PART TWO

TRADE IN GOODS

Chapter Three

National Treatment and Market Access for Goods

Subchapter A - National Treatment

Article 301: National Treatment

1. Each Party shall accord national treatment to the goods of

another Party in accordance with Article III of the General

Agreement on Tariffs and Trade (GATT), including its

interpretative notes, and to this end Article III of the GATT and

its interpretative notes, or any equivalent provision of a

successor agreement to which all Parties are party, are

incorporated into and made part of this Agreement.

2. The provisions of paragraph 1 regarding national treatment

shall mean, with respect to a province or state, treatment no

less favorable than the most favorable treatment accorded by such

province or state to any like, directly competitive or

substitutable goods, as the case may be, of the Party of which it

forms a part.

3. Paragraphs 1 and 2 shall not apply to the measures set out

in Annex 301.3.

Subchapter B - Tariffs

Article 302: Tariff Elimination

1. Except as otherwise provided in this Agreement, no Party may

increase any existing customs duty, or adopt any customs duty, on

an originating good.

2. Except as otherwise provided in this Agreement, each Party

shall progressively eliminate its customs duties on originating

goods in accordance with its Schedule set out in Annex 302.2 or

as otherwise indicated in Annex 300-B.

3. At the request of any Party, the Parties shall consult to

consider accelerating the elimination of customs duties set out

in their Schedules. An agreement between any two or more Parties

to accelerate the elimination of a customs duty on a good shall

supersede any prior inconsistent duty rate or staging category in

their Schedules for such good when approved by each such Party in

accordance with Article 2202(2) (Amendments).

Article 303: Restriction on Drawback and Duty Deferral Programs

1. Except as otherwise provided in this Article, no Party may

refund the amount of customs duties paid, or waive or reduce the

amount of customs duties owed, on a good imported into its

territory that is:

(a) subsequently exported to the territory of another

Party,

(b) used as a material in the production of another good

that is subsequently exported to the territory of

another Party, or

(c) substituted by an identical or similar good used as a

material in the production of another good that is

subsequently exported to the territory of another

Party,

in an amount that exceeds the lesser of the total amount of

customs duties paid or owed on the good on importation into its

territory, or the total amount of customs duties paid to another

Party on the good that has been subsequently exported to the

territory of that other Party.

2. No Party may, by reason of an exportation described in

paragraph 1, refund, waive or reduce:

(a) an antidumping or countervailing duty that is applied

pursuant to a Party's domestic law and that is not

applied inconsistently with Chapter Nineteen (Review

and Dispute Settlement in Antidumping and

Countervailing Duty Matters);

(b) a premium offered or collected on an imported good

arising out of any tendering system in respect of the

administration of quantitative import restrictions,

tariff rate quotas or tariff preference levels;

(c) a fee applied pursuant to section 22 of the U.S.

Agricultural Adjustment Act, subject to Chapter Seven

(Agriculture); or

(d) customs duties paid or owed on a good imported into its

territory and substituted by an identical or similar

good that is subsequently exported to the territory of

another Party.

3. Where a good is imported into the territory of a Party

pursuant to a duty deferral program and is subsequently exported

to the territory of another Party, or is used as a material in

the production of another good that is subsequently exported to

the territory of another Party, or is substituted by an identical

or similar good used as a material in the production of another

good that is subsequently exported to the territory of another

Party, the Party from whose territory the good is exported:

(a) shall assess the customs duties as if the exported good

had been withdrawn for domestic consumption; and

(b) may waive or reduce such customs duties to the extent

permitted under paragraph 1.

4. In determining the amount of customs duties that may be

refunded, waived or reduced pursuant to paragraph 1 on a good

imported into its territory, each Party shall require

presentation of satisfactory evidence of the amount of customs

duties paid to another Party on the good that has been

subsequently exported to the territory of that other Party.

