Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**
**Brussels, 5 September 2025**
**(OR. en)**

**12440/25**
**ADD 1**

**Interinstitutional File:**

**2025/0191 (NLE)**

**COLAC 127**

**POLCOM 211**

**SERVICES 47**

**FDI 42**

**PROPOSAL**

From: Secretary-General of the European Commission, signed by Ms Martine
DEPREZ, Director

date of receipt: 3 September 2025

To: Ms Thérèse BLANCHET, Secretary-General of the Council of the
European Union

No. Cion doc.: COM(2025) 356 annex

Subject: ANNEX 1 ANNEX to the Proposal for a Council Decision on the signing,
on behalf of the European Union, and provisional application of the
Partnership Agreement between the European Union and its Member
States, of the one part, and the Common Market of the South, the
Argentine Republic, the Federative Republic of Brazil, the Republic of
Paraguay and the Oriental Republic of Uruguay, of the other part

Delegations will find attached document COM(2025) 356 annex.

Encl.: COM(2025) 356 annex

12440/25 ADD 1

## RELEX. 1 EN

EUROPEAN

COMMISSION

**ANNEX**

_**to the**_

Brussels, 3.9.2025
COM(2025) 356 final

ANNEX 1

**Proposal for a Council Decision**

**on the signing, on behalf of the European Union, and provisional application of the**
**Partnership Agreement between the European Union and its Member States, of the one**

**part, and the Common Market of the South, the Argentine Republic, the Federative**
**Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay, of**

**the other part**

# **EN EN**

PARTNERSHIP AGREEMENT BETWEEN THE EUROPEAN UNION AND ITS MEMBER

STATES, OF THE ONE PART, AND THE COMMON MARKET OF THE SOUTH, THE

ARGENTINE REPUBLIC, THE FEDERATIVE REPUBLIC OF BRAZIL, THE REPUBLIC OF

PARAGUAY AND THE ORIENTAL REPUBLIC OF URUGUAY, OF THE OTHER PART

THE KINGDOM OF BELGIUM,

THE REPUBLIC OF BULGARIA,

THE CZECH REPUBLIC,

THE KINGDOM OF DENMARK,

THE FEDERAL REPUBLIC OF GERMANY,

THE REPUBLIC OF ESTONIA,

IRELAND,

THE HELLENIC REPUBLIC,

THE KINGDOM OF SPAIN,

THE FRENCH REPUBLIC,

THE REPUBLIC OF CROATIA,

& /en 1

THE ITALIAN REPUBLIC,

THE REPUBLIC OF CYPRUS,

THE REPUBLIC OF LATVIA,

THE REPUBLIC OF LITHUANIA,

THE GRAND DUCHY OF LUXEMBOURG,

HUNGARY,

THE REPUBLIC OF MALTA,

THE KINGDOM OF THE NETHERLANDS,

THE REPUBLIC OF AUSTRIA,

THE REPUBLIC OF POLAND,

THE PORTUGUESE REPUBLIC,

ROMANIA,

THE REPUBLIC OF SLOVENIA,

THE SLOVAK REPUBLIC,

& /en 2

THE REPUBLIC OF FINLAND,

THE KINGDOM OF SWEDEN,

Contracting Parties to the Treaty on European Union and the Treaty on the Functioning of the

European Union, hereinafter referred to as "the Member States",

and

THE EUROPEAN UNION, hereinafter referred to as "the Union" or "the EU",

of the one part,

AND

THE ARGENTINE REPUBLIC,

THE FEDERATIVE REPUBLIC OF BRAZIL,

THE REPUBLIC OF PARAGUAY,

THE ORIENTAL REPUBLIC OF URUGUAY,

State Parties to the Common Market of the South signatories of this Agreement, hereinafter referred

to as "Signatory MERCOSUR States",

and

& /en 3

THE COMMON MARKET OF THE SOUTH, hereinafter referred to as "MERCOSUR",

of the other part,

hereinafter jointly referred to as "the Parties",

for the purposes of this Agreement MERCOSUR refers to the Argentine Republic, the Federative

Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay,

CONSIDERING the deep historical, cultural, political and economic ties that unite their peoples

and inspired by their common values;

CONSIDERING that MERCOSUR and the European Union wish to reinforce those ties and

intensify their relations on the basis of dialogue and cooperation, with a view to establishing a

strategic partnership;

RECALLING the Parties' firm commitment to the principles of international law, to the Charter of

the United Nations ("UN"), to democracy, the rule of law and human rights and to fundamental

freedoms;

CONSIDERING that respect for democratic principles and human rights as laid down in the

Universal Declaration of Human Rights and other relevant international human rights instruments,

for international humanitarian law, and for the principles of the rule of law underpins the internal

and international policies of the Parties and constitutes an essential element of this Agreement;

REAFFIRMING their support for democratic institutions and values, which are indispensable for

the development of their respective integration processes and their mutual relationship;

& /en 4

MOTIVATED to contribute to the reinforcement of multilateralism, to international peace and

security and to the promotion of a fair and democratic international order;

RECOGNISING the important contribution to disarmament and non-proliferation of the

proclamation of Latin America and the Caribbean as a zone of peace, free of nuclear weapons, in

accordance to the Treaty of Tlatelolco and its additional protocols, and reaffirming their

commitments to promote nuclear disarmament;

REAFFIRMING the values, purposes and principles of the Charter of the United Nations, signed

on 26 June 1945, in San Francisco, at the conclusion of the United Nations Conference on

International Organization ("the UN Charter");

REAFFIRMING the shared aim of promoting economic and social development which underpins

this Agreement, and considering that market liberalisation should be complemented by the

promotion of social development and the reduction of inequalities through adequate access to

employment, education and health, and the elimination of extreme poverty;

REAFFIRMING their commitment to strengthen and develop the multilateral trading system

through the application of transparent, equitable and non-discriminatory rules, with a view to the

promotion of increasingly dynamic and open international trade which ensures the increased

participation of developing countries in international trade, investment and technology flows;

REAFFIRMING their commitment to promote international trade in such a way as to contribute to

sustainable development in its economic, social and environment dimensions, involving all relevant

stakeholders, including civil society and the private sector, and to implement this agreement in a

manner consistent with their respective laws and international commitments on labour and

environmental matters;

& /en 5

BUILDING UPON the rights and obligations assumed by the Parties as members of the World

Trade Organization ("WTO");

DESIRING to improve the competitiveness of their enterprises, by providing them with a

predictable legal framework for their trade and investment relations, with special attention to micro,

small and medium enterprises;

REAFFIRMING the need to promote the respect of internationally recognised guidelines and

principles of corporate social responsibility and responsible business conduct, including the

Organisation for Economic Co-operation and Development ("OECD") Guidelines for Multinational

Enterprises, amongst enterprises operating in their territories;

CONSIDERING that the strengthening of the multilateral trading system can be achieved through

multilateral trade negotiations which aim at ambitious, comprehensive and balanced results, the

promotion of economic development and the improvement of human welfare;

TAKING INTO ACCOUNT that the Parties consider regional integration and open regionalism to

be important instruments for economic and social development which enhance the international

integration of their economies, promote closer ties between their peoples and contribute to

international stability;

WELCOMING the adoption of the 2030 Agenda for Sustainable Development document

"Transforming our World: the 2030 Agenda for Sustainable Development" adopted by the United

Nations General Assembly on 25 September 2015 (hereinafter referred to as "the 2030 Agenda")

and the Paris Agreement adopted under the United Nations Framework Convention on Climate

Change, done at Paris on 12 December 2015 (hereinafter referred to as the "Paris Agreement") and

calling for their swift implementation;

& /en 6

CONSCIOUS of the need to promote the growth and development of the Parties and to reduce

existing disparities, giving special attention to the needs and difficulties faced by Paraguay as a

landlocked country;

RECOGNISING the long history of migration between European Union and MERCOSUR

countries, and its positive contribution to their relationship as well as to their social, cultural and

economic development;

BEARING IN MIND the internationally agreed provisions on special and differential treatment for

developing countries;

RECOGNISING that this Agreement preserves the right of the Parties to regulate within their

territories in conformity with their internal laws and regulations as well as the Parties' flexibility to

achieve legitimate policy objectives, such as those concerning public health, safety, the

environment, education, public morals and the promotion and protection of cultural diversity;

REAFFIRMING the Parties' right to exploit their natural resources in accordance with their own

environmental policies, and sustainable development goals;

BEARING IN MIND the Interregional Framework Cooperation Agreement between the European

Community and its Member States, of the one part, and the Southern Common Market and its Party

States, of the other part, signed in Madrid on 15 December 1995, as well as its annexed Joint

Declaration on political dialogue and the purpose of establishing a partnership based on reinforced

political dialogue, trade liberalisation, the promotion of investment and the deepening of

cooperation;

CONSIDERING that cooperation between the European Union and MERCOSUR is implemented

through a variety of instruments;

& /en 7

RECALLING the decision of the meeting of Heads of State and Government from MERCOSUR

and the European Union in June 1999 in Rio de Janeiro to attach renewed priority to their relations

in the political, economic, trade, cultural and cooperation fields, aiming at building a deeper and

fuller partnership between both regions, which should be based on democracy, sustainable

development and economic growth with social justice;

REAFFIRMING their commitment to further strengthen, liberalise and diversify their trade and

investment relations;

LOOKING FORWARD, in this context, to increasing their trade and investment relations through

the establishment of a free trade area in conformity with General Agreement on Tariffs and

Trade 1994 and WTO rules;

WILLING to strengthen cooperation between the Parties, on the basis of an open and permanent

dialogue in all areas of mutual interest, in particular in the political, economic, commercial,

financial, legal and judicial, freedom and security, scientific and technological, social and cultural

fields;

CONSCIOUS of the importance of involving civil society in the context of the partnership between

the Parties;

CONSCIOUS, that, in order to intensify their relationship in all areas of common interest, it is

essential to bring the existing political dialogue between the Parties to a new stage;

CONSIDERING the specific regional integration experiences of the Parties, from which they can

mutually benefit according to their own needs;

& /en 8

REAFFIRMING the importance of their shared principles and values in the field of social

development;

CONSIDERING the importance of cultural dialogue as a means to achieve better mutual

understanding between the Parties, to promote cultural diversity and to foster cultural links between

their citizens;

NOTING that, in the event that the Parties decide, within the framework of this Agreement, to enter

into specific agreements in the area of freedom, security and justice which may be concluded by the

European Union pursuant to Title V of Part Three of the Treaty on the Functioning of the European

Union, the provisions of such future agreements would not bind Ireland unless the European Union,

simultaneously with Ireland as regards its respective previous bilateral relations, notifies

MERCOSUR that Ireland has become bound by such agreements as part of the European Union in

accordance with Protocol No 21 on the position of Ireland in respect of the area of freedom, security

and justice, annexed to the Treaty on European Union and to the Treaty on the Functioning of the

European Union; noting that any subsequent internal measures of the European Union which may

be adopted pursuant to Title V of Part three of the Treaty on the Functioning of the European Union

to implement this Agreement would not bind Ireland, unless it has notified its wish to take part in

such measures or accept them in accordance with Protocol No 21; also noting that such future

agreements or subsequent internal measures of the European Union would fall within Protocol

No 22 on the position of Denmark, annexed to the Treaty on European Union and the Treaty on the

Functioning of the European Union;

RECOGNISING the differences in economic and social development between and within the

Parties;

HAVE AGREED AS FOLLOWS:

& /en 9

PART I

GENERAL PRINCIPLES AND INSTITUTIONAL FRAMEWORK

CHAPTER 1

INITIAL PROVISIONS

ARTICLE 1.1

General definitions

For the purposes of this Agreement:

(a) "1995 Interregional Framework Cooperation Agreement" means the Interregional Framework

Cooperation Agreement between the European Community and its Member States, of the one

part, and the Southern Common Market and its Party States, of the other part, signed in

Madrid on 15 December 1995;

(b) "Interim Trade Agreement" means the Interim Agreement on Trade between the European

Union, of the one part, and the Common Market of the South, the Argentine Republic, the

Federative Republic of Brazil, the Republic of Paraguay and the Oriental Republic of

Uruguay, of the other part, to be concluded;

(c) "SMEs" means small and medium-sized enterprises, which includes micro, small and

medium-sized enterprises and entrepreneurs;

& /en 10

(d) "third country" means a country or territory outside the territorial scope of application of this

Agreement;

(e) "UNCLOS" means the United Nations Convention on the Law of the Sea, done at Montego

Bay on 10 December 1982; and

(f) "WTO" means the World Trade Organization.

ARTICLE 1.2

General principles

1. Respect for democratic principles, human rights and fundamental freedoms as laid down in

the Universal Declaration of Human Rights and other international human rights instruments to

which they are party, as well as for the principles of the rule of law underpins the internal and

international policies of the Parties and constitutes an essential element of this Agreement.

2. The Parties confirm their strong commitment to the shared principles and objectives as

expressed in the UN Charter. The promotion of sustainable economic and social development, as

well as the equitable distribution of the benefits of this Agreement, are among the guiding principles

for the implementation of this Agreement.

3. The Parties reaffirm their attachment to the principles of good governance, including

principles such as governmental transparency and the fight against corruption, ethical and

accountable government, independence of the judiciary and the protection of the rights of

minorities.

& /en 11

ARTICLE 1.3

Scope

This Agreement establishes a partnership between the Parties based on shared values, including

reciprocity, and common interest. It shall strengthen the partnership between the EU Party and the

MERCOSUR Party and lead to a strategic relationship in the political, cooperation and trade fields,

as well as other areas to be agreed upon.

