Kiri

EN EN

EUROPEAN COMMISSION

Brussels, 3.9.2025

COM(2025) 338 final

2025/0183 (NLE)

Proposal for a

COUNCIL DECISION

on the signing, on behalf of the European Union, of the Interim Agreement on Trade

between the European Union, of the one part, and the Common Market of the South, the

Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and

the Oriental Republic of Uruguay, of the other part

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EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

The attached proposal constitutes the legal instrument for authorising the signature of the

Interim Agreement on Trade between the European Union, and the Common Market of the

South, the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay

and the Oriental Republic of Uruguay (hereinafter referred to as 'the ITA').

Mercosur1 is the world’s fifth largest economy outside of the EU in terms of GDP

(EUR 2.9 trillion in 2023), and the EU's eleventh largest trading partner. It is an important

market, with a population of over 270 million inhabitants and large untapped potential for

trade and investment. The EU is the first major economy to reach a comprehensive trade

agreement with Mercosur, which will give EU exporters, service providers and investors an

important first mover advantage in this region. The ITA will strengthen ties between like-

minded, reliable partners, and reflects both sides’ commitment to open, sustainable and rules-

based trade, countering protectionism. It will create an ambitious and comprehensive

framework for the trade relationship that will contribute to economic security and help facing

current global challenges.

On 13 September 1999, the Council of the European Union authorised the European

Commission to open negotiations with Mercosur and adopted negotiating directives. The

negotiations were conducted in consultation with the Council Working Party on Latin

America and the Caribbean. The Trade Policy Committee was consulted on the trade-related

parts of the negotiations. The negotiation process took more than 25 years. The negotiation of

the trade related parts was initially politically concluded in June 2019 and of the political and

cooperation part in June 2020. During 2023 and 2024 the EU and Mercosur negotiated

additional elements, in particular the Annex to the Trade and Sustainable Development

Chapter, including reinforced commitments on deforestation as well as provisions granting

Mercosur more flexibility on some industrial policy related commitments (e.g. public

procurement). The EU and Mercosur and its members concluded the negotiations of the

Partnership Agreement between the European Union and its Member States, and the Common

Market of the South, the Argentine Republic, the Federative Republic of Brazil, the Republic

of Paraguay and the Oriental Republic of Uruguay (hereinafter referred to as the “EMPA”) on

6 December 2024 in Montevideo, Uruguay.

The negotiated texts relating to trade and investment liberalisation were published by the

Commission in August 2019 and in December 2024.

The negotiated outcome consists of two legal instruments:

1. the EMPA that will include a) the Political and Cooperation pillar and b) the Trade

pillar; and

2. the ITA covering trade and investment liberalisation.

The ITA is intended to be signed at the same time as the EMPA. Pursuant to Article 23.2(1),

the ITA will enter into force on the first day of the month following the date on which the

1 The Common Market of the South (MERCOSUR for its Spanish initials) is a regional integration

process, initially established by Argentina, Brazil, Paraguay and Uruguay, and subsequently joined by

Venezuela (currently suspended) and Bolivia (in accession process). Only Argentina, Brazil, Paraguay

and Uruguay are parties to the EU-Mercosur Partnership Agreement.

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Parties have notified each other in writing of the completion of their respective internal

procedures required for this purpose. The ITA will expire and be replaced by the EMPA upon

the latter’s entry into force, following its ratification.

• Consistency with existing policy provisions in the policy area

The ITA provides a comprehensive legal framework for EU-Mercosur trade and investment

relations. It will remain in force until the entry into force of the EU-Mercosur Partnership

Agreement.

The ITA will replace Title II of the Interregional Framework Cooperation Agreement between

the European Community and its Member States, and the Southern Common Market and its

Party States, signed in Madrid on 15 December 1995.

The ITA is fully in line with the overall EU vision for its partnership with Latin America and

the Caribbean, as outlined in the Joint Communication to the European Parliament and the

Council on a New Agenda for Relations between the EU and Latin America and the

Caribbean, adopted on 7 June 2023.

In addition, the ITA is in line with the “Trade Policy Review - An Open, Sustainable and

Assertive Trade Policy” of February 2021, which anchors trade and investment policy to

European and universal standards and values, alongside core economic interests, putting a

greater emphasis on sustainable development, human rights, tax evasion, consumer

protection, and responsible and fair trade.

• Consistency with other Union policies

The EU-Mercosur ITA is fully consistent with European Union policies and will not require

the EU to amend its rules, regulations or standards in any regulated area, e.g. technical rules

and product standards, sanitary or phytosanitary rules, regulations on food and safety, health

and safety standards, rules on GMOs, environmental protection or consumer protection.

The EU-Mercosur iTA also includes a chapter on Trade and Sustainable Development, which

links the Agreement to overall objectives of sustainable development and specific objectives

in the areas of labour, environment, and climate change.

Furthermore, the EU-Mercosur ITA safeguards public services and ensures that governments’

right to regulate in the public interest is fully preserved and constitutes a basic underlying

principle thereof.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The Commission presents the result of negotiations with Mercosur in the form of two self-

standing but linked agreements: the ITA and the EMPA.

In accordance with the Treaties and case law of the European Court of Justice, in particular its

Opinion 2/15 on the EU-Singapore Free Trade Agreement of 16 May 2017, all areas covered

by the ITA fall within the exclusive external competence of the European Union and, more

particularly, within the scope of Articles 91, 100(2) and 207 TFEU.

The ITA is to be signed by the European Union pursuant to a decision of the Council based on

Article 218(5) TFEU and concluded by the European Union pursuant to a decision of the

Council based on Article 218(6) TFEU, following the European Parliament’s consent.

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• Subsidiarity (for non-exclusive competence)

The EU-Mercosur ITA, as presented to the Council, does not cover any matters that fall

outside the scope of the EU’s exclusive competence.

• Proportionality

Trade agreements are the appropriate means to govern market access and the related areas of

comprehensive economic relations with a third country outside the EU. No alternative means

exist to render such commitments and liberalisation efforts legally binding.

This initiative pursues directly the objectives of the Union's external action and contributes to

the political priority of 'EU as a stronger global actor’. It is in line with the EU Global

Strategy’s orientations to engage with other countries and to revamp its external partnerships

in a responsible way, in order to attain the EU's external priorities. It contributes to the EU’s

trade and development objectives. The proposal is in line with the EU Green Deal.

Negotiations for the ITA with Mercosur were carried out in accordance with the negotiating

directives set out by the Council. The outcome of negotiations does not go beyond what is

necessary to achieve the policy objectives set out in the negotiating directives.

• Choice of the instrument

This proposal for a Council decision is submitted in accordance with paragraph 5 of Article

218 TFEU, which envisages the adoption by the Council of a decision authorising the signing

of international agreements. There exists no other legal instrument 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

• Stakeholder consultations

During the negotiations with Mercosur, a Sustainability Impact Assessment (SIA) was

commissioned from an external contractor to study the potential economic, social and

environmental impact of the trade part of the agreement. The SIA fed into the negotiations

and informed the negotiators and Commission services. The final report was published on 29

March 2021.

In the framework of the SIA process, the contractor consulted widely internal and external

experts, organised public consultations and workshops, conducted online questionnaires and

held bilateral meetings and interviews with civil society both in Europe and in Mercosur.

Consultations in the framework of the SIA provided a valuable and effective platform for the

involvement of key stakeholders and civil society, which participated in significant numbers.

All along the negotiation process, including prior to and after each negotiation round, the

Commission informed and consulted EU Member States orally and in writing on the different

aspects of the negotiations via the Council’s Trade Policy Committee. The European

Parliament was also regularly informed and consulted via its Committee on International

Trade (INTA), and the EU-Mercosur Monitoring Group. Draft proposals as well as the texts

resulting from the negotiations were sent throughout the negotiation process to both

institutions. The Commission also organised number of meetings and contacts with civil

society (Civil Society Dialogues) to discuss progress and negotiating positions throughout the

negotiations.

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• Collection and use of expertise

The “Sustainability Impact Assessment in Support of the Association Agreement Negotiations

between the European Union and Mercosur” was carried out by the external contractor

London School of Economics Enterprise. The SIA provides an examination of the potential

economic, social, human rights and environmental impact of the trade agreement.

The “Economic Assessment of Negotiated Outcome” (the EANO) was carried out by

Commission services following the conclusion of the negotiations and reflecting their

outcome.

• Impact assessment

The SIA consists of two complementary components. First, a robust analysis of the economic,

social, human rights and environmental impacts, that the trade agreement under negotiation

could have in the EU, in Mercosur countries and in other relevant countries. Second, a broad

consultation process involving stakeholders both in the EU and in Mercosur countries,

providing opportunities for information gathering and sharing, consultation and dissemination

of the results. The SIA provides valuable input to the process of designing possible flanking

and mitigating measures, including via proposals in the study.

The report employs the dynamic version of the GTAP Model to study the impacts of two

scenarios, one conservative and one more ambitious, with respect to the outcome of the

negotiations in terms of tariff and non-tariff measures reductions by both parties. In the

conservative scenario, GDP in the EU expands by 10.9 billion euro (0.1%) and in Mercosur

by 7.4 billion euro (0.3%) by 2032, in comparison to the modelling baseline without the FTA.

In the ambitious scenario, GDP in the EU expands by 15 billion euro and in Mercosur by

11.4 billion euro.

The EANO assesses the economic impact of the actual outcome of the negotiations. It is not

based on assumptions regarding the expected outcome of the agreement, contrary to the SIA.

The SIA assessed the impact of two scenarios - one conservative and one ambitious - with

respect to the outcome of the negotiations in terms of reductions of barriers to trade through

tariff and non-tariff measures. The EANO estimates the economic impact based on the actual

tariff and non-tariff measures concessions. It also takes into account the fact that the UK is no

longer in the EU. This explains the difference in the estimated impact of the agreement in the

EANO compared to the SIA. Furthermore, the EANO analysis is updated to include the most

recent developments in the EU’s trade policy.

• Regulatory fitness and simplification

The EU-Mercosur ITA is not subject to REFIT procedures. It nevertheless contains a

framework for simplified trade and investment procedures, reduced export and investment

related costs and will therefore increase trade and investment opportunities for small and

medium-sized enterprises in both markets. Among the expected benefits are increased

transparency, less burdensome technical rules, compliance requirements, customs procedures

and rules of origin, enhanced protection of intellectual property rights and geographical

indications, better access to government procurement tenders, as well as a special chapter to

help SMEs use the opportunities offered under the Agreement.

• Fundamental rights

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

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4. BUDGETARY IMPLICATIONS

The ITA will have a financial impact on the EU budget on the side of the revenues. The ITA

will lead to an estimated loss of duties of EUR 330 million at the entry into force of the

Agreement. After the ITA is fully implemented on the EU side (after 15 years from its entry

into force) the yearly loss of duties is estimated to reach EUR 1 billion. This estimation is

based on a projection of the evolution of trade for the next 15 years without any agreement.

Indirect positive impacts are expected in terms of increases in resources linked to value added

tax and gross national income.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The ITA includes institutional provisions that lay down an implementing bodies’ structure to

continuously monitor its implementation, operation and impact. This institutional framework

will be replaced by the one set up in the EMPA, upon its entry into force.

The institutional chapter of the ITA establishes the specific functions of the Trade Council

that will oversee the fulfilment of the objectives of the ITA and supervise its implementation

and of the Trade Committee that will assist the Trade Council in performance of its duties.

The Trade Committee will supervise the work of specialised Subcommittees and other bodies

established under the ITA.

• Detailed explanation of the specific provisions of the proposal

The ITA creates a coherent, comprehensive, up-to-date legally binding framework for the

EU's trade relations with Mercosur. It will foster trade and investment by contributing to the

expansion and diversification of economic and trade relations.

Through this agreement, the EU aims to provide the best possible conditions for its operators

on the Mercosur's market. The ITA goes beyond existing WTO commitments in many areas,

such as trade in goods, services, government procurement, non-tariff barriers and the

protection and enforcement of intellectual property rights, including geographical indications

(GIs). In all of these areas, Mercosur countries agreed to significant new commitments in

comparison to WTO terms. The ITA also contains advanced provisions on trade and

sustainable development, including strong commitments on deforestation.

The agreement satisfies the criteria of Article XXIV GATT (to eliminate duties and other

restrictive regulations of commerce with respect to substantially all trade in goods between

the parties), as well as of Article V GATS, which provides for a similar test with respect to

services.

In line with the objectives set by the negotiating directives, the Commission notably secured:

(1) The full removal, over time, of duties on 91% of goods that EU companies export to

Mercosur. This will save over EUR 4 billion annually in duties. For example,

Mercosur countries will remove high duties on industrial products, such as cars

(35%), car parts (14 to 18%), machinery (14 to 20%), chemicals (up to 18%),

clothing (up to 35%), pharmaceuticals (up to 14%), leather shoes (up to 35%) or

textiles (up to 35%). The agreement will also progressively eliminate duties on EU

food and drink exports, such as wine (27%), chocolate (20%), spirits (20 to 35%),

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biscuits (16 to 18%), canned peaches (55%) or soft drinks (20-35%). The agreement

will also provide duty-free access subject to quotas for EU dairy products (currently

28% tariff), notably for cheeses.

(2) A balanced market opening by the EU, as the agreement will eliminate import duties

on 92% of Mercosur goods exported to the EU. Sensitive agricultural products such

as beef, sugar or poultry are only given preferential treatment in limited quantities

via carefully calibrated tariff-rate quotas.

(3) For Argentina, Uruguay and Paraguay, the agreement fully dismantles, or binds at

zero, export taxes on raw materials and on industrial goods. It also reduces export

taxes on agricultural goods (Argentina), or eliminates them (Uruguay, Paraguay and

Brazil). For industrial goods, Brazil has bound at zero important raw materials

needed for the EU’s economic diversification (nickel, copper, aluminium, steel raw

materials, steel, titanium). Brazil has maintained policy space to impose export duties

on certain raw materials, in such cases the EU has obtained preferences of at least

50% on any export tax introduced by Brazil in the future and a ceiling of 25%.

(4) A robust bilateral safeguard mechanism that allows the EU and Mercosur to impose

temporary measures to regulate imports in the event of an unexpected and significant

increase in imports, which causes, or threatens to cause, serious injury to their

domestic industry. These safeguards also apply to agricultural goods under the tariff-

rate quota regime or can be limited to the territory of EU outermost regions, where

relevant.

(5) The highest standards for food safety, animal and plant health continue to apply to all

products, irrespectively of whether they are produced domestically or imported into

the EU. The precautionary principle applies. The agreement provides for reinforced

cooperation with the authorities of the partner countries and faster flow of

information about any potential risks through a more direct and efficient information

and notification system.

(6) A comprehensive chapter on trade and sustainable development, which aims at

ensuring that trade supports environmental protection and social development. The

chapter covers issues such as sustainable management and conservation of forests,

respect for labour rights and promotion of responsible business conduct It also

includes specific dispute settlement provisions and a dedicated review mechanism.

The chapter also includes an explicit commitment to effectively implement the Paris

Agreement on Climate Change, which was also agreed to constitute an essential

element of the EMPA, therefore allowing a suspension of the ITA if a Party leaves

the Paris Agreement or stops being a party “in good faith”. An Annex to the TSD

Chapter contains commitments by the Parties to take measures to stop further

deforestation as of 2030. This is the first time that Parties to a trade agreement

subject to dispute settlement take an individual legal commitment to stop

deforestation. The Agreement also offers civil society organisations an active role to

monitor the implementation of the agreement, including any environmental concerns.

(7) New tendering opportunities for EU bidders with Mercosur countries, which are not

members of the WTO Agreement on Government Procurement. This is the first time

that Mercosur countries will open up their government procurement markets. EU

companies will be able to tender for contracts with public authorities, such as central

government ministries and other governmental and federal agencies, on an equal

footing with companies from Mercosur countries.

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(8) The removal of technical and regulatory trade barriers to trade in goods, in particular

by promoting the use of first-party certification and convergence through the use of

international standards adopted by ISO, IEC, ITU and Codex Alimentarius, as well

as by other international standard setting organisations, in accordance with the

common definition agreed by the EU and Mercosur. There is an agreement to reduce

duplicative testing in the electronics sector in low-risk areas. There will also be a

specific Motor Vehicles Annex promoting UNECE Regulations and reducing

duplicative testing in the sector.

(9) A comprehensive Annex with detailed provisions to facilitate trade in wine and

spirits, covering recognition of winemaking practices, certification and labelling, in

line with the most modern EU FTAs.

(10) The opening of services sectors and facilitation of trade in services between the EU

and Mercosur, both through local establishment and on a cross-border basis. The

agreement covers a wide range of services sectors, including business services,

financial services, telecommunications, maritime transport (for the first time

Mercosur is opening maritime transport within the region), postal and courier

services. It also includes commitments on establishment of enterprises, both in

services and non-services sectors. It will ensure a level-playing field between EU

service providers and their competitors in Mercosur. The ‘right to regulate’ in public

interest is fully preserved, at all levels of government. The agreement also contains

advanced provisions on the movement of professionals for business purposes, such

as managers or specialists that EU companies post to their subsidiaries in Mercosur

countries. There is also a substantive e-commerce chapter – a novelty for the

Mercosur partners.

(11) A high level of protection and enforcement of intellectual property rights including

detailed provisions on copyright, trade secrets and enforcement providing for

improved protection.

(12) A high level of protection and enforcement for EU Geographical Indications (GIs),

comparable to that of the EU, for 344 EU names of quality food, wine and spirits

products.

(13) A chapter dedicated to SMEs to ensure that they fully benefit from the opportunities

offered by the ITA.

(14) Efficient dispute resolution mechanisms, either through panel arbitration or with the

help of a mediator. The dispute settlement chapter includes new provisions modelled

on the WTO non-violation complaint - if a party considers that a measure of the other

party nullifies or substantially impairs its benefits under the agreement, it can ask a

panel to rule on this question.

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2025/0183 (NLE)

Proposal for a

COUNCIL DECISION

on the signing, on behalf of the European Union, of the Interim Agreement on Trade

between the European Union, of the one part, and the Common Market of the South, the

Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and

the Oriental Republic of Uruguay, of the other part

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(5) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1) On 13 September 1999, the Council authorised the European Commission to open

negotiations on an Agreement with the Common Market of the South and its State

Parties consisting of political, cooperation and trade parts.

(2) The negotiations were successfully concluded on 6 December 2024.

(3) The newly negotiated partnership consists of two parallel legal instruments. The first

instrument is the Partnership Agreement between the European Union and its Member

States, of the one part, and the Common Market of the South, the Argentine Republic,

the Federative Republic of Brazil, the Republic of Paraguay and the Oriental Republic

of Uruguay, of the other part (‘EU-Mercosur Partnership Agreement’), which includes

the Political and Cooperation pillar, and the Trade and Investment pillar. The second

instrument is the Interim Agreement on Trade between the European Union and the

Common Market of the South and the Argentine Republic, the Federative Republic of

Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay (hereinafter

‘the Agreement’), which covers trade and investment liberalisation. The Agreement

will cease to have effect and will be replaced by the EU-Mercosur Partnership

Agreement upon entry into force of the latter.

(4) Therefore, the Agreement should be signed on behalf of the Union, subject to its

conclusion,

HAS ADOPTED THIS DECISION:

Article 1

The signing on behalf of the Union of the Interim Agreement on Trade between the European

Union and the Common Market of the South and the Argentine Republic, the Federative

Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay

(hereinafter ‘the Agreement’) is hereby authorized, subject to the conclusion of the said

Agreement.

The text of the Agreement to be signed is attached to this Decision.

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Article 2

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

Done at Brussels,

For the Council

The President

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LEGISLATIVE FINANCIAL STATEMENT ‘REVENUE’- FOR PROPOSALS

HAVING BUDGETARY IMPACT ON THE REVENUE SIDE OF THE BUDGET

1. NAME OF THE PROPOSAL:

Proposal for a Council Decision on the signing, on behalf of the European Union, of

the Interim Agreement on Trade between the European Union, of the one part, and

the Common Market of the South and the Argentine Republic, the Federative

Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay,

of the other part

2. BUDGET LINES:

Revenue line (Chapter/Article/Item): Chapter 12, Article 120

Amount budgeted for the year concerned (2025): EUR 21 082 004 566

(only in case of assigned revenues):

The revenues will be assigned to the following expenditure line

(Chapter/Article/Item):

3. FINANCIAL IMPACT

 Proposal has no financial implications

X Proposal has no financial impact on expenditure but has a financial impact on

revenue

 Proposal has a financial impact on assigned revenue

The effect is as follows:

(EUR million to one decimal place)

Revenue line Impact on revenue 12 months Year 2026

Chapter 12/Article 120 EUR 247.5 mn Entry into force expected

beginning 2026

0

Chapter 12/Article/120

Situation following action

Revenue line [N+15] [N+16] [N+17] [N+18] [N+19]

Chapter 12/Article 120 EUR 1

billion

EUR 1

billion

EUR 1

billion

EUR 1

billion

EUR 1

billion

Chapter/Article/Item …

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(Only in case of assigned revenues, under the condition that the budget line is already

known):

Expenditure line2 Year N Year N+1

Chapter/Article/Item

…

Chapter/Article/Item

…

Expenditure line [N+2] [N+3] [N+4] [N+5]

Chapter/Article/Item

…

Chapter/Article/Item

…

4. ANTI-FRAUD MEASURES

5. OTHER REMARKS

The proposed Decision does not incur additional costs (expenditure) in the EU

budget.

The ITA will have a financial impact on the EU budget on the side of the revenues.

The ITA will lead to an estimated loss of duties of EUR 247.5 million at the entry

into force of the Agreement.3 After the ITA is fully implemented on the EU side

(after 15 years from its entry into force) the yearly loss of duties is estimated to reach

EUR 1 billion. This estimation is based on a projection of the evolution of trade for

the next 15 years without any agreement.

Indirect positive impacts are expected in terms of increases in resources linked to

value added tax and gross national income.

2 To be used only if necessary. 3 The estimated amount of revenue losses at EUR 247.5 mn is net of collection costs (a 25% has been

deducted from the estimated revenue loss of EUR 330 mn).

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EUROPEAN COMMISSION

Brussels, 3.9.2025

COM(2025) 338 final

ANNEX 1

ANNEX

to the

Proposal for a Council Decision

on the signing, on behalf of the European Union, of the Interim Agreement on Trade

between the European Union, of the one part, and the Common Market of the South, the

Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and

the Oriental Republic of Uruguay, of the other part

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INTERIM AGREEMENT ON TRADE BETWEEN THE EUROPEAN UNION, OF THE ONE

PART, AND THE COMMON MARKET OF THE SOUTH, THE ARGENTINE REPUBLIC, THE

FEDERATIVE REPUBLIC OF BRAZIL, THE REPUBLIC OF PARAGUAY AND THE

ORIENTAL REPUBLIC OF URUGUAY, OF THE OTHER PART

THE EUROPEAN UNION, hereinafter referred to as "the Union" or the "EU",

of the one part, and

THE ARGENTINE REPUBLIC,

THE FEDERATIVE REPUBLIC OF BRAZIL,

THE REPUBLIC OF PARAGUAY,

THE ORIENTAL REPUBLIC OF URUGUAY,

State Parties to the Common Market of the South signatories of this Agreement, hereinafter referred

to as "Signatory MERCOSUR States", and

THE COMMON MARKET OF THE SOUTH, hereinafter referred to as "MERCOSUR",

of the other part,

hereinafter jointly referred to as "the Parties",

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for the purposes of this Agreement MERCOSUR refers to the Argentine Republic, the Federative

Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay,

CONSIDERING the important and longstanding trade and investment relations between the Parties;

REAFFIRMING their commitment to further strengthen, liberalise and diversify their trade and

investment relations;

RECOGNISING that the provisions of this Agreement maintain the right of the Parties to regulate

within their territories in conformity with their internal legislation to achieve legitimate policy

objectives, such as public health, safety, environment, education, public morals, and the promotion

and protection of cultural diversity, among others;

BUILDING UPON the rights and obligations of the Parties in the World Trade Organisation;

REAFFIRMING their commitment to strengthen and develop the multilateral trading system

through the application of transparent, equitable and non-discriminatory rules, with a view to the

promotion of increasingly dynamic and open international trade which ensures a larger participation

of developing countries in international trade, investment and technology flows;

REAFFIRMING their commitment to promote international trade in such a way as to contribute to

sustainable development in its economic, social and environment dimensions, involving all relevant

stakeholders, including civil society and the private sector, and to implement this agreement in a

manner consistent with their respective laws and international commitments on labour and

environmental matters;

& /en 3

RECOGNISING the interim character of this Agreement, which will strengthen bilateral economic

and trade relations between the Parties, which will be subsumed under the EU–MERCOSUR

Partnership Agreement and which will hence cease to apply upon the entry into force of the

EU–MERCOSUR Partnership Agreement;

REAFFIRMING the Parties' right to exploit their natural resources in accordance with their own

environmental policies, and sustainable development goals;

DESIRING to improve the competitiveness of their enterprises, by providing them with a

predictable legal framework for their trade and investment relations, with special attention to micro,

small and medium enterprises;

REAFFIRMING the need to promote the respect of internationally recognised guidelines and

principles of corporate social responsibility and responsible business conduct, including the

Organisation of Economic Cooperation and Development (hereinafter referred to as "OECD")

Guidelines for Multinational Enterprises, amongst enterprises operating in their territories;

REAFFIRMING their commitment to promote comprehensive economic and social development

with the objective of raising living standards, eradicating poverty, and enhancing the levels of

labour and environmental protection in their respective territories;

CONSIDERING the importance of their respective regional integration processes for the promotion

of economic and social development at the regional and global levels, for the strengthening of ties

between their peoples and for international stability;

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RECOGNISING the differences in economic and social development between and within the

Parties;

RECOGNISING the specific challenges and difficulties faced by Paraguay as a landlocked

developing country;

HAVE AGREED AS FOLLOWS:

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CHAPTER 1

INITIAL PROVISIONS

ARTICLE 1.1

Establishment of a free trade area and relation to the WTO Agreement

1. The Parties to this Agreement hereby establish a free trade area, in conformity with

Article XXIV of the GATT 1994 and Article V of the GATS.

2. The Parties affirm their rights and obligations with respect to each other under the

WTO Agreement.

3. Nothing in this Agreement shall be construed as requiring a Party to act in a manner

inconsistent with its obligations under the WTO Agreement.

ARTICLE 1.2

Objectives

The provisions of this Agreement aim at:

(a) a modern and mutually advantageous trade agreement which creates a predictable framework

to boost trade and economic activity, while promoting and protecting our shared values and

perspectives on the role of government in society, and retaining the right of the Parties to

regulate at all levels of government to achieve public policy objectives;

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(b) the development of international trade and of trade between the Parties in a way as to

contribute to sustainable development in its economic, social and environmental dimensions,

consistent with, and supportive of, their respective international obligations, in these fields;

(c) the promotion of a more sustainable, equitable and inclusive economy so as to raise standards

of living, reduce poverty and create new employment opportunities;

(d) the consolidation, increase and diversification of trade in agricultural and non-agricultural

goods between the Parties, through the reduction or the elimination of tariff and non-tariff

barriers to trade and the further integration in the global value chains;

(e) the facilitation of trade in goods through, in particular, the application of the agreed

provisions regarding customs and trade facilitation, standards, technical regulations and

conformity assessment procedures as well as sanitary and phytosanitary measures;

(f) the liberalisation and facilitation of trade in services, and the development of an environment

conducive to an increase in investment flows, competitiveness, and economic growth and, in

particular, to the improvement of conditions of establishment of businesses between

the Parties;

(g) the free movement of capital relating to direct investment and of current payments in

accordance with Chapter 10;

(h) the effective, transparent and competitive opening of government procurement markets of

the Parties;

& /en 7

(i) the promotion of innovation and creativity by ensuring an adequate and effective level of

protection and of enforcement of intellectual property rights, in accordance with international

rules in force between the Parties, so as to ensure the balance between the rights of the

right-holders and the public interest;

(j) the conduct of economic activities, in particular those regarding the relations between the

Parties, in conformity with the principle of free and undistorted competition;

(k) the establishment of a framework for the participation of civil society, including employers,

unions, labour and business organisations and environmental groups to support the effective

implementation of this Agreement;

(l) the establishment of an expeditious and effective dispute settlement mechanism; and

(m) a transparent and predictable regulatory environment and efficient procedures for economic

operators, especially small and medium-sized enterprises (hereinafter referred to as "SMEs"),

while preserving the ability of the Parties to adopt and apply their own laws and regulations

that regulate economic activity in the public interest, and to achieve legitimate public policy

objectives such as the protection and promotion of public health, social services, public

education, safety, the environment, public morals, social or consumer protection, privacy and

data protection and the promotion and protection of cultural diversity.