5. Where satisfactory evidence of the customs duties paid to

the Party to which a good is subsequently exported under a duty

deferral program described in paragraph 3 is not presented within

60 days after the date of exportation, the Party from whose

territory the good was exported:

(a) shall collect customs duties as if the exported good

had been withdrawn for domestic consumption; and

(b) may refund such customs duties to the extent permitted

under paragraph 1 upon the timely presentation of such

evidence under the laws and regulations of the Party.

6. This Article shall not apply to:

(a) a good entered under bond for transportation and

exportation to the territory of another Party;

(b) a good exported to the territory of another Party in

the same condition as when imported into the territory

of the Party from which the good was exported

(processes such as testing, cleaning, repacking or

inspecting the good, or preserving it in its same

condition, shall not be considered to change a good's

condition). Where originating and non-originating

fungible goods are commingled and exported in the same

form, the origin of the good may be determined on the

basis of the inventory methods provided for in the

Uniform Regulations;

(c) a good imported into the territory of the Party that is

deemed to be exported from the territory of a Party, or

used as a material in the production of another good

that is deemed to be exported to the territory of

another Party, or is substituted by an identical or

similar good used as a material in the production of

another good that is deemed to be exported to the

territory of another Party, by reason of

(i) delivery to a duty-free shop,

(ii) delivery for ship's stores or supplies for ships

or aircraft, or

(iii) delivery for use in joint undertakings of two

more of the Parties and that will

subsequently become the property of the Party

into whose territory the good was imported;

(d) a refund of customs duties by a Party on a particular

good imported into its territory and subsequently

exported to the territory of another Party, where that

refund is granted by reason of the failure of such good

to conform to sample or specification, or by reason of

the shipment of such good without the consent of the

consignee;

(e) a dutiable originating good that is imported into the

territory of a Party and is subsequently exported to

the territory of another Party, or used as a material

in the production of another good that is subsequently

exported to the territory of another Party, or is

substituted by an identical or similar good used as a

material in the production of another good that is

subsequently exported to the territory of another

Party; or

(f) a good set out in Annex 303.6.

7. This Article shall apply as of the date set out in each

Party's section of Annex 303.7.

8. Notwithstanding any other provision of this Article and

except as specifically provided in Annex 303.8, no Party may

refund the amount of customs duties paid, or waive or reduce the

amount of customs duties owed, on a non-originating good provided

for under tariff provision 8540.xx (cathode-ray color television

picture tubes, including video monitor tubes, with a diagonal

exceeding 14") that is imported into the Party's territory and

subsequently exported to the territory of another Party, or is

used as a material in the production of another good that is

subsequently exported to the territory of another Party, or is

substituted by an identical or similar good used as a material in

the production of another good that is subsequently exported to

the territory of another Party.

Article 304: Waiver of Customs Duties

1. Except as set out in Annex 304.1, no Party may adopt any new

waiver of customs duties, or expand with respect to existing

recipients or extend to any new recipient the application of an

existing waiver of customs duties, where the waiver is

conditioned, explicitly or implicitly, upon the fulfillment of a

performance requirement.

2. Except as set out in Annex 304.2, no Party may, explicitly

or implicitly, condition on the fulfillment of a performance

requirement the continuation of any existing waiver of customs

duties.

3. If a waiver or a combination of waivers of customs duties

granted by a Party with respect to goods for commercial use by a

designated person, and thus not generally available to all

importers, can be shown by another Party to have an adverse

impact on the commercial interests of a person of that Party, or

of a person owned or controlled by a person of that Party that is

located in the territory of the Party granting the waiver, or on

the other Party's economy, the Party granting the waiver shall

either cease to grant it or make it generally available to any

importer.

4. This Article shall not apply to measures covered by Article

303 (Restriction on Drawback and Duty Deferral).

