North American Free Trade Agreement, 1992 Oct. 7 Tariff Phasing Descriptions

NAFTA PART ONE GENERAL PART (continued 2)

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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

(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;

(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 Chapter Five (Customs Procedures).

2. If any Party concludes that the provisions of this Chapter require revision to take into account developments in production processes or other matters, the proposed revision along with supporting rationale and any studies shall be submitted to the other Parties for consideration and any appropriate action pursuant to Chapter Five (Customs Procedures).

Article 415: Definitions

For purposes of this Chapter:

class of motor vehicles means any one of the following categories of motor vehicles:

(a) motor vehicles provided for in subheadings 8701.20 and 8702.yy (vehicles for the transport of 16 or more persons), subheadings 8704.22, 8704.23, 8704.32 and 8704.90, and headings 87.05 and 87.06;

(b) motor vehicles provided for in subheadings 8701.10 and 8701.30 through 8701.90;

(c) motor vehicles provided for in subheadings 8702.xx (vehicles for the transport of 15 or fewer persons) and 8704.21 and 8704.31; or

(d) motor vehicles provided for in subheadings 8703.21 through 8703.90;

customs value means the value of a good for the purposes of levying duties of customs on an imported good;

F.O.B. means free on board, regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer;

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

identical or similar goods has the same meaning as prescribed for identical goods and similar goods, respectively, in the Customs Valuation Code;

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

(a) fuel and energy;

(b) tools, dies and molds;

(d) lubricants, greases, compounding materials and other materials used by labor or used to operate equipment and buildings, or both;

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

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

(g) catalysts and solvents; and

(h) any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be a part of that production;

marque means the trade name used by a separate marketing division of a motor vehicle assembler;

material means a good, other than an indirect material, that is used in the production of another good;

model line means a group of motor vehicles having the same platform or model name;

motor vehicle assembler means a producer of motor vehicles and any related persons or joint ventures in which the producer participates;

new building means new construction, including at least the pouring or construction of new foundations and floors, erection of new structure and roof, and installation of new plumbing, electrical and other utilities to house the complete vehicle assembly process (need definition of complete vehicle assembly process);

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 the good using one of the methods set forth in Article 402 (8) (a);

non-allowable interest costs means interest costs actually incurred by the producer in excess of the applicable federal government rate identified in the Uniform Regulations for comparable maturities, plus seven percentage points;

non-originating good or non-originating material means a good or material that has not satisfied the rule of origin applicable to the good or material under this Chapter;

producer means a person who grows, mines, harvests, manufactures, processes or assembles a good, or any combination thereof;

production means growing, mining, harvesting, manufacturing, processing or assembling a good, or any combination thereof;

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

refit means a plant closure for the purposes of plant conversion or retooling that lasts at least three months;

related person means persons who are related only if:

(a) they are officers or directors of one another's business;

(b) they are legally recognized partners in business;

(d) any person directly or indirectly owns, controls or holds 25 per cent or more of the outstanding voting stock or shares of both of them;

(e) one of them directly or indirectly controls the other;

(f) both of them are directly or indirectly controlled by a third person; or

(g) they are members of the same family (members of the same family are natural or adoptive children, brothers sisters, parents, grandparents, or spouses);

royalties means payments of any kind, including payments under technical assistance and similar agreements, made as consideration for the use, or right to use any copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, 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 performed; and

(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, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; entertainment;

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

(c) salaries and wages, sales commissions, bonuses, benefits (e.g., medical, insurance, pension), travelling and living expenses, 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 customer employees, where such 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, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

(g) telephone, mail and other communications, where such 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, where such 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 the good;

shipping and packing costs means the costs incurred in packing the 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;

transaction value means the price of a good actually paid or payable to the producer of the good, adjusted to a F.O.B. basis and in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the Customs Valuation Code;

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

wholly obtained or produced in the territory of one or more of the Parties means goods that are:

(a) mineral goods extracted in the territory of one or more of the Parties;

(b) goods harvested in the territory of one or more of the Parties;

(d) goods (fish, shellfish and other marine life) taken from the sea by vessels registered or recorded with a Party and flying its flag;

(e) goods produced on board factory ships from the goods referred to in subparagraph (d) provided such factory ships are registered or recorded with that Party and fly its flag;

(f) goods taken by a Party or a person of a Party from the seabed or beneath the seabed outside territorial waters, provided that a Party has rights to exploit such seabed;

(g) goods taken from outer space, provided they are obtained by a Party or a person of a Party and not processed in a non-Party; and

(h) waste and scrap derived from

(i) production in the territory of one or more of the Parties,

(ii) used goods collected in the territory of one or more of the Parties, provided such goods are fit only for the recovery of raw materials, or

(iii) goods produced in the territory of one or more of the Parties exclusively from goods referred to in subparagraphs (a) through (h) inclusive or from their derivatives, at any stage of production.

============================================================================= ANNEX 403.1

List of Tariff Provisions for Article 403(1)

INTERIM NOTE: The nomenclature that follows the tariff provisions is for illustrative purposes only.

4009 (tubes, pipes and hoses) 4010.10 (rubber belts) 4011 (tires) 4016.93 (rubber, gaskets, washers and other seals) 4016.99.15.xx (seals) 7007.11 and 7007.21 (laminated safety glass) 7009.10 (mirrors) 8301.20 (locks) 8407.31 (engines of a cylinder capacity not exceeding 50cc) 8407.32 (engines of a cylinder capacity exceeding 50cc but not exceeding 250cc) 8407.33 (engines of a cylinder capacity exceeding 250cc but not exceeding 1000cc) 8407.34.xx (engines of a cylinder capacity exceeding 1000 cc but not exceeding 2,000 cc); 8407.34.yy (engines of a cylinder capacity exceeding 2000 cc) 8408 (diesel engines) 8409 (parts of engines) 8413.30 (pumps) 8414.59 (turbochargers and supercharges) 8415.81 through 8415.83 (air conditioners) 8481.20, 8481.30 and 8481.80 (valves) 8482.10 through 8482.80 (ball bearings) 8483.10 through 8483.40 (transmission shafts) 8483.50 (flywheels) 8501.10 (electric motors) 8501.20 (electric motors) 8501.31 (electric motors) 8501.32.xx (electric motors that provide primary source for electric powered vehicles of subheading 8703.90) 8507.10.xx, 8507.30.xx, 8507.40.xx and 8507.80.xx (batteries that provide primary source for electric cars) 8511.30 (distributors) 8511.40 (starter motors) 8511.50 (other generators) 8512.20 (other lighting or visual signalling equipment) 8512.40 (windscreen wipers, defrosters) 8519.91 (cassette decks) 8527.21 (cassette players combined with radios) 8527.29 (radios) 8536.50 (switches) 8536.90 (junction boxes) 8537.10.99.10 (U.S. tariff provision 8537.10.00.40) (motor control centres) 8539.10 (seal beamed headlamps) 8539.21 (tungsten halogen headlamps) 8544.30 (wire harnesses) 8706 (chassis) 8707 (bodies) 8708.10.xx (bumpers but not parts thereof) 8708.21 (safety seat belts) 8708.29.99.10 (U.S. tariff provision 8708.29.00.10) (body stampings) 8708.29.xx (inflators and modules for airbags) 8708.39 (brakes and servo-brakes, and parts thereof) 8708.40 (gear boxes, transmissions) 8708.50 (drive axles with differential, whether or not provided with other transmission components) 8708.60 (non-driving axles, and parts thereof) 8708.70.xx (road wheels, but not parts or accessories thereof) 8708.80 (suspension shock-absorbers) 8708.91 (radiators) 8708.92 (silencers (mufflers) and exhaust pipes) 8708.93.xx (clutches, but not parts thereof) 8708.94 (steering wheels, steering columns and steering boxes) 8708.99.50.xx (airbags) 8708.99.81 (catalytic convertors) 8708.99.99.11 (half-shafts and drive shafts) 8708.99.99.19 (other parts for powertrains) 8708.99.99.20 (parts for suspension systems) 8708.99.99.49 (parts for steering systems) 8708.99.xx (other parts not included above) 9031.80 (monitoring devices) 9031.80.xx (electronic diagnostics for air bag systems) 9032.89 (automatic regulating instruments) 9401.20 (seats)

