Title
FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND MERCOSUR
Preamble
PREAMBLE
Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation (EFTA States),
and
The Common Market of the South (MERCOSUR) and its State Parties, signatories of this Agreement, the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay (MERCOSUR States),
hereinafter referred to as the "Parties" (1)
RECOGNISING the common wish to strengthen the links between the Parties by establishing close and lasting relations;
DESIRING to create favourable conditions for the development and diversification of trade between the Parties and for the promotion of commercial and economic cooperation in areas of common interest on the basis of mutual benefit, non-discrimination and international law;
DETERMINED to promote and further strengthen the multilateral trading system, building on their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organization (WTO Agreement) and the other agreements negotiated thereunder to which they are a party, thereby contributing to the harmonious development and expansion of world trade;
REAFFIRMING their commitment to democracy, the rule of law, human rights and fundamental freedoms in accordance with their obligations under international law, including as set out in the United Nations Charter and the Universal Declaration of Human Rights;
AIMING to promote economic and social development, to create new employment opportunities, to improve living standards and to ensure high levels of protection ofhealth and safety and of the environment;
RECOGNISING the importance of coherent and mutually supportive trade, environmental and labour policies and reaffirming their commitment to pursue the objective of sustainable development, their rights and obligations under multilateral environmental agreements to which they are a party, and the respect for the fundamental principles and rights at work, including the principles set out in the International Labour Organisation (ILO) Conventions to which they are a party;
DETERMINED to implement this Agreement in line with the objectives to preserve and protect the environment through sound environmental management and to promote an optimal use of the world's resources in accordance with the objective of sustainable development;
RECOGNISING the importance of ensuring predictability for the trading communities of the Parties;
AFFIRMING their commitment to prevent and combat corruption, including bribery of foreign public officials, in international trade and investment and to promote the principles of transparency and good public governance;
ACKNOWLEDGING the importance of good corporate governance and corporate social responsibility for sustainable development, and affirming their aim to encourage enterprises to observe internationally recognised guidelines and principles in this respect, such as the OECD Guidelines for Multinational Enterprises, the OECD Principles of Corporate Governance and the UN Global Compact;
CONVINCED that this Agreement will enhance the competitiveness of their firms in global markets and create conditions encouraging economic, trade and investment relations between the Parties;
HAVE AGREED, in pursuit of the above, to conclude the following Free Trade Agreement (Agreement):
Body
Chapter 1. GENERAL PROVISIONS
Article 1.1. Objectives
1. The Parties hereby establish a free trade area in accordance with the provisions of this Agreement, which is based on trade relations between market economies and on the respect for democratic principles and human rights, with a view to spurring prosperity and sustainable development.
2. The objectives of this Agreement are:
(a) to liberalise trade in goods, in conformity with Article XXIV of the General Agreement on Tariffs and Trade 1994 (GATT 1994);
(b) to liberalise trade in services, in conformity with Article V of the General Agreement on Trade in Services (GATS);
(c) to mutually enhance investment opportunities;
(d) to prevent or eliminate unnecessary technical barriers to trade and unnecessary sanitary and phytosanitary measures;
(e) to promote competition in their economies, particularly as it relates to the economic relations between the Parties;
(f) to improve mutual access to the government procurement markets of the State Parties;
(g) to ensure adequate and effective protection of intellectual property rights, in accordance with international standards;
(h) to develop international trade in such a way as to contribute to the objective of sustainable development and to ensure that this objective is integrated and reflected in the Parties' trade relations; and
a to contribute to the harmonious development and expansion of world trade.
Article 1.2. Geographical Scope
1. Except as otherwise specified in Annex I (Rules of Origin), this Agreement applies to:
(a) the land territory, internal waters and the territorial sea of a State Party, and the air-space above the territory of a State Party, in accordance with international law; and
(b) the exclusive economic zone and the continental shelf of a State Party, in accordance with international law.
2. This Agreement shall not apply to the Norwegian territory of Svalbard, with the exception of trade in goods.
Article 1.3. Trade and Economic Relations Governed by this Agreement
1. This Agreement applies to the trade and economic relations between, on the one side, the individual EFTA States and, on the other side, the individual MERCOSUR States or MERCOSUR. This Agreement applies neither to the economic relations between individual EFTA States, nor to the economic relations between the MERCOSUR States, unless otherwise provided for in this Agreement.
