WORLD TRADE
ORGANIZATIONWT/REG124/1
7 August 2001
(01-3922)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN ISRAEL AND MEXICO
The following text reproduces the Agreement between Israel and Mexico.1
_______________
FREE TRADE AGREEMENT BETWEEN ISRAEL AND MEXICO
PREAMBLE
The Government of the State of Israel and th e Government of the United Mexican States,
Resolved to:
Strengthen their economic relations and to promote economic development;
Create  an expanded and secure market for the goods produced in their territories;
Establish  clear and mutually advantageous rules governing their trade;
Create  a framework for promoting investment and cooperation;
Foster  the development of their trade with due re gard to fair conditions of competition;
Recall the mutual interest of the Government of the State of Israel and the Government of the
United Mexican States in reinforcement of the multilateral trading system as reflected in the
WTO;
Establish a free trade area between the two countries through the removal of trade barriers;
Create new employment opportunities and improve living standards in their respective
territories;
Declaring their readiness to explore other possibilities for extending their economic relations to
other fields not covered by this Agreement;
HAVE AGREED  as follows:
                                                     
1 The Annexes and Protocols thereto have been submitted to the Secretariat for consultation by
interested Members (Office 3006).   The Spanish version of the Agreement, together with its annexes and
protocols, are also available at the web s ite of the Secretary of Economy of Mexico,
http://www.economia-snci.gob.mx/Tratados/tlcdinamic/Texto_M_x-Isr/texto_m_x-isr.htm.WT/REG124/1
Page 2
CHAPTER I
Initial Provisions
Article 1-01
General Definitions
For purposes of this Agreement, unless otherwise specified:
customs duty:   includes any duty and 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
GATT 1994;
(b) antidumping or countervailing duty or levy;
(c) safeguard duty or levy;  and
(d) fee or other charge provided that it is commensurate with the cost of services
rendered;
GATT 1994 means the General Agreement of Tariffs and Trade of 1994, which is part of the WTO
Agreement;
good  means a domestic good as this is understood in GATT 1994 or such a good as the Parties may
agree, and includes an originating good of that Party;
Harmonized System  means the Harmonized Commodity Description and Coding System, and its
General Rules of Interpretation, Section notes and Chapter notes, as adopted and implemented by the
Parties in their respective tariff laws;
measure  includes any law, regulation, procedure, requirement or practice;
originating goods  means good or material that qualifies as originating under the provisions of
Chapter III (Rules of Origin); and
WTO Agreement  means the Marrakesh Agreement Establishing the World Trade Organization,
including GATT 1994.
Article 1-02
Establishment of the Free-Trade Area
The Parties to this Agreement, consistent with Article XXIV of GATT 1994, hereby
establish a free trade area.WT/REG124/1
Page 3
Article 1-03
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 movement of goods between the
territories of the Parties;
(b) promote conditions of fair competition in the free trade area;
(c) increase substantially investment opportunities in the territories of the Parties;
(d) create effective procedures for the implementation, application and compliance with
this Agreement, and its joint administration;  and
(e) establish a framework for further bilateral 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.
3. Each Party shall administer in a consistent, impartial and reasonable manner all laws,
regulations, decisions and rulings affecting matters covered by this Agreement.
Article 1-04
Relation to Other Agreements
1. The Parties affirm their rights and obligations  with respect to each other in accordance with
the WTO Agreement, including GATT 1994, and its successor agreements and other agreements to
which both Parties are party.
2. In the event of any inconsistency between this Agreement and such other agreements, this
Agreement shall prevail to the extent of the inco nsistency, except as otherwise provided in this
Agreement.
Article 1-05
Extent of Obligations
Each Party shall ensure that all necessary measur es are taken in order to give effect to the
provisions of this Agreement, including their observance by states and municipal governments and
authorities within its territory.WT/REG124/1
Page 4
CHAPTER II
Trade in Goods
Article 2-01
Scope and Coverage
This Chapter applies to trade in goods of a Party, except as otherwise provided in this
Agreement.
Article 2-02
National Treatment
1. Each Party shall accord national treatment to the goods of the other Party in accordance with
Article III of GATT 1994, including its interpretative notes, and to this end Article III of GATT 1994and its interpretative notes, or any equivalent provision of a successor agreement to which both
Parties are party, are incorporated into and made part of this Agreement.
2. Paragraph 1 does not apply to the measures set out in Annex 2-02 (Exceptions to Article 2-02
and Article 2-04).
Article 2-03
Customs Duties and Tariff Elimination
1. The basic customs duty for the successive reductions set out in this Agreement shall be the
lowest most-favored-nation rate effectively applied by each Party in the period starting on 1 July 1998
until 1 February 2000.  If, after this date, any tariff reduction is applied on a most-favored-nation
basis, such reduced customs duties shall replace the basic customs duties as from the date when such
reduction is effectively applied.  To this end, each Party shall cooperate to inform the other Party of
basic customs duties and preferential rates in force.
2. Except as otherwise provided in this Agreement, no Party may increase any existing customs
duty, or adopt any customs duty, on an originating good of the other Party  referred to in paragraphs 3
or 4.
3. Unless specified in this paragraph or elsewhere, each Party shall eliminate its customs duties
on originating goods classified in Chapters 25 to 98 of the Harmonized System in four equal stages,
the first one taking place on the entry into force of this Agreement, and the other three on 1 January of
each successive year, so that these customs duties are completely eliminated by 1 January 2003:
(a) each Party shall eliminate its customs duties on goods classified in the Harmonized
System headings or subheadings listed in Annex 2-03.3(a) (Products for ImmediateTariff Elimination) on the date of entry into force of this Agreement;
(b) each Party shall eliminate its customs duties on goods classified in the Harmonized
System headings or subheadings listed in Annex 2-03.3(b) (Products with Tariff
Elimination Schedule for 2005) in six equal stages, the first one taking place on thedate of entry into force of this Agreement, and the other five on 1 January of each
successive year, so that these customs duties are completely eliminated by
1 January 2005;WT/REG124/1
Page 5
(c) for the purpose of elimination of duties in accordance with this Article, rates shall be
rounded down, 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 .01 of the official monetary unit
of the Party;  and
(d) goods classified in the Harmonized System headings 3502 and 3505 shall be treated
in accordance with paragraph 4.
4. Except as otherwise provided in this Agreement, each Party shall eliminate or reduce duties
on originating goods covered by Chapters 1 to 24 of the Harmonized System and by paragraph 3(d)
and listed in Annexes 2-03.4(a) (Concessions made by Israel to Mexico) and 2-03.4(b) (Concessions
made by Mexico to Israel) in accordance with the timetables and the conditions set out in thoseAnnexes.
5. Upon request of either Party, the Parties shall consult to consider accelerating the elimination
or reduction of customs duties set out in the Annexes referred to in paragraphs 3 and 4.  The Parties
shall examine periodically the possibilities of granting each other further concessions in trade inagricultural goods.
6. In accordance with paragraph 5, an agreement between the Parties to accelerate the
elimination or the reduction of a customs duty on a good or the inclusion of a good in the Tariff
Elimination Schedule or in Annexes 2-03.4(a) (C oncessions made by Israel to Mexico) and (b)
(Concessions made by Mexico to Israel), shall supersede any duty rate or staging category determined
pursuant to their schedules for such good when approved by the Commission.
7. Upon entry into force of this Agreement, th e Parties shall eliminate any customs users fee
which is applied on originating goods on an ad valorem  basis.
8. The preferential rates of duty set out in paragraph 3 shall apply to certain goods classified in
Chapters 50 through 63 of the Harmonized System, within the Tariff Preferential Quotas set out in
Annex 2-03 (8) (Tariff Preferential Quotas for certain Goods classified in Chapter 50 through 63 of
the Harmonized System), provided that these goods comply with the provisions of Article 3-03(3).
Article 2-04
Import and Export Restrictions
1. Except as otherwise provided in this Agreement, no Party may adopt or maintain any
prohibition or restriction on the importation of any good of the other Party or on the exportation or
sale for export of any good destined for the territory of the other Party, except in accordance withArticle XI of GATT 1994, including its interpretative notes.  To this end, Article XI of GATT 1994
and its interpretative notes, or any equivalent provision of a successor agreement to which the Parties
are party, are incorporated into and made a part of this Agreement.
2. The Parties understand that the rights and obligations incorporated by paragraph 1 prohibit, in
any circumstances in which any other form of rest riction 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:WT/REG124/1
Page 6
(a) limiting or prohibiting the importation from the territory of the other 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 the other
Party, that the good not be re-exported to the non-Party, directly or indirectly, withoutbeing consumed in the territory of the other Party.
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, on request of either Party, shall consult with a view to avoiding
undue interference or distortion of pricing, marketing and distribution arrangements in a Party.
5. Paragraphs 1 through 4 shall not apply to the measures set out in Annex 2-02 (Exceptions to
Article 2-02 and 2-04).
Article 2-05
Appellations of Origin or Geographical Indications
Annex 2-05 applies to appellations of origin or geographical indications.
Article 2-06
Committee on Trade
1. The Parties hereby establish a Committee on Trade, comprising representatives of each Party.
The Committee shall meet on a date and with an agenda agreed in advance by the Parties.  The office
of chairman of the Committee shall be held alternatively by each Party.  The Committee shall reportto the Commission.
2. Upon request of either Party, the Committee shall convene in order to consider and find
appropriate solution to any matter concerning trade in goods, including:
(a) sanitary and phytosanitary measures;
(b) standards-related measures;
(c) antidumping and countervailing duties measures;
(d) government procurement;
(e) intellectual property rights;  and
(f) any other matter referred to it by the Commission.
3. Additionally, the Committee may, as if it considers appropriate, establish and determine the
scope and mandate of any ad hoc group or subcommittee to deal with any specific matter.WT/REG124/1
Page 7
ANNEX 2-02
Exceptions to Article 2-02 and Article 2-04
Measures of Israel
1. Restrictions on imports of waste and scrap of plastic, rubber, paper, metal, and glass that are
maintained for ecological purposes.
2. Restrictions on imports of meat not approved by the Chief Rabbinate.3. Restrictions on the import of used clothing and made-up textile of second quality.
Measures of Mexico
Exceptions to Article 2-02
Notwithstanding article 2-02, until 1 January 2004, Mexico may maintain the provisions of
the Decree for Development and Modernization of the Automotive Industry  (“Decreto para el Fomento
y Modernización de la Industria Automotriz”), 11 December 1989, and its amendments of
31 May 1995.
Exceptions to Article 2-04
1. For only those goods listed below, Mexico may restrict the granting of import and export
licenses for the sole purpose of reserving foreign trade in these goods to itself.
(For purposes of reference only, descriptions provided next to the corresponding item)
Item Description
2707.50 Other aromatic hydrocarbon mixtures of which 65 percent or more by volume (including losses)
distills at 250° C by the ASTM D 86 method.
2707.99 Rubber extended oils, solvent naphtha and carbon black feedstocks only.
27.09 Petroleum oils and oils obtained from bituminous minerals, crude.
27.10 Aviation gasoline and motor fuel blending stocks (except aviation gasoline) and reformates when
used as motor fuel blending stocks; kerosene; gas oil and diesel oil; petroleum ether; fuel oil;
paraffinic oils other than for lubricating purposes; pentanes; carbon black feedstocks; hexanes;heptanes and naphthas.
27.11 Petroleum gases and other gaseous hydrocarbons other than: ethylene, propylene, butylene, and
butadiene, in purities over 50 percent.
2712.90 Only paraffin wax containing by weight more than 0.75 percent of oil, in bulk (Mexico classifies
these goods under HS 2712.90.02) and only when imported to be used for further refining.
2713.11 Petroleum coke not calcined.
2713.20 Petroleum bitumen (except when used for road surfacing purposes under HS 2713.20.01).
2713.90 Other residues of petroleum oils or of oils obtained from bituminous minerals.
27.14 Bitumen and asphalt natural; bituminous or oil shale and tar sands, asphaltites and asphaltic rocks
(except when used for road surfacing purposes under HS 2714.90.01).
2901.10 Ethane, butanes, pentanes, hexanes, and heptanes only.
2. Mexico may maintain restrictions in effect on the date of entry into force of this Agreement
on the importation of used products classified under heading 63.09 of the Harmonized System.
3. Mexico may adopt or maintain prohibitions or restrictions to the importation of used goods
provided for in the items set out below:WT/REG124/1
Page 8
(For purposes of references only, descriptions are provided next to the corresponding item)
Item Description
8407.34 Reciprocating piston engines of a kind used for the propulsion of vehicles of chapter 87, of a
cylinder capacity exceeding 1,000 cc.
8701.20 Road tractors for semi-trailers.
87.02 Motor vehicles for the transport of ten or more persons.87.03 Motor cars and other motor vehicles principally designed for the transport of persons, (other than
those of heading 8702), including station wagons and racing cars.
87.04 Motor vehicles for the transport of goods.
8705.20 Mobile drilling derricks.8705.40 Concrete mixers.
87.06 Chassis fitted with engines, for the motor vehicles of headings 87.01 to 87.05.
4. Until 1 January 2004, Mexico may adopt or maintain prohibitions or restrictions to the
importation of used goods provided for in the items set out below.
8426.91.02 8471.60.06 8471.90.99 8708.70.02 8716.20.99
8426.91.03 8471.60.07 8474.20.02 8708.70.03 8716.31.018427.20.01 8471.60.08 8474.20.05 8708.70.07 8716.31.028429.20.01 8471.60.09 8474.20.06 8708.70.99 8716.31.998452.29.04 8471.60.10 8504.40.12 8711.10.01 8716.39.01
8471.10.01 8471.60.11 8701.90.02 8711.20.01 8716.39.02
8471.30.01 8471.60.12 8702.90.01 8711.30.01 8716.39.048471.41.01 8471.60.13 8703.10.01 8711.40.01 8716.39.058471.49.01 8471.60.99 8703.90.01 8711.90.99 8716.39.068471.50.01 8471.70.01 8705.10.01 8712.00.04 8716.39.078471.60.02 8471.80.01 8705.20.99 8712.00.99 8716.39.99
8471.60.03 8471.80.02 8705.90.01 8716.10.01 8716.40.99
8471.60.04 8471.80.03 8705.90.99 8716.20.01 8716.80.998471.60.05 8471.80.99 8708.70.01 8716.20.03
5. Until 31 December 2003, Mexico may maintain prohibitions or restrictions to the importation
of goods provided for in the items set out below:
(For purposes of references only, descriptions are provided next to the corresponding item)
Item Description
8407.34 Reciprocating piston engines of a kind used for the propulsion of vehicles of chapter 87, of
a cylinder capacity exceeding 1,000 cc.
8701.20 Road tractors for semi-trailers.
87.02 Motor vehicles for the transport of ten or more persons.87.03 Motor cars and other motor vehicles principally designed for the transport of persons, (other
than those of heading 8702), including station wagons and racing cars.
87.04 Motor vehicles for the transport of goods.
8705.20 Mobile drilling derricks.8705.40 Concrete mixers.
87.06 Chassis fitted with engines, for the motor vehicles of headings 87.01 to 87.05.WT/REG124/1
Page 9
ANNEX 2-03.3(a)
Products for Immediate Tariff Elimination (1) (2) (3)
HS Code Only HS Code Only HS Code Only
250300 540341 82075010 (Il)
250410 540620 82075002 (Mx)
250490 540810 830160 (Il)
250610 550110 83016099 (Mx)
250621 550120 841920
250629 550130 842121 (Il)
250700 550200 84212104 (Mx)
250810 550310 84212199 (Mx)
250820 550320 846610
250830 550330 846693
250840 550510 846911
250850 550520 846912
250860 550630 846920
250870 570320 846930
250900 570330 847010
251020 590210 847021
251110 590220 847029
251120 590290 847030
251200 690390 (Il) 847040
251311 69039099 (Mx) 847050
251319 690919 (Il) 847090
251320 69091999 (Mx) 847110
251400 691490 847130
251511 720110 847141
251512 720120 847149
251520 720150 847150
251611 720221 847160
251612 720229 847170
251621 720241 847180
251622 720249 847190
251690 720250 847310
251810 720260 847321
251820 720270 847329
251830 720280 847330
252010 720291 847340
252020 720292 847350
252210 720293 8481 (Mx) For irrigation
252220 720299 851711
252230 720310 851719
252310 720390 851721
252321 720410 851722
252329 720421 851730
252330 720429 851750
252390 720430 851780
252400 720441 851790
252510 720449 851810
252520 720450 851821WT/REG124/1
Page 10
HS Code Only HS Code Only HS Code Only
252530 720510 851822
252610 720521 851829
252620 720529 851830
252700 720610 851840
252890 720690 851850
252910 720711 851890
252921 720712 851910
252922 720719 851921
252930 720720 851929
253010 720810 851931
253090 720825 851939
260200 720826 851940
260300 720827 851992
260400 720836 851993
260500 720837 851999
260600 720838 852010
260700 720839 852020
260800 720840 852032
260900 720851 852033
261000 720852 852039
261100 720853 852090
261310 720854 852110
261390 720890 852190
261400 720915 852210
261510 720916 852290
261590 720917 852311
261610 720918 852312
261690 720925 852313
261710 720926 852320
261790 720927 852330
262011 720928 852390
262019 720990 852410
262020 721011 852431
262030 721012 852432
262040 721020 852439
262050 721030 852440
262090 721041 852451
270760 721049 852452
280700 721050 852453
282751 (Il) 721061 852460
28275101(Mx) 721069 852491
282759 (Il) 721070 852499
28275999 (Mx) 721090 852510
283421 721113 852520
284990 721114 852530
290129 721119 852540
290220 721123 852610
290244 721129 852691
290330 721190 852692
290349 (Il) 721210 852712
29034999 (Mx) 721220 852713WT/REG124/1
Page 11
HS Code Only HS Code Only HS Code Only
290359 (Il) 721230 852719
29035902 (Mx) 721240 852721
290369 721250 852729
290410 721260 852731
290516 721320 852732
290519 (Il) 721391 852739
29051901 (Mx) 721399 852790
29051902 (Mx) 721410 852812
29051903 (Mx) 721430 852813
29051904 (Mx) 721491 852821
29051907 (Mx) 721499 852822
29051908 (Mx) 721510 852830
29051999 (Mx) 721550 852910
290621 721590 852990
290711 721610 853010
290719 (Il) 721621 853080
29071902 (Mx) 721622 853120
29071904 (Mx) 721631 853180
29071905 (Mx) 721632 853190
29071906 (Mx) 721633 853321
29071908 (Mx) 721640 853400
290723 721650 85371091 (Il)
290810 721661 85371004 (Mx)
290890 721669 854381
290919 721691 85438957 (Il)
290930 (Il) 721699 85438959 (Il)
29093002 (Mx) 721710 85438999 (Mx)
291010 721720 854011
291020 721730 854012
291241 721790 854020
291249 721810 854040
291411 721891 854050
291429 (Il) 721899 854060
29142999 (Mx) For use in food
industry721911 854071
291439 (Il) 721912 854072
29143903 (Mx) 721913 854079
29143904 (Mx) 721914 854081
29143907 (Mx) 721921 854089
291614 721922 854091
291714 721923 854099
291736 721924 854110
291737 721931 854121
291814 721932 854129
291815 721933 854130
292211 721934 854140
292212 721935 854150
292213 721990 854160
292690 722011 854190
292800 (Il) 722012 854212
29280006 (Mx) 722020 854213WT/REG124/1
Page 12
HS Code Only HS Code Only HS Code Only
29310090 (Il) 722090 854214
29310099 (Mx) For use for
agriculture722100 854219
293299 (Il) 722211 854230
29329999 (Mx) 722219 854240
293319 (Il) 722220 854250
29331999 (Mx) 722230 854290
293359 722240 854810
293369 722300 854890
300210 (Il) 722410 870110
30021004 (Mx) 722490 870120
30021008 (Mx) 722511 870130
30021099 (Mx) 722519 870190
30049099 (Mx) "Approtinina
500,000 KIU".722520 870210
300630 (Il) 722530 870290
30063001 (Mx) 722540 870310
320411 (Il) 722550 870321
32041101 (Mx) 722591 870322
32041199 (Mx) 722592 870323
320412 (Il) 722599 870324
32041202 (Mx) 722611 870331
320414 (Il) 722619 870332
32041402 (Mx) 722620 870333
320417 (Il) 722691 870390
32041702 (Mx) 722692 870410
320420 (Il) 722693 870421
32042003 (Mx) 722694 870422
320649 (Il) 722699 870423
32064999 (Mx) 722710 870431
340111 722720 870432
340119 722790 870490
340120 722810 871200
340211 722820 880260
340212 722830 880390
340213 722840 900510
340219 722850 900911
340220 722860 900912
340290 722870 900921
380991 (Il) 722880 900922
38099101 (Mx) 722910 900930
380992 (Il) 722920 900990
38099299 (Mx) 722990 901310
381090 (Il) 730110 901320
38109001 (Mx) 730120 901811 (Il)
381300 730210 90181101 (Mx)
381400 730220 901819 (Il)
381590 (Il) 730230 90181905 (Mx)
38159099 (Mx) 730240 90181910 (Mx)WT/REG124/1
Page 13
HS Code Only HS Code Only HS Code Only
38220099 (Mx) Diagnostic
reagents for thedetection ofAIDS, Hepatitis,Chlamydia,
TORCH and
Helicobacterpylori.730290 90181999 (Mx)
390190 730410 901832 (Il)
390760 730421 90183299 (Mx)
390810 (Il) 730429 90183990 (Il)
39081004 (Mx) 730431 90183999 (Mx)
391000 730439 90184990 (Il)
391211 730441 90184999 (Mx)
391231 730449 90189090 (Il)
391239 730451 90189015 (Mx)
391390 (Mx)  For use in
irrigation,covering fields(either below orabove),shadowing and
greenhouses730459 90189099 (Mx)
3917 (Mx) For use in
irrigation,covering fields(either below orabove),
shadowing and
greenhouses730490 902212 (Il)
391739 (Il) 730511 90221201 (Mx)
39173999 (Mx) Epoxy resin
pressure vesselsfor watertreatment byinverse osmosis730512 902214 (Il)
3920 (Mx)  For use in
irrigation,covering fields(either below orabove),
shadowing and
greenhouses730519 90221499 (Mx)
3921 (Mx)  For use in
irrigation,covering fields(either below or
above),
shadowing andgreenhouses730520 902221 (Il)
39269040 (Il) 730531 90222199 (Mx)
39269031 (Mx) 730539 902290 (Il)
400910 730590 90229099 (Mx)
400940 730650 902300
401191 730810 902610 (Il)
401199 730820 90261099 (Mx)WT/REG124/1
Page 14
HS Code Only HS Code Only HS Code Only
401290 730830 930100
401693 730840 930200
401699 750110 930310
440810 750120 930320
440831 750210 930330
440839 750220 930390
440890 750300 930400
540110 750400 930510
540120 750511 930521
540210 750512 930529
540220 750521 930590
540233 750522 930610
540242 750610 930621
540243 750620 930629
540262 750711 930630
540310 750712 930690
540331 750720 930700
540332 750810 950390
540333 750890
(1) “Il”refers to the Israeli Harmonized System Code as expressed in the “Israeli Customs Tariff”; Israel
shall implement inmediate tariff elimination for these items.
(2) “Mx” refers to the Mexican Harmonized System Code as expressed in the “Tarifa de la Ley del
Impuesto General de Importación (T.I.G.I.)”; Mexico shall implement inmediate tariff elimination forthese items.
(3) Mexico shall grant immediate tariff elimination for originating “woven and non woven fabrics used for
making bullet proof vests and suits”, for originating “bullet proof vests and suits”, as well as fororiginating “fabrics used for covering fields, shad owing and greenhousing”, regardless of what their
HS tariff classification is.WT/REG124/1
Page 15
ANNEX 2-03.3(b)
Products with Tariff Elimination Schedule for 2005 (1)
HS Code HS Code HS Code HS Code HS Code
280300 520841 551634 611410 790111
280910 520842 551641 611420 790112280920 520843 551642 611430 790120281122 520849 551643 611490 810600281511 520851 551644 611511 810710
281512 520852 551691 611512 841810
282590 520853 551692 611519 841820282911 520859 551693 611520 841830282919 520911 551694 611591 841840282990 520912 560110 611592 841850283010 520919 560121 611593 841860
