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

The Council Secretariat General shall establish the instrument of full powers to sign the Agreement on behalf of the Union, subject to its conclusion, for the person(s) indicated by the negotiator of the Agreement.

The signing of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam (the 'Agreement') is hereby approved on behalf of the Union, subject to the conclusion of the Agreement.

(4)Therefore, the Agreement should be signed on behalf of the Union, subject to its conclusion at a later date,

(3)The negotiations for a Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam (the 'Agreement') have been concluded.

(2)On 22 December 2009, the Council authorised the Commission to pursue bilateral FTA negotiations with individual ASEAN countries. In June 2012, the Commission launched bilateral negotiations on an FTA with Vietnam to be conducted in accordance with the existing negotiating directives.

(1)On 23 April 2007, the Council authorised the Commission to negotiate a free trade agreement ('FTA') with countries of the Association of Southeast Asian Nations (ASEAN). That authorisation provided for the possibility of bilateral negotiations.

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 91(1), Article 100(2), and the first subparagraph of Article 207(4), in conjunction with Article 218(5) thereof,

on the signing, on behalf of the European Union, of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam

The Commission is mindful of the balance to be struck between moving forward with the reformed EU investment policy and the sensitivities of EU Member States as regards the possible exercise of shared competence on these matters. The Commission has not, therefore made a proposal to provisionally apply the investment protection agreement. Nonetheless, should Member States wish to see a proposal for provisional application of the investment protection agreement, the Commission stands ready to make such a proposal.

Also in line with the negotiating directives, the IPA negotiated by the Commission will offer investors the option of a modern and reformed investment dispute resolution mechanism. This system ensures that investment protection rules are adhered to and seeks to strike a balance between protecting investors in a transparent manner and safeguarding the right of a State to regulate in order to pursue public policy objectives. The agreement sets up a standing international and fully independent dispute resolution system, consisting of a permanent First Instance and an Appeal Tribunal that will conduct dispute settlement proceedings in a transparent and impartial manner.

In line with the objectives set by the negotiating directives, the Commission ensured that EU investors and their investments in Vietnam will be granted fair and equitable treatment and not be discriminated against compared to Vietnamese investments that are in like situations. At the same time, the IPA protects EU investors and their investments in Vietnam from expropriation, unless it is for public purposes, in accordance with due process, on a non-discriminatory basis and against payment of prompt, adequate, and effective compensation according to fair market value of the expropriated investment.

The agreement contains all the innovations of the EU’s new approach to investment protection and its enforcement mechanisms that are not present in the 21 existing bilateral investment treaties between Vietnam and EU Member States. It is a very important feature of the IPA that it replaces and hence improves the 21 existing bilateral investment treaties.

The EU-Vietnam IPA will ensure a high level of investment protection, while safeguarding the EU’s and Vietnam’s rights to regulate and pursue legitimate public policy objectives such as the protection of public health, safety and the environment.

(8)a swift dispute resolution mechanisms through either panel arbitration or with the help of a mediator.

(7)a comprehensive chapter on trade and sustainable development, which aims at ensuring that trade supports labour rights, environmental protection and social development and promotes the sustainable management of forests and fisheries. It includes commitments on effective application of international standards and on efforts towards ratification of a number of international conventions. The chapter also sets out how social partners and civil society will be involved in its implementation and monitoring; and

(6)a high level protection of intellectual property rights, including with regard to the enforcement of these rights, also at the border, and a TRIPs-plus level of protection of EU GIs;

(5)Vietnam’s commitment to reduce or eliminate its tariffs on imports from the EU, and a cheaper access of European businesses and consumers to products originating in Vietnam;

(4)based on international standards, a more trade-facilitative regime for the approval of European food exports to Vietnam;

(3)the removal of technical and regulatory trade barriers to trade in goods, such as duplicative testing, in particular by promoting the use of technical and regulatory standards familiar in the EU in the sectors of motor vehicles, pharmaceuticals and medical devices, as well as green technologies;

(2)new tendering opportunities for EU bidders in Vietnam, who is not a member of the WTO Agreement on Government Procurement;

(1)the comprehensive liberalisation of services and investment markets, including cross-cutting rules on licensing and for the mutual recognition of diplomas, and sector-specific rules designed to ensure a level playing field for EU businesses;

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

Both of these objectives have been fully met: the agreement goes beyond existing WTO commitments in many areas, such as services, procurement, non-tariff barriers and the protection of intellectual property, including geographical indications (GI). In all of these areas Vietnam also agreed to new commitments which go significantly beyond what Vietnam has so committed in other agreements, including in CPTPP.

In negotiating the EU-Vietnam FTA, the Commission pursued two principal objectives: first, to provide the best possible terms of access for EU operators to Vietnam's market; and, second, to set a valuable second point of reference (after the agreements with Singapore) for the EU’s other negotiations in the region.

Certain actions will need to be taken in order to ensure implementation of the Agreement. These will be put in place in time for the application of the Agreement. These are a Commission implementing regulation to be adopted pursuant to Article 58(1) of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code opening the tariff rate quotas provided for by the Agreement.

As emphasised in the “Trade for All” Communication, the Commission is dedicating increasing resources to the effective implementation and enforcement of trade and investment agreements. In 2017, the Commission published the first annual FTA Implementation Report. The main purpose of the report is to convey an objective picture on the implementation of EU FTAs, highlighting the progress made and the shortcomings that need to be addressed. The objective is for the report to serve as the basis for open debate and engagement with Member States, the European Parliament and the civil society at large on the functioning of the FTAs and their implementation. As an annual exercise, the publication of the report will allow regular monitoring of developments, registering also how identified priority issues have been addressed. The report will cover the EU-Vietnam FTA as of its entry into force.

The institutional chapter of the IPA establishes a Committee with the main task to supervise and facilitate the implementation and application of the agreement. Among other tasks, the Committee may, subject to the completion of each side’s respective legal requirements and procedures, decide to appoint the Members of the ICS Tribunals, fix their monthly remuneration, and adopt binding interpretations of the agreement.

The Trade Committee has also the task to communicate with all interested parties, including private sector and civil society, in relation to the functioning and implementation of the agreement. In the agreement, both sides recognise the importance of transparency and openness and commit to consider the views of members of the public in order to draw on a broad range of perspectives in the implementation of the agreement.

The institutional chapter of the FTA establishes a Trade Committee that has as its main task to supervise and facilitate the implementation and application of the agreement. The Trade Committee is comprised of representatives of the EU and of Vietnam who will meet every year or at the request of either side. The Trade Committee will be in charge of supervising the work of all specialised committees and working groups established under the agreement (Committee on Trade in Goods; Committee on Customs; Committee on Sanitary and Phytosanitary Measures; Committee on Investment, Trade in Services, Electronic Commerce and Government Procurement; Committee on Trade and Sustainable Development; Working Group on Intellectual Property Rights, including Geographical Indications; and Working Group on Motor Vehicles and Parts).

The EU-Vietnam FTA and IPA include institutional provisions that lay down an implementing bodies’ structure to continuously monitor the implementation, operation and impact of the agreements. The agreements being an integral part of the overall bilateral relation between the EU and Vietnam as governed by the PCA, the mentioned structures will form part of a common institutional framework with the PCA.

The EU-Vietnam IPA is expected to have a financial impact on the EU budget on the side of the expenditures. The agreement will be the EU’s third (after the EU-Canada Comprehensive Economic and Trade Agreement, and the EU-Singapore) to incorporate the Investment Court System (ICS) for the resolution of disputes between investors and states. An amount of € 700,000 of additional yearly expenditure is foreseen from 2019 onwards (subject to the entry into force of the agreement) to finance the permanent structure comprising a First Instance and an Appeal Tribunal. At the same time, the agreement entails the use of administrative resources under budget line XX 01 01 01 (Expenditure related to officials and temporary staff working with the Institution), considering that it is estimated that one Administrator will be dedicated as full-time equivalent to the tasks inherent to this agreement. This is indicated in the Legislative Financial Statement and is subject to the conditions mentioned in it.

The EU-Vietnam FTA will have a financial impact on the EU budget on the side of the revenues. It is estimated that foregone duties could reach an amount of € 1.7 billion upon full implementation of the agreement. The estimate is based on average imports projected for 2035 in the absence of an agreement and represents the annual loss in revenues resulting from the elimination of EU tariffs on imports originating in Vietnam.

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

The EU-Vietnam FTA and IPA are not subject to REFIT procedures. They nevertheless contain a number of provisions that will simplify trade and investment procedures, reduce export and investment related costs and will therefore enable more small firms to do business in both markets. Among the expected benefits are: less burdensome technical rules, compliance requirements, customs procedures and rules of origin, the protection of intellectual property rights, or the reduction in cost of litigation under the Investment Court System for claimants that are SMEs.

The TSIA, conducted by an external contractor and finalised in 2009, concluded that an ambitious EU-ASEAN FTA would deliver important positive impacts (in terms of GDP, income, trade and employment) for both the EU and Vietnam. National income effects on the EU side were estimated at € 13 billion and for Vietnam at € 7.6 billion.

A Trade Sustainability Impact Assessment of the FTA between the EU and ASEAN was carried out by the external contractor “Ecorys”.

Prior and during negotiations, the EU Member States were regularly informed and consulted orally and in writing on the different aspects of the negotiation via the Council’s Trade Policy Committee. The European Parliament was also regularly informed and consulted via its Committee on International Trade (INTA), and notably its EU-Vietnam FTA Monitoring Group. The texts progressively resulting from the negotiations were circulated throughout the process to both institutions.

