FTAA - Free Trade Area of the Americas

Draft Agreement

Chapter on Market Access

(Continuation)

[Article 6. Notification and Consultations]

[6.1 The importing Party shall give written notification [to the other Party]without delay of [its intention to start] [the initiation of] an investigation in the realm of safeguards. The notification shall be made in writing by the competent authority in [a period of ….] [the next day] [[after] [starting on the day of] publication] [at the initiation of the investigation]. It shall contain [the main features of the facts under investigation, such as] [sufficient antecedents that support the [application of the measures] [the opening of the investigation], including]:

[a) the names and available addresses of the applicants, their share in the branch of domestic industry of the good, and the reasons leading them to claim that they are representatives of the branch of domestic industry;]

[b) a clear comprehensive description of the good subject to the proceeding, including its tariff classification, the current tariff treatment, as well as a description of the like or directly competitive good;]

[c) the import figures [corresponding to each of the .... most recent years] supporting the argument that this good is being imported in ever increasing quantities, [either in absolute terms or relative to domestic production;]]

[d) the data on the branch of domestic industry of the like or directly competitive good [corresponding to the last .... years], ]

e) the data that [demonstrates] [was taken into consideration to demonstrate the existence of] the serious injury or threat of serious injury caused by the imports to the sector in question, in accordance with the data referred to in subparagraphs c) and d); 

[f) an enumeration and description of the alleged causes of serious injury or threat of serious injury, based on the information required pursuant to subparagraphs a) through d) and a summary of the basis for claiming that the increase in imports of the good, [in absolute terms or relative to the domestic production], is the cause thereof;]

g) the time limit for the interested parties to be able to submit evidence and set forth their opinions in writing, so that they may be taken into consideration during the investigation; [and]

h) the time limit to hold consultations.

[i) the data of the applicable rules] 

[j) the date and place of the public hearing;]

[k) the place where the request and other documents presented during the procedure can be inspected {be included}; and ]

[l) the name, domicile and telephone number of the office where more information can be obtained.]]

[6.1 The importing Party shall promptly give written notification to the other Parties of the institution of a safeguard investigation. The notification shall include the following information:

a) A description of the imported good(s) that is the subject of the investigation and the HTS number(s) under which it is believed to {enter} {be recorded};

b) If the investigation is instituted on the basis of a petition or complaint, the name of the entity or person filing the petition or complaint;

c) The place where the non-confidential version of the petition or complaint may be inspected and how an interested party may obtain a copy;

d) The date, time, and place of the public hearing, the deadlines for filing briefs and other submissions in connection with the investigation, and the likely date on which the decision will be made and announced and a public version of competent authority’s report made available to the other Parties.]

[6.2 At any stage during the procedure, the Party receiving the notice may request the additional information it deems necessary from the Party that opened the investigation. [The Party that is conducting the investigation shall, if so requested by the Party whose goods are the object of the investigation, give said Party access to the public record, including the non-confidential summary of the confidential information used to initiate the investigation or during the course of same.]]

[6.3 [The Parties] [A Party] may not [adopt final measures ] [apply a final measure] [initiate an investigation] without having afforded an opportunity for consultation, the objective of which shall be a mutual knowledge of the facts, the exchange of opinions and possible clarification of the problem that has arisen. The time period for such consultations shall be .... .]

[The Parties may not apply or extend a safeguard measure without affording suitable opportunity for consultation in order to determine compensation. The main objective of the consultations shall be to arrive at an understanding regarding the maintenance of a level of concessions substantially equivalent to the measure applied.]

[Countries with smaller economies shall not grant any compensation.]

[6.3’ Without prejudice to the obligation to provide adequate opportunity to hold consultations, the provisions on consultations do not aim to keep the authorities of any Party from proceeding without delay to initiate an investigation or to formulate preliminary or definitive, positive or negative determinations, nor to keep them from applying measures in accordance with the provisions of this [Chapter].]

