General Agreement on Tariffs and Trade (GATT) and the commitments arising therefrom for them.
The status of their countries as members of the Latin American Integration Association (ALADI) and the commitments derived therefrom for them, as well as the will to strengthen said Association as a center of convergence of Latin American integration.
Colombia's and Venezuela's status as members of the Cartagena Agreement and the commitments arising therefrom for them
The coincidence in the policies of internationalization and modernization of their countries' economies, as well as their decision to contribute to the expansion of world trade.
The priority of deepening economic relations between their countries and the decision to promote the Latin American integration process.
DECIDED TO:
Strengthen the special ties of friendship, solidarity and cooperation between their peoples.
To contribute to harmonious development, the expansion of world trade and the broadening of international cooperation.
Create an expanded and secure market for goods and services produced in their territories. Reduce trade distortions.
Establish clear and mutually beneficial rules for their commercial exchange.
Ensure a predictable business framework for planning productive activities and investment. Strengthen the competitiveness of its companies in world markets.
Encourage innovation and creativity by protecting intellectual property rights.
Create new employment opportunities, improve working conditions and living standards in their respective territories.
Preserve its ability to safeguard the public welfare.
Promote sustainable development.
Promote the coordinated action of the Parties in international economic forums, particularly those related to Latin American integration processes.
Encourage the dynamic participation of the various economic agents, particularly the private sector, in efforts to deepen economic relations between the Parties and to develop and maximize the potential of their joint presence in international markets.
THE FREE TRADE AGREEMENT:
Pursuant to the GATT and as a Partial Scope Economic Complementation Agreement in accordance with the provisions of the Treaty of Montevideo 1980 and Resolution 2 of the Council of Ministers of Foreign Affairs of the contracting parties to that treaty.
Body
Chapter I. Initial Provisions.
Article 1-01. Objectives
1. The objectives of this Treaty, specifically developed through its principles and rules, including those of national treatment, most-favored-nation treatment and transparency, are as follows:
a) to stimulate the expansion and diversification of trade between the Parties;
b) eliminate barriers to trade and facilitate the movement of goods and services between the Parties;
c) to promote conditions of fair competition in trade between the Parties; d) substantially increase investment opportunities in the territories of the Parties; e) protect and enforce intellectual property rights;
f) to establish guidelines for further cooperation among the Parties, as well as at the regional and multilateral levels, aimed at extending and enhancing the benefits of this Agreement;
(g) to establish effective procedures for the implementation and enforcement of this Agreement, for its joint administration and for the settlement of disputes;
h) to promote equitable relations between the Parties, recognizing differential treatment based on the categories of countries established in LAIA;
2. The Parties shall interpret and apply the provisions of this Agreement in the light of the objectives set forth in paragraph 1 and in accordance with the applicable rules of international law.
Article 1-02. Relationship with other International Treaties.
1. The Parties confirm the rights and obligations existing between them under the GATT, the Treaty of Montevideo 1980 and other international treaties and agreements ratified by them.
2. Inthe event of incompatibility between the provisions of the treaties and agreements referred to in paragraph 1 and the provisions of this Treaty, the provisions of this Treaty shall prevail to the extent of the incompatibility.
Article 1-03. Relations between Colombia and Venezuela.
1. Chapters III, IV, V section A, VI, VIII, IX, XVI and XVIII shall not apply between Colombia and Venezuela.
2. The chapters not covered in paragraph 1 shall apply between Colombia and Venezuela, without prejudice to the obligations arising from the legal system of the Cartagena Agreement.
3. Paragraphs 1 and 2 do not affect any rights Mexico may have under this Agreement.
Article 1-04. Compliance with the Treaty.
Each Party shall ensure, in accordance with its constitutional provisions, compliance with the provisions of this Agreement in its territory at the central or federal, state or departmental, and municipal levels, except as otherwise provided in this Agreement.
Article 1-05. Succession of Treaties.
Any reference to another treaty or international agreement shall be understood to be made in the same terms to any successor treaty or agreement to which all the Parties are parties.
Chapter II. General Definitions
Article 2-01. Definitions of General Application
For the purposes of this Agreement, unless otherwise specified, the following shall mean:
good of a Party: domestic products as understood in the GATT, such goods as the Parties may agree, and includes originating goods; a good of a Party may incorporate materials from other countries.
Customs Valuation Code: the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade, including its interpretative notes.
Commission: the Administrative Commission established in accordance with Article 20-01. communication: official written communication or notification. days: continuous, calendar or calendar days.
enterprise: any entity constituted or organized under applicable law, whether or not for profit and whether privately or governmentally owned, including corporations, foundations, companies, branches, trusts, participations, sole proprietorships, joint ventures or other partnerships. Nothing in this Agreement shall be construed to require a Party to grant or recognize legal personality to entities that do not have legal personality under the laws of that Party.
