WT/REG395/3  
 
27 August 2021 
(21-6460) Page: 1/7 
Committee on Regional Trade Agreements  Original: English  
 
 
COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS -PACIFIC PARTNERSHIP 
(CPTPP) (GOODS AND SERVICES)  
QUESTIONS AND REPLIES  
 The following communication, dated 4 August  2021, is being circulated at the request of the 
delegations of  Australia, Canada, Japan, Mexico, New Zealand, Singapore and Viet Nam.   
 
 This document reproduces the follow -up question s addressed to the Parties following 
the 100th Session of the CRTA and the response s submitted.  
 
_______________  
 
 
Questions from the delegation of the Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu   
 
Customs Administration and Trade Facilitation (Chapter 5)  
 
1.1.  Article 5.7 (Express Shipment) provides that each party shall provide for the release 
of certain goods with a minimum of documentation.  
 Please explain the definition of "certain goods ". 
 
 Article 5.7 closely aligns with the commitments made under the Trade Facilitation Agreement 
in relation to the f acilitation of trade – and in particular provides for the simplification of clearance 
and movement for low -risk goods. The Article 5.7 reference to certain goods should be read to 
include such goods as low value goods for which no customs duties are payabl e, goods needed for 
just-in-time manufacture, emergency relief goods, and perishable goods.  
 
1.2.  Article 5.7 (Express Shipment) provides that each party shall provide for express 
shipments to be released within six hours under normal circumstances, after submi ssion 
of the necessary customs documents, provided the shipment has arrived.  
a. Please explain the considerations behind the rule of Article 5.7.  
 Article 5.7 recognises the particular importance of prompt and rapid processing and release 
of goods that have been consigned by express shipment. This is the reason for the difference in the 
usual processing time stipulated in Article 5.7.1 (d) and the usual processing time for other 
shipments indicated in Article 5.10.2(a) – i.e. 6 hours, compared with 48 ho urs.  
 
 At the same time, Article 5.7.1 (d) also recognises that there may be some unusual situations 
in which it might not be possible for the goods sent by express shipment to be released within 
6 hours. One such situation would be where there were impor tant deficiencies in the documentation 
provided. Other possible situations that could be envisaged might be cases where the customs 
authorities had reasonable grounds to suspect unlawful or fraudulent activity or that the goods posed 
a biosecurity risk. Gi ven this, the provision includes the reference to the 6 hour release time applying 
'under normal circumstances '.  
 
 
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  b. Please also provide an overview of the practices of CPTPP Parties . 
 As an example, an overview  of Canada 's practice vis-à-vis Article 5.7 , please see: Importing 
goods through the Courier Low Value Shipment (CLVS) Program .  
 
1.3.  Article 5.8.4 (Penalty) provides that each Party shall ensure that it maintains 
measures to avoid conflicts of interest in the assessment and collection of penalties and 
duties. No portion of the remuneration of a government official shall be calculated as a 
fixed portion or percentage of any penalties or duties assessed or collected.  
 Should a penalty be calculated as a fixed percentage of the price of the goods 
confiscated and is allocate d into a fund/pool that is managed by the competent authority 
distributing incentives to officers who investigate the case, does this kind of incent ive 
pass the scrutiny of Article 5.8.4.  
 
 The intention of Article 5.8.4 is to ensure that customs officials do not have any incentive to 
discharge their duties in anything other than a fair, proper and impartial manner and penalties to be 
imposed are prop ortional to the degree and severity of the breach in accordance with the Party 's 
customs laws and regulations.  To this end, Article 5.8.4 makes clear that the remuneration of 
government officials should not be connected to the amount of customs penalties o r duties assessed 
or collected.  
 
1.4.  Article 5.8.7 (Penalty) provides that each Party shall provide in its laws, regulations 
or procedures, or otherwise give effect to, a fixed and finite period within which its 
customs administration may initiate proceedings to impose a penalty relating to a breach 
of a customs law, regulation or procedural requirement. Notwithstanding this 
(paragraph  7), a customs administration may impose, outside of the fixed and finite 
period, a penalty where this is in lieu of judicial or  administrative tribunal proceedings.  
 Please provide an example of such penalty.  
 