ARTICLE 1.4

General objectives

This Agreement provides for:

(a) an institutional framework which forms the basis of the partnership;

(b) the enhancement of political dialogue through new institutional mechanisms;

(c) cooperation between the Parties aiming at contributing to the achievement of the general

objectives of this Agreement by taking advantage of existing or future innovative cooperation

instruments that are capable of providing added value to the relationship; and

(d) the expansion and diversification of the Parties' biregional trade relations and the specific

objectives and provisions set out in Part III of this Agreement, which should contribute to

higher economic growth, the gradual improvement of the quality of life in both regions and to

the better integration of both regions into the world economy.

& /en 12

CHAPTER 2

INSTITUTIONAL FRAMEWORK

ARTICLE 2.1

Summit

1. The highest level of political and policy dialogue between the EU Party and the

MERCOSUR Party shall be at summit level. Summits shall be held as necessary and as mutually

agreed.

2. The Summits shall provide the opportunity to evaluate progress in the implementation of

this Agreement, set out the objectives for its future evolution and discuss other topics of common

interest.

ARTICLE 2.2

Joint Council

1. A Joint Council is hereby established to oversee the fulfilment of the objectives of this

Agreement and supervise its implementation. The Joint Council shall address the matters covered

by this Agreement and shall examine any major issue arising within the framework of this

Agreement, as well as interregional, multilateral or international questions of common interest.

& /en 13

2. The Joint Council shall meet at ministerial level at regular intervals, at least on a biennial

basis or on an ad-hoc basis as mutually agreed. It may also meet via teleconference, video

conference or through other means, as mutually agreed by the Parties.

3. The Joint Council shall be composed of representatives of each of the Parties at ministerial

level in accordance with the Parties' respective internal arrangements and taking into consideration

the specific issues to be addressed. The Joint Council shall meet in all necessary configurations, by

mutual agreement.

4. When the Joint Council addresses any matter related to Part III of this Agreement, it shall be

composed of representatives of each of the Parties with responsibility for trade-related matters

(hereinafter referred to as "Joint Council in trade configuration").

5. The Joint Council shall adopt its own rules of procedure and the rules of procedure of the

Joint Committee.

6. The Joint Council shall be co-chaired by one representative of the EU Party and one

representative of the MERCOSUR Party in accordance with the provisions laid down in its rules of

procedure and taking into consideration the specific issues to be addressed at any given session.

7. The Joint Council shall examine proposals and recommendations and have the power to take

decisions, including on the interpretation of provisions, and make appropriate recommendations as

provided for in this Agreement. Decisions and recommendations shall be adopted by agreement of

the Parties and in accordance with the rules of procedure of the Joint Council. Decisions shall be

binding on the Parties, which shall take all necessary measures, in accordance with their internal

procedures, to implement them. Within the scope of Part II of this Agreement, the Joint Council

shall also have the power to take decisions and make recommendations as mutually agreed by

the Parties.

& /en 14

8. The Joint Council may delegate to the Joint Committee any of its functions, including the

power to take binding decisions, in accordance with the Joint Council's rules of procedure.

ARTICLE 2.3

Joint Committee

1. A Joint Committee is hereby established.

2. The Joint Committee shall assist the Joint Council in the performance of its duties.

3. The Joint Committee shall prepare the meetings of the Joint Council and shall be responsible

for the correct implementation of this Agreement.

4. The Joint Committee shall be composed of representatives of each of the Parties at senior

official level or as otherwise designated by the Parties in accordance with their internal

arrangements and taking into consideration the specific issues to be addressed at any given session.

5. When the Joint Committee addresses any matter related to Part III of this Agreement it shall

be composed of representatives of each of the Parties with responsibility for trade-related matters

(hereinafter referred to as "Joint Committee in trade configuration").

6. When the Joint Committee addresses any matter related to Part II of this Agreement it shall

be composed of representatives of each of the Parties with responsibility for those matters, in

accordance with the Parties' respective internal arrangements.

& /en 15

7. The Joint Committee shall have the power to take decisions as provided for in this

Agreement or where such power has been delegated to it by the Joint Council. The Joint Committee

shall adopt decisions by agreement of the Parties. The decisions shall be binding on the Parties,

which shall take the measures necessary for the implementation of those decisions. When exercising

delegated powers, the Joint Committee shall take its decisions in accordance with the rules of

procedure of the Joint Council.

8. Without prejudice to the specific provisions in Chapter 29, any Party may refer any issue

concerning the application or interpretation of the Agreement to the Joint Committee.

9. The Joint Committee shall be co-chaired by one representative of the MERCOSUR Party

and one representative of the EU Party, taking into consideration the specific issues to be addressed

in any given session.

10. The Joint Committee shall generally meet once a year to review the implementation of this

Agreement, on a date and with an agenda agreed in advance by the Parties, alternately in Brussels

and in a signatory MERCOSUR State. Additional meetings may also be convened by mutual

agreement, at the request of either the EU Party or MERCOSUR. It may also meet via

teleconference, video-conference or through other means, as mutually agreed by the Parties.

ARTICLE 2.4

Subcommittees and other bodies

1. The Joint Committee may decide to set up subcommittees or other bodies to assist in the

exercise of its functions and to address specific tasks or subjects. It may decide to change the tasks

assigned to, or to dissolve, any subcommittees or other structure set up for these purposes.

& /en 16

2. The Joint Committee shall adopt rules of procedure which determine the composition, duties

and functioning of the subcommittees and other bodies.

3. The creation or existence of any subcommittees shall not prevent the Parties from bringing

any matter directly to the Joint Committee.

4. Except as otherwise provided for in this Agreement, subcommittees and other bodies

established by this Agreement or by the Joint Committee shall report on their activities to the Joint

Committee regularly or when requested.

5. The Subcommittees addressing trade and trade-related matters, which are established

pursuant to Article 9.9(4) shall be governed by Article 9.9 and shall report to the Joint Committee in

trade configuration.

6. A Subcommittee on International Cooperation and Development is hereby established to

promote, coordinate and supervise the implementation of cooperation activities in the areas referred

to in Part II of this Agreement, as well as the follow-up, monitoring and evaluation of those

cooperation initiatives. It shall assist the Joint Committee in the performance of its functions

regarding these matters.

ARTICLE 2.5

Joint Parliamentary Committee

1. A Joint Parliamentary Committee is hereby established to foster closer relations and ensure

regular dialogue between the European Parliament and the Parliament of MERCOSUR.

& /en 17

2. The Joint Parliamentary Committee shall consist of members of the European Parliament,

on the one hand, and of members of the Parliament of MERCOSUR on the other. It shall meet at

intervals which it shall itself determine.

3. The Joint Parliamentary Committee shall establish its own rules of procedure.

4. The Joint Parliamentary Committee shall be presided in turn by the European Parliament

and the Parliament of MERCOSUR.

5. The Joint Parliamentary Committee will be kept informed of progress made in the

implementation of this Agreement.

6. The Joint Parliamentary Committee may make recommendations to the Joint Council.

ARTICLE 2.6

Relationship with civil society

1. In order to facilitate the implementation of this Agreement, the Parties shall promote

consultations with civil society through the establishment of an appropriate consultation mechanism

and the promotion of interaction between the representatives of their civil society.

2. The Parties shall promote dialogue between the Economic and Social Committee, for the

European Union, and the Consultative Social and Economic Forum, for MERCOSUR, and

encourage their contribution to the mechanisms set out in Articles 2.7 and 2.8.

& /en 18

ARTICLE 2.7

Domestic Advisory Groups

1. The EU Party and the MERCOSUR Party shall each designate a Domestic Advisory Group,

established in accordance with each Party's internal arrangements, to advise the Party concerned on

issues covered by this Agreement. It shall be composed of a balanced representation of independent

civil society organisations including non-governmental organisations, business and employers'

organisations and trade unions active on economic, development, social, human rights,

environmental and other matters.

2. The Parties shall promote a regular dialogue with their Domestic Advisory Group and shall

consider views or recommendations submitted by their respective Domestic Advisory Group on the

implementation of this Agreement.

3. In order to promote public awareness of the Domestic Advisory Groups, the EU Party and

the MERCOSUR Party shall each make available to the public the list of organisations participating

in consultations as well as the contact point for that group.

ARTICLE 2.8

Civil Society Forum

1. The Parties shall facilitate the organisation of a Civil Society Forum to conduct a public

dialogue on the implementation of this Agreement and shall agree at the first meeting of the Joint

Committee on operational guidelines for the conduct of the Civil Society Forum.

& /en 19

2. The Parties may facilitate participation in the Civil Society Forum by virtual means.

3. The Civil Society Forum shall be open to the participation of independent civil society

organisations established in the territories of either the EU Party or the MERCOSUR Party,

including members of the Domestic Advisory Groups referred to in Article 2.7. The Parties shall

promote a balanced representation, including non-governmental organisations, business and

employers' organisations and trade unions active on economic, development, social, human rights,

environmental and other matters.

4. The representatives of the Parties participating in the Joint Council or the Joint Committee,

as appropriate, shall take part in a session of the meeting of the Civil Society Forum in order to

present information on the implementation of the Agreement and to engage in a dialogue with the

Civil Society Forum.

CHAPTER 3

GENERAL PROVISIONS

ARTICLE 3.1

Security clause

Nothing in this Agreement shall be construed:

(a) to require a Party to furnish or allow access to information the disclosure of which it considers

to be contrary to its essential security interests; or

& /en 20

(b) to prevent a Party from taking an action that it considers necessary to protect its essential

security interests:

(i) connected to the production of or traffic in arms, ammunition and implements of war

and to such traffic and transactions in other goods and materials, services and

technology undertaken, and to economic activities carried out, directly or indirectly for

the purpose of supplying a military establishment;

(ii) taken in time of war or other emergency in international relations; or

(iii) relating to fissionable and fusionable materials or the materials from which they are

derived; or

(c) to prevent a Party from taking any action in pursuance of its international obligations under

the UN Charter for the purpose of maintaining international peace and security.

ARTICLE 3.2

Other agreements

1. The 1995 Interregional Framework Cooperation Agreement shall cease to have effect and be

replaced by this Agreement, upon the entry into force of this Agreement.

2. This Agreement replaces the 1995 Interregional Framework Cooperation Agreement.

References to the 1995 Interregional Framework Cooperation Agreement in all other agreements

between the Parties shall be construed as references to this Agreement.

& /en 21

3. The Interim Trade Agreement shall cease to have effect and be replaced by this Agreement,

upon the entry into force of this Agreement. References to the Interim Trade Agreement in all other

agreements between the Parties shall be construed as referring to this Agreement.

4. Upon entry into force of this Agreement, any decisions adopted by the Trade Council

established by the Interim Trade Agreement, shall be deemed to have been adopted by the Joint

Council established by Article 2.2 of this Agreement. Any decisions adopted by the Trade

Committee established by the Interim Trade Agreement shall be deemed to have been adopted by

the Joint Committee established by Article 2.3 of this Agreement.

5. Notwithstanding paragraph 3 of this Article:

(a) temporary measures adopted pursuant to Articles 11.4 and 11.5 of the Interim Trade

Agreement, which are in place on the date of entry into force of this Agreement, shall remain

applicable until their natural expiration;

(b) bilateral safeguard measures adopted pursuant to Section C of Chapter 9 of the Interim Trade

Agreement, which are in place on the date of entry into force of this Agreement, shall remain

applicable until their natural expiration;

(c) dispute settlement procedures already initiated pursuant to Article 21.7 and 18.17 of the

Interim Trade Agreement shall, as from the date of entry into force of this Agreement, be

deemed to be a dispute under this Agreement and shall continue until their completion; and

(d) the binding outcome of any dispute settlement procedure initiated pursuant to Article 21.7

and 18.17 of the Interim Trade Agreement shall remain binding on the Parties after the date of

entry into force of this Agreement.

& /en 22

6. The Parties shall not be able to bring dispute settlement proceedings under this Agreement

on matters that have been the subject of a final panel report under Chapter 18 and arbitral award

under Chapter 21 of the Interim Trade Agreement.

7. Transition periods already completely or partially elapsed under the Interim Trade

Agreement shall be taken into account when calculating transition periods provided for in

equivalent provisions of this Agreement. Such transition periods under this Agreement shall be

calculated starting from the date of entry into force of the Interim Trade Agreement.

Procedural periods already completely or partially elapsed under the Interim Trade Agreement shall

be taken into account when calculating procedural periods provided for in equivalent provisions of

this Agreement.

8. The Parties may complement this Agreement by concluding specific agreements in any area

of cooperation falling within its scope. Such specific agreements may provide that they shall form

an integral part of the overall interregional relations as governed by this Agreement and shall be

subject to a common institutional framework.

ARTICLE 3.3

Territorial application

1. This Agreement shall apply:

(a) to the territories in which the Treaty on European Union and the Treaty on the Functioning of

the European Union are applicable, under the conditions laid down in those Treaties; and

& /en 23

(b) to the territories of the Argentine Republic, the Federative Republic of Brazil, the Republic of

Paraguay and the Oriental Republic of Uruguay.

2. References to "territory" in this Agreement include air space and territorial sea as provided

in UNCLOS.

3. References to territory in this Agreement shall be understood in this sense, save as otherwise

expressly provided.

4. As regards those provisions concerning the tariff treatment of goods, including provisions

on customs and trade facilitation, mutual administrative assistance in customs matters and rules of

origin, as well as the temporary suspension of this treatment, this Agreement shall also apply to

those areas of the customs territory of the European Union, as defined by Article 4 of Regulation

(EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down

the Union Customs Code **[1]**, not covered by point 1(a) of this Article.

**1** OJ EU L 343, 29.12.2015, p. 1.

& /en 24

PART II

POLITICAL DIALOGUE AND COOPERATION

CHAPTER 4

OBJECTIVES OF THE POLITICAL DIALOGUE AND INTERNATIONAL COOPERATION

ARTICLE 4.1

Objectives of the political dialogue

1. The Parties agree that the political dimension is an essential part of the partnership

established by this Agreement and shall strengthen and deepen the regular political dialogue

between the Parties. The Parties agree to establish a political agenda, cooperate in areas of common

interest and make efforts to coordinate their positions in order to undertake joint initiatives in the

appropriate international fora.