2. In accordance with the Customs Treaty of 29 March 1923 between Switzerland and Liechtenstein, Switzerland shall represent Liechtenstein in matters covered therein.
Article 1.4. Relation to other International Agreements
1. The Parties affirm their rights and obligations under the WTO Agreement and the other agreements negotiated thereunder to which they are a party, and any other international agreement to which they are a party.
2, If a Party considers that the development or establishment of a customs union, free trade area or another preferential agreement by another Party has the effect of altering the trade regime provided for by this Agreement, it may request consultations. The Party concluding such agreement shall afford adequate opportunity for consultations with the requesting Party.
Article 1.5. Fulfilment of Obligations
1. Each Party shall take any general or specific measures required to fulfil its obligations under this Agreement.
2. Each State Party shall ensure the observance of all obligations and commitments under this Agreement by its respective central, regional and local governments and authorities, and by non-governmental bodies in the exercise of governmental powers delegated to them by central, regional and local governments or authorities.
Article 1.6. Transparency
1. The Parties shall publish, or otherwise make publicly available, their laws, regulations, judicial decisions, administrative rulings of general application as well as their respective international agreements, that may affect the operation of this Agreement.
2. The Parties shall promptly respond to specific questions and provide, upon request, information to each other on matters referred to in paragraph 1.
3. Nothing in this Agreement shall be construed to require any Party to disclose confidential information, the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice the legitimate commercial interests of any economic operator.
4. In case of any inconsistency between this Article and provisions relating to transparency in other parts of this Agreement, the latter shall prevail to the extent of the inconsistency.
Chapter 2. TRADE IN GOODS
Article 2.1. Scope
This Chapter applies to trade in goods between the Parties.
Article 2.2. National Treatment on Internal Taxation and Regulation
Each Party shall accord national treatment to the goods of another Party. Article Ill of GATT 1994 applies to this Chapter and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.3. Customs Duties on Imports
1. Each Party shall apply customs duties on imports on goods originating in another Party in accordance with Annexes II-V (Schedules of Tariff Commitments on Goods).
2. Customs duties on imports include any duty or charge of any kind (2) imposed on or in connection with the importation of goods, but do not include any:
(a) internal taxes or other internal charges imposed in accordance with Article Ill of GATT 1994;
(b) anti-dumping or countervailing duties applied in accordance with Articles VI and XVI of GATT 1994, the WTO Agreement on Implementation of Article VI of GATT 1994 (ADA) and the WTO Agreement on Subsidies and Countervailing Measures (ASCM) as well as with Chapter 3 (WTO Trade Defence and Global Safeguards);
(c) safeguard measures applied in accordance with Article XIX of GATT 1994 and the WTO Agreement on Safeguards (ASFG) as well as with Chapters 3 (WTO Trade Defence and Global Safeguards) and 4 (Bilateral Safeguard Measures);
(d) measures authorised by the WTO Dispute Settlement Body or under Chapter 15 (Dispute Settlement);
(e) fees or other charges, imposed in accordance with Article VIII of GATT 1994; and
(f) measures adopted to safeguard a State Party's external financial position and its balance of payments, in accordance with Article 2.13 (Balance-of-Payments).
3. Unless otherwise provided for in this Agreement, no Party shall introduce any new customs duties on imports, or increase those already applied on goods originating in another Party in accordance with its Schedule of Tariff Commitments. This paragraph shall not preclude a Party from raising customs duties on imports to the level established in its Schedule of Tariff Commitments following a unilateral reduction.
4. A Party may create a new tariff line as long as the customs duty applicable to the corresponding goods under the new tariff line is equal to or lower than the original tariff line, according to its Schedule of Tariff Commitments, and that the agreed tariff concessions remain unchanged. The respective Schedule of Tariff Commitments shall indicate which version of the Harmonized Commodity Description and Coding System (HS) each Party has used.