& /en 8

ARTICLE 1.3

General definitions

Unless otherwise specified, for the purposes of this Agreement:

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

(b) "customs duty" means any duty or charge of any kind imposed on or in connection with the

importation of a good, including any form of surtax or surcharge imposed on or in connection

with such importation1, but does not include any:

(i) internal taxes or other internal charges imposed consistently with Article III of

GATT 1994;

(ii) antidumping or countervailing duties applied in accordance with Articles VI and XVI of

GATT 1994 and the WTO Agreement on the Implementation of Article VI of

GATT 1994 and the SCM Agreement in conformity with Chapter 8;

(iii) measures applied in accordance with Article XIX of GATT 1994 and with the

Safeguards Agreement, or other safeguard measures applied pursuant to Chapter 8;

(iv) measures authorised by the WTO Dispute Settlement Body or under Chapter 21;

(v) fee or other charge, imposed consistently with Article VIII of GATT 1994; or

1 Among other measures of equivalent effect, this includes ad valorem import duties,

agricultural components, additional duties on sugar content, additional duties on flour content,

specific duties, mixed duties, seasonal duties and additional duties from entry price systems.

& /en 9

(vi) measures adopted to safeguard a Party's external financial position and its balance of

payments, in conformity with Article XII of GATT 1994 and the Understanding on

Balance of Payments Provisions of GATT 1994.

(c) "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);

(d) "days" means calendar days, including weekends and holidays;

(e) "EU–MERCOSUR Partnership Agreement" means the Partnership Agreement between the

European Union and its Member States, of the one part, and the Common Market of the

South, the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay

and the oriental Republic of Uruguay, of the other part, to be concluded;

(f) "existing" means in effect on the date of entry into force of this Agreement;

(g) "good of a Party" means a domestic good as that is understood in the GATT 1994, and

includes originating goods of that Party;

(h) "Harmonized System" or "HS" means the Harmonized Commodity Description and Coding

System, including its General Rules of Interpretation, Section Notes, and Chapter Notes,

done at Brussels on 14 June 1983;

(i) "heading" means the first four digits in the tariff classification number under the

Harmonized System;

& /en 10

(j) "juridical person" means any legal entity duly constituted or otherwise organised under

applicable law, whether for profit or otherwise, and whether privately-owned or

governmentally-owned, including any corporation, trust, partnership, joint venture, sole

proprietorship or association;

(k) "measure" includes any measure by a Party, whether in the form of a law, regulation, rule,

procedure, decision, administrative action, requirement or practice1;

(l) "natural person of a Party" means, for the European Union, a national of a Member State of

the European Union, and for MERCOSUR, a national of a Signatory MERCOSUR State, in

accordance with their respective applicable legislation;

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

(n) "sanitary or phytosanitary measure" means any measure as defined in Annex A to the

SPS Agreement;

(o) "third country" means a country or territory outside the territorial scope of application of

this Agreement;

(p) "UNCLOS" means the United Nations Convention on the Law of the Sea,

done at Montego Bay on 10 December 1982; and

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

1 For greater certainty, the term "measure" includes omissions and legislation that has not been

fully implemented at the conclusions of the negotiations of this Agreement as well as its

implementing acts.

& /en 11

ARTICLE 1.4

WTO Agreements

(a) "ADA" means the Agreement on Implementation of Article VI of GATT 1994;

(b) "Agreement on Agriculture" means the Agreement on Agriculture, contained in Annex 1A to

the WTO Agreement;

(c) "DSU" means the Understanding on Rules and Procedures Governing the Settlement of

Disputes, contained in Annex 2 of the WTO Agreement;

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

WTO Agreement;

(e) "GATT 1994" means the General Agreement on Tariffs and Trade 1994, contained in

Annex 1A to the WTO Agreement;

(f) "Safeguards Agreement" means the Agreement on Safeguards, contained in Annex 1A to the

WTO Agreement;

(g) "SCM Agreement" means the Agreement on Subsidies and Countervailing Measures,

contained in Annex 1A to the WTO Agreement;

(h) "SPS Agreement" means the Agreement on the Application of Sanitary and Phytosanitary

Measures, contained in Annex 1A to the WTO Agreement;

& /en 12

(i) "TBT Agreement" means the Agreement on Technical Barriers to Trade, contained in

Annex 1 to the WTO Agreement;

(j) "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property

Rights, contained in Annex 1C to the WTO Agreement; and

(k) "WTO Agreement" means the Marrakesh Agreement Establishing the World Trade

Organization, done on 15 April 1994.

ARTICLE 1.5

Parties

1. The European Union shall be responsible for the fulfilment of the commitments in

this Agreement.

2. Save where otherwise provided, each of the Signatory MERCOSUR States of this Agreement

shall be responsible for the fulfilment of the commitments in this Agreement.

ARTICLE 1.6

Regional integration

1. While recognising the differences in their respective regional integration processes, and

without prejudice to the commitments undertaken under this Agreement, the Parties shall foster

conditions which facilitate the movement of goods and services between and within the

two regions.

& /en 13

2. With respect to movement of goods, pursuant to paragraph 1:

(a) goods originating in a Signatory MERCOSUR State that are released for free circulation in

the European Union shall benefit from free movement of goods within the territory of the

European Union under the conditions established by the Treaty on the Functioning of the

European Union;

(b) the Signatory MERCOSUR States shall apply to goods originating in the European Union that

are imported in its territory from another Signatory MERCOSUR State, customs procedures

that are no less favourable than those applicable to goods originating in that Signatory

MERCOSUR State.

The treatment referred to under points (a) and (b) of this paragraph does not include tariff

treatment for goods, which is governed by Chapter 2;

(c) the Signatory MERCOSUR States shall periodically review their customs procedures with a

view to facilitating the movement of goods of the European Union between their territories

and to avoiding duplication of procedures and controls when practicable and in accordance

with the evolution of their integration process; and

(d) the benefits of MERCOSUR's harmonisation of technical regulations and conformity

assessment procedures, SPS requirements and approval procedures, including import

certificates and controls, shall be extended under non-discriminatory conditions to goods

originating in the European Union if they have been imported in compliance with the laws

and regulations of the importing Signatory MERCOSUR State.

& /en 14

3. With respect to movement of services, pursuant to paragraph 1:

(a) Member States of the European Union shall endeavour to facilitate, as appropriate, the

freedom to provide services within the territory of the European Union to enterprises owned

or controlled by natural or juridical persons of a Signatory MERCOSUR State and established

in a Member State of the European Union; and

(b) the Signatory MERCOSUR States shall endeavour to facilitate, as appropriate, the freedom to

provide services between their territories to enterprises owned or controlled by natural or

juridical persons of a Member State of the European Union and established in a Signatory

MERCOSUR State.

ARTICLE 1.7

References to laws and other agreements

1. Unless otherwise specified, where reference is made to laws and regulations of a Party, those

laws and regulations shall be understood to include amendments thereto.

2. Unless otherwise specified, any reference, or incorporation by means of a reference in this

Agreement to other agreements or legal instruments in whole or in part shall be construed as

including related annexes, protocols, footnotes, interpretative notes and explanatory notes.

& /en 15

3. 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 signature of

this Agreement. If any matter arises regarding the implementation or application of the provisions

of this Agreement as a result of such amendments or successor agreements, the Parties may, on

request of either Party, consult with each other via the Trade Council with a view to finding a

mutually satisfactory solution to this matter as necessary. As a result of such consultation, the

Parties may, by decision in the Trade Council, amend this Agreement accordingly.

4. Paragraph 3 applies mutatis mutandis, if the amendment or successor agreement of an

international agreement referred to or incorporated into this Agreement in whole or in part, has

entered into force for the European Union and one or more Signatory MERCOSUR States.

CHAPTER 2

TRADE IN GOODS

ARTICLE 2.1

Objective and scope

1. The Parties shall establish a free trade area for goods over a transitional period starting on the

date of entry into force of this Agreement.

2. Except as otherwise provided in this Agreement, the provisions of this Chapter apply to trade

in goods of a Party.

& /en 16

SECTION A

CUSTOM DUTIES

ARTICLE 2.2

National treatment

Each Party shall accord national treatment to the goods of the other Party in accordance with

Article III of GATT 1994, including its Notes and Supplementary Provisions. To that end,

Article III of GATT 1994 and its Notes and Supplementary Provisions are incorporated into and

made part of this Agreement, mutatis mutandis.

ARTICLE 2.3

Definitions

For the purposes of this Chapter, "originating good" means a good qualifying as originating in a

Party under the rules of origin set out in Chapter 3.

ARTICLE 2.4

Reduction and elimination of customs duties

1. Except as otherwise provided for in this Agreement, each Party shall reduce or eliminate its

customs duties on originating goods in accordance with Annex 2-A.

& /en 17

2. The classification of goods in trade between the Parties shall be in accordance with each

Party's respective tariff nomenclature in conformity with the Harmonized System. Each Party shall

specify in its respective Appendix to Annex 2-A the version of the Harmonized System used to

this end.

3. A Party may create a new tariff line. In that event and in so far as trade between the Parties is

concerned, the customs duty applicable to the corresponding goods under the new tariff line shall be

equal to or lower than the customs duty applicable to the corresponding goods under the original

tariff line specified in Annex 2-A and the agreed tariff concession shall remain unchanged.

4. For each good originating in the other Party, the base rate of customs duties on imports to

which the successive reductions apply under paragraph 1 is specified in Annex 2-A.

5. Without prejudice to paragraphs 1 and 3, for a period of 2 (two) years from the date of entry

into force of this Agreement, the European Union shall not increase the customs duties applied

on 31 December 2017 on goods originating in Paraguay that are classified under the following tariff

lines set out in Appendix 2-A-1 as "PY" goods: 20019030, 21012098, 21069098 and, 33021029.

For the purposes of this paragraph, "goods originating in Paraguay" means goods that conform to

the origin requirements under Subsections 2 and 3 of Section 2 of Chapter 1 of Title II of

Commission Delegated Regulation (EU) 2015/2446 of 28 July of 2015 supplementing Regulation

(EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules

concerning certain provisions of the Union Customs Code1 and Subsections 3 to 9 of Section 2 of

Chapter 2 of Title II of Commission Implementing Regulation (EU) 2015/2447 of 24 November

2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No

952/2013 of the European Parliament and of the Council laying down the Union Customs Code2.

1 OJ EU L 343, 29.12.2015, p. 1. 2 OJ EU L 343, 29.12.2015, p. 558.

& /en 18

6. Except as otherwise provided for in this Agreement, a Party shall not introduce new customs

duties or increase customs duties which are already applied in accordance with the base rates set out

in Annex 2-A on trade in originating goods between the Parties as from the date of entry into force

of this Agreement. For greater certainty, a Party may increase a customs duty applicable to trade

between the Parties as set out in Annex 2-A that has been unilaterally reduced to the level set out in

that Annex for the respective year following that unilateral reduction.

7. If a Party reduces its most-favoured-nation applied rate of customs duty to a level below the

base rate for a particular tariff line specified in Annex 2-A, that duty rate shall be deemed to replace

the base rate in Annex 2-A, if, and for as long as it is lower than the base rate, for the purposes of

the calculation of the preferential rate for that tariff line. In this regard, the Party shall apply the

tariff reduction to the most-favoured-nation applied rate to calculate the applicable rate of customs

duty, maintaining at all times the relative margin of preference for any tariff line. Such relative

margin of preference for a tariff line shall correspond to the difference between the base rate set out

in Annex 2-A and the applied duty rate for that tariff line in accordance with Annex 2-A divided by

that base rate and shall be expressed as a percentage.

8. Each Party may accelerate the elimination of customs duties on originating goods of the other

Party, or otherwise improve the conditions of market access for originating goods of the other Party,

if its general economic situation and the situation of the economic sector concerned so permit.

9. As from 3 (three) years after the date of entry into force of this Agreement, on request of

either Party, the Subcommittee on trade in goods, referred to in Article 2.14, shall consider

measures providing for improved market access. The Trade Council shall have the power to adopt

decisions to amend Annex 2-A. Such decisions shall supersede any duty rate or staging category

determined in Annex 2-A for such originating goods.

& /en 19

ARTICLE 2.5

Goods re-entered after repair

1. For the purposes of this Article, "repair" means any processing operation undertaken on a

good to remedy operating defects or material damage and entailing the re-establishment of the good

to its original function or to ensure its 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 of a good includes restoration and maintenance but does not include an operation

or process that:

(a) destroys the essential characteristics of a good or creates a new or commercially

different good;

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

(c) is used to improve the technical performance of a good.

2. A Party shall not apply customs duties to a good, regardless of its origin, that re-enters that

Party's customs territory after hat good has been temporarily exported from its customs territory to

the customs territory of the other Party for repair, regardless of whether such repair could have been

performed in the customs territory of the Party from which the goods were exported for repair as

defined in paragraph 1.

3. Paragraph 2 does not apply to a good imported in bond into free-trade zones or zones of

similar status, that is exported for repair and is not re-imported in bond into free-trade zones or

zones of similar status.

& /en 20

4. A Party shall not apply customs duties to a good, regardless of its origin, imported

temporarily from the customs territory of the other Party for repair.

SECTION B

NON-TARIFF MEASURES

ARTICLE 2.6

Fees and other charges on imports and exports

1. Each Party shall ensure, in accordance with Article VIII of GATT 1994, including its Notes

and Supplementary Provisions, that all fees and other charges of whatever character1, other than

import and export duties imposed on or in connection with importation or exportation, are limited in

amount to the approximate cost of services rendered, shall not be calculated on an ad valorem basis

and shall not represent an indirect protection for domestic goods or a taxation of imports or exports

for fiscal purposes.

2. Each Party may impose charges or recover costs only if specific services are rendered, in

particular for the following:

(a) attendance, if requested, by customs staff outside official office hours or at premises other

than customs premises;

1 For greater certainty, "tasa consular" of the Oriental Republic of Uruguay and "tasa

estadística" of the Argentine Republic are governed by paragraph 3.

& /en 21

(b) analyses or expert reports on goods and postal fees for the return of goods to an applicant,

particularly in respect of decisions relating to binding information or the provision of

information concerning the application of customs laws and regulations;

(c) the examination or sampling of goods for verification purposes, or the destruction of goods, if

costs other than the cost of using customs staff are involved; or

(d) exceptional control measures, where these are necessary due to the nature of the goods or to a

potential risk.

3. A Party shall not require consular transactions, including related fees and charges, in

connection with the importation of goods from the other Party. The Parties shall have a transitional

period of 3 (three) years from the date of entry into force of this Agreement to fulfil the

requirements of this paragraph1.

4. Each Party shall publish a list of the fees and charges it imposes in connection with the

importation or exportation of goods.

1 Notwithstanding this paragraph, for the Republic of Paraguay the transitional period will

be 10 (ten) years after the date of entry into force of this Agreement.

& /en 22

ARTICLE 2.7

Import and export licensing procedures

1. The Parties shall ensure that all import and export licensing procedures applicable to trade in

goods between the Parties are neutral in application and administered in a fair, equitable,

non-discriminatory and transparent manner.

2. Each Party shall only adopt or maintain licensing procedures as a condition for importation

into its territory from that of the other Party or exportation from its territory to that of the other

Party if other appropriate procedures to achieve an administrative purpose are not reasonably

available.

3. The Parties shall not adopt or maintain non-automatic import or export licensing procedures1

unless it is necessary to implement a measure that is consistent with this Agreement. A Party

adopting non-automatic import or export licensing procedures shall indicate clearly the measure

being implemented through such licensing procedure.

4. The Parties shall introduce and administer any licensing procedures in accordance with

Articles 1 to 3 of the WTO Import Licensing Agreement (hereinafter referred to as "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, and shall apply to any export

licensing procedures.

1 For the purposes of this Article, "non-automatic import or export licensing procedures" is

defined as licensing procedures where approval of the application is not granted for all legal

and natural persons who fulfil the requirements of the Party concerned for engaging in the

importation or exportation of goods subject to licensing procedures.

& /en 23

5. Any Party introducing or modifying any import and export licensing procedures shall make

the relevant information available on an official website. This information shall be made available,

whenever practicable, 21 (twenty-one) days prior to the date of the application of the introduction

of, or modification to, licensing procedures but in any event no later than such date. The

information available on the Internet shall contain the data required under Article 5 of the Import

Licensing Agreement. Each Party shall notify the other Party of any introduction or modification of

export licensing procedures and such notification shall contain the same information as referred to

in Article 5 of the Import Licensing Agreement.

6. On request of a Party, the other Party shall promptly provide any relevant information

regarding any import and or export licensing procedures that the Party to which the request is

addressed intends to adopt or has adopted or maintained, including the information referred to in

Articles 1 to 3 of the Import Licensing Agreement, mutatis mutandis.

ARTICLE 2.8

Export competition

1. The Parties affirm their commitments expressed in the Export Competition Ministerial

Decision of 19 December 2015 (WT/MIN(15)/45, WT/L/980) of the WTO (hereinafter referred to

as the "Export Competition Ministerial Decision").

2. For the purposes of this Article, "export subsidies" means subsidies within the meaning of

Articles 1 and 3 of the SCM Agreement that are contingent upon export performance, including the

subsidies listed in Annex I to the SCM Agreement and the subsidies listed in Article 9 of the

Agreement on Agriculture.

& /en 24

3. A Party shall not maintain, introduce or reintroduce export subsidies on an agricultural good

that is exported or incorporated in a product that is exported.

4. A Party shall not maintain, introduce or reintroduce export credits, export credit guarantees,

insurance programmes, state trading enterprises or international food aid, or other measures that

have an effect equivalent to an export subsidy, on an agricultural good that is exported or

incorporated in a good that is exported to the territory of the other Party, unless those measures

comply with the obligations of the exporting Party under the WTO Agreements and Decisions of

the Ministerial Conference and the General Council of the WTO, including in particular the Export

Competition Ministerial Decision.

5. The Parties affirm their commitment in the Bali Ministerial Declaration adopted

on 7 December 2013 (WT/MIN(13)/DEC) of the WTO, strengthened by the Export Competition

Ministerial Decision, to enhance transparency and to improve monitoring in relation to all forms of

export subsidies and export credits, export credit guarantees, insurance programmes, state trading

enterprises and international food aid, as well as other measures that have an effect equivalent to an

export subsidy.

6. The Parties affirm the commitments taken under the Export Competition Ministerial Decision

with regard to international food aid and shall work together to encourage the best practice in the

delivery of food aid in the relevant international fora by seeking to limit the monetisation of food

aid and the delivery of in-kind food aid only to emergency situations.

& /en 25

ARTICLE 2.9

Duties, taxes and other fees and charges on exports

A Party shall not introduce or maintain any duties or charges of any kind on or in connection

with the exportation of a good to the other Party, other than in accordance with Annex 2-B,

3 (three) years from the date of entry into force of this Agreement.

ARTICLE 2.10

State trading enterprises

1. Nothing in this Agreement shall prevent a Party from maintaining or establishing a state

trading enterprise in accordance with Article XVII of GATT 1994, including its Notes and

Supplementary Provisions and the WTO Understanding on the Interpretation of Article XVII of

GATT 1994, which are incorporated into and made part of this Agreement, mutatis mutandis.

2. If a Party requests information from the other Party on individual cases of state trading

enterprises, their operation or the effect of their operations on bilateral trade, the requested Party

shall ensure full transparency in accordance with Article XVII of GATT 1994.

3. Notwithstanding paragraph 1, a Party shall not designate or maintain a designated import or

export monopoly, except for those already established by a Party or prescribed by in its Constitution

as listed in Annex 2-C. For the purposes of this paragraph, an import or export monopoly means the

exclusive right or grant of authority by a Party to an entity to import a good from, or to export a

good to, the other Party.

& /en 26

ARTICLE 2.11

Prohibition of quantitative restrictions

1. A Party may not adopt or maintain any prohibition or restriction on the importation of any

good from the other Party or on the exportation or sale for export of any good destined for the other

Party, whether applied by quotas, licences or other measures, except in accordance with Article XI

of GATT 1994, including its Notes and Supplementary Provisions. To that end, Article XI of

GATT 1994 and its Notes and Supplementary Provisions are incorporated into and made part of this

Agreement, mutatis mutandis.

2. A Party may not adopt or maintain export or import price requirements, except as permitted in

the enforcement of antidumping and countervailing duty orders or price undertakings.

ARTICLE 2.12

Preference utilisation

1. For the purpose of monitoring the functioning of this Agreement and calculating preference

utilisation rates, the Parties shall annually exchange import statistics for a period

starting 1 (one) year after the date of entry into force of this Agreement and ending 10 (ten) years

after the tariff elimination is completed for all goods in accordance with Annex 2-A. Unless the

Trade Committee decides otherwise, this period shall be automatically extended for 5 (five) years,

and the Trade Committee may decide to further extend it.

& /en 27

2. The exchange of import statistics referred to in paragraph 1 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 those that received non-preferential treatment.

3. Without prejudice to paragraph 2 and subject to confidentiality requirements under each

Party's laws and regulations a Party shall not be obliged to exchange import statistics.

ARTICLE 2.13

Specific measures concerning the management of preferential treatment

1. The Parties shall cooperate in preventing, detecting and combating breaches of their laws and

regulations, irregularities and fraud related to the preferential treatment granted under this Chapter,

in accordance with Chapter 3 and Annex 4-A.

2. A Party may, in accordance with the procedure laid down in paragraph 4, decide to

temporarily suspend the relevant preferential treatment of the products concerned, if that Party

makes a finding, based on objective, compelling and verifiable information, that:

(a) large-scale systematic breaches in the relevant laws and regulations, irregularities or fraud

have been committed in order to obtain preferential tariff treatment granted under this

Chapter; and

(b) the other Party systematically refuses or otherwise fails to comply with its obligations referred

to in paragraph 1, in accordance with Chapter 3 and Annex 4-A.

& /en 28

3. For the purposes of this Article, a failure to comply with the obligations referred to in

paragraph 1 means, among others, a clearly demonstrated and systematic:

(a) failure to fulfil the obligation to verify the originating status of the products concerned, in

accordance with the procedures established in Articles 3.24 and 3.25 and;

(b) refusal or unjustifiable delay in communicating the result of a verification of origin carried

out in accordance with Articles 3.25 and 3.26; or

(c) lack of administrative cooperation pursuant to Annex 4-A.

4. The Party which has made a finding referred to in paragraph 2 shall, without undue delay,

notify the Trade Committee thereof and provide it with the information that constitutes the basis for

its finding.

5. When the requirements of paragraph 4 are fulfilled, the Party which has made a finding shall

enter into consultations with the other Party, in the Trade Committee, with a view to reaching a

solution that is acceptable to both Parties. If the Parties fail to agree on a mutually acceptable

solution within 3 (three) months after the date of notification, the Party which has made the finding

may decide to suspend temporarily the relevant preferential treatment of the products concerned. In

such cases, the Party which has made the finding shall notify the temporary suspension to the Trade

Committee without undue delay.

& /en 29

6. A decision to suspend temporarily the relevant preferential treatment of the product concerned

pursuant to paragraph 4 shall apply only for a period commensurate with the impact on the financial

interests of the Party concerned and not for longer than 3 (three) months. If it can be objectively and

verifiably ascertained that the conditions that gave rise to that decision to suspend persist at the

expiry of the suspension period, the Party concerned may decide to renew that decision to suspend

for an equal period of time. Any suspension shall be subject to periodic consultations in the Trade

Committee. In case of renewal, consultations shall take place in the Trade Committee at

least 15 (fifteen) days prior to the expiry of the suspension period.

7. Each Party shall publish, in accordance with its internal procedures, notices to importers about

any notification of a finding pursuant to paragraph 4 and decision to suspend temporarily referred to

in paragraphs 5 and 6.

SECTION C

INSTITUTIONAL PROVISIONS

ARTICLE 2.14

Subcommittee on trade in goods

1. The Subcommittee on trade in goods, established pursuant to Article 22.3(4), shall have the

following functions, in addition to those listed in Article 22.3 and Article 5.14:

(a) promote trade in goods between the Parties;

& /en 30

(b) evaluate annually the use and the administration of quotas and of preferences granted by this

Agreement; and

(c) discuss, clarify and address any technical issues that may arise between the Parties on matters

related to the application of each Party's tariff nomenclature as defined in paragraphs 3 and 4

of Annex 2-A.

ARTICLE 2.15

Subcommittee on trade in wine products and spirits

1. The Subcommittee on trade in wine products and spirits, established pursuant to

Article 22.3(4), shall have the following functions, in addition to those listed in Article 22.3:

(a) ensure the timely notification of amendments to laws and regulations on matters covered by

Annex 2-D that have an impact on wine products and spirits traded between the Parties; and

(b) adopt decisions to determine the details of the rules set out in paragraph 2 of Appendix 2-D-3,

in particular the forms to be used and the details of the information to be provided in the

analysis report.

& /en 31

ARTICLE 2.16

Cooperation on trade in wine products and spirits and focal points

1. The Parties shall cooperate on and address issues related to trade in wine products and spirits,

in particular:

(a) product definitions, certification and labelling of wine products;

(b) the use of vine varieties in winemaking and the labelling thereof; and

(c) product definitions, certification and labelling of spirits.

2. The Parties shall closely cooperate and seek ways to improve assistance to each other in the

application of Annex 2-D, in particular in order to combat fraudulent practices.

3. To facilitate mutual assistance between the enforcement bodies and authorities of the Parties

as regards matters covered by this Annex, each Party shall designate the bodies and authorities

responsible for the application and enforcement of Annex 2-D. If a Party designates more than one

competent body or authority, it shall ensure that the work of those bodies and authorities is

coordinated. In such cases, a Party shall also designate a single liaison body or authority that serves

as the single focal point for the body or authority of the other Party.

4 The Parties shall, via the Subcommittee on trade in wine products and spirits, inform each

other of the contact details of the bodies, authorities and focal points referred to in in paragraph 3 no

later than 6 (six) months after the date of entry into force of this Agreement. The Parties shall

inform each other of any changes of the contact details to such bodies, authorities and focal points.

& /en 32

CHAPTER 3

RULES OF ORIGIN AND ORIGIN PROCEDURES

SECTION A

RULES OF ORIGIN

ARTICLE 3.1

Definitions

For the purposes of this Chapter:

(a) "classified" refers to the classification of a product or material under a particular section,

Chapter, heading or subheading of the Harmonized System;

(b) "consignment" means products which are either sent simultaneously from one exporter to one

consignee or covered by a single transport document covering their shipment from the

exporter to the consignee or, in the absence of such a document, by a single invoice;

(c) "customs authority or competent governmental authority" refers to:

(i) in the European Union, the services of the European Commission responsible for

customs matters, and the customs administrations and any other authorities of the

Member States of the European Union responsible for the application and enforcement

of customs legislation; and

& /en 33

(ii) in MERCOSUR, the competent authorities of the Signatory MERCOSUR States or their

successors, as listed below:

(A) Argentina: Secretaría de Industria y Gestión Comercio of the Ministerio de

Economía;

(B) Brazil: Secretaria de Comércio Exterior do Ministério do Desenvolvimento,

Indústria, Comércio e Serviços and Secretaria Especial da Receita Federal do

Brasil of the Ministério da Fazenda;

(C) Paraguay: Subsecretaría de Estado de Comercio y Servicios of the Ministerio de

Industria y Comercio; and

(D) Uruguay: Asesoría de Política Comercial of the Ministerio de Economía y

Finanzas;

(d) "exporter" means a person located in a Party who exports the originating product and makes

out a statement on origin;

(e) "fungible materials" means materials that are of the same kind and commercial quality, with

the same technical and physical characteristics, and which cannot be distinguished from one

another once they are incorporated into the product;

(f) "goods" means both materials and products;

(g) "importer" means a person who imports the originating product and claims preferential tariff

treatment for it;

& /en 34

(h) "manufacture" means any kind of working or processing, including assembly or specific

operations;

(i) "material" means any ingredient, raw material, component or part used in the manufacture of

a product; and

(j) "product" means the product being manufactured, even if it is intended for later use in another

manufacturing operation.

ARTICLE 3.2

General requirements

1. For the purposes of applying the preferential tariff treatment by a Party to the originating

goods of the other Party in accordance with this Agreement, the following products shall be

considered as originating in the European Union, provided that they satisfy all other applicable

requirements in this Chapter:

(a) products wholly obtained in the European Union pursuant to Article 3.4;

(b) products obtained in the European Union exclusively from originating materials; or

(c) products obtained in the European Union incorporating non-originating materials, provided

that they have fulfilled the conditions set out in Annex 3-B.