283322 520921 560122 611599 841890
283329 520922 560129 611610 848180283429 520929 560130 611691 850110283510 520931 560210 611692 850120283522 520932 560221 611693 850131283523 520939 560290 611699 850132
283524 520941 560311 611710 850133
283525 520942 560312 611720 850134283526 520943 560313 611780 850140283529 520949 560314 611790 850151283531 520951 560391 620111 850152
283539 520952 560392 620112 850153
284110 520959 560393 620113 850161284210 521011 560394 620119 850162290722 521012 560410 620191 850163291260 521019 560420 620192 850164291429 521021 560490 620193 850410
291550 521022 560500 620199 850421
291735 521029 560600 620211 850422292090 521031 560710 620212 850423292144 521032 560721 620213 850431293030 521039 560729 620219 850432293100 521041 560730 620291 850433
300120 521042 560741 620292 850434
300190 521049 560749 620293 850440300210 521051 560750 620299 850450300220 521052 560790 620311 850490300230 521059 560811 620312 853510300290 521111 560819 620319 853521
300310 521112 560890 620321 853529
300320 521119 560900 620322 853530300331 521121 570110 620323 853540300340 521122 570190 620329 853590300390 521129 570210 620331 853610
300410 521131 570220 620332 853620
300420 521132 570231 620333 853630300431 521139 570232 620339 853641300432 521141 570239 620341 853649300439 521142 570241 620342 853650300440 521143 570242 620343 853661
300450 521149 570249 620349 853669
300490 521151 570251 620411 853690300510 521152 570252 620412 853720WT/REG124/1
Page 16
HS Code HS Code HS Code HS Code HS Code
300590 521159 570259 620413 854411
300610 521211 570291 620419 854419
300620 521212 570292 620421 854420
300630 521213 570299 620422 854430300640 521214 570310 620423 854441300650 521215 570490 620429 854449300660 521221 570500 620431 854451
310290 521222 580110 620432 854459
310490 521223 580121 620433 854460310520 521224 580122 620439 854470310540 521225 580123 620441310559 530210 580124 620442310590 530290 580125 620443
320300 530310 580126 620444
321490 530390 580131 620449360500 530410 580132 620451380210 530490 580133 620452380820 530511 580134 620453380830 530519 580135 620459
380890 530521 580136 620461
382440 530529 580190 620462382490 530591 580211 620463390110 530599 580219 620469390130 530610 580220 620510390210 530620 580230 620520
390311 530710 580310 620530
390319 530720 580390 620590390390 530810 580410 620610390410 530820 580421 620620390421 530830 580429 620630
390422 530890 580430 620640
390430 530911 580500 620690390519 530919 580610 620711390530 530921 580620 620719390690 530929 580631 620721392330 531010 580639 620722
400110 531090 580640 620729
400211 531100 580710 620791400219 540231 580790 620792400249 540232 580810 620799400251 540239 580890 620811400259 540241 580900 620819
400291 540249 581010 620821
401110 540251 581091 620822440710 540252 581092 620829440724 540259 581099 620891440725 540261 581100 620892
440726 540269 590110 620899
440729 540320 590190 620910440791 540339 590310 620920440792 540342 590320 620930440799 540349 590410 620990441011 540410 590491 621010
441019 540490 590492 621020
441090 540500 590500 621030441111 540610 590610 621040441119 540710 590691 621050441121 540720 590699 621111WT/REG124/1
Page 17
HS Code HS Code HS Code HS Code
441129 540730 590700 621112
441131 540741 590800 621120441139 540742 590900 621131441191 540743 591000 621132
441199 540744 591110 621139
441213 540751 591120 621141441214 540752 591131 621142441219 540753 591132 621143441222 540754 591140 621149441223 540761 591190 621210
441229 540769 600110 621220
441292 540771 600121 621230441293 540772 600122 621290441299 540773 600129 621310500100 540774 600191 621320
500200 540781 600192 621390
500310 540782 600199 621410500390 540783 600210 621420500400 540784 600220 621430500500 540791 600230 621440500600 540792 600241 621490
500710 540793 600242 621510
500720 540794 600243 621520500790 540821 600249 621590510130 540822 600291 621600510210 540823 600292 621710510220 540824 600299 621790
510310 540831 610110 630110
510320 540832 610120 630120510330 540833 610130 630130510400 540834 610190 630140510510 550690 610210 630190510529 550700 610220 630210
510530 550810 610230 630221
510540 550820 610290 630222510610 550911 610311 630229510620 550912 610312 630231510710 550921 610319 630232
510720 550922 610321 630239
510810 550931 610322 630240510820 550932 610323 630251510910 550941 610329 630252510990 550942 610331 630253511000 550951 610332 630259
511111 550952 610333 630260
511119 550953 610339 630291511120 550959 610341 630292511130 550961 610342 630293511190 550962 610343 630299511211 550969 610349 630311
511219 550991 610411 630312
511220 550992 610412 630319511230 550999 610413 630391511290 551011 610419 630392511300 551012 610421 630399
520100 551020 610422 630411
520210 551030 610423 630419WT/REG124/1
Page 18
HS Code HS Code HS Code HS Code
520291 551090 610429 630491
520300 551110 610431 630492
520411 551120 610432 630493
520419 551130 610433 630499520420 551211 610439 630510520511 551219 610441 630520520512 551221 610442 630532
520513 551229 610443 630533
520514 551291 610444 630539520515 551299 610449 630590520521 551311 610451 630611520522 551312 610452 630612520523 551313 610453 630619
520524 551319 610459 630621
520526 551321 610461 630622520527 551322 610462 630629520528 551323 610463 630631520531 551329 610469 630639520532 551331 610510 630641
520533 551332 610520 630649
520534 551333 610590 630691520535 551339 610610 630699520541 551341 610620 630710520542 551342 610690 630720520543 551343 610711 630790
520544 551349 610712 630800
520546 551411 610719 630900520547 551412 610721 631010520548 551413 610722 631090520611 551419 610729 700719
520612 551421 610791 700729
520613 551422 610792 710691520614 551423 610799 720211520615 551429 610811 720219520621 551431 610819 720230520622 551432 610821 721310
520623 551433 610822 721420
520624 551439 610829 730300520625 551441 610831 730610520631 551442 610832 730620520632 551443 610839 730630520633 551449 610891 730640
520634 551511 610892 730660
520635 551512 610899 730690520641 551513 610910 730711520642 551519 610990 730719520643 551521 611010 730721
520644 551522 611020 730722
520645 551529 611030 730723520710 551591 611090 730729520790 551592 611110 730791520811 551599 611120 730792520812 551611 611130 730793
520813 551612 611190 730799
520819 551613 611211 730890520821 551614 611212 732510520822 551621 611219 761290520823 551622 611220 780110WT/REG124/1
Page 19
HS Code HS Code HS Code HS Code
520829 551623 611231 780191
520831 551624 611239 780200
520832 551631 611241 780411
520833 551632 611249 780419520839 551633 611300 780420
(1) Excluding products covered by Annex 2-03.3(a), which shall be granted immediate tariff elimination.WT/REG124/1
Page 20
ANNEX 2-03.4(a)
Concessions made by Israel to Mexico
1. The following tariff concessions shall apply each year from the date of entry into force of this
Agreement.
Israel´s Customs
Tariff CodeDescription Specific provisions
0402.29 Other Quota of 300 tons duty free
0713.20 Chickpeas Quota of 200 tons duty free
0901 Coffee Free
0904.20 Fruits of the genes Capsicum or of
the genus Pimenta (including
allspice), dried or crushed or
groundQuota of 50 tons duty free
1108.12 Corn (maize) starch 25% reduction1
1207.40 Sesame seeds Free
1701.11 Sugar Free
1704.90 Sugar confectionery Free
1806.20-90 Chocolate and other food
preparations containing cocoaFree
1901.20 Mixes and doughs for the
preparation of bakers' wares ofheading 190525% reduction
1
2001.10 Cucumbers including gherkins 25% reduction1
2001.20 Onions 25% reduction1
2001.9090 Other 25% reduction1
2003.10 Mushrooms 25% reduction1
2004.9094
2004.9099Other vegetables and mixtures of
vegetablesQuota of 300 tons duty free
2005.10 Homogenized vegetables Free
2005.40 Peas (Pisum sativum) 15% reduction1
2005.51 Beans, shelled 50% reduction1
2005.59 Other 25% reduction1
2005.60 Asparagus 50% reduction*
2005.9090 Other vegetables and mixtures of
vegetablesFree
2006.00 Fruit, nuts, fruit-peel and other
parts of plants, preserved by sugar
(drained, glacé or crystallized)50% reduction1
2007.10 Homogenized preparations Free
2007.91 Citrus fruit 25% reduction1
2007.99 Other 20% reduction1
ex 2008.1110 Peanuts butter and peanut mash Free
2008.20 Pineapples 50% reduction1
2008.80 Strawberries 50% reduction1
2008.91 Palm hearts 50% reduction1
2008.92 Mixtures 25% reduction1
2008.99 Other 25% reduction1
ex 2009.11-19 Orange juice concentrated in
packings containing 230 kgs ormore (50 brix or more).Free
ex 2009.2030 Grapefruit juice  concentrated in
packings containing 230 kgs ormore (50 brix or more).FreeWT/REG124/1
Page 21
Israel´s Customs
Tariff CodeDescription Specific provisions
ex 2009.3010 Juice of any other single citrus
fruit in packings containing 230kgs or more (50 brix or more).Free
2009.40 Pineapple juice
2009.80 Juice of any other single fruit or
vegetable
2009.9090 Mixtures of juicesAggregate quota of 600 ton duty free
for subheadings
2009.40 and 2009.80 and item 2009.9090
2101.11 Coffee extracts Free
2102.10 Active yeasts  Tariff fixed at 6%
2102.20 Inactive yeasts; other single-cell
micro-organism, dead Tariff fixed at 6%
2102.30 Prepared baking powders  Tariff fixed at 6%
2103.90 Other Tariff fixed at 6%
2104.20 Homogenized composite food
preparationsFree
2106.10 Protein concentrates Free
2106.90 Other Free
2203.00 Beer made from malt Free
ex.2208.90  Tequila and Mezcal Free
1Reduction from the lowest of the basic duty or the applicable MFN rate at the moment of importation.
2. Israel may adopt or maintain import measures to allocate in-quota imports made pursuant to a
quota set out in this Annex, provided that such measures do not have trade restrictive effects on
imports additional to those caused by the imposition of the quota.WT/REG124/1
Page 22
ANNEX 2-03.4(b)
Concessions made by Mexico to Israel
1. The following tariff concessions shall apply each year from the date of entry into force of this
Agreement.
HS Code Description Specific provisions
0601 Bulbs Free
0602 Live plants Free
0603 Cut flowers Quota of 60 tons duty free
0604 Foliage Free
ex 0703 Only: shallots and leeks Free
ex 0709 Only: Basil, Chervil, Chives, Coriander,
Dill, Lemon Grass,  Lovage, Marjoram,
Melissa, Mint, Oregano, Parsley, Rocket,Rocolla, Rosemary, Sage, Savory, Sorrel,Spring Onion, Tarragon, Thyme, Mizuna,Red Mustard, Salad Burnet, Spinach.Free
ex 0711.10 Only: Pearl onions Free
ex 0711.90 Only: Baby carrots, frozen Free
ex 0901.21-22 Only: "Kosher coffee, in individual
packages containing 10 grams or less of
coffee ".See note for 2101.11
ex 0910 Only: Ginger, saffron, turmeric, thyme,
bay leavesFree
1209 Sowing seeds Free
1211 Plants and parts of plants (including seeds
and fruits)Free
1704.90 Only: Kosher sugar confectionery Free
1806.20-90 Only: Kosher chocolate and other Kosher
food preparations containing cocoaFree
ex 1904 Only: "Puffed corn covered with peanut
butter, containing more than 20% but less
than 50% of peanut butter "Free
ex 2001.20 Only: Pearl onions Free
ex 2004.90 Only: Baby carrots, frozen Free
ex 2101.11 Only: "Kosher instant coffee, in individual
packages containing 5 grams or less of
coffee."Aggregate quota of 50 ton duty free for ex
0901 and ex 2101.11.  1/
2102.10 Active yeasts Tariff fixed at 6%
2102.20 Inactive yeasts; other single-cell
microorganism, deadTariff fixed at 6%
2102.30 Prepared baking powders Tariff fixed at 6%
2103.90 Other Tariff fixed at 6%
2106.10 Protein concentrates Free
2106.90 Other prepared foodstuff Free, except for Mexican item 2106.9005
"flavoured or coloured syrups".
2203.00 Beer made from malt Free
ex 2208.90 Only: Arack Free
1/ If the quota is filled in any year, it will grow 25% for the next year, but it would be no greater than 200 ton.WT/REG124/1
Page 23
2. Mexico may adopt or maintain import measures to allocate in-quota imports made pursuant to
a quota set out in this Annex, provided that such measures do not have trade restrictive effects on
imports additional to those caused by the imposition of the quota.WT/REG124/1
Page 24
ANNEX 2-03.8
Tariff Preferential Quotas for certain Goods classified
in Chapter 50 through 63 of the Harmonized System
1. Each Party shall apply the provision of ar ticle 02-03.8, in accordance to the following
quantities:
(a) Apparel and Other Made Up Textile Articles(classified in Chapters 61 through 63 of
the Harmonized System)
(b) 
For the first 3 years of entry into force of theAgreement2.1 million dollars
For the year 4 and thereafter 3.0 million dollars
(c) Yarns and Fabrics (classified in Chapters 50 through 60 of the Harmonized System)
(d) 
For the first 3 years of entry into force of the
Agreement1.4 million dollars
For the year 4 and thereafter 2.0 million dollars
Total annual quota for the first three years of entry into
force of the Agreement3.5 million dollars
Total annual quota for the year 4 and thereafter 5.0 million dollars
2. Maximum amount of annual quota to be allocated within 15% of total annual quota
the same heading
3. Mexico shall allocate the annual Tariff Preferential Quotas (TPQ´s) specified in this Schedule
through a “first come, first served” mechanism.
The Parties agree to review after 2005 the annual TPQ´ s to adjust it in the light of the experience in
managing it and the bilateral trade flows.WT/REG124/1
Page 25
ANNEX 2-05
Appellations of Origin and Geographical Indications
1. Israel shall recognize Tequila and Mezcal as geographical indications or appellations of origin
of Mexico in respect to beverages.  Therefore, Isra el, in accordance with its legislation, shall ensure
Mexico the legal means to enforce those rights against any import, manufacture or sale of any
beverage, as Tequila and Mezcal, that is not manufactured in accordance with the Mexican laws and
regulations applicable to those geographical indications or appellations of origin.
2. Articles 22 to 24 of the WTO Agreement on Trad e-Related Aspects of  Intellectual Property
Rights shall be applicable to the above mentioned geographical indications.WT/REG124/1
Page 26
CHAPTER III
Rules of Origin
Article 3-01
Definitions
For purposes of this Chapter:
Customs Valuation Code means  the WTO Agreement on Implementation of Article VII of the
GATT 1994, including its interpretative notes;
direct overhead  means overhead incurred during a period, directly related to the good, other than
direct material costs and direct labour costs;
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 means goods that are interchangeable for commercial purposes, whose properties are
essentially identical, not practical to distinguish by the naked eye;
fungible materials  means materials that are interchangeable for commercial purposes and whose
properties are essentially identical;
Generally Accepted Accounting Principles means the recognized consensus or substantial
authoritative support in the territory of a Party w ith respect to the recording of revenues, expenses,
costs, assets and liabilities, the disclosure of information and the preparation of financial statements.
These standards may encompass broad guidelines of general application as well as detailed standards,
practices and procedures;
goods wholly obtained or produced entirely in the territory of one or both Parties:
(a) mineral goods extracted in the territory of one or both of the Parties;
(b) vegetable goods harvested in the territory of one or both Parties;
(c) live animals born and raised in the territory of one or both Parties;(d) goods obtained from hunting or fishing in the territory of one or both Parties;
(e) fish, shellfish and other marine species taken from the sea by vessels registered or
recorded with a Party and flying its flag;
(f) goods produced on board factory ships from the goods referred to in subparagraph (e)
provided such factory ships are registered or recorded with a Party and fly its flag;
(g) goods taken by a Party or a person of a Party from the seabed or beneath the seabed
outside territorial waters, provided that a Party has rights to exploit such seabed;
(h) waste and scrap derived from:
(i) production in the territory of one or both Parties;  orWT/REG124/1
Page 27
(ii) used goods collected in the territory of one or both Parties, provided such
goods are fit only for the recovery of raw materials;  or
(i) goods produced in the territory of one or both Parties exclusively from goods referred
to in subparagraphs (a) through (h), or from their derivatives, at any stage ofproduction;
identical or similar goods  means "identical goods " and "similar goods", respectively, as defined 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 a good used in the maintenance of buildings or the operation
of equipment associated with the production of a good, including:
(a) fuel and energy;
(b) tools, dies and molds;
(c) spare parts and materials used in the maintenance of equipment and buildings;
(d) lubricants, greases, compounding materials and other materials used in production or
used to operate equipment and buildings;
(e) gloves, glasses, footwear, clothing, safety equipment and supplies;
(f) equipment, 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 thatproduction;
indirect overhead  means overhead incurred during a period, other than direct overhead, direct labour
costs and direct material costs;
intermediate material  means a material that is self-produced and used in the production of a good,
and designated pursuant to Article 3-07;
material  means a good that is used in the production of another good;
net cost  means total cost less sales promotion, marketin g and after-sales service costs, shipping and
repackaging costs; and royalties, pursuant to the provisions of Annex 3-04 (Calculation of Net Cost);
originating good or material  means a good or material that qualifies as originating under the
provisions of this Chapter;
packing materials and containers for shipment  means goods that are used to protect a good during
transportation, other than packaging materials and containers for retail sale;
place where the producer is located:  in relation to a good, the production plant of that good;
producer  means a person who grows, mines, harvests, fishes, hunts, manufactures, processes or
assembles a good;WT/REG124/1
Page 28
production  means growing, mining, harvesting, fishing, hunting, manufacturing, processing or
assembling a good;
related person  means a person related to another person on the basis that:
(a) they are officers or directors of one another's businesses;
(b) they are legally recognized partners in business;
(c) they are employer and employee;
(d) any person directly or indirectly owns, controls or holds 25 per cent or more of the
outstanding voting stock or shares of each 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;
(g) together they directly or indirectly control a third person;  or
(h) they are members of the same family (natural or adoptive children, brothers, sisters,
parents, grandparents, or spouses);
royalties  means payments made as consideration for technology transference and the right to use or
exploitation of any copyright or intellectual property rights;
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 promotion conferences,
trade shows and conventions; banners; marketing displays; free samples; sales,
marketing and after-sales service literature such as 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, medical insurance and pension
benefits, travelling and living expenses, membership and professional fees, for salespromotion, marketing and after-sales service personnel;
(d) recruiting and training of sales promotion, marketing and after-sales service
personnel, and after-sales training of customers' employees;
(e) product liability insurance premium;
(f) office supplies for sales promotion, marketing and after-sales service of goods;
(g) telephone, mail and other communications for sales promotion, marketing and after-
sales service;WT/REG124/1
Page 29
(h) rent and depreciation of sales promotion, marketing and after-sales service offices
and distribution centers;
(i) property insurance premiums, taxes, costs of utilities, and repair and maintenance of
offices and distribution centers;  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 a good and used in the
production of that good;
shipping and repacking costs  means the costs incurred in the repacking and transportation of a good
outside the territory where the producer or exporter of the good is located;
total cost  means the sum of the following elements, pursuant to Annex 3-04 (Calculation of Net
Cost):
(a) the cost of direct materials used in the production of the good;
(b) the costs of direct labour used in the production of the good;  and(c) an amount of direct and indirect overhead of the good, reasonably allocated to the
good, except for the following:
(i) costs and expenses of a service given by the producer of the good to another
person, where the service is not related to the good;
(ii) costs and losses resulting from a sale of a part of the producer’s company,
which constitutes a discontinued operation;
(iii) the costs related to the cumulative effect of changes in the application of
generally accepted accounting principles;
(iv) the costs and losses resulting from the sale of the producer’s capital assets;(v) costs and expenses related to fortuitous cases or force majeure ;
(vi) profits obtained by the producer of the good, regardless of whether they were
retained by the producer or paid to other persons as dividends and taxes paidon these profits, including taxes on capital gains;  and
(vii) interest costs agreed among related persons exceeding those interests paid at
market interest rate.
transaction value of a good  means the price actually paid or payable for a good with respect to a
transaction of the producer of the good, pursuant to the principles of Article 1 of the Customs
Valuation Code, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the
said Code, regardless of whether the good is sold for export.  For purposes of this definition, the seller
referred to in the Customs Valuation Code shall be the producer of the good;
transaction value of a material  means the price actually paid or payable for a material with respect
to a transaction of the producer of the good, pursuant to the principles of Article 1 of the Customs
Valuation Code, adjusted in accordance with the principles of paragraphs 1, 3 and 4 of Article 8 of the
said Code, regardless of whether the material is sold for export.  For purposes of this definition, theWT/REG124/1
Page 30
seller referred to in the Customs Valuation Code shall be the supplier of the material, and the buyer
referred to in the Customs Valuation Code shall be the producer of the good;  and
used  means used or consumed in the production of goods.
Article 3-02
Application and Interpretation
1. For purposes of this Chapter:
(a) the basis for tariff classification is the Harmonized System;(b) the determination of transaction value of a good or of a material shall be made in
accordance with the principles of the Customs Valuation Code;  and
(c) all costs referred to in this Chapter sha ll be recorded and maintained in accordance
with the generally accepted accounting principles applicable in the territory of the
Party in which the good is produced.
2. For purposes of this Chapter, in applying the Customs Valuation Code to determine the origin
of a good:
(a) the principles of the Customs Valuation Code shall apply to domestic transactions,
with such modifications as may be required by the circumstances, as would apply to
international transactions;  and
(b) the provisions of this Chapter shall prevail over the Customs Valuation Code to the
extent of any difference.
Article 3-03
Originating Goods
1. A good shall originate in the territory of one or both Parties where:
(a) the good is wholly obtained or produced entirely in the territory of one or both
Parties, as defined in Article 3-01;
(b) the good is produced entirely in the territory of one or both Parties exclusively from
materials that qualify as originating pursuant to this Chapter;
(c) the good satisfies the requirements specified in Annex 3-03 (Specific Rules of
Origin)*, as well as all other applicable requirements of this Chapter, when the good
is produced entirely in the territory of one or both Parties from non-originating
materials;  or
(d) except for a good provided for in Chapters 61 through 63 of the Harmonized System,
the good is produced entirely in the territory of one or both Parties, but one or moreof the non-originating materials that are used in the production of the good does not
undergo a change in tariff classification because:
                                                     