A roundtable with stakeholders on human rights and sustainable development in the context of bilateral relations between the EU and Vietnam was held in May 2015. The Commission then carried out a dedicated analysis addressing the possible impact of the FTA on human rights and sustainable development.

In addition, in June 2012, the Commission conducted a public consultation on the future bilateral agreement with Vietnam that included a questionnaire prepared to obtain information from stakeholder that later helped the Commission in establishing priorities and taking decisions throughout the negotiating process. 62 replies were received, of which 43 from industry federations and associations, 16 from individual companies and three from Member States. Replies covered a wide range of sectors, including agri-food, ICT, textiles, services, pharmaceuticals, chemicals, metals, green energy, automotive, machinery and wood-paper. The written consultation was followed with meetings with a selected number of respondents to the questionnaire identified as representing the most sensitive sectors for the negotiations with Vietnam (textile, alcoholic beverages, pharmaceuticals, automotive and ICT).

Both, the TSIA report and the consultations held in the context of its preparation, provided the Commission with input that has been of great value in all bilateral trade and investment negotiations launched since with individual ASEAN countries.

In the framework of the preparation of the TSIA, the contractor consulted internal and external experts, organised public consultations in Brussels and in Bangkok, and held bilateral meetings and interviews with civil society in the EU and in ASEAN. Consultations in the framework of the TSIA provided a platform for the involvement of key stakeholders and the civil society in a dialogue on trade policy in relation to Southeast Asia.

Prior to the launch of bilateral negotiations with Vietnam, a Trade Sustainability Impact Assessment (TSIA) of the FTA between the EU and the ASEAN was conducted by an external contractor to study the potential economic, social and environmental impact of a closer economic partnership between both regions.

The results of the quantitative analysis presented above may be considered to underestimate the real economic impact of the agreement, as they do not take into account the foreseeable benefits linked to the strengthening of the protection and enforcement of intellectual property rights or the liberalisation of FDIs in the manufacturing sectors and of public procurement. Furthermore, synergies in global supply chains that may derive from the EU-Vietnam FTA, particularly in the broader context of an ongoing effort to further strengthen the EU's economic relationship with the ASEAN region, have not been possible to model but could be expected to be significant.

The economic modelling carried out further estimates that EU national income could grow by more than € 1.9 billion by 2035 as a result of the FTA, while Vietnam's national income could increase by € 6 billion over the same period. The sizeable difference in expected benefits is the result of the large difference in the relative importance of the EU and Vietnam as export destination to each another.

The analysis predicts that the elimination of bilateral tariffs and export taxes together with the reduction of the NTBs that affect the cross-border exchanges of goods and services will boost bilateral trade considerably. EU exports to Vietnam are estimated to rise by more than € 8 billion by 2035, while Vietnam's exports to the EU are expected to grow by € 15 billion. This corresponds to an increase in relative terms of EU exports to Vietnam by almost 29% and of Vietnam exports to the EU by nearly 18%.

After negotiations with Vietnam were completed, a team led by DG Trade’s Chief Economist Unit’s carried out a study of the economic benefits to be expected from the agreement.

This proposal is in accordance with Article 218 TFEU, which envisages the adoption by the Council of decisions on international agreements. There exists no other legal instrument that could be used in order to achieve the objective expressed in this proposal.

This proposal is in line with the vision of Europe 2020 strategy and contributes to the Union's trade and development objectives.

These elements cannot be separated in any coherent way from the substantive provisions or the state-to-state dispute settlement and hence should be included in EU-level agreements.

With regard to the IPA, the Court confirmed that, pursuant to Article 207 TFEU, the EU has exclusive competence with regard to all substantive provisions on investment protection, to the extent that these apply to foreign direct investment. The Court further confirmed the EUs exclusive competence with regard to the state-to-state dispute settlement mechanism in relation to investment protection. Finally, the Court stated that the EU has shared competence with regard to non-direct investment and investor-to-state dispute settlement (replaced later on by the Investment Court System in the IPA), where the Member States act as defendants.

As confirmed by Opinion 2/15 on the EU-Singapore FTA and in analogy thereto, the EU-Vietnam FTA as presented to Council does not cover any matters that fall outside of the EU’s exclusive competence.

The EU-Vietnam IPA is to be signed by the Union pursuant to a decision of the Council based on Article 218(5) TFEU and concluded by the Union pursuant to a decision of the Council based on Article 218(6) TFEU, following the European Parliament’s consent and ratification by the Member States in accordance with their respective internal procedures.

As a result, the EU-Vietnam FTA is to be signed by the Union pursuant to a decision of the Council based on Article 218(5) TFEU and concluded by the Union pursuant to a decision of the Council based on Article 218(6) TFEU, following the European Parliament’s consent.

In view of Opinion 2/15, and considering that the content of the EU-Vietnam FTA is essentially the same contents as that of the EU-Singapore FTA, all the areas covered by the EU-Vietnam FTA would fall within the competence of the EU and, more particularly, within the scope of Articles 91, 100(2) and 207 TFEU. In the same vein, all substantive provisions on investment protection under the EU-Vietnam IPA, to the extent that these apply to foreign direct investment, would be covered under Article 207 TFEU.

Following the Court of Justice of the EU Opinion 2/15, and in light of the subsequent wide-ranging discussions among EU institutions on the architecture of trade and investment agreements, the Commission presents the result of negotiations with Vietnam in the form of two self-standing agreements: an FTA and an IPA, as was the case for the result of negotiations between the EU and Singapore.

The EU-Vietnam FTA and IPA are fully consistent with Union policies and will not require the EU to amend its rules, regulations or standards in any regulated area. Furthermore, like all other trade and investment agreements the Commission has negotiated, the EU-Vietnam FTA and IPA fully safeguard public services and ensure that governments’ right to regulate in the public interest is fully preserved by the agreements and constitutes a basic underlying principle to them.

From the date of its entry into force, the EU-Vietnam IPA will replace and supersede the bilateral investment treaties between Vietnam and EU Member States that are listed in Annex 6 (List of Investment Agreements) to the IPA.

The EU and Vietnam's longstanding trade and economic relationship has until now developed in the absence of a specific legal framework. The FTA and IPA that have been negotiated will constitute specific agreements giving effect to the trade and investment provisions of the PCA and will be an integral part of the overall bilateral relations between the EU and Vietnam.

The negotiations of the FTA and the IPA were preceded by the negotiation, by the European External Action Service, of a Partnership and Cooperation Agreement (PCA) between the European Union and its Member States and the Socialist Republic of Viet Nam, which entered into force in October 2016. The PCA provides the legal framework to further develop the already longstanding and strong partnership between the EU and Vietnam, in a broad range of areas, including political dialogue, trade, energy, transport, human rights, education, science and technology, justice asylum and migration.

The attached proposal for a Council Decision constitutes the legal instrument authorising the signing, on behalf of the European Union, of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam.

Earlier, the Commission had put forward a proposal for a horizontal safeguard regulation that will be of application among other agreements to the FTA between the EU and Vietnam.

–Proposal for a Council Decision on the conclusion of the Investment Protection Agreement between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part.

–Proposal for a Council Decision on the signing, on behalf of the European Union, of the Investment Protection Agreement between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part; and

–Proposal for a Council Decision on the conclusion of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam;

–Proposal for a Council Decision on the signing, on behalf of the European Union, of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam;

On the basis of the negotiating directives adopted by the Council in 2007, and supplemented in October 2013 to include investment protection, the Commission has negotiated with Vietnam an ambitious and comprehensive FTA and an Investment Protection Agreement (IPA), with a view to creating new opportunities and legal certainty for trade and investment between both partners to develop. The legally reviewed texts of both agreements have been made public and can be found on the following link:

On 15 October 2013, based on a new EU competence under the Lisbon Treaty, the Council authorised the Commission to extend the on-going bilateral negotiations with ASEAN countries to cover also investment protection.

On 22 December 2009, the Council agreed on the principle of launching bilateral negotiations with individual ASEAN countries based on the authorisation and negotiating directives of 2007, whilst preserving the strategic objective of a region-to-region agreement. The Council also authorised the Commission to launch bilateral negotiations first with Singapore, as a first step towards the objective of the timely launch of such negotiations with other relevant ASEAN countries. The EU has thereafter launched bilateral FTA negotiations with Malaysia (2010), Vietnam (2012), Thailand (2013), the Philippines (2015) and Indonesia (2016).

On 23 April 2007, the Council authorised the Commission to enter into negotiations for a region-to-region Free Trade Agreement (FTA) with countries of the ASEAN. It being understood that the objective was to negotiate a region-to-region FTA, the authorisation provided however for the possibility of bilateral negotiations in the event that it was not possible to reach an agreement to negotiate jointly with a grouping of countries of the ASEAN. In light of difficulties encountered in the region-to-region negotiations, both sides acknowledged that an impasse had been reached and agreed to pause these.

Vietnam has become the EU's second biggest trading partner in ASEAN after Singapore and ahead of Malaysia, with trade between the EU and Vietnam worth € 47.6 billion in 2017. Vietnam is one of the fastest growing countries in ASEAN, with an average GDP growth rate of around 6% in the past decade that is forecasted to be maintained in the future. Vietnam is a vibrant economy of more than 90 million inhabitants, with the fastest growing middle class in ASEAN, and a young and dynamic workforce. With its high literacy rate and education levels, comparatively low wages, good connectivity and a central location within ASEAN, more and more foreign investors are choosing Vietnam as their hub to service the Mekong region and beyond.

