EUROPEAN COMMISSION

Brussels, 17.2.2023

COM(2023) 87 final

2023/0038(NLE)

Proposal for a

COUNCIL DECISION

on the conclusion of the Free Trade Agreement between the European Union and New Zealand

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

New Zealand is the EU's 50th-largest trading partner for goods while the EU is New Zealand's third largest trading partner, accounting for 11.5% of total trade (following China and Australia). Bilateral trade in goods between the two partners equaled €7.8 billion in 2021, whereas trade in services accounted for €3.7 billion in 2020. New Zealand's exports to the EU are largely dominated by agricultural products, while the EU's exports to New Zealand are focused on manufactured goods. In 2020, the stock of EU’s foreign direct investment in New Zealand amounted to €8.5 billion and the stock of New Zealand's investment in the EU was €4.8 billion.

The decision to start preparing for possible negotiations was taken on 29 October 2015 at a meeting between the Presidents of the European Council and the European Commission and the Prime Minister of New Zealand. Important consideration was given to the facts that New Zealand is among the world's fastest-growing developed economies and that it has concluded numerous preferential trade agreements with other partners. Therefore, EU businesses enjoyed less favorable conditions to access New Zealand’s market. It was thus considered that a trade agreement with a like-minded partner like New Zealand would provide EU companies with a level playing field, help to deliver jobs, growth and investment, thereby benefitting EU businesses and citizens alike.

An extensive scoping exercise was concluded in the spring of 2017, demonstrating that negotiations could lead to a trade agreement in both sides’ interest. The draft negotiating directives were presented to Member States in September 2017, together with an accompanying impact assessment 1 .

On 22 May 2018, the Council of the European Union authorised the European Commission to open trade negotiations with New Zealand and adopted negotiating directives. The negotiations were supported by a Trade Sustainability Impact Assessment. The first round of negotiations for a Free Trade Agreement between the European Union and New Zealand (‘FTA’) was held in July 2018. Following a four-year negotiation process and 12 rounds of negotiations, the EU and New Zealand concluded the negotiations for an ambitious FTA on 30 June 2022.

While New Zealand is statistically a relatively small trading partner, the FTA is a welcome confirmation of our enhanced relationship with New Zealand and underlines the EU’s ambition to deepen relations with the Indo-Pacific region in light of its 2021 Indo-Pacific Strategy.

From the broader geopolitical and geo-economic context, the timely conclusion of these negotiations with a like-minded partner like New Zealand also sends a strong signal of the joint commitment to a rules-based trading system.

The deal will remove all New Zealand tariffs on EU goods, support EU farmers, and protect workers and the environment through far-reaching, enforceable provisions on sustainable development. The FTA is the first one that the EU has concluded with “new generation” provisions on sustainable development, in line with the outcome of the EU’s recent sustainable trade policy review communication ('The power of trade partnerships: together for green and just economic growth’ of 22 June 2022 2 ).

The legally reviewed texts of the FTA have been made public and can be found on the following link:

https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/new-zealand/eu-new-zealand-agreement/text-agreement_en

The Commission is putting forward the following proposals for Council decisions:

–Proposal for a Council Decision on the signing, on behalf of the European Union, of the Free Trade Agreement between the European Union and New Zealand;

–Proposal for a Council Decision on the conclusion of the Free Trade Agreement between the European Union and the New Zealand.

The attached proposal for a Council Decision constitutes the legal instrument for the conclusion of the Free Trade Agreement between the European Union and New Zealand.

•Consistency with existing policy provisions in the policy area

Prior to concluding the negotiations for an FTA, the EU and New Zealand had negotiated a comprehensive Partnership Agreement on Relations and Cooperation (PARC), which entered into force on 21 July 2022. The PARC provides the legal basis for the longstanding and strong partnership between the EU and New Zealand and deepens the cooperation between the two sides in many areas such as international peace and security, research and innovation, development, fisheries and maritime affairs, and cooperation on trade and economic matters.

Once the FTA enters into force, it will coexist with the PARC as a specific agreement and an integral part of the overall bilateral relations between the EU and New Zealand. The two agreements have no overlapping or conflicting provisions.

•Consistency with other Union policies

The FTA is fully consistent with Union policies and will not require the EU to amend its rules, regulations or standards in any regulated area. Furthermore, like all other trade agreements the Commission has negotiated, the FTA fully safeguards public services and ensures that governments’ right to regulate in the public interest is fully preserved and constitutes a basic underlying principle to them.

Furthermore, the provisions of the FTA fully reflect the outcome of the EU’s recent sustainable trade policy review communication ('The power of trade partnerships: together for green and just economic growth’ of 22 June 2022).

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

•Proportionality

•Choice of the instrument

This proposal is in accordance with Article 218(6) TFEU, which envisages the adoption by the Council of decisions on the conclusion of international agreements. No other legal instrument exists that could be used in order to achieve the objective expressed in this proposal.

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

•Ex-post evaluations/fitness checks of existing legislation

According to the impact assessment, as a result of the FTA, bilateral trade is expected to increase by up to 30% and can save up to 140 million euros a year in duties for EU companies exporting to New Zealand under the terms of the FTA, from the first year of application. EU investments may potentially increase by 80% into New Zealand.

However, the quantitative elements may be considered to underestimate the real economic impact of this FTA, given that the standard modelling configuration does not fit the small size of New Zealand. The numbers cannot take into account the foreseeable benefits linked to the strengthening of the protection and enforcement of intellectual property rights, the important provisions on digital trade or services or the political importance of this FTA. The EU-New Zealand FTA is the most modern EU trade deal. It is particularly important in the broader context, setting standards for future deals and at the same time supporting the EU’s ongoing efforts to further strengthen its economic relationship in the Indo-Pacific region. These elements are not possible to model but could be expected to be of significant importance and foster deeper economic engagement.

•Stakeholder consultations

Before the start of the negotiations, an Impact Assessment (IA) of the FTA between the EU and New Zealand 3 was conducted by the Commission, supported by an online public consultation and an independent study carried out by an external contractor. The study confirmed that the FTA between the EU and New Zealand could provide important benefits beyond improved market access, emphasizing the importance of comprehensive economic relations in the wider region.

In parallel to the negotiations, a Trade Sustainability Impact Assessment (TSIA) of the FTA between the EU and New Zealand 4 was conducted by an external contractor to study the potential economic, social, human rights and environmental impacts stemming from the provisions in the FTA or being a consequence of removing or reducing barriers to bilateral trade and investment between the EU and New Zealand.

In the framework of both the IA the TSIA, the respective contractors consulted internal and external experts and carried out consultations with stakeholders both in the EU and New Zealand through online surveys, requests for position papers, interviews and meetings.

Prior to and during the negotiations, the EU Member States were regularly informed and consulted orally and in writing on the different aspects of the negotiation via the Council’s Trade Policy Committee. The European Parliament was also regularly informed and consulted via its Committee on International Trade (INTA), and notably its Australia-New Zealand Monitoring Group. The texts progressively resulting from the negotiations were circulated throughout the process to both institutions.

The Commission also provided the possibility for civil society organisations to have their voice heard and ask questions, including through dedicated civil society dialogues, both during the IA and the TSIA and the actual negotiations.

Furthermore, during the negotiations the Commission on its website has published and regularly updated reports of the negotiating rounds, the text proposals, press releases, facts sheets and background information materials.

•Collection and use of expertise

•Impact assessment

The TSIA, conducted in support of the FTA negotiations, confirmed that the agreement would have overall positive macro-economic effects for both the EU and for New Zealand.

•Regulatory fitness and simplification

The FTA is not subject to REFIT procedures. It nevertheless contains a number of provisions that will simplify trade and the related procedures, reduce export related costs and will therefore enable more SMEs to do business in both markets. A dedicated chapter for SMEs addresses in particular enhanced information exchange and cooperation with New Zealand on SME-related issues. Tariff elimination, simplified and digitised customs procedures and more compatible technical requirements will lower export related costs and allow SMEs with lower trade volumes to compete with larger companies. This also enhances SMEs' ability to participate in supply chains, digital trade and public procurement and to provide services on the New Zealand market. The FTA also promotes transparency and the use of international standards to facilitate market access and lower costs of compliance.

•Fundamental rights

The proposal does not affect the protection of fundamental rights in the Union.

4.BUDGETARY IMPLICATIONS

5.OTHER ELEMENTS

•Implementation plans and monitoring, evaluation and reporting arrangements

The FTA includes institutional provisions that lay down the structure for the implementing bodies to continuously monitor the implementation, operation and impact of the FTA.

The institutional chapter of the FTA establishes a Trade Committee that has as its main task to supervise and facilitate the implementation and application of the FTA. The Trade Committee will be in charge of supervising the work of all specialised committees and working groups established under the FTA.

The FTA establishes Domestic Advisory Groups comprising of a balanced representation of independent civil society organisations including non-governmental organisations, business and employers' organisations as well as trade unions active on economic, sustainable development, social, human rights, environmental and other matters, and, in the case of New Zealand, Māori representatives. The Domestic Advisory Groups may submit views and recommendations concerning the functioning and implementation of the FTA and shall meet once a year.

As emphasised in the “Trade for All” Communication, the Commission is dedicating increasing resources to the effective implementation and enforcement of trade and investment agreements. In October 2022, the Commission published its third annual Implementation and Enforcement Report. The main purpose of the report is to convey an objective picture on the implementation of EU FTAs, highlighting the progress made and the shortcomings that need to be addressed. The objective is for the report to serve as the basis for open debate and engagement with Member States, the European Parliament and the civil society at large on the functioning of the FTAs and their implementation. As an annual exercise, the publication of the report will allow regular monitoring of developments, registering also how identified priority issues have been addressed. The report will cover the EU-New Zealand FTA as of its entry into force.

•Explanatory documents (for directives)

•Detailed explanation of the specific provisions of the proposal

It is estimated that as a result of the FTA, bilateral trade is expected to increase by up to 30% and can save up to € 140 million a year in duties for EU companies exporting to New Zealand under the terms of the FTA, from the first year of application. For example, New Zealand will remove high duties on industrial products, such as cars and motor vehicle parts (current tariffs up to 10%); machinery (current tariffs up to 5%); chemicals (current tariffs up to 5%); clothing (current tariffs 10%); pharmaceuticals (current tariffs up to 5%); shoes (current tariffs up to 10%) and textiles (current tariffs up to 10%).

European farmers and food businesses will benefit from new business opportunities in New Zealand, as the FTA removes all tariffs at entry into force on EU agri-food exports, including key EU export products, such as swine meat (current tariffs 5 %); wine and sparkling wine (current tariff at 5%); chocolate, sugar confectionary and biscuits (current tariff at 5%); pet food (current tariffs at 5%). Furthermore, the FTA will protect the geographical indications for the full list of close to 2000 EU wines and spirits as well as 163 other food products, such as Feta, Parmigiano Reggiano, Lubecker Marzipan and Elia Kalamatas olives.

At the same time, the FTA takes EU agricultural sensitivities fully into account. The EU will not fully liberalise its markets for highly sensitive products, such as beef, butter or milk powder. These products imported from New Zealand will only have a limited and controlled access to the EU market through carefully calibrated tariff quotas that take into account concerns of European farmers and consumer preferences. It was ensured that these quotas would mitigate possible market pressure.

The FTA sets high sustainability and quality standards for the imported food products. Farmers on both sides will be on a level-playing field regarding production and sustainability criteria. The FTA contains dedicated text on Sustainable Food Systems (for the first time in the EU’s trade agreements) and Animal Welfare, paving the way for further bilateral and multilateral cooperation on topics such as animal welfare, food, pesticides and fertilisers. The provisions of the FTA will protect EU farmers against unfair competition.

The FTA will improve access for EU companies to New Zealand’s government procurement contracts.

Concerning trade and sustainable development, this is the EU’s first trade agreement to reflect the outcome of the EU’s recent sustainable trade policy review communication, with sanctionable commitments to the Paris Climate Agreement as well as the core ILO labour standards. Furthermore, the FTA is the first trade agreement with dedicated trade and gender equality provisions under the Trade and Sustainable Development chapter and with dedicated provisions on trade and fossil fuel subsidies reform and an FTA which liberalises green goods and services at entry into force. The FTA provides for new commitments on the circular economy, deforestation, carbon pricing, and protection of marine environment.

2023/0038 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion of the Free Trade Agreement between the European Union and New Zealand

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 91(1), Article 100(2), and Article 207(4), first subparagraph, in conjunction with Article 218(6), point (a)(v) and Article 218(7) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament 5 , 

Whereas:

(1)In accordance with Council Decision No [XX] 6 , the Free Trade Agreement between the European Union and New Zealand ('the Agreement') was signed on [XX XXX 2023], subject to its conclusion at a later date.

(2)Pursuant to Article 218(7) of the Treaty on the Functioning of the European Union, it is appropriate to authorise the Commission to approve on the Union’s behalf the position to be taken on certain modifications to the Agreement that are to be adopted by a simplified procedure pursuant to Articles 14.4, 18.33 and 24.3(h) and (i) of the Agreement.

(3)The Agreement should be approved on behalf of the Union.

(4)The Agreement, in accordance with its Article 27.6, does not, within the Union, confer rights or impose obligations on persons, other than those created between the Parties under public international law,

HAS ADOPTED THIS DECISION:

Article 1

The Free Trade Agreement between the European Union and New Zealand ('the Agreement') is hereby approved on behalf of the Union.

The text of the Agreement is attached to this Decision.

Article 2

For the purposes of Articles 14.4 and 24.3(h) of the Agreement, the modifications or rectifications as regards Annex 14 to the Agreement shall be approved by the Commission on behalf of the Union.

Article 3

For the purposes of Articles 18.33 and 24.3(i) of the Agreement, the amendment of Annex 18-A and Annex 18-B of the Agreement shall be approved by the Commission on behalf of the Union.

Article 4

The President of the Council shall designate the person empowered to proceed, on behalf of the Union, to the notification provided for in Article 27.2 of the Agreement, in order to express the consent of the Union to be bound by the Agreement.

Article 5

This Decision shall enter into force on the day of its adoption 7 .

Done at Brussels,

(1)    SWD/2017/0289 final

(2)    https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0409&qid=1656586727707

(3)    https://policy.trade.ec.europa.eu/analysis-and-assessment/impact-assessments_en

(4)    https://policy.trade.ec.europa.eu/analysis-and-assessment/sustainability-impact-assessments_en

(5)    OJ C , , p. .

(6)    [Reference to be inserted]

(7)    The date of entry into force of the Agreement will be published in the Official Journal of the European Union by the General Secretariat of the Council.

EUROPEAN COMMISSION

Brussels, 17.2.2023

COM(2023) 87 final

ANNEX

to the

Proposal for a Council Decision

on the conclusion of the Free Trade Agreement between the European Union and New Zealand

FREE TRADE AGREEMENT
BETWEEN THE EUROPEAN UNION
AND NEW ZEALAND

PREAMBLE

The European Union, hereinafter referred to as "the Union",

and

New Zealand,

hereinafter individually referred to as a "Party" and jointly referred to as the "Parties",

RECOGNISING their longstanding and strong partnership based on the common principles and values reflected in the Partnership Agreement on Relations and Cooperation between the European Union and its Member States, of the one part, and New Zealand, of the other part, done at Brussels on 5 October 2016, and their important economic, trade and investment relationship;

RESOLVED to strengthen their economic relations, and expand bilateral trade and investment;

RECOGNISING the importance of global cooperation to address issues of shared interest;

RECOGNISING the importance of transparency in international trade and investment to the benefit of all stakeholders;

SEEKING to establish a stable and predictable environment with clear and mutually advantageous rules governing trade and investment between the Parties, and to reduce or eliminate barriers thereto;

ACKNOWLEDGING that te Tiriti o Waitangi/the Treaty of Waitangi is a foundational document of constitutional importance to New Zealand;

DESIRING to raise living standards, promote inclusive economic growth and stability, create new employment opportunities and improve the general welfare and, to this end, reaffirming their commitment to promote trade and investment liberalisation;

CONVINCED that this Agreement will create an expanded and secure market for goods and services, thus enhancing the competitiveness of their firms in global markets;

DETERMINED to strengthen their economic, trade, and investment relations in accordance with the objective of sustainable development, in its economic, social and environmental dimensions, and to promote trade and investment consistent with the aims for high levels of environmental and labour protection and relevant internationally recognised standards and agreements to which they are a party;

DETERMINED to enhance consumer welfare through policies that ensure a high level of consumer protection, consumer choice and economic wellbeing;

AFFIRMING the Parties' right to regulate within their territories to achieve legitimate policy objectives, such as the protection of human, animal or plant life or health; social services; public education; safety; the environment, including climate change; public morals; social or consumer protection; animal welfare; privacy and data protection; the promotion and protection of cultural diversity; and, in the case of New Zealand, the promotion or protection of the rights, interests, duties, and responsibilities of Māori;

COMMITTED to communicate with all relevant stakeholders from civil society, including the private sector, trade unions and other non-governmental organisations;

RECOGNISING the importance of promoting inclusive participation in international trade, and of addressing barriers and other challenges that exist for domestic stakeholders in accessing international trade and economic opportunities, including in digital trade;

DETERMINED to address the particular challenges faced by small and medium-sized enterprises in contributing to the development of trade and foreign direct investment;

RECOGNISING the importance of international trade in enabling and advancing Māori wellbeing, and the challenges that exist for Māori, including wāhine Māori, in accessing trade and investment opportunities derived from international trade, including the opportunities and benefits created by this Agreement;

SEEKING to advance gender equality and the economic empowerment of women by promoting the importance of gender inclusive policies and practices in economic activities, including international trade, in an effort to eliminate all forms of gender-based discrimination;

REAFFIRMING their commitment to the Charter of the United Nations signed in San Francisco on 26 June 1945 and having regard to the principles articulated in the Universal Declaration of Human Rights adopted by the General Assembly of the United Nations on 10 December 1948;

BUILDING upon their respective rights and obligations under the Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994, and other multilateral and bilateral instruments of cooperation to which both Parties are a party;

HAVE AGREED AS FOLLOWS:

CHAPTER 1

INITIAL PROVISIONS

ARTICLE 1.1

Objectives of this Agreement

The objectives of this Agreement are to liberalise and facilitate trade and investment, as well as to promote a closer economic relationship between the Parties.

