(c) ensure the proper functioning of this Section.
2. The Sub-Committee on Trade in Wines and Spirits may make recommendations and prepare decisions for the Joint Council which may be adopted as provided for in this Section.
Section D. Non-Tariff Market Access Commitments for other Sectors
Article 2.30. Pharmaceuticals
Specific non-tariff market access commitments of each Party relating to pharmaceutical products and medical devices are set out in Annex 2-F (Pharmaceuticals).
Article 2.31. Motor Vehicles
Specific non-market access commitments of each Party relating to motor vehicles and equipment, and parts thereof, are set out in Annex 2-G (Motor Vehicles and Equipment and Parts Thereof).
Chapter 3. RULES OF ORIGIN AND ORIGIN PROCEDURES
Section A. Rules of Origin
Article 3.1. Definitions
1. For the purposes of this Chapter:
(a) "chapters", "headings" and "subheadings" means the chapters (two-digit codes), the headings (four-digit codes) and sub-headings (six-digit codes) used in the nomenclature of the Harmonized System;
(b) "competent governmental authority" means in the case of Mexico, the designated authority within the Ministry of Economy (Secretaría de Economía), or its successor;
(c) "consignment" means goods which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice;
(d) "customs authorities" means the governmental authority that is responsible under the law of a Party for the administration, application and enforcement of customs laws and regulations;
(e) "exporter" means a person located in the territory of a Party who exports from the territory of that Party and makes out a statement on origin;
(f) "importer" means a person located in the territory of a Party who imports a good and claims preferential tariff treatment;
(g) "material" means any ingredient, raw material, component, part, or the like, used in the production of the product;
(h) "non-originating materials" means materials which do not qualify as originating under this Chapter;
(i) "originating materials" or "originating products" means materials or products which qualify as originating under this Chapter;
(j) "product" means the product being manufactured, even if it is intended as a material for later use in the production of another product; and
(k) "production" means any kind of working, processing or specific operations, including assembly.
Article 3.2. General Requirements
1. For the purposes of applying the preferential tariff treatment by a Party to the originating good of the other Party in accordance with this Agreement, the following products shall be considered as originating in the Party where the last production took place:
(a) products wholly obtained in that Party within the meaning of Article 3.4;
(b) products produced in that Party exclusively from originating materials; or
(c) products produced in that Party incorporating non-originating materials, provided they fulfil the conditions set out in Annex 3-A (Product Specific Rules of Origin).
2. A product considered as originating in a Party in accordance with paragraph 1 has to meet all other applicable requirements of this Chapter for granting preferential tariff treatment based on a claim pursuant to Article 3.16.
3. If a product has acquired originating status, the non-originating materials used in the production of that product shall not be considered non-originating when that product is incorporated as a material in another product.
4. For the acquisition of the originating status, the product has to be produced as referred to in subparagraphs 1(a) to 1(c) without interruption in a Party.
Article 3.3. Cumulation of Origin
1. A product originating in a Party shall be considered as an originating product of the other Party if it is used as a material in the production of another product in that other Party (14).
2. Paragraph 1 does not apply if:
(a) the production of a product does not go beyond the operations referred to in Article 3.6; and
(b) the object of this production, as demonstrated on the basis of a preponderance of evidence, is to circumvent financial or tax law of the Parties.
Article 3.4. Wholly Obtained Products
1. The following products shall be considered as wholly obtained in a Party:
(a) mineral products extracted from its soil or from its seabed;
(b) plants and vegetable products grown or harvested there;
(c) live animals born and raised there;
(d) products from live animals raised there;
(e) products obtained from slaughtered animals born and raised there;
(f) products obtained by hunting or fishing conducted there;
(g) products obtained from aquaculture there, if aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants are born or raised from seed stock such as eggs, roes, fry, fingerlings or larvae, by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding or protection from predators;
(h) products of sea fishing and other products taken from the sea outside any territorial sea by a vessel of a Party;
(i) products produced on board of a factory ship of a Party exclusively from products referred to in subparagraph (h);
(j) used articles collected there fit only for the recovery of raw materials, including those raw materials;
(k) waste and scrap resulting from production operations conducted there;
(l) products extracted from the seabed or subsoil thereof outside the territorial sea of a Party, provided that they have rights to exploit or work such seabed or subsoil; or
(m) goods produced there exclusively from the products specified in subparagraphs (a) to (l).