2. The political dialogue between the Parties shall aim to:

(a) strengthen their ties in order to contribute to peace, stability, security and prosperity and

consolidate their strategic partnership;

& /en 25

(b) promote international peace and security, preventive diplomacy, confidence-building

measures and the peaceful resolution of disputes, including through the development of joint

actions to strengthen the United Nations (hereinafter referred to as "UN") system and

multilateralism;

(c) strengthen democracy, the rule of law and the promotion and protection of human rights and

fundamental freedoms;

(d) promote human and social development, reaffirming their commitment to sustainable

development, as expressed through the adoption of the 2030 Agenda. The Parties shall

cooperate to implement and achieve the Sustainable Development Goals (hereinafter referred

to as "SDGs"), recognising that their broad and ambitious nature calls for urgent action,

follow-up and review;

(e) promote gender equality, and respect for all women and girl's rights, emphasising the gender

perspective, and address discrimination and violence based on sexual orientation, in

accordance with the internal law of each Party;

(f) contribute to disarmament and the non-proliferation of weapons of mass destruction and their

means of delivery, in full compliance with and ensuring national implementation of the

Parties' respective international obligations;

(g) enhance cooperation in the fight against racism, racial discrimination, xenophobia and related

intolerances;

(h) develop joint actions to enhance cooperation in the fight against human trafficking, the

smuggling of migrants, the illegal traffic in arms, drug trafficking and related crimes,

cybercrime and other forms of transnational organised crime;

& /en 26

(i) promote and develop joint actions to eradicate child sexual abuse, including the production

and dissemination of child abuse material and the fight against travelling sex offenders;

(j) enhance cooperation in fighting against corruption and, in preventing the use of their financial

systems for laundering proceeds of criminal activities and for the financing of terrorism, and

in identifying, recovering and returning illicit assets;

(k) act against impunity for the most serious crimes under international law that are of concern to

the international community as a whole;

(l) enhance cooperation in the prevention and suppression of acts of terrorism, in accordance

with international conventions to which Member States of the European Union and Signatory

MERCOSUR States are party, the relevant UN resolutions and the Parties' respective laws

and regulations;

(m) exchange views and improve dialogue on international tax matters, including global standards

and transparency;

(n) act in favour of their respective regional integration, considered to be one of the means to

achieve sustainable development, as well as an instrument for competitive integration in the

world economy;

(o) develop mutual understanding and promote consensus on interregional and international

issues, in particular through cooperation in multilateral fora and the development of joint

initiatives;

(p) develop joint actions to strengthen the UN system and multilateralism in order to face

effectively, efficiently and expeditiously the most important current and future challenges;

& /en 27

(q) build wide political coordination at international level to support and strengthen multilateral,

transparent and democratic multi-stakeholder processes for internet governance, with the

involvement of governments, the private sector, civil society, international organisations,

technical and academic communities, and all other relevant stakeholders, in accordance with

their respective roles, responsibilities and capabilities;

(r) discuss legal and judicial matters of mutual interest; and

(s) address other topics as agreed by the Parties.

ARTICLE 4.2

Objectives of international cooperation and development

1. The Parties, reaffirming the need to strengthen their partnership, highlight the importance of

international cooperation and development and agree that interregional cooperation and its

modalities shall have as one of its main purposes to facilitate the implementation of this Agreement.

2. The Parties shall carry out cooperation projects and joint activities through all existing and

future instruments and methodologies and available means, including triangular cooperation. Such

cooperation may include, inter alia:

(a) promoting investment and job creation through mobilising financial resources inter alia

through the leveraging of grants and loans to achieve sustainable development outcomes;

(b) supporting capacity building through training courses, workshops and seminars and the

exchange of experts, studies, joint research and good practices;

& /en 28

(c) promoting institutional know-how in both regions through cooperation activities;

(d) promoting financing for development through all instruments available to each Party and

other forms of innovative financial mechanisms;

(e) promoting access innovative technologies, as well as the enhancement of national capacities;

(f) developing specific actions to reduce poverty, fight hunger and promote social inclusion and

cohesion;

(g) consolidating existing regional cooperation networks and platforms, and

(h) promoting cooperation between the public administrations and institutions of the Parties.

3. The Parties agree to promote the mobilisation of financial resources for the implementation

of this Agreement, in close partnership with the European Investment Bank, European financial

institutions and institutions from Signatory MERCOSUR States, as well as international and

regional financial institutions.

& /en 29

ARTICLE 4.3

Resources

1. Within the aim of contributing to reaching the objectives of the cooperation established in

this Agreement, the Parties commit themselves to providing, within the limits of their capacities and

through their own channels, the appropriate resources, including financial resources, and encourage

development-related public and private financial institutions in both regions to cooperate actively

for that purpose.

2. The Parties shall encourage the European Investment Bank and other financial institutions to

continue their operations in Signatory MERCOSUR States, in accordance with their procedures and

financing criteria, according to their respective laws and regulations and without prejudice to the

powers of their competent authorities.

& /en 30

CHAPTER 5

COOPERATION ON DEMOCRATIC PRINCIPLES,

HUMAN RIGHTS, THE RULE OF LAW

AND INTERNATIONAL PEACE AND SECURITY

ARTICLE 5.1

Cooperation on democratic principles, human rights and the rule of law

1. The Parties shall cooperate on the promotion and protection of human rights, including the

ratification and implementation of international human rights instruments, and on the strengthening

of democratic principles and the rule of law.

2. Such cooperation may include:

(a) the effective implementation of the international instruments of human rights to which they

are Parties, as well as the recommendations emanating from the United Nations Human

Rights Treaty Bodies, Special Procedures of the United Nations Human Rights Council and

the Universal Periodic Review;

(b) the integration of human rights into national policies and development plans;

(c) the strengthening of the capacity to apply democratic principles and practices;

(d) the exchange of good practices on national action plans on democracy and human rights;

& /en 31

(e) awareness raising and education in human rights, democracy and the culture of peace;

(f) the strengthening of democratic and human-rights-related institutions, as well as the legal and

institutional frameworks for the promotion and protection of human rights and the rule of law;

(g) the development of joint initiatives of mutual interest in the framework of relevant human

rights-related institutions of the UN and multilateral fora;

(h) the promotion of democracy, international law, including human rights, fundamental

freedoms and the rule of law, including in multilateral fora;

(i) the collaboration and coordination, including in third countries, where appropriate, with

regard to the practical advancement of democratic principles, human rights and the rule of

law, in particular with regard to political rights and fundamental freedoms, including

enhancing transparent, credible and inclusive electoral processes in line with international

standards;

(j) the reinforcement of good governance at national, regional and local level, including the

accountability and transparency of institutions, supporting the participation of citizens and

involvement of civil society, and fighting against corruption; and

(k) the promotion of the prevention of genocide, crimes against humanity, war crimes and any

other crimes under the jurisdiction of the International Criminal Court.

& /en 32

ARTICLE 5.2

Gender equality and women, peace and security

1. The Parties shall promote gender equality and the empowerment of all women and girls.

They acknowledge the necessity of gender equality and the empowerment of women and girls as a

precondition to fully achieve inclusive development, democracy and security. The Parties shall

explore further schemes of cooperation and potential synergies between respective policies and

initiatives, in line with international standards and commitments such as the Convention on the

Elimination of All Forms of Discrimination against Women (CEDAW), the 2030 Agenda and UN

Security Council Resolution (UNSCR) 1325 on women, peace and security.

2. Such cooperation may include:

(a) fostering effective gender mainstreaming;

(b) promoting women's political participation and leadership, women's access to quality

education, women's economic empowerment and women's increased participation in the

workforce;

(c) strengthening national and regional institutions to address and handle issues related to

violence against women, including the prevention of and protection from sexual and gender

based violence, investigation and accountability mechanisms, support to victims and the

promotion of conditions of safety and security for women and girls;

& /en 33

(d) actively reinforcing women's human rights, including freedom from human rights violations

and any type of violence against women, and women's access to justice;

(e) supporting the development and implementation of national action plans on UNSCR 1325;

and

(f) enhancing cooperation with relevant bodies of the UN and other international organisations.

ARTICLE 5.3

Weapons of mass destruction

1. The Parties recognise the central role of the Treaty on the Non-Proliferation of Nuclear

Weapons, done in London on 1 July 1968, and its three equally important and reinforcing pillars:

the disarmament, non-proliferation and the peaceful use of nuclear energy.

2. The Parties consider that the proliferation of weapons of mass destruction (hereinafter

referred to as "WMDs") and their means of delivery, both to State and non-State actors, represents

one of the most serious threats to international stability and security. The Parties therefore agree to

cooperate and to contribute to countering the proliferation of WMDs and their means of delivery

through full compliance with and national implementation of their existing obligations under

international disarmament and non-proliferation treaties and agreements and other relevant

international obligations. The Parties agree that this paragraph constitutes an essential element of

this Agreement.

& /en 34

3. The Parties agree to cooperate and to contribute to countering the proliferation of WMDs

and their means of delivery by:

(a) taking steps to sign, ratify, or accede to, as appropriate, and fully implement all other relevant

international instruments; and

(b) establishing an effective system of national export controls, controlling the export as well as

transit of WMDs related to goods, including a WMD end-use control on dual-use

technologies and containing effective sanctions for breaches of export controls.

4. The Parties shall establish a regular political dialogue to accompany and consolidate these

elements.

ARTICLE 5.4

Serious crimes of international concern and the International Criminal Court

1. The Parties reaffirm that there must be no impunity for the most serious crimes of concern to

the international community, such as the crimes falling within the jurisdiction of the International

Criminal Court and that these crimes must be prosecuted by national and international means, as

appropriate, in accordance with the principle of complementarity.

& /en 35

2. The Parties, considering that an effective International Criminal Court constitutes a

significant development for international peace and justice, agree to cooperate in promoting

universal accession to the Rome Statute of the International Criminal Court, done in Rome on 17

July 1998 (hereinafter referred to as "Rome Statute"), and to this end:

(a) continue to take steps to implement the Rome Statute and its amendments, and to ratify and

implement the related instruments, such as the Agreement on the Privileges and Immunities of

the International Criminal Court, adopted in New York on 9 September 2002;

(b) share, where appropriate, experience on the adoption of national legislation aiming at the

effective implementation of the Rome Statute; and

(c) take measures to safeguard the integrity of the Rome Statute.

ARTICLE 5.5

Small arms and light weapons and other conventional weapons

1. The Parties undertake to cooperate and to ensure coordination and complementarity and to

explore possible synergies in their efforts to regulate or improve the regulation of international trade

in conventional arms and to prevent, combat and eradicate the illicit trade in arms, at global,

regional and sub-regional level.

& /en 36

2. At global level, the Parties highlight the unique framework given by the Arms Trade Treaty,

adopted in New York on 2 April 2013 (hereinafter referred to as "ATT"), in order to achieve this

cooperation and complementarity between national control systems for transfers of conventional

arms, including its provisions on cooperation and assistance. They also agree on the importance of

promoting the universalisation and full implementation of the ATT by all UN member states.

3. The Parties recognise that the illicit manufacture, transfer and circulation of small arms and

light weapons and their excessive accumulation and uncontrolled spread in many regions of the

world have a wide range of humanitarian and socio-economic consequences and pose a serious

threat to peace, reconciliation, safety, security, stability and sustainable development at individual,

local, national, regional and international level.

4. The Parties agree to fully implement their respective obligations to deal with the illicit trade

in small arms and light weapons, including their ammunition, under existing international

agreements to which they are party and UN Security Council resolutions, as well as their

commitments within the framework of other international instruments applicable in this area, such

as the UN Programme of Action to prevent, combat and eradicate the illicit trade in small arms and

light weapons in all its aspects.

5. The Parties recognise the importance of domestic control systems for the transfer of

conventional arms in line with existing international standards. The Parties agree to apply such

controls in a responsible manner, as a contribution to international and regional peace, security and

stability, and to the reduction of human suffering, as well as to the prevention of diversion of

conventional weapons.

& /en 37

ARTICLE 5.6

Cooperation in the field of counterterrorism

1. The Parties reaffirm their commitment in the fight against terrorism in all its forms and

manifestations, in accordance with international law, human rights law and international

humanitarian law, the relevant UN resolutions and their respective legislation.

2. The Parties agree to cooperate and where there is joint interest prevent, fight and criminalise

all acts of terrorism in accordance with UN instruments to which they are parties.

3. The Parties agree not to provide assistance or refuge to the authors or instigators of any type

of terrorist activity, or to any other participant therein, in accordance with Resolutions 1373 (2001)

and 1624 (2005) of the UN Security Council. They shall cooperate in particular:

(a) in the framework of the full implementation of Resolutions 1267 (1999), 1373 (2001),

1624 (2005), 1904 (2009), 2178 (2014), 2253 (2015), 2322 (2016) and 2331 (2016) of

the UN Security Council and other relevant UN resolutions and international and regional

conventions and instruments;

(b) by promoting cooperation among UN member states to effectively implement the UN Global

Counter-Terrorism strategy;

(c) by exchanging experiences and good practices in the area of protection of human rights,

humanitarian law and international law in the fight against terrorism;

& /en 38

(d) by exchanging views on means and methods used to counter terrorism, including cooperation

in technical fields, and training, and by exchanging experiences and good practices in respect

of preventing violent extremism that lead to terrorism, especially in the framework of

implementation of sections I and IV of the UN Global Counter-Terrorism Strategy in respect

of terrorism prevention; and

(e) by addressing the structural causes that are at the root of the phenomenon of terrorism and

violent extremism.

