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Canada-Korea Free Trade Agreement

Chapter Two: National Treatment and Market Access for Goods

Article 2.1: Scope and Coverage

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

Section A – National Treatment

Article 2.2: National Treatment

1. Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of the GATT 1994 and, for greater certainty, its interpretative notes, and to this end Article III of the GATT 1994 and, for greater certainty, its interpretative notes, or an equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made part of this Agreement.

2. The treatment to be accorded by a Party pursuant to paragraph 1 means, with respect to a sub-national government, treatment no less favourable than the most favourable treatment that sub-national government accords to like, directly competitive or substitutable goods of the Party of which it forms a part.

3. Paragraph 1 does not apply to the measures set out in Annex 2-A.

Section B – Tariffs

Article 2.3: Tariff Elimination

1. Except as otherwise provided in this Agreement, a Party shall not increase an existing customs duty, or adopt a customs duty, on an originating good.

2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Schedule to Annex 2-D.

3. Each party shall apply to an originating good the lesser of:

4. At the request of a Party, the Parties shall consult to consider accelerating the elimination of customs duties on a good after the entry into force of this Agreement. An agreement between the Parties to accelerate elimination of customs duties on an originating good shall supersede a duty rate or staging category determined pursuant to their Schedules for that good when approved by each Party in accordance with its applicable domestic legal procedures.

5. For greater certainty, a Party may:

Article 2.4: Temporary Admission of Goods

1. Each Party shall grant duty-free temporary admission for the following goods imported from the territory of the other Party, regardless of their origin and regardless of whether like, directly competitive or substitutable goods are available in the territory of the Party:

2. Except as otherwise provided in this Agreement, a Party shall not condition the duty-free temporary admission of a good under paragraph 1(a), (b), or (c), other than to require that the good:

3. Except as otherwise provided in this Agreement, a Party shall not condition the duty-free temporary admission of a good under paragraph 1(d), other than to require that the good:

4. If a good is temporarily admitted duty-free pursuant to paragraph 1 and a condition that the Party imposes pursuant to paragraphs 2 and 3 has not been fulfilled, a Party may impose:

5. Subject to Chapters Eight (Investment) and Nine (Cross-Border Trade in Services):

Article 2.5: Duty-Free Entry of Certain Commercial Samples and Printed Advertising Materials

Each Party shall grant duty-free entry to commercial samples of negligible value, and to printed advertising materials, imported from the territory of the other Party, regardless of their origin, but may require that:

Article 2.6: Goods Re-Entered after Repair or Alteration

1. Except as provided in Annex 2-E, a Party shall not apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported from its territory to the territory of the other Party for repair or alteration, regardless of whether the repair or alteration could be performed in its territory.Footnote 2

2. A Party shall not apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair or alteration.

Section C – Non-Tariff Measures

Article 2.7: Import and Export Restrictions

1. Except as otherwise provided in this Agreement, a Party shall not adopt or maintain a prohibition or restriction on the importation of a good of the other Party, or on the exportation or sale for export of a good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994 and, for greater certainty, its interpretative notes, and to this end Article XI of the GATT 1994 and, for greater certainty, its interpretative notes, or an equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made a part of this Agreement.

2. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.

3. If a Party adopts or maintains a prohibition or restriction on the importation from, or exportation to, a non-party of a good, this Agreement is not to be construed to prevent the Party from:

4. If a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-party, on request of the other Party, the Parties shall consult with a view to avoiding undue interference with, or distortion of, pricing, marketing, and distribution arrangements in the other Party.

5. Paragraphs 1 through 4 do not apply to the measures set out in Annex 2-A.

Article 2.8: Export Duties, Taxes or Other Charges

A Party shall not adopt or maintain duties, taxes, or other charges on the export of a good to the territory of the other Party, unless the duties, taxes, or charges are also adopted or maintained on the good when destined for domestic consumption.

Article 2.9: Most-Favoured-Nation Treatment for Internal Taxes and Emissions  Regulations

With respect to internal taxes and emissions regulations related to automotive goods, each Party shall accord to the products originating in the other Party no less favourable treatment than that accorded to the like products originating in a non-party, including as provided in any free trade agreement with that non-party.

Article 2.10: Customs User Fees

1. A Party shall not adopt or maintain a customs user fee or other similar charge in connection with importation of a good of the other Party that is not commensurate with the cost of services rendered.

2. The Parties affirm that nothing in this Article modifies Article VIII of the GATT 1994 as it applies between them.

Article 2.11: Customs Valuation Agreement

The Customs Valuation Agreement or any successor agreement to which both Parties are party shall govern the customs valuation rules applied by the Parties to their reciprocal trade.

Article 2.12: Agricultural Safeguard Measures

1. Notwithstanding Article 2.3, a Party may impose an agricultural safeguard measure in the form of a higher import duty, consistent with paragraphs 2 through 7, on an originating agricultural good listed in its Schedule to Annex 2-F, if the aggregate volume of imports of a good in a year exceeds a trigger level as set out in its Schedule to Annex 2-F.