Article 305: Temporary Admission of Goods

1. Each Party shall grant duty-free temporary admission for:

(a) professional equipment necessary for carrying out the

business activity, trade or profession of a business

person who qualifies for temporary entry pursuant to

Chapter 16 (Temporary Entry for Business Persons),

(b) equipment for the press or for sound or television

broadcasting and cinematographic equipment,

(c) goods imported for sports purposes and goods intended

for display and demonstration, and

(d) commercial samples and advertising films,

imported from the territory of another Party, regardless of their

origin and regardless of whether like, directly competitive or

substitutable goods are available in the territory of the Party.

2. Except as otherwise provided in this Agreement, no Party may

condition the duty-free temporary admission of a good referred to

in subparagraph 1(a), (b), or (c), other than to require that

such good:

(a) be imported by a national or resident of another Party

who seeks temporary entry;

(b) be used solely by or under the personal supervision of

such person in the exercise of the business activity,

trade or profession of that person;

(c) not be sold or leased while in its territory;

(d) be accompanied by a bond in an amount no greater than

110 percent of the charges that would otherwise be owed

upon entry or final importation, or by another form of

security, releasable upon exportation of the good,

except that a bond for customs duties shall not be

required for an originating good;

(e) be capable of identification when exported;

(f) be exported upon the departure of that person or within

such other period of time as is reasonably related to

the purpose of the temporary admission; and

(g) be imported in no greater quantity than is reasonable

for its intended use.

3. Except as otherwise provided in this Agreement, no Party may

condition the duty-free temporary admission of a good referred to

in subparagraph 1(d), other than to require that such good:

(a) be imported solely for the solicitation of orders for

goods, or services provided from the territory, of

another Party or non-Party;

(b) not be sold, leased, or put to any use other than

exhibition or demonstration while in its territory;

(c) be capable of identification when exported;

(d) be exported within such period as is reasonably related

to the purpose of the temporary admission; and

(e) be imported in no greater quantity than is reasonable

for its intended use.

4. A Party may impose the customs duty and any other charge on

a good temporarily admitted duty-free under paragraph 1 that

would be owed upon entry or final importation of such good if any

condition that the Party imposes under paragraph 2 or 3 has not

been fulfilled.

5. Subject to Chapters Eleven (Investment) and Twelve (Cross-

Border Trade in Services):

(a) each Party shall allow a locomotive, truck, truck

tractor, or tractor trailer unit, railway car, other

railroad equipment, trailer ("vehicle") or container,

used in international traffic, that enters its

territory from the territory of another Party to exit

its territory on any route that is reasonably related

to the economic and prompt departure of such vehicle or

container;

(b) no Party may require any bond or impose any penalty or

charge solely by reason of any difference between the

port of entry and the port of departure of a vehicle or

container;

(c) no Party may condition the release of any obligation,

including any bond, that it imposes in respect of the

entry of a vehicle or container into its territory on

its exit through any particular port of departure; and

(d) no Party may require that the vehicle or carrier

bringing a container from the territory of another

Party into its territory be the same vehicle or carrier

that takes such container to the territory of another

Party.

Article 306: Duty-Free Entry of Certain Commercial Samples and

Printed Advertising Materials

Each Party shall grant duty-free entry to commercial samples

of negligible value, and to printed advertising materials,

imported from the territory of another Party, regardless of their

origin, but may require that:

(a) such samples be imported solely for the solicitation of

orders for goods of, or services provided from, the

territory of another Party or non-Party; or

(b) such advertising materials be imported in packets that

each contain no more than one copy of each such

material and that neither such materials nor packets

form part of a larger consignment.

Article 307: Goods Re-entered after Repair or Alteration

1. Except as set out in Annex 307.1, no Party may apply a

customs duty on a good, regardless of its origin, that re-enters

its territory after that good has been exported from its

territory to the territory of another Party for repair or

alteration, regardless of whether such repair or alteration could

be performed in its territory.

2. Notwithstanding Article 303 (Duty Drawback), no Party shall

apply a customs duty to a good, regardless of its origin,

imported temporarily from the territory of another Party for

repair or alteration.