============================================================================= ANNEX 403.2

List of Components and Materials for Article 403(2)

1. Component: Engines of heading 8407 or 8408

Materials: cast block, cast head, fuel nozzle, fuel injector pumps, glow plugs, turbochargers and superchargers, electronic engine controls, intake manifold, exhaust manifold, intake/exhaust valves, crankshaft/camshaft, alternator, starter, air cleaner assembly, pistons, connecting rods and assemblies made therefrom (or rotor assemblies for rotary engines), flywheel (for manual transmissions), flexplate (for automatic transmissions), oil pan, oil pump and pressure regulator, water pump, crankshaft and camshaft gears, and radiator assemblies or charge-air coolers.

2. Component: Gear boxes (transmissions) subheading 8708.40

Materials: (a) for manual transmissions - transmission case and clutch housing; clutch; internal shifting mechanism; gear sets, synchronizers and shafts; and (b) for torque convertor type transmissions - transmission case and convertor housing; torque convertor assembly; gear sets and clutches; and electronic transmission controls.

============================================================================= ANNEX 403.4

Regional Value-Content Calculation for CAMI

1. For purposes of Article 403, when determining the origin of motor vehicles produced in the territory of Canada and imported into the territory of the United States, CAMI Automotive, Inc. ("CAMI") may average its calculation of the regional value content of a class of motor vehicles or a model line of motor vehicles produced in a fiscal year in the territory of Canada by CAMI for sale in the territory of one or more of the Parties with the calculation of the regional value content of the corresponding class of motor vehicles or model line of motor vehicles produced in the territory of Canada by General Motors of Canada Limited in a fiscal year that corresponds most closely to CAMI's fiscal year, provided that:

(a) General Motors of Canada Limited owns 50 percent or more of the voting common stock of CAMI; and

(b) General Motors of Canada Limited, General Motors Corporation, General Motors de Mexico S.A., and any subsidiary directly or indirectly owned by any of them, or by any combination thereof, ("GM") acquires 75 percent (75 percent) or more by unit of the class of motor vehicles or model line of motor vehicles, as the case may be, that CAMI Automotive Inc. has produced in the territory of Canada in CAMI's fiscal year for sale in the territory of one or more of the Parties.

2. If GM acquires less than 75 percent by unit of the class of motor vehicles or model line of motor vehicles, as the case may be, that CAMI has produced in the territory of Canada in CAMI's fiscal year for sale in the territory of one or more of the Parties, CAMI may average in the manner described in paragraph 1 only those motor vehicles that are acquired by GM for distribution under the GEO marque or other GM marque.

3. In calculating the regional value content of motor vehicles produced by CAMI in the territory of Canada, CAMI may choose to average the calculation in paragraph 1 or 2 over a period of two fiscal years in the event that any motor vehicle assembly plant operated by CAMI or any motor vehicle assembly plant operated by General Motors of Canada Limited with which CAMI is averaging its regional value content is closed for more than two consecutive months:

(a) for the purpose of re-tooling for a model change, or

(b) as the result of any event or circumstance (other than the imposition of antidumping and countervailing duties, or an interruption of operations resulting from a labour strike, lock-out, labour dispute, picketing or boycott of or by employees of CAMI or GM), that CAMI or GM could not reasonably have been expected to avert by corrective action or by exercise of due care and diligence, including a shortage of materials, failure of utilities, or inability to obtain or delay in obtaining raw materials, parts, fuel or utilities.

Such averaging may be for CAMI's fiscal year in which a CAMI or the General Motors of Canada Limited plant with which CAMI is averaging is closed and either the previous or subsequent fiscal year. In the event that the period of closure spans two fiscal year, the averaging may be only for those two fiscal years.

4. For the purposes of this Article, where by virtue of an amalgamation, reorganization, division or similar transaction:

(a) a motor vehicle producer (the "successor producer") acquires all or substantially all of the assets used by GM; and

(b) the successor producer, directly or indirectly controls, or is controlled by, GM, or both the successor producer and GM are controlled by the same person,

the successor producer shall be deemed to be the same person and a continuation of GM from which it acquired the assets. NAFTA Chapter Five Customs Procedures

Subchapter A - Certification of Origin

Article 501: Certificate of Origin

1. Upon the date of entry into force of this Agreement, the Parties shall establish a Certificate of Origin 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, and may thereafter revise the Certificate by agreement.

2. Each Party may provide that a Certificate of Origin for a good imported into its territory be completed in a language required under its laws or regulations.

3. Each Party shall provide that:

(a) an exporter in its territory shall complete and sign a Certificate of Origin for any exportation of a good for which an importer may claim preferential tariff treatment upon importation of the good into the territory of another Party; and

(b) where an exporter in its territory is not the producer of the good, such exporter may complete and sign a Certificate on the basis of

(i) its knowledge of whether the good qualifies as an originating good,

(ii) reasonable reliance upon the producer's written representation that the good qualifies as an originating good, or

(iii) a completed and signed Certificate for the good voluntarily provided to the exporter by the producer.

4. Nothing in paragraph 3 shall be construed to require a producer to provide a Certificate of Origin to an exporter.

5. Each Party shall:

(a) provide that a Certificate of Origin that has been completed and signed by an exporter or a producer in the territory of another Party that is applicable to

(i) a single importation of a good into its territory, or

(ii) multiple importations of identical goods imported into its territory within any specified period, not exceeding 12 months, set out therein by the exporter or producer,

shall be accepted by its customs administration for a period of four years after the date on which the Certificate was signed; and

(b) require an exporter or a producer in its territory that completes and signs a Certificate pursuant to subparagraph (a) to notify in writing all persons to whom such Certificate was given of any change that could affect its accuracy or validity.

