EN EN

EUROPEAN COMMISSION

Brussels, 3.9.2025

COM(2025) 339 final

2025/0184 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion, 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 conclusion 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').

The attached proposal also constitutes the legal instrument for authorising the provisional

application of the ITA between, on the one part, the Union and, on the other part, one or more

of the Signatory MERCOSUR States, in accordance with Article 23.3 of the Agreement,

pending the completion of the procedures necessary for its entry into force. The ITA will fully

enter into force following the completion of the necessary internal procedures by, on the one

part, the Union and, on the other part, MERCOSUR and the four Signatory MERCOSUR

States. The ITA provides for the possibility of provisional application of the whole ITA

between the Union and one or more of the Signatory MERCOSUR States, in order to allow

the Union and that or those Signatory MERCOSUR States that have completed their

respective internal procedures to benefit from the Agreement as soon as they are ready,

without having to wait for completion of internal procedures by all the Parties.

The proposed Council decision includes the authorisation of provisional application as part of

the Council decision authorising the conclusion of the ITA. Unlike other cases of provisional

application of international agreements, in the case of ITA the purpose of provisional

application is not to allow the Parties to provisionally apply parts of an agreement pending the

completion of necessary internal procedures within the Union; rather, it is to allow the

provisional application of the whole ITA where the Union has completed its internal

procedures for entry into force of the ITA (i.e. both the Council and the Parliament will have

considered the agreement and given their agreement), but where, at that time, only some (but

not all) Signatory MERCOSUR States have done the same. In this context, it is more

appropriate to include the proposal to authorise the provisional application of the ITA

between the Union and one or more of the Signatory MERCOSUR States in the proposed

Council decision on the conclusion of the ITA, rather than in the Council decision on the

signature of that Agreement.

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.

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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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 negotiation 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 was signed on …., 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 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.

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• 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.

As a result, the ITA is to be concluded by the Union pursuant to a decision of the Council

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

Article 218(7) TFEU enables the Council to authorise the Commission to approve on the

Union's behalf, modifications to the agreement, subject, as the case may be, to specific

conditions the Council may attach to such authorisation.

Provisional application of the Agreement between, on the one part, the Union and, on the

other part, one or more of the Signatory MERCOSUR States, in accordance with Article 23.3

of the ITA, is to be authorised pursuant to a decision of the Council based on Article 218(5)

TFEU.

• 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.

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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 paragraphs 5 and 6 of

Article 218 TFEU, which envisage the adoption by the Council of a decision authorising the

provisional application of international agreements and authorising the conclusion of

international agreements, respectively. 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.

• 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

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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.

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.

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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 a strong commitment 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%),

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

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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.

(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.

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(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 FTA.

(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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2025/0184 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion, 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), Article 218(6), second subparagraph, point (a), and Article 218(7) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament2,

Whereas:

(1) In accordance with Council Decision No [XX]3, 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 (hereinafter ‘the

Agreement’) was signed on [XX XXX 2025], subject to its conclusion at a later date.

(2) The Agreement should be applied on a provisional basis between, on the one part, the

Union and, on the other part, one or more of the Signatory MERCOSUR States, in

accordance with Article 23.3 of the Agreement, pending the completion of the

procedures necessary for its entry into force. The Union’s agreement to provisionally

apply the Agreement between the Union and one or more of the Signatory

MERCOSUR States in accordance with Article 23.3(2) of the Agreement should be

expressed together with the Union’s consent to be bound by the Agreement.

(3) The Agreement should be approved.

(4) Pursuant to Article 218(7) of the Treaty on the Functioning of the European Union, it

is appropriate to authorise the Commission to approve on the Union’s behalf certain

modifications to the Agreement by a body set up by the Agreement pursuant to Article

12.26 and subparagraph (f)(ii)(iv)(xvi) of Article 22.1(6) of the Agreement.

(5) The Agreement does not, in accordance with Article 23.7(1) thereof, within the Union,

confer rights or impose obligations on persons, other than those created between the

Parties under public international law,

2 OJ C , , p. . 3 [Reference to be inserted]

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HAS ADOPTED THIS DECISION:

Article 1

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 (hereinafter

‘the Agreement’), is hereby approved. 4

Article 2

Pending its entry into force, the Agreement shall be applied provisionally, between, on the

one part, the Union and, on the other part, one or more of the Signatory MERCOSUR States,

in accordance with Article 23.3 of the Agreement, as from the first day of the second month

following the date on which one or more Signatory MERCOSUR State or States, as the case

may be, have notified the Union of the completion of its or their respective internal

procedures necessary for the provisional application of the Agreement and confirm their

agreement to provisionally apply the Agreement.5

Article 3

For the purposes of Article 12.26 of the Agreement, any modification or rectification of

Annexes 12-A to 12-E to the Agreement shall be approved by the Commission on behalf of

the Union, following consultation of the Trade Policy Committee

Article 4

1. For the purposes of paragraph 6 of Article 2 of Annex 2-D and subparagraph (f)(ii)

of Article 22.1(6) of the Agreement, any amendment to Appendix 2-D-1 of Annex 2-

D to the Agreement shall be approved by the Commission on behalf of the Union,

following consultation of the Trade Policy Committee.

2. For the purposes of paragraph 4 of Article 5 of Annex 2-D and subparagraph (f)(iv)

of Article 22.1(6) of the Agreement, any amendment to Appendix 2-D-3 of Annex 2-

D to the Agreement shall be approved by the Commission on behalf of the Union,

following consultation of the Trade Policy Committee.

Article 5

For the purposes of Article 13.39 and subparagraph (f)(xii) of Article 22.1(6) of the

Agreement, any amendment to Annex 13-C to the Agreement shall be approved by the

Commission on behalf of the Union, following consultation of the Trade Policy Committee.

4 The text of the Agreement is published in OJ L, XXXXX… 5 The date from which the Agreement is to be provisionally applied between, on the one part, the Union

and, on the other part, one or more of the Signatory MERCOSUR States, shall be published in the

Official Journal of the European Union by the General Secretariat of the Council.

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Article 6

This Decision shall enter into force on the day of its adoption6.

Done at Brussels,

For the Council

The President

6 The date of entry into force of the Agreement will be published in the Official Journal of the European

Union by the General Secretariat of the Council.

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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 conclusion, 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 …

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

known):

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Expenditure line7 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.8 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.

7 To be used only if necessary. 8 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) 339 final

ANNEX 1

ANNEX

to the

Proposal for a Council Decision

on the conclusion, 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

& /en 1

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",

& /en 2

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;

& /en 4

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:

& /en 5

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;

& /en 6

(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.

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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.

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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.

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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).

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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.

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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.

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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;

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(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;

& /en 87

(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;

& /en 97

(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.

& /en 100

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.

& /en 101

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;

& /en 102

(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;

& /en 103

(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.

& /en 105

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

& /en 106

(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;

& /en 107

(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.

& /en 109

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.

& /en 110

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;

& /en 111

(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;

& /en 112

(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.

& /en 142

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.

& /en 143

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.

& /en 144

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.

& /en 145

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.

& /en 146

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.

& /en 147

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.

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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

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(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.

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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.

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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.

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(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

Definitions

For the purposes of this Sub-Section:

(a) "consumer " means any natural person, or juridical person if provided for in national laws and

regulations of each Party, using or requesting a public telecommunications transport service,

defined in point (e) of Article 10.27, for purposes outside their trade, business or profession;

(b) "direct marketing communication" means any form of advertising by which a person

communicates marketing messages directly to end-users via a public telecommunications

network and, for the purposes of this Agreement, covers at least electronic mail, text and

multimedia messages (SMS and MMS);

(c) "electronic authentication service" means a service that enables the confirmation of:

(i) the electronic identification of a person; or

(ii) the origin and integrity of data in electronic form;

(d) "electronic signature" means data in electronic form which is attached to or logically

associated with other electronic data and fulfils the following requirements:

(i) it is used by a natural person to agree on the electronic data to which it relates;

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(ii) it is linked to the electronic data to which it relates in such a way that any subsequent

alteration in the data is detectable; and

(iii) it is used by a juridical person to ensure the origin and integrity of the electronic data to

which it relates; and

(e) "end-user" means any person using or requesting a publicly available telecommunications

service, either as a consumer or for trade, business or professional purposes.

ARTICLE 10.48

Customs duties on electronic transmissions

1. A Party shall not impose custom duties on electronic transmissions between a person of one

Party and a person of the other Party.

2. For greater certainty, paragraph 1 shall not preclude a Party from imposing internal taxes,

fees, or other charges on electronic transmissions, provided that such taxes, fees, or charges are

imposed in a manner consistent with this Agreement.

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ARTICLE 10.49

Principle of no prior authorisation

1. The Parties shall endeavour not to require prior authorisation of the supply of a service by

electronic means solely on the ground that the service is provided by electronic means or to adopt or

maintain any other requirement having equivalent effect.

2. Paragraph 1 does not apply to telecommunications services as defined in point (i) of

Article 10.27 and financial services as defined in point (a) of Article 10.39(1).

3. For greater certainty, nothing shall prevent a Party from adopting or maintaining measures

inconsistent with paragraph 1 to achieve a legitimate public policy objective in accordance with:

(a) Article 10.1(4);

(b) Article 10.40;

(c) Article 20.1; and

(d) Article 20.2.

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ARTICLE 10.50

Conclusion of contracts by electronic means

Each Party shall ensure that their legal system allows contracts to be concluded by electronic means

and that its laws and regulations regarding contractual processes neither create obstacles for the use

of electronic contracts nor result in such contracts being deprived of legal effect and validity on the

ground that they have been made by electronic means, unless provided for in their laws and

regulations1.

ARTICLE 10.51

Electronic signature and authentication services

1. A Party shall not deny the legal effect and admissibility as evidence in legal proceedings of an

electronic signature and electronic authentication service solely on the basis that it is in

electronic form.

1 This Article shall not apply to contracts that create or transfer rights in real estate; contracts

requiring by law the involvement of courts, public authorities or professions exercising public

authority; contracts of suretyship granted or collateral securities furnished by persons acting

for purposes outside their trade, business or profession; and contracts governed by family law

or by the law of succession.

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2. A Party shall not adopt or maintain measures regulating electronic signature and electronic

authentication services that would:

(a) prohibit parties to an electronic transaction from mutually determining the appropriate

electronic methods for their transaction; or

(b) prevent parties to an electronic transaction from having the opportunity to prove to judicial

and administrative authorities that their electronic transaction complies with any legal

requirements with respect to electronic signature and electronic authentication services.

ARTICLE 10.52

Unsolicited direct marketing communications

1. Each Party shall endeavour to effectively protect end-users against unsolicited direct

marketing communications.

2. Each Party shall endeavour to ensure that persons do not send direct marketing

communications to consumers who have not given their consent1 to receive such communications.

3. Notwithstanding paragraph 2, each Party shall allow persons which have collected, in

accordance with its laws and regulations, a consumer's contact details in the context of the sale of a

product or a service, to send direct marketing communications to that consumer for their own

similar products or services.

1 Consent shall be defined in accordance with each Party's own laws and regulations.

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4. Each Party shall endeavour to ensure that direct marketing communications are clearly

identifiable as such, clearly disclose on whose behalf they are made and contain the necessary

information to enable end-users to request cessation free of charge and at any moment.

ARTICLE 10.53

Consumer protection

1. The Parties recognise the importance of adopting and maintaining transparent and effective

measures to protect consumers, including from fraudulent and misleading commercial practices,

when they engage in electronic commerce transactions.

2. For the purposes of paragraph 1, the Parties shall adopt or maintain measures that contribute

to consumer trust, including measures that proscribe fraudulent and deceptive commercial practices.

Such measures shall provide for, among others:

(a) the right of consumers to clear and thorough information regarding the service and its

provider;

(b) the obligation of traders to act in good faith and abide by honest market practices, including in

response to questions by consumers;

(c) the prohibition of charging consumers for services not requested or for a period in time not

authorised by the consumer; and

(d) access to redress for consumers to claim their rights, including as regards their right to

remedies for services paid and not provided as agreed.

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3. The Parties recognise the importance of cooperation between their respective agencies in

charge of consumer protection or other relevant bodies on activities related to electronic commerce,

in order to protect consumers and enhance consumer trust.

ARTICLE 10.54

Regulatory cooperation on e-commerce

1. The Parties shall maintain cooperation and dialogue on the regulatory issues raised by

electronic commerce on the basis of mutually agreed terms and conditions, which shall address the

following issues, among others:

(a) the recognition and facilitation of interoperable cross-border electronic signature and

authentication services;

(b) the liability of intermediary service providers with respect to the transmission or storage

of information;

(c) the treatment of direct marketing communications;

(d) the protection of consumers in the ambit of electronic commerce;

(e) the promotion of paperless trading; and

(f) any other issue relevant to the development of electronic commerce.

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2. The cooperation referred to in paragraph 1 shall focus on exchange of information on the

Parties' respective laws and regulations on these issues as well as on the implementation of such

laws and regulations.

ARTICLE 10.55

Understanding on computer services

1. The Parties agree that, for the purposes of liberalising trade in services in accordance with

Articles 10.3 and 10.4, the following shall be considered as computer and related services,

regardless of whether they are delivered via a network, including the Internet:

(a) consulting, strategy, analysis, planning, specification, design, development, installation,

implementation, integration, testing, debugging, updating, support, technical assistance, or

management of or for computers or computer systems;

(b) computer programmes defined as the sets of instructions required to make computers work

and communicate (in and of themselves), plus consulting, strategy, analysis, planning,

specification, design, development, installation, implementation, integration, testing,

debugging, updating, adaptation, maintenance, support, technical assistance, management or

use of or for computer programmes;

(c) data processing, data storage, data hosting or database services;

(d) maintenance and repair services for office machinery and equipment, including computers;

and

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(e) training services for staff of clients, related to computer programmes, computers or computer

systems, and not elsewhere classified.

2. For greater certainty, services enabled by computer and related services shall not necessarily

be regarded as computer and related services in themselves.

SECTION D

FINAL PROVISIONS AND EXCEPTIONS

ARTICLE 10.56

Contact points

1. No later than one 1 (one) year after the date of entry into force of the Agreement, each Party

shall designate contact points and notify the other Party of their contact details with a view to:

(a) facilitate the provision of information to the other Party regarding the implementation of this

Chapter, such as:

(i) commercial and technical aspects of the supply of services; and

(ii) the registration, recognition and obtaining of professional qualifications; and

(b) consider any other issues regarding the implementation of this Chapter that are referred by

a Party.

& /en 234

2. Each Party shall promptly notify the other Party of any changes to these contact points.

ARTICLE 10.57

Subcommittee on trade in services and establishment

1. The Subcommittee on trade in services and establishment, established pursuant to

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

a) conduct the preparatory technical work in the event of a revision of this Chapter in accordance

with Article 10.58; and

b) discuss relevant subjects for trade in services and establishment, including opportunities for

the expansion of mutual investment in services and non-services sectors.

2. The Subcommittee may invite, on an ad hoc basis, representatives of relevant entities, with

the necessary expertise relevant to the issues to be addressed.

ARTICLE 10.58

Review clause

In light of its objectives, this Chapter may be reviewed no earlier than 3 (three) years after the date

of entry into force of this Agreement, or in the context of an overall review of this Agreement.

