Objectives of new zealand china free trade agreement

China - New Zealand Free Trade Agreement

Preamble

The Governments of New Zealand ("New Zealand") and the People's Republic of China ("China") hereinafter referred to collectively as "the Parties":

Inspired by their longstanding friendship and growing bilateral economic and trade relationship since the establishment of diplomatic relations in 1972;

Recalling the Trade and Economic Cooperation Framework between New Zealand and the People's Republic of China adopted on 28 May 2004 with the objective of strengthening the comprehensive and stable economic and trade relationship between the Parties;

Recognising that the strengthening of their economic partnership through a Free Trade Agreement, which removes barriers on the trade of goods and services and investment flows, will produce mutual benefits for New Zealand and China;

Desiring to avoid distortions in their reciprocal trade and to create an expanded market for the goods and services in their territories through establishing clear rules governing their trade which will ensure a predictable commercial framework for business operations;

Mindful that fostering innovation and the promotion and protection of intellectual property rights will encourage further trade, investment and cooperation between the Parties;

Building on their rights, obligations and undertakings under the Marrakesh Agreement Establishing the World Trade Organization and other multilateral, regional and bilateral agreements and arrangements;

Mindful of their commitment to the Asia-Pacific Economic Cooperation ("APEC") goals and principles, and in particular the efforts of all APEC economies to meet the APEC Bogor goals of free and open trade and the actions subscribed in the Osaka Action Agenda;

Upholding the rights of their governments to regulate in order to meet national policy objectives, and preserving their flexibility to safeguard the public welfare;

Mindful that economic development, social development and environmental protection are interdependent and mutually reinforcing components of sustainable development and that closer economic partnership can play an important role in promoting sustainable development;

Desiring to strengthen their economic partnership to bring economic and social benefits, to create new opportunities for employment and to improve the living standards of their peoples;

Have agreed as follows:

Body

Chapter 1. Initial Provisions

Article 1. Establishment of the Free Trade Area

The Parties to this Agreement, consistent with Article XXIV of GATT 1994 and Article V of GATS, hereby establish a free trade area.

Article 2. Objectives

1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, are to:

(a) encourage expansion and diversification of trade between the Parties;

(b) eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the Parties;

(c) promote conditions of fair competition in the free trade area;

(d) substantially increase investment opportunities between the Parties;

(e) provide for the protection and enforcement of intellectual property rights in each Party's territory in accordance with the provisions of the TRIPS Agreement and enhance and strengthen cooperation on intellectual property rights; and

(f) create an effective mechanism to prevent and resolve trade disputes.

2. The Parties seek to support the wider liberalisation process in APEC consistent with its goals of free and open trade and investment.

Article 3. Relation to other Agreements

1. Nothing in this Agreement shall derogate from the existing rights and obligations of a Party under the WTO Agreement or any other multilateral or bilateral agreement to which it is a party.

2. In the event of any inconsistency between this Agreement and any other agreement to which the Parties are party, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution in accordance with customary rules of interpretation of public international law.

Chapter 2. General Definitions

Article 4. General Definitions

For the purposes of this Agreement, unless otherwise specified:

Agreement means the Free Trade Agreement between the Government of New Zealand and the Government of the People's Republic of China;

APEC means Asia-Pacific Economic Cooperation;

customs duty includes any duty or charge of any kind imposed in connection with the importation of a good, but does not include:

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

(b) any anti-dumping or countervailing duty applied consistently with the provisions of Article VI of GATT 1994, the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, or the WTO Agreement on Subsidies and Countervailing Measures; and

(c) any fee or other charge in connection with importation commensurate with the cost of services rendered;

days means calendar days; existing means in effect on the date of entry into force of this Agreement;

FTA Joint Commission means the New Zealand – China Free Trade Area Joint Commission established under Article 179;

GATS means the General Agreement on Trade in Services, which is part of the WTO Agreement;

GATT 1994 means the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;

goods means domestic products as these are understood in GATT 1994 and includes originating goods;

goods and products shall be understood to have the same meaning, unless the context otherwise requires;

measure includes any law, regulation, procedure, requirement or practice; originating means qualifying under the rules of origin set out in Chapter 4 (Rules of Origin and Operational Procedures);

person means a natural person or a juridical person;

TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, which is part of the WTO Agreement;

WCO means the World Customs Organization;

WTO means the World Trade Organization;

WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.