* This Annex is available in Office 3006 for consultation.  It is also available on website referred to in
footnote 1.WT/REG124/1
Page 31
(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
Rule 2(a) of the General Rules of the Harmonized System;  or
(ii) the heading for the good provides for both, the good itself and its parts and
specifically describes both the good itself and its parts and is not further
subdivided into subheadings, or the subheading for the good provides for and
specifically describes both, the good itself and its parts;
provided that the regional value content of the good, determined in accordance with
Article 3-04, is not less than 45 per cent where the transaction value method is used,or is not less than 35 per cent where the net cost method is used, and that the good
satisfies all other applicable requirements of this Chapter, unless otherwise provided
in the Annex 3-03 (Specific Rules of Origin).
2. For purposes of this Chapter, the production of a good from non-originating materials that
undergo an applicable change in tariff classification and satisfy other requirements, as specified in
Annex 3-03 (Specific Rules of Origin), shall occur en tirely in the territory of one or both Parties and
every regional value content of a good shall be entirely satisfied in the territory of one or both Parties.
3. For purposes of Article 2-03(8), a good classified in Chapter 50 through 63 may satisfy the
requirements specified in the Annex 3-03(3) a nd shall be considered as an originating good.
4. Notwithstanding paragraphs 1 and 2, the Parties may agreed that for any specifically
identified product or sector, the acquisition of originating status under the conditions set out in
paragraph 1 shall not be affected if the good undergoes working or processing outside the Parties and
are subsequently re-imported, provided that:
(a) it can be demonstrated to the satisfaction of the customs authorities that:
(i) the re-imported goods result from the working or processing of the exported
materials;  and
(ii) the total added value acquired outside the territory of one or both Parties
concerned through the application of this Article does not exceed 10 per cent
of the F.O.B. price of the final product for which originating status is claimed;
or
(iii) the working and processing carried out outside the territory of the Parties does
not go beyond the non-qualifying operations listed in Article 3-16;  and
(b) the good satisfies all requirements set out in paragraph 1.
Article 3-04
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 eitherthe transaction value method set out in paragraph 2 or the net cost method set out in paragraph 4.WT/REG124/1
Page 32
2. For purposes of calculating the regional value content of a good on the basis of the transaction
value method, the following formula shall be applied:
TV - VNM
RVC= -------------- x 100
  TV
where
RVC: the regional value content, expressed as a percentage;TV: transaction value of the good adjusted to a F.O.B. basis,
except as provided in paragraph 3;  and
VNM: value of non-originating materials used by the producer in
the production of the good determined pursuant to
Article 3-05.
3. For purposes of paragraph 2, when the producer of the good does not export it directly, the
transaction value of the good shall be adjusted to the point where the buyer receives the good in the
territory where the producer is located.
4. For purposes of calculating the regional value content of a good on the basis of the net cost
method, the following formula shall be applied:
 NC - VNM
RVC= -------------- x 100
  NC
where
RVC: regional value content, expressed as a percentage;NC: net cost of the good;  andVNM: value of non-originating materials used by the producer in
the production of the good determined pursuant to
Article 3-5.
5. Each Party shall provide that an exporter or producer shall calculate the regional value
content of a good solely on the basis of the net cost method set out in paragraph 4 where:
(a) there is no transaction value where the good is not the subject of a sale;
(b) the transaction value of the good cannot be determined where there are restrictions on
the disposition or use of the good by the buyer, other than restrictions that:
(i) are imposed or required by law or by the public authorities of the Party where
the buyer of the good is located;
(ii) limit the geographical area in which the good may be resold;  or(iii) do not substantially affect the value of the good;WT/REG124/1
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(c) the sale or price is subject to a condition or consideration for which a value cannot be
determined with respect to the good;
(d) part of the proceeds of any subsequent resale, disposal or use of the good by the buyer
will accrue directly or indirectly to the seller, unless the proper adjustment pursuantto Article 8 of the Customs Valuation Code can be made;
(e) the buyer and seller are related persons and their relationship between them
influenced the price, except as provided in Article 1.2 of the Customs Valuation
Code;
(f) 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 producer sold the good exceeds
85 per cent of the producer's total sales of such goods during that period;
(g) the exporter or producer chooses to accumulate the regional value content of the good
in accordance with Article 3-08;  or
(h) the good is designated as an intermediate material under Article 3-07 and is subject to
a regional value-content requirement.
6. Except for the goods specified in Article 3-15, a producer may average the regional value
content for one or all the goods classified in the same subheading that he produces in the same plant
or in several plants in the territory of one Party, on the basis of either all the goods produced by the
producer or only those goods exported to the territory of the other Party:
(a) in its fiscal year or period;  or
(b) in any period of one, two, three, four or six months.
Article 3-05
Value of Materials
1. The value of a material:
(a) shall be the transaction value of the material;  or(b) in the event that there is no transaction value or the transaction value of the material is
unacceptable under Article 1 of the Customs Valuation Code, shall be determined in
accordance with the principles set out in Articles 2 through 7 of the Customs
Valuation Code.
2. Where not included under subparagraph (a) or (b) of paragraph 1, the value of a material shall
include:
(a) freight, insurance, packing and all other co sts incurred in transporting the material to
the importation port in the territory of the Party where the producer of the good is
located, except as provided in paragraph 3;  and
(b) the cost of waste and spoilage resulting from the use of the material in the production
of the good, less the value of reusable scrap or by-product.WT/REG124/1
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3. The value of a non-originating material shall not include where the producer acquires the
material in the territory of the Party where the produc er is located, freight, insurance, packing and all
other costs incurred in transporting the material from the warehouse of the supplier to the place where
the producer is located; as well as any other known and ascertainable cost incurred in the territory of
the producer of the good.
4. For purposes of determining the regional value content under Article 3-04, the value of non-
originating materials used by the producer in the production of the good shall not include the value of
the non-originating materials used by:
(a) another producer in the production of an originating material, which is acquired and
used by the producer of the good in the production of such good;  or
(b) the producer of the good in the production of a self-produced originating material,
which is designated by the producer as an intermediate material under Article 3-07.
Article 3-06De Minimis
1. 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 an applicable change in tariffclassification set out in Annex 3-03 (Specific Rules of Origin) is not more than 10 per cent of the
transaction value of the good, adjusted to the basis set out in paragraphs 2 or 3, as the case may be, of
Article 3-04 or, in the cases referred to in subparagraphs (a) through (e) of paragraph 5 of
Article 3-04, the value of all such non-originating materials is not more than 10 per cent of the total
cost of the good.
2. Where that same good is also subject to a regional value content, the value of such non-
originating materials shall be taken into account in determining the regional value of the good and the
good shall be required to satisfy all other applicable requirements under this Chapter.
3. A good that is subject to a regional value-content requirement pursuant to Annex 3-03
(Specific Rules of Origin) shall not be required to satisfy such requirement if the value of all non-originating materials is not more than 10 per cent of the transaction value of the good, adjusted to the
basis set out in paragraphs 2 or 3, as the case may be, of Article 3-04 or, in the cases referred to in
subparagraphs (a) through (e) of paragraph 5 of Article 3-04, the value of all such non-originating
materials is not more than 10 per cent of the total cost of the good.
4. Paragraph 1 does not apply to:
(a) a good provided for in Chapters 50 through 63 of the Harmonized System;  or
(b) a non-originating material used in the production of goods provided for in
Chapters 01 through 19 and 22 through 27 of the Harmonized System, except where
the non-originating material is provided for in a different subheading to the good for
which the origin is being determined under this Article.
5. A good provided for in Chapters 50 through 63 of the Harmonized System that does not
originate because certain fibers or yarns used in the production of the material that determines the
tariff classification of the good do not undergo an applicable change in tariff classification set out in
Annex 3-03 (Specific Rules of Origin), shall nonetheless be considered to originate if the total weight
of all such fibers or yarns in that material is not more than 7 per cent of the total weight of such
material.WT/REG124/1
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Article 3-07
Intermediate Materials
1. For purposes of determining the regional value content under Article 3-04, the producer of the
good may designate as an intermediate material, any self-produced material used in the production of
the good that satisfies the requirements of Article 3-03.
2. Where an intermediate material is subject to a regional value content under subparagraph (d)
of paragraph 1 of Article 3-03 or to Annex 3-03 (Specific Rules of Origin), the regional value content
shall be determined on the basis of the net cost method provided for in paragraph 4 of Article 3-04.
3. For purposes of determining the regional value content of a good, the value of the
intermediate material shall be the total cost that  can be reasonably allocated to that intermediate
material pursuant to Annex 3-04 (Calculation of Net Cost).
4. Where a material that has been designated as intermediate material is subject to a regional
value content, no other self-produced material subject to a regional value content used in the
production of such intermediate material may, at the same time, be designated by the producer as
intermediate material.
Article 3-08
Accumulation
For purposes of determining whether a good is an originating good, a producer may
accumulate his production with one or more producers in the territory of one or both Parties, of
materials incorporated in the good, in a manner that the production of materials be considered to have
been performed by that producer, provided that the provisions of Article 3-03 are satisfied.
Article 3-09
Fungible Goods and Materials
1. For purposes of determining whether a good is an originating good, where originating and
non-originating fungible materials that are commingled  in an inventory, are used in the production of
a good, the origin of the materials may be determined pursuant to an inventory management method
set out in paragraph 3.
2. Where originating and non-originating fungible goods are commingled and, prior to
exportation do not undergo any production process or any operation in the territory of the Party where
they were commingled other than unloading, loadin g or any other operation necessary to preserve it in
good condition or to transport the good to the territory of the other Party, the origin of the good may
be determined on the basis of any of the inventory management methods set out in paragraph 3.
3. The inventory management methods for fungible goods or materials shall be the following:
(a) “FIFO method” (first in-first out) is th e inventory management method by which the
origin of the number of fungible goods or materials first received in the inventory is
considered to be the origin of the same number of fungible goods or materials firstwithdrawn from the inventory;WT/REG124/1
Page 36
(b) “LIFO method” (last in-first out) is th e inventory management method by which the
origin of the number of fungible goods or materials last received in the inventory is
considered to be the origin of the same number of fungible goods or materials first
withdrawn from the inventory;  or
(c) “average method” is the inventory management method by which, except as provided
in paragraph 4, the origin of fungible goods or materials is determined through the
following formula:
     TOM
AOM= --------------- x 100
     TONM
AOM: average of originating fungible materials or goods;TOM: total units of fungible originating goods or materials in the inventory prior to
the shipment;  and
TONM: total sum of units of fungible originating and non-originating goods or
materials in the inventory prior to the shipment.
4. Where a good is subject to a regional value content, the determination of non-originating
fungible materials shall be made through the following formula:
     TNM
ANM= --------------- x 100
     TONM
where
ANM: average of non-originating materials;TNM: total value of fungible non-originating materials in the inventory prior to the
shipment;  and
TONM: total value of fungible originat ing and non-originating materials in the
inventory prior to the shipment.
5. Once an inventory management method set out in paragraph 3 has been chosen, it shall be
used through all the fiscal year or period.
Article 3-10
Sets, Kits or Composite Goods
1. Sets, kits and composite goods classified pursuant to Rule 3 of the General Rules of
Interpretation of the Harmonized System, and the goods specifically described as a set, kit or
composite goods in the nomenclature of the Harmonized System, shall qualify as originating, where
every good contained in the set, kit or composite goods satisfies the applicable rule of origin for eachof them under this Chapter.
2. Regardless of the provisions of paragraph 1, a set, kit or composite goods shall be considered
as originating, if the value of all non-originatin g goods used in the collection of the set, kit or
composite goods does not exceed 15 per cent of the transaction value of the set, kit or compositeWT/REG124/1
Page 37
goods, adjusted to the basis set out in paragraphs 2 or 3, as the case may be, of Article 3-04 or, in the
cases referred to in subparagraphs (a) through (e) of paragraph 5 of Article 3-04, if the value of all
non-originating goods used in the collection of the set, kit or composite goods is not more than
15 per cent of the total cost of the set.
3. The provisions of this Article shall prevail over the specific rules set out in Annex 3-03
(Specific Rules of Origin).
Article 3-11
Indirect Materials
Indirect materials shall be considered to be originating without regard to where the good is
produced and the value of such materials shall be their cost as reported in the accounting records of
the producer of the good.
Article 3-12
Accessories, Spare Parts and Tools
1. Accessories, spare parts or tools delivered with the good that form part of the good's standard
accessories, spare parts or tools, shall be disregarded in determining whether all the non-originatingmaterials used in the production of the good undergo the applicable change in tariff classification set
out in Annex 3-03 (Specific Rules of Origin), provided that:
(a) the accessories, spare parts or tools are not invoiced separately from the good,
without regard of whether they are separately detached in the commercial invoice;and
(b) the quantities and value of the accessories, spare parts or tools are customary for the
good.
2. If the good is subject to a regional value-content, the value of the accessories, spare parts or
tools shall be taken into account as originating or non-originating materials, as the case may be, incalculating the regional value content of the good.
Article 3-13
Packaging Materials and Containers for Retail Sale
1. Packaging materials and containers in which a good is packaged for retail sale shall, if
classified 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 set out in
Annex 3-03 (Specific Rules of Origin).
2. If the good is subject to a regional value-content requirement, the value of such packaging
materials and containers for retail sale shall be taken into account as originating or non-originating
materials, as the case may be, in calculating the regional value content of the good.WT/REG124/1
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Article 3-14
Packing Materials and Containers for Shipment
1. Packing materials and containers in which a good is packed for shipment shall be disregarded
in determining whether all non-originating materials used in the production of the good undergo an
applicable change in tariff classification set out in Annex 3-03 (Specific Rules of Origin).
2. Where the good is subject to a regional value content, the packing materials and containers
for the shipment of the good shall be considered as originating and non-originating, as the case may
be in calculating the regional value content of the good, and the value of such materials shall be their
cost as reported in the accounting records of the producer of the good.
Article 3-15
Automotive Goods
1. For purposes of this Article:
class of motor vehicles  means any one of the following categories of motor vehicles:
(a) motor vehicles provided for in subheading 8702.10 or 8702.90, where they are motor
vehicles for the transport of 16 or more persons, or in subheading 8701.20, 8704.10,
8704.22, 8704.23, 8704.32 or 8704.90, or heading 87.05 or 87.06;
(b) motor vehicles provided for in  subheading 8701.10 or 8701.30 through 8701.90;
(c) motor vehicles provided for in subheading 8702.10 or 8702.90 where they are motor
vehicles for the transport of 15 or fewer persons, or subheading 8704.21 or 8704.31;
or
(d) motor vehicles provided for in subheading 8703.21 through 8703.90;
model line  means a group of motor vehicles having the same platform or model name;
model name  means the word, group of words, letter or letters, number or numbers or similar
designation assigned to a motor vehicle by a marketing division of a motor vehicle assembler to:
(a) differentiate the motor vehicle from other motor vehicles that use the same platform
design;
(b) associate the motor vehicle with other motor vehicles that use different platform
designs;  or
(c) to denote a platform design;
motor vehicle  means a good provided for in headings 87.01, 87.02, 87.03, 87.04, 87.05 or 87.06;
plant  means a building, or buildings in close proximity but not necessarily contiguous, machinery,
apparatus and fixtures that are under the control of a producer and are used in the production of motor
vehicles;
platform  means the primary load bearing structural asse mbly of a motor vehicle that determines the
basic size of the motor vehicle, and is the structural base that supports the driveline and links theWT/REG124/1
Page 39
suspension components of the motor vehicle for various types of frames, such as the body-on frame or
space-frame, and monoblocks;  and
underbody  means the floor pan of a motor vehicle;
2. For purposes of calculating the regional value content set out in Article 3-04 for a motor
vehicle, the producer may average that calculation in his fiscal year or period 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 the other Party:
(a) the same model line of motor vehicles in the same class of motor 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;(c) the same model line of motor vehicles produced in the territory of a Party;  or
(d) the same class of motor vehicles produced in the territory of a Party.
Article 3-16
Non-Qualifying Operations
1. A good shall not be considered to be an originating good merely by reason of:
(a) dilution with water or another substance that does not materially alter the
characteristics of the good;
(b) simple operations for the maintenance of the good during transportation or storing,
such as ventilation, refrigeration, removal of damaged parts, drying or addition of
substances;
(c) removal of dust, sieving, classification, selection, washing;
(d) packing, repacking or packaging for retail sale;
(e) collection of goods to form sets, kits or composite goods;(f) application of stamps, labels or similar distinctive signs;(g) washing, including removal of oxide, oil, paint or other coverings;(h) mere collection of parts and components classified as a good, according to Rule 2(a)
of the General Rules of Interpretation of the Harmonized System.  The above shall notapply to originating goods previously assembled and then disassembled for
considerations of packaging, handling or transportation;  or
(i) mere disassembly of the good into parts or components.  This shall not apply to
originating goods previously assembled and then disassembled for considerations ofpackaging, handling or transportation.
2. A good shall not be considered originating merely by a production or pricing practice in
respect of which it may be demonstrated, on the basis of a preponderance of evidence, that the object
was to circumvent this Chapter.WT/REG124/1
Page 40
3. The provisions of this Article shall prevail over the specific rules of origin set out in
Annex 3-03 (Specific Rules of Origin).
Article 3-17
Transshipment and Direct Expedition
1. A good shall not be considered to be an originating good, even if it has undergone production
that satisfies the requirements of Article 3-03 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 tothe territory of the other Party.
2. A good shall not loose its originating condition where, in transit through the territory of one
or more countries that are non Parties, with or without transshipment or temporary storage, under
surveillance of the customs authorities of such countries:
(a) transit is justified by geographical or transportation requirement considerations;(b) the good is not destined to trade or use in the transit country or countries;  and
(c) during transportation and storage the good is not submitted to operations other than
packing, packaging, loading, reloading or operations to preserve it in good conditions.
3. Notwithstanding paragraph 1 and 2, within a y ear from the entry into force of the Agreement,
the Parties shall agree on the condition and procedures  required in order to allow that an originating
good, which is transshipped without customs supervision through the territory of a non Party with
each Party has entered separately into a free trade agreement under Article XXIV of GATT 1994
before the year 1999, will not lose its originating status.
Article 3-18
Consultation and Modifications
1. The Parties hereby establish a Committee on Rules of Origin and Customs Procedures,
comprising representatives of each Party, which shall meet on the request of either Party.
2. The Committee shall:
(a) ensure the effective implementation and administration of this Chapter and
Chapter IV (Customs Procedures);
(b) agree on the interpretation, application and administration of this Chapter and
Chapter IV(Customs Procedures);
(c) endeavor to agree on:
(i) tariff classification and customs valuation matters relating to determinations
of origin;
(ii) equivalent procedures and criteria for the request, approval, issuing,
modification, revocation and implementation of advance rulings;  orWT/REG124/1
Page 41
(iii) review the Certificate of Origin or the Declaration of Origin set out in
Article 4-02
(d) consider the proposed customs-related administrative and operational modifications
that may affect the flow of trade between the Parties;
(e) revise Article 4-05;(f) propose to the Commission any modification or addition to Annex 3-03 (Specific
Rules of Origin);
(g) propose to the Commission the implementation of the Uniform Procedures
established in accordance with Article 4-12, as well as any modification or addition to
them;  and
(h) consider any other matter as the Parties may agree related to this Chapter and
Chapter IV (Customs Procedures).
3. The Parties will consult regularly and shall cooperate to ensure that this Chapter and
Chapter IV (Customs Procedures) are applied in an effective and uniform manner, in accordance with
the spirit and the objectives of this Agreement.WT/REG124/1
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ANNEX 3-03(3)
Rules of Origin for certain Goods classified in Chapter 50 through 63
of the Harmonized System under Tariff Preferential Quotas
50.01-60.02 A change to yarns or fabrics classified in heading 50.01 through 60.02 from fiber
or yarn produced or obtained outside the free trade area, provided that the good is
spun, woven or knitted in a Party;  or
52.04 A change to this heading from any other heading, except from any of
headings 52.05 through 52.07;  or
A change to heading 52.04 from heading 52.05 through 52.07, whether or not
there is also a change from any other h eading, provided that the change is the
result of dyeing or bleaching, and l ubrication and precision winding;  or
1. 54.01 A change to heading 54.01 from any other heading, except from heading 54.02;  or
A change to heading 54.01 from heading 54.02, whether or not there is also a
change from any other chapter, provided that the change involves uptwisting,
dyeing or bleaching or thermofixing a nd lubrication and precision winding;  or
55.08 A change to heading 55.08 from any other heading, except from heading 55.09
through 55.11;  or
A change to heading 55.08 from heading 55.09 through 55.11, whether or not
there is also a change from any other h eading, provided that the change is the
result of dyeing or bleaching, and l ubrication and precision winding;  or
56.01-59.11 a change to heading 56.01 through 59.11 from any other chapter, including another
chapter within that group.
61.01-63.10 A change to heading 61.01 through 63.10 from fabric or yarn produced or obtained
outside the free trade area provided that the good is both cut (or knitted to shape)and sewn or otherwise assembled in the territory of a Party;  or
61.01-61.17 A change to heading 61.01 through 61.17 other than garment parts, from not more
than six major garment parts or other garment parts that were the result of change
from any other chapter, except from non-originating material of chapter 60 andmay undergo assembly, which is less than substantial assembly, outside the
territory of the Parties, provided it is subsequently reimported into the territory of
the Party;  or
62.01-62.17 A change to heading 62.01 through 62.17 other than garment parts, from not more
than six major garment parts or other garment parts that were the result of change
from any other chapter, except from non-originating materials of heading 50.07,
51.11 through 51.13, 52.08 through 52.12, 53.09 through 53.11, 54.07
through 54.08 or 55.12 through 55.16 and may undergo assembly, which is less
than substantial assembly, outside the territory of the Parties, provided it issubsequently re-imported into the territory of the Party.
Note 1: For the purposes of the rules of origin of heading 52.04, 54.01 or 55.08, the
following definitions shall apply:WT/REG124/1
Page 43
Uptwisting of yarn: means twisting the yarn in “S” direction or “Z” direction; the
process of twisting yarn on the uptwister.  The yarn to be twisted, which has been
wound on a balanced support package, is placed on a revolving spindle.  The yarn
from the revolving supply package is fed upward through a gathering eye or guide,over a stop motion and a tension bar o bars, through a traversing guide, and onto
the revolving collecting package.
Thermofixing: A process of heating in autoclave for the purpose of twist setting or
of lowering the shrinkage rate;
Lubricating (called also dressing): is a finishing treatment designed to facilitate the
use of textile yarn as sewing thread, for example, by giving it antifriction
properties or thermal resistance, preventing the formation of static electricity or
improving its appearance.  Such treatment involves the use of substances based on
silicones, starch, wax, paraffin, etc.
Precision winding: winding is the process of transferring yarn or thread from one
type of package to another to facilitate subsequent processing.  The rehandling of
yarn is an integral part of the fiber and textile industries.  Not only must be
package and the yarn itself be suitable for processing on the next machine in the
production process, but also other factors such as packing cases. pressure due towinding tension, etc. must be considered.  Basically, there are two types of
winding machines: precision winders and drum winders.  Precision winders, used
primarily for filament yarn, have a traverse driven by a cam that is synchronized
with the spindle and produce package with diamond-patterned wind.
Note 2: for the purposes of the rules of origin of heading 61.01 through 61.17 or 62.01
through 62.17 "substantial assembly" means the sewing together or other assembly
of six or more major or other parts of a good of this chapter.
Note 3: for purposes of the rules of origin of heading 61.01 through 61.17 or 62.01
through 62.17 "major garment parts" means integral components of the garment,
but does not include such parts as collars, cuffs, waistbands, plackets, pockets,lining, padding, accessories, or the like.WT/REG124/1
Page 44
ANNEX 3-04
Calculation of Net Cost
Section A - Definitions
For purposes of this Annex:
allocation base  means any of the following allocation bases that are used by the producer for
calculating the cost ratio with respect to the good:
(a) the sum of the direct labour costs and the direct material costs of the good;(b) the sum of the direct labour costs, the direct material costs and the direct overhead of
the good;
(c) direct labour hours or direct labour costs;(d) units produced;(e) machine-hours;
(f) sales amount;
(g) floor space; or(h) any other allocation bases that are considered reasonable and measurable;
internal management purpose  means any procedure for costs allocation that is used for purposes
relating to tax reporting, financial reporting, internal control, financial planning, decision-making,
pricing, cost recovery, cost control management or performance measurement;  and
non-allowable costs  means sales promotion, marketing and after-sales service costs; royalties,
shipping and repackaging costs.
Section B - Calculation of the Net Cost
1. The net cost is calculated in accordance with the following formula:
NC = TC - NAC
where:
NC: net cost.TC: total cost.NAC: non-allowable costs.
2. For purposes of calculating the total cost:
(a) the producer of the good may choose to average the total cost with respect to the good
and other identical or similar goods produced in a single plant by the producer over:WT/REG124/1
Page 45
(i) a month;  or
(ii) any consecutive period longer than a month that is evenly divisible into the
number of months of the producer’s fiscal year or period;
(b) for purposes of subparagraph (a), the producer of the good shall consider all the
good’s units produced within the chosen period.  The producer may not rescind or
modify that period, once elected;
(c) for purposes of calculating total cost, where the producer of the good is using, for an
internal management purpose, a cost allocation method to allocate to the good the
direct material costs, the direct labour costs or the direct or indirect overhead or partthereof, and that method reasonable reflects the direct material costs, the direct labour
costs or direct or indirect overhead incurred in the production of the good, that
method shall be considered as a method to reasonable allocate costs and shall be used
to allocate the costs to the good;
(d) the producer of the good may determine a reasonable costs amount, when those costs
have not been allocated to the good, as follows:
(i) with respect to direct material costs and direct labour costs, on the basis of
any method that reasonably reflects the direct material and direct labour usedin the production of the good;  and
(ii) with respect to direct and indirect overhead, the producer of the good may
choose one or more allocation bases that reflect a relationship between the
overhead and the good, in accordance with subparagraphs (f) and (g);
(e) the producer of the good may choose any reasonable costs allocation method, which
shall be used throughout the producer’s fiscal year or period;
(f) with respect to each allocation base, the producer may chose to calculate a cost ratio
for each good produced, in accordance with the following formula:
AB
CR=-------------- x 100
TAB
where
CR: cost ratio with respect to the good;AB: allocation base for the good;  and
TAB: total allocation base for all the goods produced by the producer of the good.
(g) the costs with respect to which an allocation base is chosen are allocated to a good in
accordance with the following formula:
CAG =    CA   x   CR
where
CAG: costs allocated to the good;WT/REG124/1
Page 46
CA: costs to be allocated;  and
CR: cost ratio with respect to the good.
(h) for purposes of calculating the net cost, where non-allowable costs are included in the
total cost to be allocated to a good, the cost ratio used to allocate those costs to the
good shall be used to determine the amount of non-allowable costs to be subtracted
from the total cost allocated to the good;  and
(i) any costs allocated in accordance with any reasonable costs allocation method that is
used for internal management purpose are considered not to be reasonable allocated,when it may be demonstrated, on the basis of a preponderance of evidence, that the
object was to circumvent the provisions of this Chapter.
3. Where the producer of a good has calculated the regional value content of the good under the
net cost method on the basis of estimated costs (including standard costs, budgeted forecasts or othersimilar estimating procedures), before or during the chosen period, as set out in paragraph 2(a), the
producer shall conduct an analysis, at the end of th e producer’s fiscal year or period, of the actual
costs incurred over that period with respect to the production of the good, in accordance with the
provisions of this Annex.WT/REG124/1
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CHAPTER IV
Customs Procedures
Article 4-01
Definitions
1. For purposes of this Chapter:
competent authority  means the authority that, according to the legislation of each Party, is
responsible for the administration of its customs laws and regulations.  The names of such authorities
are listed in Annex 4-01 (Competent Authorities);
commercial importation  means the importation of a good into the territory of a Party for the purpose
of sale, or any commercial, industrial or other like use;
customs value means the value of a good for purposes of calculating customs duties according to the
legislation of each Party;
determination of origin  means a determination issued as a result of a verification of origin that
determines whether a good qualifies as an originating good in accordance with Chapter III (Rules of
Origin);
exporter  means an exporter located in the territory of the Party from which the good is exported and
who, under this Chapter, is required to maintain in th e territory of that Party the records referred to in
Article 4-06(1)(a);
identical goods  means goods that are the same in all respects, including physical characteristics,
quality and reputation, irrespective of minor differences in appearance that are not relevant to a
determination of its origin under Chapter III (Rules of Origin);
importer means  an importer located in the territory of a Party, to which the good is imported, who,
under this Chapter, is required to maintain, in the territory of that Party, the records referred to in
Article 4-06(1)(b);
preferential tariff treatment  means the duty rate applicable to an originating good in accordance
with this Agreement;
producer  means “producer”, according to Article 3-01, located in the territory of a Party, who is
required to maintain, in the territory of that Party, the records referred to in Article 4-06(1)(a);
valid certificate of origin  means a certificate of origin in the format referred to in Article 4-02(1),
completed, signed and dated by the exporter of the good, in accordance with the provisions of this
Chapter and with its instructions;  and
value  means the value of a good or material for purposes of applying Chapter III (Rules of Origin).
2. Except as otherwise defined in this Article, the definitions of Chapter III (Rules of Origin) are
incorporated herein.WT/REG124/1
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Article 4-02
Certificate and Declaration of Origin
1. For purposes of this Chapter, prior to the implementation of this Agreement, the Parties shall
establish a unique form for the Certificate and the Declaration of Origin, and may thereafter revise the
form by agreement.
2. The Certificate of Origin referred to in paragraph 1, will have the purpose of certifying that a
good being exported from the territory of one Party into the territory of the other Party is considered
to qualify as an originating good.
3. Each Party shall require its exporters to complete and sign a Certificate of Origin for any
exportation of a good for which an importer may claim preferential tariff treatment.
4. Each Party shall provide that where an exporter is not the producer of the good, the exporter
may complete and sign a Certificate of Origin on the basis of:
(a) the Declaration of Origin referred to in paragraph 1, for the good subject to
exportation which shall be completed and signed by the producer of the good and
voluntarily provided to the exporter by the producer;  and
(b) the exporter's knowledge of whether the good qualifies as an originating good.
5. Each Party shall provide that a Certificate of Origin that has been completed and signed by an
exporter in the territory of the other Party, whether or not he is also the producer of the good, be
applicable to:
(a) a single importation of a good into the Party's territory;  or(b) multiple importations of identical goods into  the Party's territory that occur within a
specified period, not exceeding 12 months, as indicated in the Certificate of Origin by
the exporter,
and shall be accepted by its competent authority for two years after the date on which the Certificate
was signed.
6. Each Party shall provide that where originating goods imported under a valid Certificate of
Origin are invoiced in the territory of a non-Party, the importing Party shall grant preferential tarifftreatment, provided that such goods are shipped dire ctly from the territory of the other Party, subject
to the provisions of Article 3-17.
7. The Certificate of Origin for a good imported into the territory of the importing Party shall be
completed in one of the official languages of this Agreement.  If the Certificate of Origin is notcompleted in the official language of the importing Party, a translation into the English language shall
be attached thereto.  If the Certificate of Origin is completed in the English language, a translation
into the Spanish or the Hebrew language shall not be required.
Article 4-03
Obligations Regarding Importations
1. Each Party shall require an importer that claims preferential tariff treatment for a good
imported into its territory from the territory of the other Party to:WT/REG124/1
Page 49
(a) make a written declaration on the import document provided for in its legislation, on
the basis of a valid Certificate of Origin, that the good qualifies as an originating
good;
(b) have the original Certificate of Origin in its possession at the time such declaration is
made;
(c) provide, on the request of the competent authority of the importing Party, a copy of
the original Certificate of Origin;  and
(d) promptly submit a corrected declaration and pay any duties owed, where the importer
has reason to believe that the Certificate of Origin on which a declaration was based
contains incorrect information.  Where the importer submits the above mentioned
declaration before the competent authority initiates the exercise of its powers to
conduct a verification, he shall not be subject to penalties, according to the legislation
of each Party.
2. Each Party shall provide that where an importer fails to comply with any of the requirements
