NAFTA TABLE OF CONTENTS

PREAMBLE

PART ONE: GENERAL PART

Chapter 1: Objectives

Chapter 2: General Definitions

PART TWO: TRADE IN GOODS

Chapter 3: National Treatment and Market Access

Annex 300 - A: Automotive Sector
Annex 300 - B: Textiles and Apparel

Chapter 4: Rules of Origin

Chapter 5: Customs Procedures

Chapter 6: Energy

Chapter 7: Agriculture

Subchapter A: Market Access
Subchapter B: Sanitary and Phytosanitary Measures

Chapter 8: Emergency Action

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PART THREE: TECHNICAL BARRIERS TO TRADE

Chapter 9: Standards-Related Measures

PART FOUR: GOVERNMENT PROCUREMENT

Chapter 10: Government Procurement

PART FIVE: INVESTMENT, SERVICES AND RELATED MATTERS

Chapter 11: Investment

Chapter 12: Cross-Border Trade in Services

Chapter 13: Telecommunications

Chapter 14: Financial Services

Chapter 15: Competition Policy, Monopolies and State Enterprises

Chapter 16: Temporary Entry for Business Persons

PART SIX: INTELLECTUAL PROPERTY

Chapter 17: Intellectual Property

PART SEVEN: ADMINISTRATIVE AND INSTITUTIONAL PROVISIONS

Chapter 18: Publication, Notification and Administration of Laws

Chapter 19: Review and Dispute Settlement in Antidumping and Countervailing Duty Matters

Chapter 20: Institutional Arrangements and Dispute Settlement Procedures

PART EIGHT: OTHER PROVISIONS

Chapter 21: Exceptions

Chapter 22: Final Provisions

ANNEXES I THROUGH VII

Reservations:

Chapter Eleven (Investment) Chapter Twelve (Cross-Border Trade in Services) Chapter Fourteen (Financial Services)

NORTH AMERICAN FREE TRADE AGREEMENT

— Text prepared September 6, 1992 —

Note: This text is currently undergoing legal review in order to ensure the Agreement's overall consistency and clarity. The three countries will initial the Agreement when legal drafting is completed.

PREAMBLE

The Government of Canada, the Government of the United Mexican States and the Government of the United States of America, resolved to:

STRENGTHEN the special bonds of friendship and cooperation among their nations;

CONTRIBUTE to the harmonious development and expansion of world trade and provide a catalyst to broader international cooperation;

CREATE an expanded and secure market for the goods and services produced in their territories;

REDUCE distortions to trade;

ESTABLISH clear and mutually advantageous rules governing
their trade;

ENSURE a predictable commercial framework for business
planning and investment;

BUILD on their respective rights and obligations under the
General Agreement on Tariffs and Trade and other
multilateral and bilateral instruments of cooperation;

ENHANCE the competitiveness of their firms in global
markets;

FOSTER creativity and innovation, and promote trade in goods
and services that are the subject of intellectual property
rights;

CREATE new employment opportunities and improve working conditions and living standards in their respective territories;

UNDERTAKE each of the preceding in a manner consistent with environmental protection and conservation;

PRESERVE their flexibility to safeguard the public welfare;

PROMOTE sustainable development;

STRENGTHEN the development and enforcement of environmental laws and regulations; and

PROTECT, enhance and enforce basic workers' rights;

HAVE AGREED as follows:

NAFTA PART ONE GENERAL PART

Chapter One

Objectives

Article 101: Establishment of the Free Trade Area

The Parties to this Agreement, consistent with Article XXIV of the General Agreement on Tariffs and Trade, hereby establish a free trade area.

Article 102: Objectives

1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation treatment and transparency are to:

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

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

(d) provide adequate and effective protection and
enforcement of intellectual property rights in each
Party's territory;

(e) create effective procedures for the implementation and
application of this Agreement, and for its joint
administration and the resolution of disputes; and

(f) establish a framework for further trilateral, regional
and multilateral cooperation to expand and enhance the
benefits of this Agreement.

2. The Parties shall interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1 and in accordance with applicable rules of international law.

Article 103: Relation to Other Agreements

1. The Parties affirm their existing rights and obligations with respect to each other under the General Agreement on Tariffs and Trade and other agreements to which such Parties are party.

2. In the event of any inconsistency between the provisions of this Agreement and such other agreements, the provisions of this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement.

Article 104: Relation to Environmental and Conservation
Agreements

1. In the event of any inconsistency between this Agreement and the specific trade obligations set out in:

(a) Convention on the International Trade in Endangered
Species of Wild Fauna and Flora, done at Washington,
March 3, 1973;

(b) the Montreal Protocol on Substances that Deplete the
Ozone Layer, done at Montreal, September 16, 1987, as
amended June 29, 1990;

(c) Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, done at Basel, March 22, 1989, upon its entry into force for Canada, Mexico and the United States; or

(d) the agreements set out in Annex 104.1,

such obligations shall prevail to the extent of the inconsistency, provided that where a Party has a choice among equally effective and reasonably available means of complying with such obligations, the Party chooses the alternative that is the least inconsistent with the other provisions of this Agreement.

2. The Parties may agree in writing to modify Annex 104.1 to include any amendment to the agreements listed in paragraph 1, and any other environmental or conservation agreement.

Article 105: Extent of Obligations

The Parties shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance, except as otherwise provided in this Agreement, by state and provincial governments.

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ANNEX 104

Bilateral and Other Environmental and Conservation Agreements

1. The Agreement Between the Government of Canada and the
Government of the United States of America Concerning the
Transboundary Movement of Hazardous Waste, signed at Ottawa,
October 28, 1986.

2. The Agreement between the United States of America and the
United Mexican States on Cooperation for the Protection and
Improvement of the Environment in the Border Area, signed at
La Paz, Baja California Sur, August 14, 1983.
NAFTA Chapter Two

General Definitions

Article 201: Definitions of General Application

1. For purposes of this Agreement, unless otherwise specified:

Commission means the Free Trade Commission established under
Article 2001;

Customs Valuation Code means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade, including its interpretative notes;

days means calendar days, including weekends and holidays;

enterprise means any entity constituted or organized under applicable law, whether or not for profit, and whether privately- owned or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association;

enterprise of a Party means an enterprise constituted or organized under the laws of, or principally carrying on its business in the territory of, a Party;

existing means in effect at the time of entry into force of this Agreement;

Generally Accepted Accounting Principles means the recognized consensus or substantial authoritative support in the territory of a Party with respect to the recording of revenues, expenses, costs, assets and liabilities, disclosure of information and preparation of financial statements. These standards may be broad guidelines of general application as well as detailed standards, practices and procedures;

Harmonized System means the Harmonized Commodity Description and Coding System, and its legal notes, as adopted and implemented by the Parties in their respective tariff laws;

measure includes any law, regulation, procedure, requirement or practice;

national means a natural person who is a citizen or permanent resident of a Party and any other natural person referred to in Annex 201.1;

originating means qualifying under the rules of origin set out in Chapter Four (Rules of Origin);

person means a natural person or an enterprise;

person of a Party means a national, or an enterprise of a Party;

state enterprise means an enterprise that is owned, or controlled through ownership interests, by a Party; and

territory means for a Party the territory of that Party as set out in Annex 201.1.

2. For purposes of this Agreement, unless otherwise specified, a reference to province or state includes local governments.

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ANNEX 201.1

Country-Specific Definitions

For purposes of this Agreement, unless otherwise specified:

national also includes:

(a) for Mexico, a national or a citizen according to
Articles 30 and 34, respectively, of the Mexican
Constitution; and

(b) for the United States, "national of the United States"
as defined in the existing provisions of the United
States Immigration and Nationality Act;

territory means:

(a) with respect to Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international law and its domestic laws, Canada may exercise rights with respect to the seabed and subsoil and their natural resources;

(b) with respect to Mexico,

(i) the states of the Federation and the Federal
District,

(ii) the islands, including the reefs and keys, in
adjacent seas,

(iii) the islands of Guadalupe and Revillagigedo
situated in the Pacific Ocean,

(iv) the continental shelf and the submarine shelf of
such islands, keys and reefs,

(v) the waters of the territorial seas, in accordance with international law and its interior maritime waters,

(vi) the space located above the national territory, in accordance with international law,

(vii) any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the United Nations Convention on the Law of the Sea, and its domestic laws, Mexico may exercise rights with respect to the seabed and subsoil and their natural resources; and

(i) the customs territory of the United States, which includes the 50 states, the District of Columbia and Puerto Rico,

(ii) the foreign trade zones located in the United States and Puerto Rico, and

(iii) any areas beyond the territorial seas of the United States within which, in accordance with international law and its domestic laws, the United States may exercise rights with respect to the seabed and subsoil and their natural resources.

NAFTA PART TWO TRADE IN GOODS Chapter Three

National Treatment and Market Access for Goods

Subchapter A - National Treatment

Article 301: National Treatment

1. Each Party shall accord national treatment to the goods of another Party in accordance with Article III of the General Agreement on Tariffs and Trade (GATT), including its interpretative notes, and to this end Article III of the GATT and its interpretative notes, or any equivalent provision of a successor agreement to which all Parties are party, are incorporated into and made part of this Agreement.

2. The provisions of paragraph 1 regarding national treatment shall mean, with respect to a province or state, treatment no less favorable than the most favorable treatment accorded by such province or state to any like, directly competitive or substitutable goods, as the case may be, of the Party of which it forms a part.

3. Paragraphs 1 and 2 shall not apply to the measures set out in Annex 301.3.

Subchapter B - Tariffs

Article 302: Tariff Elimination

1. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any customs duty, on an originating good.

2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Schedule set out in Annex 302.2 or as otherwise indicated in Annex 300-B.

3. At the request of any Party, the Parties shall consult to consider accelerating the elimination of customs duties set out in their Schedules. An agreement between any two or more Parties to accelerate the elimination of a customs duty on a good shall supersede any prior inconsistent duty rate or staging category in their Schedules for such good when approved by each such Party in accordance with Article 2202(2) (Amendments).

Article 303: Restriction on Drawback and Duty Deferral Programs

1. Except as otherwise provided in this Article, no Party may refund the amount of customs duties paid, or waive or reduce the amount of customs duties owed, on a good imported into its territory that is:

(a) subsequently exported to the territory of another Party,

(b) used as a material in the production of another good that is subsequently exported to the territory of another Party, or

(c) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party,

in an amount that exceeds the lesser of the total amount of customs duties paid or owed on the good on importation into its territory, or the total amount of customs duties paid to another Party on the good that has been subsequently exported to the territory of that other Party.

2. No Party may, by reason of an exportation described in paragraph 1, refund, waive or reduce:

(a) an antidumping or countervailing duty that is applied pursuant to a Party's domestic law and that is not applied inconsistently with Chapter Nineteen (Review and Dispute Settlement in Antidumping and Countervailing Duty Matters);

(b) a premium offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions, tariff rate quotas or tariff preference levels;

(c) a fee applied pursuant to section 22 of the U.S. Agricultural Adjustment Act, subject to Chapter Seven (Agriculture); or

(d) customs duties paid or owed on a good imported into its territory and substituted by an identical or similar good that is subsequently exported to the territory of another Party.

3. Where a good is imported into the territory of a Party pursuant to a duty deferral program and is subsequently exported to the territory of another Party, or is used as a material in the production of another good that is subsequently exported to the territory of another Party, or is substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party, the Party from whose territory the good is exported:

(a) shall assess the customs duties as if the exported good
had been withdrawn for domestic consumption; and

(b) may waive or reduce such customs duties to the extent
permitted under paragraph 1.

4. In determining the amount of customs duties that may be refunded, waived or reduced pursuant to paragraph 1 on a good imported into its territory, each Party shall require presentation of satisfactory evidence of the amount of customs duties paid to another Party on the good that has been subsequently exported to the territory of that other Party.

5. Where satisfactory evidence of the customs duties paid to the Party to which a good is subsequently exported under a duty deferral program described in paragraph 3 is not presented within 60 days after the date of exportation, the Party from whose territory the good was exported:

(a) shall collect customs duties as if the exported good had been withdrawn for domestic consumption; and

(b) may refund such customs duties to the extent permitted under paragraph 1 upon the timely presentation of such evidence under the laws and regulations of the Party.

6. This Article shall not apply to:

(a) a good entered under bond for transportation and exportation to the territory of another Party;

(b) a good exported to the territory of another Party in the same condition as when imported into the territory of the Party from which the good was exported (processes such as testing, cleaning, repacking or inspecting the good, or preserving it in its same condition, shall not be considered to change a good's condition). Where originating and non-originating fungible goods are commingled and exported in the same form, the origin of the good may be determined on the basis of the inventory methods provided for in the Uniform Regulations;

(c) a good imported into the territory of the Party that is deemed to be exported from the territory of a Party, or used as a material in the production of another good that is deemed to be exported to the territory of another Party, or is substituted by an identical or similar good used as a material in the production of another good that is deemed to be exported to the territory of another Party, by reason of

(i) delivery to a duty-free shop,

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

(iii) delivery for use in joint undertakings of two more of the Parties and that will subsequently become the property of the Party into whose territory the good was imported;

(d) a refund of customs duties by a Party on a particular good imported into its territory and subsequently exported to the territory of another Party, where that refund is granted by reason of the failure of such good to conform to sample or specification, or by reason of the shipment of such good without the consent of the consignee;

(e) a dutiable originating good that is imported into the territory of a Party and is subsequently exported to the territory of another Party, or used as a material in the production of another good that is subsequently exported to the territory of another Party, or is substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party; or

(f) a good set out in Annex 303.6.

