North American Free Trade Agreement, 1992 Oct. 7 Tariff Phasing Descriptions
Chapter Four, in determining whether such good is an
originating good, operations performed in or materials obtained from the United States are considered as if they were performed in or obtained from a non-Party; and
(b) any processing that occurs in the United States after the good would qualify as an originating good in accordance with subparagraph (a) does not increase the transaction value of the good by greater than seven percent.
6. Canada shall apply to an originating good to which neither paragraph 4 nor paragraph 5 applies, the applicable rate indicated for an item contained in column II, reduced in accordance with the staging category of column I of section A of this Annex except as otherwise indicated, or where there is a letter "X" (to be replaced with descriptive language) in column II, the applicable rate of duty for the item shall be the higher of:
(a) the General Preferential Tariff rate of duty for that item applied on July 1, 1991, reduced in accordance with the applicable staging category set out for that item in column I of its Schedule; or
(b) the applicable rate under the staging category for that item set out in Annex 401.2, as amended, of the Canada - United States Free Trade Agreement.
7. Paragraphs 4, 5 and 6 shall not apply to goods provided for under Chapters 50 through 63 of the Harmonized System and to other goods identified in Appendix 1.1 of Annex 300-B (Textiles and Apparel Goods).
8. Mexico shall apply the rate applicable under the staging category set out for an item in column II of section B of this Annex to an originating good when the good qualifies to be marked as a good of Canada, pursuant to Annex 312, without regard to whether the good is marked.
9. Mexico shall apply the rate applicable under the staging category set out for an item in column I of section B of this Annex to an originating good when the good qualifies to be marked as a good of the United States, pursuant to Annex 312, without regard to whether the good is marked.
10. The United States shall apply the rate applicable under the staging category set out for an item in Annex 401.2, as amended, of the Canada - United States Free Trade Agreement to an originating good when the good qualifies to be marked as a good of Canada pursuant to Annex 312, without regard to whether the good is marked.
11. The United States shall apply the rate applicable under the staging category set out for an item in section C of this Annex to an originating good when the good qualifies to be marked as a good of Mexico pursuant to Annex 312, whether or not the good is marked. ============================================================================= SECTION A - SCHEDULE OF CANADA
(TARIFF SCHEDULE TO BE ATTACHED)
SECTION B - SCHEDULE OF MEXICO
(TARIFF SCHEDULE TO BE ATTACHED)
SECTION C - SCHEDULE OF THE UNITED STATES
(TARIFF SCHEDULE TO BE ATTACHED)
=============================================================================
ANNEX 303.6
Goods Not Subject to Article 303
1. For exports from the territory of the United States to the territory of Canada or Mexico, a good, provided for in U.S. tariff item 1701.11.02, that is imported into the territory of the United States 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, a good provided for in Canadian tariff item 1701.99.00 or Mexican tariff items 1701.99.01 and 1701.99.99 (refined sugar).
2. For trade between Canada and the United States:
(a) imported citrus products;
(b) 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) that are subject to the most-favored-nation rate of duty when exported to the territory of the other Party; (Canadian tariff items to be added) and
(c) 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, apparel that is subject to the most-favored-nation rate of duty when exported to the territory of the other Party.
============================================================================= ANNEX 303.7
Effective Dates for the Application of Article 303
Section A - Canada
For Canada, Article 303 shall apply to a good imported into the territory of Canada that is:
(a) subsequently exported to the territory of the United States on or after January 1, 1996, or subsequently exported to the territory of Mexico on or after January 1, 2001;
(b) used as a material in the production of another good that is subsequently exported to the territory of the United States on or after January 1, 1996, or used as a material in the production of another good that is subsequently exported to the territory of Mexico on or after January 1, 2001;
(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 the United States on or after January 1, 1996, or 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 Mexico on or after January 1, 2001; or
(d) substituted by an identical or similar good that is subsequently exported to the territory of the United States on or after January 1, 1996, or substituted by an identical or similar good that is subsequently exported to the territory of Mexico on or after January 1, 2001.
Section B - Mexico
For Mexico, Article 303 shall apply to a good imported into the territory of Mexico that is:
(a) subsequently exported to the territory of another Party on or after January 1, 2001;
(b) used as a material in the production of another good that is subsequently exported to the territory of another Party on or after January 1, 2001;
(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 on or after January 1, 2001; or
(d) substituted by an identical or similar good that is subsequently exported to the territory of another Party on or after January 1, 2001.
Section C - United States
For the United States, Article 303 shall apply to a good imported into the territory of the United States that is:
(a) subsequently exported to the territory of Canada on or after January 1, 1996, or subsequently exported to the territory of Mexico on or after January 1, 2001;
(b) used as a material in the production of another good that is subsequently exported to the territory of Canada on or after January 1, 1996, or used as a material in the production of another good that is subsequently exported to the territory of Mexico on or after January 1, 2001;
(c) substituted by an identical or similar good used as a material in the production of another good subsequently exported to the territory of Canada on or after January 1, 1996, or substituted by an identical or similar good used as a material in the production of another good subsequently exported to the territory of Mexico on or after January 1, 2001; or
(d) substituted by an identical or similar good that is subsequently exported to the territory of Canada on or after January 1, 1996, or substituted by an identical or similar good that is subsequently exported to the territory of Mexico on or after January 1, 2001.