Article 502: Obligations Regarding Importations

1. Except as otherwise provided in this Chapter, each Party, with respect to an importer in its territory that claims preferential tariff treatment for a good imported into its territory from the territory of another Party, shall provide that:

(a) the importer shall make a written declaration, based on a valid Certificate of Origin, that the good qualifies as an originating good;

(b) the importer shall have the Certificate in its possession at the time such declaration is made;

(d) if the importer fails to comply with any requirement set out in this Chapter, that Party may deny preferential tariff treatment to the good;

(e) the importer, where the importer has reason to believe that a Certificate on which a declaration was based contains information that is not correct, shall promptly make a corrected declaration and pay any duties owing; and

(f) the importer, who voluntarily makes a corrected declaration pursuant to subparagraph (e), shall not be subject to penalties for the making of an incorrect declaration.

2. Each Party shall provide that, where a good would have qualified as an originating good when it was imported into the territory of that Party but no claim for preferential tariff treatment was made at that time, the importer of the good may, within one year of the date on which the good was imported, apply for a refund of any excess duties paid as the result of the good not having been accorded preferential tariff treatment, upon presentation of:

(a) a written declaration that the good qualifies as an originating good at the time of importation;

(b) a copy of the Certificate of Origin to the same effect; and

Article 503: Exceptions

Each Party shall provide that a Certificate of Origin shall not be required for:

(a) a commercial importation of a good whose value does not exceed the amount of (US)$1,000 or its equivalent amount in the Party's currency or such higher amount as it may establish, except that it may require that the invoice accompanying such importation include a statement certifying that such goods qualify as originating goods;

(b) a non-commercial importation of a good whose value does not exceed the amount of (US)$1000 or its equivalent amount in the Party's currency, or such higher amount as it may establish; or

(c) an importation of a good for which the Party into whose territory the good is imported has waived the requirement for a Certificate of Origin,

provided that such 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 avoiding the certification requirements set out in Articles 501 and 502.

Article 504: Obligations Regarding Exportations

Each Party shall provide that:

(a) upon the request of its customs administration, an exporter in its territory, or a producer in its territory that has provided a copy of a Certificate of Origin to such exporter pursuant to Article 501(3)(b)(iii), shall provide a copy of the Certificate to its customs administration;

(b) a false certification by an exporter or a producer in its territory that a good to be exported to the territory of another Party qualifies as an originating good shall have the same legal consequences, with appropriate modifications, as would apply to an importer in its territory with respect to a contravention of its customs laws and regulations regarding the making of a false statement or representation;

(c) where an exporter or a producer in its territory fails to comply with any of the requirements set out in this Chapter, it may apply such measures as the circumstances may warrant;

(d) an exporter or a producer in its territory that has completed and signed a Certificate of Origin, and that has reason to believe that the Certificate contains information that is not correct, shall promptly notify in writing all persons to whom the Certificate was given of any change that could affect the accuracy or validity of the Certificate; and

(e) an exporter or a producer who voluntarily provides written notification pursuant to subparagraph (d) shall not be subject to penalties with respect to the making of an incorrect certification.

Subchapter B - Administration and Enforcement

Article 505: Records

1. Each Party shall provide that:

(a) an exporter or a producer in its territory that completes and signs a Certificate of Origin shall maintain in its territory, for a period of five years from the date the Certificate was signed or for such longer period as such Party may specify, all records relating to the origin of a good for which preferential tariff treatment was claimed in the territory of another Party, including records associated with

(i) the purchase of, cost of, value of, and payment for, the good that is exported from its territory, and

(ii) the purchase of, cost of, value of, and payment for, all materials, including indirect materials, used in the production of the good that is exported from its territory, and

(iii) the production of the good in the form in which the good is exported from its territory; and

(b) an importer claiming preferential tariff treatment for a good imported into the Party's territory shall maintain in that territory, for a period of five years from the date of importation of the good or for such longer period as the Party may specify, a copy of the Certificate and all other required documentation relating to the importation of the good.

Article 506: Origin Verifications

1. For purposes of determining whether a good imported into its territory from the territory of another Party qualifies as an originating good, a Party may, through its customs administration, conduct a verification solely by means of:

(a) written questionnaires to an exporter or a producer in the territory of another Party;

(b) visits to the premises of an exporter or a producer in the territory of another Party to review the records and observe the facilities used in the production of the good; or

2. Prior to conducting a verification visit pursuant to paragraph (1)(b), a Party shall, through its customs administration:

(a) deliver a written notification of its intention to conduct such visit;

(i) to the exporter or producer whose premises are to be visited,

(ii) to the customs administration of the Party in whose territory the visit is to occur, and

(iii) to, if requested by the Party in whose territory the visit is to occur, the embassy of such Party in the territory of the Party proposing to conduct the visit; and

(b) obtain the written consent of the exporter or producer whose premises are to be visited.

3. The notification referred to in paragraph 2 shall include:

(a) the identity of the customs administration issuing the notification;

(b) the name of the exporter or producer whose premises are to be visited;

(d) the object and scope of the proposed verification visit, including specific reference to the good subject to the verification;

(e) the names and titles of the officials performing the verification visit; and

(f) the legal authority for the verification visit.

4. Where an exporter or a producer has not given its written consent to a proposed verification visit within 30 days of receipt of notification pursuant to paragraph 2, the notifying Party may deny preferential tariff treatment to the good that would have been the subject of the visit.

5. Each Party shall provide that, where its customs administration receives notification pursuant to paragraph 2, it may, within 15 days from the date of receipt of such notification, postpone the proposed verification visit for a period not exceeding 60 days from the date of such receipt, or for such longer period as the Parties may otherwise agree.

6. A Party shall not deny preferential tariff treatment to a good based solely on the postponement of a verification visit pursuant to paragraph 5.

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

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

(b) the failure of such exporter or producer to designate observers shall not result in the postponement of the visit.

8. Each Party shall, through its customs administration, conduct a verification of a regional value-content requirement in accordance with the Generally Accepted Accounting Principles applied in the territory of the Party from which the good was exported.

9. The Party conducting a verification shall provide the exporter or producer whose good is subject to the verification with a written determination of whether the good qualifies as an originating good, including findings of fact and the legal basis for the determination.

10. Where verifications by a Party indicate a pattern of conduct by an exporter or a producer of false or unsupported representations that a good imported into its territory qualifies as an originating good, such Party may withhold preferential tariff treatment to identical goods exported or produced by such person until that person establishes compliance with the provisions of Chapter Four (Rules of Origin).

11. Each Party shall provide that where it determines that a certain good imported into its territory does not qualify as an originating good based on a tariff classification or a customs value applied by the Party to one or more materials used in the production of the good, which differs from the tariff classification or customs value applied to such materials by the Party from whose territory the good was exported, the Party's determination shall not become effective until it notifies in writing both the importer of the good and the person that completed and signed the Certificate of Origin for the good of its determination.

12. A Party shall not apply a determination made under paragraph 11 to an importation made before the effective date of the determination, provided that:

(a) the customs administration of the Party from whose territory the good was exported has issued an advance ruling on the tariff classification or on the customs value of such materials, or has given consistent treatment to the entry of such materials under the tariff classification or customs value at issue, on which a person is entitled to rely; and

(b) the advance ruling or consistent treatment was given prior to notification of the determination.