Chapter 3. Trade In Goods

Article 5. Scope

Except as otherwise provided, this Chapter shall apply to trade in all goods between the Parties.

Article 6. National Treatment

Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994. To this end, the provisions of Article III of GATT 1994 and its interpretative notes are incorporated into and shall form part of this Agreement, mutatis mutandis.

Article 7. Elimination of Customs Duties

1. Except as otherwise provided in this Agreement, neither Party may increase any existing customs duty, or adopt any new customs duty, on an originating good of the other Party.

2. Except as otherwise provided in this Agreement, and subject to a Party's Tariff Schedule as set out in Annex 1, as at the date of entry into force of this Agreement each Party shall eliminate its customs duties on originating goods of the other Party.

Article 8. Accelerated Tariff Elimination

1. At the request of either Party, the Parties shall consult to consider accelerating the elimination of customs duties on originating goods as set out in their Tariff Schedules in Annex 1.

2. An agreement by the Parties to accelerate the elimination of customs duties on originating goods shall supersede any duty rate determined pursuant to their Schedules for such good and shall enter into force following approval by each Party in accordance with Article 180.2(b)(i) and their respective applicable legal procedures.

3. A Party may at any time accelerate unilaterally the elimination of customs duties on originating goods of the other Party set out in its Tariff Schedule. A Party considering doing so shall inform the other Party as early as practicable before the new rate of customs duty takes effect.

Article 9. Administrative Fees and Formalities

1. Each Party shall ensure, in accordance with Article VIII.1 of GATT 1994, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charge applied consistently with Article III.2 of GATT 1994, and anti-dumping and countervailing duties) imposed on or in connection with import or export are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation on imports or exports for fiscal purposes.

2. Each Party shall make available through the Internet or a comparable computer-based telecommunications network a current list of the fees and charges it imposes in connection with importation or exportation.

Article 10. Agricultural Export Subsidies

1. For the purposes of this Article, agricultural goods means those products listed in Annex 1 of the WTO Agreement on Agriculture and export subsidies shall have the meaning assigned to that term in Article 1(e) of the WTO Agreement on Agriculture, including any amendment of that article.

2. The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods and shall work together toward an agreement in the WTO to eliminate those subsidies and prevent their reintroduction in any form.

3. Neither Party shall introduce or maintain any export subsidy on any agricultural good destined for the territory of the other Party.

Article 11. Non-tariff Measures

1. A Party shall not adopt or maintain any non-tariff measures on the importation of any good of the other Party or on the exportation of any good destined for the territory of the other Party except in accordance with its WTO rights and obligations or in accordance with other provisions of this Agreement.

2. Each Party shall ensure its non-tariff measures permitted in paragraph 1 are not prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to trade between the Parties.

Article 12. Consumer Protection

1. The Parties affirm their concern to provide protection in their territories from deceptive practices or the use of false or misleading descriptions in trade.

2. Each Party shall provide the legal means for interested parties to prevent the sale of products within the Party's territory which, under the laws of that Party, are labelled in a manner which is false, deceptive or misleading or is likely to create an erroneous impression about the character, composition, quality, or origin, including the country of origin, of the product.

Article 13. Special Agricultural Safeguard Measures

1. China may apply a special safeguard measure to agricultural goods specified in Table One of Annex 2, in accordance with this Article.

2. If during any given calendar year the volume of imports from New Zealand of an originating good listed in Table One of Annex 2 exceeds the trigger level for that product in that calendar year as set out in Table Two of Annex 2, China may apply a special safeguard measure to that product in the form of an additional customs duty.