3. Each Party shall act in accordance with Annex 307.3

respecting the repair and rebuilding of vessels.

Article 308: Most-Favored-Nation Rates of Duty on Certain Goods

1. Each Party shall act in accordance with Annex 308.1

respecting certain automatic data processing goods and their

parts.

2. Each Party shall act in accordance with Annex 308.2

respecting certain color television tubes.

3. Each Party shall accord most-favored-nation duty-free

treatment to Local Area Network (LAN) apparatus imported into its

territory as set out in each Party's section of Annex 308.3.

Subchapter C - Non-Tariff Measures

Article 309: Import and Export Restrictions

1. Except as otherwise provided in this Agreement, no Party

shall adopt or maintain any prohibition or restriction on the

importation of any good of another Party or on the exportation or

sale for export of any good destined for the territory of another

Party, except in accordance with Article XI of the GATT,

including its interpretative notes, and to this end Article XI of

the GATT and its interpretative notes, or any equivalent

provision of a successor agreement to which all Parties are

party, are incorporated into and made part of this Agreement.

2. The Parties understand that the GATT rights and obligations

incorporated by paragraph 1 prohibit, in any circumstances in

which any other form of restriction is prohibited, export price

requirements and, except as permitted in enforcement of

countervailing and antidumping orders and undertakings, import

price requirements.

3. In the event that a Party adopts or maintains a prohibition

or restriction on the importation from or exportation to a non-

Party of a good, nothing in this Agreement shall be construed to

prevent the Party from:

(a) limiting or prohibiting the importation from the

territory of another Party of such good of that non-

Party; or

(b) requiring as a condition of export of such good of the

Party to the territory of another Party, that the good

not be re-exported to that non-Party, directly or

indirectly, without having been increased in value and

improved in condition [subject to review].

4. In the event that a Party adopts or maintains a prohibition

or restriction on the importation of a good from a non-Party, the

Parties, upon request of any Party, shall consult with a view to

avoiding undue interference with or distortion of pricing,

marketing and distribution arrangements in another Party.

5. Paragraphs 1 through 4 shall:

(a) not apply to the measures set out in Annex 301.3;

(b) apply to automotive goods as modified in Annex 300-A

(Trade and Investment in the Automotive Sector); and

(c) apply to trade in textile and apparel goods, as

modified in Annex 300-B (Textile and Apparel Goods).

6. For purposes of this Article, goods of another Party shall

mean [under review].

Article 310: Non-Discriminatory Administration of Restrictions

(GATT Article XIII)

[need for this Article is under review]

Article 311: Customs User Fees

1. No Party may adopt any customs user fee of the type referred

to in Annex 311 for originating goods.

2. Each Party may maintain existing such fees only in

accordance with Annex 311.2.

Article 312: Country of Origin Marking

Each Party shall comply with Annex 312 with respect to its

measures relating to country of origin marking.

Article 313: Blending Requirements

No Party may adopt or maintain any measure requiring that

distilled spirits imported from the territory of another Party

for bottling be blended with any distilled spirits of the Party.

Article 314: Distinctive Products

Each Party shall comply with Annex 314 respecting standards

and labelling of the distinctive products set out therein.

Article 315: Export Taxes

Except as set out in Annex 315 or Article 604 (Energy -

Export Taxes), no Party may adopt or maintain any duty, tax, or

other charge on the export of any good to the territory of

another Party, unless such duty, tax, or charge is adopted or

maintained on:

(a) exports of any such good to the territory of all other

Parties; and

(b) any such good when destined for domestic consumption.