ARTICLE 1.2

General definitions

For the purposes of this Agreement, the following definitions apply:

(a)    "agricultural good" means a product listed in Annex 1 to the Agreement on Agriculture;

(b)    "CCMAA" means the Agreement between the Union and New Zealand on cooperation and mutual administrative assistance in customs matters, done at Brussels on 3 July 2017;

(c)    "customs authority " means:

(i)    with respect to New Zealand, the New Zealand Customs Service; and

(ii)    with respect to the Union, the services of the European Commission responsible for customs matters, or, as appropriate, the customs administrations and any other authorities empowered in the Member States to apply and enforce customs legislation;

(d)    "customs duty" means any duty or charge of any kind imposed on, or in connection with, the importation of a good but does not include any:

(i)    charge equivalent to an internal tax imposed consistently with Article III:2 of GATT 1994;

(ii)    anti-dumping or countervailing duty applied in conformity with GATT 1994, the Anti‑dumping Agreement, and the Agreement on Subsidies and Countervailing Measures; and

(iii)    fee or other charge imposed on or in connection with importation that is limited in amount to the approximate cost of the services rendered;

(e)    "CPC" means the Provisional Central Product Classification (Statistical Papers Series M No. 77, Department of International Economic and Social Affairs, Statistical Office of the United Nations, New York, 1991);

(f)    "day" means a calendar day;

(g)    "enterprise" means a juridical person or a branch or a representative office of a juridical person;

(h)    "EU" or "Union" means the European Union;

(i)    "existing" means, unless otherwise specified in this Agreement, in effect on the date of entry into force of this Agreement;

(j)    "good of a Party" means a domestic good as that is understood in GATT 1994, and includes goods originating in that Party;

(k)    "Harmonized System" or "HS" means the Harmonized Commodity Description and Coding System, including all legal notes and amendments thereto developed by the World Customs Organization;

(l)    "heading" means the first four digits in the tariff classification number under the Harmonized System;

(m)    "ILO" means the International Labour Organization;

(n)    "juridical person" means any legal entity duly constituted or otherwise organised under a Party's law, whether for profit or otherwise, and whether privately-owned or governmentally‑owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;

(o)    "measure" means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action, requirement or practice, or any other form 1 ;

(p)    "measures of a Party" means any measures adopted or maintained by: 2

(i)    central, regional or local governments or authorities; and

(ii)    non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities;

(q)    "Member State" means a Member State of the Union;

(r)    "natural person of a Party" means:

(i)    for the Union, a national of one of the Member States according to its law 3 ; and

(ii)    for New Zealand, a national of New Zealand, according to its law 4 ;

(s)    "OECD" means the Organisation for Economic Co-operation and Development;

(t)    "originating" means qualifying as originating under the rules of origin set out in Chapter 3 (Rules of origin and origin procedures);

(u)    "originating good" or "good originating in a Party" means a good qualifying under the rules of origin set out in Chapter 3 (Rules of origin and origin procedures);

(v)    "person" means a natural person or a juridical person;

(w)    "preferential tariff treatment" means the rate of customs duty applicable to an originating good pursuant to the tariff elimination schedules in Annex 2-A (Tariff elimination schedules);

(x)    "Sanitary Agreement" means the Agreement between the European Community and New Zealand on sanitary measures applicable to trade in live animals and animal products, done at Brussels on 17 December 1996 5 ;

(y)    "sanitary or phytosanitary measure" means any measure referred to in paragraph 1 of Annex A to the SPS Agreement;

(z)    "SDR" means special drawing rights;

(aa)    "service supplier" means a person that supplies or seeks to supply a service;

(bb)    "SMEs" means small and medium-sized enterprises;

(cc)    "territory" means with respect to each Party the area where this Agreement applies in accordance with Article 1.4 (Territorial application);

(dd)    "TFEU” means the Treaty on the Functioning of the European Union;

(ee)    "the Paris Agreement" means the Paris Agreement under the United Nations Framework Convention on Climate Change, done at Paris on 12 December 2015;

(ff)    "the Partnership Agreement" means Partnership Agreement on Relations and Cooperation between the European Union and its Member States, of the one part, and New Zealand, of the other part, done at Brussels on 5 October 2016;

(gg)    "third country" means a country or territory outside the territorial scope of application of this Agreement; and

(hh)    "WTO" means the World Trade Organization.

ARTICLE 1.3

WTO Agreements

For the purposes of this Agreement, the following definitions apply:

(a)    "Agreement on Agriculture" means the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement;

(b)    "Agreement on Safeguards" means the Agreement on Safeguards, contained in Annex 1A to the WTO Agreement;

(c)    "Anti-dumping Agreement" means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

(d)    "Customs Valuation Agreement" means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

(e)    "DSU" means the Understanding on Rules and Procedures Governing the Settlement of Disputes, contained in Annex 2 to the WTO Agreement;

(f)    "GATS" means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;

(g)    "GATT 1994" means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

(h)    "GPA" means the Agreement on Government Procurement as amended by the Protocol Amending the Agreement on Government Procurement, done at Geneva on 30 March 2012;

(i)    "Import Licensing Agreement" means the Agreement on Import Licensing Procedures, contained in Annex 1A to the WTO Agreement;

(j)    "SCM Agreement" means the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement;

(k)    "SPS Agreement" means the Agreement on the Application of Sanitary and Phytosanitary Measures, contained in Annex 1A to the WTO Agreement;

(l)    "TBT Agreement" means the Agreement on Technical Barriers to Trade, contained in Annex 1A to the WTO Agreement;

(m)    "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement; and

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

ARTICLE 1.4

Territorial application

1.    This Agreement applies:

(a)    to the territories in which the Treaty on European Union and the TFEU are applied and under the conditions laid down in those Treaties; and

(b)    to the territory of New Zealand and the exclusive economic zone, seabed and subsoil over which New Zealand exercises sovereign rights with respect to natural resources in accordance with international law, but does not include Tokelau.

2.    As regards the provisions of this Agreement concerning the tariff treatment of goods, including rules of origin and origin procedures, this Agreement also applies to those areas of the customs territory of the Union within the meaning of Article 4 of Regulation (EU) No 952/2013 of the European Parliament and of the Council 6 that are not covered by point (a) of paragraph 1 of this Article.

3.    References to "territory" in this Agreement shall be understood in the sense referred to in paragraphs 1 and 2, except as otherwise expressly provided.

ARTICLE 1.5

Relation to other international agreements

1.    Unless otherwise provided for in this Agreement, the existing international agreements between the Member States of the Union, the European Community or the Union on the one side and New Zealand on the other side, are not superseded or terminated by this Agreement.

2.    This Agreement shall be an integral part of the overall bilateral relations as governed by the Partnership Agreement and shall form part of the common institutional framework.

3.    The Parties affirm their rights and obligations with respect to each other under the WTO Agreement. For greater certainty, nothing in this Agreement requires a Party to act in a manner inconsistent with its obligations under the WTO Agreement.

4.    In the event of any inconsistency between this Agreement and any international agreement other than the WTO Agreement to which both Parties are a party, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution.

5.    Unless otherwise specified, where international agreements are referred to or incorporated into this Agreement, in whole or in part, they shall be understood to include amendments thereto or their successor agreements entering into force for both Parties on or after the date of entry into force of this Agreement.

6.    If any matter arises regarding the implementation or application of this Agreement as a result of any amendments or successor agreements as referred to in paragraph 5, the Parties may, on request of either Party, consult with each other with a view to finding a mutually satisfactory solution to this matter as necessary.

ARTICLE 1.6

Establishment of a free trade area

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

CHAPTER 2

NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

ARTICLE 2.1

Objective

The Parties shall progressively and reciprocally liberalise trade in goods in accordance with this Agreement.

ARTICLE 2.2

Scope

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

ARTICLE 2.3

Definitions

For the purposes of this Chapter, the following definitions apply:

(a)    "A.T.A. carnet" means the document reproduced in accordance with the Annex to the Customs Convention on the A.T.A. Carnet for the temporary admission of goods, done in Brussels on 6 December 1961;

(b)    "consular transaction" means the procedure of obtaining from a consul of the importing Party in the territory of the exporting Party, or in the territory of a third country, a consular invoice or a consular visa for a commercial invoice, certificate of origin, manifest, shipper's export declaration or any other customs documentation in connection with the importation of the good;

(c)    "export licensing procedure" means an administrative procedure requiring the submission of an application or other documentation, other than that generally required for customs clearance purposes, to the relevant administrative body or bodies as a prior condition for exportation from the territory of the exporting Party;

(d)    "import licensing procedure" means an administrative procedure, requiring the submission of an application or other documentation, other than that generally required for customs clearance purposes, to the relevant administrative body or bodies as a prior condition for importation into the territory of the importing Party;

(e)    "remanufactured good" means a good classified in HS Chapters 84 to 90 or heading 94.02 that:

(i)    is entirely or partially comprised of parts obtained from used goods;

(ii)    has similar performance and working conditions compared to equivalent goods, when new; and

(iii)    is given the same warranty as that applicable to equivalent goods, when new;

(f)    "repair" or "alteration" means any processing operation undertaken on a good, regardless of any increase in the value of the good, to remedy operating defects or material damage and entailing the re-establishment of the good to its original function or to ensure compliance with technical requirements for its use, without which the good could no longer be used in the normal way for the purposes for which it was intended; repair or alteration of a good includes restoration and maintenance but does not include an operation or process that:

(i)    destroys the essential characteristics of a good, or creates a new or commercially different good;

(ii)    transforms an unfinished good into a finished good; or

(iii)    is used to substantially change the function of a good; and

(g)    "staging category" means the timeframe for the elimination of customs duties ranging from zero to seven years, after which a good is free of customs duty, unless otherwise specified in Annex 2-A (Tariff elimination schedules).

ARTICLE 2.4

National treatment on internal taxation and regulation

Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994 including its interpretative Notes and Supplementary Provisions. To that end, Article III of GATT 1994 and its interpretative Notes and Supplementary Provisions are incorporated into and made part of this Agreement, mutatis mutandis.

ARTICLE 2.5

Elimination of customs duties

1.    Unless otherwise provided for in this Agreement, each Party shall reduce or eliminate its customs duties on goods originating in the other Party in accordance with Annex 2-A (Tariff elimination schedules).

2.    For the purposes of paragraph 1, the base rate of customs duties shall be the base rate specified for each good in Annex 2-A (Tariff elimination schedules).

3.    If a Party reduces its applied most-favoured-nation customs duty rate, that duty rate shall apply to goods originating in the other Party for as long as it is lower than the customs duty rate determined pursuant to Annex 2-A (Tariff elimination schedules).

4.    Two years after the date of entry into force of this Agreement, on the request of a Party, the Parties shall consult to consider accelerating the reduction or elimination of customs duties set out in Annex 2-A (Tariff elimination schedules). The Trade Committee may adopt a decision to amend Annex 2-A (Tariff elimination schedules) to accelerate the tariff reduction or elimination.

5.    A Party may at any time autonomously accelerate the elimination of customs duties set out in Annex 2-A (Tariff elimination schedules) on goods originating in the other Party. That Party shall inform the other Party as early as practicable before the new customs duty rate takes effect.

6.    If a Party autonomously accelerates the elimination of customs duties in accordance with paragraph 5, that Party may raise a customs duty to the level set out in Annex 2-A (Tariff elimination schedules) for the respective year following any autonomous reduction.

ARTICLE 2.6

Standstill

Unless otherwise provided in this Agreement, a Party shall not increase any customs duty set as the base rate in Annex 2-A (Tariff elimination schedules) or adopt any new customs duty on a good originating in the other Party.

ARTICLE 2.7

Export duties, taxes or other charges

1.    A Party shall not adopt or maintain:

(a)    any duty, tax or other charge of any kind imposed on, or in connection with, the exportation of a good to the other Party; or

(b)    any internal tax or other charge on a good exported to the other Party that is in excess of the tax or charge that would be imposed on like goods when destined for domestic consumption.

2.    Nothing in this Article shall prevent a Party from imposing on the exportation of a good a fee or charge that is permitted under Article 2.8 (Fees and formalities).

ARTICLE 2.8

Fees and formalities

1.    Each Party shall ensure, in accordance with Article VIII:1 of GATT 1994 including its interpretative Notes and Supplementary Provisions, that all fees and other charges of whatever character imposed by a Party on or in connection with importation or exportation of goods are limited in amount to the approximate cost of services rendered, and do not represent an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes.

2.    A Party shall not levy the fees and other charges of whatever character referred to in paragraph 1 on an ad valorem basis.

3.    Each Party shall promptly publish all fees and other charges of whatever character it imposes in connection with importation or exportation of goods in such a manner as to enable governments, traders and other interested parties to become acquainted with them.

4.    A Party shall not require a consular transaction, including related to fees and other charges of whatever character, in connection with the importation of any good of the other Party.

5.    For the purposes of this Article, fees or other charges of whatever character do not include export taxes, customs duties, charges equivalent to an internal tax, or other internal charges applied consistently with Article III:2 of GATT 1994, or antidumping or countervailing duties.

ARTICLE 2.9

Repaired or altered goods

1.    A Party shall not apply a customs duty to a good, regardless of its origin, that re-enters the Party's 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 that repair or alteration could have been performed in the territory of the Party from which the good was exported for repair or alteration.

2.    Paragraph 1 does not apply to a good imported in bond, into free trade zones, or in similar status, that is then exported for repair or alteration and is not re-imported in bond, into free trade zones, or in similar status.

3.    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.

ARTICLE 2.10

Remanufactured goods

1.    A Party shall not accord to remanufactured goods of the other Party treatment that is less favourable than the Party accords to equivalent goods in new condition.

2.    For greater certainty, Article 2.11 (Import and export restrictions) applies to import or export prohibitions or restrictions on the importation or exportation of remanufactured goods. If a Party adopts or maintains import or export prohibitions or restrictions on the importation or exportation of used goods, it shall not apply such measures to remanufactured goods.

3.    A Party may require that remanufactured goods be identified as such for distribution or sale in its territory and that the goods meet all applicable technical requirements that apply to equivalent goods in new condition.

ARTICLE 2.11

Import and export restrictions

1.    A Party shall not adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of GATT 1994, including its interpretative Notes and Supplementary Provisions. To that end, Article XI of GATT 1994 and its interpretative Notes and Supplementary Provisions are incorporated into and made part of this Agreement, mutatis mutandis.

2.    A Party shall not adopt or maintain:

(a)    export and import price requirements 7 , except as permitted in enforcement of countervailing and antidumping duty orders and undertakings; or

(b)    import licensing conditioned on the fulfilment of a performance requirement.

ARTICLE 2.12

Origin marking

1.    If New Zealand requires a mark of origin on the importation of goods from the Union, New Zealand shall accept the origin mark "Made in the EU" under conditions that are no less favourable than those applied to marks of origin of a Member State.

2.    For the purposes of the origin mark "Made in the EU", New Zealand shall treat the Union as a single territory.

ARTICLE 2.13

Import licensing procedures

1.    Each Party shall adopt and administer any import licensing procedures in accordance with Articles 1 to 3 of the Import Licensing Agreement. To that end, Articles 1 to 3 of the Import Licensing Agreement are incorporated into and made part of this Agreement, mutatis mutandis.

2.    A Party that adopts a new import licensing procedure or modifies an existing import licensing procedure, shall notify the other Party of such adoption or modification without delay and in any event no later than 60 days after the date of the publication of the relevant procedure. The notification shall include the information specified in Article 5(2) of the Import Licensing Agreement. A Party shall be deemed to be in compliance with this obligation if it notifies a new import licensing procedure, or a modification to an existing import licensing procedure, to the WTO Committee on Import Licensing in accordance with Article 4 of the Import Licensing Agreement, including the information specified in Article 5(2) of that Agreement.

3.    Upon request of a Party, the other Party shall promptly provide any relevant information, including the information specified in Article 5(2) of the Import Licensing Agreement, regarding any import licensing procedure that it intends to adopt or that it maintains as well as any modification to an existing import licensing procedure.

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

ARTICLE 2.14

Export licensing procedures

1.    Each Party shall publish any new export licensing procedure, or any modification of an existing export licensing procedure, in such a manner as to enable governments, traders and other interested parties to become acquainted with them. Such publication shall take place, whenever practicable, 45 days before the new export licensing procedure or modification of an existing export licensing procedure takes effect, and in any event no later than the date on which the new export licensing procedure or modification takes effect.