[6.4 The [ruling by which a decision is made to adopt or extend] [determination to apply] a safeguard measure shall be published [as corresponds] and the other [party] [Parties] shall be notified within a period of .... The notice shall contain [the findings of the investigation and the reasoned conclusions regarding all the pertinent questions of fact and law, including a description of]:

[a) evidence of the existence of serious injury or threat of serious injury;]

b) a precise description of the [product] [good] in question (including its tariff classification according to the HS);

c) description of the measure proposed or [adopted] [applied];

d) date of its entry into force and its duration; [and]

[e) when applicable, the criteria and objective information that shows that the circumstances laid down in this [Chapter] for the application of a measure [to the other Party] are met; [the time limit for holding consultations [to determine compensation]; and in the case of extension of a measure, information should also be supplied to show that the branch of domestic industry in question is in the process of readjustment.] [has complied with the adjustment program] [;]]

f) [the domestic industry that has suffered or is threatened by serious injury.]]
[6.5 If a [definitive] safeguard measure is not called for, the investigation shall be closed, [the records thereof shall be filed,] [and the temporary measures imposed as provided for in Article .... of this [Chapter] shall be lifted, order shall be issued for the return of amounts {with the corresponding interest} deposited for {the} {such} purpose or the respective bonds shall be released, as the case may be].]

[6.6 If the importing Party determines that the motives that gave rise to the application of the bilateral safeguard measure continue to exist, it shall notify the competent authority of the other Party of its intention to extend the safeguard measure for at least ninety (90) days {before it expires} {prior to its expiration}, and it shall provide the evidence that the causes that led to its adoption persist, with a view to initiating the respective consultations, which shall be conducted pursuant to the stipulations of this article. The notifications of extension and of compensation shall be made in the terms provided in this {article}, prior to the expiration of the measures adopted.]

[Article 7. Provisional Safeguards]

[7.1 In critical circumstances, where any delay could cause damage that would be difficult to remedy, provisional safeguard measures can be adopted pursuant to a preliminary determination of the existence of clear evidence that the increase in imports under preferential tariffs has caused or threatens to cause serious injury.]

[7.1 In critical circumstances where delay would cause damage to a [branch of a] domestic industry producing a like or directly competitive good which it would be difficult to repair, a Party may apply a provisional safeguard measure pursuant to a preliminary determination that there is clear evidence that imports have increased as a result of the reduction or elimination of a duty pursuant to this Agreement and are [causing or threatening to cause serious injury] [a substantial cause of serious injury, or threat of serious injury, to the domestic industry].]

[The Parties shall not apply provisional measures to smaller economies.]

[7.2 A provisional safeguard measure may only be applied {until} {after} a period of …. has elapsed {following} {from the} [initiation of the investigation] receipt of the request from the petitioner.] 

[7.3 The duration of a provisional safeguard measure may not exceed .... .[and shall adopt one of the forms provided for in article 3.2] [200 days during which time the pertinent requirements of this [Chapter] concerning Investigation Procedures and Transparency Requirements shall be met.]]

[7.4 [Immediately after] [Before] [adopting a temporary] [applying a provisional] safeguard measure, the other Parties shall be notified [within a period of ….], and consultations shall begin [immediately] [promptly] after application of the measure. Said notice shall include the main features of the facts, including the evidence showing the need for the provisional safeguard, and a precise description of the [product] [good] subject thereof.]

[7.5 If the subsequent investigation were to show that the increase in preferential-tariff imports or the conditions of said imports have not caused or posed a threat of serious injury to the branch of domestic industry in question, the amount received under the temporary measures shall be reimbursed promptly or, when such is the case, the bond posted for the purpose shall be released.]

[7.5 If the imposition of a provisional safeguard results in the imposition of a rate of duty in excess of the rate of duty pursuant to Schedule .... of this Agreement, the excess duties imposed shall be promptly refunded if the subsequent investigation referred to in Article 5 does not determine that increased imports are a substantial cause of serious injury or threat thereof to a domestic production.]

Article 8. Rights of the Affected Parties

8.1 A Party [intending to apply] [applying]/ a safeguard measure will [accord the affected Party or Parties ] [, in consultation with Parties that are substantial suppliers of the good concerned, provide to such substantial suppliers mutually agreed trade liberalizing] compensation in the form of : 

a) [tariff] concessions having substantially equivalent trade effects, or 

b) [concessions equivalent to the value of the additional duties [resulting from the adoption of the safeguard measure] [expected to result from the measure].]

8.2 [Compensation shall be determined at the consultation stage.] [Such consultations shall begin within 30 days of the imposition of the measure. 