Article 316: Other Export Measures

1. Except as set out in Annex 316, a Party may adopt or

maintain a restriction otherwise justified under the provisions

of Articles XI:2(a) or XX(g), (i) or (j) of the GATT with respect

to the export of a good of the Party to the territory of another

Party, only if:

(a) the restriction does not reduce the proportion of the

total export shipments of the specific good made

available to that other Party relative to the total

supply of that good of the Party maintaining the

restriction as compared to the proportion prevailing in

the most recent 36-month period for which data are

available prior to the imposition of the measure, or in

such other representative period on which the Parties

may agree;

(b) the Party does not adopt any measure, such as a

license, fee, tax or minimum price requirement, that

has the effect of raising the price for exports of a

good to that other Party above the price charged for

such good when consumed domestically, except that a

measure taken pursuant to subparagraph (a) that only

restricts the volume of exports shall not be considered

to have such effect; and

(c) the restriction does not require the disruption of

normal channels of supply to that other Party or normal

proportions among specific goods or categories of goods

supplied to that other Party.

2. The Parties shall cooperate in the maintenance and

development of effective controls on the export of each other's

goods to a non-Party in implementing this Article.

Subchapter D - Consultations

Article 317: 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 at the request of any Party or the

Commission to consider any matter arising under this Chapter.

Article 318: Third-Country Dumping

1. The Parties affirm the importance of cooperation with

respect to actions under Article 12 of the Agreement on

Implementation of Article VI of the General Agreement on Tariffs

and Trade.

2. Where a Party presents an application to another Party

requesting anti-dumping action on its behalf, those Parties shall

consult within 30 days respecting the factual basis of the

request, and the requested Party shall give full consideration to

the request.

Subchapter E - Definitions

Article 319: Definitions

For purposes of this Chapter:

advertising films means recorded visual media, with or without

sound-tracks, consisting essentially of images showing the nature

or operation of goods or services offered for sale or lease by a

person established or resident in the territory of any Party,

provided that the films are of a kind suitable for exhibition to

prospective customers but not for broadcast to the general

public, and provided that they are imported in packets that each

contain no more than one copy of each film and that do not form

part of a larger consignment;

commercial samples of negligible value means commercial samples

having a value (individually or in the aggregate as shipped) of

not more than one U.S. dollar, or the equivalent amount in the

currency of another Party, or so marked, torn, perforated or

otherwise treated that they are unsuitable for sale or for use

except as commercial samples;

customs duty includes any customs or import duty and a charge of

any kind imposed in connection with the importation of a good,

including any form of surtax or surcharge in connection with such

importation, but does not include any:

(a) charge equivalent to an internal tax imposed

consistently with Article III:2 of the GATT, or any

equivalent provision of a successor agreement to which

all Parties are party, in respect of like, directly

competitive or substitutable goods of the Party, or in

respect of goods from which the imported good has been

manufactured or produced in whole or in part;

(b) antidumping or countervailing duty that is applied

pursuant to a Party's domestic law and not applied

inconsistently with Chapter Nineteen (Review and

Dispute Settlement in Antidumping and Countervailing

Duty Matters);

(c) fee or other charge in connection with importation

commensurate with the cost of services rendered;

(d) premium offered or collected on an imported good

arising out of any tendering system in respect of the

administration of quantitative import restrictions or

tariff rate quotas or tariff preference levels; and

(e) fee applied pursuant to section 22 of the U.S.

Agricultural Adjustment Act, subject to Chapter Seven

(Agriculture);

distilled spirits include distilled spirits and distilled spirit-

containing beverages;

duty deferral program includes measures such as those governing

foreign-trade zones, temporary importations under bond, bonded

warehouses, "maquiladoras", and inward processing programs;

duty-free means free of customs duty;

goods imported for sports purposes means sports requisites for

use in sports contests, demonstrations or training in the

territory of the Party into whose territory such goods are

imported;

goods intended for display or demonstration includes their

component parts, ancillary apparatus and accessories;

item means a tariff classification item at the eight- or ten-

digit level set out in a Party's tariff schedule;

material means "material" as defined in Chapter Four (Rules of

Origin);

most-favored-nation rate of duty does not include any other

concessionary rate of duty;

performance requirement means a requirement that:

(a) a given level or percentage of goods or services be

exported;

