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Free Trade Agreement Between Preamble The Government of the State of Israel and the Government of the United Mexico Mexican States, RESOLVED to: STRENGHTEN their economic relations and to promote economic development; CREATE an expanded and secure market for the goods produced in their territories; ESTABLISH clear and mutually advantageous rules governing their trade; CREATE a framework for promoting investment and cooperation; FOSTER the development of their trade with due regard to fair conditions of competition; RECALL the mutual interest of the Government of the State of Israel and the Government of the United Mexican States Mexico in reinforcement of the multilateral trading system as reflected in the WTO; ESTABLISH a free trade area between the two countries through the removal of trade barriers; CREATE new employment opportunities and improve working conditions and living standards in their respective territories;
DECLARING their readiness to explore other possibilities for extending their economic relations to other fields not covered by this Agreement; HAVE AGREED as follows: Initial Provisions
Article 1-01: General Definitions For purposes of this Agreement, unless otherwise specified: customs duty: includes any duty and 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:
GATT 1994 means the General Agreement of Tariffs and Trade of 1994, which is part of the WTO Agreement; good means a domestic good as this is understood in GATT 1994 or such a good as the Parties may agree, and includes an originating good of that Party; Harmonized System means the Harmonized Commodity Description and Coding System, and 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, requirement or practice; originating goods means good or material that qualifies as originating under the provisions of Chapter III (Rules of Origin); and WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, including GATT 1994. Article 1-02: Establishment of the Free Trade Area
The Parties to this Agreement, consistent with Article XXIV of GATT 1994, hereby establish a free trade area. Article 1-03: Objectives 1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation treatment and transparency, are to:
2. The Parties shall interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1 and in accordance with applicable rules of international law.
3. Each Party shall administer in a consistent, impartial and reasonable manner all laws, regulations, decisions and rulings affecting matters covered by this Agreement. Article 1-04: Relation to Other Agreements 1. The Parties affirm their rights and obligations with respect to each other in accordance with the WTO Agreement, including GATT 1994, and its successor agreements and other agreements to which both Parties are party.
2. In the event of any inconsistency between this Agreement and such other agreements, this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement. Article 1-05: Extent of Obligations
Each Party shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance by states and municipal governments and authorities within its territory.
Trade in Goods Article 2-01: Scope and Coverage
Article 2-02: 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 interpretative notes, and to this end Article III of GATT 1994 and its interpretative notes, or any equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made part of this Agreement.
2. Paragraph 1 does not apply to the measures set out in Annex 2-02 (Exceptions to Article 2-02 and Article 2-04). Article 2-03: Customs Duties and Tariff Elimination
1. The basic customs duty for the successive reductions set out in this Agreement shall be the lowest most-favored-nation rate effectively applied by each Party in the period starting on July 1 1998 until February 1, 2000. If, after this date, any tariff reduction is applied on a most-favored-nation basis, such reduced customs duties shall replace the basic customs duties as from the date when such reduction is effectively applied. To this end, each Party shall cooperate to inform the other Party of basic customs duties and preferential rates in force.
2. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any customs duty, on an originating good of the other Party referred to in paragraphs 3 or 4.
3. Unless specified in this paragraph or elsewhere, each Party shall eliminate its customs duties on originating goods classified in Chapters 25 to 98 of the Harmonized System in four equal stages, the first one taking place on the entry into force of this Agreement, and the other three on January 1 of each successive year, so that these customs duties are completely eliminated by January 1, 2003:
4. Except as otherwise provided in this Agreement, each Party shall eliminate or reduce duties on originating goods covered by Chapters 1 to 24 of the Harmonized System and by paragraph 3 (d) and listed in Annexes 2-03.4(a) (Concessions made by Israel to Mexico ) and 2-03.4(b) (Concessions made by Mexico to Israel) in accordance with the timetables and the conditions set out in those Annexes.
5. Upon request of either Party, the Parties shall consult to consider accelerating the elimination or reduction of customs duties set out in the Annexes referred to in paragraphs 3 and 4. The Parties shall examine periodically the possibilities of granting each other further concessions in trade in agricultural goods.
6. In accordance with paragraph 5, an agreement between the Parties to accelerate the elimination or the reduction of a customs duty on a good or the inclusion of a good in the Tariff Elimination Schedule or in Annexes 2-03.4(a) (Concessions made by Israel to Mexico) and (b) (Concessions made by Mexico to Israel), shall supersede any duty rate or staging category determined pursuant to their schedules for such good when approved by the Commission.
7. Upon entry into force of this Agreement, the Parties shall eliminate any customs users fee which is applied on originating goods on an ad valorem basis.
8. The preferential rates of duty set out in paragraph 3 shall apply to certain goods classified in Chapters 50 through 63 of the Harmonized System, within the Tariff Preferential Quotas set out in Annex 2-03 (8) (Tariff Preferential Quotas for certain Goods classified in Chapter 50 through 63 of the Harmonized System), provided that these goods comply with the provisions of Article 3-03(3). Article 2-04: Import and Export Restrictions
1. Except as otherwise provided in this Agreement, no Party may adopt or maintain any prohibition or restriction on the importation of any good of 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, including its interpretative notes. To this end, Article XI of GATT 1994 and its interpretative notes, or any equivalent provision of a successor agreement to which the Parties are party, are incorporated into and made a part of this Agreement.
2. The Parties understand that the rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.
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, nothing in this Agreement shall be construed to prevent the Party from:
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 request of either Party, shall consult with a view to avoiding undue interference or distortion of pricing, marketing and distribution arrangements in a Party.
5. Paragraphs 1 through 4 shall not apply to the measures set out in Annex 2-02 (Exceptions to Article 2-02 and 2-04). Article 2-05: Appellations of Origin or Geographical Indications
Article 2-06: Committee on Trade
1. The Parties hereby establish a Committee on Trade, comprising representatives of each Party. The Committee shall meet on a date and with an agenda agreed in advance by the Parties. The office of chairman of the Committee shall be held alternatively by each Party. The Committee shall report to the Commission.
2. Upon request of either Party, the Committee shall convene in order to consider and find appropriate solution to any matter concerning trade in goods, including:
3. Additionally, the Committee may, as if it considers appropriate, establish and determine the scope and mandate of any ad hoc group or subcommittee to deal with any specific matter.
Exceptions to Article 2-02 and Article 2-04 Measures of Israel
1. Restrictions on imports of waste and scrap of plastic, rubber, paper, metal, and glass that are maintained for ecological purposes. 2. Restrictions on imports of meat not approved by the Chief Rabbinate. 3. Restrictions on the import of used clothing and made-up textile of second quality. Measures of Mexico Exceptions to Article 2-02 Notwithstanding article 2-02, until January 1, 2004, Mexico may maintain the provisions of the Decree for Development and Modernization of the Automotive Industry (“Decreto para el Fomento y Modernización de la Industria Automotriz”), December 11, 1989, and its amendments of May 31, 1995.