============================================================================= ANNEX 303.8
Exception to Article 303(8) For Certain Cathode-Ray Picture Tubes
Mexico
Mexico may refund customs duties paid, or waive or reduce the amount of customs duties owed, on goods provided for in subheading 8540.xx for a person who, during the period July 1, 1991 through June 30, 1992, imported into its territory no fewer than 20,000 units of such goods that would not have been considered to be originating goods had this Agreement been in force during that period, where the goods are:
(a) subsequently exported from the territory of Mexico to the territory of the United States, or are used as materials in the production of other goods that are subsequently exported from the territory of Mexico to the territory of the United States, or are substituted by identical or similar goods used as materials in the production of other goods that are subsequently exported to the territory of the United States, in an amount, for all such persons combined, no greater than
(i) 1,200,000 units in 1994,
(ii) 1,000,000 units in 1995,
(iii) 800,000 units in 1996,
(iv) 600,000 units in 1997,
(v) 400,000 units in 1998,
(vi) 200,000 units in 1999, and
(vii) zero units in 2000 and thereafter,
provided that the number of goods on which such customs duties may be refunded, waived or reduced in any year shall be reduced, with respect to that year, by the number of such goods qualifying as originating goods during the year immediately preceding that year, considering operations performed in, or materials obtained from, the territories of Canada and the United States as if they were performed in, or obtained from, a non-Party; or
(b) subsequently exported from the territory of Mexico to the territory of Canada, or used as materials in the production of other goods that are subsequently exported from the territory of Mexico to the territory of Canada, or are substituted by identical or similar goods used as materials in the production of other goods that are subsequently exported to the territory of Canada, in an amount no greater than
(i) 75,000 units in 1994,
(ii) 50,000 units in 1995, and
(iii) zero units in 1996 and thereafter.
============================================================================= ANNEX 304.1
Exceptions for Existing Waiver Measures
Article 304(1) shall not apply in respect of existing Mexican waivers of customs duties, except that:
(a) Mexico shall not increase the ratio of customs duties waived to customs duties owed relative to the performance required under any such waiver; or
(b) Mexico shall not add any type of good to those qualifying on July 1, 1991, in respect of any waiver of customs duties in effect on that date.
============================================================================= ANNEX 304.2
Continuation of Existing Waiver Measures
For purposes of Article 304(2):
(a) Canada may condition on the fulfillment of a performance requirement the waiver of customs duties under any measure in effect on or before September 28, 1988, on any goods entered or withdrawn from warehouse for consumption before January 1, 1998;
(b) Mexico may condition on the fulfillment of a performance requirement the waiver of customs duties under any measure in effect on July 1, 1991, on any goods entered or withdrawn from warehouse for consumption before January 1, 2001;
(c) as between the United States and Canada, Article 405 of the Canada - United States Free Trade Agreement is incorporated and made part of this Annex solely with respect to measures adopted by Canada or the United States prior to the date of entry into force of this Agreement; and
(d) Canada may grant duty waivers as set out in Annex 300- A. ============================================================================= ANNEX 307.1
Goods Re-Entered after Repair or Alteration
Section A - Canada
Canada may impose customs duties on goods, regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of another Party for repair or alteration as follows:
(a) for goods set out in section D that re-enter its territory from the territory of Mexico, Canada shall apply to the value of the repair or alteration of such goods the rate of duty for such goods applicable under its Schedule attached to Annex 302.2;
(b) for goods other than those set out in section D that re-enter its territory from the territory of the United States or Mexico, other than goods repaired or altered pursuant to a warranty, Canada shall apply to the value of the repair or alteration of such goods the rate of duty for such goods applicable under the Tariff Schedule of Canada attached to Annex 401.2 of the Canada - United States Free Trade Agreement.
(c) for goods set out in section D that re-enter its territory from the territory of the United States, Canada shall apply to the value of the repair or alteration of such goods the rate of duty for such goods applicable under its Schedule attached to Annex 401.2 of the Canada - United States Free Trade Agreement.
Section B - Mexico
Mexico may impose customs duties on goods set out in section D, regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of another Party for repair or alteration, by applying to the value of the repair or alteration of those goods the rate of duty for such goods that would apply if such goods were included in staging category B in the Schedule of Mexico attached to Annex 302.2.
Section C - United States
1. The United States may impose customs duties on:
(a) goods set out in section D, or
(b) goods that are not set out in section D and that are not repaired or altered pursuant to a warranty,
regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of Canada for repair or alteration, by applying to the value of the repair or alteration of such goods the rate of duty applicable under the Canada-U.S. Free Trade Agreement.
2. The United States may impose customs duties on goods set out in section D, regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of Mexico for repair or alteration, by applying to the value of the repair or alteration of such goods a rate of duty of 50 percent reduced in five equal annual stages commencing on January 1, 1994, and the value of such repair or alteration shall be duty-free on January 1, 1998.
Section D - List of Goods [description under review]
Any vessel, including the following goods, documented by a Party under its law to engage in foreign or coastwise trade, or a vessel intended to be employed in such trade:
1. Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods, including:
(a) tankers;
(b) refrigerated vessels, other than tankers; and
(c) other vessels for the transport of goods and other vessels for the transport of both persons and goods, including open vessels.
2. Fishing vessels, including factory ships and other vessels for processing or preserving fishery products of a registered length not exceeding 30.5m.
3. Light-vessels, fire-floats, dredgers, floating cranes, and other vessels the navigability of which is subsidiary to their main function, floating docks, floating or submersible drilling or production platforms, including drilling ships, drilling barges and floating drilling rigs.
============================================================================= ANNEX 307.3
Repair and Rebuilding of Vessels
United States
For the purpose of increasing transparency regarding the types of repairs that may be performed in shipyards outside the territory of the United States that do not result in any loss of privileges for such vessel to:
(a) remain eligible to engage in coastwise trade or to access U.S. fisheries,
(b) transport U.S. government cargo, or
(c) participate in U.S. assistance programs, including the "operating difference subsidy",
the United States shall, no later than the date of entry into force of this Agreement:
(d) provide written clarification to the other Parties of current U.S. Customs and Coast Guard practices that constitute, and differentiate between, the repair and the rebuilding of vessels, including, where possible, clarifications on "jumboizing", vessel conversions, and emergency repairs, and
(e) commence a process to define the terms "repairs", "emergency repairs", and "rebuilding" under U.S. maritime legislation, including the Merchant Marine Act of 1920 (codified at 46 U.S.C. App. 883) and the Merchant Marine Act of 1936 (codified at 46 U.S.C. App. 1171, 1176, 1241 and 1241(o)).