State enterprise: an enterprise that is owned or controlled by a Party through equity participation. existing: existing on the date of entry into force of this Treaty.
import tax: any import levy or import duty and any charge of any kind applied in connection with the importation of goods, including any form of taxation or additional charge on imports, except:
a) any charge equivalent to an internal tax imposed pursuant to Article III:2 of the GATT with respect to like goods, direct competitors or substitutes of the Party, or with respect to goods from which the imported good has been manufactured or produced in whole or in part;
b) any antidumping or countervailing duty or countervailing duty imposed in accordance with the laws of a Party;
c) any duties or other charges related to the importation, proportionate to the cost of the services rendered; and
d) any premium offered or collected on imported goods, derived from any bidding system, with respect to the administration of quantitative import restrictions or tariff-rate quotas or tariff preference quotas. measure: any law, regulation, procedure, administrative provision or practice, among others, adopted by a Party.
national: a natural person who has the nationality of a Party in accordance with its legislation. It shall be understood that the term also extends to persons who, in accordance with the legislation of that Party, have the status of permanent residents in the territory of that Party.
originating: that complies with the rules of origin established in Chapter VI.
Party: any State with respect to which this Treaty has entered into force. Exporting Party: the Party from whose territory a good or service is exported. Importing Party: the Party into whose territory a good or service is imported. person: a natural or natural person, or a company.
Tax Relief Program: the one established in Annex 1 to Article 3-04.
Protocol: a protocol annexed to this Treaty, the provisions of which have the same hierarchy and binding force as those of this Treaty.
resolution: decision or resolution of an authority.
Harmonized System: the Harmonized Commodity Description and Coding System, including the General Rules of Classification and their explanatory notes.
Chapter III. National Treatment and Market Access for Goods
Section A. Definitions
Article 3-01. Definitions.
For the purposes of this chapter, the following definitions shall apply:
F.O.B.: free on board (L.A.B.).
Tariff item: a Harmonized System tariff classification code at the eight- or ten-digit level.
samples without commercial value: goods representative of a class of goods already produced or of a model of goods the production of which is planned. It does not include identical goods imported by the same person or shipped to a single consignee in such quantity that, taken as a whole, they constitute an ordinary import subject to import duties.
used: those goods that at the time of importation show signs of wear and tear or tarnishing due to use; those that, even without having been used, have been manufactured for a considerable period of time; and leftovers, imperfect goods, second-hand goods and scrap.
Section B. Scope of Application and National Treatment
Article 3-02. Scope of Application.
This Chapter applies to trade in goods of the Parties, except as otherwise provided in this Agreement.
Article 3-03. National Treatment.
1. Each Party shall accord national treatment to goods of another Party in accordance with Article III of the GATT, including its interpretative notes. For this purpose, Article IIl of the GATT and its interpretative notes are incorporated into and made an integral part of this Agreement.
2. The provisions of paragraph 1 mean, with respect to a state or department, or a municipality, treatment no less favorable than the most favorable treatment accorded by that state or department, or municipality to any like goods, direct competitors or substitutes, as the case may be, of the Party of which it is a member.
3. Paragraphs 1 and 2 do not apply to the measures set forth in the annex to this article.
Section C. Import Taxes
Article 3-04. Import Tax Exemption.
1. Except as otherwise provided in this Agreement, no Party may increase any existing import tax, or adopt any new import tax, on originating goods.
2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its import taxes on originating goods as set out in Annex 1 to this Article.
3. Paragraphs 1 and 2 of this article are not intended:
(a) prohibit a Party from increasing an import tax on originating goods to a level no higher than that set out in the Schedule, where that Party had previously reduced that import tax unilaterally to a level lower than that set out in the Schedule;
(b) prevent a Party from increasing an import duty on originating goods when such increase is authorized as a result of a GATT dispute settlement proceeding between those Parties.
(c) prevent a Party from creating a new tariff split or split, provided that the import duty applicable to the originating goods concerned is not higher than that applicable to the tariff code split or split.
4. Unless otherwise provided, this Agreement incorporates the tariff preferences previously negotiated between the Parties, the regional tariff preference (RTP) for the tariff universe and the extension of the RTP between Mexico and Venezuela, as reflected in Annex 1 to this Article. As of the entry into force of this Agreement, the preferences previously negotiated or granted between the Parties within the framework of the ALADI are no longer in effect.
5. For purposes of import tax relief in accordance with this Article, the transitional rates or tariff rates shall be approximated downward to at least the nearest tenth of a percent or, if the rate of duty is expressed in units of currency, to at least the nearest .001 of the Party's official currency unit.
