Agreement between the Government of the United States of America and the
Government of the Sultanate of Oman on the Establishment of
a Free Trade Area

The Government of the United States of America (hereinafter “the United States”) and the Government of the Sultanate of Oman (hereinafter “Oman”) (together referred to as “Parties”, and individually as “Party”),

Recognizing the strong bonds of friendship between them and wishing to strengthen their economic relations;

Recognizing that open and competitive markets are key drivers of economic efficiency, innovation, and growth;

Desiring to create new employment opportunities and raise the standard of living for their citizens by liberalizing and expanding trade between them;

Desiring to enhance the competitiveness of their enterprises in global markets;

Desiring to establish clear and mutually advantageous rules governing their trade;

Building on their rights and obligations under the WTO Agreement and other agreements to which both Parties are party;

Affirming their commitment to transparency and their desire to eliminate bribery and corruption in international trade and investment;

Desiring to foster creativity and innovation, improve technology, and enhance the protection and enforcement of intellectual property rights;

Desiring to protect, enhance, and enforce basic workers’ rights and to strengthen the development and enforcement of labor laws and policies;

Desiring to strengthen the development and enforcement of environmental laws and policies, promote sustainable development, and implement this Agreement in a manner consistent with the objectives of environmental protection and conservation;

Affirming their support for the participation of the Parties in the establishment of an expanded free trade area in the Middle East that would contribute to economic liberalization and development in the region;

Have agreed as follows:

CHAPTER ONE
INITIAL PROVISIONS AND DEFINITIONS

Section A: Initial Provisions

ARTICLE 1.1: ESTABLISHMENT OF A FREE TRADE AREA

Consistent with Article XXIV of GATT 1994 and Article V of GATS, the Parties hereby establish a free trade area in accordance with the provisions of this Agreement.

ARTICLE 1.2: RELATION TO OTHER AGREEMENTS

1.  Each Party affirms its existing rights and obligations with respect to each other under existing bilateral and multilateral agreements to which both Parties are party, including the WTO Agreement.

2.  This Agreement shall not be construed to derogate from any legal obligation between the Parties that entitles goods or services, or suppliers of goods or services, to treatment more favorable than that accorded by this Agreement.
 

Section B: General Definitions

ARTICLE 1.3: DEFINITIONS

For purposes of this Agreement, unless otherwise specified:

Agreement on Textiles and Clothing means the Agreement on Textiles and Clothing, contained in Annex 1A to the WTO Agreement;

central level of government means:

(a) for Oman, the government of Oman; and

(b) for the United States, the federal level of government;

covered investment means, with respect to a Party, an investment, as defined in Article 10.27 (Definitions), in its territory of an investor of the other Party in existence as of the date of entry into force of this Agreement or established, acquired, or expanded thereafter;

customs duties includes any customs or import duty and a charge of any kind imposed in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but does not include any:

(a) charge equivalent to an internal tax imposed consistently with Article III:2 of the GATT 1994, in respect of like, directly competitive, or substitutable goods of the Party, or in respect of goods from which the imported good has been manufactured or produced in whole or in part;

(b) antidumping or countervailing duty that is applied pursuant to a Party’s domestic law; and

(c) fee or other charge in connection with importation commensurate with the cost of services rendered;

Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

days means calendar days as reckoned according to the Gregorian calendar;

enterprise means any entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association, or similar organization;

enterprise of a Party means an enterprise constituted or organized under a Party’s law;

existing means in effect on the date of entry into force of this Agreement;

GATS means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;

GATT 1994 means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

goods of a Party means domestic products as these are understood in GATT 1994 or such goods as the Parties may agree, and includes originating goods of that Party;

government procurement means the process by which a government obtains the use of or acquires goods or services, or any combination thereof, for governmental purposes and not with a view to commercial sale or resale, or use in the production or supply of goods or services for commercial sale or resale;

Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, and Chapter Notes, as adopted and implemented by the Parties in their respective tariff laws;

measure includes any law, regulation, procedure, order, requirement, or practice;

national means:

(a) with respect to Oman, any person who is a citizen within the meaning of its domestic laws governing nationality; and

(b) with respect to the United States, “national of the United States” as defined in Title III of the Immigration and Nationality Act;

originating good means a good qualifying under the rules of origin set out in Chapter Four (Rules of Origin) or Chapter Three (Textiles and Apparel);

person means a natural person or an enterprise;

person of a Party means a national or an enterprise of a Party;

preferential tariff treatment means the duty rate applicable under this Agreement to an originating good;

regional level of government means:

(a) for Oman, “regional level of government” is not applicable; and

(b) for the United States, a state of the United States, the District of Columbia, or Puerto Rico;