2.    Each Party shall ensure that it includes the following information in its publication of export licensing procedures:

(a)    the texts of its export licensing procedures, or of any modifications the Party makes to those procedures;

(b)    the goods subject to each export licensing procedure;

(c)    for each export licensing procedure, a description of the process for applying for a license and any criteria an applicant must meet to be eligible to apply for a license, such as possessing an activity license, establishing or maintaining an investment, or operating through a particular form of establishment in the territory of a Party;

(d)    a contact point or points from which interested persons can obtain further information on the conditions for obtaining an export licence;

(e)    the administrative body or bodies to which an application for a licence or other relevant documentation is to be submitted;

(f)    a description of any measure or measures being implemented through the export licensing procedure;

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

(h)    if the Party intends to use an export licensing procedure to administer an export quota, the overall quantity and, if applicable, the value of the quota and the opening and closing dates of the quota; and

(i)    any exemptions or exceptions that replace the requirement to obtain an export licence, how to request or use those exemptions or exceptions, and the criteria for granting them.

3.    Within 30 days after the date of entry into force of this Agreement, each Party shall notify the other Party of its existing export licensing procedures. A Party that adopts new export licensing procedures, or modifications of existing licensing procedures, shall notify the other Party of such adoption or modification within 60 days after the publication of any new export licensing procedure or any modification of an existing licensing procedure. The notification shall include the reference to the source or sources where the information required in paragraph 2 is published and include, if appropriate, the address of the relevant government website or websites.

4.    For greater certainty, nothing in this Article requires a Party to grant an export licence, or prevents a Party from implementing its commitments under United Nations Security Council Resolutions, as well as under multilateral non-proliferation regimes and export control arrangements, including:

(a)    the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies done at the Hague on 19 December 1995;

(b)    the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction done at Paris on 13 January 1993;

(c)    the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction done at London, Moscow and Washington on 10 April 1972;

(d)    the Treaty on the Non-Proliferation of Nuclear Weapons done at London, Moscow and Washington on 1 July 1968; and

(e)    the Australia Group, the Nuclear Suppliers Group, and the Missile Technology Control Regime.

ARTICLE 2.15

Preference utilisation

1.    For the purposes of monitoring the functioning of this Agreement and calculating preference utilisation rates, the Parties shall annually exchange comprehensive import statistics for a period starting one year after the date of entry into force of this Agreement until 10 years after the tariff elimination is completed for all goods in accordance with Annex 2-A (Tariff elimination schedules). Unless the Trade Committee decides otherwise, that period shall be automatically extended for five years, and thereafter the Trade Committee may decide to extend it further.

2.    The exchange of import statistics shall cover data pertaining to the most recent year available, including value and, if applicable, volume, at the tariff line level for imports of goods of the other Party benefitting from preferential duty treatment under this Agreement and for the import of those goods that received non-preferential treatment including under the different regimes used by the Parties upon importation. Such statistics as well as preference utilisation rates may be presented for an exchange of views to the Trade Committee.

ARTICLE 2.16

Temporary admission

1.    For the purposes of this Article, the term "temporary admission" means the customs procedure under which certain goods, including means of transport, can be brought into the territory of a Party with conditional relief from the payment of import duties and taxes and without the application of import prohibitions or restrictions of an economic character, on the condition that the goods are imported for a specific purpose and are intended for re-exportation within a specified period without having undergone any change except normal depreciation due to the use made of those goods.

2.    Each Party shall grant temporary admission in accordance with its laws, regulations or procedures, to the following goods, regardless of their origin:

(a)    professional equipment, including equipment for the press or television, software, and broadcasting and cinematographic equipment, necessary for carrying out the business activity, trade, or profession of a person visiting the territory of the other Party to perform a specified task;

(b)    goods, including their component parts, ancillary apparatus, and accessories, intended for display or use at exhibitions, fairs, meetings or similar events;

(c)    commercial samples and advertising films and recordings (recorded visual media or audio materials, consisting essentially of images or sound showing the nature or operation of goods or services offered for sale or lease by a person established or resident in the territory of a Party provided that such materials are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public); and

(d)    goods imported for sports purposes, including contests, demonstrations, training, racing or similar events.

3.    For the temporary admission of the goods referred to in paragraph 2 and regardless of their origin, each Party shall accept A.T.A. carnets issued in the other Party, endorsed there and guaranteed by an association forming part of the international guarantee chain, certified by the competent authorities and valid in the territory of the importing Party.

4.    Each Party shall determine the period during which goods may remain under the temporary admissions procedure. The initial period may be extended autonomously by a Party.

5.    Each Party may require that the goods benefiting from temporary admission in accordance with paragraph 1:

(a)    be used solely by or under the personal supervision of a national or resident of the other Party in the exercise of the business activity, trade, profession, or sport carried out by that national or resident;

(b)    not be sold, leased, disposed of, or transferred while in its territory;

(c)    be accompanied by a security that is consistent with the importing Party's obligations under the relevant international customs conventions to which it has acceded;

(d)    be identified when imported and exported;

(e)    be exported on or before the departure of the national or resident referred to in point (a), or within a period related to the purpose of the temporary admission that the Party may establish, or within one year, unless extended;

(f)    be admitted in no greater quantity than is reasonable for its intended use; or

(g)    be otherwise admissible into the territory of the Party under its law.

6.    If any condition that a Party may impose under paragraph 5 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on the good as well as any other charges or penalties provided for under its law.

7.    Each Party shall allow a good temporarily admitted under this Article to be re-exported through a customs authorised point of departure other than that through which it was admitted.

8.    A Party shall relieve the importer or other person responsible for a good admitted under this Article of liability for failure to export a temporarily admitted good on presentation of satisfactory proof to the importing Party that the good has been destroyed or irretrievably lost, in accordance with the customs legislation of that Party.

ARTICLE 2.17

Duty-free entry of commercial samples of negligible value
and printed advertising material

1.    Each Party shall, in accordance with its laws, regulations or procedures, grant duty-free entry to commercial samples of negligible value and printed advertising material imported from the other Party, regardless of their origin.

2.    A Party may define commercial samples of negligible value as:

(a)    having a value, individually or in the aggregate as shipped, of not more than the amount specified in the law of a Party; or

(b)    being so marked, torn, perforated, or otherwise treated that they are unsuitable for sale or use except as commercial samples.

3.    Printed advertising materials are defined as goods classified in HS Chapter 49, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, 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.

ARTICLE 2.18

Specific measures concerning the management of preferential treatment

1.    The Parties shall cooperate in preventing, detecting and combating breaches of customs legislation related to the preferential treatment granted under this Chapter in accordance with Chapter 3 (Rules of origin and origin procedures) and Titles I, III, IV and V of the CCMAA.

2.    A Party may temporarily suspend the relevant preferential treatment of goods in accordance with the procedure laid down in paragraphs 3 to 5, if:

(a)    it has made a finding, on the basis of objective, compelling and verifiable information, that systematic and sectoral breaches of customs legislation related to the preferential treatment granted under this Chapter, which results in a significant loss of revenue to that Party, have been committed; and

(b)    the other Party repeatedly and unjustifiably refuses or otherwise fails to cooperate with respect to the breaches of customs legislation referred to in point (a).

3.    The Party that has made a finding as referred to in point (a) of paragraph 2 shall, without undue delay, notify the Trade Committee and enter into consultations with the other Party within the Trade Committee with a view to reaching a mutually acceptable solution.

4.    If the Parties fail to agree on an acceptable solution within three months after the notification as referred to in paragraph 3, the Party that made the finding may decide to temporarily suspend the relevant preferential treatment of the goods concerned. The temporary suspension shall apply to only those traders that both Parties during the consultations referred to in paragraph 3 identified and agreed were involved in the breaches of customs legislation. This temporary suspension shall be notified to the Trade Committee without undue delay.

5.    If a Party has made a finding as referred to in point (a) of paragraph 2, and within three months following the notification referred to in paragraph 4, has established that the temporary suspension referred to in paragraph 4 has been ineffective in combatting breaches of customs legislation related to the preferential treatment granted under this Chapter, the Party may decide to temporarily suspend the relevant preferential treatment of the goods concerned. The Party may also decide to suspend temporarily the relevant preferential treatment of the goods concerned if, during the consultations referred to in paragraph 3, the Parties were unable to identify and to agree on the traders involved in the breaches of customs legislation. This temporary suspension shall be notified to the Trade Committee without undue delay.

6.    The temporary suspensions referred to in this Article shall apply only for the period necessary to protect the financial interests of the Party concerned, and in any case they shall not apply longer than six months. If the conditions that gave rise to the initial temporary suspension persist at the expiry of the six month period, the Party concerned may decide to renew the temporary suspension after notifying the other Party. Any such suspension shall be subject to periodic consultations within the Trade Committee.

7.    Each Party shall publish, in accordance with its internal procedures, notices to importers about any decision concerning temporary suspensions referred to in this Article.

8.    Notwithstanding paragraph 5, if an importer is able to satisfy the customs authority of the importing Party that the goods concerned are fully compliant with the customs law of the importing Party, the requirements of this Agreement, and any other conditions related to the temporary suspension established by the importing Party in accordance with its law, the importing Party shall allow the importer to apply for preferential treatment and recover any duties paid in excess of the applicable preferential tariff rates when the goods concerned were imported.

ARTICLE 2.19

Committee on Trade in Goods

1.    This Article complements and further specifies Article 24.4 (Specialised committees).

2.    The functions of the Committee on Trade in Goods, with respect to this Chapter, shall include:

(a)    promoting trade in goods between the Parties, including through consultation on accelerating tariff elimination under this Agreement

(b)    promptly addressing barriers to trade in goods between the Parties;

(c)    without prejudice to Chapter 26 (Dispute settlement), consulting on and endeavouring to resolve any issues relating to this Chapter, including differences that may arise between the Parties on matters related to the classification of goods under the Harmonized System and Annex 2-A (Tariff elimination schedules), or amendment to the Harmonized System Code Structure or each Party's respective nomenclatures, to ensure that the obligations of each Party pursuant to Annex 2-A (Tariff elimination schedules) are not altered;

(d)    monitoring preference utilisation rates and statistics, the data of which may be presented for an exchange of views by the Trade in Goods Committee to the Trade Committee; and

(e)    working with any Specialised Committee or other subsidiary body established or granted authority to act under this Agreement on issues that may be relevant to that Specialised Committee or body, as appropriate.

ARTICLE 2.20

Contact points

Within 90 days after the date of entry into force of this Agreement each Party shall designate a contact point responsible for facilitating communication between the Parties on matters covered by this Chapter and notify the other Party of the contact details for the contact point. Each Party shall notify the other Party promptly in the event of any change of those contact details.

CHAPTER 3

RULES OF ORIGIN AND ORIGIN PROCEDURES

SECTION A

RULES OF ORIGIN

ARTICLE 3.1

Definitions

For the purposes of this Chapter, the following definitions apply:

(a)    "consignment" means a product that is either sent simultaneously from a consignor to a consignee or covered by a single transport document covering a shipment from the consignor to the consignee or, in the absence of such a document, by a single invoice;

(b)    "exporter" means a person, located in a Party, who, in accordance with the requirements laid down in the law of that Party, exports or produces the originating product and makes out a statement on origin;

(c)    "importer" means a person who imports the originating product and claims preferential tariff treatment for it;

(d)    "material" means any substance used in the production of a product, including any ingredient, raw material, component or part;

(e)    "non-originating material" means a material that does not qualify as originating under this Chapter, including a material whose originating status cannot be determined;

(f)    "product" means the result of production, even if it is intended for use as a material in the production of another product; and

(g)    "production" means any kind of working or processing, including assembly.

ARTICLE 3.2

General requirements for originating products

1.    For the purposes of applying preferential tariff treatment by a Party to an originating good of the other Party in accordance with this Agreement, provided that a product satisfies all other applicable requirements of this Chapter, a product shall be considered as originating in the other Party if it is:

(a)    wholly obtained in that Party within the meaning of Article 3.4 (Wholly obtained products);

(b)    produced in that Party exclusively from originating materials; or

(c)    produced in that Party incorporating non-originating materials provided that the product satisfies the requirements set out in Annex 3-B (Product-specific rules of origin).

2.    If a product has acquired originating status, the non-originating materials used in the production of that product shall not be considered non-originating materials when that product is incorporated as a material in another product.

3.    The acquisition of originating status shall be fulfilled without interruption in New Zealand or the Union.

ARTICLE 3.3

Cumulation of origin

1.    A product originating in a Party shall be considered as originating in the other Party if that product is used as a material in the production of another product in that other Party.

2.    Production carried out in a Party on a non-originating material may be taken into account for the purpose of determining whether a product is originating in the other Party.

3.    Paragraphs 1 and 2 do not apply if the production carried out in the other Party does not go beyond one or more of the operations referred to in Article 3.6 (Insufficient working or processing).

4.    In order for an exporter to complete the statement on origin referred to in point (a) of Article 3.16(2) (Claim for preferential tariff treatment) for a non-originating material referred to in paragraph 2, the exporter shall obtain from its supplier a supplier's declaration as provided for in Annex 3-D (Supplier's declaration referred to in Article 3.3(4) (Cumulation of origin)) or an equivalent document that contains the same information describing the non-originating materials concerned in sufficient detail to enable them to be identified.

ARTICLE 3.4

Wholly obtained products

1.    The following shall be considered as wholly obtained in a Party:

(a)    a mineral or naturally occurring substance extracted or taken from the soil or the seabed of a Party;

(b)    a plant or vegetable grown or harvested in a Party;

(c)    a live animal born and raised in a Party;

(d)    a product obtained from a live animal raised in a Party;

(e)    a product obtained from a slaughtered animal born and raised in a Party;

(f)    a product obtained by hunting or fishing conducted in a Party, but not beyond the outer limits of the Party's territorial sea;

(g)    a product obtained from aquaculture in a Party, if aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants are born or raised from seed stock such as eggs, roes, fry, fingerlings or larvae, by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding or protection from predators;

(h)    a product of sea fishing and other product taken in accordance with international law from the sea outside any territorial sea by a vessel of a Party;

(i)    a product made aboard a factory ship of a Party exclusively from a product referred to in point (h);

(j)    a product taken or extracted by a Party or a person of a Party from the seabed or subsoil, outside any territorial sea, provided that Party or person of that Party has the right to work that seabed or subsoil in accordance with international law;

(k)    waste or scrap resulting from manufacturing operations conducted in a Party;

(l)    a used product collected in a Party and which is fit only for the recovery of raw materials, including such raw materials; and

(m)    a product produced in a Party exclusively from the products referred to in points (a) to (l).

2.    The terms "vessel of a Party" and "factory ship of a Party" in points (h) and (i) of paragraph 1 refer only to a vessel or a factory ship which:

(a)    is registered in a Member State or in New Zealand;

(b)    sails under the flag of a Member State or of New Zealand; and

(c)    meets one of the following conditions:

(i)    it is at least 50 % owned by nationals of a Member State or of New Zealand; or

(ii)    it is owned by one or more juridical persons each of which:

(A)    has its head office and main place of business in a Member State or in New Zealand; and

(B)    is at least 50 % owned by public entities or persons of a Member State or of New Zealand.

ARTICLE 3.5

Tolerances

1.    If non-originating materials used in the production of a product do not satisfy the requirements set out in Annex 3-B (Product-specific rules of origin), the product shall be considered as originating in a Party, provided that:

(a)    for all products, except for a product classified under HS Chapters 50 to 63, the value of those non-originating materials used in the production of those products does not exceed 10 % of the ex‑works price of the product;

(b)    for a product classified under HS Chapters 50 to 63, the tolerances set out in Notes 7 and 8 of Annex 3-A (Introductory notes to product-specific rules of origin) apply.

2.    Paragraph 1 does not apply if the value or weight of non-originating materials used in the production of a product exceeds any of the percentages for the maximum value or weight of non-originating materials as specified in the requirements set out in Annex 3-B (Product-specific rules of origin).

3.    Paragraph 1 does not apply to products wholly obtained in a Party within the meaning of Article 3.4 (Wholly obtained products). If Annex 3-B (Product-specific rules of origin) requires that the materials used in the production of a product are wholly obtained, paragraphs 1 and 2 apply.

ARTICLE 3.6

Insufficient working or processing

1.    Notwithstanding point (c) of Article 3.2(1) (General requirements for originating products), a product shall not be considered as originating in a Party if the production of the product in a Party consists only of one or more of the following operations conducted on non-originating materials:

(a)    preserving operations such as drying, freezing, keeping in brine and other similar operations when their sole purpose is to ensure that the products remain in good condition during transport and storage 8 ;

(b)    breaking-up or assembly of packages;

(c)    washing or cleaning, removal of dust, oxide, oil, paint or other coverings;

(d)    ironing or pressing of textiles and textile articles;

(e)    simple painting and polishing operations;

(f)    husking and partial or total milling of rice; polishing and glazing of cereals and rice;

(g)    operations to colour or flavour sugar or form sugar lumps, partial or total milling of crystal sugar;

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

(i)    sharpening, simple grinding or simple cutting;

(j)    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, whether or not of different kinds; mixing of sugar with any material;

(n)    simple addition of water or dilution with water or another substance that does not materially alter the characteristics of the products, or dehydration or denaturation of products;

(o)    simple assembly of parts of articles to constitute a complete article or disassembly of products into parts; or

(p)    slaughter of animals.