7. This Article shall apply as of the date set out in each Party's section of Annex 303.7.

8. Notwithstanding any other provision of this Article and except as specifically provided in Annex 303.8, no Party may refund the amount of customs duties paid, or waive or reduce the amount of customs duties owed, on a non-originating good provided for under tariff provision 8540.xx (cathode-ray color television picture tubes, including video monitor tubes, with a diagonal exceeding 14") that is imported into the Party's territory and subsequently exported to the territory of another Party, or is used as a material in the production of another good that is subsequently exported to the territory of another Party, or is substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party.

Article 304: Waiver of Customs Duties

1. Except as set out in Annex 304.1, no Party may adopt any new waiver of customs duties, or expand with respect to existing recipients or extend to any new recipient the application of an existing waiver of customs duties, where the waiver is conditioned, explicitly or implicitly, upon the fulfillment of a performance requirement.

2. Except as set out in Annex 304.2, no Party may, explicitly or implicitly, condition on the fulfillment of a performance requirement the continuation of any existing waiver of customs duties.

3. If a waiver or a combination of waivers of customs duties granted by a Party with respect to goods for commercial use by a designated person, and thus not generally available to all importers, can be shown by another Party to have an adverse impact on the commercial interests of a person of that Party, or of a person owned or controlled by a person of that Party that is located in the territory of the Party granting the waiver, or on the other Party's economy, the Party granting the waiver shall either cease to grant it or make it generally available to any importer.

4. This Article shall not apply to measures covered by Article 303 (Restriction on Drawback and Duty Deferral).

Article 305: Temporary Admission of Goods

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

(a) professional equipment necessary for carrying out the business activity, trade or profession of a business person who qualifies for temporary entry pursuant to Chapter 16 (Temporary Entry for Business Persons),

(b) equipment for the press or for sound or television
broadcasting and cinematographic equipment,

(d) commercial samples and advertising films,

imported from the territory of another Party, regardless of their origin and regardless of whether like, directly competitive or substitutable goods are available in the territory of the Party.

2. Except as otherwise provided in this Agreement, no Party may condition the duty-free temporary admission of a good referred to in subparagraph 1(a), (b), or (c), other than to require that such good:

(a) be imported by a national or resident of another Party who seeks temporary entry;

(b) be used solely by or under the personal supervision of such person in the exercise of the business activity, trade or profession of that person;

(d) be accompanied by a bond in an amount no greater than 110 percent of the charges that would otherwise be owed upon entry or final importation, or by another form of security, releasable upon exportation of the good, except that a bond for customs duties shall not be required for an originating good;

(e) be capable of identification when exported;

(f) be exported upon the departure of that person or within such other period of time as is reasonably related to the purpose of the temporary admission; and

(g) be imported in no greater quantity than is reasonable for its intended use.

3. Except as otherwise provided in this Agreement, no Party may condition the duty-free temporary admission of a good referred to in subparagraph 1(d), other than to require that such good:

(a) be imported solely for the solicitation of orders for goods, or services provided from the territory, of another Party or non-Party;

(b) not be sold, leased, or put to any use other than exhibition or demonstration while in its territory;

(d) be exported within such period as is reasonably related
to the purpose of the temporary admission; and

(e) be imported in no greater quantity than is reasonable
for its intended use.

4. A Party may impose the customs duty and any other charge on a good temporarily admitted duty-free under paragraph 1 that would be owed upon entry or final importation of such good if any condition that the Party imposes under paragraph 2 or 3 has not been fulfilled.

5. Subject to Chapters Eleven (Investment) and Twelve (Cross- Border Trade in Services):

(a) each Party shall allow a locomotive, truck, truck tractor, or tractor trailer unit, railway car, other railroad equipment, trailer ("vehicle") or container, used in international traffic, that enters its territory from the territory of another Party to exit its territory on any route that is reasonably related to the economic and prompt departure of such vehicle or container;

(b) no Party may require any bond or impose any penalty or
charge solely by reason of any difference between the
port of entry and the port of departure of a vehicle or
container;

(c) no Party may condition the release of any obligation,
including any bond, that it imposes in respect of the
entry of a vehicle or container into its territory on
its exit through any particular port of departure; and

(d) no Party may require that the vehicle or carrier
bringing a container from the territory of another
Party into its territory be the same vehicle or carrier
that takes such container to the territory of another
Party.

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

Each Party shall grant duty-free entry to commercial samples of negligible value, and to printed advertising materials, imported from the territory of another Party, regardless of their origin, but may require that:

(a) such samples be imported solely for the solicitation of orders for goods of, or services provided from, the territory of another Party or non-Party; or

(b) such advertising materials be imported in packets that each contain no more than one copy of each such material and that neither such materials nor packets form part of a larger consignment.

Article 307: Goods Re-entered after Repair or Alteration

1. Except as set out in Annex 307.1, no Party may apply a customs duty on a good, regardless of its origin, that re-enters its territory after that good has been exported from its territory to the territory of another Party for repair or alteration, regardless of whether such repair or alteration could be performed in its territory.

2. Notwithstanding Article 303 (Duty Drawback), no Party shall apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of another Party for repair or alteration.

3. Each Party shall act in accordance with Annex 307.3 respecting the repair and rebuilding of vessels.

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

1. Each Party shall act in accordance with Annex 308.1 respecting certain automatic data processing goods and their parts.

2. Each Party shall act in accordance with Annex 308.2 respecting certain color television tubes.

3. Each Party shall accord most-favored-nation duty-free treatment to Local Area Network (LAN) apparatus imported into its territory as set out in each Party's section of Annex 308.3.

Subchapter C - Non-Tariff Measures

Article 309: Import and Export Restrictions

1. Except as otherwise provided in this Agreement, no Party shall adopt or maintain any prohibition or restriction on the importation of any good of another Party or on the exportation or sale for export of any good destined for the territory of another Party, except in accordance with Article XI of the GATT, including its interpretative notes, and to this end Article XI of the GATT and its interpretative notes, or any equivalent provision of a successor agreement to which all Parties are party, are incorporated into and made part of this Agreement.

2. The Parties understand that the GATT rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.

3. In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non- Party of a good, nothing in this Agreement shall be construed to prevent the Party from:

(a) limiting or prohibiting the importation from the territory of another Party of such good of that non- Party; or

(b) requiring as a condition of export of such good of the Party to the territory of another Party, that the good not be re-exported to that non-Party, directly or indirectly, without having been increased in value and improved in condition [subject to review].

4. In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, upon request of any Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing and distribution arrangements in another Party.

5. Paragraphs 1 through 4 shall:

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

(b) apply to automotive goods as modified in Annex 300-A
(Trade and Investment in the Automotive Sector); and

6. For purposes of this Article, goods of another Party shall mean [under review].

Article 310: Non-Discriminatory Administration of Restrictions
(GATT Article XIII)

[need for this Article is under review]

Article 311: Customs User Fees

1. No Party may adopt any customs user fee of the type referred to in Annex 311 for originating goods.

2. Each Party may maintain existing such fees only in accordance with Annex 311.2.

Article 312: Country of Origin Marking

Each Party shall comply with Annex 312 with respect to its measures relating to country of origin marking.

Article 313: Blending Requirements

No Party may adopt or maintain any measure requiring that distilled spirits imported from the territory of another Party for bottling be blended with any distilled spirits of the Party.

Article 314: Distinctive Products

Each Party shall comply with Annex 314 respecting standards and labelling of the distinctive products set out therein.

Article 315: Export Taxes

Except as set out in Annex 315 or Article 604 (Energy - Export Taxes), no Party may adopt or maintain any duty, tax, or other charge on the export of any good to the territory of another Party, unless such duty, tax, or charge is adopted or maintained on:

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

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

Article 316: Other Export Measures

1. Except as set out in Annex 316, a Party may adopt or maintain a restriction otherwise justified under the provisions of Articles XI:2(a) or XX(g), (i) or (j) of the GATT with respect to the export of a good of the Party to the territory of another Party, only if:

(a) the restriction does not reduce the proportion of the total export shipments of the specific good made available to that other Party relative to the total supply of that good of the Party maintaining the restriction as compared to the proportion prevailing in the most recent 36-month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties may agree;

(b) the Party does not adopt any measure, such as a license, fee, tax or minimum price requirement, that has the effect of raising the price for exports of a good to that other Party above the price charged for such good when consumed domestically, except that a measure taken pursuant to subparagraph (a) that only restricts the volume of exports shall not be considered to have such effect; and

(c) the restriction does not require the disruption of normal channels of supply to that other Party or normal proportions among specific goods or categories of goods supplied to that other Party.

2. The Parties shall cooperate in the maintenance and development of effective controls on the export of each other's goods to a non-Party in implementing this Article.

Subchapter D - Consultations

Article 317: Committee on Trade in Goods

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

2. The Committee shall meet at the request of any Party or the Commission to consider any matter arising under this Chapter.

Article 318: Third-Country Dumping

1. The Parties affirm the importance of cooperation with respect to actions under Article 12 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade.

2. Where a Party presents an application to another Party requesting anti-dumping action on its behalf, those Parties shall consult within 30 days respecting the factual basis of the request, and the requested Party shall give full consideration to the request.

Subchapter E - Definitions

Article 319: Definitions

For purposes of this Chapter:

advertising films means recorded visual media, with or without sound-tracks, consisting essentially of images showing the nature or operation of goods or services offered for sale or lease by a person established or resident in the territory of any Party, provided that the films are of a kind suitable for exhibition to prospective customers but not for broadcast to the general public, and provided that they are imported in packets that each contain no more than one copy of each film and that do not form part of a larger consignment;

commercial samples of negligible value means commercial samples having a value (individually or in the aggregate as shipped) of not more than one U.S. dollar, or the equivalent amount in the currency of another Party, or so marked, torn, perforated or otherwise treated that they are unsuitable for sale or for use except as commercial samples;

customs duty includes any customs or import duty and a charge of any kind imposed in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but does not include any:

(a) charge equivalent to an internal tax imposed consistently with Article III:2 of the GATT, or any equivalent provision of a successor agreement to which all Parties are party, in respect of like, directly competitive or substitutable goods of the Party, or in respect of goods from which the imported good has been manufactured or produced in whole or in part;

(b) antidumping or countervailing duty that is applied pursuant to a Party's domestic law and not applied inconsistently with Chapter Nineteen (Review and Dispute Settlement in Antidumping and Countervailing Duty Matters);

(d) premium offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions or tariff rate quotas or tariff preference levels; and

(e) fee applied pursuant to section 22 of the U.S. Agricultural Adjustment Act, subject to Chapter Seven (Agriculture);

distilled spirits include distilled spirits and distilled spirit- containing beverages;

duty deferral program includes measures such as those governing foreign-trade zones, temporary importations under bond, bonded warehouses, "maquiladoras", and inward processing programs;

duty-free means free of customs duty;

goods imported for sports purposes means sports requisites for use in sports contests, demonstrations or training in the territory of the Party into whose territory such goods are imported;

goods intended for display or demonstration includes their component parts, ancillary apparatus and accessories;

item means a tariff classification item at the eight- or ten- digit level set out in a Party's tariff schedule;

material means "material" as defined in Chapter Four (Rules of Origin);

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

performance requirement means a requirement that:

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

(b) domestic goods or services of the Party granting a waiver of customs duties be substituted for imported goods or services;

(c) a person benefitting from a waiver of customs duties
purchase other goods or services in the territory of
the Party granting the waiver or accord a preference to
domestically produced goods or services; or

(d) a person benefitting from a waiver of customs duties
produce goods or provide services, in the territory of
the Party granting the waiver, with a given level or
percentage of domestic content; or

(e) relates in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows;

printed advertising materials means those goods classified in Chapter 49 of the Harmonized System, including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials and posters, that are used to promote, publicize or advertise a good or service, are essentially intended to advertise a good or service, and are supplied free of charge;

repair or alteration does not include an operation or process that either destroys the essential characteristics of a good or creates a new or commercially different good;

satisfactory evidence means:

(a) a receipt, or a copy of a receipt, evidencing payment
of customs duties on a particular entry;

(b) a copy of the entry document with evidence that it was
received by a customs administration;

(d) any other evidence of payment of customs duties
acceptable under the Uniform Regulations developed in
accordance with Chapter Five (Customs Procedures);

total export shipments means all shipments from total supply to users located in the territory of another Party;

total supply means all shipments, whether intended for domestic or foreign users, from:

(a) domestic production;

(b) domestic inventory; and

waiver of customs duties means a measure that waives otherwise applicable customs duties on any good imported from any country, including the territory of another Party. ============================================================================= ANNEX 301.3

Exceptions to Articles 301 and 309

[subject to review]

Section A - Canadian Measures

1. Articles 301 and 309 shall not apply to:

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

(b) controls by Canada on the export of unprocessed fish
pursuant to the following existing statutes:

(i) New Brunswick Fish Processing Act, R.S.N.B. c. F- 18.01 (1982), as amended, and Fisheries Development Act, S.N.B. c. F-15.1 (1977), as amended;

(ii) Newfoundland Fish Inspection Act, R.S.N. 1970, c.
132, as amended;

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

(iv) Prince Edward Island Fish Inspection Act,
R.S.P.E.I. 1988, c. F-13, as amended; and

(v) Quebec Marine Products Processing Act, No. 38,
S.Q. 1987, c. 51, as amended;

(c) measures by Canada respecting the importation of
certain items on the Prohibited Goods List in Schedule
VII of the Customs Tariff, R.S.C. 1985, c. 41 (3rd
supp.), as amended, as of July 1, 1991;

(d) except as provided in Chapter Seven (Agriculture),
measures by Canada respecting the importation of grains
taken with respect to the United States, (Canadian
Wheat Board Act, R.S.C. 1985, c. C-24, as amended);

(e) measures by Canada respecting the exportation of liquor for delivery into any country into which the importation of liquor is prohibited by law under the existing provisions of Export Act, R.S.C. 1985, c. E- 18, as amended;

(f) measures by Canada respecting the importation and distribution of imported liquor by designated government agencies under the existing provisions of Importation of Intoxicating Liquors Act, R.S.C. 1985, c. I-3, as amended, to the extent that it creates an import monopoly consistent with Articles II:4 and XVII of the GATT and Article 31 of the Havana Charter;

(g) except as provided in Chapter Seven (Agriculture), measures by Canada respecting preferential freight rates for grain originating in certain Canadian provinces under the existing provisions of Western Grain Transportation Act, R.S.C. 1985, c. W-8, as amended;

(h) measures by Canada respecting preferential rates for goods originating in certain Canadian provinces under the existing provisions of Maritime Freight Rate Act, R.S.C. 1985, c. M-1, as amended;

(i) Canadian excise taxes on absolute alcohol used in manufacturing under the existing provisions of Excise Tax Act, R.S.C. 1985, c. E-15, as amended;

(j) except as provided for in Chapter Seven (Agriculture), import restrictions imposed under Section 5(1)(b) and (d) of the Export and Import Permits Act, R.S.C. 1985, c. E-19, as amended, as of January 1, 1994, that are in accordance with the provisions of Article XI:2(c)(i) of the GATT; and

(k) quantitative import restrictions on goods that originate in the territory of the United States, considering operations performed in, or materials obtained from, Mexico as if they were performed in, or obtained from, a non-Party, and that are indicated by asterisks in Chapter 89 in Annex 401.2 (Tariff Schedule of Canada) of the Canada - United States Free Trade Agreement for as long as the measures taken under the Merchant Marine Act of 1920, (46 U.S.C. App. 883) and the Merchant Marine Act of 1936, (46 U.S.C. App. 1171, 1176, 1241 and 1241o) apply with quantitative effect to comparable Canadian origin goods sold or offered for sale into the United States market.

