Agreement between the United States of America, the United Mexican States, and Canada

PREAMBLE

The Government of the United States of America, the Government of the United Mexican States, and the Government of Canada (collectively “the Parties”), resolving to:

STRENGTHEN ANEW the longstanding friendship between them and their peoples, and the strong economic cooperation that has developed through trade and investment;

FURTHER strengthen their close economic relationship;

REPLACE the 1994 North American Free Trade Agreement with a 21st Century, high standard new agreement to support mutually beneficial trade leading to freer, fairer markets, and to robust economic growth in the region;

PRESERVE AND EXPAND regional trade and production by further incentivizing the production and sourcing of goods and materials in the region;

ENHANCE AND PROMOTE the competitiveness of regional exports and firms in global markets, and conditions of fair competition in the region;

RECOGNIZE that small and medium-sized enterprises (SMEs), including micro-sized enterprises, contribute significantly to economic growth, employment, community development, youth engagement and innovation, and seek to support their growth and development by enhancing their ability to participate in and benefit from the opportunities created by this Agreement;

ESTABLISH a clear, transparent, and predictable legal and commercial framework for business planning, that supports further expansion of trade and investment;

FACILITATE trade between the Parties by promoting efficient and transparent customs procedures that reduce costs and ensure predictability for importers and exporters, and encourage expanding cooperation in the area of trade facilitation and enforcement;

RECOGNIZE their inherent right to regulate and resolve to preserve the flexibility of the Parties to set legislative and regulatory priorities, and protect legitimate public welfare objectives, such as health, safety, environmental protection, conservation of living or non-living exhaustible natural resources, integrity and stability of the financial system, and public morals, in accordance with the rights and obligations provided in this Agreement;

FACILITATE trade in goods and services between the Parties by preventing, identifying, and eliminating unnecessary technical barriers to trade, enhancing transparency, and promoting good regulatory practices;

PROTECT human, animal, or plant life or health in the territories of the Parties and advance science-based decision making while facilitating trade between them;

ELIMINATE obstacles to international trade which are more trade-restrictive than necessary;

PROMOTE high levels of environmental protection, including through effective enforcement by each Party of its environmental laws, as well as through enhanced environmental cooperation, and further the aims of sustainable development, including through mutually supportive trade and environmental policies and practices;

PROMOTE the protection and enforcement of labor rights, the improvement of working conditions, the strengthening of cooperation and the Parties' capacity on labor issues;

RECOGNIZE that the implementation of government-wide practices to promote regulatory quality through greater transparency, objective analysis, accountability, and predictability can facilitate international trade, investment, and economic growth, while contributing to each Party's ability to achieve its public policy objectives;

PROMOTE transparency, good governance and the rule of law, and eliminate bribery and corruption in trade and investment;

RECOGNIZE the importance of increased engagement by indigenous peoples in trade and investment;

SEEK to facilitate women's and men's equal access to and ability to benefit from the opportunities created by this Agreement and to support the conditions for women's full participation in domestic, regional, and international trade and investment;

RECOGNIZE the important work that their relevant authorities are doing to strengthen macroeconomic cooperation; and

ESTABLISH an Agreement to address future trade and investment challenges and opportunities, and contribute to advancing their respective priorities over time,

HAVE AGREED as follows:

CHAPTER 1

INITIAL PROVISIONS AND GENERAL DEFINITIONS

Section A: Initial Provisions

Article 1.1: Establishment of a Free Trade Area

The Parties, consistent with Article XXIV of the GATT 1994 and Article V of the GATS, hereby establish a free trade area.

Article 1.2: Relation to Other Agreements

Each Party affirms its existing rights and obligations with respect to each other under the WTO Agreement and other agreements to which it and another Party are party.

Article 1.3: Persons Exercising Delegated Governmental Authority

Each Party shall ensure that a person that has been delegated regulatory, administrative, or other governmental authority by a Party acts in accordance with the Party's obligations as set out under this Agreement in the exercise of that authority.

Section B: General Definitions

Article 1.4: General Definitions

For the purposes of this Agreement, unless otherwise provided:

AD Agreement means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, set out in Annex 1A to the WTO Agreement;

central level of government means:

(a) for Canada, the Government of Canada;

(b) for Mexico, the federal level of government; and

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

Commission means the Free Trade Commission established under Article 30.1 (Establishment of the Free Trade Commission) ;

covered investment means, with respect to a Party, an investment in its territory of an investor of another Party in existence as of the date of entry into force of this Agreement or established, acquired, or expanded thereafter;

customs administration means the competent authority that is responsible under the law of a Party for the administration of customs laws and regulations or any successor of such customs administration;

customs duty includes a duty or charge of any kind imposed on or in connection with the importation of a good, and any surtax or surcharge imposed 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;

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

(c) antidumping or countervailing duty; and

(d) premium offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions, tariff rate quotas, or tariff preference levels;

customs offense means any act committed for the purpose of, or having the effect of, avoiding a Party's laws or regulations pertaining to the provisions of this Agreement governing importations or exportations of goods between, or transit of goods through, the territories of the Parties, specifically those that violate a customs law or regulation for restrictions or prohibitions on imports or exports, duty evasion, transshipment, falsification of documents relating to the importation or exportation of goods, fraud, or smuggling of goods;

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

days means calendar days, including weekends and holidays;

Dispute Settlement Understanding (DSU) means the Understanding on Rules and Procedures Governing the Settlement of Disputes, set out in Annex 2 to the WTO Agreement;

duty deferral program includes measures such as those governing foreign trade zones, temporary importations under bond, bonded warehouses, "maquiladoras", and inward processing programs;

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

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

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

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

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

goods means a merchandise, product, article, or material;

goods of a Party means domestic products as these are understood in the GATT 1994 or such goods as the Parties may agree, and includes originating goods of a 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 Systems, including its General Rules of Interpretation, Section Notes, Chapter Notes, and Subheading Notes as adopted and implemented by the Parties in their respective laws;

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

IMF Articles of Agreement means the Articles of Agreement of the International Monetary Fund, done at Bretton Woods, United States on July 22, 1944;

individual means a natural person;

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

NAFTA 1994 means the North American Free Trade Agreement that entered into force on January 1, 1994;

national means a “natural person who has the nationality of a Party” as set out below for each Party or a permanent resident of a Party:

(a) for Canada, a citizen of Canada;

(b) for Mexico, a person who has the nationality of Mexico in accordance with its applicable laws; and

(c) for the United States, a “national of the United States” as defined in the Immigration and Nationality Act ;

originating means qualifying as originating under the rules of origin set out in Chapter 4 (Rules of Origin) or Chapter 6 (Textile and Apparel Goods) ;

person means a natural person or an enterprise;

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

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

publish means to disseminate information through paper or electronic means that is distributed widely and is readily accessible to the general public;

recovered material means a material in the form of one or more individual parts that results from:

(a) the disassembly of a used good into individual parts; and

(b) the cleaning, inspecting, testing or other processing of those parts as necessary for improvement to sound working condition;

remanufactured good means a good classified in HS Chapters 84 through 90 or under heading 94.02 except goods classified under HS headings 84.18, 85.09, 85.10, and 85.16, 87.03 or subheadings 8414.51, 8450.11, 8450.12, 8508.11, and 8517.11, that is entirely or partially composed of recovered materials and:

(a) has a similar life expectancy and performs the same as or similar to such a good when new; and

(b) has a factory warranty similar to that applicable to such a good when new;

regional level of government means:

(a) for Canada, a province or territory of Canada;

(b) for Mexico, a state of the United Mexican States; and

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

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

sanitary or phytosanitary measure means a measure referred to in paragraph 1 of Annex A to the SPS Agreement;

SCM Agreement means the Agreement on Subsidies and Countervailing Measures set out in Annex 1A to the WTO Agreement;

Secretariat means the Secretariat established under Article 30.6 (The Secretariat) ;

SME means a small and medium-sized enterprise, including a micro-sized enterprise;

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

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

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

territory has for each Party the meaning set out in Section C (Country-Specific Definitions) ;

textile or apparel good means a textile or apparel good classified in HS subheading 4202.12, 4202.22, 4202.32, or 4202.92 (luggage, handbags and similar articles with an outer surface of textile materials), heading 50.04 through 50.07, 51.04 through 51.13, 52.04 through 52.12, 53.03 through 53.11, Chapter 54 through 63, heading 66.01 (umbrellas) or heading 70.19 (yarns and fabrics of glass fiber), subheading 9404.90 (articles of bedding and similar furnishing), or heading 96.19 (babies diapers and other sanitary textile articles) ;

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

Uniform Regulations means the regulations described in Article 5.16 (Uniform Regulations) ;

WTO means the World Trade Organization; and

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

Section C: Country-Specific Definitions

For the purposes of this Agreement, unless otherwise provided:

territory means:

(a) for Canada,

(i) the land territory, air space, internal waters, and territorial sea of Canada,

(ii) the exclusive economic zone of Canada, and

(iii) the continental shelf of Canada,

as determined by its domestic law and consistent with international law.

(b) for Mexico,

(i) the land territory, including the states of the Federation and Mexico City,

(ii) the air space, and

(iii) the internal waters, territorial sea, and any areas beyond the territorial seas of Mexico within which Mexico may exercise sovereign rights and jurisdiction, as determined by its domestic law, consistent with the United Nations Convention on the Law of the Sea, done at Montego Bay on December 10, 1982; and

(c) for 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) the territorial sea and air space of the United States and any area beyond the territorial sea within which, in accordance with customary international law as reflected in the United Nations Convention on the Law of the Sea, the United States may exercise sovereign rights or jurisdiction.

CHAPTER 2

NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

Article 2.1: Definitions

For the purposes of this Chapter:

advertising films and recordings means recorded visual media or audio materials that exhibit for prospective customers 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 the films and recordings are not for broadcast to the general public;

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 the currency of another Party, 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 another Party must first be submitted to the supervision of the consul of the importing Party in the territory of the exporting Party, or in the territory of a non-Party, for the purpose of obtaining a consular invoice or a consular visa for a commercial invoice, certificate of origin, manifest, shipper's export declaration, or any other customs documentation in connection with the importation of the good;

consumed means:

(a) actually consumed; or

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

customs duty includes a duty or charge of any kind imposed on or in connection with the importation of a good, and any surtax or surcharge imposed 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;

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

(c) anti-dumping or countervailing duty; and

(d) premium offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions, tariff rate quotas, or tariff preference levels;

distributor means a person of a Party who is responsible for the commercial distribution, agency, concession, or representation in the territory of the Party of goods of another Party;

duty deferral program includes measures such as those governing foreign trade zones, temporary importations under bond, bonded warehouses, “maquiladoras”, and inward processing programs;

duty-free means free of customs duty;

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

import licensing means 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 importing Party;

Import Licensing Agreement means the Agreement on Import Licensing Procedures, set out in Annex 1A to the WTO Agreement;

performance requirement means a requirement that:

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

(b) a domestic good or service of the Party granting a waiver of a custom duty or an import license be substituted for an imported good or service;

(c) a person benefitting from a waiver of a custom duty or a grant of an import license, purchase a good or service in the territory of the Party granting the waiver or the import license or accord a preference to a domestically produced good or service;

(d) a person benefitting from a waiver of a custom duty or a grant of an import license produce a good or provide a service, in the territory of the Party granting the waiver or 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;

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;

satisfactory evidence means:

(a) a receipt, or a copy of a receipt, evidencing payment of a customs duty on a particular entry;

(b) a copy of the entry document with evidence that it was received by a customs administration;

(c) a copy of a final customs duty determination by a customs administration respecting the relevant entry; or

(d) any other evidence of payment of a customs duty acceptable under the Uniform Regulations; and

used vehicle means an automobile, a truck, a bus, or a special purpose motor vehicle, not including a motorcycle, that:

(a) has been sold, leased, or loaned;

(b) has been driven for more than:

(i) 1,000 kilometers if the vehicle has a gross weight of less than five metric tons, or

(ii) 5,000 kilometers if the vehicle has a gross weight of five metric tons or more; or

(c) was manufactured prior to the current year and at least 90 days have elapsed since the date of manufacture.

