III Negotiating Round - Amman, Jordan

Annex 6

MERCOSUR – JORDAN

III Negotiating Round - Amman, Jordan

CHAPTER II

RULES OF ORIGIN

SECTION I

GENERAL PROVISIONS

Article 1. - Definitions

For the purpose of this Chapter:

(a) “Manufacture” means any kind of working or processing, including assembly or specific operations;

(b) “Material" means raw materials, ingredients, intermediate materials, parts, components, subassembly and goods that are incorporated into another good or are subject to a process in the production of another good;

(d) “customs value" means the value as determined in accordance with the Agreement on Implementation of Article VII of the GATT 1994 (WTO Agreement on Customs Valuation);

(e) “CIF price” means the price paid to the exporter for the product when the goods pass the ship’s rail at the port of importation, including the costs of freight and insurance necessary to deliver the goods to the named port of destination, or the equivalent price paid in another means of transportation.

(f) “FOB price” means the price paid to the exporter for the product when the goods pass the ship’s rail at the named port of shipment, or the equivalent price in another means of transportation;

(g) “Harmonized System” refers to the Harmonized Commodity Description and Coding System which contains headings, subheadings and the corresponding numeric codes, the notes of the sections, chapters and subheadings, as well as the General Rules for its interpretation;

(h) “Chapters”, “headings” and “subheadings” refer respectively to the first two, the first four and the first six digit codes used in the nomenclature of the Harmonized System or “HS”;

(i) “Tariff classification” refers to the numeric code which corresponds to a good that is subject of international trade, in a nomenclature based on the Harmonized System;

(j) “Goods” means both materials and products;

(k) The ‘territory of Jordan’ means the land territory, air space, internal water and territorial sea over which Jordan exercises sovereignty

(l) The ‘territory of the Member Sates of MERCOSUR’ means the respective territories of the Member States of MERCOSUR, including their respective territorial seas the exclusive economic zones and continental shelves, in accordance with their respective laws in force, the 1982 United Nations Convention on the Law of the Sea;

(m) “Competent authorities” refers to the authorities under the legislation of each Signatory Party, who is responsible for the implementation of the provisions of this Chapter.

The competent authorities in MERCOSUR and Jordan, or their possible successors, are detailed below:

(i) In MERCOSUR:

Ministerio de Industria - Secretaría de Industria y Comercio - Dirección Nacional de Política Comercial Externa / Ministry of Industry – Secretariat of Industry and Trade – National Directorate of External Trade Policy

Julio A. Roca N° 651- 6th Floor - Office 26 - Buenos Aires, Argentina

Fax: (5411) 4349 3809

Ministério do Desenvolvimiento, Indústria e Comércio Exterior - Secretaria de Comércio Exterior (SECEX) - Departamento de Negociações Internacionais (DEINT) / Ministry of Development, Industry and Foreign Trade – Secretariat of Foreign Trade (SECEX) – Department of International Negotiations (DEINT)

Esplanada dos Ministérios, Block J, 7th Floor – Brasília, Brasil

Fax: (5561) 2027 7385

Ministério da Fazenda - Secretaria da Receita Federal do Brasil (RFB) - Coordenação Geral de Administração Aduaneira (Coana) /Ministry of Finance - Secretariat of the Federal Revenue of Brazil (RFB) - General Coordination of Customs Administration (Coana) Esplanada dos Ministérios - Bloco P, Prédio Anexo, Ala "B" - 4º andar CEP: 70048-900 - Brasília, DF Fax: (5561) 3412-1566

Ministerio de Industria y Comercio - Dirección General de Comercio Exterior - Dirección de Operaciones de Comercio Exterior / Ministry of Industry and Trade – Directorate General of Foreign Trade – Directorate of Foreign Trade Operations

Av. Mariscal López Nº 3333 – Asunción, Paraguay

Fax: (59521) 616 3084

Ministerio de Economía y Finanzas - Asesoría de Política Comercial / Ministry of Economy and Finance – Trade Policy Bureau