2. Notwithstanding any provision of this Agreement, any measure related to the internal sale and distribution of wine and distilled spirits, other than those covered by Article 313 (Blending Requirements) or Article 314 (Distinctive Products) shall, as between Canada and the United States, be governed under this Agreement exclusively in accordance with the relevant provisions of the Canada - United States Free Trade Agreement which for this purpose are hereby incorporated into this Agreement.

3. In respect of any measure related to the internal sale and distribution of wine and distilled spirits, the provisions of Articles 301 and 309 shall not apply as between Canada and Mexico to:

(a) a non-conforming provision of any existing measure;

(b) the continuation or prompt renewal of a non-conforming provision of any existing measure;

(c) an amendment to a non-conforming provision of any existing measure to the extent the amendment does not decrease its conformity with the provisions of Article 301 or 309; or

(d) measures set out in paragraphs 4 and 5.

4. Further to paragraph 3(d):

(a) automatic listing measures in the province of British Columbia may be maintained provided they apply only to existing estate wineries producing less than 30,000 gallons of wine annually and meeting the existing content rule;

(b) Canada may

(i) adopt or maintain a measure limiting on-premise sales by a winery or distillery to those wines or distilled spirits produced on its premises, and

(ii) maintain a measure requiring existing private wine
store outlets in the provinces of Ontario and
British Columbia to discriminate in favor of wine
of those provinces to a degree no greater than the
discrimination required by such existing measure;
and

(c) nothing in this Agreement shall prohibit the Province
of Quebec from requiring that any wine sold in grocery
stores in Quebec be bottled in Quebec, provided that
alternative outlets are provided in Quebec for the sale
of wine of the other Parties, whether or not such wine
is bottled in Quebec.

5. As between Canada and Mexico:

(a) any measure related to listing of wine and distilled spirits of the other Party shall

(i) conform with Article 301,

(ii) be transparent, non-discriminatory and provide for prompt decision on any listing application, prompt written notification of such decision to the applicant, and in the case of a negative decision, provide for a statement of the reason for refusal,

(iii) establish administrative appeal procedures for listing decisions that provide for prompt, fair and objective rulings,

(iv) be based on normal commercial considerations,

(v) not create disguised barriers to trade, and

(vi) be published and made generally available to persons of Mexico;

(b) where the distributor is a public entity, the entity may charge the actual cost-of-service differential between wine and distilled spirits of the other Party and domestic wine and distilled spirits. Any such differential shall not exceed the actual amount by which the audited cost-of-service for the wine or distilled spirits of the exporting party exceeds the audited cost-of-service for the wine and distilled spirits of the importing party;

(c) notwithstanding Articles 301 and 309, Article I (Definitions), Article IV.3 (Wine), and Annexes A, B and C of the Agreement between Canada and the European Economic Community Concerning Trade and Commerce in Alcoholic Beverages dated February 28, 1989 shall apply with such modifications as may be necessary as between Canada and Mexico;

(d) all discriminatory mark-ups on distilled spirits shall be eliminated immediately upon the date of entry into force of this Agreement. Cost-of-service differential mark-ups as described in subparagraph (b) shall be permitted;

(e) any other discriminatory pricing measure shall be eliminated upon the date of entry into force of this Agreement;

(f) any measure related to distribution of wine or
distilled spirits of the other Party shall conform with
Article 301; and

(g) unless otherwise specifically provided in this Annex,
the Parties retain their rights and obligations under
the GATT and agreements negotiated under the GATT.

(The intention of paragraphs 3, 4, and 5 is to
grant Mexico the same concessions granted to the
U.S. under the Canada - United States Free Trade
Agreement respecting wine and distilled spirits.)

=============================================================================

Section B - Mexican Measures

1. Articles 301 and 309 shall not apply to:

(a) controls by Mexico on the export of logs of all species;

(b) measures under the existing provisions of Articles 192 through 194 of the General Ways of Communication Act ("Ley de Vias Generales de Comunicaci¢n") reserving exclusively to Mexican vessels all services and operations not authorized for foreign vessels and empowering the Mexican Ministry of Communications and Transportation to deny foreign vessels the right to perform authorized services if their country of origin does not grant reciprocal rights to Mexican vessels;

(c) measures taken in accordance with Annex 300-A (Trade in Automotive Goods) and measures taken in accordance with existing provisions of Articles 1, 4 and 5 of the Mexican Foreign Trade Act ("Ley Reglamentaria del Art¡culo 131 de la Constituci¢n Pol¡tica de los Estados Unidos Mexicanos en Materia de Comercio Exterior") with respect to automotive goods referred to in Annex 300-A (Trade in Automotive Goods);

(d) measures taken in accordance with Sections 3 (Import and Export Restrictions), 5 (Bilateral Emergency Actions-Quantitative Restrictions), 6 (Rules of Origin), and 8 (Trade in Worn Clothing) of Annex 300-B (Textile and Apparel Goods) and measures taken in accordance with existing provisions of Articles 1, 4 and 5 of the Mexican Foreign Trade Act ("Ley Reglamentaria del Art¡culo 131 de la Constituci¢n Pol¡tica de los Estados Unidos Mexicanos en Materia de Comercio Exterior") with respect to textile and apparel goods referred to in Annex 300-B;

(e) measures taken in accordance with Articles 703 (Market Access) and Annex (permits for Dairy, Poultry and Eggs) of Chapter Seven (Agriculture) and measures taken in accordance with existing provisions of Articles 1, 4 and 5 of the Mexican Foreign Trade Act ("Ley Reglamentaria del Art¡culo 131 de la Constituci¢n Pol¡tica de los Estados Unidos Mexicanos en Materia de Comercio Exterior") with respect to agricultural goods referred to in Chapter Seven;

(f) measures covered by Chapter Six (Energy) and measures taken in accordance with existing provisions of Articles 1, 4 and 5 of the Mexican Foreign Trade Act ("Ley Reglamentaria del Art¡culo 131 de la Constituci¢n Pol¡tica de los Estados Unidos Mexicanos en Materia de Comercio Exterior") with respect to energy and basic petrochemical goods referred to in Chapter 6;

(g) export permit measures taken in accordance with existing provisions of Articles 1, 4 and 5 of the Mexican Foreign Trade Act ("Ley Reglamentaria del Art¡culo 131 de la Constituci¢n Pol¡tica de los Estados Unidos Mexicanos en Materia de Comercio Exterior") with respect to goods subject to quantitative restrictions, tariff rate quotas or tariff preference levels adopted or maintained by another Party; and

(h) with respect to existing provisions, the continuation or prompt renewal of a non-conforming provision of any of the above provisions or an amendment to a non- conforming provision of any of the above provisions to the extent that the amendment does not decrease its conformity with the provisions of Articles 301 and 309.

2. Notwithstanding Article 309, and without prejudice to other rights and obligations under this Agreement concerning import and export restrictions, for the first 10 years after the date of entry into force of this Agreement, Mexico may require permits for the importation of used goods provided for in the following existing items in the Tariff Schedule of the General Import Duty Act ("Tarifa de la Ley del Impuesto General de Importaci¢n"). For purposes of reference, the goods covered by those items are broadly identified next to the corresponding item.

Item Description

8407.3499 Gasoline engines of more than 1,000 cm3, except
for motorcycles.

8413.11.01 Pumps fitted with a measuring device even if
it includes a totalizing mechanism.

8413.40.01 Concrete pumps for liquids, not fitted with a measuring device from 36 up to 60 m3/hr capacity.

8426.12.01 Mobile lifting frames on tires and straddle carriers.

8426.19.01 Other (overhead travelling cranes, transporter cranes, gantry cranes, bridge cranes, mobile lifting frames and straddle carriers.

8426.30.01 Portal or pedestal jib cranes.

8426.41.01 Derricks, cranes and other lifting machinery
on tires, self-propelled with mechanical
working and carrying capacity less than 55
tons.

8426.41.02 Derricks, cranes and other lifting machinery
on tires, self-propelled with hydraulic
working and carrying capacity more than 9.9
up to 30 tons.

8426.41.99 Other (Machinery, self propelled, on tires.)

8426.49.01 Derricks, cranes and other lifting machinery
(other than on tires), self-propelled with
mechanical working and carrying capacity less
than 55 tons.

8426.49.02 Derricks, cranes sand other lifting machinery
(other than on tires), self-propelled with
hydraulic working and carrying capacity more
than 9.9 up to 30 tons.

8426.91.01 Derricks, cranes and other lifting machinery except items 8426.91.02, 03 and 04.

8426.91.02 Derricks, cranes and other lifting machinery
for mounting on road vehicles, with
hydraulical working and carrying capacity up
to 9.9 tons.

8426.91.03 Derricks, cranes and other lifting machinery
(basket type) for mounting on road vehicles,
with carrying capacity up to 1 ton and 15
meters lift.

8426.91.99 Other (machinery designed for mounting on
road vehicles).

8426.99.01 Derricks, cranes and other lifting machinery
except items 8426.91.02

8426.99.02 Swivel cranes.

8426.99.99 Other (derricks; cranes, including cable cranes; mobile lifting frames, straddle carriers and works trucks fitted with a crane).

8427.10.01 Self-propelled work trucks powered by an electric motor, carrying capacity 3.5 tons.

8427.20.01 Other self-propelled trucks with combustion piston engines, carrying capacity up to 7 tons.

8428.40.99 Other (escalators and moving walkways).

8428.90.99 Other (continuous-action elevators and
conveyors, for goods or materials).

8429.11.01 Self-propelled bulldozers and angledozers,
for track laying.

8429.19.01 Other (bulldozers and angledozers).

8429.20.01 Self-propelled graders and levelers.

8429.30.01 Self-propelled scrapers.

8429.40.01 Self-propelled tamping machines and road
rollers.

8429.51.02 Self-propelled front-end shovel loaders,
wheel-type, less than 335 HP.

8429.51.03 Self-propelled front-end shovel loaders,
wheel-type, other than item 8429.51.01.

8429.51.99 Other (mechanical shovels, excavators and
shovel loaders).

8429.52.02 Self-propelled backhoes, shovels, clamshells
and draglines, other than 8429.52.01.

8429.52.99 Other (machinery with a 360 revolving
superstructure).

8429.59.01 Excavators.

8429.59.02 Track laying draglines, carrying capacity up
to 4 tons.

8429.59.03 Track laying draglines, other than item
8429.59.04.

8429.59.99 Other (self-propelled bulldozers, angledozers, graders, levellers, scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers).

8430.31.01 Self-propelled tunneling machinery.

8430.31.99 Other (self-propelled coal or rock cutters and tunnelling machinery).

8430.39.01 Sinking or boring shields.

8430.39.99 Other (coal or rock cutters and tunnelling
machinery).

8430.41.01 Self-propelled boring or sinking machinery,
other than item 8430.41.02.

8430.41.99 Other (self-propelled boring or sinking
machinery).

8430.49.99 Other (boring or sinking machinery).

8430.50.01 Self-propelled peat excavators, with frontal carriers and hydraulic mechanism less than 335 hp capacity.

8430.50.02 Scrapers.

8430.50.99 Other (machinery self-propelled).

8430.61.01 Tamping machinery, not self-propelled.

8430.61.02 Compacting machinery, not self-propelled.

8430.61.99 Other (machinery, not self-propelled).

8430.62.01 Scarificationer machine.

8430.69.01 Threshers or scrapers machine.

8430.69.02 Trencher machine, other than 8430.69.03.

8430.69.99 Other (moving, grading, levelling, scraping, excavating, tamping, compacting, extracting or boring machinery).