============================================================================= ANNEX 308.1
Most-Favored-Nation Rates of Duty on Certain Automatic Data Processing Goods and Their Parts
Section A - General Provisions
1. Each Party shall reduce its most-favored-nation rate of duty applicable to the goods provided for under the tariff provisions set out in Tables 308.1.1 and 308.1.2 in section B of this Annex to the rate set out therein, or to such reduced rate as the Parties may agree, in accordance with the Schedule set out in section B of this Annex, or with such accelerated schedule as the Parties may agree.
2. Notwithstanding Chapter 3, when the most-favored-nation rate of duty applicable to a good provided for under the tariff provisions set out in Table 308.1.1 in section B of this Annex has been reduced in accordance with paragraph 1, each Party shall consider the good, when imported into its territory from the territory of another Party, to be an originating good.
3. A Party may reduce in advance of the schedule set out in Table 308.1.1 or Table 308.1.2 in section B of this Annex, or of such accelerated schedule as the Parties may agree, its most- favored-nation rate of duty applicable to any good provided for under the tariff provisions set out therein, to the rate set out therein or to such reduced rate as the Parties may agree.
=============================================================================
Section B - Rates of Duty and Schedule for Reduction
Table 308.1.1
Tariff Rate Schedule
Automatic Data Processing Machines (ADP):
8471.10 3.9% S
8471.20 3.9% S
Digital Processing Units:
8471.91 3.9% S
Input or Output Units:
Combined Input/Output Units:
Canada:
8471.92.90.11 3.7% S 8471.92.90.12 3.7% S 8471.92.90.19 3.7% S
Mexico:
8471.92.h1 3.7% S
United States:
8471.92.10 3.7% S
Display Units:
Canada:
8471.92.90.32 3.7% S 8471.92.90.39.a1 3.7% S 8471.92.90.39.a2 Free S
Mexico:
8471.92.h2 3.7% S 8471.92.h3 Free S
United States:
8471.92.30 Free S 8471.92.40.75 3.7% S =============================================================================
Other Input or Output Units:
Canada:
8471.92.10.20 Free S 8471.92.10.90 Free S 8471.92.90.20 Free S 8471.92.90.40 Free S 8471.92.90.50 3.7% S 8471.92.90.91 Free S 8471.92.90.99 Free S
Mexico:
8471.92.h4 3.7% S 8471.92.h5 Free S
United States:
8471.92.20 Free S 8471.92.80 Free S 8471.92.90.20 Free S 8471.92.90.40 3.7% S 8471.92.90.60 Free S 8471.92.90.80 Free S
=============================================================================
Storage Units
8471.93 Free S
Other Units of Automatic Data Processing Machines
8471.99 Free S
Parts of Computers
8473.30 Free R
Computer Power Supplies
8504.40.a3 Free S
8504.90.a4 Free S
Table 308.1.2
Metal Oxide Varistors:
8533.40.a4 Free R
Diodes, Transistors and Similar Semiconductor Devices; Photosensitive Semiconductor Devices; Light Emitting Diodes; Mounted Piezo-electric Crystals
8541.10 Free R 8541.21 Free R 8541.29 Free R 8541.30 Free R 8541.50 Free R 8541.60 Free R 8541.90 Free R
Canada:
8541.20 Free R
Mexico:
8541.20 Free R
United States:
8541.40.20 Free S 8541.40.60 Free R 8541.40.70 Free R 8541.40.80 Free R 8541.40.95 Free R
Electronic Integrated Circuits and Microassemblies
8542 Free R
============================================================================= ANNEX 308.2
Most-Favored-Nation Rates of Duty on Certain Color Television Picture Tubes
1. Any Party considering the reduction of its most-favored- nation rate of customs duty for goods provided for in tariff provision 8540.11.a2 (cathode-ray color television picture tubes, including video monitor cathode-ray tubes, with a diagonal exceeding 14 inches) during the first 10 years after the date of entry into force of this Agreement shall consult with the other Parties in advance of such reduction.
2. If any other Party objects in writing to such reduction, and the Party proceeds with the reduction, any objecting Party may raise its applicable rate of duty on originating goods provided for in the corresponding tariff provision set out in its Schedule attached to Annex 302.2, up to the applicable rate of duty as if such good had been placed in staging category C for purpose of tariff elimination.
============================================================================= ANNEX 308.3
Most-Favored-Nation Duty-Free Treatment of Local Area Network Apparatus
Section A - Canada
Canada shall accord most-favored-nation duty-free treatment to goods provided for in item(s) [to be provided] of its tariff schedule.
Section B - Mexico
Mexico shall accord most-favored-nation duty-free treatment to goods provided for in item(s) [to be provided] of its tariff schedule.
Section C - United States
The United States shall accord most-favored-nation duty-free treatment to goods provided for in item(s) [to be provided] of its tariff schedule.
For purposes of this Annex:
local area network apparatus means a good dedicated for use solely or principally to permit the interconnection of automatic data processing machines and units thereof for a network that is used primarily for the sharing of resources such as central processor units, data storage devices and input or output units, including in-line repeaters, converters, concentrators, bridges and routers, and printed circuit assemblies for physical incorporation into automatic data processing machines and units thereof suitable for use solely or principally with a private network, and providing for the transmission, receipt, error- checking, control, signal conversion or correction functions for non-voice data to move through a local area network. ============================================================================= ANNEX 311.2
Existing Customs User Fees
Section A - Mexico
Mexico shall not increase its customs processing fee ("derechos de tr mite aduanero") on originating goods, and shall by June 30, 1999, eliminate such fee on originating goods.