ARTICLE 5.7

Cooperation on peacebuilding and peacekeeping

1. The Parties reaffirm their commitment to cooperate in promoting international peace and

security under the _aegis_ of the UN.

2. With regard to UN peacebuilding and peacekeeping, the Parties shall establish a dialogue on

peace and security issues with a view to initiating cooperation in the field of capacity building and

exchange of best practices, among others.

& /en 39

ARTICLE 5.8

Humanitarian assistance and disaster risk management

1. The Parties reaffirm their commitment to the UN Framework in the field of disaster risk

reduction and response and agree to recognise the reduction of vulnerability and risk and the

promotion of resilience as their priorities.

2. For the purposes set out in paragraph 1, the Parties shall explore possibilities to coordinate

humanitarian assistance and disaster response activities.

ARTICLE 5.9

Cooperation in multilateral, regional and international fora and organisations

1. The Parties reaffirm their commitment to the principles of the UN Charter. The Parties share

a commitment to multilateralism and efforts to improve the effectiveness of regional and

international fora and organisations, such as the UN and its specialised organisations and agencies,

and other multilateral fora.

2. The Parties shall maintain effective consultation mechanisms on the margins of multilateral

fora. At the UN, the Parties shall establish appropriate consultation mechanisms at the General

Assembly of the UN and UN Offices as appropriate and agreed by the Parties.

& /en 40

ARTICLE 5.10

Cybersecurity and information and communication technologies

The Parties recognise the importance of the cooperation and the exchange of views in the field of

cybersecurity, regarding the use of information and communication technologies (hereinafter

referred to as "ICTs"), in the context of international peace and security, including on norms, rules

and principles of responsible behaviour of States, the application of international law to the use of

ICTs, and the development of confidence-building measures and capacity building.

ARTICLE 5.11

Cybercrime

1. The Parties recognise that cybercrime is becoming a widespread global problem requiring

multilateral, regional and national responses. The Parties shall strengthen cooperation to prevent

and combat cybercrime through the exchange of information and practical cooperation, in

compliance with their respective legal frameworks and laws, and with applicable international

instruments on cybercrime. The Parties shall endeavour to work together where appropriate in the

development of effective laws, policies and practices to prevent and combat cybercrime wherever it

occurs.

2. The Parties shall, as appropriate within their respective legal frameworks, exchange

information including in the areas of education and training of cybercrime investigators, the conduct

of cybercrime investigations and digital forensics.

& /en 41

CHAPTER 6

COOPERATION ON JUSTICE, FREEDOM AND SECURITY

ARTICLE 6.1

Migration and international protection of refugees

1. The Parties reaffirm the importance that they attach to dealing effectively with migration

flows and agree to strengthen their cooperation on migration issues on the basis of the principle of

national sovereignty, shared responsibility and related issues such as the potential economic, social

and cultural contribution of migrants to countries of origin, transit and destination.

2. The Parties shall focus in particular on:

(a) the root causes of migration;

(b) facilitation of movement of their nationals between their territories in accordance with

applicable law and respective competences;

(c) full respect for the human rights of all migrants and their families, as well as measures against

racism and xenophobia;

(d) the mainstreaming of a gender perspective on migration;

(e) family reunification, in accordance with the applicable law, including international human

rights law;

& /en 42

(f) the bi-regional cooperation for the prevention of and the fight against the smuggling of

migrants and trafficking in persons, especially children and persons in vulnerable situations,

including women at risk, and for the protection of victims, in accordance with the Convention

against Transnational Organized Crime, adopted in New York on 15 November 2000, and its

Additional Protocols on Trafficking in Persons and Smuggling of Migrants;

(g) regular exchanges of information on legislative and administrative measures applicable to

migrants and experiences on migration issues;

(h) matters arising from the implementation of the relevant international instruments on the

protection of refugees and asylum seekers;

(i) exploring opportunities for cooperation at a regional level on voluntary resettlement and other

forms of humanitarian admission of refugees, as part of reaching collective solutions to the

growing global phenomenon of large movements of refugees; and

(j) bi-regional cooperation for the prevention of irregular migration.

3. The Parties shall cooperate to ensure safe, orderly and regular migration, readmitting their

own nationals irregularly staying in the territory of the other Party and fighting against trafficking in

human beings and the smuggling of migrants. They shall also cooperate on the exchange of

information, along with the sharing of data and statistics on migration.

& /en 43

4. Each Member State of the EU and each Signatory MERCOSUR State shall readmit its own

nationals irregularly staying in the territory of the other Party at the latter's request. Appropriate

travel documents ensuring effective return shall be provided for this purpose. The Parties shall

ensure safe and dignified treatment to irregular staying migrants. The return of non-admitted

persons shall be also ensured under human, dignified and fair conditions, in accordance with the

applicable law, including remedies provided therein.

5. Upon the request of one of the Parties, Signatory MERCOSUR States individually and the

EU or any of the Member States individually shall endeavour to negotiate and conclude specific

agreements, in order to further facilitate the cooperation between competent authorities for the

identification and documentation of nationals irregularly staying in the territory of the other Party to

be readmitted. Such agreements would also address the readmission of persons who are not their

nationals but who hold a valid residence authorisation issued by one of the Parties or who have

entered the territory of one Party coming directly from the territory of the other Party.

6. The Parties shall promote the development and implementation of national legislation and

practices as regards the international protection of refugees, with a view to satisfying the provisions

of the United Nations Convention relating to the Status of Refugees, done at Geneva

on 28 July 1951, and of its Protocol of 1967, and other relevant regional and international

instruments to ensure respect for the principle of "non-refoulement". The Parties shall focus in

particular on exploring opportunities for cooperation at a regional level on voluntary resettlement

and other forms of humanitarian admission of refugees, as part of reaching collective solutions to

the growing global phenomenon of large movements of refugees.

& /en 44

ARTICLE 6.2

Legal and judicial cooperation

1. The Parties agree to develop judicial cooperation in civil matters, in particular as regards the

negotiation, ratification and implementation of multilateral conventions on civil judicial cooperation

and, in particular, the Conventions of The Hague Conference on Private International Law in the

field of international legal cooperation and litigation as well as the protection of children.

2. The Parties agree to strengthen judicial cooperation in criminal matters based on the relevant

standards of the UN, international and regional organisations such as the Council of Europe and the

Organization of American States, in particular in the area of mutual legal assistance, extradition and

transfer of prisoners.

ARTICLE 6.3

Cooperation on countering the world drug problem

1. The Parties, based on the principle of common and shared responsibility, shall cooperate to

ensure a balanced and integrated approach towards addressing all aspects of the world drug

problem, including challenges such as new psychoactive substances. In this regard, drug policies

and actions shall be aimed at reinforcing structures, reducing the supply of, trafficking in and the

demand for illicit drugs, coping with the health and social consequences of drug abuse with a view

to reducing harm, and more effective prevention of diversion of chemical precursors used for the

illicit manufacture of narcotic drugs and psychotropic substances.

& /en 45

2. The Parties shall agree on the necessary methods of cooperation to attain the objectives

referred to in paragraph 1. Actions shall be based on commonly agreed principles along the lines of,

in particular, the three UN Drug Control Conventions of 1961, 1971 and 1988 and the Outcome

Document of the UN General Assembly Special Session on the World Drugs Problem, adopted in

New York on 19 April 2016.

3. The Parties agree to support and encourage the development of policies and measures to

address the world drug problem.

ARTICLE 6.4

Cooperation on combating corruption and transnational organised crime,

on anti-money-laundering and on countering the financing of terrorism

1. In accordance with their internal laws and regulations and applicable bilateral and

international instruments, such as the UN Convention against Transnational Organized Crime,

adopted in New York on 15 December 2000, and its protocols, and the UN Convention against

corruption, adopted in New York on 31 October 2003, the Parties shall strengthen their cooperation

in the fight against transnational organised crime and corruption, including prevention and

investigation activities, the prosecution of offenders, and mutual legal assistance.

& /en 46

2. The Parties agree on the need to work towards preventing and combating in an effective way

the use of their financial institutions and designated non-financial businesses and professions for the

purpose of financing terrorism and laundering the proceeds of criminal activities, including drug

trafficking, trafficking in persons, especially children, women at risk and other persons in

vulnerable situations, arms trafficking and corruption, in accordance with the recommendations of

the Financial Action Task Force (hereinafter referred to as "FATF") and taking into account the

work of the Latin American Financial Action Group (hereinafter referred to as "GAFILAT").

3. The Parties agree to cooperate with a view to combating and preventing money laundering

and terrorist financing and ensuring effective and full implementation of the FATF

recommendations and taking into account the work of the GAFILAT. This cooperation extends to

the tracing, identification, seizure, confiscation, recovery and return of assets or funds derived from

the proceeds of crime.

4. The cooperation referred to in paragraph 3 shall allow exchanges of relevant information

within the framework of the laws and regulations of each Party and in line with international

standards to prevent and combat money laundering and the financing of terrorism, in compliance

with the recommendations of FATF and taking into account the work of the GAFILAT.

5. The Parties agree, subject to and in accordance with their respective laws and regulations

and applicable bilateral and international instruments, to undertake measures to support the

identification, tracing, freezing, seizure and confiscation of the proceeds of criminal activities.

& /en 47

ARTICLE 6.5

Personal data

1. The Parties recognise the importance of promoting and protecting the fundamental rights to

privacy and data protection, including security of personal data, as a central factor of consumer trust

in the digital economy and an essential element for further developing commercial exchanges and

law enforcement cooperation.

2. The Parties shall cooperate to ensure the effective protection of the rights referred to in

paragraph 1, including in the context of the prevention and combatting of terrorism and of other

transnational crimes. Cooperation at bilateral and multilateral level shall take into account existing

international commitments and the Parties' respective laws and regulations where applicable. It may

include capacity-building, technical assistance and the exchange of information and expertise.

ARTICLE 6.6

Consular protection

1. Each Signatory MERCOSUR State agrees that the diplomatic and consular authorities of

any represented EU Member State shall provide protection to any national of an EU Member State

which does not have a permanent representation in its territory in a position to provide consular

protection in a given case, on the same conditions as to nationals of that EU Member State.

& /en 48

2. Each EU Member State agrees that the diplomatic and consular authorities of any

represented Signatory MERCOSUR State shall provide protection to any national of a Signatory

MERCOSUR State which does not have a permanent representation in its territory in a position to

provide consular protection in a given case.

CHAPTER 7

COOPERATION ON SUSTAINABLE DEVELOPMENT

ARTICLE 7.1

Objectives and working methods

1. The Parties reaffirm their commitment to promote sustainable and inclusive economic

development, contributing to the principles set forth in the Rio Declaration on Environment and

Development adopted by the United Nations Conference on Environment and Development in 1992

(hereinafter referred to as "Rio Declaration on Environment and Development of 1992"), supported

by the Outcome Document of the United Nations Conference on Sustainable Development of 2012

incorporated in Resolution 66/288 adopted by the United Nations General Assembly

on 27 July 2012 entitled "The Future We Want" (hereinafter referred to as "the Outcome Document

of the UN Conference on Sustainable Development of 2012 entitled "The Future We Want" ") and

the 2030 Agenda. In that framework, the Parties shall cooperate to implement and achieve the

SDGs, recognising that their broad and ambitious nature calls for urgent action.

& /en 49

2. The Parties recognise the importance of dialogue and cooperation as essential for addressing

the challenges linked to achieving the SDGs and further recognise the importance of multi

stakeholder engagement, including the private sector and civil society, in international cooperation.

3. The Parties will work towards consolidating economic growth in a way that reduces

inequalities and respects the principles of sustainable development.

4. The Parties should promote sustainable consumption and production patterns and raise

awareness of the economic and social costs of environmental damage and its associated impact on

human well-being.

5. The Parties shall promote sustainable development through dialogue, the sharing of good

practices, good governance and sound financial management.

6. The Parties share a common goal of eradicating poverty and supporting inclusive economic

development and shall work together whenever possible to achieve this aim.

7. The Parties shall work together to strengthen the implementation of the 2030 Agenda and

the methodologies of follow-up, accountability to their citizens on the implementation of results

related to the monitoring of the 2030 Agenda and evaluation of cooperation actions, including

qualitative and quantitative data taking into account the impact on the ground.

8. Acknowledging gender equality and the empowerment of women and girls as essential for

sustainable development, the Parties will explore further schemes of cooperation.

& /en 50

9. The Parties shall promote structures for South – South and triangular cooperation. Such

cooperation will involve establishing joint initiatives with third countries with the aim of working

together to support the design and implementation of multilevel strategies for the 2030 Agenda, as

well as any other relevant future bi-regional and international agreements on sustainable

development.

10. The Parties understand the comprehensive nature of the SDGs. In this context, the Parties

should encourage innovative partnerships, which embrace a multi-stakeholder approach in order to

promote and implement international development initiatives. These partnerships may include the

private sector, organised civil society, philanthropic organisations and local and regional authorities.

11. The Parties recognise the importance of a comprehensive approach to social development,

which must go hand in hand with economic development and environmental sustainability. They

shall give priority to promote full employment, social inclusion and cohesion, as well as the

participation of civil society. In line with the objectives of SDG 8, they shall promote decent work

for all as provided by the International Labour Organisation (hereinafter referred to as "ILO")

Declaration on Social Justice for a Fair Globalization, adopted by the International Labour

Conference at its 97th Session in Geneva on 10 June 2008 (hereinafter referred to as "ILO

Declaration on Social Justice for a Fair Globalization").

& /en 51

ARTICLE 7.2

Implementation of EU-MERCOSUR and bilateral cooperation

1. The provisions of this Agreement shall not affect the implementation of programmes,

projects and activities under the 1995 Interregional Framework Cooperation Agreement, and shall

not affect ongoing or future bilateral cooperation developed on the basis of bilateral programming

instruments, such as indicative programmes or any other relevant instrument.