8452.10.01 Sewing machines of the household type.

8452.21.04 Industrial machines, other than 845221.02, 03 and 05.

8452.21.99 Other (automatic sewing machines).

8452.29.05 Pending

8452.29.06 Industrial machines, other than 84522901, 03 and 05.

8452.29.99 Other (sewing machines).

8452.90.99 Other (parts of sewing machines).

8471.10.01 Analog or hybrid automatic data processing machines.

8471.20.01 Digital automatic data processing machines, containing in the same housing at least a central processing unit and an input and output unit, whether or not combined.

8471.91.01 Numerical or digital units entered with the rest of a system, which may contain in the housing one or two of the following types of units: storage units, input units, output unit.

8471.92.99 Other (input or output units whether or not entered with the rest of a system and whether or not containing storage units in the same housing).

8471.93.01 Storage units, including the rest of the
system.

8471.99.01 Other (automatic data processing machines and
units thereof).

8474.20.02 Crushing jawbone and grinding millstone.

8474.20.05 Drawer cone crushing, with diameter no more than 1200 millimeters.

8474.20.06 Grinding hammer percussion.

8701.30.01 Track-laying tractors with a net engine power more than 105 h.p. but less than 380 h.p. including pushing blade.

8701.90.02 Rail road tractors, on tires with mechanical
mechanism for pavement.

8474.20.01 Crushing and grinding with two or more
cylinders.

8474.20.03 Blades crushing machines.

8474.20.04 Blades XXX

8474.20.99 Other (crushing or grinding machines).

8474.39.99 Other (mixing machines).

8474.80.99 Other (kneading machines).

8475.10.01 Machines for assembling electric or electronic lamps, tubes.

8477.10.01 Injection-molding machines for working rubber or plastics, up to 5 kg capacity for one molding model.

8711.10.01 Motorcycles, mopeds and cycles fitted with an
auxiliary motor with reciprocating internal
combustion piston engine not exceeding 50
cm.3.

8711.20.01 Motorcycles, mopeds and cycles fitted with an
auxiliary motor with reciprocating internal
combustion piston engine over 50 cm.3 but not
over 250 cm.3.

8711.30.01 Motorcycles, mopeds and cycles fitted with an
auxiliary motor with reciprocating internal
combustion piston engine over 250 cm.3 but
not over 500 cm.3.

8711.40.01 Motorcycles, mopeds and cycles fitted with an
auxiliary motor with reciprocating internal
combustion piston engine over 500 cm.3 but
less than 550 cm.3.

8711.90.99 Other (motorcycles, mopeds and cycles fitted with an auxiliary motor without an internal combustion piston engine, and sidecars which are not to be used with motocycles and velocipedes of any kind).

8712.00.02 Bicycles, other than of the type for racing.

8712.00.99 Other (Cycles, not motorized, except bicycles, and tricycles for the transport of merchandise).

8716.10.01 Trailers and semi-trailers for housing and camping, not mechanically propelled.

8716.31.02 Tanker trailers and tanker semi-trailers for the transport of goods, not mechanically propelled, of the steel-tank type.

8716.31.99 Other (Tanker trailers and tanker semi-trailers for the transport of goods, not mechanically propelled, except of the steel-tank type, and of the thermal type for the transportation of milk).

8716.39.01 Trailers and semi-trailers for the transport of goods, not mechanically propelled, of the platform type (more detailed description pending).

8716.39.02 Trailers and semi-trailers for the transport of vehicles, not mechanically propelled.

8716.39.04 Trailers and semi-trailers for the transport of goods, not mechanically propelled, of the modular-platform type (more detailed description pending).

8716.39.05 Semi-trailers for the transport of goods, not mechanically propelled, of the low-bed type (more detailed description pending).

8716.39.06 Trailers and semi-trailers for the transport of goods, not mechanically propelled, of the closed-box type, including those for refrigeration.

8716.39.07 Trailers and semi-trailers for the transport of goods, not mechanically propelled, of the steel-tank type.

8716.39.99 Other. (Trailers and semi-trailers for the transport of goods, not mechanically propelled, except those referred to in items 87163901, 02, 04, 05, 06 and 07, those with two levels which are recognizable as intended for use exclusively in the transportation of cattle, and carriages with solid rubber wheels).

8716.40.01 Other trailers and semi-trailers, not mechanically propelled. (Other than for the transport of goods).

8716.80.99 Other. (Vehicles not mechanically propelled, except trailers and semi-trailers, hand-wagons, and hand-wagons of hydraulic operation.

3. Notwithstanding Article 309, and without prejudice to other rights and obligations under this Agreement concerning import and export restrictions:

(a) for the first five years after the date of entry into force of this Agreement, Mexico may require permits for the importation of new automotive goods provided for in the following existing items in the Tariff Schedule of the General Import Duty Act ("Tarifa de la Ley del Impuesto General de Importaci¢n"). For purposes of reference, the goods covered by those items are broadly identified next to the corresponding item;

Item Description

8701.20.01 Road Tractors for semi-trailers

8702.10.01 Public-transport type passenger vehicles, with
diesel or semi-diesel engine, with body mounted on
a chassis.

8702.10.02 Public-transport type passenger vehicles, with
diesel or semi-diesel engine, with an integral
body.

8702.90.03 Public-transport type passenger vehicles, with gasoline engine, with an integral body.

8703.10.99 Other special vehicles.

8704.22.99 Motor vehicles for the transport of goods with
diesel engine and capacity of cargo of more than 5
tons but less than 20 tons.

8704.23.99 Motor vehicles for the transport of goods with
diesel engine and capacity of cargo of more than
20 tons.

8704.32.99 Motor vehicles for the transport of goods with
gasoline engine and with capacity of cargo of more
than 5 tons.

8705.20.01 Mobile drilling derricks.

8705.40.01 Concrete mixers.

8706.00.01 Chassis fitted with gasoline engine.

8706.00.99 Other chassis fitted with gasoline engine.

(b) for the first 10 years after the date of entry into force of this Agreement, Mexico may require permits for the importation of new automotive goods provided for in the following existing items in the Tariff Schedule of the General Import Duty Act ("Tarifa de la Ley del Impuesto General de Importaci¢n"). For purposes of reference, the goods covered by those items are broadly identified next to the corresponding item;

Item Description

8407.34.99 Gasoline engines of more than 1,000 cm3, except
for motorcycles.

8702.90.02 Public-transport type passenger vehicles, with
gasoline engine, with body mounted on a chassis.

8703.21.01 Passenger motor vehicles with gasoline engine of
less than or equal to 1,000 cm3.

8703.22.01 Passenger motor vehicles with gasoline engine of
more than 1,000 cm3 but less than 1,500 cm3.

8703.23.01 Passenger motor vehicles with gasoline engine of more than 1,500 cm3 but less than or equal to 3,000 cm3.

8703.24.01 Passenger motor vehicles with gasoline engine of
more than 3,000 cm3.

8703.31.01 Passenger motor vehicles with diesel engine of
less than or equal to 1,500 cm3.

8703.32.01 Passenger motor vehicles with diesel engine of more than 1,500 cm3 but less than or equal to 2,500 cm3.

8703.33.01 Passenger motor vehicles with diesel engine of more than 2,500 cm3.

8703.90.99 Other passenger vehicles.

8704.21.99 Motor vehicles for the transport of goods with
diesel engine and with capacity of cargo of less
than or equal to 5 tons.

8704.31.99 Motor vehicles for the transport of goods with
gasoline engine and with capacity of cargo of less
than or equal to 5 tons.

(c) for the first 25 years after the date of entry into force of this Agreement, Mexico may require permits for the importation of used automotive goods provided for in the following existing items in the Tariff Schedule of the General Import Duty Act ("Tarifa de la Ley del Impuesto General de Importaci¢n"). As of the 26th year after the date of entry into force of this Agreement, Mexico may require permits for the importation of non-originating automotive goods provided for under such items. For purposes of reference, the goods covered by those items are broadly identified next to the corresponding item.

Item Description

8701.20.01 Road Tractors for semi-trailers

8702.10.01 Public-transport type passenger vehicles, with
diesel or semi-diesel engine, with body mounted on
a chassis.

8702.10.02 Public-transport type passenger vehicles, with
diesel or semi-diesel engine, with an integral
body.

8702.90.01 Trolleys.

8702.90.02 Public-transport type passenger vehicles, with
gasoline engine, with body mounted on a chassis.

8702.90.03 Public-transport type passenger vehicles, with
gasoline engine, with an integral body.

8703.10.01 Special vehicles with electric engine
(snowmobiles, golf cart).

8703.10.99 Other special vehicles.

8703.21.01 Passenger motor vehicles with gasoline engine of
less than or equal to 1,000 cm3.

8703.22.01 Passenger motor vehicles with gasoline engine of
more than 1,000 cm3 but less than 1,500 cm3.

8703.23.01 Passenger motor vehicles with gasoline engine of more than 1,500 cm3 but less than or equal to 3,000 cm3.

8703.24.01 Passenger motor vehicles with gasoline engine of
more than 3,000 cm3.

8703.31.01 Passenger motor vehicles with diesel engine of
less than or equal to 1,500 cm3.

8703.32.01 Passenger motor vehicles with diesel engine of more than 1,500 cm3 but less than or equal to 2,500 cm3.

8703.33.01 Passenger motor vehicles with diesel engine of more than 2,500 cm3.

8703.90.01 Electrical motor cars.

8703.90.99 Other passenger vehicles.

8704.21.99 Motor vehicles for the transport of goods with
diesel engine and with capacity of cargo of less
than or equal to 5 tons.

8704.22.99 Motor vehicles for the transport of goods with
diesel engine and capacity of cargo of more than 5
tons but less than 20 tons.

8704.23.99 Motor vehicles for the transport of goods with
diesel engine and capacity of cargo of more than
20 tons.

8704.31.99 Motor vehicles for the transport of goods with
gasoline engine and with capacity of cargo of less
than or equal to 5 tons.

8704.32.99 Motor vehicles for the transport of goods with
gasoline engine and with capacity of cargo of more
than 5 tons.

8705.10.01 Mobile crane vehicles.

8705.20.01 Mobile drilling derricks.

8705.20.99 Other drilling derricks.

8705.40.01 Concrete mixers.

8705.90.01 Spraying vehicles.

8705.90.99 Other special purpose vehicles.

8706.00.01 Chassis fitted with gasoline engine.

8706.00.99 Other chassis fitted with gasoline engine.

=============================================================================

Section C - United States Measures

Articles 301 and 309 shall not apply to:

(a) controls by the United States on the export of logs of all species;

(b) taxes on imported perfume containing distilled spirits under existing provisions of Section 5001(a)(3) and 5007(b)(2) of the Internal Revenue Code of 1986 (26 U.S.C. 5001(a)(3), 5007(b)(2));

(c) measures under existing provisions of section 27 of the
Merchant Marine Act (46 U.S.C. App. 883), the Passenger
Vessel Act of 1920 (46 U.S.C. App. 289), the Merchant
Ship Sales Act of 1946 (46 U.S.C. App. 292, 316, and 46
U.S.C. 12108); and

(d) import restrictions with respect to Canada imposed
under existing provisions of section 22 of the
Agricultural Adjustment Act of 1933 (7 U.S.C. 624).
=============================================================================
ANNEX 302.2

Tariff Elimination

1. Except as otherwise provided in a Party's Schedule attached to this Annex, the following staging categories apply to the elimination of customs duties by each Party pursuant to Article 302(2):

(a) duties on goods provided for in the items in staging category A in a Party's Schedule shall be eliminated entirely and such goods shall be duty-free, effective January 1, 1994;

(b) duties on goods provided for in the items in staging
category B in a Party's Schedule shall be removed in 5
equal annual stages commencing on January 1, 1994, and
such goods shall be duty-free, effective January 1,
1998;

(c) duties on goods provided for in the items in staging
category C in a Party's Schedule shall be removed in 10
equal annual stages commencing on January 1, 1994, and
such goods shall be duty-free, effective January 1,
2003;

(d) duties on goods provided for in the items in staging
category C+ in a Party's Schedule shall be removed in
15 equal annual stages commencing on January 1, 1994,
and such goods shall be duty-free, effective January 1,
2008; and

(e) goods provided for in the items in staging category D
in a Party's Schedule shall continue to receive duty-
free treatment.

(other staging categories will be displayed in the tariff schedules of each Party and may be incorporated here.)

2. The base rate of duty and staging category for determining the interim rate of duty at each stage of reduction for an item are indicated for the item in each Party's Schedule attached to this Annex. These rates generally reflect the rate of duty in effect on July 1, 1991, including rates under the U.S. Generalized System of Preferences and the General Preferential Tariff of Canada.

3. For the purpose of the elimination of customs duties in accordance with Article 302, interim staged rates shall be rounded down, except as set out in each Party's Schedule attached to this Annex, at least to the nearest tenth of a percentage point or, if the rate of duty is expressed in monetary units, at least to the nearest .001 of the official monetary unit of the Party.

4. Canada shall apply the rate applicable under the staging category set out for an item in Annex 401.2, as amended, of the Canada - United States Free Trade Agreement which Annex is hereby incorporated into and made part of this Agreement, to an originating good provided that:

(a) notwithstanding any provision in Chapter Four of this Agreement, in determining whether such good is an originating good, operations performed in or materials obtained from Mexico are considered as if they were performed in or obtained from a non-Party; and

(b) any processing that occurs in Mexico after the good would qualify as an originating good in accordance with subparagraph (a) does not increase the transaction value of the good by greater than seven percent.

5. Canada shall apply the rate applicable under the staging category set out for an item contained in column I of section A of this Annex to an originating good provided that:

(a) notwithstanding any provision to the contrary in Chapter Four, in determining whether such good is an originating good, operations performed in or materials obtained from the United States are considered as if they were performed in or obtained from a non-Party; and

(b) any processing that occurs in the United States after the good would qualify as an originating good in accordance with subparagraph (a) does not increase the transaction value of the good by greater than seven percent.