established in paragraph 1 of this Article, that Party may deny the preferential tariff treatment
requested for the good imported from the territory of the other Party.  However, where a Certificate of
Origin is illegible or defective on its face or contains minor formal errors that may affect the accuracyof the Certificate of Origin, the importer shall be granted a period not less than five working days to
provide the customs administration with a copy of the corrected certificate.
3. Each Party shall provide that where a good qualified as an originating good when it was
imported into the territory of that Party, but no claim for preferential tariff treatment was made at thattime, the importer of the good may, no later than six months after the date on which the written
declaration referred to in Article 4-03(1)(a) was made, despite the fact that he did not have in his
possession a valid Certificate of Origin, apply for a refund of any excess duties paid as the result of
the good not having been accorded preferential tariff treatment, provided that the importer:
(a) submits, if required by the importing Party, a written declaration that the good
qualifies as an originating good on the import document referred to inArticle 4-03(1)(a);
(b) submits at the time of application for a refund:
(i) a copy of the original Certificate of Origin and has the original Certificate of
Origin in his possession;  and
(ii) such other documentation relating to the importation of the good as the
importing Party may require.
Article 4-04
Obligations Regarding Exportations
1. Each Party shall provide that its exporter or producer, who completed and signed a Certificate
or a Declaration of Origin, provide, on request of its competent authority, a copy of the Certificate or
Declaration of Origin, as the case may be.
2. Each Party shall provide that its exporter or a producer that has completed and signed a
Certificate or a Declaration of Origin, and that has reasons to believe that the Certificate or theWT/REG124/1
Page 50
Declaration contains incorrect information, shall prom ptly notify in writing, of any change that could
affect the accuracy or validity of the Certificate or Declaration of Origin to all persons to whom the
certificate or declaration was given, as well as to the competent authority of the importing Party.  The
notification shall be sent by one of the methods stipulated in Article 4-07(2).  If this is done prior to
the commencement of a verification and if the exporter or producer demonstrates that at time ofissuance of the Certificate of Origin he possessed facts upon which he could reasonably rely to the
effect that the good qualified as an originating good, the exporter or producer shall not be subject to
penalties for having submitted an incorrect certificate or declaration.
3. Each Party shall provide that a false certification or declaration of origin by its exporter or
producer, certifying that a good to be exported to the territory of the other Party qualifies as an
originating good shall have the same legal consequences, with appropriate modifications, as wouldapply to its importer for a contravention of its customs laws and regulations regarding the making of a
false statement or representation.
Article 4-05
Exceptions
Provided that the importation does not form part of a series of importations that may be
considered to have been undertaken or arranged for the purpose of avoiding the certification
requirements of Articles 4-02 and 4-03, the Parties shall not require a Certificate of Origin for theimportation of goods in the following cases:
(a) a commercial importation of goods, whose customs value does not exceed one
thousand U.S. dollars or its equivalent am ount in the Party's currency or any other
higher amount that the Party establishes, except that it may require that the invoiceaccompanying the importation include a statement of the importer or of the exporter
certifying that the good qualifies as an originating good;
(b) a non-commercial importation of goods whose customs value does not exceed one
thousand U.S. dollars or its equivalent am ount in the Party's currency or any higher
amount as established by the Party;  and
(c) an importation of a good for which the Party into whose territory the good is imported
has waived the requirement for a Certificate of Origin.
Article 4-06
Records
Each Party shall provide that:
(a) its exporter or producer that completes and signs a Certificate or Declaration of Origin
shall maintain in its territory, for a minimum of five years after the date on which the
Certificate or Declaration was signed, all records and documents relating to the origin
of a good, including records associated with:
(i) the sourcing of, the purchase of, cost of, value of, and payment for, the good
that is exported from its territory;
(ii) the purchase of, cost of, value of, and payment for, all materials, including
indirect materials, used in the production of the good that is exported from its
territory;WT/REG124/1
Page 51
(iii) the production of the good in the form in which the good is exported from its
territory;  and
(iv) the sale of, the shipping route and all points of shipment prior to the
importation of the good that is exported from its territory and invoiced in the
territory of a non Party to the importer in the territory of the other Party;
(b) an importer claiming preferential tariff treatment for a good imported into its Party's
territory from the territory of the other Party, shall maintain, for a minimum of five
years after the date of importation of the good, the original Certificate of Origin and
all other documentation, as the competent authority of the importing Party mayrequire, relating to the importation of the good;  and
(c) an exporter, producer or importer that is required to maintain documents or records
under this Article shall provide copies of  the original thereof to the competent
authority conducting a verification in accordance with Article 4-07, upon requestmade by such competent authority. For this purpose, all copies of records provided
must match with the original documentation from which such copies were made.
Article 4-07
Origin Verification
1. For purposes of determining whether a good imported into its territory from the territory of
the other Party under preferential tariff treatment qualifies as an originating good, the importing Party
may conduct a verification through its competent authority, in the territory of the other Party bymeans of:
(a) written questionnaires to an exporter or a producer in the territory of the other Party;
(b) verification visits to the premises of an exporter or a producer in the territory of the
other Party to review the records and documents that demonstrate the compliance
with the rules of origin, pursuant to Article 4-06 and to observe the facilities used in
the production of the good and, as the case may be, the facilities used in theproduction of the materials used in the production of the good;  or
(c) such other procedure as the Parties may agree.
2. The competent authority of the importing Party shall send the questionnaires and any
communication relating to a verification visit, referred to in paragraphs 1(a) and 1(b), to the exporters
or producers in the territory of the other Party, by any of the following means:
(a) certified or registered mail with confirmation of receipt;
(b) any other method that produces a confirmation of receipt by the exporter or producer;
or
(c) such other method that the Parties may agree.
3. The provisions of paragraph 1 shall not prevent the competent authority of the importing
Party from exercising its powers to conduct verifications in its territory, in relation with the fulfilment
of any other obligation by its own importers, exporters or producers.WT/REG124/1
Page 52
4. The exporter or producer who receives a questionnaire pursuant to paragraph 1(a), shall
answer it correctly and return it within 45 days from the date of its receipt.
5. Each Party shall provide that, where it has rece ived the answer to the questionnaire referred to
in paragraph 1(a) within the period specified therein, and considers that it requires more informationto determine whether the good subject to the verification qualifies as an originating good, it may,
through its competent authority, request additional information from the exporter or producer, by
means of a subsequent questionnaire, in which case, the exporter or producer shall answer it and
return it, within 30 days from the date of its receipt.
6. If the exporter or producer fails to respond correctly to any of the questionnaires referred to in
paragraphs 4 or 5, or does not return it within the period specified therein, the importing Party may
determine that the good subject to the verification does not qualify as an originating good and maydeny it preferential tariff treatment, upon written determination under paragraph 17.
7. The conducting of a verification in accordance with one of the methods set forth in
paragraph 1 shall not preclude the use of another verification method provided for in paragraph 1.
8. Before conducting a verification visit pursuant to paragraph 1(b), the importing Party shall,
through its competent authority, deliver a written notification of its intention to conduct the visit, at
least 30 days in advance of the proposed date of the visit.  The written notification shall be sent to the
exporter or producer whose premises are to be visited and to the competent authority of the Party in
whose territory the visit is to occur.  The competent authority of the importing Party shall obtain thewritten consent of the exporter or producer whose premises are to be visited.
9. The notification referred to in paragraph 8 shall include:
(a) the identity of the competent authority issuing the notification;(b) the name of the exporter or producer whose premises are to be visited;(c) the date and place of the proposed verification visit;(d) the object and scope of the proposed verification visit, including specific reference to
the good or goods subject of the verification referred to in the Certificate(s) orDeclaration(s) of Origin;
(e) the names and titles of the officials performing the verification visit;  and(f) the legal authority for the verification visit.
10. Any modification to the information referred to in paragraph 9, will be notified in writing,
prior to the verification visit, in the manner specified in paragraph 2, to the exporter or producer, and
to the competent authority of the exporting Party.
11. If within 30 days from the date of the notification of the proposed visit under paragraph 8, the
exporter or producer has not given its written consent to such a visit, the importing Party may
determine that the good or goods that would have been the subject of the visit upon written
determination under paragraph 17 do not qualify as originating goods and may deny them preferential
tariff treatment.
12. Each Party shall provide that, where its competent authority receives a notification pursuant
to paragraph 9, it may, within 15 days of receipt of the notification, postpone the proposed verificationWT/REG124/1
Page 53
visit for a period not exceeding 60 days from the date of such receipt, or for such a longer period as
the Parties may agree.
13. A Party shall not deny preferential tariff treatment to a good based solely on the
postponement of a verification visit pursuant to paragraph 12.
14. The Party conducting a verification visit shall permit an exporter or a producer whose good or
goods are the subject of a verification visit, to designate two observers to be present during the visit,
provided that the observers do not participate in a manner other than as observers.  The failure of the
exporter or producer to designate observers shall not result in the postponement of the visit.  The
competent authority of the exporting Party, according to the national procedures and regulations of the
Party conducting the verification may send a representative to be present during the verification visit,upon notifying the competent authority of the importing Party, provided that he be present as an
observer only.
15. The Party conducting the verification of origin of a good imported into its territory under this
Article may determine that a material used in the production of the good is a non-originating materialwhere the producer or exporter of the good, or the producer or supplier of the material, does not
provide the information, documents or records relating to the origin of the material that demonstrate
that the material in question is an originating material.  Such a determination shall not necessarily lead
to a decision that the good, itself, is not originating.
16. Each Party shall, through its competent authority, conduct a verification of a regional value-
content requirement in accordance with the genera lly accepted accounting principles applied in the
territory of the Party from which the good was exported.
17. After carrying out the verification procedures outlined in paragraph 1, the competent authority
of the importing Party shall in the manner specified in paragraph 2, provide the exporter or producerwhose good is subject to the verification, a written determination of whether or not the good qualifies
as an originating good under Chapter III (Rules of Or igin), including findings of fact and the legal
basis for the determination.
18. Where the exporter or producer has failed to respond to or return a questionnaire as set forth
in paragraphs 4 and 6, or has not given its written consent to a verification visit as set forth in
paragraph 11, and the importing Party, denies preferential tariff treatment to the good in question, a
written determination thereof, pursuant to paragraph 17, shall be sent to the exporter or producer, inthe manner specified in paragraph 2.
19. When the Party conducting a verification determines, based on the information obtained
during the verification, that a good does not qualify as an originating good, by written determination
issued under paragraph 17, it shall grant the exporter or producer whose good was the subject of the
verification, 30 days from the date of receipt of the written determination, to provide any additionalcomments or information before denying preferential tariff treatment to the good, and shall issue a
final determination after taking into considerati on any comments or additional information received
from the exporter or producer during the above-mentioned period, and shall send it to the exporter or
producer in the manner specified in paragraph 2.
20. Where the verification completed by a Party indicates that an exporter or a producer has
repeatedly made false or unsupported representations that a good imported into its territory qualifies
as an originating good, the Party may withhold preferential tariff treatment to identical goods exported
or produced by such person until that person establishes compliance with Chapter III (Rules of
Origin).  In taking such an action, the competen t authority of the importing Party shall notify the
person who issued the Certificate of Origin and the competent authority of the exporting Party.WT/REG124/1
Page 54
21. Each Party shall provide that where it determines  that a certain good imported into its territory
does not qualify as an originating good based on a tariff classification or a value applied by the Party
to one or more materials used in the production of the good, which differs from the tariff classification
or value applied to the materials by the Party from whose territory the good was exported, the Party's
determination shall not become effective until it notifies in writing both the importer of the good andthe person that completed and signed the Certificate of Origin for the good and the competent
authority of the other Party.
22. A Party shall not apply a determination made under paragraph 17 to an importation made
before the effective date of the determination where:
(a) the competent authority of the Party from whose territory the good was exported
issued a ruling on the tariff classification or on the value of such materials, on which a
person is entitled to rely;  and
(b) the above mentioned rulings were given prior to the commencement of the origin
verification.
Article 4-08
Confidentiality
1. Each Party shall maintain, in accordance with its legislation, the confidentiality of
information collected pursuant to this Chapter and shall protect that information from disclosure that
could prejudice the competitive position of the persons providing the information.
2. Information obtained pursuant to this Chapter may only be disclosed to those competent
authorities of the Parties responsible for the administration and enforcement of determinations of
origin and customs and other indirect taxes on imports, for the purposes of this Agreement.
Article 4-09
Advance Rulings
1. Each Party shall, through its competent authority, provide for the expeditious issuance of
written advance rulings, prior to the importation of a good into its territory.  The advance rulings shall
be issued by the competent authority of the impor ting Party to its importer or to an exporter or a
producer of the other Party, on the basis of the facts and circumstances presented by such importer,
exporter or producer relating to the origin of the goods.
2. The advance rulings shall concern:
(a) whether a good qualifies as an originating good under Chapter III (Rules of Origin);
(b) whether non-originating materials used in the production of a good undergo an
applicable change in tariff classification set out in the Annex 3-03 (Specific Rules of
Origin);
(c) whether a good satisfies a regional value-content requirement under Chapter III
(Rules of Origin);
(d) whether the method for value to be applied by an exporter or a producer in the
territory of another Party, in accordance with the principles of the Customs Valuation
Code, for calculating the transaction value of the good or of the materials used in theWT/REG124/1
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production of the good for which an advance ruling is requested, is appropriate for the
purpose of determining whether a good satisfies a regional value-content requirement
under Chapter III (Rules of Origin);
(e) whether the method applied by the exporter or producer in the territory of the other
Party for reasonably allocating costs, in accordance with the Annex 3-04 (Calculation
of Net Cost), is appropriate for the purpose of determining whether a good satisfies a
regional value-content under Chapter III (Rules of Origin);  or
(f) such other matters as the Parties may agree.
3. Each Party shall adopt or maintain procedures for the issuance of advance rulings, including:
(a) the information reasonably required by the competent authority to process an
application including whether or not the good or goods in question have been or are
the subject of a verification or an advance ruling;
(b) the right of its competent authority to request, at any time during the course of an
evaluation of an application for an advance ruling, supplemental information from the
person requesting the ruling;
(c) the obligation of the competent authority to issue the advance ruling within 120 days,
after it has obtained all necessary information from the person requesting the ruling;
and
(d) the obligation of the competent authority to issue the advance ruling including
findings of fact and the legal basis for the determination.
The issuance of an advance ruling shall be declined where a good is subject to a verification
of origin or to a review and appeal process in the territory of a Party.
4. Each Party shall provide that the advanced ruling s issued to imports into its territory, shall be
effective as of the date they are issued, or on such later date as may be specified therein, except when
the ruling is modified or revoked pursuant to paragraph 6.  The advance ruling shall be valid only withregards to the person or entity on whose behalf it was issued and as long as the substantial facts and
circumstances upon which it was based are true and accurate and have not been changed or modified.
The issuance of the advance ruling shall not affe ct in any manner whatsoever the right of the
competent authority that issued the ruling to conduct a verification, as set forth in Article 4-07.
5. Each Party shall provide to any person reque sting an advance ruling the same treatment,
including the same interpretation and application of provisions of Chapter III (Rules of Origin)
regarding a determination of origin, as it provided  to any other person to whom it issued an advance
ruling, provided that the facts and circumstances are identical in all material respects.
6. An advance ruling may be modified or revoked by the competent authority that issued the
ruling in the following cases:
(a) if the ruling is based on an error:
(i) of fact;(ii) in the tariff classification of a good or a material that is the subject of the
ruling;  orWT/REG124/1
Page 56
(iii) in the application of a regional value-content requirement under Chapter III
(Rules of Origin);
(b) if the ruling is not in accordance with Chapter III (Rules of Origin) or with an
interpretation agreed by the Parties or a modification regarding Chapter III (Rules ofOrigin);
(c) if there is a change in the material facts or circumstances on which the ruling is based;(d) to conform with an administrative or judici al decision or a change in the domestic law
of the Party that issued the advance ruling;  or
(e) any other relevant factor that could affect the outcome of the advanced ruling.
7. Each Party shall provide that any modification or revocation of an advance ruling shall be
effective on the date on which the modification or revocation is issued, or on such later date as may be
specified therein, and shall not be applied to importa tions of a good that have occurred prior to that
date, unless the person to whom the advance ruling was issued has not acted in accordance with its
terms and conditions or if such person provided false information on which the advanced ruling was
based.
8. Each Party shall provide that where its competent authority examines the regional value
content of a good for which it has issued an advance ruling, it shall evaluate whether:
(a) the exporter or producer has complied with the terms and conditions of the advance
ruling;
(b) the exporter's or producer's operations are consistent with the material facts and
circumstances on which the advance ruling is based;  and
(c) the supporting data and computations used in applying the basis or method for
calculating value or allocating costs were correct in all material respects.
9. Each Party shall provide that where its compet ent authority determines that any requirement
in paragraph 8 has not been satisfied, it may modify or revoke the advance ruling as the circumstances
may warrant.
10. Each Party shall provide that, where its comp etent authority determines that the advance
ruling was based on incorrect information, the person to whom the ruling was issued shall not besubject to penalties, where that person demonstrates that it used reasonable care and acted in good
faith in presenting the facts and circumstances on which the ruling was based, although preferential
tariff treatment may be denied after the completi on of verification procedures in accordance with the
relevant provisions of Article 4-07.
11. Each Party shall provide that where it issues an advance ruling to a person that has
misrepresented or omitted material facts or circumstances on which the ruling is based or has failed to
act in accordance with the terms and conditions of the ruling, the competent authority that issued the
advance ruling may apply such measures as the circumstances may warrant.WT/REG124/1
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Article 4-10
Penalties
Each Party shall establish or maintain measures imposing criminal, civil or administrative
penalties for violations of its laws and regulations relating to this Chapter.
Article 4-11
Review and Appeal
1. Each Party shall grant substantially the same rights of review and appeal of determinations of
origin and advance rulings by its competent authority  as it provides to importers in its territory to
exporters or producers from the other Party who:
(a) complete and sign a Certificate or Declaration of Origin for a good that has been the
subject of a determination of origin, according to paragraph 15 of Article 4-07;  or
(b) have received an advance ruling pursuant to Article 4-09.
2. The right referred to in paragraph 1 includes access to at least one level of administrative
review independent of the official or office resp onsible for the determination under review and in
accordance with its domestic law, judicial or quasi-judicial review of the determination or decision
taken at the final level of administrative review.
Article 4-12
Uniform Procedures
No later than the date of entry into force of this Agreement, the Parties shall, through their
respective administrative regulations or departmental directives, implement the Certificate and
Declaration of Origin, and implement Uniform Procedures that may be necessary for the
administration, application, interpretation and other matters as the Parties may agree of Chapter III
(Rules of Origin) and this Chapter.WT/REG124/1
Page 58
ANNEX 4-01
Competent Authorities
For purposes of this Chapter, “competent authorities” are:
(a) in the case of Israel, the Department of Customs and VAT of the Ministry of Finance;
and
(b) in the case of Mexico, the Ministry of Finance and Public Credit (Secretaría de
Hacienda y Crédito Público) or its successor.WT/REG124/1
Page 59
CHAPTER V
Emergency Actions
Article 5-01
Definitions
For purposes of this Chapter:
competent investigating  authority  means the competent authority of each Party set out in
Annex 5-01;
contribute importantly  means an important cause, but not necessarily the most important cause;
domestic industry  means the producers as a whole of the like or directly competitive product
operating in the territory of a Party;
emergency action  does not include any emergency action pursuant to a proceeding instituted prior to
the entry into force of this Agreement;
good originating in the territory of a Party  means an “originating good”, as defined in Chapter III
(Rules of Origin);
like good  means a good which, although not alike in all respects, has like characteristics and like
component materials which enable it to perform the same functions and to be commercially
interchangeable with the good to which it is compared;
petition  means also complaint;
representative of the domestic industry  means the producers accounting  for at least 50 per cent of
the production of the like or directly competitive good operating in the territory of the importing
Party;
serious injury and threat of serious injury  means “serious injury” and “threat of serious injury”, as
defined in the WTO Agreement on Safeguards and shall be determined in accordance with this
Agreement;  and
transition period  means for each good the period of tariff elimination for that good with the addition
of two years.
Article 5-02
Bilateral Emergency Actions
1. Subject to paragraphs 2 through 4, and during the transition period only, if a good originating
in the territory of a Party, as a result of the reduction or elimination of a customs duty provided for in
this Agreement, is being imported into the territory of the other Party in such increased quantities, in
absolute and relative terms, and under such conditions that the imports of the good from that Partyalone constitute a substantial cause of serious in jury to a domestic industry, the Party into whose
territory the product is being imported may, to the minimum extent necessary to remedy the injury:
(a) suspend the further reduction of any rate of a customs duty provided for under this
Agreement on the product;  orWT/REG124/1
Page 60
(b) increase the rate of a customs duty on the product to a level not exceeding the base
rate of customs duty, as referred to in paragraph 1 of Article 2-03.
2. The following conditions and limitations shall apply to a proceeding that may result in
emergency action under paragraph 1:
(a) the Party initiating such a proceeding shall, without delay, deliver to the other Party
written notice thereof;
(b) any such action shall be taken no later than one year after the date of initiation of the
proceeding;
(c) no action may be maintained beyond the expiration of the transition period, except
with the consent of the Party against whose good the action is taken;
(d) no action may be taken by a Party against any particular good originating in the
territory of the other Party more than two times or for a cumulative period exceeding
two years;  and
(e) upon the termination of the action, the rate of duty shall be the rate which would have
been in effect but for the action.
3. A Party may take a bilateral emergency action after the expiration of the transition period to
deal with cases of serious injury to a domestic industry arising from the operation of this Agreement
only with the consent of the other Party.
Article 5-03
Global Emergency Actions
1. Each Party retains its rights and obligations under Article XIX of GATT 1994, the WTO
Agreement on Safeguards or any other safeguard agreement pursuant thereto except those regarding
compensation or retaliation and exclusion from an action to the extent that such rights or obligationsare inconsistent with this Article.  Any Party taking an emergency action under Article XIX or any
such agreement shall exclude imports of a product from the other Party from the action unless:
(a) imports from the other Party account for a substantial share of total imports;  and
(b) imports from the other Party contribute importantly to the serious injury or threat
thereof caused by total imports.
2. In determining whether:
(a) imports from the other Party account for a substantial share of total imports, those
imports normally shall not be considered to account for a substantial share of total
imports if that Party is not among the top five suppliers and does not supply at least
15 per cent of the good subject to the proceeding, measured in terms of import share
during the most recent representative period, that shall normally be three-years.During the first three years after the entry into force of this Agreement, the import
share may be calculated for a period shorter than three years to the extent not to
include the years before the date of entry into force of this Agreement;  andWT/REG124/1
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(b) imports from the other Party contribute importantly to the serious injury or threat
thereof, the competent investigating author ity shall consider such factors as the
change in the import share of the other Part y and the level and change in the level of
imports of the other Party.  In this regard, imports from the other Party normally shall
not be deemed to contribute importantly to serious injury or threat thereof, if the
growth rate of imports from that Party during the period in which the injurious
increase in imports occurred is appreciably lower than the growth rate of total imports
from all sources over the same period.
3. The following conditions and limitations shall apply to a proceeding that may result in
emergency action under paragraph 1 or 4:
(a) the Party initiating such a proceeding shall, without delay, deliver to the other Party
written notice thereof;
(b) where, as a result of an action, the rate of a customs duty is increased, the margin of
preference shall be maintained;
(c) no action may be taken by a Party against any particular good originating in the
territory of the other Party more than two times or for a cumulative period exceeding
two years;  and
(d) upon the termination of the action, the rate of a customs duty shall be the rate which
would have been in effect but for the action.
4. A Party taking such action, from which a good from the other Party is initially excluded
pursuant to paragraph 1, shall have the right subsequently to include that good from the other Party inthe action in the event that the competent investig ating authority determines that an increase in
imports of such good from the other Party is contributing importantly to the serious injury or threat
thereof and thereby undermines the effectiveness of the action.
Article 5-04
Administration of Emerge ncy Action Proceedings
1. Neither Party may impose restrictions on a product in an action under Articles 5-02 or 5-03:
(a) without delivery of prior written notice to the other Party, and without adequate
opportunity for consultations with the other Party, at least 20 days in advance oftaking the action;  and
(b) that would have the effect of reducing imports of such good from the other Party
below the trend of imports of the good from that Party over a recent representative
base period, which may include dates prior to the increase in imports underArticle 5-02 or 5-03, with allowance for reasonable growth.
2. The Party taking an action pursuant to Article 5-02 or 5-03 shall endeavor to provide to the
other Party a mutually agreed trade liberalizing compensation in the form of concessions having
substantially equivalent trade effects or equivalent to the value of the additional custom dutiesexpected to result from the action.  If the Parties are unable to agree on compensation, the Party
against whose product the action is taken may take tariff action having trade effects substantially
equivalent to the action taken.  The Party taking the tariff action shall apply such action only while the
measure is in force, and shall not exercise this right without delivering adequate opportunity for
consultation.WT/REG124/1
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3. Each Party shall entrust determinations of serious injury, or threat thereof, in emergency
action proceedings to a competent investigating authority, subject to review by judicial or
administrative tribunals.  Negative injury determinations shall not be subject to modification, except
by such review.
4. An emergency action proceeding may be initiated by a petition by or on behalf of the
domestic industry.  The petition shall be considered to have been made on behalf of the domestic
industry if it is supported by those domestic producers whose collective output constitutes more than
50 per cent of the total production of the like good produced by the domestic industry.
5. In special circumstances, a Party may initiate an emergency action proceeding on its own
motion.
6. Where the basis for an investigation is a petition filed by an entity representative of a
domestic industry, the petition shall include adequate and detailed information concerning the
petitioner, as well as all other relevant information to the extent that such information is publiclyavailable from governmental or other sources, or best estimates and their basis if such information is
not available, concerning the following:
(a) the imported good as well as the like or directly competitive domestic good;
(b) representativeness, according to paragraph 4;
(c) import data for a sufficient representative period of no less than two years that form
the basis of the assertion that the imported good is causing or threatening to cause
serious injury;
(d) data on total domestic production of the like or directly competitive good for the same
period;
(e) quantitative and objective data indicating the nature and extent of injury to the
concerned domestic industry, such as data showing changes in the level of sales,
prices, production, productivity, capacity utilization, market share, profits and losses,and employment;  and
(f) evidence showing the existence of causal link, in accordance with Article 4.2(b) of the
WTO Agreement on Safeguards, between increased imports of the product concerned
and the serious injury or threat thereof to the domestic industry.
7. Immediately after initiation, and due regard being paid to the requirement for the protection of
confidential information, the investigating author ity shall make available for review by interested
parties the petition, the assessment of the authority under paragraph 9 and any other data or
information that constitutes the basis for initiation.
8. On initiating an emergency action proceeding concerning the other Party, the competent
investigating authority shall publish notice and notify the other Party of the initiation of the
proceeding.  The notice shall identify the petitioner or other requester, the imported good that is the
subject of the proceeding and its tariff subheading, the nature and timing of the proceedings, includingdates of deadlines for filing briefs, statements and other documents, time and place of hearing if so
decided by the competent authority, the place at which the petition and any other documents filed in
the course of the proceeding may be reviewed, and the name, address and telephone number of the
office to be contacted for more information.WT/REG124/1
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9. The investigating authority shall not publish the notice required under paragraph 8 without
first assessing carefully the existence of the information detailed in paragraph 6 notwithstanding the
initiation is due to a petition or self-motion, and shall determine whether such information is sufficient
in order to justify initiations of the proceedings.
10. In the course of each proceeding, the competent investigating authority shall:
(a) allow interested parties to submit evid ence and their views, including the opportunity
to respond in writing;
(b) hold a hearing upon request, after providing reasonable notice, to allow all interested
parties, and any association whose purpose is to represent the interests of consumersin the territory of the Party initiating the proceeding, to appear in person or by
counsel, to present evidence and to be heard on the questions of serious injury, or
threat thereof, and the appropriate remedy;  and
(c) provide an opportunity to all interested parties and any such association to respond to
presentations made at that hearing.
11. The competent investigating authority shall adop t or maintain procedures for the treatment of
confidential information, protected under domestic law, that is provided in the course of a proceeding,
including a requirement that interested parties and consumer associations providing such informationfurnish non-confidential written summaries thereof, or where they indicate that the information cannot
be summarized, the reasons why a summary cannot be provided.
12. In conducting its proceeding the competent investigating authority shall gather, to the best of
its ability, all relevant information appropriate to the determination it must make.  It shall evaluate allrelevant factors of an objective and quantifiable nature having a bearing on the situation of that
industry, including the rate and amount of the increase in imports of the good concerned, in absolute
and relative terms as appropriate, the share of the domestic market taken by increased imports, and
changes in the level of sales, production, productivity, capacity utilization, profits and losses, and
employment.
13. The competent investigating authority shall not  make an affirmative injury determination
unless its investigation demonstrates, on the basis of objective evidence, the existence of a causal link
between increased imports of the product concerned and serious injury or threat thereof.  Where
factors other than increased imports are causing injury to the domestic industry at the same time, such
injury shall not be attributed to increased imports.
14. The competent investigating authority, before making a final affirmative determination in an
emergency action proceeding, shall allow sufficient time to gather and consider the relevant
information, and to conduct its proceeding in accordance with paragraph 10.
15. The competent investigating authority shall publish promptly a report in accordance with
Article 4.2(c) of the WTO Agreement on Safeguards that shall set forth the findings and reasoned
conclusions of the investigating authority on all pertinent issues of law and fact.
16. In its report, the competent investigating authority shall not disclose any confidential
information provided pursuant to any undertaking concerning confidential information that may havebeen made in the course of the proceedings.WT/REG124/1
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ANNEX 5-01
Competent Investigating Authority
For purposes of this Chapter, “competent authority” means:
(a) in the case of Israel, the Commissioner of Trade Levies, or its successor;  and(b) in the case of Mexico, Secretaría de Comercio y Fomento Industrial (Secretariat of
Trade and Industrial Development), or its successor.WT/REG124/1
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CHAPTER VI
Government Procurement
Article 6-01
Scope and Coverage
1. This Chapter applies to any law, regulation, procedure or practice regarding any procurement
(a) by entities set out in Annex I;
 