 Article 5.8.7 requires that each Party have legislation or procedures that require that 
proceedings (administrative measures undertaken by a customs administration) be init iated within 
a fixed time period.  Article 5.8.8 acknowledges that the outcome of such proceedings may not be 
concluded within a fixed timeframe and allows for the imposition of any ensuing penalties once the 
matter is concluded.  
 
 Those penalties may include a mutually agreed settlement. NOTE: these provisions relate only 
to administrative measures by the customs administration and does not include judicial proceedings.  
 
 Under NZ Customs legislation an administrative penalty may be imposed where an im port or 
export entry made by a person contains an error that is materially incorrect, or the entry contains 
an error or omission that results in an amount of duty payable not being paid or declared for 
payment. The amount of the penalty varies according to  whether to the error or omission was 
intentional, grossly careless, or due to insufficient care.  
 
1.5.  Article 5.10 (Release of Goods) reads that each party shall provide for the release of 
goods within a period no longer than that required to ensure complianc e with its customs 
laws and, to the extent possible, within 48 hours of the arrival of the goods.  
a. Please explain the considerations behind the rule of Article 5.10.  
 See answer to question 1.2 above.  
 
b. Please also provide an overview of the practices of CPT PP Parties . 
 New Zealand operates a risk management approach.  The majority of goods are pre -cleared 
for release prior to their arrival into New Zealand and only goods that fit the risk profile, have been 
identified as requiring intervention,  or pose a bios ecurity risk to New Zealand will be physically 
detained at the border.  NZ Customs undertakes post clearance audits to ensure that its risk profile 
remains appropriately targeted, and is using data analytics and other intelligence -based tools to 
more accura tely identify non -compliance.  WT/REG395/3  
 
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   NZ Customs deals with around two million electronic lodgements per month. This covers 
imports and exports, and comprises around 200,000 entries (generally goods worth over NZ$1000) 
and around 1,800,000 electronic manifest lin es (low value goods).  
 
 These lodgements are made by customs brokers and freight forwarders directly into the border 
processing system ( "Trade Single Window ") which enables a single point of clearance for Customs 
and biosecurity purposes. 99% of compliant trade entries are cleared electronically within seconds 
of being lodged.  
 
 Typically around 0.5% of total lodgements are held by the system for further assessment. Of 
these some 30% or 40% will be referred for examination or further scrutiny of some sort. Effectively 
this means that only around 0.2% of all lodgements are held for examination.  
 
 Importers who meet credit criteria can defer payment of duties and taxes and pay monthly 
on all import transactions.   
 
 As an example,  an overview of Canada 's practice vis-à-vis Article 5.10 is available here : Guide 
to importing commercial goods into Canada: 5. Getting your goods released . 
 
Technical Barriers to Trade T BT (Chapter 8)  
 
1.6.  Article 8.4 (Incorporation of Certain Provisions of the TBT Agreement) only selects 
certain provisions of the WTO TBT Agreement to be incorporated into the CPTPP 
Agreement.  
 Please explain the reasons for excluding certain para graphs  of Arti cle 2, Article 5 
and Annex 3 of the WTO TBT Agreement from the CPTPP.  
 
 The CPTPP TBT Chapter builds on the WTO TBT Agreement. Article 8.4 reflects Parties ' 
recognition that certain provisions of the TBT Agreement, which are expressly identified in Article  8.4 
and incorporated into this Chapter, set out fundamental rules to achieve the objective of this Chapter 
as provided for in Article 8.2. These provisions  thus constitute a building bloc of the regulatory 
regime under this Chapter regarding technical barriers to trade. In relation to the WTO TBT 
provisions referred to in the question i.e. those not specifically identified in Article 8.4:  
 
-  Articles 2.6, 5.5  and Annex 3 of the TBT Agreement concern the important role that 
international standards, guides and recommendations within the meaning of Articles 2, 5 
and Annex 3 of the WTO TBT Agreement can play in supporting greater regulatory alignment, 
good regulat ory practice and reducing unnecessary barriers to trade. These are recognised 
in Article 8.5 of the TBT Chapter;  
 
-  Article 8.9.6 builds on Article 2.7 of the WTO TBT Agreement in requiring a CPTPP Party, on 
request of another Party, to explain the reasons why it has not accepted a technical 
regulation of that Party as equivalent.  
 