6. Canada shall apply to an originating good to which neither paragraph 4 nor paragraph 5 applies, the applicable rate indicated for an item contained in column II, reduced in accordance with the staging category of column I of section A of this Annex except as otherwise indicated, or where there is a letter "X" (to be replaced with descriptive language) in column II, the applicable rate of duty for the item shall be the higher of:

(a) the General Preferential Tariff rate of duty for that item applied on July 1, 1991, reduced in accordance with the applicable staging category set out for that item in column I of its Schedule; or

(b) the applicable rate under the staging category for that
item set out in Annex 401.2, as amended, of the Canada -
United States Free Trade Agreement.

7. Paragraphs 4, 5 and 6 shall not apply to goods provided for under Chapters 50 through 63 of the Harmonized System and to other goods identified in Appendix 1.1 of Annex 300-B (Textiles and Apparel Goods).

8. Mexico shall apply the rate applicable under the staging category set out for an item in column II of section B of this Annex to an originating good when the good qualifies to be marked as a good of Canada, pursuant to Annex 312, without regard to whether the good is marked.

9. Mexico shall apply the rate applicable under the staging category set out for an item in column I of section B of this Annex to an originating good when the good qualifies to be marked as a good of the United States, pursuant to Annex 312, without regard to whether the good is marked.

10. The United States shall apply the rate applicable under the staging category set out for an item in Annex 401.2, as amended, of the Canada - United States Free Trade Agreement to an originating good when the good qualifies to be marked as a good of Canada pursuant to Annex 312, without regard to whether the good is marked.

11. The United States shall apply the rate applicable under the staging category set out for an item in section C of this Annex to an originating good when the good qualifies to be marked as a good of Mexico pursuant to Annex 312, whether or not the good is marked. ============================================================================= SECTION A - SCHEDULE OF CANADA

(TARIFF SCHEDULE TO BE ATTACHED)

SECTION B - SCHEDULE OF MEXICO

(TARIFF SCHEDULE TO BE ATTACHED)

SECTION C - SCHEDULE OF THE UNITED STATES

(TARIFF SCHEDULE TO BE ATTACHED)

=============================================================================

ANNEX 303.6

Goods Not Subject to Article 303

1. For exports from the territory of the United States to the territory of Canada or Mexico, a good, provided for in U.S. tariff item 1701.11.02, that is imported into the territory of the United States and used as a material in the production of, or substituted by an identical or similar good used as a material in the production of, a good provided for in Canadian tariff item 1701.99.00 or Mexican tariff items 1701.99.01 and 1701.99.99 (refined sugar).

2. For trade between Canada and the United States:

(a) imported citrus products;

(b) an imported good used as a material in the production of, or substituted by an identical or similar good used as a material in the production of, a good provided for in U.S. tariff items 5811.00.20 (quilted cotton piece goods), 5811.00.30 (quilted man-made piece goods) or 6307.90.99 (furniture moving pads) that are subject to the most-favored-nation rate of duty when exported to the territory of the other Party; (Canadian tariff items to be added) and

(c) an imported good used as a material in the production of, or substituted by an identical or similar good used as a material in the production of, apparel that is subject to the most-favored-nation rate of duty when exported to the territory of the other Party.

============================================================================= ANNEX 303.7

Effective Dates for the Application of Article 303

Section A - Canada

For Canada, Article 303 shall apply to a good imported into the territory of Canada that is:

(a) subsequently exported to the territory of the United States on or after January 1, 1996, or subsequently exported to the territory of Mexico on or after January 1, 2001;

(b) used as a material in the production of another good that is subsequently exported to the territory of the United States on or after January 1, 1996, or used as a material in the production of another good that is subsequently exported to the territory of Mexico on or after January 1, 2001;

(c) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of the United States on or after January 1, 1996, or substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of Mexico on or after January 1, 2001; or

(d) substituted by an identical or similar good that is subsequently exported to the territory of the United States on or after January 1, 1996, or substituted by an identical or similar good that is subsequently exported to the territory of Mexico on or after January 1, 2001.

Section B - Mexico

For Mexico, Article 303 shall apply to a good imported into the territory of Mexico that is:

(a) subsequently exported to the territory of another Party on or after January 1, 2001;

(b) used as a material in the production of another good that is subsequently exported to the territory of another Party on or after January 1, 2001;

(c) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of another Party on or after January 1, 2001; or

(d) substituted by an identical or similar good that is subsequently exported to the territory of another Party on or after January 1, 2001.

Section C - United States

For the United States, Article 303 shall apply to a good imported into the territory of the United States that is:

(a) subsequently exported to the territory of Canada on or after January 1, 1996, or subsequently exported to the territory of Mexico on or after January 1, 2001;

(b) used as a material in the production of another good that is subsequently exported to the territory of Canada on or after January 1, 1996, or used as a material in the production of another good that is subsequently exported to the territory of Mexico on or after January 1, 2001;

(c) substituted by an identical or similar good used as a material in the production of another good subsequently exported to the territory of Canada on or after January 1, 1996, or substituted by an identical or similar good used as a material in the production of another good subsequently exported to the territory of Mexico on or after January 1, 2001; or

(d) substituted by an identical or similar good that is subsequently exported to the territory of Canada on or after January 1, 1996, or substituted by an identical or similar good that is subsequently exported to the territory of Mexico on or after January 1, 2001.

=============================================================================
ANNEX 303.8

Exception to Article 303(8)
For Certain Cathode-Ray Picture Tubes

Mexico

Mexico may refund customs duties paid, or waive or reduce the amount of customs duties owed, on goods provided for in subheading 8540.xx for a person who, during the period July 1, 1991 through June 30, 1992, imported into its territory no fewer than 20,000 units of such goods that would not have been considered to be originating goods had this Agreement been in force during that period, where the goods are:

(a) subsequently exported from the territory of Mexico to the territory of the United States, or are used as materials in the production of other goods that are subsequently exported from the territory of Mexico to the territory of the United States, or are substituted by identical or similar goods used as materials in the production of other goods that are subsequently exported to the territory of the United States, in an amount, for all such persons combined, no greater than

(i) 1,200,000 units in 1994,

(ii) 1,000,000 units in 1995,

(iii) 800,000 units in 1996,

(iv) 600,000 units in 1997,

(v) 400,000 units in 1998,

(vi) 200,000 units in 1999, and

(vii) zero units in 2000 and thereafter,

provided that the number of goods on which such customs duties may be refunded, waived or reduced in any year shall be reduced, with respect to that year, by the number of such goods qualifying as originating goods during the year immediately preceding that year, considering operations performed in, or materials obtained from, the territories of Canada and the United States as if they were performed in, or obtained from, a non-Party; or

(b) subsequently exported from the territory of Mexico to the territory of Canada, or used as materials in the production of other goods that are subsequently exported from the territory of Mexico to the territory of Canada, or are substituted by identical or similar goods used as materials in the production of other goods that are subsequently exported to the territory of Canada, in an amount no greater than

(i) 75,000 units in 1994,

(ii) 50,000 units in 1995, and

(iii) zero units in 1996 and thereafter.

============================================================================= ANNEX 304.1

Exceptions for Existing Waiver Measures

Article 304(1) shall not apply in respect of existing
Mexican waivers of customs duties, except that:

(a) Mexico shall not increase the ratio of customs duties
waived to customs duties owed relative to the
performance required under any such waiver; or

(b) Mexico shall not add any type of good to those
qualifying on July 1, 1991, in respect of any waiver of
customs duties in effect on that date.

=============================================================================
ANNEX 304.2

Continuation of Existing Waiver Measures

For purposes of Article 304(2):

(a) Canada may condition on the fulfillment of a
performance requirement the waiver of customs duties
under any measure in effect on or before September 28,
1988, on any goods entered or withdrawn from warehouse
for consumption before January 1, 1998;

(b) Mexico may condition on the fulfillment of a
performance requirement the waiver of customs duties
under any measure in effect on July 1, 1991, on any
goods entered or withdrawn from warehouse for
consumption before January 1, 2001;

(c) as between the United States and Canada, Article 405 of the Canada - United States Free Trade Agreement is incorporated and made part of this Annex solely with respect to measures adopted by Canada or the United States prior to the date of entry into force of this Agreement; and

(d) Canada may grant duty waivers as set out in Annex 300-
A.
=============================================================================
ANNEX 307.1

Goods Re-Entered after Repair or Alteration

Section A - Canada

Canada may impose customs duties on goods, regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of another Party for repair or alteration as follows:

(a) for goods set out in section D that re-enter its territory from the territory of Mexico, Canada shall apply to the value of the repair or alteration of such goods the rate of duty for such goods applicable under its Schedule attached to Annex 302.2;

(b) for goods other than those set out in section D that re-enter its territory from the territory of the United States or Mexico, other than goods repaired or altered pursuant to a warranty, Canada shall apply to the value of the repair or alteration of such goods the rate of duty for such goods applicable under the Tariff Schedule of Canada attached to Annex 401.2 of the Canada - United States Free Trade Agreement.

(c) for goods set out in section D that re-enter its territory from the territory of the United States, Canada shall apply to the value of the repair or alteration of such goods the rate of duty for such goods applicable under its Schedule attached to Annex 401.2 of the Canada - United States Free Trade Agreement.

Section B - Mexico

Mexico may impose customs duties on goods set out in section D, regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of another Party for repair or alteration, by applying to the value of the repair or alteration of those goods the rate of duty for such goods that would apply if such goods were included in staging category B in the Schedule of Mexico attached to Annex 302.2.

Section C - United States

1. The United States may impose customs duties on:

(a) goods set out in section D, or

(b) goods that are not set out in section D and that are not repaired or altered pursuant to a warranty,

regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of Canada for repair or alteration, by applying to the value of the repair or alteration of such goods the rate of duty applicable under the Canada-U.S. Free Trade Agreement.

2. The United States may impose customs duties on goods set out in section D, regardless of their origin, that re-enter its territory after such goods have been exported from its territory to the territory of Mexico for repair or alteration, by applying to the value of the repair or alteration of such goods a rate of duty of 50 percent reduced in five equal annual stages commencing on January 1, 1994, and the value of such repair or alteration shall be duty-free on January 1, 1998.

Section D - List of Goods [description under review]

Any vessel, including the following goods, documented by a Party under its law to engage in foreign or coastwise trade, or a vessel intended to be employed in such trade:

1. Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods, including:

(a) tankers;

(b) refrigerated vessels, other than tankers; and

(c) other vessels for the transport of goods and other vessels for the transport of both persons and goods, including open vessels.

2. Fishing vessels, including factory ships and other vessels for processing or preserving fishery products of a registered length not exceeding 30.5m.

3. Light-vessels, fire-floats, dredgers, floating cranes, and other vessels the navigability of which is subsidiary to their main function, floating docks, floating or submersible drilling or production platforms, including drilling ships, drilling barges and floating drilling rigs.

============================================================================= ANNEX 307.3

Repair and Rebuilding of Vessels

United States

For the purpose of increasing transparency regarding the types of repairs that may be performed in shipyards outside the territory of the United States that do not result in any loss of privileges for such vessel to:

(a) remain eligible to engage in coastwise trade or to access U.S. fisheries,

(b) transport U.S. government cargo, or

the United States shall, no later than the date of entry into force of this Agreement:

(d) provide written clarification to the other Parties of
current U.S. Customs and Coast Guard practices that
constitute, and differentiate between, the repair and
the rebuilding of vessels, including, where possible,
clarifications on "jumboizing", vessel conversions, and
emergency repairs, and

(e) commence a process to define the terms "repairs",
"emergency repairs", and "rebuilding" under U.S.
maritime legislation, including the Merchant Marine Act
of 1920 (codified at 46 U.S.C. App. 883) and the
Merchant Marine Act of 1936 (codified at 46 U.S.C. App.
1171, 1176, 1241 and 1241(o)).

=============================================================================
ANNEX 308.1

Most-Favored-Nation Rates of Duty on
Certain Automatic Data Processing Goods and Their Parts

Section A - General Provisions

1. Each Party shall reduce its most-favored-nation rate of duty applicable to the goods provided for under the tariff provisions set out in Tables 308.1.1 and 308.1.2 in section B of this Annex to the rate set out therein, or to such reduced rate as the Parties may agree, in accordance with the Schedule set out in section B of this Annex, or with such accelerated schedule as the Parties may agree.

2. Notwithstanding Chapter 3, when the most-favored-nation rate of duty applicable to a good provided for under the tariff provisions set out in Table 308.1.1 in section B of this Annex has been reduced in accordance with paragraph 1, each Party shall consider the good, when imported into its territory from the territory of another Party, to be an originating good.

3. A Party may reduce in advance of the schedule set out in Table 308.1.1 or Table 308.1.2 in section B of this Annex, or of such accelerated schedule as the Parties may agree, its most- favored-nation rate of duty applicable to any good provided for under the tariff provisions set out therein, to the rate set out therein or to such reduced rate as the Parties may agree.