2.    For the purposes of paragraph 1, operations shall be considered simple if neither special skills nor especially produced or installed machines, apparatus or equipment are needed for carrying out those operations.

ARTICLE 3.7

Unit of qualification

1.    For the purposes of this Chapter, the unit of qualification shall be the particular product that is considered as the basic unit when classifying the product under the HS.

2.    If a consignment consists of a number of identical products classified under the same heading of the HS, each individual product shall be taken into account when applying this Chapter.

ARTICLE 3.8

Packing materials and containers for shipment

Packing materials and containers for shipment that are used to protect a product during transportation shall be disregarded in determining whether a product has originating status.

ARTICLE 3.9

Packaging materials and containers for retail sale

1.    Packaging materials and containers in which a product is packaged for retail sale, if classified with the product, shall be disregarded in determining whether the non-originating materials used in the production of the product have undergone the applicable change in tariff classification or a specific manufacturing or processing operation as set out in Annex 3-B (Product-specific rules of origin) or whether the product is wholly obtained.

2.    When a product is subject to a value requirement as set out in Annex 3-B (Product-specific rules of origin), the value of the packaging materials and containers in which the product is packaged for retail sale, if classified with the product, shall be taken into account as originating or non-originating, as the case may be, in the calculation for the purpose of application of the value requirement to the product.

ARTICLE 3.10

Accessories, spare parts and tools

1.    For the purposes of this Article, accessories, spare parts, tool and instructional or other information materials are covered if they are:

(a)    classified, delivered and invoiced with the product; and

(b)    of the type, quantity and value that are customary for the product concerned.

2.    In determining whether a product:

(a)    is wholly obtained, or satisfies a production process or change in tariff classification requirement as set out in Annex 3-B (Product-specific rules of origin), accessories, spare parts, tools and instructional or other information materials of that product shall be disregarded; and

(b)    meets a value requirement as set out in Annex 3-B (Product-specific rules of origin), the value of accessories, spare parts, tools and instructional or other information materials of that product shall be taken into account as originating or non-originating materials, as the case may be, in the calculation for the purpose of the application of the value requirement to the product.

ARTICLE 3.11

Sets

Sets, as defined in General Rule 3 (b) and (c) for Interpretation of the HS, shall be considered as originating in a Party if all of their components have originating status. When a set is composed of originating and non-originating components, the set as a whole shall be considered as originating in a Party, if the value of the non-originating components does not exceed 15 % of the ex-works price of the set.

ARTICLE 3.12

Neutral elements

In order to determine whether a product is originating in a Party, it shall not be necessary to determine the originating status of the following neutral elements:

(a)    energy and fuel;

(b)    plant and equipment, including products used for their maintenance;

(c)    machines, tools, dies and moulds;

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

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

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

(g)    equipment, devices and supplies used for testing or inspecting the product;

(h)    catalysts and solvents; and

(i)    other materials that are neither incorporated nor intended to be incorporated into the final composition of the product.

ARTICLE 3.13

Accounting segregation for fungible materials and products

1.    For the purposes of this Article, "fungible materials" or "fungible products" means materials or products that are of the same kind and commercial quality, with the same technical and physical characteristics, and which cannot be distinguished from one another for origin purposes.

2.    Originating and non-originating fungible materials or fungible products shall be physically segregated during storage in order to maintain their originating and non-originating status.

3.    Notwithstanding paragraph 2, originating and non-originating fungible materials may be used in the production of a product without being physically segregated during storage if an accounting segregation method is used.

4.    Notwithstanding paragraph 2, originating and non-originating fungible products classified under Chapters 10, 15, 27, 28, 29, headings 32.01 to 32.07, or headings 39.01 to 39.14 of the HS may be stored in a Party before exportation to the other Party without being physically segregated, if an accounting segregation method is used.

5.    The accounting segregation method referred to in paragraphs 3 and 4 shall be applied in conformity with a stock management method under accounting principles that are generally accepted in the Party where the method is used.

6.    The accounting segregation method shall be any method that ensures that at any time no more products receive originating status than that would be the case if the materials or the products had been physically segregated.

ARTICLE 3.14

Returned products

If an originating product of a Party exported from that Party to a third country returns to that Party, it shall be considered as a non-originating product unless the returned product:

(a)    is the same as that exported; and

(b)    has not undergone any operation other than what was necessary to preserve it in good condition while in the third country to which it has been exported or while being exported.

ARTICLE 3.15

Non-alteration

1.    An originating product declared for home use in the importing Party shall not, after exportation and prior to being declared for home use, have been altered, transformed in any way or subjected to operations other than to preserve it in good condition or than adding or affixing marks, labels, seals or any other documentation to ensure compliance with specific requirements of the importing Party.

2.    The storage or exhibition of an originating product may take place in a third country if that originating product is not cleared for home use in that third country.

3.    Without prejudice to Section B (Origin procedures), the splitting of consignments may take place in a third country if the consignments are not cleared for home use in that third country.

4.    In case of doubt as to whether the requirements provided for in paragraphs 1 to 3 are complied with, the customs authority of the importing Party may request the importer to provide evidence of compliance with those requirements, which may be given by any means, including contractual transport documents, such as bills of lading, factual or concrete evidence based on marking or numbering of packages or any evidence related to the product itself.

SECTION B

ORIGIN PROCEDURES

ARTICLE 3.16

Claim for preferential tariff treatment

1.    The importing Party shall grant preferential tariff treatment to a product originating in the other Party within the meaning of this Chapter on the basis of a claim by the importer for preferential tariff treatment. The importer shall be responsible for the correctness of the claim for preferential tariff treatment and for compliance with the requirements set out in this Chapter.

2.    A claim for preferential tariff treatment shall be based on either:

(a)    a statement on origin that the product is originating made out by the exporter; or

(b)    the importer's knowledge that the product is originating.

3.    A claim for preferential tariff treatment and its basis as referred to in points (a) and (b) of paragraph 2 shall be included in the customs import declaration in accordance with the law of the importing Party.

4.    The importer making a claim for preferential tariff treatment based on a statement on origin referred to in point (a) of paragraph 2 shall keep the statement on origin and, when required by the customs authority of the importing Party, shall provide a copy thereof to that customs authority.

ARTICLE 3.17

Claim for preferential tariff treatment after importation

1.    If the importer did not make a claim for preferential tariff treatment at the time of importation, and the product would have qualified for preferential tariff treatment at the time of importation, the importing Party shall grant preferential tariff treatment and repay or remit any excess customs duty paid.

2.    The importing Party may require as a condition for granting preferential tariff treatment under paragraph 1 that the importer makes a claim for preferential tariff treatment and provides the basis for the claim as referred to in paragraph 2 of Article 3.16 (Claim for preferential tariff treatment). Such a claim shall be made no later than three years after the date of importation or within a longer period if specified in the law of the importing Party.

ARTICLE 3.18

Statement on origin

1.    A statement on origin shall be made out by an exporter of a product on the basis of information demonstrating that the product is originating, including, when applicable, information on the originating status of materials used in the production of that product. The exporter shall be responsible for the correctness of the statement on origin and the information provided.

2.    A statement on origin shall be made out in one of the language versions included in Annex 3‑C (Text of the statement on origin) on an invoice or on any other document that describes the originating product in sufficient detail to enable its identification 9 . The importing Party shall not require the importer to submit a translation of the statement on origin.

3.    A statement on origin shall be valid for one year from the date it was made out.

4.    A statement on origin may apply to:

(a)    a single shipment of one or more products imported into a Party; or

(b)    multiple shipments of identical products imported into a Party within the period specified in the statement on origin not exceeding 12 months.

5.    The importing Party shall, upon the request of the importer and subject to requirements that the importing Party may provide, allow a single statement on origin for unassembled or disassembled products within the meaning of General Rule 2(a) of the HS falling within Sections XV to XXI of the HS when imported by instalments.

ARTICLE 3.19

Minor errors or minor discrepancies

The customs authority of the importing Party shall not reject a claim for preferential tariff treatment due to minor errors or minor discrepancies in the statement on origin.

ARTICLE 3.20

Importer's knowledge

The importer's knowledge that a product is originating in the exporting Party shall be based on information demonstrating that the product is originating and satisfies the requirements of this Chapter.

ARTICLE 3.21

Record keeping requirements

1.    For a minimum of three years after the date on which the claim for preferential tariff treatment was made as referred to in paragraph 1 of Article 3.16 (Claim for preferential tariff treatment) or in Article 3.17 (Claim for preferential tariff treatment after importation) or for a longer period that may be specified in the law of the importing Party, an importer making a claim for preferential tariff treatment for a product imported into the importing Party shall keep:

(a)    the statement on origin made out by the exporter, if the claim was based on a statement on origin; or

(b)    all records demonstrating that the product satisfies the requirements to obtain originating status, if the claim was based on the importer's knowledge.

2.    An exporter who has made out a statement on origin shall, for a minimum of four years after that statement was made out or within a longer period provided for in the law of the exporting Party, keep a copy of that statement and other records demonstrating that the product satisfies the requirements to obtain originating status.

3.    If an exporter is not the producer of the products, and has relied on information from a supplier as to the originating status of the products, the exporter shall be required to keep the information provided by that supplier.

4.    The records to be kept in accordance with this Article may be held in electronic format.

ARTICLE 3.22

Waiver of procedural requirements

1.    Notwithstanding Articles 3.16 to 3.21, the importing Party shall grant preferential tariff treatment to:

(a)    a product sent in a small package from private persons to private persons; or

(b)    a product forming part of a traveller's personal luggage.

2.    Paragraph 1 applies only to products that have been subject to a customs declaration declaring conformity with the requirements of this Chapter, and for which the customs authority of the importing Party has no doubts as to the veracity of such declaration.

3.    The following products are excluded from the application of paragraph 1:

(a)    products imported by way of trade, except for imports that are occasional and consist solely of products for the personal use of the recipients or travellers or their families if it is evident from the nature and quantity of the products that the imports have no commercial purpose;

(b)    products whose importation forms part of a series of importations that may reasonably be considered to have been made separately for the purpose of avoiding the requirements of Article 3.16 (Claim for preferential tariff treatment);

(c)    products for which the total value exceeds:

(i)    for the Union, EUR 500 in the case of products sent in small packages, or EUR 1 200 in the case of products forming part of a traveller's personal luggage. The amounts to be used in a given national currency shall be the equivalent in that currency of the amounts expressed in euro as at the first working day of October. The exchange rate amounts shall be those published for that day by the European Central Bank, unless a different amount is communicated to the European Commission by 15 October, and shall apply from 1 January the following year. The European Commission shall notify New Zealand of the relevant amounts;

(ii)    for New Zealand, NZD 1 000 both in the case of products sent in small packages and in the case of products forming part of a traveller's personal luggage.

4.    The importer shall be responsible for the correctness of the declaration as referred to in paragraph 2. The record-keeping requirements set out in Article 3.21 (Record keeping requirements) do not apply to the importer when this Article is being applied.

ARTICLE 3.23

Verification

1.    The customs authority of the importing Party may conduct a verification as to whether a product is originating or the other requirements of this Chapter are met, on the basis of risk assessment methods, which may include random selection. Such verification may be conducted by means of a request for information to the importer who made the claim referred to in Article 3.16 (Claim for preferential tariff treatment), at the time the import declaration is submitted, either before or after the release of the products.

2.    The information requested pursuant to paragraph 1 shall cover no more than the following elements:

(a)    if the claim was based on a statement on origin as referred to in point (a) of Article 3.16(2) (Claim for preferential tariff treatment), that statement on origin;

(b)    if the origin criterion is:

(i)    "wholly obtained", the applicable category (such as harvesting, mining, fishing) and the place of production;

(ii)    based on change in tariff classification, a list of all the non-originating materials, including their tariff classification (in 2, 4 or 6 digit format, depending on the origin criterion);

(iii)    based on a value method, the value of the final product as well as the value of all the non-originating materials used in the production of that final product;

(iv)    based on weight, the weight of the final product as well as the weight of the relevant non-originating materials used in the production of that final product;

(v)    based on a specific production process, a specific description of that production process.

3.    When providing the requested information, the importer may add any other information considered relevant for the purposes of verification.

4.    If the claim for preferential tariff treatment is based on a statement on origin, the importer shall inform the customs authority of the importing Party if the importer does not have the requested information referred to in point (a) of Article 3.16(2) (Claim for preferential tariff treatment). In that case, the importer may inform the customs authority that the requested information will be provided by the exporter directly.

5.    If the claim for preferential tariff treatment is based on the importer's knowledge referred to in point (b) of Article 3.16(2) (Claim for preferential tariff treatment), after having first requested information in accordance with paragraph 1 of this Article the customs authority of the importing Party conducting the verification may send a request for information to the importer if it considers that additional information is required in order to verify whether a product has originating status or whether the other requirements of this Chapter are met. The customs authority of the importing Party may request the importer for specific documentation and information, if appropriate.

6.    During verification, the importing Party shall allow the release of the products concerned. The importing Party may condition such release on the importer providing a guarantee or implementing other appropriate precautionary measures required by the customs authorities. Any suspension of preferential tariff treatment shall be terminated as soon as possible after the customs authority of the importing Party has ascertained that the products concerned have originating status, and that the other requirements of this Chapter are fulfilled.

ARTICLE 3.24

Administrative cooperation

1.    In order to ensure the proper application of this Chapter, the Parties shall cooperate, through the customs authority of each Party, in verifying whether a product is originating and is in compliance with the other requirements provided for in this Chapter.

2.    If the claim for preferential tariff treatment is based on a statement on origin and after having first requested information in accordance with Article 3.23(1) (Verification), the customs authority of the importing Party conducting the verification may also request information from the customs authority of the exporting Party within a period of two years after the date on which the claim for preferential tariff treatment was made pursuant to point (a) of Article 3.16(2) (Claim for preferential tariff treatment) or Article 3.17(2) (Claim for preferential tariff treatment after importation), if the customs authority of the importing Party considers that it requires additional information in order to verify the originating status of the product or whether the other requirements provided for in this Chapter are complied with. The customs authority of the importing Party may request specific documentation and information from the customs authority of the exporting Party, if appropriate.

3.    The request for information referred to in paragraph 2 shall include the following elements:

(a)    the statement on origin;

(b)    the identity of the customs authority issuing the request;

(c)    the name of the exporter;

(d)    the subject and scope of the verification; and

(e)    where applicable, any relevant documentation.

4.    The customs authority of the exporting Party may, in accordance with its law, request documentation or examination by calling for any evidence, or by visiting the premises of the exporter, to review records and observe the facilities used in the production of the product.

5.    Without prejudice to paragraph 6, the customs authority of the exporting Party receiving the request referred to in paragraph 2 shall provide the customs authority of the importing Party with the following information:

(a)    the requested documentation, where available;

(b)    an opinion on the originating status of the product;

(c)    the description of the product subject to examination and the tariff classification relevant to the application of this Chapter;

(d)    a description and explanation of the production process to support the originating status of the product;

(e)    information on the manner in which the examination was conducted; and

(f)    supporting documentation, where appropriate.

6.    The customs authority of the exporting Party shall not provide to the customs authority of the importing Party information referred to in paragraph 5 without the consent of the exporter.

7.    Each Party shall notify the other Party of the contact details of its customs authorities and shall notify the other Party of any modification thereof within thirty days after the date of such modification. For the Union, the European Commission shall be responsible for the notifications referred to in this paragraph.

ARTICLE 3.25

Denial of preferential tariff treatment

1.    Without prejudice to the requirements in paragraph 3, the customs authority of the importing Party may deny preferential tariff treatment, if:

(a)    within three months after the date of a request for information referred to in Article 3.23(1) (Verification):

(i)    no reply is provided by the importer;

(ii)    if the claim for preferential tariff treatment is based on a statement on origin, no statement on origin has been provided; or

(iii)    if the claim for preferential tariff treatment is based on the importer's knowledge, the information provided by the importer is inadequate to confirm that the product has originating status;

(b)    within three months after the date of a request for additional information pursuant to Article 3.23(5) (Verification):

(i)    no reply has been provided by the importer; or

(ii)    the information provided by the importer is inadequate to confirm that the product has originating status;

(c)    within ten months after the date of delivery of a request for information pursuant to Article 3.24(2) (Administrative cooperation):

(i)    no reply has been provided by the customs authority of the exporting Party; or

(ii)    the information provided by the customs authority of the exporting Party is inadequate to confirm that the product has originating status.

2.    The customs authority of the importing Party may deny preferential tariff treatment to a product for which an importer claims preferential tariff treatment if the importer fails to comply with requirements of this Chapter other than those relating to the originating status of the products.

3.    If the customs authority of the importing Party has sufficient justification to deny preferential tariff treatment under paragraph 1 of this Article, in cases where the customs authority of the exporting Party has provided an opinion pursuant to point (b) of Article 3.24(5) (Administrative cooperation) confirming the originating status of the products, the customs authority of the importing Party shall notify the customs authority of the exporting Party of its reasons and intention to deny the preferential tariff treatment within two months after the date of receipt of that opinion.