If no agreement is reached within 30 days in these consultations, then any Party that is a substantial supplier shall be free to suspend the application of substantially equivalent concessions to the trade of the Party applying the safeguard measure.]

8.3 If [they] [the Party intending to apply a safeguard measure and the affected Parties] are unable to agree on a satisfactory solution, the affected [Party or] Parties may [impose] [apply] tariff measures having substantially equivalent trade effects to the measure adopted.

[Any Party that is a substantial supplier of the product concerned shall provide written notification to the importing Party at least 30 days prior to exercising the right of suspension referred to in Article .... .]

[The obligation to provide compensation and the right of suspension of substantially equivalent concessions shall terminate upon the later of: (a) the termination of the safeguard measure, or (b) if the Party terminates such measure in accordance with Article .... the date on which the rate of duty returns to the rate of duty set out in Schedule …. .]

[8.4 The Party applying the tariff measure will do so to the extent and for the minimum period of time necessary for achieving the objective being pursued.] 

[Article 9. Safeguards for Specific Sectors]

[Part II. Global Safeguards]¹⁰

[Article 10. Global Safeguards]

[10.1 Parties preserve their rights and obligations to apply safeguard measures pursuant to Article XIX of GATT 1994 and the Agreement on Safeguards of the WTO.[, except those referring to compensation or reprisal and the exclusion of a measure, where they are incompatible with the provisions of this [Chapter] [article].] [This Agreement does not confer any additional rights or obligations on the Parties with regard to actions taken pursuant to Article XIX of GATT 1994 and the WTO Agreement on Safeguards.]]

[10.2 The Party that decides to adopt a global safeguard measure may only apply it to the imports of another Party when it determines that said imports, taken individually, represent a substantial portion of the total imports and is a major contributor to the serious injury or to the threat of serious injury.]
[10.3 In order to make this determination, the following criteria [, among others, shall be taken into account] [shall be observed]: 

a) imports of [originating] goods from a Party shall be considered substantial if they are included among the [....] [three] [5] main supplier countries of that good [taking as the basis its share in imports during … years immediately before]. [By way of exception, imports from another Party shall be considered substantial if they are included among the ten leading supplier countries of the good to the importing Party when in all they represent over 25 per cent of said imports;]

b) a safeguard measure shall not be taken against imports from [developing countries] [the smaller economies and/or economies in different levels of development] where such imports, considered individually, do not account for more than 8% of the imports of that good in the importing Party;

c) imports of goods from another Party shall not be considered to make a major contribution to the serious injury or threat of serious injury, if their rate of growth during the period in which the prejudicial [sudden]increase therein took place is [appreciably]lower than the rate of growth of the total imports over the same period. [Similarly, the volume of and changes in the Party's share in the total imports shall be take into account to determine that the other Party's imports contribute significantly to the serious injury or threat of serious injury.]]

[10.4 The Party that applies the measures and has initially excluded another Party's good from it shall be entitled to include it afterwards, if the competent investigating authority determines that an increase in the imports of said good from the excluded Party causes serious injury or threatens to cause serious injury and as a result reduces the effectiveness of the measure.]

[10.5 [One Party shall notify the other Party without delay and in writing of the initiation of a procedure that may result in the application of a safeguard measure in accordance with paragraph 1.]In no case may the importing Party apply a global safeguard measure without prior notification in writing [to the FTAA administrative body {and}] to the other Party and without first engaging in [prior] consultations [with the other Party].]

[10.6 The Party that intends to apply a global safeguard measure shall provide the Party affected by the measure with mutually agreed compensation, in the form of concessions that have trade effects [substantially]equivalent [to the impact of] [or that are equivalent to the value of the additional tariffs expected from] [to] the safeguard measure.]

[10.7 Unless the Parties agree otherwise, the compensation referred to in the foregoing paragraph shall be determined at the consultation stage.]

[10.8 If the Parties do not reach agreement regarding compensation, the Party proposing the adoption of the measure shall be authorized to implement it, and the affected Party may impose measures that have trade effects [substantially] equivalent to those of the measure adopted.]

[10.9 [For the purpose of] [Before imposing] global safeguard measures, each Party shall [ensure that the domestic industry or branch of production benefiting from the measure present an] [examine and determine the feasibility of an] adjustment plan or a plan to overcome the circumstances alleged to cause serious injury or the threat of serious injury [, provided that these circumstances are variables that can be controlled by the given industry][presented by the branch of domestic industry]. The Party that applies the measure shall provide the other Parties a non-confidential summary of the plan [and a duly founded report of its determination].]