Article 2.2: Scope

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

Article 2.3: National Treatment

1.

Each Party shall accord national treatment to the goods of another Party in accordance with Article III of the GATT 1994, including its interpretative notes, and to this end, Article III of the GATT 1994 and its interpretative notes are incorporated into and made 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 of 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 do not apply to the measures set out in Annex 2-A (Exceptions to Article 2.3 (National Treatment) and Article 2.11 (Import and Export Restrictions) ).

Article 2.4: Treatment of Customs Duties

1.

Unless otherwise provided in this Agreement, no Party shall increase any existing customs duty, or adopt any new customs duty, on an originating good.

2.

Unless otherwise provided in this Agreement, each Party shall apply a customs duty on an originating good in accordance with its Schedule to Annex 2-B (Tariff Commitments).

3.

On the request of a Party, the Parties shall consult to consider accelerating or broadening the scope of the elimination of customs duties set out in their Schedules to Annex 2-B (Tariff Commitments). An agreement between two or more Parties to accelerate or broaden the scope of the elimination of a customs duty on an originating good shall supersede any customs duty rate determined pursuant to those Parties' Schedules to Annex 2-B (Tariff Commitments) for that good once approved by each Party in accordance with its applicable legal procedures.

4.

A Party may at any time unilaterally accelerate the elimination of customs duties set out in its Schedule to Annex 2-B (Tariff Commitments) on originating goods.

5.

Annex 2-C (Provisions Between Mexico and the United States on Automotive Goods) contains additional provisions between Mexico and the United States relating to customs duties on automotive goods that are not originating under Chapter 4 (Rules of Origin).

Article 2.5: Drawback and Duty Deferral Programs

1.

Except as otherwise provided in this Article, no Party shall refund the amount of customs duties paid, or waive or reduce the amount of customs duties owed, on a good imported into its territory, on condition that the good is:

a.

subsequently exported to the territory of another Party;

b.

used as a material in the production of another good that is subsequently exported to the territory of another Party; or

c.

substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party,

in an amount that exceeds the lesser of the total amount of customs duties paid or owed on the good on importation into its territory and the total amount of customs duties paid to another Party on the good that has been subsequently exported to the territory of that other Party.

2.

No Party shall, on condition of export, refund, waive, or reduce:

a.

an antidumping or countervailing duty;

b.

a premium offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions, or tariff rate quotas or tariff preference levels; or

c.

customs duties paid or owed on a good imported into its territory and substituted by an identical or similar good that is subsequently exported to the territory of another Party.

3.

If a good is imported into the territory of a Party pursuant to a duty deferral program and is subsequently exported to the territory of another Party, or is used as a material in the production of another good that is subsequently exported to the territory of another Party, or is substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party, the Party from whose territory the good is exported:

a.

shall assess the customs duty as if the exported good had been withdrawn for domestic consumption; and

b.

may waive or reduce such customs duty to the extent permitted under paragraph 1.

4.

In determining the amount of a customs duty that may be refunded, waived, or reduced pursuant to paragraph 1 on a good imported into its territory, each Party shall require presentation of satisfactory evidence of the amount of customs duties paid to another Party on the good that has been subsequently exported to the territory of that other Party.

5.

If satisfactory evidence of the customs duty paid to the Party to which a good is subsequently exported under a duty deferral program described in paragraph 3 is not presented within 60 days after the date of exportation, the Party from whose territory the good was exported:

a.

shall collect the customs duty as if the exported good had been withdrawn for domestic consumption; and

b.

may refund such customs duty, to the extent permitted under paragraph 1, on the timely presentation of such evidence under its laws and regulations.

6.

This Article does not apply to:

a.

a good entered under bond for transportation and exportation to the territory of another Party;

b.

a good exported to the territory of another Party in the same condition as when imported into the territory of the Party from which the good was exported.1 If that good has been commingled with fungible goods and exported in the same condition, its origin for purposes of this subparagraph may be determined on the basis of inventory management methods such as first-in, first-out or last-in, firstout. For greater certainty, nothing in this subparagraph shall be construed to permit a Party to waive, refund, or reduce a customs duty contrary to paragraph 2(c) ;

c.

a good imported into the territory of a Party that is deemed to be exported from its territory, is used as a material in the production of another good that is deemed to be exported to the territory of another Party, or is substituted by an identical or similar good used as a material in the production of another good that is deemed to be exported to the territory of another Party, by reason of:

i.

delivery to a duty-free shop,

ii.

delivery for ship's stores or supplies for ships or aircraft, or

iii.

delivery for use in joint undertakings of two or more of the Parties and that will subsequently become the property of the Party into whose territory the good was deemed to be exported;

d.

a refund of customs duties by a Party on a particular good imported into its territory and subsequently exported to the territory of another Party, if that refund is granted by reason of the failure of that good to conform to sample or specification, or by reason of the shipment of that good without the consent of the consignee;

e.

an originating good that is imported into the territory of a Party and is subsequently exported to the territory of another Party, or used as a material in the production of another good that is subsequently exported to the territory of another Party, or is substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party;

f.

for exports from the territory of the United States to the territory of Canada or Mexico, goods provided for in U.S. tariff items 1701.13.20 or 1701.14.20 that are imported into the territory of the United States under any re-export program or any like program and used as a material in the production of, or substituted by an identical or similar good used as a material in the production of:

i.

a good provided for in Canadian tariff item 1701.99.00 or Mexican tariff items 1701.99.01, 1701.99.02, and 1701.99.99 (refined sugar), or

ii.

sugar containing products that are prepared foodstuffs or beverages classified in headings 17.04 and 18.06 or in Chapters 19, 20, 21, or 22; or

g.

for trade between Canada and the United States:

i.

imported citrus products,

ii.

an imported good used as a material in the production of, or substituted by an identical or similar good used as a material in the production of, a good provided for in U.S. tariff items 5811.00.20 (quilted cotton piece goods), 5811.00.30 (quilted man-made piece goods) or 6307.90.99 (furniture moving pads), or Canadian tariff items 5811.00.10 (quilted cotton piece goods), 5811.00.20 (quilted man-made piece goods) or 6307.90.30 (furniture moving pads), that are subject to the most-favored-nation rate of duty when exported to the territory of the other Party, and

iii.

an imported good used as a material in the production of apparel that is subject to the most-favored-nation rate of duty when exported to the territory of the other Party.

7.

For the purposes of this Article:

identical or similar goods means “identical goods” and “similar goods,” respectively, as defined in the Customs Valuation Agreement, or as otherwise provided for under the law of the importing Party;

material means “material” as defined in Article 4.1 (Definitions) ;

used means “used” as defined in Article 4.1 (Definitions).

8.

If a good referred to by a tariff item number in this Article is described in parentheses following the tariff item number, the description is provided for purposes of reference only.

Article 2.6: Waiver of Customs Duties

No Party shall adopt or maintain any waiver of a customs duty if the waiver is conditioned, explicitly or implicitly, on the fulfillment of a performance requirement.

Article 2.7: Temporary Admission of Goods

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, that is necessary for carrying out the business activity, trade, or profession of a person who qualifies for temporary entry in accordance with the law of the importing Party;

b.

a good intended for display or demonstration, including its component parts, ancillary apparatus and accessories;

c.

commercial samples and advertising films and recordings; and

d.

a good admitted for sports purposes,

admitted from the territory of another Party, regardless of their origin and regardless of whether like, directly competitive, or substitutable goods are available in the territory of the Party.

2.

No Party shall condition the duty-free temporary admission of a good referred to in paragraph 1, other than to require that the good:

a.

be imported by a national of another Party who seeks temporary entry;

b.

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

c.

not be sold, leased, or, for goods referred to in paragraph 1(c), not be put to any use other than exhibition or demonstration, while in its territory;

d.

be accompanied by a security in an amount no greater than 110 percent of the charges that would otherwise be owed on entry or importation, and releasable on exportation of the good except that a bond for customs duties shall not be required for an originating good;

e.

be capable of identification when exported;

f.

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

g.

be admitted in no greater quantity than is reasonable for its intended use; and

h.

be otherwise admissible into the Party's territory under its law.

3.

Subject to its law, each Party shall extend the time limit for temporary admission beyond the period initially fixed at the request of the person concerned.

4.

Each Party shall adopt or maintain procedures providing for the expeditious release of a good admitted under this Article. To the extent possible, those procedures must provide that when such a good accompanies a national of another Party who is seeking temporary entry, the good shall be released simultaneously with the entry of that national.

5.

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

6.

Each Party shall provide, in accordance with its law, that the person responsible for a good admitted under this Article shall not be liable for failure to export the good upon presentation of proof satisfactory to the Party into whose territory the good was admitted that the good has been destroyed within the original time period fixed for temporary admission or any lawful extension.

7.

If any condition that a Party imposes under paragraph 2 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on entry or importation of the good in addition to any other charges or penalties provided for under its law.

8.

Subject to Chapters 14 (Investment) and Chapter 15 (Cross Border Trade in Services) :

a.

each Party shall allow a vehicle, or shipping container or other substantial holder, that enters its territory from the territory of another Party to exit its territory on any route that is reasonably related to the economic and prompt departure of that vehicle, or shipping container or other substantial holder;

b.

no Party shall require any security or impose any penalty or charge solely by reason of any difference between the port of entry and the port of departure of a vehicle, or shipping container or other substantial holder;

c.

no Party shall condition the release of any obligation, including any security, that it imposes in respect of the entry of a vehicle, or shipping container or other substantial holder, into its territory on the exit of that vehicle, or shipping container or other substantial holder, through any particular port of departure; and

d.

no Party shall require that the vehicle or carrier bringing a shipping container or other substantial holder from the territory of another Party into its territory be the same vehicle or carrier that takes that shipping container or other substantial holder to the territory of another Party.