13. Where a Party denies preferential tariff treatment to a good pursuant to a determination made under paragraph 11, it shall postpone the effective date of the denial for a period not exceeding 90 days, provided that the importer of the good, or the person who completed and signed the Certificate of Origin for the good, demonstrates that it has relied in good faith to its detriment on the tariff classification or customs value applied to such materials by the customs administration of the Party from whose territory the good was exported.

Article 507: Confidentiality

1. Each Party shall maintain, in accordance with its laws and regulations, the confidentiality of confidential business information collected pursuant to this Chapter and shall protect that business information from disclosure that could prejudice the competitive position of the persons providing the information.

2. The confidential business information collected pursuant to this Chapter may only be disclosed to those authorities responsible for the administration and enforcement of determinations of origin, and of customs and revenue matters.

Article 508: Penalties

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

2. Nothing in Articles 502(1)(d) and (f), 504(e) and 506(6) shall be construed to prevent a Party from applying such measures as the circumstances may warrant.

Subchapter C - Advance Rulings

Articles 509: Advance Rulings

1. Each Party shall, through its customs administration, provide for the expeditious issuance of written advance rulings, prior to the importation of a good into its territory, to an importer in its territory or an exporter or a producer in the territory of another Party, on the basis of the facts and circumstances presented by such importer, exporter or producer of the good, concerning:

(a) whether materials imported from the territory of a non- Party undergo, as a result of production in the territory of one or more of the Parties, the applicable change in tariff classification under Chapter Four (Rules of Origin) to qualify as an originating good;

(b) whether a good satisfies a regional value-content requirement under either the transaction value method or the net cost method set out in Chapter Four;

(c) the appropriate basis or method for customs value to be applied by an exporter or a producer in the territory of another Party, in accordance with the principles of the Customs Valuation Code, in calculating the transaction value of a good, or the value of materials used in the production of a good, for which an advance ruling is requested, for the purpose of determining whether the good satisfies a regional value-content requirement under Chapter Four;

(d) the appropriate basis or method for reasonably allocating costs, in accordance with the allocation methods set out in the Uniform Regulations, for calculating the net cost of a good, or the value of an intermediate material, for which an advance ruling is requested, for the purposes of determining whether the good satisfies a regional value-content requirement under Chapter Four;

(e) whether a good that re-enters its territory after the good has been exported from its territory to the territory of another Party for repair or alteration qualifies for duty-free treatment in accordance with Article 307 (Goods Re-entered After Repair or Alteration);

(f) whether the proposed or actual marking of a good satisfies country of origin marking requirements under Article 312 (Country of Origin Marking); or

(g) whether a good to be imported qualifies as a good of a Party under Annexes 300-B or 302.2.

2. Each Party shall provide that an advance ruling issued pursuant to paragraph 1 shall be based on:

(a) for the purpose of determining the origin of a good, Chapter Four (Rules of Origin), the principles of the Customs Valuation Code and the Uniform Regulations;

(b) for the purpose of determining country of origin marking, Article 312 (Country of Origin Marking); and

3. Each Party shall adopt or maintain procedures for the issuance of advance rulings, including a detailed description of the information reasonably required to process an application.

4. Each Party shall provide that its customs administration:

(a) may, at any time during the course of an evaluation of an application for an advance ruling, request supplemental information from the person requesting the ruling;

(b) after it has obtained all necessary information from the person requesting an advance ruling, shall issue the ruling in accordance with the time periods specified in the Uniform Regulations; and

(c) where the advance ruling is unfavorable to the person requesting it, shall provide that person with a full explanation of the reasons for the ruling.

5. Subject to paragraph 7, each Party shall apply an advance ruling to importations into its territory of the good for which the ruling was requested, commencing on the date of its issuance or such later date as may be specified therein.

6. Each Party shall provide to any person requesting an advance ruling the same treatment, including the same interpretation and application of the provisions of Chapter Four (Rules of Origin) regarding a determination of origin of a good, as it provided to any other person to whom it issued an advance ruling, provided that the facts and circumstances are identical in all material respects.

7. The issuing Party may modify or revoke an advance ruling:

(a) if the ruling is based on an error

(i) of fact,

(ii) in the tariff classification of a good or the materials subject to the ruling,

(iii) in the application of a regional value- content requirement under Chapter Four (Rules of Origin), or

(iv) in the application of the rules for determining whether a good qualifies as a good of a Party under Annexes 300-B or 302.2;

(b) if the ruling is not in accordance with an interpretation agreed by the Parties regarding Chapter Three (National Treatment and Market Access for Goods) and Chapter Four (Rules of Origin);

(d) to conform with an amendment of Chapter Three, Chapter Four, Marking Rules or Uniform Regulations; or

(e) to conform with a judicial decision or a change in its domestic law.

8. Each Party shall provide that any modification or revocation of an advance ruling shall be effective on the date on which the modification or revocation is issued, or on such later date as may be specified therein, and shall not be applied to importations of a good that have occurred prior to that date, unless the person to whom the advance ruling was issued has not acted in accordance with its terms and conditions.

9. Notwithstanding paragraph 8, the issuing Party shall postpone the effective date of such modification or revocation for a period not exceeding 90 days where the person to whom the advance ruling was issued has in good faith relied to its detriment on that ruling.

10. Each Party shall provide that where its customs administration examines the regional value-content of a good for which it has issued an advance ruling with respect to an approved basis or method of customs value under Article 509(1)(c), or with respect to an approved basis or method for reasonably allocating costs under Article 509(1)(d), or with respect to whether a good qualifies for duty-free treatment under Article 509(1)(e), it may evaluate whether:

(a) the exporter or producer has complied with the terms and conditions of the advance ruling;

(b) the exporter's or producer's operations are consistent with the material facts and circumstances upon which the advance ruling is based; and

(c) the supporting data and computations used in applying the basis or method of customs valuation were correct in all material respects.

11. Each Party shall provide that where its customs administration determines that any requirement in paragraph 10 has not been satisfied, it may modify or revoke the advance ruling as the circumstances may warrant.

12. Each Party shall provide that, where a person can demonstrate that it used reasonable care and acted in good faith in presenting the facts and circumstances on which an advance ruling was based, and where the customs administration of a Party determines that the ruling was based on incorrect information, the person to whom such advance ruling was issued shall not be subject to penalties.

13. Where a Party issues an advance ruling to a person that has misrepresented or omitted material facts or circumstances upon which the ruling is based or has failed to act in accordance with the terms and conditions of such ruling, it may apply such measures as the circumstances may warrant.

Subchapter D - Review And Appeal of Origin Determinations and Advance Rulings

Article 510: Review and Appeal

1. Each Party shall grant substantially the same rights of review and appeal of determinations of origins and advance rulings by its customs administration as it provides to importers in its territory to any person:

(a) who completes and signs a Certificate of Origin for a good that has been subject to a determination of origin;

(b) whose good has been subject to a country of origin marking determination pursuant to Article 312 (Country of Origin Marking); or

2. Further to Articles 1804 (Administrative Proceedings) and 1805 (Review and Appeal), each Party shall provide that the rights of review and appeal referred to in paragraph 1 shall include access to:

(a) at least one level of administrative review, independent of the official or office responsible for the determination under review; and

(b) in accordance with its domestic law, judicial or quasi- judicial review of the determination or decision taken at the final level of administrative review.