2. Cooperation shall be carried out in line with the relevant internationally agreed principles

and policies to which both Parties have adhered, and in line with the relevant legislative framework

of the EU on the one hand, and of MERCOSUR and its Signatory States, on the other hand.

ARTICLE 7.3

Facilitation arrangements

The Parties shall ensure, as appropriate, the customs and tax exemptions and visa facilities

necessary to implement the cooperation initiatives agreed under this Part of the Agreement and

under the Protocol on Cooperation.

& /en 52

ARTICLE 7.4

Cooperation on public administration

The Parties will introduce cooperation and dialogue to identify actions aimed at developing

capacities for the design, effective implementation and evaluation of public policies. In this respect,

the Parties shall cooperate in matters relating to public administration and institutions with a view to

strengthening institutional capacities, including by promoting transfer of know-how and training of

government personnel, improving management processes of public administrations as well as

facilitating the modernisation of regulatory frameworks for the effective implementation of

this Agreement.

ARTICLE 7.5

Environment

1. The aim of environmental cooperation should be to contribute to the protection,

conservation, sustainable use of natural resources and to the promotion of sustainable development

–
through coordination, integration and mutually supportive consideration of its three dimensions

–
economic, social and environmental in accordance with the principles set out in the Rio

Declaration on Environment and Development of 1992, supported by the Outcome Document of the

UN Conference on Sustainable Development of 2012 entitled "The Future We Want" and

the 2030 Agenda, and taking into account different national realities, capacities and levels of

development and respecting national policies and priorities.

& /en 53

2. Environmental cooperation should focus in particular on:

(a) exchanging of information, technical expertise, environmental practices and experiences on

programmes, projects and regulations promoting the protection, conservation, restoration, and

sustainable use of natural resources and sustainable development, in particular with respect to

applicable legislation, international commitments and goals;

(b) implementing multilateral environment agreements and the outcomes of the UN Environment

Assembly and promoting environmental goals;

(c) mainstreaming environmental consideration in all sectors of cooperation;

(d) the conservation and sustainable use of biological diversity, and the fair and equitable sharing

of the benefits arising from the utilisation of genetic resources considering any format, by

means of appropriate access to such resources, in accordance with national legislation, as well

as cooperation on water, chemicals, waste and other mutually agreed priority areas;

(e) cooperation on and encouragement of the development, dissemination and diffusion and

transfer of environmentally sound technologies to developing countries on favourable terms,

including on concessional and preferential terms, as mutually agreed;

(f) increasing the availability in developing countries of the means of implementation towards

the full achievement of national sustainable development strategies, recognising the urgency

that dealing with their broad and ambitious nature requires and facilitating participatory

stakeholder involvement as appropriate. Under this Agreement, environmental cooperation

should also promote the development of environmentally sound infrastructure.

& /en 54

ARTICLE 7.6

Sustainable urban development

1. The Parties recognise the importance of policies to promote sustainable urban development

and of the need to contribute to the effective implementation of the New Urban Agenda adopted by

the UN Conference on Housing and Sustainable Urban Development (HABITAT III) and the

aspects of the 2030 Agenda relevant to sustainable urban development.

2. The Parties shall promote cooperation and partnership involving all the key actors relevant

to policy and practice in the field of sustainable urban development, in particular, on ways to

address urban challenges in an integrated and comprehensive manner.

3. The Parties shall promote knowledge sharing and the exchange of experiences on, inter alia,

disaster risk reduction and management policies aimed at strengthening the resilience of cities and

human settlements. The Parties shall do so, inter alia, through the development of quality

infrastructure and spatial planning and implementation of urban development plans. These plans

should consider key topics such as the effective use of renewable energy sources, urban inclusion,

taking into account the different levels of urbanisation within the global south, and financing

mechanisms for urban development projects at the local, national and regional level.

4. To this end, the Parties shall commit to expanding, wherever possible, concrete

opportunities for decentralised, city-to-city cooperation at regional and international level, with a

view to improving urban governance and capacity building through exchanges of experience and

practice, as well as mutual learning, on sustainable solutions to urban challenges.

& /en 55

ARTICLE 7.7

Climate change

1. The Parties recognise that the global threat of climate change calls for the widest possible

cooperation of all countries to reduce global greenhouse gas emissions and to adapt to the adverse

effects of climate change in a manner that does not threaten food production, with developed

countries continuing to take the lead. The Parties reiterate their commitment to the implementation

of the Paris Agreement adopted under the United Nations Framework Convention on Climate

Change, done at New York on 9 May 1992, (hereinafter referred to as "UNFCCC"), reflecting

equity and the principle of common but differentiated responsibilities and respective capabilities, in

light of different national circumstances.

2. The Parties shall cooperate, as appropriate, on trade-related climate change issues

bilaterally, regionally and in relevant international fora. In this context, recognizing the role of trade

in contributing to the response to the urgent threat of climate change, each Party shall remain a

party, in good faith, of the UNFCCC and its Paris Agreement **[1]** .

3. The Parties agree that the second sentence of paragraph 2 constitutes an essential element of

this Agreement.

**1** The international instruments herein referred to do not include amendments thereto or their
successor agreements, nor decisions, interpretations or any acts adopted by the bodies
governing such instruments, unless the Parties agree otherwise.

& /en 56

4. Nothing in this Article prejudices to the rights of a Party to have recourse to dispute

settlement procedures available under any other international agreement to which the Parties are

party, including the WTO Agreement.

5. Within the scope of their respective competences, and based on the UNFCCC, and the Paris

Agreement, the Parties should enhance cooperation and policy dialogue to drive the transformation

to low greenhouse-gas (hereinafter referred to as "GHG") emissions development, in accordance

with their responsibilities and capabilities, and exchange information and experiences on, inter alia:

(a) combating climate change, guided by equity and scientific evidence, in particular through the

implementation of their respective nationally determined contributions and further

collaboration on mitigation and adaptation action for the effective implementation of the Paris

Agreement;

(b) enhancing public and private partnerships which could effectively support action to combat

climate change and adapt to its adverse effects;

(c) promoting collaborative action on technology research, development, diffusion, deployment

and transfer in order to improve resilience to climate change and to reduce GHG emissions,

including through business-oriented dialogues;

(d) monitoring, reporting and verifying GHG emissions and developing and implementing

mitigation and adaptation programmes;

(e) delivering on the Paris Agreement implementation and putting in place conditions to foster

low GHG development, increasing the ability to adapt to the adverse impacts of climate

change and fostering climate resilience in a manner that does not threaten food production, in

accordance with Article 2 of the Paris Agreement;

& /en 57

(f) ensuring swift development of the Paris Agreement transparency framework for action and

support provisions, including policy dialogue and cooperation in mutually agreed priority

areas;

(g) promoting domestic climate policies and programmes in the framework of

the Paris Agreement related to mitigation and adaptation, including in deforestation and forest

degradation and restoration, as well as means to promote renewable energy, energy efficiency,

sustainable transport and sustainable and climate-resilient infrastructure development; and

(h) enhancing other areas of bilateral dialogue on climate mitigation and adaptation policy or any

other areas of mutual interest that may arise including in other related multilateral fora such as

the International Civil Aviation Organization, the International Maritime Organization and the

Montreal Protocol, concluded at Montreal on 16 September 1987, and its Kigali Amendment,

when applicable.

6. To these ends, the Parties agree to improve cooperation and exchange information and

experiences in this field, and to continue their existing obligations under the UNFCCC and the Paris

Agreement. To this effect, developed countries will provide financial resources for mitigation and

adaptation and mobilise climate finance from a wide variety of sources, instruments and channels,

taking into account the needs and priorities of developing country parties, as well as other means of

implementation for the achievement of the objectives set out in the Paris Agreement.

& /en 58

ARTICLE 7.8

Oceans and seas

1. The Parties recognise the importance of the conservation and sustainable use of marine

resources, including the sustainable and responsible management of fisheries, aquaculture and other

maritime activities and their contribution to providing environmental, economic and social

opportunities for present and future generations, in the context of the sustainable use and

conservation of the oceans, seas and marine resources with the long-term objective of improving the

state of the oceans, including by strengthening the framework of international institutions and fora,

where appropriate.

2. In a manner consistent with their obligations under international law, in particular

UNCLOS, the Parties undertake to:

–
(a) cooperate to achieve SDG 14 "Conserve and sustainably use the oceans, seas and marine

resources" – of the 2030 Agenda;

(b) promote better cooperation and consultation, as appropriate, within and between competent

international organisations, instruments and bodies, where applicable;

(c) adopt effective monitoring, control and surveillance measures to ensure the effective

implementation of fisheries conservation measures;

(d) cooperate at the UN towards the development of an international legally binding instrument

under UNCLOS on the conservation and sustainable use of marine biological diversity of

areas beyond national jurisdiction; and

& /en 59

(e) cooperate where appropriate in relevant sub-regional, regional and multilateral bodies in

which the Parties are members, observers or cooperating non-contracting parties, towards

achieving SDG 14 and other related SDGs.

3. The Parties agree to strengthen dialogue and cooperation with regard to:

(a) supporting sustainable fisheries production, fish-farming sectors and in particular the

preservation of fishery resources, including possible interregional cooperation on several

areas, depending on the interest of the coastal State, such as scientific, technological,

industrial, economic and commercial cooperation, as well as institutional building and

training;

(b) supporting the development of an environmentally responsible and economically competitive

aquaculture industry;

(c) supporting marine scientific research and the development of research and technological

capacity, as well as promoting science-based decisions;

(d) exchanging best practices on the sustainable development of maritime economic activities of

interest to the Parties such as ocean energy, shipping, coastal and marine tourism or marine

biotechnology;

(e) combatting illegal, unreported and unregulated (hereinafter referred to as IUU) fishing,

including, where appropriate, the exchange of information on IUU activities and the support

for the building-up of the technical and administrative capacity to deal with IUU fishing;

& /en 60

(f) developing area-based conservation measures and management tools, including marine

protected areas, consistent with the national and international law and based on the best

available scientific information to protect and restore coastal and marine areas and resources;

(g) reducing pressure on the oceans through, inter alia, the fight against marine litter and

pollution, including from land-based sources and maritime human activities;

(h) promoting marine spatial planning and integrated coastal zone management; and

(i) addressing climate-related issues such as adaption and mitigation of GHG emissions, sea

level rise, ocean and coastal acidification and air pollution.

ARTICLE 7.9

Cooperation on energy

1. The Parties shall aim to facilitate the exchange of ideas, experiences and best practices on

how to improve access to secure, sustainable and affordable energy, including through the fostering

of new investments and the transfer of technology between public and private economic operators

of the Parties, especially with regard to electricity, hydrocarbon, renewable energy, including

sustainable production and use, biofuels and the efficient use of energy.

& /en 61

2. Cooperation under this Article, based on the principle of the sovereign right of States to

manage their own natural resources, with a view to ensuring access to affordable, reliable,

sustainable and modern energy for all, shall take the form of, inter alia:

(a) cooperation between institutions dealing with policy, planning and modelling issues in the

energy sector;

(b) the exchange of scientific, technical and other energy research results, experiences,

publications, information and data, including the development of joint databanks shared by

the Parties' operators, in accordance with the laws and regulations of each Party;

(c) the promotion of joint conferences and technical training, including at post-graduate level;

(d) technology transfers, especially those related to renewable energy sources;

(e) the promotion of feasibility studies and the implementation of joint projects in the energy

sector between public and private economic operators and research institutions of the Parties;

(f) the participation of economic operators from the two regions in technology, development and

infrastructure joint projects, including networks with other countries; and

(g) the rationalisation and phasing-out of inefficient fossil-fuel subsidies that encourage wasteful

consumption, taking fully into account the specific needs and conditions of developing

countries and minimising the possible adverse impacts on their development in a manner that

protects the poor and the affected communities.

& /en 62

ARTICLE 7.10

Cooperation on raw materials

The Parties shall cooperate in the area of raw materials with a view to, inter alia:

(a) promoting efficient, flexible, competitive and transparent international markets;

(b) fostering exchange of market information in the area of raw materials;

(d) promoting research, development and innovation in the area of raw materials;

(e) fostering exchange of information and best practices on domestic policy developments; and

(f) promoting standards of safety and environmental protection for offshore mining operations,

by increasing transparency, sharing information, including on industry safety and

environmental performance.

& /en 63

CHAPTER 8

SOCIAL, ECONOMIC AND CULTURAL PARTNERSHIP

ARTICLE 8.1

Objectives

1. In the framework of their cooperation, the Parties recognise that all peoples have the right to

pursue their economic, social and cultural development. The Parties, acknowledging that social

development should progress in parallel with economic development, agree to cooperate in

enhancing social inclusion and cohesion through the reduction of poverty, injustice and inequality.

2. The main objectives of economic cooperation are to contribute to the expansion,

diversification and deepening of economic and commercial ties between the Parties, strengthening

the productive sector, with special attention to SMEs, the creation of new opportunities and an

increase in international competitiveness and innovation, and to reinforce the process of regional

economic integration.

3. Economic cooperation should be strengthened as a way of contributing to the easing of the

economic implications that might arise from structural changes resulting from this Agreement.

4. Any measure that could contribute to the further development of regional integration or the

reinforcement of the interregional relations in social, economic and cultural areas between the

Parties should be encouraged.

& /en 64

ARTICLE 8.2

Corporate social responsibility

1. The Parties shall promote corporate social responsibility in accordance with international

standards, such as the OECD Guidelines for Multinational Enterprises and Due Diligence Guidance.

2. The Parties support the dissemination and implementation, on a voluntary basis, of the UN

Guiding Principles on Business and Human Rights, emphasising the importance of a comprehensive

discussion with all relevant stakeholders.