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ARTICLE 10.59

Denial of benefits

A Party may deny the benefits of this Chapter to:

(a) the supply of a service, if it establishes that the service is supplied from or in the territory of a

third country; or

(b) a juridical person, if it establishes that it is a juridical person of a third country.

CHAPTER 11

TRANSFERS OR PAYMENTS FOR CURRENT ACCOUNT TRANSACTIONS,

CAPITAL MOVEMENTS AND TEMPORARY SAFEGUARD MEASURES

ARTICLE 11.1

Capital account

With regard to transactions on the capital and financial account of the balance of payments, each

Party shall allow the free movement of capital for the purposes of establishment of direct

investments as provided for in Chapter 10. Such movements shall include the liquidation or

repatriation of such capital.

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ARTICLE 11.2

Current account

Each Party shall allow, in a freely convertible currency and in accordance with the Articles of

Agreement of the International Monetary Fund adopted at the United Nations Monetary and

Financial Conference, in Bretton Woods, New Hampshire, on 22 July 1944 (hereinafter referred to

as "Agreement of the International Monetary Fund"), any payments and transfers with respect to

transactions on the current account of the balance of payments that fall within the scope of

this Agreement.

ARTICLE 11.3

Application of laws and regulations relating to transfers or payments

for current account transactions and capital movements

Nothing in Articles 11.1 and 11.2 shall be construed as preventing a Party from applying in an

equitable and non-discriminatory manner, and in a way that would not constitute a disguised

restriction on transfers or payments for current account transactions or on capital movements its

laws and regulations relating to:

(a) bankruptcy, insolvency or the protection of the rights of creditors;

(b) issuing, trading or dealing in securities;

& /en 237

(c) criminal or penal offences1;

(d) financial reporting or record keeping of transfers if necessary to assist law enforcement or

financial regulatory authorities; or

(e) the satisfaction of judgments in adjudicatory proceedings.

ARTICLE 11.4

Temporary safeguard measures

If, in exceptional circumstances, transfers or payments for current account transactions or capital

movements cause or threaten to cause serious difficulties for the operation of the Economic and

Monetary Union of the European Union, the European Union may adopt safeguard measures that

are strictly necessary to address those difficulties or the threat thereof for a period not

exceeding 6 (six) months.

1 For greater certainty, this includes laws and regulations on anti-money laundering and

combating the financing of terrorism.

& /en 238

ARTICLE 11.5

Restrictions to safeguard the balance of payments

1. If, in exceptional circumstances, a Party experiences serious balance-of-payments difficulties

including with regard to the operation of monetary policy or exchange rate policy, or external

financial difficulties or the threat thereof, it may adopt or maintain restrictive measures with regard

to transfers or payments for current account transactions or capital movements.

2. The measures referred to in paragraph 1 shall:

(a) be non-discriminatory compared to those applied to a third country in like situations;

(b) be consistent with the Articles of Agreement of the International Monetary Fund,

as applicable;

(c) avoid unnecessary damage to the commercial, economic and financial interests of the other

Party; and

(d) be temporary, proportional and strictly necessary to address the difficulties and be phased out

progressively as the situation referred to in paragraph 1 improves. If extremely exceptional

circumstances arise such that a Party seeks to extend those measures beyond a period

of 1 (one) year, it shall notify the other Party that it will introduce such an extension.

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ARTICLE 11.6

Final provisions

1. Nothing in this Chapter shall be construed as limiting the rights of economic operators of the

Parties to benefit from any more favourable treatment that may be provided for in any existing

bilateral or multilateral agreement to which a Party is party.

2. The Parties shall consult each other with a view to facilitating the movement of capital falling

within the scope of this Agreement between them in order to promote the objectives of this

Agreement.

CHAPTER 12

GOVERNMENT PROCUREMENT

ARTICLE 12.1

Objectives

The Parties recognise the contribution of transparent, competitive and open tendering to

economic development and set as their objective the effective opening of their respective

procurement markets.

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ARTICLE 12.2

Definitions

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

(a) "commercial goods or services" means goods or services of a type generally sold or offered

for sale in the commercial marketplace to, and customarily purchased by, non-governmental

buyers for non-governmental purposes;

(b) "construction service" means a service that has as its objective the realisation by whatever

means of civil or building works, based on Division 51 of the CPC;

(c) "electronic auction" means an iterative process that involves the use of electronic means for

the presentation by suppliers of either new prices, or new values for quantifiable non-price

elements of the tender related to the evaluation criteria, or both, resulting in a ranking or re-

ranking of tenders;

(d) "in writing" or "written" means any worded or numbered expression that can be read,

reproduced and later communicated, which may include electronically transmitted and

stored information;

(e) "limited tendering" means a procurement method whereby the procuring entity contacts a

supplier or suppliers of its choice;

(f) "measure" means any law, regulation, procedure, administrative guidance or practice, or any

action of a procuring entity relating to a covered procurement;

& /en 241

(g) "multi-use list" means a list of suppliers that a procuring entity has determined satisfy the

conditions for participation in that list, and that the procuring entity intends to use more

than once;

(h) "negotiation" means a way of conducting the procurement procedure subject to the principles

of transparency and non-discrimination, that is limited to specific situations in which

procuring entities are allowed to negotiate with suppliers when certain conditions are met;

(i) "notice of intended procurement" means a notice published by a procuring entity inviting

interested suppliers to submit a request for participation, a tender, or both;

(j) "offsets" means measures used to encourage local development or improve the balance-of-

payments accounts by means of the use of domestic content, the licensing of technology,

investment requirements, counter-trade or similar requirements;

(k) "open tendering" means a procurement method whereby all interested suppliers may submit

a tender;

(l) "procuring entity" means an entity covered under the Appendices to Annexes 12-A to 12-E;

(m) "qualified supplier" means a supplier that a procuring entity recognises as having satisfied the

conditions for participation;

(n) "selective tendering" means a procurement method whereby only qualified suppliers are

invited by the procuring entity to submit a tender;

(o) "services" includes construction services, unless otherwise specified;

& /en 242

(p) "standard" means a document approved by a recognised body that provides for common and

repeated use, rules, guidelines or characteristics for goods or services, or related processes and

production methods, with which compliance is not mandatory; it may also include or deal

exclusively with terminology, symbols, packaging, marking or labelling requirements as they

apply to a good, service, process or production method;

(q) "supplier" means a person or persons that provides or could provide goods or services; and

(r) "technical specification" means a tendering requirement that:

(i) lays down the characteristics of goods or services to be procured, including quality,

performance, safety and dimensions, or the processes and methods for their production

or provision; or

(ii) addresses terminology, symbols, packaging, marking or labelling requirements, as they

apply to a good or a service.

ARTICLE 12.3

Scope

1. This Chapter applies to covered procurement. Covered procurement means procurement for

governmental purposes:

(a) of goods, services, or any combination thereof:

(i) as specified in each Party's Appendices to Annexes 12-A to 12-E; and

& /en 243

(ii) not procured with a view to commercial sale or resale, or for use in the production or

supply of goods or services for commercial sale or resale;

(b) by any contractual means, including: purchase; lease; and rental or hire purchase, with or

without an option to buy;

(c) for which the value equals or exceeds the relevant threshold specified in each Party's

Appendices to Annex 12-A to 12-E, at the time of publication of a notice in accordance with

Article 12.13;

(d) by a procuring entity as specified in each Party's Appendices to Annexes 12-A to 12-E; and

(e) that is not otherwise excluded from coverage.

2. Except where provided otherwise in each Party's Appendices to Annexes 12-A to 12-E, this

Chapter does not apply to:

(a) the acquisition or rental of land, existing buildings or other immovable property or the

rights thereon;

(b) non-contractual agreements or any form of assistance that a Party provides, including

cooperative agreements, grants, loans, equity infusions, guarantees and fiscal incentives,

government provision of goods and services to state, regional, or local government entities;

(c) the procurement or acquisition of fiscal agency or depositary services, liquidation and

management services for regulated financial institutions or services related to the sale,

redemption and distribution of public debt, including loans and government bonds, notes and

other securities;

& /en 244

(d) public employment contracts; or

(e) procurement conducted:

(i) for the specific purpose of providing international assistance, including

development aid;

(ii) under the particular procedure or condition of an international agreement relating to the

stationing of troops;

(iii) under the particular procedure or condition of an international agreement relating to the

joint implementation by the signatory countries of a project; or

(iv) under the particular procedure or condition of an international organisation, or funded

by international grants, loans or other assistance where the applicable procedure or

condition would be inconsistent with this Chapter.

3. Each Party shall specify in each of the Appendices to Annexes 12-A to 12-E the following

information:

(a) in Appendices 12-A-1, 12-B-1, 12-C-1, 12-D-1 and 12-E-1, the central government entities

whose procurement is covered by this Chapter;

(b) in Appendices 12-A-2, 12-B-2, 12-C-2, 12-D-2 and 12-E-2, the sub-central government

entities whose procurement is covered by this Chapter;

(c) in Appendices 12-A-3, 12-B-3, 12-C-3, 12-D-3 and 12-E-3, all other entities whose

procurement is covered by this Chapter;

& /en 245

(d) in Appendices 12-A-4, 12-B-4, 12-C-4, 12-D-4 and 12-E-4, the goods covered by

this Chapter;

(e) in Appendices 12-A-5, 12-B-5, 12-C-5, 12-D-5 and 12-E-5, the services, other than

construction services, covered by this Chapter;

(f) in Appendices 12-A-6, 12-B-6, 12-C-6, 12-D-6 and 12-E-6, the construction services covered

by this Chapter; and

(g) in Appendices 12-A-7, 12-B-7, 12-C-7, 12-D-7 and 12-E-7, any General Notes.

4. Where a procuring entity, in the context of covered procurement, requires persons not covered

under a Party's Appendices to Annex 12-A to 12-E to procure on its behalf, Article 12.6 shall apply

mutatis mutandis.

ARTICLE 12.4

Valuation of contracts

1. In estimating the value of a procurement for the purpose of ascertaining whether it is a

covered procurement, a procuring entity shall:

(a) neither divide a procurement into separate procurements nor select or use a particular

valuation method for estimating the value of a procurement with the intention of totally or

partially excluding it from the application of this Agreement; and

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(b) include the estimated maximum total value of the procurement over its entire duration,

whether awarded to one or more suppliers, taking into account all forms of remuneration,

including:

(i) premiums, fees, commissions, and interest; and

(ii) if the procurement provides for the possibility of options, the total value of

such options.

2. If an individual requirement for a procurement results in the award of more than one contract

or in the award of contracts in separate parts (both hereinafter referred to as "recurring

procurements"), the calculation of the estimated maximum total value shall be based on

(a) the value of recurring procurements of the same type of good or service awarded during the

preceding 12 (twelve) months or the procuring entity's preceding fiscal year, adjusted, where

possible, to take into account anticipated changes in the quantity or value of the good or

service being procured over the subsequent 12 (twelve) months; or

(b) the estimated value of recurring procurements of the same type of good or service to be

awarded during the 12 (twelve) months subsequent to the initial contract award or the

procuring entity's fiscal year.

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3. In the case of procurement by lease, rental, or hire purchase of goods or services, or

procurement for which a total price is not specified, the basis for valuation shall be:

(a) in the case of a fixed-term contract

(i) where the term of the contract is 12 (twelve) months or less, the total estimated

maximum value for its duration; or

(ii) where the term of the contract exceeds 12 (twelve) months, the total estimated

maximum value, including any estimated residual value;

(b) if the contract is of an indefinite duration, the estimated monthly instalment multiplied

by 48 (forty-eight); and

(c) if it is not certain whether the contract is of indefinite duration or a fixed-term contract,

point (b) shall apply.

ARTICLE 12.5

Security and general exceptions

1. Nothing in this Chapter shall be construed as preventing a Party from taking any action or not

disclosing any information that it considers necessary for the protection of its essential security

interests relating to the procurement of arms, ammunition, defence products or war materials, or to

procurement indispensable for national security or for national defence purposes.

& /en 248

2. Subject to the requirement that such measures not be applied in a manner that would

constitute a means of arbitrary or unjustifiable discrimination between the Parties where the same

conditions prevail, or a disguised restriction on trade between the Parties, nothing in this Chapter

shall be construed to prevent a Party from adopting or maintaining measures:

(a) relating to goods or services of natural persons with disabilities, of philanthropic institutions

or of prison labour;

(b) necessary to protect public morals, order or safety;

(c) necessary to protect human, animal, or plant life or health, including environmental measures;

or

(d) necessary to protect intellectual property.

ARTICLE 12.6

Non-discrimination

1. With respect to any measure related to covered procurement:

(a) the European Union, including its procuring entities, shall accord immediately and

unconditionally to the goods and services of the Signatory MERCOSUR States and to the

suppliers of the Signatory MERCOSUR States offering those goods and services, treatment

no less favourable than the treatment accorded to its domestic goods, services and suppliers;

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(b) each Signatory MERCOSUR State, including its procuring entities, shall accord immediately

and unconditionally to the goods and services of the European Union and to the suppliers of

the European Union offering those goods and services, treatment no less favourable than the

treatment accorded to its domestic goods, services and suppliers.

2. With respect to any measure concerning covered procurement, the European Union and each

Signatory MERCOSUR State, including their respective procuring entities, shall not:

(a) treat a locally established supplier less favourably than another locally established supplier on

the basis of the degree of foreign affiliation to, or ownership by persons of the other Party1 2;

or

(b) discriminate against a locally established supplier on the basis that the goods or services

offered by that supplier for a particular procurement are goods or services of the other Party.

3. This Article does not apply to customs duties or any other measure of an equivalent nature

which have an impact on foreign trade, or to other import regulations and measures affecting trade

in services, different from the ones which specifically regulate public procurement covered under

this Chapter.

1 Notwithstanding Article 12.3(1), in the case of the European Union and Argentina,

paragraph 2(a) shall apply to all procurement in Argentina with regard to suppliers of the

European Union which are juridical persons established in Argentina, and in the European

Union with regard to suppliers of Argentina which are juridical persons established in the

European Union. This remains subject to security and general exceptions as defined in Article

12.5. 2 Notwithstanding Article 12.3(1), in the case of the European Union and Brazil, paragraph 2(a)

shall apply to all procurement in Brazil with regard to suppliers of the European Union which

are juridical persons established in Brazil, and in the European Union with regard to suppliers

of Brazil which are juridical persons established in the European Union. This remains subject

to security and general exceptions as defined in Article 12.5.

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ARTICLE 12.7

Use of electronic means

1. Each Party shall conduct covered procurement by electronic means to the widest extent

possible and shall cooperate in developing and expanding the use of electronic means in

government procurement systems.

2. If a procuring entity conducts a covered procurement by electronic means, it shall:

(a) ensure that the procurement is conducted using information technology systems and software,

including those related to authentication and encryption of information, that are generally

available and interoperable with other generally available information technology systems and

software; and

(b) maintain mechanisms that ensure the integrity of requests for participation and tenders,

including establishment of the time and receipt and the prevention of inappropriate access.

ARTICLE 12.8

Conduct of procurement

A procuring entity shall conduct covered procurement in a transparent and impartial manner that

avoids conflicts of interest, prevents corrupt practices and that is consistent with this Chapter, using

the following methods: open tendering, selective tendering or limited tendering. Each Party shall

adopt or maintain sanctions against corrupt practices according to its law.