Safeguards Agreement means the Agreement on Safeguards, contained in Annex 1A to the WTO Agreement;

SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measures, contained in Annex 1A to the WTO Agreement;

state enterprise means an enterprise owned, or controlled through ownership interests, by a Party;

TBT Agreement means the Agreement on Technical Barriers to Trade, contained in Annex 1A to the WTO Agreement;

territory means:

(a) with respect to Oman, all the lands of Oman within its geographical boundaries, the internal waters, maritime areas including the territorial sea, and airspace under its sovereignty, and the exclusive economic zone and the continental shelf where Oman exercises sovereign rights and jurisdiction in accordance with its domestic law and international law, including the United Nations Convention on the Law of the Sea;

(b) with respect to the United States,

(i) the customs territory of the United States, which includes the 50 states, the District of Columbia, and Puerto Rico;

(ii) the foreign trade zones located in the United States and Puerto Rico; and

(iii) any areas beyond the territorial seas of the United States within which, in accordance with international law and its domestic law,
the United States may exercise rights with respect to the seabed and subsoil and their natural resources;

TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement;¹

WTO means the World Trade Organization; and

WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on April 15, 1994.
 

CHAPTER TWO
NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

ARTICLE 2.1: SCOPE AND COVERAGE

Except as otherwise provided, this Chapter applies to trade in goods of a Party.

Section A: National Treatment

ARTICLE 2.2: NATIONAL TREATMENT

1.  Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994, including its interpretive notes, and to this end Article III of GATT 1994 and its interpretative notes are incorporated into and made a part of this Agreement, mutatis mutandis.

2.  The treatment to be accorded by a Party under paragraph 1 means, with respect to a regional level of government, treatment no less favorable than the most favorable treatment that regional level government accords to any like, directly competitive, or substitutable goods, as the case may be, of the Party of which it forms a part.

3.  Paragraphs 1 and 2 shall not apply to the measures set out in Annex 2-A.

Section B: Tariff Elimination

ARTICLE 2.3: TARIFF ELIMINATION

1.  Except as otherwise provided in this Agreement, neither Party may increase any existing customs duty, or adopt any new customs duty, on an originating good.

2.  Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods, in accordance with its Schedule to Annex 2-B.

3.  On the request of either Party, the Parties shall consult to consider accelerating the elimination of customs duties set out in their Schedules to Annex 2-B. An agreement by the Parties to accelerate the elimination of a customs duty on a good shall supercede any duty rate or staging category determined pursuant to their Schedules to Annex 2-B for that good when approved by each Party in accordance with its applicable legal procedures.

4.  For greater certainty, a Party may:

(a) raise a customs duty back to the level established in its Schedule to Annex 2-B following a unilateral reduction; or

(b) maintain or increase a customs duty as authorized by the Dispute Settlement Body of the WTO.

Section C: Special Regimes

ARTICLE 2.4: WAIVER OF CUSTOMS DUTIES

1.  Neither Party may adopt any new waiver of customs duties, or expand with respect to existing recipients or extend to any new recipient the application of an existing waiver of customs duties, where the waiver is conditioned, explicitly or implicitly, on the fulfillment of a performance requirement.

2.  Neither Party may, explicitly or implicitly, condition on the fulfillment of a performance requirement the continuation of any existing waiver of customs duties.

ARTICLE 2.5: TEMPORARY ADMISSION OF GOODS¹

1.  Each Party shall grant duty-free temporary admission for:

(a) professional equipment, including equipment for the press or television, software, and broadcasting and cinematographic equipment, necessary for carrying out the business activity, trade, or profession of a person who qualifies for temporary entry pursuant to the laws of the importing Party;

(b) goods intended for display or demonstration;

(c) commercial samples and advertising films and recordings; and

(d) goods imported for sports purposes,

regardless of their origin.

2.  Each Party shall, at the request of the person concerned and for reasons its customs authority considers valid, extend the time limit for temporary admission beyond the period initially fixed.

3.  Neither Party may condition the duty-free temporary admission of a good referred to in paragraph 1, other than to require that the good:

(a) be used solely by or under the personal supervision of a national or resident of the other Party in the exercise of the business activity, trade, profession, or sport of that person;

(b) not be sold or leased while in its territory;

(c) be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the good;

(d) be capable of identification when exported;

(e) be exported on the departure of the person referenced in subparagraph (a), or within such other period related to the purpose of the temporary admission as the Party may establish;

(f) be imported in no greater quantity than is reasonable for its intended use; and

(g) be otherwise admissible into the Party’s territory under its laws.

4.  If any condition that a Party imposes under paragraph 3 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on the good.