4.    If the notification referred to in paragraph 3 has been made, consultations shall be held at the request of either Party, within three months after the date of that notification. The period for consultations may be extended on a case by case basis by mutual agreement between the customs authorities of the Parties. The consultations shall take place in accordance with the procedure set by the Joint Customs Cooperation Committee, unless otherwise agreed between the customs authorities of the Parties.

5.    Upon expiry of the period for consultations, if the customs authority of the importing Party cannot confirm that the product is originating, it may deny the preferential tariff treatment if it has sufficient justification for doing so and after having granted the importer the right to be heard. However, when the customs authority of the exporting Party confirms the originating status of the products and provides justification for such conclusion, the customs authority of the importing Party shall not deny preferential tariff treatment to a product on the sole ground that Article 3.24(6) (Administrative cooperation) has been applied.

6.    Within two months after the date of its final decision on the originating status of the product, the customs authority of the importing Party shall notify the customs authority of the exporting Party that provided an opinion pursuant to point (b) of Article 3.24(5) (Administrative cooperation) of that final decision.

ARTICLE 3.26

Confidentiality

1.    Each Party shall maintain, in accordance with its law, the confidentiality of information provided by the other Party or a person of that Party, pursuant to this Chapter, and shall protect that information from disclosure.

2.    Information obtained by the authorities of the importing Party may only be used for the purposes of this Chapter. A Party may use information collected pursuant to this Chapter in any administrative, judicial, or quasi-judicial proceedings instituted for failure to comply with the requirements set out in this Chapter. A Party shall notify the person or Party that provided the information in advance of such use.

3.    Each Party shall ensure that confidential information collected pursuant to this Chapter shall not be used for purposes other than the administration and enforcement of decisions and determinations relating to origin and to customs matters, except with the permission of the person or Party who provided the confidential information. If confidential information is requested for judicial proceedings not relating to origin and customs matters to comply with the law of a Party, and provided that Party notifies the person or Party who provided the information in advance and states the legal requirement for such use, permission of the person or Party who provided the confidential information shall not be required.

ARTICLE 3.27

Administrative measures and sanctions

Each Party shall ensure the effective enforcement of this Chapter. Each Party shall ensure that the competent authorities are able to impose administrative measures, and where appropriate, sanctions, for violations of the obligations under this Chapter in accordance with its law.

SECTION C

FINAL PROVISIONS

ARTICLE 3.28

Ceuta and Melilla

1.    For the purposes of this Chapter, the term "Party" does not include Ceuta and Melilla.

2.    Products originating in New Zealand, when imported into Ceuta and Melilla, shall in all respects be subject to the same customs regime, including preferential tariff treatment, as that which is applied to products originating in the customs territory of the Union under Protocol 2 of the 1985 Act of Accession 10 . New Zealand shall apply to imports of products covered by this Agreement and originating in Ceuta and Melilla the same customs regime, including preferential tariff treatment, as that which is applied to products imported from and originating in the Union.

3.    The rules of origin and origin procedures applicable to New Zealand under this Chapter shall apply in determining the origin of products exported from New Zealand to Ceuta and Melilla. The rules of origin and origin procedures applicable to the Union under this Chapter shall apply in determining the origin of products exported from Ceuta and Melilla to New Zealand.

4.    Ceuta and Melilla shall be considered as a single territory.

5.    The Spanish customs authorities shall be responsible for the application of this Chapter in Ceuta and Melilla.

ARTICLE 3.29

Transitional provisions for products in transit or storage

This Agreement may be applied to products that comply with this Chapter and on the date of entry into force of this Agreement, are either in transit from the exporting Party to the importing Party or under customs control in the importing Party without payment of import duties and taxes, subject to the making of a claim for preferential tariff treatment referred to in Article 3.16 (Claim for preferential tariff treatment) to the customs authority of the importing Party, within 12 months after that date.

ARTICLE 3.30

Joint Customs Cooperation Committee

1.    This Article complements and further specifies Article 24.4 (Specialised committees).

2.    The Joint Customs Cooperation Committee, established under the Agreement between the European Union and New Zealand on cooperation and mutual administrative assistance in customs matters, done at Brussels on 3 July 2017, shall, with respect to this Chapter, have the following functions:

(a)    considering possible amendments to this Chapter, including those arising from the review of the Harmonized System;

(b)    adopting, by decisions, explanatory notes to facilitate the implementation of this Chapter; and

(c)    adopt a decision to establish the consultation procedure referred to in Article 3.25(4) (Denial of preferential tariff treatment).

CHAPTER 4

CUSTOMS AND TRADE FACILITATION

ARTICLE 4.1

Objectives

The objectives of this Chapter are to:

(a)    promote trade facilitation for goods traded between the Parties while ensuring effective customs controls, taking into account the evolution of trade practices;

(b)    ensure transparency of each Party's laws and regulations relating to the requirements for the import, export and transit of goods and consistency thereof with applicable international standards;

(c)    ensure predictable, consistent and non-discriminatory application by each Party of its customs laws and regulations relating to the requirements for the import, export and transit of goods;

(d)    promote simplification and modernisation of each Party's customs procedures and practices;

(e)    further develop risk management techniques to facilitate legitimate trade while securing the international trade supply chain; and

(f)    enhance cooperation between the Parties in the field of customs matters and trade facilitation.

ARTICLE 4.2

Customs cooperation and mutual administrative assistance

1.    The competent authorities of the Parties shall cooperate on customs matters in order to ensure that the objectives set out in Article 4.1 (Objectives) are attained.

2.    In addition to the CCMAA, the Parties shall develop cooperation, including in the following areas:

(a)    exchanging information concerning customs laws and regulations, their implementation, and customs procedures, particularly in the following areas:

(i)    the enforcement of intellectual property rights by the customs authorities;

(ii)    the facilitation of transit movements and transhipment; and

(iii)    relations with the business community;

(b)    strengthening their cooperation in the field of customs in international organisations such as the WTO and the World Customs Organization (hereinafter referred to as "WCO");

(c)    endeavouring to harmonise their data requirements for import, export and other customs procedures by implementing common standards and data elements in accordance with the WCO Data Model;

(d)    exchanging, where relevant and appropriate, through a structured and recurrent communication between customs authorities of the Parties, certain categories of customs-related information for the purposes of improving risk management and the effectiveness of customs controls, targeting high-risk goods and facilitating legitimate trade. Exchanges under this point shall be without prejudice to exchanges of information that may take place between the Parties pursuant to the mutual administrative assistance provisions of the CCMAA;

(e)    strengthening their cooperation on risk management techniques, including sharing best practices, and where appropriate, risk information and control results; and

(f)    establishing, where relevant and appropriate, mutual recognition of Authorised Economic Operator programmes and customs controls including equivalent trade facilitation measures.

3.    Without prejudice to other forms of cooperation envisaged under this Agreement, the customs authorities of the Parties shall cooperate, including through exchange of information, and provide each other with mutual administrative assistance in the matters covered by this Chapter in accordance with the provisions of the CCMAA. Any exchange of information between the Parties under this Chapter shall be mutatis mutandis subject to the confidentiality and protection of information set out in Article 17 on mutual administrative assistance in customs matters in the CCMAA as well as any confidentiality and privacy requirements to be agreed by the Parties.

ARTICLE 4.3

Customs provisions and procedures

1.    Each Party shall ensure that its customs provisions and procedures are based on:

(a)    the international instruments and standards applicable in the area of customs and trade, which each Party has accepted, including the substantive elements of the Revised Kyoto Convention on the Simplification and Harmonisation of Customs Procedures, the International Convention on the Harmonized Commodity Description and Coding System, as well as the Framework of Standards to Secure and Facilitate Global Trade and the Customs Data Model of the WCO;

(b)    the protection and facilitation of legitimate trade through effective enforcement and compliance with the applicable requirements provided under its law;

(c)    customs laws and regulations that are proportionate and non-discriminatory, avoiding unnecessary burdens on economic operators, providing for further facilitation for operators with high levels of compliance, including favourable treatment with respect to customs controls prior to the release of goods, and ensuring safeguards against fraud and illicit or damageable activities; and

(d)    rules that ensure that any penalty imposed for breaches of customs laws and regulations is proportionate and non-discriminatory and that the imposition of such penalties does not unduly delay the release of the goods.

2.    Each Party should periodically review its customs laws, regulations and procedures. Customs procedures shall also be applied in a manner that is predictable, consistent and transparent.

3.    In order to improve working methods, as well as to ensure non-discrimination, transparency, efficiency, integrity and accountability of operations, each Party shall:

(a)    simplify and review requirements and formalities wherever possible with a view to ensuring the rapid release and clearance of goods; and

(b)    work towards further simplification and standardisation of data and documentation required by customs and other agencies.

ARTICLE 4.4

Release of goods

1.    Each Party shall adopt or maintain customs procedures that:

(a)    provide for the prompt release of goods within a period that is no longer than necessary to ensure compliance with its laws and regulations and, to the extent possible, upon arrival of the goods;

(b)    provide for advance electronic submission and processing of documentation and any other required information prior to the arrival of the goods, to enable the release of goods upon arrival;

(c)    allow for the release of goods prior to the final determination of the applicable customs duties, taxes, fees and charges, if such a determination is not done prior to, or upon arrival, or as rapidly as possible after arrival and provided that all other regulatory requirements have been met. As a condition for such release, each Party may require a guarantee for any amount not yet determined in the form of a surety, a deposit or another appropriate instrument provided for in its laws and regulations. Such guarantee shall not be greater than the amount the Party requires to ensure payment of customs duties, taxes, fees and charges ultimately due for the goods covered by the guarantee. The guarantee shall be discharged when it is no longer required; and

(d)    allow goods to be released at the point of arrival, without temporary transfer to warehouses or other facilities, provided that the goods are otherwise eligible for release.

2.    Each Party shall, to the extent possible, minimise the documentation required for the release of goods.

3.    Each Party shall endeavour to allow for the expeditious release of goods in need of urgent clearance, including outside normal business hours of customs and other relevant authorities.

4.    Each Party shall, to the extent possible, adopt or maintain customs procedures that provide for expedited release of certain consignments while maintaining appropriate customs control, including allowing the submission of a single document covering all of the goods in the shipment by, if possible, electronic means.

ARTICLE 4.5

Perishable goods

1.    For the purposes of this Article, "perishable goods" are goods that rapidly decay due to their natural characteristics, in particular in the absence of appropriate storage conditions.

2.    To prevent avoidable loss or deterioration of perishable goods, each Party shall give appropriate priority to perishable goods when scheduling and performing any examinations that may be required.

3.    In addition to point (a) of Article 4.4(1) (Release of goods), and at the request of the economic operator, each Party shall, where practicable and in accordance with its laws and regulations:

(a)    provide for the clearance of a consignment of perishable goods outside the business hours of customs and other relevant authorities; and

(b)    allow consignments of perishable goods to be moved to and cleared at the premises of the economic operator.

ARTICLE 4.6

Simplified customs procedures

Each Party shall adopt or maintain measures allowing traders or operators fulfilling criteria specified in its laws and regulations to benefit from further simplification of customs procedures. Such measures may include:

(a)    customs declarations containing a reduced set of data or supporting documents; or

(b)    periodical customs declarations for the determination and payment of customs duties and taxes covering multiple imports within a given period, after the release of those imported goods.

ARTICLE 4.7

Transit and transhipment

1.    Each Party shall ensure the facilitation and effective control of transhipment operations and transit movements through its respective territory.

2.    Each Party shall ensure cooperation and coordination between all authorities and agencies concerned in its respective territory to facilitate traffic in transit.

3.    Provided all regulatory requirements are met, each Party shall allow goods intended for import to be moved within its territory under customs control from a customs office of entry to another customs office in its territory from where the goods would be released or cleared.

ARTICLE 4.8

Risk management

1.    Each Party shall adopt or maintain a risk management system for customs control.

2.    Each Party shall design and apply risk management in a manner as to avoid arbitrary or unjustifiable discrimination, or disguised restrictions to international trade.

3.    Each Party shall concentrate customs control and other relevant border controls on high-risk consignments and shall expedite the release of low-risk consignments. Each Party may also select consignments for such controls on a random basis as part of its risk management.

4.    Each Party shall base risk management on assessment of risk through appropriate selectivity criteria.

ARTICLE 4.9

Post-clearance audit

1.    With a view to expediting the release of goods, each Party shall adopt or maintain post‑clearance audits to ensure compliance with customs and other related laws and regulations.

2.    Each Party shall select a person or a consignment for a post-clearance audit in a risk-based manner, which may include appropriate selectivity criteria. Each Party shall conduct a post‑clearance audit in a transparent manner. Where a person is involved in the audit process and conclusive results have been achieved, the Party shall, without delay, notify the person whose record is audited of the results, the person's rights and obligations and the reasons for the results.

3.    The information obtained in a post-clearance audit may be used in further administrative or judicial proceedings.

4.    The Parties shall, wherever practicable, use the result of a post-clearance audit in applying risk management.

ARTICLE 4.10

Authorised Economic Operators

1.    Each Party shall establish or maintain a partnership programme for operators who meet specified criteria (hereinafter referred to as "Authorised Economic Operators").

2.    The specified criteria to qualify as an Authorised Economic Operator shall be published and they shall relate to compliance with requirements specified in the Parties' respective laws and regulations or procedures. These criteria may include:

(a)    an appropriate record of compliance with customs and other related laws and regulations;

(b)    a system of managing records to allow for necessary internal controls;

(c)    financial solvency, including, where appropriate, provision of a sufficient security or guarantee; and

(d)    supply chain security.

3.    The specified criteria to qualify as an Authorised Economic Operator shall not be designed or applied so as to afford or create arbitrary or unjustifiable discrimination between operators where the same conditions prevail and shall allow the participation of SMEs.

4.    The Authorised Economic Operator programme shall include specific benefits for an Authorised Economic Operator, such as:

(a)    low rate of physical inspections and examinations as appropriate;

(b)    priority treatment if selected for control;

(c)    rapid release time as appropriate;

(d)    deferred payment of duties, taxes, fees and charges;

(e)    use of comprehensive guarantees or reduced guarantees;

(f)    a single customs declaration for all imports or exports in a given period; and

(g)    clearance of goods at the premises of the Authorised Economic Operator or another place authorised by the customs authorities.

5.    Notwithstanding paragraphs 1 to 4, a Party may offer the benefits referred to in paragraph 4 through customs procedures generally available to all operators, in which case that Party is not required to establish a separate scheme for Authorised Economic Operators.

6.    The Parties may foster cooperation between customs and other government authorities or agencies within a Party in relation to Authorised Economic Operator programmes. This cooperation may be achieved, inter alia, by aligning requirements, facilitating access to benefits and minimising unnecessary duplication.

ARTICLE 4.11

Publication and availability of information

1.    Each Party shall promptly publish, in a non-discriminatory and easily accessible manner, and as far as possible through the internet, laws, regulations and customs procedures, relating to the requirements for the import, export and transit of goods. This shall include:

(a)    importation, exportation and transit procedures (including port, airport, and other entry-point procedures) and required forms and documents;

(b)    applied rates of duties and taxes of any kind imposed on or in connection with importation or exportation;

(c)    fees and charges imposed by or for governmental agencies on or in connection with importation, exportation or transit;

(d)    rules for the classification or valuation of products for customs purposes;

(e)    laws, regulations and administrative rulings of general application relating to rules of origin;

(f)    import, export or transit restrictions or prohibitions;

(g)    penalty provisions against breaches of import, export or transit formalities;

(h)    appeal procedures;

(i)    agreements or parts thereof with any country or countries relating to importation, exportation or transit;

(j)    procedures relating to the administration of tariff quotas;

(k)    hours of operation for customs offices; and

(l)    relevant notices of an administrative nature.

2.    Each Party shall endeavour to make public new laws, regulations and customs procedures, relating to the requirements for the import, export and transit of goods prior to their application, as well as changes to and interpretations thereof.

3.    Each Party shall, to the extent possible, ensure there is a reasonable time period between the publication of new or amended laws, regulations and customs procedures, fees or charges and their entry into force.

4.    Each Party shall make available, and update as appropriate, the following through the internet:

(a)    a description of its importation, exportation and transit procedures, including appeal procedures, informing of the practical steps needed to import and export, and for transit;

(b)    the forms and documents required for importation into, exportation from, or transit through the territory of that Party; and

(c)    contact information of enquiry points.

5.    Each Party shall, subject to its available resources, establish or maintain enquiry points to answer within a reasonable time enquiries of governments, traders and other interested parties on matters covered by paragraph 1. A Party shall not require the payment of a fee for answering enquiries from the other Party.

ARTICLE 4.12

Advance rulings

1.    The customs authority of each Party shall issue advance rulings to an applicant setting out the treatment to be accorded to the goods concerned, in accordance with its laws and regulations. Such rulings shall be issued in writing or in electronic format in a time bound manner and shall contain all necessary information. Each Party shall ensure that an advance ruling can be issued to, and used in that Party by, an applicant of the other Party.

2.    Advance rulings shall be issued with regard to:

(a)    the tariff classification of goods;

(b)    the origin of goods; and

(c)    the appropriate method or criteria, and the application thereof, to be used for determining the customs value under a particular set of facts, if permitted by a Party's laws and regulations.