2. The terms "vessel of a Party" and "factory ship of a Party" in subparagraph 1(h) and 1(i) mean a vessel or a factory ship which:
(a) is registered in a Member State or in Mexico;
(b) sails under the flag of a Member State or Mexico; and
(c) meets one of the following conditions:
(i) it is at least 50 % owned by nationals of a Member State or Mexico; or
(ii) it is owned by enterprises which:
(A) have their head office and main place of business in the European Union or Mexico; and
(B) are at least 50 % owned by public entities, nationals or enterprises of a Member State or Mexico.
Article 3.5. Tolerances
1. If a product does not satisfy the requirements set out in Annex 3-A (Product Specific Rules of Origin) due to the use of a non-originating material in the production, that product shall nevertheless be considered as originating in a Party provided that:
(a) the total value of that non-originating material does not exceed 10 % of the ex-works price of the product; and
(b) any of the percentages set out in Annex 3-A (Product Specific Rules of Origin) for the maximum value or weight of non-originating materials are not exceeded through the application of this paragraph.
2. Paragraph 1 does not apply to products classified under Chapters 50 to 63, for which the tolerances set out in Notes 5 and 6 of Section A of Annex 3-A (Product Specific Rules of Origin) apply.
3. Paragraph 1 does not apply to products wholly obtained in a Party within the meaning of Article 3.4. If Annex 3-A (Product Specific Rules of Origin) requires that the materials used in the production of a product are wholly obtained, the tolerance provided for in paragraph 1 applies to the sum of those materials.
Article 3.6. Insufficient Working or Processing Operations
1. Notwithstanding Article 3.2.1(c), a product shall not be considered as originating in a Party if the production of the product in a Party consists only of the following operations performed on non-originating materials:
(a) operations to ensure the preservation of products in good condition during transport and storage such as ventilation, spreading out, drying, freezing, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations;
(b) simple addition of water or dilution that does not materially alter the characteristics of the product or dehydration or denaturation (15) of products;
(c) sifting, screening, sorting, classifying, grading or matching, including the making-up of sets of articles;
(d) sharpening, simple grinding or simple cutting;
(e) peeling, stoning or shelling of fruits, nuts or vegetables;
(f) husking;
(g) removing of grains;
(h) polishing or glazing of cereals and rice, partial or total milling of rice;
(i) operations to colour or flavour sugar or form sugar lumps; partial or total milling of crystal sugar;
(j) changes of packaging, breaking up and assembly of packages;
(k) simple packaging operations;
(l) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;
(m) washing, cleaning, the removal of dust, oxide, oil, paint or other coverings;
(n) simple painting and polishing operations;
(o) simple mixing of products (16) , whether or not of different kinds; (17)
(p) assembly of parts classified as complete or finished article in accordance with General Interpretative Rule 2(a) of the General Rules for the Interpretation of the Harmonized System or other simple assembly of parts;
(q) disassembly of a product into parts or components;
(r) ironing or pressing of textiles and textile articles;
(s) slaughter of animals; or
(t) a combination of two or more operations specified in subparagraphs (a) to (s).
2. For the purposes of paragraph 1, operations shall be considered simple if neither special skills nor machines, apparatus or tools especially produced or installed for those operations are required for their performance and the operations resulting from those skills, machines, apparatus or tools do not confer the essential character or properties of the good.
Article 3.7. Unit of Qualification
1. For the application of this Chapter the unit of qualification shall be the particular product, which is considered as the basic unit when classifying the product under the Harmonized System.