5.  Each Party, through its customs authority, shall adopt and maintain procedures providing for the expeditious release of goods admitted under this Article. To the extent possible, these procedures shall provide that when such goods accompany a national or resident of the other Party who is seeking temporary entry, the good shall be released simultaneously with the entry of that national or resident.

6.  Each Party shall permit a good temporarily admitted under this Article to be exported through a customs port other than that through which it was admitted.

7.  Each Party, through its customs authority, shall relieve the importer or other person responsible for a good admitted under this Article from any liability for failure to export the good on destruction of the good in the presence of the Party’s customs authority or presentation of satisfactory proof to its customs authority, in accordance with its law, that the good has been destroyed within the original period fixed for temporary admission or any lawful extension.

8.  Subject to Chapters Ten (Investment) and Eleven (Cross-Border Trade in Services):

(a) each Party shall allow a container used in international traffic that enters its territory from the territory of the other Party to exit its territory on any route that is reasonably related to the economic and prompt departure of such container;

(b) neither Party may require any security or impose any penalty or charge solely because of any difference between the port of entry and the port of departure of a container;

(c) neither Party may condition the release of any obligation, including any security, that it imposes in respect of the entry of a container into its territory on its exit through any particular port of departure; and

(d) neither Party may require that the carrier bringing a container from the territory of the other Party into its territory be the same carrier that takes such container to the territory of the other Party.

ARTICLE 2.6: GOODS RE-ENTERED AFTER REPAIR OR ALTERATION

1.  Neither Party may apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been exported from its territory to the territory of the other Party for repair or alteration, regardless of whether such repair or alteration could be performed in its territory.

2.  Neither Party may apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair or alteration.

3.  For purposes of this Article, repair or alteration means restoration, renovation, cleaning, resterilizing, or other operation or process that does not:

(a) destroy a good’s essential characteristics or create a new or commercially different good; or

(b) transform an unfinished good into a finished good.

ARTICLE 2.7: DUTY-FREE ENTRY OF COMMERCIAL SAMPLES OF NEGLIGIBLE VALUE AND PRINTED ADVERTISING MATERIALS

Each Party shall grant duty-free entry to commercial samples of negligible value, and to printed advertising materials, imported from the territory of the other Party, regardless of their origin, but may require that:

(a) such samples be imported solely for the solicitation of orders for goods, or the solicitation of orders for services provided from the territory, of the other Party or a non-Party; or

(b) such advertising materials be imported in packets that each contain no more than one copy of each such material and that neither such materials nor packets form part of a larger consignment.

Section D: Non-Tariff Measures

ARTICLE 2.8: IMPORT AND EXPORT RESTRICTIONS

1.  Except as otherwise provided in this Agreement, neither Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of GATT 1994 and its interpretive notes, and to this end Article XI of GATT 1994 and its interpretive notes are incorporated into and made a part of this Agreement, mutatis mutandis.²

2.  The Parties understand that GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, a Party from adopting or maintaining:

(a) export and import price requirements, except as permitted in enforcement of countervailing and antidumping duty orders and undertakings;

(b) measures conditioning the grant of an import license on the fulfillment of a performance requirement; or

(c) voluntary export restraints inconsistent with Article VI of GATT 1994, as implemented under Article 18 of the WTO Agreement on Subsidies and Countervailing Measures and Article 8.1 of the WTO Agreement on Implementation of Article VI of GATT 1994.

3.  In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, no provision of this Agreement shall be construed to prevent the Party from:

(a) limiting or prohibiting the importation of the good of the non-Party from the territory of the other Party; or

(b) requiring as a condition for exporting the good of the Party to the territory of the other Party, that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.

4.  In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on the request of either Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing, and distribution arrangements in the other Party.

5.  Paragraphs 1 through 4 shall not apply to the measures set out in Annex 2-A.

ARTICLE 2.9: ADMINISTRATIVE FEES AND FORMALITIES

1.  Each Party shall ensure, in accordance with Article VIII:1 of GATT 1994 and its interpretive notes, that all fees and charges of whatever character (other than import and export duties, charges equivalent to an internal tax or other internal charges applied consistently with Article III:2 of GATT 1994, and antidumping and countervailing duties applied pursuant to a Party’s law) imposed on, or in connection with, importation or exportation are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes.

2.  Neither Party may require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party.

3.  Each Party shall make available on the Internet a current list of the fees and charges it imposes in connection with importation or exportation.

4.  The United States shall eliminate its merchandise processing fee on originating goods.

ARTICLE 2.10: EXPORT TAXES

Neither Party may adopt or maintain any tax, duty, or other charge on the export of any good to the territory of the other Party, unless the tax, duty, or charge is also adopted or maintained on the good when destined for domestic consumption.