3.    Advance rulings shall be valid for a period of at least three years from the date of their issuance or some other date if specified in the ruling. The issuing Party may modify or revoke, invalidate or annul an advance ruling if the ruling was based on incorrect, incomplete, false or misleading information, an administrative error or if there is a change in the law, the material facts or the circumstances on which the ruling is based.

4.    A Party may refuse to issue an advance ruling if the question raised in the application is the subject of an administrative or judicial review, or if the application does not relate to any intended use of the advance ruling or any intended use of a customs procedure. If a Party declines to issue an advance ruling, it shall promptly notify the applicant in writing, setting out the relevant facts and the basis for its decision.

5.    Each Party shall publish, at least:

(a)    the requirements for the application for an advance ruling, including the information to be provided and the format;

(b)    the time period by which it will issue an advance ruling; and

(c)    the length of time for which the advance ruling is valid.

6.    If a Party revokes, modifies, invalidates or annuls an advance ruling, it shall provide written notice to the applicant setting out the relevant facts and the basis for its decision. A Party may only revoke, modify, invalidate or annul an advance ruling with retroactive effect if the ruling was based on incomplete, incorrect, false or misleading information.

7.    An advance ruling issued by a Party shall be binding on that Party in respect of the applicant that sought it. The Party may provide that the advance ruling be binding on the applicant.

8.    Each Party shall provide, upon written request from the holder, a review of an advance ruling or of a decision to amend, revoke or invalidate it.

9.    Each Party shall endeavour to make publicly available information on advance rulings, taking into account the need to protect personal and commercially confidential information.

10.    Each Party shall issue an advance ruling without delay, and normally within 150 days after the date of receipt of all necessary information. This period may be extended, in accordance with a Party's laws and regulations, if additional time is needed to ensure that the advance rulings are issued in a correct and uniform manner. In that event, the Party shall inform the applicant of the reason for, and the duration of, the extension.

ARTICLE 4.13

Customs brokers

The customs provisions and procedures of a Party shall not require the mandatory use of customs brokers. Each Party shall notify and publish its measures on the use of customs brokers. Each Party shall apply transparent, non-discriminatory and proportionate rules if and when licensing customs brokers.

ARTICLE 4.14

Customs valuation

1.    Each Party shall determine the customs value of goods in accordance with Part I of the Customs Valuation Agreement. To that end, Part 1 of the Customs Valuation Agreement is hereby incorporated into and made part of this Agreement, mutatis mutandis.

2.    The Parties shall cooperate with a view to reaching a common approach to issues relating to customs valuation.

ARTICLE 4.15

Pre-shipment inspections

A Party shall not require the mandatory use of pre-shipment inspections as defined in the WTO Agreement on Pre-shipment Inspection.

ARTICLE 4.16

Review and appeal

1.    Each Party shall provide effective, prompt, non-discriminatory and easily accessible procedures to guarantee the right of appeal against administrative actions, rulings and decisions of customs or other competent authorities that affect the import or export of goods or goods in transit.

2.    Each Party shall ensure that any person to whom it issues such a ruling or decision or with respect to whom it takes administrative action has access to:

(a)    an administrative appeal to or review by an administrative authority higher than or independent of the official or office that issued the ruling or the decision or that took the administrative action; or

(b)    a judicial appeal or review of the ruling or the decision or the administrative action.

3.    Each Party shall ensure that, in cases where the decision on appeal or review under point (a) of paragraph 2 is not given within the period of time provided for in its laws and regulations or is not given without undue delay, the petitioner has the right to further administrative or judicial appeal or review or any other recourse to a judicial authority in accordance with that Party's laws and regulations.

4.    Each Party shall ensure that the petitioner is provided in writing, including electronically, with the reasons for the administrative decision, so as to enable the petitioner to have recourse to appeal or review procedures where necessary.

ARTICLE 4.17

Engagement with the business community

1.    Considering the need for timely and regular consultations with trade representatives on legislative proposals and general procedures related to customs and trade facilitation issues, each Party's customs administration shall hold consultations with that Party's business community.

2.    Each Party shall ensure, where possible, that its customs and related requirements and procedures continue to meet the needs of the business community, follow internationally accepted best practices, and remain as least trade-restrictive as possible.

ARTICLE 4.18

Joint Customs Cooperation Committee

1.    This Article complements and further specifies Article 24.4 (Specialised committees).

2.    The Joint Customs Cooperation Committee shall, with respect to the Chapters and provisions that fall within its competences pursuant to Article 24.4(1) (Specialised committees) except for Chapter 3 (Rules of origin and origin procedures), have the following functions:

(a)    identifying areas for improvement in their implementation and operation; and

(b)    seeking appropriate ways and methods to reach mutually agreed solutions with regard to any matters that may arise.

3.    The Joint Customs Cooperation Committee may adopt decisions in relation to the areas referred to in Article 4.2(2) (Customs cooperation and mutual administrative assistance), including, where it considers it necessary, for the purposes of implementing points (d) and (f) of paragraph 2 of that Article.

CHAPTER 5

TRADE REMEDIES

SECTION A

GENERAL PROVISIONS

ARTICLE 5.1

Non-application of preferential rules of origin

For the purposes of Sections B (Anti-dumping and countervailing duties) and C (Global safeguard measures), the preferential rules of origin under Chapter 3 (Rules of origin and origin procedures) do not apply.

ARTICLE 5.2

Non-application of dispute settlement

Chapter 26 (Dispute settlement) does not apply to Sections B (Anti-dumping and countervailing duties) and C (Global safeguard measures) of this Chapter.

SECTION B

ANTI-DUMPING AND COUNTERVAILING DUTIES

ARTICLE 5.3

Transparency

1.    Trade remedies should be used in full compliance with the relevant WTO requirements and should be based on a fair and transparent system.

2.    Without prejudice to Article 6.5 of the Anti-dumping Agreement and Article 12.4 of the SCM Agreement, each Party shall ensure as soon as possible after any imposition of provisional measures and before a final determination is made, full and meaningful disclosure of all essential facts and considerations on which a decision to apply definitive measures is based. Disclosures shall be made in writing and allow interested parties sufficient time to make their comments.

3.    Provided it does not unnecessarily delay the conduct of the investigation, each interested party shall be granted the possibility to be heard in order to express their views during trade remedy investigations.

ARTICLE 5.4

Consideration of public interest

1.    A Party may refrain from applying anti-dumping or countervailing measures on the goods of the other Party if, on the basis of the information made available during the investigation pursuant to the requirements under that Party's laws and regulations, it can be concluded that it is not in the public interest to apply such measures.

2.    When making a final determination on the imposition of duties, each Party shall, in accordance with its laws and regulations, take into account information provided by relevant interested parties, which may include the domestic industry, importers and their representative associations, representative users and representative consumer organisations.

ARTICLE 5.5

Lesser duty rule

If a Party imposes an anti-dumping duty on the goods of the other Party, the amount of such duty shall not exceed the margin of dumping. If a duty less than the margin of dumping is adequate to remove the injury to the domestic industry, the Party shall adopt such lesser duty in accordance with its laws and regulations.

SECTION C

GLOBAL SAFEGUARD MEASURES

ARTICLE 5.6

Transparency

1.    At the request of the other Party, the Party initiating a global safeguard investigation or intending to apply global safeguard measures shall provide immediately a written notification of all pertinent information leading to the initiation of a global safeguard investigation or the imposition of global safeguard measures, including on provisional findings, if relevant. This is without prejudice to Article 3.2 of the Agreement on Safeguards.

2.    Each Party shall endeavour to impose global safeguard measures in a way that least affects trade between the Parties.

3.    For the purposes of paragraph 2, if a Party considers that the legal requirements are met for the imposition of definitive safeguard measures, the Party intending to apply such measures shall notify the other Party and shall endeavour to provide adequate opportunity for prior consultations with that Party, with a view to reviewing the information provided under paragraph 1 and exchanging views on the proposed measures before a final decision is adopted.

SECTION D

BILATERAL SAFEGUARD MEASURES

ARTICLE 5.7

Definitions

For the purposes of this Section, the following definitions apply:

(a)    "bilateral safeguard measure" means a measure described in Article 5.8 (Application of a bilateral safeguard measure);

(b)    "domestic industry" means with respect to an imported good, the producers as a whole of the like or directly competitive goods operating in the territory of a Party, or those producers whose collective production of the like or directly competitive goods constitutes a major proportion of the total domestic production of those goods;

(c)    "serious deterioration" means major difficulties in a sector of the economy producing like or directly competitive products;

(d)    "serious injury" means a significant overall impairment in the position of a domestic industry;

(e)    "threat of serious deterioration" means serious deterioration that, on the basis of facts and not merely on allegation, conjecture or remote possibility, is clearly imminent;

(f)    "threat of serious injury" means serious injury that, on the basis of facts and not merely on allegation, conjecture or remote possibility, is clearly imminent; and

(g)    "transition period" means a period of seven years starting from the date of entry into force of this Agreement.

ARTICLE 5.8

Application of a bilateral safeguard measure

1.    Without prejudice to the Parties' rights and obligations under Section C (Global safeguard measures), if, as a result of the reduction or elimination of a customs duty under this Agreement, a good originating in a Party is being imported into the territory of the other Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry of the other Party, that other Party may, during the transition period and only in accordance with the conditions and procedures laid down in this Section, apply a bilateral safeguard measure.

2.    Bilateral safeguard measures applied pursuant to paragraph 1 may only consist of:

(a)    the suspension of any further reduction of the rate of customs duty on the good concerned in accordance with Chapter 2 (National treatment and market access for goods); or

(b)    the increase of the rate of customs duty on the good concerned to a level which does not exceed the lesser of:

(i)    the most-favoured-nation applied rate of customs duty in effect on the day when the bilateral safeguard measure is applied; or

(ii)    the most-favoured-nation applied rate of customs duty in effect on the day immediately preceding the date of entry into force of this Agreement.

ARTICLE 5.9

Standards for a bilateral safeguard measure

1.    A bilateral safeguard measure shall not be applied:

(a)    except to the extent, and for such time, as may be necessary to prevent or remedy the serious injury, or threat thereof, to the domestic industry or the serious deterioration, or threat thereof, in the economic situation of the outermost region or regions;

(b)    for a period exceeding two years; and

(c)    beyond the expiration of the transition period.

2.    The period referred to in point (b) of paragraph 1 may be extended by one year provided that:

(a)    the competent investigating authorities of the importing Party determine, in conformity with the procedures specified in Sub-Section 1 (Procedural rules applicable to bilateral safeguard measures), that the measure continues to be necessary to prevent or remedy the serious injury, or threat thereof, to the domestic industry or the serious deterioration, or threat thereof, in the economic situation of the outermost region or regions; and

(b)    there is evidence that the domestic industry is adjusting and the total period of application of a safeguard measure, including the period of initial application and any extension thereof, does not exceed three years.

3.    When a Party ceases to apply a bilateral safeguard measure, the rate of customs duty shall be the rate that would have been in effect for the good concerned, in accordance with Annex 2-A (Tariff elimination schedules).

4.    A bilateral safeguard measure shall not be applied to the import of a particular good of a Party which has already been subject to such a bilateral safeguard measure for a period of time equal to half of the duration of the previous bilateral safeguard measure.

5.    A Party shall not apply on the same good and at the same time:

(a)    a bilateral safeguard measure, a provisional bilateral safeguard measure or an outermost regions safeguard measure pursuant to this Agreement; and

(b)    a safeguard measure pursuant to Article XIX of GATT 1994 and the Agreement on Safeguards.

ARTICLE 5.10

Provisional bilateral safeguard measures

1.    In critical circumstances, where delay would cause damage that would be difficult to repair, a Party may apply a provisional bilateral safeguard measure, pursuant to a preliminary determination that there is clear evidence that imports of a good originating in the other Party have increased as a result of the reduction or elimination of a customs duty under this Agreement, and that such imports cause serious injury, or threat thereof, to the domestic industry or serious deterioration, or threat thereof, in the economic situation of the outermost region or regions.

2.    The duration of any provisional bilateral safeguard measure shall not exceed 200 days. During this period, the Party shall comply with the relevant procedural rules laid down in Sub-Section 1 (Procedural rules applicable to bilateral safeguard measures).

3.    The customs duty imposed as a result of the provisional bilateral safeguard measure shall promptly be refunded if the subsequent investigation referred to in Sub-Section 1 (Procedural rules applicable to bilateral safeguard measures) does not determine that the increased imports of the good subject to the provisional bilateral safeguard measure cause serious injury, or threat thereof, to the domestic industry or serious deterioration, or threat thereof, in the economic situation of the outermost region or regions.

4.    The duration of any provisional bilateral safeguard measure shall be counted as part of the period laid down in point (b) of Article 5.9(1) (Standards for a bilateral safeguard measures).

5.    The Party applying a provisional bilateral safeguard measure shall inform the other Party immediately upon applying such provisional bilateral safeguard measures.

6.    At the request of the other Party, consultations shall be held immediately after the application of the provisional bilateral safeguard measure.

ARTICLE 5.11

Outermost regions

1.    Where any product originating in New Zealand is being directly imported into the territory of one or several outermost regions 11 of the Union in such increased quantities and under such conditions as to cause or threaten to cause serious deterioration in the economic situation of the outermost region or regions concerned, the Union, after having examined alternative solutions, may exceptionally apply bilateral safeguard measures limited to the territory of the region or regions concerned.

2.    For the purposes of paragraph 1, the determination of serious deterioration shall be based on objective factors, including the following elements:

(a)    the increase in the volume of imports in absolute or relative terms to the domestic production and to the imports from other sources; and

(b)    the effect of such imports on the situation of the relevant industry or the economic sector concerned, including on the levels of sales, production, financial situation and employment;

3.    Without prejudice to paragraph 1, this Section applies to any safeguard measure adopted under this Article, mutatis mutandis.

ARTICLE 5.12

Compensation and suspension of concessions

1.    No later than 30 days after the date of the application of the bilateral safeguard measure, the Party applying that measure shall provide an opportunity for consultations with the other Party in order to mutually agree on appropriate trade liberalising compensation in the form of concessions having substantially equivalent trade effect.

2.    If the consultations referred to in paragraph 1 do not result in an agreement on trade liberalising compensation within 30 days after the first day of the consultations, the Party to whose originating good the safeguard measure is applied may suspend the application of substantially equivalent concessions to the trade of the Party applying the bilateral safeguard measure.

3.    The obligation to provide compensation under paragraph 1 and the right to suspend concessions under paragraph 2 shall apply only as long as the bilateral safeguard measure is maintained.

4.    Notwithstanding paragraph 3, the right of suspension referred to in that paragraph shall not be exercised for the first 24 months during which a bilateral safeguard measure is in effect, provided that the bilateral safeguard measure has been applied as a result of an absolute increase in imports and provided that the safeguard measure conforms to this Agreement.

SUB-SECTION 1

PROCEDURAL RULES APPLICABLE TO BILATERAL SAFEGUARD MEASURES

ARTICLE 5.13

Applicable law

This Sub-Section applies to bilateral safeguard measures covered by Section D (Bilateral safeguard measures) and applied by the competent investigating authority of a Party. In cases not covered by this Sub-Section, the competent investigating authority shall apply the rules established under its domestic legislation provided that those rules are in conformity with the provisions of this Section.

ARTICLE 5.14

Investigation procedures

1.    A Party shall apply a bilateral safeguard measure only after an investigation has been carried out by its competent investigating authorities in accordance with Article 3 and points (a) and (c) of Article 4.2 of the Agreement on Safeguards. To that end, Article 3 and points (a) and (c) of Article 4.2 of the Agreement on Safeguards are incorporated into and made part of this Agreement, mutatis mutandis.

2.    In order to apply a bilateral safeguard measure, the competent investigating authority shall demonstrate on the basis of objective evidence, the existence of a causal link between the increased imports of the product concerned and the serious injury or threat thereof. The competent investigating authority shall also examine known factors other than the increased imports to ensure that the injury caused by these other factors is not attributed to the increased imports.

3.    The investigation shall in all cases be completed within one year after the date of its initiation.

ARTICLE 5.15

Notification and consultation

1.    A Party shall promptly notify the other Party in writing if it:

(a)    initiates a bilateral safeguard investigation under this Chapter;

(b)    determines that the increased imports cause serious injury, or threat thereof, or serious deterioration, or threat thereof, in the economic situation of the outermost regions;

(c)    decides to apply a provisional bilateral safeguard measure, or to apply or extend a bilateral safeguard measure; or

(d)    decides to modify a bilateral safeguard measure previously adopted.

2.    A Party shall provide to the other Party a copy of the public version of the complaint and the report of its competent investigating authorities that is required under Article 3 of the Agreement on Safeguards.

3.    When a Party notifies the other Party pursuant to point (c) of paragraph 1 that it is applying or extending a bilateral safeguard measure, that Party shall include in its notification all pertinent information, such as:

(a)    evidence that, as a result of the reduction or elimination of a customs duty pursuant to this Agreement, the increased imports of the good of the other Party are causing serious injury, or threat thereof, to the domestic industry or serious deterioration, or threat thereof, in the economic situation of the outermost region or regions;

(b)    a precise description of the good subject to the bilateral safeguard measure including its heading or subheading under the HS, on which Annex 2-A (Tariff elimination schedules) is based;

(c)    a precise description of the bilateral safeguard measure;

(d)    the date of application of the bilateral safeguard measure, its expected duration and, if applicable, a timetable for progressive liberalisation of the measure; and

(e)    in the case of an extension of the bilateral safeguard measure, evidence that the domestic industry concerned is adjusting.