3. The sum of the additional customs duty applied under paragraph 2 and any other customs duties applied to the product in question shall not exceed the lesser of the most-favoured-nation ("MFN") applied rate of customs duty in effect on the date on which the special safeguard measure is applied or the base rate.

4. China may maintain a special safeguard measure applied under paragraph 2 only until the end of the calendar year in which China applies the measure.

5. Supplies of the product in question which were en route to China on the basis of a contract settled before the additional customs duty is applied under paragraph 2 shall be exempted from such additional customs duty, provided that they may be counted in the volume of imports of the product in question during the following calendar year for the purposes of a determination under paragraph 2 in that calendar year.

6. Any special safeguard measure shall be applied in a transparent manner. China shall ensure that the volume of imports is published regularly in a manner which is readily accessible to New Zealand, and shall give notice in writing, including relevant data, to New Zealand as far in advance as may be practicable and in any event within 10 days of the implementation of such action.

7. China may not apply or maintain, with respect to the same product, a special safeguard measure and at the same time apply or maintain a measure under Article XIX of GATT 1994 and the WTO Agreement on Safeguards or under Section 2 of Chapter 6 (Trade Remedies) of this Agreement.

Article 14. Mid-term Review Mechanism

Following the application of the tariff reduction specified in Annex 1 of this Agreement for 2013 and before the application of tariff reduction specified therein for 2014, the Committee on Trade in Goods established under Article 16 shall conduct a review in accordance with Annex 3.

Article 15. Contact Points

Each Party shall designate one or more contact points to facilitate communications between the Parties on any matter covered by this Chapter, and shall provide details of such contact points to the other Party. The Parties shall notify each other promptly of any amendments to the details of their contact points.

Article 16. Committee on Trade In Goods

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

2. The Committee shall meet on the request of either Party to consider any matter arising under this Chapter, Chapter 4 (Rules of Origin and Operational Procedures), Chapter 5 (Customs Procedures and Cooperation) or Chapter 6 (Trade Remedies).

3. The Committee's functions shall include:

(a) promoting trade in goods between the Parties, including through consultations on accelerating tariff elimination under this Agreement and other issues as appropriate; and

(b) addressing barriers to trade in goods between the Parties, especially those related to the application of non-tariff measures.

Chapter 4. Rules of Origin and Operational Procedures

Section 1. Rules of Origin

Article 17. Definitions

For the purposes of this Chapter:

CIF means the value of the good imported inclusive of the cost of insurance and freight up to the port or place of entry in the country of importation;

Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;

FOB means the value of the good free on board inclusive of the cost of transport to the port or site of final shipment abroad;

generally accepted accounting principles means the recognized accounting standards of a Party with respect to the recording of revenues, expenses, costs, assets and liabilities, the disclosure of information and the preparation of financial statements. Those standards may encompass broad guidelines of general application as well as detailed standards, practices and procedures;

Harmonized System means the Harmonized Commodity Description and Coding System of the World Customs Organization;

materials means any matter or substance used in the production or transformation of another good, including a part or ingredient;

originating materials or originating goods means materials or goods which qualify as originating in accordance with the provisions of this Section;

packing materials and containers for shipment means goods used to protect a good during its transportation, other than containers or packaging materials used for retail sale;

producer means a person who engages in the production of a good;

production means methods of obtaining goods, including growing, raising, mining, harvesting, fishing, farming, trapping, hunting, capturing, gathering, collecting, breeding, extracting, manufacturing, processing or assembling a good.

Article 18. Preferential Tariff Treatment

Preferential tariff treatment under this Agreement shall be applied to goods that satisfy the requirements of this Chapter and which are consigned directly between the Parties.