Section E: Agriculture

ARTICLE 2.11: AGRICULTURAL EXPORT SUBSIDIES

1.  The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods and shall work together toward an agreement in the WTO to eliminate those subsidies and prevent their reintroduction in any form.

2.  Except as provided in paragraph 3, neither Party may introduce or maintain any export subsidy on any agricultural good destined for the territory of the other Party.

3.  Where an exporting Party considers that a non-Party is exporting an agricultural good to the territory of the other Party with the benefit of export subsidies, the importing Party shall, on written request of the exporting Party, consult with the exporting Party with a view to agreeing on specific measures that the importing Party may adopt to counter the effect of such subsidized imports. If the importing Party adopts the agreed-on measures, the exporting Party shall refrain from applying any export subsidy to exports of such good to the territory of the importing Party.³

Section F: Definitions

ARTICLE 2.12: DEFINITIONS

For purposes of this Chapter:

advertising films and recordings means recorded visual media or audio materials, consisting essentially of images and/or sound, showing the nature or operation of goods or services offered for sale or lease by a person established or resident in the territory of a Party, provided that such materials are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public;

agricultural goods means those goods referred to in Article 2 of the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement;

commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than one U.S. dollar, or the equivalent amount in Omani currency, or so marked, torn, perforated, or otherwise treated that they are unsuitable for sale or use except as commercial samples;

consular transactions means requirements that goods of a Party intended for export to the territory of the other Party must first be submitted to the supervision of the consul of the importing Party in the territory of the exporting Party for the purpose of obtaining consular invoices or consular visas for commercial invoices, certificates of origin, manifests, shippers’ export declarations, or any other customs documentation required on, or in connection with, importation;

consumed means

(a) actually consumed; or

(b) further processed or manufactured so as to result in a substantial change in value, form, or use of the good or in the production of another good;

duty-free means free of customs duty;

export subsidies means “export subsidies” as defined in Article 1(e) of the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement, including any amendment of that article;

goods imported for sports purposes means sports requisites for use in sports contests, demonstrations, or training in the territory of the importing Party;

goods intended for display or demonstration includes their component parts, ancillary apparatus, and accessories;

import license means a license issued by a Party pursuant to an administrative procedure requiring the submission of an application or other documentation (other than that generally required for customs clearance purposes) to the relevant administrative body as a prior condition for importation into the territory of the Party;

performance requirement means a requirement that:

(a) a given level or percentage of goods or services be exported;

(b) domestic goods or services of the Party granting a waiver of customs duties or an import license be substituted for imported goods or services;

(c) a person benefiting from a waiver of customs duties or an import license purchase other goods or services in the territory of the Party granting the waiver of customs duties or the import license, or accord a preference to domestically produced goods;

(d) a person benefiting from a waiver of customs duties or an import license produce goods or supply services in the territory of the Party granting the waiver of customs duties or the import license, with a given level or percentage of domestic content; or

(e) relates in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows;

but does not include a requirement that an imported good be:

(f) subsequently exported;

(g) used as a material in the production of another good that is subsequently exported;

(h) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported; or

(i) substituted by an identical or similar good that is subsequently exported; and

printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials, and posters, that are used to promote, publicize, or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge.

ANNEX 2-A
NATIONAL TREATMENT AND IMPORT AND EXPORT RESTRICTIONS

Section A: Measures of the United States

Paragraphs 1 and 2 of Article 2.2 and paragraphs 1 through 4 of Article 2.8 shall not apply to:

(a) controls on the export of logs of all species;

(b)  

(i) measures under existing provisions of the Merchant Marine Act of 1920, 46 App. U.S.C. § 883; the Passenger Vessel Act, 46 App. U.S.C. §§ 289, 292, and 316; and 46 U.S.C. § 12108, to the extent that such measures were mandatory legislation at the time the United States acceded to the General Agreement on Tariffs and Trade 1947 (“GATT 1947”) and have not been amended so as to decrease their conformity with Part II of GATT 1947;

(ii) the continuation or prompt renewal of a non-conforming provision of any statute referred to in clause (i); and

(iii) the amendment to a non-conforming provision of any statute referred to in clause (i) to the extent that the amendment does not decrease the conformity of the provision with Articles 2.2 and 2.8; and

(c) actions authorized by the Dispute Settlement Body of the WTO.

Section B: Measures of Oman

Paragraphs 1 and 2 of Article 2.2 and paragraphs 1 through 4 of Article 2.8 shall not apply to actions authorized by the Dispute Settlement Body of the WTO.