4.    On request of the Party whose good is subject to a bilateral safeguard proceeding under this Chapter, the Party that conducts that proceeding shall provide adequate opportunity for consultations with the requesting Party before a final decision to apply safeguard measures is taken, with a view to reviewing a notification provided under paragraph 1 or any public notice or report that the competent investigating authority issued in connection with the proceeding, and exchanging views on the proposed measure and reaching an understanding on compensations provided for in Article 5.12 (Compensation and suspension of concessions).

CHAPTER 6

SANITARY AND PHYTOSANITARY MEASURES

ARTICLE 6.1

Objectives and general provisions

1.    The objectives of this Chapter are to:

(a)    protect human, animal and plant health in the respective territories of the Parties while facilitating trade between them;

(b)    ensure that the Parties' sanitary and phytosanitary measures do not create unnecessary barriers to trade;

(c)    facilitate implementation of the SPS Agreement, international standards and related texts, and in particular, regionalisation and equivalence;

(d)    maintain cooperation in international standard-setting bodies;

(e)    promote transparency and understanding on the application of each Party's sanitary and phytosanitary measures;

(f)    enhance cooperation between and recognise the common objectives of the Parties to combat antimicrobial resistance (hereinafter referred to as "AMR"); and

(g)    enhance communication, cooperation and resolution of sanitary and phytosanitary issues that may affect trade between the Parties.

2.    In respect of the SPS Agreement, the Parties recall in particular:

(a)    the principle that a Party's SPS measures are based on a risk assessment in accordance with Article 5 and other relevant provisions of the SPS Agreement; and

(b)    the concept of provisional SPS measures.

ARTICLE 6.2

Scope

1.    The Parties affirm their respective rights and obligations under the Sanitary Agreement.

2.    Subject to paragraph 3, this Chapter applies:

(a)    to sanitary and phytosanitary measures of a Party that may affect trade between the Parties; and

(b)    to cooperation on AMR.

3.    This Chapter does not apply to any measure of a Party or matters covered by the Sanitary Agreement.

ARTICLE 6.3

Definitions

For the purposes of this Chapter, the following definitions apply:

(a)    the definitions in Annex A of the SPS Agreement;

(b)    the definitions adopted under the auspices of the Codex Alimentarius Commission;

(c)    the definitions adopted under the auspices of the World Organisation for Animal Health (hereinafter referred to as the "WOAH");

(d)    the definitions adopted under the auspices of the International Plant Protection Convention (hereinafter referred to as the "IPPC");

(e)    "competent authority" means a governmental body listed in Annex 6-A (Competent authorities) and includes the relevant national plant protection organisations; and

(f)    "import check" means an assessment that may include inspection, examination, sampling, review of documentation, tests or procedures, including laboratory, organoleptic or identity, conducted at the border of an importing Party by the competent authority of the importing Party to determine if a consignment complies with the SPS requirements of the importing Party.

ARTICLE 6.4

Specific plant health related conditions

1.    In accordance with applicable standards agreed under the IPPC, the Parties shall exchange information on their pest status in their respective territories. At the request of a Party, the other Party shall provide the justification for the pest categorisation and related phytosanitary measures.

2.    In relation to pest categorisation, each Party shall establish and update a list of regulated pests for plants and plant products for which a phytosanitary concern exists. The list shall contain:

(a)    the quarantine pests not present within any part of its territory;

(b)    the quarantine pests present but not widely distributed and under official control;

(c)    protected zone quarantine pests; and

(d)    where applicable, regulated non-quarantine pests.

3.    Each Party shall limit its import requirements for plants or plant products to those needed to mitigate against the risks of the introduction of regulated pests. Import requirements to mitigate the risk from protected zone quarantine pests shall not apply unless the destination of any plants or plant products is known to be within a protected zone.

4.    Pre-export inspection by the importing Party's national plant protection organisation should not be a requirement by the importing Party, where inspection of plants or plant products is within the scope of the exporting Party's national plant protection organisation.

ARTICLE 6.5

Recognition of pest freedom

Where regionalisation is defined with respect to a pest free area, pest free place of production, pest free production site, or a protected zone in the plants and plant products sector:

(a)    the Parties recognise the concepts of pest free areas, pest free places of production and pest free production sites as specified in relevant IPPC International Standards for Phytosanitary Measures ("ISPMs");

(b)    the Parties shall accept each other's:

(i)    pest free areas, pest free places of production and pest free production sites; and

(ii)    official controls in the establishment and maintenance of pest free areas, pest free places of production and pest free production sites;

(c)    New Zealand shall recognise the concept of protected zones within the territory of the Union as equivalent to a pest free area as specified in IPPC ISPM 4 ("Requirements for the establishment of pest free areas");

(d)    the exporting Party, if requested by the importing Party, shall identify pest free areas, pest free places of production, pest free production sites and protected zones, and, if requested by the importing Party, provide a full explanation and supporting data as provided for in the relevant ISPMs or as otherwise deemed appropriate; and

(e)    the Trade Committee may adopt a decision to amend Annex 6-B (Regional conditions for plants and plant products) to set out any other matter that may pertain to regionalisation or to specify any appropriate risk-based special conditions.

ARTICLE 6.6

Equivalence

1.    The Parties acknowledge that recognition of equivalence is an important means to facilitate trade.

2.    In determining the equivalence of a specific SPS measure, group of measures or on a systems‑wide basis, each Party shall take into account the relevant guidance of the WTO Committee on Sanitary and Phytosanitary Measures (hereinafter referred to as "WTO SPS Committee") and international standards, guidelines and recommendations. The Trade Committee may adopt a decision to set out further guidance and procedures to determine, recognise and maintain equivalence in Annex 6-C (Equivalence recognition of SPS measures).

3.    At the request of the exporting Party, the importing Party shall, within a reasonable period of time, explain the objective and rationale of its SPS measure and clearly identify the risk the SPS measure is intended to address.

4.    The importing Party shall recognise the equivalence of an SPS measure if the exporting Party objectively demonstrates that its measure achieves the importing Party's appropriate level of protection (hereinafter referred to as "ALOP") in relation to human, animal or plant health.

5.    If an equivalence assessment does not result in an equivalence determination by the importing Party, the importing Party shall provide the exporting Party with the rationale for its decision.

6.    Without prejudice to Article 6.8(6) (Certification), the Trade Committee may adopt a decision to amend Annex 6-C (Equivalence recognition of SPS measures) in order to:

(a)    set out the exporting Party's commodity types which the importing Party recognises as being covered by an SPS measure equivalent to its own or set out the exporting Party's official controls which the importing Party recognises as equivalent to its own; and

(b)    specify any appropriate risk-based special conditions or any agreed pest or disease status.

7.    If a Party amends an SPS measure in a way that it considers does not affect an equivalence determination specified in this Chapter, the determination shall be applicable to the most recent version of the relevant law or regulation amending the SPS measure.

8.    If a Party considers that a previous equivalence determination is affected, it shall notify the other Party of that.

9.    If an importing Party amends an SPS measure and considers an equivalence determination specified in this Chapter may be affected it shall:

(a)    objectively consider whether the previous determination is no longer sufficient to meet its ALOP; and

(b)    consult with the exporting Party and then decide whether the determination may continue with or without any special conditions.

ARTICLE 6.7

Trade conditions and approval procedures

1.    The importing Party shall make publicly available its phytosanitary import health requirements and the procedures used to establish those requirements.

2.    If the Parties jointly identify a specific plant or plant product as a priority, the importing Party shall establish specific import requirements for that product without undue delay other than in duly justified circumstances.

3.    Where an import request is received in relation to a specific plant or plant product which has previously been approved for import from the exporting Party, the importing Party shall assess the risk profile and, if determined to be the same, complete the approval procedure without undue delay, other than in duly justified circumstances.

4.    Each Party shall ensure that procedures used to approve imports from the other Party are undertaken and completed without undue delay including, if needed, audits and the necessary legislative or administrative measures to complete the approval procedure. Each Party shall in particular avoid unnecessary or unduly burdensome information requests, which shall be limited to what is necessary and take into account information already available to the importing Party, such as information on the applicable laws and regulations and audit reports of the exporting Party.

5.    Except as provided for in Article 6.5 (Recognition of pest freedom), each Party shall apply its phytosanitary import conditions to the entire territory of the other Party where the same pest status prevails.

6.    Without prejudice to Article 6.10 (Emergency measures), each Party shall recognise as equivalent the official controls applied by the other Party for trade provided that from the date of entry into force of this Agreement, there are no significant changes in the official control systems of the exporting Party that would lower the level of assurance to the importing Party.

7.    Without prejudice to Article 6.10 (Emergency measures), the importing Party shall not refuse or stop the importation of a good of the exporting Party solely for the reason that the importing Party is undertaking a review of its SPS measures, if the importing Party permitted the importation of that good from the other Party when the review was initiated.

8.    The Parties shall, without any subsequent approval processes, accept each other's lists of establishments that are subject to SPS measures for trade.

9.    Each Party shall make the lists of establishments referred to in paragraph 8 available to one another on request.

ARTICLE 6.8

Certification

1.    In respect of health certification for plants and plant products the competent authorities shall apply the principles laid down in the IPPC ISPM 7 ("Export Certification System") and ISPM 12 ("Guidelines for Phytosanitary Certificates").

2.    Each Party shall promote the implementation of electronic certification and other technologies to facilitate trade.

3.    Without prejudice to Article 6.2 (Scope) and 6.10 (Emergency measures), food safety certification shall not be required for processed foods covered by this Chapter unless supported by a risk analysis.

4.    The Trade Committee may adopt a decision to amend Annex 6-E (Certification) in order to specify further guidance, procedures and requirements in relation to certification.

5.    If the importing Party has accepted a commodity SPS measure of the exporting Party as equivalent to its own, the exporting Party may include the model health attestation set out in Section 1 of Annex 6-E (Certification) on the official health certificate.

6.    If an importing Party has, in accordance with Article 6.6(7) or Article 6.6(8) (Equivalence), determined that equivalence is maintained, the import health certificate provided for in Annex 6‑E (Certification) shall, where practicable and if applicable, state the importing Party's parent laws or regulations.

7.    If an importing Party determines that a special condition included in Annex 6-C (Equivalence recognition of SPS measures) is no longer necessary, guarantees to that special condition shall no longer be required and the Trade Committee shall adopt a decision to amend Annex 6‑C (Equivalence recognition of SPS measures) accordingly within a reasonable period of time.

ARTICLE 6.9

Transparency, information exchange and technical consultation

1.    The Parties shall promptly inform each other of any significant:

(a)    findings of epidemiological importance that may relate to a product being traded between the Parties;

(b)    food safety matters related to a product being traded between the Parties; or

(c)    other pertinent information for the adequate implementation of this Chapter.

2.    If the information referred to in paragraph 1 has been made available through a notification to the WTO or to the relevant international standard-setting body in accordance with their rules, or on a publicly accessible website of a Party, the requirement in paragraph 1 shall be deemed to have been fulfilled.

3.    If either Party has a serious concern with respect to a SPS risk, technical consultations regarding that situation shall, on request, take place as soon as possible and in any case within 14 days after the date of delivery of the request.

4.    If a Party has a significant concern with a SPS measure that the other Party has proposed or implemented, that Party may request technical consultations with the other Party. The Party to which the request is addressed shall respond within 30 days after the date of delivery of the request.

5.    With respect to paragraphs 3 and 4, each Party shall endeavour to provide all the information necessary to avoid a disruption in trade and to enable the Parties to reach a mutually acceptable solution that effectively manages any SPS risk.

6.    The Parties shall seek to resolve any concerns arising from the implementation of this Chapter through technical consultations 12 pursuant to this Article prior to initiating dispute settlement pursuant to Chapter 26 (Dispute settlement).

ARTICLE 6.10

Emergency measures

1.    If a Party adopts an emergency measure that is necessary for the protection of human, animal or plant life or health, the competent authority of the Party shall notify the competent authority of the other Party within 24 hours. If a Party requests technical consultations to address the emergency SPS measure, the technical consultations shall be held within 14 days after the date of delivery of the notification of the emergency SPS measure. The Parties shall consider any information provided through the technical consultations.

2.    The Party applying the emergency measure shall consider any information provided in a timely manner by the exporting Party when it makes its decision with respect to any consignment that, at the time of adoption of the emergency SPS measure, is being transported between the Parties.

3.    Where an emergency measure seriously disrupts or suspends trade, the importing Party shall as soon as practically possible revoke that measure or provide relevant scientific and technical justification for its continuation.

ARTICLE 6.11

Audits

1.    For the purpose of maintaining confidence in the implementation of this Chapter, each Party has the right to carry out a systems-based audit of all, or part of, the control system of the competent authority of the other Party to determine that it is functioning as intended.

2.    In undertaking an audit, a Party shall take into account relevant guidance of the WTO SPS Committee and international standards, guidelines and recommendations.

3.    Any decision or action taken by the auditing Party that may adversely affect trade as a result of the audit shall take into account and be proportionate to:

(a)    the risk assessed, supported by objective evidence and data that can be verified; and

(b)    the auditing Party's knowledge of, relevant experience with, and confidence in, the audited Party.

4.    The auditing Party shall provide objective evidence and data to the audited Party on request.

5.    The auditing Party shall bear its own costs associated with the audits.

6.    Each Party shall ensure that procedures are in place to prevent the disclosure of confidential information that is acquired during an audit of the other Party's competent authorities, including procedures to remove any confidential information from a final audit report that is made publicly available.

7.    The auditing Party shall consider any comments on the report by the audited Party and shall determine whether the report or part of it is made publicly available or is made available in a more limited way.

8.    The Trade Committee may adopt a decision to amend Annex 6-D (Guidelines and procedures for an audit or verification) in order to establish or specify audit guidelines and procedures.

ARTICLE 6.12

Import checks and fees

1.    The importing Party shall have the right to carry out import checks based on the SPS risks associated with imports. These checks shall be carried out without undue delay and with minimum trade disrupting effects.

2.    If import checks reveal non-compliance with the relevant import requirements, the action taken by the importing Party shall follow international standards, be based on an assessment of the risk involved and not be more trade-restrictive than required to achieve the importing Party's ALOP.

3.    The competent authority of the importing Party shall notify the competent authority of the exporting Party when any non-compliance constitutes a serious risk to human, animal or plant health.

4.    The competent authority of the importing Party shall notify the importer or its representative of a non-compliant consignment including the reason for non-compliance, and provide them with an opportunity for a review of the decision. The competent authority of the importing Party shall consider any relevant information submitted to assist in the review.

5.    Any fees imposed for procedures on imported products shall not be higher than any fees charged for comparable checks of like domestic products and not higher than the actual cost of the service.

6.    The Trade Committee may adopt a decision to amend Annex 6-F (Import checks and fees) in order to set out frequency rates and fees for import checks for certain commodities within the scope of this Chapter.

ARTICLE 6.13

Scientific robustness and transparency in specified authorisation 13 processes

1.    The Parties recognise that authorisation processes shall be based on robust science and conducted in a transparent manner so as to build and maintain public trust and confidence. The Parties shall cooperate on increasing the robustness and transparency of these processes.

2.    The Parties acknowledge that their respective authorisation processes are intended to provide comparable outcomes and that cooperation in this area is desirable.

3.    If a person responsible for ensuring that the requirements for obtaining marketing authorisation are met by the business under its control commissions scientific studies in a scientific institution 14 located in a Party with a view to support an application for authorisation in the context of certain specified authorisation processes in the other Party, and this is brought to the attention of the Party in which the scientific institution is located, both Parties shall endeavour to share such information with each other.

4.    The Parties may also exchange information on their authorisation processes.

5.    A Party may request a fact-finding visit under this Article to a scientific institution located in the other Party to collect information concerning the application of relevant standards by the scientific institution when it conducts a scientific study for the purposes of certain specified authorisation processes in the Party which requests a fact-finding visit.

6.    If a Party seeks to conduct a fact-finding visit, it shall notify the other Party no later than 60 days before such visit.

7.    If a Party seeks to conduct a fact-finding visit and the scientific institution agrees to such visit, officials of the other Party may accompany the officials of the visiting Party during the visit.

8.    The final report of any fact-finding visit shall be made available to the competent authorities of both Parties. The relevant portions of the final report shall also be made available to the scientific institution that was visited.

9.    The costs of any such fact-finding visit shall be borne by the Party that requests a fact-finding visit.

10.    The Trade Committee may adopt a decision to establish detailed implementing rules and any necessary guidance with respect to paragraphs 3 to 9.

ARTICLE 6.14

Antimicrobial resistance

1.    The Parties recognise that AMR is a serious threat to human and animal health.

2.    The Parties shall, in accordance with the One Health approach, cooperate and facilitate the exchange of information, including with respect to regulations, guidelines, national plans, standards, expertise and experiences in the field of AMR, and identify common views, interests, priorities and policies in that area.