[10.10 When a Party decides, pursuant to this article, to apply a safeguard measure to goods originating in another Party, the measures applied to said goods shall solely and exclusively consist of tariff measures]

[Article ___. Dispute Settlement for matters related to safeguard measures]

[No Party may request the establishment of an arbitral group, pursuant to the provisions in the [Chapter] on dispute settlement, when it is a matter of safeguard measures that have merely been proposed.] 

Article 11. Definitions

The following definitions shall apply:

Agreement on Safeguards: the Agreement on Safeguards, which forms part of the Agreement Establishing the World Trade Organization (WTO).

[Branch of] domestic industry: the producers as a whole of [the] like or directly competitive goods operating [in] [within] the territory of a Party, [or those whose collective output [of the like or directly competitive] [products] [goods] constitutes a major proportion of the total domestic production of those [products] [goods]].

Competent authority: the authority of a Party listed in Annex ...., or those who succeed them.

[Critical circumstances: those circumstances in which a delay in the application of the safeguard measure could cause difficult to repair injury;]

[Directly competitive good: that which, while not similar to the one that it is compared with, is essentially equivalent for purposes of trade being put to the same use and being interchangeable with the latter.[To establish determination of a directly competitive good, the competent authority shall also consider whether the good makes use of the same distribution channels, is sold in the same market, and is purchased by a similar group of consumers.]]

GATT 1994: the General Agreement on Tariffs and Trade of 1994, which forms part of the Agreement Establishing the World Trade Organization.

Interested [parties] [party]: the petitioner; other [domestic] producers; commercial, trade or business associations in which the majority of the members are producers of the [product] [good] under investigation; foreign producers; exporters; importers; governments of the exporting or producing Parties; and consumers or associations representing them.

[Safeguard measure: all measures applied in accordance with the provisions of this [Chapter]. This does not include any safeguard measure derived from a procedure initiated before this {Agreement} {Treaty} entered into force.]

Serious injury: a significant overall impairment [of the situation of a branch of] [in the position of a] domestic industry.

[Similar good: [includes an identical good and]one that, although not the same in all aspects, has similar features and composition, which enables them to perform the same functions and to be commercially interchangeable with the good it is compared with.]

[Substantial cause: a cause which is important and not less than any other cause.]

[Substantial supplier: any Party that for the three years preceding an investigation described in Article 5 was, on average, the territory of origin of at least ten percent, by value, of imports from the Party of the good subject to a safeguard measure.]

Threat of serious injury: [the clear imminence of serious injury, determined on the basis of facts and not merely on allegations, suppositions or remote possibilities.] [serious injury that is clearly imminent. Such a determination shall be made on the basis of facts and not merely on allegation, conjecture, or remote possibility.]

[Transition period: [the ten-year period beginning on the date of entry into force of this Agreement.] [ the period during which a Party may adopt and maintain safeguard measures; and it shall cover, for each good,]]

[CHAPTER ON] ORIGIN REGIME

1) ORIGINATING GOODS

[[For purposes of the Liberalization Program envisaged in this Agreement and] pursuant to the provisions of this [Chapter],] the following goods shall be considered to be originating [from] [in][,] the territory of [any] [a] [one of] [the] Part[y][ies]: 

1.1 ) Goods wholly obtained or produced entirely in the territory of [one or more] [one] [any] of the Party[ies] [means]

[(a) minerals [and other non-living natural resources] [and other natural substances] extracted [in] [or taken from] the territory of [one or more] [one] [any] of the Party[ies];]

[(b) vegetable [s] [products] [, as those products are defined in the Harmonized System,] harvested [or gathered] in the territory of [one or more] [one] [any] of the Party[ies];]

[(c) live animals born and raised in the territory of [one or more] [one] [any] of the Party[ies] [and products of live animals raised therein];]

[(c’) goods obtained from live animals in the territory of one or more of the Parties]

[ (d) [goods][products] obtained from hunting [, trapping] or fishing [conducted] in the territory [or in the territorial waters and exclusive economic zone] of [one or more] [one] [any] of the Party[ies];]