ANNEX 2-B
TARIFF ELIMINATION

1.  Except as otherwise provided in a Party’s Schedule attached to this Annex, the following staging categories apply to the elimination of customs duties by each Party pursuant to Article 2.3:

(a) duties on goods provided for in the items in staging category A in a Party’s Schedule shall be eliminated entirely and such goods shall be duty-free on the date this Agreement enters into force;

(b) duties on goods provided for in the items in staging category B in a Party’s Schedule shall be removed in five equal annual stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year five;

(c) duties on goods provided for in the items in staging category C in a Party’s Schedule shall be removed in ten equal annual stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year ten;

(d) goods provided for in the items in staging category D in a Party’s Schedule shall continue to receive duty-free treatment; and

(e) duties on goods provided for in the items in staging category E shall remain at base rates during years one through nine, and duties shall be removed, and such goods shall be duty-free, effective January 1 of year ten.

2.  The base rate of duty and staging category for determining the interim rate of customs duty at each stage of reduction for an item are indicated for the item in each Party’s Schedule attached to this Annex.

3.  Interim staged rates shall be rounded down, at least to the nearest tenth of a percentage point, or, if the rate of duty is expressed in monetary units, at least to the nearest 0.001 of the official monetary unit of the Party.

4.  For purposes of this Annex and a Party’s Schedule, year one means the year the Agreement enters into force as provided in Article 22.5 (Entry into Force and Termination).

5.  For purposes of this Annex and a Party’s Schedule, beginning in year two, each annual stage of tariff reduction shall take effect on January 1 of the relevant year.

CHAPTER THREE
TEXTILES AND APPAREL ARTICLE

ARTICLE 3.1: BILATERAL EMERGENCY ACTIONS

1.  If, as a result of the reduction or elimination of a duty under this Agreement, a textile or apparel good benefiting from preferential tariff treatment under this Agreement is being imported into the territory of a Party in such increased quantities, in absolute terms or relative to the domestic market for that good, and under such conditions as to cause serious damage, or actual threat thereof, to a domestic industry producing a like or directly competitive good, the importing Party may, to the extent and for such time as may be necessary to prevent or remedy such damage and to facilitate adjustment, take emergency action, consisting of an increase in the rate of duty on the good to a level not to exceed the lesser of:

(a) the most-favored-nation (MFN) applied rate of duty in effect at the time the action is taken; and

(b) the MFN applied rate of duty in effect on the date of entry into force of this Agreement.

2.  In determining serious damage, or actual threat thereof, the importing Party:

(a) shall examine the effect of increased imports of the good from the exporting Party on the particular industry, as reflected in changes in such relevant economic variables as output, productivity, utilization of capacity, inventories, market share, exports, wages, employment, domestic prices, profits, and investment, none of which is necessarily decisive; and

(b) shall not consider changes in technology or consumer preference as factors supporting a determination of serious damage or actual threat thereof.

3.  The importing Party may take an emergency action under this Article only following an investigation by its competent authorities.

4.  The importing Party shall deliver to the exporting Party, without delay, written notice of its intent to take emergency action, and, on the request of the exporting Party, shall enter into consultations with that Party regarding the matter.

5.  The following conditions and limitations apply to any emergency action taken under this Article:

(a) no emergency action may be maintained for a period exceeding three years;

(b) no emergency action against a good may be taken or maintained beyond the period ending ten years after duties on that good have been eliminated pursuant to this Agreement;

(c) no emergency action may be taken by an importing Party against the same good of the exporting Party more than once; and

(d) on termination of the emergency action, the importing Party shall accord to the good that was subject to the emergency action the tariff treatment that would have been in effect but for the action.

6.  The Party taking an emergency action under this Article shall provide to the exporting Party mutually agreed trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the emergency action. Such concessions shall be limited to textile and apparel goods, unless the Parties otherwise agree. If the Parties are unable to agree on compensation, the Party against whose good the emergency action is taken may take tariff action having trade effects substantially equivalent to the trade effects of the emergency action taken under this Article. Such tariff action may be taken against any goods of the Party taking the emergency action. The Party taking the tariff action shall apply the tariff action only for the minimum period necessary to achieve the substantially equivalent trade effects. The importing Party’s obligation to provide trade compensation and the exporting Party’s right to take tariff action terminate when the emergency action terminates.

7.  Nothing in this Agreement shall be construed to limit a Party’s right to restrain imports of textile and apparel goods in a manner consistent with the Safeguards Agreement. However, a Party may not take or maintain an emergency action under this Article against a textile or apparel good that is subject, or becomes subject, to a safeguard measure that a Party takes pursuant to the Safeguards Agreement.

ARTICLE 3.2: RULES OF ORIGIN AND RELATED MATTERS

Application of Chapter Four

1.  Except as provided in this Chapter, including its Annex, Chapter Four (Rules of Origin) applies to textile and apparel goods.