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ARTICLE 12.9

Rules of origin

For the purposes of Article 12.6, determination of the origin of goods shall be made on a

non-preferential basis.

ARTICLE 12.10

Denial of benefits

Without prejudice to the time-periods of the procurement procedure, and subject to prior

notification to a service supplier of the other Party and, if requested, consultations with a service

supplier of the other Party, a Party may deny the benefits of this Chapter to that supplier, if such

supplier is a juridical person of the other Party not engaged in substantial business operation in the

territory of that other Party.

ARTICLE 12.11

Offsets

With regard to covered procurement, a Party shall not seek, take account of, impose or

enforce offsets.

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ARTICLE 12.12

Publication of procurement information

1. Each Party shall:

(a) promptly publish any law, regulation, judicial decision or administrative ruling of general

application, standard contract clauses that are mandated by law or regulation and incorporated

by reference in notices and tender documentation and procedure regarding covered

procurement, and any modifications thereof, in officially designated electronic or paper media

that are widely disseminated and remain readily accessible to the public;

(b) provide, if so requested by the other Party, further information concerning the application of

such provisions;

(c) list, in Appendices 12-F-1, 12-G-1, 12-H-1, 12-I-1 and 12-J-1, the electronic or paper media

in which the Party publishes the information described in point (a);

(d) list, where available in Appendices 12-F-2, 12-G-2, 12-H-2, 12-I-2 and 12-J-2, the electronic

media, in which the Party publishes the notices required by Articles 12.13, 12.15(4)

and 12.23(2).

2. Each Party shall promptly notify the other Party of any modification to the information listed

in its Appendices to Annexes 12-F to 12-J. The Trade Council shall amend Annexes 12-F to 12-J

accordingly, pursuant to point (f) of Article 22.1(6).

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ARTICLE 12.13

Publication of notices

Notice of intended procurement

1. For each covered procurement, except in the circumstances described in Article 12.20, a

procuring entity shall publish a notice of intended procurement, which shall be directly accessible

by electronic means, free of charge, through a single point of access, for the European Union at

European level and for Signatory MERCOSUR States at national level or once such single point of

access is established at the MERCOSUR level. The notice of intended procurement shall remain

readily accessible to the public, at least until the expiration of the time-period indicated in the

notice. The electronic medium shall be listed by each Party in its Appendices to Annexes 12-F

to 12-J. Each such notice shall include the information set out in Annex 12-O.

Summary notice

2. For each case of intended procurement, a procuring entity shall publish a summary notice that

is readily accessible, at the same time as the publication of the notice of intended procurement, in

one of the WTO languages in which the WTO Agreement is authentic. Each such notice shall

include the information set out in Annex 12-K.

Notice of planned procurement

3. Procuring entities are encouraged to publish in the appropriate paper or electronic medium

listed in Appendices to Annexes 12-F to 12-J as early as possible in each fiscal year a notice

regarding their future procurement plans. Such notice should include the subject-matter of the

procurement and the planned date of the publication of the notice of intended procurement.

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4. A procuring entity in Appendices 12-A-2, 12-A-3, 12-B-2, 12-B-3, 12-C-2, 12-C-3, 12-D-2,

12-D-3, 12-E-2 and 12-E-3 to Annexes 12-A to 12-E may use a notice of planned procurement as a

notice of intended procurement, provided that it includes as much of the information referred to in

Annex 12-O as is available and a statement that interested suppliers should express their interest in

the procurement to the procuring entity.

ARTICLE 12.14

Conditions for participation

1. A procuring entity shall limit any conditions for participation in a procurement to those that

are essential to ensure that a supplier has the legal and financial capacities and the commercial and

technical abilities to undertake the relevant procurement.

2. In assessing whether a supplier satisfies the conditions for participation, a procuring entity

shall evaluate the financial capacities and commercial and technical abilities of a supplier on the

basis of that supplier's business activities inside and outside the territory of the Party of the

procuring entity.

3. The procuring entity may require a supplier to demonstrate relevant prior experience; it may

not, however, impose the condition that, in order for a supplier to participate in a procurement, the

supplier has previously been awarded one or more contracts by a procuring entity of a given Party

or that the supplier has prior work experience in the territory of a given Party.

4. In making this assessment, the procuring entity shall base its evaluation on the conditions that

it has specified in advance in notices or tender documentation.

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5. A procuring entity may exclude a supplier on the following grounds:

(a) bankruptcy;

(b) false declarations;

(c) significant deficiencies in performance of any substantive requirement or obligation under a

prior contract or contracts;

(d) final judgments in respect of crime or serious public offences;

(e) other sanctions that disqualify the supplier to contract with entities of a Party;

(f) grave professional misconduct which renders the suppliers' integrity questionable; or

(g) failure to pay taxes.

6. The conditions for participation established by a procuring entity as set out in paragraphs 1, 2

and 3 shall be fulfilled by the suppliers of the Parties through the presentation of the documentation

required by the tender or through equivalent documentation.

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ARTICLE 12.15

Qualification of suppliers

Selective tendering

1. Where a procuring entity intends to use selective tendering, the entity shall:

(a) include in the notice of intended procurement at least the information specified in points (a),

(b), (c), (i), (j) and (k) of: Annex 12-O and invite suppliers to submit a request for

participation; and

(b) provide, by the commencement of the time period for tendering, at least the information

specified in points (d) to (h) of Annex 12-O to the qualified suppliers.

2. A procuring entity shall recognise as qualified suppliers any domestic supplier and any

supplier of the other Party that meets the conditions for participation in a particular procurement,

unless the procuring entity states in the notice of intended procurement any limitation regarding the

number of suppliers permitted to tender and the criteria for selecting the limited number

of suppliers.

3. Where the tender documentation is not made publicly available on the date of publication of

the notice referred to in paragraph 1, a procuring entity shall ensure that those documents are made

available at the same time to all qualified suppliers selected in accordance with paragraph 2.

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Multi-use lists

4. If a Party's law provides that procuring entities may maintain a multi-use list of suppliers, it

shall ensure that a notice inviting interested suppliers to apply for inclusion on the list is:

(a) published annually; and

(b) where published by electronic means, made available continuously, in the appropriate

medium listed in Appendices to Annexes 12-F to 12-J. Such a notice shall include the

information set out in Annex 12-L.

5. Notwithstanding paragraph 4, if a multi-use list is valid for 3 (three) years or less, a procuring

entity may publish the notice referred to in paragraph 4 only once, at the beginning of the period of

validity of the list, provided that the notice:

(a) states the period of validity and that further notices will not be published; and

(b) is published by electronic means and is made available continuously during the period of

its validity.

6. A procuring entity shall allow suppliers to apply at any time for inclusion on a multi-use list

and shall include on the list all qualified suppliers within a reasonably short time.

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7. Where a supplier that is not included on a multi-use list submits a request for participation in

a procurement based on a multi-use list and all the required documents relating thereto, within the

time period provided for in Annex 12-M, a procuring entity shall examine the request. The

procuring entity shall not exclude the supplier from consideration in respect of the procurement on

the grounds that it has insufficient time to examine the request, unless, in exceptional cases, due to

the complexity of the procurement, the entity is not able to complete the examination of the request

within the time period allowed for the submission of tenders.

Entities listed in Appendices 12-A-2, 12-A-3, 12-B-2, 12-B-3, 12-C-2, 12-C-3, 12-D-2, 12-D-3,

12-E-2 and 12-E-3

8. A procuring entity listed in Appendices 12-A-2, 12-A-3, 12-B-2, 12-B-3, 12-C-2, 12-C-3,

12-D-2, 12-D-3, 12-E-2 and 12-E-3 may use a notice inviting suppliers to apply for inclusion on a

multi-use list as a notice of intended procurement, provided that:

(a) the notice is published in accordance with paragraph 4 and includes the information listed in

Annex 12-L, as much of the information listed in Annex 12-O as is available and a statement

that it constitutes a notice of intended procurement or that only the suppliers on the multi-use

list will receive further notices of procurement covered by the multi-use list; and

(b) the procuring entity promptly provides to suppliers that have expressed to it an interest in a

given procurement information sufficient to allow them to assess their interest in the

procurement, including all remaining information required in Annex 12-O, to the extent such

information is available.

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9. A supplier having applied for inclusion on a multi-use list in accordance with paragraph 6

may be allowed by a procuring entity covered under Appendices 12-A-2, 12-A-3, 12-B-2, 12-B-3,

12-C-2, 12-C-3, 12-D-2, 12-D-3, 12-E-2 and 12-E-3 to tender in a given procurement, if there is

sufficient time for the procuring entity to examine whether it satisfies the conditions for

participation.

Information on procuring entity decisions

10. A procuring entity shall promptly inform any supplier that submits a request for participation

in a procurement or an application for inclusion on a multi-use list of the procuring entity's decision

with respect to the request or application.

11. The procuring entity shall promptly inform the supplier and, on request of the supplier,

promptly provide the supplier with a written explanation of the reasons for its decision, if the entity:

(a) rejects a supplier's request for participation in a procurement or its application for inclusion on

a multi-use list;

(b) ceases to recognise a supplier as qualified; or

(c) removes a supplier from a multi-use list.

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ARTICLE 12.16

Technical specifications

1. A procuring entity shall not prepare, adopt or apply any technical specification or prescribe

any conformity assessment procedure with the purpose or the effect of limiting competition,

creating unnecessary obstacles to international trade, or discriminating between suppliers.

2. In prescribing the technical specifications for the goods or services being procured, a

procuring entity shall, where appropriate:

(a) set out the technical specifications in terms of performance and functional requirements,

rather than design or descriptive characteristics; and

(b) base the technical specifications on international standards, where these exist; otherwise on

national technical regulations, recognized national standards or building codes; each reference

shall be accompanied by the words "or equivalent".

3. Where design or descriptive characteristics are used in the technical specifications, a

procuring entity should indicate, where appropriate, that it will consider tenders of equivalent goods

or services that demonstrably fulfil the requirements of the procurement by including words such as

"or equivalent" in the tender documentation.

4. A procuring entity shall not prescribe technical specifications that require or refer to a

particular trademark or trade name, patent, copyright, design, type, specific origin, producer or

supplier, unless there is no other sufficiently precise or intelligible way of describing the

procurement requirements and provided that, in such cases, the entity includes words such as "or

equivalent" in the tender documentation.

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5. A procuring entity shall not seek or accept, in a manner that would have the effect of

precluding competition, advice that may be used in the preparation of adoption of any technical

specification for a specific procurement from a person that may have a commercial interest in

the procurement.

6. For greater certainty, a Party, including its procuring entities, may, in accordance with this

Article, prepare, adopt or apply technical specifications to promote the conservation of natural

resources or protect the environment.

ARTICLE 12.17

Tender documentation

1. A procuring entity shall make available to suppliers tender documentation that includes all

information necessary to permit suppliers to prepare and submit responsive tenders. Unless already

provided in the notice of intended procurement, such documentation shall include a complete

description of the following issues:

(a) the procurement, including the nature and quantity of the goods or services to be procured or,

where the quantity is not known, the estimated quantity and any requirements to be fulfilled,

including any technical specifications, conformity assessment certification, plans, drawings or

instructional materials;

(b) any conditions for participation of suppliers, including a list of information and documents

that suppliers are required to submit in connection therewith;

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(c) all evaluation criteria to be considered in the awarding of the contract and, except where the

price is the sole criterion, the relative importance of such criteria;

(d) where the procuring entity conducts the procurement by electronic means, any authentication

and encryption requirements or other requirements related to the submission of information

by electronic means;

(e) where the procuring entity holds an electronic auction, the rules, including identification of

the elements of the tender related to the evaluation criteria, on which the auction will

be conducted;

(f) where there is a public opening of tenders, the date, time and place for the opening and, where

appropriate, the persons authorised to be present;

(g) any other terms or conditions, including terms of payment and any limitation to the means by

which tenders may be submitted, for instance on paper or by electronic means; and

(h) any dates for the delivery of goods or the supply of services.

2. In establishing in the tender documentation any delivery date for the goods or services being

procured, a procuring entity shall take into account such factors as the complexity of the

procurement, the extent of subcontracting anticipated and the realistic time required for production,

de-stocking and transport of goods from the point of supply or for supply of services.

3. The evaluation criteria set out in the notice of intended procurement or tender documentation

may include, among others, price and other cost factors, quality, technical merit, environmental

characteristics and terms of delivery.

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4. A procuring entity shall promptly provide the tender documentation to any supplier

participating in the procurement, if so requested by such supplier, and reply to any reasonable

request for relevant information by a supplier participating in the procurement, provided that such

information does not give that supplier an advantage over its competitors in the procurement and

that the request was presented within the applicable time limits.

5. Where, prior to the assessment of tenders in accordance with Article 12.22, a procuring entity

modifies or amends the criteria or requirements set out in the notice of intended procurement or

tender documentation provided to participating suppliers, it shall transmit in writing all

such modifications:

(a) to all suppliers that are participating at the time the information is amended, if such suppliers

are known, and in all other cases, in the same manner as the original information; and

(b) at a time that allows such suppliers to modify and re-submit amended tenders, as appropriate.

6. Procuring entities may require the participating suppliers to provide guarantees for

maintaining the offer, and the successful supplier to provide a guarantee for the execution.

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ARTICLE 12.18

Time periods

A procuring entity shall, in accordance with its own needs, provide sufficient time for suppliers to

prepare and submit requests for participation and responsive tenders, taking into account such

factors as the nature and complexity of the procurement, the extent of subcontracting anticipated,

and the time for transmitting tenders from foreign as well as domestic points where electronic

means are not used. Such time periods, including any extension thereof, shall be the same for all

interested or participating suppliers. The applicable time periods are set out in Annex 12-M.

ARTICLE 12.19

Negotiations

1. If a Party's law provides that procuring entities may conduct procurement through

negotiations, the procuring entities may do so in the following cases:

(a) in the context of procurements in which they have indicated such intent in the notice of

intended procurement; or

(b) where it appears from the evaluation that no tender is obviously the most advantageous in

terms of the specific evaluation criteria set forth in the notices or tender documentation.

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2. A procuring entity shall:

(a) ensure that any elimination of suppliers participating in negotiations is carried out in

accordance with the evaluation criteria set out in the notices or tender documentation; and

(b) when negotiations are concluded, provide a common deadline for the remaining suppliers to

submit any new or revised tenders.