Colonia 1206 – 2nd. Floor - Montevideo, Uruguay

Fax: (5982) 902 03 54 int 15

ii) in Jordan

Ministry of Industry and Trade

Industrial Development Directorate

Queen Noor street- Shmeisani area

P.O.Box 2019 -Amman 11181 Jordan

Tel: (009626) 5629070

Fax:( 009626)5622162

SECTION II

CRITERIA FOR ORIGINATING GOODS

Article 2. - Goods wholly obtained or produced exclusively from originating materials

1. The following goods will be considered as wholly obtained or produced in the territory of any of the [Signatory Parties]:

a) Plants and vegetable products grown, harvested, gathered or obtained there, including in their territorial seas, exclusive economic zone or continental shelf;

b) Live animals born and raised there, including by aquaculture and in its territorial sea, the continental shelf or the exclusive economic zone;

c) Products obtained from animals born and raised there;

d) animals and products thereof obtained by hunting, trapping, collecting, fishing and capturing there; including in its territorial seas, continental shelf or in the exclusive economic zone;

e) Mineral products and other natural substances extracted from the soil or subsoil of any of the [Signatory Parties], including its territorial seas, continental shelf or exclusive economic zone;

f) Products obtained from the seabed and subsoil beyond the limits of national jurisdiction provided that the [Signatory Party] has the rights of exploitation;

g) products of sea fishing obtained, only by their vessels according to paragraph 2, under a specific quota or other fishing rights allocated to a [Signatory Party] by international agreements;

h) Products made aboard their factory ships exclusively from products referred to in (f) and (g);

i) Goods produced in any of the [Signatory Parties] using exclusively originating materials from these Parties.

j) Waste and scrap resulting from utilization, consumption or manufacturing operations conducted there, provided that these norms are without prejudice to national legislation regarding the import of the goods mentioned therein

2. The terms “their vessels” and “their factory ships” in paragraph 1 (g and h) shall apply only to vessels and factory ships:

(a) Which are flagged and registered or recorded in a [Signatory Party]; and

(b) which are owned by a natural person with domicile in that [Signatory Party] or by a commercial company, established and registered in that [Signatory Party] in accordance with its laws and performing its activities in conformity with the laws and regulations of the said [Signatory Party], and which have at least XXX% (Jordan proposes 75% and MS under consultation) of the crew composed of nationals of that [Signatory Party], provided that the master and officers are nationals of that [Signatory Party].

Article 3. - Goods manufactured from non originating materials

1- The following goods shall be considered as originating in the territory of any [Signatory Party]:

i) Products that are not subject to specific rules of origin, when:

a) Classified in a different heading (four digits level) of Harmonized Commodity Description and Coding System (HS) from those in which all non originating materials used in it's the manufacture are classified, or

b) In the case that rule a) can not be fulfilled, the CIF value of non originating materials used in its manufacture does not exceed 40% of the FOB value of the final product. In the case of Paraguay the referred value of non originating materials should not exceed 50% of the FOB price.

ii) Products that fulfill the specific rules of origin established in Appendix xxxxxxx. The specific rules of origin shall prevail over the rule mentioned in point i) of the present paragraph, letters a) and b). The [Signatory Parties] could establish future specific rules of origin, in exceptional and justified situations, as well revise the specific rules of origin established in Appendix xxxxxxx.]

JD: a) either specific rules of origin for all the products (similar to Canada but with adjustments to be submitted by Jordan side), or

b) Change in tariff heading at a 6 digit level or 40% of local value added.

MS: cannot accept change in tariff classification at a 6 digit level. Regarding value added, it can accept 50% but not 40%.

[2- For the purposes of determining the CIF value of non originating materials for countries without coastline, the port of destination of the imported non originating products shall be the first seaport or inland waterway port located in any of the other [Signatory Parties].

3- In the cases that Uruguay and Paraguay export to ……., it shall be considered that a product fulfills the requirement of change of tariff heading if the CIF value of all non originating materials used in its the manufacture, which are not classified in a tariff heading different from that of the product, does not exceed 10% of the FOB value of the exported product.

The provisions aforementioned do not apply to tariff headings subject to specific rules of origin.

4- Paragraphs 1 to 3 are subject to the provisions of the Article 4.]