(b) of goods in accordance with Annex II, serv ices in accordance with Annex III, or
construction services in accordance with Annex IV;  and
 
(c) where the value of the contract to be awarded is estimated to be equal to or greater
than a threshold as set out in Annex V2.
2. Paragraph 1 is subject to the provisions set out in Annex VI.
3. Subject to paragraph 4, where a contract to be awarded by an entity is not covered by this
Chapter, this Chapter shall not be construed to cover any good or service component of that contract.
4. No Party may prepare, design or otherwise structure any procurement contract in order to
avoid the obligations of this Chapter.
5. This Chapter covers any procurement3 by any contractual means, including through such
methods as purchase, lease, rental or hire purchase, with or without an option to buy, including any
combination of goods and services.
Article 6-02
National Treatment and Non-Discrimination
1. With respect to any law, regulation, procedure or practice regarding government procurement
covered by this Chapter, each Party shall provide immediately and unconditionally to the goods of the
other Party, to the suppliers of such goods and to the services suppliers of the other Party,  treatment
no less favorable than the most favorable treatment that the Party  accords to domestic goods, services
and suppliers.
 
2. With respect to any law, regulation, procedure or practice regarding government procurement
covered by this Chapter, each Party shall ensure:
(a) that its entities shall not treat a locally-established supplier less favorably than
another locally-established supplier on the basis of the degree of foreign affiliation or
ownership;  and,
                                                     
2 The threshold value shall be calculated and adjust ed according to the provisions set out in Annex V.
3 Procurement does not include:
(a) non-contractual agreements or any form of government assistance, including cooperative
agreements, grants, loans, equity infusions, guarantees, fiscal incentives, and government
provision of goods and services to persons or states and municipal governments;  and
(b) the acquisition of fiscal agency or depository services, liquidation and management services
for regulated financial institutions and sale and distribution services for government debt.WT/REG124/1
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(b) that its entities shall not discriminate against locally- established suppliers on the
basis of the country of production of the goods or service being supplied, provided
that the country of origin is the other Party in accordance with Articles 6-03 and 6-04.
3. The provisions of paragraphs 1 and 2 shall not apply to customs duties and charges of any
kind imposed on or in connection with importation, the method of levying such duties and charges,other import regulations and formalities, and measures affecting trade in services other than laws,
regulations, procedures and practices regarding government procurement covered by this Chapter.
Article 6-03
Rules of Origin
1. A Party shall not apply rules of origin to goods  imported from the other Party, for purposes of
government procurement covered by this Chapter, th at are different from the rules of origin applied in
the normal course of trade.
2. Following the conclusion of the work program for the harmonization of rules of origin for
goods to be undertaken under the WTO Agreement on Rules of Origin, the Parties shall take the
results of that work program into account in amending paragraph 1 as appropriate.
Article 6-04
Denial of Benefits
1. A Party may deny the benefits of this Chapter to a service supplier of the other Party, subject
to prior notification and consultation with the other Party, where the Party establishes that the service
is being provided by an enterprise that is owned or controlled by persons of a non-Party and that hasno substantial business activities in the territory of either Party.
2. Following the conclusion of the negotiations regarding trade in services within the framework
of the General Agreement on Trade in Services, the Parties shall take the results of those negotiations
into account in amending paragraph 1 as appropriate.
Article 6-05
Valuation of Contracts
1. The following provisions shall apply in  determining the value of contracts4 for purposes of
implementing this Chapter.
2. Valuation shall take into account all forms of remuneration, including any premiums, fees,
commissions and interest receivable.
3. The selection of the valuation method by the entity shall not be used, nor shall any
procurement requirement be divided, with the intent ion of avoiding the application of this Chapter.
4. If an individual requirement for procurement results in the award of more than one contract,
or in contracts being awarded in separate parts, the basis for valuation shall be either:
                                                     
 4 This Chapter shall apply to any procurement cont ract for which the contract value is estimated to
equal or exceed the threshold at the time of pub lication of the notice in accordance with Article 9.WT/REG124/1
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(a) the actual value of similar recurring contracts concluded over the previous fiscal year
or 12 months adjusted, where possible, for anticipated changes in quantity and value
over the subsequent 12 months;  or
 
(b) the estimated value of recurring contracts in the fiscal year or 12 months subsequent
to the initial contract.
5. In cases of contracts for the lease, rental or hire purchase of goods or services, or in the case
of contracts, which do not specify a total price, the basis for valuation shall be:
(a) in the case of fixed-term contracts, where their term is 12 months or less, the total
contract value for their duration, or, where their term exceeds 12 months, their total
value including the estimated residual value;  or
(b) in the case of contracts for an indefinite period, the monthly installment multiplied
by 48.
If there is any doubt, the second basis for valuation, namely (b), is to be used.
6. In cases where an intended procurement specifies the need for option clauses, the basis for
valuation shall be the total value of the maximum permissible procurement, inclusive of optional
purchases.
Article 6-06
Technical Specifications
1. Technical specifications laying down the characteristics of the goods or services to be
procured, such as quality, performance, safety and dimensions, symbols, terminology, packaging,
marking and labeling, or the processes and methods for their production and requirements relating to
conformity assessment procedures prescribed by procuring entities, shall not be prepared, adopted orapplied with a view to, or with the effect of, creating unnecessary obstacles to international trade.
2. Technical specifications prescribed by procuring entities shall, where appropriate:
(a) be in terms of performance rather than design or descriptive characteristics;  and
(b) be based on international standards, national technical regulations
5, recognized
national standards6 or building codes.
 
3. There shall be no requirement or reference to a particular trademark or trade name, patent,
design or type, specific origin, producer or supplier, unless there is no sufficiently precise or
intelligible way of describing the procurement requirements and provided that words such as "or
equivalent" are included in the tender documentation.
                                                     
 5 For the purpose of this Chapter, a technical regulation is a document which lays down characteristics
of a good or a service or their related processes and production methods, including the applicable administrativeprovisions, with which compliance is mandatory.  It ma y also include or deal exclusively with terminology,
symbols, packaging, marking or labeling requirements as they apply to a product, service, process or productionmethod. 
6 For the purpose of this Chapter, a standard is a document approved by a recognized body, that
provides, for common and repeated use, rules, guidelines or characteristics for goods or services or related
processes and production methods, with which compliance is not mandatory.  It may also include or dealexclusively with terminology, symbols, packaging, marking or labeling requirements as they apply to a good,service, process or production method.WT/REG124/1
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4. Entities shall not seek or accept, in a manner which would have the effect of precluding
competition, advice which may be used in the preparation of specifications for a specific procurement
from a firm that may have a commercial interest in the procurement.
Article 6-07
Tendering Procedures
1. Each Party shall ensure that the tendering procedures of its entities are applied in a non-
discriminatory manner and are consistent with the provisions contained in Articles 6-07 through 6-14.
2. Entities shall not provide to any supplier information with regard to a specific procurement in
a manner, which would have the effect of precluding competition.
3. For the purposes of this Chapter:
(a) open tendering procedures are those procedures under which all interested suppliers
may submit a tender;
 
(b) selective tendering procedures are those procedures under which, consistent with
paragraph 3 of Article 6-10 and other relevant provisions of this Chapter, those
suppliers invited to do so by the entity may submit a tender;  and
 
(c) limited tendering procedures are those procedures where the entity contacts suppliers
individually, only under the conditions specified in Article 6-15.
Article 6-08
Qualification of Suppliers
1. In the process of qualifying suppliers, entities shall not discriminate among suppliers of the
Party or between domestic suppliers and suppliers of the other Party.  Qualification procedures shall
be consistent with the following:
(a) any conditions for participation in tendering procedures shall be published in adequate
time to enable interested suppliers to initia te and, to the extent that it is compatible
with efficient operation of the procurement process, complete the qualification
procedures;
 
(b) any conditions for participation in tendering procedures shall be limited to those
which are essential to ensure the firm's cap ability to fulfil the contract in question.
Any conditions for participation required from suppliers, including financial
guarantees, technical qualifications and information necessary for establishing thefinancial, commercial and technical capacity of suppliers, as well as the verification
of qualifications, shall be no less favorable to suppliers of the other  Party than to
domestic suppliers.  The financial, commercial and technical capacity of a supplier
shall be judged both on the basis of that supplier's global business activity, including
its activity in the territory of the Party of the suppliers, and its activity, if any, in theterritory of the Party of the procuring entity;
 
(c) the process of, and the time required for, qualifying suppliers shall not be used in
order to keep suppliers of the other Party off a suppliers' list or from being considered
for a particular intended procurement.  Entities shall recognize as qualified supplierssuch domestic suppliers or suppliers of other Party who meet the conditions forWT/REG124/1
Page 69
participation in a particular intended procurement.  Suppliers requesting to participate
in a particular intended procurement who may not yet be qualified shall also be
considered, provided there is sufficient time to complete the qualification procedure;
 
(d) entities maintaining permanent lists of qualified suppliers shall ensure that suppliers
may apply for qualification at any time;  and that all qualified suppliers so requesting
are included in the lists within a reasonably short time;
(e) if, after publication of the notice under paragraph 1 of Article 6-09, a supplier not yet
qualified requests to participate in an intended procurement, the entity shall promptly
start procedures for qualification;
 
(f) any supplier having requested to become a qualified supplier shall be advised by the
entities concerned of the decision in this regard.  Qualified suppliers included on
permanent lists by entities shall also be notified of the termination of any such lists or
of their removal from them;
 
(g) each Party shall ensure that:
 
 (i) each entity and its constituent parts follow a single qualification procedure,
except in cases of duly substantiated need for a different procedure;  and
 
 (ii) efforts be made to minimize differences in qualification procedures between
entities.
 
(h) nothing in subparagraphs (a) through (g) shall preclude the exclusion of any supplier
on grounds such as bankruptcy or false declarations, provided that such an action isconsistent with the national treatment and non-discrimination provisions of this
Chapter.
Article 6-09
Invitation to Participate
1. In accordance with paragraphs 2 and 3, entities shall publish an invitation to participate for all
cases of intended procurement, except as otherwise provided for in Article 6-15.  The notice shall be
published in the appropriate publication listed in Annex VII.
2. The invitation to participate may take the form of a notice of proposed procurement, as
provided for in paragraph 6.
3. Entities in Annex I (only for government enterprises) may use a notice of planned
procurement, as provided for in paragraph 7, or a notice regarding a qualification system, as provided
for in paragraph 9, as an invitation to participate.
4. Entities which use a notice of planned procurement as an invitation to participate shall
subsequently invite all suppliers who have expressed an interest to confirm their interest on the basis
of information which shall include at least the information referred to in paragraph 6.
5. Entities which use a notice regarding a qualification system as an invitation to participate
shall provide, subject to the considerations referred to in paragraph 4 of Article 6-20 and in a timelymanner, information which allows all those who ha ve expressed an interest to have a meaningful
opportunity to assess their interest in participating in the procurement.  This information shall include
the information contained in the notices referred to in paragraphs 6 and 8, to the extent suchWT/REG124/1
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information is available.  Information provided to one interested supplier shall be provided in a non-
discriminatory manner to the other interested suppliers.
6. Each notice of proposed procurement, referred to in paragraph 2, shall contain the following
information:
(a) the nature and quantity, including any options for further procurement and, if
possible, an estimate of the timing when such options may be exercised; in the case of
recurring contracts the nature and quantity and, if possible, an estimate of the timing
of the subsequent tender notices for the goods or services to be procured;
 
(b) whether the procedure is open or selective or will involve negotiation;
 
(c) any date for starting delivery or completion of delivery of goods or services;
 
(d) the address and final date for submitting an application to be invited to tender or for
qualifying for the suppliers’ lists, or for receiving tenders, as well as the language or
languages in which they must be submitted;
(e) the address of the entity awarding the contract and providing any information
necessary for obtaining specifications and other documents;
 
(f) any economic and technical requirements, financial guarantees and information
required from suppliers;
 
(g) the amount and terms of payment of any sum payable for the tender documentation;
and
 
(h) whether the entity is inviting offers for purchase, lease, rental or hire purchase, or
more than one of these methods.
7. Each notice of planned procurement referred to in paragraph 3 shall contain as much of the
information referred to in paragraph 6 as is availa ble.  It shall in any case include the information
referred to in paragraph 8 and:
(a) a statement that interested suppliers should express their interest in the procurement to
the entity;
 
(b) a contact point with the entity from which further information may be obtained.
8. For each case of intended procurement, the entity shall publish a summary notice in one of the
official languages of the WTO.  The notice shall contain at least the following information:
(a) the subject matter of the contract;
 
(b) the time-limits set for the submission of tenders or an application to be invited to
tender;  and
 
(c) the addresses from which documents relating to the contracts may be requested.
9. In the case of selective tendering procedures, entities maintaining permanent lists of qualified
suppliers shall publish annually in one of the publications listed in Annex VII a notice of the
following:WT/REG124/1
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(a) the enumeration of the lists maintained, including their headings, in relation to the
goods or services or categories of goods or services to be procured through the lists;
 
(b) the conditions to be fulfilled by suppliers with a view to their inscription on those lists
and the methods according to which each of those conditions will be verified by theentity concerned;  and
(c) the period of validity of the lists, and the formalities for their renewal.
 
When such a notice is used as an invitation to participate in accordance with paragraph 3, the
notice shall, in addition, include the following information:
 
(d) the nature of the goods or services concerned;
 
(e) a statement that the notice constitutes an invitation to participate.
However, when the duration of the qualification system is three years or less, and if the
duration of the system is made clear in the notice and it is also made clear that further notices will not
be published, it shall be sufficient to publish the notice once only, at the beginning of the system.
Such a system shall not be used in a manner which circumvents the provisions of this Chapter .
10. If, after publication of an invitation to participate in any case of intended procurement, but
before the time set for opening or receipt of tenders as specified in the notices or the tender
documentation, it becomes necessary to amend or re-issue the notice, the amendment or the re-issued
notice shall be given the same circulation as the original documents upon which the amendment is
based.  Any significant information given to one supplier with respect to a particular intended
procurement shall be given simultaneously to all other suppliers concerned in adequate time to permitthe suppliers to consider such information and to respond to it.
11. Entities shall make clear, in the notices referred to in this Article or in the publication in
which the notices appear, that the procurement is covered by this Chapter.
Article 6-10
Selection Procedures
1. To ensure optimum effective international competition under selective tendering procedures,
entities shall, for each intended procurement, invite tenders from the maximum number of domestic
suppliers and suppliers of the other  Party, consistent with the efficient operation of the procurement
system.  They shall select the suppliers to participate in the procedure in a fair and non-discriminatory
manner.
2. Entities maintaining permanent lists of qualified suppliers may select suppliers to be invited
to tender from among those listed.  Any selection shall allow for equitable opportunities for supplierson the lists.
3. Suppliers requesting to participate in a partic ular intended procurement shall be permitted to
submit a tender and be considered, provided, in the case of those not yet qualified, there is sufficient
time to complete the qualification procedure under Articles 6-08 and 6-09.  The number of additionalsuppliers permitted to participate shall be limited only by the efficient operation of the procurement
system.
4. Requests to participate in selective tendering procedures may be submitted by telex, telegram
or facsimile.WT/REG124/1
Page 72
5. Where an entity of the Parties does not invite or  admit a supplier to tender, the entity shall, on
the request of the supplier, promptly provide per tinent information concerning its reasons for not
doing so.
Article 6-11
Time – Limits of Tendering and Delivery
1. Any prescribed time-limit shall be adequate to allow suppliers of the other Party  as well as
domestic suppliers to prepare and submit tenders before the closing of the tendering procedures.  In
determining any such time-limit, enti ties shall, consistent with their own reasonable needs, take into
account such factors as the complexity of the intended procurement, the extent of subcontracting
anticipated and the normal time for transmitting tenders by mail from foreign as well as domestic
points.
2. Each Party shall ensure that its entities shall take due account of publication delays when
setting the final date for receipt of tenders or of applications to be invited to tender.
3. Except in so far as provided in paragraph 4,
(a) in open procedures, the period for the receipt of tenders shall not be less than 40 days
from the date of publication referred to in paragraph 1 of Article 6-09;
 
(b) in selective procedures not involving the use of a permanent list of qualified suppliers,
the period for submitting an application to be invited to tender shall not be less than
25 days from the date of publication referred to in paragraph 1 of Article 6-09; theperiod for receipt of tenders shall in no case be less than 40 days from the date of
issuance of the invitation to tender;
 
(c) in selective procedures involving the use of a permanent list of qualified suppliers, the
period for receipt of tenders shall not be less than 40 days from the date of the initial
issuance of invitations to tender, whether or not the date of initial issuance of
invitations to tender coincides with the date of the publication referred to inparagraph 1 of Article 6-09.
4. The periods referred to in paragraph 3 may be reduced in the circumstances set out below:
(a) if a separate notice has been published 40 days and not more than 12 months in
advance and the notice contains at least:
 
 (i) as much of the information referred to in paragraph 6 of  Article 6-09  as is
available;
 
 (ii) the information referred to in paragraph 8 of Article 6-09 ;
 
 (iii) a statement that interested suppliers should express their interest in the
procurement to the entity;  and
 
 (iv) a contact point with the entity from which further information may be obtained,
 
the 40-day limit for receipt of tenders may be replaced by a period sufficiently long to enable
responsive tendering, which, as a general rule, shall not be less than 24 days, but in any case not less
than ten days;WT/REG124/1
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(b) in the case of the second or subsequent publications dealing with contracts of a
recurring nature within the meaning of paragraph 6 of Article 6-09, the 40-day limit
for receipt of tenders may be reduced to not less than 24 days;
 
(c) where a state of urgency duly substantiated by the entity renders impracticable the
periods in question, the periods specified in paragraph 2 may be reduced but shall in
no case be less than ten days from the date of the publication referred to in
paragraph 1 of Article 6-09;  or
(d) the period referred to in paragraph 3(c) may, for procurements by entities listed in
Annex I (only for government enterprises), be fixed by mutual agreement between the
entity and the selected suppliers.  In the absence of agreement, the entity may fix
periods which shall be sufficiently long to enable responsive tendering and shall in
any case not be less than 10 days.
5. Consistent with the entity's own reasonable needs, any delivery date shall take into account
such factors as the complexity of the intended procurement, the extent of subcontracting anticipated
and the realistic time required for production, de-stocking and transport of goods from the points of
supply or for supply of services.
Article 6-12
Tender Documentation
1. If, in tendering procedures, an entity allows tenders to be submitted in several languages, one
of those languages shall be one of the official languages of the WTO.
2. Tender documentation provided to suppliers shal l contain all information necessary to permit
them to submit responsive tenders, including info rmation required to be published in the notice of
intended procurement, except for paragraph 6(g) of Article 6-09, and the following:
(a) the address of the entity to which tenders should be sent;
 
(b) the address where requests for supplementary information should be sent;
 
(c) the language or languages in which tenders and tendering documents must be
submitted;
 
(d) the closing date and time for receipt of tenders and the length of time during which
any tender should be open for acceptance;
 
(e) the persons authorized to be present at the opening of tenders and the date, time and
place of this opening;
 
(f) any economic and technical requirement, financial guarantees and information or
documents required from suppliers;
 
(g) a complete description of the goods or services required or of any requirements
including technical specifications, conformity certification to be fulfilled, necessary
plans, drawings and instructional materials;
 