=============================================================================

Section B - Rates of Duty and Schedule for Reduction

Table 308.1.1

Tariff Rate Schedule

Automatic Data Processing
Machines (ADP):

8471.10 3.9% S

8471.20 3.9% S

Digital Processing Units:

8471.91 3.9% S

Input or Output Units:

Combined Input/Output Units:

Canada:

8471.92.90.11 3.7% S 8471.92.90.12 3.7% S 8471.92.90.19 3.7% S

Mexico:

8471.92.h1 3.7% S

United States:

8471.92.10 3.7% S

Display Units:

Canada:

8471.92.90.32 3.7% S
8471.92.90.39.a1 3.7% S
8471.92.90.39.a2 Free S

Mexico:

8471.92.h2 3.7% S 8471.92.h3 Free S

United States:

8471.92.30 Free S
8471.92.40.75 3.7% S
=============================================================================

Other Input or Output Units:

Canada:

8471.92.10.20 Free S 8471.92.10.90 Free S 8471.92.90.20 Free S 8471.92.90.40 Free S 8471.92.90.50 3.7% S 8471.92.90.91 Free S 8471.92.90.99 Free S

Mexico:

8471.92.h4 3.7% S 8471.92.h5 Free S

United States:

8471.92.20 Free S 8471.92.80 Free S 8471.92.90.20 Free S 8471.92.90.40 3.7% S 8471.92.90.60 Free S 8471.92.90.80 Free S

=============================================================================

Storage Units

8471.93 Free S

Other Units of Automatic Data Processing
Machines

8471.99 Free S

Parts of Computers

8473.30 Free R

Computer Power Supplies

8504.40.a3 Free S

8504.90.a4 Free S

Table 308.1.2

Metal Oxide Varistors:

8533.40.a4 Free R

Diodes, Transistors and Similar
Semiconductor Devices; Photosensitive
Semiconductor Devices; Light Emitting
Diodes; Mounted Piezo-electric Crystals

8541.10 Free R 8541.21 Free R 8541.29 Free R 8541.30 Free R 8541.50 Free R 8541.60 Free R 8541.90 Free R

Canada:

8541.20 Free R

Mexico:

8541.20 Free R

United States:

8541.40.20 Free S 8541.40.60 Free R 8541.40.70 Free R 8541.40.80 Free R 8541.40.95 Free R

Electronic Integrated Circuits and Microassemblies

8542 Free R

=============================================================================
ANNEX 308.2

Most-Favored-Nation Rates of Duty
on Certain Color Television Picture Tubes

1. Any Party considering the reduction of its most-favored- nation rate of customs duty for goods provided for in tariff provision 8540.11.a2 (cathode-ray color television picture tubes, including video monitor cathode-ray tubes, with a diagonal exceeding 14 inches) during the first 10 years after the date of entry into force of this Agreement shall consult with the other Parties in advance of such reduction.

2. If any other Party objects in writing to such reduction, and the Party proceeds with the reduction, any objecting Party may raise its applicable rate of duty on originating goods provided for in the corresponding tariff provision set out in its Schedule attached to Annex 302.2, up to the applicable rate of duty as if such good had been placed in staging category C for purpose of tariff elimination.

=============================================================================
ANNEX 308.3

Most-Favored-Nation Duty-Free
Treatment of Local Area Network Apparatus

Section A - Canada

Canada shall accord most-favored-nation duty-free treatment to goods provided for in item(s) [to be provided] of its tariff schedule.

Section B - Mexico

Mexico shall accord most-favored-nation duty-free treatment to goods provided for in item(s) [to be provided] of its tariff schedule.

Section C - United States

The United States shall accord most-favored-nation duty-free treatment to goods provided for in item(s) [to be provided] of its tariff schedule.

For purposes of this Annex:

local area network apparatus means a good dedicated for use solely or principally to permit the interconnection of automatic data processing machines and units thereof for a network that is used primarily for the sharing of resources such as central processor units, data storage devices and input or output units, including in-line repeaters, converters, concentrators, bridges and routers, and printed circuit assemblies for physical incorporation into automatic data processing machines and units thereof suitable for use solely or principally with a private network, and providing for the transmission, receipt, error- checking, control, signal conversion or correction functions for non-voice data to move through a local area network. ============================================================================= ANNEX 311.2

Existing Customs User Fees

Section A - Mexico

Mexico shall not increase its customs processing fee ("derechos de tr mite aduanero") on originating goods, and shall by June 30, 1999, eliminate such fee on originating goods.

Mexico B - United States

1. The United States shall not increase its merchandise processing fee and shall eliminate such fee according to the schedule set out in Article 403 of the Canada - United States Free Trade Agreement on originating goods where those goods qualify to be marked as goods of Canada pursuant to Annex 312, without regard to whether the goods are marked.

2. The United States shall not increase its merchandise processing fee and shall by June 30, 1999, eliminate such fee, on originating goods where those goods qualify to be marked as goods of Mexico pursuant to Annex 312, without regard to whether the goods are marked. ============================================================================= ANNEX 312

Country of Origin Marking

1. The Parties shall establish by January 1, 1994, rules for determining whether a good is a good of a Party ("Marking Rules") for the purposes of this Annex, Annex 300-B and Annex 302.2, and for such other purposes as may be agreed.

2. Each Party may require that a good of another Party, as determined in accordance with the Marking Rules, imported into its territory bear a country of origin marking that indicates to the ultimate purchaser of that good the name of its country of origin.

3. Each Party shall permit the country of origin marking of a good of another Party to be indicated in English, French or Spanish, except that a Party may, as part of its general consumer information measures, require that an imported good be marked with its country of origin in the same manner as prescribed for goods of that Party.

4. Each Party shall, in adopting, maintaining and administering any measure relating to country of origin marking, minimize the difficulties, costs and inconveniences that such measure may cause to the commerce and industry of the other Parties.

5. Each Party shall:

(a) accept any reasonable method of marking, including the use of stickers, labels, tags or paint, that ensures that the marking is conspicuous, legible and sufficiently permanent;

(b) exempt from a country of origin marking requirement a good of another Party which

(i) is incapable of being marked,

(ii) cannot be marked prior to exportation to the
territory of another Party without causing injury
to the goods,

(iii) cannot be marked except at an expense which
would materially discourage its exportation
to the territory of another Party,

(iv) cannot be marked without materially impairing its
function or substantially detracting from its
appearance,

(v) is in a container that is marked in a manner that
will reasonably indicate the good's origin to the
ultimate purchaser,

(vi) is a crude substance,

(vii) is imported for use by the importer and is not intended for sale in the form in which it was imported,

(viii) is to be processed in the importing Party by
the importer, or on its behalf, in a manner
that results in a change of origin for
marking purposes, under the Marking Rules,

(ix) by reason of its character, or the circumstances
of its importation, the ultimate purchaser would
reasonably know its country of origin even though
it is not marked,

(x) was produced more than 20 years prior to its importation,

(xi) was imported without the required marking and cannot be marked after its importation except at an expense that would materially discourage its importation, provided that the failure to mark the good before importation was not for the purpose of avoiding compliance with such requirement,

(xii) for the purposes of temporary duty-free admission, is in transit or in bond or otherwise under customs administration control,

(xiii) is an original work of art, or

(xiv) is provided for in headings 8541 or 8542, and 6904.10.

6. Except for a good described in subparagraphs 5(b)(vi),(vii), (viii), (ix), (x), (xii), (xiii) and (xiv), a Party may provide that, wherever a good is exempted under subparagraph 5(b), its outermost container that ordinarily reaches the ultimate purchaser shall be marked so as to indicate the country of origin of the good it contains.

7. Each Party shall provide that:

(a) a usual container imported empty, whether or not disposable, shall not be required to be marked with its own country of origin, but the container in which it is imported may be required to be marked with the country of origin of its contents; and

(b) a usual container imported filled, whether or not
disposable,

(i) shall not be required to be marked with its own
country of origin, but

(ii) may be required to be marked with the country of origin of its contents, unless the contents are marked with their country of origin and the container can be readily opened for inspection of the contents, or the marking of the contents is clearly visible through the container.

8. Each Party shall, whenever administratively practicable, permit an importer to mark a good subsequent to importation but prior to release of the good from customs control or custody, unless there have been repeated violations of the country of origin marking requirements of that Party by the same importer and that importer has been previously notified in writing that such good is required to be marked prior to importation.

9. Each Party shall provide that, except with respect to importers that have been notified under paragraph 8, no special duty or penalty shall be imposed for failure to comply with country of origin marking requirements, unless a good is removed from customs custody or control without being properly marked, or a deceptive marking has been used.

10. The Parties shall cooperate and consult on matters related to this Annex, including additional exemptions from a country of origin marking requirement, in accordance with Chapter Five (Customs Procedures).

11. For purposes of this Annex:

conspicuous means capable of being easily seen with normal handling of the good or container;

legible means capable of being easily read;

materially discourage means add a cost to the good that is substantial in relation to its customs value;

sufficiently permanent means capable of remaining in place until the good reaches the ultimate purchaser, unless deliberately removed;

the form in which it was imported means the condition of the good before it has undergone one of the changes in tariff classification described in the Marking Rules;

ultimate purchaser means the last person in the territory of the Party into which the good is imported that purchases the good in the form in which it was imported; such purchaser need not be the last person that will use the good; and

usual container means the container in which a good will ordinarily reach its ultimate purchaser.

=============================================================================
ANNEX 314

Distinctive Products

1. Mexico and Canada shall recognize Bourbon Whiskey and Tennessee Whiskey, which is a straight Bourbon Whiskey authorized to be produced only in the State of Tennessee, as distinctive products of the United States. Accordingly, Mexico and Canada shall not permit the sale of any product as Bourbon Whiskey or Tennessee Whiskey, unless it has been manufactured in the United States in accordance with the laws and regulations of the United States governing the manufacture of Bourbon Whiskey and Tennessee Whiskey.

2. The United States and Mexico shall recognize Canadian Whiskey as a distinctive product of Canada. Accordingly, the United States and Mexico shall not permit the sale of any product as Canadian Whiskey, unless it has been manufactured in Canada in accordance with the laws and regulations of Canada governing the manufacture of Canadian Whiskey for consumption in Canada.

3. The United States and Canada shall recognize Tequila and Mezcal as distinctive products of Mexico. Accordingly, the United States and Canada shall not permit the sale of any product as Tequila or Mezcal, unless it has been manufactured in Mexico in accordance with the laws and regulations of Mexico governing the manufacture of Tequila and Mezcal. This provision shall apply to Mezcal, either on the date of entry into force of this Agreement, or 90 days after the date when the official standard for this product is made obligatory by the Government of Mexico, whichever is later. ============================================================================= ANNEX 315

Export Taxes

Mexico

1. Mexico may adopt or maintain a duty, tax, or other charge on the export of those basic foodstuffs set out in paragraph 4, on their ingredients, or on the goods from which such foodstuffs are derived, if such duty, tax, or other charge is adopted or maintained on the export of such goods to the territory of all other Parties, and is used:

(a) to limit to domestic consumers the benefits of a domestic food assistance program with respect to such foodstuff; or

(b) to ensure the availability of sufficient quantities of such foodstuff to domestic consumers or of sufficient quantities of its ingredients, or of the goods from which such foodstuffs are derived, to a domestic processing industry, when the domestic price of such foodstuff is held below the world price as part of a governmental stabilization plan, provided that such duty, tax, or other charge

(i) does not operate to increase the protection afforded to such domestic industry, and

(ii) is maintained only for such period of time as is necessary to maintain the integrity of the stabilization plan.

2. Notwithstanding paragraph 1, Mexico may adopt or maintain a duty, tax, or other charge on the export of any foodstuff to the territory of another Party if such duty, tax, or other charge is temporarily applied to relieve critical shortages of that foodstuff. For purposes of this paragraph, "temporarily" means up to one year, or such longer period as the Parties may agree.

3. Mexico may maintain its existing tax on the export of goods provided for under tariff item 4001.30.02 of the Tariff Schedule of the General Export Duty Act ("Tarifa de la Ley del Impuesto General de Exportaci¢n") for up to 10 years after the date of entry into force of this Agreement.

============================================================================= 4. For purposes of paragraph 1, "basic foodstuffs" means:

Beans
Beef steak or pulp
Beef liver
Beef remnants and bones ("retazo con
hueso")
Beer
Bread
Brown sugar
Canned sardines
Canned tuna
Canned peppers
Chicken broth
Condensed milk
Cooked ham
Corn tortillas
Corn flour
Corn dough
Crackers
Eggs
Evaporated milk
French rolls ("pan blanco")
Gelatine
Ground beef
Instant coffee
Low-priced cookies ("galletas dulces
populares)
Margarine
Oat flakes
Pasteurized milk
Powdered chocolate
Powdered milk for children
Powdered milk
Rice
Roasted coffee
Salt
Soft drinks
Soup paste
Tomato puree
Vegetable oil
Vegetable fat
Wheat flour
White sugar

=============================================================================
ANNEX 316

Other Export Measures

Article 316 shall not apply as between Mexico and the other
Parties.

NAFTA Chapter Four Rules of Origin

Article 401: Originating Goods

Except as otherwise provided in this Chapter, a good shall originate in the territory of a Party provided that:

(a) the good is wholly obtained or produced in the territory of one or more of the Parties as defined in Article 415;

(b) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification described in Annex 401.1 as a result of production occurring entirely in the territory of one or more of the Parties, and the good satisfies all other applicable requirements of this Chapter;

(c) the good is produced entirely in the territory of one or more of the Parties exclusively from originating materials; or

(d) with the exception of a good provided for in Chapters 61 through 63 of the Harmonized System, the good is produced entirely in the territory of one or more of the Parties but one or more of the non-originating parts used in the production of the good does not undergo a change in tariff classification because

(i) the good was imported into the territory of a
Party in an unassembled or a disassembled form but
was classified as an assembled good pursuant to
General Rule of Interpretation 2(a) of the
Harmonized System, or

(ii) the tariff heading for the good provides for both
the good itself and its parts and is not further
subdivided into subheadings, or the tariff
subheading for the good provides for both the good
itself and its parts,

provided that the good is the good specifically described by the nomenclature of the heading or subheading and that the regional value content of the good, determined in accordance with Article 402, is not less than 60 percent where the transaction value method is used, or 50 percent where the net cost method is used, and that the good satisfies all other applicable requirements of this Chapter.