JD: It prefers the rule of origin to be set on EX-WORKS basis.

Article 4 – Insufficient processes to confer origin status

In the case of the products which have non-originating materials, the following operations, inter alia, shall be considered as insufficient working or processing to confer the status of originating products, whether or not the requirements of Article 3 are satisfied.

(a) preserving operations to ensure that the products remain in good condition during transport and storage such as aeration, drying, refrigeration, immersion in salty or sulphured water or in water added with other substances and extraction of damaged parts;

(b) Simple change of package, disassembly and assembly of packages;

(d) Ironing or pressing of textiles;

(e) Simple painting or polishing operations;

(f) Husking, partial or total bleaching, polishing, and glazing of cereals and rice;

(g) Operations to color sugar or form sugar lumps;

(h) Peeling, stoning and shelling, of fruits, nuts and vegetables;

(i) Sharpening, simple grinding or simple cutting;

(j) Simple operations as sifting, screening, sorting, classifying, grading, matching (including the making-up of sets of articles);

(k) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;

(l) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;

(m) Simple mixing of products, provided the characteristics of the obtained product are not essentially different from those of the mixed products;

(n) Simple assembly refers to operations that do not require special skills nor machines, apparatus or tools especially produced or installed for those operations.

(o) Slaughter of animals;

(p) Oil application;

(q) Dilution in water or in any other substance which does not substantially alter the product characteristics;

(r) A combination of two or more operations specified in (a) to (q);

Article 5 - Accumulation of origin

[Goods originating in any of the Signatory Parties when used as an input for a finished product in another Signatory Party shall be considered originating in the latter.] JD

JD proposal (Products shall be considered as originating in Jordan if they are obtained in any MERCOSUR countries or any country has a free trade agreement with parties applying the same rules of origin, provided that the working or processing carried out in Jordan goes beyond the operations referred to in Article 4 of this Chapter.

And products shall be considered as originating in MERCOSUR countries if they are obtained in Jordan or any country has a free trade agreement with parties applying the same rules of origin, provided that the working or processing carried out in Jordan goes beyond the operations referred to in Article 4 in this agreement.

Jordan and MERCOSUR will establish a mechanism to be adopted for all the goods that has different rules of origin for cumulation purposes for all Goods originating in any of the Parties, where each Party has a trade Agreement that, as contemplated by the WTO Agreement, concerns the establishment of a free trade area with the same non-party in order for the territory of that non-party to be deemed to form part of the territory of the free trade area established by this Agreement, for purposes of determining whether a good is an originating good under this agreement. The mechanism will be established through the joint committee in accordance with article XX of Chapter XX (Institutional Provision) of this Agreement).

Article 6. - Direct transport, Transit and Trans-shipment

In order for the originating goods or products to benefit from the preferential treatment provided for under the Agreement, they shall be transported directly between the exporting Signatory Party and the importing Signatory Party. The goods or products are transported directly provided:

a) They are transported through the territory of one or more Signatory Parties;

b) They are in transit through one or more territories of third countries, with or without trans-shipment or temporary warehouse in such territories, under the surveillance of the customs authorities therein, provided that:

i) The transit entry is justified for geographical reasons or by consideration related exclusively to transport requirements;

ii) They are not intended for trade, consumption, use or employment in the country of transit;

iii) They do not undergo operations other than unloading, reloading or any operation designed to preserve them in good condition;

c) The originating goods that are stored under the control of a custom office in a custom warehouse of a Signatory Party with the corresponding Certificate of Origin, shall only undergo operations designed to ensure its trading, preservation in good condition, breaking-up of packages, or other operations, provided that their tariff classification and their originating status are not changed.

Such goods shall be sent totally or partially to any Signatory Party. The Signatory Parties may designate authorized entities or competent governmental authorities to issue replacement Certificates of Origin for all or some of these goods, within the period of validity of the Certificate of Origin submitted when the goods entered the custom warehousing.

In the case of MERCOSUR, the provisions of item d above shall apply only to the Signatory Parties that have decided on its implementation and that have duly notified the Joint Committee thereof.