[(e) [fish, shellfish and other marine life] [products] taken from the sea [[outside territorial waters and maritime zones in which the Parties have jurisdiction,] [in accordance with the United Nations Law of the Sea] whether] [, seabed or subsoil outside the territory of one or more of the Parties] by vessels registered [or] [,] recorded [or listed] [with] [in] a Party and [flying] {[entitled to fly]} its flag [{or} by vessels [leased [or chartered] by enterprises established in the territory of a Party] [not exceeding {[15]} tons gross tonnage that are licensed by a Party]; ]

[(f) goods produced aboard [factory] ships from the goods referred to in subparagraph (e), provided such [factory] ships are registered [or] [ , ] recorded [or listed] [with][in] one of the Parties and [entitled to] fly its flag [, or by [factory] ships leased by enterprises established in the territory of a Party];]

[(g) goods [other than fish, shellfish and other marine life,] taken [by a Party or a person of a Party] [or extracted] from the seabed or {subsoil}{beneath the seabed} outside [the] [its] territorial [and patrimonial] waters [and exclusive economic zones], provided that [one of] [the] [that] Party[ies] [have] [or a person {on}{of} one of the Parties has] rights to exploit such seabed] [the subsoil of the continental shelf or the exclusive economic zone of any of the Parties];]

[(g’) goods, other than fish, shellfish and other marine life, taken or extracted from the seabed or the subsoil, in the Area outside the continental shelf and the exclusive economic zone of any of the Parties or of any other State as defined in the United Nations Convention on the Law of the Sea, by a vessel registered, recorded or listed with a Party and entitled to fly its flag, or by a Party or person of a Party;]

[(h) goods taken from [outer] [terrestrial] space, provided they are obtained by a Party or a person of [a] [one or more of the] Party[ies] and not processed in a non-Party [country]; ]

[(i) waste and scrap [derived from the use, consumption or industrial processes carried out in the territory of any of the Parties, that are useable only for the recovery of raw materials; and] {[ derived from]} 

- production in the territory of [one or more] [one] of the Party[ies], or

- used goods collected in the territory of [one or more] [one] of the Party[ies], provided such goods are fit only for the recovery of raw materials; and]

[(i) Waste and scrap derived from production in the territory of one or more of the Parties;

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

[[(j) [The] goods produced in the territory of [one or more] [any] Party[ies] exclusively from goods referred to in the preceding sub-paragraphs [or from their derivatives, at any stage of production][[or their derivatives].] [(j) goods produced in the territory of one of the Parties, exclusively on the basis of the goods mentioned in letter (a) to (i), in any stage of production]]]

1.2 ) Goods produced exclusively from materials [that qualify as] originating in the territory of [one or more of ] the Parties [in accordance with paragraphs 1.1 and 1.3.1 of this article.]

Alternative 1

[A good shall be considered as originating [in one of the Parties] when it is [wholly] produced [entirely] in the territory of [one or more] [one] [that] Party[ies] exclusively from [originating] materials [that qualify as originating] [in any of the Parties], in accordance with this [Chapter].]

Alternative 2

[A good shall originate in the territory of [one or more] [one] Party[ies] when the good is produced [entirely] in the territory of [one or more] [one] Party[ies] exclusively from materials [which qualify as] originating in accordance with this [Chapter].] 

[ Where goods are produced in one or more of the Parties only from materials which are considered as originating under this [Chapter], these goods shall in turn be considered as originating.]

1.3) [Goods produced from originating and non-originating materials]¹¹ {[Sufficient Production]} {[Substantial transformation]}

1.3.1[Criteria for qualification of goods as originating:] [Criteria for the qualification of goods produced using non-originating materials] 

[Change in tariff classification]

[Goods produced in the territory of one or more of the Parties from [originating and] non-originating materials that comply with a change in tariff classification [defined by a fixed, general rule such as a change in tariff heading] [defined in a variable manner for each product, as detailed in Annex ___.] [; and for those cases in which the change in tariff classification is not sufficient or appropriate, regional value content shall be used as criteria.] 

[A good shall qualify for the benefits of this Agreement where each of the non-originating materials undergoes an applicable change in tariff classification set out in Annex # as a result of production occurring entirely in the territory of one [or more] of the Part(ies).]
[[and for those cases in which the change in tariff classification is insufficient or not appropriate, [regional value content] [and/or specific transformation criteria shall be used]] [and/or regional value content and/or specific transformations.]] 