9.

For the purposes of paragraph 8, vehicle means a truck, a truck tractor, a tractor, a trailer unit or trailer, a locomotive, or a railway car or other railroad equipment, if used in international traffic.

10.

Each Party shall adopt or maintain procedures allowing for the arrival and release from customs custody, such as through a procedure that provides for temporary admission as set forth in this Article, of a shipping container or other substantial holder being used or to be used in the shipment of goods in international traffic, whether arriving full or empty and of any size, volume, or dimension, with relief from custom duties and allowing it to remain within its territory for at least 90 consecutive days.

11.

Each Party shall, in accordance with its laws, regulations, and procedures, extend the timeframe for temporary admission of a shipping container or other substantial holder beyond the period initially fixed at the request of the person concerned.

12.

A Party may require that a shipping container or other substantial holder be registered with the customs authority the first time it arrives in its territory, as a condition for the treatment described in paragraphs 10 and 11.

13.

Each Party shall include in the treatment of any shipping container or other substantial holder that has an internal volume of one cubic meter or more, the accessories or equipment accompanying it as defined by the importing Party.

14.

For the purposes of paragraph 8 and paragraphs 10 through 13, a “shipping container or other substantial holder” includes any container or holder, whether collapsible or not, that is constructed of a sturdy material capable of repeated use, and is used in the shipment of goods in international traffic.

Article 2.8: Goods Re-Entered after Repair or Alteration

1.

No Party shall apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported from its territory to the territory of another Party for repair or alteration, regardless of whether that repair or alteration could have been performed in the territory of the Party from which the good was exported for repair or alteration or has increased the value of the good.

2.

Paragraph 1 does not apply to a good imported under a duty deferral program that is exported for repair or alteration and is not re-imported under a duty deferral program.

3.

Notwithstanding Article 2.5 (Drawback and Duty Deferral Programs), no Party shall apply a customs duty to a good, regardless of its origin, admitted temporarily from the territory of another Party for repair or alteration.

4.

For the purposes of this Article, repair or alteration does not include an operation or process that:

a.

destroys a good's essential characteristics or creates a new or commercially different good; or

b.

transforms an unfinished good into a finished good.

Article 2.9: Duty-Free Entry of Commercial Samples of Negligible Value and Printed Advertising Materials

No Party shall apply a customs duty to commercial samples of negligible value or to printed advertising materials imported from the territory of another Party, regardless of their origin, but a Party may require that:

a.

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

b.

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

Article 2.10: Most-Favored-Nation Rates of Duty on Certain Goods

1.

Each Party shall accord most-favored-nation duty-free treatment to a good provided for under the tariff provisions set out in Tables 2.10.1, 2.10.2, and 2.10.3.

2.

Notwithstanding Chapter 4 (Rules of Origin), each Party shall consider a good set out in Table 2.10.1, if imported into its territory from the territory of another Party, to be an originating good.

Article 2.11: Import and Export Restrictions

1.

Except as otherwise provided in this Agreement, no Party shall adopt or maintain any prohibition or restriction on the importation of any good of another Party or on the exportation or sale for export of any good destined for the territory of another Party, except in accordance with Article XI of the GATT 1994, including its interpretative notes, and to this end Article XI of the GATT 1994 and its interpretative notes are incorporated into and made a part of this Agreement, mutatis mutandis .

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.

an export or import price requirement, except as permitted in enforcement of antidumping and countervailing duty orders or price undertakings;

b.

import licensing conditioned on the fulfilment of a performance requirement; or

c.

a voluntary export restraint inconsistent with Article VI of the GATT 1994, as implemented under Article 18 of the SCM Agreement and Article 8.1 of the AD Agreement.

3.

If 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 that Party from:

a.

limiting or prohibiting the importation of the good of that non-Party from the territory of another Party; or

b.

requiring, as a condition for exporting the good of the Party to the territory of another 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.

If 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 a Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing, or distribution arrangements in another Party.

5.

No Party shall as a condition for engaging in importation generally, or for the importation of a particular good, require a person of another Party to establish or maintain a contractual or other relationship with a distributor in its territory.

6.

For greater certainty, paragraph 5 does not prevent a Party from requiring that a person referred to in that paragraph designate a point of contact for the purpose of facilitating communications between its regulatory authorities and that person.

7.

Paragraphs 1 through 6 do not apply to the measures set out in Annex 2-A (Exceptions to Article 2.3 (National Treatment) and Article 2.11 (Import and Export Restrictions) ).

8.

For greater certainty, paragraph 1 applies to the importation of any good implementing or incorporating cryptography, if the good is not designed or modified specifically for government use and is sold or otherwise made available to the public.

9.

For greater certainty, no Party shall adopt or maintain a prohibition or restriction on the importation of originating used vehicles from the territory of another Party. This Article does not prevent a Party from applying motor vehicle safety or emissions measures, or vehicle registration requirements, of general application to originating used vehicles in a manner consistent with this Agreement.

Article 2.12: Remanufactured Goods

1.

For greater certainty, Article 2.11.1 (Import and Export Restrictions) applies to prohibitions and restrictions on a remanufactured good.

2.

Subject to its obligations under this Agreement and the WTO Agreement, a Party may require that a remanufactured good:

a.

be identified as such, including through labelling, for distribution or sale in its territory, and

b.

meet all applicable technical requirements that apply to an equivalent good in new condition.

3.

If a Party adopts or maintains a prohibition or a restriction on a used good, it shall not apply the measure to a remanufactured good.

Article 2.13: Transparency in Import Licensing Procedures

1.

Subject to paragraph 2, each Party shall notify the other Parties of its existing import licensing procedures, if any, as soon as practicable, after this Agreement enters into force. The notification shall:

a.

include the information specified in Article 5.2 of the Import Licensing Agreement and in the annual questionnaire on import licensing procedures described in Article 7.3 of the Import Licensing Agreement; and

b.

be without prejudice as to whether the import licensing procedures are consistent with this Agreement.

2.

A Party shall be deemed to be in compliance with the obligations in paragraph 1 with respect to an import licensing procedure if:

a.

it has notified that procedure to the Committee on Import Licensing established under Article 4 of the Import Licensing Agreement together with the information specified in Article 5.2 of that agreement; and

b.

it has provided the information requested in the questionnaire on import licensing procedures under Article 7.3 of the Import Licensing Agreement in its most recent submission to the Committee on Import Licensing before the entry into force of this Agreement.

3.

A Party shall publish on an official government website any new or modified import licensing procedure, including any information that it is required to be published under Article 1.4(a) of the Import Licensing Agreement. To the extent possible, the Party shall do so at least 20 days before the new procedure or modification takes effect.

4.

Each Party shall respond within 60 days to a reasonable inquiry from another Party concerning its licensing rules and its procedures for the submission of an application for an import license, including the eligibility of persons, firms, and institutions to make an application, any administrative body to be approached, and the list of products subject to the licensing requirement.

5.

If a Party denies an import license application with respect to a good of another Party, it shall, on request of the applicant and within a reasonable period after receiving the request, provide the applicant with a written explanation of the reason for the denial.

6.

No Party shall apply an import licensing procedure to a good of another Party unless the Party has complied with the requirements of paragraphs 1 or 2, and 3, with respect to that procedure.

Article 2.14: Transparency in Export Licensing Procedures

1.

Within 30 days after the date of entry into force of this Agreement, each Party shall notify the other Parties in writing of the publications in which its export licensing procedures, if any, are set out, including addresses of relevant government websites on which the procedures are published. Thereafter, each Party shall publish any new export licensing procedure, or any modification of an export licensing procedure, it adopts as soon as practicable but no later than 30 days after the new procedure or modification takes effect.

2.

Each Party shall ensure that it includes in the publications it has notified under paragraph

a.

the texts of its export licensing procedures, including any modifications it makes to those procedures;

b.

the goods subject to each licensing procedure;

c.

for each licensing procedure, a description of:

i.

the process for applying for a license, and

ii.

any criteria an applicant must meet to be eligible to apply for a license, such as possessing an activity license, establishing or maintaining an investment, or operating through a particular form of establishment in a Party's territory;

d.

a contact point from which interested persons can obtain further information on the conditions for obtaining an export license;

e.

any administrative body to which an application or other relevant documentation is to be submitted;

f.

a description of or a citation to a publication reproducing in full any measure that the export licensing procedure implements;

g.

the period during which each export licensing procedure will be in effect, unless the procedure will remain in effect until withdrawn or revised in a new publication;

h.

if the Party intends to use a licensing procedure to administer an export quota, the overall quantity and, if practicable, the value of the quota, and the opening and closing dates of the quota; and

i.

any exemptions from or exceptions to the requirement to obtain an export license that are available to the public, how to request or use these exemptions or exceptions, and the criteria for the exemptions or exceptions.

3.

Each Party shall provide another Party, upon the other Party's request and to the extent practicable, the following information regarding a particular export licensing procedure that it adopts or maintains, except when doing so would reveal business proprietary or other confidential information of a particular person:

a.

the aggregate number of licenses the Party has granted over a recent period specified in the other Party's request; and

b.

measures, if any, that the Party has adopted in conjunction with the licensing procedure to restrict domestic production or consumption or to stabilize production, supply, or prices for the relevant good.

4.

This Article does not require a Party to grant an export license, or prevent a Party from implementing its obligations or commitments under United Nations Security Council Resolutions, as well as multilateral non-proliferation regimes, including: the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies ; Nuclear Suppliers Group; the Australia Group; Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction, done at Geneva, September 3, 1992, and signed at Paris, January 13, 1993; Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on Their Destruction, done at Washington, London, and Moscow, April 10, 1972; Treaty on the Non-Proliferation of Nuclear Weapons done at Washington, London, and Moscow, July 1, 1968; and the Missile Technology Control Regime.

5.

For the purposes of this Article, export licensing procedure means a requirement that a Party adopts or maintains under which an exporter must, as a condition for exporting a good from the Party's territory, submit an application or other documentation to an administrative body or bodies, but does not include customs documentation required in the normal course of trade or any requirement that must be fulfilled prior to introduction of the good into commerce within the Party's territory.

Article 2.15: Export Duties, Taxes, or Other Charges

No Party shall adopt or maintain any duty, tax, or other charge on the export of any good to the territory of another Party, unless the duty, tax, or charge is also applied to the good if destined for domestic consumption.

Article 2.16: Administrative Fees and Formalities

1.

Each Party shall ensure, in accordance with Article VIII:1 of the GATT 1994 and its interpretative notes, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charges applied in a manner consistent with Article III:2 of the GATT 1994, and antidumping or countervailing duties) 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 a domestic good or a taxation of an import or export for fiscal purposes.

2.

No Party shall require a consular transaction, including a related fee or charge, in connection with the importation of a good of another Party.2

3.

No Party shall adopt or maintain a customs user fee on an originating good.3

Article 2.17: Committee on Trade in Goods

1.