Exceptions to Article 2-04
1. For only those goods listed below, Mexico may restrict the granting of import and export licenses for the sole purpose of reserving foreign trade in these goods to itself. (For purposes of reference only, descriptions provided next to the corresponding item)
2. Mexico may maintain restrictions in effect on the date of entry into force of this Agreement on the importation of used products classified under heading 63.09 of the Harmonized System.
3. Mexico may adopt or maintain prohibitions or restrictions to the importation of used goods provided for in the items set out below: (For purposes of references only, descriptions are provided next to the corresponding item)
4. Until January 1, 2004, Mexico may adopt or maintain prohibitions or restrictions to the importation of used goods provided for in the items set out below.
5. Until December 31, 2003, Mexico may maintain prohibitions or restrictions to the importation of goods provided for in the items set out below: (For purposes of references only, descriptions are provided next to the corresponding item)
Products
for Immediate Tariff Elimination (1) (2) (3)
(1) “Il”refers to the Israeli Harmonized System Code as expressed in the “Israeli Customs Tariff”; Israel shall implement inmediate tariff elimination for these items.
(2) “Mx” refers to the Mexican Harmonized System Code as expressed in the “Tarifa de la Ley del Impuesto General de Importación (T.I.G.I.)”; Mexico shall implement inmediate tariff elimination for these items.
(3) Mexico shall grant immediate tariff elimination for originating “woven and non woven fabrics used for making bullet proof vests and suits”, for originating “bullet proof vests and suits”, as well as for originating “fabrics used for covering fields, shadowing and greenhousing”, regardless of what their HS tariff classification is.
Products with Tariff Elimination Schedule for 2005 (1)
(1) Excluding products covered by Annex 2-03.3(a), which shall be granted immediate tariff elimination. Concessions made by Israel to Mexico
1. The following tariff concessions shall apply each year from
the date of entry into force of this Agreement.
1 Reduction from the lowest of the basic duty or the applicable MFN rate at the moment of importation. 2. Israel may adopt or maintain import measures to allocate in-quota imports made pursuant to a quota set out in this Annex, provided that such measures do not have trade restrictive effects on imports additional to those caused by the imposition of the quota.
Concessions made by Mexico to Israel
1. The following tariff concessions shall apply each year from the date of entry into force of this Agreement.
1/ If the quota is filled in any year, it will grow 25% for the next year, but it would be no greater than 200 ton. 2. Mexico may adopt or maintain import measures to allocate in-quota imports made pursuant to a quota set out in this Annex, provided that such measures do not have trade restrictive effects on imports additional to those caused by the imposition of the quota. Tariff Preferential Quotas for certain Goods classified in
Chapter 50 through 63 of the 1. Each Party shall apply the provision of article 02-03.8, in accordance to the following quantities:
3.
Mexico shall allocate the annual Tariff Preferential Quotas (TPQ´s)
specified in this Schedule through a “first come, first served”
mechanism.
Appellations of Origin and Geographical Indications
1. Israel shall recognize Tequila and Mezcal as geographical indications or appellations of origin of Mexico in respect to beverages. Therefore, Israel, in accordance with its legislation, shall ensure Mexico the legal means to enforce those rights against any import, manufacture or sale of any beverage, as Tequila and Mezcal, that is not manufactured in accordance with the Mexican laws and regulations applicable to those geographical indications or appellations of origin.
2. Articles 22 to 24 of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights shall be applicable to the above mentioned geographical indications.
Rules of Origin
Article 3-01: Definitions
For purposes of this Chapter: Customs Valuation Code means the WTO Agreement on Implementation of Article VII of the GATT 1994, including its interpretative notes; direct overhead means overhead incurred during a period, directly related to the good, other than direct material costs and direct labor costs; F.O.B. means free on board, regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer;
fungible goods means goods that are interchangeable for commercial purposes, whose properties are essentially identical, not practical to distinguish by the naked eye;
fungible materials means materials that are interchangeable for commercial purposes and whose properties are essentially identical; Generally Accepted Accounting Principles means the recognized consensus or substantial authoritative support in the territory of a Party with respect to the recording of revenues, expenses, costs, assets and liabilities, the disclosure of information and the preparation of financial statements. These standards may encompass broad guidelines of general application as well as detailed standards, practices and procedures; goods wholly obtained or produced entirely in the territory of one or both Parties:
identical or similar goods means "identical goods " and "similar goods", respectively, as defined in the Customs Valuation Code;
indirect material means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, including:
indirect overhead means overhead incurred during a period, other than direct overhead, direct labor costs and direct material costs; intermediate material means a material that is self-produced and used in the production of a good, and designated pursuant to Article 3-07; material means a good that is used in the production of another good; net cost means total cost less sales promotion, marketing and after-sales service costs, shipping and repackaging costs; and royalties, pursuant to the provisions of Annex 3-04 (Calculation of Net Cost); originating good or material means a good or material that qualifies as originating under the provisions of this Chapter;
packing materials and containers for shipment means goods that are used to protect a good during transportation, other than packaging materials and containers for retail sale; place where the producer is located: in relation to a good, the production plant of that good; producer means a person who grows, mines, harvests, fishes, hunts, manufactures, processes or assembles a good; production means growing, mining, harvesting, fishing, hunting, manufacturing, processing or assembling a good; related person means a person related to another person on the basis that:
royalties means payments made as consideration for technology transference and the right to use or exploitation of any copyright or intellectual property rights; sales promotion, marketing and after-sales service costs means the following costs related to sales promotion, marketing and after-sales service:
self-produced material means a material that is produced by the producer of a good and used in the production of that good;
shipping and repacking costs means the costs incurred in the repacking and transportation of a good outside the territory where the producer or exporter of the good is located;
total cost means the sum of the following elements, pursuant to Annex 3-04 (Calculation of Net Cost):
transaction value of a good means the price actually paid or payable for a good with respect to a transaction of the producer of the good, pursuant to the principles of Article 1 of the Customs Valuation Code, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the said Code, regardless of whether the good is sold for export. For purposes of this definition, the seller referred to in the Customs Valuation Code shall be the producer of the good; transaction value of a material means the price actually paid or payable for a material with respect to a transaction of the producer of the good, pursuant to the principles of Article 1 of the Customs Valuation Code, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the said Code, regardless of whether the material is sold for export. For purposes of this definition, the seller referred to in the Customs Valuation Code shall be the supplier of the material, and the buyer referred to in the Customs Valuation Code shall be the producer of the good; and used means used or consumed in the production of goods.