Mexico B - United States
1. The United States shall not increase its merchandise processing fee and shall eliminate such fee according to the schedule set out in Article 403 of the Canada - United States Free Trade Agreement on originating goods where those goods qualify to be marked as goods of Canada pursuant to Annex 312, without regard to whether the goods are marked.
2. The United States shall not increase its merchandise processing fee and shall by June 30, 1999, eliminate such fee, on originating goods where those goods qualify to be marked as goods of Mexico pursuant to Annex 312, without regard to whether the goods are marked. ============================================================================= ANNEX 312
Country of Origin Marking
1. The Parties shall establish by January 1, 1994, rules for determining whether a good is a good of a Party ("Marking Rules") for the purposes of this Annex, Annex 300-B and Annex 302.2, and for such other purposes as may be agreed.
2. Each Party may require that a good of another Party, as determined in accordance with the Marking Rules, imported into its territory bear a country of origin marking that indicates to the ultimate purchaser of that good the name of its country of origin.
3. Each Party shall permit the country of origin marking of a good of another Party to be indicated in English, French or Spanish, except that a Party may, as part of its general consumer information measures, require that an imported good be marked with its country of origin in the same manner as prescribed for goods of that Party.
4. Each Party shall, in adopting, maintaining and administering any measure relating to country of origin marking, minimize the difficulties, costs and inconveniences that such measure may cause to the commerce and industry of the other Parties.
5. Each Party shall:
(a) accept any reasonable method of marking, including the use of stickers, labels, tags or paint, that ensures that the marking is conspicuous, legible and sufficiently permanent;
(b) exempt from a country of origin marking requirement a good of another Party which
(i) is incapable of being marked,
(ii) cannot be marked prior to exportation to the territory of another Party without causing injury to the goods,
(iii) cannot be marked except at an expense which would materially discourage its exportation to the territory of another Party,
(iv) cannot be marked without materially impairing its function or substantially detracting from its appearance,
(v) is in a container that is marked in a manner that will reasonably indicate the good's origin to the ultimate purchaser,
(vi) is a crude substance,
(vii) is imported for use by the importer and is not intended for sale in the form in which it was imported,
(viii) is to be processed in the importing Party by the importer, or on its behalf, in a manner that results in a change of origin for marking purposes, under the Marking Rules,
(ix) by reason of its character, or the circumstances of its importation, the ultimate purchaser would reasonably know its country of origin even though it is not marked,
(x) was produced more than 20 years prior to its importation,
(xi) was imported without the required marking and cannot be marked after its importation except at an expense that would materially discourage its importation, provided that the failure to mark the good before importation was not for the purpose of avoiding compliance with such requirement,
(xii) for the purposes of temporary duty-free admission, is in transit or in bond or otherwise under customs administration control,
(xiii) is an original work of art, or
(xiv) is provided for in headings 8541 or 8542, and 6904.10.
6. Except for a good described in subparagraphs 5(b)(vi),(vii), (viii), (ix), (x), (xii), (xiii) and (xiv), a Party may provide that, wherever a good is exempted under subparagraph 5(b), its outermost container that ordinarily reaches the ultimate purchaser shall be marked so as to indicate the country of origin of the good it contains.
7. Each Party shall provide that:
(a) a usual container imported empty, whether or not disposable, shall not be required to be marked with its own country of origin, but the container in which it is imported may be required to be marked with the country of origin of its contents; and
(b) a usual container imported filled, whether or not disposable,
(i) shall not be required to be marked with its own country of origin, but
(ii) may be required to be marked with the country of origin of its contents, unless the contents are marked with their country of origin and the container can be readily opened for inspection of the contents, or the marking of the contents is clearly visible through the container.
8. Each Party shall, whenever administratively practicable, permit an importer to mark a good subsequent to importation but prior to release of the good from customs control or custody, unless there have been repeated violations of the country of origin marking requirements of that Party by the same importer and that importer has been previously notified in writing that such good is required to be marked prior to importation.
9. Each Party shall provide that, except with respect to importers that have been notified under paragraph 8, no special duty or penalty shall be imposed for failure to comply with country of origin marking requirements, unless a good is removed from customs custody or control without being properly marked, or a deceptive marking has been used.
10. The Parties shall cooperate and consult on matters related to this Annex, including additional exemptions from a country of origin marking requirement, in accordance with Chapter Five (Customs Procedures).
11. For purposes of this Annex:
conspicuous means capable of being easily seen with normal handling of the good or container;
legible means capable of being easily read;
materially discourage means add a cost to the good that is substantial in relation to its customs value;
sufficiently permanent means capable of remaining in place until the good reaches the ultimate purchaser, unless deliberately removed;
the form in which it was imported means the condition of the good before it has undergone one of the changes in tariff classification described in the Marking Rules;
ultimate purchaser means the last person in the territory of the Party into which the good is imported that purchases the good in the form in which it was imported; such purchaser need not be the last person that will use the good; and
usual container means the container in which a good will ordinarily reach its ultimate purchaser.
============================================================================= ANNEX 314
Distinctive Products
1. Mexico and Canada shall recognize Bourbon Whiskey and Tennessee Whiskey, which is a straight Bourbon Whiskey authorized to be produced only in the State of Tennessee, as distinctive products of the United States. Accordingly, Mexico and Canada shall not permit the sale of any product as Bourbon Whiskey or Tennessee Whiskey, unless it has been manufactured in the United States in accordance with the laws and regulations of the United States governing the manufacture of Bourbon Whiskey and Tennessee Whiskey.