6. In addition to the provisions of Annex 2 to this Article, at the request of any Party, the Commission shall consult to examine the possibility of accelerating the relief of import taxes on one or more goods or of including one or more goods in the Schedule and shall make appropriate recommendations to the Parties. Once the relevant legal requirements have been met, the accelerated relief from import taxes on a good that is achieved for two or more Parties shall prevail over any import tax or relief period for that good between those Parties. The inclusion of goods in the Duty Relief Program that is achieved between two or more Parties will become effective for those goods between those Parties once the corresponding legal procedures are fulfilled.
Article 3-05. Customs Valuation.
1. Except as provided in the annex to this article, the customs value of an imported good shall be determined in accordance with the principles of the Customs Valuation Code.
2. The taxable base on which import taxes shall be applied to goods imported from another Party shall not be the value of a good produced in the territory of the importing Party, nor an arbitrary or fictitious value. Pursuant to Article 13 of the Customs Valuation Code, if in the course of determining the customs value of imported goods it becomes necessary to delay the final determination of that value, the importer may remove the goods from customs if, when required to do so, he provides sufficient security in the form of a bond or, if the importer so chooses, by such other means of security as the Party's legislation may provide. The guarantee shall cover the payment of any taxes to which the goods may ultimately be subject.
3. Each Party shall establish the appropriate documentation to prove that the customs value is correct, which shall not be greater than that which may reasonably be required to comply with the provisions of Article VII of the GATT.
4. The guarantee granted under the terms of paragraph 3 shall be released within a term not to exceed twenty working days from the date on which the importer delivers the appropriate documentation to the customs authority, unless the customs authority has initiated the exercise of its verification or verification powers.
5. Each Party may determine, in accordance with paragraph 3, the goods imported from another Party that shall be subject to the aforementioned guarantee when the customs value declared by the importer is lower than the estimated price determined by the customs authority of the importing Party based on previously obtained and analyzed transaction value histories.
6. Before adopting the estimated price referred to in paragraph 6, the Party shall communicate to the other Parties the description of the good, its tariff item, the estimated price it proposes to establish and the reasons on which it relies to adopt the measure.
7. The Parties understand that the estimated price referred to in paragraph 6 shall not be considered as the base price for the determination of import taxes.
Article 3-06. Temporary Importation of Goods.
1. Each Party shall authorize the temporary importation free of import duties or with suspension of the payment thereof, at least to the goods listed below, which are imported from another Party, regardless of their origin and regardless of whether similar goods, direct competitors or substitutes are available in the territory of the importing Party:
a) professional equipment necessary for the exercise of the activity, trade or profession of a business person;
b) press equipment or equipment for on-air transmission of radio or television signals and cinematographic equipment;
c) goods imported for sporting purposes or for exhibition or demonstration purposes including components, ancillary apparatus and accessories; and
d) commercial samples and advertising films.
2. Except as otherwise provided in this Agreement, each Party may subject the temporary importation of a good referred to in paragraph 1(a), (b) or (c), free of import duty or with suspension of import duty, to any of the following conditions, and no additional conditions may be adopted:
a) that are introduced by natural or juridical persons legally established in the Party, or by nationals of another Party;
b) that the property is used exclusively by the person who enters temporarily or under his personal supervision, in the performance of his activity, trade or profession;
c) that the property is not sold, leased or otherwise disposed of while it remains in its territory;
d) that the temporary importation is secured by a bond or other guarantee not exceeding 110% of the charges that would be caused by the definitive importation of the good, to be released at the time of re-exportation;
e) that the good is susceptible to identification upon re-export;
f) that the good is re-exported upon departure of the person or within a period that reasonably corresponds to the purpose of the temporary importation, which in no case may exceed six months, extendable to nine months;
g) that the good is imported in quantities not greater than is reasonable in accordance with its intended use; and
h) that the good is re-exported in the same form in which it was imported.
3. Except as otherwise provided in this Agreement, the Parties may subject the temporary importation of a good referred to in paragraph 1(d) to any of the following conditions free of import duties or with suspension of the payment thereof, without the possibility of adopting additional conditions:
a) that the good is imported only for the purpose of obtaining orders for goods or services to be supplied from the territory of another Party or from another non-Party;
b) that the property is not for sale or lease and is used only for demonstration or exhibition while remaining in its territory;
c) that the good is susceptible to identification upon re-export;
d) that the good is re-exported within a period that reasonably corresponds to the purpose of the temporary importation, which in no case may exceed six months, which may be extended to nine months; and
e) that the good is imported in amounts not greater than reasonable in accordance with its intended use.