Article 3-02: Application and Interpretation
1. For purposes of this Chapter:
2. For purposes of this Chapter, in applying the Customs Valuation Code to determine the origin of a good:
Article 3-03: Originating Goods
1. A good shall originate in the territory of one or both Parties where:
2. For purposes of this Chapter, the production of a good from non-originating materials that undergo an applicable change in tariff classification and satisfy other requirements, as specified in Annex 3-03 (Specific Rules of Origin), shall occur entirely in the territory of one or both Parties and every regional value content of a good shall be entirely satisfied in the territory of one or both Parties.
3. For purposes of Article 2-03(8), a good classified in Chapter 50 through 63 may satisfy the requirements specified in the Annex 3-03(3) and shall be considered as an originating good.
4. Notwithstanding paragraphs 1 and 2, the Parties may agreed that for any specifically identified product or sector, the acquisition of originating status under the conditions set out in paragraph 1 shall not be affected if the good undergoes working or processing outside the Parties and are subsequently re-imported, provided that:
Article 3-04: Regional Value Content 1. Except as provided in paragraph 5, each Party shall provide that the regional value content of a good shall be calculated, at the choice of the exporter or producer of the good, on the basis of either the transaction value method set out in paragraph 2 or the net cost method set out in paragraph 4.
2. For purposes of calculating the regional value content of a good on the basis of the transaction value method, the following formula shall be applied:
TV - VNM RVC= -------------- x 100 TV
3. For purposes of paragraph 2, when the producer of the good does not export it directly, the transaction value of the good shall be adjusted to the point where the buyer receives the good in the territory where the producer is located. 4. For purposes of calculating the regional value content of a good on the basis of the net cost method, the following formula shall be applied:
5. Each Party shall provide that an exporter or producer shall calculate the regional value content of a good solely on the basis of the net cost method set out in paragraph 4 where:
6. Except for the goods specified in Article 3-15, a producer may average the regional value content for one or all the goods classified in the same subheading that he produces in the same plant or in several plants in the territory of one Party, on the basis of either all the goods produced by the producer or only those goods exported to the territory of the other Party:
Article 3-05: Value of materials
1. The value of a material:
2. Where not included under subparagraph (a) or (b) of paragraph 1, the value of a material shall include:
3. The value of a non-originating material shall not include where the producer acquires the material in the territory of the Party where the producer is located, freight, insurance, packing and all other costs incurred in transporting the material from the warehouse of the supplier to the place where the producer is located; as well as any other known and ascertainable cost incurred in the territory of the producer of the good. 4. For purposes of determining the regional value content under Article 3-04, the value of non-originating materials used by the producer in the production of the good shall not include the value of the non-originating materials used by:
Article 3-06: De Minimis
1. A good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in Annex 3-03 (Specific Rules of Origin) is not more than 10 percent of the transaction value of the good, adjusted to the basis set out in paragraphs 2 or 3, as the case may be, of Article 3-04 or, in the cases referred to in subparagraphs (a) through (e) of paragraph 5 of Article 3-04, the value of all such non-originating materials is not more than 10 percent of the total cost of the good.
2. Where that same good is also subject to a regional value content, the value of such non-originating materials shall be taken into account in determining the regional value of the good and the good shall be required to satisfy all other applicable requirements under this Chapter.
3. A good that is subject to a regional value-content requirement pursuant to Annex 3-03 (Specific Rules of Origin) shall not be required to satisfy such requirement if the value of all non-originating materials is not more than 10 percent of the transaction value of the good, adjusted to the basis set out in paragraphs 2 or 3, as the case may be, of Article 3-04 or, in the cases referred to in subparagraphs (a) through (e) of paragraph 5 of Article 3-04, the value of all such non-originating materials is not more than 10 percent of the total cost of the good.
4. Paragraph 1 does not apply to:
5. A good provided for in Chapters 50 through 63 of the Harmonized System that does not originate because certain fibers or yarns used in the production of the material that determines the tariff classification of the good do not undergo an applicable change in tariff classification set out in Annex 3-03 (Specific Rules of Origin), shall nonetheless be considered to originate if the total weight of all such fibers or yarns in that material is not more than 7 per cent of the total weight of such material.
Article 3-07: Intermediate Materials
1. For purposes of determining the regional value content under Article 3-04, the producer of the good may designate as an intermediate material, any self-produced material used in the production of the good that satisfies the requirements of Article 3-03.
2. Where an intermediate material is subject to a regional value content under subparagraph (d) of paragraph 1 of Article 3-03 or to Annex 3-03 (Specific Rules of Origin), the regional value content shall be determined on the basis of the net cost method provided for in paragraph 4 of Article 3-04.
3. For purposes of determining the regional value content of a good, the value of the intermediate material shall be the total cost that can be reasonably allocated to that intermediate material pursuant to Annex 3-04 (Calculation of Net Cost).
4. Where a material that has been designated as intermediate material is subject to a regional value content, no other self-produced material subject to a regional value content used in the production of such intermediate material may, at the same time, be designated by the producer as intermediate material. Article 3-08: Accumulation For purposes of determining whether a good is an originating good, a producer may accumulate his production with one or more producers in the territory of one or both Parties, of materials incorporated in the good, in a manner that the production of materials be considered to have been performed by that producer, provided that the provisions of Article 3-03 are satisfied. Article 3-09: Fungible Goods and Materials 1. For purposes of determining whether a good is an originating good, where originating and non-originating fungible materials that are commingled in an inventory, are used in the production of a good, the origin of the materials may be determined pursuant to an inventory management method set out in paragraph 3.
2. Where originating and non-originating fungible goods are commingled and, prior to exportation do not undergo any production process or any operation in the territory of the Party where they were commingled other than unloading, loading or any other operation necessary to preserve it in good condition or to transport the good to the territory of the other Party, the origin of the good may be determined on the basis of any of the inventory management methods set out in paragraph 3.
3. The inventory management methods for fungible goods or materials shall be the following:
TOM AOM= --------------- x 100 TONM
4. Where a good is subject to a regional value content, the determination of non-originating fungible materials shall be made through the following formula:
TNM ANM= --------------- x 100 TONM
where
5. Once an inventory management method set out in paragraph 3 has been chosen, it shall be used through all the fiscal year or period.
Article 3-10: Sets, kits or composite goods
1. Sets, kits and composite goods classified pursuant to Rule 3 of the General Rules of Interpretation of the Harmonized System, and the goods specifically described as a set, kit or composite goods in the nomenclature of the Harmonized System, shall qualify as originating, where every good contained in the set, kit or composite goods satisfies the applicable rule of origin for each of them under this Chapter.
2. Regardless of the provisions of paragraph 1, a set, kit or composite goods shall be considered as originating, if the value of all non-originating goods used in the collection of the set, kit or composite goods does not exceed 15 percent of the transaction value of the set, kit or composite goods, adjusted to the basis set out in paragraphs 2 or 3, as the case may be, of Article 3-04 or, in the cases referred to in subparagraphs (a) through (e) of paragraph 5 of Article 3-04, if the value of all non-originating goods used in the collection of the set, kit or composite goods is not more than 15 percent of the total cost of the set.