Subchapter E - Uniform Regulations

Article 511: Uniform Regulations

1. Upon the date of entry into force of this Agreement, the Parties shall establish, and implement through their respective domestic laws or regulations, Uniform Regulations regarding the interpretation, application and administration of the provisions of Chapter Four (Rules of Origin).

2. Each Party shall implement any modification of or addition to the Uniform Regulations no later than 180 days after the Parties agree on such modification or addition, or such other period as the Parties may agree.

Subchapter F - Cooperation

Article 512: Cooperation

1. Each Party shall notify the other Parties of the following determinations, measures and rulings, including to the greatest extent practicable those that are prospective in application:

(a) a determination of origin issued as the result of a verification conducted pursuant to Article 506(1);

(b) a determination of origin that such Party is aware is contrary to:

(i) a ruling issued by the customs administration of another Party with respect to the tariff classification or customs value of a good, or of materials used in the production of a good, or the reasonable allocation of costs where calculating the net cost of a good, that is the subject of a determination of origin, or

(ii) consistent treatment given by the customs administration of another Party with respect to the tariff classification or customs value of a good, or of materials used in the production of a good, or the reasonable allocation of costs where calculating the net cost of a good, that is the subject of a determination of origin;

(c) a measure establishing or significantly modifying an administrative policy that is likely to affect future determinations of origin, country of origin marking requirements or determinations as to whether a good qualifies as a good of a Party under the Marking Rules; and

(d) an advance ruling, or a ruling modifying or revoking an advance ruling pursuant to Article 509(1).

2. The Parties shall cooperate:

(a) in the enforcement of their respective customs-related laws or regulations implementing this Agreement, and under any customs mutual assistance agreements or other customs-related agreements to which they are party;

(b) for purposes of the detection and prevention of unlawful transshipments of textile and apparel goods of a non-Party in the enforcement of prohibitions or quantitative restrictions, including the verification by a Party, in accordance with the procedures set out in this Chapter, of the capacity for production of goods by an exporter or a producer in the territory of another Party, provided that the customs administration of the Party proposing to conduct such verification, prior to conducting the verification

(i) obtains the consent of the Party in whose territory the verification is to occur, and

(ii) provides notification to the exporter or producer whose premises are to be visited,

except that procedures for notifying the exporter or producer whose premises are to be visited shall be in accordance with other procedures as the Parties may agree;

(c) to the extent practicable, for purposes of facilitating the flow of trade between their territories, in customs-related matters, such as the collection and exchange of statistics regarding the importation and exportation of goods, the harmonization of documentation used in trade, the standardization of data elements, the acceptance of an international data syntax and the exchange of information; and

(d) to the extent practicable, in the storage and transmission of customs-related documentation.

Article 513: Working Group and Customs Subgroup

1. The Parties hereby establish a Working Group on Rules of Origin, comprising representatives of each Party, to ensure:

(a) the effective implementation and administration of Articles 303, 308 and 312, Chapter Four (Rules of Origin), this Chapter, the Marking Rules and the Uniform Regulations; and

(b) the effective administration of the customs-related aspects of Chapter Three (National Treatment and Market Access).

2. The Working Group shall meet at least four times a year and at the request of any Party.

3. The Working Group shall:

(a) monitor the implementation and administration by the customs administrations of the Parties of Articles 303, 308 and 312, Chapter Four, this Chapter, the Marking Rules and the Uniform Regulations to ensure their uniform interpretation;

(b) endeavor to agree, upon the request of any Party, on any proposed modification of or addition to Articles 303, 308 and 312, Chapter Four, this Chapter, the Marking Rules and the Uniform Regulations;

(d) propose to the Commission any modification of or addition to Articles 303, 308 and 312, Chapter Three, Chapter Four, this Chapter, the Marking Rules, the Uniform Regulations or other provision of this Agreement as required to conform with any change to the Harmonized System; and

(e) consider any other matter referred to it by a Party, or by the Customs Subgroup established under paragraph 6.

4. Each Party shall, to the greatest extent practicable, take all necessary measures to implement any modification of or addition to this Agreement within 180 days after the Commission agrees on any such modification or addition.

5. If the Working Group fails to resolve a matter referred to it pursuant to paragraph 2(f) within 30 days of such referral, any Party may request a meeting of the Commission pursuant to Article 2007.

6. The Working Group shall establish, and monitor the work of, a Customs Subgroup comprising representatives of each Party. The Subgroup shall meet at least four times a year and on the request of any Party and shall:

(a) endeavor to agree on

(i) the uniform interpretation, application and administration of the provisions of Articles 303, 308 and 312, Chapter Four, this Chapter, the Marking Rules and the Uniform Regulations,

(ii) tariff classification and valuation matters relating to determinations of origin,

(iii) equivalent procedures and criteria for the request, approval, modification, revocation and implementation of advance rulings,

(iv) revisions to the Certificate of Origin,

(v) any other matter referred to it by a Party, the Working Group or the Committee on Trade in Goods established under Chapter Three, and

(vi) any other customs-related matter arising under this Agreement;

(b) consider

(i) the harmonization of customs-related automation requirements and documentation, and

(ii) proposed customs-related administrative and operational changes that could affect the flow of trade between the Parties' territories;

(d) refer to the Working Group any matter on which it has been unable to reach agreement within 60 days after the matter was referred to it pursuant to subparagraph (a)(v).

7. Nothing in this Chapter shall be construed to prevent a Party from issuing a determination of origin or an advance ruling related to a matter under consideration by the Customs Subgroup or the Working Group or from taking such other action as it considers necessary pending a resolution of the matter pursuant to this Agreement.

Article 514: Definitions

For purposes of this Chapter:

advance ruling means a written interpretation issued by the customs administration of a Party on the application of a measure to a given set of facts and circumstances regarding a prospective importation of a good into its territory;

commercial importation means the importation of a good into the territory of any Party for the purpose of sale, or any commercial, industrial, or other like use;

customs administration means the competent authority that is responsible under the domestic law of a Party for the administration of customs laws and regulations;

customs value means "customs value" as defined in Article 415;

determination of origin means a determination as to whether a good qualifies as an originating good in accordance with Chapter Four (Rules of Origin);

exporter in the territory of a Party includes an exporter located in the territory of a Party or 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 the determination of origin of such goods under Chapter Four (Rules of Origin);

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

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

producer includes a person that grows, mines, harvests, manufactures, processes, or assembles a good, or any combination thereof.

NAFTA Chapter Six Energy and Basic Petrochemicals

Article 601: Principles

1. The Parties confirm their full respect for their Constitutions.

2. The Parties recognize that it is desirable to strengthen the important role that trade in energy and basic petrochemical goods play in the North American region and to enhance this role through sustained and gradual liberalization.

