2. A good which complies with the origin requirements of Paragraph 1 will retain its eligibility for preferential tariff treatment if exported to a Party and subsequently re-exported to another Party.
3. Goods Wholly Produced or Obtained
For the purposes of Article 2.1(a) (Originating Goods), the following goods shall be considered as wholly produced or obtained in a Party:
(a) plants and plant goods, including fruit, flowers, vegetables, trees, seaweed, fungi and live plants, grown, harvested, picked, or gathered in a Party; (1)
(b) live animals born and raised in a Party;
(c) goods obtained from live animals in a Party;
(d) goods obtained from hunting, trapping, fishing, farming, aquaculture, gathering, or capturing in a Party;
(e) minerals and other naturally occurring substances extracted or taken from the soil, waters, seabed or beneath the seabed in a Party;
(f) goods of sea-fishing and other marine goods taken from the high seas, in accordance with international law (2), by any vessel registered or recorded with a Party and entitled to fly the flag of that Party;
(g) goods produced on board any factory ship registered or recorded with a Party and entitled to fly the flag of that Party from the goods referred to in Subparagraph (f);
(h) goods taken by a Party, or a person of a Party, from the seabed or beneath the seabed beyond the Exclusive Economic Zone and adjacent Continental Shelf of that Party and beyond areas over which third parties exercise jurisdiction under exploitation rights granted in accordance with international law; (3)
(i) goods which are:
(i) waste and scrap derived from production and consumption in a Party provided that such goods are fit only for the recovery of raw materials; or
(ii) used goods collected in a Party provided that such goods are fit only for the recovery of raw materials; and
(j) goods produced or obtained in a Party solely from products referred to in Subparagraphs (a) to (i) or from their derivatives.
4. Goods Not Wholly Produced or Obtained
1. For the purposes of Article 2.1(b) (Originating Goods), a good shall qualify as an originating good of a Party if it satisfies all applicable requirements of Annex 3B (Product-Specific Rules).
2. Where Annex 3B (Product-Specific Rules) provides a choice of rule between a regional value content based rule of origin, a change in tariff classification based rule of origin, a specific process of production, or a combination of any of these, a Party shall permit the producer or exporter of the good to decide which rule to use in determining if the good is an originating good.
5. Calculation of Regional Value Content
1. For the purposes of Article 4 (Goods Not Wholly Produced or Obtained), the formula for calculating the regional value content will be either:
(a) Direct Formula
AANZFTA Material Cost + Labour Cost + Overhead Cost + Profit + Other Costs / FOB x 100% or
(b) Indirect/Build-Down Formula
FOB - Value of Non-Originating Materials / FOB x 100%
where:
(i) AANZFTA Material Cost is the value of originating materials, parts or produce that are acquired or self-produced by the producer in the production of the good;
(ii) Labour Cost includes wages, remuneration and other employee benefits;
(iii) Overhead Cost is the total overhead expense;
(iv) Other Costs are the costs incurred in placing the good in the ship or other means of transport for export including, but not limited to, domestic transport costs, storage and warehousing, port handling, brokerage fees and service charges;
(v) FOB is the free-on-board value of the goods as defined in Article 1 (Definitions); and
(vi) Value of Non-Originating Materials is the CIF value at the time of importation or the earliest ascertained price paid for all non-originating materials, parts or produce that are acquired by the producer in the production of the good. Non-originating materials include materials of undetermined origin but do not include a material that is self-produced.
2. The value of goods under this Chapter shall be determined in accordance with Article VIl of GATT 1994 and the Agreement on Customs Valuation.
6. Cumulative Rules of Origin
1. Unless otherwise provided in this Agreement, goods and materials which comply with the origin requirements provided in Article 2 (Originating Goods), and which are used in another Party as materials in the production of another good or material, shall be considered as originating in the Party where working or processing of the finished good or material has taken place.
2. In addition to Paragraph 1, the Participating Parties shall extend the application of cumulation referred to in Paragraph 1 to all production undertaken on, and value-added to, non- originating materials in any Participating Party, which are used in another Participating Party as materials in the production of another good or material. Such production undertaken on, or value added to, a non-originating material in the territory of one or more of the Participating Parties shall contribute towards the originating content of a good or material for the purpose of determining the origin of a good or material finished in the territory of a Participating Party, regardless of whether that production or value added was sufficient to confer originating status to the material itself.