2. The United States and Mexico shall recognize Canadian Whiskey as a distinctive product of Canada. Accordingly, the United States and Mexico shall not permit the sale of any product as Canadian Whiskey, unless it has been manufactured in Canada in accordance with the laws and regulations of Canada governing the manufacture of Canadian Whiskey for consumption in Canada.
3. The United States and Canada shall recognize Tequila and Mezcal as distinctive products of Mexico. Accordingly, the United States and Canada shall not permit the sale of any product as Tequila or Mezcal, unless it has been manufactured in Mexico in accordance with the laws and regulations of Mexico governing the manufacture of Tequila and Mezcal. This provision shall apply to Mezcal, either on the date of entry into force of this Agreement, or 90 days after the date when the official standard for this product is made obligatory by the Government of Mexico, whichever is later. ============================================================================= ANNEX 315
Export Taxes
Mexico
1. Mexico may adopt or maintain a duty, tax, or other charge on the export of those basic foodstuffs set out in paragraph 4, on their ingredients, or on the goods from which such foodstuffs are derived, if such duty, tax, or other charge is adopted or maintained on the export of such goods to the territory of all other Parties, and is used:
(a) to limit to domestic consumers the benefits of a domestic food assistance program with respect to such foodstuff; or
(b) to ensure the availability of sufficient quantities of such foodstuff to domestic consumers or of sufficient quantities of its ingredients, or of the goods from which such foodstuffs are derived, to a domestic processing industry, when the domestic price of such foodstuff is held below the world price as part of a governmental stabilization plan, provided that such duty, tax, or other charge
(i) does not operate to increase the protection afforded to such domestic industry, and
(ii) is maintained only for such period of time as is necessary to maintain the integrity of the stabilization plan.
2. Notwithstanding paragraph 1, Mexico may adopt or maintain a duty, tax, or other charge on the export of any foodstuff to the territory of another Party if such duty, tax, or other charge is temporarily applied to relieve critical shortages of that foodstuff. For purposes of this paragraph, "temporarily" means up to one year, or such longer period as the Parties may agree.
3. Mexico may maintain its existing tax on the export of goods provided for under tariff item 4001.30.02 of the Tariff Schedule of the General Export Duty Act ("Tarifa de la Ley del Impuesto General de Exportaci¢n") for up to 10 years after the date of entry into force of this Agreement.
============================================================================= 4. For purposes of paragraph 1, "basic foodstuffs" means:
Beans Beef steak or pulp Beef liver Beef remnants and bones ("retazo con hueso") Beer Bread Brown sugar Canned sardines Canned tuna Canned peppers Chicken broth Condensed milk Cooked ham Corn tortillas Corn flour Corn dough Crackers Eggs Evaporated milk French rolls ("pan blanco") Gelatine Ground beef Instant coffee Low-priced cookies ("galletas dulces populares) Margarine Oat flakes Pasteurized milk Powdered chocolate Powdered milk for children Powdered milk Rice Roasted coffee Salt Soft drinks Soup paste Tomato puree Vegetable oil Vegetable fat Wheat flour White sugar
============================================================================= ANNEX 316
Other Export Measures
Article 316 shall not apply as between Mexico and the other Parties.
NAFTA Chapter Four Rules of Origin
Article 401: Originating Goods
Except as otherwise provided in this Chapter, a good shall originate in the territory of a Party provided that:
(a) the good is wholly obtained or produced in the territory of one or more of the Parties as defined in Article 415;
(b) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification described in Annex 401.1 as a result of production occurring entirely in the territory of one or more of the Parties, and the good satisfies all other applicable requirements of this Chapter;
(c) the good is produced entirely in the territory of one or more of the Parties exclusively from originating materials; or
(d) with the exception of a good provided for in Chapters 61 through 63 of the Harmonized System, the good is produced entirely in the territory of one or more of the Parties but one or more of the non-originating parts used in the production of the good does not undergo a change in tariff classification because
(i) 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 General Rule of Interpretation 2(a) of the Harmonized System, or
(ii) the tariff heading for the good provides for both the good itself and its parts and is not further subdivided into subheadings, or the tariff subheading for the good provides for both the good itself and its parts,
provided that the good is the good specifically described by the nomenclature of the heading or subheading and that the regional value content of the good, determined in accordance with Article 402, is not less than 60 percent where the transaction value method is used, or 50 percent where the net cost method is used, and that the good satisfies all other applicable requirements of this Chapter.
Article 402: Regional Value Content
1. Except as provided in paragraph 5, each Party shall provide that the regional value content of a good shall be calculated, at the choice of the exporter or producer of the good, on the basis of either the transaction value method described in paragraph 2 or the net cost method described in paragraph 3.
2. The regional value content of a good, where calculated on the basis of the transaction value method, shall be determined as follows:
TV - VNM RVC = --------- x 100 TV
where:
RVC is the regional value content, expressed as a percentage;
TV is the transaction value of the good; and
VNM is the value of non-originating materials used by the producer in the production of the good.
3. The regional value content of a good, where calculated on the basis of the net cost method, shall be determined as follows:
NC - VNM RVC = --------- x 100 NC
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 used by the producer in the production of the good.
4. For purposes of paragraphs 2 and 3, and except as provided in Articles 403(1) and 403(2)(a)(i), the value of non-originating materials used by the producer in the production of the good shall not include the value of non-originating materials used to produce originating materials that are subsequently used in the production of the good.
5. The regional value content of a good shall be calculated solely on the basis of the net cost method described in paragraph 3, where:
(a) there is no transaction value for the good;
(b) the transaction value of the good is unacceptable under Article 1 of the Customs Valuation Code;
(c) the good is sold by the producer to a related person and the volume, by units of quantity, of sales of identical or similar goods to related persons, during the six-month period immediately preceding the month in which the good is sold, exceeds 85 percent of the producer's total sales with respect to such goods;
(d) the good is
(i) identified in Article 403(1) or 403(2),
(ii) provided for in headings 64.01 through 64.05, or
(iii) provided for in tariff item 8469.10.a1 (word processing machines);
(e) the exporter or producer chooses to accumulate the regional value content of the good in accordance with Article 404; or
(f) the good has been designated as an intermediate material under paragraph 10 and is subject to a regional value-content requirement.