2.  The rules of origin set forth in this Agreement shall not apply in determining the country of origin of a textile or apparel good for non-preferential purposes.

Consultations

3.  On the request of either Party, the Parties shall consult to consider whether the rules of origin applicable to particular textile and apparel goods should be revised to address issues of availability of supply of fibers, yarns, or fabrics in the territories of the Parties.

4.  In the consultations referred to in paragraph 3, each Party shall consider all data presented by the other Party that demonstrate substantial production in its territory of a particular fiber, yarn, or fabric. The Parties shall consider that there is substantial production if a Party demonstrates that its domestic producers are capable of supplying commercial quantities of the fiber, yarn, or fabric in a timely manner.

5.  The Parties shall endeavor to conclude consultations within 60 days of a request. If the Parties agree in the consultations to revise a rule of origin, the agreed revision shall supersede any prior rule of origin for such good when approved by the Parties in accordance with Article 22.2 (Amendments).

De Minimis

6.  A textile or apparel good that is not an originating good because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification setout in Annex 3-A shall nonetheless be considered to be an originating good if the total weight of all such fibers or yarns in that component is not more than seven percent of the total weight of that component. Notwithstanding the preceding sentence, a good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed in the territory of a Party.

Treatment of Sets

7.  Notwithstanding the specific rules of origin set out in Annex 3-A, textile and apparel goods classifiable under General Rule of Interpretation 3 of the Harmonized System as goods put up in sets for retail sale shall not be regarded as originating goods unless each of the goods in the set is an originating good or the total value of the non-originating goods in the set does not exceed 10 percent of the customs value of the set.

Preferential Tariff Treatment for Certain Non-Originating Apparel Goods

8.  Subject to paragraph 9, each Party shall accord preferential tariff treatment to cotton or man-made fiber apparel goods provided for in Chapters 61 or 62 of the Harmonized System that are cut or knit to shape, or both, and sewn or otherwise assembled in the territory of a Party from fabric or yarn produced or obtained outside the territory of a Party, if they meet the applicable conditions for preferential tariff treatment under this Agreement other than the condition that they be originating goods.

9.  The treatment described in paragraph 8 shall be limited to goods imported into the territory of a Party up to an annual total quantity of 50,000,000 square meters equivalent in each of the first ten twelve-month periods after entry into force of this Agreement. To determine the quantity in square meters equivalent that is charged against the annual quantity, the importing Party shall apply the conversion factors listed in the Correlation: U.S. Textile and Apparel Category System with the Harmonized Tariff Schedule of the United States of America (“The Textile Correlation”), 2004, U.S. Department of Commerce, Office of Textiles and Apparel, or successor publication.

10.  At the written request of an exporting Party, an importing Party shall require an importer claiming preferential tariff treatment under paragraph 8 to submit to the importing Party a certificate of eligibility. An importing Party shall not accept such a claim unless the certificate of eligibility is properly completed and signed by an authorized official of the exporting Party and is presented at the time the preferential tariff treatment is claimed.

11.  Where an importing Party has reason to question the accuracy of a claim under paragraph 8, or where an importing Party seeks such information in the course of a verification under Article 3.3, it may require an importer claiming preferential tariff treatment for an apparel good under paragraph 8 to prepare, sign, and submit to its competent authority a declaration supporting such a claim for preferential tariff treatment and to provide all pertinent information concerning the production of the good, including:

(a) a description of the good, quantity, invoice numbers, and bills of lading;

(b) a description of the operations performed in the production of the good in the territory of one or both of the Parties; and

(c) a statement as to any yarn or fabric of a non-Party and the origin of such materials used in the production of the good.

The importing Party may require the importer to retain all documents relied upon to prepare the declaration for a period of five years.

12.  Paragraphs 8 through 11 shall cease to apply beginning on the first day of the11th twelve-month period following the date of entry into force of this Agreement.

ARTICLE 3.3: CUSTOMS COOPERATION FOR TEXTILE AND APPAREL GOODS

The Parties shall cooperate for purposes of:

(a) enforcing or assisting in the enforcement of their measures affecting trade in textile or apparel goods;

(b) ensuring the accuracy of claims of origin;

(c) enforcing or assisting in the enforcement of measures implementing international agreements affecting trade in textile or apparel goods; and

(d) preventing circumvention of international agreements affecting trade in textile or apparel goods.