ARTICLE 12.20

Limited tendering

1. Provided that the tendering procedure is not used to avoid competition or to protect domestic

suppliers, a procuring entity may award contracts by limited tendering, in the following

circumstances:

(a) where:

(i) no tenders were submitted, or no suppliers requested participation;

(ii) no tenders that conform to the essential requirements of the tender documentation

were submitted;

(iii) no suppliers satisfied the conditions for participation; or

(iv) the tenders submitted have involved collusion,

provided that the requirements of the tender documentation are not substantially modified;

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(b) where, for works of art, or for reasons connected with the protection of exclusive intellectual

property rights, such as patents or copyrights, or proprietary information, or where there is an

absence of competition for technical reasons, the goods or services can be supplied only by a

particular supplier and no reasonable alternative or substitute exists;

(c) for additional deliveries by the original supplier of goods and services that were not included

in the initial procurement where a change of supplier for such additional goods or services:

(i) cannot be made for economic or technical reasons such as requirements of

interchangeability or interoperability with existing equipment, software, services or

installations procured under the initial procurement; and

(ii) would cause significant inconvenience or substantial duplication of costs for the

procuring entity;

(d) for goods purchased on a commodity market;

(e) where a procuring entity procures a prototype or a first good or service that is developed at its

request in the course of, and for, a particular contract for research, experiment, study, or

original development; when such contracts have been fulfilled, subsequent procurements of

goods or services shall be subject to this Chapter;

(f) insofar as is strictly necessary where for reasons of urgency brought about by events

unforeseeable by the procuring entity, the goods or services could not be obtained in time by

means of an open tendering procedure or selective tendering;

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(g) where a contract is awarded to a winner of a design contest provided that the contest has been

organised in a manner that is consistent with the principles of this Chapter, and the

participants are judged by an independent jury with a view to awarding a design contract to a

winner; or

(h) for purchases made under exceptionally advantageous conditions that only arise in the very

short term, such as unusual disposals by juridical persons that normally are not suppliers, or

disposals of assets of businesses in liquidation or receivership.

2. A procuring entity shall maintain records or prepare written reports providing specific

justification for any contract awarded under paragraph 1.

ARTICLE 12.21

Electronic auctions

Where a procuring entity intends to conduct a covered procurement using an electronic auction, the

entity shall provide each participant, before commencing the electronic auction, with:

(a) the automatic evaluation method, including the mathematical formula, that is based on the

evaluation criteria set out in the tender documentation and that are to be used in the automatic

ranking or re-ranking during the auction;

(b) the results of any initial evaluation of the elements of its tender where the contract is to be

awarded on the basis of the most advantageous tender; and

(c) any other relevant information relating to the conduct of the auction.

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ARTICLE 12.22

Treatment of tenders and award of contracts

1. A procuring entity shall receive, open and treat all tenders under procedures that guarantee the

fairness and impartiality of the procurement process and the confidentiality of tenders.

2. A procuring entity shall not penalise any supplier whose tender is received after the time

specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring

entity.

3. To be considered for an award, a tender shall be submitted in writing and shall, at the time of

opening, comply with the essential requirements set out in the tender documentation and, where

applicable, in the notices, and it shall be from a supplier that satisfies the conditions for

participation.

4. Unless a procuring entity determines that it is not in the public interest to award a contract, the

entity shall award the contract to the supplier that the entity has determined to be capable of

fulfilling the terms of the contract and that, based solely on the evaluation criteria specified in the

notices and tender documentation, has submitted the most advantageous tender or, where price is

the sole criterion, the lowest price.

5. Where a procuring entity receives a tender with a price that is abnormally lower than the

prices in other tenders submitted, it may verify with the supplier that it satisfies the conditions for

participation and is capable of fulfilling the terms of the contract.

6. A procuring entity shall not use options, cancel a procurement, or modify awarded contracts

in a manner that circumvents the obligations under this Chapter.

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7. Each Party may provide that if, for reasons imputable to the successful supplier, the contract

is not concluded within a reasonable time, or the successful supplier does not fulfil the guarantee for

the execution of the contract referred to in Article 12.17 or does not comply with the contract terms,

the contract may be awarded to the supplier that has submitted the next most advantageous tender.

ARTICLE 12.23

Transparency of procurement information

1. A procuring entity shall promptly inform participating suppliers of the entity's contract award

decisions and, on the request of a supplier, shall do so in writing. Subject to paragraphs 2 and 3 of

Article 12.24, a procuring entity shall, on request, provide an unsuccessful supplier with an

explanation of the reasons why the entity did not select its tender and the relative advantages of the

successful supplier's tender.

2. After the award of each contract covered by this Chapter, a procuring entity shall as early as

possible according to the time limits established in each Party's law, publish a notice in the

appropriate paper or electronic media listed in Appendices to Annexes 12-F to 12-J. Where only an

electronic medium is used, the information shall remain readily available for a reasonable period of

time. The notice shall include at least the following information:

(a) a description of the goods or services procured which may include the nature and the quantity

of the goods procured and the nature and the extent of the services procured;

(b) the name and address of the procuring entity;

(c) the name of the successful supplier;

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(d) the value of the successful tender or the highest and lowest offers taken into account in the

award of the contract;

(e) the date of the award; and

(f) the type of procurement method used, and if limited tendering was used a description of the

circumstances justifying the use of limited tendering.

3. Each Party shall communicate to the other Party the available and comparable statistical data

relevant to the procurement covered by this Chapter.

ARTICLE 12.24

Disclosure of information

1. On request of a Party, the other Party shall promptly provide all relevant information about

the adjudication of a covered procurement, in order to determine if the procurement was conducted

in accordance with the rules of this Chapter. In cases where release of this information would

prejudice competition in future tenders, the Party that receives that information shall not disclose it

to any supplier, except after consultation with, and agreement of, the Party that provided

the information.

2. Notwithstanding any other provision of this Chapter, a Party, including its procuring entities,

shall not provide to any supplier information that might prejudice fair competition

between suppliers.

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3. Nothing in this Chapter shall be construed as requiring a Party, including its procuring

entities, authorities and review bodies, to disclose confidential information where such disclosure:

(a) would impede law enforcement;

(b) might prejudice fair competition between suppliers;

(c) would prejudice the legitimate commercial interests of particular persons, including the

protection of intellectual property; or

(d) would otherwise be contrary to the public interest.

ARTICLE 12.25

Domestic review procedures

1. Each Party shall establish or maintain timely, effective, transparent and non-discriminatory

administrative or judicial review procedures through which a supplier may challenge:

(a) a breach of the Chapter; or

(b) a failure to comply with a Party's measures implementing this Chapter, if the supplier does not

have a right to challenge directly a breach of the Chapter under the law of a Party,

arising in the context of a covered procurement, in which the supplier has, or has had, an interest.

The procedural rules for all challenges shall be in writing and made publicly available.

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2. Each Party may foresee in its law that, in the event of a complaint by a supplier arising in the

context of covered procurement, the Party concerned shall encourage its procuring entity and the

supplier to seek resolution of the complaint through consultations. The procuring entity shall accord

impartial and timely consideration to any such complaint in a manner that is not prejudicial to the

supplier's participation in ongoing or future procurement or its right to seek corrective measures

under the administrative or judicial review procedure.

3. Each supplier shall be allowed a sufficient period of time to prepare and submit a challenge,

which may in no case be less than 10 (ten) days from the time when the basis of the challenge

became known or reasonably should have become known to the supplier.

4. Each Party shall establish or designate at least one impartial administrative or judicial

authority that is independent of its procuring entities to receive and review a challenge by a supplier

arising in the context of a covered procurement.

5. Where a body other than an authority referred to in paragraph 4 initially reviews a challenge,

the Party shall ensure that the supplier may appeal the initial decision to an impartial administrative

or judicial authority that is independent of the procuring entity whose procurement is the subject of

the challenge. A review body that is not a court shall either be subject to judicial review or have

procedural guarantees which shall provide that:

(a) the procuring entity responds in writing to the challenge and discloses all relevant documents

to the review body;

(b) the participants to the proceedings have the right to be heard prior to a decision of the review

body being made on the challenge;

(c) the participants to the proceedings have the right to be represented and accompanied;

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(d) the participants to the proceedings have access to all proceedings;

(e) the participants to the proceedings have the right to request that the proceedings take place in

public and that witnesses may be presented; and

(f) decisions or recommendations relating to challenges by suppliers be provided, within a

reasonable time, in writing, with an explanation of the basis for each decision or

recommendation.

6. Each Party shall adopt or maintain procedures that provide for:

(a) rapid interim measures to preserve the supplier's opportunity to participate in the

procurement. Such interim measures may result in suspension of the procurement process.

The procedures may provide that overriding adverse consequences for the interests concerned,

including the public interest, may be taken into account when deciding whether such

measures should be applied. Just cause for not acting shall be provided in writing; and

(b) corrective action or compensation for the loss or damages suffered, which may be limited to

either the costs for the preparation of the tender or the costs relating to the challenge, or both,

if a review body determines that there has been a breach or a failure as referred to in

paragraph 1.

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ARTICLE 12.26

Amendments and rectifications of coverage

1. A Party may propose to amend or rectify its respective Annexes 12-A to 12-E.

Amendments

2. If a Party intends to amend its Annexes referred to in paragraph 1, the Party shall:

(a) notify the other Party in writing; and

(b) include in the notification a proposal for appropriate compensatory adjustments to the other

Party to maintain a level of coverage comparable to that existing prior to the amendment.

3. Notwithstanding point (b) of paragraph 2, a Party does not need to provide compensatory

adjustments if the amendment covers an entity over which the Party has effectively eliminated its

control or influence.

4. The other Party may object to the amendment if:

(a) an adjustment proposed under point (b) of paragraph 2 is not adequate to maintain a

comparable level of mutually agreed coverage; or

(b) the amendment covers an entity over which the Party has not effectively eliminated its control

or influence under paragraph 3.

The other Party shall object in writing within 45 (forty-five) days of receipt of the notification

referred to in point (a) of paragraph 2. If no such objection is submitted within 45 (forty-five)

days after having received the notification, the Party shall be deemed to have agreed to the

proposed amendment.

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Rectifications

5. The following changes to a Party's Annexes shall be considered a rectification of a purely

formal nature, provided that they do not affect the mutually agreed coverage provided for in

the Chapter:

(a) a change in the name of an entity;

(b) a merger of two or more entities listed within an Appendix; and

(c) the separation of an entity listed in an Appendix into 2 (two) or more entities that are all

added to the entities listed in the same Appendix.

The Party making such rectification of a purely formal nature shall not be obliged to provide

for compensatory adjustments

6. In the case of proposed rectifications to a Party's Annexes, that Party shall notify the proposed

rectifications to the other Party every 2 (two) years following the date of entry into force of

this Agreement.

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7. A Party may notify the other Party of an objection to a proposed rectification

within 45 (forty-five) days after the receipt of the notification. If a Party submits an objection, it

shall set out the reasons why it believes the proposed rectification is not a change provided for in

paragraph 5, and describe the effect of the proposed rectification on the mutually agreed coverage

provided for in this Chapter. If no such objection is submitted in writing within 45 (forty-five) days

after the receipt of the notification, the Party shall be deemed to have agreed to the proposed

rectification.

Consultations and Dispute resolution

8. If the other Party objects to the proposed amendment or rectification, the Parties shall seek to

resolve the issue through consultations. If no agreement is found within 60 (sixty) days of receipt of

the objection, the Party seeking to modify or rectify its Annexes may refer the matter to the dispute

settlement procedure established in Chapter 21 unless the Parties agree to extend the deadline.

9. The consultation procedure under paragraph 8 is without prejudice to the consultations

provided for in Chapter 21.

10. If a Party does not object to the proposed amendment pursuant to paragraphs 2 and 3 or to the

proposed rectification pursuant to paragraph 5, or the amendment or rectifications are agreed

between the Parties through consultations or there is a final settlement of the matter under

Chapter 21, the Trade Council shall amend the relevant Annex to reflect the agreed amendment or

rectifications or the agreed compensatory adjustments.

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ARTICLE 12.27

Subcommittee on government procurement

1. The Subcommittee on government procurement, established pursuant to Article 22.3(4), shall

have the following functions, in addition to those listed in Article 22.3:

(a) review the mutual opening of procurement markets;

(b) exchange information relating to the government procurement opportunities in each Party

including exchanges on procurement statistical data; and

(c) discuss the extent and the means of cooperation in government procurement between the

Parties as referred to in Article 12.28.

ARTICLE 12.28

Cooperation in government procurement

1. The Parties shall cooperate to ensure the effective implementation of this Chapter. The Parties

shall use the available and existing instruments, resources and mechanisms.

2. In particular, cooperation activities in this area shall be carried out, among other activities,

through:

(a) exchange of information, good practices, statistical data, experts, experiences and policies in

areas of mutual interest;

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(b) exchange of good practices regarding the use of sustainable procurement practices and other

areas of mutual interest;

(c) promotion of networks, seminars and workshops in topics of mutual interest;

(d) transfer of knowledge, including contacts between experts from the European Union and

Signatory MERCOSUR States; and

(e) sharing of information between the European Union and Signatory MERCOSUR States, with

a view to facilitate access to the government procurement markets of the Parties' suppliers, in

particular for micro, small and medium size enterprises.

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CHAPTER 13

INTELLECTUAL PROPERTY

SECTION A

GENERAL PROVISIONS AND PRINCIPLES

ARTICLE 13.1

General provisions

1. Each Party affirms the rights and obligations to each other under the WTO, the TRIPS

Agreement and any other multilateral agreement related to intellectual property to which it is

a Party.

2. Each Party shall be free to determine the appropriate method of implementing the provisions

of this Chapter within its own legal system and practice, in a manner consistent with the objectives

and principles of the TRIPS Agreement and this Chapter.

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ARTICLE 13.2

Objectives

The objectives of this Chapter are to:

(a) facilitate access, production and commercialisation of innovative and creative products and

foster trade and investment between the Parties, contributing to a more sustainable, equitable

and inclusive economy for the Parties;

(b) achieve an adequate and effective level of protection and enforcement of intellectual property

rights that provides incentives and rewards to innovation while contributing to the effective

transfer and dissemination of technology and favouring social and economic welfare and the

balance between the rights of the holders and the public interest; and

(c) foster measures that will help the Parties to promote research and development, and access to

knowledge, including to a rich public domain.

ARTICLE 13.3

Nature and scope of obligations

1. For the purposes of this Agreement, "intellectual property rights" refer to all categories of

intellectual property that are the subject of Sections 1 to 7 of Part II of the TRIPS Agreement and

Articles 13.9 to 13.43 of this Agreement.

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2. Protection of intellectual property includes protection against unfair competition as referred to

in Article 10bis of the Paris Convention for the Protection of Industrial Property, done in Paris

on 20 March 1883, as last revised at Stockholm on 14 July 1967 (hereinafter referred to as

"Paris Convention").

3. Nothing in this Chapter shall prevent a Party from adopting measures necessary to prevent the

abuse of intellectual property rights by right holders or the resort to practices which unreasonably

restrain trade or adversely affect the international transfer of technology, provided that such

measures are consistent with this Chapter.

4. A Party shall not be obliged to afford through its law more extensive protection than is

required by this Chapter. This Chapter does not preclude a Party from applying, through its law,

higher standards for the protection and enforcement of intellectual property rights, provided that

they do not violate this Chapter.

ARTICLE 13.4

Principles

1. Each Party recognises that the protection and enforcement of intellectual property rights can

and must be done in a manner conducive to economic, social and scientific progress. Each Party

shall ensure the enforcement of intellectual property rights within its own legal system and practice.

2. In formulating or amending its laws and regulations, each Party may establish exceptions and

flexibilities permitted by the multilateral instruments to which the Parties are signatories.

3. The Parties reaffirm the provisions in the TRIPS Agreement regarding competition.

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4. The Parties support the attainment of the United Nations Sustainable Development Goals.