4. Where a good that is temporarily imported free of import duty under paragraph 1 fails to meet any of the conditions that a Party imposes under paragraphs 2 and 3, that Party may require payment of import duties and any other charges that would be incurred on the final importation of the good.
Article 3-07. Importation of Samples with No Commercial Value.
Each Party shall authorize the importation free of import duty of samples of no commercial value originating in another Party.
Article 3-08. Temporary Flexibility Levels for Certain Goods Classified In Chapters 51 to 63 of the Harmonized System
Until December 31, 1999, the Parties listed in the Annex to this Article shall grant to goods classified in Chapters 51 through 63 of the Harmonized System that comply with the provisions of Article 6-19, the preferential treatment for originating goods provided for in the Duty-Free Program, in accordance with the provisions of that Annex.
Section D. Non-Tariff Measures
Article 3-09. Import and Export Restrictions.
1. Except as otherwise provided in this Agreement, no Party may adopt or maintain any prohibition or restriction on the importation of any good of another Party or on the exportation or sale for export of any good destined for the territory of another Party, except as provided in Article XI of the GATT, including its interpretative notes. For this purpose, Article XI of the GATT and its interpretative notes are incorporated into and made an integral part of this Agreement.
2. The Parties understand that the GATT rights and obligations embodied in paragraph 1 prohibit, in all circumstances in which any other type of restriction is prohibited, the establishment of minimum export and import prices, except as permitted for the application of anti-dumping and countervailing duties or countervailing duty undertakings and penalties.
3. In cases where a Party adopts or maintains a prohibition or restriction on the importation of goods from a non-Party or on the exportation of goods to a non-Party, nothing in this Agreement shall be construed to prevent it:
a) limit or prohibit the importation of the goods of the non-Party from the territory of another Party; or
b) require as a condition for the exportation of the goods to the territory of another Party that the goods are not re-exported directly or indirectly to the non-Party without being processed or manufactured in the territory of the other Party in a manner that results in a substantial change in the value, form or use of the goods or in the production of another good.
4. Inthe event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, at the request of either Party, the Parties shall consult with a view to minimizing undue interference with or distortion of pricing, marketing and distribution mechanisms in another Party.
5. Paragraphs 1 to 4 shall not apply to the measures set forth in the annex to this article.
Article 3-10. Customs Duties.
No Party shall increase or establish any customs duties for the service rendered by customs on originating goods and shall eliminate such duties on originating goods within five and a half years of the entry into force of this Agreement.
Article 3-11. Export Taxes.
1. Except as provided in this Article, no Party shall adopt or maintain any tax, levy or charge on the exportation of a good to the territory of another Party, unless such tax, levy or charge is adopted or maintained on the exportation of that good to the territory of all other Parties, and on that good, when destined for domestic consumption.
2. Each Party may maintain or adopt a tax, levy or charge on the export of the staple goods listed in Annex 1 to this Article, their ingredients, or the goods from which such foodstuffs are derived, if such tax, levy or charge is adopted or maintained for the export of such goods to the territory of all other Parties, and is used:
(a) for the benefits of a domestic food assistance program that includes such food to be received only by consumers in the Party implementing that program; or
(b) to ensure the availability of sufficient quantities of the foodstuff for domestic consumption, or of sufficient quantities of its ingredients or of the goods from which such foodstuffs are derived for a domestic processing industry, when the domestic price of such foodstuff is held below the world price as part of a government stabilization program, provided that such taxes, levies or charges do not have the effect of increasing the protection afforded to such domestic industry, and are sustained only for the period necessary to maintain the integrity of such program.
3. Notwithstanding paragraph 1, each Party may adopt or maintain a tax, levy or charge on the export of any foodstuff to the territory of another Party if that tax, levy or charge is applied temporarily to alleviate a critical shortage of that foodstuff. For purposes of this paragraph, "temporarily" means up to one year, or such longer period as agreed by all Parties.
4. Paragraph 1 shall not apply to the measures set forth in Annex 2 to this article.
Article 3-12. Country of Origin Marking.
The annex to this article shall apply to measures related to country of origin marking. Section E - Publication and communication
Article 3-13. Publication and Communication.
1. No Party shall apply prior to its official publication any measure of a general nature that has the effect of increasing an import tax or other charge on the importation of goods from another Party or the exportation of goods destined for another Party, or that imposes a new or more burdensome measure, restriction or prohibition on such imports or exports or on transfers of funds relating thereto.
2. At the request of a Party, another Party shall identify in terms of the tariff items and nomenclature corresponding to them under the Harmonized System, the measures, restrictions or prohibitions on the importation or exportation of goods for reasons of national security, public health, preservation of flora or fauna, the environment, phytosanitary and zoosanitary standards, technical standards, labeling, international commitments, public order requirements or any other regulation.