6. If an exporter or producer calculates the regional value content of a good using the transaction value method described in paragraph 2 and a Party subsequently notifies the exporter or producer during the course of a verification pursuant to Chapter Five (Customs Procedures) that the transaction value of the good, or the value of any material used in the production of the good, or both, is required to be adjusted or is unacceptable under Article 1 of the Customs Valuation Code, the exporter or producer of the good may then calculate the regional value content of the good using the net cost method described in paragraph 3.
7. Nothing in paragraph 6 shall be construed to preclude a review and appeal, pursuant to Chapter Five (Customs Procedures), of an adjustment or rejection of a transaction value for a good or the value of any material used in the production of the good, or both.
8. For purposes of calculating the net cost of a good pursuant to paragraph 3, the producer of the good may use any one of the following methods:
(a) calculate the total cost incurred with respect to all goods produced by that producer minus 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 goods and then reasonably allocate the resulting net cost of those goods to the good;
(b) reasonably allocate the total cost incurred with respect to all goods produced by that producer to the good minus 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 the individual costs that are 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 such costs are consistent with the provisions regarding the reasonable allocation of costs set out in the Uniform Regulations.
9. With the exception of an intermediate material described in paragraph 10 and except as provided in Article 403(1) and (2)(a)(i), the value of a material used in the production of a good shall be:
(a) the price actually paid or payable by the producer for the material, provided that the price is acceptable under Article 1 of the Customs Valuation Code; or
(b) if the price actually paid or payable is unacceptable under Article 1 of the Customs Valuation Code, the value shall be determined in accordance with the other Articles of the Customs Valuation Code; and
(c) when not included under subparagraph (a) or (b)
(i) freight, insurance, packing and all other costs incurred in transporting such materials to the location of the producer,
(ii) duties, taxes and customs brokerage fees on such materials paid in the territory of one or more of the Parties,
(iii) the cost of waste and spoilage resulting from the use or consumption, or both, of such materials, less the value of renewable scrap or by-product, and
(iv) the value of goods and services relating to such materials determined in accordance with subparagraph 1(b) of Article 8 of the Customs Valuation Code.
10. Except as provided in Article 403, the producer of a good may designate any self-produced material used in the production of the good as an intermediate material, provided that, when the intermediate material is subject to a regional value-content requirement, no other intermediate material subject to a regional value-content requirement is used in the production of that intermediate material.
11. For purposes of determining the value of an intermediate material, the producer of the intermediate material may use either of the following methods:
(a) calculate the total cost incurred with respect to all goods produced by that producer and then reasonably allocate the resulting cost to the intermediate material; or
(b) reasonably allocate to the intermediate material the individual costs that are part of the total cost incurred with respect to that intermediate material.
Article 403: Automotive Goods
1. Where applying the net cost method under Article 402(3) for purposes of calculating the regional value content of any one of the following goods:
(a) a motor vehicle provided for in subheadings 8702.xx (vehicles for the transport of 15 or fewer persons), 8703.21 through 8703.90, 8704.21 or 8704.31; or
(b) a good provided for in the tariff provisions listed in Annex 403.1 where the good is subject to a regional value-content requirement and is for use as original equipment in the production of a good provided for in subheadings 8703.21 through 8703.90, 8704.21 or 8704.31,
the value of non-originating materials used by the producer in the production of the good shall be the sum of the customs values of non-originating materials imported from outside the territories of the Parties under the tariff provisions listed in Annex 403.1.
2. (a) Where applying the net cost method under Article 402(3) with respect to a good identified in subparagraph (b), the producer of the good shall include in the value of non-originating materials used by the producer in the production of the good the sum of
(i) for each material used by the producer that is listed in Annex 403.2, at the choice of the producer, either
(A) the value of such material that is non- originating, or
(B) the value of non-originating materials used in the production of such material, and
(ii) the value of any non-originating material used by the producer that is not in listed in Annex 403.2.
(b) Subparagraph (a) shall apply to the following goods
(i) a motor vehicle provided for in heading 8701 or subheading 8702.yy (vehicles for the transport of 16 or more persons),
(ii) a motor vehicle provided for in subheadings 8704.10, 8704.22, 8704.23, 8704.32 or 8704.90,
(iii) a motor vehicle provided for in headings 8705 or 8706, and
(iv) any of the components identified in Annex 403.2 for use in such motor vehicles.
3. A producer may designate a self-produced material used in the production of any material listed in Annex 403.2 as an intermediate material, provided that, when the intermediate material is subject to a regional value-content requirement, no other intermediate material subject to a regional value-content requirement is used in the production of that intermediate material.
4. In calculating the regional value content of a motor vehicle described in paragraphs 1 and 2, the producer may average its calculation over its fiscal year, using any one of the following categories, on the basis of either all motor vehicles in the category or only those motor vehicles in the category that are exported to the territory of one or more of the other Parties:
(a) the same model line of motor vehicles in the same class of vehicles produced in the same plant in the territory of a Party;
(b) the same class of motor vehicles produced in the same plant in the territory of a Party;
(c) the same model line of motor vehicles produced in the territory of a Party; or
(d) the basis described in Annex 403.4.
5. In calculating the regional value content for any or all goods provided for in a tariff provision listed in Annex 403.1 produced in the same plant, the producer of the good may:
(a) average its calculation
(i) over the fiscal year of the motor vehicle producer to whom the good is sold, or over any quarter or month, or
(ii) over its fiscal year, if the good is sold as an after-market part;
(b) calculate the average referred to in subparagraph (a) separately for any or all goods sold to one or more motor vehicle producers; and
(c) with respect to any calculation under this paragraph, calculate separately those goods that are exported to the territory of one or more of the Parties.