3. The Participating Parties shall implement Paragraph 2 180 days after the date of entry into force of the Second Protocol.
4. For the purposes of this Article, "Participating Party" means:
(a) a Party that does not make a notification under Paragraph 5; or
(b) a Party that has withdrawn its notification in accordance with Paragraph 6.
5. Paragraph 2 shall not apply to a Party (4) if that Party notifies the other Parties in writing through the FTA Joint Committee of its intention to not implement Paragraph 2 (and is therefore a "non-Participating Party" for the purposes of this Article) within 120 days after the date of entry into force of the Second Protocol.
6. A Party that has made a notification under Paragraph 5 may at any time notify the other Parties in writing through the FTA Joint Committee of its withdrawal of the notification. 180 days after the date of a Party’s notification of withdrawal, Paragraph 2 shall apply with respect to that Party
7. For greater certainty, for the purposes of Paragraph 2:
(a) production undertaken or value added that does not confer originating status to a non-originating material in the territory of a non-Participating Party shall not contribute towards the originating content of a good or material for the purpose of determining the origin of a good or material finished in the territory of a Participating Party;
(b) production undertaken or value added that does not confer originating status to a non-originating material in the territory of a Participating Party shall not contribute towards the originating content of a good or material for the purpose of determining the origin of a good or material finished in the territory of a non-Participating Party; and
(c) production undertaken or value added that does not confer originating status to a non-originating material in the territory of a non-Participating Party shall not contribute towards the originating content of a good or material for the purpose of determining the origin of a good or material finished in the territory of another non- Participating Party.
7. Minimal Operations and Processes
Where a claim for origin is based solely on regional value content, the operations or processes listed below, undertaken by themselves or in combination with each other, are considered to be minimal and shall not be taken into account in determining whether or not a good is originating:
(a) ensuring preservation of goods in good condition for the purposes of transport or storage;
(b) facilitating shipment or transportation;
(c) packaging (5) or presenting goods for transportation or sale;
(d) simple processes, consisting of sifting, classifying, washing, cutting, slitting, bending, coiling and uncoiling and other similar operations;
(e) affixing of marks, labels or other like distinguishing signs on products or their packaging; and
(f) mere dilution with water or another substance that does not materially alter the characteristics of the goods.
8. De Minimis
1. A good that does not satisfy a change in tariff classification requirement pursuant to Annex 3B (ProductSpecific Rules) will nonetheless be an originating good if:
(a) (i) for a good, other than that provided for in Chapters 50 to 63 of the HS Code, the value of all non-originating materials used in the production of the good that did not undergo the required change in tariff classification does not exceed 10 per cent of the FOB value of the good;
(ii) for a good provided for in Chapters 50 to 63 of the HS Code, the weight of all non-originating materials used in its production that did not undergo the required change in tariff classification does not exceed 10 per cent of the total weight of the good, or the value of all non-originating materials used in the production of the good that did not undergo the required change in_ tariff classification does not exceed 10 per cent of the FOB value of the good; and
(b) the good meets all other applicable criteria of this Chapter.
2. The value of such materials shall, however, be included in the value of non-originating materials for any applicable regional value content requirement.
9. Accessories, Spare Parts, Tools and Instructional or other Information Materials
1. For the purposes of determining the origin of a good, accessories, spare parts, tools and instructional or other information materials presented with the good shall be considered part of that good and shall be disregarded in determining whether all the non-originating materials used in the production of the originating good have undergone the applicable change in tariff classification, provided that:
(a) the accessories, spare parts, tools and instructional or other information materials presented with the good are not invoiced separately from the originating good; and
(b) the quantities and value of the accessories, spare parts, tools and instructional or other information materials presented with the good are customary for that good.
2. Notwithstanding Paragraph 1, if the good is subject to a regional value content requirement, the value of the accessories, spare parts, tools and instructional or other information materials presented with the good 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.
3. Paragraphs 1 and 2 do not apply where accessories, spare parts, tools and instructional or other information materials presented with the good have been added solely for the purpose of artificially raising the regional value content of that good, provided it is proven subsequently by the importing Party that they are not sold therewith.
10. Identical and Interchangeable Materials
The determination of whether identical and interchangeable materials are originating materials shall be made either by physical segregation of each of the materials or by the use of Generally Accepted Accounting Principles of stock control applicable, or inventory management practice, in the exporting Party.