5. The Parties support the World Health Assembly Resolution WHA 60.28 and the Pandemic

Influenza Preparedness Framework adopted at the sixty-fourth World Health Assembly.

6. The Parties recognise the importance of promoting the implementation of Global Strategy and

Plan of Action on Public Health, Innovation and Intellectual Property, adopted by the World Health

Assembly on 24 of May 2008 (Resolution WHA 61.21 as amended by Resolution WHA 62.16).

7. The Parties affirm the Development Agenda recommendations, adopted in 2007 by the

General Assembly of the World Intellectual Property Organization (hereinafter referred to as

"WIPO").

8. Where the acquisition of an intellectual property right is subject to the right being granted or

registered, each Party shall make best efforts to ensure that the procedures for grant or registration

of the right are conducive to granting or registration within a reasonable period of time so as to

avoid unwarranted curtailment of the period of protection.

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ARTICLE 13.5

National treatment

Each Party shall accord to the nationals1 of the other Party treatment no less favourable than that it

accords to its own nationals with regard to the protection2 of intellectual property rights covered by

this Chapter, subject to the exceptions provided for in Articles 3 and 5 of the TRIPS Agreement3.

1 For the purposes of this Chapter, "national" means, in respect of the relevant intellectual

property right, a person of a Party that would meet the criteria for eligibility for protection

provided for in the TRIPS Agreement or multilateral agreements concluded and administered

under the auspices of WIPO, as appropriate, to which a Party is a contracting party. 2 For the purposes of Article 13.5, "protection" includes matters affecting the availability,

acquisition, scope, maintenance and enforcement of intellectual property rights as well as

those matters affecting the use of intellectual property rights specifically addressed in this

Chapter. 3 In respect of performers, producers of phonograms and broadcasting organisations, this

obligation only applies in respect of the rights provided under this Chapter.

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ARTICLE 13.6

Protection of biodiversity and traditional knowledge

1. The Parties recognise the importance and value of biological diversity and its components and

of the associated traditional knowledge, innovations and practices of indigenous and local

communities1. The Parties furthermore affirm their sovereign rights over their natural resources and

their rights and obligations as established by the Convention of Biological Diversity of 1992, done

in Rio de Janeiro on 5 June 1992 (hereinafter referred to as "CBD") with respect to access to genetic

resources, and to the fair and equitable sharing of benefits arising out of the utilisation of these

genetic resources.

2. The Parties affirm, recognising the special nature of agricultural biodiversity, its distinctive

features and problems needing distinctive solutions, that access to genetic resources for food and

agriculture shall be subject to specific treatment in accordance with the International Treaty on

Plant Genetic Resources for Food and Agriculture, done in Rome on 3 November 2001 (hereinafter

referred to as "International Treaty on Plant Genetic Resources for Food and Agriculture").

3. The Parties may, by mutual agreement, review this Article subject to the results and

conclusions of multilateral discussions.

1 For the purposes of Article 13.6, "indigenous and local communities" may include

descendants of enslaved Africans and small-scale farmers.

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ARTICLE 13.7

Exhaustion

Each Party shall be free to establish its own regime for exhaustion of intellectual property rights

subject to the TRIPS Agreement.

ARTICLE 13.8

TRIPS Agreement and public health

1. The Parties recognise the importance of the Declaration on the TRIPS Agreement and Public

Health, adopted on 14 November 2001 (hereinafter referred to as the "Doha Declaration") by the

Ministerial Conference of the WTO. In interpreting and implementing the rights and obligations

under this Chapter, the Parties shall ensure consistency with the Doha Declaration.

2. Each Party shall implement Article 31bis of the TRIPS Agreement, as well as the Annex and

Appendix to the Annex thereto, which entered into force on 23 January 2017.

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SECTION B

STANDARDS CONCERNING INTELLECTUAL PROPERTY RIGHTS

SUB-SECTION 1

COPYRIGHT AND RELATED RIGHTS1

ARTICLE 13.9

International agreements

Each Party affirms its rights and obligations under the following international agreements, taking

into consideration that agreements are not binding on those that are not parties to them:

(a) the Berne Convention for the Protection of Literary and Artistic Works, done in Berne

on 9 September 1886 as amended on 28 September 1979 (hereinafter referred to as

"the Berne Convention");

(b) the International Convention for the Protection of Performers, Producers of Phonograms and

Broadcasting Organisations, done at Rome on 18 May 1964 (hereinafter referred to as the

"Rome Convention");

1 The Parties shall be free, in their laws and regulations, to use different names for the rights set

out in this Sub-section, provided the agreed level of protection is ensured.

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(c) the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind,

Visually Impaired or Otherwise Print Disabled, adopted at Marrakesh on 27 June 2013;

(d) the WIPO Copyright Treaty, done in Geneva on 20 December 1996;

(e) the WIPO Performances and Phonograms Treaty, done in Geneva on 20 December 1996; and

(f) the Beijing Treaty on Audiovisual Performances, done in Beijing on 24 June 2012.

ARTICLE 13.10

Authors

Each Party shall provide authors with the exclusive right to authorise or prohibit:

(a) direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part, of their works;

(b) any form of distribution to the public by sale or otherwise of the original of their works or of

copies thereof;

(c) any communication to the public of their works, by wire or wireless means; and

(d) the making available to the public of their works in such a way that members of the public

may access them from a place and at a time individually chosen by them.

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ARTICLE 13.11

Performers

Each Party shall provide performers with the exclusive right to authorise or prohibit:

(a) the fixation of their performances;

(b) the direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part of fixations of their performances;

(c) the distribution to the public, by sale or otherwise, of the fixations of their performances;

(d) the broadcasting by wireless means or by wire means if the laws and regulations of a Party

provides for it, and the communication to the public of their performances, except if the

performance is itself already a broadcast performance or is made from a fixation; and

(e) the making available to the public of fixations of their performances in such a way that

members of the public may access them from a place and at a time individually chosen

by them.

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ARTICLE 13.12

Producers of phonograms

Each Party shall provide phonogram producers with the exclusive right to authorise or prohibit:

(a) the direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part, of their phonograms;

(b) the distribution to the public, by sale or otherwise, of their phonograms, including copies

thereof; and

(c) the making available to the public of their phonograms in such a way that members of the

public may access them from a place and at a time individually chosen by them.

ARTICLE 13.13

Broadcasting organisations

Each Party may stipulate the legal requirements in its laws and regulations as to what is to be

considered a broadcasting organisation and shall provide broadcasting organisations with the

exclusive right to authorise or prohibit:

(a) the fixation of their broadcasts;

(b) the direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part, of fixations of their broadcasts;

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(c) the making available to the public, by wire or wireless means, of fixations of their broadcasts,

whether these broadcasts are transmitted by wire or over the air, including by cable or satellite

in such a way that members of the public may access them from a place and at a time

individually chosen by them;

(d) the distribution to the public, by sale or otherwise, of fixations of their broadcasts1; and

(e) the rebroadcasting of their broadcasts by wireless means, or if the Party's laws and regulations

so provide, retransmission by wire means, as well as the communication to the public of their

broadcasts if such communication is made in places accessible to the public against payment

of an entrance fee2.

1 Points (c) and (d) of Article 13.13 shall not apply to a Party to the extent that that Party does

not provide in its laws and regulations for the rights set out therein. In such case, the other

Parties may exclude broadcasting organisations of that Party from the protection granted in

points (c) and (d) of Article 13.13, and the obligation under Article 13.5 shall not apply in

respect of the rights provided for in points (c) and (d) of Article 13.13. 2 Each Party may grant more extensive rights as regards the communication to the public by

broadcasting organisations.

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ARTICLE 13.14

Right to remuneration for broadcasting and communication to the public

of phonograms published for commercial purposes

1. Each Party shall provide a right in order to ensure that remuneration is paid by the user to the

performers and producers of phonograms, if a phonogram published for commercial purposes, or a

reproduction of such a phonogram, is used for broadcasting by wireless means or for any

communication to the public1.

2. Each Party shall provide that the remuneration referred to in paragraph 1 be claimed from the

user by the performer or by the producer of a phonogram or by both. Each Party may enact

legislation that, in the absence of an agreement between performers and producers of phonograms,

sets the terms according to which performers and producers of phonograms are to share such

remuneration.

1 Each Party may grant more extensive rights, in place of the right to remuneration or in

addition to this right, as regards the broadcasting and communication to the public of

phonograms published for commercial purposes, to performers and producers of phonograms.

& /en 292

ARTICLE 13.15

Term of protection

1. The rights of the author of a literary or artistic work within the meaning of Article 2 of the

Berne Convention shall run for the life of the author and for at least 50 (fifty) years after the

author's death or, if the Party's laws and regulations so provide, for 70 (seventy) years after the

author's death. With respect to photographic and cinematographic works, each Party shall establish

the term of protection in accordance with its laws and regulations.

2. In the case of a work of joint authorship, the terms referred to in paragraph 1 shall be

calculated from the death of the last surviving author.

3. In the case of anonymous or pseudonymous works, the term of protection shall run for at

least 50 (fifty) years after the work is lawfully made available to the public or, if the Party's laws

and regulations so provide, for 70 (seventy) years after the work is lawfully made available to the

public. Notwithstanding the first sentence, if the pseudonym adopted by the author leaves no doubt

as to the author's identity, or if the author discloses his or her identity during the period referred to

in the first sentence, the term of protection applicable shall be that laid down in paragraph 1.

4. The rights of performers in a performance other than fixed in a phonogram shall expire not

less than 50 (fifty) years after the date of the performance.

& /en 293

5. The rights of performers and producers of phonograms shall not expire for at

least 50 (fifty) years after the fixation is lawfully published or lawfully communicated to the public

or, if the Party's laws and regulations so provide, 70 (seventy) years after the fixation is lawfully

published or lawfully communicated to the public1. Each Party may, in accordance with its laws and

regulations, adopt effective measures to ensure that the profits generated during the 20 (twenty)

years of protection beyond 50 (fifty) years are fairly shared between performers and producers.

6. The term of protection of the rights of the broadcasting organisations shall be at

least 20 (twenty) years from the first broadcast or, if a Party's laws and regulations so provide,

50 (fifty) years from the first broadcast.

7. The terms laid down in this Article shall be calculated from the 1st (first) of January of the

year following the event which gives rise to them.

8. Each Party may provide for longer terms of protection than those provided for in this Article.

ARTICLE 13.16

Resale right

1. Each Party may provide, for the benefit of the author of graphic or plastic art, a resale right,

defined as an inalienable right, which cannot be waived, even in advance, to receive a percentage of

the price obtained from any resale of that work, after the first transfer of that work by the author.

1 Each Party may provide that the publication or lawful communication to the public of the

fixation of the performance or of the phonogram must occur within a defined period of time

of the date of the performance (in the case of the performers) or the date of the fixation (in the

case of producers of phonograms).

& /en 294

2. The right referred to in paragraph 1 applies to all acts of resale involving as sellers, buyers or

intermediaries art market professionals, such as salesrooms, art galleries and, in general, any dealers

in works of art.

3. Each Party may provide that the right referred to in paragraph 1 does not apply to acts of

resale if the seller has acquired the work directly from the author less than 3 (three) years before

that resale and if the resale price does not exceed a minimum amount.

4. Each Party may provide that authors who are nationals of the other Party and their successors

in title enjoy the resale right in accordance with this Article and the laws and regulations of the

Party concerned provided that the laws and regulations of the country of which the author or the

author's successor in title is a national permits resale right protection in that country for authors

from the Party concerned and their successors in title.

ARTICLE 13.17

Cooperation on collective management of rights

1. The Parties shall promote cooperation, transparency and non-discrimination of collective

management organisations, in particular as regards the revenues they collect, the deductions they

apply to such revenues, the use of the royalties collected, the distribution policy and their repertoire,

including in the digital environment.

& /en 295

2. If a collective management organisation established in the territory of a Party represents a

collective management organisation established in the territory of another Party by way of a

representation agreement, the former Party shall seek to ensure that the representing collective

management organisation:

(a) does not discriminate against entitled members of the represented organisation; and

(b) pays the amounts owed to the represented organisation accurately, regularly, diligently and in

a fully transparent manner and provides the represented organisation with information on the

amounts of revenues collected on its behalf and the deductions made.

ARTICLE 13.18

Exceptions and limitations

1. Each Party shall confine exceptions and limitations to the rights in this Sub-Section to certain

special cases which do not conflict with a normal exploitation of the work or other subject matter

and do not unreasonably prejudice the legitimate interests of the right holders.

2. Each Party shall exempt from the reproduction right temporary acts of reproduction which are

transient or incidental, which are an integral and essential part of a technological process and the

sole purpose of which is to enable:

(a) a transmission in a network between third parties by an intermediary; or

(b) a lawful use of a work or other subject matter to be made, and which have no independent

economic significance.

& /en 296

ARTICLE 13.19

Protection of technological measures

1. Each Party shall provide adequate legal protection and effective legal remedies against the

circumvention of effective technological measures that are used by right holders in connection with

the exercise of their rights under this Sub-Section and that restrict acts which are not authorised by

the right holders concerned or permitted by law.

2. Each Party may, if permissible under its law, ensure that right holders make available to the

beneficiary of an exception or limitation the means for benefiting, to the extent necessary, from that

exception or limitation.

ARTICLE 13.20

Obligations concerning rights management information

1. For the purposes of this Article, "rights-management information" means any information

provided by right holders which identifies the work or other subject-matter referred to in this

Sub-Section, the author or any other right holder, or information about the terms and conditions of

use of the work or other subject matter, and any numbers or codes that represent such information.

& /en 297

2. Each Party shall provide adequate legal protection against any person knowingly performing

without authority any of the following acts, if that person knows, or has reasonable grounds to

know, that by so doing that person is inducing, enabling, facilitating or concealing an infringement

of any copyright or any related rights:

(a) the removal or alteration of any electronic rights-management information; and

(b) the distribution, importation for distribution, broadcasting, communication or making

available to the public of works or other subject matter protected under this Sub-Section from

which electronic rights-management information has been removed or altered without

authorisation.

3. Paragraph 1 applies when any of the items of information referred to in that paragraph is

associated with a copy of, or appears in connection with the communication to the public of, a work

or other subject matter referred to in this Sub-Section.

4. The Parties shall ensure that the obligations set out in this Article do not harm non-infringing

uses.

& /en 298

SUB-SECTION 2

TRADEMARKS

ARTICLE 13.21

International agreements

Each Party shall:

(a) comply with the Nice Agreement Concerning the International Classification of Goods and

Services for the Purposes of the Registration of Marks, done at Nice on 15 June 1957

(hereinafter referred to as "Nice Classification")1; and

(b) make best efforts to accede to the Protocol relating to the Madrid Agreement concerning the

International Registration of Marks, done in Madrid on 27 June 1989, as last amended

on 12 November 2007.

1 This obligation only applies to trademarks registered after the date of adoption of the Nice

Classification criteria or of accession to the instrument.

& /en 299

ARTICLE 13.22

Registration procedure

1. Each Party shall establish a system for the registration of trademarks in which each final

negative decision, including the partial refusal of registration, issued by the relevant trademark

administration, shall be notified in writing, duly reasoned and open to challenge.

2. Each Party shall provide for the possibility to oppose applications to register trademarks or, if

appropriate, the registration of trademarks. Such opposition proceedings shall be adversarial.