Article 2.4. Goods Re-Entered after Repair
1. For the purposes of this Article, "repair" means any processing operation undertaken on goods to remedy operating defects or material damage, entailing the re- establishment of goods to their original function, or to ensure their compliance with technical requirements for their use, without which such goods could no longer be fit for their intended purposes. Repair of goods includes restoration and maintenance. It shall not include any operation or process that:
(a) destroys the essential characteristics of the goods or creates new goods or goods fit for different commercial purposes;
(b) transforms the unfinished goods into finished goods; or (c) is used to improve the technical performance of goods.
2. No Party shall apply customs duties to goods referred to in paragraph 1, regardless of their origin, that re-enter its customs territory after those goods have been temporarily exported from its customs territory to the customs territory of another Party for repair, regardless of whether such repair could be performed in the customs territory of the Party from which the goods were exported for repair.
3. Paragraph 2 shall not apply to goods imported in bond, into free trade zones, or zones of similar status, that are exported for repair and are not re-imported in bond, into free trade zones, or zones of similar status.
4. No Party shall apply customs duties to goods, regardless of their origin, imported temporarily from the customs territory of another Party for repair.
Article 2.5. Exchange of Information on Trade
1. For the purpose of monitoring the functioning of this Agreement and calculating preference utilisation rates, the Parties shall annually exchange import statistics and applied most-favoured-nation tariff rates starting one year after the entry into force of this Agreement until ten years after the tariff elimination is completed for all goods in accordance with Annexes II-V (Schedules of Tariff Commitments on Goods). Unless the EFTA-MERCOSUR Joint Committee (Joint Committee) decides otherwise, this period shall be automatically extended for five years. Thereafter, the Joint Committee may decide on further extension.
2. The exchange of import statistics shall cover data pertaining to the most recent year available, including value and, where applicable, volume, at the tariff line level (eight-digit level tariff lines based on Harmonized System Nomenclature) for imports of goods from another Party benefitting from preferential treatment under this Agreement and for imports of goods from another Party that received non-preferential treatment. The preferential and the applied most-favoured-nation tariff rates exchanged shall pertain to the same year as the import statistics.
3. Notwithstanding paragraph 2, no Party shall be obliged to exchange import data that is confidential in accordance with its domestic laws and regulations.
Article 2.6. Quantitative Restrictions
Except as otherwise provided for in this Agreement, no Party may adopt or maintain any prohibition or restriction on the importation of goods of another Party or on the exportation or sale for export of goods destined for the territory of another Party, whether applied by quotas, licences or other measures, except those in accordance with Article XI of GATT 1994, including its interpretative notes. To this end, Article XI of GATT 1994 applies to this Chapter and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.7. Import Licensing
1. The WTO Agreement on Import Licensing Procedures applies to this Chapter and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
2. The State Parties may only adopt or maintain licensing procedures as a condition for importation if other appropriate procedures to achieve an administrative purpose are not reasonably available.
3. The State Parties shall not adopt or maintain import licensing procedures in order to implement a measure that is inconsistent with this Agreement, GATT 1994 or the WTO Agreement on Trade-Related Investment Measures. A Party adopting non-automatic licensing procedures shall clearly indicate the measure implemented through such licensing procedures.
4. The State Parties shall ensure that all import licensing procedures are neutral in application, and administered in a fair, equitable, non-discriminatory, transparent, predictable and least trade-restrictive manner.
5. If a State Party has denied an application for an import licence it shall, without undue delay, provide the applicant with a written explanation of the reasons for the denial;
6. Each State Party shall provide effective, non-discriminatory and prompt and easily accessible procedures in accordance with its domestic laws and regulations to guarantee the right of appeal against administrative decisions on applications for import licences. Appeal procedures shall include administrative review by the supervising authority or judicial review in accordance with the domestic laws and regulations of each State Party. If the denial of an import licence is upheld in an appeal, the State Party granting the licence shall provide the applicant with a written justification without undue delay.
7. A State Party adopting or amending regulations related to import licensing that are likely to affect trade between the Parties, shall promptly notify the other State Parties. The notice shall clearly state the purpose of such licensing procedures and any conditions on eligibility for obtaining an import licence. A notification made by a State Party in accordance with the WTO Agreement on Import Licensing Procedures shall be deemed equivalent to a notification under this Agreement.