The Parties hereby establish a Committee on Trade in Goods (Goods Committee), comprising representatives of each Party.

2.

The Goods Committee shall meet on the request of a Party or the Commission to consider any matter arising under this Chapter.

3.

The Goods Committee shall meet at a venue and time as the Parties decide or by electronic means. In-person meetings will be held alternately in the territory of each Party.

4.

The Goods Committee's functions shall include:

a.

monitoring the implementation and administration of this Chapter;

b.

promoting trade in goods between the Parties;

c.

providing a forum for the Parties to consult and endeavor to resolve issues relating to this Chapter, including, as appropriate, in coordination or jointly with other Committees, working groups, or other subsidiary bodies established under this Agreement;

d.

promptly seeking to address tariff and non-tariff barriers to trade in goods between the Parties and, if appropriate, referring the matter to the Commission for its consideration;

e.

coordinating the exchange of information on trade in goods between the Parties;

f.

discussing and endeavoring to resolve any difference that may arise between the Parties on matters related to the Harmonized System, including ensuring that each Party's obligations under this Agreement are not altered by its implementation of future amendments to the Harmonized System into its national nomenclature;

g.

referring to another committee established under this Agreement those issues that may be relevant to that committee, as appropriate; and

h.

undertaking additional work that the Commission may assign, or another committee may refer, to it.

CHAPTER 3

AGRICULTURE

Section A: General Provisions

Article 3.1: Definitions

For the purposes of this Chapter:

agricultural good means agricultural products referred to in Article 2 of the Agreement on Agriculture;

export subsidy has the same meaning as assigned to “export subsidies” in Article 1(e) of the Agreement on Agriculture; and

Agreement on Agriculture means the Agreement on Agriculture, set out in Annex 1A to the WTO Agreement.

Article 3.2: Scope

1.

This Chapter applies to measures adopted or maintained by a Party relating to trade in agricultural goods.

2.

In the event of any inconsistency between this Chapter and another provision of this Agreement, this Chapter shall prevail to the extent of the inconsistency.

Article 3.3: International Cooperation

The Parties shall work together at the WTO to promote increased transparency and to improve and further develop multilateral disciplines on market access, domestic support, and export competition with the objective of substantial progressive reductions in support and protection resulting in fundamental reform.

Article 3.4: Export Competition

1.

No Party shall adopt or maintain an export subsidy on any agricultural good destined for the territory of another Party.

2.

If a Party considers that export financing support granted by another Party results or may result in a distorting effect on trade between the Parties, or considers that an export subsidy is being granted by another Party, with respect to an agricultural good, it may request a discussion on the matter with the other Party. The responding Party shall agree to discuss the matter with the requesting Party as soon as practicable.

Article 3.5: Export Restrictions - Food Security

1.

For the purpose of this Article, “foodstuff” includes fish and fish products intended for human consumption.

2.

The Parties recognize that under Article XI:2(a) of the GATT 1994 a Party may temporarily apply an export prohibition or restriction that is otherwise prohibited under Article XI:1 of the GATT 1994 on a foodstuff to prevent or relieve a critical shortage, subject to meeting the conditions set out in Article 12.1 of the Agreement on Agriculture.

3.

In addition to the conditions set out in Article 12.1 of the Agreement on Agriculture under which a Party may apply an export prohibition or restriction, other than a duty, tax, or other charge on a foodstuff, a Party that:

a.

imposes an export prohibition or restriction on the exportation or sale for export of a foodstuff to another Party shall notify the measure to the other Parties at least 30 days prior to the date the measure takes effect, except when the critical shortage is caused by an event constituting force majeure, in which case the Party shall notify prior to the date the measure takes effect; or

b.

maintains an export prohibition or restriction as of the date of entry into force of this Agreement shall notify the measure to the other Parties within 30 days of the date of entry into force of this Agreement.

4.

A notification made pursuant to paragraph 3 must include: the reasons for adopting or maintaining the export prohibition or restriction, an explanation of how the measure is consistent with Article XI:2(a) of the GATT 1994, and an identification of alternative measures, if any, that the Party considered before imposing the export prohibition or restriction.

5.

A Party is not required to notify an export prohibition or restriction pursuant to paragraphs 3 or 8 if the measure prohibits or restricts the exportation or sale for export only of a foodstuff that the Party has been a net importer during each of the three calendar years preceding the imposition of the measure, excluding the year in which the Party imposes the measure.

6.

If a Party that adopts or maintains a measure referred to in paragraph 3 has been a net importer of each foodstuff subject to that measure during each of the three calendar years preceding imposition of the measure, excluding the year in which the Party imposes the measure, and that Party does not provide the other Parties with a notification pursuant to paragraph 3, the Party shall, within a reasonable period of time, provide to the other Parties trade data demonstrating that it was a net importer of the foodstuff during these three calendar years.

7.

A Party that is required to notify a measure under paragraph 3 shall:

a.

on the request of another Party having a substantial interest as an importer of the foodstuff subject to the measure, consult with that Party with respect to any matter relating to the measure;

b.

on the request of another Party having a substantial interest as an importer of the foodstuff subject to the measure, provide that Party with relevant economic indicators bearing on whether a critical shortage within the meaning of Article XI:2(a) of the GATT 1994 exists or is likely to occur in the absence of the measure, and on how the measure will prevent or relieve the critical shortage; and

c.

respond in writing to any question posed by another Party regarding the measure within 14 days of receipt of the question.

8.

A Party that considers that another Party should have notified a measure under paragraph 3 may bring the matter to the attention of that other Party. If the matter is not satisfactorily resolved promptly thereafter, the Party that considers that the measure should have been notified may itself bring the measure to the attention to the third Party.

9.

A Party should ordinarily terminate a measure subject to notification under paragraphs 3 or 8 within six months of the date it is adopted. A Party contemplating continuation of a measure beyond six months from the date it adopted the measure shall notify the other Parties no later than five months after the date it adopted the measure and provide the information identified in paragraph 3. Unless the Party has consulted with the other Parties that are net importers of the foodstuff subject to the export prohibition or restriction, the Party shall not continue the measure beyond 12 months from the date the Party adopted the measure. The Party shall immediately discontinue the measure when the critical shortage, or threat thereof, ceases to exist.

10.

No Party shall apply a measure that is subject to notification under paragraphs 3 or 8 to a foodstuff purchased for a non-commercial, humanitarian purpose.

Article 3.6: Domestic Support

1.

The Parties recognize that domestic support measures can be of crucial importance to their agricultural sectors but may also have trade distorting effects and effects on production. If a Party supports its agricultural producers, the Party shall consider domestic support measures that have no, or at most minimal, trade distorting effects or effects on production.

2.

If a Party raises concerns that another Party's domestic support measure has had a negative impact on trade between the Parties, the Parties shall share relevant information regarding the domestic support measure with each other and discuss the matter with a view to seeking to minimize any negative trade impact.

Article 3.7: Committee on Agricultural Trade

1.

The Parties hereby establish a Committee on Agricultural Trade (“Agriculture Committee”), composed of government representatives of each Party.

2.

The Agriculture Committee's functions shall include:

a.

promoting trade in agricultural goods between the Parties under this Agreement;

b.

monitoring and promoting cooperation on the implementation and administration of this Chapter;

c.

providing a forum for the Parties to consult and endeavor to address issues or trade barriers and improve access to their respective markets, in coordination or jointly with other committees, working groups, or any other subsidiary bodies established under this Agreement;

d.

endeavoring to exchange information on trade in agricultural goods between the Parties, including information covered by Article 3.10.1 (Transparency and Consultations) or any other relevant transparency provision in this Chapter;

e.

fostering cooperation among the Parties in areas of mutual interest, such as rural development, technology, research and development, and capacity building, and creating joint programs as mutually agreed between the agencies involved in agriculture, among others;

f.

undertaking any additional work, including that the Commission may assign or another committee may refer;

g.

recommending to the Commission any modification of or addition to this Chapter; and

h.

reporting annually on its activities to the Commission.

3.

The Agriculture Committee shall establish its terms of reference at its first meeting and may revise those terms as needed.

4.

The Agriculture Committee shall meet within one year of the date of entry into force of this Agreement and once each year thereafter unless the Parties decide otherwise.

Article 3.8: Consultative Committees on Agriculture

1.

The activities of the Consultative Committees on Agriculture (CCAs) established by:

a.

the Canada-U.S. Consultative Committee on Agriculture Terms of Reference in accordance with the Record of Understanding Between the Governments of the United States of America and Canada Regarding Areas of Agricultural Trade (ROU) on December 4, 1998;

b.

the Memorandum of Understanding Between the U.S. Department of Agriculture and the Office of the U.S. Trade Representative, and the Secretariat of Agriculture, Livestock, Rural Development, Fish and Food and the Secretary of Economy of the United Mexican States Regarding Areas of Food and Agriculture Trade (US-MX MOU) on October 1, 2001 and re-established on March 6, 2007; and

c.

the Memorandum of Understanding between the Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food of the United Mexican States and Agriculture and Agri-Food Canada for the establishment of the Mexico-Canada Agriculture Consultative Committee (MX-CA MOU) on February 1, 2002 and re-established in March 2006,

shall as of the date of entry into force of this Agreement be organized under this Agreement.

2.

The CCAs shall be governed by and operate according to their respective ROU or MOU, and all implementing or administrative documents, as may be amended.

3.

The CCAs may inform the Agriculture Committee, the Committee on Sanitary and Phytosanitary Measures, or the Committee on Technical Barriers to Trade of their activities.

Article 3.9: Agricultural Special Safeguards

Originating agricultural goods traded under preferential tariff treatment shall not be subject to any duties that the importing Party applies pursuant to a special safeguard it takes pursuant to the Agreement on Agriculture.1

Article 3.10: Transparency and Consultations

1.

Each Party shall endeavor, as appropriate, to share with another Party, on request, available information regarding a measure relating to trade in agricultural goods taken by a regional level of government in its territory that may have a significant effect on trade between those Parties.

2.

At the request of another Party, a Party shall meet to discuss, and if appropriate, resolve, matters arising from grade, quality, technical specifications, and other standards as they affect trade between the Parties.

Article 3.11: Annexes

1.

Annex 3-A applies to trade in agricultural goods between Canada and the United States.

2.

Annex 3-B applies to trade in agricultural goods between Mexico and the United States.

3.

Annex 3-C applies to trade in distilled spirits, wine, beer, and other alcohol beverages.

4.

Annex 3-D applies to proprietary formulas for prepackaged foods and food additives.