3. Each Party shall provide a publicly available electronic database of applications and

registrations of trademarks.

ARTICLE 13.23

Rights conferred by a trademark

A registered trademark shall confer on the proprietor exclusive rights therein. The proprietor shall

be entitled to prevent all third parties not having the proprietor's consent from using in the course

of trade:

(a) any sign which is identical to the trademark in relation to goods or services which are

identical to those for which the trademark is registered; and

& /en 300

(b) any sign which is identical to, or similar to, the trademark and is used in relation to goods or

services which are identical to, or similar to, the goods or services for which the trademark is

registered, if there exists a likelihood of confusion on the part of the public, which includes

the likelihood of association between the sign and the trademark.

ARTICLE 13.24

Well-known trademarks

1. Article 6bis of the Paris Convention shall apply, mutatis mutandis, to services. In determining

whether a trademark is well-known, each Party shall take account of the knowledge of the

trademark in the relevant sector of the public, including knowledge in the Party concerned which

has been obtained as a result of the promotion of the trademark.

2. Article 6bis of the Paris Convention shall apply, mutatis mutandis, to goods or services which

are not similar to those in respect of which a trademark is registered, provided that use of that

trademark in relation to those goods or services would indicate a connection between those goods or

services and the owner of the registered trademark and provided that the interests of the owner of

the registered trademark are likely to be damaged by such use.

3. For the purpose of giving effect to protection of well-known trademarks, as referred to in

Article 6bis of the Paris Convention and paragraphs 2 and 3 of Article 16 of the TRIPS Agreement,

each Party shall take into due consideration the principles established in the Joint Recommendation

Concerning Provisions on the Protection of Well-Known Marks adopted by the Assembly of the

Paris Union for the Protection of Industrial Property and the General Assembly of the WIPO at the

Thirty-Fourth Series of Meetings of the Assemblies of the Member States of WIPO

on 20 to 29 September 1999.

& /en 301

ARTICLE 13.25

Bad faith applications

Each Party shall provide that a trademark may be declared invalid if the application for the

registration thereof was made in bad faith by the applicant. Each Party may also provide that such a

trademark shall not be registered.

ARTICLE 13.26

Exceptions to the rights conferred by a trademark

1. Each Party shall provide for limited exceptions to the rights conferred by a trademark such as

the fair use of descriptive terms including in the case of geographical indications, and may provide

other limited exceptions if such exceptions take account of the legitimate interests of the owner of

the trademark and of third parties.

2. The trademark shall not entitle the owner to prohibit a third party from using the following

when used in accordance with honest practices in industrial and commercial matters:

(a) his or her own name or address if that third party is a natural person;

(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical

origin, the time of production of goods or of rendering of the service, or other characteristics

of goods or services; or

& /en 302

(c) the trademark, if it is necessary to indicate the intended purpose of a product or service, in

particular as accessories or spare parts.

SUB-SECTION 3

DESIGNS

ARTICLE 13.27

International agreements

Each Party shall make best efforts to accede to the Geneva (1999) Act of the Hague Agreement

Concerning the International Registration of Industrial Designs, done at Geneva on 2 July 1999.

ARTICLE 13.28

Protection of registered designs

1. Each Party shall provide for the protection of independently created designs that are new and

original1 2. This protection shall be provided by registration and shall confer an exclusive right upon

their holders in accordance with this Sub-Section.

1 For the purposes of this Article, a Party may consider that a design having individual

character is original. 2 Argentina shall provide for the protection of independently created designs that are new or

original.

& /en 303

2. The holder of a registered design shall have the right to prevent third parties not having the

holder's consent from making, offering for sale, selling, putting on the market, importing, exporting,

stocking such a product or using articles bearing or embodying the protected design if such acts are

undertaken for commercial purposes.

ARTICLE 13.29

Term of protection

The duration of protection available, including renewals, shall amount to at least 15 (fifteen) years

from the date of filing the application.

ARTICLE 13.30

Protection of unregistered designs

Each Party may establish legal means to prevent the use of unregistered designs.

ARTICLE 13.31

Exceptions and exclusions

1. Each Party may establish limited exceptions to the protection of designs, provided that such

exceptions do not unreasonably conflict with the normal exploitation of protected designs and do

not unreasonably prejudice the legitimate interests of the holder of the protected design, taking

account of the legitimate interests of third parties.

& /en 304

2. The protection of designs shall not extend to designs dictated essentially by technical or

functional considerations.

ARTICLE 13.32

Relation to copyright

Each Party shall, to the extent that it is provided for in its laws and regulations, ensure that a design

shall also be eligible for protection under its law of copyright as from the date on which the design

was created or fixed in any form. Each Party shall determine the extent and conditions of such

protection, including the level of originality required.

SUB-SECTION 4

GEOGRAPHICAL INDICATIONS

ARTICLE 13.33

Protection of geographical indications

1. This Sub-Section applies to the recognition and protection of geographical indications

originating in the territory of the Parties.

& /en 305

2. The Parties shall take the necessary measures to implement the protection of geographical

indications referred to in paragraph 1 in their territories, determining the appropriate method for

such implementation within their own legal system and practice.

3. Geographical indications of a Party shall only be subject to this Article if they are protected as

geographical indications in the territory of the Party of origin under its system of registration and

protection of geographical indications.

4. Each Party, having examined the legislation of the other Party in Annex 13-A and the

geographical indications in Annex 13-B, and having completed an objection procedure or public

consultation related to the geographical indications in Annex 13-B, undertake to protect since the

date of entry into force of this Agreement those geographical indications in accordance with the

level of protection laid down in this Sub-Section including the specific level of protection, notably

as set out in Article 13.35(8) and Appendix 13-B-1.

5. Each Party may protect geographical indications for products other than agricultural

foodstuffs, wines, spirit drinks or aromatised wines in its laws and regulations. The Parties

acknowledge that geographical indications listed in Annex 13-D are protected as geographical

indications in the country of origin.

& /en 306

ARTICLE 13.34

Addition of new geographical indications

By request of a Party, and once completed the steps described in Article 13.33(4), the

Subcommittee on intellectual property rights referred to under Article 13.59 may recommend to the

Trade Council to adopt a decision, pursuant to point (f) of Article 22.1(6) to add new geographical

indications to Annex 13-B, including in order to transfer the geographical indications listed in

Annex 13-C to Annex 13-B.

ARTICLE 13.35

Scope of protection of geographical indications

1. Each Party shall provide, according to its laws and regulations, the legal means for interested

parties to prevent:

(a) the use of a geographical indication of the other Party listed in Parts 1 and 2 of Annex 13-B

for any product that falls within the relevant product class, as specified in Section 3 of

Annex 13-B and that either:

(i) does not originate in the country of origin specified in Annex 13-B for that geographical

indication; or

(ii) originates in the country of origin specified in Annex 13-B for that geographical

indication but was not produced or manufactured in accordance with the laws and

regulations of the other Party that would apply if the product was for consumption in the

other Party;

& /en 307

(b) the use of any means in the designation or presentation of a good that indicates or suggests

that the good in question originates in a geographical area other than the true place of origin,

in a manner which misleads the public as to the geographical origin of the good;

(c) any other use which constitutes an act of unfair competition within the meaning of

Article 10bis of the Paris Convention;

(d) any direct or indirect commercial use of a protected name for comparable products not

complying with the product specification of the protected name, or that exploits the reputation

of a geographical indication;

(e) the use of a geographical indication not originating in the place indicated by the geographical

indication, even if the true origin of the goods is indicated or the geographical indication is

used in translation or accompanied by expressions such as "kind", "type", "style", "imitation"

or the like; and

(f) any misuse, imitation or deceiving use of a protected name of a geographical indication; or

any false or misleading indication of a protected name of a geographical indication; or any

practice liable to mislead the consumer as to the true origin, provenance and nature of the

product.

2. Regarding the relationship between trademarks and geographical indications:

(a) if a geographical indication is protected under this Sub-Section, each Party shall refuse the

registration of a trademark for the same or a similar product the use of which would

contravene this Sub-Section, provided that an application for registration of the trademark was

submitted after the date of application for protection of the geographical indication on the

territory concerned; trademarks registered in breach of this paragraph shall be invalidated in

accordance with the law of the Parties;

& /en 308

(b) for geographical indications listed in Annex 13-B at the date of entry into force of this

Agreement, the date of submission of the application for protection referred to in point (a)

shall be the date of the publication of the opposition procedure or public consultation in the

respective territories;

(c) for geographical indications referred to in Article 13.34, the date of submission of the

application for protection shall be the date of the transmission of a request to another Party to

protect a geographical indication;

(d) without prejudice to point (e), each Party shall protect the geographical indications referred to

in Annex 13-B also if a prior trademark exists; a prior trademark shall mean a trademark

which has been applied for, registered or established by use, if that possibility is provided for

by the laws and regulations of the Party concerned, in good faith in the territory of one Party

before the date of application for protection of the geographical indication, as referred to in

paragraph 1 is submitted by the other Party under this Agreement;

such prior trademark may continue to be used, renewed and be subject to variations which

may require the filing of new trademark applications, notwithstanding the protection of the

geographical indication, provided that no grounds for the trademark's invalidity or revocation

exist in the trademark law under which the trademark has been registered or established;

neither the prior trademark nor the geographical indication shall be used in a way that would

mislead the consumer as to the nature of the intellectual property right concerned; and

(e) a Party shall not be obliged to protect a geographical indication in light of a famous, reputed

or well-known trademark, if the protection is liable to mislead the consumer as to the true

identity of the product.

& /en 309

3. Nothing in this Sub-Section shall prevent the use by a Party, with respect to any product, of a

customary name of a plant variety or an animal breed, existing in the territory of that Party1.

4. Nothing in this Sub-Section shall prevent the use by a Party of an individual component of a

multi-component term that is protected as a geographical indication in the territory of that Party if

such individual component is a term customary in the common language as the common name for

the associated good2.

5 Nothing in this Sub-Section shall require a Party to protect a geographical indication which is

identical to the term customary in common language as the common name for the associated good

in the territory of that Party.

6. If a translation of a geographical indication is identical with or contains within it a term

customary in common language as the common name for a product in the territory of a Party, or if a

geographical indication is not identical with but contains within it such a term, this Sub-Section

shall not prejudice the right of any person to use that term in association with that product.

1 The Parties define in Appendix 13-B-1 the plant varieties and animal breeds the use of which

shall not be prevented. 2 The Parties define in Appendix 13-B-1 the terms for which protection is not sought or

granted.

& /en 310

7. With regard to homonymous geographical indications:

(a) in the case of existing or future homonymous geographical indications of the Parties for

products falling within the same product category1, both shall coexist per se, and each Party

shall determine the practical conditions under which the homonymous indications in question

shall be differentiated from each other, taking into account the need to ensure equitable

treatment of the producers concerned and that consumers are not misled; and

(b) if a Party, in the context of negotiations with a third country proposes to protect a

geographical indication from that third country, and the name is homonymous with a

geographical indication of the other Party, the latter shall be informed and be given the

opportunity to comment before the name is protected.

1 In accordance with the Nice Classification and its amendments.

& /en 311

8. Without prejudice to Articles 13.35(1) to 13.35(7), a specific level of protection is defined for

the following cases of geographical indications listed in Annex 13-B1:

(a) "Genièvre", "Jenever" or "Genever": the protection of the geographical indication "Genièvre",

"Jenever" or "Genever" shall not prevent prior users of the term "Ginebra" in the territory of

Argentina that have used the term in good faith and in a continuous manner for at

least 5 (five) years prior to the publication for opposition of the geographical indication

"Genièvre", "Jenever" or "Genever" in Argentina, and prior users of the term "Genebra" in the

territory of Brazil that have used the term in good faith and in a continuous manner prior to

the publication for opposition of the geographical indication "Genièvre", "Jenever" or

"Genever" in Brazil, to continue using the term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the genuine origin of

the geographical indication and provided the term is displayed in a font character substantially

smaller, while readable, than the brand name and is differentiated from it in a non-ambiguous

manner as regards to the origin of the product;

1 For greater certainty, the specific level of protection by each Signatory MERCOSUR State as

defined in Article 13.35(8) applies only in favour of those prior users that are part of the prior

users' list of that particular Signatory MERCOSUR State.

& /en 312

(b) "Queso Manchego": the protection of the geographical indication "Queso Manchego" for

cheeses elaborated in Spain in accordance with the applicable technical specifications, using

sheep's milk, shall not prevent prior users of the term "Queso Manchego" in the territory of

Uruguay that have used the term in good faith and in a continuous manner for at

least 5 (five) years prior to the publication for opposition of the geographical indication

"Queso Manchego", if related to cheeses elaborated with cow's milk, to continue using this

term provided these products are not commercialised using graphics, names, pictures or flags

as references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name, and is

differentiated from it in a non-ambiguous manner as regards the origin and the composition of

the product;

(c) "Grappa": the protection of the geographical indication "Grappa" shall not prevent prior users

of the term "Grappamiel" or "Grapamiel" in the territory of Uruguay that have used the term

in good faith and in a continuous manner prior to the publication for opposition of the

geographical indication "Grappa" to continue using this term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the protected

European geographical indication and provided the term is displayed in a font character

substantially smaller, while readable, than the brand name and is differentiated from it in a

non-ambiguous manner as regards the origin of the product;

& /en 313

(d) "Steinhäger": the protection of the geographical indication "Steinhäger" shall not prevent

prior users of the term "Steinhäger" in the territory of Brazil that have used the term in good

faith and in a continuous manner prior to the publication for opposition of the geographical

indication "Steinhäger" to continue using this term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the protected

European geographical indication and provided the term is displayed in a font character

substantially smaller, while readable, than the brand name and is differentiated from it in a

non-ambiguous manner as regards the origin of the product;

(e) "Parmigiano Reggiano":

(i) the protection of the geographical indication "Parmigiano Reggiano" shall not prevent

prior users of the term "Parmesão" in the territory of Brazil and of the term "Parmesano"

in the territories of Argentina, Paraguay and Uruguay that have used these terms in good

faith and in a continuous manner prior to the publication for opposition of the

geographical indication "Parmigiano Reggiano" to continue using these terms, provided

these products are not commercialised using graphics, names, pictures or flags as

references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name

and is differentiated from it in a non-ambiguous manner as regards the origin of

the product;

& /en 314

(ii) the protection of the geographical indication "Parmigiano Reggiano" shall not prevent

prior users of the term "Reggianito" in the territory of Argentina that have used this

term in good faith and in a continuous manner prior to the publication for opposition of

the geographical indication "Parmigiano Reggiano", and in the territories of Paraguay

and Uruguay that have used this term in good faith and in a continuous manner for at

least 5 (five) years prior to the publication for opposition of the geographical indication

"Parmigiano Reggiano", to continue using this term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the protected

European geographical indication and provided the term is displayed in a font character

substantially smaller, while readable, than the brand name and is differentiated from it

in a non-ambiguous manner as regards the origin of the product;

(f) "Fontina": the protection of the geographical indication "Fontina" shall not prevent prior users

of the term "Fontina" in the territories of Argentina, Brazil, Paraguay and Uruguay that have

used the term in good faith and in a continuous manner for at least 5 (five) years prior to the

publication for opposition of the geographical indication "Fontina", to continue using this

term, provided these products are not commercialised using graphics, names, pictures or flags

as references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name and is

differentiated from it in a non-ambiguous manner as regards the origin of the product;