3. The Parties recognize the importance of having viable and internationally competitive energy and petrochemical sectors to further their individual national interests.

Article 602: Scope and Coverage

1. This Chapter applies to measures relating to energy and basic petrochemical goods originating in the territories of the Parties and to measures relating to investment and services associated with such energy and basic petrochemical goods, as set forth in this Chapter.

2. For purposes of this Chapter, energy and basic petrochemical goods refer to those goods classified under the Harmonized System as:

(a) Chapter 27 (excluding: subheadings 2707.10, 2707.20, 2707.30, 2707.40, 2707.60, 2707.91, 2707.99 (except solvent naphtha, rubber extender oils and carbon black feedstocks), and in subheading 2710.00 (only normal paraffin mixtures in the range of C9 to C15), and in heading 2711 (only ethylene, propylene, butylene and butadiene, in purities over 50 percent));

(b) subheading 2612.10;

(d) subheading 2845.10;

(e) subheading: 2901.10 (ethane, butanes, pentanes, hexanes, and heptanes only);

3. Except as otherwise specified in Annex 602.3, energy and petrochemical goods and activities shall be governed by the provisions of this Agreement.

Article 603: Import and Export Restrictions

1. Subject to the further rights and obligations of this Agreement, the Parties incorporate the provisions of the General Agreement on Tariffs and Trade (GATT), with respect to prohibitions or restrictions on trade in energy and basic petrochemical goods. The Parties agree that this language does not incorporate their respective protocols of provisional application to the GATT.

2. The Parties understand that the provisions of the GATT incorporated in paragraph 1 prohibit, in any circumstances in which any other form of quantitative restriction is prohibited, minimum or maximum export-price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, minimum or maximum import-price requirements.

3. In circumstances where a Party imposes a restriction on importation from or exportation to a non-Party of an energy or basic petrochemical good, nothing in this Agreement shall be construed to prevent the Party from:

(a) limiting or prohibiting the importation from the territory of any Party of such energy or basic petrochemical good of the non-Party; or

(b) requiring as a condition of export of such energy or basic petrochemical good of the Party to the territory of any other Party that the good be consumed within the territory of the other Party.

4. In the event that a Party imposes a restriction on imports of an energy or basic petrochemical good from non-Party countries, the Parties, upon request of any Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing and distribution arrangements in another Party.

5. Parties may administer a system of import and export licensing for energy and basic petrochemical goods provided that such system is operated in a manner consistent with the provisions of this Agreement, including paragraph 1 and Article 1502 (Monopolies and State Enterprises).

6. In addition, the Parties recognize the provisions of Annex 603.6.

Article 604: Export Taxes

No Party shall maintain or introduce any tax, duty, or charge on the export of any energy or basic petrochemical good to the territory of any other Party, unless such tax, duty, or charge is also maintained or introduced on such energy or basic petrochemical good when destined for domestic consumption.

Article 605: Other Export Measures

A Party may maintain or introduce a restriction otherwise justified under the provisions of Articles XI:2(a) and XX(g), (i) and (j) of the GATT with respect to the export of an energy or basic petrochemical good to the territory of another Party, only if:

(a) the restriction does not reduce the proportion of the total export shipments of a specific energy or basic petrochemical good made available to such other Party relative to the total supply of that good of the Party maintaining the restriction as compared to the proportion prevailing in the most recent 36-month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties involved may agree;

(b) the Party does not impose a higher price for exports of an energy or basic petrochemical good to such other Party than the price charged for such energy good when consumed domestically, by means of any measure such as licenses, fees, taxation and minimum price requirements. The foregoing provision does not apply to a higher price which may result from a measure taken pursuant to subparagraph (a) that only restricts the volume of exports; and

(c) the restriction does not require the disruption of normal channels of supply to such other Party or normal proportions among specific energy or basic petrochemical goods supplied to the other Party such as, for example, between crude oil and refined products and among different categories of crude oil and of refined products.

Article 606: Energy Regulatory Measures

1. The Parties recognize that energy regulatory measures are subject to the disciplines of:

(a) national treatment, as provided in Article 301;

(b) import and export restrictions, as provided in Article 603; or

2. Each Party shall seek to ensure that in the application of any energy regulatory measure, energy regulatory bodies within its territory avoid disruption of contractual relationships to the maximum extent practicable, and provide for orderly and equitable implementation appropriate to such measures.

Article 607: National Security Measures

1. No Party shall maintain or introduce a measure restricting imports of an energy or basic petrochemical good from, or exports of an energy or basic petrochemical good to, another Party under Article XXI of the GATT or under Article 2102 (National Security), except to the extent necessary to:

(a) supply a military establishment of a Party or enable fulfillment of a critical defense contract of a Party;

(b) respond to a situation of armed conflict involving the Party taking the measure;

(c) implement national policies or international agreements relating to the non-proliferation of nuclear weapons or other nuclear explosive devices; or

(d) respond to direct threats of disruption in the supply of nuclear materials for defense purposes.

2. The Parties recognize the provisions of Annex 607.2.

Article 608: Miscellaneous Provisions

1. Canada and the United States shall act in accordance with the terms of Annexes 902.5 and 905.2 of the Canada - United States Free Trade Agreement.

2. The Parties agree to allow existing or future incentives for oil and gas exploration, development and related activities in order to maintain the reserve base for these energy resources.

3. Canada and the United States intend no inconsistency between the provisions of this Chapter and the Agreement on an International Energy Program (IEP). In the event of any unavoidable inconsistency between the IEP and this Chapter, the provisions of the IEP shall prevail to the extent of that inconsistency as between Canada and the United States.

Article 609: Definitions

For purposes of this Chapter:

consumed means transformed so as to qualify under the rules of origin set out in Chapter Four (Rules of Origin), or actually consumed;

restriction means any limitation, whether made effective through quotas, licenses, permits, minimum or maximum price requirements or any other means;

energy regulatory measure means any measure by federal or sub- federal entities that directly affects the transportation, transmission or distribution, purchase or sale, of an energy or basic petrochemical good;

first hand sale refers to the first commercial transaction affecting the good in question;

Independent Power Producer (IPP) means a facility that is used for the generation of electric energy exclusively for sale to an electric utility for further resale;

investment means investment as defined in Chapter Eleven (Investment);

total supply means shipments to domestic users and foreign users from:

(a) domestic production;

(b) domestic inventory; and

total export shipments means the total shipments from total supply to users located in the territory of the other Party.

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ANNEX 602.3

1. The Mexican State reserves to itself the following strategic activities and investment in such activities:

(a) exploration and exploitation of crude oil and natural gas; refining or processing of crude oil and natural gas; and production of artificial gas, basic petrochemicals and their feedstocks; and pipelines; and

(b) foreign trade; transportation, storage and distribution, up to and including first hand sales of the following goods: crude oil; natural and artificial gas; goods covered by this Chapter obtained from the refining or processing of crude oil and natural gas; and basic petrochemicals.

2. In the event of an inconsistency between Annex 602.3, paragraphs 1, 5(a) and 6, and another provision of this Agreement, the provisions of Annex 602.3, paragraphs 1, 5(a) and 6, shall prevail to the extent of that inconsistency.