2. The duty pursuant to paragraph 1 shall not exceed the lesser of the prevailing most-favoured-nation (MFN) applied rate, or the MFN applied rate of duty in effect on the day immediately preceding the date of entry into force of this Agreement, or the tariff rate set out in its Schedule to Annex 2-F.

3. The duty imposed pursuant to paragraph 1 shall be set according to the Party’s Schedule to Annex 2-F and shall only be maintained until the end of the year, as defined in Annex 2-D, in which it has been imposed.

4. A Party shall not apply or maintain an agricultural safeguard measure and at the same time apply or maintain, with respect to the same good:

5. Each Party shall implement an agricultural safeguard measure in a transparent manner. Within 60 days after imposing a measure, the Party applying the measure shall notify the other Party in writing and shall provide it with relevant data concerning the measure. On the written request of the exporting Party, the Parties shall consult regarding the application of the measure.

6. The implementation and operation of this Article may be the subject of discussion and review in the Committee on Trade in Goods or in a sub-committee established under Article 2.14.

7. A Party shall not apply or maintain an agricultural safeguard measure on an originating agricultural good:

Article 2.13: Administration and Implementation of TRQs

1. A Party that has established TRQs as set out in Annex 2-G shall implement and administer these TRQs in accordance with Article XIII of the GATT 1994 and, for greater certainty, its interpretive notes, and the WTO Agreement on Import Licensing Procedures, and any other WTO agreement.

2. A Party shall ensure that:

3. Over the course of each year, the administering authority of a Party shall publish, in a timely fashion on its designated publicly available Internet site, administration procedures, utilisation rates, and remaining available quantities for each of the TRQs.

4. A Party shall notify the other Party of new or modified administration of TRQs established in Annex 2-G prior to its application.

5. A Party shall make every effort to administer its TRQs in a manner that allows importers to fully utilise them. On the written request of a Party, the Parties shall discuss a Party’s administration of its TRQs at the next meeting of Committee on Trade in Goods to arrive at a mutually satisfactory agreement. The Parties shall consider prevailing supply and demand conditions in the discussions.

Section D – Committee on Trade in Goods

Article 2.14: Committee on Trade in Goods

1. The Parties hereby establish a Committee on Trade in Goods, composed of representatives of each Party.

2. The Committee shall meet periodically, and at any other time at the request of either Party or the Commission, to ensure the effective implementation and administration of this Chapter. In this regard, the Committee shall:

3. If the Committee fails to resolve a matter referred to it within 30 days of such referral, either Party may request a meeting of the Commission under Article 20.1 (Joint Commission).

4. Upon written request of a Party, a sub-committee shall be established and convene a meeting of relevant officials from each Party within 90 days or at a mutually agreed time for discussions with a view to resolving issues resulting from the implementation and administration of this Chapter and its Annexes. The sub-committee may refer to the Committee any matter for its consideration.

5. Each Party shall, to the extent practicable, take all necessary measures to implement modifications of, or additions to, this Chapter within 180 days of the date on which the Commission agrees on the modification or addition.

6. This Chapter is not to be construed to prevent a Party from issuing a determination of origin or an advance ruling relating to a matter under consideration by the Committee or from taking other action it considers necessary, pending a resolution of the matter under this Agreement.

7. The Parties hereby establish a Sub-Committee on Trade in Forest Products as set out in Annex 2-B.

8. The Parties hereby establish a Sub-Committee on Trade in Automotive Goods as set out in Annex 2-C.

Section E – Definitions

Article 2.15: Definitions

For the purposes of this Chapter:

advertising films and recordings means recorded visual media or audio materials, consisting essentially of images or sound, showing the nature or operation of a good or service offered for sale or lease by a person established or resident in the territory of a Party, provided that those materials are of a kind suitable for exhibition to a prospective customer but not for broadcast to the general public, and provided that they are imported in a packet that contains no more than one copy of each film or recording and that does not form part of a larger consignment;

agricultural goods means the products listed in Annex 1 of the WTO Agreement on Agriculture with any subsequent changes agreed in the WTO to be automatically effective for this Agreement;

automotive good means all forms of motor vehicles, systems, and parts thereof falling under Chapters 40, 84, 85, 87, and 94 of the Harmonized System, except for the following goods:

commercial samples of negligible value means commercial samples having a value, individually or in the aggregate as shipped, of not more than US$1, or the equivalent amount in the currency of a Party, or so marked, torn, perforated or otherwise treated that they are unsuitable for sale or for use except as commercial samples;

consumed means:

duty-free means free of customs duties;

goods imported for sports purposes means sports requisites for use in sports contests, demonstrations, or training in the territory of the Party into whose territory the goods are imported;

goods intended for display or demonstration includes their component parts, ancillary apparatus, and accessories;

goods of a Party means domestic products as understood in the GATT 1994 or goods as the Parties may agree, and includes originating goods of that Party;

printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, and tourist promotional materials and posters, that are used to promote, publicise, or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge;

repair or alteration does not include an operation or process that either destroys the essential characteristics of a good or creates a new or commercially different good;Footnote 4 and

tariff elimination schedule means the provisions of Annex 2-D.