& /en 35

2. For the purposes of applying the preferential tariff treatment by a Party to the originating

goods of the other Party in accordance with this Agreement, the following products shall be

considered as originating in MERCOSUR, provided that they satisfy all other applicable

requirements in this Chapter:

(a) products wholly obtained in MERCOSUR pursuant to Article 3.4;

(b) products obtained in MERCOSUR exclusively from originating materials; or

(c) products obtained in MERCOSUR incorporating non-originating materials, provided that they

have fulfilled the conditions set out in Annex 3-B.

3. If a product has acquired originating status, the non-originating materials used in the

manufacture of that product shall not be considered non-originating if that product is incorporated

into another product as a material.

ARTICLE 3.3

Bilateral cumulation of origin

1. Products originating in the European Union shall be considered as materials originating in

MERCOSUR when incorporated into a product obtained there, provided that they have undergone

working or processing going beyond the operations referred to in Article 3.6.

2. Products originating in MERCOSUR shall be considered as materials originating in the

European Union when incorporated into a product obtained there, provided that they have

undergone working or processing going beyond the operations referred to in Article 3.6.

& /en 36

ARTICLE 3.4

Wholly obtained products

1. The following shall be considered as wholly obtained products in the European Union or in

MERCOSUR:

(a) mineral products and other natural substances extracted from their soil or from their seabed;

(b) plants and vegetable products grown or harvested there;

(c) live animals born and raised there;

(d) products from live animals raised there;

(e) products from slaughtered animals born and raised there;

(f) products obtained through hunting or fishing conducted there;

(g) products of aquaculture where the fish, crustaceans, molluscs and other aquatic invertebrates

are born and raised there;

(h) products of fishing and other products taken from the sea by their vessels1;

(i) products made aboard their factory ships exclusively from products referred to in point (h);

1 This point is without prejudice to the sovereign rights and obligations of the Parties under

UNCLOS in particular within the exclusive economic zone and continental shelf.

& /en 37

(j) mineral products and other non-living natural resources, taken or extracted from the seabed,

subsoil or ocean floor of:

(i) the exclusive economic zone of Signatory MERCOSUR States or of Member States of

the European Union, as determined by their laws and regulations and in accordance with

Part V of UNCLOS;

(ii) the continental shelf of Signatory MERCOSUR States or of Member States of the

European Union, as determined by their laws and regulations and in accordance with

Part VI of UNCLOS; or

(iii) the Area, as defined in Article 1(1) of UNCLOS, where a Party or a person of a Party

has exclusive exploitation rights, in accordance with Part XI of UNCLOS and the

Agreement relating to the implementation of Part XI of UNCLOS;

(k) used articles collected there fit only for the recovery of raw materials;

(l) waste and scrap resulting from manufacturing operations conducted there1; or

(m) goods produced there exclusively from the products specified in points (a) to (l).

1 Points (k) and (l) are without prejudice to each Party's laws and regulations regarding the

import of the goods mentioned therein.

& /en 38

2. The terms "their vessels" and "their factory ships" in points (h) and (i) of paragraph 1 apply

only to vessels and factory ships which:

(a) are registered in a Member State of the European Union or in a Signatory MERCOSUR State

and, where appropriate, have fishing licences issued by a Signatory MERCOSUR State or the

European Union in the name of fishing companies duly registered to operate in that Member

State of the European Union or that Signatory MERCOSUR State;

(b) sail under the flag of the same registering Member State of the European Union or Signatory

MERCOSUR State1; and

(c) meet one of the following conditions:

(i) they are at least 50 % (fifty per cent) owned by one or more natural persons2 of

the Parties;

(ii) they are owned by juridical persons3:

(A) which have their head office and their main place of business in a Party; and

1 Products of fishing or other products taken from the sea by chartered vessels sailing under the

flag of a Member State of the European Union or a Signatory MERCOSUR State are

considered to originate in the Member State of the European Union or the Signatory

MERCOSUR State in which the vessel is chartered and the license is issued, provided that

they fulfil all criteria in this paragraph. 2 For the purposes of this Article, the definition of point (m) of Article 10.2 applies. 3 For the purposes of this Article, the definition of point (h) of Article 10.2 applies.

& /en 39

(B) in which at least 50 % (fifty per cent) of the ownership belongs to natural persons

or juridical persons of the Parties; or

(iii) at least a minimum of two thirds of the crew are natural persons of the Parties.

ARTICLE 3.5

Tolerances

1. If a non-originating material used in the manufacture of a product does not satisfy the

requirements set out in Annex 3-B, such product shall nonetheless be considered as originating in a

Party if:

(a) the total value of non-originating materials does not exceed 10 % (ten per cent) of the

ex-works price of the product; and

(b) any of the percentages for the maximum value or weight of non-originating materials

set out in Annex 3-B are not exceeded through the application of this paragraph.

2. Paragraph 1 does not apply to products falling within Chapters 50 to 63 of the Harmonized

System, for which the tolerances set out in Notes 6 and 7 of Annex 3-A apply.

& /en 40

ARTICLE 3.6

Insufficient working or processing operations

1. Notwithstanding point (c) of Article 3.2(1) and point (c) of Article 3.2(2), a product shall not

be considered as originating in a Party if the manufacture of that product consists only of the

following operations conducted on non-originating materials in that Party:

(a) preserving operations to ensure that the products remain in good condition during transport

and storage;

(b) changes of packaging and breaking-up and assembly of packages;

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

(d) ironing or pressing of textiles;

(e) simple painting and polishing operations;

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

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

crystal sugar;

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

(i) sharpening, simple grinding, separating or simple cutting;

& /en 41

(j) sifting, screening, sorting, classifying, grading and matching, including the making-up of sets

of articles;

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

other simple packaging operations;

(l) affixing or printing marks, labels, logos and other similar signs on products or their

packaging;

(m) simple mixing of products, whether or not of different kinds, and simple mixing of sugar with

any material;

(n) simple assembly of non-originating parts to constitute a complete product, or disassembly of

products into parts;

(o) simple addition of water, dilution, dehydration or denaturation of products;

(p) a combination of two or more operations specified in points (a) to (o); or

(q) slaughter of animals.

2. For the purposes of paragraph 1, operations shall be considered simple if neither special skills

nor machines, apparatus or tools specially produced or installed for those operations are required for

their performance.

& /en 42

ARTICLE 3.7

Unit of qualification

1. The unit of qualification for the application of this Chapter shall be the particular product as

classified in accordance with the Harmonized System.

2. For a product composed of a group or assembly of articles which is classified under a single

heading of the Harmonized System, the whole constitutes the unit of qualification.

3. For a consignment consisting of a number of identical products classified under the same

heading of the Harmonized System, each product shall be taken individually when applying this

Chapter.

ARTICLE 3.8

Packaging materials, packing materials and containers

1. If, under General Rule 5 for the Interpretation of the Harmonized System, packaging is

included with the product for classification purposes, it shall be included for the purposes of

determining origin.

2. Packing materials and containers for shipment that are used to protect products during

transportation shall be disregarded in determining the origin of such products.

& /en 43

ARTICLE 3.9

Accessories, spare parts and tools

Accessories, spare parts and tools dispatched with a piece of equipment, machine, apparatus or

vehicle which are customary for that product and included in the price thereof or which are not

separately invoiced shall be regarded as one product with the piece of equipment, machine,

apparatus or vehicle in question.

ARTICLE 3.10

Accounting segregation

1. If originating and non-originating fungible materials are used in the manufacture of a product,

those materials shall be physically segregated, according to their origin, during storage in order for

the originating materials to maintain their originating status.

2. Notwithstanding paragraph 1, physical segregation of originating and non-originating

fungible materials is not needed in the manufacture of a product if the origin of such product is

determined pursuant to the accounting segregation method for managing stocks.

3. The accounting segregation shall be recorded and applied in accordance with the generally

accepted accounting principles applicable in the Party in which the product is manufactured.

4. The accounting segregation method may be used only if it can be ensured that, at any time, no

more products receive originating status than would be the case if the materials had been physically

segregated.

& /en 44

5. A Party may require that the application of the accounting segregation method be subject to

prior authorisation by the relevant competent authorities. The competent authorities may grant

authorisation subject to any conditions deemed appropriate and, in such cases, they shall monitor

the use of the authorisation. Those authorities may withdraw the authorisation at any time if the

beneficiary of the authorisation makes improper use of the accounting segregation method in any

manner or fails to fulfil any of the other conditions laid down in this Chapter.

ARTICLE 3.11

Sets

Sets, as defined in General Rule 3 for the Interpretation of the Harmonized System, shall be

regarded as originating if all their component products are originating. Nevertheless, if a set is

composed of originating and non-originating products, the set as a whole shall be regarded as

originating, provided that the value of the non-originating products does not exceed 15 %

(fifteen per cent) of the ex-works price of the set.

ARTICLE 3.12

Neutral elements

In order to determine whether a product is originating, it is not necessary to determine the origin of

the following elements used in its manufacture:

(a) energy and fuel;

& /en 45

(b) plant and equipment;

(c) machines and tools; or

(d) goods which do not enter and which are not intended to enter into the final composition of

the product.

ARTICLE 3.13

Principle of territoriality

1. The conditions set out in this Chapter relating to the acquisition of originating status shall be

fulfilled without interruption in the European Union or MERCOSUR.

2. If originating goods exported from the European Union or MERCOSUR to a third country are

returned, they shall be considered to be non-originating unless it can be demonstrated to the

satisfaction of the customs authorities that the goods returned:

(a) are the same as those exported; and

(b) have not undergone any operation beyond that necessary to preserve them in good condition

while in that third country or while being exported.

& /en 46

ARTICLE 3.14

Transport conditions

1. The products declared for importation into a Party shall be the same products as exported

from the Party in which they are considered originating. They shall not have been altered,

transformed in any way or subjected to operations other than those to preserve them in good

condition or to add or affix marks, labels, seals or any other distinguishing signs, in order to ensure

compliance with specific domestic requirements of the importing Party, prior to being declared for

import.

2. Storage of products or consignments and splitting of consignments may take place if carried

out under the responsibility of the exporter or of a subsequent holder of the goods, and if the

products remain under customs supervision in the country or countries of transit.

3. In case of doubt as to whether the requirements provided for in paragraphs 1 and 2 are

complied with, the customs authorities of the importing Party may request the importer to provide

evidence of compliance, 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.

& /en 47

ARTICLE 3.15

Exhibitions

1. Originating products sent for exhibition in a third country and sold after the exhibition for

importation into the European Union or MERCOSUR shall benefit on importation from the

provisions of this Agreement if it is shown to the satisfaction of the customs authorities of the

importing Party that:

(a) an exporter has consigned the products from the European Union or MERCOSUR to

the third country in which the exhibition is held and has exhibited them there;

(b) the products have been sold or otherwise disposed of by that exporter to a person in the

European Union or MERCOSUR;

(c) the products have been consigned during the exhibition or immediately thereafter in the state

in which they were sent for exhibition; and

(d) the products have not, since they were consigned for exhibition, been used for any purpose

other than demonstration at the exhibition.

2. A statement on origin shall be made out pursuant to Section B and submitted to the customs

authorities of the importing Party. The name and address of the exhibition shall be indicated

thereon.

& /en 48

3. Paragraph 1 applies to any trade, industrial, agricultural or crafts exhibition, fair or similar

public show or display which is organised for purposes other than private purposes in shops or

business premises with a view to the sale of foreign products, and during which the products remain

under customs control.

SECTION B

ORIGIN PROCEDURES

ARTICLE 3.16

General requirements

Products originating in the European Union on importation into MERCOSUR, and products

originating in MERCOSUR on importation into the European Union, shall benefit from preferential

tariff treatment under this Agreement upon submission of a statement on origin in accordance with

Article 3.17 and each Party's laws and regulations1.

1 A certificate of origin will be valid in accordance with the transitional measures contained in

Annex 3-D, for the time period specified therein.

& /en 49

ARTICLE 3.17

Conditions for making out a statement on origin

1. A statement on origin as referred to in Article 3.16 may be made out by:

(a) an exporter in accordance with the relevant laws and regulations of the Party of export; or

(b) any exporter for any small consignment consisting of one or more packages containing

originating products whose total value does not exceed the threshold stipulated in the relevant

laws and regulations of the Party of export.

2. The Parties shall exchange information on the relevant laws and regulations as referred to in

paragraph 1:

(a) on the date of entry into force of this Agreement;

(b) if there are any modifications to such laws and regulations, prior to the entry into force of

such modifications; and

(c) on request of either Party, at any time after the entry into force of this Agreement.

3. A statement on origin may be made out if the products concerned are products originating in

the European Union or MERCOSUR and fulfil the other requirements of this Chapter.

& /en 50

4. The exporter making out a statement on origin shall be prepared to submit at any time, at the

request of the customs authorities or competent governmental authorities of the Party of export, all

appropriate documents proving the originating status of the products concerned and the fulfilment

of the other requirements of this Chapter.

5. The exporter shall make out a statement on origin on the invoice, the delivery note, or any

other commercial document that describes the originating product in sufficient detail to enable its

identification using one of the language versions set out in Annex 3-C and in accordance with the

laws and regulations of the Party of export.

6. A statement on origin shall bear the original, handwritten signature of the exporter unless

otherwise provided in the relevant laws and regulations of the Party of export.

7. A statement on origin may be made out by the exporter when the products to which it relates

are exported, or after exportation provided that it is presented in the Party of import no later

than 2 (two) years after the importation of the products to which it relates.

ARTICLE 3.18

Validity of a statement on origin

1. A statement on origin shall be valid for 12 (twelve) months from the date on which it was

made out by the exporter, and shall be submitted within that time period to the customs authorities

of the Party of import.

& /en 51

2. Statements on origin submitted after the time period specified in paragraph 1 may be accepted

for the purposes of applying preferential treatment only if the failure to submit them within that

time period was due to exceptional circumstances.

3. In other cases of belated submission, the customs authorities of the Party of import may

accept the statement on origin if the products have been submitted before the final date.

ARTICLE 3.19

Importation by instalments

If, at the request of the importer and subject to the conditions set by the customs authorities of the

Party of import, dismantled or non-assembled products within the meaning of General Rule 2(a) for

the Interpretation of the Harmonized System that are classified within Sections XV to XXI of the

Harmonized System are imported by instalments, a single statement on origin for such products

shall be submitted to the customs authorities upon importation of the first instalment.

& /en 52

ARTICLE 3.20

Exemptions from a statement on origin

1. Products sent as small packages from private persons to private persons or forming part of

travellers' personal luggage shall be admitted as originating products without requiring the

submission of a statement on origin if such products are not imported by way of trade and have

been declared as meeting the requirements of this Chapter, and if there is no doubt as to the veracity

of the declaration. In the case of products sent by post, the declaration can be made on the customs

declaration CN22/CN23 or on a sheet of paper annexed to that document.

2. Imports which are occasional and consist solely of products for the personal use of the

recipients or travellers or their families shall not be considered to be imports by way of trade if it is

evident from the nature and quantity of the products that no commercial purpose is intended.

3. The total value of the products referred to in paragraph 1 shall not exceed the values

stipulated in the laws and regulations of the Party of import. The Parties shall exchange information

on those values.

ARTICLE 3.21

Supporting documents

The documents referred to in Article 3.17(4) may include:

(a) direct evidence of the processes carried out by the exporter or supplier to obtain the goods

concerned, contained, for example, in their accounts or internal book-keeping;

& /en 53

(b) documents proving the originating status of materials used, issued or made out in the

European Union or MERCOSUR, if those documents are used, issued or made out in

accordance with that Party's laws and regulations;

(c) documents proving the working or processing of materials in the European Union or

MERCOSUR, issued or made out in the European Union or MERCOSUR, if those documents

are used, issued or made out in accordance with that Party's laws and regulations; and

(d) a statement on origin proving the originating status of materials used made out in the

European Union or MERCOSUR in accordance with this Chapter.

ARTICLE 3.22

Record-keeping requirements

The exporter making out a statement on origin shall keep, for at least 3 (three) years as of the date

of making out the statement on origin, a copy of that statement on origin and of the documents

referred to in Article 3.17(4). The importer shall keep that statement of origin, or a copy thereof if

the original is held by the customs authority or competent governmental authority, for at

least 3 (three) years as of the date of importation of the products to which that statement on

origin refers.

& /en 54

ARTICLE 3.23

Discrepancies and formal errors

1. Slight discrepancies between the statements on origin and the documents submitted to the

customs office for the purposes of carrying out the formalities for importing the products shall not

render the statement on origin null and void if it is duly established that the statement on origin

corresponds to the products submitted.

2. Obvious formal errors on a statement on origin shall not cause the statement on origin to be

rejected if such errors do not create doubts concerning the correctness of the information contained

in the statement on origin.

ARTICLE 3.24

Cooperation between customs authorities and competent governmental authorities

1. The customs authorities or competent governmental authorities of the Member States of the

European Union and of the Signatory MERCOSUR State shall provide each other, by means of

communication between the European Commission and the Secretariat of MERCOSUR, with the

addresses of the customs authorities or competent governmental authorities responsible for

verifying statements on origin.

2. In order to ensure the proper application of this Chapter, the European Union and

MERCOSUR shall assist each other, through their customs authorities or competent governmental

authorities, in checking the authenticity of statements on origin and the correctness of the

information given in these statements.

& /en 55

3. To prevent, investigate and combat breaches of customs legislation, Annex 4-A provides for

cooperation between customs authorities or competent governmental authorities, including the

presence of duly authorised officials of one Party in the territory of the other, subject to the

agreement of and the conditions set by the Party in whose territory the assistance is being given.

ARTICLE 3.25

Verification of statements on origin

1. Verifications of statements on origin shall be carried out at random or whenever the customs

authorities or competent governmental authorities of the Party of import have reasonable doubts as

to the authenticity of such statements, the originating status of the products concerned or the

fulfilment of the other requirements of this Chapter.

2. For the purposes of implementing paragraph 1, the customs authorities or competent

governmental authorities of the Party of import shall return the statement on origin, or a copy

thereof, to the customs authorities or competent governmental authorities of the Party of export,

providing the reasons for the request of verification. Any documents or information obtained

suggesting that the information provided on the statement on origin is incorrect shall be included in

support of the request for verification.

3. The request for verification and the subsequent reply shall be submitted in an official

language of the customs authority or competent governmental authority of the Party of import

requesting the verification, in a language acceptable to that Party or in accordance with Article 5(3)

of Annex 4-A.

& /en 56

4. The verification shall be carried out by the customs authorities or competent governmental

authorities of the Party of export. For this purpose, they have the authority to call for any evidence

and to carry out any inspections of the exporter's accounts or any other check that they consider

appropriate.

5. If the customs authorities or competent governmental authorities of the Party of import decide

to suspend the granting of preferential treatment to the products concerned while awaiting the

results of the verification, they shall offer to release the products to the importer subject to any

precautionary measures that the customs authorities or competent governmental authorities deem

necessary. Any suspension of preferential treatment shall be terminated as soon as possible after the

Party of import has determined the origin of the products.

6. The customs authorities or competent governmental authorities of the Party of export shall

inform the authorities of the Party of import requesting the verification of the results thereof as soon

as possible. The Party of export shall provide to the customs authorities or competent governmental

authorities of the Party of import the following information:

(a) the results of the verification;

(b) a description of the product subject to verification and the tariff classification relevant for the

application of the rules of origin;

(c) a description and explanation of the manufacture sufficient to support the rationale concerning

the originating status of the product;

(d) information on the manner in which the verification was conducted; and

(e) if appropriate, supporting documentation.

& /en 57

7. If there is no reply within 10 (ten) months of the date of the verification request or if the reply

does not contain sufficient information to determine the authenticity of the statement in question or

the origin of the products, the requesting customs authorities or competent governmental authorities

shall, except in exceptional circumstances, refuse preferential tariff treatment to the products

covered by the statement on origin. The period of 10 (ten) months may be extended by mutual

agreement between the Parties, taking into account the number of verification requests and the

complexity of the verifications.

8. The customs authorities or competent governmental authorities of the Party of import

requesting the verification shall, at the request of the customs authorities or competent

governmental authorities of the Party of export, notify those authorities of their decision on the

verification process.

ARTICLE 3.26

Consultations

1. If, in relation to the verification procedures set out in Article 3.25, the customs authorities or

competent governmental authorities of the Party of import intend to make a determination of origin

that is not consistent with the reply provided by the customs authorities or competent governmental

authorities of the Party of export in accordance with Article 3.25(6), the Party of import shall notify

this intention to the Party of export within 60 (sixty) days of receiving the reply in accordance with

Article 3.25(6).

& /en 58

2. At the request of either Party, the Parties shall hold consultations within 90 (ninety) days of

the date of the notification referred to in paragraph 1 or within an agreed period of time, with a view

to resolving differences in relation to the verification procedures. The period for consultation may

be extended on a case-by-case basis by mutual written agreement between the Parties.

3. If there are differences in relation to the verification procedures which cannot be settled

between the customs authorities or competent governmental authorities of the Party of import

requesting a verification and the customs authorities or competent governmental authorities of the

Party of export responsible for carrying out this verification, or if such differences raise questions as

to the interpretation of this Chapter, such differences or questions shall be submitted to the

Subcommittee on customs, trade facilitation and rules of origin, referred to in Article 3.32.

4. The customs authorities or competent governmental authorities of the Party of import

requesting a verification may make the determination on origin after consultations in the

Subcommittee on customs, trade facilitation and rules of origin and only on the basis of sufficient

justification, after having granted the importer the right to be heard. The determination shall be

notified to the Party of export.

5. Nothing in this Article shall affect the procedures or the rights of the Parties under

Chapter 21.

6. In all cases, disputes between the importer and the customs authorities or competent

governmental authorities of the Party of import shall be settled under the law of that Party.

& /en 59

ARTICLE 3.27

Confidentiality

1. Each Party shall maintain, in conformity with its law, the confidentiality of the information

collected 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 by those

authorities for the purposes of this Chapter. Each Party shall ensure that the confidential

information collected pursuant to this Chapter is not used for purposes other than the administration

and enforcement of determination of origin and of customs matters, except with the permission of

the person or Party that provided such confidential information.

3. Notwithstanding paragraph 2, the importing Party may allow information collected pursuant

to this Chapter to be used or disclosed in any administrative, judicial or jurisdictional proceedings

instituted for failure to comply with customs related laws implementing this Chapter. In such a case

the importing Party shall notify the exporting Party of the use or disclosure of the information.

ARTICLE 3.28

Administrative measures and sanctions

A Party shall impose, in accordance with its laws and regulations, administrative measures and

sanctions on any person who draws up, or causes to be drawn up, a document which contains

incorrect information for the purposes of obtaining a preferential treatment for products.

& /en 60

SECTION C

FINAL PROVISIONS

ARTICLE 3.29

Ceuta and Melilla

1. For the purposes of this Chapter, in the case of the European Union, the term "Party" does not

include Ceuta and Melilla.

2. Products originating in MERCOSUR, when imported into Ceuta and Melilla, shall in all

respects be subject to the same customs treatment under this Agreement as that which is applied to

products originating in the customs territory of the European Union under Protocol 2 of the Act of

Accession of the Kingdom of Spain and the Portuguese Republic to the European Union.

MERCOSUR shall grant to imports of products covered by this Agreement and originating in Ceuta

and Melilla the same customs treatment as that which is granted to products imported from and

originating in the European Union.

3. The rules of origin and origin procedures referred to in this Chapter shall apply, mutatis

mutandis, to products exported from MERCOSUR to Ceuta and Melilla and to products exported

from Ceuta and Melilla to MERCOSUR.

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

5. The exporter shall indicate "MERCOSUR" or "Ceuta and Melilla" in field 2 of the text of the

statement on origin, depending on the origin of the product.

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6. The customs authorities of the Kingdom of Spain shall be responsible for the application and

implementation of this Chapter in Ceuta and Melilla.

ARTICLE 3.30

Tariff rate quotas

Products exported under tariff rate quotas granted by the European Union shall be accompanied by

an official document issued by the Signatory MERCOSUR States, the model of which should be

communicated to the European Union by MERCOSUR no later than the date of entry into force of

this Agreement1.

ARTICLE 3.31

Goods in transit or storage

This Agreement may be applied to goods which comply with this Chapter and which, on the date of

entry into force of this Agreement, are either in transit or in temporary storage in bonded

warehouses or in free zones in the European Union or in MERCOSUR, subject to the submission to

the customs authorities of the importing Party, within 6 (six) months of said date, of a statement on

origin and, if appropriate, the documents showing that the goods comply with Article 3.14.

1 This provision applies without prejudice to the other provisions in this Chapter.

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ARTICLE 3.32

Subcommittee on customs, trade facilitation and rules of origin

1. The Subcommittee on customs, trade facilitation and rules of origin established pursuant to

Article 22.3(4) shall have the following functions, in addition to those listed in Article 22.3 and

Articles 4.6(10) and 4.21:

(a) conduct the preparatory internal work necessary for the Trade Committee on:

(i) the implementation and operation of this Chapter; and

(ii) any amendments to this Chapter proposed by a Party;

(b) adopt explanatory notes to facilitate the implementation of this Chapter; and

(c) conduct, where necessary, the consultations provided for in Article 3.26.

ARTICLE 3.33

Explanatory notes

The Subcommittee on customs, trade facilitation and rules of origin shall adopt, as appropriate,

explanatory notes regarding the interpretation, application and administration of this Chapter.

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ARTICLE 3.34

Amendments to this Chapter

The Trade Council may amend this Chapter pursuant to point (f) of Article 22.1(6).

CHAPTER 4

CUSTOMS AND TRADE FACILITATION

ARTICLE 4.1

Objectives and scope

1. The Parties recognise the importance of customs and trade-facilitation matters in the evolving

global trading environment.

2. The Parties recognise that international trade and customs instruments and standards are the

basis for import, export and transit requirements and procedures.

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3. The Parties recognise that their legislation should be non-discriminatory and that customs and

other trade-related procedures should be based upon the use of modern methods and effective

controls to combat fraud, protect consumer health and safety and promote legitimate trade. Each

Party should periodically review its legislation and customs procedures. The Parties also recognise

that their customs and other trade-related procedures should not be more administratively

burdensome or trade-restrictive than necessary to achieve legitimate objectives and that they should

be applied in a predictable, consistent and transparent manner.

4. The Parties shall reinforce their cooperation with a view to ensuring that the relevant laws and

regulations, as well as the administrative capacity of the relevant administrations, fulfil the

objectives of promoting trade-facilitation while ensuring effective control of import, export and

transit of goods at the border.

5. The Parties shall cooperate with a view to support the development of regional integration

within both the European Union and MERCOSUR.

ARTICLE 4.2

Customs cooperation

1. The Parties, through their respective authorities, shall cooperate on customs and other

trade-related matters in order to ensure that the objectives set out in Article 4.1 are attained.

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2. Cooperation may include:

(a) exchanging information concerning customs and other trade-related legislation, the

implementation of such legislation and customs procedures, particularly in the

following areas:

(i) simplification and modernisation of customs procedures;

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

(iii) free circulation of goods and regional integration;

(iv) facilitation of transit movements and transhipment;

(v) interagency coordination at the border;

(vi) relations with the business community;

(vii) supply chain security and risk management; and

(viii) use of information technology, data and documentation requirements and single window

systems, including work towards their future interoperability;

(b) exchanging information concerning international trade and customs instruments

and standards;

& /en 66

(c) collaborating on the customs-related aspects of securing and facilitating the international trade

supply chain in accordance with the Framework of Standards to Secure and Facilitate Global

Trade (hereinafter referred to as the "SAFE Framework" of the World Customs Organization

(hereinafter referred to as the "WCO");

(d) developing joint initiatives related to import and export procedures, including technical

assistance, capacity building and measures aimed at providing an effective service to the

business community;

(e) strengthening cooperation between the Parties in the fields of customs and trade-facilitation in

international organisations such as the WTO, the WCO and the United Nations Conference on

Trade and Development (hereinafter referred to as "UNCTAD");

(f) establishing, if relevant and appropriate, mutual recognition of trade partnership programmes

and customs controls, including equivalent trade-facilitation measures;

(g) fostering cooperation between customs and other government authorities or agencies in

relation to authorized economic operator programmes for example by aligning requirements,

facilitating access to benefits and minimising unnecessary duplication;

(h) working together with a view to reaching a common approach to issues relating to customs

valuation; and

(i) working together to further reduce release times and to release goods without undue delay, in

particular perishable goods.

3. The Parties shall provide each other with mutual administrative assistance in customs matters

in accordance with the provisions of Annex 4-A.