(h) the criteria for awarding the contract, including any factors other than price that are to
be considered in the evaluation of tenders and the cost elements to be included inWT/REG124/1
Page 74
evaluating tender prices, such as transport, insurance and inspection costs, and in the
case of goods or services of the other Party, customs duties and other import charges,
taxes and currency of payment;
 
(i) the terms of payment;  and
(j) any other terms or conditions.
3. In open procedures, entities shall forward the tender documentation at the request of any
supplier participating in the procedure, and shal l reply promptly to any reasonable request for
explanations relating thereto.
4. In selective procedures, entities shall forward the tender documentation at the request of any
supplier requesting to participate, and shall reply promptly to any reasonable request for explanations
relating thereto.
5. Entities shall reply promptly to any reasonable request for relevant information submitted by
a supplier participating in the tendering procedure,  on condition that such information does not give
that supplier an advantage over its competitors in the procedure for the award of the contract.
Article 6-13
Submission, Receipt and Opening of Tenders and Awarding of Contracts
1. The submission, receipt and opening of tenders and awarding of contracts shall be consistent
with the following:
(a) tenders shall normally be submitted in writing directly or by mail.  If tenders by telex,
telegram, facsimile or other means of electronic transmission7 are permitted, the
tender made thereby must include all the information necessary for the evaluation of
the tender, in particular the definitive price proposed by the tenderer and a statement
that the tenderer agrees to all the terms, conditions and provisions of the invitation to
tender.  The tender must be confirmed promptly by letter or by the dispatch of a
signed copy of the telex, telegram, facsimile or electronic transmission.  Tenders
presented by telephone shall not be permitted.  The content of the telex, telegram,
facsimile or electronic transmission shall prevail where there is a difference orconflict between that content and any documentation received after the time-limit;
and
 
(b) the opportunities that may be given to tenders to correct unintentional errors of form
between the opening of tenders and the awarding of the contract shall not bepermitted to give rise to any discriminatory practice.
2. A supplier shall not be penalized if a tender is received in the office designated in the tender
documentation after the time specified because of delay due solely to mishandling on the part of the
entity.  Tenders may also be considered in other exceptional circumstances if the procedures of theentity concerned so provide.
3. All tenders solicited under open or selective procedures by entities shall be received and
opened under procedures and conditions guaranteeing the regularity of the openings.  The receipt and
opening of tenders shall also be consistent with the national treatment and non-discrimination
                                                     
7 Means of electronic transmission consists of me ans capable of producing for the recipient at the
destination of the transmission a printed copy of the tender.WT/REG124/1
Page 75
provisions of this Chapter.  Information on the opening of tenders shall remain with the entity
concerned at the disposal of the government authorities responsible for the entity in order that it may
be used if required under the procedures of Articles 6-17, 6-20, 6-21 and Chapter X (Institutional
Provisions and Dispute Settlement Procedures).
4. To be considered for award, a tender must, at the time of opening, conform to the essential
requirements of the notices or tender documentation and be from a supplier which complies with the
conditions for participation.  If an entity has received a tender abnormally lower than other tenders
submitted, it may enquire with the tenderer to en sure that it can comply with the conditions of
participation and be capable of fulfilling the terms of the contract.
5. Unless in the public interest an entity decides not to issue the contract, the entity shall make
the award to the tenderer who has been determined to be fully capable of undertaking the contract and
whose tender, whether for domestic goods or services, or goods or services of the other Party, is either
the lowest tender or the tender which in terms of the specific evaluation criteria set forth in the notices
or tender documentation is determined to be the most advantageous.
6. Awards shall be made in accordance with the criteria and essential requirements specified in
the tender documentation.
7. No entity may make it a condition of the awarding of a contract that the supplier has
previously been awarded one or more contracts by an entity of that Party or that the supplier has priorwork experience in the territory of that Party.
8. The Parties shall not require for the performance of the contract or as award criteria in the
tender the establishment of the supplier or service provider or his presence in the territory of the
contracting entity, except where such establishment or presence is an essential and objectiverequirement for the performance of the contract to be awarded.
9. Option clauses shall not be used in a manner which circumvents the provisions of this
Chapter.
Article 6-14
Negotiations
1. A Party may provide for entiti es to conduct negotiations:
(a) in the context of procurements in which they have indicated such intent, namely in the
notice referred to in paragraph 2 of Article 6-09;  or
 
(b) when it appears from evaluation that no one tender is obviously the most
advantageous in terms of the specific evaluation criteria set forth in the notices or
tender documentation.
2. Negotiations shall primarily be used to identify the strengths and weaknesses in tenders.
3. Entities shall treat tenders in confidence.  In  particular, they shall not provide information
intended to assist particular participants to bring their tenders up to the level of other participants.
4. Entities shall not, in the course of negotiations, discriminate between different suppliers.  In
particular, they shall ensure that:WT/REG124/1
Page 76
(a) any elimination of participants is carried out in accordance with the criteria set forth
in the notices and tender documentation;
 
(b) all modifications to the criteria and to the technical requirements are transmitted in
writing to all remaining part icipants in the negotiations;
 
(c) all remaining participants are afforded an opportunity to submit new or amended
submissions on the basis of the revised requirements;  and
 
(d) when negotiations are concluded, all participants remaining in the negotiations shall
be permitted to submit final tenders in accordance with a common deadline.
Article 6-15
Limited Tendering
1. The provisions of Articles 6-07 through 6-14 governing open and selective tendering
procedures need not apply in the following conditions, provided that limited tendering is not used
with a view to avoiding maximum possible compet ition or in a manner which would constitute a
means of discrimination among suppliers of the other Party or protection to domestic producers or
suppliers:
(a) in the absence of tenders in response to an open or selective tender, or when the
tenders submitted have been collusive, or not in conformity with the essential
requirements in the tender, or from suppl iers who do not comply with the conditions
for participation provided for in accordan ce with this Chapter, on condition, however,
that the requirements of the initial tender are not substantially modified in the contract
as awarded;
 
(b) when, for works of art or for reasons connected with protection of exclusive rights,
such as patents or copyrights, or in the absence of competition for technical reasons,
the goods or services can be supplied only by a particular supplier and no reasonable
alternative or substitute exists;
 
(c) in so far as is strictly necessary when, for reasons of extreme urgency brought about
by events unforeseeable by the entity, the goods or services could not be obtained in
time by means of open or selective tendering procedures;
 
(d) for additional deliveries by the original supplier which are intended either as parts
replacement for existing supplies, or installations, or as the extension of existingsupplies, services, or installations where a change of supplier would compel the entity
to procure equipment or services not meeting requirements of interchangeability with
already existing equipment
8 or services;
 
(e) when an entity procures prototypes or a first good or service which are developed at
its request in the course of, and for, a particular contract for research, experiment,
study or original development.  When such contracts have been fulfilled, subsequent
procurements of goods or services shall be subject to Articles 6-07 through 6-149;
                                                     
 8 It is the understanding that "existing equipment" includes software to the extent that the initial
procurement of the software was covered by this Chapter. 
9 Original development of a first good or service may include limited production or supply in order to
incorporate the results of field testing and to demonstrate that the good or service is suitable for production orWT/REG124/1
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(f) when additional construction services which were not included in the initial contract
but which were within the objectives of the original tender documentation have,
through unforeseeable circumstances, become necessary to complete the construction
services described therein, and the entity needs to award contracts for the additionalconstruction services to the contractor carrying out the construction services
concerned since the separation of the additional construction services from the initial
contract would be difficult for technical or economic reasons and cause significant
inconvenience to the entity.  However, the total value of contracts awarded for the
additional construction services may not exceed 50 per cent of the amount of the main
contract;
(g) for new construction services consisting of the repetition of similar construction
services which conform to a basic project for which an initial contract was awarded in
accordance with Articles 6-07 through 6-14 and for which the entity has indicated in
the notice of intended procurement concerning the initial construction service, that
limited tendering procedures might be used in awarding contracts for such newconstruction services;
(h) for goods purchased on a commodity market;
(i) for purchases made under exceptionally advantageous conditions which only arise in
the very short term.  This provision is intended to cover unusual disposals by firms
which are not normally suppliers, or disposal of assets of businesses in liquidation or
receivership. It is not intended to cover routine purchases from regular suppliers;
(j) in the case of contracts awarded to the winner of a design contest provided that the
contest has been organized in a manner which is consistent with the principles of this
Chapter, notably as regards the publication, in the sense of Article 6-09, of an
invitation to suitably qualified suppliers, to  participate in such a contest which shall
be judged by an independent jury with a view to design contracts being awarded to
the winners;
(k) an entity may use limited tendering procedures when an entity needs to procure
consulting services regarding matters of a confidential nature, the disclosure of which
could reasonably be expected to compromise government confidences, cause
economic disruption or similarly be contrary to the public interest.
2. Entities shall prepare a report in writing on each contract awarded under the provisions of
paragraph 1. Each report shall contain the name of the procuring entity, value and kind of goods or
services procured, country of origin, and a statement of the conditions in this Article which prevailed.
This report shall remain with the entities concerned at the disposal of the government authorities
responsible for the entity in order that it may be used if required under the procedures of
Articles 6-17, 6-20, 6-21, and under Chapter X (Institutional Provisions and Dispute SettlementProcedures).
                                                                                                                                                                    
supply in quantity to acceptable quality standards.  It does not extend to quantity production or supply to
establish commercial viability or to recover research and development costs.WT/REG124/1
Page 78
Article 6-16
Offsets
1. Entities shall not, in the qualification and selection of suppliers, goods or services, or in the
evaluation of tenders and award of contracts, impose, seek or consider offsets, except otherwise
provided in Annex VI.
2. For purposes of this Article, offsets are conditions imposed or considered by an entity prior to
or in the course of its procurement process that encourage local development or improve its Party’s
balance of payments accounts, by means of requirements of local content, licensing of technology,
investment, counter-trade or similar requirements.
Article 6-17
Challenge Procedures
1. In the event of a complaint by a supplier that there has been a breach of this Chapter in the
context of a procurement, each Party shall encourage the supplier to seek resolution of its complaint in
consultation with the procuring entity. In such inst ances the procuring entity shall accord impartial
and timely consideration to any such complaint, in a manner that is not prejudicial to obtaining
corrective measures under the challenge system.
2. Each Party shall provide non-discriminatory, timely, transparent and effective procedures
enabling suppliers to challenge alleged breaches of this Chapter arising in the context of procurements
in which they have, or have had, an interest.
3. Each Party shall provide its challenge procedures in writing and make them generally
available.
4. Each Party shall ensure that documentation relating to all aspects of the process concerning
procurements covered by this Chapter shall be retained for three years.
5. The interested supplier may be required to initiate a challenge procedure and notify the
procuring entity within specified time-limits from the time when the basis of the complaint is known
or reasonably should have been known, but in no ca se within a period of less than 10 days from that
time.
6. Challenges shall be heard by a court or by an impartial and independent reviewing authority
with no interest in the outcome of the procurement and the members of which are secure fromexternal influence during the term of appointment.  A review authority which is not a court shall
either be subject to judicial review or shall have procedures which provide that:
(a) participants can be heard before an opinion is given or a decision is reached;
 
(b) participants can be represented and accompanied;
 
(c) participants shall have access to all proceedings;
 
(d) proceedings can take place in public;
 
(e) opinions or decisions are given in writing with a statement describing the basis for the
opinions or decisions;
 WT/REG124/1
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(f) witnesses can be presented;  and
 
(g) documents are disclosed to the review body.
7. Challenge procedures shall provide for:
(a) rapid interim measures to correct breaches of this Chapter and to preserve commercial
opportunities.  Such action may result in suspension of the procurement process.
However, procedures may provide that overriding adverse consequences for the
interests concerned, including the public interest, may be taken into account in
deciding whether such measures should be applied.  In such circumstances, just cause
for not acting shall be provided in writing;
 
(b) an assessment and a possibility for a decision on the justification of the challenge;
 
(c) correction of the breach of the Chapter or compensation for the loss or damages
suffered, where appropriate.  In the case of compensation for the loss or damagessuffered, it shall be limited to costs for tender preparation or protest.
8. With a view to the preservation of the commercial and other interests involved, the challenge
procedure shall normally be completed in a timely fashion.
Article 6-18
Exceptions to this Chapter
1. Nothing in this Chapter shall be construed to prevent any Party from taking any action or not
disclosing any information which it considers necessary for the protection of its essential security
interests relating to the procurement of arms, am munition or war materials, or to procurement
indispensable for national security or for national defense purposes.
2. Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between the Parties where the same
conditions prevail or a disguised restriction on international trade, nothing in this Chapter shall be
construed to prevent any Party from imposing or enforcing measures: necessary to protect publicmorals, order or safety, human, animal or plant life or health or intellectual property; or relating to the
goods or services of handicapped persons, of philanthropic institutions or of prison labor.
Article 6-19
Rectification, Modification and Privatization
1. Each Party may modify its coverage under this Chapter only in exceptional circumstances.
2. Where a Party modifies its coverage under this Chapter, that Party shall:
(a) notify the other Party of the modification;
(b) reflect the change in the appropriate Annex;  and(c) propose to the other Party appropriate compensatory adjustments to its coverage in
order to maintain a level of coverage co mparable to that existing prior to the
modification.WT/REG124/1
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3.  Notwithstanding paragraphs 1 and 2, a Party may make rectifications of a purely formal
nature and minor amendments to Annexes I to VI, provided that it notifies such rectifications to the
other Party and the other Party does not object to su ch proposed rectification within 30 days.  In such
cases, compensation need not be proposed.
4. Notwithstanding any other provision of this Chapter, a Party may undertake reorganizations
of its government procurement entities covered by this Chapter, including programs through which
the procurement of such entities is decentralized or the corresponding government functions cease to
be performed by any government entity whether or not subject to this Chapter, provided that it notifies
such reorganization to the other Party.  In such cases, compensation need not be proposed.  No Party
may undertake such reorganizations or programs to avoid the obligations of this Chapter.
5. Where a Party considers that:
(a) an adjustment proposed under paragraph 2(c) is not adequate to maintain a
comparable level of mutually agreed coverage;  or
(b) a rectification or  amendment does not meet the requirements of paragraph 3 and
should be compensated,
that Party may have recourse to procedures under Chapter X (Institutional Provisions and Dispute
Settlement Procedures).
6. Where a Party considers that a reorganization of procurement entities does not meet the
requirements of paragraph 4 and should be compensated, it may have recourse to procedures under
Chapter X (Institutional Provisions and Dispute Settlement Procedures), provided that it has objected
to such reorganization within 60 days from the day of the notification.
7. Nothing in this Chapter shall be construed to prevent a Party from divesting an entity covered
by this Chapter:
(a) If, on the public offering of shares of an entity listed in Annex I (government
enterprises), or through other methods, the entity is no longer subject to government
control, that Party may delete the entity from its Annex, and withdraw the entity fromthe coverage of this Chapter, on notification to the other Party.
(b) Where the other Party objects to the withdrawal on the grounds that the entity remains
subject to government control, that Party may have recourse to procedures under
Chapter X (Institutional Provisions and Dispute Settlement Procedures).
Article 6-20
Provision of Information and Review as regards of Parties
1. Each Party shall promptly publish any law, regulation, judicial decision, administrative ruling
of general application, and any procedure (including standard contract clauses) regarding government
procurement covered by this Chapter, in the appropri ate publications listed in Annex VII and in such a
manner as to enable other Party and suppliers to become acquainted with them.  Each Party shall be
prepared, upon request, to explain to  the other Party its government procurement procedures.
 
2. The Party of an unsuccessful tenderer may seek , without prejudice to the provisions under
Chapter X (Institutional Provisions and Dispute Settlement Procedures), such additional information
on the contract award as may be necessary to ensure that the procurement was made fairly and
impartially.  To this end, the Party of the procuring entity shall provide information on both theWT/REG124/1
Page 81
characteristics and relative advantages of the winning tender and the contract price.  Normally this
latter information may be disclosed by the Party of the unsuccessful tenderer provided it exercises this
right with discretion.  In cases where release of this information would prejudice competition in future
tenders, this information shall not be disclosed except after consultation with and agreement of the
Party which gave the information to the Party of the unsuccessful tenderer.
 
3. Available information concerning procurement by covered entities and their individual
contract awards shall be provided, upon request, to the other Party.
4. Confidential information provided to any Party which would impede law enforcement or
otherwise be contrary to the public interest or would prejudice the legitimate commercial interest of
particular enterprises, public or private, or might prejudice fair competition between suppliers shall
not be revealed without formal authorization from the Party providing the information.
5. The Parties shall annually exchange, on a reciprocal basis, all available relevant data
regarding statistics on its procurements covered by this Chapter.  The first exchange of relevant data
will take place two years after the entry into force of this Agreement.
6. Following the conclusion of the negotiations regarding Israel’s commitments under
Article XIX(5) of the WTO Government Procurement Agreement, the Parties shall take the results of
those negotiations into account in amending paragraph 5 as appropriate.
Article 6-21
Information and Review as regards Obligations of Entities
1. Entities shall publish a notice in the appropriate publication listed in Annex VII not later than
72 days after the award of each contract under Articles 6-13 through 6-15.  These notices shall
contain:
(a) the nature and quantity of goods or services in the contract award;
 
(b) the name and address of the entity awarding the contract;
 
(c) the date of award;
 
(d) the name and address of winning tenderer;
 
(e) the value of the winning award or the highest and lowest offer taken into account in
the award of the contract;
 
(f) where appropriate, means of identifying the notice issued under paragraph 1 of
Article 6-09 or justification according to Article 6-15 for the use of such procedure;and
 
(g) the type of procedure used.
2. Each entity shall, on request from a supplier of a Party, promptly provide:
(a) an explanation of its procurement practices and procedures;
 
(b) pertinent information concerning the reasons why the supplier's application to qualify
was rejected, why its existing qualification was brought to an end and why it was not
selected;  andWT/REG124/1
Page 82
 