Article 402: Regional Value Content

1. Except as provided in paragraph 5, each Party shall provide that the regional value content of a good shall be calculated, at the choice of the exporter or producer of the good, on the basis of either the transaction value method described in paragraph 2 or the net cost method described in paragraph 3.

2. The regional value content of a good, where calculated on the basis of the transaction value method, shall be determined as follows:

TV - VNM
RVC = ————- x 100
TV

where:

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

TV is the transaction value of the good;
and

VNM is the value of non-originating materials used by the producer in the production of the good.

3. The regional value content of a good, where calculated on the basis of the net cost method, shall be determined as follows:

NC - VNM
RVC = ————- x 100
NC

where:

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

NC is the net cost of the good; and

VNM is the value of non-originating materials used by the producer in the production of the good.

4. For purposes of paragraphs 2 and 3, and except as provided in Articles 403(1) and 403(2)(a)(i), the value of non-originating materials used by the producer in the production of the good shall not include the value of non-originating materials used to produce originating materials that are subsequently used in the production of the good.

5. The regional value content of a good shall be calculated solely on the basis of the net cost method described in paragraph 3, where:

(a) there is no transaction value for the good;

(b) the transaction value of the good is unacceptable under Article 1 of the Customs Valuation Code;

(c) the good is sold by the producer to a related person and the volume, by units of quantity, of sales of identical or similar goods to related persons, during the six-month period immediately preceding the month in which the good is sold, exceeds 85 percent of the producer's total sales with respect to such goods;

(d) the good is

(i) identified in Article 403(1) or 403(2),

(ii) provided for in headings 64.01 through 64.05, or

(iii) provided for in tariff item 8469.10.a1 (word processing machines);

(e) the exporter or producer chooses to accumulate the
regional value content of the good in accordance with
Article 404; or

(f) the good has been designated as an intermediate
material under paragraph 10 and is subject to a
regional value-content requirement.

6. If an exporter or producer calculates the regional value content of a good using the transaction value method described in paragraph 2 and a Party subsequently notifies the exporter or producer during the course of a verification pursuant to Chapter Five (Customs Procedures) that the transaction value of the good, or the value of any material used in the production of the good, or both, is required to be adjusted or is unacceptable under Article 1 of the Customs Valuation Code, the exporter or producer of the good may then calculate the regional value content of the good using the net cost method described in paragraph 3.

7. Nothing in paragraph 6 shall be construed to preclude a review and appeal, pursuant to Chapter Five (Customs Procedures), of an adjustment or rejection of a transaction value for a good or the value of any material used in the production of the good, or both.

8. For purposes of calculating the net cost of a good pursuant to paragraph 3, the producer of the good may use any one of the following methods:

(a) calculate the total cost incurred with respect to all goods produced by that producer minus any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non- allowable interest costs that are included in the total cost of all goods and then reasonably allocate the resulting net cost of those goods to the good;

(b) reasonably allocate the total cost incurred with respect to all goods produced by that producer to the good minus any sales promotion, marketing and after- sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in the portion of the total cost allocated to the good; or

(c) reasonably allocate the individual costs that are part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non- allowable interest costs,

provided that the allocation of all such costs are consistent with the provisions regarding the reasonable allocation of costs set out in the Uniform Regulations.

9. With the exception of an intermediate material described in paragraph 10 and except as provided in Article 403(1) and (2)(a)(i), the value of a material used in the production of a good shall be:

(a) the price actually paid or payable by the producer for the material, provided that the price is acceptable under Article 1 of the Customs Valuation Code; or

(b) if the price actually paid or payable is unacceptable under Article 1 of the Customs Valuation Code, the value shall be determined in accordance with the other Articles of the Customs Valuation Code; and

(i) freight, insurance, packing and all other costs
incurred in transporting such materials to the
location of the producer,

(ii) duties, taxes and customs brokerage fees on such
materials paid in the territory of one or more of
the Parties,

(iii) the cost of waste and spoilage resulting from
the use or consumption, or both, of such
materials, less the value of renewable scrap
or by-product, and

(iv) the value of goods and services relating to such
materials determined in accordance with
subparagraph 1(b) of Article 8 of the Customs
Valuation Code.

10. Except as provided in Article 403, the producer of a good may designate any self-produced material used in the production of the good as an intermediate material, provided that, when the intermediate material is subject to a regional value-content requirement, no other intermediate material subject to a regional value-content requirement is used in the production of that intermediate material.

11. For purposes of determining the value of an intermediate material, the producer of the intermediate material may use either of the following methods:

(a) calculate the total cost incurred with respect to all goods produced by that producer and then reasonably allocate the resulting cost to the intermediate material; or

(b) reasonably allocate to the intermediate material the individual costs that are part of the total cost incurred with respect to that intermediate material.

Article 403: Automotive Goods

1. Where applying the net cost method under Article 402(3) for purposes of calculating the regional value content of any one of the following goods:

(a) a motor vehicle provided for in subheadings 8702.xx (vehicles for the transport of 15 or fewer persons), 8703.21 through 8703.90, 8704.21 or 8704.31; or

(b) a good provided for in the tariff provisions listed in Annex 403.1 where the good is subject to a regional value-content requirement and is for use as original equipment in the production of a good provided for in subheadings 8703.21 through 8703.90, 8704.21 or 8704.31,

the value of non-originating materials used by the producer in the production of the good shall be the sum of the customs values of non-originating materials imported from outside the territories of the Parties under the tariff provisions listed in Annex 403.1.

2. (a) Where applying the net cost method under Article 402(3) with respect to a good identified in subparagraph (b), the producer of the good shall include in the value of non-originating materials used by the producer in the production of the good the sum of

(i) for each material used by the producer that is listed in Annex 403.2, at the choice of the producer, either

(A) the value of such material that is non- originating, or

(B) the value of non-originating materials used in the production of such material, and

(ii) the value of any non-originating material used by the producer that is not in listed in Annex 403.2.

(b) Subparagraph (a) shall apply to the following goods

(i) a motor vehicle provided for in heading 8701 or subheading 8702.yy (vehicles for the transport of 16 or more persons),

(ii) a motor vehicle provided for in subheadings
8704.10, 8704.22, 8704.23, 8704.32 or 8704.90,

(iii) a motor vehicle provided for in headings 8705
or 8706, and

(iv) any of the components identified in Annex 403.2
for use in such motor vehicles.

3. A producer may designate a self-produced material used in the production of any material listed in Annex 403.2 as an intermediate material, provided that, when the intermediate material is subject to a regional value-content requirement, no other intermediate material subject to a regional value-content requirement is used in the production of that intermediate material.

4. In calculating the regional value content of a motor vehicle described in paragraphs 1 and 2, the producer may average its calculation over its fiscal year, using any one of the following categories, on the basis of either all motor vehicles in the category or only those motor vehicles in the category that are exported to the territory of one or more of the other Parties:

(a) the same model line of motor vehicles in the same class of vehicles produced in the same plant in the territory of a Party;

(b) the same class of motor vehicles produced in the same
plant in the territory of a Party;

(d) the basis described in Annex 403.4.

5. In calculating the regional value content for any or all goods provided for in a tariff provision listed in Annex 403.1 produced in the same plant, the producer of the good may:

(a) average its calculation

(i) over the fiscal year of the motor vehicle producer to whom the good is sold, or over any quarter or month, or

(ii) over its fiscal year, if the good is sold as an after-market part;

(b) calculate the average referred to in subparagraph (a)
separately for any or all goods sold to one or more
motor vehicle producers; and

(c) with respect to any calculation under this paragraph,
calculate separately those goods that are exported to
the territory of one or more of the Parties.

6. Notwithstanding Annex 401.1,

(a) the regional value-content requirement shall be, for a producer's fiscal year beginning nearest to January 1, 1998 and thereafter, 56 percent under the net cost method, and for a producers's fiscal year beginning nearest to January 1, 2002 and thereafter, 62.5 percent under the net cost method, for the following

(i) a motor vehicle provided for in subheading 8702.xx
(vehicles for the transport of 15 or fewer
persons), 8703.21 through 8703.90, 8704.21 or
8704.31, and

(ii) a good provided for in heading 8407 or 8408 or
subheading 8708.40 which is for use as original
equipment in the production of a motor vehicle
identified in subparagraph (a)(i); and

(b) the regional value-content requirement shall be, for a producer's fiscal year beginning nearest to January 1, 1998 and thereafter, 55 percent under the net cost method, and for a motor vehicle producers's fiscal year beginning nearest to January 1, 2002 and thereafter, 60 percent under the net cost method, for the following

(i) a motor vehicle provided for in heading 8701,
subheadings 8702.yy (vehicles for the transport of
16 or more persons), 8704.10, 8704.22, 8704.23,
8704.32 and 8704.90, and heading 8705 or 8706,

(ii) a good provided for in heading 8407 or 8408 or
subheading 8708.40 which is for use as original
equipment in the production of a motor vehicle
identified in subparagraph (b)(i), and

(iii) except for a good identified in subparagraph (a)(ii) or provided for in subheadings 8482.10 through 8482.80 or subheadings 8483.10 through 8483.40, a good identified in Annex 403.1 which is for use as original equipment in the production of a motor vehicle identified in subparagraphs (a)(i) or (b)(i).

7. Notwithstanding paragraph 6,

(a) the regional value content of a motor vehicle referred
to in Article 403(1) or 403(2) shall not be less than
50 percent for a period of five years from the date on
which the first motor vehicle prototype is produced in
a plant by a motor vehicle assembler, provided that

(i) it is a motor vehicle of a class, or marque, or, for a motor vehicle identified in Article 403(1)(a), size and underbody, not previously produced by the motor vehicle assembler in the territory of any of the Parties,

(ii) the plant consists of a new building in which the motor vehicle is assembled, and

(iii) the plant contains substantially all new machinery that is used in the assembly of the motor vehicle;

(b) the regional value content of a motor vehicle referred to in Article 403(1) or 403(2) shall not be less than 50 percent for a period of two years from the date on which the first motor vehicle prototype is produced at a plant following a refit, provided that it is a different motor vehicle of a class, or marque, or, for a motor vehicle identified in Article 403(1)(a), size and underbody, than was assembled by the motor vehicle assembler in the plant before the refit; and

(c) for the purposes of subparagraphs (a) and (b) sizes means in the case of a motor vehicle identified in Article 403(1)(a)

(i) minicompacts — less than 85 cubic feet of
passenger and luggage volume,

(ii) subcompacts — between 85 and 100 cubic feet of
passenger and luggage volume,

(iii) compacts — between 100 and 110 cubic feet of
passenger and luggage volume,

(iv) midsize — between 110 and 120 cubic feet of
passenger and luggage volume, and

(v) large — between 120 or more cubic feet of
passenger and luggage volume.

Article 404: Accumulation

For purposes of determining whether a good is an originating good, the production of the good in the territory of one or more of the Parties by one or more producers shall, at the choice of the exporter or producer of the good, be considered to have been performed in the territory of a Party by that exporter or producer, provided that:

(a) the applicable tariff classification change has occurred, or the regional value-content requirement has been satisfied, or both, entirely in the territory of one or more of the Parties;

(b) the good satisfies all other applicable requirements of this Chapter; and

(c) the production of the producer that chooses to accumulate its production with that of other producers is deemed to be the production of a single producer for purposes of Article 402(10).

Article 405: De Minimis

1. Notwithstanding Article 401(b), a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo the applicable change in tariff classification is not more than seven percent of the transaction value of the good or, if the transaction value of the good is unacceptable under Article 1 of the Customs Valuation Code, seven percent of the total cost of the good, provided that:

(a) if the good is subject to a regional value-content requirement, the value of such non-originating materials shall be taken into account in calculating the regional value content of the good; and

(b) the good satisfies all other applicable requirements of this Chapter.

2. A good that is subject to a regional value-content requirement shall not be required to satisfy such requirement if the value of all non-originating materials used in the production of the good is not more than seven percent of the transaction value of the good or, if the transaction value of the good is unacceptable under Article 1 of the Customs Valuation Code, the value of all non-originating materials is not more than seven percent of the total cost of the good, provided that the good satisfies all other applicable requirements of this Chapter.

3. Paragraphs 1 and 2 shall not apply to:

(a) a material provided for in Chapter 4 of the Harmonized System or tariff item 1901.90.a1 (dairy preparations containing over 10 percent by weight of milk solids) that is used in the production of a good provided for in Chapter 4 of the Harmonized System;

(b) a material provided for in Chapter 4 of the Harmonized System or tariff item 1901.90.a1 (dairy preparations containing over 10 percent by weight of milk solids) that is used in the production of a good provided for in heading 21.05, subheading 2202.90, or tariff items 1901.10.a1 (infant preparations containing over 10 percent by weight of milk solids), 1901.20.a1 (mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale), 1901.90.a1 (dairy preparations containing over 10 percent by weight of milk solids), 2106.90.a4 (preparations containing over 10 percent by weight of milk solids) or 2309.90.a1 (animal feeds containing over 10 percent by weight of milk solids and less than 6 percent by weight of grain or grain products);

(c) a material provided for in heading 17.01 that is used in the production of a good provided for in headings 17.01 through 17.03;

(d) a material provided for in Chapter 15 of the Harmonized System that is used in the production of a good provided for in headings 15.01 through 15.08, 15.12, 15.14 or 15.15;

(e) a material provided for in heading 08.05 and subheadings 2009.11 through 2009.30 that is used in the production of a good provided for in subheadings 2009.11 through 2009.30 or tariff item 2106.90.a2 (concentrated fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins) or 2202.90.a1 (fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins); and

(f) a material provided for in headings 22.03 through 22.08 that is used in the production of a good provided for in headings 22.07 through 22.08.