 For the avoidance of doubt, Article 8.3.6 also makes clear that nothing in the chapter prevents 
a Party from adopting or maintaining technical regulations, standards or conformit y assessment 
procedures in accordance with its rights and obligations under the WTO TBT Agreement.  
 
1.7.  Article 8.6.1 requires each CPTPP Party to provide most -favored nation treatment 
and national treatment to conformity assessment bodies located in another territory of 
another Party. Article 8.6.5 allows the Party to use mutual recognition agreements (MRAs) 
to accredit, approve, license or otherwise recognize conformity assessment bodies located 
outside its territory.  
 Does this mean that a Party may use MRA  as a precondition for the participation of 
conformity assessment bodies located in other Parties in its own conformity assessment 
activities? If it is the case, are foreign conformity assessment bodies being treated equally 
as domestic ones according to A rticle 8.6.1?  
 
 Article 8.6 of the TBT Chapter builds on Article 6.4 of the WTO TBT Agreement including by 
requiring a CPTPP Party to permit conformity assessment bodies in other CPTPP Parties territories to 
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  apply for a determination that they comply with any procedures, criteria and other conditions 
that Party might apply to deem them competent or to otherwise approve them to test or certify the 
product or conduct an inspection (Articles 8.6.1 and 8.6.2(c) refer). Article 8.6.5 indicates that 
mutual recogn ition agreements are one means by which a Party may accredit, approve, licence or 
otherwise recognise conformity assessment bodies outside its territory.  
 
1.8.  Article 8.6.8 states that a Party shall consider adopting measures to approve 
conformity assessment b odies that have accreditation for the technical regulations or 
standards of the importing Party, by an accreditation body that is a signatory to an 
international or regional mutual recognition arrangement.  
 Please explain how Parties implements this provis ion, especially in terms of the 
requirement "shall consider adopting measures".  
 
 Article 8.6.8 of the TBT Chapter recognises the usefulness of accreditation by an accreditation 
body that is a signatory to an international or regional mutual recognition ar rangement.  It therefore 
encourages Parties to adopt measures to approve conformity assessment bodies that have such 
accreditation for the technical regulations or standards of the importing Party, by requiring to 
"consider " such adoption.  
 
 The implementat ion mechanisms adopted by Parties will differ depending on their regulatory 
arrangements and mandatory conformity assessment schemes.   
 
Financial Services (Chapter 11)  
 
Article 11.17 (Performance of Back -Office Functions) provides the following:  
 
1.9.  The Parties recogni ze that the performance of the back -office functions of a financial 
institution in its territory by the head office or an affiliate of the financial institution, or 
by an unrelated service supplier, either inside or outside its territory, is  important to the 
effective management and efficient operation of that financial institution. While a Party 
may require financial institutions to ensure compliance with any domestic requirements 
applicable to those functions, they recognise the importance of avoiding the imposition of 
arbitrary requirements on the performance of those functions.  
 Article 11.17 recognises that outsourcing of back -office functions of a financial institution can 
have efficiency benefits, so also recognises the value of avoidin g the imposition of arbitrary 
requirements on the performance of such back -office functions.  
 
 At the same time, it recognises too that there may be domestic requirements that apply to 
these functions, including a requirement for a financial institution in  a Party 's territory to retain 
certain functions (i.e. not to outsource such functions).   
 
1.10.   For greater certainty, nothing in paragraph 1 prevents a Party from requiring a 
financial institution in its territory to retain certain functions.  
 Please provide e xamples of "certain functions".  
 
 There may be a wide variety of regulatory reasons why financial regulatory authorities of the 
Parties may require financial institutions to comply with domestic requirements which are applicable 
to back -office functions, depending on a legal status or lega l types of financial institution at issue in 
their territories, permitted type of business or volume, changes in business environments or 
regulatory/supervisory frameworks of the Parties. Article 11.17 does not illustrate concrete examples 
of "certain func tions" and provide certain discretion on a part of Parties ' financial authorities to 
impose domestic requirements applicable to back -office functions.  
 
 This reflects an awareness that the outsourcing of some functions could expose banks or the 
banking sys tem to particular risks, including that the failure of a service provider to which functions 
such as the processing of trade or transaction payments had been outsourced could lead to 
disruption of liquidity and the functioning of a bank 's payments and tran saction systems.  
 