3. Natural Gas and Petrochemical Feedstock Trade

Where end-users and suppliers of natural gas or basic petrochemical goods consider that cross-border trade in such goods may be in their interests, the Parties agree that such end-users and suppliers, and state enterprises of the Parties as may be required under their domestic law, shall have the right to negotiate supply contracts.

The modalities of implementing such arrangements are left to the end-users, suppliers and state enterprises of the Parties as may be required under their domestic law and may take the form of individual contracts between the state enterprise and each of the other entities. Such contracts may be subject to regulatory approval.

4. Performance Contracts

The Parties shall allow state enterprises to negotiate performance clauses in their service contracts.

5. Electricity

(a) In Mexico the supply of electricity as a public service is a strategic area reserved to the State. Except as provided in subparagraph (b) below the activities encompassed by the supply of electricity as a public service in Mexico include the generation, transmission, transformation, distribution and sale of electricity.

(b) The opportunities for private investment in Mexico in electricity generating facilities include:

(i) Production for Own Use

Enterprises of the other Parties may acquire, establish, and/or operate an electrical generating facility to meet its own supply needs. Electricity generated in excess of the enterprise's own supply requirements must be sold to CFE and CFE shall purchase such electricity under terms and conditions agreed to by CFE and the enterprise.

(ii) Co-generation

Enterprises of the other Parties may acquire, establish, and/or operate co-generation facilities which generate electricity using heat, steam or other energy sources associated with an industrial process. Owners of the industrial facility need not be the owners of the co-generating facility. Electricity generated in excess of the enterprise's own supply requirements must be sold to CFE and CFE shall purchase such electricity under terms and conditions agreed to by CFE and the enterprise.

(iii) Independent Power Production

Enterprises of the other Parties may acquire, establish, and/or operate electricity generating facilities for independent power production (IPP) in Mexico. Electricity generated by IPP facilities for sale in Mexico shall be sold to CFE and CFE shall purchase such electricity under terms and conditions agreed to by CFE and the enterprise. Where an IPP located in Mexico and an electric utility of another Party consider that cross- border trade in electricity may be in their interest, the Parties agree that these entities and CFE shall have the right to negotiate the terms and conditions of power purchase and power sale contracts. The modalities of implementing such supply arrangements is left to the end-users, suppliers and CFE and may take the form of individual contracts between the state enterprise and each of the other entities. Such contracts shall be subject to regulatory approval.

6. Nuclear

The generation of nuclear energy; the exploration, exploitation and processing of radioactive minerals; the nuclear fuel cycle; the use and reprocessing of nuclear fuels and the regulation of their applications for other purposes; the transportation and storage of nuclear wastes; and the production of heavy water, are reserved to the Mexican state.

7. Pursuant to Article 1101(3), private investment is not permitted in reserved activities listed above in paragraphs 1, 5(a) and 6. Chapter Twelve (Cross Border Trade in Services) shall only apply to activities involving the provision of services covered in paragraphs 1, 5(a) and 6 when Mexico permits a contract to be granted in respect of such activities and only to the extent of that contract.

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ANNEX 603.6

United Mexican States:

1. For only those goods listed below, Mexico may restrict the granting of import and export licenses for the sole purpose of reserving foreign trade in these goods to itself.

2707.50 Other aromatic hydrocarbon mixtures of which 65% or more by volume (including losses) distills at 250 C by the ASTM D 86 method.

2707.99 Rubber extender oils, solvent naphtha and carbon black feedstocks only.

2709 Petroleum oils and oils obtained from bituminous minerals, crude.

2710 aviation gasoline; gasoline and motor fuel blending stocks (except aviation gasoline) and reformates when used as motor fuel blending stocks; kerosene; gas oil and diesel oil; petroleum ether; fuel oil; paraffinic oils other than for lubricating purposes; pentanes; carbon black feedstocks; hexanes; heptanes and naphthas.

2711 Petroleum gases and other gaseous hydrocarbons other than: ethylene, propylene, butylene and butadiene, in purities over 50 percent.

2712.90 only paraffin wax containing by weight more than 0.75% of oil, in bulk (Mexico classifies these goods under HS 2712.90.02) and only when imported to be used for further refining.

2713.11 Petroleum coke not calcined.

2713.20 Petroleum bitumen (except when used for road surfacing purposes under HS 2713.20.01).

2713.90 Other residues of petroleum oils obtained from bituminous materials.

2714 Bitumen and asphalt, natural; bituminous or oil shale and tar sands, asphaltites and asphaltic rocks (except when used for road surfacing purposes under HS 2714.90.01).

2901.10 Ethane, butanes, pentanes, hexanes, and heptanes only.

2. Notwithstanding any other provision of this Chapter, the provisions of Article 605 shall not apply as between the other Parties and Mexico.

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ANNEX 607.2

1. The provisions of Article 607(1) shall impose no obligations and confer no rights on Mexico.

2. Nothwithstanding Article 607(1), the provisions of Article 2102 (National Security) shall apply as between the other Parties and Mexico.

NAFTA Chapter Seven Agriculture

Article 701: Scope

1. This Chapter applies to trade in agricultural goods and to sanitary and phytosanitary measures.

Subchapter A - Market access

Article 702: Scope

1. Further to Article 102 (Objectives), the provisions of this Subchapter address import barriers, domestic support, export subsidies, and grading and marketing standards and measures that affect trade of agricultural goods between the Parties.

2. To the extent of any inconsistency in this Agreement with the provisions of this Subchapter, this Subchapter shall prevail.

Article 703: International obligations

1. Each Party shall comply with Annex 703.1 with respect to its agricultural trade under other international agreements, to the extent set out in that Annex.

2. When a Party desires to adopt a measure pursuant to any international commodity agreement with respect to an agricultural good, it shall consult with the other Parties in order to avoid nullification or impairment of a concession granted by such Party in its Schedule set out in Annex 302.2.

3. Each Party shall comply with Annex 703.3 with respect to actions taken pursuant to any international coffee agreement.

Article 704: Market Access

General Provisions

1. In order to facilitate trade in agricultural goods, the Parties shall work together to improve access to their respective markets through the reduction or elimination of import barriers.

Tariffs and Quantitative Restrictions

2. Each Party shall comply with Annex 704.2 with respect to tariffs and quantitative restrictions, including GATT market access requirements and trade in sugar.

Agricultural Grading and Marketing Standards

3. Each Party shall comply with Annex 704.3 with respect to agricultural grading and marketing standards.

Special Safeguard Provisions

4. Each Party may, during the applicable period of transition, adopt or maintain special safeguards in the form of tariff quotas on specific agricultural goods, as specified in its Schedule set out in Annex 302.2, and further described in Annex 704.4.

5. A Party may not apply, at the same time, measures under paragraph 4 and Chapter 8 (Emergency Action) with respect to the same agricultural good.