3. The provisions of this Article shall prevail over the specific rules set out in Annex 3-03 (Specific Rules of Origin). Article 3-11: Indirect materials
Indirect materials shall be considered to be originating without regard to where the good is produced and the value of such materials shall be their cost as reported in the accounting records of the producer of the good. Article 3-12: Accessories, Spare Parts and Tools
1. Accessories, spare parts or tools delivered with the good that form part of the good's standard accessories, spare parts or tools, shall be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable change in tariff classification set out in Annex 3-03 (Specific Rules of Origin), provided that:
2. If the good is subject to a regional value-content, the value of the accessories, spare parts or tools 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. Article 3-13: Packaging Materials and Containers for Retail Sale
1. Packaging materials and containers in which a good is packaged for retail sale shall, if classified with the good, be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable change in tariff classification set out in Annex 3-03(Specific Rules of Origin).
2. If the good is subject to a regional value-content requirement, the value of such packaging materials and containers 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. Article 3-14: Packing Materials and Containers for Shipment 1. Packing materials and containers in which a good is packed for shipment shall be disregarded in determining whether all non-originating materials used in the production of the good undergo an applicable change in tariff classification set out in Annex 3-03 (Specific Rules of Origin).
2. Where the good is subject to a regional value content, the packing materials and containers for the shipment of the good shall be considered as originating and non-originating, as the case may be in calculating the regional value content of the good, and the value of such materials shall be their cost as reported in the accounting records of the producer of the good. Article 3-15: Automotive Goods
1. For purposes of this Article: class of motor vehicles means any one of the following categories of motor vehicles:
model line means a group of motor vehicles having the same platform or model name; model name means the word, group of words, letter or letters, number or numbers or similar designation assigned to a motor vehicle by a marketing division of a motor vehicle assembler to:
motor vehicle means a good provided for in headings 87.01, 87.02, 87.03, 87.04, 87.05 or 87.06; plant means a building, or buildings in close proximity but not necessarily contiguous, machinery, apparatus and fixtures that are under the control of a producer and are used in the production of motor vehicles;
platform means the primary load bearing structural assembly of a motor vehicle that determines the basic size of the motor vehicle, and is the structural base that supports the driveline and links the suspension components of the motor vehicle for various types of frames, such as the body-on frame or space-frame, and monoblocks; and underbody means the floor pan of a motor vehicle;
2. For purposes of calculating the regional value content set out in Article 3-04 for a motor vehicle, the producer may average that calculation in his fiscal year or period using any one of the following categories, on the basis of either all motor vehicles in the category or only those motor vehicles in the category that are exported to the territory of the other Party:
Article 3-16: Non-Qualifying Operations
1. A good shall not be considered to be an originating good merely by reason of:
2. A good shall not be considered originating merely by a production or pricing practice in respect of which it may be demonstrated, on the basis of a preponderance of evidence, that the object was to circumvent this Chapter.
3. The provisions of this Article shall prevail over the specific rules of origin set out in Annex 3-03 (Specific Rules of Origin). Article 3-17: Transshipment and Direct Expedition
1. A good shall not be considered to be an originating good, even if it has undergone production that satisfies the requirements of Article 3-03 if, subsequent to that production, the good undergoes further production or any other operation outside the territories of the Parties, other than unloading, reloading or any other operation necessary to preserve it in good condition or to transport the good to the territory of the other Party.
2. A good shall not loose its originating condition where, in transit through the territory of one or more countries that are non Parties, with or without transshipment or temporary storage, under surveillance of the customs authorities of such countries:
3. Notwithstanding paragraph 1 and 2, within a year from the entry into force of the Agreement, the Parties shall agree on the condition and procedures required in order to allow that an originating good, which is transshipped without customs supervision through the territory of a non Party with each Party has entered separately into a free trade agreement under Article XXIV of GATT 1994 before the year 1999, will not lose its originating status. Article 3-18: Consultation and Modifications 1. The Parties hereby establish a Committee on Rules of Origin and Customs Procedures, comprising representatives of each Party, which shall meet on the request of either Party.
2. The Committee shall:
3. The Parties will consult regularly and shall cooperate to ensure that this Chapter and Chapter IV (Customs Procedures) are applied in an effective and uniform manner, in accordance with the spirit and the objectives of this Agreement.
Calculation of Net Cost Section A - Definitions.
allocation base means any of the following allocation bases that are used by the producer for calculating the cost ratio with respect to the good:
internal management purpose means any procedure for costs allocation that is used for purposes relating to tax reporting, financial reporting, internal control, financial planning, decision-making, pricing, cost recovery, cost control management or performance measurement; and non-allowable costs means sales
promotion, marketing and after-sales service costs;
royalties, shipping and repackaging costs.
1. The net cost is calculated in accordance with the following formula:
NC = TC - NAC
2. For purposes of calculating the total cost:
AB CR=-------------- x 100 TAB
CAG = CA x CR
3. Where the producer of a good has calculated the regional value content of the good under the net cost method on the basis of estimated costs (including standard costs, budgeted forecasts or other similar estimating procedures), before or during the chosen period, as set out in paragraph 2 (a), the producer shall conduct an analysis, at the end of the producer’s fiscal year or period, of the actual costs incurred over that period with respect to the production of the good, in accordance with the provisions of this Annex. Customs Procedures Article 4-01: Definitions
1. For purposes of this Chapter: competent authority means the authority that, according to the legislation of each Party, is responsible for the administration of its customs laws and regulations. The names of such authorities are listed in Annex 4-01 (Competent Authorities);
commercial importation means the importation of a good into the territory of a Party for the purpose of sale, or any commercial, industrial or other like use; customs value means the value of a good for purposes of calculating customs duties according to the legislation of each Party;
determination of origin means a determination issued as a result of a verification of origin that determines whether a good qualifies as an originating good in accordance with Chapter III (Rules of Origin); exporter means an exporter located in the territory of the Party from which the good is exported and who, under this Chapter, is required to maintain in the territory of that Party the records referred to in Article 4-06(1)(a); identical goods means goods that are the same in all respects, including physical characteristics, quality and reputation, irrespective of minor differences in appearance that are not relevant to a determination of its origin under Chapter III (Rules of Origin); importer means an importer located in the territory of a Party, to which the good is imported, who, under this Chapter, is required to maintain, in the territory of that Party, the records referred to in Article 4-06(1)(b); preferential tariff treatment means the duty rate applicable to an originating good in accordance with this Agreement;
producer means “producer”, according to Article 3-01, located in the territory of a Party, who is required to maintain, in the territory of that Party, the records referred to in Article 4-06(1)(a);
valid certificate of origin means a certificate of origin in the format referred to in Article 4-02(1), completed, signed and dated by the exporter of the good, in accordance with the provisions of this Chapter and with its instructions; and
value means the value of a good or material for purposes of applying Chapter III (Rules of Origin).