The dynamically growing Southeast Asian economies, with their over 600 million consumers and a rapidly rising middle class, are key markets for European Union exporters and investors. With a total € 227.3 billion of trade in goods (2017) and € 77 billion of trade in services (2016), the Association of Southeast Asian Nations (ASEAN) taken as a whole is the EU’s third largest trading partner outside Europe, after the US and China. At the same time, a total € 263 billion foreign direct investment stock (2016) in the ASEAN makes the EU the first foreign direct investor in the ASEAN, while the ASEAN as a whole is in its turn the second largest Asian foreign direct investor in the EU – with a total foreign direct investment stock of € 116 billion (2016).

on the signing, on behalf of the European Union, of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam

EUROPEAN COMMISSION Brussels, 17.10.2018 COM(2018) 692 final ANNEX

to the Proposal for a Council Decision on the signing, on behalf of the European Union, of the Free Trade Agreement between the European Union and the Socialist Republic of Viet Nam







FREE TRADE AGREEMENT

BETWEEN THE EUROPEAN UNION

AND THE SOCIALIST REPUBLIC OF VIET NAM PREAMBLE The European Union, hereinafter referred to as "the Union", and the Socialist Republic of Viet Nam, hereinafter referred to as "Viet Nam", hereinafter jointly referred to as "the Parties" or individually referred to as "Party", RECOGNISING their longstanding and strong partnership based on the common principles and values reflected in the Partnership and Cooperation Agreement, and their important economic, trade and investment relationship; DESIRING to further strengthen their economic relationship as part of, and in a manner coherent with, their overall relations, and convinced that this Agreement will create a new climate for the development of trade and investment between the Parties; RECOGNISING that this Agreement will complement and promote regional economic integration efforts;

DETERMINED to strengthen their economic, trade and investment relationship in accordance with the objective of sustainable development, in its economic, social and environmental dimensions, and to promote trade and investment under this Agreement in a manner mindful of high levels of environmental and labour protection and relevant internationally recognised standards and agreements;

DESIRING to raise living standards, promote economic growth and stability, create new employment opportunities and improve the general welfare and, to this end, reaffirming their commitment to promoting trade and investment liberalisation; CONVINCED that this Agreement will create an expanded and secure market for goods and services and a stable and predictable environment for trade and investment, thus enhancing the competitiveness of their firms in global markets; REAFFIRMING their commitment to the Charter of the United Nations, signed in San Francisco on 26 June 1945, and having regard to the principles articulated in The Universal Declaration of Human Rights, adopted by the General Assembly of the United Nations on 10 December 1948; RECOGNISING the importance of transparency in international trade to the benefit of all stakeholders; SEEKING to establish clear and mutually advantageous rules governing their trade and investment and to reduce or eliminate the barriers to mutual trade and investment;

RESOLVED to contribute to the harmonious development and expansion of international trade by removing obstacles to trade through this Agreement and to avoid creating new barriers to trade or investment between the Parties that could reduce the benefits of this Agreement; BUILDING on their respective rights and obligations under the WTO Agreement and other multilateral, regional and bilateral agreements and arrangements to which they are party; DESIRING to promote the competitiveness of their companies by providing them with a predictable legal framework for their trade and investment relations, HAVE AGREED AS FOLLOWS:



CHAPTER 1 OBJECTIVES AND GENERAL DEFINITIONS ARTICLE 1.1 Establishment of a Free Trade Area The Parties hereby establish a free trade area, in conformity with Article XXIV of GATT 1994 and Article V of GATS. ARTICLE 1.2 Objectives The objectives of this Agreement are to liberalise and facilitate trade and investment between the Parties in accordance with the provisions of this Agreement.



ARTICLE 1.3 Partnership and Cooperation Agreement For the purposes of this Agreement "Partnership and Cooperation Agreement" means the Framework Agreement on Comprehensive Partnership and Cooperation between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part, signed in Brussels on 27 June 2012. ARTICLE 1.4 WTO Agreements For the purposes of this Agreement: (a) "Agreement on Agriculture" means the Agreement on Agriculture contained in Annex 1A of the WTO Agreement; (b) "Agreement on Government Procurement" means the Agreement on Government Procurement contained in Annex 4 of the WTO Agreement; (c) "Agreement on Preshipment Inspection" means the Agreement on Preshipment Inspection contained in Annex 1A of the WTO Agreement;

(d) "Agreement on Rules of Origin" means the Agreement on Rules of Origin contained in Annex 1A of the WTO Agreement;

(e) "Anti-Dumping Agreement" means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 contained in Annex 1A of the WTO Agreement; (f) "Customs Valuation Agreement" means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 contained in Annex 1A of the WTO Agreement; (g) "DSU" means the Understanding on Rules and Procedures Governing the Settlement of Disputes contained in Annex 2 of the WTO Agreement; (h) "GATS" means the General Agreement on Trade in Services contained in Annex 1B of the WTO Agreement; (i) "GATT 1994" means the General Agreement on Tariffs and Trade 1994 contained in Annex 1A of the WTO Agreement; (j) "Import Licensing Agreement" means the Agreement on Import Licensing Procedures contained in Annex 1A of the WTO Agreement; (k) "Safeguards Agreement" means the Agreement on Safeguards contained in Annex 1A of the WTO Agreement;

(l) "SCM Agreement" means the Agreement on Subsidies and Countervailing Measures contained in Annex 1A of the WTO Agreement; (m) "SPS Agreement" means the Agreement on the Application of Sanitary and Phytosanitary Measures contained in Annex 1A of the WTO Agreement; (n) "TBT Agreement" means the Agreement on Technical Barriers to Trade contained in Annex 1A of the WTO Agreement;

(o) "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property Rights contained in Annex 1C of the WTO Agreement; and (p) "WTO Agreement" means the Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994. ARTICLE 1.5 General Definitions For the purposes of this Agreement, unless otherwise specified: (a) "day" means a calendar day;

(b) "domestic" means with regard to legislation, law or laws and regulations for the Union and its Member States and for Viet Nam, respectively, legislation, law or laws and regulations at central, regional or local level; (c) "goods" means products as understood in GATT 1994, unless otherwise provided for in this Agreement; (d) "Harmonized System" means the Harmonized Commodity Description and Coding System, including all legal notes and amendments thereto (hereinafter referred to as the "HS");

(e) "IMF" means the International Monetary Fund; (f) "measure" means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action or any other form; (g) "natural person of a Party" means a national of one of the Member States of the Union or of Viet Nam, according to their respective legislation; (h) "person" means a natural person or a legal person;

(i) "third country" means a country or territory outside the scope of territorial application of this Agreement as defined in Article 17.24 (Territorial Application); (j) "UNCLOS" means the United Nations Convention on the Law of the Sea, done at Montego Bay on 10 December 1982; (k) "WIPO" means the World Intellectual Property Organization; and (l) "WTO" means the World Trade Organization. CHAPTER 2 NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

ARTICLE 2.1 Objective The Parties shall progressively liberalise trade in goods and improve market access over a transitional period starting from the entry into force of this Agreement in accordance with the provisions of this Agreement and in conformity with Article XXIV of GATT 1994.

ARTICLE 2.2 Scope Except as otherwise provided for in this Agreement, this Chapter applies to trade in goods between the Parties. ARTICLE 2.3 Definitions

For the purposes of this Chapter: (a) "agricultural export subsidies" means subsidies as defined in paragraph (e) of Article 1 of the Agreement on Agriculture, including any amendment of that Article; (b) "agricultural good" means a product listed in Annex 1 to the Agreement on Agriculture; (c) "consular transactions" means the procedure of obtaining from a consul of the importing Party in the territory of the exporting Party, or in the territory of a third party, a consular invoice or a consular visa for a commercial invoice, certificate of origin, manifest, shipper's export declaration or any other customs documentation in connection with the importation of the goods;

(d) "customs duty" includes any duty or charge of any kind imposed on or in connection with the importation of a good, including any form of surtax or surcharge imposed on or in connection with such importation, and does not include any: (i) charge equivalent to an internal tax imposed in accordance with Article 2.4 (National Treatment); (ii) duty imposed in accordance with Chapter 3 (Trade Remedies); (iii) duties applied in accordance with Articles VI, XVI and XIX of GATT 1994, the AntiDumping Agreement, the SCM Agreement, the Safeguards Agreement, Article 5 of the Agreement on Agriculture and the DSU; and (iv) fee or other charge imposed in accordance with Article 2.18 (Administrative Fees, Other Charges and Formalities on Imports and Exports); (e) "export licensing procedures" means administrative procedures used for the operation of export licensing regimes requiring the submission of an application or other documentation, other than that required for customs purposes, to the relevant administrative body as a prior condition for exportation from the territory of the exporting Party;



(f) "import licensing procedures" means administrative procedures used for the operation of import licensing regimes requiring the submission of an application or other documentation, other than that required for customs purposes, to the relevant administrative body as a prior condition for importation into the territory of the importing Party; (g) "non-automatic export licensing procedures" means export licensing procedures where approval of the application is not granted for all legal and natural persons who fulfil the requirements of the Party concerned for engaging in export operations involving the products subject to export licensing procedures; (h) "non-automatic import licensing procedures" means import licensing procedures where approval of the application is not granted for all legal and natural persons who fulfil the requirements of the Party concerned for engaging in import operations involving the products subject to import licensing procedures; (i) "originating" refers to the origin of a good as determined in accordance with the rules of origin set out in Protocol 1 (Concerning the Definition of the Concept of "Originating Products" and Methods of Administrative Cooperation); (j) "performance requirement" means a requirement that: (i) a given quantity, value or percentage of goods be exported;

(ii) goods of the Party granting an import license be substituted for imported goods; (iii) a person benefiting from an import license purchase other goods in the territory of the Party granting the import licence, or accord a preference to domestically produced goods; (iv) a person benefiting from an import licence produce goods in the territory of the Party granting the import licence, with a given quantity, value or percentage of domestic content; or (v) relates in whatever form to the volume or value of imports, to the volume or value of exports or to the amount of foreign exchange inflows; and

(k) "remanufactured good" means a good classified in HS Chapter 84, 85, 87, 90 or 9402, except those listed in Appendix 2-A-5 (Goods excluded from the Definition of Remanufactured Goods), which: (i) is entirely or partially comprised of parts obtained from goods that have been used beforehand; and (ii) has similar performance and working conditions as well as life expectancy compared to the original new good and is given the same warranty as the original new good.