3. The Parties shall promote the voluntary incorporation by companies in their internal policies

of principles of corporate social responsibility or responsible business conduct, including by

encouraging the uptake of relevant practices, consistent with the international instruments referred

to in this Article.

ARTICLE 8.3

Industrial cooperation, business opportunities

and micro, small and medium-sized enterprises and entrepreneurs

1. The Parties recognise the importance of promoting SMEs and strengthening industry to

foster inclusive and sustainable economic growth across the regions, promote higher levels of social

cohesion, and close territorial gaps, thereby improving equity in lagging areas. The Parties

recognise that the promotion of SMEs' competitiveness contributes positively to a strengthened

social fabric, through job creation and poverty reduction, as well as reducing other economic

implications that might arise from structural changes resulting from this Agreement.

& /en 65

2. The Parties shall support women's economic empowerment through entrepreneurship and

business creation.

3. The Parties shall promote industrial cooperation and strengthen cooperation on SMEs, with

a view to enhancing productivity and improving competitiveness in order to boost trade and

investment between the Parties, while balancing the opportunities provided by this Agreement to

both Parties.

4. The Parties shall promote an attractive and stable climate for greater mutually beneficial

business opportunities, including for SMEs and undertake to strengthen cooperation with the

purpose of contributing to the expansion, diversification and deepening of economic and

commercial ties between the Parties.

5. The Parties agree to promote the development of SMEs, embracing both rural and urban

firms, and encourage their introduction into international markets.

6. The implementation of this Article may include the following actions, which cover all kinds

of businesses, including SMEs:

(a) supporting regular contacts between the Parties' business sectors through business-to-business

and cluster-to-cluster events or missions, trade fairs, seminars and roundtables with a view to

promoting the identification and dissemination of information of business opportunities for

investment, industrial and technological cooperation in areas of mutual interest as well as

promoting information networks and cooperation between economic operators, especially

SMEs and clusters;

& /en 66

(b) exchanging best practices that support industrial development, innovation processes and

industrial policies including the strengthening of the regional industrial policies to enhance

competitiveness in industrial sectors of mutual interest;

(c) promoting industrial cooperation projects, including technology development and innovation,

in sectors of mutual interest;

(d) promoting reciprocal and joint investments and encouraging joint ventures and clusters and

the establishment of associative processes in strategic sectors;

(e) developing mechanisms to support private-sector development, facilitating access to

innovative finance in accordance with the laws and regulations of each Party and industrial

cooperation to boost productivity, innovation and competitiveness, including providing up-to

date information about available financing instruments for SMEs;

(f) supporting enterprises to adapt to the current trend of automation and data exchange in

manufacturing technologies;

(g) promoting joint projects among technology-, industrial- and application-oriented research

centres from the EU and MERCOSUR; and

(h) strengthening bi-regional and global value and supply chains, including the development of

suppliers for the industry.

& /en 67

7. In addition to the cooperation referred to in paragraph 4, the Parties agree that cooperation

with regard to SMEs may involve, inter alia:

(a) facilitating the exchange of best practices on public policies and programmes, regulatory

frameworks, experiences, relevant information and know-how to promote and support

entrepreneurship and SMEs' creation, development and innovation;

(b) promoting SMEs' participation in fairs, commercial missions and other mechanisms at local

and international level;

(c) exchanging best practices that support SMEs' access to government procurement markets;

(d) building on existing successful partnerships and developing new strategic partnerships and

contacts between economic operators and business networks through existing or new EU or

MERCOSUR horizontal programmes dedicated to SMEs;

(e) supporting internationalisation of SMEs, including cooperation for the development of

specialised websites;

(f) promoting SMEs' participation in joint programmes and pilot projects, in particular in sectors

such as digital economy; and

(g) providing support and expertise on business development services, including quality

management systems, and promoting e-commerce to strengthen SMEs.

& /en 68

ARTICLE 8.4

Tax matters

The Parties agree to cooperate bi-regionally in tax matters and commit to implement the global

standards on transparency and exchange of information, as well as the minimum standards against

base erosion and profit shifting (BEPS).

ARTICLE 8.5

Macroeconomic dialogue

The Parties shall promote the exchange of information on their respective macroeconomic trends

and policies as well as the sharing of their experiences with coordination of macroeconomic

policies. To this end, the Parties will aim to deepen the dialogue among their authorities on

macroeconomic matters. Cooperation in this area may include the organisation of seminars and

conferences.

& /en 69

ARTICLE 8.6

Cooperation on consumer rights

The Parties recognise the importance of ensuring a high level of consumer protection and, to that

end, shall endeavour to cooperate in the field of consumer policy. The Parties agree that cooperation

in this field may involve, to the extent possible:

(a) exchanging information on their respective consumer protection frameworks, including on

consumer laws, consumer product safety, consumer redress and the enforcement of consumer

legislation;

(b) encouraging the development of independent consumer associations and contacts between

consumer representatives; and

(c) exchanging information and promoting joint activities between both Parties' consumer bodies

upon mutual agreement.

& /en 70

ARTICLE 8.7

Cooperation in statistics

The Parties shall cooperate in the area of statistics with a view to ensuring comparability of

statistical data among Signatory MERCOSUR States and between MERCOSUR and the European

Union. The activities could be developed in the form of, inter alia:

(a) support for the strengthening of a statistical system, established on the basis of administrative

structures and legal bases which would be able to meet the necessary statistical information

requirements;

(b) support for the implementation of statistical good practices based on internationally

recognised standards;

(c) the development of comparable statistical information, mainly focused on the fields of trade

in goods and services and foreign direct investment, as well as the development of

comparable macro-economic indicators; and

(d) exchange of good practices and experiences through, inter alia, training, workshops and

study visits.

& /en 71

ARTICLE 8.8

Research and innovation

1. The Parties shall cooperate in the areas of scientific research, technological development

and innovation on the basis of common interest and mutual benefit and in accordance with their

respective legislation. Such cooperation shall aim to promote sustainable development, tackle

global challenges, achieve scientific excellence, improve regional competitiveness and strengthen

the relations between the Parties, taking into account their research and innovation capacities and

specific priorities. The Parties shall foster policy dialogue at regional level and use their different

instruments, including agreements for science, technology and innovation (hereinafter referred to as

"STI") cooperation, in complementary ways.

2. In order to improve the conditions for cooperation, the Parties shall also seek to:

(a) increase the mobility of researchers, scientists, experts, students and entrepreneurs as well as

the movement of scientific equipment across borders;

(b) facilitate reciprocal access to each other's STI programmes, research infrastructures and

facilities, publication and scientific data;

(c) increase cooperation in pre-normative research and standardisation; and

(d) promote intellectual property rights in research and innovation projects.

& /en 72

3. The Parties shall promote, inter alia, the following activities to be undertaken by

government organisations, public and private research centres, higher-education institutions,

innovation agencies and networks, as well as other stakeholders, including SMEs:

(a) joint initiatives to raise awareness of STI and capacity-building programmes and opportunities

for participating in each other's programmes;

(b) joint meetings and workshops aiming at exchanging information and best practices and

identifying areas for joint research;

(c) joint research actions in areas of common interest; and

(d) mutually recognised assessment and evaluation of scientific cooperation and dissemination of

the corresponding results.

ARTICLE 8.9

Cooperation on competition matters

1. The Parties shall engage in capacity-building activities in the area of competition policy,

subject to the availability of funding for such activities under the Parties' cooperation instruments

and programmes.

& /en 73

2. Technical assistance shall focus on institutional capacity-building and training of human

resources of the competition authorities, to support them in the establishment of their respective

competition regimes and effective enforcement. The aim shall be to strengthen and effectively

enforce competition law in the areas of anti-competitive practices and concentrations between

undertakings, including competition advocacy.

ARTICLE 8.10

Cooperation on digital economy

1. Cooperation activities in this area shall aim in particular to promote:

(a) exchanges of ideas, experiences and practices on information and communication technology

(hereinafter referred to as "ICT") policies with a view to building an inclusive information

society, in order to bridge the digital divide by exchanging policy principles, information,

experiences and good practices to strengthen our cooperation both in shaping digital policies

and regulatory frameworks, opening up markets and discuss research cooperation;

(b) the use of ICTs as tools to promote social, cultural and economic development, social

inclusion and cultural diversity, emphasising the entrepreneurial spirit and participatory

collaborative work;

(c) cooperation on regulatory aspects of telecommunications and audio-visual policies, including

e-commerce and exchanges of information on standards, conformity assessment and type

approval, involving civil society and the private sector in the process where appropriate;

(d) the development of e-commerce as a means to contribute to economic growth;

& /en 74

(e) the efficient management of spectrum, in order to maximise its availability and optimise its

allocation and use;

(f) policies and joint actions for the dissemination, use and transfer of new ICTs, including,

where appropriate, with the participation of civil society and private sector in the process;

(g) research and innovation collaboration on ICTs within the applicable research and innovation

framework;

(h) the development of digital skills at all ages in formal and informal learning settings and

identification of training needs for digital economy, including ICT professionals;

(i) the joint formulation of actions to promote jobs and investment in SMEs and for the self

employed, as well as to meet the particular needs of vulnerable social groups, using the

opportunities offered by ICTs;

(j) cooperation in the area of e-government and trust services such as electronic signature and

eID, with a focus on exchanging policy principles, information and good practices on the use

of ICT to modernise public administration, promote high-quality public services and improve

organisational efficiency and the transparent management of public resources; and

(k) wide political coordination at international level to ensure that the global internet governance

continues to support the continuation and development of a highly robust, dynamic and

geographically diverse Internet regime, building on the WSIS+10 outcome document

"Implementing World Summit on the Information Society outcomes: a 10-year review".

& /en 75

2. The Parties consider that the global management of the internet should be based on a

transparent and democratic multi-stakeholder model, with the full involvement of, inter alia,

governments, the private sector, civil society, academia, the scientific and technological community

and international organisations, according to their respective roles and responsibilities. It should

ensure the equitable management of resources and the free flow of information, facilitate access for

all and ensure the resilient, stable and secure functioning of the internet, taking into account

multilingualism.

3. The Parties reaffirm their commitment to working together towards a people-centred,

inclusive and development-oriented information society and their agreement to continue to

coordinate positions for the World Summit on the Information Society (WSIS) follow-up

mechanisms, as well as in the other fora or organisations related to internet governance.

4. The Parties stress that every effort should be made in internet governance fora to mobilise

and ensure the meaningful and effective participation of all countries, in particular developing

countries, including all stakeholders, within their own roles, such as governments, the private

sector, civil society, academia, the scientific and technological community and international

organisations.

& /en 76

ARTICLE 8.11

Civil space activities

Considering the positive impact that space activities can have on economic and social development

and industrial competitiveness, the Parties agree to promote cooperation on matters of common

interest in the area of civil space activities according to the observance and fulfilment of the

international conventions and their respective legislation and in particular in the following areas:

(a) Earth observation and Earth science, including cooperation in multilateral fora and in

particular, the intergovernmental Group on Earth Observations and the Committee on Earth

Observation Satellites; with a view to addressing societal challenges and to facilitate business

and innovation partnerships on Earth observation in the framework of Copernicus by

identifying areas of common interest;

(b) satellite communications; and

(c) other peaceful uses of outer space, including space science, space exploration and space

sustainability.

ARTICLE 8.12

Transport

1. The Parties agree to cooperate in relevant areas of transport policy, including integrated

transport policy, with a view to developing and supporting an efficient, sustainable, safe and secure

and environmentally friendly transport system for both passengers and goods.

& /en 77

2. Cooperation between the Parties shall aim to promote, inter alia:

(a) dialogue and exchange of information on their respective transport policies, standards and

good practices and other subjects of mutual interest;

(b) expert dialogue and cooperation within international transport fora;

(c) interconnection and interoperability of networks;

(d) a multimodal transport system approach;

(e) environmentally friendly, safe and secure transport systems;

(f) low carbon and carbon-free transport solutions, research and innovation, and smart and digital

solutions;

(g) sustainable transport solutions, including in relation to urban mobility; and

(h) the facilitation and increased efficiency of cargo movements in all transport modes through

digitalisation, the simplification of reporting requirements and the optimisation of transport

operations.

& /en 78

ARTICLE 8.13

Cooperation on tourism

1. Cooperation between the Parties shall primarily aim to improve the exchange of information

and establish best practices in order to ensure the balanced and sustainable development of tourism

and to support the creation of jobs, economic development and the improvement of quality of life.

2. For the purposes of paragraph 1, the Parties shall focus on, inter alia:

(a) supporting the creation and consolidation of tourism products and services, as well as tourism

promotion channels;

(b) safeguarding and maximising the potential of natural and cultural heritage;

(c) respecting the integrity and interests of local communities;

(d) improving training and education in tourism services, including in the hotel industry; and

(e) promoting information exchange and cooperation for creative industries and innovation in the

tourism sector.

& /en 79

ARTICLE 8.14

Cooperation on social development

1. The Parties, acknowledging that social development goes hand in hand with economic

development, agree to give priority to enhancing social cohesion through poverty eradication,

inequality reduction and the promotion of social inclusion, in particular with a view to the

fulfilment of the 2030 Agenda and its SDGs.

2. The Parties agree to enhance cooperation in the field of social affairs with the aim of

contributing to sustainable and inclusive economic growth and development and to promote

cooperation and exchanges of information with regard to, inter alia:

(a) the promotion of social rights;

(b) the development of innovative and sustainable projects involving vulnerable social groups,

such as low-income families, people of African and indigenous descent and other minorities

as well as persons with disabilities, including through labour market integration;

(c) the promotion of gender equality and the full empowerment of women in all spheres;

(d) promoting the protection of mothers and children as well as accessible and inclusive childcare

facilities;

(e) the promotion of specific programmes for youths, especially for those in vulnerable social

sectors; and

(f) improving working and living conditions in densely populated areas in less-favoured regions.