2. Except as otherwise defined in this Article, the definitions of Chapter III (Rules of Origin) are incorporated herein. Article 4-02: Certificate and Declaration of Origin
1. For purposes of this Chapter, prior to the implementation of this Agreement, the Parties shall establish a unique form for the Certificate and the Declaration of Origin, and may thereafter revise the form by agreement.
2. The Certificate of Origin referred to in paragraph 1, will have the purpose of certifying that a good being exported from the territory of one Party into the territory of the other Party is considered to qualify as an originating good.
3. Each Party shall require its exporters to complete and sign a Certificate of Origin for any exportation of a good for which an importer may claim preferential tariff treatment. 4. Each Party shall provide that where an exporter is not the producer of the good, the exporter may complete and sign a Certificate of Origin on the basis of:
5. Each Party shall provide that a Certificate of Origin that has been completed and signed by an exporter in the territory of the other Party, whether or not he is also the producer of the good, be applicable to:
and shall be accepted by its competent authority for two years after the date on which the Certificate was signed.
6. Each Party shall provide that where originating goods imported under a valid Certificate of Origin are invoiced in the territory of a non-Party, the importing Party shall grant preferential tariff treatment, provided that such goods are shipped directly from the territory of the other Party, subject to the provisions of Article 3-17. 7. The Certificate of Origin for a good imported into the territory of the importing Party shall be completed in one of the official languages of this Agreement. If the Certificate of Origin is not completed in the official language of the importing Party, a translation into the English language shall be attached thereto. If the Certificate of Origin is completed in the English language, a translation into the Spanish or the Hebrew language shall not be required.
Article 4-03: Obligations Regarding Importations 1. Each Party shall require an importer that claims preferential tariff treatment for a good imported into its territory from the territory of the other Party to:
2. Each Party shall provide that where an importer fails to comply with any of the requirements established in paragraph 1 of this Article, that Party may deny the preferential tariff treatment requested for the good imported from the territory of the other Party. However, where a Certificate of Origin is illegible or defective on its face or contains minor formal errors that may affect the accuracy of the Certificate of Origin, the importer shall be granted a period not less than five working days to provide the customs administration with a copy of the corrected certificate.
3. Each Party shall provide that where a good qualified as an originating good when it was imported into the territory of that Party, but no claim for preferential tariff treatment was made at that time, the importer of the good may, no later than six months after the date on which the written declaration referred to in Article 4-03(1)(a) was made, despite the fact that he did not have in his possession a valid Certificate of Origin, apply for a refund of any excess duties paid as the result of the good not having been accorded preferential tariff treatment, provided that the importer:
Article 4-04: Obligations Regarding Exportations 1. Each Party shall provide that its exporter or producer, who completed and signed a Certificate or a Declaration of Origin, provide, on request of its competent authority, a copy of the Certificate or Declaration of Origin, as the case may be.
2. Each Party shall provide that its exporter or a producer that has completed and signed a Certificate or a Declaration of Origin, and that has reasons to believe that the Certificate or the Declaration contains incorrect information, shall promptly notify in writing, of any change that could affect the accuracy or validity of the Certificate or Declaration of Origin to all persons to whom the certificate or declaration was given, as well as to the competent authority of the importing Party. The notification shall be sent by one of the methods stipulated in Article 4-07(2) . If this is done prior to the commencement of a verification and if the exporter or producer demonstrates that at time of issuance of the Certificate of Origin he possessed facts upon which he could reasonably rely to the effect that the good qualified as an originating good, the exporter or producer shall not be subject to penalties for having submitted an incorrect certificate or declaration.
3. Each Party shall provide that a false certification or declaration of origin by its exporter or producer, certifying that a good to be exported to the territory of the other Party qualifies as an originating good shall have the same legal consequences, with appropriate modifications, as would apply to its importer for a contravention of its customs laws and regulations regarding the making of a false statement or representation. Article 4-05: Exceptions Provided that the importation does not form part of a series of importations that may be considered to have been undertaken or arranged for the purpose of avoiding the certification requirements of Articles 4-02 and 4-03, the Parties shall not require a Certificate of Origin for the importation of goods in the following cases:
Article 4-06: Records Each Party shall provide that:
Article 4-07: Origin Verification 1. For purposes of determining whether a good imported into its territory from the territory of the other Party under preferential tariff treatment qualifies as an originating good, the importing Party may conduct a verification through its competent authority, in the territory of the other Party by means of:
2. The competent authority of the importing Party shall send the questionnaires and any communication relating to a verification visit, referred to in paragraphs 1(a) and 1(b), to the exporters or producers in the territory of the other Party, by any of the following means:
3. The provisions of paragraph 1 shall not prevent the competent authority of the importing Party from exercising its powers to conduct verifications in its territory, in relation with the fulfillment of any other obligation by its own importers, exporters or producers.
4. The exporter or producer who receives a questionnaire pursuant to paragraph 1(a), shall answer it correctly and return it within 45 days from the date of its receipt.
5. Each Party shall provide that, where it has received the answer to the questionnaire referred to in paragraph 1(a) within the period specified therein, and considers that it requires more information to determine whether the good subject to the verification qualifies as an originating good, it may, through its competent authority, request additional information from the exporter or producer, by means of a subsequent questionnaire, in which case, the exporter or producer shall answer it and return it, within 30 days from the date of its receipt.
6. If the exporter or producer fails to respond correctly to any of the questionnaires referred to in paragraphs 4 or 5, or does not return it within the period specified therein, the importing Party may determine that the good subject to the verification does not qualify as an originating good and may deny it preferential tariff treatment, upon written determination under paragraph 17.
7. The conducting of a verification in accordance with one of the methods set forth in paragraph 1 shall not preclude the use of another verification method provided for in paragraph 1. 8. Before conducting a verification visit pursuant to paragraph 1(b), the importing Party shall, through its competent authority, deliver a written notification of its intention to conduct the visit, at least 30 days in advance of the proposed date of the visit. The written notification shall be sent to the exporter or producer whose premises are to be visited and to the competent authority of the Party in whose territory the visit is to occur. The competent authority of the importing Party shall obtain the written consent of the exporter or producer whose premises are to be visited.
9. The notification referred to in paragraph 8 shall include:
10. Any modification to the information referred to in paragraph 9, will be notified in writing, prior to the verification visit, in the manner specified in paragraph 2, to the exporter or producer, and to the competent authority of the exporting Party.
11. If within 30 days from the date of the notification of the proposed visit under paragraph 8, the exporter or producer has not given its written consent to such a visit, the importing Party may determine that the good or goods that would have been the subject of the visit upon written determination under paragraph 17 do not qualify as originating goods and may deny them preferential tariff treatment.