2.  Oman shall establish and maintain a program to ensure that textile and apparel goods that are imported into or exported from Oman, or that are processed or manipulated in Oman or in a free trade zone or export processing zone in Oman en route to the United States, are marked with the correct country of origin and that the documents accompanying the goods accurately describe the goods. In this program, Oman shall provide for:

(a) immediate referral by Omani officials of suspected violations of either Party’s measures relating to circumvention to the appropriate enforcement authorities;

(b) with respect to enforcement action by Omani officials involving textile or apparel goods destined for the United States, not later than 30 days after the resolution of the matter, issuance by Omani officials to the United States of a written report describing:

(i) each violation of law relating to circumvention, including a failure to maintain or produce records;

(ii) any other act of circumvention;

(iii) the resolution of the matter, including any enforcement action taken and any penalty imposed; and

(iv) the identity of the enterprise found to have engaged in such circumvention.

3.  Oman shall establish and maintain a program to verify that textile and apparel goods that an enterprise claims as originating goods or marks as products of Oman and that are exported to the United States are produced in Oman. In this program, Oman shall include on-site government inspections of such enterprises. These visits should occur without providing prior notification to the enterprise to verify compliance with measures of either Party affecting trade in textile or apparel goods and to verify that production of and capability to produce such goods are consistent with claims regarding the origin of such goods.

4.  On the request of the importing Party, the exporting Party shall conduct a verification for purposes of enabling the importing Party to determine that a claim of origin for a textile or apparel good is accurate. The exporting Party shall conduct such a verification, regardless of whether an importer claims preferential tariff treatment for the good. The exporting Party also may conduct such a verification on its own initiative.

5.  Where the importing Party has a reasonable suspicion that an enterprise of the exporting Party is engaging in unlawful activity relating to trade in textile or apparel goods, the exporting Party shall conduct, on the request of the importing Party, a verification for purposes of enabling the importing Party to determine that the enterprise is complying with applicable customs measures affecting trade in textile or apparel goods, including measures that the exporting Party adopts and maintains pursuant to this Agreement and measures of either Party implementing other international agreements affecting trade in textile or apparel goods, or to determine that a claim of origin regarding textile or apparel goods exported or produced by that enterprise is accurate. For purposes of this paragraph, a reasonable suspicion of unlawful activity means a suspicion based on relevant factual information of the type set forth in Article 5.5 (Cooperation) or factors that indicate:

(a) circumvention by an enterprise of applicable customs measures affecting trade in textile or apparel goods, including measures adopted to implement this Agreement; or

(b) the existence of conduct that would facilitate the violation of measures relating to other international agreements affecting trade in textile orapparel goods or the nullification or impairment of rights or benefits accruing to a Party under such agreements.

6.  The exporting Party, through its competent authorities, shall permit the importing Party, through its competent authorities, to assist in a verification conducted pursuant to paragraph 4 or 5, including by conducting, along with the competent authorities of the exporting Party, visits in the territory of the exporting Party to the premises of an exporter, producer, or any other enterprise involved in the movement of a textile or apparel good from the territory of the exporting Party to the territory of the importing Party. If an exporter, producer, or other enterprise refuses to consent to a visit by the competent authorities of the importing Party, the importing Party may consider that the verification cannot be completed and the determination described in paragraph 4 or 5cannot be made and may take appropriate action as described in paragraph 11.

7.  Oman shall require each enterprise that exports, produces, or is otherwise involved in the movement of textile or apparel goods within the territory of Oman to maintain in Oman records relating to textile and apparel good production or exportation for a period of five years from the date on which such records are created. Oman also shall require each enterprise that produces textile or apparel goods in the territory of Oman to maintain in Oman records relating to its production capabilities in general, the number of persons it employs, and any other records and information sufficient to allow officials of each Party to verify the enterprise’s production and exportation of textile or apparel goods.

8.  Each Party shall provide to the other Party, consistent with its law, production, trade, and transit documents and other information necessary to conduct a verification under paragraph 4 or 5. Each Party shall consider any documents or information exchanged between the Parties in the course of such a verification to be confidential within the meaning of Article 5.6 (Confidentiality). Notwithstanding the previous sentence and Article 5.6 (Confidentiality), a governmental entity of a Party may share information gathered under this Article with other government entities of that Party for a purpose set forth in paragraph 1. Sharing information as described in this paragraph for a purpose set forth in paragraph 1 is deemed not to prejudice the competitive position of persons providing such information for purposes of Article 5.6.3 (Confidentiality).

9.  While a verification is being conducted, the importing Party may, consistent with its law, take appropriate action, which may include suspending the application of preferential tariff treatment to:

(a) the textile or apparel good for which a claim of origin has been made, in the case of a verification under paragraph 4; or

(b) any textile and apparel goods exported or produced by the enterprise subject to a verification under paragraph 5, where the reasonable suspicion of unlawful activity relates to those goods.

10.  The Party conducting a verification under paragraph 4 or 5 shall provide the other Party with a written report on the results of the verification, which shall include all documents and facts supporting any conclusion that the Party reaches.