Article 705: Domestic Support

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. The Parties further recognize that domestic support commitments may result from the agriculture negotiations in the Uruguay Round of multilateral trade negotiations under the GATT. Accordingly, to the extent a Party decides to support its agricultural producers, such Party should endeavor to move toward domestic support policies that:

(a) have minimal or no trade distortion effects or effects on production; or

(b) are exempt from domestic support reduction commitments under the GATT.

The Parties further recognize that the domestic support mechanisms of each Party, including those that are subject to reduction commitments, may be changed at the Party's discretion so long as such change is in compliance with its GATT rights and obligations.

Article 706: Export Subsidies

1. The Parties recognize that export subsidies may have serious prejudicial effects on importing and exporting Parties, and the Parties share the objective of achieving the multilateral elimination of export subsidies for agricultural goods. The Parties shall cooperate in an effort to achieve an agreement in the General Agreement on Tariffs and Trade which eliminates export subsidies on agricultural goods.

2. The Parties also recognize that export subsidies may cause disruption in the market of an importing Party. Accordingly, the Parties affirm that it is inappropriate for a Party to provide export subsidies for the export of an agricultural good to the territory of another Party when there are no other subsidized imports of that good into that other Party.

3. Except as provided in Annex 703.1, where an exporting Party considers that a non-Party is exporting an agricultural good into the territory of another Party with the benefit of export subsidies, the exporting Party may request consultations with the importing Party with a view toward agreeing on measures that the importing Party could adopt to counter the effect of such subsidized imports. If the importing Party adopts the agreed-upon measures, the exporting Party shall refrain from applying, or immediately cease to apply, any export subsidy to exports of such good into the territory of the importing Party.

4. Except as provided in Annex 703.1, a Party proposing to introduce an export subsidy on exports of an agricultural good to the territory of another Party shall notify such Party at least three days in advance, and shall upon request consult with such Party, within 72 hours of receipt of the request, with a view to eliminating the subsidy or minimizing any adverse impact on the importing Party's market for that good. Another Party may request to join such consultations.

5. Each Party shall take into account the interests of the other Parties in the use of any export subsidy on an agricultural good exported to a Party or non-Party, recognizing that such subsidies may have prejudicial effects on the interests of the other Parties.

6. The Parties shall establish a Working Group on Agricultural Subsidies which shall meet at least semi-annually, or at such other times as the Parties may agree, to work toward elimination of all export subsidies in connection with trade in agricultural goods between the Parties. The functions of the Working Group on Agricultural Subsidies shall include:

(a) monitoring the volume and price of imports of agricultural goods that have benefitted from export subsidies into the territory of any Party;

(b) providing a forum for the Parties to develop mutually acceptable criteria and procedures for reaching agreement on the limitation or elimination of the provision of export subsidies in connection with importation of agricultural goods into the territories of the Parties; and

(c) reporting annually to the Committee on Agricultural Trade, established under Article 708, with respect to implementation of this Article.

7. Notwithstanding any other provision of this Article:

(a) if the Parties agree to a particular export subsidy measure on an agricultural good for export to the territory of a Party, the exporting Party may adopt or maintain such measure; and

(b) each Party shall retain its rights to apply countervailing duties to subsidized imports from any source.

Article 707: Resolution of Private Commercial Disputes Regarding Transactions in Agricultural Goods

The advisory committee established pursuant to Article 2022(4) shall work toward a system for resolving private commercial disputes that arise in connection with transactions in agricultural goods. The system of each Party shall be designed to achieve prompt and effective resolution of such disputes with attention to special circumstances, including the perishability of the goods involved.

Article 708: Committee on Agricultural Trade

1. The Parties hereby establish a Committee on Agricultural Trade, comprising representatives of each Party.

2. The Committee's functions shall include:

(a) monitoring and promoting cooperation on the implementation and administration of this Subchapter;

(b) providing a forum for the Parties to consult at least semi-annually and at such other times as the Parties may agree on issues related to this Subchapter; and

Article 709: Definitions

For purposes of this Subchapter:

agricultural goods means:

(i) HS Chapters 1 to 24 less fish and fish products, plus

(ii) HS Code 29.05.43 (manitol) HS Code 29.05.44 (sorbitol) HS Heading 33.01 (essential oils) HS Headings 35.01 to 35.05 (albuminoidal substances, modified starches, glues) HS Code 38.09.10 (finishing agents) HS Code 38.23.60 (sorbitol n.e.p.) HS Headings 41.01 to 41.03 (hides and skins) HS Heading 43.01 (raw furskins) HS Headings 50.01 to 50.03 (raw silk and silk waste) HS Headings 51.01 to 51.03 (wool and animal hair) HS Headings 52.01 to 52.03 (raw cotton, waste and cotton carded or combed) HS Heading 53.01 (raw flax) HS Heading 53.02 (raw hemp);

fish and fish products for purposes of the definition of agricultural goods means fish or crustaceans, molluscs or other aquatic invertebrates, marine mammals, and their products within the following headings of the Harmonized System:

HS Heading 05.07 (tortoise-shell, whalebone and whalebone hair and those fish or crustaceans, molluscs or other aquatic invertebrates, marine mammals, and their products within this heading)

HS Heading 05.08 (all goods (coral and similar materials)) HS Heading 05.09 (all goods (natural sponges of animal origin)) HS Heading 05.11 (products of fish or crustaceans,molluscs or other aquatic invertebrates; dead animals of Chapter 3) HS Heading 15.04 (all goods (fats and oils and their fractions, of fish or marine mammals)) HS Heading 16.03 ("non-meat" extracts and juices) HS Heading 16.04 (all goods (prepared or preserved fish)) HS Heading 16.05 (all goods (prepared preserved crustaceans, molluscs and other aquatic invertebrates));

net production surplus means the quantity by which a Party's domestic production of sugar exceeds its total consumption of sugar for a marketing year;

net surplus producer means that a Party has been determined to have a net production surplus in accordance with Schedule 704.2(I)(B)(3);

plantation white sugar means crystalline sugar which has not been refined and is intended for human consumption without further processing or refining;

raw value means the equivalent of a quantity of sugar in terms of raw sugar testing 96 degrees by the polariscope, determined as follows:

(a) the raw value of plantation white sugar equals the number of kilograms thereof multiplied by 1.03;

(b) the raw value of liquid sugar and invert sugar equals the number of kilograms of the total sugars thereof multiplied by 1.07; and

(c) the raw value of other imported sugar and syrup goods equals the number of kilograms thereof multiplied by the greater of 0.93, or 1.07 less 0.0175 for each degree of polarization under 100 degrees (and fractions of a degree in proportion);

sugar means raw or refined sugar derived directly or indirectly from sugar cane or sugar beets, including liquid refined sugar; and

sugar and syrup goods means "sugar and syrup goods" as defined in Annex 709.

ANNEX 703.1

Incorporation of Trade Provisions

1. Articles 701.1, 701.2, 701.3, 701.5, 702, 704, 705, 706, 707, 708.1, 708.4 710 and 711 [subject to review] of the Canada - U.S. Free Trade Agreement shall apply to trade in "agricultural goods", as that term is defined in Article 711 of that Agreement, between Canada and the United States, which Articles are hereby incorporated into and made a part of this Agreement for such purpose.