12. Each Party shall provide that, where its competent authority receives a notification pursuant to paragraph 9, it may, within 15 days of receipt of the notification, postpone the proposed verification visit for a period not exceeding 60 days from the date of such receipt, or for such a longer period as the Parties may agree.
13. A Party shall not deny preferential tariff treatment to a good based solely on the postponement of a verification visit pursuant to paragraph 12. 14. The Party conducting a verification visit shall permit an exporter or a producer whose good or goods are the subject of a verification visit, to designate two observers to be present during the visit, provided that the observers do not participate in a manner other than as observers. The failure of the exporter or producer to designate observers shall not result in the postponement of the visit. The competent authority of the exporting Party, according to the national procedures and regulations of the Party conducting the verification may send a representative to be present during the verification visit, upon notifying the competent authority of the importing Party, provided that he be present as an observer only.
15. The Party conducting the verification of origin of a good imported into its territory under this Article may determine that a material used in the production of the good is a non-originating material where the producer or exporter of the good, or the producer or supplier of the material, does not provide the information, documents or records relating to the origin of the material that demonstrate that the material in question is an originating material. Such a determination shall not necessarily lead to a decision that the good, itself, is not originating.
16. Each Party shall, through its competent authority, conduct a verification of a regional value-content requirement in accordance with the generally accepted accounting principles applied in the territory of the Party from which the good was exported.
17. After carrying out the verification procedures outlined in paragraph 1, the competent authority of the importing Party shall in the manner specified in paragraph 2, provide the exporter or producer whose good is subject to the verification, a written determination of whether or not the good qualifies as an originating good under Chapter III (Rules of Origin), including findings of fact and the legal basis for the determination.
18. Where the exporter or producer has failed to respond to or return a questionnaire as set forth in paragraphs 4 and 6, or has not given its written consent to a verification visit as set forth in paragraph 11, and the importing Party, denies preferential tariff treatment to the good in question, a written determination thereof, pursuant to paragraph 17, shall be sent to the exporter or producer, in the manner specified in paragraph 2.
19. When the Party conducting a verification determines, based on the information obtained during the verification, that a good does not qualify as an originating good, by written determination issued under paragraph 17, it shall grant the exporter or producer whose good was the subject of the verification, 30 days from the date of receipt of the written determination, to provide any additional comments or information before denying preferential tariff treatment to the good, and shall issue a final determination after taking into consideration any comments or additional information received from the exporter or producer during the above-mentioned period, and shall send it to the exporter or producer in the manner specified in paragraph 2.
20. Where the verification completed by a Party indicates that an exporter or a producer has repeatedly made false or unsupported representations that a good imported into its territory qualifies as an originating good, the Party may withhold preferential tariff treatment to identical goods exported or produced by such person until that person establishes compliance with Chapter III (Rules of Origin). In taking such an action, the competent authority of the importing Party shall notify the person who issued the Certificate of Origin and the competent authority of the exporting Party.
21. Each Party shall provide that where it determines that a certain good imported into its territory does not qualify as an originating good based on a tariff classification or a value applied by the Party to one or more materials used in the production of the good, which differs from the tariff classification or value applied to the materials by the Party from whose territory the good was exported, the Party's determination shall not become effective until it notifies in writing both the importer of the good and the person that completed and signed the Certificate of Origin for the good and the competent authority of the other Party.
22. A Party shall not apply a determination made under paragraph 17 to an importation made before the effective date of the determination where:
Article 4-08: Confidentiality 1. Each Party shall maintain, in accordance with its legislation, the confidentiality of information collected pursuant to this Chapter and shall protect that information from disclosure that could prejudice the competitive position of the persons providing the information. 2. Information obtained pursuant to this Chapter may only be disclosed to those competent authorities of the Parties responsible for the administration and enforcement of determinations of origin and customs and other indirect taxes on imports, for the purposes of this Agreement.
Article 4-09: Advance Rulings 1. Each Party shall, through its competent authority, provide for the expeditious issuance of written advance rulings, prior to the importation of a good into its territory. The advance rulings shall be issued by the competent authority of the importing Party to its importer or to an exporter or a producer of the other Party, on the basis of the facts and circumstances presented by such importer, exporter or producer relating to the origin of the goods.
2. The advance rulings shall concern:
3. Each Party shall adopt or maintain procedures for the issuance of advance rulings, including:
The issuance of an advance ruling shall be declined where a good is subject to a verification of origin or to a review and appeal process in the territory of a Party.
4. Each Party shall provide that the advanced rulings issued to imports into its territory, shall be effective as of the date they are issued, or on such later date as may be specified therein, except when the ruling is modified or revoked pursuant to paragraph 6. The advance ruling shall be valid only with regards to the person or entity on whose behalf it was issued and as long as the substantial facts and circumstances upon which it was based are true and accurate and have not been changed or modified. The issuance of the advance ruling shall not affect in any manner whatsoever the right of the competent authority that issued the ruling to conduct a verification, as set forth in Article 4-07.
5. Each Party shall provide to any person requesting an advance ruling the same treatment, including the same interpretation and application of provisions of Chapter III (Rules of Origin) regarding a determination of origin, as it provided to any other person to whom it issued an advance ruling, provided that the facts and circumstances are identical in all material respects.
6. An advance ruling may be modified or revoked by the competent authority that issued the ruling in the following cases:
7. Each Party shall provide that any modification or revocation of an advance ruling shall be effective on the date on which the modification or revocation is issued, or on such later date as may be specified therein, and shall not be applied to importations of a good that have occurred prior to that date, unless the person to whom the advance ruling was issued has not acted in accordance with its terms and conditions or if such person provided false information on which the advanced ruling was based.
8. Each Party shall provide that where its competent authority examines the regional value content of a good for which it has issued an advance ruling, it shall evaluate whether:
9. Each Party shall provide that where its competent authority determines that any requirement in paragraph 8 has not been satisfied, it may modify or revoke the advance ruling as the circumstances may warrant.
10. Each Party shall provide that, where its competent authority determines that the advance ruling was based on incorrect information, the person to whom the ruling was issued shall not be subject to penalties, where that person demonstrates that it used reasonable care and acted in good faith in presenting the facts and circumstances on which the ruling was based, although preferential tariff treatment may be denied after the completion of verification procedures in accordance with the relevant provisions of Article 4-07.
11. Each Party shall provide that where it issues an advance ruling to a person that has misrepresented or omitted material facts or circumstances on which the ruling is based or has failed to act in accordance with the terms and conditions of the ruling, the competent authority that issued the advance ruling may apply such measures as the circumstances may warrant.
Article 4-10: Penalties
Each Party shall establish or maintain measures imposing criminal, civil or administrative penalties for violations of its laws and regulations relating to this Chapter.