11. 

(a) If the importing Party is unable to make the determination described in paragraph 4 within 12 months after its request for a verification, or makes a negative determination, it may, consistent with its laws, regulations, and procedures, take appropriate action, including denying preferential tariff treatment to the textile or apparel good subject to the verification, and to similar goods exported or produced by the enterprise that exported or produced the good.

(b) If the importing Party is unable to make one of the determinations described in paragraph 5 within 12 months after its request for a verification, or makes a negative determination, it may, consistent with its laws, regulations, and procedures, take appropriate action, including denying preferential tariff treatment to any textile or apparel goods exported or produced by the enterprise subject to the verification.

12.  Prior to commencing any action under paragraph 11, the importing Party shall notify the other Party. The importing Party may continue to take appropriate action under paragraph 11 until it receives information sufficient to enable it to make the determination described in paragraph 4 or 5, as the case may be. A Party may make public the identity of an enterprise that it has determined to have made an in accurate claim of origin for a textile or apparel good as described in paragraph 4 or to have engaged in unlawful activity relating to trade in textile and apparel goods as described in paragraph 5.

13.  On the request of either Party, the Parties shall enter into consultations to resolve any technical or interpretive difficulties that may arise under this Article or to discuss ways to improve the effectiveness of their cooperative efforts. In addition, either Party may request technical or other assistance from the other Party in implementing this Article. The Party receiving such a request shall make every effort to respond favorably and promptly to it. Each Party shall, at the request of either Party, establish and maintain working level contact points in order to facilitate the effective implementation of this Article.

ARTICLE 3.4: COMMITTEE ON TEXTILE AND APPAREL TRADE MATTERS

The Parties hereby establish a Committee on Textile and Apparel Trade Matters.

The Committee on Textile and Apparel Trade Matters will meet upon the request of either party or the Joint Committee provided for in Article 19.2 (Joint Committee) and may consider any matter arising under this Chapter.

ARTICLE 3.5: DEFINITIONS

For purposes of this Chapter:

claim of origin means a claim that a textile or apparel good is an originating good or a product of a Party;

exporting Party means the Party from whose territory a textile or apparel good is exported;

importing Party means the Party into whose territory a textile or apparel good is imported; and

textile or apparel good means a good listed in the Annex to the Agreement on Textiles and Clothing.

ANNEX 3-A
RULES OF ORIGIN FOR TEXTILE OR APPAREL GOODS
FOR CHAPTERS 42, 50 THROUGH 63, 70, AND 94

1. For goods covered in this Annex, a good is an originating good if:

(i) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in this Annex as a result of production occurring entirely in the territory of one or both of the Parties, or the good otherwise satisfies the applicable requirements of this Chapter where a change in tariff classification for each non-originating material is not required; and

(ii) the good satisfies any other applicable requirements of this Chapter and Chapter Four (Rules of Origin).

2. For purposes of interpreting the rules of origin set out in this Annex:

(a) the specific rule, or specific set of rules, that applies to a particular heading or subheading is set out immediately adjacent to the heading or subheading;

(b) a rule applicable to a subheading shall take precedence over a rule applicable to the heading which is parent to that subheading;

(c) a requirement of a change in tariff classification applies only to non-originating materials;

(d) a good is considered to be “wholly” of a material if the good is made entirely of the material; and

(e) the following definitions apply:

chapter means a chapter of the Harmonized System;

heading means the first four digits in the tariff classification number under the Harmonized System; and

subheading means the first six digits in the tariff classification number under the Harmonized System.

Chapter 42 - Luggage

Chapter 50 - Silk

Chapter 51 - Wool, Fine or Coarse Animal Hair; Horsehair Yarn and Woven Fabric

Chapter 52 - Cotton

Chapter 53 - Other Vegetable Textile Fibers; Paper Yarn and Woven Fabrics of Paper Yarn

Chapter 54 – Man-Made Filaments

Chapter 55 – Man-Made Staple Fibers

Chapter 56 - Wadding, Felt and Nonwovens; Special Yarns; Twine, Cordage, Ropes and Cables and Articles Thereof

Chapter 57 - Carpets and Other Textile Floor Coverings

Chapter 58 - Special Woven Fabrics; Tufted Textile Fabrics; Lace; Tapestries; Trimmings; Embroidery

Chapter 59 - Impregnated, Coated, Covered or Laminated Textile Fabrics; Textile Articles of a Kind Suitable For Industrial Use

Chapter 60 - Knitted or Crocheted Fabrics

Chapter 61 - Articles of Apparel and Clothing Accessories, Knitted or Crocheted

Chapter 62 Articles of Apparel and Clothing Accessories, Not Knitted or Crocheted