ARTICLE 2.4 National Treatment Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994, including its Notes and Supplementary Provisions. To that end, the obligations contained in Article III of GATT 1994, including its Notes and Supplementary Provisions, are incorporated into and made part of this Agreement, mutatis mutandis. ARTICLE 2.5 Classification of Goods The classification of goods in trade between the Parties shall be in accordance with each Party's respective tariff nomenclature in conformity with the HS.

ARTICLE 2.6 Remanufactured Goods The Parties shall accord to remanufactured goods the same treatment as that accorded to new like goods. A Party may require specific labelling of remanufactured goods in order to prevent deception of consumers. Each Party shall implement this Article within a transitional period of no longer than three years from the date of entry into force of this Agreement.

ARTICLE 2.7 Reduction or Elimination of Customs Duties 1. Except as otherwise provided for in this Agreement, each Party shall reduce or eliminate its customs duties on goods originating in the other Party in accordance with its respective schedule included in Appendices 2-A-1 (Tariff Schedule of the Union) and 2-A-2 (Tariff Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties). 2. For the calculation of the successive reductions under paragraph 1, the base rate for customs duties of each good shall be the one specified in the schedules included in Appendices 2A-1 (Tariff Schedule of the Union) and 2-A-2 (Tariff Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties). The tariff elimination established under Appendix 2-A-2 (Tariff Schedule of Viet Nam) does not apply to used motor-vehicles under HS codes 8702, 8703 and 8704. 3. If a Party reduces an applied most favoured nation customs duty rate below the rate of customs duty applied in accordance with its respective schedule included in Appendices 2-A-1 (Tariff Schedule of the Union) and 2-A-2 (Tariff Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties), the good originating in the other Party shall be eligible for that lower duty rate.

4. Except as otherwise provided in this Agreement, a Party shall not increase any existing customs duty applied in accordance with its respective schedule included in Appendices 2-A-1 (Tariff Schedule of the Union) and 2-A-2 (Tariff Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties), or adopt any new customs duty, on a good originating in the other Party.

5. A Party may unilaterally accelerate the reduction or elimination of customs duties on originating goods of the other Party applied in accordance with its respective schedule included in Appendices 2-A-1 (Tariff Schedule of the Union) and 2-A-2 (Tariff Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties). When a Party considers such an acceleration it shall inform the other Party as early as possible before the new rate of customs duty takes effect. A unilateral acceleration shall not preclude the Party from raising a customs duty to the prevailing rate at each stage of reduction or elimination in accordance with its respective schedule included in Appendices 2-A-1 (Tariff Schedule of the Union) and 2-A-2 (Tariff Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties). 6. Upon request of a Party, the Parties shall consult to consider accelerating or broadening the scope of the reduction or elimination of customs duties applied in accordance with their respective schedules included in Appendices 2-A-1 (Tariff Schedule of the Union) and 2-A-2 (Tariff Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties). If the Parties agree to amend this Agreement in order to accelerate or broaden such scope, such agreement shall supersede any duty rate or staging category for such good determined pursuant to their Schedules. Such an amendment shall come into effect in accordance with Article 17.5 (Amendments).

ARTICLE 2.8 Management of Administrative Errors In the event of an error by the competent authorities in the proper management of the preferential system at export, and in particular in the application of Protocol 1 (Concerning the Definition of the Concept of "Originating Products" and Methods of Administrative Cooperation), where this error leads to consequences in terms of import duties, the importing Party may request the Trade Committee established pursuant to Article 17.1 (Trade Committee) to examine the possibilities of adopting appropriate measures with a view to resolving the situation. ARTICLE 2.9 Specific Measures concerning the Preferential Tariff Treatment 1. The Parties shall cooperate on combating customs violations relating to the preferential tariff treatment granted under this Chapter.

2. For the purpose of paragraph 1, each Party shall offer the other Party administrative cooperation and mutual administrative assistance in customs and related matters as part of the implementation and control of the preferential tariff treatment, which shall include the following obligations:

(a) verifying the originating status of the product or products concerned; (b) carrying out the subsequent verification of the proof of origin and providing the results of that verification to the other Party; and (c) granting authorisation to the importing Party to conduct enquiry visits in order to determine the authenticity of documents or accuracy of information relevant to the granting of the preferential treatment in question. 3. Where, in accordance with the provisions on administrative cooperation or mutual administrative assistance in customs and related matters referred to in paragraph 2, the importing Party establishes that a proof of origin was unduly issued because the requirements provided for in Protocol 1 (Concerning the Definition of the Concept of "Originating Products" and Methods of Administrative Cooperation) were not fulfilled, that Party may deny a preferential tariff treatment to a declarant who claimed it with regard to goods for which the proof of origin was issued in the exporting Party.

4. If the importing Party considers that the denial of preferential tariff treatment for individual consignments referred to in paragraph 3 is insufficient to implement and control the preferential tariff treatment of a given product, that Party may, in accordance with the procedure laid down in paragraph 5, temporarily suspend the relevant preferential tariff treatment of the products concerned in the following cases: (a) when that Party finds that there has been a systematic customs violation regarding claims of preferential tariff treatment under this Agreement; or (b) when that Party finds that the exporting Party has systematically failed to comply with the obligations under paragraph 2. 5. The competent authority of the importing Party shall, without undue delay, notify its finding to the competent authority of the exporting Party, provide verifiable information upon which the finding was based and engage in consultations with the competent authority of the exporting Party with a view to achieving a mutually acceptable solution. 6. If the competent authorities have not achieved a mutually acceptable solution after 30 days following the notification referred to in paragraph 5, the importing Party shall, without undue delay, refer the matter to the Trade Committee. 7. If the Trade Committee has failed to agree on an acceptable solution within 60 days following the referral, the importing Party may temporarily suspend the preferential tariff treatment for the products concerned.



The importing Party may apply the temporary suspension of preferential tariff treatment under this paragraph only for a period necessary to protect its financial interests and until the exporting Party provides convincing evidence of its ability to comply with the obligations referred to in paragraph 2 and to provide sufficient control of the fulfilment of those obligations. The temporary suspension shall not exceed a period of three months. If the conditions that gave rise to the initial suspension persist after the expiry of the three-month period, the importing Party may decide to renew the suspension for another period of three months. Any suspension shall be subject to periodic consultations within the Trade Committee. 8. The importing Party shall publish, in accordance with its internal procedures, notices to importers about any notification and decision concerning the temporary suspension referred to in paragraph 4. The importing Party shall, without undue delay, notify the exporting Party and the Trade Committee. ARTICLE 2.10 Repaired Goods 1. A Party shall not apply a customs duty to a good, regardless of its origin, that re-enters its territory after the good has been temporarily exported from its territory to the territory of the other Party for repair, regardless of whether such repair could be performed in the territory of the Party from which the good was temporarily exported.

2. Paragraph 1 does not apply to a good imported in bond, into a free trade zone, or in similar status, that is exported for repair and is not re-imported in bond, into a free trade zone, or in similar status. 3. A Party shall not apply a customs duty to a good, regardless of its origin, imported temporarily from the territory of the other Party for repair. 4. For the purposes of this Article, the term "repair" means any processing operation which is undertaken on a good to remedy operating defects or material damage and entailing the re-establishment of a good to its original function or to ensure its compliance with technical requirements for its use, without which the good could no longer be used in the normal way for the purposes for which it was intended. Repair of a good includes restoring and maintenance. It shall not include an operation or process that: (a) destroys the essential characteristics of the good or creates a new or commercially different good;

(b) transforms an unfinished good into a finished good; or (c) is used to improve or upgrade the technical performance of a good.

ARTICLE 2.11 Export Duties, Taxes or Other Charges 1. A Party shall not maintain or adopt any duties, taxes, or other charges of any kind imposed on, or in connection with, the exportation of a good to the territory of the other Party that are in excess of those imposed on like goods destined for domestic consumption, other than in accordance with the schedule included in Appendix 2-A-3 (Export Duties Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties). 2. If a Party applies a lower rate of duty, tax or charge on, or in connection with, the exportation of a good and for as long as it is lower than the rate calculated in accordance with the schedule included in Appendix 2-A-3 (Export Duties Schedule of Viet Nam) of Annex 2-A (Reduction or Elimination of Customs Duties), that lower rate shall apply. This paragraph shall not apply to more favourable treatment granted to any other third party pursuant to a preferential trade agreement. 3. At the request of either Party, the Trade Committee shall review any duties, taxes, or other charges of any kind imposed on, or in connection with, the exportation of goods to the territory of the other Party, when a Party has granted more favourable treatment to any other third party pursuant to a preferential trade agreement.