[Specific transformations for those cases in which the tariff classification criteria are insufficient or not appropriate.] 

[The determination of requirements for specific transformations shall be established on the basis of [compliance with productive processes and/or] exclusive use of regional inputs, materials, parts or components.]

{[1.3.1 Qualification criteria for originating goods:]}

[(a) goods produced in the territory of a party from non-originating goods that undergo a change in tariff classification and other requirements, as specified in the annex to this article and that fulfill other applicable provisions of this chapter;

(b) goods produced in the territory of a party from non-originating goods that undergo a change in tariff classification and other requirements, and the goods comply with a regional value content requirement, as specified in the annex to this article, and that fulfill other applicable provisions of this chapter; or

(c) goods produced in the territory of a party and that meet a regional value content requirement as specified in the annex to this article and that complies with the other applicable provisions of this chapter.

1.3.2 For the purposes of this chapter, a good shall be produced entirely in the territory of a party and all regional value content requirement of a good must be satisfied entirely in the territory of a party.

1.3.3 For determining the origin of a good in accordance with the provisions of subparagraph a) of paragraph 1.3.1, if the good used materials determined to be originating in accordance with subparagraphs b) or c) of paragraph 1.3.1, the non-originating materials incorporated into them must satisfy the change in tariff classification of the good and other requirements, as specified in the annex to this article.

1.3.4 For determining the origin of a good in accordance with the provisions of subparagraph b) of paragraph 1.3.1, if the good used materials determined to be originating in accordance with subparagraphs b) or c) of paragraph 1.3.1, the non-originating materials incorporated in the latter must satisfy the change in tariff classification of the good and other requirements, as specified in the annex to this article, and the value of said non-originating materials shall be included in the calculation of the regional value content of the good, in accordance with subparagraph 1.4.

1.3.5 For determining the origin of a good in accordance with subparagraph c) of paragraph 1.3.1, if the good used materials determined to be originating in accordance with the provisions of subparagraphs b) or c) of paragraph 1.3.1, the value of said non-originating materials shall be included in the calculation of the regional value content of the good, in accordance with paragraph 1.4.

1.3.6 In establishing whether a good is originating, an exporter or producer may accumulate production with that of one or more producers in its territory of non-originating goods that are incorporated into the good, so that the production of the materials is considered by the exporter or producer, provided it complies with the provisions of paragraphs 1.3.1 to 1.3.5]

[[1.4] Regional value content [for those cases in which tariff classification criteria are insufficient or not appropriate.]] 

[A good shall be considered to be an originating good if the CIF value of the originating and non-originating materials from the territory of the Parties used in the production or transformation of the good does not exceed ___ percent of the FOB export value of the product [___ percent for [the countries included in Annex XXX (small economies)][smaller economies and/or countries in different levels of development]]]

[[1.4.1 Save for the provisions of paragraph 1.4.5][ For purposes of determining whether a good is an originating good,] the regional value content of a good shall be calculated [at the choice of the exporter or producer of the good]on the basis of the transaction value method {[established in paragraph 1.4.2]} or [with the net cost method] {[established in paragraph 1.4.4 ]}.]

[1.4.2 For calculating the regional value content of a good, based on the transaction value method, the following formula will be used:]

[[Transaction Value method:] 

            TV – VNM 
RVC = ----------------- x 100
                 TV

where: 

RVC             is the regional value content, expressed as a percentage;

TV                is the transaction value of the good adjusted on an FOB basis. [save
                    for the provisions of paragraph 1.4.3][ If such value does not exist or
                    can not be determined according to the principles set forth in Article 1
                    of the Customs Valuation Agreement, it shall be calculated according
                    to the principles set forth in Articles 2 through 7 of said Agreement];
                    and 

VNM             [is the value of non-originating materials adjusted on a CIF basis. If
                    such value does not exist or can not be determined according to the
                    principles set forth in Article 1 of the Customs Valuation Agreement, it
                    shall be calculated according to the principles set forth in Articles 2
                    through 7 of said Agreement]]. [value of the non-originating materials
                    used by the producer in the production of the good, determined in
                    accordance with the provisions of article 1.5]