6. Notwithstanding Annex 401.1,
(a) the regional value-content requirement shall be, for a producer's fiscal year beginning nearest to January 1, 1998 and thereafter, 56 percent under the net cost method, and for a producers's fiscal year beginning nearest to January 1, 2002 and thereafter, 62.5 percent under the net cost method, for the following
(i) a motor vehicle provided for in subheading 8702.xx (vehicles for the transport of 15 or fewer persons), 8703.21 through 8703.90, 8704.21 or 8704.31, and
(ii) a good provided for in heading 8407 or 8408 or subheading 8708.40 which is for use as original equipment in the production of a motor vehicle identified in subparagraph (a)(i); and
(b) the regional value-content requirement shall be, for a producer's fiscal year beginning nearest to January 1, 1998 and thereafter, 55 percent under the net cost method, and for a motor vehicle producers's fiscal year beginning nearest to January 1, 2002 and thereafter, 60 percent under the net cost method, for the following
(i) a motor vehicle provided for in heading 8701, subheadings 8702.yy (vehicles for the transport of 16 or more persons), 8704.10, 8704.22, 8704.23, 8704.32 and 8704.90, and heading 8705 or 8706,
(ii) a good provided for in heading 8407 or 8408 or subheading 8708.40 which is for use as original equipment in the production of a motor vehicle identified in subparagraph (b)(i), and
(iii) except for a good identified in subparagraph (a)(ii) or provided for in subheadings 8482.10 through 8482.80 or subheadings 8483.10 through 8483.40, a good identified in Annex 403.1 which is for use as original equipment in the production of a motor vehicle identified in subparagraphs (a)(i) or (b)(i).
7. Notwithstanding paragraph 6,
(a) the regional value content of a motor vehicle referred to in Article 403(1) or 403(2) shall not be less than 50 percent for a period of five years from the date on which the first motor vehicle prototype is produced in a plant by a motor vehicle assembler, provided that
(i) it is a motor vehicle of a class, or marque, or, for a motor vehicle identified in Article 403(1)(a), size and underbody, not previously produced by the motor vehicle assembler in the territory of any of the Parties,
(ii) the plant consists of a new building in which the motor vehicle is assembled, and
(iii) the plant contains substantially all new machinery that is used in the assembly of the motor vehicle;
(b) the regional value content of a motor vehicle referred to in Article 403(1) or 403(2) shall not be less than 50 percent for a period of two years from the date on which the first motor vehicle prototype is produced at a plant following a refit, provided that it is a different motor vehicle of a class, or marque, or, for a motor vehicle identified in Article 403(1)(a), size and underbody, than was assembled by the motor vehicle assembler in the plant before the refit; and
(c) for the purposes of subparagraphs (a) and (b) sizes means in the case of a motor vehicle identified in Article 403(1)(a)
(i) minicompacts -- less than 85 cubic feet of passenger and luggage volume,
(ii) subcompacts -- between 85 and 100 cubic feet of passenger and luggage volume,
(iii) compacts -- between 100 and 110 cubic feet of passenger and luggage volume,
(iv) midsize -- between 110 and 120 cubic feet of passenger and luggage volume, and
(v) large -- between 120 or more cubic feet of passenger and luggage volume.
Article 404: Accumulation
For purposes of determining whether a good is an originating good, the production of the good in the territory of one or more of the Parties by one or more producers shall, at the choice of the exporter or producer of the good, be considered to have been performed in the territory of a Party by that exporter or producer, provided that:
(a) the applicable tariff classification change has occurred, or the regional value-content requirement has been satisfied, or both, entirely in the territory of one or more of the Parties;
(b) the good satisfies all other applicable requirements of this Chapter; and
(c) the production of the producer that chooses to accumulate its production with that of other producers is deemed to be the production of a single producer for purposes of Article 402(10).
Article 405: De Minimis
1. Notwithstanding Article 401(b), a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo the applicable change in tariff classification is not more than seven percent of the transaction value of the good or, if the transaction value of the good is unacceptable under Article 1 of the Customs Valuation Code, seven percent of the total cost of the good, provided that:
(a) if the good is subject to a regional value-content requirement, the value of such non-originating materials shall be taken into account in calculating the regional value content of the good; and
(b) the good satisfies all other applicable requirements of this Chapter.
2. A good that is subject to a regional value-content requirement shall not be required to satisfy such requirement if the value of all non-originating materials used in the production of the good is not more than seven percent of the transaction value of the good or, if the transaction value of the good is unacceptable under Article 1 of the Customs Valuation Code, the value of all non-originating materials is not more than seven percent of the total cost of the good, provided that the good satisfies all other applicable requirements of this Chapter.
3. Paragraphs 1 and 2 shall not apply to:
(a) a material provided for in Chapter 4 of the Harmonized System or tariff item 1901.90.a1 (dairy preparations containing over 10 percent by weight of milk solids) that is used in the production of a good provided for in Chapter 4 of the Harmonized System;
(b) a material provided for in Chapter 4 of the Harmonized System or tariff item 1901.90.a1 (dairy preparations containing over 10 percent by weight of milk solids) that is used in the production of a good provided for in heading 21.05, subheading 2202.90, or tariff items 1901.10.a1 (infant preparations containing over 10 percent by weight of milk solids), 1901.20.a1 (mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale), 1901.90.a1 (dairy preparations containing over 10 percent by weight of milk solids), 2106.90.a4 (preparations containing over 10 percent by weight of milk solids) or 2309.90.a1 (animal feeds containing over 10 percent by weight of milk solids and less than 6 percent by weight of grain or grain products);
(c) a material provided for in heading 17.01 that is used in the production of a good provided for in headings 17.01 through 17.03;
(d) a material provided for in Chapter 15 of the Harmonized System that is used in the production of a good provided for in headings 15.01 through 15.08, 15.12, 15.14 or 15.15;
(e) a material provided for in heading 08.05 and subheadings 2009.11 through 2009.30 that is used in the production of a good provided for in subheadings 2009.11 through 2009.30 or tariff item 2106.90.a2 (concentrated fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins) or 2202.90.a1 (fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins); and
(f) a material provided for in headings 22.03 through 22.08 that is used in the production of a good provided for in headings 22.07 through 22.08.