3.    The Parties acknowledge that:

(a)    their respective antimicrobial regulatory standards, guidelines and surveillance systems deliver comparable controls and health outcomes;

(b)    antimicrobial agents that are critical to human and animal treatment and health are a core focus of their respective AMR strategies; and

(c)    initiatives are taken on both sides, within their respective strategies and policies, to promote the phasing out of the use of antibiotic agents as growth promoters, in particular those of medical importance, and to reduce the use of antimicrobial agents in animal production.

4.    Furthermore, the Parties shall:

(a)    cooperate in relevant international fora on the development of future codes, guidelines, standards, recommendations and initiatives;

(b)    cooperate on international action plans, especially with regard to responsible and prudent use of antimicrobial agents in order to combat AMR more effectively; and

(c)    within the context of their respective strategies and policies support the implementation of agreed international action plans and strategies on AMR.

5.    Any regulations, guidelines, strategic plans, standards and other initiatives on AMR shall not be used to create or implement measures affecting trade unless those measures are consistent with the SPS Agreement and relevant provisions of this Chapter.

6.    The SPS Committee may establish a technical Working Group on AMR.

ARTICLE 6.15

Fraud in traded commodities

1.    The Parties recognise that fraudulent activities by commercial operators engaged in international trade may:

(a)    affect the health of humans, animals, plants and consequentially the environment; and

(b)    undermine fair commercial practice and consumer confidence.

2.    The Parties shall exchange relevant information and cooperate to deter practices that are, or appear to be, non-compliant with their respective SPS measures or that mislead consumers and other relevant stakeholders.

ARTICLE 6.16

Implementation and resources

Each Party shall ensure that its competent authorities have the necessary resources to effectively implement this Chapter.

ARTICLE 6.17

Committee on Sanitary and Phytosanitary Measures

1.    This Article complements and further specifies Article 24.4 (Specialised committees).

2.    The Committee on Sanitary and Phytosanitary Measures shall, with respect to this Chapter, have the following functions:

(a)    provide a forum to exchange information on each Party's regulatory system including the scientific and risk assessment basis for its SPS measures;

(b)    identify opportunities for cooperation, including trade facilitation initiatives and further work on eliminating unnecessary barriers to trade between the Parties;

(c)    promote cooperation in multilateral fora, including in the WTO SPS Committee and international standard-setting bodies, as appropriate;

(d)    establish ad hoc working groups;

(e)    provide a forum for the Parties to update each other at an early stage on regulatory considerations related to SPS measures;

(f)    without prejudice to Chapter 26 (Dispute settlement), serve as a forum to resolve specific trade concerns where the Parties have been unable to reach a mutually acceptable solution through technical consultations pursuant to Article 6.9 (Transparency, Information Exchange and Technical Consultation);

(g)    take any other action in the exercise of its functions as the Parties may agree; and

(h)    consider any other matter related to this Chapter.

3.    Unless the Parties decide otherwise, the Committee shall meet and establish its work programme no later than one year after the date of entry into force of this Agreement.

CHAPTER 7

SUSTAINABLE FOOD SYSTEMS

ARTICLE 7.1

Objectives

1.    The Parties, recognising the importance of strengthening policies and defining programmes that contribute to the development of sustainable, inclusive, healthy, and resilient food systems, agree to establish close cooperation to jointly engage in the transition towards sustainable food systems.

2.    This Chapter applies in addition to, and without prejudice to, the other Chapters of this Agreement related to food systems or to sustainability, in particular Chapter 6 (Sanitary and Phytosanitary Measures), Chapter 9 (Technical Barriers to Trade) and Chapter 19 (Trade and Sustainable Development).

ARTICLE 7.2

Scope

1.    This Chapter applies to the cooperation between the Parties to improve the sustainability of their respective food systems.

2.    This Chapter sets out provisions for cooperation in areas which can achieve more sustainable food systems ("SFS"). Indicative areas for cooperation are listed in Article 7.4 (Cooperation to improve the sustainability of food systems).

3.    The Parties recognise that priorities for cooperation may change over time as their respective understandings and the international understanding and treatment of food systems develop.

ARTICLE 7.3

Definition

1.    The Parties recognise that food systems are diverse and context-specific, encompassing a range of actors and their interlinked activities across all areas of the food system, including the production, harvesting, processing, manufacturing, transport, storage, distribution, sale, consumption and disposal of food products.

2.    For the purposes of this Chapter, and acknowledging that definitions of SFS can evolve over time, the Parties consider SFS to be food systems which ensure access to safe, nutritious and sufficient food all year round in such a way that the economic, social, cultural and environmental bases to generate food security and nutrition for future generations are not compromised.

ARTICLE 7.4

Cooperation to improve the sustainability of food systems

1.    The Parties recognise the importance of cooperation as a mechanism to implement this Chapter as they strengthen their trade and investment relations.

2.    Taking account of their respective priorities and circumstances, the Parties shall cooperate to address matters of common interest related to the implementation of this Chapter. Such cooperation may take place bilaterally as well as in international fora.

3.    Cooperation may include exchange of information, expertise and experiences, as well as cooperation in research and innovation.

4.    The Parties shall cooperate on topics which may include:

(a)    food production methods and practices which aim to improve sustainability, including organic farming and regenerative agriculture, amongst others;

(b)    the efficient use of natural resources and agricultural inputs, including reducing the use and risk of chemical pesticides and fertilisers, where appropriate;

(c)    the environmental and climate impacts of food production, including on agricultural greenhouse gas emissions, carbon sinks and biodiversity loss;

(d)    contingency plans to ensure the security and resilience of food supply chains and trade in times of international crisis;

(e)    sustainable food processing, transport, wholesale, retail and food services;

(f)    healthy, sustainable and nutritious diets;

(g)    the carbon footprint of consumption;

(h)    food loss and waste, in line with the Sustainable Development Goals Target 12.3;

(i)    reduction of the adverse environmental effects of policies and measures linked to the food system; and

(j)    indigenous knowledge, participation and leadership in food systems, in line with the Parties' respective circumstances.

ARTICLE 7.5

Additional provisions

1.    The cooperation activities under this Chapter shall not affect the independence of each Party's agencies, including a Party's regional agencies.

2.    Fully respecting each Party's right to regulate, nothing in this Chapter shall be construed to oblige a Party to:

(a)    modify its import requirements;

(b)    deviate from its procedures for preparing or adopting regulatory measures;

(c)    take action that would undermine or impede the timely adoption of regulatory measures to achieve its public policy objectives; or

(d)    adopt any particular regulatory measure.

ARTICLE 7.6

The Committee on Sustainable Food Systems

1.    This Article complements and further specifies Article 24.4 (Specialised committees).

2.    The Committee on Sustainable Food Systems shall, with respect to this Chapter, have the following functions:

(a)    establishing priorities for cooperation and work plans to implement those priorities;

(b)    promoting cooperation in multilateral fora; and

(c)    performing any other functions relating to the implementation or operation of this Chapter.

3.    In pursuing the objectives of this Chapter, and to monitor the results obtained from its implementation, the Committee on Sustainable Food Systems shall establish each year an annual work plan including actions with objectives and milestones for those actions.

4.    When appropriate, the Committee on Sustainable Food Systems may establish working groups consisting of expert-level representatives of each Party.

5.    The Committee on Sustainable Food Systems shall meet within one year after the date of entry into force of this Agreement and thereafter as mutually agreed.

6.    The Committee on Sustainable Food Systems may establish rules mitigating potential conflicts of interest for the experts that may participate in its meetings and those of any working group reporting to it.

ARTICLE 7.7

Contact points

Within 90 days after the date of entry into force of this Agreement, each Party shall designate a contact point to facilitate the communication between the Parties and notify the other Party of the contact details for the contact point. Each Party shall notify the other Party promptly in the event of any change of those contact details.

CHAPTER 8

ANIMAL WELFARE

ARTICLE 8.1

Objective

The objective of this Chapter is to enhance cooperation between the Parties on animal welfare of farmed animals with a view to facilitating trade between the Parties.

ARTICLE 8.2

General provisions and cooperation

1.    The Parties recognise that animals are sentient beings. 15

2.    The Parties acknowledge that their farming practices are substantively different but recognise that their respective animal welfare standards and associated systems provide comparable animal welfare outcomes.

3.    The Parties shall make best endeavours to cooperate in international fora to promote the development and implementation of science-based animal welfare standards. In particular, the Parties shall cooperate to reinforce and broaden the scope of the World Organisation for Animal Health animal welfare standards, as well as their implementation, with a focus on farmed animals.

4.    The Parties shall exchange information, expertise and experiences in the field of animal welfare related to the treatment of animals on the farm, during transport and at slaughter or killing.

5.    The Parties shall continue to cooperate on research in the area of animal welfare to facilitate the development of science-based animal welfare standards related to the treatment of animals on the farm, during transport and at slaughter or killing.

ARTICLE 8.3

Technical working group on animal welfare

The Parties hereby establish a technical working group on animal welfare. The working group shall report to and undertake activities specified by the Committee on Sanitary and Phytosanitary Measures.

CHAPTER 9

TECHNICAL BARRIERS TO TRADE

ARTICLE 9.1

Objectives

The objectives of this Chapter are to facilitate trade in goods between the Parties by preventing, identifying and eliminating unnecessary technical barriers to trade, and to enhance cooperation between the Parties in matters covered by this Chapter.

ARTICLE 9.2

Scope

1.    This Chapter applies to the preparation, adoption and application of all technical regulations, standards and conformity assessment procedures as defined in Annex 1 to the TBT Agreement that may affect trade in goods between the Parties.

2.    This Chapter does not apply to:

(a)    purchasing specifications prepared by governmental bodies for production or consumption requirements of bodies to which Chapter 14 (Public procurement) applies; or

(b)    SPS measures as defined in Annex A to the SPS Agreement to which Chapter 6 (Sanitary and phytosanitary measures) applies.

ARTICLE 9.3

Relation to the TBT Agreement

1.    Articles 2 to 9 of and Annexes 1 and 3 to the TBT Agreement are incorporated into and made part of this Agreement, mutatis mutandis.

2.    Terms referred to in this Chapter, including in the Annexes to this Chapter, shall have the same meaning as they have in the TBT Agreement.

ARTICLE 9.4

Technical regulations

1.    Further to Article 22.8 (Impact assessment), each Party shall endeavour to carry out an impact assessment of planned technical regulations falling within the scope of regulatory measures as defined in Article 22.2 (Definitions), that may have a significant impact on trade, in accordance with its rules and procedures. For greater certainty, this paragraph also applies to conformity assessment procedures that are part of such technical regulations.

2.    If an impact assessment is carried out pursuant to paragraph 1, then, further to point (b) of Article 22.8(2) (Impact Assessment), each Party shall assess the feasible and appropriate regulatory and non-regulatory options for the proposed technical regulation that may fulfil the Party's legitimate objectives in accordance with Article 2.2 of the TBT Agreement. For greater certainty, this obligation also applies to conformity assessment procedures that are part of such technical regulations.

3.    Further to Articles 2.3 and 2.4 of the TBT Agreement, each Party shall review its technical regulations from time to time. In undertaking this review, each Party shall, inter alia, give positive consideration to increasing convergence with relevant international standards, taking into account any new development as regards the relevant international standards and whether previous circumstances that gave rise to divergences from any relevant international standard continue to exist.

4.    Without prejudice to Chapter 22 (Good regulatory practices and regulatory cooperation), when developing major technical regulations that may have a significant effect on trade, each Party shall, as required by its rules and procedures, allow persons of the Parties to provide input through a public consultation process, except where urgent problems of safety, health, environmental protection or national security arise or threaten to arise. Each Party shall allow persons of the other Party to participate in such consultations on terms no less favourable than those accorded to its own persons, and shall make the results of that consultation process public.

ARTICLE 9.5

International standards

1.    International standards developed by the International Organization for Standardization ("ISO"), the International Electrotechnical Commission ("IEC"), the International Telecommunication Union ("ITU"), and the Codex Alimentarius Commission ("Codex") shall be considered as the relevant international standards within the meaning of Article 2, Article 5 and Annex 3 of the TBT Agreement provided that they comply with the conditions set out in paragraph 2.

2.    A standard developed by an international organisation, other than those referred to in paragraph 1, may also be considered a relevant international standard within the meaning of Article 2, Article 5 and Annex 3 to the TBT Agreement, provided that:

(a)    it has been developed by a standardisation body which seeks to establish consensus either:

(i)    among national delegations of the participating WTO Members representing all the national standards bodies in their territory that have adopted, or expect to adopt, standards for the subject matter to which the international standardisation activity relates; or

(ii)    among governmental bodies of participating WTO Members; and

(b)    it has been developed in accordance with the Decision of the Committee on Technical Barriers to Trade established by Article 13 of the TBT Agreement on Principles for the Development of International Standards, Guides and Recommendations in relation to Article 2, Article 5 and Annex 3 of the TBT Agreement.

3.    If a Party has not used international standards as a basis for its technical regulations and related conformity assessment procedures, a Party shall, on request from the other Party, identify any substantial deviation from the relevant international standard and explain the reasons why such standards have been judged inappropriate or ineffective for the aim pursued, and provide the evidence on which that assessment is based, where available.

ARTICLE 9.6

Standards

1.    With a view to harmonising standards on as wide a basis as possible, and in addition to Article 4.1 of the TBT Agreement, each Party shall encourage the standardising bodies within its territory, as well as the regional standardising bodies of which a Party or the standardising bodies within its territory are members, to:

(a)    review national and regional standards that are not based on relevant international standards at regular intervals, with a view to increasing the convergence of those standards with relevant international standards, among other considerations;

(b)    cooperate with the relevant standardisation bodies of the other Party in international standardisation activities, including through cooperation in the international standardisation bodies or at regional level; and

(c)    foster bilateral cooperation with the standardisation bodies of the other Party.

2.    The Parties should exchange information on:

(a)    their respective use of standards in support of technical regulations; and

(b)    their respective standardisation processes, and the extent of use of international standards, regional or sub-regional standards as a base for their national standards.

3.    If standards are made mandatory through incorporation or by reference in a draft technical regulation or conformity assessment procedure, the transparency obligations set out in Article 9.8 (Transparency) of this Chapter and in Article 2 or Article 5 of the TBT Agreement shall apply, to the extent permitted by applicable copyright.

ARTICLE 9.7

Conformity assessment

1.    If a Party requires conformity assessment as a positive assurance that a product conforms with a technical regulation, it shall:

(a)    select conformity assessment procedures proportionate to the risks involved;

(b)    accept the use of a Supplier's Declaration of Conformity (hereinafter referred to as "SDoC"), where appropriate; and

(c)    if requested by the other Party, explain the rationale for selecting particular conformity assessment procedures for specific products.

2.    The Parties recognise that a broad range of mechanisms exist to facilitate the acceptance of the results of conformity assessment procedures. Such mechanisms may include:

(a)    SDoC;

(b)    recognition by a Party of the results of conformity assessment procedures conducted in the territory of the other Party;

(c)    cooperative and voluntary arrangements between conformity assessment bodies located in the territories of the Parties;

(d)    mutual recognition agreements for the results of conformity assessment procedures with respect to specific technical regulations conducted by bodies located in the territory of the other Party;

(e)    use of accreditation to qualify conformity assessment bodies; and

(f)    government designation of conformity assessment bodies.

3.    If a Party requires third-party conformity assessment as a positive assurance that a product conforms with a technical regulation, and it has not reserved this task to a governmental authority as specified in paragraph 4, it shall:

(a)    give preference to the use of accreditation to qualify conformity assessment bodies;

(b)    use international standards for accreditation and conformity assessment;

(c)    where practicable, use international agreements involving the Parties' accreditation bodies, for example, through the mechanisms of the International Laboratory Accreditation Cooperation ("ILAC") and the International Accreditation Forum ("IAF");

(d)    encourage the use of functioning international agreements or arrangements for harmonisation, or facilitation of acceptance of conformity assessment results;

(e)    ensure that its rules and procedures do not unnecessarily restrict choice for economic operators amongst the conformity assessment bodies designated by its authorities for a particular product or set of products;

(f)    ensure that the activities of its accreditation bodies are consistent with international standards for accreditation and, in that respect, that there are no conflicts of interest between accreditation bodies and conformity assessment bodies in relation to their conformance activities, including personnel;

(g)    ensure that conformity assessment bodies carry out their activities in a manner that prevents conflicts of interests affecting the outcome of the assessment;

(h)    allow conformity assessment bodies to use subcontractors to perform testing or inspections in relation to the conformity assessment, including subcontractors located in the territory of the other Party. Nothing in this point shall be construed as to prohibit a Party from requiring subcontractors to meet the same requirements that the conformity assessment body to which it is contracted is required to meet in order to perform the contracted tests or inspection itself; and

(i)    ensure that the details, including the scope of the designation, of the bodies that have been designated to perform such conformity assessment, are published online.

4.    Nothing in this Article shall preclude a Party from requiring that conformity assessment in relation to specific products is performed by specified governmental authorities of the Party. If a Party requires conformity assessment to be performed by its specified governmental authorities, that Party shall:

(a)    limit the conformity assessment fees to the approximate cost of the services rendered and, upon the request of an applicant for conformity assessment, explain how any fees it imposes for such conformity assessment are limited to the approximate cost of services rendered; and

(b)    ensure that the conformity assessment fees are available on request, if they are not published.