11. Treatment of Packing Materials and Containers
1. Packing materials and containers for transportation and shipment of a good shall not be taken into account in determining the origin of any good.
2. Packing materials and containers in which a good is packaged for retail sale, when classified together with that good, shall not be taken into account in determining whether all of the non-originating materials used in the production of the good have met the applicable change in tariff classification requirements for the good.
3. If a good is subject to a regional value content requirement, the value of the packing materials and containers in which the good is packaged for retail sale 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.
12. Indirect Materials
An indirect material shall be treated as an originating material without regard to where it is produced and its value shall be the cost registered in the accounting records of the producer of the good.
13. Recording of Costs
For the purposes of this Chapter, all costs shall be recorded and maintained in accordance with the Generally Accepted Accounting Principles applicable in the Party in which the goods are produced.
14. Direct Consignment, Transit and Transshipment
An originating good shall retain its originating status as determined under Article 2 (Originating Goods) if the following conditions have been met:
(a) the good has been transported to the importing Party without passing through any non-Party; or
(b) the good has transited through one or more non- Parties, provided that:
(i) the good has not undergone subsequent production or any other operation outside the territories of the Parties other than unloading, reloading, storing, or any other operations necessary to preserve them in good condition or to transport them to the importing Party; and
(ii) the good has not entered into commerce or free circulation in the non-Party.
15. Proof of Origin
A claim that goods are eligible for preferential tariff treatment shall be supported by a Proof of Origin in accordance with Annex 3A (Annex on Operational Certification Procedures).
16. Denial of Preferential Tariff Treatment
The Customs Authority of the importing Party may deny a claim for preferential tariff treatment when:
(a) the good does not qualify as an originating good; or
(b) the importer, exporter or producer fails to comply with any of the relevant requirements of this Chapter.
17. Review and Appeal
The importing Party shall grant the right of appeal in matters relating to the eligibility for preferential tariff treatment to producers, exporters or importers of goods traded or to be traded between the Parties, in accordance with its laws, regulations and administrative practices.
18. Sub-Committee on Rules of Origin
1. For the purpose of the effective and uniform implementation of this Chapter, the Parties hereby establish a Sub-Committee on Rules of Origin (the "ROO Sub- Committee"). The functions of the ROO Sub-Committee shall include:
(a) monitoring of the implementation and administration of this Chapter;
(b) discussion of any issue that may arise in the course of implementation, including any matters that may have been referred to the ROO Sub- Committee by the Committee on Trade in Goods established pursuant to Article 19 (Committee on Trade in Goods) of Chapter 2 (Trade in Goods) or the FTA Joint Committee;
(c) discussion of any proposed modifications of the rules of origin under this Chapter; and
(d) consultations on issues relating to rules of origin and administrative co-operation.
2. The ROO Sub-Committee shall consist of representatives of the Parties. It shall meet from time to time as mutually determined by the Parties.
19. Consultations, Review and Modification
1. The Parties shall consult regularly to ensure that this Chapter is administered effectively, uniformly and consistently in order to achieve the spirit and objectives of this Agreement.
2. The FTA Joint Committee, upon recommendation of the Committee on Trade in Goods and the ROO Sub-Committee, may adopt revisions to the:
(a) List of Data Requirements for inclusion in the Application for a Certificate of Origin and the Certificate of Origin, as set out in Appendix 3A.1 (List of Data Requirements); and
(b) Minimum Data Requirements for Declaration of Origin, as set out in Appendix 3A.2 (Minimum Data Requirements - Declaration of Origin).
3. The List of Data Requirements and the Minimum Data Requirements for Declaration of Origin, and any subsequent revisions, adopted in accordance with Paragraph 2 shall be promptly published and shall come into effect on the date determined by the Parties through the FTA Joint Committee and on the basis of a report from the ROO Sub-Committee, through the Committee on Trade in Goods.
4. The FTA Joint Committee, upon recommendation of the Committee on Trade in Goods and the ROO Sub-Committee, shall adopt the transposition of Annex 3B (Product-Specific Rules) that is in the nomenclature of the revised HS Code following periodic amendments to the HS Code. Such transposition shall be carried out without impairing the existing commitments and shall be completed in a timely manner. The Parties shall promptly publish the transposition of Annex 3B (Product-Specific Rules) in the nomenclature of the revised HS Code.