(c) to an unsuccessful tenderer, pertinent information concerning the reasons why its
tender was not selected and on the characteristics and relative advantages of the
tender selected as well as the name of the winning tenderer.
3. Entities shall promptly inform participating suppliers of decisions on contract awards and,
upon request, in writing.
4. However, entities may decide that certain information on the contract award, contained in
paragraphs 1 and 2(c), be withheld where release of such information would impede law enforcement
or otherwise be contrary to the public interest or would prejudice the legitimate commercial interest of
particular enterprises, public or private, or might prejudice fair competition between suppliers.
Article 6-22
Further Negotiations
In the case that, after the entry into force of this Agreement, Israel or Mexico offer a WTO
Government Procurement Agreement or North American Free Trade Agreement Party, respectively,
additional advantages with regard to the rules, pr ocurement procedures or access to their respective
procurement markets beyond what has been agreed under this Chapter, that Party shall agree to enter
into negotiations with the other Party with a view to extending these advantages to the other Party ona reciprocal basis.WT/REG124/1
Page 83
ANNEX I
Covered Entities under Chapter VI
Part A - Covered Entities of Mexico
Section 1 Federal Government Entities
(Authentic in the Spanish language only)1. Secretaría de Gobernación (Ministry of Government), includes:
— Centro Nacional de Desarrollo Municipal (National Center For Municipal Studies)
— Comisión Calificadora de Publicaciones y Revist as Ilustradas (Ilustrated Periodicals and
Publications Classification Commission)
— Consejo Nacional de Población (National Population Council)
— Archivo General de la Nación (General Archives of the Nation)
— Instituto Nacional de Estudios Históricos de la Revolución Mexicana (National Institute
of Historical Studies on the Mexican Revolution)
— Patronato para la Reincorporación Social por el Empleo en el Distrito Federal (Social
Reintegration Assistance Foundation)
— Centro Nacional de Prevención de Desastres (National Disaster Prevention Center)
2. Secretaría de Relaciones Exteriores (Ministry of Foreign Relations)
3. Secretaría de Hacienda y Crédito Público (Ministry of Finance and Public Credit), includes:
— Comisión Nacional Bancaria y de Valores (National Banking and Securities Commission)
— Comisión Nacional de Seguros y Fianzas (National Insurance and bonds Commision)
— Instituto Nacional de Estadística, Geografía e Informática (National Institute of Statistics,
Geography and Informatics)
— Servicio de Administración Tributaria ( Tax Administration Service)
4. Secretaría de Agricultura, Ganadería y Desarroll o Rural (Ministry of Agriculture, Livestock and
Rural Development), includes:
— Apoyos y Servicios a la Comercialización Ag ropecuaria (ASERCA) (Support Services for
Agricultural Marketing)
— Instituto Nacional de Investigaciones Forestales y Agropecuarias (National Forestry and
Agricultural Research Institue)
5. Secretaría de Comunicaciones y Transportes (Ministry of Communication and Transport),
includes:
— Comisión Federal de Telecomunicaciones  (Telecommunications Federal Commission)
— Instituto Mexicano de Transporte  (Mexican Institue of Transport)
6. Secretaría de Comercio y Fomento Industrial (Ministry of Commerce and Industrial
Development)
7. Secretaría de Educación Pública (Ministry of Public Education), includes:
— Instituto Nacional de Antropología e Historia (National Institute of Anthropology and
History)
— Instituto Nacional de Bellas Artes y Literatura (National Institute of National Arts and
Literature)
— Radio Educación (Radio Education)
— Centro de Ingeniería y Desarrollo Industrial (Engineering and Industrial development
Center)
— Consejo Nacional para la Cultura y las Artes (National Council for Culture and the Arts)
—
 Comisión Nacional del Deporte (National Sports Commission)
8. Secretaría de Salud (Ministry of Health), includes:
— Administración del Patrimonio de la Beneficencia Pública  (Public Charity Fund
Administration)
— Centro Nacional de la Transfusión Sang uínea (National Blood Transfusion Center)WT/REG124/1
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— Centro Nacional de Rehabilitación (National Rehabilitative Center)
— Consejo Nacional para la Prevención y Control del Síndrome de Inmunodeficiencia
Adquirida (Conasida).(Nati onal Council for the Prevention and Control of the
Autoimmune Deficiency Syndrome)
9. Secretaría del Trabajo y Previsión Social (Ministry of Labor and Social Welfare), includes:
— Procuraduría Federal de la Defensa del Trabajo (Office of the Federal Attorney for Labor
Defense)
10. Secretaría de la Reforma Agraria (Ministry of Agrarian Reform), includes:
— Instituto Nacional de Desarrollo Agrario (National Institute of Agrarian Development)
11. Secretaría de Medio Ambiente, Recursos Naturales y Pesca (Ministry of Environment, Natural
Resources and Fisheries), includes:
— Instituto Nacional de la Pesca (National Institute of Fisheries)
— Instituto Mexicano de Tecnología del Agua
12. Procuraduría General de la República (Office of the Attorney General of the Republic)
13. Secretaría de Energía (Ministry of Energy), includes:
— Comisión Nacional de Seguridad Nuclear y Salvaguardias (National Commission on
Nuclear Safety and Safeguards)
— Comisión Nacional para el Ahorro de Energía (National Commission for Energy
Conservation)
14. Secretaría de Desarrollo Social (Ministry of Social Development)
15. Secretaría de Turismo (Ministry of Tourism)
16. Secretaría de Contraloría y Desarrollo Administrativo (Ministry of Comptroller and
Administrative Devolpment)
17. Secretaría de la Defensa Nacional (Ministry of National Defense)
18. Secretaría de Marina (Ministry of Navy)
Section 2 Government Enterprises
(Authentic in the Spanish language only)
1. Talleres Gráficos de México (National Printers)
2. Aeropuertos y Servicios Auxiliares (ASA) (Airports and Auxiliary)
3. Caminos y Puentes Federales de Ingresos y Servicios Conexos (CAPUFE) (Federal Toll Roads
and Bridges and Related Services)
4. Servicio Postal Mexicano (Mexican Postal Service)
5. Ferrocarriles Nacionales de México (FERRONALES) (National Railways of Mexico)
6. Telecomunicaciones de México (TELECOM) (Telecommunications of Mexico)
7. Petróleos Mexicanos (Mexican Petroleum)  (PEMEX Corporativo) ( No incluye las compras de
combustibles y gas ) (PEMEX Corporative) (Not including procurements of fuels or gas)
— PEMEX Exploración y Producción (PEMEX Exploration and Production)
— PEMEX Refinación (PEMEX Refination)
— PEMEX Gas y Petroquímica Básica (PEMEX Gas and Basic
— PEMEX Petroquímica (PEMEX Petrchemical)
8. Comisión Federal de Electricidad (Federal Electricity Commission)
9. Consejo de Recursos Minerales (Mineral Resources Council)
10. Distribuidora e Impulsora Comercial Conasupo S.A. de C.V. (DICCONSA) (Commercial
Distributor and Trade Promotion S.A. de C.V
11. Leche Industrializada Conasupo, S.A. de C.V. (L ICONSA)  (No incluye las compras de bienes
agrícolas adquiridos para programas de apoyo a la agricultura o bienes para la alimentación
humana ). (Conasupo Industrialized Milk, S.A. de C.V.) ( Not including procurements of
agricultural goods made in furtherance of agricultural support programs or goods for human
feeding programs)
12. Procuraduría Federal del Consumidor (Office of the Federal Attorney for Consumers)WT/REG124/1
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13. Servicio Nacional de Información de Mercados (National Markets Information Service)
14. Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE) (Social
Security And Services Institute for Government Workers)
15. Instituto Mexicano del Seguro Social (IMSS) (Mexican Social Security Institute)
16. Sistema Nacional para el Desarrollo Integral de la Familia (DIF) ( No incluye las compras de
bienes agrícolas adquiridos para programas de apoyo a la agricultura o bienes para la
alimentación humana ). (National System for Integrated Family Development) (Not including
procurements of agricultural goods made in furtherance of agricultural support programs or
goods for human feeding programs)
17. Instituto de Seguridad Social para las Fuerzas Armadas Mexicanas (Social Security Institute for
the Mexican Armed Forces)
18. Instituto Nacional Indigenista (INI) (National Institute of Indian Peoples)
19. Instituto Nacional para la Educación de los Adultos (National Institute for Adult Education)
20. Centros de Integración Juvenil (Youth Integration Centers)
21. Instituto Nacional de la Senectud (National Institute on Old Age)
22. Comité Administrador del Programa Federa l de Construcción de Escuelas (CAPFCE)
(Administrative Committe of the School Construction Federal Program)
23. Comisión Nacional del Agua (CNA) (National Water Commission)
24. Comisión para la Regularización de la Tenencia de la Tierra  (Commission for the Regularization
fo Land Tenure)
25. Consejo Nacional de Ciencia y Tecnología (CONACYT) (National Science and Technology
Council)
26. NOTIMEX, S.A. de C.V.
27. Instituto Mexicano de Cinematografía  (Mexican Institute of Cinematography)
28. Lotería Nacional para la Asistencia Pública (National Lottery for Public Assistance)
29. Pronósticos para la Asistencia Pública (Sports Lottery)
30. Comisión Nacional de Zonas Aridas (National Commission on Arid Zones)
31. Comisión Nacional de los Libros de Texto Gratuitos (National Commission of the Free
Textbooks)
32. Comisión Nacional de Derechos Humanos (National Commission on Human Rights)
33. Consejo Nacional de Fomento Educativo (Nat ional Educational Development Council).
34. Laboratorios de Biológicos y Reactivos,  S.A. de C.V. (Laboratory of Biologicals and Reagents of
Mexico,S.A de C.V.)
Section 3 Sub-Federal Government Entities
None.
Part B - Covered Entities of Israel
Section 1 Central Government Entities
1. House of Representatives (The Knesset)
2. Prime Minister’s Office
3. Ministry of Agriculture and Rural Development
4. Ministry of Communications
5. Ministry of Construction and Housing
6. Ministry of Education, Culture and Sport
7. Ministry of the Environment
8. Ministry of Finance
9. Civil Service Commissioner
10. Ministry of Foreign Affairs
11. Ministry of HealthWT/REG124/1
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12. Ministry of Immigrants Absorption
13. Ministry of National Infrastructure excluding Fuel Authority
14. Ministry of Industry and Trade
15. Ministry of the Interior
16. Ministry of Justice
17. Ministry of Labour and Social Affairs
18. Ministry of Religious Affairs
19. Ministry of Science and Technology
20. Ministry of Tourism
21. Ministry of Transport
22. The State Controller’s office
Section 2 Government Enterprises
1. Israel Airports Authority
2. Israel Ports and Railways Authority
3. Israeli Broadcasting Authority
4. Israel Educational Television
5. Postal Authority
6. Israel Electricity Company
7. Mekoroth Water Resources Ltd.
8. Sports’ Gambling Arrangement Board
9. Israel Standards Institute
10. National Insurance Institute
Section 3 Sub-Central Government Entities
None.WT/REG124/1
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ANNEX II
Goods Covered
Part A - List of Goods covered by Mexico
This Chapter applies to all goods. However, for procurement by the Secretaría de la Defensa
Nacional and the Secretaría de Marina only the foll owing goods are included in the coverage of this
Chapter:
(Note: numbers refer to the Federal Supply Classification codes)
22. Railway equipment23. Motor vehicles, trailers and cycles (except buses in 2310; and military trucks and trailers in
2320 and 2330 and tracked combat, assault and tactical vehicles in 2350)
24. Tractors
25. Vehicular equipment components
26. Tires and tubes
29. Engine accessories
30. Mechanical power transmission equipment32. Woodworking machinery and equipment
34. Metal working machinery
35. Service and trade equipment
36. Special industry machinery
37. Agricultural machinery and equipment38. Construction, mining, excavating and highway maintenance equipment
39. Materials handling equipment
40. Rope, cable, chain and fittings
41. Refrigeration and air conditioning equipment
42. Fire fighting, rescue and safety equipment)
43. Pumps and compressors
44. Furnace, steam plant, drying equipment and nuclear reactors45. Plumbing, heating and sanitation equipment
46. Water purification and sewage treatment equipment
47. Pipe, tubing, hose and fittings
48. Valves
49. Maintenance and repair shop equipment52. Measuring tools
53. Hardware and abrasives
54. Prefabricated structures and scaffolding
55. Lumber, millwork, plywood and veneer
56. Construction and building materials61. Electric wire and power and distribution equipment
62. Lighting fixtures and lamps
63. Alarm and signal systems
65. Medical, dental and veterinary equipment and supplies
66. Instruments and laboratory equipment67. Photographic equipment
68. Chemicals and chemical products
69. Training aids and devices
70. General purpose automatic data processing equipment, software, supplies and support
equipment
71. Furniture
72. Household and commercial furnishings and appliancesWT/REG124/1
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73. Food preparation and serving equipment
74. Office machines, text processing system and visible record equipment
75. Office supplies and devices
76. Books, maps and other publications (except 7650: drawings and specifications)
77. Musical instruments, phonographs and home-type radios78. Recreational and athletic equipment
79. Cleaning equipment and supplies
80. Brushes, paints, sealers and adhesives
81. Containers, packaging and packing supplies
85. Toiletries
87. Agricultural supplies
88. Live animals91. Fuels, lubricants, oils and waxes
93. Non-metallic fabricated materials
94. Non-metallic crude materials
96. Ores, minerals and their primary products (except 9620: minerals, natural and synthetic)
99. Miscellaneous
Part B - List of Goods covered by Israel
This Chapter applies to all goods, excluding the following:
(a) Ministry of Health
- Insulin and infusion pumps
- Audiometers
- Medical dressings (bandages, adhesive tapes excluding gauze bandages and gauze pads)
- Intravenous solution
- Administration sets for transfusion
- Scalp vein sets
- Hemi-dialysis and blood lines (does not cover blood derivatives)
- Blood packs (does not cover blood derivatives)
- Syringe needles
(b) Israel Electricity Company:
- Cables for electricity (H.S. 8544)
- Electro-mechanic meters (ex. H.S. 9028)
- transformers (H.S. 8504)
- disconnectors and switchers (H.S. 8535-8537)
- electric motors (H.S. 8501)
(c) Israel Ports and Railways Authority:
- CablesWT/REG124/1
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ANNEX III
Covered Services
Part A - List of Services covered by Mexico
This Chapter applies to all services set out below that are procured by the entities listed in
Annex I.
Note:  Based on the United Nations Central Product Classification (CPC)
CPC Professional Services
863 Taxation services (excluding legal services)
Architectural services
86711 Advisory and pre-design architectural services86712 Architectural design services
86713 Contract administration services
86714 Combined architectural design and contract administration services
86719 Other architectural services
Engineering services
86721 Advisory and consultative engineering services
86722 Engineering design services for foundations and building structures
86723 Engineering design services for mechanical and electrical installations for buildings
86724 Engineering design services for civil engineering construction86725 Engineering design for industrial processes and production
86726 Engineering design services n.e.c.
86727 Other engineering services during the construction and installation phase
86729 Other engineering services
Integrated engineering services
86731 Integrated engineering services for transportation, infrastructure turnkey projects86732 Integrated engineering and project management services for water supply and sanitation
works turnkey projects
86733 Integrated engineering services for the construction of manufacturing turnkey projects
86739 Integrated engineering services for other turnkey projects
8674 Urban planning and landscape architectural services
Computer and Related Services
841 Consultancy services related to the installation of computer hardware
842 Software implementation services, including systems and software consulting services,
systems analysis, design, programming and maintenance services
843 Data processing services, including processing, tabulation and facilities management services
844 Data base services
845 Maintenance and repair services of office machinery and equipment including computers
849 Other computer services
Real Estate Services
821 Real estate services involving own or leased property
822 Real estate services on a fee or contract basisWT/REG124/1
Page 90
Rental/Leasing Services without Operators
831 Leasing or rental services concerning machinery and equipment without operator, including
computers
832 Leasing or rental services concerning personal and household goods (excluding in 83201, the
rental of prerecorded records, sound cassettes, CD’s and excluding 83202, rental servicesconcerning video tapes)
Other Business ServicesManagement consulting services
86501 General management consulting services
86503 Marketing management consulting services86504 Human resources management consulting services
86505 Production management consulting services
86509 Other management consulting services, including agrology, agronomy, farm management and
related consulting services
8676 Technical testing and analysis services including quality control and inspection8814 Services incidental to forestry and logging, including forest management
883 Services incidental to mining, including, drilling and field services
Related scientific and technical consulting services
86751 Geological, geophysical and other scientific prospecting services, including those related to
mining
86752 Subsurface surveying services
86753 Surface surveying services
86754 Map making services
8861through
8866 Repair services incidental to metal products, to machinery and equipment including
computers,and communications equipment
874 Building-cleaning
876 Packaging services
Environmental Services
940 Sewage and refuse disposal, sanitation and other environmental protection services, including
sewage services, nature and landscape protection services and other environmental protection
services n.e.c.
Hotels and restaurants (including catering)
641 Hotel and other lodging services
642 Food services
643 Beverage serving services
Travel agency and tour operators services
7471 Travel agency and tour operator services
Part B - List of Services covered by Israel
Of the Universal List of Services, as contained in document MTN.GNS/W/120, the following
services are included:WT/REG124/1
Page 91
CPC Description
6112, 6122, 633, 886 Maintenance and Repair Services
841-3 Computer and related services
864 Market research and public opinion865-6 Management consulting
8671 Architectural services
8672-3 Engineering services
8674 Urban Planning
871 Advertising services
874, 82201-82206 Building – cleaning services & Property Management Services
88442 Publishing & Printing services on a fee or contract basis9401-5 Environmental services
Note:  The offer regarding services(including construction services referred in Annex IV to this chapter) is
subject to the limitation and conditions specified in Israel’s offer under the General Agreement on Trade in
Services negotiation.WT/REG124/1
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ANNEX IV
Covered Construction Services
Part A - List of Construction Services covered by Mexico
This Chapter applies to all construction services set out below that are procured by the entities
listed in Annex I.
Construction Work Codes
Note: Based on the United Nations Central Product Classification (CPC) Division 51.
Definition of Construction work: Pre-erection work; new construction and repair, alteration, restoration and
maintenance work on residential buildings, non-residential buildings or civil engineering works.  This work can
be carried out either by general contractors who do the complete construction work for the owner of the project,
or on own account; or by subcontracting parts of the construction work to contractors specializing, e.g., ininstallation work, where the value of work done by subcontractors becomes part of the main contractor’s work.The products classified here are services which are esse ntial in the production process of the different types of
constructions, the final output of construction activities.
Code Descriptions
511 Pre-erection work at construction sites5111 Site investigation work
5112 Demolition work
5113 Site formation and clearance work
5114 Excavating and earthmoving work
5115 Site preparation work for mining (except for mining of oil and gas which is classified under
FO42)
5116 Scaffolding work
512 Construction works for buildings
5121 For one and two dwelling buildings
5122 For multi-dwelling buildings
5123 For warehouses and industrial buildings
5124 For commercial buildings5125 For public entertainment buildings
5126 For hotel, restaurant and similar buildings
5127 For educational buildings
5128 For health buildings
5129 For other buildings513 Construction work for civil engineering
5131 For highways (except elevated highways), st reets , roads, railways and airfield runways
5132 For bridges, elevated highways, tunnels ,subways and railroads
5133 For waterways, harbours, dams and other water works
5134 For long distance pipelines, communication and power lines  (cables)5135 For local pipelines and cables; ancillary works
5136 For constructions for mining and manufacturing
5137 For constructions for sport and recreation
5138 Dredging services
5139 For engineering works n.e.c.514 Assembly and erection of prefabricated constructions
515 Special trade construction work
5151 Foundation work, including  pile driving
5152 Water well drilling
5153 Roofing and water proofingWT/REG124/1
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5154 Concrete work
5155 Steel bending and erection, including welding
5156 Masonry work
5159 Other special trade construction work
516 Installation work5161 Heating, ventilation and air conditioning work
5162 Water plumbing and drain laying work
5163 Gas fitting construction work
5164 Electrical work
5165 Insulation work (electrical wiring, water, heat, sound)
5166 Fencing and railing construction work
5169 Other installation work517 Building completion and finishing work
5171 Glazing work and window glass installation work
5172 Plastering work
5173 Painting work
5174 Floor and wall tiling work5175 Other floor laying, wall covering and wall papering work
5176 Wood and metal joinery and carpentry work
5177 Interior fitting decoration work
5178 Ornamentation fitting work
5179 Other building completion and finishing work518 Renting services related to equipment for construction or demolition of buildings or civil
engineering works, with operator
Part B - List of Construction Services covered by Israel
This Chapter applies to all construction services set out below that are procured by the entities
listed in Annex I.
Definition:A construction services contract is a contract that has as its objective the realization by whatever
means of civil or building works, in the sense of Division 51 of the Central Product Classification.
List of construction services:CPC Description511 Pre-erection work at construction sites
512 Construction work for buildings
513 Construction work for civil engineering
514 Assembly and erection of prefabricated construction515 Special trade construction work
516 Installation work
517 Building completion and finishing work
518 Renting services related to equipment for constructionWT/REG124/1
Page 94
ANNEX V
Thresholds
Part A - Thresholds applicable to Mexico
1. The thresholds for procurement, by entities listed in Annex I (federal government entities)
are:
− 100,000 United States dollars for goods or serv ices specified in Annexes II and III, or
any combination thereof, and
− 6,500,000 United States dollars for construction services specified in Annex IV.
2. The thresholds for procurements by entities listed under Annex I (government enterprises)
are:
− 250,000 United States dollars for goods or serv ices specified in Annexes II and III, or
any combination thereof, and
− 8,000,000 United States dollars for construction services specified in Annex IV.
3. However, in order to provide equivalence to the current value of the thresholds applied in the
context of the North American Free Trade Agreement, Mexico shall, from the entry into force of this
Agreement, apply the actual North American Free Trade Agreement thresholds instead of those
mentioned in paragraphs 1 and 2.
4. Mexico shall calculate and convert the value of the thresholds into pesos using the conversion
rate of the Banco de México. Its conversion rate shall be the existing value of the Mexican peso in
terms of the US dollar as of 1 December and 1 June of each year, or the first working day thereafter.
The conversion rate as of 1 December shall apply from 1 January to 30 June of the following year,and the conversion rate as of 1 June shall apply from 1 July to 31 December of that year.
Part B - Thresholds applicable to Israel
Central Government Entities
Goods (specified in Annex II) Threshold: 130,000 SDR
Services (specified in Annex III) Threshold: 130,000 SDR
Construction Services (specified in Annex IV) Threshold: 8,500,000 SDR
Other Governmental Entities
Goods (specified in Annex II) Threshold: 355,000 SDR
Services (specified in Annex III) Threshold: 355,000 SDR
Construction Services (specified in Annex IV) Threshold: 8,500,000 SDRWT/REG124/1
Page 95
ANNEX VI
General Notes
Part A -  General Notes and Derogations
 governing Mexico’s Offer set out in Annex I through V
Section 1 Transitional Provisions
Notwithstanding any other provision of this Chapter, Annexes 1 through 5 are subject to the
following transitional provisions:
Pemex, CFE and non-energy construction
1. Mexico may set aside from the obligations of this Chapter for each calendar year following
the entry into force of this Agreement the respective percentage specified in paragraph 2 of:
(a) the total value of procurement contracts for goods and services and any combination
thereof and construction services procured by Pemex in the year that are above the
thresholds set out in Annex V;
(b) the total value of procurement contracts for goods and services and any combination
thereof and construction services procured by CFE in the year that are above thethresholds set out in Annex V;  and
(c) the total value of procurement contracts for construction services procured in the year
that are above the thresholds set out in Annex V, excluding procurement contracts for
construction services procured by Pemex and CFE.
2. The percentages referred to in paragraph 1 are as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 and
thereafter
45% 40% 35% 35% 35% 30% 30% 0%
3. The value of procurement contracts that are financed by loans from regional and multilateral
financial institutions shall not be included in the calculation of the total value of procurement
contracts under paragraphs 1 and 2.  Procurement contracts that are financed by such loans shall also
not be subject to any restrictions set out in this Chapter.
4. Mexico shall ensure that the total value of the procurement contracts under any single FSC class
(or other classification system agreed by the Parties) that are set aside by Pemex or CFE under
paragraphs 1 and 2 for any calendar year does not exceed 15 per cent of the total value of the
procurement contracts that may be set aside by Pemex or CFE for that year.
5. Mexico shall ensure that after 31 December of the fourth year following the entry into force
of this Chapter, Pemex and CFE each shall make all reasonable efforts to assure that the total value of
procurement contracts under any single FSC class (or other classification system as agreed by the
Parties) that are set aside by Pemex or CFE under paragraphs 1 and 2 for any year does not exceed50 per cent of the total value of all Pemex or CFE procurement contracts under that FSC class (or
other classification system as agreed by the Parties) for that year.WT/REG124/1
Page 96
Pharmaceuticals
6. Until 1 January of the eighth year following its entry into force, this Chapter shall not apply to
the procurement by the Secretaría de Salud, IMSS, ISSSTE, Secretaría de la Defensa Nacional and the
Secretaría de Marina of drugs that are not currently patented in Mexico or whose Mexican patentshave expired.  Nothing in this paragraph shall prejudice protection of intellectual property rights.
Section 2 Permanent Provisions
1. This Chapter does not apply to procurements made:
(a) with a view to commercial resale by government owned retail stores;
(b) pursuant to loans from regional or multilateral financial institutions to the extent
that different procedures are imposed by such institutions (except for national
content requirements);
(c) by one entity from another entity of Mexico;  or(d) for the purchase of water and for the supply of energy or of fuels for the
production of energy.
 