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ARTICLE 4.3

Customs and other trade-related laws and regulations

1. Each Party's customs and trade-related laws and regulations1 shall be based upon:

(a) international instruments and standards applicable in the area of customs and trade, including:

the WTO Trade Facilitation Agreement done at Bali on 7 December 2013 (hereinafter

referred to as "WTO Trade Facilitation Agreement"); the International Convention on the

Harmonized Commodity Description and Coding System, done at Brussels on 14 June 1983;

the Safe Framework and the WCO data model, adopted in June 2005, and, to the extent

possible, the substantive elements of the Revised Kyoto Convention on the Simplification and

Harmonisation of Customs Procedures, done at Kyoto on the 18 May 1973;

(b) the common objective of facilitating legitimate trade through effective enforcement of and

compliance with legislative requirements; and

(c) legislation that is proportionate and non-discriminatory, avoids unnecessary burdens on

economic operators, provides 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 ensures safeguards against fraud and illicit or damaging activities.

1 For greater certainty, reference to laws and regulations covers procedures enshrined therein.

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2. 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 the rapid

release and clearance of goods;

(b) work towards the further simplification and standardisation of data and documentation

required by customs authorities and other agencies; and

(c) ensure that the highest standards of integrity be maintained, through the application of

measures reflecting the principles of the relevant international conventions and instruments in

this field.

ARTICLE 4.4

Release of goods

1. Each Party shall adopt or maintain requirements and procedures that:

(a) provide for the prompt release of goods within a period no greater than that required to ensure

compliance with its customs and other trade-related laws and formalities;

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(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 on

arrival1; and

(c) allow for the release of goods prior to the final determination of customs duties, taxes, fees

and charges, if such a determination is not done prior to, upon, or as rapidly as possible after

arrival, and if all other regulatory requirements have been met.

2. For the purposes of point (c) of paragraph 1, 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 required2.

3. Each Party shall strive to further reduce release-times and release the goods without undue

delay.

1 Signatory MERCOSUR States shall comply with the commitments in this paragraph in

accordance with Article 16 (Notification of definitive dates for implementation of Category B

and Category C) of the WTO Trade Facilitation Agreement. 2 Signatory MERCOSUR States shall comply with the commitments in this paragraph in

accordance with Article 16 (Notification of definitive dates for implementation of Category B

and Category C) of the WTO Trade Facilitation Agreement.

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ARTICLE 4.5

Perishable goods

1. For the purposes of this provision, perishable goods are goods that rapidly decay due to their

natural characteristics, in particular in the absence of appropriate storage conditions.

2. Each Party shall give appropriate priority to perishable goods when scheduling and

performing any examinations that may be required.

3. On request of an economic operator, each Party shall, if practicable and consistent 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 cleared at the premises of the economic

operator.

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ARTICLE 4.6

Advance rulings

1. For the purposes of this Article, "advance ruling" means a written decision provided to an

applicant prior to the importation of a good covered by the application that sets forth the treatment

that the Party shall provide to the good at the time of importation with regard to:

(a) the good's tariff classification; and

(b) the origin of the good.

2. Each Party shall issue, through its customs authorities, an advance ruling that sets forth the

treatment to be provided to the goods concerned. If an applicant submits a written request, including

in electronic format, containing all necessary information in accordance with the laws and

regulations of the issuing Party, that ruling shall be issued in a reasonable, time-bound manner.

3. The advance ruling shall be valid for a period of at least 3 (three) years after its issuance

unless the law, facts or circumstances supporting the original advance ruling change.

4. A Party may decline to issue an advance ruling if the question raised is the subject of

administrative or judicial review or if the application does not relate to any intended use of the

advance ruling. 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.

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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 or invalidates 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 revoke,

modify or invalidate an advance ruling with retroactive effect, only 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 of an applicant, a review of the advance ruling

or of the decision to revoke, modify or invalidate it1.

9. Subject to any confidentiality requirements, substantive elements of these rulings shall be

published, online or in other appropriate formats.

1 Under this paragraph, a review may, either before or after the ruling has been acted upon, be

provided by the official, office, or authority that issued the ruling, a higher or independent

administrative authority, or a judicial authority.

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10. To facilitate trade, the Subcommittee on customs, trade facilitation and rules of origin,

referred to in Article 4.21, shall regularly discuss updates on changes in the respective laws and

regulations of the Parties on the matters listed in this Article.

11. The Parties may agree upon advance rulings on any other matter.

ARTICLE 4.7

Transit and transhipment

1. Each Party shall ensure freedom of transit through its territory via the route most convenient

for transit.

2. Without prejudice to legitimate control, each Party shall accord to traffic in transit to or from

the territory of the other Party, treatment no less favourable than that accorded to its own like goods

and their movement, including imports and exports, when such goods are transported on the same

route under like conditions.

3. Each Party shall, to the extent possible, apply to transhipped goods customs procedures that

are less burdensome than those applied to traffic in transit.

4. Each Party shall operate bonded transport regimes that allow the transit of goods without

payment of customs duties or other charges subject to the provision of an appropriate guarantee.

5. Each Party shall promote and implement regional transit arrangements with a view to

facilitating traffic in transit and reducing trade barriers.

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6. Each Party shall draw upon and use international standards and instruments relevant to transit.

7. Customs transit procedures may be used also if the transit of goods begins or ends in the

territory of a Party (inland transit).

8. The Parties shall ensure that all concerned authorities and agencies in their respective

territories cooperate and coordinate on customs matters with a view to facilitating traffic in transit.

ARTICLE 4.8

Authorized economic operator

1. Each Party shall establish or maintain a trade-facilitation partnership programme for operators

who meet specified criteria, hereinafter referred to as authorized economic operators (hereinafter

referred to as "AEO").

2. The specified criteria that operators need to meet in order to qualify as authorized economic

operators, hereinafter referred to as "the specified criteria", shall be related to compliance, or the

risk of non-compliance, with requirements specified in each Party's laws and regulations. The

specified criteria, which shall be published, may include:

(a) the absence of any serious infringement or repeated infringements of customs and taxation

laws and regulations, including no record of serious criminal offences relating to the

economic activity of the applicant;

& /en 75

(b) the demonstration by the applicant of a high level of control of his or her operations and of the

flow of goods, by means of a system of managing commercial and, where appropriate,

transport records which allows appropriate customs controls;

(c) financial solvency, which shall be deemed to be proven if the applicant has good financial

standing, which enables him or her to fulfil his or her commitments, with due regard to the

characteristics of the type of business activity concerned;

(d) proven competences or professional qualifications directly related to the activity carried out;

and

(e) appropriate security and safety standards.

3. The specified criteria 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 trade-facilitation partnership programme shall include at least four of the following

benefits:

(a) fewer documentary and data requirements, as appropriate;

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

(c) rapid release time, as appropriate;

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

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(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 authorized economic operator or another place

authorised by the customs authorities.

5. The Parties should ensure coordination between customs authorities and other border agencies

in the development of their respective authorized economic operator programmes through means

such as the alignment of requirements, the minimisation of unnecessary duplication and the access

to benefits related to controls and requirements administered by agencies other than customs

authorities.

ARTICLE 4.9

Single window

Each Party shall endeavour to establish single window systems, enabling traders to submit through

a single entry point documentation and data requirements for importation, exportation or transit of

goods to the participating authorities or agencies.

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ARTICLE 4.10

Transparency

1. The Parties recognise the importance of timely consultations with trade representatives on a

Party's proposed laws and procedures related to customs and trade facilitation matters.

2. Each Party shall ensure that its respective customs and other trade-related requirements and

procedures continue to meet the needs of the trading community, follow best practices and remain

as less trade-restrictive as possible.

3. Each Party shall, as appropriate, provide for regular consultations between its border agencies

and traders or other stakeholders located within its territory.

4. Each Party shall promptly publish, in a non-discriminatory and easily accessible manner, and

as far as possible through electronic means, new laws, regulations and general procedures related to

customs and trade-facilitation matters prior to the application of any such laws, regulations or

general procedures, as well as changes to and interpretations of such laws, regulations and general

procedures. This shall include:

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

procedures and hours of operation, 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;

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(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) points of contact for information enquiries; and

(l) other relevant notices of an administrative nature in relation to the above.

5. Each Party shall ensure there is a reasonable time period between the publication of new or

amended laws, regulations and general procedures and fees or charges and their entry into force.

6. Each Party shall make available online and update, as appropriate, the following:

(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;

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(b) the forms and documents required for importation into, exportation from, or transit through

the territory of that Party; and

(c) contact information on enquiry points.

7. Each Party shall establish or maintain one or more enquiry points to answer within a

reasonable time enquiries from governments, traders and other interested parties on customs and

other trade-related matters. The Parties shall not require the payment of a fee for answering

enquiries or providing required forms and documents. The enquiry points shall answer enquiries

and provide the forms and documents within a reasonable time period set by each Party, which may

vary depending on the nature or complexity of the enquiry.

ARTICLE 4.11

Customs valuation

The Agreement on the Implementation of Article VII of GATT (1994) shall govern customs

valuation rules applied to reciprocal trade between the Parties. Its provisions are hereby

incorporated into and made an integral part of this Agreement.

ARTICLE 4.12

Risk management

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

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2. Each Party shall design and apply risk management in such a manner as to avoid arbitrary or

unjustifiable discrimination, or disguised restrictions on international trade.

3. Each Party shall concentrate customs control and other relevant border controls on high-risk

consignments and expedite the release of low-risk consignments. Each Party may also select, on a

random basis, consignments for such controls as part of its risk management.

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

criteria.

5. The provisions of this Article are, whenever possible, applicable to procedures administered

by other border agencies.

ARTICLE 4.13

Post-clearance audit

1. With a view to expediting the release of goods, each Party shall adopt or maintain

post-clearance audit to ensure compliance with customs and other related laws and regulations.

2. Each Party shall conduct post-clearance audits in a risk-based manner.

3. Each Party shall conduct post-clearance audits in a transparent manner. If an audit is

performed 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.

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4. The Parties acknowledge that the information obtained in a post-clearance audit may be used

in further administrative or judicial proceedings.

5. The Parties shall, wherever practicable, use the results of a post-clearance audit in applying

risk management.

ARTICLE 4.14

Customs brokers

Each Party shall 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.

A Party shall not adopt new measures introducing the mandatory use of customs brokers.

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 or any other inspection activity performed at

destination, before customs clearance, by private companies.

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ARTICLE 4.16

Appeals

1. Each Party shall provide effective, prompt, non-discriminatory and easily accessible

procedures to guarantee the right of appeal against the administrative actions, rulings and decisions

of customs or other competent authorities affecting import or export of goods or goods in transit.

2. Appeal procedures may include administrative review by the supervising authority and

judicial review of decisions taken at the administrative level according to each Party's laws and

regulations.

3. Any person who has applied to the customs authorities for a decision and has not obtained a

decision on that application within the applicable time-limits shall also be entitled to exercise the

right of appeal.

4. Each Party shall provide a person to whom it issues an administrative decision with the

reasons for that decision, so as to enable that person to have recourse to appeal procedures

if necessary.

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ARTICLE 4.17

Import, export and transit formalities and data and documentation requirements

1. Each Party shall ensure that import, export and transit formalities and data and documentation

requirements are:

a) adopted or applied with a view to a rapid release of goods, in particular perishable goods,

provided the conditions for the release are fulfilled;

b) adopted or applied in a manner that aims to reduce the time and cost of compliance for traders

and operators;

c) the least trade-restrictive measure chosen, if two or more alternative measures are reasonably

available for fulfilling the policy objective or objectives in question; and

d) not maintained, including parts thereof, if they, or parts of them are no longer required.

2. MERCOSUR shall work towards applying common customs procedures and uniform customs

data requirements for the release of goods.

ARTICLE 4.18

Use of information technology

1. Each Party shall use information technologies that expedite procedures for the release of

goods in order to facilitate trade between the Parties.

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2. Each Party shall:

(a) make available by electronic means customs declarations and, whenever possible, other

documents required for the import, transit or export of goods;

(b) allow a customs declaration and, whenever possible, any other data requirements for the

import and export of goods to be submitted in electronic format;

(c) establish means of providing for the electronic exchange of customs information with its

trading community;

(d) promote the electronic exchange of data between its respective traders, customs

administrations and other trade-related agencies; and

(e) use electronic risk management systems for assessment and targeting that enable its customs

authorities and, whenever possible, other border agencies to focus their inspections on high-

risk goods and that facilitate the release and movement of low-risk goods.

3. Each Party shall adopt or maintain procedures allowing the option of electronic payment for

duties, taxes, fees and charges incurred upon importation and exportation collected by customs

authorities and, whenever possible and applicable, by other border agencies.

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ARTICLE 4.19

Penalties

1. Each Party shall ensure that its customs laws and regulations provide that any penalties

imposed for breaches of customs regulations or procedural requirements be proportionate and non-

discriminatory.

2. Penalties for a breach of a Party's customs law, regulation or procedural requirement are

imposed only on the person responsible under that Party's law for such breach.

3. Penalties imposed shall depend on the facts and circumstances of the case and shall be

commensurate with the degree and severity of the breach. Each Party shall avoid incentives for the

assessment or collection of a penalty or conflicts of interest in the assessment and collection of

penalties.

4. In the event of voluntary prior disclosure to a customs administration of the circumstances of

a breach of a customs law, regulation or procedural requirement, each Party is encouraged to

consider this as a potential mitigating factor when establishing a penalty.

5. When a penalty is imposed for a breach of a customs law, regulation or procedural

requirement, an explanation in writing is provided to the person upon whom the penalty is imposed

specifying the nature of the breach and the applicable law, regulation or procedure under which the

amount or range of penalty for the breach has been prescribed.

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ARTICLE 4.20

Temporary admission

1. For the purposes of this Article, the term "temporary admission" means the customs

procedure under which certain goods, including their means of transport, that are brought into a

customs territory for a specific purpose are conditionally relieved from payment of import duties

and taxes, without application of import prohibitions or restrictions of economic character. Such

goods must be intended for re-exportation within a specified period and without having undergone

any change except normal depreciation due to the use made of them.

2. Nothing in this Article should be construed as to relieve imported goods from meeting trade-

related requirements of non-economic character, in particular sanitary and phytosanitary measures.

3. Each Party shall, in accordance with its law, grant temporary admission, with total conditional

relief from import duties and taxes and without application of import restrictions or prohibitions of

economic character to the following goods:

(a) goods for display or use at exhibitions, fairs, meetings or similar events;

(b) professional equipment for the press or for sound or television broadcasting; cinematographic

equipment; any other equipment necessary for the exercise of the calling, trade or profession

of a person visiting the territory of another country to perform a specified task;

(c) goods imported in connection with a commercial operation but whose importation does not in

itself constitute a commercial operation;

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(d) goods imported in connection with a manufacturing operation (such as plates, drawings,

moulds, plans and models, for use during a manufacturing process); replacement means of

production;

(e) goods imported exclusively for educational, scientific or cultural purposes;

(f) personal effects of passengers and goods imported for sports purposes;

(g) tourist publicity material;

(h) goods imported for humanitarian purposes; and

(i) animals imported for specific purposes.

3. Each Party shall, for the temporary admission of the goods referred to in paragraph 2 and

regardless of their origin, accept A.T.A. carnets issued and endorsed by the other Party in

accordance with the Customs Convention on the A.T.A. Carnet for the temporary admission of

goods done at Brussels on 6 December 1961, 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 Party1.

1 This provision shall apply only in respect of the European Union and of those Signatory

MERCOSUR States that are Contracting parties to the Convention on Temporary Admission

done at Istanbul on 26 June 1990 and according to the commitments undertaken in that

Convention.

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ARTICLE 4.21

Subcommittee on customs, trade facilitation and rules of origin

The Subcommittee on customs, trade facilitation and rules of origin, established pursuant to

Article 22.3(4) shall, in addition to the functions listed in Articles 3.32, 4.6(10) and 22.3, have the

function to enhance cooperation on the development, application and enforcement of customs and

trade-related procedures, mutual administrative assistance in customs matters, rules of origin and

administrative cooperation.

ARTICLE 4.22

Trade Council

With a view to implementing the relevant provisions in this Chapter, the Trade Council shall have

the power to adopt decisions relating to AEO programmes and their mutual recognition as well as to

joint initiatives relating to customs procedures and trade-facilitation.

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CHAPTER 5

TECHNICAL BARRIERS TO TRADE

ARTICLE 5.1

Objective

The objective of this Chapter is to facilitate trade in goods between the Parties by identifying,

preventing and eliminating unnecessary technical barriers to trade (hereinafter referred to as "TBT")

and to enhance cooperation between the Parties in matters covered by this Chapter.

ARTICLE 5.2

Relation to the TBT Agreement

1. The Parties reaffirm their rights and obligations under the TBT Agreement, which is hereby

incorporated into and made part of this Agreement.

2. References to "this Agreement" in the TBT Agreement are to be read, as appropriate, as

references to the Interim Agreement on Trade between the European Union, of the one part, and the

Common Market of the South, the Argentine Republic, the Federative Republic of Brazil, the

Republic of Paraguay and the Oriental Republic of Uruguay, of the other part.

3. The term "Members" in the TBT Agreement means the Parties to this Agreement.

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ARTICLE 5.3

Scope

1. This Chapter applies to the preparation, adoption and application of standards, technical

regulations and conformity assessment procedures 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 governmental bodies; and

(b) sanitary and phytosanitary measures as defined in Annex A to the SPS Agreement.

ARTICLE 5.4

Definitions

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

(a) the definitions set out in Annex 1 to the TBT Agreement;

(b) "supplier's declaration of conformity" means a first-party attestation issued by the

manufacturer on his sole responsibility based on the results of an appropriate type of

conformity assessment activity and excluding mandatory third-party assessment;

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(c) "ISO" means the International Organization for Standardization;

(d) "IEC” means the International Electrotechnical Commission;

(e) "ITU" means the International Telecommunication Union;

(f) "Codex Alimentarius" means the Codex Alimentarius Commission (hereinafter referred to as

"Codex Alimentarius");

(g) "ILAC" means the International Laboratory Accreditation Cooperation;

(h) "IAF" means the International Accreditation Forum; and

(i) "IECEE CB Scheme" means the Scheme of the IEC System of Conformity Assessment

Schemes for Electrotechnical Equipment and Components for Mutual Recognition of Test

Certificates for Electrical Equipment.

ARTICLE 5.5

Joint cooperation on trade-facilitating initiatives

1. The Parties recognise the importance of intensifying their cooperation with a view to

increasing mutual understanding of their respective systems and helping to eliminate or avoid the

creation of TBT. In this regard, the Parties shall work towards the identification, promotion,

development and implementation, as appropriate, of trade-facilitating initiatives, on a

case-by-case basis.

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2. A Party may propose to the other Party sector-specific initiatives in matters covered by this

Chapter. Those proposals shall be transmitted to the TBT Chapter coordinator, nominated pursuant

to Article 5.13, and may include:

(a) information exchange on regulatory approaches and practices;

(b) joint analysis of a sector or group of products;

(c) initiatives to further align technical regulations and conformity assessment procedures with

relevant international standards;

(d) the promotion of the use of accreditation to assess the competence of conformity assessment

bodies; and

(e) the consideration of mutual or unilateral recognition of conformity assessment results.

3. Whenever one of the Parties proposes a specific trade-facilitating initiative, the other Party

shall duly consider such proposal and reply within a reasonable period of time. If the other Party

rejects the proposed initiative, it shall explain the reasons for its decision to the proposing Party.

4. The terms of the work envisaged in this Article shall be defined by, of the one hand, the

European Union and, of the other hand, MERCOSUR or the Signatory MERCOSUR States

engaged in each trade-facilitating activity, if needed, and may include establishing ad hoc working

groups. In order to benefit from non-governmental perspectives on matters related to this Article,

each Party may, as appropriate and in accordance with its rules and procedures, consult with

stakeholders and other interested parties.

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5. The Subcommittee on trade in goods, established pursuant to Article 22.3(4), shall discuss the

results of the work carried out pursuant to this Article and may consider appropriate actions.

6. Nothing in this Article shall be construed as obliging a Party to:

(a) deviate from domestic procedures for preparing and adopting regulatory measures;

(b) take actions that would undermine or impede the timely adoption of regulatory measures to

achieve its public policy objectives; or

(c) adopt any particular regulatory outcome.

7. If initiatives referred to in this Article are agreed and if that is necessary for their

implementation, each Party shall facilitate the interaction of technical teams to demonstrate their

conformity assessment schemes and systems in order to increase mutual understanding.

8. For the purposes of this Article, the European Union shall act through the European

Commission.

ARTICLE 5.6

Technical regulations

1. Each Party shall make best use of good regulatory practices with regard to the preparation,

adoption and application of technical regulations, as provided for in the TBT Agreement, including,

for example, preference for performance-based technical regulations, use of impact assessments or

stakeholder consultation.

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2. In particular, the Parties shall:

(a) use relevant international standards as a basis for their technical regulations, including any

conformity assessment elements therein, except if such international standards would be an

ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued; if

international standards are not used as a basis for a technical regulation which may have a

significant effect on trade, a Party shall, upon request of the other Party, explain the reasons

why such standards are considered inappropriate or ineffective for the fulfilment of the

legitimate objective pursued;

(b) when reviewing their respective technical regulations, in addition to Article 2.3 of the

TBT Agreement and without prejudice to Articles 2.4 and 12.4 of the TBT Agreement,

increase the alignment of those regulations with relevant international standards; a Party shall

consider among others any new development in the relevant international standards and

whether the circumstances that have given rise to any divergence from any relevant

international standards continue to exist;

(c) promote the development of regional technical regulations and encourage that these are

adopted at national level and replace existing ones, in order to facilitate trade between

the Parties;

(d) allow a reasonable interval between the publication of technical regulations and their entry

into force for economic operators of the other Party to adapt1;

1 "Reasonable interval" shall be understood to mean normally a period of not less

than 6 (six) months, except when this would be ineffective in fulfilling the legitimate

objectives pursued.

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(e) carry out the impact analysis of planned technical regulations in accordance with their

respective rules and procedures; and

(f) when preparing technical regulations, take due account of the characteristics and special needs

of micro, small and medium-sized enterprises.

ARTICLE 5.7

Standards

1. The Parties reaffirm their obligations under Article 4.1 of the TBT Agreement, particularly in

respect of taking all reasonable measures to ensure that all standardising bodies within their

territories accept and comply with the Code of Good Practice for the Preparation Adoption and

Application of Standards in Annex 3 to the TBT Agreement.

2. International standards developed by ISO, IEC, ITU or the Codex Alimentarius shall be

considered as the relevant international standards within the meaning of Articles 2 and 5 and

Annex 3 to the TBT Agreement.

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3. A standard developed by other international organisations may also be considered a relevant

international standard within the meaning of Articles 2 and 5 and Annex 3 to the TBT Agreement,

if:

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

(i) among national delegations of the participating WTO Members representing all the

national standardising 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 WTO TBT Committee Decision on Principles

for the Development of International Standards, Guides and Recommendations with relation

to Articles 2 and 5 and Annex 3 to the TBT Agreement.

4. With a view to harmonising standards on a basis as wide as possible each Party shall

encourage, within the limits of its competence and resources, the standardising bodies within its

territory, as well as the regional standardising bodies of which that Party or the standardising bodies

within its territory are members, to:

(a) participate, within the limits of their resources, in the preparation of international standards by

relevant international standardising bodies;

(b) cooperate with the relevant national and regional standardising bodies of the other Party in

international standardisation activities;

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(c) use relevant international standards as a basis for the standards they develop, except where

such international standards would be ineffective or inappropriate, for instance because of an

insufficient level of protection or fundamental climatic or geographical factors or fundamental

technological problems;

(d) avoid duplication of, or overlap with, the work of international standardising bodies;

(e) promote the development of standards at regional level and the adoption of such standards by

national standardising bodies, thereby replacing existing national standards;

(f) review national and regional standards not based on relevant international standards at regular

intervals, with a view to increasing their alignment with relevant international standards; and

(g) foster bilateral cooperation with the standardising bodies of the other Party.

5. The Parties should exchange information through the TBT Chapter coordinators, nominated

pursuant to Article 5.13, on:

(a) their use of standards as a basis for, or in support of, technical regulations;

(b) cooperation agreements implemented by either Party on standardisation, for example on

standardisation issues in free trade agreements with third countries; and

(c) their respective standardisation processes, and the use of international, regional or sub-

regional standards as a basis for their national standards.

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ARTICLE 5.8

Conformity assessment procedures and accreditation

1. The provisions set out in Article 5.6 with respect to the preparation, adoption and application

of technical regulations also apply to conformity assessment procedures.

2. 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) consider, in the regulatory process, the use of the supplier's declaration of conformity as

assurance of conformity, among other options, for showing compliance with technical

regulations; and

(c) if requested, provide information to the other Party on the reasons for selecting a particular

conformity assessment procedure for specific products.

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 body as

specified in paragraph 4, it shall:

(a) preferentially use accreditation to qualify conformity assessment bodies;

(b) make best use of international standards for accreditation and conformity assessment, as well

as international agreements involving the Parties' accreditation bodies, for example, through

the mechanisms of ILAC and IAF;

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(c) consider to join or, as applicable, encourage its testing, inspection and certification bodies to

join any functioning international agreements or arrangements for harmonisation or

facilitation of acceptance of conformity assessment results;

(d) within its territory, promote competition between conformity assessment bodies designated by

the authorities for a particular product or set of products with a view to enabling economic

operators to choose amongst them;

(e) ensure that conformity assessment bodies are independent of manufacturers, importers and

distributors, in the sense that they carry out their activities with objectivity and independence

of judgment;

(f) ensure that there are no conflicts of interest between accreditation bodies and conformity

assessment bodies, or between activities of market surveillance authorities and activities of

conformity assessment bodies;

(g) allow, to the extent possible, 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; and

(h) publish online a list of the bodies that it has designated to perform such conformity

assessment and relevant information on the scope of each such body's designation.

4. Nothing in point (g) of paragraph 3 shall be construed as prohibiting a Party from requiring

subcontractors to meet the requirements that the conformity assessment body to which it is

contracted would be required to meet in order to perform the contracted tests or inspection itself.

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5. Nothing in this Article shall preclude a Party from requesting that conformity assessment in

relation to specific products is performed by specified government authorities of that Party. In such

cases, that Party shall:

(a) establish the conformity assessment fees in accordance with the approximate cost of the

services rendered and, upon request of an applicant for conformity assessment, provide the

different elements included in those fees; and

(b) in principle, make the conformity assessment fees publicly available or, publicly available or,

when such information is not publicly available, provide it upon request.

6. Notwithstanding paragraphs 3 to 5 of this Article, in the fields which are listed in Annex 5-A,

in which the European Union accepts supplier's declaration of conformity as assurance that a

product conforms to a technical regulation, and in which a Signatory MERCOSUR State requires

mandatory third-party testing or certification for these fields, the Signatory MERCOSUR State

shall, as an assurance that a product conforms with the requirements of a Signatory MERCOSUR

State's technical regulations, accept certificates or, in cases where such acceptance is not provided

for under its relevant laws and regulations, accept test reports issued by conformity assessment

bodies that are located in the territory of the European Union and which have been accredited for

the relevant scopes by an accreditation body member of the international arrangements for mutual

recognition of the ILAC and the IAF; or accept certificates that have been issued under the IECEE

CB Scheme. In order to accept such certificates or test reports, a Signatory MERCOSUR State may

require in its relevant laws and regulations that bilateral arrangements, including memoranda of

understanding, exist between the conformity assessment body located in the territory of the

European Union and the conformity assessment body located in the territory of the Signatory

MERCOSUR State.

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7. If supplier's declarations of conformity are considered a valid conformity assessment

procedure in the European Union, test reports issued by conformity assessment bodies that are

located in the territory of the Signatory MERCOSUR State, shall be accepted as a valid document

in the process of demonstrating that a product conforms with the European Union's technical

regulation requirements. The manufacturer shall remain responsible in all cases for the conformity

of the product.

8. Paragraph 6 also applies where a Signatory MERCOSUR State introduces new mandatory

third-party testing or certification requirements for the fields specified in Annex 5-A, in accordance

with paragraph 10 of this Article. If the European Union introduces mandatory third-party testing or

certification requirements for the fields specified in Annex 5-A, in accordance with paragraph 10 of

this Article, the Parties shall discuss in the Subcommittee on trade in goods, referred to in

Article 5.14, whether any steps need to be taken to ensure reciprocity as regards the acceptance of

tests reports or certificates issued by conformity assessment bodies that are located in the territory

of the Signatory MERCOSUR State.