ARTICLE 2.12 Agricultural Export Subsidies

1. In the multilateral context, the Parties share the objective of the parallel elimination and prevention of the reintroduction of all forms of export subsidies and disciplines on all export measures with equivalent effect for agricultural goods. To that end, they shall work together with the aim of enhancing multilateral disciplines on agricultural exporting state enterprises, international food aid and export financing support. 2. Upon the entry into force of this Agreement, the exporting Party shall not introduce or maintain any export subsidies or other measures having equivalent effect on any agricultural good which is subject to the elimination or reduction of customs duties by the importing Party in accordance with Annex 2-A (Reduction or Elimination of Customs Duties) and which is destined for the territory of the importing Party.

ARTICLE 2.13 Administration of Trade Regulations In accordance with Article X of GATT 1994, each Party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, judicial decisions and administrative rulings pertaining to: (a) the classification or the valuation of goods for customs purposes; (b) rates of duty, taxes or other charges; (c) requirements, restrictions or prohibitions on imports or exports; (d) the transfer of payments; and

(e) issues affecting sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use of goods for customs purposes.

ARTICLE 2.14 Import and Export Restrictions 1. Except as otherwise provided for in this Agreement, a Party shall not 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, in accordance with Article XI of GATT 1994, including its Notes and Supplementary Provisions. To that end, Article XI of GATT 1994, including its Notes and Supplementary Provisions, are incorporated into and made part of this Agreement, mutatis mutandis. 2. Paragraph 1 prohibits a Party from adopting or maintaining: (a) import licensing conditioned on the fulfilment of a performance requirement; or (b) voluntary export restraints. 3. Paragraphs 1 and 2 do not apply to the goods listed in Appendix 2-A-4 (Specific Measures by Viet Nam governing the Importation and Exportation of Goods). Any amendment of Viet Nam's laws and regulations that reduces the scope of the goods listed in Appendix 2-A-4 (Specific Measures by Viet Nam governing the Importation and Exportation of Goods) shall automatically apply under this Agreement. Any preference accorded by Viet Nam regarding the scope of the goods listed in Appendix 2-A-4 (Specific Measures by Viet Nam governing the Importation and Exportation of Goods) to any other trading partner shall automatically apply under this Agreement. Viet Nam shall notify the Union of any amendment or preference referred to in this paragraph.

4. In accordance with the WTO Agreement, a Party may implement any measure authorised by the Dispute Settlement Body of the WTO against the other Party. 5. When a Party adopts or maintains an import or export prohibition or restriction it shall ensure full transparency thereof.

ARTICLE 2.15 Trading Rights and Related Rights for Pharmaceuticals 1. Viet Nam shall adopt and maintain appropriate legal instruments allowing foreign pharmaceutical companies to establish foreign-invested enterprises for the purposes of importing pharmaceuticals which have obtained a marketing authorisation by Viet Nam's competent authorities. Without prejudice to Viet Nam's schedules included in Annex 8-B (Viet Nam's Schedule of Specific Commitments), such foreign-invested enterprises are allowed to sell pharmaceuticals which they have legally imported to distributors or wholesalers who have the right to distribute pharmaceuticals in Viet Nam. 2. Foreign-invested enterprises referred to in paragraph 1 are allowed to: (a) build their own warehouses to store pharmaceuticals which they have legally imported into Viet Nam in accordance with the regulations issued by the Ministry of Health, or its successor;

(b) provide information relating to pharmaceuticals, which they have legally imported into Viet Nam, to health care professionals in accordance with the regulations issued by the Ministry of Health, or its successor, and Viet Nam's other competent authorities; and (c) carry out clinical study and testing pursuant to Article 3 (International Standards) of Annex 2C (Pharmaceutical/Medicinal Products and Medical Devices) and in accordance with the regulations issued by the Ministry of Health, or its successor, to ensure that the pharmaceuticals which they have legally imported into Viet Nam are suitable for domestic consumption. ARTICLE 2.16 Import Licensing Procedures

1. The Parties affirm their rights and obligations under the Import Licensing Agreement. 2. Each Party shall notify the other Party of its existing import licensing procedures, including the legal basis and the relevant official website, within 30 days of the entry into force of this Agreement unless they were already notified or provided under Article 5 or paragraph 3 of Article 7 of the Import Licensing Agreement. The notification shall contain the same information as referred to in Article 5 or paragraph 3 of Article 7 of the Import Licensing Agreement.

3. Each Party shall notify the other Party of any introduction or modification of any import licensing procedure which it intends to adopt no later than 45 days before the new procedure or modification takes effect. In no case shall a Party provide such notification later than 60 days following the date of the publication of the introduction or modification unless this was already notified in accordance with Article 5 of the Import Licensing Agreement. The notification shall contain the same information as referred to in Article 5 of the Import Licensing Agreement. 4. Each Party shall publish on an official website any information that it is required to publish under subparagraph 4(a) of Article 1 of the Import Licensing Agreement. 5. Upon request of a Party, the other Party shall respond within 60 days to a reasonable enquiry regarding any import licensing procedure which it intends to adopt or has adopted or maintained, as well as the criteria for granting or for allocating import licenses, including the eligibility of persons, firms, and institutions to make such an application, the administrative body or bodies to be approached and the list of products subject to the import licensing requirement. 6. The Parties shall introduce and administer import licensing procedures in accordance with: (a) paragraphs 1 to 9 of Article 1 of the Import Licensing Agreement; (b) Article 2 of the Import Licensing Agreement; and (c) Article 3 of the Import Licensing Agreement.

To that end, the provisions referred to in subparagraphs (a), (b) and (c) are incorporated into and made part of this Agreement, mutatis mutandis.

7. A Party shall only adopt or maintain automatic import licensing procedures as a condition for importation into its territory in order to fulfil legitimate objectives after having conducted an appropriate impact assessment. 8. A Party shall grant import licences for an appropriate length of time which shall not be shorter than set out in the domestic legislation providing for the import licensing requirements and which shall not preclude imports. 9. Where a Party has denied an import licence application with respect to a good of the other Party, it shall, upon request of the applicant and promptly after receiving the request, provide the applicant with a written explanation of the reasons for the denial. The applicant shall have the right of appeal or review in accordance with the domestic legislation or procedures of the importing Party. 10. The Parties shall only adopt or maintain non-automatic import licensing procedures in order to implement a measure that is not inconsistent with this Agreement, including with Article 2.22 (General Exceptions). A Party adopting non-automatic import licensing procedures shall indicate clearly the purpose of such licensing procedures.

ARTICLE 2.17 Export Licensing Procedures 1. Each Party shall notify the other Party of its existing export licensing procedures, including the legal basis and the relevant official website, within 30 days of the entry into force of this Agreement. 2. Each Party shall notify the other Party of any introduction or modification of an export licensing procedure which it intends to adopt no later than 45 days before the new procedure or modification takes effect. In no case shall a Party provide such notification later than 60 days following the date of the publication of the introduction or modification. 3. The notification referred to in paragraphs 1 and 2 shall contain the following information:

(a) the texts of its export licensing procedures, including any modifications; (b) the products subject to each export licensing procedure; (c) for each export licensing procedure, a description of: (i) the process for applying for an export licence; and (ii) criteria which an applicant must meet to be eligible to apply for an export licence;

(d) the contact point or points from which interested persons can obtain further information on the conditions for obtaining an export licence; (e) the administrative body or bodies to which an application or other relevant documentation shall be submitted; (f) the period during which each export licensing procedure will be in effect; (g) if the Party intends to use an export licensing procedure to administer an export quota, the overall quantity and, where practicable, value of the quota and the opening and closing dates of the quota; and (h) any exceptions or derogations from an export licensing requirement, how to request those exceptions or derogations, and the criteria for granting them.

4. Each Party shall publish any export licensing procedure, including the legal basis and a reference to the relevant official website. Each Party shall also publish any new export licensing procedure, or any modification to its export licensing procedures, as soon as possible but in any case no later than 45 days after its adoption and at least 25 working days before its entry into force.

5. Upon request of a Party, the other Party shall respond within 60 days to a reasonable enquiry regarding any export licensing procedures which it intends to adopt or which it has adopted or maintained as well as the criteria for granting or for allocating export licenses, including the eligibility of persons, firms, and institutions to make such an application, the administrative body or bodies to be approached, and the list of products subject to the export licensing requirement. 6. The Parties shall introduce and administer any export licensing procedures in accordance with: (a) paragraphs 1 to 9 of Article 1 of the Import Licensing Agreement; (b) Article 2 of the Import Licensing Agreement; (c) Article 3 of the Import Licensing Agreement with the exception of subparagraphs 5(a), (c), (j) and (k). To that end, the provisions referred to in subparagraphs (a), (b) and (c) are incorporated into and made part of this Agreement, mutatis mutandis. 7. Each Party shall ensure that all export licensing procedures are neutral in application and administered in a fair, equitable, non-discriminatory and transparent manner. 8. A Party shall grant export licences for an appropriate length of time which shall not be shorter than set out in the domestic legislation providing for the export licensing requirement and which shall not preclude exports.

9. When a Party has denied an export licence application with respect to a good of the other Party, it shall, upon request of the applicant and promptly after receiving the request, provide the applicant with a written explanation of the reasons for the denial. The applicant shall have the right of appeal or review in accordance with the domestic legislation or procedures of the exporting Party.

10. A Party shall only adopt or maintain automatic export licensing procedures as a condition for exportation from its territory in order to fulfil legitimate objectives after having conducted an appropriate impact assessment. 11. The Parties shall only adopt or maintain non-automatic export licensing procedures in order to implement a measure that is not inconsistent with this Agreement, including with Article 2.22 (General Exceptions). A Party adopting non-automatic export licensing procedures shall indicate clearly the purpose of such licensing procedures. ARTICLE 2.18 Administrative Fees, Other Charges and Formalities on Imports and Exports 1. Each Party shall ensure that fees, charges, formalities and requirements, other than import and export customs duties and measures listed in subparagraphs (i), (ii) and (iii) of paragraph (d) of Article 2.3 (Definitions), are consistent with the Parties' obligations under Article VIII of GATT 1994, including its Notes and Supplementary Provisions.