& /en 315

(g) "Gruyère" (France):

(i) the protection of the geographical indication "Gruyère" (France) shall not prevent prior

users of the terms "Gruyère" and "Gruyere" in the territories of Argentina, Brazil,

Paraguay and Uruguay that have used the term in good faith and in a continuous manner

for at least 5 (five) years prior to the publication for opposition of the geographical

indication "Gruyère" (France), to continue using this term, provided these products are

not commercialised using graphics, names, pictures or flags as references to the

protected European geographical indication and provided the term is displayed in a font

character substantially smaller, while readable, than the brand name and is differentiated

from it in a non-ambiguous manner as regards the origin of the product;

(ii) the protection of the geographical indication "Gruyère" (France) shall not prevent prior

users of the terms "Gruyerito" and "Gruyer" in the territory of Uruguay that have used

the term in good faith and in a continuous manner for at least 5 (five) years prior to the

publication for opposition of the geographical indication "Gruyère" (France) to continue

using this term, provided these products are not commercialised using graphics, names,

pictures or flags as references to the protected European geographical indication and

provided the term is displayed in a font character substantially smaller, while readable,

than the brand name and is differentiated from it in a non-ambiguous manner as regards

the origin of the product;

& /en 316

(h) "Grana Padano": the protection of the geographical indication "Grana Padano" shall not

prevent prior users of the term "Grana" in the territory of Brazil that have used the term in

good faith and in a continuous manner for at least 5 (five) years prior to the publication for

opposition of the geographical indication "Grana Padano" to continue using this term,

provided these products are not commercialised using graphics, names, pictures or flags as

references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name and is

differentiated from it in a non-ambiguous manner as regards the origin of the product; and

(i) "Gorgonzola": the protection of the geographical indication "Gorgonzola" shall not prevent

prior users of the term "Gorgonzola" in the territory of Brazil that have used the term in good

faith prior to the publication for opposition to continue using the term, provided these

products are not commercialised using graphics, names, pictures or flags as references to the

genuine origin of the geographical indication and provided the term is displayed in a font

character substantially smaller, while readable, than the brand name and is differentiated from

it in a non-ambiguous manner as regards to the origin of the product.

9. Prior users as referred to in points (a) to (i) of paragraph 8 are listed in Annex 13-E.

Succession of prior users and the effects thereof shall be determined by the domestic laws and

regulations of each Signatory MERCOSUR State.

10. Protected geographical indications listed in Annex 13-B shall not become generic in the

territories of the Parties.

11. Nothing in this Chapter shall create an obligation for the Parties to protect geographical

indications which are not or cease to be protected in their place of origin.

& /en 317

12. This Chapter shall not prejudice the right of any person to make commercial use of that

person's name or the name of that person's predecessor in business, except if such name is used in

such a manner as to mislead the public.

ARTICLE 13.36

Right of use of geographical indications

1. Any operator marketing agricultural products, foodstuffs, wines, aromatised wines or spirit

drinks which conform to the corresponding specification may use a geographical indication under

this Agreement.

2. Once a geographical indication is protected under this Agreement, the use of such protected

name shall not be subject to any registration of users or further charges.

ARTICLE 13.37

Enforcement of protection

Each Party shall provide the legal means for interested parties to seek enforcement of the protection

provided for in Article 13.35 via appropriate administrative and judicial action within its own legal

system and practice.

& /en 318

ARTICLE 13.38

Import, export and marketing

Import, export and marketing of products carrying the names listed in Annex 13-B shall comply

with the laws and regulations applying in the territory of the Party in which the products are placed

on the market.

ARTICLE 13.39

Cooperation and transparency on geographical indications

1. The Subcommittee on intellectual property rights, referred to in Article 13.59, shall monitor

the proper functioning of this Sub-Section and may consider any matter related to its

implementation and operation. It shall be responsible for:

(a) exchanging information on legislative and policy developments on geographical indications

and any other matter of mutual interest in the area of geographical indications; and

(b) cooperating on the development of alternative names for products that were once marketed by

producers of a Party with terms corresponding to geographical indications of the other Party,

especially in cases subject to a phasing-out.

2. The Subcommittee on intellectual property rights may recommend to the Trade Council to

amend, pursuant to point (f) of Article 22.1(6):

(a) Annex 13-A as regards the references to the law applicable in the Parties;

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(b) Annex 13-B as regards geographical indications and exchanging information for that purpose;

(c) Annex 13-C as regards the geographical indication; and

(d) Annex 13-E as regards prior users.

3. Each Party shall notify the other if a geographical indication listed in Annex 13-B ceases to be

protected in its territory. Following such notification, the Trade Council shall amend Annex 13-B in

accordance with point (f) of Article 22.1(6) to end the protection under this Agreement. Only the

Party in which the product originates is entitled to request the end of the protection under this

Sub-Section of a geographical indication listed in Annex 13-B.

4. MERCOSUR shall notify the European Union if, following the entry into force of this

Agreement, it identifies additional prior users that comply with the specific requirements set forth in

points (a) to (i) of Article 13.35(8). Following such a notification and provided that the Parties agree

that the proposed additional prior users meet the aforementioned requirements, the Trade Council

shall amend Annex 13-E pursuant to point (f) of Article 22.1(6) by adding such additional

prior users.

5. The Parties shall, either directly or through the Subcommittee on intellectual property rights,

remain in contact directly on all matters relating to the implementation and the functioning of this

Sub-Section. In particular, a Party may request from the other Party information relating to product

specifications and amendments thereto, and contact points for control.

6. A product specification referred to in this Sub-Section shall be the one approved, including

any amendments also approved, by the authorities of the Party in the territory from which the

product originates.

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7. The Parties may make publicly available the product specifications or a summary thereof

corresponding to the geographical indications of the other Party protected pursuant to this

Sub-Section, in Portuguese, Spanish or English.

SUB-SECTION 5

PATENTS

ARTICLE 13.40

International treaties

Each Party shall make best efforts to accede to the Patent Cooperation Treaty, done in Washington

on 19 June 19701.

1 For the European Union this provision can be fulfilled through adherence of its

Member States.

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SUB-SECTION 6

PLANT VARIETIES

ARTICLE 13.41

International agreements

Each Party shall protect plant varieties rights, in accordance with the International Convention for

the Protection of New Varieties of Plants done in Paris on 2 December 1961, as revised in Geneva

on 10 November 1972, and on 23 October 1978 (1978 UPOV ACT) or on 19 March 1991

(1991 UPOV ACT), and shall cooperate to promote the protection of plant varieties.

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SUB-SECTION 7

PROTECTION OF UNDISCLOSED INFORMATION

ARTICLE 13.42

Scope of protection of trade secrets

1. In fulfilling its obligation under Article 13.1(1) to comply with the TRIPS Agreement, and in

particular with paragraphs 1 and 2 of Article 39 of the TRIPS Agreement, each Party shall provide

for appropriate civil judicial procedures and remedies for any trade secret holder to prevent, and

obtain redress for, the acquisition, use or disclosure of a trade secret whenever carried out in a

manner contrary to honest commercial practices.

2. For the purposes of this Sub-Section:

(a) "trade secret" means information that:

(i) is secret in the sense that it is not, as a body or in the precise configuration and assembly

of its components, generally known among or readily accessible to persons within the

circles that normally deal with the kind of information in question;

(ii) has commercial value because it is secret; and

(iii) has been subject to reasonable steps under the circumstances, by the person lawfully in

control of the information, to keep it secret; and

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(b) "trade secret holder" means any natural or legal person lawfully controlling a trade secret.

3. For the purposes of this Sub-Section, a Party shall consider at least the following conducts to

be contrary to honest commercial practices:

(a) the acquisition of a trade secret without the consent of the trade secret holder, whenever

carried out by unauthorised access to, appropriation of, or copying of any documents, objects,

materials, substances or electronic files, lawfully under the control of the trade secret holder,

containing the trade secret or from which the trade secret can be deduced;

(b) the use or disclosure of a trade secret whenever carried out without the consent of the trade

secret holder by a person who:

(i) acquired the trade secret unlawfully;

(ii) was in breach of a confidentiality agreement or any other duty not to disclose the trade

secret; or

(iii) was in breach of a contractual or any other duty to limit the use of the trade secret; and

(c) the acquisition, use or disclosure of a trade secret whenever carried out by a person who, at

the time of the acquisition, use or disclosure, knew or ought to have known, under the

circumstances, that the trade secret had been obtained directly or indirectly from another

person who was using or disclosing the trade secret unlawfully within the meaning of

point (b).

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4. A Party shall not be required to consider any of the following conducts to be contrary to

honest commercial practices under this Sub-Section:

(a) independent discovery or creation by a person of the relevant information;

(b) reverse engineering of a product by a person who is lawfully in possession of that product and

who is free from any legally valid duty to limit the acquisition of the relevant information;

(c) acquisition, use or disclosure of information required or allowed by the relevant Party's law;

or

(d) use by employees of their experience and skills honestly acquired in the normal course of

their employment.

5. Nothing in this Sub-Section shall be understood as restricting freedom of expression and

information, including media freedom as protected in the jurisdiction of each of the Parties.

ARTICLE 13.43

Civil judicial procedures and remedies of trade secrets

1. Each Party shall ensure that any person participating in the civil judicial proceedings referred

to in Article 13.42 or having access to documents which form part of those legal proceedings is not

permitted to use or disclose any trade secret or alleged trade secret which the competent judicial

authorities have, in response to a duly reasoned application by an interested party, identified as

confidential and of which they have become aware as a result of such participation or access.

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2. In the civil judicial proceedings referred to in Article 13.42, each Party shall provide that its

judicial authorities have the authority to, at least:

(a) order provisional measures, as set out in its laws and regulations, to prevent the acquisition,

use or disclosure of the trade secret in a manner contrary to honest commercial practices;

(b) order injunctive relief to prevent the acquisition, use or disclosure of the trade secret in a

manner contrary to honest commercial practices;

(c) order the person that knew or ought to have known that he or she was acquiring, using or

disclosing a trade secret in a manner contrary to honest commercial practices to pay the trade

secret holder damages appropriate to the actual prejudice suffered as a result of the unlawful

acquisition, use or disclosure of the trade secret;

(d) take specific measures to preserve the confidentiality of any trade secret or alleged trade

secret produced in civil proceedings relating to the alleged acquisition, use and disclosure of a

trade secret in a manner contrary to honest commercial practices; such specific measures may

include, in accordance with the Party's law, restricting access to certain documents in whole

or in part, restricting access to hearings and the corresponding records or transcript and

making available a non-confidential version of judicial decision in which the passages

containing trade secrets have been removed or redacted; and

(e) impose sanctions on parties, or other persons subject to the court's jurisdiction, for violation of

judicial orders concerning the protection of a trade secret or alleged trade secret produced in

those proceedings.

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3. A Party shall not be required to provide for the judicial procedures and remedies referred to in

Article 13.42 if the conduct contrary to honest commercial practices is carried out, in accordance

with that Party's law, to reveal misconduct, wrongdoing or illegal activity or for the purpose of

protecting a legitimate interest recognised by law.

SECTION C

ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

SUB-SECTION 1

CIVIL AND ADMINISTRATIVE ENFORCEMENT

ARTICLE 13.44

General obligations

1. Each Party reaffirms its commitments under the TRIPS Agreement and in particular under

Part III thereof, and shall ensure the enforcement of intellectual property rights in accordance with

its law and within its own legal system and practice.

2. For the purposes of this Section, "intellectual property rights" means, unless otherwise

provided, intellectual property rights as defined in Article 13.3(1) with the exception of the rights

referred to in Articles 13.42 and 13.43.

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3. Procedures1 adopted, maintained or applied to implement this Section shall be effective, fair

and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time

limits or unwarranted delays, and shall act as a deterrent to further infringements. Each Party shall

take into account the need for proportionality among the infringement, the rights of all parties

involved, the interests of third parties, and the applicable measures, remedies and penalties.

4. The Parties shall apply the procedures referred to in paragraph 3 concerning the enforcement

of intellectual property rights in such a manner as to avoid the creation of barriers to legitimate

trade and to provide for safeguards against their abuse.

5. Articles 13.44 to 13.58 do not create any obligation for a Party to put in place a judicial

system for the enforcement of intellectual property rights distinct from that for the enforcement of

law in general in accordance with that Party's law, nor does it affect the capacity of the Parties to

enforce their law in general.

ARTICLE 13.45

Persons entitled to apply for procedures

Each Party shall recognise at least the following persons as entitled to seek application of the

procedures concerning the enforcement of intellectual property rights referred to in this Section and

in Part III of the TRIPS Agreement, in accordance with the law where the procedure takes place:

(a) the holders of intellectual property rights;

1 For the purposes of this Section, "procedures" includes measures and remedies.

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(b) exclusive licensees provided they are authorised by the right holders; and

(c) intellectual property collective rights management bodies which are legally and expressly

recognised as having a right to represent holders of intellectual property rights.

ARTICLE 13.46

Evidence

1. Each Party shall ensure that the competent judicial authorities have the authority to order, on

application by a party which has presented reasonably available evidence to support the Party's

claims that that party's intellectual property right has been infringed or is about to be infringed,

prompt and effective provisional measures to preserve relevant evidence in respect of the alleged

infringement, subject to the protection of confidential information1.

2. The provisional measures referred to in paragraph 1 may include the detailed description, with

or without the taking of samples, or the physical seizure, of the alleged infringing goods, and in

appropriate cases the documents relating thereto.

3. Each Party shall take the measures necessary to, in cases of trademark counterfeiting or

copyright piracy on a commercial scale2, enable the competent judicial authorities to order, if

appropriate, on application by a party, and if necessary to determine the existence and extent of an

infringement, the communication of relevant banking, financial or commercial documents under the

control of the opposing party, subject to the protection of confidential information.

1 For the purposes of this Article, "confidential information" may include personal data. 2 A Party may extend the application of this paragraph to other intellectual property rights.

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4. Each Party shall ensure that the judicial authorities have the competence to subject the

measures to preserve evidence to the lodging by the applicant of adequate security or an equivalent

assurance intended to ensure compensation for any prejudice suffered by the defendant.

5. If the measures to preserve evidence are revoked, if they lapse due to any act or omission by

the applicant, or if it is subsequently found that there was no infringement or threat of infringement

of an intellectual property right, the judicial authorities shall have the authority to order the

applicant, upon the request of the defendant, to provide the defendant appropriate compensation for

any injury caused by those measures.

ARTICLE 13.47

Right of information

1. Each Party shall ensure that, in cases of an infringement of intellectual property rights and in

response to a justified and proportionate request of the claimant, the competent judicial authorities

may order the infringer or any other person to provide relevant information on the origin and

distribution networks of the infringing goods or services.

2. For the purposes of this Article:

(a) "any other person" means a person who was:

(i) found in possession of the infringing goods on a commercial scale;

(ii) found to be using the infringing services on a commercial scale;

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(iii) found to be providing on a commercial scale services used in infringing activities; or

(iv) indicated by the person referred to in points (i) to (iii) as being involved in the

production, manufacture or distribution of the goods or the provision of the services.