Section B: Agricultural Biotechnology

Article 3.12: Definitions

For the purposes of this Section:

agricultural biotechnology means technologies, including modern biotechnology, used for the deliberate manipulation of an organism to introduce, remove, or modify one or more heritable characteristics of a product for agriculture and aquaculture use and that are not technologies used in traditional breeding and selection;

Low Level Presence (LLP) Occurrence means low levels of recombinant deoxyribonucleic acid (DNA) plant materials that have passed a food safety assessment according to the Codex Guideline for the Conduct of a Food Safety Assessment of Foods Derived from Recombinant-DNA Plants (CAC/GL 45-2003) in one or more countries, which may on occasion be inadvertently present in food or feed in importing countries in which the food safety of the relevant recombinant DNA plant has not been determined;

modern biotechnology means the application of:

(a) in vitro nucleic acid techniques, including recombinant DNA and direct injection of nucleic acid into cells or organelles; or

(b) fusion of cells beyond the taxonomic family,

that overcome natural physiological reproductive or recombination barriers and that are not techniques used in traditional breeding and selection;

product of agricultural biotechnology means an agricultural good, or a fish or fish product covered by Chapter 3 of the Harmonized System, developed using agricultural biotechnology, but does not include a medicine or a medical product; and

product of modern biotechnology means an agricultural good, or a fish or fish product covered by Chapter 3 of the Harmonized System, developed using modern biotechnology, but does not include a medicine or a medical product.

Article 3.13: Contact Points

Each Party shall designate and notify a contact point or contact points for the sharing of information on matters related to this Section, in accordance with Article 30.5 (Agreement Coordinator and Contact Points).

Article 3.14: Trade in Products of Agricultural Biotechnology

1.

The Parties confirm the importance of encouraging agricultural innovation and facilitating trade in products of agricultural biotechnology, while fulfilling legitimate objectives, including by promoting transparency and cooperation, and exchanging information related to the trade in products of agricultural biotechnology.

2.

This Section does not require a Party to mandate an authorization for a product of agricultural biotechnology to be on the market.

3.

Each Party shall make available to the public and, to the extent possible, online:

a.

the information and documentation requirements for an authorization, if required, of a product of agricultural biotechnology;

b.

any summary of any risk or safety assessment that has led to the authorization, if required, of a product of agricultural biotechnology; and

c.

any list of the products of agricultural biotechnology that have been authorized in its territory.

4.

To reduce the likelihood of disruptions to trade in products of agricultural biotechnology:

a.

each Party shall continue to encourage applicants to submit timely and concurrent applications to the Parties for authorization, if required, of products of agricultural biotechnology;

b.

a Party requiring any authorization for a product of agricultural biotechnology shall:

i.

accept and review applications for the authorization, if required, of products of agricultural biotechnology on an ongoing basis year-round,

ii.

adopt or maintain measures that allow the initiation of the domestic regulatory authorization process of a product not yet authorized in another country,

iii.

if an authorization is subject to expiration, take steps to help ensure that the review of the product is completed and a decision is made in a timely manner, and if possible, prior to expiration, and

iv.

communicate with the other Parties regarding any new and existing authorizations of products of agricultural biotechnology so as to improve information exchange.

Article 3.15: LLP Occurrence

2.

To address an LLP Occurrence, and with a view to preventing future LLP Occurrences, on request of an importing Party, an exporting Party shall:

a.

provide any summary of the specific risk or safety assessments that the exporting Party conducted in connection with any authorization of the product of modern biotechnology that is the subject of the LLP Occurrence;

b.

provide, on receiving permission of the entity, if required, a contact point for any entity within its territory that received authorization for the product of modern biotechnology that is the subject of the LLP Occurrence and that is on the basis of this authorization, likely to possess:

i.

any existing, validated methods for the detection of the product of modern biotechnology that is the subject of the LLP Occurrence,

ii.

any reference sample of the product of modern biotechnology that is the subject of the LLP Occurrence necessary for the detection of the LLP Occurrence, and

iii.

relevant information2 that can be used by the importing Party to conduct a risk or safety assessment, if appropriate, in accordance with the relevant international standards and guidelines; and

c.

encourage the entity in its territory that received authorization related to the product of modern biotechnology that is the subject of the LLP Occurrence to share the information referred to in paragraph 2(b) with the importing Party.

1.

Each Party shall adopt or maintain policies or approaches designed to facilitate the management of any LLP Occurrence.

3.

In the event of an LLP Occurrence, the importing Party shall:

a.

inform the importer or the importer's agent of the LLP Occurrence and of any additional information, including the information referenced in paragraph 2(b) of this Article, that will be required to be submitted to assist the importing Party to make a decision on the management of the LLP occurrence;

b.

on request, and if available, provide to the exporting Party a summary of any risk or safety assessment that the importing Party has conducted in accordance with its domestic law in connection with the LLP Occurrence;

c.

ensure that the LLP Occurrence is managed without unnecessary delay and that any measure3 applied to manage the LLP Occurrence is appropriate to achieve compliance with the importing Party's laws and regulations and takes into account any risk posed by the LLP Occurrence; and

d.

take into account, as appropriate, any relevant risk or safety assessment provided, and authorization granted, by another Party or non-Party when deciding how to manage the LLP Occurrence.

Article 3.16: Working Group for Cooperation on Agricultural Biotechnology

1.

The Parties hereby establish a Working Group for Cooperation on Agricultural Biotechnology (Working Group) for information exchange and cooperation on policy and trade-related matters associated with products of agricultural biotechnology. The Working Group shall be co-chaired by government representatives of each of the Parties, and shall be comprised of policy officials responsible for issues related to agricultural biotechnology of each of the Parties. The Working Group shall report to the Agriculture Committee on its activities and progress on related matters.

2.

The Working Group shall provide a forum for the Parties to:

a.

exchange information on issues, including on existing and proposed domestic laws, regulations, and policies, and on any risk or safety assessments subject to appropriate confidentiality arrangements, related to the trade in products of agricultural biotechnology;

b.

exchange information, and collaborate when possible, on issues pertaining to products of agricultural biotechnology, including on regulatory and policy developments;

c.

consider work, based upon accumulated knowledge and experience of certain products, in areas of regulatory affairs and policy to facilitate trade in products of agricultural biotechnology;

d.

collaborate to consider common approaches for the management of an LLP Occurrence; and

e.

consider the work conducted under other trilateral cooperation mechanisms focused on agricultural biotechnology, including the Trilateral Technical Working Group, established by the Parties in 2003 and operating under Terms of Reference from February 2015.

3.

The Working Group shall coordinate efforts to advance regulatory approaches and trade policies that are transparent, and based on science and on risk for products of agricultural biotechnology in other countries and in international organizations.

4.

The Working Group shall meet annually, unless otherwise decided by the Parties, and may meet in person, or by any other means as determined by the Parties.

CHAPTER 4

RULES OF ORIGIN

Article 4.1: Definitions

For the purposes of this Chapter:

aquaculture means the farming of aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants from seed stock such as eggs, fry, fingerlings, or larvae, by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding, or protection from predators;

fungible goods or fungible materials means goods or materials that are interchangeable for commercial purposes and the properties of which are essentially identical;

indirect material means a material used in the production, testing, or inspection of a good but not physically incorporated into the good, or a material used in the maintenance of buildings or the operation of equipment associated with the production of a good, including:

(a) fuel and energy;

(b) tools, dies, and molds;

(c) spare parts and materials used in the maintenance of equipment and buildings;

(d) lubricants, greases, compounding materials, and other materials used in production or used to operate equipment and buildings;

(e) gloves, glasses, footwear, clothing, safety equipment, and supplies;

(f) equipment, devices, and supplies used for testing or inspecting the goods;

(g) catalysts and solvents; and

(h) any other material that is not incorporated into the good but for which the use in the production of the good can reasonably be demonstrated to be a part of that production;

intermediate material means a material that is self-produced and used in the production of a good, and designated pursuant to Article 4.8 (Intermediate Materials) ;

material means a good that is used in the production of another good, and includes a part or an ingredient;

net cost means total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost;

net cost of a good means the net cost that can be reasonably allocated to a good using one of the methods set out in Article 4.5 (Regional Value Content) ;

non-allowable interest costs means interest costs incurred by a producer that exceed 700 basis points above the applicable federal government interest rate identified in the Uniform Regulations for comparable maturities;

non-originating good or non-originating material means a good or material that does not qualify as originating under this Chapter;

originating good or originating material means a good or material that qualifies as originating under this Chapter;

packaging materials and containers means materials and containers in which a good is packaged for retail sale;

packing materials and containers means materials and containers that are used to protect a good during transportation;

producer means a person who engages in the production of a good;

production means growing, cultivating, raising, mining, harvesting, fishing, trapping, hunting, capturing, breeding, extracting, manufacturing, processing, or assembling a good, or aquaculture;

reasonably allocate means to apportion in a manner appropriate to the circumstances;

royalties means payments of any kind, including payments under technical assistance or similar agreements, made as consideration for the use or right to use a copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, or secret formula or process, excluding those payments under technical assistance or similar agreements that can be related to specific services such as:

(a) personnel training, without regard to where the training is performed; or

(b) if performed in the territory of one or more of the Parties, engineering, tooling, die-setting, software design and similar computer services, or other services;

sales promotion, marketing, and after-sales service costs means the following costs related to sales promotion, marketing, and after-sales service:

(a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstration materials; exhibits; sales conferences, trade shows, and conventions; banners; marketing displays; free samples; sales, marketing, and after-sales service literature (product brochures, catalogs, technical literature, price lists, service manuals, or sales aid information) ; establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; or entertainment;

(b) sales and marketing incentives; consumer, retailer, or wholesaler rebates; or merchandise incentives;

(c) salaries and wages, sales commissions, bonuses, benefits (for example, medical, insurance, or pension), travelling and living expenses, or membership and professional fees for sales promotion, marketing and after-sales service personnel;

(d) recruiting and training of sales promotion, marketing, and after-sales service personnel, and after-sales training of customers' employees, if those costs are identified separately for sales promotion, marketing, and after-sales service of goods on the financial statements or cost accounts of the producer;

(e) product liability insurance;

(f) office supplies for sales promotion, marketing, and after-sales service of goods, if those costs are identified separately for sales promotion, marketing, and aftersales service of goods on the financial statements or cost accounts of the producer;

(g) telephone, mail, and other communications, if those costs are identified separately for sales promotion, marketing, and after-sales service of goods on the financial statements or cost accounts of the producer;

(h) rent and depreciation of sales promotion, marketing, and after-sales service offices, and distribution centers;

(i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing, and after-sales service offices and distribution centers, if those costs are identified separately for sales promotion, marketing, and after-sales service of goods on the financial statements or cost accounts of the producer; and

(j) payments by the producer to other persons for warranty repairs;

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 packing costs means the costs incurred in packing a good for shipment and shipping the good from the point of direct shipment to the buyer, excluding costs of preparing and packaging the good for retail sale;

total cost means all product costs, period costs, and other costs incurred in the territory of one or more of the Parties, where:

(a) product costs are costs that are associated with the production of a good and include the value of materials, direct labor costs, and direct overheads;

(b) period costs are costs, other than product costs, that are expensed in the period in which they are incurred, such as selling expenses and general and administrative expenses; and

(c) other costs are all costs recorded on the books of the producer that are not product costs or period costs, such as interest.