9. The Trade Council may adopt a decision to amend Section A of Annex 5-A.

10. Notwithstanding paragraph 6 of this Article, either Party may introduce requirements for

mandatory third-party testing or certification for the fields specified in Annex 5-A, for products

falling within the scope of that Annex under the following conditions:

(a) the introduction of such requirements or procedures are justified under the legitimate

objectives referred to in Article 2.2 of the TBT Agreement;

(b) the reasons for the introduction of any such requirements or procedures are supported by

substantiated technical or scientific information regarding the performance of the products in

question;

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(c) any such requirements or procedures are not more trade-restrictive than necessary to fulfil the

Party's legitimate objective, taking account of the risks that non-fulfilment would create; and

(d) the Party could not have reasonably foreseen the need for introducing any such requirements

or procedures at the date of entry into force of this Agreement.

11. Paragraph 6 is without prejudice to the exercise, on a non-discriminatory basis, of market

surveillance competences by the authorities of a Party, including additional testing on samples at

the point of entry.

ARTICLE 5.9

Transparency

1. With regard to the preparation, adoption and application of standards, technical regulations

and conformity assessment procedures, each Party shall:

(a) take the other Party's views into account if the process of developing a technical regulation is

open to public consultation, wholly or partially;

(b) when developing major technical regulations and conformity assessment procedures which

may have a significant effect on trade ensure in accordance with its respective laws and

regulations that transparency procedures are in place that allow persons of the Parties to

provide input through a formal public consultation process, except when urgent problems of

safety, health, environmental protection or national security arise or threaten to arise;

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(c) allow persons of the other Party to participate in the consultation process referred to in

point (b) on terms no less favourable than those accorded to its own persons and, whenever

possible, make the results of that consultation process public;

(d) allow, in principle, a period of at least 60 (sixty) days for the other Party to provide written

comments on the proposed technical regulations and conformity assessment procedures, and

consider a reasonable request to extend the comment period;

(e) provide, in cases where the notified text is not in one of the official WTO languages, a clear

and comprehensive description of the content of the measure in the WTO notification format;

(f) if it receives written comments on its proposed technical regulation or conformity assessment

procedure from the other Party:

(i) discuss, upon request by the other Party, the written comments, whenever possible with

the participation of its competent regulatory authority and at a time when they can be

taken into account; and

(ii) reply in writing to the comments, whenever possible no later than the date of

publication of the technical regulation or conformity assessment procedure;

(g) provide, if requested by the other Party, information regarding the objectives of, legal basis

and rationale for, a technical regulation or conformity assessment procedure that the Party has

adopted or is proposing to adopt;

(h) provide information on the adoption and the entry into force of the technical regulation or

conformity assessment procedure and the adopted final text through an addendum to the

original notification to the WTO;

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(i) consider a reasonable request from the other Party, received prior to the end of the comment

time period following the transmission of a proposed technical regulation, to extend the time

period between the adoption of the technical regulation and its entry into force, except when

the delay would be ineffective in fulfilling the legitimate objectives pursued; and

(j) provide free of charge access to the electronic version of the notified text with the

notification.

2. For the purposes of point (d) of paragraph 1, where urgent problems of safety, health,

environmental protection or national security arise or threaten to arise, Articles 2.10 and 5.7 of the

TBT Agreement shall apply.

3. If standards are made mandatory through incorporation or referencing in a draft technical

regulation or conformity assessment procedure, the transparency obligations related to

TBT notification set out in this Article and in Article 2 or 5 of the TBT Agreement shall be fulfilled.

4. Each Party shall ensure that all technical regulations and mandatory conformity assessment

procedures adopted and in force are publicly available on an official website free of charge. Each

Party shall always provide unrestricted access to all information relevant to the achievement of

conformity with a technical regulation. If standards provide a presumption of conformity with

technical regulations and these standards are not referred to in those technical regulations, each

Party shall ensure access to the information on corresponding standards.

5. Each Party shall, upon a reasonable request of the other Party or its economic operators,

provide information on technical regulations in force and, as appropriate and available, written

guidance on compliance with the technical regulations, without undue delay.

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ARTICLE 5.10

Marking and labelling

1. The Parties' technical regulations including or dealing exclusively with mandatory marking or

labelling shall observe the principles of Article 2 of the TBT Agreement.

2. In particular, if a Party requires mandatory marking or labelling of products:

(a) it shall only require information which is relevant for consumers or users of the product or

authorities to indicate the product's conformity with the mandatory technical requirements;

(b) and if a Party requires any prior approval, registration or certification of the labels or

markings of the products, as a precondition for placing on the market products that otherwise

comply with its mandatory technical requirements, it shall ensure that the requests submitted

by the economic operators of the other Party are decided without undue delay and on a non-

discriminatory basis;

(c) and if a Party requires the use of a unique identification number, the Party shall issue such

number to the economic operators of the other Party without undue delay and on a non-

discriminatory basis;

(d) and provided that it is not misleading, contradictory or confusing in relation to the importing

Party's regulatory requirements and the legitimate objectives under the TBT Agreement are

not compromised thereby, the Party shall permit:

(i) information in other languages in addition to the language required in the importing

Party of the products; and

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(ii) nomenclatures, pictograms, symbols or graphics adopted in international standards;

(e) it shall accept, whenever possible, that supplementary labelling and corrections to labelling

take place in customs warehouses or other designated areas at the point of import as an

alternative to labelling in the country of origin;

(f) if it considers that the protection of public health and the environment, the protection against

deceptive practices and any other legitimate objectives under the TBT Agreement are not

compromised thereby, it shall endeavour to accept non-permanent or detachable labels, rather

than labels physically attached to the product, or inclusion of relevant information in the

accompanying documentation.

3. Paragraph 2 shall not apply to marking or labelling of medicinal products.

4. If a Party considers that marking or labelling requirements for a product or a sector in the

other Party could be improved, it may propose a trade-facilitating initiative to address its concerns

in conformity with Article 5.5.

ARTICLE 5.11

Cooperation and technical assistance

1. To contribute to the fulfilment of the objectives of this Chapter, each Party shall, inter alia:

(a) promote cooperation and joint activities and projects between their respective organisations,

public or private, national or regional, in the fields of technical regulations, standardisation,

conformity assessment, metrology and accreditation;

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(b) promote good regulatory practices through the exchange of information, experiences and best

practices about, inter alia, regulatory impact assessment, regulatory stock management and

risk assessment and public consultation;

(c) exchange views on market surveillance;

(d) strengthen the technical and institutional capacity of the national regulatory, metrology,

standardisation, conformity assessment and accreditation bodies, supporting the development

of their technical infrastructure, including laboratories and testing equipment, and sustaining

the continuous training of human resources;

(e) promote, facilitate and, whenever possible, coordinate their participation in international

organisations and other fora related to technical regulations, conformity assessment,

standards, accreditation and metrology;

(f) support technical assistance activities by national, regional and international organisations in

the areas of technical regulations, standardisation, conformity assessment, metrology and

accreditation; and

(g) endeavour to share available scientific evidence and technical information among regulatory

authorities of the Parties, to the extent necessary to cooperate or pursue technical discussions

under this Chapter, with the exception of confidential or other sensitive information.

2. A Party shall give appropriate consideration to proposals of the other Party for cooperation

under this Chapter.

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ARTICLE 5.12

Technical discussions

1. Each Party may request to discuss any concern that arises under this Chapter, including any

draft or proposed technical regulation or conformity assessment procedure of the other Party that

the Party considers might significantly adversely affect trade between the Parties. The requesting

Party shall deliver its request to the TBT Chapter coordinator of the other Party nominated pursuant

to Article 5.13 and shall identify:

(a) the issue;

(b) the provisions of this Chapter to which the concerns relate; and

(c) the reasons for the request, including a description of the requesting Party's concerns.

2. Any information or explanation requested in accordance with paragraph 1 shall be provided

no later than 60 (sixty) days after the date of the request of a Party in accordance with paragraph 1.

The deadline may be extended with prior justification by the requested Party.

3. If an issue has been previously addressed between the Parties in any forum, a Party may

request directly a discussion, in person or via video or teleconference, no later than 60 (sixty) days

after the date of such request. In such cases, the requested Party shall make every effort to be

available for such discussion.

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4. If the Parties have not had a discussion under this Article in the previous 12-month period, the

request may not be refused by the other Party. If the requesting Party believes that the matter is

urgent, it may request that a meeting take place within a shorter timeframe. In such cases, the

responding Party shall give positive consideration to such a request. The Parties shall make every

attempt to arrive at a mutually satisfactory resolution of the matter.

5. For greater certainty, a Party may request technical discussions with the other Party pursuant

to paragraph 2 also with regard to technical regulations or conformity assessment procedures of

national, regional or local governments, as the case may be, on the level directly below that of the

central government that may have a significant effect on trade.

6. Following the technical discussion, the Parties may conclude that the issue could be better

addressed through a trade-facilitating initiative, in accordance with Article 5.5.

7. This Article is without prejudice to a Party's rights and obligations under Chapter 21.

ARTICLE 5.13

TBT Chapter coordinator

1. Each Party shall nominate a TBT Chapter coordinator and notify the other Party in the event

of any changes. The TBT Chapter coordinators shall work jointly to facilitate the implementation of

this Chapter and cooperation between the Parties in all TBT matters.

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2. The functions of the TBT Chapter coordinators include:

(a) supporting the Subcommittee on trade in goods, referred to in Article 5.14, in the exercise of

the functions;

(b) supporting trade-facilitating initiatives and technical discussions, as appropriate, in

accordance with Articles 5.5 and 5.12 respectively;

(c) exchanging information on work undertaken in non-governmental, regional and multilateral

fora related to standards, technical regulations and conformity assessment procedures; and

(d) reporting any relevant development related to the implementation of this Chapter to the

Subcommittee on trade in goods, referred to in Article 5.14, whenever appropriate.

3. The TBT Chapter coordinators shall communicate with one another by any agreed method

that is appropriate to carry out their functions, which may include email, teleconferences, video

conferences and meetings.

ARTICLE 5.14

Subcommittee on trade in goods

The Subcommittee on trade in goods, established pursuant to Article 22.3(4), shall have the

following functions, in addition to those listed in Article 22.3, and Article 2.14:

(a) discuss the results of the work carried out pursuant to Article 5.5 and consider

appropriate actions;

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(b) provide a forum for the Parties to discuss the need to take steps to ensure reciprocity in

accordance with Article 5.8(8);

(c) foster cooperation in accordance with Article 5.11 and support technical discussions, as

appropriate, in accordance with Article 5.12;

(d) endeavour to discuss at least annually the issues covered under paragraph 2 of Section C of

Annex 5-B; and

(e) provide a forum for the Parties to cooperate and exchange information on any issues relevant

for the implementation of Annex 5-B.

CHAPTER 6

SANITARY AND PHYTOSANITARY MEASURES

ARTICLE 6.1

Objectives

The objectives of this Chapter are to:

(a) protect human, animal or plant life or health in the territory of the Parties while facilitating

trade between the Parties in so far as sanitary and phytosanitary (hereinafter referred to as

"SPS") measures are concerned;

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(b) establish cooperation on the implementation of SPS Agreement;

(c) ensure that SPS measures do not create unjustified barriers to trade between the Parties;

(d) enhance cooperation on technical and scientific issues related to the adoption and application

of SPS measures;

(e) improve the exchange of information and consultations between the Parties on SPS matters;

and

(f) establish cooperation concerning multilateral fora dealing with SPS matters.

ARTICLE 6.2

Scope

1. This Chapter applies to all SPS measures1 that may, directly or indirectly, affect trade

between the Parties.

2. This Chapter applies to cooperation concerning multilateral fora dealing with SPS matters.

1 In case of conflict, this Chapter prevails over other Chapters of this Agreement when applied

to SPS measures, including when such measures are part of a measure.

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ARTICLE 6.3

Definitions

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

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

(b) the definitions adopted by the Codex Alimentarius;

(c) the definitions adopted by the World Organisation for Animal Health (hereinafter referred to

as the "OIE");

(d) the definitions adopted by the International Plant Protection Convention (hereinafter referred

to as the "IPPC"); and

(e) "protected zone" means an officially defined geographical part of the territory of the European

Union in which a specific regulated pest is known not to be established in spite of favourable

conditions and its presence in other parts of the territory of the European Union.

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Protected zones are pest-free areas under European Union control in the European Union territory.

They are recognised by Regulation (EU) No 2016/2031 of the European Parliament of the Council

of 26 October 2016 on protective measures against pests of plants, amending Regulations

(EU) No 228/2013, (EU) No 652/2014 and (EU) No 1143/2014 of the European Parliament and of

the Council and repealing Council Directives 69/464/EEC, 74/647/EEC, 93/85/EEC, 98/57/EC,

2000/29/EC, 2006/91/EC and 2007/33/EC1. This concept is not applied outside the European Union

territory. For trade purposes, the European Union shall not require the other Party to establish

protected zones in its territory. In such cases, the conditions of pest-free areas shall apply. For the

purposes of Chapter 6 and for the recognition of protected zones, the same conditions as for

pest-free areas shall apply.

2. In the event of any inconsistency between the definitions in Annex A to the SPS Agreement

and the definitions agreed by the Parties or the definitions adopted by the Codex Alimentarius, OIE

and IPPC, the definitions set out in Annex A of the SPS Agreement shall prevail.

ARTICLE 6.4

Rights and obligations

The Parties affirm their rights and obligations under the SPS Agreement. Nothing in this Chapter

shall affect the rights and obligations of each Party under the SPS Agreement.

1 OJ EU L 317, 23.11.2016, p. 4.

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ARTICLE 6.5

Competent authorities

1. For the purposes of this Chapter, the official competent authority of a Party is the authority

that, in accordance with a Party's law, is empowered to enforce its laws and regulations falling

within the scope of this Chapter to ensure compliance with its requirements, or any other authority

to which those authorities have delegated that power (hereinafter referred to as "competent

authorities").

2. Upon the date of entry into force of this Agreement, each Party shall provide in writing to the

other Party the name of the competent authorities referred to in paragraph 1, specifying where this

information is made publicly available and a description of the distribution of competences between

the respective competent authorities.

3. The Parties shall, in accordance with paragraph 4 of Article 6.11, inform each other of any

change to these competent authorities.

ARTICLE 6.6

General obligations

1. Products exported from a Party shall meet the applicable SPS requirements of the

importing Party.

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2. The SPS requirements of the importing Party shall be the same for the entire territory of the

exporting Party, as long as the same sanitary and phytosanitary conditions prevail throughout that

territory, without prejudice to decisions and measures adopted in accordance with Article 6.10.

Each Party shall ensure that their SPS measures are applied in a proportionate manner and do not

arbitrarily or unjustifiably discriminate between Member States of the European Union or Signatory

MERCOSUR States where identical or similar conditions prevail, including between its own

territory and that of the other Party. SPS measures shall not be applied in a manner which would

constitute a disguised restriction on trade between the Parties.

3. The procedures referred to in this Chapter shall be applied without undue delay and in a

transparent manner, and information requested shall be limited to what is necessary for appropriate

approval, control, inspection and verification purposes.

4. Each Party shall ensure that any fees imposed for import procedures to check and ensure the

fulfilment of SPS requirements are equitable in relation to any fees charged on like domestic

products or products originating in any other WTO Member and shall not be higher than the actual

cost of the service.

5. Except as provided for in Article 6.14, when modifying SPS import requirements, each Party,

and where appropriate MERCOSUR, shall allow for a transitional period, taking into account the

nature of the modification, in order to avoid the unnecessary interruption or disruption of trade

flows of products and to allow the exporting Party to adjust its export procedures accordingly to

such modification.

6. The implementation of this Chapter shall not jeopardise the SPS requirements for trade

between the Parties existing at the date of entry into force of this Agreement.

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7. Without prejudice to similar provisions in other Chapters of this Agreement, nothing in this

Chapter shall affect the rights and obligations of each Party to protect confidential information, in

accordance with each Party's relevant laws and regulations. Each Party shall ensure that procedures

are in place to prevent the disclosure of confidential information that is acquired during procedures

referred to in this Chapter.

8. Each Party shall ensure that the necessary resources are available for the effective

implementation of this Chapter.

ARTICLE 6.7

Trade-facilitation measures

Approval of establishments for the import of animals, animal products, products of animal origin

and animal by-products

1. The importing Party may require the approval of establishments situated in the territory of the

exporting Party for the import of animals, animal products, products of animal origin and animal

by-products from such establishments.

2. Such approval shall be granted without prior inspection of individual establishments by the

importing Party if:

(a) the importing Party has recognised the official control system of the competent authority of

the exporting Party;

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(b) the importing Party has authorised the import of the concerned products; and

(c) the competent authority of the exporting Party has provided sufficient guarantees that such

establishments comply with the sanitary requirements of the importing Party.

3. The exporting Party shall only authorise exports from approved establishments as referred to

in paragraph 1. The exporting Party shall suspend or withdraw its approval of establishments that do

not comply with the sanitary requirements of the importing Party and shall notify such suspension

or withdrawal to the importing Party.

4. The exporting Party shall propose to the importing Party a list of establishments to be

approved. This list shall be accompanied by guarantees of the competent authority of the exporting

Party that the establishments comply with the guarantees referred in to point (c) of paragraph 2.

5. The importing Party shall authorise imports from approved establishments no later

than 40 (forty) working days after the receipt of the list and guarantees referred to in in paragraph 4

of the exporting Party. If additional information is requested and as a result an authorisation cannot

be granted within the deadline of 40 (forty) working days, the importing Party shall inform the

exporting Party and establish a new deadline for such authorisation. That deadline shall not

exceed 40 (forty) working days after the receipt of the additional information.

6. The importing Party shall draw up lists of approved establishments and shall make those lists

publicly available.

7. The importing Party may refuse the approval of establishments that are not compliant with its

sanitary requirements. In such cases, the importing Party shall inform the exporting Party about

such refusal, including the justification therefor.

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8. The importing Party may carry out verifications of the official control system in accordance

with Article 6.15. Based on the results of these verifications, the importing Party may amend the

lists of approved establishments.

SPS import checks

9. Each Party shall adopt or maintain procedures relating to SPS import checks allowing for the

expedited release of products for import without undue delay.

10. Each Party shall, where appropriate, simplify controls and verifications and reduce the

frequency of the SPS import checks made by the importing Party on products of the exporting

Party. Each Party shall base its decision on the following:

(a) the risks involved;

(b) the controls carried out by the producers or importers which are validated by the competent

authorities of the Parties;

(c) the guarantees given by the competent authority of the exporting Party that the establishments

comply with the sanitary requirements of the importing Party; and

(d) the international guidelines, standards and recommendations of the Codex Alimentarius, OIE

or IPPC, as applicable.

11. Each Party may apply other criteria to simplify the controls and verifications pursuant to

paragraph 10 if they do not undermine the commonly agreed criteria that are listed therein.

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12. If import checks reveal non-compliance with SPS import requirements and products or

consignments are rejected, the importing Party shall notify the exporting Party thereof in

accordance with the procedure referred to in Article 6.12, as soon as possible and no later

than 5 (five) working days after the date of the rejection.

13. If import checks reveal non-compliance with the relevant SPS import requirements, the action

taken by the importing Party shall be justified, based on the identified non-compliance, and not

more trade-restrictive than required to achieve the Party's appropriate level of sanitary or

phytosanitary protection.

Simplification of the import and approval procedures of MERCOSUR

14. The Parties recognise the different levels reached by regional integration processes within the

European Union, on the one hand, and MERCOSUR on the other. With a view to facilitating trade

between their respective territories, MERCOSUR shall make its best efforts to gradually adopt for

import and approval procedures for products and establishments of the European Union, if

applicable:

(a) one single questionnaire;

(b) one single certificate; and

(c) one list of approved establishments.

15. MERCOSUR will make its best efforts to harmonise the SPS import requirements, certificates

and import checks of the individual Signatory MERCOSUR States.

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ARTICLE 6.8

Alternative measures

1. Upon request of the exporting Party, the importing Party shall examine whether exceptionally

an alternative SPS measure to the SPS measure of the importing Party ensures the appropriate level

of protection of the importing Party. The alternative measure may be based on international

guidelines, standards and recommendations of the Codex Alimentarius, OIE or IPPC or on

SPS measures of the exporting Party.

2. Article 6.9 shall not apply to alternative SPS measures.

ARTICLE 6.9

Equivalence

1. An exporting Party may request a determination of equivalence from the importing Party that

a specific SPS measure or specific SPS measures related to a product or group of products or on a

system-wide basis is equivalent to its own SPS measures.

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2. In order to implement this Article, the Subcommittee, referred to in Article 6.18, shall make

recommendations to establish a procedure for the recognition of equivalence based on the Decision

on the implementation of Article 4 of the Agreement on Sanitary and Phytosanitary Measures of the

WTO Committee on Sanitary and Phytosanitary Measures1 and any subsequent updates thereof, and

international guidelines, standards and recommendations adopted in the framework of the

Codex Alimentarius, OIE and IPPC. This procedure should include a process whereby the Parties

hold consultations in order to determine the equivalence of SPS measures, the information to be

required from the Parties, the responsibilities of the Parties and the deadlines for the recognition of

equivalence.

3. Upon receipt of a specific request, the Parties shall enter into consultations based on the

procedure to be established pursuant to paragraph 2, with the aim of achieving an agreement on

recognition of equivalence.

4. Upon request of the exporting Party, the importing Party shall inform the exporting Party of

the stage of the procedure for the assessment of equivalence.

1 WTO Document G/SPS/19/Rev.2, dated 13 July 2004.

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ARTICLE 6.10

Recognition of animal health and plant pest status and regional conditions

1. The Parties recognise the concept of zoning and compartmentalisation, including pest free

areas or disease free areas and areas of low pest or low disease prevalence and shall apply it in the

trade between the Parties, in accordance with the SPS Agreement, including the Guidelines to

further the practical implementation of Article 6 of the Agreement on the Application of Sanitary

and Phytosanitary measures adopted by the WTO Committee on Sanitary and Phytosanitary

Measures1 and the relevant guidelines, recommendations and standards of the OIE or IPPC.

2. At the request of the exporting Party, the importing Party shall decide whether to recognise

pest and disease free areas, areas of low pest and low disease prevalence and compartments of the

exporting Party, whether for the first time or after an outbreak of an animal disease or a plant pest.

The importing Party shall base this decision on the information provided by the exporting Party in

accordance with the SPS Agreement and OIE and IPPC standards, and take into account the

establishment of pest and disease free areas, areas of low pest and low disease prevalence and

compartments by the exporting Party. The Parties shall follow the procedures set out in Annex 6-A.

3. The decision of the importing Party pursuant to paragraph 2 shall be taken without undue

delay. If, without prejudice to Article 6.14, the importing Party decides to recognise pest and

disease free areas, areas of low pest and low disease prevalence and compartments of the exporting

Party, it shall allow trade from those areas or compartments without undue delay.

1 WTO Document G/SPS/48, dated 16 May 2008.

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4. The Subcommittee, referred to in Article 6.18, may define further details for the procedure for

the recognition of pest and disease free areas, areas of low pest and low disease prevalence and

compartments set out in paragraph 2, taking into account the SPS Agreement and the guidelines,

standards and recommendations of the IPPC and OIE.

Animals, animal products, products of animal origin and animal by-products

5. The procedure for the recognition of the disease free zones or compartments for animals,

animal products, products of animal origin and animal by-products is set out in paragraphs 7 to 9

and in Annex 6-A.

6. When establishing or maintaining the zones or compartments referred to in paragraph 2 for

animals, animal products, products of animal origin and animal by-products, the Parties shall

consider factors such as geographical location, ecosystems, epidemiological surveillance and the

effectiveness of sanitary controls.

7. No later than 60 (sixty) working days after the receipt of the information referred to in

paragraph 2 from the exporting Party, the importing Party may:

(a) explicitly object to the request for recognition of disease-free zones or compartments for

animals, animal products, products of animal origin and animal by-products;

(b) request additional information from the exporting Party; or

(c) request verifications pursuant to Article 6.15.

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The importing Party shall assess any additional information no later than 30 (thirty) working days

after its receipt. If verifications are required by the importing Party, the deadline for assessing the

additional information shall be interrupted.

8. The importing Party shall expedite the procedure established in paragraph 7 if the zones or

compartments for which recognition is sought by the exporting Party are officially recognised by

the OIE as having disease free status or if disease-free status has been recovered after an outbreak.

9. If after following the procedure in paragraph 7, the importing Party decides not to recognise

the zones or compartments for which recognition was sought by the exporting Party, it shall notify

its decision to the exporting Party and explain the reasons for not recognising the zones or

compartments concerned and, upon request, hold consultations in accordance with Article 6.13.

Plants and plant products

10. Each Party shall establish a list of regulated pests and regulated plants and plant products for

which phytosanitary requirements exist. The importing Party shall make available to the other Party

its list of regulated pests, and regulated plants and plant products and the phytosanitary import

requirements that apply thereto. The phytosanitary import requirements for regulated plants and

plant products shall be limited to what is necessary to protect plant health or safeguard the intended

use of the plants and plant products. The importing Party shall inform the other Party about any

required additional declaration.

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11. The phytosanitary requirements of the importing Party shall be established taking into account

the phytosanitary status in the exporting Party and, if required by the importing Party, the result of a

pest risk analysis (hereinafter referred to as "PRA"). The PRA shall be carried out in accordance

with the relevant International Standards for Phytosanitary Measures (hereinafter referred to as

"ISPM") of the IPPC. Such risk analysis shall take into account available scientific and technical

information as well as the intended use of the plants and plant products under consideration.

12. The importing Party shall update the lists referred to in paragraph 10 when the exporting Party

makes a request to export new products to the other Party. When the importing Party requires a

PRA to authorise the import of a certain product, in order to expedite the process, a PRA already

carried out for the same or similar products may be used as a basis, together with any additional

information that the importing Party considers necessary to be analysed.

13. The importing Party, when conducting the process for the determination of the pest status of

the exporting Party, shall take into account paragraphs 10 to 17 of this Article, Annex 6-A and the

recommendations of the ISPM of the IPPC.

14. The Parties recognise the concepts of pest free areas, pest free places of production and pest

free production sites, as well as areas of low pest prevalence as specified in the ISPM of the IPPC,

and of protected zones which they shall apply in trade between them.

15. When establishing or maintaining phytosanitary measures, the importing Party shall take into

account pest free areas, pest free places of production, pest free production sites and areas of low

pest prevalence, as well as protected zones if they are established by the exporting Party.

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16. The exporting Party shall communicate pest free areas, pest free places of production, pest

free production sites or areas of low pest prevalence to the other Party and provide, upon request, an

explanation and supporting information as provided for in the relevant ISPM or as otherwise

deemed appropriate. Unless the importing Party:

(a) explicitly objects to the request for approval of pest free areas, pest free places of production,

pest free production sites or areas of low pest prevalence to the other Party or protected zones

if they are established by the exporting Party;

(b) requests additional information from the exporting Party;

(c) requests verifications pursuant to Article 6.15; or

(d) initiates consultations pursuant to Article 6.13 no later than 150 (one hundred and fifty)

working days after receiving such information, the status of the exporting Party shall be

recognised by the importing Party.

17. The importing Party shall assess any additional information requested pursuant to

paragraph 16 no later than 90 (ninety) days after its receipt. Any verifications requested by the

importing Party pursuant to paragraph 16 shall be carried out in accordance with Article 6.15 taking

into account the biology of the pest and the plant concerned. If the importing Party requests such

verifications, the deadline for assessing additional information shall be interrupted.

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18. If, after following the procedure in paragraph 16, the importing Party decides not to approve

pest free areas, pest free places of production, pest free production sites or areas of low pest

prevalence or protected zones if they are established by the exporting Party for which recognition

was sought by the exporting Party, it shall notify its decision to the exporting Party and explain the

reasons for not approving them and, upon request, hold consultations in accordance with Article

6.13.

ARTICLE 6.11

Transparency and exchange of information

1. Upon request of a Party and no later than 15 (fifteen) working days after the date of such

request, the Parties shall exchange information on:

(a) procedures for the authorisation to import a product, including, if possible, the expected

timeframe;

(b) requirements for the import of specific products, including the model for a certificate, as

appropriate;

(c) their pest status, including surveillance, eradication and containment programmes and the

results thereof in order to support such pest status and import phytosanitary measures;

(d) the stage of progress of the procedure for import approval of specific products; and

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(e) the relationship between a SPS measure and the international guidelines, standards and

recommendations and, if an SPS measure is not based on international guidelines, standards

and recommendations, the scientific information as to how the SPS measure is not in

conformity with international guidelines, standards and recommendations and an explanation

of the reasons for such measure.

2. In cases where the relevant scientific evidence is insufficient, a Party adopting a provisional

SPS measure shall provide the available pertinent information on which the measure is based and, if

available, additional information for a more objective assessment of the risk, and shall review the

SPS measure within a reasonable period of time.

3. The Parties shall make publicly available, by any means, updated information about their:

(a) SPS import requirements and approval procedures; and

(b) a list of regulated pests.