 
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  Telecommunication (Chapter 13)  
 
1.11.   Article 13.13.2 provides: "Where physical co -location is not practical for technical 
reasons or because of spade limitations, each Party shall ensure that a major supplier in 
its territory provides an alte rnative solution, such as facilitating virtual co -location...."  
 Please explain the practice of virtual co -location in Parties. Are there actual cases 
where virtual co -location is used? Besides virtual co -location, what are other alternative 
solutions that Parties have ever adopted?  
 
 'Virtual Co -location ' is defined in Article 13.1 of the Telecommunications Chapter to mean an 
arrangement by which a requesting telecommunications supplier is able to specify equipment to be 
used in the premises of a major supplier, but does not obtain physical access to those premises and 
allows the major supplier to install, maintain and repair that equipment.  While this would not be the 
usual approach, as Article 13.13.1 makes clear, it provides a means of enab ling competition in those 
limited circumstances in which limitations on space in the facilities concerned or other technical 
constraints make actual physical co -location impractical.  
 
Electronic Commerce (Chapter 14)  
 
Article 14.2 (Scope and General Provis ions)  
 
1.12.   For greater certainty, the obligations contained in Article 14.4 (Non -Discriminatory 
Treatment of Digital Products), Article 14.11 (Cross -Border Transfer of Information by 
Electronic Means), Article  14.13 (Location of Computing Facilities) and Artic le 14.17 
(Source Code) are:  
a. subject to the relevant provisions, exceptions and non -conforming measures of 
Chapter 9 (Investment), Chapter 10 (Cross -Border Trade in Services) and 
Chapter 11 (Financial Services); and  
b. to be read in conjunction with any other relevant provisions in this Agreement.  
1.13.   The obligations contained in Article 14.4 (Non -Discriminatory Treatment of Digital 
Products), Article 14.11 (Cross -Border Transfer of Information by Electronic Means) and 
Article 14.13 (Location of Computing Fac ilities) shall not apply to the non -conforming 
aspects of measures adopted or maintained in accordance with Article 9. 12 (Non -
Conforming Measures), Article 10.7 (Non -Conforming Measures) or Article 11.10 (Non -
Conforming Measures).  
 Please explain why Arti cle 14.17 (Source Code) is included in paragraph 5 but not 
in paragraph  6.  
 
 Article 14.2.5 covers the legal relationship between four particular articles in the e -commerce 
chapter, including the source code article, on the one hand, and the full range of relevant provisions 
(and any exceptions or non -conforming measures related to these) across the Agreement as a whole 
(see sub -paragraphs (a) and (b)), on the other.  
 
 Article 14.2.6 focuses particularly on the scope of application of certain artic les (or non -
applicability of these articles) to the non -conforming aspects of measures contained in the Parties 
investment, cross -border trade in services and financial services non -conforming measures that may 
also engage disciplines in the e -commerce cha pter and clarifies the relationship between these 
disciplines and the non -conforming measures. As such, it refers to the articles in the e -commerce 
chapter identified as of most relevance in relation to the Parties' non -conforming measures.  
 
1.14.   Article 14.14 (Unsolicited Commercial Electronic Messages) provides that each 
Party shall adopt or maintain measures regarding unsolicited commercial electronic 
messages that:  
a. require suppliers of unsolicited commercial electronic messages to facilitate the 
ability of r ecipients to prevent ongoing reception of those messages;  
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  b. require the consent, as specified according to the laws and regulations of each 
Party, of recipients to receive commercial electronic messages; or  
c. otherwise provide for the minimisation of unsolicit ed commercial electronic 
messages.  
 In order to fulfil the requirements of Article 14.14, is it correct that a Party needs to 
do (a) and choose one from (b) and (c)? In other words, a Party can fulfil the requirements 
by either doing (a) + (b), or (a) + (c ).  
 
 No, Article 14.14 outlines three possible ways to address the problem of unsolicited 
commercial electronic messages, and the requirement of Article 14.14. will be satisfied if the Party 
adopts or maintains any one of these three types of measures.  These are either by: (a) enabling 
recipients to easily 'opt out ' of receiving commercial electronic messages; (b) requiring that 
recipients 'opt in ' to receive commercial electronic messages; or (c) providing in another way for the 
minimisation of unsolicite d commercial electronic messages.  
 