2. For a product composed of a group or assembly of articles, which is classified under the terms of the Harmonized System in a single heading, the whole constitutes the unit of qualification;
3. For a consignment consisting of a number of identical products classified under the same heading, each product shall be considered individually when applying this Chapter.
Article 3.8. Accounting Segregation
1. If originating and non-originating fungible materials are used in the production of a good, the management of materials may be done by using an accounting segregation method without keeping the materials in separate stocks.
2. If originating and non-originating fungible products of Chapters 10, 15, 27, 28, 29, headings 32.01 to 32.07, or headings 39.01 to 39.14 are physically combined or mixed in stocks in a Party before exportation to the other Party, the management of those products may be done by using an accounting segregation method without keeping those products in separate stocks.
3. For the purposes of paragraphs 1 and 2, fungible materials or fungible products are materials or products that are of the same kind and commercial quality, with the same technical and physical characteristics, and which cannot be distinguished one from another, in the case of materials, once they are incorporated into the finished product.
4. The accounting segregation method used for managing stocks shall be applied pursuant to a stock management system which is in accordance with accounting principles generally accepted in the Party.
5. The stock management system must ensure at any time that the number of products obtained, which could be considered as originating products in a Party, is no more than the number that would have been obtained by using a method of physical segregation of the stocks.
6. A manufacturer using a stock management system must keep records of the operation of the system that are necessary for the customs authorities of the Party concerned to verify compliance with the provisions of this Chapter.
7. A Party may require that the use of accounting segregation pursuant to this Article is subject to prior authorisation by the customs authorities of that Party.
8. The customs authorities of a Party may make the granting of the authorisation referred to in paragraph 7 subject to any conditions they deem appropriate and may withdraw the authorisation if the manufacturer makes improper use thereof or fails to fulfil any of the other conditions set out in this Chapter.
Article 3.9. Accessories, Spare Parts and Tools
1. Accessories, spare parts and tools dispatched with a piece of equipment, machine, apparatus or vehicle, which are part of the normal equipment and included in the price thereof or which are not separately invoiced, shall be regarded as one product with the piece of equipment, machine, apparatus or vehicle in question.
2. The accessories, spare parts and tools referred to in paragraph 1 shall be disregarded in determining the origin of the product except for the purposes of calculating the maximum value of non-originating materials if a product is subject to a maximum value of non-originating materials set out in Annex 3-A (Product Specific Rules of Origin).
Article 3.10. Sets
Sets, as defined in General Rule 3 for the Interpretation of the Harmonized System, shall be considered as originating in a Party if all of their components are originating goods. If a set is composed of originating and non-originating goods, the set as a whole shall be considered as originating in a Party, provided the value of the non-originating goods does not exceed 15 % of the ex-works price of the set.
Article 3.11. Neutral Elements
In order to determine whether a product is originating in a Party, it shall not be necessary to determine the origin of the following elements which might be used in its production:
(a) fuel, energy, catalysts and solvents;
(b) equipment, devices and supplies used to test or inspect the product;
(c) gloves, glasses, footwear, clothing, safety equipment and supplies;
(d) machines, tools, dies and moulds;
(e) plant, equipment, spare parts and materials used in the maintenance of equipment and buildings;
(f) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings; and
(g) other materials which are not incorporated nor intended to be incorporated into the final composition of the product.
Article 3.12. Packing Materials, Packaging Materials and Containers
1. Packaging materials and containers in which the product is packaged for retail sale, if classified with the product pursuant to General Rule 5 for the Interpretation of the Harmonized System, shall be disregarded in determining the origin of the product, except for the purposes of calculating the maximum value of non-originating materials if a product is subject to a maximum value of non-originating materials in accordance with Annex 3-A (Product Specific Rules of Origin).
2. Packing materials and containers in which a product is packed for shipment shall be disregarded in determining the origin of the product.