Total cost does not include profits that are earned by the producer, regardless of whether they are retained by the producer or paid out to other persons as dividends, or taxes paid on those profits, including capital gains taxes;

transaction value means the customs value as determined in accordance with the Customs Valuation Agreement, that is, the price actually paid or payable for a good or material with respect to a transaction of, except for the application of Articles 10.3(a) in the Appendix to Annex 4-B (Product-Specific Rules of Origin), the producer of the good, adjusted in accordance with the principles of Articles 8(1), 8(3), and 8(4) of the Customs Valuation Agreement, regardless of whether the good or material is sold for export;

used means used or consumed in the production of goods; and

value means value of a good or material for purposes of calculating customs duties or for the purposes of applying this Chapter.

Article 4.2: Originating Goods

Except as otherwise provided in this Chapter, each Party shall provide that a good is originating if it is:

a.

wholly obtained or produced entirely in the territory of one or more of the Parties, as defined in Article 4.3 (Wholly Obtained or Produced Goods) ;

b.

produced entirely in the territory of one or more of the Parties using nonoriginating materials provided the good satisfies all applicable requirements of Annex 4-B (Product-Specific Rules of Origin) ;

c.

produced entirely in the territory of one or more of the Parties exclusively from originating materials; or

d.

except for a good provided for in Chapter 61 to 63 of the Harmonized System:

i.

produced entirely in the territory of one or more of the Parties;

ii.

one or more of the non-originating materials provided for as parts under the Harmonized System used in the production of the good cannot satisfy the requirements set out in Annex 4-B (Product-Specific Rules of Origin) because both the good and its materials are classified in the same subheading or same heading that is not further subdivided into subheadings or, the good was imported into the territory of a Party in an unassembled or a disassembled form but was classified as an assembled good pursuant to rule 2(a) of the General Rules of Interpretation of the Harmonized System; and

iii.

the regional value content of the good, determined in accordance with Article 4.5 (Regional Value Content), is not less than 60 percent if the transaction value method is used, or not less than 50 percent if the net cost method is used;

and the good satisfies all other applicable requirements of this Chapter.

Article 4.3: Wholly Obtained or Produced Goods

Each Party shall provide that, for the purposes of Article 4.2 (Originating Goods), a good is wholly obtained or produced entirely in the territory of one or more of the Parties if it is:

a.

a mineral good or other naturally occurring substance extracted or taken from there;

b.

a plant, plant good, vegetable, or fungus, grown, cultivated, harvested, picked, or gathered there;

c.

a live animal born and raised there;

d.

a good obtained from a live animal there;

e.

an animal obtained by hunting, trapping, fishing, gathering, or capturing there;

f.

a good obtained from aquaculture there;

g.

fish, shellfish, or other marine life taken from the sea, seabed or subsoil outside the territories of the Parties and, under international law, outside the territorial sea of non-Parties, by vessels that are registered, listed, or recorded with a Party and entitled to fly the flag of that Party;

h.

a good produced from goods referred to in subparagraph (g) on board a factory ship that is registered, listed, or recorded with a Party and entitled to fly the flag of that Party;

i.

a good other than fish, shellfish, and other marine life taken by a Party or a person of a Party from the seabed or subsoil outside the territories of the Parties, provided that Party has the right to exploit that seabed or subsoil;

j.

waste and scrap derived from:

i.

production there, or

ii.

used goods collected there, provided the goods are fit only for the recovery of raw materials; and

k.

a good produced there, exclusively from goods referred to in subparagraphs (a) through (j), or from their derivatives, at any stage of production.

Article 4.4: Treatment of Recovered Materials Used in the Production of a Remanufactured Good

1.

Each Party shall provide that a recovered material derived in the territory of one or more of the Parties is treated as originating when it is used in the production of, and incorporated into, a remanufactured good.

2.

For greater certainty:

a.

a remanufactured good is originating only if it satisfies the applicable requirements of Article 4.2 (Originating Goods) ; and

b.

a recovered material that is not used or incorporated in the production of a remanufactured good is originating only if it satisfies the applicable requirements of Article 4.2 (Originating Goods).

Article 4.5: Regional Value Content

1.

Except as provided in paragraph 6, each Party shall provide that the regional value content of a good shall be calculated, at the choice of the importer, 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 3.

2.

Each Party shall provide that an importer, exporter, or producer may calculate the regional value content of a good on the basis of the following transaction value method:

RVC = (TV-VNM) /TV x 100

where

RVC is the regional value content, expressed as a percentage;

TV is the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good; and

VNM is the value of non-originating materials including materials of undetermined origin used by the producer in the production of the good.

3.

Each Party shall provide that an importer, exporter, or producer may calculate the regional value content of a good on the basis of the following net cost method:

RVC = (NC-VNM) /NC x 100

where

RVC is the regional value content, expressed as a percentage;

NC is the net cost of the good; and

VNM is the value of non-originating materials including materials of undetermined origin used by the producer in the production of the good.

4.

Each Party shall provide that the value of non-originating materials used by the producer in the production of a good shall not, for the purposes of calculating the regional value content of the good under paragraph 2 or 3, include the value of non-originating materials used to produce originating materials that are subsequently used in the production of the good.

5.

Each Party shall provide that if a non-originating material is used in the production of a good, the following may be counted as originating content for the purpose of determining whether the good meets a regional value content requirement:

a.

the value of processing of the non-originating materials undertaken in the territory of one or more of the Parties; and

b.

the value of any originating material used in the production of the non-originating material undertaken in the territory of one or more of the Parties.

6.

Each Party shall provide that an importer, 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 3 if the rule under the Annex 4-B (Product-Specific Rules of Origin) does not provide a rule based on the transaction value method.

7.

If an importer, exporter, or producer of a good calculates the regional value content of the good on the basis of the transaction value method set out in paragraph 2 and a Party subsequently notifies the importer, exporter, or producer, during the course of a verification pursuant to Chapter 5 (Origin Procedures) that the transaction value of the good, or the value of material used in the production of the good, is required to be adjusted or is unacceptable under Article 1 of the Customs Valuation Agreement, the exporter, producer, or importer may then also calculate the regional value content of the good on the basis of the net cost method set out in paragraph 3.

8.

For the purposes of calculating the net cost of a good under paragraph 3, the producer of the good may:

a.

calculate the total cost incurred with respect to all goods produced by that producer, subtract any sales promotion, marketing, and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost of all those goods, and then reasonably allocate the resulting net cost of those goods to the good;

b.

calculate the total cost incurred with respect to all goods produced by that producer, reasonably allocate the total cost to the good, and then subtract any sales promotion, marketing, and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the portion of the total cost allocated to the good; or

c.

reasonably allocate each cost that forms part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing, and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs,

provided that the allocation of all those costs is consistent with the provisions regarding the reasonable allocation of costs set out in the Uniform Regulations.

Article 4.6: Value of Materials Used in Production

Each Party shall provide that, for the purposes of this Chapter, the value of a material is:

a.

for a material imported by the producer of the good, the transaction value of the material at the time of importation, including the costs incurred in the international shipment of the material;

b.

for a material acquired in the territory where the good is produced:

i.

the price paid or payable by the producer in the Party where the producer is located,

ii.

the value as determined for an imported material in subparagraph (a), or

iii.

the earliest ascertainable price paid or payable in the territory of the Party; or

c.

for a material that is self-produced:

i.

all the costs incurred in the production of the material, which includes general expenses, and

ii.

an amount equivalent to the profit added in the normal course of trade, or equal to the profit that is usually reflected in the sale of goods of the same class or kind as the self-produced material that is being valued.

Article 4.7: Further Adjustments to the Value of Materials

1.

Each Party shall provide that for a non-originating material or material of undetermined origin, the following expenses may be deducted from the value of the material:

a.

the costs of freight, insurance, packing, and all other costs incurred in transporting the material to the location of the producer of the good;

b.

duties, taxes, and customs brokerage fees on the material paid in the territory of one or more of the Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, which include credit against duty or tax paid or payable; and

c.

the cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of reusable scrap or by-product.

2.

If the cost or expense listed in paragraph 1 is unknown or documentary evidence of the amount of the adjustment is not available, then no adjustment is allowed for that particular cost.

Article 4.8: Intermediate Materials

Each Party shall provide that any self-produced material, other than a component identified in Table G of that Appendix, that is used in the production of a good may be designated by the producer of the good as an intermediate material for the purpose of calculating the regional value content of the good under paragraph 2 or 3 of Article 4.5 (Regional Value Content), provided that if the intermediate material is subject to a regional value content requirement, no other self-produced material subject to a regional value content requirement used in the production of that intermediate material may itself be designated by the producer as an intermediate material.

Article 4.9: Indirect Materials

An indirect material shall be considered to be an originating material without regard to where it is produced.

Article 4.10: Automotive Goods

The Appendix to Annex 4-B (Product-Specific Rules of Origin) includes additional provisions that apply to automotive goods.

Article 4.11: Accumulation

1.

Each Party shall provide that a good is originating if the good is produced in the territory of one or more of the Parties by one or more producers, provided that the good satisfies the requirements of Article 4.2 (Originating Goods) and all other applicable requirements in this Chapter.

2.

Each Party shall provide that an originating good or material of one or more of the Parties is considered as originating in the territory of another Party when used as a material in the production of a good in the territory of another Party.

3.

Each Party shall provide that production undertaken on a non-originating material in the territory of one or more of the Parties may contribute toward the originating status of a good, regardless of whether that production was sufficient to confer originating status to the material itself.

Article 4.12: De Minimis

1.

Except as provided in Annex 4-A (Exceptions to Article 4.12 (De Minimis) ), each Party shall provide that a good is 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 4-B (Product- Specific Rules of Origin) is not more than 10 percent:

a.

of the transaction value of the good adjusted to exclude any costs incurred in the international shipment of the good; or

b.

of the total cost of the good,

provided that the good satisfies all other applicable requirements of this Chapter.

2.

If a good described in paragraph 1 is also subject to a regional value content requirement, the value of those non-originating materials shall be included in the value of non-originating materials for the applicable regional value content requirement.

3.

A good that is otherwise subject to a regional value content requirement shall not be required to satisfy the requirement if the value of all non-originating materials used in the production of the good is not more than 10 percent of the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good, or the total cost of the good, provided that the good satisfies all other applicable requirements of this Chapter.

4.

With respect to a textile or apparel good, Articles 6.1.2 and 6.1.3 (Rules of Origin and Related Matters) apply in place of paragraph 1.

Article 4.13: Fungible Goods and Materials

1.

Each Party shall provide that a fungible material or good is originating if:

a.

when originating and non-originating fungible materials are used in the production of a good, the determination of whether the materials are originating is made on the basis of an inventory management method recognized in the Generally Accepted Accounting Principles of, or otherwise accepted by, the Party in which the production is performed; or

b.

when originating and non-originating fungible goods are commingled and exported in the same form, the determination of whether the goods are originating is made on the basis of an inventory management method recognized in the Generally Accepted Accounting Principles of, or otherwise accepted by, the Party from which the good is exported.