Article 4-11: Review and Appeal
1. Each Party shall grant substantially the same rights of review and appeal of determinations of origin and advance rulings by its competent authority as it provides to importers in its territory to exporters or producers from the other Party who:
2. The right referred to in paragraph 1 includes access to at least one level of administrative review independent of the official or office responsible for the determination under review and in accordance with its domestic law, judicial or quasi-judicial review of the determination or decision taken at the final level of administrative review. Article 4-12: Uniform Procedures No later than the date of entry into force of this Agreement, the Parties shall, through their respective administrative regulations or departmental directives, implement the Certificate and Declaration of Origin, and implement Uniform Procedures that may be necessary for the administration, application, interpretation and other matters as the Parties may agree of Chapter III (Rules of Origin) and this Chapter.
Competent Authorities For purposes of this Chapter, “competent authorities” are:
Emergency Actions Article 5-01: Definitions
competent investigating authority means the competent authority of each Party set out in Annex 5-01; contribute importantly means an important cause, but not necessarily the most important cause;
domestic industry means the producers as a whole of the like or directly competitive product operating in the territory of a Party;
emergency action does not include any emergency action pursuant to a proceeding instituted prior to the entry into force of this Agreement;
good originating in the territory of a Party means an “originating good”, as defined in Chapter III (Rules of Origin); like good means a good which, although not alike in all respects, has like characteristics and like component materials which enable it to perform the same functions and to be commercially interchangeable with the good to which it is compared;
petition means also complaint;
representative of the domestic industry means the producers accounting for at least 50 percent of the production of the like or directly competitive good operating in the territory of the importing Party;
serious injury and threat of serious injury means “serious injury” and “threat of serious injury”, as defined in the WTO Agreement on Safeguards and shall be determined in accordance with this Agreement; and
transition period means for each good the period of tariff elimination for that good with the addition of two years. Article 5-02: Bilateral Emergency Actions 1. Subject to paragraphs 2 through 4, and during the transition period only, if a good originating in the territory of a Party, as a result of the reduction or elimination of a customs duty provided for in this Agreement, is being imported into the territory of the other Party in such increased quantities, in absolute and relative terms, and under such conditions that the imports of the good from that Party alone constitute a substantial cause of serious injury to a domestic industry, the Party into whose territory the product is being imported may, to the minimum extent necessary to remedy the injury:
2. The following conditions and limitations shall apply to a proceeding that may result in emergency action under paragraph 1:
3. A Party may take a bilateral emergency action after the expiration of the transition period to deal with cases of serious injury to a domestic industry arising from the operation of this Agreement only with the consent of the other Party.
Article 5-03: Global Emergency Actions 1. Each Party retains its rights and obligations under Article XIX of GATT 1994, the WTO Agreement on Safeguards or any other safeguard agreement pursuant thereto except those regarding compensation or retaliation and exclusion from an action to the extent that such rights or obligations are inconsistent with this Article. Any Party taking an emergency action under Article XIX or any such agreement shall exclude imports of a product from the other Party from the action unless:
2. In determining whether:
3. The following conditions and limitations shall apply to a proceeding that may result in emergency action under paragraph 1 or 4:
4. A Party taking such action, from which a good from the other Party is initially excluded pursuant to paragraph 1, shall have the right subsequently to include that good from the other Party in the action in the event that the competent investigating authority determines that an increase in imports of such good from the other Party is contributing importantly to the serious injury or threat thereof and thereby undermines the effectiveness of the action.
Article 5-04: Administration of Emergency Action Proceedings 1. Neither Party may impose restrictions on a product in an action under Articles 5-02 or 5-03:
2. The Party taking an action pursuant to Article 5-02 or 5-03 shall endeavor to provide to the other Party a mutually agreed trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional custom duties expected to result from the action. If the Parties are unable to agree on compensation, the Party against whose product the action is taken may take tariff action having trade effects substantially equivalent to the action taken. The Party taking the tariff action shall apply such action only while the measure is in force, and shall not exercise this right without delivering adequate opportunity for consultation.
3. Each Party shall entrust determinations of serious injury, or threat thereof, in emergency action proceedings to a competent investigating authority, subject to review by judicial or administrative tribunals. Negative injury determinations shall not be subject to modification, except by such review.
4. An emergency action proceeding may be initiated by a petition by or on behalf of the domestic industry. The petition shall be considered to have been made on behalf of the domestic industry if it is supported by those domestic producers whose collective output constitutes more than 50 percent of the total production of the like good produced by the domestic industry.
5. In special circumstances, a Party may initiate an emergency action proceeding on its own motion.
6. Where the basis for an investigation is a petition filed by an entity representative of a domestic industry, the petition shall include adequate and detailed information concerning the petitioner, as well as all other relevant information to the extent that such information is publicly available from governmental or other sources, or best estimates and their basis if such information is not available, concerning the following:
7. Immediately after initiation, and due regard being paid to the requirement for the protection of confidential information, the investigating authority shall make available for review by interested parties the petition, the assessment of the authority under paragraph 9 and any other data or information that constitutes the basis for initiation.
8. On initiating an emergency action proceeding concerning the other Party, the competent investigating authority shall publish notice and notify the other Party of the initiation of the proceeding. The notice shall identify the petitioner or other requester, the imported good that is the subject of the proceeding and its tariff subheading, the nature and timing of the proceedings, including dates of deadlines for filing briefs, statements and other documents, time and place of hearing if so decided by the competent authority, the place at which the petition and any other documents filed in the course of the proceeding may be reviewed, and the name, address and telephone number of the office to be contacted for more information.
9. The investigating authority shall not publish the notice required under paragraph 8 without first assessing carefully the existence of the information detailed in paragraph 6 notwithstanding the initiation is due to a petition or self-motion, and shall determine whether such information is sufficient in order to justify initiations of the proceedings.
10. In the course of each proceeding, the competent investigating authority shall:
11. The competent investigating authority shall adopt or maintain procedures for the treatment of confidential information, protected under domestic law, that is provided in the course of a proceeding, including a requirement that interested parties and consumer associations providing such information furnish non-confidential written summaries thereof, or where they indicate that the information cannot be summarized, the reasons why a summary cannot be provided.
12. In conducting its proceeding the competent investigating authority shall gather, to the best of its ability, all relevant information appropriate to the determination it must make. It shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, including the rate and amount of the increase in imports of the good concerned, in absolute and relative terms as appropriate, the share of the domestic market taken by increased imports, and changes in the level of sales, production, productivity, capacity utilization, profits and losses, and employment.
13. The competent investigating authority shall not make an affirmative injury determination unless its investigation demonstrates, on the basis of objective evidence, the existence of a causal link between increased imports of the product concerned and serious injury or threat thereof. Where factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to increased imports.