Article 3.13. Returned Goods
If originating goods of a Party exported from that Party to a third country are returned, they shall be considered as non-originating, unless it can be demonstrated to the satisfaction of the customs authorities that the goods returned:
(a) are the same goods as those exported; and
(b) have not undergone any operation other than that necessary to preserve them in good condition while in that third country or while being exported.
Article 3.14. Non-Alteration
1. The goods declared for importation in a Party shall be the same goods as exported from the other Party in which they are considered originating. Those goods shall not have been altered, transformed in any way or subjected to operations other than operations to preserve them in good condition, or other than adding or affixing marks, labels, seals or any other distinguishing signs, to ensure compliance with specific domestic requirements of the importing Party, prior to being declared for import.
2. Storage of goods or consignments may take place in a third country provided they remain under customs supervision in that third country.
3. Without prejudice to the provisions of Section B, the splitting of consignments may take place in a third country if the splitting is carried out by the exporter or under the exporter's responsibility and provided the goods remain under customs supervision in that third country.
4. Compliance with paragraphs 1 to 3 shall be considered as satisfied unless the customs authorities have reasons to believe the contrary. In such a case, the importer, in accordance with the provisions of the law of each Party, shall provide evidence of compliance by appropriate means, including through contractual transport documents such as bills of lading, factual or concrete evidence based on marking, numbering of packages, or any evidence related to the goods themselves.
Article 3.15. Exhibitions
1. Originating products sent for exhibition in a third country and sold after the exhibition for importation in a Party, shall benefit on importation from the provisions of this Agreement provided it is shown to the satisfaction of the customs authorities that:
(a) an exporter has consigned these products from a Party to the third country in which the exhibition is held and has exhibited them there;
(b) the products have been sold or otherwise disposed of by that exporter to a person in a Party;
(c) the products have been consigned during the exhibition or immediately thereafter in the same state in which they were sent for exhibition; and
(d) the products have not, since they were consigned for exhibition, been used for any purpose other than demonstration at the exhibition.
2. A statement on origin must be made out in accordance with the provisions of Section B and submitted to the customs authorities of the importing Party in the normal manner. The name and address of the exhibition must be indicated thereon.
3. Paragraph 1 shall apply to any trade, industrial, agricultural or crafts exhibition, fair or similar public show or display, which is not organised for private purposes in shops or business premises with a view to the sale of those products, and during which the products remain under customs control.
4. The customs authorities of the importing Party may require evidence that the products have remained under customs control in the third country of exhibition, as well as additional documentary evidence of the conditions under which they have been exhibited.
Section B. Origin Procedures
Article 3.16. Claim for Preferential Tariff Treatment and Statement on Origin
1. The importing Party shall, on importation, grant preferential tariff treatment to a product originating in the other Party within the meaning of Article 3.2 based on a claim by the importer for preferential tariff treatment, provided all other applicable requirements of this Chapter are met.
2. The claim for preferential tariff treatment shall be based on a statement on origin issued in accordance with Article 3.18 provided by the exporter on an invoice or any other commercial document.
3. The claim for preferential tariff treatment and the statement on origin referred to in paragraph 2, shall be included in the customs import declaration, in accordance with the laws and regulations of the importing Party.
4. The importer making a claim based on a statement on origin referred to in paragraph 2 shall be in possession thereof and, when required, provide a copy of the statement on origin to the customs authority of the importing Party.
5. Paragraphs 2, 3 and 4 do not apply in the cases specified in Article 3.23.
Article 3.17. Claims for Preferential Treatment after Importation
1. Each Party shall provide that an importer may claim preferential tariff treatment after the importation and obtain refund of any excess duties paid for the imported good if the importer did not make a claim for preferential tariff treatment at the time of importation and the good concerned would have qualified at the time of importation for such claim as originating in accordance with Article 3.2.
2. The importer shall make a claim for preferential tariff treatment no later than one year after the date of importation. As a condition for granting preferential tariff treatment pursuant to paragraph 1, a Party may require that the importer:
(a) provides a copy of the statement of origin for the good concerned;