2. A Party shall only impose fees and charges for services provided in connection with importation and exportation of goods. Fees and charges shall not be levied on an ad valorem basis and shall not exceed the approximate cost of the service provided. Each Party shall publish information on fees and charges it imposes in connection with the importation and exportation of goods in accordance with Article 4.10 (Fees and Charges). 3. A Party shall not require consular transactions, including related fees and charges, in connection with the importation or exportation of goods. After three years from the date of entry into force of this Agreement, a Party shall not require consular authentication for the importation of goods covered by this Agreement. ARTICLE 2.19 Origin Marking

Except as otherwise provided for in this Agreement, when Viet Nam applies mandatory country of origin marking requirements to non-agricultural products of the Union, Viet Nam shall accept the marking "Made in EU", or a similar marking in the local language, as fulfilling such requirements.

ARTICLE 2.20 State Trading Enterprises 1. The Parties affirm their existing rights and obligations under Article XVII of GATT 1994, including its Notes and Supplementary Provisions, and the WTO Understanding on the Interpretation of Article XVII of GATT 1994, which are incorporated into and made part of this Agreement, mutatis mutandis. 2. When a Party requests information from the other Party on individual cases of state trading enterprises and on their operations, including information on their bilateral trade, the requested Party shall ensure transparency subject to subparagraph 4(d) of Article XVII of GATT 1994. ARTICLE 2.21 Elimination of Sector-Specific Non-Tariff Measures 1. The Parties shall implement their commitments on sector-specific non-tariff measures on goods as set out in Annexes 2-B (Motor Vehicles and Motor Vehicles Parts and Equipment) and 2C (Pharmaceutical/Medicinal Products and Medical Devices).

2. Except as otherwise provided for in this Agreement, 10 years after the entry into force of this Agreement and upon request of either Party, the Parties shall, in accordance with their internal procedures, enter into negotiations with the aim of broadening the scope of their commitments on sector-specific non-tariff measures on goods.

ARTICLE 2.22 General Exceptions 1. Nothing in this Chapter prevents either Party from taking measures in accordance with Article XX of GATT 1994, including its Notes and Supplementary Provisions, which are incorporated into and made part of this Agreement, mutatis mutandis. 2. The Parties understand that before taking any measures provided for in paragraphs (i) and (j) of Article XX of GATT 1994, the exporting Party intending to take such measures shall provide the other Party with all relevant information. Upon request, the Parties shall consult with a view to seeking an acceptable solution. The Parties may agree on any means needed to resolve the difficulties. If prior information or examination is impossible due to exceptional and critical circumstances requiring immediate action, the exporting Party may apply the necessary precautionary measures and shall immediately inform the other Party thereof.

ARTICLE 2.23 Committee on Trade in Goods 1. The Committee on Trade in Goods established pursuant to Article 17.2 (Specialised Committees) shall comprise representatives of the Parties. 2. The Committee on Trade in Goods shall consider any matter arising under this Chapter and Protocol 1 (Concerning the Definition of the Concept of "Originating Products" and Methods of Administrative Cooperation). 3. The Committee on Trade in Goods shall carry out the following tasks in accordance with Article 17.2 (Specialised Committees):

(a) reviewing and monitoring the implementation and operation of the provisions referred to in paragraph 2; (b) identifying and recommending measures to resolve any difference that may arise, and to promote, facilitate and improve market access, including any acceleration of tariff commitments under Article 2.7 (Reduction or Elimination of Customs Duties); (c) recommending the Trade Committee to establish working groups, as it deems necessary; (d) undertaking any additional work that the Trade Committee may assign; and

(e) proposing decisions to be adopted by the Trade Committee for amending the list of fragrant rice varieties included in subparagraph 5(c) of Sub-Section 1 (Union Tariff Rate Quotas) of Section B (Tariff Rate Quotas) of Annex 2-A (Reduction or Elimination of Customs Duties). CHAPTER 3 TRADE REMEDIES SECTION A ANTI-DUMPING AND COUNTERVAILING DUTIES

ARTICLE 3.1 General Provisions 1. The Parties affirm their rights and obligations under Article VI of GATT 1994, the AntiDumping Agreement, and the SCM Agreement.

2. The Parties, recognising that anti-dumping and countervailing measures can be abused to obstruct trade, agree that: (a) trade remedies should be used in full compliance with the relevant WTO requirements and should be based on a fair and transparent system; and (b) careful consideration should be given to the interests of the other Party when a Party considers imposing such measures. 3. For the purposes of this Section, origin shall be determined in accordance with Article 1 of the Agreement on Rules of Origin. ARTICLE 3.2 Transparency

1. Without prejudice to Article 6.5 of the Anti-Dumping Agreement and Article 12.4 of the SCM Agreement, the Parties shall ensure, immediately after any imposition of provisional measures and in any case before the final determination is made, full and meaningful disclosure to interested parties of all essential facts and considerations which form the basis for the decision to apply measures. Disclosures shall be made in writing and allow interested parties sufficient time to make their comments.

2. Provided it does not unnecessarily delay the conduct of the investigation, interested parties shall be granted the possibility to be heard in order to express their views during trade remedies investigations. ARTICLE 3.3 Consideration of Public Interest A Party shall not impose anti-dumping or countervailing measures where, on the basis of the information made available during the investigation, it can clearly be concluded that it is not in the public interest to apply such measures. In determining the public interest, the Party shall take into account the situation of the domestic industry, importers and their representative associations, representative users and representative consumer organisations, based on the relevant information provided to the investigating authorities. ARTICLE 3.4 Lesser Duty Rule An anti-dumping or countervailing duty imposed by a Party shall not exceed the margin of dumping or countervailable subsidy, and the Party shall endeavour to ensure that the amount of this duty is less than that margin if such lesser duty would be adequate to remove the injury to the domestic industry.

ARTICLE 3.5

Exclusion from Dispute Settlement The provisions of this Section shall not be subject to Chapter 15 (Dispute Settlement). SECTION B GLOBAL SAFEGUARD MEASURES ARTICLE 3.6 General Provisions 1. The Parties affirm their rights and obligations under Article XIX of GATT 1994, the Safeguards Agreement and Article 5 of the Agreement on Agriculture. 2. A Party shall not apply with respect to the same good at the same time: (a) a bilateral safeguard measure under Section C (Bilateral Safeguard Clause) of this Chapter; and



(b) a measure under Article XIX of GATT 1994 and the Safeguards Agreement. 3. For the purposes of this Section, origin shall be determined in accordance with Article 1 of the Agreement on Rules of Origin. ARTICLE 3.7 Transparency 1. Notwithstanding Article 3.6 (General Provisions), the Party initiating a global safeguard investigation or intending to impose global safeguard measures shall immediately provide, at the request of the other Party and provided that it has a substantial interest, ad hoc written notification of all pertinent information leading to the initiation of a global safeguard investigation and, as the case may be, the proposal to impose the global safeguard measures, including on the provisional findings, where relevant. This is without prejudice to Article 3.2 of the Safeguards Agreement. 2. When imposing global safeguard measures, the Parties shall endeavour to impose them in a way that least affects bilateral trade.

3. For the purposes of paragraph 2, if a Party considers that the legal requirements for the imposition of definitive safeguard measures are met, it shall notify the other Party and give the possibility to hold bilateral consultations. If no satisfactory solution has been reached within 30 days of the notification, the Party may adopt the definitive global safeguard measures. The possibility to hold consultations should be offered to the other Party in order to exchange views on the information referred to in paragraph 1. ARTICLE 3.8 Exclusion from Dispute Settlement

The provisions of this Section referring to WTO rights and obligations shall not be subject to Chapter 15 (Dispute Settlement).

SECTION C BILATERAL SAFEGUARD CLAUSE ARTICLE 3.9 Definitions For the purposes of this Section: (a) "domestic industry" shall be understood in accordance with subparagraph 1(c) of Article 4 of the Safeguards Agreement. To that end, subparagraph 1(c) of Article 4 of the Safeguards Agreement is incorporated into and made part of this Agreement, mutatis mutandis; (b) "serious injury" and "threat of serious injury" shall be understood in accordance with subparagraphs 1(a) and 1(b) of Article 4 of the Safeguards Agreement; to that end subparagraphs 1(a) and 1(b) of Article 4 of the Safeguards Agreement are incorporated into and made part of this Agreement, mutatis mutandis; and (c) "transition period" means a period of 10 years from the entry into force of this Agreement.