14. The competent investigating authority, before making a final affirmative determination in an emergency action proceeding, shall allow sufficient time to gather and consider the relevant information, and to conduct its proceeding in accordance with paragraph 10.
15. The competent investigating authority shall publish promptly a report in accordance with Article 4.2(c) of the WTO Agreement on Safeguards that shall set forth the findings and reasoned conclusions of the investigating authority on all pertinent issues of law and fact.
16. In its report, the competent investigating authority shall not disclose any confidential information provided pursuant to any undertaking concerning confidential information that may have been made in the course of the proceedings.
For purposes of this Chapter, “competent authority” means:
Government Procurement Article 6-01: Scope and coverage
1. This Chapter applies to any law, regulation, procedure or practice regarding any procurement
2. Paragraph 1 is subject to the provisions set out in Annex VI.
3. Subject to paragraph 4, where a contract to be awarded by an entity is not covered by this Chapter, this Chapter shall not be construed to cover any good or service component of that contract.
4. No Party may prepare, design or otherwise structure any procurement contract in order to avoid the obligations of this Chapter.
5. This Chapter covers any procurement2 by any contractual means, including through such methods as purchase, lease, rental or hire purchase, with or without an option to buy, including any combination of goods and services.
Article 6-02: National treatment and non-discrimination
1. With respect to any law, regulation, procedure or practice regarding government procurement covered by this Chapter, each Party shall provide immediately and unconditionally to the goods of the other Party, to the suppliers of such goods and to the services suppliers of the other Party, treatment no less favorable than the most favorable treatment that the Party accords to domestic goods, services and suppliers.
2. With respect to any law, regulation, procedure or practice regarding government procurement covered by this Chapter, each Party shall ensure:
3. The provisions of paragraphs 1 and 2 shall not apply to customs duties and charges of any kind imposed on or in connection with importation, the method of levying such duties and charges, other import regulations and formalities, and measures affecting trade in services other than laws, regulations, procedures and practices regarding government procurement covered by this Chapter. Article 6-03: Rules of origin 1. A Party shall not apply rules of origin to goods imported from the other Party, for purposes of government procurement covered by this Chapter, that are different from the rules of origin applied in the normal course of trade. 2. Following the conclusion of the work program for the harmonization of rules of origin for goods to be undertaken under the WTO Agreement on Rules of Origin, the Parties shall take the results of that work program into account in amending paragraph 1 as appropriate.
Article 6-04: Denial of benefits
1. A Party may deny the benefits of this Chapter to a service supplier of the other Party, subject to prior notification and consultation with the other Party, where the Party establishes that the service is being provided by an enterprise that is owned or controlled by persons of a non-Party and that has no substantial business activities in the territory of either Party. 2. Following the conclusion of the negotiations regarding trade in services within the framework of the General Agreement on Trade in Services, the Parties shall take the results of those negotiations into account in amending paragraph 1 as appropriate. Article 6-05: Valuation of contracts
1. The following provisions shall apply in determining the value of contracts3 for purposes of implementing this Chapter. 2. Valuation shall take into account all forms of remuneration, including any premiums, fees, commissions and interest receivable. 3. The selection of the valuation method by the entity shall not be used, nor shall any procurement requirement be divided, with the intention of avoiding the application of this Chapter. 4. If an individual requirement for procurement results in the award of more than one contract, or in contracts being awarded in separate parts, the basis for valuation shall be either:
5. In cases of contracts for the lease, rental or hire purchase of goods or services, or in the case of contracts, which do not specify a total price, the basis for valuation shall be:
If there is any doubt, the second basis for valuation, namely (b), is to be used. 6. In cases where an intended procurement specifies the need for option clauses, the basis for valuation shall be the total value of the maximum permissible procurement, inclusive of optional purchases. Article 6-06: Technical specifications 1. Technical specifications laying down the characteristics of the goods or services to be procured, such as quality, performance, safety and dimensions, symbols, terminology, packaging, marking and labeling, or the processes and methods for their production and requirements relating to conformity assessment procedures prescribed by procuring entities, shall not be prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to international trade.
2. Technical specifications prescribed by procuring entities shall, where appropriate:
'3. There shall be no requirement or reference to a particular trademark or trade name, patent, design or type, specific origin, producer or supplier, unless there is no sufficiently precise or intelligible way of describing the procurement requirements and provided that words such as "or equivalent" are included in the tender documentation.
4. Entities shall not seek or accept, in a manner which would have the effect of precluding competition, advice which may be used in the preparation of specifications for a specific procurement from a firm that may have a commercial interest in the procurement. Article 6-07: Tendering procedures 1. Each Party shall ensure that the tendering procedures of its entities are applied in a non-discriminatory manner and are consistent with the provisions contained in Articles 6-07 through 6-14. 2. Entities shall not provide to any supplier information with regard to a specific procurement in a manner, which would have the effect of precluding competition. . 3. For the purposes of this Chapter:
Article 6-08: Qualification of suppliers
In the process of qualifying suppliers, entities shall not discriminate among suppliers of the Party or between domestic suppliers and suppliers of the other Party. Qualification procedures shall be consistent with the following:
Article 6-09: Invitation to participate 1. In accordance with paragraphs 2 and 3, entities shall publish an invitation to participate for all cases of intended procurement, except as otherwise provided for in Article 6-15. The notice shall be published in the appropriate publication listed in Annex VII. 2. The invitation to participate may take the form of a notice of proposed procurement, as provided for in paragraph 6.
3. Entities in Annex I (only for government enterprises) may use a notice of planned procurement, as provided for in paragraph 7, or a notice regarding a qualification system, as provided for in paragraph 9, as an invitation to participate.
4. Entities which use a notice of planned procurement as an invitation to participate shall subsequently invite all suppliers who have expressed an interest to confirm their interest on the basis of information which shall include at least the information referred to in paragraph 6. 5. Entities which use a notice regarding a qualification system as an invitation to participate shall provide, subject to the considerations referred to in paragraph 4 of Article 6-20 and in a timely manner, information which allows all those who have expressed an interest to have a meaningful opportunity to assess their interest in participating in the procurement. This information shall include the information contained in the notices referred to in paragraphs 6 and 8, to the extent such information is available. Information provided to one interested supplier shall be provided in a non-discriminatory manner to the other interested suppliers. 6. Each notice of proposed procurement, referred to in paragraph 2, shall contain the following information:
7. Each notice of planned procurement referred to in paragraph 3 shall contain as much of the information referred to in paragraph 6 as is available. It shall in any case include the information referred to in paragraph 8 and:
8. For each case of intended procurement, the entity shall publish a summary notice in one of the official languages of the WTO. The notice shall contain at least the following information:
9. In the case of selective tendering procedures, entities maintaining permanent lists of qualified suppliers shall publish annually in one of the publicati |