Article 2.8. Rules of Origin and Administrative Cooperation
The provisions on rules of origin and administrative cooperation procedures applicable between the State Parties are set out in Annex I (Rules of Origin).
Article 2.9. Trade Facilitation
The provisions on trade facilitation applicable between the State Parties are set out in Annex VI (Trade Facilitation).
Article 2.10. State Trading Enterprises
Article XVII of GATT 1994 and the Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994 apply to this Chapter and are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.11. General Exceptions
Article XX of GATT 1994 and its interpretative notes apply to this Chapter and Chapters 5 (Technical Barriers to Trade) and 6 (Sanitary and Phytosanitary Measures) and are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.12. Security Exceptions
Article XXI of GATT 1994 applies to this Chapter and Chapters 5 (Technical Barriers to Trade) and 6 (Sanitary and Phytosanitary Measures) and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.13. Balance-of-Payments
1. A State Party, in serious balance of payments difficulties, or under imminent threat thereof, may, in accordance with the conditions established under GATT 1994 and the WTO Understanding on the Balance of Payments Provisions of the General Agreement on Tariffs and Trade 1994, adopt trade restrictive measures, which shall be of limited duration and non-discriminatory, and may not go beyond what is necessary to remedy the balance of payments situation.
2. The State Party introducing a measure under this Article shall promptly notify the Joint Committee.
Article 2.14. Sub-Committee on Trade In Goods
1. A Sub-Committee on Trade in Goods (Sub-Committee) is hereby established.
2, The mandate of the Sub-Committee is set out in Annex VII (Mandate of the Sub- Committee on Trade in Goods).
Article 2.15. Tariff Rate Quota Administration
1. A Party granting bilateral tariff rate quotas (TRQ) as referred to in Annexes II, IV, and V (Schedules of Tariff Commitments on Goods) shall administer its bilateral TRQ in a manner that does not result in underfill due to domestic laws, regulations, or administrative procedures related to TRQ administration.
2. TRQ administration shall be transparent, based on clearly specified timeframes, procedures, and requirements, no more administratively burdensome than necessary, and conducted in a timely manner.
3. The Party granting the bilateral TRQ shall make publicly available, in a timely and continuous manner, relevant information concerning TRQ administration, including volume available, eligibility criteria, intra-quota tariffs whenever applicable and effective fill rates.
4. A Party shall promptly notify the other Parties of any changes to its domestic laws, regulations, or administrative procedures that may affect TRQ administration and, on request of another Party, shall provide information and respond to questions pertaining to such domestic laws, regulations or administrative procedures related to TRQ administration.
5. In cases where an exporting State Party considers that a bilateral TRQ is being consistently underfilled due to the importing State Party's domestic laws, regulations, or administrative procedures related to TRQ administration:
(a) the importing Party shall, upon request and within 30 days from receipt of the request, undertake consultations with the exporting State Party to address any such measure, including by providing, if applicable, information on any reasonable commercial conditions that may have caused the TRQ underfill; and
(b) if consultations under subparagraph (a) do not result in a satisfactory resolution, the Subc-Committee on Trade in Goods and the Joint Committee shall, as appropriate, make recommendations or take decisions to ensure the proper implementation of the obligations set out on this Article and in Annexes II, IV and V (Schedules of Tariff Commitments on Goods).
6. Products exported under bilateral TRQ granted by an EFTA State shall be accompanied by an official document issued by the exporting MERCOSUR State Party. The model of the official document shall be communicated to the EFTA States by MERCOSUR no later than at entry into force of this Agreement.
Article 2.16. Wine Terms
The State Parties have addressed the use of certain wine terms in the Record of Understanding on Trade in Wine Products which constitutes an integral part of this Agreement.
Article 2.17. Review
Upon request of a Party, beginning three years from the entry into force of this Agreement, the Parties shall undertake a review of the tariff commitments in Annexes II to V (Schedules of Tariff Commitments on Goods). As a result of such review, the Parties may agree to enter into negotiations on possible improvement of market access conditions under this Chapter and Annexes II to V (Schedules of Tariff Commitments on Goods).
