Treaty Establishing a Common Market
between the Argentine Republic, the Federal Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay

ANNEX II

GENERAL RULES OF ORIGIN

Chapter I

General Rules for Classification of Origin

Article 1

The following shall be classified as originating in the States Parties:

(a) Products manufactured wholly in the territory of any of the Parties, when only materials originating in the States Parties are used in their manufacture;

(b) Products included in the chapters or headings of the tariff nomenclature of the Latin Arnerican Integration Association referred to in Annex 1 of resolution 78 of the Committee of Representatives of that Association, simply by virtue of the fact that they are produced in their respective territories.

The following shall be classified as produced in the territory of a State Party:

(i) Mineral, plant and animal products, including hunting and fishing products, extracted, harvested or gathered, born and raised in its territory or in its territorial waters or exclusive economic zone;

(ii) Marine products extracted outside its territorial waters and exclusive economic zone by vessels flying its flag or leased by companies established in its territory; and

(iii) Products resulting from operations or processes carried out in its territory by which they acquire the final form in which they will be marketed, except when such processes or operations simply involve assembly, packaging, division into lots or volumes, selection and classification, marking, the putting together of assortments of goods or other equivalent operations or processes;

(c) Products in whose manufacture materials not originating in the States Parties are used, when such products are changed by a process carried out in the territory of one of the States Parties which results in their reclassification in the tariff nomenclature of the Latin American Integration Association under a heading different from that of such materials, except in cases where the States Parties determine that the requirement of Article 2 of this Annex must also be met.

However, products resulting from operations or processes carried out in the territory of a State Party, by which they acquire the final form in which they will be marketed, shall not be classified as originating in the States Parties when such operations or processes use only materials or inputs not originating in their respective countries and simply involve assembly, division into lots or volumes, selection, classification, marking, the putting together of assortments of goods or other similar operations or processes;

(d) Until 31 December 1994, products resulting from assembly operations carried out in the territory of a State Party using materials originating in the States Parties and third countries, when the value of those materials is not less than 40 per cent of the f.o.b. export value of the final product; and

(e) Products which, in addition to being produced in their territory, meet the specific requirements established in Annex 2 of Resolution 78 of the Committee of Representatives of the Latin American Integration Association.

Article 2

In cases where the requirement of Article 1 (c) cannot be met because the process carried out does not involve a change in nomenclature heading, it shall suffice that the c.i.f. value of the third country materials at the port of destination or the maritime port does not exceed 50 per cent of the f.o.b. export value of the goods in question.

In considering materials originating in third countries for States Parties with no outlet to the sea, warehouses and free zones granted by the other States Parties when the rnaterials arrive by sea shall be treated as the port of destination.

Article 3

The States Parties may establish, by mutual consent, specific requirements of origin which shall prevail over general classification criteria.

Article 4

In determining the specific requirements of origin referred to in Article 3 and in reviewing those already established, State Parties shall take the following elements, individually or jointly, as a basis:

I. Materials and other inputs used in production:

(a) Raw materials:

(i) Preponderant raw material or that which essentially characterizes the product; and

(ii) Main raw materials.

(b) Parts or components:

(i) Part or component which essentially characterizes the product;

(ii) Main parts or components; and

(iii) Percentage of parts or components in relation to total weight.

(c) Other inputs.

II. Type of processing used.

III. Maximum proportion of the value of materials imported from third countries in relation to the total value of the product arrived at using the valuation procedure agreed to in each case.

Article 5

In exceptional cases, where specific requirements cannot be met because of circumstantial supply problems: availability, technical specifications, delivery date and price, taking into account the provisions of Article 4 of the Treaty, materials not originating in the States Parties may be used.

In the situation envisaged in the preceding paragraph, the exporting country shall issue the corresponding certificate informing the importing State Party and the Common Market Group, together with any background information and evidence justifying the issue of that document.

If such cases occur repeatedly, the exporting State Party or the importing State Party shall inform the Common Market Group of the situation so that the specific requirement can be reviewed.

This article does not cover products resulting from assembly operations and shall apply pending the entry into force of the common external tariff for products subject to specific requirements of origin and their materials or inputs.

Article 6

Any State Party may request that requirements of origin established pursuant to Article 1 above be reviewed. Such requests shall propose and justify the requirements applicable to the product or products in question.

Article 7

For the purpose of meeting requirements of origin, materials and other inputs originating in the territory of any State Party and used by a State Party in the manufacture of a given product shall be classified as originating in the territory of this latter State Party.

Article 8

The criterion of maximum use of materials or other inputs originating in States Parties may not be taken into account in establishing requirements which involve the imposition of materials or other inputs of those States Parties when, in their view, such materials or inputs do not meet adequate supply, quality or price standards or are not adapted to the industrial processes or technologies used.

Article 9

In order for originating goods to benefit from preferential treatment, they must have been shipped directly from the exporting country to the importing country. For these purposes, the following shall be deemed direct shipment:

(a) Goods not shipped through the territory of a country that is not a party to the Treaty;

(b) Goods shipped in transit through one or more countries that are not parties to the Treaty, with or without transshipment or temporary storage, under the supervision of the competent customs authority in such countries, provided that:

(i) Transit is justified by geographical reasons or transport considerations;

(ii) The goods are not intended for trade or use in the country of transit; and

iii) The goods are not subjected, during shipment and storage, to any operation other than loading, unloading or handling to keep them in good condition or ensure their conservation.

Article 10

For the purposes of these general rules, it shall be understood that:

(a) Products coming from free zones located within the geographical boundaries of any of the States Parties shall meet the requirements envisaged in these general rules;

(b) The term "materials" shall include raw materials, intermediate products and parts and components used in the manufacture of goods.