Government Procurement (Chapter 15)  
 
1.15.   Article 15.14 (Time Periods) mandates minimum time periods for procurement 
processes, though some flexibility in terms of timelines is provided, for instance when 
using electronic pro curement tools or in urgent situations.  
 Please explain the considerations for giving flexibility in this Article.  
 
 Article 15.14 is similar to Article XI in the WTO Government Procurement Agreement (GPA). 
It permits a reduction in the minimum time period  set out in Article 15.14.3 in specific circumstances.  
 
 Articles 15.14.4, 15.14.5 and 15.14.6 set out the circumstances where a reduction of time is 
permissible.  In other words, these paragraphs place limits on the extent of any reduction of time 
periods permissible (consistent with similar periods specified in Article XI of the WTO GPA), to ensure 
that there remains a reasonable opportunity for interested suppliers to participate in the tender 
process.  
 
State -owned Enterprises (SOE) and Designated Monopolies (Chapter 17)  
 
1.16.   Our understanding regarding Article 17.6 (Non -commercial Assistance) is mainly 
related to "state -owned enterprises." We presume that "designated monopolies" might 
receive non -commercial assistance to gain unfair competit iveness as well.  
 What is the reason that this article covers solely SOE, instead of both SOE and 
designated monopolies?  
 
 Article 17.6 is focused on addressing the possible effects of 'non-commercial assistance ', which 
is defined in Article 17.1 as: 'assistance to a state -owned enterprise by virtue of that state -owned 
enterprises ' government ownership or control, … ' and goes on to further explain the meaning of 
'assistance ' in this context, as well as of the phrase 'by virtue of that state -owned enterprise 's 
government ownership or control '. Consistent with this definition, the provisions in Article 17.6 relate 
to the state -owned enterprises of a Party.  
 
Article 17.13 Exceptions  
 
1.17.   Article 17.13.2(a) provides that, Article 17.4.1 (Non -discriminatory Treatment and 
Commercial Considerations) shall not apply with respect to the supply of financial services 
by a state -owned enterprise pursuant to a government mandate if that supply of financial 
services:  
a. supports exports or imports, pr ovided that these services are:  
i. not intended to displace commercial financing; or  WT/REG395/3  
 
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  ii. offered on terms no more favourable than those that could be obtained for 
comparable financial services in the commercial market;  
 When a loan can be obtained by only one com mercial bank with a prohibitively high 
interest rate (e.g. 30% annually) in the market, would it be considered "no more 
favourable" if a state -owned import/export bank offers a loan with the interest rate at 
29% annually?  
 
 The exception in Article 17.13. 2 recognises that there may be situations in which a state -
owned enterprise is mandated to supply financial services to support exports or imports (for example 
export credit agencies acting in accordance with the Arrangement on Officially Supported Export 
Credits). It ensures that – in doing so – the actions of any such state -owned enterprises are not 
intended to displace commercial financing. Similar kinds of financial disciplines can be found in other 
international instruments, such as the OECD Arrangemen t on Officially Supported Export Credits 
referred to above and referenced in Article 17.13.2 (c).  
 
Intellectual Property (Chapter 18)  
 
1.18.   Article 18.49 (Regulatory Review Exception) provides that without prejudice to the 
scope of, and consistent with, Article  18.40 (Exceptions), each Party shall adopt or 
maintain a regulatory review exception for pharmaceutical products.  
 Please provide detailed explanation of the exception. What is the rationale behind 
this article?  
 
 Article 18.49 requires each Party to adop t or maintain a regulatory review exception for 
pharmaceutical products without prejudice to the scope of, and consistent with, Article 18.40 which 
allows each Party to provide limited exceptions to the exclusive rights conferred by a patent.  
 
 This regulatory review exception allows pharmaceutical manufacturers to take actions that 
would otherwise infringe a patented invention for the purposes of seeking regulatory approval before 
a relevant patent expires.  
 
 Given the sometimes lengthy regulat ory approval processes associated with an application for 
the marketing of a generic pharmaceutical product, the regulatory review exception can provide that 
regulatory approval processes do not result in a delay to the market entrance of generic drugs by  
enabling a generic manufacturer to be in a position to enter the market as soon as possible before 
the patent expires.  
 
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