4. Paragraph 1 shall not apply for purposes of calculating the volume or weight of:

(a) a non-originating material of Chapter 17 of the
Harmonized System or heading 18.05 that are used in the
production of a good provided for in subheading
1806.10;

(b) a non-originating material of Chapter 9 of the
Harmonized System that is used in the production of a
good provided for in tariff item 2101.10.a1 (instant
coffee, not flavored); and

(c) a non-originating material of heading 20.09 that is used in the production of a good provided for in subheading 2009.90, or 2106.90.a3 (concentrated mixtures of fruit or vegetable juice, fortified with minerals or vitamins) 2202.90.a2 (mixtures of fruit or vegetable juices, fortified with minerals or vitamins).

5. A good of Chapters 50 through 63 of the Harmonized System that does not originate because certain fibers or yarns used in the production of the component of the good that gives the good its essential character do not undergo the applicable change in tariff classification described in Annex 401.1 for the good, shall nonetheless be considered to originate if the weight of all such fibers or yarns in the good is not more than seven percent of the weight of that component.

6. Paragraphs 1 and 2 shall not apply to a good of Chapters 1 through 44 of the Harmonized System unless the non-originating material is provided for in a different subheading than the good for which origin is being determined under this Article.

Article 406: Fungible Goods and Materials

For purposes of determining whether a good is an originating good:

(a) where originating and non-originating fungible materials are used in the production of a good, the origin of the materials need not be determined through the identification of any specific fungible material, but may be determined on the basis of any of the inventory management methods provided for in the Uniform Regulations; and

(b) where originating and non-originating fungible goods are commingled and exported in the same form, the origin of the good may be determined on the basis of any of the inventory management methods provided for in the Uniform Regulations.

Article 407: Accessories, Spare Parts, or Tools

For purposes of determining whether a good, is an originating good, accessories, spare parts or tools delivered with the good that form part of the good's standard accessories, spare parts, or tools, shall be considered as one with the good and shall be disregarded in determining whether all the non- originating materials used in the production of the good undergo the applicable change in tariff classification described in Annex 401.1, provided that:

(a) the accessories, spare parts or tools are not invoiced
separately from the good;

(b) the quantities and value of the accessories, spare
parts or tools are customary for the good; and

(c) if the good is subject to a regional value-content requirement, the value of the accessories, spare parts or tools shall be taken into account as either originating or non-originating materials in calculating the regional value content of the good.

Article 408: Indirect Materials

An indirect material shall be considered to be an originating material without regard to where it is produced.

Article 409: Packaging Materials and Containers for Retail Sale

Packaging materials and containers in which a good is packaged for retail sale shall, if classified as one with the good, be disregarded in determining whether all the non- originating materials used in the production of the good undergo the applicable change in tariff classification described in Annex 401.1, and, if the good is subject to a regional value content requirement, the value of such packaging materials and containers shall be taken into account in calculating the regional value content of the good.

Article 410: Packing Materials and Containers for Shipment

For the purpose of determining whether a good is an originating good, packing materials and containers in which the good is packed for shipment shall be disregarded in determining whether:

(a) the non-originating materials used in the production of the good undergo the applicable change in tariff classification described in Annex 401.1; and

(b) the good satisfies a regional value-content requirement.

Article 411: Transshipment

A good shall not be considered to be an originating good by virtue of having undergone production that satisfies the requirements of Article 401 if, subsequent to that production, the good undergoes further production, or any other operation, outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good to the territory of a Party.

Article 412: Non-Qualifying Operations

A good shall not be considered to be an originating good merely by virtue of having undergone:

(a) mere dilution with water or another substance that does not materially alter the characteristics of the good; or

(b) any process, work or pricing practice, or any combination thereof, in respect of which it is demonstrated, on the basis of a preponderance of evidence, that the object was to circumvent the provisions of this Chapter.

Article 413: Interpretation

For purposes of this Chapter, the following rules of
interpretation shall apply:

(a) the basis for tariff classification in Article 401 is the Harmonized System;

(b) a more specific rule in Annex 401.1 shall take precedence over a general requirement under Article 401;

(c) for purposes of applying Article 401(d), when determining whether a tariff heading or subheading provides for both a good and its parts, reference shall be made both to the nomenclature of the heading or subheading and to any legal note provided in the Harmonized System;

(d) the principles of the Customs Valuation Code shall apply to domestic transactions as well as international transactions;

(e) in the event of any inconsistency between the
provisions of this Chapter and the Customs Valuation
Code, the provisions of this Chapter shall prevail to
the extent of the inconsistency;

(f) in applying Customs Valuation Code under this Chapter,
the definitions in Article 415 shall take precedence
over the definitions of the Customs Valuation Code to
the extent of any difference; and

(g) all costs referred to in this Chapter shall be recorded
and maintained in accordance with the Generally
Accepted Accounting Principles in the territory of the
Party in which the good is produced.

Article 414: Consultation and Revision

1. The Parties shall consult regularly to ensure that the provisions of this Chapter are administered effectively, uniformly and consistently with the spirit and intent of this Agreement, and shall cooperate in the administration of the provisions of this Chapter in accordance with the provisions of Chapter Five (Customs Procedures).

2. If any Party concludes that the provisions of this Chapter require revision to take into account developments in production processes or other matters, the proposed revision along with supporting rationale and any studies shall be submitted to the other Parties for consideration and any appropriate action pursuant to Chapter Five (Customs Procedures).

Article 415: Definitions

For purposes of this Chapter:

class of motor vehicles means any one of the following categories of motor vehicles:

(a) motor vehicles provided for in subheadings 8701.20 and 8702.yy (vehicles for the transport of 16 or more persons), subheadings 8704.22, 8704.23, 8704.32 and 8704.90, and headings 87.05 and 87.06;

(b) motor vehicles provided for in subheadings 8701.10 and 8701.30 through 8701.90;

(c) motor vehicles provided for in subheadings 8702.xx (vehicles for the transport of 15 or fewer persons) and 8704.21 and 8704.31; or

(d) motor vehicles provided for in subheadings 8703.21 through 8703.90;

customs value means the value of a good for the purposes of levying duties of customs on an imported good;

F.O.B. means free on board, regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer;

fungible goods or fungible materials means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical;

identical or similar goods has the same meaning as prescribed for identical goods and similar goods, respectively, in the Customs Valuation Code;

indirect material means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or used in the maintenance or operation of equipment or buildings associated with the production of a good, including:

(a) fuel and energy;

(b) tools, dies and molds;

(d) lubricants, greases, compounding materials and other materials used by labor or used to operate equipment and buildings, or both;

(e) gloves, glasses, footwear, clothing, safety equipment
and supplies;

(f) equipment, other devices and supplies used for testing
or inspecting the goods;

(g) catalysts and solvents; and

(h) any other goods that are not incorporated into the good but whose use in the production of the good can reasonably be demonstrated to be a part of that production;

marque means the trade name used by a separate marketing division of a motor vehicle assembler;

material means a good, other than an indirect material, that is used in the production of another good;

model line means a group of motor vehicles having the same platform or model name;

motor vehicle assembler means a producer of motor vehicles and any related persons or joint ventures in which the producer participates;

new building means new construction, including at least the pouring or construction of new foundations and floors, erection of new structure and roof, and installation of new plumbing, electrical and other utilities to house the complete vehicle assembly process (need definition of complete vehicle assembly process);

net cost means total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non-allowable interest costs that are included in the total cost;

net cost of a good means the net cost that can be reasonably allocated to the good using one of the methods set forth in Article 402 (8) (a);

non-allowable interest costs means interest costs actually incurred by the producer in excess of the applicable federal government rate identified in the Uniform Regulations for comparable maturities, plus seven percentage points;

non-originating good or non-originating material means a good or material that has not satisfied the rule of origin applicable to the good or material under this Chapter;

producer means a person who grows, mines, harvests, manufactures, processes or assembles a good, or any combination thereof;

production means growing, mining, harvesting, manufacturing, processing or assembling a good, or any combination thereof;

reasonably allocate means to apportion in a manner appropriate to the circumstances;

refit means a plant closure for the purposes of plant conversion or retooling that lasts at least three months;

related person means persons who are related only if:

(a) they are officers or directors of one another's business;

(b) they are legally recognized partners in business;

(d) any person directly or indirectly owns, controls or holds 25 per cent or more of the outstanding voting stock or shares of both of them;

(e) one of them directly or indirectly controls the other;

(f) both of them are directly or indirectly controlled by a third person; or

(g) they are members of the same family (members of the same family are natural or adoptive children, brothers sisters, parents, grandparents, or spouses);

royalties means payments of any kind, including payments under technical assistance and similar agreements, made as consideration for the use, or right to use any copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, secret formula or process, excluding those payments under technical assistance or similar agreements that can be related to specific services such as:

(a) personnel training, without regard to where performed; and

(b) if performed in the territory of one or more of the Parties, engineering, tooling, die setting, software design and similar computer services, or other services;

sales promotion, marketing and after-sales service costs means the following costs related to sales promotion, marketing and after-sales service:

(a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstration materials, exhibits; sales conferences, trade shows and conventions; banners; marketing displays; free samples; sales, marketing and after- sales service literature (product brochures, catalogs, technical literature, price lists, service manuals, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; entertainment;

(b) sales and marketing incentives; consumer, retailer or wholesaler rebates; merchandise incentives;

(c) salaries and wages, sales commissions, bonuses, benefits (e.g., medical, insurance, pension), travelling and living expenses, membership and professional fees, for sales promotion, marketing and after-sales service personnel;

(d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training customer employees, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

(e) product liability insurance;

(f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

(g) telephone, mail and other communications, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;

(h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centers;

(i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after-sales service offices and distribution centers, where such costs are identified separately for sales promotion, marketing and after- sales service of goods on the financial statements or cost accounts of the producer; and

(j) payments by the producer to other persons for warranty repairs;

self-produced material means a material that is produced by the producer of the good;

shipping and packing costs means the costs incurred in packing the good for shipment and shipping the good from the point of direct shipment to the buyer, excluding costs of preparing and packaging the good for retail sale;

total cost means all product costs, period costs and other costs incurred in the territory of one or more of the Parties;

transaction value means the price of a good actually paid or payable to the producer of the good, adjusted to a F.O.B. basis and in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the Customs Valuation Code;

used means used or consumed, or both, in the production of goods; and

wholly obtained or produced in the territory of one or more of the Parties means goods that are:

(a) mineral goods extracted in the territory of one or more
of the Parties;

(b) goods harvested in the territory of one or more of the
Parties;

North American Free Trade Agreement, 1992 Oct. 7 Tariff Phasing Descriptions

NAFTA TABLE OF CONTENTS

PREAMBLE

PART ONE: GENERAL PART

Chapter 1: Objectives

Chapter 2: General Definitions

PART TWO: TRADE IN GOODS

Chapter 3: National Treatment and Market Access

Chapter 4: Rules of Origin

Chapter 5: Customs Procedures

Chapter 6: Energy

Chapter 7: Agriculture

Chapter 8: Emergency Action

PART THREE: TECHNICAL BARRIERS TO TRADE

Chapter 9: Standards-Related Measures

PART FOUR: GOVERNMENT PROCUREMENT

Chapter 10: Government Procurement

PART FIVE: INVESTMENT, SERVICES AND RELATED MATTERS

Chapter 11: Investment

Chapter 12: Cross-Border Trade in Services

Chapter 13: Telecommunications

Chapter 14: Financial Services

Chapter 15: Competition Policy, Monopolies and State Enterprises

Chapter 16: Temporary Entry for Business Persons

PART SIX: INTELLECTUAL PROPERTY

Chapter 17: Intellectual Property

PART SEVEN: ADMINISTRATIVE AND INSTITUTIONAL PROVISIONS

Chapter 18: Publication, Notification and Administration of Laws

Chapter 19: Review and Dispute Settlement in Antidumping and Countervailing Duty Matters

Chapter 20: Institutional Arrangements and Dispute Settlement Procedures

PART EIGHT: OTHER PROVISIONS

Chapter 21: Exceptions

Chapter 22: Final Provisions

ANNEXES I THROUGH VII

Chapter Eleven (Investment) Chapter Twelve (Cross-Border Trade in Services) Chapter Fourteen (Financial Services)

** NORTH AMERICAN FREE TRADE AGREEMENT **

PREAMBLE

NAFTA PART ONE GENERAL PART

Chapter One

ANNEX 104

ANNEX 201.1

Section A - Canadian Measures

Section B - Mexican Measures

Section C - United States Measures

(TARIFF SCHEDULE TO BE ATTACHED)

SECTION B - SCHEDULE OF MEXICO

(TARIFF SCHEDULE TO BE ATTACHED)

SECTION C - SCHEDULE OF THE UNITED STATES

(TARIFF SCHEDULE TO BE ATTACHED)

ANNEX 303.6

Section A - Canada

Section B - Mexico

Section C - United States

Section A - Canada

Section B - Mexico

Section C - United States

Section D - List of Goods [description under review]

Section A - General Provisions

Section B - Rates of Duty and Schedule for Reduction

8471.10 3.9% S

8471.20 3.9% S

8471.91 3.9% S

8471.92.90.11 3.7% S 8471.92.90.12 3.7% S 8471.92.90.19 3.7% S

8471.92.10 3.7% S

Section A - Canada

Section B - Mexico

Section C - United States

Section A - Mexico

NORTH AMERICAN FREE TRADE AGREEMENT