4. Paragraph 1 shall not apply for purposes of calculating the volume or weight of:
(a) a non-originating material of Chapter 17 of the Harmonized System or heading 18.05 that are used in the production of a good provided for in subheading 1806.10;
(b) a non-originating material of Chapter 9 of the Harmonized System that is used in the production of a good provided for in tariff item 2101.10.a1 (instant coffee, not flavored); and
(c) a non-originating material of heading 20.09 that is used in the production of a good provided for in subheading 2009.90, or 2106.90.a3 (concentrated mixtures of fruit or vegetable juice, fortified with minerals or vitamins) 2202.90.a2 (mixtures of fruit or vegetable juices, fortified with minerals or vitamins).
5. A good of Chapters 50 through 63 of the Harmonized System that does not originate because certain fibers or yarns used in the production of the component of the good that gives the good its essential character do not undergo the applicable change in tariff classification described in Annex 401.1 for the good, shall nonetheless be considered to originate if the weight of all such fibers or yarns in the good is not more than seven percent of the weight of that component.
6. Paragraphs 1 and 2 shall not apply to a good of Chapters 1 through 44 of the Harmonized System unless the non-originating material is provided for in a different subheading than the good for which origin is being determined under this Article.
Article 406: Fungible Goods and Materials
For purposes of determining whether a good is an originating good:
(a) where originating and non-originating fungible materials are used in the production of a good, the origin of the materials need not be determined through the identification of any specific fungible material, but may be determined on the basis of any of the inventory management methods provided for in the Uniform Regulations; and
(b) where originating and non-originating fungible goods are commingled and exported in the same form, the origin of the good may be determined on the basis of any of the inventory management methods provided for in the Uniform Regulations.
Article 407: Accessories, Spare Parts, or Tools
For purposes of determining whether a good, is an originating good, accessories, spare parts or tools delivered with the good that form part of the good's standard accessories, spare parts, or tools, shall be considered as one with the good and shall be disregarded in determining whether all the non- originating materials used in the production of the good undergo the applicable change in tariff classification described in Annex 401.1, provided that:
(a) the accessories, spare parts or tools are not invoiced separately from the good;
(b) the quantities and value of the accessories, spare parts or tools are customary for the good; and
(c) if the good is subject to a regional value-content requirement, the value of the accessories, spare parts or tools shall be taken into account as either originating or non-originating materials in calculating the regional value content of the good.
Article 408: Indirect Materials
An indirect material shall be considered to be an originating material without regard to where it is produced.
Article 409: Packaging Materials and Containers for Retail Sale
Packaging materials and containers in which a good is packaged for retail sale shall, if classified as one with the good, be disregarded in determining whether all the non- originating materials used in the production of the good undergo the applicable change in tariff classification described in Annex 401.1, and, if the good is subject to a regional value content requirement, the value of such packaging materials and containers shall be taken into account in calculating the regional value content of the good.
Article 410: Packing Materials and Containers for Shipment
For the purpose of determining whether a good is an originating good, packing materials and containers in which the good is packed for shipment shall be disregarded in determining whether:
(a) the non-originating materials used in the production of the good undergo the applicable change in tariff classification described in Annex 401.1; and
(b) the good satisfies a regional value-content requirement.
Article 411: Transshipment
A good shall not be considered to be an originating good by virtue of having undergone production that satisfies the requirements of Article 401 if, subsequent to that production, the good undergoes further production, or any other operation, outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good to the territory of a Party.
Article 412: Non-Qualifying Operations
A good shall not be considered to be an originating good merely by virtue of having undergone:
(a) mere dilution with water or another substance that does not materially alter the characteristics of the good; or
(b) any process, work or pricing practice, or any combination thereof, in respect of which it is demonstrated, on the basis of a preponderance of evidence, that the object was to circumvent the provisions of this Chapter.
Article 413: Interpretation
For purposes of this Chapter, the following rules of interpretation shall apply:
(a) the basis for tariff classification in Article 401 is the Harmonized System;
(b) a more specific rule in Annex 401.1 shall take precedence over a general requirement under Article 401;
(c) for purposes of applying Article 401(d), when determining whether a tariff heading or subheading provides for both a good and its parts, reference shall be made both to the nomenclature of the heading or subheading and to any legal note provided in the Harmonized System;
(d) the principles of the Customs Valuation Code shall apply to domestic transactions as well as international transactions;
(e) in the event of any inconsistency between the provisions of this Chapter and the Customs Valuation Code, the provisions of this Chapter shall prevail to the extent of the inconsistency;
(f) in applying Customs Valuation Code under this Chapter, the definitions in Article 415 shall take precedence over the definitions of the Customs Valuation Code to the extent of any difference; and
(g) all costs referred to in this Chapter shall be recorded and maintained in accordance with the Generally Accepted Accounting Principles in the territory of the Party in which the good is produced.
Article 414: Consultation and Revision
1. The Parties shall consult regularly to ensure that the provisions of this Chapter are administered effectively, uniformly and consistently with the spirit and intent of this Agreement, and shall cooperate in the administration of the provisions of this Chapter in accordance with the provisions of