(b) "relevant information" may include information regarding any person involved on a

commercial scale in the infringement or alleged infringement and regarding the means of

production and distribution networks of the goods or services.

3. This Article applies without prejudice to other statutory provisions which:

(a) grant the right holder rights to receive fuller information;

(b) govern the use in civil proceedings of the information communicated pursuant to this Article;

(c) govern responsibility for misuse of the right of information;

(d) afford an opportunity for refusing to provide information which would force the person

referred to in paragraph 1 to admit their own involvement or that of their close relatives; or

(e) govern the protection of confidentiality of information sources or the processing of

personal data.

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ARTICLE 13.48

Provisional and precautionary measures

1. Each Party shall provide that its judicial authorities have the authority to order prompt and

effective provisional and precautionary measures, including an interlocutory injunction, against a

party or, if appropriate, against a third party over whom the relevant judicial authority exercises

jurisdiction, to prevent an infringement of an intellectual property right from occurring and, in

particular, to prevent infringing goods from entering into the channels of commerce.

2. An interlocutory injunction may also be issued to order the seizure or delivery up of goods

suspected of infringing an intellectual property right, so as to prevent their entry into or movement

within the channels of commerce.

3. Each Party shall ensure that, in the case of an alleged infringement committed on a

commercial scale, if the applicant demonstrates circumstances likely to endanger the recovery of

damages, the judicial authorities are able to order the precautionary seizure of the movable and

immovable property of the alleged infringer, including the blocking of the alleged infringer's bank

accounts and other assets. To that end, each Party shall ensure that the competent authorities are

able to order the communication of bank, financial or commercial documents, or appropriate access

to the relevant information.

4. The judicial authorities shall have the authority to require the applicant to provide any

reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty

that the applicant is the right holder and that the applicant's right is being infringed or that such

infringement is imminent, and to order the applicant to provide a security or equivalent assurance

sufficient to protect the defendant and to prevent abuse.

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ARTICLE 13.49

Remedies

1. Each Party shall ensure that the competent judicial authorities are able to order, on the request

of the applicant and without prejudice to any damages due to the right holder by reason of the

infringement, and without compensation of any sort, the destruction, or at least the definitive

removal from the channels of commerce, of goods that they have found to infringe an intellectual

property right. Such goods may be used for the public interest. The judicial authorities shall also

have the authority to order that materials and implements predominantly used in the creation of the

infringing goods be, without compensation of any sort, disposed of outside the channels of

commerce in such a manner as to minimise the risks of further infringements. In considering such

requests, the competent judicial authorities shall take the need for proportionality between the

seriousness of the infringement and the remedies ordered as well as the interests of third parties

into account.

2. The competent judicial authorities of each Party shall have the authority to order that those

measures be carried out at the expense of the infringer, unless particular reasons are invoked for not

doing so.

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ARTICLE 13.50

Injunctions

Each Party shall ensure that, if a judicial decision finds an infringement of an intellectual property

right, the competent judicial authorities are able to issue against the infringer or, if appropriate,

against a third party over whom the relevant judicial authority exercises jurisdiction, an injunction

aimed at prohibiting the continuation of the infringement.

ARTICLE 13.51

Alternative measures

Each Party may provide that the judicial authorities, in appropriate cases and upon the request of the

person liable to be subject to the measures provided for in Article 13.49 or 13.50, may order

pecuniary compensation to be paid to the injured party instead of applying the measures provided

for in Article 13.49 or 13.50, if it is found that the former acted unintentionally and without

negligence, or if execution of the measures in question would cause them disproportionate harm or

if pecuniary compensation to the injured party appears reasonably satisfactory1.

1 In deciding what is "reasonably satisfactory", the judge may take into consideration the public

interest.

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ARTICLE 13.52

Damages

1. Each Party shall ensure that the judicial authorities have the authority, upon the request of the

injured party, to order an infringer who knowingly, or with reasonable grounds to know, engaged in

an activity infringing intellectual property rights to pay the right holder damages appropriate to

compensate for the actual prejudice suffered as a result of the infringement of the intellectual

property right. In setting the damages, the competent judicial authorities:

(a) shall take into account all appropriate aspects, such as the negative economic consequences,

including lost profits, which the injured party has suffered, any unfair profits1 made by the

infringer and, if applicable, elements other than economic factors, such as the moral prejudice

caused to the right holder by the infringement; or

(b) as an alternative to point (a), they may, in appropriate cases, set the damages as a lump sum

on the basis of elements such as at least the amount of royalties or fees which would have

been due if the infringer had requested authorisation to use the intellectual property right

in question.

1 "Unfair profits" are those derived from the infringement, in accordance with a Party's law.

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ARTICLE 13.53

Legal costs

Each Party shall provide that its judicial authorities, if appropriate, have the authority to order, at

the conclusion of civil judicial proceedings concerning the enforcement of intellectual property

rights, that the prevailing party be awarded payment by the losing party of legal costs and other

expenses, as provided for under that Party's law.

ARTICLE 13.54

Publication of judicial decisions

Each Party shall ensure that its judicial authorities are able to order the publication of the decision

in cases of infringement of an intellectual property right, unless this would not be proportionate to

the seriousness of the infringement.

ARTICLE 13.55

Presumption of authorship or ownership

Each Party shall, at least in provisional measures requested in civil proceedings involving copyright

and related rights, provide for a presumption that, in the absence of proof to the contrary, the person

or entity whose name is indicated as the author or related right holder of the work or subject matter

in the usual manner is the designated right holder in such work or subject matter.

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ARTICLE 13.56

Public awareness

The Parties shall take the necessary measures to enhance public awareness of protection of

intellectual property including educational and dissemination projects on the use of intellectual

property rights as well as on the enforcement thereof.

SUB-SECTION 2

BORDER ENFORCEMENT

ARTICLE 13.57

Consistency with GATT and the TRIPS Agreement

In implementing border measures for the enforcement of intellectual property rights by customs

authorities, whether or not covered by this Chapter, each Party shall ensure consistency with its

obligations under the GATT and the TRIPS Agreement and, in particular, with Article V of GATT

and Article 41 and Section 4 of Part III of the TRIPS Agreement.

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ARTICLE 13.58

Border measures

1. With respect to goods under customs control, each Party shall adopt or maintain procedures

under which a right holder may submit applications requesting customs authorities to suspend the

release or detain goods suspected of, at least, trademark counterfeiting, copyright and related rights

piracy on a commercial scale or infringing of geographical indications (hereinafter referred to as

"suspect goods").

2. The Parties shall not be obliged to apply the procedures in this Sub-Section to goods in transit.

3. Each Party shall encourage the use of electronic systems for the management by customs

authorities of the applications granted or recorded.

4. Each Party shall ensure that customs authorities inform the applicant within a reasonable

period of time whether they have granted or recorded the application.

5. Each Party shall provide for such application or recordation to apply to multiple shipments

when so allowed in accordance with the provisions of the Party's law.

6. Each Party may provide that its customs authorities have the authority, with respect to goods

under customs control, to suspend the release of or detain suspect goods on their own initiative.

7. Each Party shall ensure that customs authorities are able to use risk analysis to identify

suspect goods.

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8. Each Party may have in place administrative or judicial procedures, in accordance with the

Party's law, allowing for the destruction of suspect goods, if the persons concerned accept or do not

oppose to the destruction thereof. If such goods are not destroyed, each Party shall ensure that they

are disposed of outside commercial channels in such a manner as to avoid any harm to the

right holder.

9. The Parties shall not be obliged to apply this Article to imports of goods put on the market in

another country by or with the consent of the right holders. A Party may exclude from the

application of this Article goods of a non-commercial nature contained in travellers'

personal luggage.

10. The Parties shall ensure that the customs authorities of each Party maintain a regular dialogue

and promote cooperation with the relevant stakeholders and with other authorities involved in the

enforcement of the intellectual property rights referred to in paragraph 1.

11. The Parties shall cooperate with respect to international trade in suspect goods and, in

particular, to share information on such trade.

12. Without prejudice to other forms of cooperation, Annex 4-A applies to breaches of legislation

on intellectual property rights the enforcement of which falls within the competence of the customs

authorities in accordance with this Article.

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SECTION D

FINAL PROVISIONS

ARTICLE 13.59

Subcommittee on intellectual property rights

1. The Subcommittee on intellectual property rights, established pursuant to Article 22.3(4),

shall have the following functions, in addition to those listed in Article 13.39 and 22.3:

(a) to exchange information:

(i) on the legal framework concerning intellectual property rights and relevant rules of

protection and enforcement; and

(ii) related to public domain in the territories of the Parties; and

(b) to exchange experiences on:

(i) legislative progress;

(ii) the enforcement of intellectual property rights; and

(iii) enforcement at central and sub-central level by customs, police, administrative and

judiciary bodies.

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ARTICLE 13.60

Cooperation

1. With a view to facilitating the implementation of this Chapter the Parties shall cooperate:

(a) within the Subcommittee on intellectual property rights;

(b) in international fora;

(c) via various agencies; or

(d) as otherwise deemed appropriate.

2. The areas of cooperation include the following activities:

(a) coordination to prevent exports of counterfeit goods, including with other countries;

(b) technical assistance, capacity-building, exchange and training of personnel;

(c) protection and enforcement of intellectual property rights and the dissemination of

information in this regard in, inter alia, business circles and civil society;

(d) public awareness of consumers and right holders and enhancement of institutional

cooperation, particularly between intellectual property offices;

(e) actively promoting awareness and education of the general public on policies concerning

intellectual property rights;

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(f) engaging with SMEs, including at SME-focused events or gatherings, regarding the use,

protection and enforcement of intellectual property rights;

(g) the application of the CBD and related instruments and the domestic frameworks on access to

genetic resources and associated traditional knowledge, innovations and practices; and

(h) facilitation of voluntary stakeholder initiatives to reduce intellectual property rights

infringement, including over the internet and in other marketplaces.

CHAPTER 14

SMALL AND MEDIUM-SIZED ENTERPRISES

ARTICLE 14.1

General principles

1. The Parties recognise that SMEs, which include micro, small and medium-sized enterprises

and entrepreneurs, contribute significantly to trade, economic growth, employment and innovation.

The Parties affirm their intention to support the growth and development of SMEs by enhancing

their ability to participate in, and benefit from, the opportunities created by this Agreement.

2. The Parties acknowledge the importance of reducing non-tariff barriers which place a

disproportionate burden on SMEs. They also acknowledge that, in addition to the provisions in this

Chapter, there are other provisions in this Agreement that seek to enhance cooperation between the

Parties on issues of relevance to SMEs or that otherwise may be of particular benefit to SMEs.

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ARTICLE 14.2

Information sharing

1. Each Party shall establish or maintain its own publicly accessible website containing

information regarding this Agreement, including:

(a) the text of this Agreement, including all Annexes, tariff schedules and product specific rules

of origin;

(b) a summary of this Agreement; and

(c) information designed for SMEs containing:

(i) a description of the provisions in this Agreement that such Party considers to be relevant

to SMEs; and

(ii) any additional information that such Party considers to be useful for SMEs interested in

benefitting from the opportunities provided by this Agreement.

2. Each Party shall include links on the website referred to in paragraph 1 to:

(a) the equivalent website of the other Party;

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(b) the websites of its own government authorities and other appropriate entities that the Party

considers would provide useful information to persons interested in trading, investing or

otherwise doing business in the territory of that Party, including available information related

to the following:

(i) rates of most-favoured-nation and preferential customs duties and quotas, rules of origin

and customs or other fees imposed at the border;

(ii) customs regulations and procedures for importation, exportation and transit as well as

other required forms and documents therefor;

(iii) regulations and procedures concerning intellectual property rights;

(iv) technical regulations including, where necessary, obligatory conformity assessment

procedures;

(v) links to lists of conformity assessment bodies, as provided for in Chapter 5;

(vi) sanitary and phytosanitary measures relating to importation and exportation as provided

for in Chapter 6;

(vii) government procurement, transparency rules and publication of procurement notices as

well as other relevant provisions contained in Chapter 12;

(viii) business registration procedures; and

(ix) other information which the SMEs coordinators agree may be of assistance to SMEs.

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(c) a database that is electronically searchable by tariff nomenclature code and that includes the

information referred to in point (b)(i) as well as the following information:

(i) excise duties;

(ii) taxes (value added tax or sales tax);

(iii) other tariff measures;

(iv) deferral or other types of relief that result in the reduction, refund or waiver of

customs duties;

(v) criteria used to determine the customs value of the good;

(vi) if applicable, country of origin marking requirements, including placement and method

of marking;

(vii) information needed for import procedures; and

(viii) information related to non-tariff measures.

3. Each Signatory MERCOSUR State shall make its best efforts to ensure that no later

than 3 (three) years after the entry into force of this Agreement, the websites and the database

referred to in paragraphs 1 and 2 are put into place, containing as much information as possible with

respect to access to its markets.

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4. Each Party shall regularly, or if requested by the other Party, update the information and links

referred to in paragraphs 1 and 2.

5. Each Party shall ensure that information set out in this Article is presented in a manner that is

easy to use for SMEs. If possible, each Party shall endeavour to make the information available

in English.

6. A Party shall not apply any fee for access to the information provided pursuant to

paragraphs 1 and 2 to any person of a Party.

ARTICLE 14.3

SMEs coordinators

1. Each Party shall communicate through the SMEs coordinators to the other Party its SME

coordinator responsible for carrying out the functions listed in this Article as well as any change in

the contact details of its SMEs coordinator. The SMEs coordinators shall:

(a) develop a work plan to carry out the tasks referred to in this Article;

(b) carry out their work through the communication channels agreed by the SMEs coordinators,

which may include email, meeting in person, meeting or communicating by telephone

conference or by video conference or communicating by other means; and

(c) report periodically on their activities to the Trade Committee for its consideration.

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2. The tasks of the SMEs coordinators shall be to:

(a) ensure that SME needs are taken into account in the implementation of this Agreement;

(b) monitor the implementation of Article 14.2 with a view to ensuring that it remains up to date

and relevant for SMEs;

(c) recommend additional information that may be included in the Parties' websites referred to in

Article 14.2;

(d) cooperate and exchange information so that SMEs of the European Union and of

MERCOSUR take advantage of new opportunities under this Agreement to increase trade and

investment;

(e) address any other matters of relevance to SMEs in connection with the implementation of this

Agreement;

(f) participate in, if appropriate, the work of subcommittees established pursuant to Article 22.3,

when those subcommittees consider matters of relevance to SMEs;

(g) exchange information to assist the Trade Committee in monitoring and implementing this

Agreement as it relates to SMEs; and

(h) consider any other matter arising under this Agreement pertaining to SMEs.

3. SMEs coordinators may cooperate with experts and external organisations, as appropriate, in

carrying out their activities.

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ARTICLE 14.4

Non-application of dispute settlement

No Party shall have recourse to dispute settlement under Chapter 21 for any matter arising under

this Chapter.

CHAPTER 15

COMPETITION

ARTICLE 15.1

Definitions

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

(a) "anti-competitive practices" means any conduct or act defined under the competition law of a

Party which is subject to the imposition of penalties;

(b) "competition authority" means:

(i) for the European Union, the European Commission; and