4. The Parties shall inform each other of:

(a) any change in the sanitary and phytosanitary status that may affect trade between the Parties;

(b) matters related to the development and application of SPS measures that may affect trade

between the Parties; and

(c) any other information relevant for the effective implementation of this Chapter.

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5. Without prejudice to paragraph 1, if the information referred to in this Article has been made

available by the Parties through a notification to the WTO or to the relevant international

standard-setting body in accordance with its relevant rules, or on publicly accessible and free of

charge websites of the Parties, the exchange of information pursuant to paragraph 1 shall not be

required.

6. Each Party shall designate a contact point for communication on all matters covered by this

Chapter and inform the other Party thereof no later than 1 (one) month after the date of entry into

force of this Agreement. Each Party shall promptly notify the other Party of any change to its

contact point.

ARTICLE 6.12

Notifications

1. Any serious or significant risk to human, animal or plant life or health, including any food or

feed control emergencies, shall be notified to the contact points of the other Party designated in

Article 6.11, within 2 (two) working days from the identification of that risk.

2. Risks to human, animal or plant life or health which are not serious shall also be notified to

the contact points of the other Party within a reasonable period of time that is sufficient to avoid

threatening human, animal or plant life or health or jeopardising existing trade between the Parties.

3. Notifications referred to in paragraphs 1 and 2 shall be done through an established system of

notifications or through specific ad hoc notifications, in accordance with the legislation of the

notifying Party. In both cases, the notification shall be sent to the competent authorities of the

concerned Parties.

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4. If the notifying Party adopts or maintains any SPS measure in relation to the notification

(including the rejection of a product or consignment), that notification shall be accompanied by an

explanation of the reasons justifying such measure.

5. The notifying Party shall withdraw any notification based upon information which is

subsequently found to be unsubstantiated or which was transmitted erroneously. Such withdrawal

shall take place as soon as possible, and be notified to the exporting Party, in order to avoid a

negative impact on trade between the Parties.

6. The Parties shall identify contact points for the notifications under this Article and inform the

other Party thereof, if they are not the same as the contact points identified pursuant to paragraph 6

of Article 6.11.

ARTICLE 6.13

Consultations

1. Without prejudice to Chapter 21, if the SPS measures or draft measures of the importing

Party, or the implementation thereof, are considered to be inconsistent with this Chapter, the Parties

shall enter into consultations no later than 60 (sixty) days after the exporting Party has introduced a

reasoned request for such consultations.

2. Notwithstanding paragraph 1, if a notification has been made by a Party pursuant to

Article 6.12 or if a Party has serious concerns regarding a risk to public, animal or plant health,

affecting products traded between the Parties consultations shall, upon request of a Party, be held as

soon as possible. Each Party shall endeavour, in such conditions, to provide the information

necessary to avoid a disruption in trade, including a limitation thereof.

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3. At the request of the exporting Party, the importing Party shall provide the information

necessary to avoid a disruption in trade, including a limitation thereof. Such information includes

the information referred to in Article 6.11(1).

4. Consultations may be held for a reasonable period of time that allows the Parties to reach a

mutually satisfactory solution.

5. Consultations may be held by e-mail, video, audio conference or any other means of

communication which are available to both Parties. The Party which requested consultations shall

be responsible for preparing the minutes. The minutes shall be formally approved by the parties to

the consultations.

6. If the parties to the consultations do not reach a mutually satisfactory solution, the matter may

be submitted to the Subcommittee, referred to in Article 6.18.

ARTICLE 6.14

Emergency measures

1. If a Party adopts any measure to control any serious risks to human, animal and plant life or

health, such measure shall, without prejudice to paragraph 2, also aim to prevent the introduction of

any sanitary and phytosanitary risk into the territory of the other Party.

2. The importing Party may, in the event of serious risks to human, animal or plant life or health,

adopt emergency measures against such risks.

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3. For products in transit between the Parties, the importing Party shall consider the most

suitable and proportional solution in order to avoid unnecessary disruptions to trade.

4. Measures referred to in paragraph 2 may be adopted without prior notification pursuant to

Article 6.12. The Party adopting emergency measures shall notify the other Party as soon as

possible of the adoption of these measures and, in any case, no later than 48 (forty-eight) hours

thereafter.

5. Each Party may request any information related to the sanitary and phytosanitary situation and

the emergency measures adopted. Each Party shall answer such requests as soon as the requested

information is available.

6. Upon request of either Party and in accordance with Article 6.13, the Parties shall hold

consultations regarding the emergency measure no later than 15 (fifteen) working days of the

notification of the emergency measures. The Parties may consider options to facilitate the

implementation, or the replacement, of the emergency measures.

ARTICLE 6.15

Verifications of the official control system

1. Each Party, within the scope of this Chapter, has the right to:

(a) carry out verifications, including audits, of the official control system of the other Party,

including verification visits; and

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(b) receive information about the official control system of the other Party and the results of the

controls carried out under that system.

2. The nature and frequency of verifications, including audits, shall be determined by the

importing Party, taking into account the import requirements, the inherent characteristics of the

product concerned, the track record of past import checks and other available information, such as

audits and inspections undertaken by the competent authority of the exporting Party.

3. The objective of the verifications shall be to evaluate the capacity of the competent authorities

of the exporting Party to ensure that the products exported or to be exported meet the SPS

requirements of the importing Party.

4. Verification visits shall be carried out without undue delay and be notified to the exporting

Party at least 60 (sixty) working days before such verifications are carried out, except in cases of

emergency or if the Parties decide otherwise. Any modification to the date of the visit shall be

agreed by the Parties.

5. Verifications shall be conducted in accordance with the audit plan agreed by the Parties

concerned, based on the Guidelines for the Design, Operation, Assessment and Accreditation of

Food Import and Export Inspection and Certification Systems1. The importing Party shall provide to

the other Party the reasons for any modification to the audit plan of the visit.

6. The expenses incurred by the Party carrying out the verification shall be borne by that Party.

1 FAO, CAC/GL 26-1997.

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7. The Party carrying out the verification shall send a draft report on the verification to the Party

subject to the verification no later than 60 (sixty) working days after the end of the verification visit.

The Party subject to the verification may comment on the draft report no later

than 60 (sixty) working days after its receipt. Comments and an action plan, if required, shall be

attached to the final report. The Party carrying out the verification shall send the final report to the

Party subject to the verification no later than 30 (thirty) working days after the receipt of the

comments on the draft report.

8. Any measure taken as a consequence of verifications shall be proportionate to shortcomings

or risks identified. If requested, technical consultations regarding the matter shall be held in

accordance with Article 6.13.

9. If a significant public, animal or plant health risk has been identified during the verification,

the Party subject to the verification shall be informed as quickly as possible and, in any case, no

later than 10 (ten) working days after the end of the verification.

ARTICLE 6.16

Cooperation on multilateral fora

1. The Parties shall promote cooperation between them on all the multilateral fora relevant for

SPS issues, in particular in international standard-setting bodies recognised in the framework of the

SPS Agreement and shall exchange information to that end.

2. The Subcommittee on SPS matters, referred to in Article 6.18, shall be the forum for

promoting cooperation as referred to in paragraph 1.

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ARTICLE 6.17

Cooperation

1. The Parties shall endeavour to cooperate in implementing this Chapter and to optimise the

results thereof with a view to expanding opportunities and obtaining the greatest benefits for the

Parties. Such cooperation shall be developed within the legal and institutional framework governing

cooperation relations between the Parties.

2. To achieve the objectives referred to in paragraph 1, the Parties shall give consideration to the

cooperation needs identified by the Subcommittee on SPS matters, referred to in Article 6.18.

ARTICLE 6.18

Subcommittee on SPS matters

1. The Subcommittee on SPS matters, established pursuant to Article 22.3(4), shall meet for the

first time no later than 1 (one) year after the entry into force of this Agreement.

2. The Subcommittee shall have the following functions, in addition to those listed in

Article 22.3:

(a) provide a forum to discuss problems arising from the application of the SPS measures with a

view to reaching mutually acceptable solutions provided that the Parties have first attempted

to address them through technical consultations pursuant to Article 6.13 and the matter has

then been referred to the Subcommittee.

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(b) provide a forum to discuss the information exchanged in accordance with Article 6.11;

(c) promote exchange of information and cooperation on multilateral fora pursuant to

Article 6.16;

(d) exchange the lists of contact points pursuant to Article 6.11(6) to share information related to

this Chapter;

(e) conduct the preparatory internal work necessary for the amendment of Annex 6-A by the

Trade Council;

(f) make recommendations to establish a procedure for the recognition of equivalence in

accordance with Article 6.9(2);

(g) may define further details for the procedure for the recognition of pest and disease free areas,

areas of low pest and low disease prevalence and compartments in accordance with

Article 6.10(4); and

(h) identify cooperation needs in implementing this Chapter, pursuant to Article 6.17(2).

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ARTICLE 6.19

Special and differential treatment

In accordance with Article 10 of the SPS Agreement, if Paraguay identifies difficulties with a

proposed measure notified by the European Union, Paraguay may request, in its comments

submitted to the European Union, pursuant to Annex B to the SPS Agreement, an opportunity to

discuss the issue. The European Union and Paraguay shall, without prejudice to Article 6.13, enter

into consultations in order to agree on:

(a) alternative import conditions to be applied by the importing Party in accordance with

Article 6.8 of this Chapter;

(b) the provision of technical assistance in accordance with Article 6.17 of this Chapter; or

(c) a transitional period of 6 (six) months for proposed measures to apply to products from

Paraguay, which could be exceptionally extended for another period of no longer

than 6 (six) months.

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CHAPTER 7

DIALOGUES ON ISSUES RELATED TO THE AGRI-FOOD CHAIN

ARTICLE 7.1

Objectives

With a view to strengthen their mutual trust and respective understanding, the Parties shall establish

dialogues and exchange information on the following subjects:

(a) animal welfare;

(b) application of agricultural biotechnology;

(c) combating antimicrobial resistance (hereinafter referred to as "AMR"); and

(d) scientific matters related to food safety, animal and plant health.

ARTICLE 7. 2

Subcommittee on dialogues on issues related to the agri-food chain

The Subcommittee on dialogues on issues related to the agri-food chain, established pursuant to

Article 22.3(4), shall in addition to functions listed in Article 22.3 and Article 7.7, meet at expert

level to conduct the dialogues referred to in Article 7.1.

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ARTICLE 7.3

Animal welfare

Recognising that animals are sentient beings, the Subcommittee on dialogues on issues related to

the agri-food chain shall conduct a dialogue covering, inter alia, the following matters:

(a) specific topics on animal welfare that may affect mutual trade;

(b) exchange of information, expertise and experiences in the field of animal welfare to improve,

to the benefit of the Parties, their respective approaches on regulatory standards related to the

breeding, holding, handling, transportation and slaughter of animals;

(c) strengthening of their research collaboration; and

(d) collaboration in international fora with a view to promoting the further development of

international standards on animal welfare by the OIE and best animal welfare practices and

their implementation.

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ARTICLE 7.4

Agricultural biotechnology

The Subcommittee on dialogues on issues related to the agri-food chain shall conduct a dialogue on

agricultural biotechnology that will cover, among others, the following matters:

(a) exchange of information on policies, legislation, guidelines, good practices and projects on

biotechnology products;

(b) discussions on specific topics related to biotechnology that may affect mutual trade, including

cooperation on genetically modified organisms (hereinafter referred to as "GMOs") testing;

(c) exchange of information on topics related to asynchronous authorisations of GMOs in order to

minimise the possible impact on trade;

(d) exchange of information on the economic and trade outlook for authorisations of GMOs; and

(e) exchange of information on cases of low-level presence of GMOs non-authorised by the

importing Party but authorised by the exporting Party.

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ARTICLE 7.5

Combating antimicrobial resistance

The Subcommittee on dialogues on issues related to the agri-food chain shall conduct a dialogue on

combatting antimicrobial resistance that will cover, among others, the following matters:

(a) collaboration to follow up on existing and future guidelines, standards, recommendations and

actions developed in relevant international organisations, initiatives and national plans aiming

to promote the prudent and responsible use of antibiotics and in relation to animal production

and veterinary practices;

(b) collaboration in the implementation of the recommendations of the OIE, World Health

Organisation (hereinafter referred to as "WHO") and Codex Alimentarius, in particular the

Code of Practice to Minimize and Contain Foodborne Antimicrobial Resistance

(CAC/RCP 61-2005);

(c) exchange of information on good farming practices;

(d) the promotion of research, innovation and development; and

(e) the promotion of multidisciplinary approaches to combat AMR, including the "One Health"

approach of the WHO, OIE and Codex Alimentarius.

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ARTICLE 7.6

Scientific matters related to food safety, animal and plant health

1. The Parties should foster cooperation between their respective official scientific bodies

responsible for food safety, animal and plant health science. Such cooperation shall aim to deepen

the scientific information available to the Parties in order to support their respective approaches on

regulatory standards that may affect mutual trade.

2. The Subcommittee shall conduct a dialogue on scientific matters related to food safety,

animal and plant health that will cover, among others, the following matters:

(a) exchange of scientific and technical information on food and feed safety, animal and plant

health areas, including risk assessment and the scientific information supporting the

establishment of maximum residue levels;

(b) collection of data; and

(c) collaboration in the building of a common understanding regarding OIE, IPPC and the Codex

Alimentarius standards.

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ARTICLE 7.7

Additional provisions

1. The Parties shall ensure that the activities of the Subcommittee, referred to in Article 7.2, do

not endanger the independence of their respective national or regional agencies. The Subcommittee

on dialogues on issues related to the agri-food chain shall establish the rules on conflicts of interest

for the participants of its meetings.

2. Nothing in this Chapter shall affect the rights and obligations of each Party to protect

confidential information, in accordance with each Party's relevant legislation. Each Party shall

ensure that procedures are in place to prevent the disclosure of confidential information that is

acquired during the process established in this Chapter.

3. Fully respecting the Parties' right to regulate, nothing in this Chapter shall be construed to

oblige a Party to:

(a) deviate from domestic procedures for preparing and adopting regulatory measures;

(b) take action that would undermine or impede the timely adoption of regulatory measures to

achieve its public policy objectives; or

(c) adopt any particular regulatory outcome.

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CHAPTER 8

TRADE DEFENCE AND GLOBAL SAFEGUARDS

SECTION A

GENERAL PRINCIPLES

ARTICLE 8.1

Relationship with the WTO Agreements

1. This Chapter applies without prejudice to the rights and obligations of the Parties under the

ADA, the SCM Agreement, the Safeguards Agreement and the DSU.

2. The Parties shall exempt bilateral trade subject to preferential treatment from the application

of the Special Agricultural Safeguard of the Agreement on Agriculture.

3. The preferential rules of origin under this Agreement do not apply to trade defence and global

safeguard investigations conducted in accordance with this Chapter.

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ARTICLE 8.2

Transparency

1. Trade defence and safeguard measures should be used in full compliance with the relevant

WTO requirements and be based on a fair and transparent system.

2. As soon as possible after the imposition of a provisional measure, a Party shall give to the

interested parties full access to the facts that are the basis for the determinations, the injury

assessment, calculations of the dumping and subsidies margins and causality. In addition, before the

final determination, a Party shall fully and meaningfully disclose all essential facts and

considerations which form the basis for the decision to apply a measure. This paragraph is without

prejudice to Article 6.5 of the ADA, Article 12.4 of the SCM Agreement and Article 3.2 of the

Safeguards Agreement.

3. A Party shall send all of the information referred to in paragraph 2 in writing, preferably in

electronic format, and the interested parties should be given enough time to make comments. For

Parties whose investigating authorities keep electronic case files, all the information referred to in

paragraph 2 may be made available online.

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SECTION B

ANTI-DUMPING AND COUNTERVAILING MEASURES

ARTICLE 8.3

Considerations concerning anti-dumping and countervailing measures

Each Party shall:

(a) analyse with special care proposals of price undertakings made by exporters of the

other Party;

(b) favour the imposition of a duty that is lower than the margin of dumping or subsidy, if that

level is sufficient to remove the injury to the domestic industry;

(c) analyse with special care requests for the extension of measures in force against exporters of

the other Party; and

(d) take into consideration the information provided by industrial users of the product under

investigation, importers and, if applicable, representative consumer organisations in the

context of Article 6.12 of the ADA and Article 12.10 of the SCM Agreement.

& /en 148

SECTION C

GLOBAL SAFEGUARDS

ARTICLE 8.4

Transparency on global safeguards

1. Upon request of the exporting Party, and provided that it has a substantial interest in exporting

the product concerned as defined in paragraph 3 of this Article, the Party initiating a safeguard

investigation or intending to adopt provisional or definitive safeguard measures shall immediately

provide:

(a) the information referred to in Article 12.2 of the Safeguards Agreement, in the format

prescribed by the WTO Committee on Safeguards;

(b) the public version of the complaint filed by the domestic industry, if relevant; and

(c) the public report setting forth the findings and reasoned conclusions on all pertinent issues of

fact and law considered in the safeguard investigation.

The public report referred to in point (c) of this paragraph shall include an analysis that attributes

injury to the factors causing it and shall set out the method used in defining the safeguard measures.

2. If information is provided under this Article, the importing Party shall offer to hold informal

consultations with the exporting Party in order to review the information provided.

& /en 149

3. For the purposes of this Article, it is considered that a Party has a substantial interest if it is

among the 5 (five) largest suppliers of the imported products concerned during the most recent

period of 3 (three) years, measured in terms of either absolute volume or value.

ARTICLE 8.5

Application of definitive measures

1. A Party adopting safeguard measures shall endeavour to apply them in the way that least

affects bilateral trade.

2. The importing Party shall offer to hold informal consultations with the exporting Party in

order to review the matter referred to in paragraph 1. The importing Party shall not adopt measures

within 30 (thirty) days of the date on which the offer to hold informal consultations was made.

SECTION D

DISPUTE SETTLEMENT

ARTICLE 8.6

Non-application of dispute settlement

No Party shall have recourse to dispute settlement under Chapter 21 for any matter arising under

this Chapter.

& /en 150

CHAPTER 9

BILATERAL SAFEGUARD MEASURES

SECTION A

SCOPE

ARTICLE 9.1

Scope

1. Sections B to I of this Chapter apply to any goods other than vehicles classified under

HS headings 8703 and 8704.

2. The provisions applicable to vehicles classified under HS headings 8703 and 8704 are

detailed in Annex 9-A.

& /en 151

SECTION B

DEFINITIONS

ARTICLE 9.2

Definitions

For the purposes of this Chapter the following definitions apply:

(a) "competent investigating authority" means:

(i) for the European Union, the European Commission; and

(ii) for MERCOSUR, the Ministerio de Economía or its successor in Argentina, the

Secretaria de Comércio Exterior of the Ministério do Desenvolvimento, Indústria,

Comércio e Serviços or its successor in Brazil, the Ministerio de Industria y Comercio

or its successor in Paraguay, and the Asesoría de Política Comercial del Ministerio de

Economía y Finanzas or its successor in Uruguay;

(b) "domestic industry" means the producers as a whole of the like or directly competitive

products operating in the territory of a Party or, failing that, those whose collective output of

the like or directly competitive products normally constitutes more than 50 % (fifty percent)

and in exceptional circumstances not less than 25 % (twenty-five percent) of the total

production of such products;

& /en 152

(c) "interested parties" includes:

(i) exporters or foreign producers or importers of a product subject to investigation, or a

trade or business association a majority of whose members are producers, exporters or

importers of such product;

(ii) the government of the exporting Party; and

(iii) producers of the like or directly competitive product in the importing Party or a trade

and business association a majority of whose members produces the like or directly

competitive product in the territory of the importing Party;

this list does not preclude the Parties from allowing domestic or foreign parties other than

those mentioned above to be included as interested parties;

(d) "like or directly competitive product" means:

(i) a product which is identical, meaning alike in all aspects, to the product under

consideration;

(ii) another product which, although not alike in all aspects, has characteristics closely

resembling those of the product under consideration; or

(iii) a product which directly competes within the internal market of the importing Party,

given its degree of substitutability, basic physical characteristics and technical

specifications, final uses and channels of distribution;

this list of factors is not exhaustive nor can one or several of these factors necessarily give

decisive guidance;

& /en 153

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

(f) "threat of serious injury" means a serious injury that is clearly imminent, based on facts and

not merely on allegation, conjecture or remote possibility; and

(g) "transition period" means:

(i) 12 (twelve) years from the date of entry into force of this Agreement; or

(ii) for goods other than vehicles classified under HS headings 8703 and 8704 for which the

Tariff Elimination Schedule of the Party applying the measures provides for tariff

elimination in 10 (ten) years or more, 18 (eighteen) years from the date of entry into

force of this Agreement.

& /en 154

SECTION C

CONDITIONS FOR APPLICATION OF BILATERAL SAFEGUARD MEASURES

ARTICLE 9.3

Application of bilateral safeguard measures

1. Without prejudice to the rights and obligations referred to in Chapter 8, a Party may, in

exceptional circumstances, for goods other than vehicles classified under HS headings 8703

and 8704, apply bilateral safeguard measures under the conditions established in this Section if,

after the date of entry into force of this Agreement, imports from the other Party of a product under

preferential terms have increased in such quantities, absolute or relative to domestic production or

consumption and under such conditions as to cause or threaten to cause serious injury to its

domestic industry of the like or directly competitive products.

2. For goods listed in paragraph 1, bilateral safeguard measures shall be applied only to the

extent necessary to prevent or remedy serious injury or the threat of serious injury.

3. Bilateral safeguard measures shall be applied following an investigation by the competent

investigating authorities of the importing Party under the procedures established in this Chapter.

& /en 155

ARTICLE 9.4

Timeframe for the application of bilateral safeguard measures

A Party shall not apply, extend or maintain in force a bilateral safeguard measure beyond the

expiration of the transition period.

ARTICLE 9.5

Conditions and limitations

1. MERCOSUR may adopt bilateral safeguard measures to imports from the European Union:

(a) as a sole entity, provided that all requirements to determine the existence of serious injury or

the threat of serious injury being caused by the imports of a product under preferential terms

have been fulfilled, on the basis of conditions applied to MERCOSUR; or

(b) on behalf of one or more of the Signatory MERCOSUR States, in which case the

requirements for the determination of the existence of serious injury or the threat of serious

injury being caused by the imports of a product under preferential terms shall be based on the

conditions prevailing in the relevant Signatory MERCOSUR State or Signatory MERCOSUR

States of the customs union; and the measure shall be limited to that Signatory MERCOSUR

State or those Signatory MERCOSUR States. The adoption of a bilateral safeguard measure

by MERCOSUR on behalf of one or more Signatory MERCOSUR States shall not prevent

another Signatory MERCOSUR State from adopting a measure regarding the same product

afterwards.

& /en 156

2. The European Union may apply bilateral safeguard measures to imports from MERCOSUR

as a sole entity or from one or more Signatory MERCOSUR States if the serious injury or threat of

serious injury is being caused by imports of products under preferential terms.

3. In case the European Union determines that a measure shall apply to MERCOSUR as a sole

entity, Paraguay shall be exempted from the application of the measure, unless the result of an

investigation demonstrates that the existence of serious injury or the threat of serious injury is also

being caused by imports of products from Paraguay under preferential terms.

SECTION D

FORM AND DURATION OF BILATERAL SAFEGUARD MEASURES

ARTICLE 9.6

Form of bilateral safeguard measures

For goods other than vehicles classified under HS headings 8703 and 8704, bilateral safeguard

measures adopted pursuant to this Chapter shall consist of:

(a) a temporary suspension of Annex 2-A for the product concerned as provided for under this

Agreement; or

& /en 157

(b) a temporary reduction of the tariff preference for the product concerned so that the rate of

customs duty does not exceed the lesser of:

(i) the most-favoured-nation applied rate of customs duty on the product in effect at the

time the measure is taken; and

(ii) the base rate of customs duty on the product referred to in Annex 2-A.

ARTICLE 9.7

Margin of preference

Upon termination of the bilateral safeguard measure, the margin of preference shall be the one that

would be applied to the product in the absence of the measure under Annex 2-A.

ARTICLE 9.8

Duration of bilateral safeguard measures

Bilateral safeguard measures shall be applied only for the period necessary to prevent or remedy the

serious injury and to facilitate adjustment of the domestic industry. That period, including the

period of application of any provisional measure, shall not exceed 2 (two) years.

& /en 158

ARTICLE 9.9

Extension of bilateral safeguard measures

1. Bilateral safeguard measures may be extended once for a maximum period equal to the

initially foreseen period of application, if it has been determined, in accordance with the procedures

set out in this Chapter, that the measure continues to be necessary to prevent or remedy serious

injury and if the domestic industry provides evidence that it is adjusting. The extended measure

shall not be more restrictive than it was at the end of the initial period.

2. No safeguard measure shall be applied again to the import of a product under Annex 2-A

which has been subject to such a measure, unless a period of time equal to half of the total duration

of the previous safeguard measure has elapsed.

& /en 159

SECTION E

INVESTIGATION AND TRANSPARENCY PROCEDURES

ARTICLE 9.10

Investigation

1. In conducting the investigation to determine whether increased imports have caused or are

threatening to cause serious injury to a domestic industry as referred to in Article 9.3, the competent

investigating authority shall evaluate all relevant factors of an objective and quantifiable nature

having a bearing on the situation of that industry, in particular the rate and amount of the increase in

imports of the product concerned in absolute and relative terms; the share of the domestic market

taken by increased imports; and changes in the level of sales, including prices, production,

productivity, capacity utilisation, profits and losses, and employment.

2. The competent investigating authority shall demonstrate, on the basis of objective evidence,

the existence of a causal link between increased imports of the product concerned and serious injury

or the threat of serious injury. The competent investigating authority shall also evaluate all known

factors other than increased imports under preferential terms of this Agreement that might be at the

same time causing injury to the domestic industry. The effects of an increase in imports of the

products concerned from other countries shall not be attributed to the imports under preferential

terms.

3. In conducting an injury investigation as referred to in paragraph 1, a competent investigating

authority should collect data over a period of at least 36 (thirty-six) months ending as close to the

date of the presentation of a request to initiate an investigation as is practicable.

& /en 160

ARTICLE 9.11

Initiation of an investigation

1. If there is sufficient prima facie evidence to justify such initiation, a bilateral safeguard

investigation may be initiated upon request of:

(a) the domestic industry or a trade and business association acting on behalf of domestic

producers of the like or directly competitive products in the importing Party; or

(b) one or more importing Member States of the European Union or Signatory

MERCOSUR States.

2. The request to initiate an investigation shall contain at least the following information:

(a) the name and description of the imported product concerned, its tariff heading and the tariff

treatment in force, as well as the name and description of the like or directly

competitive product;

(b) the names and addresses of the producers or association that submit the request, if applicable;

(c) if reasonably available, a list of all known producers of the like or directly competitive

product; and

(d) evidence that the conditions for imposing the safeguard measure set out in Article 9.3(1)

are met.

& /en 161

For the purposes of point (d) of this paragraph, the request to initiate an investigation shall contain

the following information:

(i) the production volume of producers submitting or represented in the application and an

estimation of the production of other known producers of the like or directly

competitive product;

(ii) the rate and amount of the increase in total and bilateral imports of the product concerned in

absolute and relative terms, for at least over the 36 (thirty-six) months prior to the date of the

presentation of a request to initiate an investigation, for which information is available;

(iii) the level of import prices during the same period; and

(iv) if information is available, objective and quantifiable data regarding the like or directly

competitive product, on the volume of total production and of total sales in the internal

market, inventories, prices for the internal market, productivity, capacity utilisation,

employment, profits and losses, and market share of the requesting firms or of those

represented in the request, for at least the last 36 (thirty-six) months previous to the

presentation of the request, for which information is available.

& /en 162

ARTICLE 9.12

Confidential information

1. The competent investigating authorities shall, upon cause being shown, treat any information

which is by nature confidential or which is provided on a confidential basis, as such. Such

information shall not be disclosed without the permission of the interested party submitting it. An

interested party providing confidential information may be requested to furnish non-confidential

summaries thereof or, if such interested party indicates that such information cannot be

summarised, the reasons why a summary cannot be provided.

2. Notwithstanding paragraph 1, if the competent authorities find that a request for

confidentiality is not warranted and if the interested party is either unwilling to make the

information public or to authorise its disclosure in generalised or summary form, the authorities

may disregard such information unless it can be demonstrated to their satisfaction from appropriate

sources that the information is correct.

3. If information regarding production, production capacity, employment, wages, volume and

value of domestic sales or average price is presented on a confidential basis, the competent

investigating authorities shall ensure that meaningful non-confidential summaries disclosing at least

aggregated data or, in cases in which the disclosure of aggregated data would endanger the

confidentiality of the company's data, indexes for each period of 12 (twelve) months under

investigation are submitted, so as to ensure the appropriate right of defence of the interested parties.