2.

The inventory management method selected under paragraph 1 must be used throughout the fiscal year of the producer or the person that selected the inventory management method.

3.

For greater certainty, an importer may claim that a fungible material or good is originating if the importer, producer, or exporter has physically segregated each fungible material or good as to allow their specific identification.

Article 4.14: Accessories, Spare Parts, Tools, or Instructional or Other Information Materials

1.

Each Party shall provide that:

a.

in determining whether a good is wholly obtained, or satisfies a process or change in tariff classification requirement as set out in Annex 4-B (Product-Specific Rules of Origin), accessories, spare parts, tools, or instructional or other information materials as described in paragraph 3, are to be disregarded; and

b.

in determining whether a good meets a regional value content requirement, the value of the accessories, spare parts, tools, or instructional or other information materials, as described in paragraph 3, are to be taken into account as originating or non-originating materials, as the case may be, in calculating the regional value content of the good.

2.

Each Party shall provide that a good's accessories, spare parts, tools, or instructional or other information materials, as described in paragraph 3, have the originating status of the good with which they are delivered.

3.

For the purposes of this Article, accessories, spare parts, tools, or instructional or other information materials are covered when:

a.

the accessories, spare parts, tools, or instructional or other information materials are classified with, delivered with, but not invoiced separately from the good; and

b.

the types, quantities, and value of the accessories, spare parts, tools, or instructional or other information materials are customary for that good.

Article 4.15: Packaging Materials and Containers for Retail Sale

1.

Each Party shall provide that packaging materials and containers in which a good is packaged for retail sale, if classified with the good, are disregarded in determining whether all the non-originating materials used in the production of the good have satisfied the applicable process or change in tariff classification requirement set out in Annex 4-B (Product-Specific Rules of Origin) or whether the good is wholly obtained or produced.

2.

Each Party shall provide that if a good is subject to a regional value content requirement, the value of the packaging materials and containers in which the good is packaged for retail sale, if classified with the good, are taken into account as originating or non-originating, as the case may be, in calculating the regional value content of the good.

Article 4.16: Packing Materials and Containers for Shipment

Each Party shall provide that packing materials and containers for shipment are disregarded in determining whether a good is originating.

Article 4.17: Sets of Goods, Kits or Composite Goods

1.

Except as provided in Annex 4-B (Product-Specific Rules of Origin), each Party shall provide that for a set classified as a result of the application of rule 3 of the General Rules for the Interpretation of the Harmonized System, the set is originating only if each good in the set is originating and both the set and the goods meet the other applicable requirements of this Chapter.

2.

Notwithstanding paragraph 1, for a set classified as a result of the application of rule 3 of the General Rules for the Interpretation of the Harmonized System, the set is originating if the value of all the non-originating goods in the set does not exceed 10 percent of the value of the set.

3.

For the purposes of paragraph 2, the value of the non-originating goods in the set and the value of the set shall be calculated in the same manner as the value of non-originating materials and the value of the good.

4.

With respect to a textile or apparel good, Articles 6.1.4 and 6.1.5 (Rules of Origin and Related Matters) apply in place of paragraph 1.

Article 4.18: Transit and Transshipment

1.

Each Party shall provide that an originating good retains its originating status if the good has been transported to the importing Party without passing through the territory of a non-Party.

2.

Each Party shall provide that if an originating good is transported outside the territories of the Parties, the good retains its originating status if the good:

a.

remains under customs control in the territory of a non-Party; and

b.

does not undergo an operation outside the territories of the Parties other than: unloading; reloading; separation from a bulk shipment; storing; labeling or marking required by the importing Party; or any other operation necessary to preserve it in good condition or to transport the good to the territory of the importing Party.

Article 4.19: Non-Qualifying Operations

Each Party shall provide that a good shall not be considered to be an originating good merely by reason of:

a.

mere dilution with water or another substance that does not materially alter the characteristics of the good; or

b.

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.

CHAPTER 5

ORIGIN PROCEDURES

Article 5.1: Definitions

For the purposes of this Chapter:

exporter means an exporter located in the territory of a Party and an exporter required under this Chapter to maintain records in the territory of that Party regarding exportations of a good;

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 origin of those goods under Chapter 4 (Rules of Origin) or Chapter 6 (Textile and Apparel Goods) ;

importer means an importer located in the territory of a Party and an importer required under this Chapter to maintain records in the territory of that Party regarding importations of a good; and

value means value of a good or material for purposes of calculating customs duties or for purposes of applying Chapter 4 (Rules of Origin) or Chapter 6 (Textile and Apparel Goods).

Article 5.2: Claims for Preferential Tariff Treatment

1.

Each Party shall provide that an importer may make a claim for preferential tariff treatment, based on a certification of origin completed by the exporter, producer, or importer1 for the purpose of certifying that a good being exported from the territory of a Party into the territory of another Party qualifies as an originating good.

2.

An importing Party may:

a.

require that an importer who completes a certification of origin provide documents or other information to support the certification;

b.

establish in its law conditions that an importer shall meet to complete a certification of origin;

c.

if an importer fails to meet or no longer meets the conditions established under subparagraph (b), prohibit that importer from providing its own certification as the basis of a claim for preferential tariff treatment; or

d.

if a claim for preferential tariff treatment is based on a certification of origin completed by an importer, prohibit that importer from:

i.

issuing a certification, based on a certification of origin or a written representation completed by the exporter or producer, and

ii.

making a subsequent claim for preferential tariff treatment for the same importation, based on a certification of origin completed by the exporter or producer.

3.

Each Party shall provide that a certification of origin:

a.

need not follow a prescribed format;

b.

contains a set of minimum data elements as set out in Annex 5-A (Minimum Data Elements) that indicate that the good is both originating and meets the requirements of this Chapter;

c.

may be provided on an invoice or any other document;

d.

describes the originating good in sufficient detail to enable its identification; and

e.

meets the requirements as set out in the Uniform Regulations.

4.

A Party shall not reject a claim for preferential tariff treatment for the sole reason that the invoice was issued in a non-Party. However, a certification of origin shall not be provided on an invoice or any other commercial document issued in a non-Party.

5.

Each Party shall provide that the certification of origin for a good imported into its territory may be completed in English, French, or Spanish. If the certification of origin is not in a language of the importing Party, the importing Party may require an importer to submit, upon request, a translation into such a language.

6.

Each Party shall allow a certification of origin to be completed and submitted electronically and shall accept the certification of origin with an electronic or digital signature.

Article 5.3: Basis of a Certification of Origin

1.

Each Party shall provide that if a producer certifies the origin of a good, the certification of origin is completed on the basis of the producer having information, including documents, that demonstrate that the good is originating.

2.

Each Party shall provide that if the exporter is not the producer of the good, the certification of origin may be completed by the exporter of the good on the basis of:

a.

having information, including documents, that demonstrate that the good is originating; or

b.

reasonable reliance on the producer's written representation, such as in a certification of origin, that the good is originating.

3.

Each Party shall provide that a certification of origin may be completed by the importer of the good on the basis of the importer having information, including documents, that demonstrate that the good is originating.

4.

For greater certainty, nothing in paragraph 1 or 2 shall be construed to allow a Party to require an exporter or producer to complete a certification of origin or provide a certification of origin or a written representation to another person.

5.

Each Party shall provide that a certification of origin may apply to:

a.

a single shipment of a good into the territory of a Party; or

b.

multiple shipments of identical goods within any period specified in the certification of origin, but not exceeding 12 months.

6.

Each Party shall provide that a certification of origin for a good imported into its territory be accepted by its customs administration for four years after the date the certification of origin was completed.

Article 5.4: Obligations Regarding Importations

1.

Except as otherwise provided for in this Chapter, each Party shall provide that, for the purpose of claiming preferential tariff treatment, the importer shall:

a.

make a statement forming part of the import documentation based on a valid certification of origin that the good qualifies as an originating good;

b.

have a valid certification of origin in its possession at the time the statement referred to in subparagraph (a) is made;

c.

provide, on the request of the importing Party's customs administration, a copy of the certification of origin, in accordance with its laws and regulations;

d.

if a certification by the importer forms the basis for the claim, demonstrate, on request of the importing Party, that the good is originating under Article 5.3.3 (Basis of a Certification of Origin) ; and

e.

if the claim for preferential tariff treatment is based on a certification of origin completed by a producer that is not the exporter of the good, demonstrate, on the request of the importing Party, that the good certified as originating did not undergo further production or any other operation other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good into the territory of the importing Party.

2.

Each Party shall provide that, if the importer has reason to believe that the certification of origin is based on incorrect information that could affect the accuracy or validity of the certification of origin, the importer shall promptly correct the importation document and pay any duties owing. The importer shall not be subject to penalties for making an incorrect statement that formed part of the import documentation, if it promptly corrects the importation document and pays any duties owing.

3.

A Party may require an importer to demonstrate that a good for which the importer claims preferential tariff treatment was shipped in accordance with Article 4.18 (Transit and Transshipment) by providing:

a.

transportation documents, including the multimodal or combined transportation documents, such as bills of lading or waybills, indicating the shipping route and all points of shipment and transhipment prior to the importation of the good; and

b.

if the good is shipped through or transhipped outside the territories of the Parties, relevant documents, such as in the case of storage, storage documents or a copy of the customs control documents, demonstrating that the good remained under customs control while outside the territories of the Parties.

Article 5.5: Exceptions to Certification of Origin

Each Party shall provide that a certification of origin shall not be required if:

a.

the value of the importation does not exceed US$1,000 or the equivalent amount in the importing Party's currency or any higher amount as the importing Party may establish. A Party may require a written representation certifying that the good qualifies as an originating good; or

b.

it is an importation of a good for which the Party into whose territory the good is imported has waived the requirement for a certification of origin,

provided that the importation does not form part of a series of importations that may reasonably be considered to have been undertaken or arranged for the purpose of evading compliance with the importing Party's laws, regulations, or procedures governing claims for preferential tariff treatment.

Article 5.6: Obligations Regarding Exportations

1.

Each Party shall provide that an exporter or producer in its territory that completes a certification of origin shall provide a copy of the certification of origin to its customs administration, on its request.

2.

Each Party shall provide that if an exporter or a producer in its territory has provided a certification of origin and has reason to believe that it contains or is based on incorrect information, the exporter or producer shall promptly notify, in writing, every person and every Party to whom the exporter or producer provided the certification of origin of any change that could affect the accuracy or validity of the certification of origin.

3.

No Party shall impose penalties on an exporter or a producer in its territory that voluntarily provides written notification pursuant to paragraph 2 with respect to a certification of origin.

4.

A Party may apply measures as the circumstances may warrant when an exporter or a producer in its territory fails to comply with any requirement of this Chapter.