5. This Chapter may be reviewed and modified in accordance with Article 6 (Amendments) of Chapter 21 (Final Provisions) as and when necessary, upon request of a Party, and subject to the agreement of the Parties, and may be open to such reviews and modifications as may be agreed upon by the FTA Joint Committee.
20. Electronic System for Origin Information Exchange
The Parties may develop an electronic system for origin information exchange to ensure the effective and efficient implementation of this Chapter in a manner jointly determined by the relevant Parties.
Chapter 4. CUSTOMS PROCEDURES AND TRADE FACILITATION
1. Objectives
The objectives of this Chapter are to:
(a) ensure predictability, consistency and transparency in the application of customs laws and regulations of the Parties;
(b) promote efficient administration of customs procedures, and the expeditious clearance of goods;
(c) simplify customs procedures of the Parties and harmonise them to the extent possible with relevant international standards;
(d) promote co-operation between the customs authorities of the Parties; and
(e) facilitate trade between the Parties, including through a strengthened environment for global and regional supply chains.
2. Scope
This Chapter shall apply to customs procedures applied to:
(a) goods traded among the Parties; and
(b) means of transport which enter or leave the customs territories of the Parties
3. Definitions
For the purposes of this Chapter:
(a) customs authority means any authority that is responsible under the law of each Party for the administration and enforcement of its customs laws and regulations;
(b) customs procedures means the measures applied by the customs authority of a Party to goods and to the means of transport that are subject to customs laws and regulations;
(c) customs laws and regulations means the statutory and regulatory provisions relating to the importation, exportation, movement, or storage of goods, the administration and enforcement of which are specifically charged to a customs authority, and any regulations made by a customs authority, under its statutory powers;
(d) Customs Valuation Agreement means the Agreement on Implementation of Article VI! of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;
(e) express consignment means all goods imported by or through an enterprise that operates a consignment service for the expeditious cross- border movement of goods and assumes liability to the customs authority for those goods; and
(f) means of transport means various types of vessels, vehicles, and aircrafts which enter or leave the customs territory of a Party carrying natural persons, goods or articles.
4. Customs Procedures
1. Each Party shall ensure that its customs procedures and practices are predictable, consistent, transparent, and facilitate trade, including through the expeditious clearance of goods.
2. The customs procedures of each Party shall, where possible and to the extent permitted by its customs laws and regulations, conform with the standards and recommended practices of the World Customs Organization and the World Trade Organization.
3. The customs authority of each Party shall review its customs procedures with a view to simplifying such procedures to facilitate trade.
5. Customs Co-operation
1. To the extent permitted by its customs laws and regulations, the customs authority of each Party may, as deemed appropriate, assist the customs authority of another Party, in relation to:
(a) the implementation and operation of this Chapter;
(b) developing and implementing customs best practice and risk management techniques;
(c) simplifying and harmonising customs procedures;
(d) advancing technical skills and the use of technology;
(e) application of the Customs Valuation Agreement; and
(f} such other customs issues as the Parties may mutually determine.
2. Subject to available resources, the customs authority of the Parties may, as deemed appropriate, explore and undertake co-operation projects, including:
(a) capacity building programmes to enhance the capability of customs personnel of the Parties; and
(b) technical assistance programmes to facilitate the Partiesâ development in customs reform and modernisation, including implementation of the single windows outlined in Article 13 (Single Window).
6. Consistency
1. Each Party shall ensure consistent implementation and application of its customs laws and regulations throughout its customs territory. For greater certainty, this does not prevent the exercise of discretion granted to the customs authority of a Party where such discretion is granted by that Party's customs laws and regulations, provided that the discretion is exercised consistently throughout that Party's customs territory and in accordance with its customs laws and regulations.
2. In fulfilling the obligation in Paragraph 1, each Party shall endeavour to adopt or maintain administrative measures to ensure consistent implementation and application of its customs laws and regulations throughout its customs territory, preferably by establishing an administrative mechanism which ensures consistent application of the customs laws and regulations of that Party among its regional customs offices.
3. If a Party fails to comply with Paragraphs 1 and 2, another Party may consult with that Party on the matter relating thereto in accordance with Article 24 (Consultation).