In this regard, requests for confidentiality should be considered in situations in which particular

market or domestic industry structures so justify it. This provision does not prevent the presentation

of more detailed non-confidential summaries.

& /en 163

4. Requests for confidentiality shall not be warranted in respect of information regarding basic

technical and quality standards or uses of the product concerned. Requests for confidentiality in

respect of information regarding the identity of the applicants and other known manufacturing

companies not part of the petition shall be warranted only in exceptional circumstances, which shall

be duly justified by the competent investigating authorities. In this regard, mere allegations shall not

suffice for justifying confidentiality requests. If the identity of the applicants cannot be disclosed,

competent investigating authorities shall disclose the total number of producers included in the

domestic industry and the proportion of the production that the applicants represent in relation to

the total production of the domestic industry.

ARTICLE 9.13

Timeframe for the investigation

The period between the date of publication of the decision to initiate the investigation and the

publication of the final decision should not exceed 1 (one) year. Under exceptional circumstances

this period may be extended, but, in any case, shall not exceed 18 (eighteen) months. A Party shall

not apply safeguard measures if this timeframe has not been observed by the competent

investigating authorities.

ARTICLE 9.14

Transparency

Each Party shall establish or maintain transparent, effective and equitable procedures for the

impartial and reasonable application of safeguard measures, in accordance with this Chapter.

& /en 164

SECTION F

PROVISIONAL SAFEGUARD MEASURES

ARTICLE 9.15

Provisional safeguard measures

1. In critical circumstances where delay may cause damage which would be difficult to repair, a

Party, after due notification, may take a provisional safeguard measure pursuant to a preliminary

determination that there is clear evidence that imports under preferential terms have increased and

that such imports have caused or are threatening to cause serious injury. The duration of the

provisional measure shall not exceed 200 (two hundred) days, during which period the requirements

of this Chapter shall be met. If the final determination concludes that there was no serious injury or

threat to the domestic industry caused by imports under preferential terms, the increased tariff or

provisional guarantee, if collected or imposed under provisional measures, shall be promptly

refunded, in accordance with the domestic regulation of the relevant Party.

2. Provisional safeguard measures shall not be taken against Paraguay, unless the result of the

preliminary determination pursuant to paragraph 1 demonstrates that the existence of serious injury

or the threat of serious injury is also being caused by imports of products from Paraguay under

preferential terms.

& /en 165

SECTION G

PUBLIC NOTICE

ARTICLE 9.16

Public notice on the initiation of an investigation

The public notice of the initiation of a safeguard investigation shall include the following

information:

(a) the name of the applicant;

(b) the complete description of the imported product under investigation and its classification

under the Harmonized System;

(c) the deadline for the request for hearings;

(d) the deadlines to register as an interested party and for the submission of information,

statements and other documents;

(e) the address where the application and other documents related to the investigation can be

examined;

(f) the name, address and email address or telephone or fax number of the institution which can

provide further information; and

& /en 166

(g) a summary of the facts on which the initiation of the investigation was based, including data

on imports that have allegedly increased in absolute or relative terms to total production and

an analysis of the domestic industry situation based on all the elements conveyed in the

application.

ARTICLE 9.17

Public notice on the application of bilateral safeguard measures

The public notice of the decision to apply a provisional safeguard measure and to apply or not apply

a definitive safeguard measure shall include the following information:

(a) the complete description of the products subject to the safeguard measure and their tariff

classification under the Harmonized System;

(b) information and evidence leading to the decision, such as:

(i) the increasing or increased preferential imports, where applicable;

(ii) the situation of the domestic industry;

(iii) the existence of a causal link between the increased preferential imports of the products

concerned and the serious injury or threat of serious injury to the domestic industry,

where applicable; and

(iv) in the case of preliminary determination, the existence of critical circumstances;

& /en 167

(c) other reasoned findings and conclusions on all relevant issues of fact and law;

(d) a description of the measure to be adopted, where applicable; and

(e) the date of entry into force of the measure and its duration, where applicable.

SECTION H

NOTIFICATIONS AND CONSULTATIONS

ARTICLE 9.18

Notifications

1. The importing Party shall notify the exporting Party in writing of the decision to:

(a) initiate the investigation under this Chapter;

(b) apply a provisional safeguard measure; and

(c) apply or not apply a definitive safeguard measure.

2. The decision shall be notified by the importing Party no later than 10 (ten) days after its

publication and shall be accompanied by the appropriate public notice. In the case of a decision to

initiate an investigation, a copy of the request to initiate the investigation shall be included in the

notification.

& /en 168

ARTICLE 9.19

Consultations

1. If a Party determines that the conditions to impose a definitive measure are met, it shall notify

in writing and at the same time invite the other Party for consultations.

2. The notification and the invitation for consultations referred to in paragraph 1 shall be made at

least 30 (thirty) days before a definitive measure is expected to enter into force. A Party shall not

apply a definitive measure in the absence of such notification.

3. The notification referred to in paragraph 1 shall include:

(a) the data and objective information demonstrating the existence of serious injury or the threat

of serious injury to the domestic industry caused by the increased imports under

preferential terms;

(b) a complete description of the imported product subject to the measure and its classification

under the Harmonized System;

(c) a description of the measure proposed;

(d) the date of entry into force of the measure and its duration; and

(e) the invitation for consultations.

& /en 169

4. The objective of the consultations referred to in paragraph 1 shall be to acquire a mutual

understanding of the publicly known facts and to exchange opinions, with a view to reaching a

mutually satisfactory solution. If no satisfactory solution is reached within 30 (thirty) days of the

notification referred to in paragraph 1, the Party may apply the measure at the end of the period

of 30 (thirty) days.

5. At any stage of the investigation, the notified Party may request consultations with the other

Party or any additional information that it considers necessary.

& /en 170

SECTION I

OUTERMOST REGIONS OF THE EUROPEAN UNION1

ARTICLE 9.20

Outermost Regions of the European Union

1. Notwithstanding Article 9.3, if a product originating in one or more Signatory MERCOSUR

States is imported under preferential terms into the territory of one or several of the European

Union's outermost regions in such increased quantities and under such conditions as to cause or

threaten to cause serious deterioration in the economic situation of the European Union's outermost

region(s), the European Union may exceptionally take safeguard measures limited to the territory of

the region(s) concerned, unless a mutually satisfactory solution is reached.

2. Without prejudice to paragraph 1, other rules laid down in this Chapter applicable to bilateral

safeguards also apply to any safeguard adopted under this Article.

1 At the entry into force of this Agreement, the outermost regions of the European Union are:

Guadeloupe, French Guiana, Martinique, Mayotte, Reunion, St. Martin, the Azores, Madeira

and the Canary Islands. This Article shall also apply to a country or an overseas territory that

changes its status to an outermost region by a decision of the European Council in accordance

with the procedure set out in Article 355(6) of the Treaty on the Functioning of the European

Union following the entry into force of that decision. In the event that an outermost region of

the European Union changes its status by the same procedure, this Article shall cease to be

applicable following the entry into force of the European Council's decision. The European

Union shall notify in writing the other Party of any change in the territories considered as

outermost regions of the European Union.

& /en 171

3. For the purposes of paragraph 1, serious deterioration means major difficulties in a sector of

the economy producing like or directly competitive products. 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 domestic production and

to imports from other countries; and

(b) the effect of such imports on the situation of the relevant industry or the economic sector

concerned, including on the level of sales, production, financial situation and employment.

CHAPTER 10

TRADE IN SERVICES AND ESTABLISHMENT

SECTION A

GENERAL PROVISIONS

ARTICLE 10.1

Objective and scope

1. The Parties, reaffirming their respective commitments under the WTO Agreement, hereby lay

down the necessary arrangements for the liberalisation of trade in services and establishment.

& /en 172

2. Nothing in this Chapter shall be construed as requiring the privatisation of public services or

imposing any obligation with respect to government procurement.

3. The provisions of this Chapter shall not apply to subsidies granted or grants provided by a

Party, including government-supported loans, guarantees and insurance.

4. Consistent with the provisions of this Chapter, each Party retains the right to regulate, to

introduce new regulations or to supply services to meet its policy objectives.

5. The provisions of this Chapter shall not apply to each Party's social security systems.

6. The provisions of this Chapter do not apply to services supplied or activities carried out in the

exercise of governmental authority, namely any service which is supplied or any activity which is

carried out neither on a commercial basis, nor in competition with one or more service suppliers or

investors.

7. This Chapter applies to measures of each Party affecting trade in services and establishment,

with the exception of:

(a) national maritime cabotage1;

1 Without prejudice to the scope of activities which may be considered as cabotage under the

relevant national legislation, national maritime cabotage under this Chapter covers

transportation of passengers or goods between a port or point located in a Signatory

MERCOSUR State or a Member State of the European Union and another port or point

located in the same Signatory MERCOSUR State or Member State of the European Union,

including on its continental shelf, as provided in UNCLOS, as well as traffic originating and

terminating in the same port or point located in the Signatory MERCOSUR State or

Member State of the European Union.

& /en 173

(b) domestic and international air transport services, whether scheduled or non-scheduled, and

services directly related to the exercise of traffic rights, other than:

(i) aircraft repair and maintenance services during which an aircraft is withdrawn from

service;

(ii) the selling and marketing of air transport services;

(iii) computer reservation system (CRS) services; and

(iv) ground handling services;

(c) inland navigation; and

(d) audio-visual services.

ARTICLE 10.2

Definitions

For the purposes of this Chapter:

(a) "consumption abroad" means the supply of a service in the territory of a Party to the service

consumer of the other Party (mode 2);

(b) "cross-border supply of services" means the supply of a service from the territory of a Party

into the territory of the other Party (mode 1);

& /en 174

(c) "economic activity" includes any activity of an economic nature, irrespective of whether it is

related to services or non-services sectors, subject to the provisions of Article 10.1;

(d) "enterprise" means a juridical person of a Party, or a branch or a representative office of such

juridical person of a Party, set up through establishment, as defined pursuant to this Article;

(e) "temporary entry and stay of natural persons" means the entry and temporary stay of key

personnel, graduate trainees, business sellers, contractual service suppliers and independent

professionals of a Party in the territory of the other Party, in accordance with Section B of

this Chapter;

(f) "establishment" means:

(i) the constitution, acquisition or maintenance of a juridical person1; or

(ii) the creation or maintenance of a branch or representative office of a juridical person,

within the territory of a Party for the purpose of performing an economic activity;

1 The terms "constitution" and "acquisition" of a juridical person shall be understood as

including capital participation in a juridical person with a view to establishing or maintaining

lasting economic links.

& /en 175

(g) "investor" of a Party means any person that seeks to perform or performs an economic activity

through establishment in the territory of the other Party1;

(h) "juridical person" means any legal entity duly constituted or otherwise organised under

applicable law, whether for profit or otherwise, and whether privately-owned or

governmentally-owned, including any corporation, trust, partnership, joint venture, sole

proprietorship or association;

(i) a juridical person is:

(i) "owned" by natural or juridical persons of a Party if more than 50 % of the equity

interest in it is beneficially owned by natural or juridical persons of that Party; and

(ii) "controlled" by natural or juridical persons of a Party if those natural or juridical

persons have the power to name a majority of its directors or to legally direct its actions;

(j) "juridical person of a Party" means a juridical person which is either:

(i) constituted or otherwise organised under the law of that Party, and is engaged in

substantive business operations in the territory of that Party or the other Party; or

1 If the economic activity is not performed directly by a juridical person but through other

forms of establishment such as a branch or a representative office, the investor (namely, the

juridical person) shall, nonetheless, through such establishment, be accorded the treatment

provided for investors under the Agreement. Such treatment shall be extended to the

establishment through which the economic activity is performed and does not need to be

extended to any other parts of the investor located outside the territory where the economic

activity is performed.

& /en 176

(ii) in the case of establishment, owned or controlled by:

(A) natural persons of that Party; or

(B) juridical persons of that Party identified under point (j) (i);

Notwithstanding point (ii), shipping companies established outside the European Union

or MERCOSUR and controlled by natural persons having the nationality of a Member

State of the European Union or of a Signatory MERCOSUR State, respectively, shall

also be beneficiaries of the provisions of this Chapter, if their vessels are registered in

accordance with the laws and regulations in that Member State of the European Union

or Signatory MERCOSUR State and fly the flag of a Member State of the European

Union or of a Signatory MERCOSUR State1;

(k) "measure" means any measure by a Party, whether in the form of a law, regulation, rule,

procedure, decision, administrative action, or any other form;

(l) "measures adopted or maintained by a Party" means measures taken by:

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

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

local governments or authorities;

1 Point (j) of this Article shall not, under any circumstances, be interpreted in such a way as to

allow a shipping company constituted or established in, or incorporated, established or

otherwise organized under the laws applicable to a territory subject to a sovereignty dispute

involving the Argentine Republic to benefit from the provisions of this Chapter. This

provision shall not be interpreted as implying the legitimacy of the laws applied to such

territories.

& /en 177

(m) "measures by Parties affecting establishment, the cross-border supply of services,

consumption abroad, and the entry and temporary stay of natural persons" include measures in

respect of:

(i) the purchase, payment or use of a service;

(ii) the access to and use of, in connection with the performance of an economic activity,

services which are required by those Parties to be offered to the public generally; and

(iii) the access, including through establishment, of persons of a Party to the territory of the

other Party to perform an economic activity in that territory;

(n) "natural person" means a person having the nationality, or a permanent resident1, of one of the

Signatory MERCOSUR States or one of the Member States of the European Union according

to their respective legislation;

(o) "sector" of an economic activity means:

(i) with reference to a specific commitment, one or more, or all, subsectors of that service

or non-service, as specified in the specific commitments contained in Annexes 10-A

to 10-E; or

(ii) otherwise, the whole of that service or non-service sector, including all of its subsectors;

1 If a Party accords substantially the same treatment to its permanent residents as it does to

natural persons having the nationality of that Party, its permanent residents shall be covered

by the definition of natural persons, in respect of measures affecting the cross-border trade in

services, consumption abroad and establishment.

& /en 178

(p) "service supplier" means any person that seeks to supply or supplies a service1; and

(q) "supply of a service" includes the production, distribution, marketing, sale and delivery of

a service.

ARTICLE 10.3

Market access

1. With respect to market access through establishment, the cross-border supply of services,

consumption abroad, and the entry and temporary stay of natural persons as provided in Section B,

each Party shall accord to enterprises, investors, services and services suppliers of the other Party

treatment no less favourable than that provided for under the terms, limitations and conditions

agreed and specified in the specific commitments contained in Annexes 10-A to 10-E.

2. In sectors where market access commitments are undertaken, the measures which a Party

shall not maintain or adopt, either on the basis of a regional subdivision or on the basis of its entire

territory, unless otherwise specified in Annexes 10-A to 10-E, are defined as:

(a) limitations on the number of services suppliers or enterprises in the form of numerical quotas,

monopolies, exclusive rights or the requirements of an economic needs test;

1 If the service is not supplied directly by a juridical person, the treatment provided under this

Chapter shall be extended to the branch or representative office through which the service is

supplied and need not be extended to any parts of the supplier located outside the territory

where the service is supplied.

& /en 179

(b) limitations on the total value of transactions or assets in the form of numerical quotas or the

requirement of an economic needs test;

(c) limitations on the total number of operations or on the total quantity of output expressed in

terms of designated numerical units in the form of quotas or the requirement of an economic

needs test;

(d) limitations on the participation of foreign capital in terms of maximum percentage limit on

foreign shareholding or the total value of individual or aggregate foreign investment;

(e) measures which restrict or require specific types of legal entity or joint ventures through

which an investor or service supplier of the other Party may perform an economic activity; or

(f) limitations on the total number of natural persons that may be employed in a particular sector

or that an enterprise may employ and who are necessary for, and directly related to, the

performance of the economic activity in the form of numerical quotas or the requirement of an

economic needs test.

3. Economic needs tests shall be described concisely and clearly, indicating the elements that

render them inconsistent with this Article and specifying the criteria on which the test is based.

& /en 180

ARTICLE 10.4

National treatment

1. In the sectors listed in Annexes 10-A to 10-E, and subject to any conditions and qualifications

set out therein, with respect to all measures affecting establishment1, the cross-border supply of

services, consumption abroad and the entry and temporary stay of natural persons as provided in

Section B, each Party shall accord to enterprises, investors, services and service suppliers of the

other Party treatment no less favourable than that it accords to its own like enterprises, investors,

services and service suppliers.

2. A Party may meet the requirement of paragraph 1 by according to enterprises, investors,

services and services suppliers of the other Party either formally identical treatment or formally

different treatment to that which it accords to its own like enterprises, investors, services and

services suppliers.

3. Formally identical or formally different treatment shall be considered to be less favourable if

it modifies the conditions of competition in favour of enterprises, investors, services or services

suppliers of the Party compared to like enterprises, investors, services and services suppliers of the

other Party.

4. Specific commitments assumed under this Article shall not be construed to require any Party

to compensate for any inherent competitive disadvantages which result from the foreign character

of the relevant enterprises, investors, services or services suppliers.

1 The obligation in this paragraph applies also to measures governing the composition of boards

of directors of an enterprise, such as nationality and residency requirements.

& /en 181

ARTICLE 10.5

List of specific commitments

1. The sectors liberalised by each Party pursuant to this Chapter and, by means of reservations,

the market access and national treatment limitations applicable to services, services suppliers,

enterprises and investors of the other Party in those sectors are set out in Annexes 10-A to 10-E.

2. The Parties shall not apply any market access or national treatment restrictions other than

those contained in Annexes 10-A to 10-E.

SECTION B

ENTRY AND TEMPORARY STAY OF NATURAL PERSONS

SUPPLYING SERVICES AND FOR BUSINESS PURPOSES

ARTICLE 10.6

Scope

1. This Section applies to measures of a Party concerning the entry and temporary stay in its

territory of key personnel, graduate trainees, business sellers, contractual service suppliers and

independent professionals of the other Party in accordance with paragraphs 2 and 3.

& /en 182

2. The provisions of this Section do not apply to measures affecting natural persons seeking

access to the employment market of a Party, nor to measures of a Party regarding citizenship,

residence or employment on a permanent basis.

3. The provisions of this Section do not prevent either Party from applying measures necessary

to regulate the entry, temporary stay and orderly movement of natural persons in its territory or to

protect the integrity of its borders, if such measures do not nullify or impair the benefits accruing to

either Party under the terms of a specific commitment1.

4. Subject to Articles 10.17 and 10.18, nothing in this Section shall prevent a Party from

requiring that natural persons possess the necessary qualifications or professional experience in the

territory where the service is supplied, for the sector of activity concerned.

ARTICLE 10.7

Definitions

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

(a) "business sellers" means natural persons who are representatives of a juridical person of a

Party seeking entry and temporary stay in the territory of the other Party for the purpose of

negotiating the sale of services or goods or entering into agreements to sell services or goods

for that supplier. They do not engage in making direct sales to the general public, do not

receive remuneration from a source located within the host Party and are not a

commission agent;

1 The sole fact of requiring a visa for a natural person of certain countries and not for those of

other countries shall not be regarded as nullifying or impairing benefits under a specific

commitment.

& /en 183

(b) "contractual service suppliers" means natural persons employed by a juridical person of a

Party which is not established in the territory of the other Party and which has concluded a

contract to supply services with a final consumer in the latter Party requiring the presence on

a temporary basis of its employees in that Party in order to fulfil the contract to

provide services1;

(c) "graduate trainees" means natural persons who have been employed by a juridical person of a

Party for at least 1 (one) year, who possess a university degree and who are temporarily

transferred to an enterprise in the territory of the other Party for career development purposes

or to obtain training in business techniques or methods2;

(d) "independent professionals" means natural persons engaged in the supply of a service and

settled as self-employed in the territory of a Party who have not established in the territory of

the other Party and who have concluded a contract to supply services with a final consumer in

the territory of the other Party, requiring their presence on a temporary basis in that Party in

order to fulfil the contract to provide services3;

1 The service contract referred to in point (b) shall be a bona fide contract and comply with the

laws and regulations of the Party where the contract is executed. 2 The recipient enterprise may be required to submit a training programme covering the

duration of stay for prior approval, demonstrating that the purpose of the stay is for training.

The competent authorities may require that training be linked to the university degree which

has been obtained. 3 The service contract referred to in point (d) shall be a bona fide contract and comply with the

laws and regulations of the Party where the contract is executed.

& /en 184

(e) "key personnel" means natural persons employed within a juridical person of a Party, other

than a non-profit organisation, and who are responsible for the establishment or the proper

control, administration and operation of an enterprise, and consists of:

(i) "business visitors": natural persons working in a senior position who are responsible for

establishing an enterprise; they do not engage in direct transactions with the general

public and do not receive remuneration from a source located within the host Party; and

(ii) "intra-corporate transferees": natural persons who have been employed by a juridical

person of a Party, or have been partners in it, for at least 1 (one) year, who are

temporarily transferred to an enterprise or a head office of that juridical person in the

territory of the other Party and who belong to one of the following categories:

(A) managers:

Natural persons working in a senior position within a juridical person, who

primarily direct the management of the enterprise receiving general supervision or

direction principally from the board of directors or stockholders of the business or

their equivalent, including:

– directing the enterprise or a department or sub-division thereof;

– supervising and controlling the work of other supervisory, professional or

managerial employees; or

– having the authority personally to recruit and dismiss or to recommend

recruiting, dismissing or other personnel actions;

& /en 185

(B) specialists:

Natural persons working within a juridical person who possess specialised

knowledge essential to the enterprise's economic activity, techniques or

management.

ARTICLE 10.8

Key personnel and graduate trainees

For each sector for which commitments have been undertaken for establishment as listed in

Annexes 10-B and 10-E, and subject to any reservations listed in Annexes 10-C and 10-E, each

Party shall allow investors of the other Party to employ in their enterprise natural persons of that

other Party, if such employees are key personnel or graduate trainees as defined in Article 10.7. The

temporary entry and stay of key personnel and graduate trainees shall be:

(a) for the period of time necessary for the fulfilment of the contract or up to 3 (three) years for

intra-corporate transferees, whichever is less;

(b) up to 60 (sixty) days in any period of 12 (twelve) months for business visitors; and

(c) up to 1 (one) year for graduate trainees.

& /en 186

ARTICLE 10.9

Business sellers

For each sector for which commitments have been undertaken for the cross-border supply of

services and for establishment, listed in Annexes 10-A, 10-B and 10-E, and subject to any

reservations listed in Annexes 10-C and 10-E, each Party shall allow the temporary entry and stay

of business sellers for a period of up to 90 (ninety) days in any period of 12 (twelve) months1.

ARTICLE 10.10

Contractual service suppliers and independent professionals

1. For the sectors specified in Annexes 10-D and 10-E and subject to any reservations listed

therein, each Party shall allow the supply of services into its territory by contractual service

suppliers of the other Party, through the presence of natural persons, subject to the following

conditions:

(a) the juridical person employing the natural person must have obtained a service contract for a

period not exceeding 12 (twelve) months;

(b) the natural persons entering the other Party must have an appropriate education or experience

relevant to the service to be provided;

1 This Article is without prejudice to the rights and obligations deriving from bilateral visa

waiver agreements between individual Signatory MERCOSUR States and individual Member

States of the European Union.

& /en 187

(c) the natural person shall not receive remuneration for the supply of a service other than the

remuneration paid by the contractual service supplier during the stay of the natural person in

the other Party;

(d) the temporary entry and stay of natural persons in the territory of the Party concerned shall be

for a cumulative period of not more than 6 (six) months in any period of 12 (twelve) months

or for the duration of the contract, whichever is less; and

(e) access accorded pursuant to the provisions of this Article relates only to the service activity

which is the subject of the contract and it does not confer entitlement on to natural persons to

exercise the professional title of the Party where the service is provided.

2. For the sectors specified in Annexes 10-D and 10-E, and subject to any reservations listed

therein, each Party shall allow the supply of services into its territory by independent professionals

of the other Party, through the presence of natural persons, subject to the following conditions:

(a) the natural persons must have obtained a service contract for a period not

exceeding 12 (twelve) months;

(b) the natural persons entering the other Party must have an appropriate education and

professional qualifications relevant to the service to be provided;

(c) the temporary entry and stay of natural persons within the Party concerned shall be for a

cumulative period of not more than 6 (six) months in any period of 12 (twelve) months or for

the duration of the contract, whichever is less; and

& /en 188

(d) access accorded pursuant to the provisions of this Article relates only to the service activity

which is the subject of the contract and it does not confer entitlement to the natural person to

exercise the professional title of the Party where the service is provided.

SECTION C

REGULATORY FRAMEWORK

SUB-SECTION 1

PROVISIONS OF GENERAL APPLICATION

ARTICLE 10.11

Mutual recognition

1. Nothing in this Chapter shall prevent a Party from requiring that natural persons possess the

necessary qualifications or professional experience specified in the territory where the service is

supplied, for the sector of activity concerned.

2. For the purposes of the fulfilment, in whole or in part, of its standards or criteria for the

authorisation, licensing or certification of investors and services suppliers, a Party may recognise

the education or experience obtained, requirements met, or licences or certifications granted in the

other Party. Such recognition, which may be achieved through harmonisation or otherwise, may be

based upon an agreement or arrangement or may be accorded autonomously.

& /en 189

ARTICLE 10.12

Transparency

1. Each Party shall publish promptly, and except in emergency situations, at the latest by the

time of their entry into force, all relevant measures of general application which pertain to or affect

this Chapter.

2. The measures referred to in paragraph 1 shall include measures applying to all modes of

supply, including on the process of entry and temporary stay of the categories of natural persons

defined in Article 10.7. Information about these measures shall be kept up to date. Each Party shall

facilitate access to relevant information by indicating to the other Party where relevant publications

and websites can be found.

3. If publication of the measures referred to in paragraph 1 is not practicable, such measures

shall be made otherwise publicly available.

4. Each Party shall respond promptly to all requests by the other Party for specific information

on any of its relevant measures of general application referred to in paragraph 1, including measures

regarding the entry and temporary stay of services suppliers as referred to in paragraph 2.

5. Each Party shall establish one or more enquiry points to provide specific information to

services providers of the other Party, upon request, on any of its measures of general application

referred to in paragraph 1. The Parties shall notify each other of these enquiry points no later than

one year after the entry into force of this Agreement. Enquiry points need not be depositories of

laws and regulations.

& /en 190

6. Nothing in this Chapter shall require any Party to provide confidential information, the

disclosure of which would impede law enforcement or otherwise be contrary to the public interest,

or which would prejudice legitimate commercial interests of particular enterprises, public or private.

SUB-SECTION 2

DOMESTIC REGULATION

ARTICLE 10.13

Scope

1. This Sub-Section only applies to sectors for which a Party has undertaken specific

commitments as listed in Annexes 10-A to 10 E and to the extent that these specific

commitments apply.

2. This Sub-Section does not apply to measures to the extent that they constitute limitations

pursuant to Articles 10.3 and 10.4.

3. In sectors where specific commitments are undertaken as listed in Annexes 10-A to 10-E,

each Party shall ensure that all measures of general application affecting trade in services and

establishment are administered in a reasonable, objective and impartial manner.

4. Each Party shall comply with this Sub-Section with regard to measures relating to licensing

requirements and procedures and qualification requirements and procedures.

& /en 191

5. This Sub-Section applies to measures of each Party relating to licensing and qualification

requirements and procedures that affect:

(a) the cross-border supply of services;

(b) the establishment in their territory of an enterprise defined in Article 10.2; or

(c) the temporary stay in their territory of categories of natural persons defined in Article 10.2.

ARTICLE 10.14

Definitions

For the purposes of this Sub-Section:

(a) "competent authority" means any central, regional or local government or authority, or any

non-governmental body in the exercise of powers delegated by central, regional or local

governments or authorities and which is entitled to take a decision concerning the

authorisation to supply a service, or concerning the authorisation to establish an enterprise in

order to perform an economic activity;

(b) "licensing procedures" means administrative and procedural rules that a service supplier or an

investor seeking authorisation to supply a service or to establish an enterprise must adhere to

in order to demonstrate compliance with licensing requirements;

& /en 192

(c) "licensing requirements" means substantive requirements other than qualification

requirements with which a services supplier or investor is required to comply in order to

obtain, from a competent authority, a decision concerning the authorisation to supply a service

or concerning the authorisation to establish an enterprise in order to perform an economic

activity, including a decision to amend or renew such authorisation;

(d) "qualification procedures" means administrative or procedural rules that a natural person must

adhere to in order to demonstrate compliance with qualification requirements, for the purpose

of obtaining authorisation to supply a service; and

(e) "qualification requirements" means substantive requirements relating to the competence of a

natural person to supply a service and which are required to be demonstrated for the purpose

of obtaining authorisation to supply a service.