(e) by Secretaría de Salud, IMSS, ISSSTE, Secretaría de la Defensa Nacional and the
Secretaría de Marina of the following goods:
(i) Insulin and infusion pumps
(ii) Audiometers
(iii) Medical dressings (bandages, adhesive tapes excluding gauze bandages
and gauze pads)
(iv) Intravenous solution
(v) Administration sets for transfusion
(vi) Scalp vein sets
(vii) Hemi-dialysis and blood lines (not covering blood derivatives)
(viii) Blood packs (not covering blood derivatives)
(ix) Syringe needles
(f) by Petróleos Mexicanos (PEMEX) and Comisión Federal de Electricidad (CFE),
of the following goods:
(i) Cables for electricity (H.S. 8544)
(ii) Electro-mechanic meters ( EX. H.S.9028)
(iii) Transformers (H.S. 8504)
(iv) Disconnectors and switchers (H.S. 8535-8537)
(v) Electric motors (H.S. 8501)
(g) by Secretaría de Comunicaciones y Transportes (SCT) of cables.
2. This Chapter does not apply to public utility services (including telecommunication,
transmission, water and energy services).
3. This Chapter does not apply to any transportation services including: land transportation
(CPC 71); water transpor t (CPC 72); air transpor t (CPC 73); supporting and auxiliary transport
(CPC 74); post and telecommunication (CPC 75); repair services of other transport equipment, on a
fee or contractual basis (CPC 8868).WT/REG124/1
Page 97
4. This Chapter does not apply to the procurement of transportation services that form a part of,
or are incidental to, a procurement contract.
5. This Chapter does not apply to financial services; research and development services; and
management and operation contracts awarded to federally funded research and development centres
or related to carrying out government, sponsored research programs.
6. Notwithstanding any other provision in this Chapter, Mexico may set aside procurement
contracts from the obligations of this Chapter, subject to the following:
(a) the total value of the contracts set aside may not exceed the Mexican peso equivalent
of:
(i) 1.0 billion United States dollars, in each year until 31 December of the
seventh year following the entry into force of this Agreement, which may be
allocated by all entities except Pemex and CFE;
(ii) 1.8 billion United States dollars, in each year beginning 1 January of the
eighth year following the entry into force of this Agreement, which may be
allocated by all entities;
(b) no entity subject to sub-paragraph (a) may set aside contracts in any year of a value of
more than 20 per cent of the total value of contracts that may be set aside for that
year.
(c) the total value of the contracts set aside by Pemex or CFE may not exceed the
Mexican peso equivalent of 720 million United States dollars in each calendar year,
beginning 1 January of the eighth year following the entry into force of this
Agreement.
(d) For the administration of the set asides under this Annex, Mexico will apply the same
criteria and treatment as applied to North American Free Trade Agreement members,
except as otherwise provided in this Annex.
7. Beginning one year after the date of entry into force of this Agreement, the dollar values
referred to in paragraph 6 shall be adjusted annually for cumulative inflation from the date of entry
into force of this Agreement, based on the implicit price deflator for the United States Gross Domestic
Product (USGDP) or any successor index published  by the Council of Economic Advisors in
“Economic Indicators”.
The dollar values adjusted for cumulative infl ation up to January of each year following 2000
shall be equal to the original dollar values multiplied by the ratio of:
(a) the implicit USGDP price deflator or any successor index published by the
Council of Economic Advisors in “Economic Indicators”, current as of January of
that year, to
(b) the implicit USGDP price deflator or any successor index published by the
Council of Economic Advisors in “Economic Indicators”, current as of the date of
entry into force of this Chapter,
provided that the price deflators under subparagraph (a) and (b) have the same base year.  The
resulting adjusted dollar values shall be rounded to the nearest million dollars.WT/REG124/1
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8. The national security exception provided for in Article 6-18 of this Chapter covers
procurements made in support of safeguarding nuclear materials or technology.
9. Notwithstanding any other provision of this Chapter, an entity may impose a local content
requirement of no more than:
(a) 40 per cent, for labour-intensive turnkey or major integrated projects; or(b) 25 per cent, for capital-intensive turnkey or major integrated projects.For purposes of this paragraph, a ‘turnkey or major integrated project’ means, in general, a
construction, supply or installation project undertaken by a person pursuant to a right
granted by an entity with respect to which:
(a) the prime contractor is vested with the authority to select the general contractors or
subcontractors;
(b) neither the Government of Mexico nor its entities fund the project;(c) the person bears the risks associated with non-performance;  and
(d) the facility will be operated by an entity or through a procurement contract of that
entity.
10. Notwithstanding the thresholds set out in An nex V, Article 6-02 applies to any procurement
from locally-established suppliers of oil and gas field supplies or equipment by Pemex at any projectsite where it performs works.
11. In the event that Mexico exceeds in any given year the total value of contracts it may set aside
for that year in accordance with paragraph 6 or paragraphs 1,2, and 4 of section 1, Mexico shall
consult with Israel with a view to agreement on compensation in the form of additional procurement
opportunities during the following year.  The consultations shall be without prejudice to the rights of
any Party under Chapter X (Institutional Provisions and Dispute Settlement Procedures).
12. Nothing in this Chapter shall be construed to require Pemex to enter into risk-sharing
contracts.
Part B -  General Notes and Derogations
governing Israel’s Offer set out in Annex I to V
1. This Chapter shall not apply to contracts awarded for purposes of re-sale or hire to third
parties, provided that the contracting entity enjoys no special or exclusive right to sell or hire thesubject of such contracts and other entities are free to sell or hire it under the same conditions as the
contracting entity.
2. This Chapter shall not apply to contracts for the purchase of water and for the supply of
energy and of fuels for the production of energy.
3. This Chapter shall not apply to the acquisition or rental of land, buildings or other immovable
property, or concerning rights thereon.WT/REG124/1
Page 99
4. Notwithstanding any other provision of this Chapter, Israel may operate provisions which
require the limited incorporation of domestic content,  offset procurement or transfer of technology, in
the form of objective and clearly defined conditions for participation in procedures for the award of
contracts.  This shall be done under the following terms:
(a) Israel shall ensure that its entities indica te the existence of such conditions in their
tender notices and specify them clearly in the contract documents.
(b) Suppliers will not be required to purchase goods that are not offered on competitive
terms, including price and quality, or to take any action which is not justified from a
commercial standpoint.
(c) Offsets in any form may be required up to 35 per cent of the contract going down to
30 per cent on 1 January 2001 and to 20 per cent on 1 January 2005 and thereafter.
(c) For the administration of the offset under this Annex, Israel will apply the same
criteria and treatment as applied to the WTO Government Procurement Agreement
members, except as otherwise provided in this Annex.
5. This Chapter does not apply to procurement made by an entity from any other government
entity.WT/REG124/1
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ANNEX VII
Publications
This Annex contains the publications utilised by Parties for the publication of laws,
regulations, judicial decisions, administrative rulings of general application, including invitations to
participate and qualification of suppliers and any procedure regarding government procurement
covered by this Chapter.
Mexico
Diario Oficial de la Federación
Semanario Judicial de la Federación (sólo para jurisprudencia)
Israel
The Official Gazette (for publications under Article 6-20(1)
The Jerusalem Post
International Herald Tribune - HaáretzWT/REG124/1
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CHAPTER VII
WTO Rights and Obligations
Article 7-01
Unfair Trade Practices
The Parties confirm their rights and obligations relating to the application of antidumping and
countervailing duties under the WTO Agreement on Implementation of Article VI of the General
Agreement of Tariffs and Trade of 1994 and the WTO Agreement on Subsidies and Countervailing
Duties.
Article 7-02
Standards, Technical Regulation and Conformity Assessment Procedures
The Parties confirm their rights and obligations relating to standards, technical regulations
and conformity assessment procedures under the WTO Agreement on Technical Barriers to Trade.
Article 7-03
Sanitary and Phytosanitary Measures
The Parties confirm their rights and obligations relating to sanitary and phytosanitary
measures under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.
Article 7-04
Services
The Parties confirm their rights and obligations relating to trade in services under the WTO
General Agreement on Trade in Services (GATS).
Article 7-05
Intellectual Property
The Parties confirm their rights and obligations relating to intellectual property rights under
the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIP’s).
Article 7-06
Dispute Settlement
No Party may have recourse to dispute settlement under Chapter X (Institutional Provisions
and Dispute Settlement Procedures) for any matter arising under this Chapter.WT/REG124/1
Page 102
CHAPTER VIII
Competition Policy, Monopolies and State Enterprises
Article 8-01
Definitions
For purposes of this Chapter:
competition law  means “competition law”, as defined in Annex 8-01;
designate means to establish, authorize or to expand the scope of a monopoly to cover an additional
good or service, after the date of entry into force of this Agreement;
monopoly  means an entity, including a consortium or government agency, that in any relevant market
in the territory of a Party is designated as the sole provider or purchaser of a good orservice but does not include an entity granted an exclusive intellectual property right
solely by reason of such grant;  and
state enterprise  means an enterprise owned or controlled through ownership interests by a Party.
Article 8-02
Competition Policy
1. The Parties undertake to enforce their respective competition laws in order to avoid
anticompetitive business conduct recognizing that such conduct may have adverse effects on their
bilateral trade, affecting the objectives of this Ag reement.  To this end the Parties shall consult from
time to time about the effectiveness of measures taken by each Party.
2. In the enforcement of its competition laws, each Party shall accord suppliers of goods and
services originating in the other Party treatment no less favorable than that accorded to domestic
suppliers or to suppliers of any other country, in respect of all the suppliers' rights and obligationsunder its competition laws.
3. No Party may have recourse to dispute settlement under this Agreement for any matter arising
under this Article where judicial challenge procedures are provided by the other Party under its
legislation.
Article 8-03
Cooperation
Each Party recognizes the importance of cooperation and coordination between their
competition authorities to further effective comp etition law enforcement in order to enhance the
fulfillment of the objectives of this Agreement.  The Parties declare their willingness to cooperate on
issues of competition law enforcement, including notification, consultation and exchange of
information related to the enforcement of competition laws on matters that may affect their bilateraltrade.WT/REG124/1
Page 103
Article 8-04
Restrictive Arrangements
1. Nothing in this Agreement shall be interprete d to prevent a Party from approving a restrictive
arrangement as established in their competition law.
2. Where a Party approves a restrictive arrangement that may affect the interests of the other
Party, the Party shall:
(a) wherever possible, provide prior written notification to the other Party or publish the
approval;  and
(b) endeavor to introduce at the time of the approval such conditions on the arrangement
as to minimize any adverse effect on competition.
Article 8-05
Monopolies
1. Nothing in this Agreement shall be construed to prevent a Party from designating a
monopoly.
2. Where a Party intends to designate a monopoly and the designation may affect the interests of
the other Party, the Party shall:
(a) wherever possible, provide prior written notification to the other Party;  and
(b) endeavor to introduce at the time of the designation such conditions on the operation
of the monopoly as to minimize or eliminate any nullification or impairment of
benefits.
3. Each Party shall ensure through regulatory  control, administrative supervision or the
application of measures, that any privately-owned monopoly it designates and any government
monopoly it maintains or designates:
(a) acts in a manner that is not inconsistent with the Party’s obligations under this
Agreement wherever such a monopoly exercises any regulatory, administrative or
other governmental authority that the Party delegated to it in connection with the
monopoly good or service, such as the power to grant import or export licenses,approve commercial transactions or impose quotas, fees or other charges;
(b) except to comply with any terms of its designation that are not inconsistent with
subparagraph (c), acts solely in accordance with commercial considerations in its
purchase or sale of the monopoly good or service in the relevant market, includingwith regard to price quality, availability, marketability, transportation and other terms
and conditions or purchase or sale;  and
(c) does not use its monopoly position to engage, either directly or indirectly including
through its dealings with its parent, its subsidiary or other enterprise with commonownership, in anticompetitive practices in  a non-monopolized market in its territory
that adversely affect the other Party, including through the discriminatory provision of
the monopoly good or service, cross-s ubsidization or predatory conduct.WT/REG124/1
Page 104
4. Paragraph 3 does not apply to procurement by governmental agencies of goods and services
for governmental purposes and not with a view to commercial resale or with a view to use the
production of goods or the provision of services for commercial sale.
5. For purposes of this Article “maintain” means designate prior to the date of entry into force of
this Agreement and existing on the date of the entry into force of this Agreement in accordance withArticle 12-03.
Article 8-06
State Enterprises
1. Nothing in this Agreement shall be cons trued to prevent a Party from maintaining or
establishing a state enterprise.
2. Each Party shall ensure, through regulatory  control, administrative supervision or the
application of other measures, that any state enterprise that it maintains or establishes acts in a manner
that is not inconsistent with the Party’s obligations wherever such enterprise exercises any regulatory,
administrative or other governmental authority that the Party has delegated to it, such as the power to
expropriate, grant licenses, approve commercial transactions or impose quotas, fees or other charges.
3. Each Party shall ensure that any state enterprise it maintains or establishes accords non-
discriminatory treatment in the sale of its goods.WT/REG124/1
Page 105
ANNEX 8-01
Competition Law
For purposes of this Chapter, "competition law" means:
(a) in the case of Israel, Restrictive Business Practices Law 5748-1988 and its
regulations;  and
(b) in the case of Mexico, the Federal Law of Economic Competition (LFCE) (1993), the
Regulations of the LFCE (1998) and the Internal Regulation of the Federal
Competition Commission (1998).
As well as any amendments thereto, and such other laws and regulations as the Parties may
from time to time agree in writing to be a "competition law" for the purposes of this Agreement.WT/REG124/1
Page 106
CHAPTER IX
Publication, Notification and Administration of Laws
Article 9-01
Contact Points
Each Party shall designate a contact point to facilitate communications between the Parties on
any matter covered by this Agreement.  On the request of the other Party, the contact point shall
identify the office or official responsible for the matter and assist, as necessary, in facilitating
communication with the requesting Party.
Article 9-02
Publication
1. Each Party shall ensure that its laws, regulations, procedures and administrative rulings of
general application respecting any matter covered by this Agreement are promptly published.
2. To the extent possible, each Party shall publish in advance any such measure that it proposes
to adopt.
Article 9-03
Notification and Provision of Information
1. To the maximum extent possible, each Party shall notify the other Party of any proposed or
actual measure that the Party considers might materially affect the operation of this Agreement or
otherwise substantially affect that other Party's interests under this Agreement.
2. On request of the other Party, a Party shall promptly provide information and respond to
questions pertaining to any actual or proposed measure, whether or not that other Party has been
previously notified of that measure.
3. Any notification or information provided under this Article shall be without prejudice as to
whether the measure is consistent with this Agreement.
Article 9-04
Administrative Proceedings
With a view to administering in a consistent, impartial and reasonable manner all measures of
general application affecting matters covered by this  Agreement, each Party shall ensure that in its
administrative proceedings applying measures referred to in Article 9-03 to particular persons orgoods of the other Party in specific cases that:
(a) wherever possible, persons of the other Party that are directly affected by a
proceeding are provided reasonable notice, in accordance with domestic procedures,
when a proceeding is initiated, including a description of the nature of the proceeding,a statement of the legal authority under which the proceeding is initiated and a
general description of any issues in controversy;WT/REG124/1
Page 107
(b) such persons are afforded a reasonable opportunity to present facts and arguments in
support of their positions prior to any final administrative action, when time, the
nature of the proceeding and the public interest permit;  and
(c) its procedures are in accordance with domestic law.WT/REG124/1
Page 108
CHAPTER X
Institutional Provisionsand Dispute Settlement Procedures
Section A - Institutions
Article 10-01
The Free Trade Commission
1. The Commission shall comprise representatives of both Parties.  The principal representative
of each Party shall be the cabinet level officer or Minister primarily responsible for internationaltrade, or a person designated by the cabinet level officer or Minister.
2. The Commission shall:
(a) supervise the implementation of this Agreement;
(b) examine its further elaboration;
(c) resolve any matter or dispute that may arise regarding its interpretation or application;
(d) supervise the work of all committees established under this Agreement;  and
(e) consider and seek to resolve any other matter that may affect the operation of this
Agreement  and review the possibility of further removal of obstacles to trade between
the Parties.
3. The Commission may:
(a) establish and delegate responsibilities to, ad hoc  or standing committees, working
groups or expert groups;
(b) seek the advice of non-governmental persons or groups;
(c) modify the Model Rules of Procedure and Code of Conduct established under
Articles 10-08 and 10-10;  and
(d) take such other action in the exercise of its functions as the Parties may agree.
4. All decisions of the Commission shall be taken by consensus.
5. The Commission shall convene at least once a year in regular session. Regular sessions of the
Commission shall be chaired alternatively by the two Parties.WT/REG124/1
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Section B - Dispute Settlement
Article 10-02
Cooperation
The Parties shall at all times endeavor to agree on the interpretation and application of this
Agreement, and shall make every attempt through cooperation and consultations to arrive at a
mutually satisfactory resolution of any matter that might affect its operation.
Article 10-03
Recourse to Dispute Settlement Procedures
Except as otherwise provided in this Agreement, the dispute settlement provisions of this
Chapter shall apply with respect to the avoidance or settlement of all disputes between the Parties
regarding the interpretation or application of this Agreement, or wherever a Party considers that an
actual or proposed measure of the other Party is or would be inconsistent with the obligations of thisAgreement or cause nullification or impairment as set out in Annex 10-03 (Nullification and
Impairment).
Article 10-04
Dispute Settlement under the WTO
1. Subject to paragraphs 2 and 3, disputes regarding any matter arising under both this
Agreement and the WTO Agreement or any agreement negotiated thereunder to which both Parties
are party, may be settled in either forum at the discretion of the complaining Party after the exhaustionof the consultations under Article 10-05.
2. The Parties shall favorably consider resolving their differences by using the mechanisms as
established under this Agreement.  Before a Party initiates a dispute settlement proceeding under the
WTO Agreement against the other Party on grounds that are substantially equivalent to those
available to that Party under this Agreement, that Party shall notify the other Party of its intention.  If
the other Party wishes the dispute to be settled under the dispute settlement procedures provided in
this Agreement, it shall inform promptly the noti fying Party and the Parties shall consult with a view
to agree on a single forum.
3. Once dispute settlement procedures have been initiated under Article 10-06 or dispute
settlement procedures have been initiated under the WTO Understanding on Rules and Procedures
Governing the Settlement of Disputes, the forum selected shall be used to the exclusion of the other.
4. For purposes of this Article, dispute settlement proceedings under the WTO Agreement are
deemed to be initiated by a Party’s request for a panel, as specified under Article 6 of the WTO
Understanding on Rules and Procedures Governing the Settlement of Disputes, following
consultations under Article 4 thereof.WT/REG124/1
Page 110
CONSULTATIONS
Article 10-05
Consultations
1. If the matter is not settled through cooperation, either Party may request in writing
consultations with the other Party regarding any matter referred to under Article 10-03.
2. The requesting Party shall deliver the request to the other Party.
3. Consultations on matters of urgency, including those regarding perishable goods, shall
commence within 15 days of the date of delivery of the request.
4. The Parties shall make every attempt to arrive at a mutually satisfactory resolution of any
matter through consultations under this Article or other relevant consultative provisions of this
Agreement. To this end, the Parties shall:
(a) provide each other with sufficient information to enable a full examination of how the
actual or proposed measure or other matter might affect the operation of this
Agreement;  and
(b) treat any confidential or proprietary information exchanged in the course of
consultations on the same basis as the Party providing that information.
INITIATION OF PROCEDURES
Article 10-06
Commission - Good Offices, C onciliation and Mediation
1. If the Parties fail to resolve a matter pursuant to Article 10-05 within:
(a) 30 days of delivery of a request for consultations,(b) 15 days of delivery of a request for consultations in matters covered by
Article 10-05(3);  or
(c) any other period as they may agree,
any Party may request in writing a meeting of the Commission.
2. The requesting Party shall state in the request the measure or other matter complained of and
indicate the provisions of this Agreement that it considers relevant, and shall deliver the request to the
other Party.
3. Unless otherwise agreed, the Commission shall convene within 20  days of delivery of the
request and shall endeavor to resolve the dispute promptly.
4. The Commission may:
(a) call on such technical advisers or create such working groups or expert groups as it
deems necessary;WT/REG124/1
Page 111
(b) have recourse to good offices, conciliation, mediation or such other dispute resolution
mechanisms;  or
(c) make recommendations,
as may assist the Parties to reach a mutually satisfactory resolution of the dispute.
5. Unless it decides otherwise, the Commission shall consolidate two or more proceedings
before it pursuant to this Article regarding the same measure.  The Commission may consolidate two
or more proceedings, regarding other matters before it pursuant to this Article, that it determines are
appropriate to be considered jointly.
PANEL PROCEEDINGS
Article 10-07
Request for an Arbitral Panel
1. If the matter has not been resolved, either Party may request in writing the establishment of an
arbitral panel within:
(a) 30 days after the Commission has convened pursuant to Article 10-06;(b) 30 days after the Commission has convened in respect of the matter most recently
referred to it, where proceedings have been consolidated pursuant to Article 10-06(5);
(c) 15 days after the Commission has convened under Article 10-05(3);  or(d) such other period as the Parties may agree.
2. On delivery of the request, the Commission shall establish an arbitral panel.3. Unless otherwise agreed by the Parties, the panel shall be established and perform its
functions in a manner consistent with the provisions of this Chapter and the Model Rules of Procedureset out in Article 10-10.
Article 10-08
Establishment of Panels
1. By the date of entry into force  of this Agreement, the Parties shall establish and maintain a
roster of up to 20 individuals to serve as panelist in disputes under this Chapter.  Each Party shall
select up to 10 individuals who may be nationals or residents of that Party.  The Parties shall normally
appoint panelist from the roster.
2. By the date of entry into force  of this Agreement, the Parties shall establish and maintain a
roster of up to 10 individuals non-nationals of the Parties, who are willing to serve as chair of a panel
established under Article 10-07.  The roster members shall be appointed by consensus for a term of
four years, and may be reappointed.
3. All panelists shall:
(a) have expertise or experience in law, international trade, other matters covered by this
Agreement or the resolution of disputes arising under international trade agreements,WT/REG124/1
Page 112
and shall be chosen strictly on the basis of objectivity, reliability and sound judgment;
(b) be selected with a view to ensuring the independence of the panel member, and not
be affiliated with or take instructions from any Party;  and
(c) comply with a Code of Conduct to  be established by the Commission by
1 January 2001.
Article 10-09
Panel Selection
1. The panel shall comprise three members.2. Within  20 days of the delivery of the request for the establishment of the panel, each Party
shall select and notify the other Party of a panelist pursuant with paragraph 10-08(1).
3. Within  20 days of the delivery of the request for the establishment of the panel, each Party
shall propose a candidate from the agreed roster established under paragraph 10-08(2) to serve as
chair of the panel.
4. The Parties shall endeavour to agree on the chair within 20 days of the appointment of the last
panelist.
5. If a Party fails to appoint its panelist pursuant to paragraph 2, it shall be selected by lot from
the roster established under paragraph 10-08(1) from that Party’s individuals on the roster.
6. If the Parties are unable to agree on the chair, it shall be selected by lot among the candidates
of the roster established under paragraph 10-08(2).
7. Should a panelist be unable to continue to serve as panelist, a new panelist shall be selected in
accordance with this Article.
8. If a Party believes that a panelist is in violation of the Code of Conduct, the Parties shall
consult and if they agree, the panelist shall be removed and a new panelist shall be selected in
accordance with this Article.
Article 10-10
Rules of Procedure
1. Unless the Parties otherwise agree, the panel shall conduct its proceedings in accordance with
the Model Rules of Procedure establish by the Commission by 1 January 2001.  The Model Rules of
Procedure shall:
(a) assure a right to at least one hearing before the panel and the opportunity to provide
written submissions and rebuttal arguments;
(b) permit counsel chosen by a Party to advise that Party during panel proceedings,
including hearings;
(c) require that a Party’s position be presented by officials spokespersons of that Party;
andWT/REG124/1
Page 113
(d) the panel’s hearings, deliberations and initial report, and all written submissions to
and communications with the panel shall be confidential.
2. The Parties shall agree on the terms of reference.  If the Parties fail to agree within 20 days
from the date of the delivery of the request for the establishment of the panel, the terms of reference
shall be:
"To examine, in the light of the relevant provisions of the Agreement, the matter
referred to the Commission (as set out in the request for a Commission meeting)
and to make findings, determinations and recommendations as provided in
Article 10-13(2)."
3. If the complaining Party, having raised it during the Commission meeting, wishes to argue
that a matter has nullified or impaired benefits, the terms of reference shall so indicate.
4. If a Party wishes the panel to make findings as to the degree of adverse trade effects on any
Party of any measure found not to conform with the obligations of the Agreement or to have causednullification or impairment as set out in Annex 10-03 (Nullification and Impairment), the terms of
reference shall so indicate.
Article 10-11
Role of Experts
1. On request of a Party or on its own initiative, the panel may seek technical advice from any
person or body, including highly qualified independent experts, on any scientific or technical matter
raised by a Party in a proceeding, provided that the Parties so agree and subject to such terms andconditions as the Parties may agree.
2. The Parties shall be provided a copy of the expert’s report and an opportunity to provide
comments on the report to the panel. Such comments shall be provided to the other Party.
3. The panel shall consider the expert’s report and any comments submitted by the Parties on the
report in the preparation of its report.
Article 10-12
Initial Report
1. Unless the Parties otherwise agree, the panel shall base its report on the submissions and
arguments of the Parties and on any information before it pursuant to Article 10-11.
2. Unless the Parties otherwise agree, the panel shall, within 90 days after the last panelist is
selected present to the Parties an initial report containing:
(a) findings of fact, including any findings pursuant to a request under Article 10-10(4);
(b) its determination as to whether the measure at issue is or would be inconsistent with
the obligations of this Agreement or cause nullification or impairment as set out in
Annex 10-03 (Nullification and Impairment), or any other determination requested in
the terms of reference;  and
(c) its recommendations, if any, for resolution of the dispute.WT/REG124/1
Page 114
3. Panelists may furnish separate opinions on matters not unanimously agreed.
4. Any Party may submit written comments to the panel on its initial report within 30 days of
presentation of the report, or any other period as the Parties may otherwise agree.  Such commentsshall be provided to the other Party.
5. In such an event, and after considering su ch written comments, the panel may, on its own
initiative or on the request of either Party:
(a) request any further views of either Party;
(b) reconsider its report;  and(c) make any further examination that it considers appropriate.
Article 10-13
Final Report
1. The panel shall present to the Parties a final report, including any separate opinions on
matters not unanimously agreed, within 60  days of presentation of the initial report, unless the Parties
otherwise agree.
2. No panel may, either in its initial report or its final report, disclose which panelists are
associated with majority or minority opinions.
3. Unless the Commission decides otherwise, the final report of the panel shall be made
available to the public 15 days after it is presented to the Parties.
Article 10-14
Implementation of Final Report
1. On receipt of the final report of a panel, the Parties shall agree on the resolution of the
dispute, which normally shall conform with the report.
2. Wherever possible, the resolution shall be non-implementation or removal of a measure not
conforming with this Agreement or causing nullification or impairment as set out in Annex 10-03
(Nullification and Impairment) or, failing such a resolution, compensation.
Article 10-15
Non-Implementation - Suspension of Benefits
1. If in its final report a panel has determined that a measure is inconsistent with the obligations
of this Agreement or causes nullification or impairment as set out in Annex 10-03 (Nullification and
Impairment) and the Party complained against has not reached agreement with the complaining Party
on a mutually satisfactory resolution pursuant to Article 10-14(1) within 30 days of receiving the final
report, the complaining Party may suspend the applic ation to the Party complained against of benefits
of equivalent effect until such time as they have reached agreement on a resolution of the dispute.
2. In considering what benefits to suspend pursuant to paragraph 1:WT/REG124/1
Page 115
(a) a complaining Party should first seek to suspend benefits in the same sector or sectors
as that affected by the measure or other matter that the panel has found to be inconsistent with
the obligations of this Agreement or to have caused nullification or impairment as set out in
Annex 10-03 (Nullification and Impairment);  and
(b) a complaining Party that considers it is not practicable or effective to suspend benefits
in the same sector or sectors may suspend benefits in other sectors.
3. On the written request of any Party delivered to the other Party, the Commission shall to the
extent possible, reconvene the panel which issued the report to determine whether the level of benefits
suspended by a Party pursuant to paragraph 1 is manifestly excessive.  Where it is not possible to
reconvene this panel, the new panelists shall be selected in accordance with Article 10-09.
4. The panel proceedings pursuant to paragraph 3 shall be conducted in accordance with the
Model Rules of Procedure.  The panel shall present its determination within 60 days after the date the
complaining party made the request pursuant to paragraph 3 or such other period as the Parties may
agree.
5. The suspension of benefits shall be temporary and shall only be applied until such time as the
measure, found to be inconsistent with the obligations of this Agreement or causes nullification orimpairment as set out in Annex 10-03 (Nullifica tion and Impairment), has been removed, or a
mutually satisfactory solution is reached.
Article 10-16
Private Rights
No Party may provide for a right of action u nder its domestic law against the other Party on
the ground that a measure of the other Party is inconsistent with this Agreement.
Section C - Private Commercial Dispute Settlement
Article 10-17
Resolution of Private Commercial Disputes
1. Each Party shall, to the maximum extent possible, encourage and facilitate the use of
arbitration and other means of alternative dispute resolution for the settlement of international
commercial disputes between private parties in the free trade area.
2. To this end, each Party shall provide appropriate legal framework to enable observance of
agreements to arbitrate and for the recognition and enforcement by courts of arbitral awards in such
disputes.
3. A Party shall be deemed to be in compliance with paragraph 2 if it is a party to and is in
compliance with the 1958 United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards.WT/REG124/1
Page 116
ANNEX 10-03
Nullification and Impairment
If any Party considers that any benefit it could reasonably have expected to accrue to it under
any provision of this Agreement is being nullified or impaired as a result of the application of any
measure that is not inconsistent with this Agreement, the Party may have recourse to dispute
settlement under this Chapter.WT/REG124/1
Page 117
CHAPTER XI
Exceptions
Article 11-01
Definitions
For purposes of this Chapter:
tax convention  means a convention for the avoidance of double taxation or other international
taxation agreement or arrangement;  and
taxation measures : does not include:
(a) a “customs duty”, as defined in Article 1-01;  and
(b) measures listed in exceptions (b) and (c) of that definition.
Article 11-02
General Exceptions
Article XX of the GATT 1994 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.  The Parties understand that the measures referred to in Article XX(b) of GATT 1994,
include environmental measures necessary to protect human, animal or plant life of health, and
Article XX(g) of GATT 1994, applies to measures relating to the conservation of living and non-
living exhaustible natural resources.
Article 11-03
National Security
Nothing in this Agreement shall be construed:(a) to require any Party to furnish or allow access to any information the disclosure of
which it determines to be contrary to its essential security interests;
(b) to prevent any Party from taking any actions that it considers necessary for the
protection of its essential security interests:
(i) relating to traffic in arms, ammunition and implements of war and to such
traffic and transactions in other goods, materials, services and technology
undertaken directly or indirectly for the purpose of supplying a military or other
security establishment;
(ii) taken in time of war or other emergency in international relations;  or
(iii) relating to the implementation of national policies or international agreements
respecting the non-proliferation of biological, chemical and nuclear weapons or
other nuclear explosive devices;  orWT/REG124/1
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(c) to prevent any Party from taking action in pursuance of its obligation under the
United Nations Charter of maintenance of international peace and security.
Article 11-04
Taxation
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of any Party under any tax
convention.  In the event of any inconsistency be tween this Agreement and any such convention, that
convention shall prevail to the extent of the inconsistency.
3. Notwithstanding paragraph 2, Article 2-02 and such other provisions of this Agreement as are
necessary to give effect to that Article shall apply to taxation measures to the same extent as does
Article III of the General Agreement on Tariffs and Trade 1994.
Article 11-05
Balance-of-Payments
The rights and obligations of the Parties relating to balance-of-payments shall be governed by
the WTO Understanding on Balance-of-Payments Provisions.WT/REG124/1
Page 119
CHAPTER XII
Final Provisions
Article 12-01
Annexes
The Annexes to this Agreement constitute an integral part of this Agreement.
Article 12-02
Amendments
1. The Parties may agree on any modification of or addition to this Agreement.
2. When so agreed, and approved in accordance with the applicable legal procedures of each
Party, a modification or addition shall constitute an integral part of this Agreement and shall enter in
to force in accordance to the procedure under Article 12-03.
Article 12-03
Entry into Force
This Agreement shall enter into force 30 days after following the date when the Parties have
notified each other that their respective internal requirements for the entry into force of this
Agreement have been fulfilled.
Article 12-04
Accession
1. Any country or group of countries may accede to this Agreement subject to such terms and
conditions as may be agreed between such country or countries and the Commission and followingapproval in accordance with the applicable legal procedures of each country.
2. This Agreement shall not apply as between any Party and any acceding country or group of
countries if, at the time of accession, either does not consent to such application.
Article 12-05
Withdrawal
A Party may withdraw from this Agreement six months after it provides written notice of
withdrawal to the other Party.
Article 12-06
Authentic Texts
The Spanish, Hebrew and English texts of this Agreement are equally authentic.  In case of
differences of interpretation, the English text shall prevail.WT/REG124/1
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IN WITNESS WHEREOF, the undersigned, bein g duly authorized by their respective
Governments, have signed this Agreement.
Done at México City, on the 10th day of April of 2000, which corresponds to the 5th day of
Nisan of 5760.
For the Government of the For the Government of the
United Mexican States State of Israel
Herminio Blanco Mendoza Moshe Melamed
       Secretary of Trade Ambassador
and Industrial Development
__________