Article 19. Originating Goods

Unless otherwise indicated in this Section, a good shall be considered as originating in a Party when:

(a) the good is wholly obtained or produced in the territory of a Party as set out and defined in Article 20, including where required to be so under Annex 5;

(b) the good is produced entirely in the territory of one or both Parties, exclusively from materials whose origin conforms to the provisions of this Section; or

(c) the good is produced in the territory of one or both Parties, using non-originating materials that conform to a change in tariff classification, a regional value content, a process requirement or other requirements specified in Annex 5, and the good meets the other applicable provisions of this Section.

Article 20. Goods Wholly Obtained

Within the meaning of Article 19(a), the following goods shall be considered as wholly obtained or produced in the territory of a Party:

(a) plant products harvested, picked or gathered in the territory of a Party;

(b) live animals born and raised in the territory of a Party;

(c) goods obtained from live animals raised in the territory of a Party;

(d) goods obtained from hunting, trapping, fishing, farming, gathering or capturing conducted in the territory of a Party;

(e) minerals and other naturally occurring substances, not included in paragraphs (a) to (d) above, extracted or taken from its soil, waters, seabed or beneath its seabed;

(f) goods extracted or taken by a Party, or a person of a Party, from the waters, seabed or subsoil beneath the seabed outside the territorial waters of that Party, provided that the Party has the right to exploit such waters, seabed or subsoil beneath the seabed under that Party's applicable domestic law in accordance with relevant international agreements to which that Party is a party;

(g) goods (fish, shellfish, plant and other marine life) taken within the territorial waters or the Exclusive Economic Zone of a Party seaward of the territorial sea under that Party's applicable laws in accordance with relevant international agreements to which that Party is a party, or taken from the high seas, by a vessel registered or recorded with a Party and flying or entitled to fly the flag of that Party;

(h) goods processed and/or made on board factory ships registered or recorded with a Party and flying or entitled to fly the flag of that Party, exclusively from goods referred to in paragraph (g) above;

(i) scrap and waste derived from processing operations in the territory of a Party and fit only for the recovery of raw materials, or used goods collected in the territory of a Party provided that such goods are fit only for the recovery of raw materials;

(j) goods obtained or produced in the territory of a Party solely from goods referred to in paragraphs (a) to (i) above.

Article 21. Change In Tariff Classification

A change in tariff classification under Annex 5 requires that the non-originating materials used in the production of the goods undergo a change of tariff classification as a result of processes performed in the territory of one or both Parties.

Article 22. Regional Value Content

1. Where Annex 5 refers to a Regional Value Content ("RVC"), the RVC shall be calculated as follows:

RVC = FOB – VNM / FOB x 100

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

FOB is the FOB value of the goods; and

VNM is the value in CIF terms of non-originating materials (including materials of undetermined origin).

2. The value of the non-originating materials shall be:

(a) the CIF value at the time of importation of the material; or

(b) the earliest ascertained price paid or payable for the non-originating materials in the territory of the Party where the working or processing takes place. When the producer of a good acquires non-originating materials within that Party the value of such materials shall not include freight, insurance, packing costs, and any other costs incurred in transporting the material from the supplier's warehouse to the producer's location.

3. Both the FOB and CIF values referred to above shall be determined pursuant to the Customs Valuation Agreement.

Article 23. Accumulation

Where originating goods or materials of a Party are incorporated into a good in the other Party's territory, the goods or materials so incorporated shall be regarded to be originating in the latter's territory.

Article 24. Minimal Operations or Processes

1. For purposes of this Article, "simple" generally describes activities which need neither special skills nor special machines, apparatus or equipment specially produced or installed for carrying out the activity.

2. Operations or processes which contribute minimally to the essential characteristics of the goods, either by themselves or in combination, are considered to be minimal operations or processes and do not confer origin. These include:

(a) operations to ensure the preservation of goods in good condition during transport and storage, such as drying, freezing, ventilation, chilling and like operations;

(b) simple operations consisting of sifting, sorting, grading, screening, classifying, washing, cutting, slitting, bending, coiling, or uncoiling;

(c) breaking-up and assembly of consignments;

(d) packing, unpacking or repacking operations;