Chapter 3. WTO TRADE DEFENSE AND GLOBAL SAFEGUARDS
Article 3.1. Relationship with the WTO Agreements
1. This Chapter applies without prejudice to the rights and obligations established under Articles VI, XVI and XIX of GATT 1994 and the ADA, the ASCM and the ASFG. For clarity, non-preferential rules of origin shall be applied under the WTO Agreements referred to in this paragraph.
2. Measures pursuant to this Chapter shall be used in a fair and transparent manner and except as otherwise provided for in this Chapter, in full compliance with the relevant WTO requirements.
Article 3.2. Anti-Dumping
1. The State Parties shall endeavour to apply the ADA in a way that least affects trade between the Parties.
2. Except where circumstances have changed, a State Party shall not initiate an investigation if its previous investigation regarding the same product from the same State Party resulted in a negative final determination less than one year prior to the filing of the application. If an investigation is initiated in such a case, that State Party shall, in the notice of initiation, explain the change in circumstances which warrants the initiation.
3. A State Party conducting an investigation shall take into account the information provided by industrial users of the product under investigation, importers and, if applicable, representative consumer organisations according to Article 6.12 of the ADA.
4. In addition to the conditions set forth in Article 7.1 of the ADA, provisional measures may only be applied if interested parties have been given adequate opportunities to submit information, including responses to questionnaires sent in accordance with Article 6.1.1 of the ADA, and a preliminary affirmative determination has been made of dumping and consequent injury to a domestic industry taking into account responses to questionnaires received from, and other relevant information submitted by, interested parties.
5. A State Party shall carefully consider proposals of price undertakings made by exporters of another State Party concerned.
6. Ifa State Party decides to apply an anti-dumping measure, that State Party shall favour the imposition of a duty that is less than the margin of dumping if that level is adequate to remove the injury to the domestic industry.
7. A State Party shall carefully consider terminating an anti-dumping measure as soon as material injury and imminent threat thereof to the domestic industry have been removed, if possible and without prejudice to the rights and obligations established under the ADA, within five years from its imposition.
Article 3.3. Global Safeguard Measures
1. A State Party adopting global safeguard measures shall impose them in a way that least affects bilateral trade.
2. Upon request of the exporting State Party, the State Party initiating a safeguard investigation shall immediately provide:
(a) the information referred to in Articles 12.2 and 12.6 of the ASFG, in the format prescribed by the WTO Committee on Safeguards; and
(b) the public notice of initiation of the investigation and the public version of the complaint filed by the domestic industry.
3. Upon request of the exporting State Party, the State Party intending to adopt provisional or definitive safeguard measures shall immediately provide the information referred to in Article 12.2 of the ASFG, in the format prescribed by the WTO Committee on Safeguards, and a public report setting forth the findings and reasoned conclusions on all pertinent issues of fact and law considered in the safeguard investigation. The public report shall include an analysis that attributes injury to the factors causing it and set out the method used in defining the safeguard measures.
4. When intending to impose definitive safeguard measures that include one or several State Parties, the importing State Party shall inform the exporting State Parties and offer to hold informal consultations. The importing State Party shall not adopt definitive safeguard measures until 30 days have elapsed from the date the offer for consultations was made.
Article 3.4. Transparency
1. For transparency purposes and without prejudice to Article 6.5 of the ADA, Article 12.4 of the ASCM and Article 3.2 of the ASFG, each State Party shall ensure that:
(a) as soon as possible after the imposition of provisional measures, interested parties be given full access to the facts that are the basis of the determinations, the injury assessment, calculation of the dumping or subsidy margins, if applicable, and causality; and
(b) before the final determination, there is a full and meaningful disclosure of all essential facts and considerations which form the basis for the final determination and the decision to apply measures, including those related to injury assessment, calculation of the dumping or subsidy margins, if applicable, and causality.
2. All information referred to in paragraph 1 shall be sent in writing, preferably in electronic version.
Article 3.5. Notification and Consultations
1. As soon as possible after an application is accepted and before initiating an investigation in accordance with the ADA or the ASCM concerning imports from another State Party, the importing State Party shall notify in writing the State Party concerned.
2. As soon as possible after the corresponding public notice has been issued, the importing State Party shall notify the exporting State Party of:
(a) any decision to initiate an investigation;
(b) any decision to apply a provisional measure; and