ARTICLE 10.15

Conditions for licensing

1. Measures of each Party relating to licensing requirements shall be based on criteria which are:

(a) proportionate to a public policy objective;

(b) clear and unambiguous;

(c) objective; and

(d) made public in advance.

& /en 193

2. A licence should be granted by the competent authority as soon as it is established, in the light

of an appropriate examination, that the conditions for obtaining a licence have been met.

3. If the number of licences available for a given activity is limited because of the scarcity of

available natural resources or technical capacity, each Party shall select candidates through an

impartial and transparent selection procedure which provides, in particular, adequate publicity about

the launch, conduct and completion of the procedure. Subject to the provisions specified by this

Article, each Party may take into account public policy objectives when establishing the rules for

the selection procedures.

ARTICLE 10.16

Licensing procedures

1. Licensing procedures shall be clear and made public in advance. Each Party shall ensure that

the licensing procedures used by, and the related decisions of, their competent authorities are

objective and impartial with respect to all applicants.

2. Licensing procedures shall not be dissuasive and shall not unduly complicate or delay the

provision of the service.

& /en 194

3. Any licensing fees1 which applicants may incur from their application shall be reasonable and

shall not in themselves restrict the supply of the service. To the extent practicable, those fees should

be proportionate to the cost of the licensing procedures in question.

4. The competent authorities of a Party shall, to the extent practicable, provide an indicative

timeframe for processing an application. Applications shall be processed within a reasonable period

of time. The period shall run only from the time when all documentation has been received by the

competent authorities. If justified by the complexity of the issue, the time period may be extended,

by the competent authority, for a reasonable time. The extension and its duration shall be duly

motivated and shall be notified to the applicant, to the extent practicable, before the original period

has expired.

5. In the case of an incomplete application, the applicant shall be informed as quickly as possible

of the need to supply any additional documentation. In such a case, the period referred to in

paragraph 4 may be suspended by the competent authorities until they have received all

documentation.

6. If a request is rejected because it fails to comply with the required procedures or formalities,

the applicant shall be informed of the rejection and of the available means of redress as quickly

as possible.

1 Licensing fees do not include payments for auction, tendering or other non-discriminatory

means of awarding concessions, or mandated contributions to the provision of universal

services.

& /en 195

ARTICLE 10.17

Qualification requirements

1. Qualification requirements shall be based on criteria which are:

(a) proportionate to a public policy objective;

(b) clear and unambiguous;

(c) objective; and

(d) made public in advance.

2. If a Party imposes qualification requirements for the supply of a service, it shall ensure that

adequate procedures exist for the verification and assessment of qualifications held by service

suppliers of the other Party. If the competent authority of a Party considers that membership in a

relevant professional association in the territory of another Party is indicative of the level of

competence or extent of experience of the applicant, such membership shall be given due

consideration.

3. For the supply of professional services, the scope of examinations and of any other

qualification requirements by a competent authority shall be related to the rights to practise a

profession for which authorisation is being sought, so as to avoid unduly restricting persons of the

other Party from applying.

& /en 196

4. Provided that an applicant has presented all necessary supporting evidence of his or her

qualifications, the competent authority, in verifying and assessing such qualifications, shall identify

any deficiency and inform the applicant of requirements to meet this deficiency. Such requirements

may include course work, examinations and training. The presentation by an applicant of a Party of

evidence of qualifications obtained in the territory of a third country shall not in itself constitute an

a priori reason for the competent authority of the other Party to reject the application and refrain

from making an assessment of the qualifications presented.

5. If examinations are required, each Party shall ensure that they are scheduled at reasonably

frequent intervals. Applicants for examinations shall be allowed a reasonable period to submit

applications.

6. Once qualification requirements and any other applicable regulatory requirements have been

fulfilled, each Party should ensure that a service supplier is allowed to supply the service without

undue delay.

ARTICLE 10.18

Qualification procedures

1. Qualification procedures shall be based on criteria which are:

(a) clear and unambiguous;

(b) objective; and

(c) made public in advance.

& /en 197

2. Each Party shall ensure that the qualification procedures used by, and the related decisions of,

their competent authorities are impartial with respect to all applicants.

3. An applicant shall, in principle, not be required to approach more than 1 (one) competent

authority for qualification procedures.

4. If specific time periods for applications exist, an applicant shall be allowed a reasonable

period for the submission of an application. The competent authority shall initiate the processing of

an application without undue delay. To the extent practicable, the competent authority shall accept

applications in electronic format under the same conditions of authenticity as an application

submitted in paper format.

5. Authenticated copies should be accepted by the competent authority, if possible, in place of

original documents.

6. If the competent authority rejects an application, it shall inform the applicant, to the extent

practicable in writing, without undue delay. It shall inform the applicant, upon request, of the

reasons for the rejection of the application and identify any deficiencies and ways in which those

deficiencies can be addressed. It shall inform the applicant of the timeframe for an appeal against

the decision, if available. It shall permit an applicant to resubmit an application within a reasonable

time limit.

7. Each Party shall ensure that the processing of an application, including the verification and

assessment of a qualification, is completed within a reasonable timeframe from the date of the

submission of a complete application. Each Party shall endeavour to establish a normal timeframe

for the processing of an application.

& /en 198

8. Each Party shall ensure that any fees relating to qualification procedures are commensurate

with the costs incurred by the competent authorities and do not in themselves restrict the supply of

the service.

ARTICLE 10.19

Review of administrative decisions

Each Party shall maintain or institute judicial, arbitral or administrative tribunals or procedures

which provide, on request of an affected investor or service supplier of the other Party, for the

prompt review of, and if justified, appropriate remedies for, administrative decisions affecting

establishment, cross border supply of services or the temporary stay of natural persons supplying

services. If such procedures are not independent of the agency entrusted with the administrative

decision concerned, each Party shall ensure that the procedures in fact provide for an objective and

impartial review.

& /en 199

SUB-SECTION 3

POSTAL SERVICES

ARTICLE 10.20

Scope

1. This Sub-Section sets out the principles of the regulatory framework for postal services

regarding which each Party has undertaken specific commitments, as listed in Annexes 10-A

and 10-E, in accordance with this Sub-Section.

2. This Sub-Section does not require a Party to liberalise services reserved to 1 (one) or more

designated operators as listed in Annexes 10-A and 10-E.

ARTICLE 10.21

Definitions

For the purposes of this Sub-Section:

(a) "essential requirements" means general non-economic reasons for imposing conditions on the

supply of postal services and may include the confidentiality of correspondence, the security

of the network as regards the transport of dangerous goods, data protection, environmental

protection and regional planning;

& /en 200

(b) "licence" means any form of authorisation or permission1 setting out rights and obligations

specific to the postal sector, granted to an individual supplier by a regulatory authority, or any

other competent body, and which is required before supplying a given service;

(c) "postal item" means an item addressed in the final form in which it is to be carried by a postal

service provider, whether public or private, and may include items such as a letter, parcel,

newspaper, catalogue and others;

(d) "postal service"2 means services involving the collection, sorting, transport and delivery of

postal items, irrespective of the destination (domestic or foreign), the speed of the service,

(priority, non-priority, urgent, express or others), or the operator (public or private);

(e) "regulatory authority" means the independent body or bodies charged with the regulation of

postal services mentioned in this Sub-Section; and

(f) "universal service" means the permanent provision of a postal service of specified quality at

all points in the territory of a Party at affordable prices for all users.

1 For greater certainty, this includes the grant of a concession, registration, declaration,

notification or individual licences. 2 "Postal services" covers the CPC, CPC 7511 and CPC 7512.

& /en 201

ARTICLE 10.22

Prevention of anti-competitive practices in the postal sector

Each Party shall ensure that a supplier of postal services subject to a universal service obligation or

a postal monopoly does not engage in anti-competitive practices such as:

(a) using revenues derived from the supply of such service to cross-subsidise the supply of an

express postal service or any non-universal postal service, and

(b) differentiating among customers such as businesses, large volume mailers or consolidators

with respect to tariffs or other terms and conditions for the supply of a service subject to a

universal service obligation or a postal monopoly, if such differentiation is not based on

objective or impartial criteria.

ARTICLE 10.23

Universal services

Each Party has the right to define the kind of universal service obligation it wishes to maintain and

to decide on its scope and implementation. Each Party may adopt the necessary measures in order to

safeguard the implementation, development and maintenance of the universal postal service. Such

measures and obligations shall not be regarded as anti-competitive per se if they are applied in a

transparent, non-discriminatory and proportionate way.

& /en 202

ARTICLE 10.24

Licences to provide postal services

1. Each Party may require licences for the supply of postal services. A licence should be granted

wherever possible, by means of a simplified authorisation procedure in accordance with national

laws and regulations.

2. A licence may require compliance with essential requirements, including quality standards

and respect for the exclusive and special rights of designated operators of reserved services or of

universal postal services.

3. If a Party requires a licence:

(a) it shall make publicly available in an easily accessible form:

(i) the rights and obligations resulting from such a licence;

(ii) the criteria, terms and conditions for licensing; and

(iii) to the extent possible, the period of time normally required to reach a decision

concerning an application for a licence.

(b) the procedures for granting a licence shall be transparent, non-discriminatory, proportionate

and based on objective criteria; and

& /en 203

(c) any licensing fees1 which the applicants may incur from their application shall be reasonable

and shall not in themselves restrict the supply of the service.

4. The status of an application for a licence and the reasons for the refusal to grant a licence shall

be made known to the applicant upon request. Each Party shall, in accordance with its laws and

regulations, maintain or establish a procedure for applicants to appeal against the refusal to grant a

licence to a domestic independent body. Such a procedure shall be transparent, non-discriminatory

and based on objective criteria.

ARTICLE 10.25

Independence of the regulatory body

Each Party may designate a regulatory body, whether specific to the postal service sector or not.

The regulatory body shall be legally separate from, and not accountable to, any supplier of postal

services. The decisions of, and the procedures used by, the regulatory bodies shall be impartial with

respect to all market participants.

1 Licensing fees do not include payments for auction, tendering or other non-discriminatory

means of awarding concessions or mandated contributions to the provision of universal

services.

& /en 204

SUB-SECTION 4

TELECOMMUNICATIONS SERVICES

ARTICLE 10.26

Scope

1. This Sub-Section sets out principles of the regulatory framework for telecommunications

services, other than broadcasting1, regarding which each Party has undertaken specific

commitments in accordance with this Chapter.

2. Nothing in this Sub-Section shall be construed:

(a) as requiring a Party to authorise a supplier of telecommunications services of the other Party

to establish, construct, acquire, lease, operate, or supply telecommunications transport

networks or services, other than as provided for in Annexes 10-A, 10-B, 10-C and 10-E; or

(b) as requiring a Party to oblige service suppliers under its jurisdiction, to establish, construct,

acquire, lease, operate or supply telecommunications transport networks or services not

offered to the public generally.

1 "Broadcasting" means radiocommunication in which transmissions are intended for direct

reception by the general public, and may include sound transmission and television

transmission. Suppliers of broadcasting services shall be considered as suppliers of public

telecommunications transport services, and their networks, as public telecommunications

transport networks, if and to the extent that such networks are also used for providing public

telecommunications transport services.

& /en 205

ARTICLE 10.27

Definitions

For the purposes of this Sub-Section:

(a) "essential telecommunications facilities"1 means facilities of a public telecommunications

transport network and public telecommunications transport service that:

(i) are exclusively or predominantly provided by a single or limited number of suppliers;

and

(ii) cannot feasibly be economically or technically substituted in order to provide a service;

(b) "interconnection" means linking with suppliers of telecommunications transport networks or

telecommunications transport services in order to allow the users of one supplier of

telecommunications services to communicate with users of another supplier of

telecommunications services and to access telecommunications services provided by another

supplier of telecommunications services;

1 For the Republic of Paraguay and the Oriental Republic of Uruguay, "essential

telecommunications facilities" means facilities of a public telecommunications transport

network and a public telecommunications transport service in accordance with the definition

provided in their national law.

& /en 206

(c) "licence" means any form of authorisation, including registration, declaration or notification

procedures or others as defined in the laws and regulations of a Party, setting out rights and

obligations specific to the telecommunications sector granted to an individual service supplier

of telecommunications services by a regulatory authority which is required for the provision

of a telecommunications service;

(d) "major supplier" in the telecommunications sector is a supplier of telecommunications

transport networks or services which has the ability to materially affect the terms of

participation, having regard to price and supply, in a relevant market for telecommunications

services as a result of control over essential facilities or the use of its position in that market;

(e) "public telecommunications transport network" means the public telecommunications

infrastructure which permits telecommunications between and among defined network

termination points;

(f) "public telecommunications transport service" means any telecommunications transport

service required, explicitly or in effect, by a Party to be offered to the public generally;

(g) "regulatory authority" means the body or bodies charged with the regulation of

telecommunications mentioned in this Sub-Section;

(h) "service supplier" means a person that has been granted a licence to supply

telecommunications services;

(i) "telecommunications services" means all services which consist in the transmission and

reception of electro-magnetic signals and excludes services providing, or exercising editorial

control over, the content transmitted; and

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(j) "universal service" means the set of services of specified quality that must be made available

to all users in the territory of a Party regardless of their geographical location and at an

affordable price.

ARTICLE 10.28

Regulatory authority

1. Each Party shall ensure that its regulatory authority for telecommunications services is legally

distinct and functionally independent from any supplier of telecommunications services.

2. The regulatory authority shall be sufficiently empowered and resourced to regulate the sector.

The competences of regulatory authority shall be made public in an easily accessible and clear

form, in particular if those tasks are assigned to more than one body.

3. The decisions of, and the procedures used by, the regulatory authority shall be impartial with

respect to all market participants.

4. A supplier of telecommunications services affected by a decision of a regulatory authority

shall have the right to appeal against that decision to a domestic appeal body that is independent of

the parties involved and of the regulatory authority. If the appeal body is not judicial in character,

written reasons for its decision shall be given and its decisions shall also be subject to review by an

impartial and independent domestic judicial or administrative authority.

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ARTICLE 10.29

Licences to provide telecommunication services

1. Each Party shall ensure that a licence is granted, by means of a simplified procedure

wherever possible.

2. Each Party shall ensure that the terms and conditions for the granting of rights of use of

numbers and frequencies are made publicly available.

3. If a licence is required by a Party:

(a) all the licensing criteria shall be made publicly available;

(b) the reasonable period of time normally required to reach the decision on whether to grant a

licence, after the submission of the complete application, shall be public;

(c) if the grant of a licence is refused, the reasons for such a refusal shall be made known in

writing to the applicant on request; and

(d) the applicant for a licence shall be able to seek recourse to a domestic appeal body to establish

whether a licence has been unduly refused.

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ARTICLE 10.30

Anti-competitive practices

Each Party shall adopt or maintain appropriate measures for the purpose of preventing all suppliers

of telecommunications services who, alone or together, are a major1 supplier, from engaging in or

continuing anti-competitive practices. These anti-competitive practices may include an abuse of a

dominant position, and all individual or concerted practices, conduct or recommendations which

have the effect of restricting, limiting, hindering, distorting or preventing current or future

competition in the relevant market.

ARTICLE 10.31

Access to essential telecommunications facilities

Each Party shall ensure that a major supplier2 in its territory grants access to its essential

telecommunications facilities to suppliers on reasonable and non-discriminatory3 terms and

conditions, including in relation to rates, technical standards, specifications, quality and

maintenance.

1 For the Oriental Republic of Uruguay, the scope of this Article applies to all suppliers of

telecommunications services. 2 For the Oriental Republic of Uruguay, the scope of this Article applies to all suppliers. 3 For the purposes of this Subsection, "non-discrimination" is understood to refer to national

treatment as defined in Article 10.4, as well as to reflect sector-specific usage of the term to

mean terms and conditions no less favourable than those accorded to any other user of like

public telecommunication transport networks or public telecommunications transport services

under like circumstances.

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ARTICLE 10.32

Interconnection

1. Each Party shall ensure that any supplier authorised to provide telecommunications services

in its territory shall have the right to negotiate interconnection with other suppliers of public

telecommunications transport networks and public telecommunications transport services.

Interconnection should in principle be agreed on the basis of commercial negotiation between the

suppliers concerned.

2. Each Party shall ensure that suppliers of telecommunications services that acquire information

from another supplier of telecommunications services during the process of negotiating

interconnection arrangements use that information solely for the purpose for which it was supplied

and respect, at all times, the confidentiality of information transmitted or stored.

3. Interconnection with a major supplier1 shall be ensured at any technically feasible point in the

network. Such interconnection shall be provided:

(a) under non-discriminatory terms, conditions, including technical standards and specifications,

and rates, and of a quality no less favourable than that provided for their own like services of

such a major supplier, or for like services of non-affiliated service suppliers, or for its

subsidiaries or other affiliates;

1 For the Oriental Republic of Uruguay, the scope of this Article applies to all suppliers of

telecommunications services.

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(b) in a timely fashion, on terms and conditions, including technical standards and specifications,

that are transparent, reasonable having regard to economic feasibility and sufficiently detailed,

so that the supplier need not pay for network components or facilities that it does not require

for the service to be provided; and

(c) on request by another supplier of telecommunication services, and subject to an assessment by

the regulatory authority if appropriate, at any technically feasible points in addition to the

network termination points offered to the majority of users, subject to reasonable charges.

4. The rules applicable for interconnection to a major supplier shall be made publicly available.

5. Major suppliers shall make publicly available either their interconnection agreements or their

reference interconnection offers, as appropriate.

6. Each Party shall ensure that a supplier of telecommunications services requesting

interconnection with a major supplier has a right of recourse, either at any time or after a reasonable

period of time which has been made publicly known, to an independent domestic body to resolve

disputes regarding appropriate terms, conditions and rates for interconnection. Such an independent

domestic body may be the regulatory authority referred to in Article 10.28.

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ARTICLE 10.33

Scarce resources

Each Party shall conduct its procedures for granting rights of use of scarce resources including

frequencies, numbers and rights of way, in an objective, timely, transparent and non-discriminatory

manner. To the extent possible, each Party shall make publicly available the current state of

allocated frequency bands, but detailed identification of frequencies for specific government uses is

not required.

ARTICLE 10.34

Universal service

1. Each Party has the right to define the kind of universal service obligations it wishes to

maintain and to decide on their scope and implementation. Each Party shall administer the universal

service obligations in a transparent, objective, non-discriminatory and proportionate manner.

2. If the designation of a universal service provider is open to multiple service suppliers of

telecommunications networks or services, such procedures shall be open to all service suppliers.

The designation shall be made through an efficient, transparent and non-discriminatory mechanism.

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ARTICLE 10.35

Confidentiality of information

Each Party shall ensure the confidentiality of telecommunications and related traffic data

transmitted by means of public telecommunications transport networks and public

telecommunications transport services, subject to the requirement that measures applied to that end

do not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on

trade in services.

ARTICLE 10.36

Disputes between suppliers

Each Party shall ensure that, in the event of a dispute arising between suppliers, the regulatory

authority1 concerned issues, on request of either party to the dispute, a binding decision to resolve

the dispute in the shortest possible timeframe.

1 For greater certainty, in the case of MERCOSUR, this refers to the regulatory authority of

each Signatory MERCOSUR State.

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ARTICLE 10.37

International mobile roaming services

1. Each Party shall endeavour to cooperate on promoting transparent and reasonable rates for

international roaming services with a view to promoting the growth of trade between the Parties and

enhancing consumer welfare.

2. Each Party shall ensure that suppliers of telecommunications services providing international

mobile roaming services for voice, text messaging and data provide those services:

(a) with a similar quality to that provided to their own retail customers in their country of

establishment; and

(b) with clear and readily available information in respect of access to the services and the prices

thereof.

3. The Parties shall cooperate on monitoring the achievement of paragraphs 1 and 2 as well as

on other issues related to international mobile roaming services that may be identified.

4. This Article does not oblige a Party to regulate rates or conditions for international mobile

roaming services.

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SUB-SECTION 5

FINANCIAL SERVICES

ARTICLE 10.38

Scope

This Sub-Section applies to measures by a Party affecting the supply of financial services.

ARTICLE 10.39

Definitions

1. For the purposes of this Sub-Section, the following definitions apply:

(a) "financial service" means any service of a financial nature offered by a financial service

supplier of a Party; financial services comprise the following activities:

(i) insurance and insurance-related services;

(A) direct insurance (including co-insurance):

(1) life; and

(2) non-life;

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(B) reinsurance and retrocession;

(C) insurance inter-mediation, such as brokerage and agency; and

(D) services auxiliary to insurance, such as consultancy, actuarial, risk assessment and

claim settlement services; and

(ii) banking and other financial services (excluding insurance):

(A) acceptance of deposits and other repayable funds from the public;

(B) lending of all types, including consumer credit, mortgage credit, factoring and

financing of commercial transaction;

(C) financial leasing;

(D) all payment and money transmission services, including credit, charge and debit

cards, travellers cheques and bankers drafts;

(E) guarantees and commitments;

(F) trading for own account or for account of customers, whether on an exchange, in

an over-the-counter market or otherwise, the following:

(1) money market instruments (including cheques, bills, certificates of

deposits);

(2) foreign exchange;

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(3) derivative products including, but not limited to, futures and options;

(4) exchange rate and interest rate instruments, including products such as

swaps, forward rate agreements;

(5) transferable securities; and

(6) other negotiable instruments and financial assets, including bullion;

(G) participation in issues of all kinds of securities, including underwriting and

placement as agent (whether publicly or privately) and the provision of services

related to such issues;

(H) money broking;

(I) asset management, such as cash or portfolio management, all forms of collective

investment management, pension fund management, custodial, depository and

trust services;

(J) settlement and clearing services for financial assets, including securities,

derivative products, and other negotiable instruments;

(K) provision and transfer of financial information, and financial data processing and

related software by suppliers of other financial services; and

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(L) advisory, intermediation and other auxiliary financial services on all the activities

listed in points (A) to (K), including credit reference and analysis, investment and

portfolio research and advice, advice on acquisitions and on corporate

restructuring and strategy;

(b) "financial service supplier" means any natural or juridical person of a Party, except public

entities, wishing to supply or supplying financial services;

(c) "new financial service" means a service of a financial nature, including services related to

existing and new products or the manner in which a product is delivered, that is not supplied

by any financial service supplier in the territory of a Party but which is supplied in the

territory of the other Party;

(d) "self-regulatory organisation" means a non-governmental body, including any organisation or

association, that exercises regulatory or supervisory authority over financial service suppliers

by delegation from a Party;

(e) "public entity" means:

(i) a government, a central bank or a monetary authority of a Party, or an entity owned or

controlled by a Party, that is principally engaged in carrying out governmental functions

or activities for governmental purposes, not including an entity principally engaged in

supplying financial services on commercial terms; or

(ii) a private entity, performing functions normally performed by a central bank or

monetary authority, when exercising those functions.

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2. For the purposes of this Sub-Section and only in relation to services covered by this

Sub-Section "services supplied in the exercise of governmental authority" means:

(a) activities conducted by a central bank or monetary authority or by any other public entity in

pursuit of monetary or exchange rate policies;

(b) activities forming part of a statutory system of social security or public retirement plans; and

(c) other activities conducted by a public entity for the account of, with the guarantee of, or using

the financial resources of, the government.

If a Party allows any of the activities referred to in points (b) or (c) to be conducted by its financial

service suppliers in competition with a public entity or a financial service supplier, "financial

services" shall include such activities, which will then fall within the scope of this Chapter.

3. The general definition of "services supplied in the exercise of governmental authority"

included in Article 10.1(6) of this Chapter shall not apply to services covered by this Sub-Section.

ARTICLE 10.40

Prudential carve-out

1. Nothing in this Agreement shall be construed as preventing a Party from taking measures for

prudential reasons, including:

(a) the protection of investors, depositors, financial market participants, policyholders or persons

to whom a fiduciary duty is owed by a financial service supplier; or

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(b) ensuring the integrity and stability of a Party's financial system.

2. If such measures do not conform with the provisions of this Sub-Section, they shall not be

used as a means of avoiding the Party's commitments or obligations under this Sub-Section.

3. Nothing in this Agreement shall be construed as requiring a Party to disclose information

relating to the affairs and accounts of individual customers or any confidential or proprietary

information in the possession of public entities.

ARTICLE 10.41

Effective and transparent regulation in the financial services sector

1. Each Party shall make its best endeavours to provide in advance to all interested persons any

measure of general application that the Party proposes to adopt. Such a measure shall be provided:

(a) by means of an official publication; or

(b) in other written or electronic form.

2. Each Party's appropriate financial authority shall make available to interested persons its

requirements for completing applications relating to the supply of financial services.

3. On the request of an applicant, the appropriate financial authority shall inform the applicant of

the status of its application. If such authority requires additional information from the applicant, it

shall notify the applicant without undue delay.

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4. Each Party shall make its best endeavours to ensure that internationally agreed standards for

regulation and supervision in the financial services sector and for the fight against tax evasion and

avoidance are implemented and applied in its territory. Such internationally agreed standards

include those adopted by the G20, the Financial Stability Board, the Basel Committee on Banking

Supervision, the International Association of Insurance Supervisors, the International Organisation

of Securities Commissions, the Financial Action Task Force on Money Laundering the Global

Forum on Transparency and Exchange of Information for Tax Purposes of the OECD and the

International Financial Reporting Standards. To this end, the Parties shall cooperate and exchange

information and experience on these matters.

ARTICLE 10.42

New financial services

1. Each Party shall permit a financial services supplier of the other Party, established in its

territory, to provide in its territory any new financial services within the scope of the sub-sectors of

financial services committed in Annexes 10-A, 10-B, 10-C and 10-E and subject to the terms,

limitations, conditions and qualifications established therein.

2. A new financial service shall be provided in accordance with the laws and regulations of the

Party in whose territory it is intended to be supplied and is subject to the approval, regulation and

supervision of the competent authorities of that Party.

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ARTICLE 10.43

Recognition of prudential measures

1. A Party may recognise prudential measures of the other Party in determining how the Party's

measures relating to financial services shall be applied. Such recognition, which may be achieved

through harmonisation or otherwise, may be based upon an agreement or arrangement or may be

accorded autonomously.

2. A Party that is party to an agreement or arrangement with a third country such as those

referred to in paragraph 1, whether future or existing, shall afford adequate opportunity for the other

Party to negotiate its accession to such agreements or arrangements, or to negotiate comparable

ones with it, under circumstances in which there would be equivalent regulation, oversight,

implementation of such regulation, and, if appropriate, procedures concerning the sharing of

information between the Parties to the agreement or arrangement. Where a Party accords

recognition autonomously, it shall afford adequate opportunity for the other Party to demonstrate

that such circumstances exist.

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ARTICLE 10.44

Self-regulatory organisations

1. If a Party requires membership or participation in, or access to, any self-regulatory

organisation, in order for financial service suppliers of the other Party to supply financial services

on an equal basis with financial service suppliers of the Party, or if a Party provides directly or

indirectly to a self-regulatory organisation privileges or advantages in supplying financial services,

that Party shall ensure that such self-regulatory organisations observe the application of Article 10.4

to financial service suppliers established in the territory of that Party.

2. For greater certainty, nothing in this Article prevents a self-regulatory organisation referred to

in paragraph 1 from adopting its own non-discriminatory requirements or procedures. Insofar as

such measures are taken by non-governmental bodies and are not taken in relation to the exercise of

powers delegated by central, regional, or local governments or authorities, they are not considered

to be measures of a Party and do not fall within the scope of this Chapter.

ARTICLE 10.45

Payment and clearing systems

On the basis of regulatory requirements and in accordance with Article 10.4, each Party shall grant

to financial services suppliers of the other Party established in its territory access to payment and

clearing facilities operated by public entities and to official funding and refinancing available in the

normal course of ordinary business. This Article is not intended to confer access to a Party's

lender-of-last-resort facilities (the national central bank or any other monetary authority).

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SUB-SECTION 6

E-COMMERCE

ARTICLE 10.46

Objective and scope

1. The Parties, recognising that electronic commerce increases trade opportunities in many

economic activities, agree to promote the development of electronic commerce between them,

including by co-operating on the issues raised by electronic commerce under the provisions of this

Sub-Section.

2. This Sub-Section applies to measures that affect trade by electronic means.

3. The Parties recognise the principle of technological neutrality in electronic commerce.

4. The provisions of this Sub-Section shall not apply to gambling services, broadcasting

services, audio-visual services, services of notaries or equivalent professions and legal

representation services.

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ARTICLE 10.47