& /en 80

ARTICLE 8.15

Cooperation on labour and employment

1. In line with the internationally agreed objective of promoting fair globalisation and

considering the aims of SDG 8, the Parties shall promote full employment, decent work for all,

and the respect for the fundamental principles and rights at work identified by the ILO Conventions

(the elimination of discrimination, abolition of all forms of forced labour, sustained eradication

of child labour, and freedom of association and collective bargaining) in accordance with

the 2008 ILO Declaration on Social Justice for a Fair Globalisation and other international

commitments.

2. The Parties agree to enhance cooperation in the area of employment and to promote

cooperation and exchanges of information, in particular with regard to:

(a) the promotion of decent work for all, social welfare and employment security and respect for

the principles concerning the fundamental rights at work, as per the ILO Declaration on

Fundamental Principles and Rights at Work of 1998, and of internationally recognised labour

standards and of other relevant ILO standards as well as sustained and continued efforts

towards ratifying other ILO instruments not yet ratified;

(b) the development and modernisation of labour relations, working conditions, and health and

safety at work, and the promotion of programmes in the field of labour inspection,

professional education, training and employment promotion;

(c) the development and modernisation of working relations and processes, with emphasis on the

promotion of social dialogue;

& /en 81

(d) the promotion of matching skills development and labour market needs;

(e) giving priority to education and training programmes aimed at vulnerable social groups, in

respect of employment and work retraining;

(f) the creation of employment in SMEs;

(g) the development and modernisation of social protection systems and programmes;

(h) the promotion of non-discrimination between women and men, and the mainstreaming of a

gender perspective in the development of labour policy; and

(i) the coordination, in the relevant international fora, to achieve international commitments.

ARTICLE 8.16

Cooperation on education, training, youth and sport

1. The Parties agree to cooperate on formal and non-formal education, including vocational

education and training with a lifelong learning perspective. Within these fields, special attention

shall be paid to promoting inclusive and quality education and training for women and vulnerable

social groups.

2. In order to build capacities and expertise, the Parties shall promote mobility and cooperation

of their relevant stakeholders in higher education and research, and foster links between

universities, research and businesses.

& /en 82

3. The Parties shall promote people-to-people contact and mutual understanding through

cooperation in the field of education, youth and sport, including financial support for the mobility of

students, PhD candidates, academic and administrative staff from higher-education institutions and

researchers, and capacity-building actions.

ARTICLE 8.17

Cultural, audio visual and media cooperation

1. The Parties shall undertake to promote cooperation in the field of culture, including cultural

heritage, with due respect for their diversity. In conformity with the Parties' respective laws and

regulations, such cooperation shall aim to enhance mutual understanding and intercultural dialogue

and foster balanced cultural exchanges and contact with relevant actors.

2. The Parties agree to cooperate in relevant international fora, such as the UN Educational,

Scientific and Cultural Organisation (hereinafter referred to as UNESCO), in order to pursue

common objectives and to foster cultural diversity, in particular through the implementation of the

UNESCO Convention on the Protection and Promotion of Diversity of Cultural Expressions.

3. The Parties shall encourage exchanges of information and experiences and shall support and

facilitate cooperation and dialogue between their relevant institutions and operators in the areas of

culture, audio-visual and media.

& /en 83

ARTICLE 8.18

Regional integration

1. The Parties agree to promote the exchange of experience between both regions, with a view

to reinforcing their respective integration processes.

2. The Parties agree in particular to promote closer cooperation on integration issues between

the institutions of the Parties, as well as the sharing of expertise through meetings between staff of

the European Union and MERCOSUR institutions, regular exchanges of information, studies, joint

projects and training.

3. In order to encourage cooperation on regional and local development, priority shall be given

to:

(a) the exchange of information, and the sharing of knowledge and experiences on, inter alia,

methodologies for the formulation of regional and local development policies, on multi-level

governance and on participative governance;

(b) the implementation of regional and local development policies, particularly concerning

disadvantaged regions and areas, especially border areas;

(c) the encouragement of the development of regional infrastructure and interconnectivity.

4. Cooperation on regional and local development may include:

(a) the organisation of seminars and conferences;

& /en 84

(b) training and technical assistance in the design and implementation of regional development

projects;

(c) the preparation of studies on subjects of common interest related to integration; and

(d) joint action between institutes and centres for education and training in the field of

integration.

ARTICLE 8.19

Increasing participation of Signatory MERCOSUR States

in exports of services to the European Union

Subject to the provisions of Chapter 4, the Parties agree to cooperate, including by providing

support for technical assistance, training and capacity building, with regard to, inter alia:

(a) improving the ability of service suppliers of Signatory MERCOSUR States to gather

information on and to meet regulations and standards of the EU Party at EU, national and

subnational level;

(b) improving the export capacity of service suppliers of Signatory MERCOSUR States, with

particular attention to the needs of SMEs; and

(c) establishing mechanisms for promoting investment and joint ventures between service

suppliers of the EU Party and Signatory MERCOSUR States.

& /en 85

PART III

TRADE AND TRADE RELATED MATTERS

CHAPTER 9

TRADE SPECIFIC INITIAL AND INSTITUTIONAL PROVISIONS

SECTION A

TRADE SPECIFIC INITIAL PROVISIONS

ARTICLE 9.1

Establishment of a free trade area and relation to the WTO Agreement

1. The Parties to this Agreement hereby establish a free trade area, in conformity with

Article XXIV of the GATT 1994 and Article V of the GATS.

2. The Parties affirm their rights and obligations with respect to each other under

the WTO Agreement.

3. Nothing in this Part of this Agreement shall be construed as requiring a Party to act in a

manner inconsistent with its obligations under the WTO Agreement.

& /en 86

ARTICLE 9.2

Objectives

The provisions of this Part of this Agreement aim at:

(a) a modern and mutually advantageous trade agreement which creates a predictable framework

to boost trade and economic activity, while promoting and protecting our shared values and

perspectives on the role of government in society, and retaining the right of the Parties to

regulate at all levels of government to achieve public policy objectives;

(b) the development of international trade and of trade between the Parties in a way as to

contribute to sustainable development in its economic, social and environmental dimensions,

consistent with, and supportive of, their respective international obligations, in these fields;

(c) the promotion of a more sustainable, equitable and inclusive economy so as to raise standards

of living, reduce poverty and create new employment opportunities;

(d) the consolidation, increase and diversification of trade in agricultural and non-agricultural

goods between the Parties, through the reduction or the elimination of tariff and non-tariff

barriers to trade and the further integration in the global value chains;

(e) the facilitation of trade in goods through, in particular, the application of the agreed

provisions regarding customs and trade facilitation, standards, technical regulations and

conformity assessment procedures as well as sanitary and phytosanitary measures;

& /en 87

(f) the liberalisation and facilitation of trade in services, and the development of an environment

conducive to an increase in investment flows, competitiveness, and economic growth and, in

particular, to the improvement of conditions of establishment of businesses between

the Parties;

(g) the free movement of capital relating to direct investment and of current payments in

accordance with Chapter 18;

(h) the effective, transparent and competitive opening of government procurement markets of

the Parties;

(i) the promotion of innovation and creativity by ensuring an adequate and effective level of

protection and of enforcement of intellectual property rights, in accordance with international

rules in force between the Parties, so as to ensure the balance between the rights of the right

holders and the public interest;

(j) the conduct of economic activities, in particular those regarding the relations between the

Parties, in conformity with the principle of free and undistorted competition;

(k) the establishment of a framework for the participation of civil society, including employers,

unions, labour and business organisations and environmental groups to support the effective

implementation of this Part of this Agreement;

(l) the establishment of an expeditious and effective dispute settlement mechanism; and

& /en 88

(m) a transparent and predictable regulatory environment and efficient procedures for economic

operators, especially SMEs, while preserving the ability of the Parties to adopt and apply their

own laws and regulations that regulate economic activity in the public interest, and to achieve

legitimate public policy objectives such as the protection and promotion of public health,

social services, public education, safety, the environment, public morals, social or consumer

protection, privacy and data protection and the promotion and protection of cultural diversity.

ARTICLE 9.3

General definitions

Unless otherwise specified, for the purposes of this Part of this Agreement:

(a) "agricultural good" means a product listed in Annex 1 to the Agreement on Agriculture;

(b) "customs duty" means any duty or charge of any kind imposed on or in connection with the

importation of a good, including any form of surtax or surcharge imposed on or in connection

with such importation **[1]**, but does not include any:

(i) internal taxes or other internal charges imposed consistently with Article III of

GATT 1994;

**1** Among other measures of equivalent effect, this includes _ad valorem_ import duties,
agricultural components, additional duties on sugar content, additional duties on flour content,
specific duties, mixed duties, seasonal duties and additional duties from entry price systems.

& /en 89

(ii) antidumping or countervailing duties applied in accordance with Articles VI and XVI of

GATT 1994 and the WTO Agreement on the Implementation of Article VI of

GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures in

conformity with Chapter 16;

(iii) measures applied in accordance with Article XIX of GATT 1994 and with

the WTO Safeguards Agreement, or other safeguard measures applied pursuant to

Chapter 16;

(iv) measures authorised by the WTO Dispute Settlement Body or under Chapter 29;

(v) fee or other charge, imposed consistently with Article VIII of GATT 1994; or

(vi) measures adopted to safeguard a Party's external financial position and its balance of

payments, in conformity with Article XII of GATT 1994 and the Understanding on

Balance of Payments Provisions of GATT 1994.

(c) "CPC" means the Provisional Central Product Classification (Statistical Papers Series M

No. 77, Department of International Economic and Social Affairs, Statistical Office of the

United Nations, New York, 1991);

(d) "days" means calendar days, including weekends and holidays;

(e) "existing" means in effect on the date of entry into force of this Agreement;

(f) "good of a Party" means a domestic good as that is understood in the GATT 1994, and

includes originating goods of that Party;

& /en 90

(g) "Harmonized System" or "HS" means the Harmonized Commodity Description and Coding

System, including its General Rules of Interpretation, Section Notes, and Chapter Notes,

done at Brussels on 14 June 1983;

(h) "heading" means the first four digits in the tariff classification number under the

Harmonized System;

(i) "juridical person" means any legal entity duly constituted or otherwise organised under

applicable law, whether for profit or otherwise, and whether privately-owned or

governmentally-owned, including any corporation, trust, partnership, joint venture, sole

proprietorship or association;

(j) "measure" includes any measure by a Party, whether in the form of a law, regulation, rule,

procedure, decision, administrative action, requirement or practice **[1]** ;

(k) "natural person of a Party" means, for the European Union, a national of a Member State of

the European Union, and for MERCOSUR, a national of a Signatory MERCOSUR State, in

accordance with their respective applicable legislation;

(l) "person" means a natural person or a juridical person; and

(m) "sanitary or phytosanitary measure" means any measure as defined in Annex A to

the SPS Agreement.

**1** For greater certainty, the term "measure" includes omissions and legislation that has not been
fully implemented at the conclusions of the negotiations of this Agreement as well as its
implementing acts.

& /en 91

ARTICLE 9.4

WTO Agreements

(a) "ADA" means the Agreement on Implementation of Article VI of GATT 1994;

(b) "Agreement on Agriculture" means the Agreement on Agriculture, contained in Annex 1A to

the WTO Agreement;

(c) "DSU" means the Understanding on Rules and Procedures Governing the Settlement of

Disputes, contained in Annex 2 of the WTO Agreement;

(d) "GATS" means the General Agreement on Trade in Services, contained in Annex 1B to

the WTO Agreement;

(e) "GATT 1994" means the General Agreement on Tariffs and Trade 1994, contained in

Annex 1A to the WTO Agreement;

(f) "Safeguards Agreement" means the Agreement on Safeguards, contained in Annex 1A to the

WTO Agreement;

(g) "SCM Agreement" means the Agreement on Subsidies and Countervailing Measures,

contained in Annex 1A to the WTO Agreement;

(h) "SPS Agreement" means the Agreement on the Application of Sanitary and Phytosanitary

Measures, contained in Annex 1A to the WTO Agreement;

& /en 92

(i) "TBT Agreement" means the Agreement on Technical Barriers to Trade, contained in

Annex 1 to the WTO Agreement;

(j) "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property

Rights, contained in Annex 1C to the WTO Agreement; and

(k) "WTO Agreement" means the Marrakesh Agreement Establishing the World Trade

Organization, done on 15 April 1994.

ARTICLE 9.5

Parties

1. The European Union shall be responsible for the fulfilment of the commitments in this Part

of this Agreement.

2. Save where otherwise provided, each of the Signatory MERCOSUR States of this

Agreement shall be responsible for the fulfilment of the commitments in this Part of this

Agreement.

& /en 93

ARTICLE 9.6

Regional integration

1. While recognising the differences in their respective regional integration processes, and

without prejudice to the commitments undertaken under this Part of this Agreement, the Parties

shall foster conditions which facilitate the movement of goods and services between and within the

two regions.

2. With respect to movement of goods, pursuant to paragraph 1:

(a) goods originating in a Signatory MERCOSUR State that are released for free circulation in

the European Union shall benefit from free movement of goods within the territory of the

European Union under the conditions established by the Treaty on the Functioning of the

European Union;

(b) the Signatory MERCOSUR States shall apply to goods originating in the European Union that

are imported in its territory from another Signatory MERCOSUR State, customs procedures

that are no less favourable than those applicable to goods originating in that Signatory

MERCOSUR State.

The treatment referred to under points (a) and (b) of this paragraph does not include tariff

treatment for goods, which is governed by Chapter 10;

(c) the Signatory MERCOSUR States shall periodically review their customs procedures with a

view to facilitating the movement of goods of the European Union between their territories

and to avoiding duplication of procedures and controls when practicable and in accordance

with the evolution of their integration process; and

& /en 94

(d) the benefits of MERCOSUR's harmonisation of technical regulations and conformity

assessment procedures, SPS requirements and approval procedures, including import

certificates and controls, shall be extended under non-discriminatory conditions to goods

originating in the European Union if they have been imported in compliance with the laws

and regulations of the importing Signatory MERCOSUR State.