ARTICLE 3.10 Application of a Bilateral Safeguard Measure 1. If, as a result of the reduction or elimination of a customs duty under this Agreement, any good originating in the territory of a Party is being imported into the territory of the other Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to a domestic industry producing like or directly competitive goods, the importing Party may adopt measures provided for in paragraph 2 in accordance with the conditions and procedures laid down in this Section during the transition period only, except as otherwise provided for in subparagraph 6(c) of Article 3.11 (Conditions and Limitations). 2. The importing Party may impose a bilateral safeguard measure which: (a) suspends the further reduction of the rate of customs duty on the good concerned as provided for in Annex 2-A (Elimination of Customs Duties); or (b) increases the rate of customs duty on the good to a level which does not exceed the lesser of: (i) the most-favoured-nation applied rate of customs duty on the good in effect at the time the measure is taken; or

(ii) the base rate of customs duty specified in the schedules included in Annex 2-A (Elimination of Customs Duties) pursuant to Article 2.6 (Reduction or Elimination of Customs Duties on Imports). ARTICLE 3.11

Conditions and Limitations 1. A Party shall notify the other Party in writing of the initiation of the investigation referred to in paragraph 2 and consult with the other Party as far as practicable in advance of applying a bilateral safeguard measure, with a view to reviewing the information arising from the investigation and exchanging views on the measure. 2. A Party shall only apply a bilateral safeguard measure following an investigation by its competent authorities in accordance with Article 3 and subparagraph 2(c) of Article 4 of the Safeguards Agreement. To that end, Article 3 and subparagraph 2(c) of Article 4 of the Safeguards Agreement are incorporated into and made part of this Agreement, mutatis mutandis. 3. In the investigation referred to in paragraph 2, the Party shall comply with the requirements of subparagraph 2(a) of Article 4 of the Safeguards Agreement. To that end, subparagraph 2(a) of Article 4 of the Safeguards Agreement is incorporated into and made part of this Agreement, mutatis mutandis.

4. The investigation shall also demonstrate, on the basis of objective evidence, the existence of a causal link between increased imports and the serious injury or threat thereof. The investigation shall also take into consideration the existence of any factor other than increased imports which may also cause injury at the same time. 5. Each Party shall ensure that its competent authorities complete the investigation referred to in paragraph 2 within one year of the date of its initiation. 6. A Party shall not apply a bilateral safeguard measure: (a) except to the extent, and for such time, as it is necessary to prevent or remedy serious injury and to facilitate adjustment; (b) for a period exceeding two years, except that the period may be extended by up to two years if the competent authorities of the importing Party determine, in conformity with the procedures set out in this Article, that the measure continues to be necessary to prevent or remedy serious injury and to facilitate adjustment and that there is evidence that the industry is adjusting, provided that the total period of application of a safeguard measure, including the period of initial application and any extension thereof, does not exceed four years; or (c) beyond the expiration of the transition period, except with the consent of the other Party.



7. In order to facilitate adjustment in a situation where the expected duration of a bilateral safeguard measure is more than two years, the Party applying the measure shall progressively liberalise the measure at regular intervals during the period of application. 8. When a Party terminates a bilateral safeguard measure, the rate of customs duty shall be the rate that, according to its schedule included in Annex 2-A (Elimination of Customs Duties), would have been in effect but for the measure. ARTICLE 3.12 Provisional Measures In critical circumstances where delay would cause damage that would be difficult to repair, a Party may apply a bilateral safeguard measure on a provisional basis pursuant to a preliminary determination that there is clear evidence that imports of an originating good from the other Party have increased as the result of the reduction or elimination of a customs duty under this Agreement, and that such imports cause serious injury, or threat thereof, to the domestic industry. The duration of any provisional measure shall not exceed 200 days, during which time the Party shall comply with the requirements of paragraphs 2 and 3 of Article 3.11 (Conditions and Limitations). The Party shall promptly refund any tariff increases if the investigation referred to in paragraph 2 of Article 3.11 (Conditions and Limitations) does not result in a finding that the requirements of paragraph 1 of Article 3.10 (Application of a Bilateral Safeguard Measure) are met. The duration of any provisional measure shall be counted as part of the period prescribed by subparagraph 5(b) of Article 3.11 (Conditions and Limitations).

ARTICLE 3.13 Compensation 1. A Party applying a bilateral safeguard measure shall consult with the other Party in order to mutually agree on appropriate trade-liberalising compensation in the form of concessions having substantially equivalent trade effects or in the form of concessions equivalent to the value of the additional duties expected to result from the safeguard measure. The Party applying a bilateral safeguard measure shall provide an opportunity for such consultations no later than 30 days after the application of the bilateral safeguard measure. 2. If the consultations under paragraph 1 do not result in an agreement on trade liberalising compensation within 30 days after the consultations begin, the Party whose goods are subject to the bilateral safeguard measure may suspend the application of concessions, with respect to originating goods of the Party applying the bilateral safeguard measure, which have trade effects substantially equivalent to the bilateral safeguard measure. The obligation to provide compensation, incumbent on the Party applying the bilateral safeguard measure, and the other Party's right to suspend concessions under this paragraph shall terminate on the same date as the bilateral safeguard measure terminates.

3. The right of suspension referred to in paragraph 2 shall not be exercised for the first 24 months during which a bilateral safeguard measure is in effect, provided that the safeguard measure conforms to the provisions of this Agreement.

ARTICLE 3.14 Use of the English Language In order to ensure the maximum efficiency for the application of the trade remedy rules under this Chapter, the investigating authorities of the Parties shall use the English language as a basis for communications and documents exchanged in the context of trade remedy investigations between the Parties. CHAPTER 4 CUSTOMS AND TRADE FACILITATION ARTICLE 4.1 Objectives

1. The Parties recognise the importance of customs and trade facilitation matters in the evolving global trading environment. The Parties shall reinforce cooperation in this area with a view to ensuring that their respective customs legislation and procedures fulfil the objectives of promoting trade facilitation while ensuring effective customs control.

2. The Parties agree that their legislation shall be non-discriminatory and that customs procedures shall be based on the use of modern methods and effective controls to combat fraud and to promote legitimate trade. 3. The Parties recognise that legitimate public policy objectives, including those in relation to security, safety and the fight against fraud, shall not be compromised. ARTICLE 4.2 Customs Cooperation and Mutual Administrative Assistance 1. The respective authorities of the Parties shall cooperate on customs matters in order to ensure that the objectives set out in Article 4.1 (Objectives) are attained. 2. The Parties shall enhance customs cooperation, inter alia, by: (a) exchanging information concerning customs legislation, its implementation, and customs procedures, in particular in the following areas: (i) simplification and modernisation of customs procedures; (ii) border enforcement of intellectual property rights by the customs authorities;



(iii) facilitation of transit movements and transhipment; and (iv) relations with the business community; (b) exploring joint initiatives relating to import, export and other customs procedures, including technical assistance, in order to ensure effective services to the business community; (c) strengthening their cooperation in the field of customs in international organisations such as the WTO and the World Customs Organization (hereinafter referred to as "WCO"); and (d) establishing, where relevant and appropriate, mutual recognition of trade partnership programmes and customs controls, including equivalent trade facilitation measures. 3. The Parties shall provide each other with mutual administrative assistance in customs matters in accordance with Protocol 2 (Mutual Administrative Assistance in Customs Matters).

ARTICLE 4.3 Customs Legislation and Procedures 1. The Parties shall base their respective customs legislation and procedures on international instruments and standards applicable in the area of customs and trade, including the substantive elements of the Revised Kyoto Convention on the Simplification and Harmonisation of Customs Procedures, done at Brussels on 26 June 1999, the International Convention on the Harmonized Commodity Description and Coding System (hereinafter referred to as "HS Convention"), the Framework of Standards to Secure and Facilitate Global Trade and the Customs Data Model of the WCO.

2. The customs legislation and procedures of the Parties shall: (a) aim at the protection of legitimate trade through effective enforcement and compliance with legislative requirements; (b) avoid unnecessary or discriminatory burdens on economic operators, and provide for further facilitation for operators with high levels of compliance; and (c) ensure safeguards against fraud and illicit or damaging activities.

3. The Parties agree that their respective customs legislation and procedures, including remedies shall be proportionate and non-discriminatory and that their application shall not unduly delay the release of goods. 4. In order to improve working methods, as well as to ensure non-discrimination, transparency, efficiency, integrity and accountability of operations, the Parties shall: (a) simplify and review requirements and formalities, wherever possible, with respect to the rapid release and clearance of goods; and (b) work towards further simplification and standardisation of data and documentation required by customs and other agencies. ARTICLE 4.4 Release of Goods

1. Each Party shall ensure that its customs authorities apply requirements and procedures that provide for the release of goods within a period no longer than that required to ensure compliance with its customs and other trade-related laws and formalities. Each Party shall work towards further reducing this period and releasing the goods without undue delay.

2. The Parties shall allow, inter alia, the release of goods without the payment of customs duties, subject to the provision of a guarantee if required in accordance with their legislation in order to secure the final payment of customs duties. 3. Each Party shall ensure that its customs authorities provide for advance electronic submission and further processing of information before the physical arrival of goods (pre-arrival processing) to enable the release of goods on arrival. ARTICLE 4.5 Simplified Customs Procedures 1. Each Party shall provide for simplified customs procedures that are transparent and efficient in order to reduce costs and increase predictability for economic operators, including for small and medium-sized enterprises. Easier access to customs simplifications shall also be provided for authorised traders according to objective and non-discriminatory criteria. 2. A single administrative document or electronic equivalent shall be used for the purposes of completing the formalities required for placing the goods under a customs procedure. 3. The Parties shall apply modern customs techniques, including risk assessment and postclearance audit methods, in order to simplify and facilitate the entry and the release of goods.

4. The Parties shall promote the progressive development and use of systems, including those based on information technology, to facilitate the electronic exchange of data between traders, customs administrations and other related agencies.

ARTICLE 4.6 Transit and Transhipment 1. Each Party shall ensure the facilitation and effective control of transhipment operations and transit movements through its territory. 2. To facilitate traffic in transit each Party shall ensure cooperation and coordination between all authorities and agencies concerned in its territory. ARTICLE 4.7 Risk Management 1. Each Party shall base its examination and release procedures and its post-clearance audit procedures on risk assessment principles and audits, rather than examining each shipment in a comprehensive manner for compliance with all import requirements.