Annex 2-A: Exceptions to Articles 2.2 and 2.7

Section A – Measures of Korea

1. Without prejudice to Canada’s rights under the WTO Agreement, Articles 2.2 and 2.7 shall not apply to:

Section B – Measures of Canada

2. Without prejudice to Korea’s rights under the WTO Agreement, Articles 2.2 and 2.7 shall not apply to:

3. With respect to paragraph 2(a)(i), Canada shall ensure that procedures under the Export and Import Permits Act (hereinafter referred to as the “EIPA”) controlling the export of logs are transparent, made available to the public, and shall notify Korea in writing of proposed amendments to the EIPA that relates to controls on the export of logs within 30 days of publication of such proposals. Canada will endeavour to ensure that EIPA procedures controlling the export of logs continue to be applied in a manner that does not constitute a disguised restriction on international trade. In respect of the export of logs, the Parties maintain their rights and obligations under the WTO Agreement, and any dispute regarding a matter relating to the export of logs shall be settled under the WTO.

Annex 2-B: Sub-Committee on Trade in Forest Products

1. The Parties hereby establish a Sub-Committee on Trade in Forest Products. The Sub-Committee shall include officials from each of the Parties, including international trade officials, regulatory officials, and those responsible for controls on the export of logs, and may include or consult with interested parties.

2.The Sub-Committee shall:

3. The Sub-Committee shall meet at the request of a Party.

4. The Sub-Committee shall report relevant activities and outcomes regularly to the Committee on Trade in Goods.

5. If a Party considers that Sub-Committee discussions have failed to resolve a matter related to trade in forest products, that Party may, on written notification to the other Party, refer the matter to the Committee on Trade in Goods.

Annex 2-C: Sub-Committee on Trade in Automotive Goods

1. The Parties hereby establish a Sub-Committee on Trade in Automotive Goods that shall:

2. The Sub-Committee may include or consult with other experts, stakeholders, and interested parties as the Parties deem necessary and appropriate.

3. The Sub-Committee shall meet annually at the request of a Party or as otherwise agreed by the Parties.

4. The Sub-Committee shall report relevant activities and outcomes to the Committee on Trade in Goods as the Parties deem necessary and appropriate.

Annex 2-D: Tariff Elimination

Section A – Staging Categories Applicable to both Parties

1. The classification of goods between the Parties is that set out in each Party’s respective tariff nomenclature in conformity with the Harmonized System.

2. As provided in each Party’s Schedule attached to this Annex, the following staging categories apply to the elimination of customs duties by each Party pursuant to Article 2.3.2:

3. For the purposes of this Annex, Annexes 2-F, 2-G, and a Party’s Schedule:

4. The base rate of customs duty for an item shall be the most-favoured-nation customs duty rate applied on January 1, 2011.

5. For the purpose of the elimination of customs duties in accordance with Article 2.3, interim staged rates shall be rounded down, except as set out in each Party’s Schedule attached to this Annex, at least to the nearest tenth of a percentage point or, if the rate of duty is expressed in monetary units, at least to the nearest 0.001 of the official monetary unit for Canada, and at least to the nearest 1 of the official monetary unit for Korea.

Section B – Staging Categories Applicable only to Korea

6. This Section applies only to goods listed in Korea’s Tariff Schedule, which is attached to this Annex.

Staging Categories:

Schedule of Canada

(Tariff Schedule Attached as Separate Volume)

Schedule of Korea

(Tariff Schedule Attached as Separate Volume)

Annex 2-E: Goods Re-Entered after Repair or Alteration

For the following goods of HS Chapter 89 that re-enter the territory of Canada from the territory of Korea, and are registered under the Canada Shipping Act, Canada may apply to the value of repair or alteration of such goods, the rate of customs duty for these goods in accordance with its Schedule to Annex 2-D:

Annex 2-F: Agricultural Safeguard Measures Agricultural Safeguard List for Korea

Subject Goods, Trigger Levels, and Maximum Duties

1. This Annex sets out those originating goods that may be subject to agricultural safeguard measures under Article 2.12, the trigger levels for applying such measures, and the maximum duty that may be applied each year for each such good.

2. Agricultural safeguard measures shall not be applied or maintained after the date the safeguard duties set out below are zero.

Annex 2-G: Administration and Implementation of TRQs

1. This Annex sets out modifications to the Harmonized Schedule of Korea (HSK) that reflect the TRQs that Korea shall apply to certain originating goods under this Agreement. In particular, originating goods of Canada included under this Annex shall be subject to the rates of duty set out in this Annex in lieu of the rates of duty specified in Chapters 1 through 97 of the HSK. Notwithstanding any other provision of the HSK, originating goods of Canada in the quantities described in this Annex shall be permitted entry into the territory of Korea as provided in this Annex. Furthermore, any quantity of originating goods imported from Canada under a TRQ provided for in this Annex shall not be counted toward the in-quota amount of any TRQ provided for such goods elsewhere in the HSK.

Honey, natural

2.

Unhulled and naked barley

3.

Flour, meal, powder, flakes, granules and pellets of potatoes

4.

Malt

5.

Soybeans for Human Consumption, Identity Preserved

6.

Fodder, Other

7.

Supplementary Feeds, Animal

8.

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