5.

Each Party shall allow a certification of origin to be maintained in any medium and submitted electronically from the exporter or producer in the territory of a Party to an importer in the territory of another Party.

Article 5.7: Errors or Discrepancies

1.

Each Party shall provide that it shall not reject a certification of origin due to minor errors or discrepancies in it that do not create doubts concerning the correctness of the import documentation.

2.

Each Party shall provide that if the customs administration of the Party into whose territory a good is imported determines that a certification of origin is illegible, defective on its face, or has not been completed in accordance with this Chapter, the importer shall be granted a period of not less than five working days to provide the customs administration with a copy of the corrected certification of origin.

Article 5.8: Record Keeping Requirements

1.

Each Party shall provide that an importer claiming preferential tariff treatment for a good imported into its territory shall maintain, for a period of no less than five years from the date of importation of the good:

a.

the documentation related to the importation, including the certification of origin that served as the basis for the claim;

b.

all records necessary to demonstrate that the good is originating, if the claim was based on a certification of origin completed by the importer; and

c.

the information, including documents, necessary to demonstrate compliance with Article 5.4.1(e) (Obligations Regarding Importations), if applicable.

2.

Each Party shall provide that an exporter or a producer in its territory that completes a certification of origin or a producer that provides a written representation shall maintain in its territory for five years after the date on which the certification of origin was completed, or for such longer period as the Party may specify, all records necessary to demonstrate that a good for which the exporter or producer provided a certification of origin or other written representation is originating, including records associated with:

a.

the purchase of, cost of, value of, shipping of, and payment for, the good or material;

b.

the purchase of, cost of, value of, shipping of, and payment for all materials, including indirect materials, used in the production of the good or material; and

c.

the production of the good in the form in which the good is exported or the production of the material in the form in which it was sold.

3.

Each Party shall provide in accordance with that Party's law that an importer, exporter, or producer in its territory may choose to maintain the records or documentation specified in paragraphs 1 and 2 in any medium, including electronic, provided that the records or documentation can be promptly retrieved and printed.

4.

For greater certainty, the record keeping requirements on an importer, exporter, or producer that a Party provides for pursuant to this Article apply even if the importing Party does not require a certification of origin or if a requirement for a certification of origin has been waived.

Article 5.9: Origin Verification

1.

For the purpose of determining whether a good imported into its territory is an originating good, the importing Party may, through its customs administration, conduct a verification of a claim for preferential tariff treatment by one or more of the following:

a.

a written request or questionnaire seeking information, including documents, from the importer, exporter, or producer of the good;

b.

a verification visit to the premises of the exporter or producer of the good in order to request information, including documents, and to observe the production process and the related facilities;

c.

for a textile or apparel good, the procedures set out in Article 6.6 (Verification) ; or

d.

any other procedure as may be decided by the Parties.

2.

The importing Party may choose to initiate a verification under this Article to the importer or the person who completed the certification of origin.

3.

If an importing Party conducts a verification under this Article it shall accept information, including documents, directly from the importer, exporter, or producer.

4.

If a claim for preferential tariff treatment is based on a certification of origin completed by the exporter or producer, and in response to a request for information by an importing Party to determine whether a good is originating in verifying a claim of preferential treatment under paragraph 1(a), the importer does not provide sufficient information to demonstrate that the good is originating, the importing Party shall request information from the exporter or producer under paragraph 1 before it may deny the claim for preferential tariff treatment. The importing Party shall complete the verification, including any additional request to the exporter or producer under paragraph 1, within the time provided in paragraph 15.

5.

A written request or questionnaire seeking information, including documents, or a request for a verification visit, under paragraphs 1(a) or (b) shall:

a.

include the identity of the customs administration issuing the request;

b.

state the object and scope of the verification, including the specific issue the requesting Party seeks to resolve with the verification;

c.

include sufficient information to identify the good that is being verified; and

d.

in the case of a verification visit, request the written consent of the exporter or producer whose premises are going to be visited and indicate:

i.

the legal authority for the visit,

ii.

the proposed date and location for the visit,

iii.

the specific purpose of the visit, and

iv.

the names and titles of the officials performing the visit.

6.

If an importing Party has initiated a verification under paragraph 1(a) or 1(b) other than to the importer, it shall inform the importer of the initiation of the verification.

7.

For a verification under paragraph 1(a) or 1(b), the importing Party shall:

a.

ensure that the written request for information, or documentation to be reviewed, is limited to information and documentation to determine whether the good is originating;

b.

describe the information or documentation in detail to allow the importer, exporter, or producer to identify the information and documentation necessary to respond;

c.

allow the importer, exporter, or producer at least 30 days from the date of receipt of the written request or questionnaire under paragraph 1(a) to respond; and

d.

allow the exporter or producer 30 days from the date of receipt of the written request for a visit under paragraph 1(b) to consent to or refuse the request.

8.

On request of the importing Party, the Party where the exporter or producer is located may, as it deems appropriate and in accordance with its laws and regulations, assist with the verification. This assistance may include providing information it has that is relevant to the origin verification. The importing Party shall not deny a claim for preferential tariff treatment solely on the grounds that the Party where the exporter or producer is located did not provide requested assistance.

9.

If an importing Party initiates a verification under paragraph 1(b), it shall, at the time of the request for the visit under paragraph 5, provide a copy of the request to:

a.

the customs administration of the Party in whose territory the visit is to occur; and

b.

if requested by the Party in whose territory the visit is to occur, the embassy of that Party in the territory of the Party proposing to conduct the visit.

10.

Each Party shall provide that, when the exporter or producer receives notification pursuant to paragraph 5, the exporter or producer may, on a single occasion, within 15 days of receipt of the notification, request the postponement of the proposed verification visit for a period not exceeding 30 days from the proposed date of the visit.

11.

Each Party shall provide that, when its customs administration receives notification pursuant to paragraph 9, the customs administration may, within 15 days of receipt of the notification, postpone the proposed verification visit for a period not exceeding 60 days from the proposed date of the visit, or for a longer period as the relevant Parties may decide.

12.

A Party shall not deny preferential tariff treatment to a good based solely on the postponement of a verification visit pursuant to paragraphs 10 or 11.

13.

Each Party shall permit an exporter or a producer whose good is subject to a verification visit by another Party to designate two observers to be present during the visit, provided that:

a.

the observers do not participate in a manner other than as observers;

b.

the failure of the exporter or producer to designate observers does not result in the postponement of the visit; and

c.

an exporter or producer of a good identifies to the customs administration conducting a verification visit any observers designated to be present during the visit.

14.

The importing Party shall provide the importer, exporter, or producer that certified that the good was originating and is the subject of a verification, with a written determination of origin that includes the findings of facts and the legal basis for the determination. If the importer is not the certifier, the importing Party shall also provide that written determination to the importer.

15.

The Party conducting a verification shall, as expeditiously as possible and within 120 days after it has received all the information necessary2 to make the determination, provide the written determination under paragraph 14. Notwithstanding the foregoing, the Party may extend this period, in exceptional cases, for up to 90 days after notifying the importer, and any exporter or producer who is subject to the verification or provided information during the verification.

16.

Prior to issuing a written determination under paragraph 14, if the importing Party intends to deny preferential tariff treatment, the importing Party shall inform the importer, and any exporter or producer who is subject to the verification and provided information during the verification, of the preliminary results of the verification and provide those persons with a notice of intent to deny that includes when the denial would be effective and a period of at least 30 days for the submission of additional information, including documents, related to the originating status of the good.

17.

If verifications by a Party indicate a pattern of conduct by an importer, exporter, or a producer of 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 imported, exported, or produced by such person until that person establishes compliance with this Chapter, Chapter 4 (Rules of Origin), and Chapter 6 (Textile and Apparel Goods).

18.

For the purposes of this Article and relevant articles of the Uniform Regulations, all communication to the exporter or producer and to the customs administration of the Party of export will be sent by any means that can produce any confirmation of receipt. The specified time periods will begin from the date of receipt.

Article 5.10: Determinations of Origin

1.

Except as otherwise provided in paragraph 2 or Article 6.7 (Determinations), each Party shall grant a claim for preferential tariff treatment made under this Chapter on or after the date of entry into force of this Agreement.

2.

The importing Party may deny a claim for preferential tariff treatment if:

a.

it determines that the good does not qualify for preferential treatment;

b.

pursuant to a verification under Article 5.9 (Origin Verification), it has not received sufficient information to determine that the good qualifies as originating;

c.

the exporter, producer, or importer fails to respond to a written request or questionnaire for information, including documents, under Article 5.9 (Origin Verification) ;

d.

the exporter or producer fails to provide its written consent for a verification visit, in accordance with Article 5.9 (Origin Verification) ;

e.

the importer, exporter, or producer fails to comply with the requirements of this Chapter; or

f.

the exporter, producer, or importer of the good that is required to maintain records or documentation in accordance with this Chapter:

i.

fails to maintain records or documentation, or

ii.

denies access, if requested by a Party, to those records or documentation.

Article 5.11: Refunds and Claims for Preferential Tariff Treatment after Importation

1.

Each Party shall provide that an importer may apply for preferential tariff treatment and a refund of any excess duties paid for a good if the importer did not make a claim for preferential tariff treatment at the time of importation, provided that the good would have qualified for preferential tariff treatment when it was imported into the territory of the Party.

2.

The importing Party may, for the purposes of paragraph 1, require that the importer:

a.

make a claim for preferential tariff treatment;

b.

provide a statement that the good was originating at the time of importation;

c.

provide a copy of the certification of origin; and

d.

provide any other documentation relating to the importation of the good as the importing Party may require,

no later than one year after the date of importation or a longer period if specified in the importing Party's law.

Article 5.12: Confidentiality

1.

If a Party provides information to another Party in accordance with this Chapter and designates the information as confidential or it is confidential under the receiving Party's law, the receiving Party shall keep the information confidential in accordance with its law.

2.

A Party may decline to provide information requested by another Party if that Party has failed to act in accordance with paragraph 1.

3.

A Party may use or disclose confidential information received from another Party under this Chapter but only for the purposes of administration or enforcement of its customs laws or as otherwise provided under the Party's law, including in an administrative, quasi-judicial, or judicial proceeding.

4.

When a Party collects information from a trader under this Chapter, that Party shall apply the provisions set out in Article 7.24 (Protection of Trader Information) to keep the information confidential.

Article 5.13: Penalties

Each Party shall maintain criminal, civil, or administrative penalties for violations of its laws and regulations related to this Chapter.

Article 5.14: Advance Rulings Relating to Origin

1.

In accordance with Article 7.5 (Advance Rulings), each Party, through its customs administration, shall, on request, provide for the issuance of a written advance ruling on origin under this Agreement.

2.

Each Party shall adopt or maintain uniform procedures throughout its territory for the issuance of advance rulings on origin under this Agreement, including the common standards set out in the Uniform Regulations regarding the information required to process an application for a ruling.