2. The Parties shall adopt and apply their import, export, transit and transhipment control requirements and procedures for goods on the basis of risk management principles which shall be applied to focus compliance measures on transactions that merit attention. ARTICLE 4.8

Transparency 1. Each Party shall ensure that its customs and other trade-related laws, regulations and general administrative procedures and other requirements, including fees and charges, are readily available to interested parties and, where feasible and possible, on an official website. 2. Each Party shall designate or maintain one or more inquiry or information points to address, within a reasonable time, inquiries by interested parties concerning customs and other trade-related matters. ARTICLE 4.9 Advance Rulings 1. Upon written request from traders, the customs authorities of each Party shall issue, in accordance with its laws and regulations, prior to the importation of a good into its territory, written advance rulings on tariff classification or on any other matter as the Parties may agree upon.

2. Subject to any confidentiality requirements in each Party's laws and regulations, each Party shall publish, for example on an official website, its advance rulings on tariff classification and on any matters as the Parties may agree upon. 3. With a view to facilitating trade, the Parties shall include in their bilateral dialogue regular updates on changes in their respective laws and regulations on advance rulings. ARTICLE 4.10

Fees and Charges 1. Each Party shall publish information on fees and charges via an officially designated medium, and where feasible and possible, on an official website. This information shall include the fees and charges that will be applied, the reason for the fees or charges for the service provided, the responsible authority, and when and how payment is to be made. 2. Each Party shall not impose new or amended fees and charges until the information in accordance with paragraph 1 is published and made readily available.

ARTICLE 4.11 Customs Brokers The Parties shall not require in their respective customs legislation and procedures the mandatory use of customs brokers. The Parties shall apply transparent, non-discriminatory and proportionate rules if and when licensing customs brokers. ARTICLE 4.12 Customs Valuation 1. The Parties shall determine the customs value of goods in accordance with Article VII of GATT 1994 and the Customs Valuation Agreement.

2. The Parties shall cooperate with a view to reaching a common approach to issues relating to customs valuation.

ARTICLE 4.13 Preshipment Inspections The Parties agree that their respective customs legislation and procedures shall not require the mandatory use of preshipment inspections as defined in the Agreement on Preshipment Inspection, or any other inspection activity performed at destination, before customs clearance, by private companies. ARTICLE 4.14 Review and Appeal Each Party shall provide effective, prompt, non-discriminatory and easily accessible procedures to guarantee the right of appeal against customs and other agency administrative actions, rulings and decisions affecting importation or exportation of goods or goods in transit.

ARTICLE 4.15

Relations with the Business Community The Parties agree: (a) on the need for timely consultations with trade representatives on legislative proposals and general procedures related to customs and trade facilitation matters. To that end, appropriate consultations between administrations and the business community shall be held by each Party; (b) to publish or otherwise make available, as far as possible through electronic means, any new legislation and general procedures related to customs and trade facilitation matters prior to the application of any such legislation and procedures, as well as changes to and interpretations of such legislation and procedures. They shall also make publicly available relevant notices of an administrative nature, including agency requirements and entry procedures, hours of operation and operating procedures for customs offices at ports and border crossing points, and contact points for information enquiries; (c) on the need for a reasonable time period between the publication of new or amended legislation, procedures and fees or charges and their entry into force; and (d) to ensure that their respective customs and related requirements and procedures continue to meet the needs of the business community, follow best practices, and remain as little trade-restrictive as possible.

ARTICLE 4.16 Committee on Customs 1. The Committee on Customs established by Article 17.2 (Specialised Committees) shall be composed of representatives of the Parties. 2. The Committee on Customs shall ensure the proper functioning of this Chapter, the enforcement of intellectual property rights by customs in Sub-Section 4 (Border Enforcement) of Section C (Enforcement of Intellectual Property Rights) of Chapter 12 (Intellectual Property), Protocol 1 (Concerning the Definition of the Concept of "Originating Products" and Methods of Administrative Cooperation), Protocol 2 (Mutual Administrative Assistance in Customs Matters) and any additional provisions relating to customs that the Parties may agree upon.

3. The Committee on Customs shall examine the need for, and adopt, decisions, opinions, proposals or recommendations on all issues arising from the implementation of the provisions referred to in paragraph 2. It shall have the power to adopt decisions on mutual recognition of risk management techniques, risk criteria and standards, security controls and trade partnership programmes, including aspects such as data transmission and mutually agreed benefits.

CHAPTER 5 TECHNICAL BARRIERS TO TRADE ARTICLE 5.1 Affirmation of the TBT Agreement The Parties affirm their rights and obligations with respect to each other under the TBT Agreement, which is incorporated into and made part of this Agreement, mutatis mutandis. ARTICLE 5.2 Objectives

1. The objectives of this Chapter are to facilitate and increase bilateral trade in goods by preventing, identifying and eliminating unnecessary obstacles to trade within the scope of the TBT Agreement, and to enhance bilateral cooperation between the Parties. 2. The Parties shall establish and enhance technical capabilities and institutional infrastructure on matters concerning technical barriers to trade.

ARTICLE 5.3 Scope and Definitions 1. This Chapter applies to the preparation, adoption and application of standards, technical regulations and conformity assessment procedures, as defined in Annex 1 to the TBT Agreement, that may affect trade in goods between the Parties, except for: (a) purchasing specifications prepared by governmental bodies for production or consumption requirements of those bodies; or (b) sanitary and phytosanitary measures as defined in Annex A to the SPS Agreement. 2. Each Party has the right to prepare, adopt and apply standards, technical regulations and conformity assessment procedures in accordance with this Chapter and the TBT Agreement. 3. For the purposes of this Chapter, the definitions of Annex 1 to the TBT Agreement apply.



ARTICLE 5.4 Technical Regulations 1. Each Party shall make best use of good regulatory practice, as provided for in the TBT Agreement and in this Chapter, in particular, by: (a) assessing the available regulatory and non-regulatory alternatives to a proposed technical regulation that would fulfil the Party's legitimate objectives, in accordance with Article 2.2 of the TBT Agreement; endeavouring to assess, inter alia, the impact of a proposed technical regulation by means of a regulatory impact assessment, as recommended by the Committee on Technical Barriers to Trade established under Article 13 of the TBT Agreement; (b) using relevant international standards, such as those developed by the International Organization for Standardization, the International Electrotechnical Commission, the International Telecommunication Union and the Codex Alimentarius Commission, as a basis for their technical regulations, except when such international standards would be ineffective or inappropriate for the fulfilment of the legitimate objectives pursued by a Party. When a Party has not used international standards as a basis for its technical regulations, it shall, upon request of the other Party, identify any substantial deviation from the relevant international standards and explain the reasons why those standards have been judged inappropriate or ineffective for the objective pursued;

(c) reviewing, without prejudice to Article 2.3 of the TBT Agreement, technical regulations with a view to increasing their convergence with relevant international standards. In undertaking this review, the Parties shall, inter alia, take into account any new development in the relevant international standards and whether the circumstances that have given rise to divergences from any relevant international standard continue to exist; (d) specifying technical regulations based on product performance requirements, rather than on design or descriptive characteristics. 2. In accordance with Article 2.7 of the TBT Agreement, a Party shall give favourable consideration to accepting as equivalent technical regulations of the other Party, even if those regulations differ from its own, provided it is satisfied that those regulations adequately fulfil the objectives of its own regulations. 3. A Party that has prepared a technical regulation that it considers to be equivalent to a technical regulation of the other Party because it has a compatible objective and product scope may request in writing that the other Party recognise it as equivalent. That request shall be made in writing and set out in detail the reasons why the technical regulations should be considered to be equivalent, including reasons with respect to product scope. A Party which does not agree that the technical regulations are equivalent shall provide to the other Party, upon request, the reasons for its decision.

ARTICLE 5.5

Standards 1. The Parties affirm their obligations under Article 4.1 of the TBT Agreement to ensure that their standardising bodies accept and comply with the Code of Good Practice for the Preparation, Adoption and Application of Standards in Annex 3 to the TBT Agreement. The Parties further affirm their adherence to the principles set out in Decisions and Recommendations adopted by the WTO Committee on Technical Barriers to Trade since 1 January 1995, G/TBT/1/rev.12, of 21 January 2015, (hereinafter referred to as "the document"), including the Decision of the Committee on Principles for the Development of International Standards, Guides and Recommendations with relation to Articles 2, 5 and Annex 3 of the Agreement, referred to in the Annexes to Part 1 of the document. 2. With a view to harmonising standards on as wide a basis as possible, the Parties shall encourage their standardising bodies as well as the regional standardising bodies of which they or their standardising bodies are members to: (a) participate, within the limits of their resources, in the preparation of international standards by relevant international standardising bodies;

(b) use relevant international standards as a basis for the standards they develop, except where those international standards would be ineffective or inappropriate for the fulfilment of the legitimate objectives pursued by a Party, for instance because of an insufficient level of protection, fundamental climatic or geographical factors, or fundamental technological problems; (c) avoid duplication of, or overlap with, the work of international standardising bodies; (d) review national and regional standards not based on relevant international standards at regular intervals, with a view to increasing their convergence with relevant international standards; and (e) cooperate with the relevant standardisation bodies of the other Party in international standardisation activities. That cooperation may be undertaken in international standardising bodies or at regional level. 3. The Parties shall exchange information on: (a) their use of standards in support of technical regulations;

(b) their standardisation processes, and the extent of their use of international or regional standards as basis for their national standards; and

(c) cooperation agreements on standardisation implemented by either Party, including on standardisation issues in international agreements with third parties, to the extent this is not explicitly prohibited by those agreements. 4. The Parties recognise that in accordance with Annex 1 to the TBT