(b) domestic goods or services of the Party granting a

waiver of customs duties be substituted for imported

goods or services;

(c) a person benefitting from a waiver of customs duties

purchase other goods or services in the territory of

the Party granting the waiver or accord a preference to

domestically produced goods or services; or

(d) a person benefitting from a waiver of customs duties

produce goods or provide services, in the territory of

the Party granting the waiver, with a given level or

percentage of domestic content; or

(e) relates in any way the volume or value of imports to

the volume or value of exports or to the amount of

foreign exchange inflows;

printed advertising materials means those goods classified in

Chapter 49 of the Harmonized System, including brochures,

pamphlets, leaflets, trade catalogues, yearbooks published by

trade associations, tourist promotional materials and posters,

that are used to promote, publicize or advertise a good or

service, are essentially intended to advertise a good or service,

and are supplied free of charge;

repair or alteration does not include an operation or process

that either destroys the essential characteristics of a good or

creates a new or commercially different good;

satisfactory evidence means:

(a) a receipt, or a copy of a receipt, evidencing payment

of customs duties on a particular entry;

(b) a copy of the entry document with evidence that it was

received by a customs administration;

(c) a copy of a final customs duty determination by a

customs administration respecting the relevant entry;

or

(d) any other evidence of payment of customs duties

acceptable under the Uniform Regulations developed in

accordance with Chapter Five (Customs Procedures);

total export shipments means all shipments from total supply to

users located in the territory of another Party;

total supply means all shipments, whether intended for domestic

or foreign users, from:

(a) domestic production;

(b) domestic inventory; and

(c) other imports as appropriate; and

waiver of customs duties means a measure that waives otherwise

applicable customs duties on any good imported from any country,

including the territory of another Party.

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ANNEX 301.3

Exceptions to Articles 301 and 309

[subject to review]

Section A - Canadian Measures

1. Articles 301 and 309 shall not apply to:

(a) controls by Canada on the export of logs of all

species;

(b) controls by Canada on the export of unprocessed fish

pursuant to the following existing statutes:

(i) New Brunswick Fish Processing Act, R.S.N.B. c. F-

18.01 (1982), as amended, and Fisheries

Development Act, S.N.B. c. F-15.1 (1977), as

amended;

(ii) Newfoundland Fish Inspection Act, R.S.N. 1970, c.

132, as amended;

(iii) Nova Scotia Fisheries Act, S.N.S. 1977, c. 9,

as amended;

(iv) Prince Edward Island Fish Inspection Act,

R.S.P.E.I. 1988, c. F-13, as amended; and

(v) Quebec Marine Products Processing Act, No. 38,

S.Q. 1987, c. 51, as amended;

(c) measures by Canada respecting the importation of

certain items on the Prohibited Goods List in Schedule

VII of the Customs Tariff, R.S.C. 1985, c. 41 (3rd

supp.), as amended, as of July 1, 1991;

(d) except as provided in Chapter Seven (Agriculture),

measures by Canada respecting the importation of grains

taken with respect to the United States, (Canadian

Wheat Board Act, R.S.C. 1985, c. C-24, as amended);

(e) measures by Canada respecting the exportation of liquor

for delivery into any country into which the

importation of liquor is prohibited by law under the

existing provisions of Export Act, R.S.C. 1985, c. E-

18, as amended;

(f) measures by Canada respecting the importation and

distribution of imported liquor by designated

government agencies under the existing provisions of

Importation of Intoxicating Liquors Act, R.S.C. 1985,

c. I-3, as amended, to the extent that it creates an

import monopoly consistent with Articles II:4 and XVII

of the GATT and Article 31 of the Havana Charter;

(g) except as provided in Chapter Seven (Agriculture),

measures by Canada respecting preferential freight

rates for grain originating in certain Canadian

provinces under the existing provisions of Western

Grain Transportation Act, R.S.C. 1985, c. W-8, as

amended;