3. With respect to movement of services, pursuant to paragraph 1:

(a) Member States of the European Union shall endeavour to facilitate, as appropriate, the

freedom to provide services within the territory of the European Union to enterprises owned

or controlled by natural or juridical persons of a Signatory MERCOSUR State and established

in a Member State of the European Union; and

(b) the Signatory MERCOSUR States shall endeavour to facilitate, as appropriate, the freedom to

provide services between their territories to enterprises owned or controlled by natural or

juridical persons of a Member State of the European Union and established in a Signatory

MERCOSUR State.

& /en 95

SECTION B

TRADE SPECIFIC INSTITUTIONAL PROVISIONS

ARTICLE 9.7

Specific functions of the Joint Council acting in trade configuration

1. When the Joint Council established pursuant to Article 2.2 addresses issues related to this

Part of the Agreement, it shall have the power to:

(a) oversee the fulfilment of the objectives of this Part of the Agreement and supervise its

implementation;

(b) discuss any matter covered by this Part of the Agreement and without prejudice to Chapter 29

address any major issue arising from its implementation;

(c) take decisions and make appropriate recommendations to the Parties as provided for in this

Part of the Agreement;

(d) adopt, through decisions, interpretations of the provisions of this Part of the Agreement which

shall be binding on the Parties and all subcommittees and other bodies set up under this Part

of the Agreement, including panels established under Chapter 29;

(e) take such other action in the exercise of its functions as the Parties may agree; and

& /en 96

(f) adopt decisions to amend, in fulfilment of the objectives of this Part of the Agreement:

(i) Annex 10-A in accordance with Article 10.4(9);

(ii) Appendix 10-D-1 in accordance with Article 10(6) of Annex 10-D;

(iii) Appendix 10-D-2 in accordance with Article 4(3) of Annex 10-D;

(iv) Appendix 10-D-3 in accordance with Article 5(4) of Annex 10-D;

(v) Chapter 11 in accordance with Article 11.34;

(vi) Section A of Annex 13-A in accordance with Article 13.8(9);

(vii) Annex 14-A in accordance with Article 14.18;

(viii) Annexes 20-A to 20-E in accordance with Article 20.26

(ix) Annexes 20-F to 20-J in accordance with Article 20.12;

(x) Annex 21-A in accordance with Article 21.39;

(xi) Annex 21-B in accordance with Article 21.39;

(xii) Annex 21-C in accordance with Article 21.39;

(xiii) Annex 21-E, in accordance with Article 21.39;

& /en 97

(xiv) Annex 25-A, in accordance with Article 25.7;

(xv) Annexes 29-A and 29-B in accordance with Article 29.22; and

(xvi) any other provision, Annex, Appendix or Protocol, for which the possibility of such

decision is explicitly foreseen in this Part of the Agreement.

2. The decisions referred to in point (f) of paragraph 1 shall be subject to Article 30.5(2).

3. Unless the Parties agree otherwise, 3 (three) years after the entry into force of this

Agreement, and every 5 (five) years thereafter, the Joint Council in trade configuration shall initiate

a review process of Part III of this Agreement. Based on the outcome of each review, the Joint

Council in trade configuration shall deliberate on the need to amend Part III of this Agreement.

ARTICLE 9.8

Specific functions of the Joint Committee acting in trade configuration

1. When the Joint Committee established pursuant to Article 2.3 addresses issues related to this

Part of the Agreement, it shall have the power to:

(a) supervise the work of all subcommittees established in accordance with this Part of

the Agreement;

(b) explore the most appropriate way to prevent or solve any difficulty that may arise in relation

to the interpretation and application of this Part of the Agreement without prejudice to

Chapter 29;

& /en 98

(c) establish additional subcommittees, to allocate responsibilities within its competence to

subcommittees, to decide to modify the functions of the subcommittees it establishes,

including by assigning new ones, or to dissolve the subcommittees;

(d) prepare decisions for adoption by the Joint Council in trade configuration, in compliance with

the specific objectives of this Part of the Agreement, including the modifications referred to in

Article 9.7(1)(f), or adopt such decisions in the intervals between the meetings of the Joint

Council in trade configuration, or when the Joint Council in trade configuration cannot meet;

and

(e) take any other action in the exercise of its functions as the Parties may agree or as instructed

by the Joint Council in trade configuration;

(f) review the implementation of Part III of this Agreement including with a view to appraising

its impacts on employment, investment and trade between the Parties; the review shall

consider views or recommendations of civil society actors, including non-governmental

organizations, business and employers' organizations, social movements and trade unions,

taking into account in particular the provisions of Articles 2.6 to 2.8, consistent with each

Party's laws and regulations;

2. The decisions referred to in Article 2.3(7) and point (d) of paragraph 1 of this Article that

introduce amendments to this Agreement shall be subject to Article 30.5(2).

& /en 99

ARTICLE 9.9

Subcommittees

1. The Subcommittees established pursuant to paragraph 4 shall be composed of

representatives of the European Union, on the one part, and of each of the Signatory MERCOSUR

States, on the other part.

2. The subcommittees shall meet at an appropriate level at the request of a Party, and, in any

event, at least once a year. If in person, meetings shall be held alternately in Brussels and in one of

the Signatory MERCOSUR States. The subcommittees may also meet via teleconference, video

conference or through other means, as mutually agreed by the Parties. The subcommittees shall be

co-chaired by a representative of the European Union and a representative of MERCOSUR.

3. Each subcommittee shall agree on its meeting schedule and set its agenda by mutual

consent.

4. The following subcommittees are hereby established under the auspices of the Joint

Committee in trade configuration:

(a) the Subcommittee on trade in goods;

(b) the Subcommittee on trade in wine products and spirits;

(c) the Subcommittee on customs, trade facilitation and rules of origin;

(d) the Subcommittee on SPS matters;

(e) the Subcommittee on dialogues on issues related to the agri-food chain;

& /en 100

(f) the Subcommittee on trade in services and establishment;

(g) the Subcommittee on government procurement;

(h) the Subcommittee on intellectual property rights; and

(i) the Subcommittee on trade and sustainable development.

5. With respect to issues related to their area of competence, the subcommittees shall have the

power to:

(a) monitor the implementation and ensure the proper functioning of this Part of the Agreement;

(b) adopt by agreement of the Parties decisions and recommendations in respect of all matters

where this Part of the Agreement so provides;

(c) discuss issues arising from the implementation of this Part of the Agreement or of any

supplementing agreement with a view to resolving them, without prejudice to Chapter 29; and

(d) provide a forum for the Parties to exchange information, including discussing best practices

and sharing implementation experience.

6. The tasks of the subcommittees are further defined as appropriate in the relevant Chapters of

this Part of the Agreement and can be modified, if necessary, by decision of the Joint Committee in

trade configuration.

& /en 101

7. The subcommittees shall conduct the preparatory technical work necessary to support the

functions of the Joint Council in trade configuration and the Joint Committee in trade configuration,

including when those bodies have to adopt decisions or recommendations.

ARTICLE 9.10

Coordinators for this Part of the Agreement

1. The European Union and each Signatory MERCOSUR State shall each appoint a

coordinator for this Part of the Agreement and notify the other Party thereof within 30 (thirty) days

following the entry into force of this Agreement.

2. The coordinators shall:

(a) prepare the agenda and coordinate the preparation of the meetings of the Joint Council in

trade configuration and the Joint Committee in trade configuration meetings in accordance

with Articles 9.7 and 9.8;

(b) follow up on the decisions adopted by the Joint Council in trade configuration or the Joint

Committee in trade configuration, as appropriate;

(c) act as contact points to facilitate communication between the Parties on any matter covered by

this Part of the Agreement, unless otherwise provided in this Part of the Agreement;

& /en 102

(d) receive any notifications and information submitted under this Part of the Agreement,

including any notification or information submitted to the Joint Council in trade configuration

or the Joint Committee in trade configuration, unless otherwise provided in this Part of the

Agreement; and

(e) fulfil any other tasks as requested by the Joint Council in trade configuration or the Joint

Committee in trade configuration.

CHAPTER 10

TRADE IN GOODS

ARTICLE 10.1

Objective and scope

1 The Parties shall establish a free trade area for goods over a transitional period starting on

the date of entry into force of this Agreement.

2. Except as otherwise provided in this Part of the Agreement, the provisions of this Chapter

apply to trade in goods of a Party.

& /en 103

SECTION A

CUSTOM DUTIES

ARTICLE 10.2

National treatment

Each Party shall accord national treatment to the goods of the other Party in accordance with

Article III of GATT 1994, including its Notes and Supplementary Provisions. To that end,

Article III of GATT 1994 and its Notes and Supplementary Provisions are incorporated into and

made part of this Agreement, _mutatis mutandis_ .

ARTICLE 10.3

Definitions

For the purposes of this Chapter, "originating good" means a good qualifying as originating in a

Party under the rules of origin set out in Chapter 11.

& /en 104

ARTICLE 10.4

Reduction and elimination of customs duties

1. Except as otherwise provided for in this Part of the Agreement, each Party shall reduce or

eliminate its customs duties on originating goods in accordance with Annex 10-A.

2. The classification of goods in trade between the Parties shall be in accordance with each

Party's respective tariff nomenclature in conformity with the Harmonized System. Each Party shall

specify in its respective Appendix to Annex 10-A the version of the Harmonized System used to

this end.

3. A Party may create a new tariff line. In that event and in so far as trade between the Parties

is concerned, the customs duty applicable to the corresponding goods under the new tariff line shall

be equal to or lower than the customs duty applicable to the corresponding goods under the original

tariff line specified in Annex 10-A and the agreed tariff concession shall remain unchanged.

4. For each good originating in the other Party, the base rate of customs duties on imports to

which the successive reductions apply under paragraph 1 is specified in Annex 10-A.

& /en 105

5. Without prejudice to paragraphs 1 and 3, for a period of 2 (two) years from the date of entry

into force of this Agreement, the European Union shall not increase the customs duties applied

on 31 December 2017 on goods originating in Paraguay that are classified under the following tariff

lines set out in Appendix 10-A-1 as "PY" goods: 20019030, 21012098, 21069098 and, 33021029.

For the purposes of this paragraph, "goods originating in Paraguay" means goods that conform to

the origin requirements under Subsections 2 and 3 of Section 2 of Chapter 1 of Title II of

Commission Delegated Regulation (EU) No 2015/2446 of 28 July of 2015 supplementing

Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed

rules concerning certain provisions of the Union Customs Code **[1]** and Subsections 3 to 9 of Section 2

[of Chapter 2 of Title II of Commission Implementing Regulation (EU) 2015/2447 of 24 November](http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32015R2447&rid=1)

2015 laying down detailed rules for implementing certain provisions of Regulation

(EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs

Code **[2]** .

6. Except as otherwise provided for in this Part of the Agreement, a Party shall not introduce

new customs duties or increase customs duties which are already applied in accordance with the

base rates set out in Annex 10-A on trade in originating goods between the Parties as from the date

of entry into force of this Agreement. For greater certainty, a Party may increase a customs duty

applicable to trade between the Parties as set out in Annex 10-A that has been unilaterally reduced

to the level set out in that Annex for the respective year following that unilateral reduction.

**1** OJ EU L 343, 29.12.2015, p. 1.
**2** OJ EU L 343, 29.12.2015, p. 558.

& /en 106

7. If a Party reduces its most-favoured-nation applied rate of customs duty to a level below the

base rate for a particular tariff line specified in Annex 10-A, that duty rate shall be deemed to

replace the base rate in Annex 10-A, if, and for as long as it is lower than the base rate, for the

purposes of the calculation of the preferential rate for that tariff line. In this regard, the Party shall

apply the tariff reduction to the most-favoured-nation applied rate to calculate the applicable rate of

customs duty, maintaining at all times the relative margin of preference for any tariff line. Such

relative margin of preference for a tariff line shall correspond to the difference between the base

rate set out in Annex 10-A and the applied duty rate for that tariff line in accordance with

Annex 10-A divided by that base rate and shall be expressed as a percentage.

8. Each Party may accelerate the elimination of customs duties on originating goods of the

other Party, or otherwise improve the conditions of market access for originating goods of the other

Party, if its general economic situation and the situation of the economic sector concerned so

permit.

9. As from 3 (three) years after the date of entry into force of this Agreement, on request of

either Party, the Subcommittee on trade in goods, referred to in Article 10.14, shall consider

measures providing for improved market access. The Joint Council in trade configuration shall have

the power to adopt decisions to amend Annex 10-A. Such decisions shall supersede any duty rate or

staging category determined in Annex 10-A for such originating goods.

& /en 107

ARTICLE 10.5

Goods re-entered after repair

1. For the purposes of this Article, "repair" means any processing operation undertaken on a

good to remedy operating defects or material damage and entailing the re-establishment of the good

to its original function or to ensure its compliance with technical requirements for its use, without

which the good could no longer be used in the normal way for the purposes for which it was

intended. Repair of a good includes restoration and maintenance but does not include an operation

or process that:

(a) destroys the essential characteristics of a good or creates a new or commercially different

good;

(b) transforms an unfinished good into a finished good; or

(c) is used to improve the technical performance of a good.

2. A Party shall not apply customs duties to a good, regardless of its origin, that re-enters that

Party's customs territory after hat good has been temporarily exported from its customs territory to

the customs territory of the other Party for repair, regardless of whether such repair could have been

performed in the customs territory of the Party from which the goods were exported for repair as

defined in paragraph 1.

3. Paragraph 2 does not apply to a good imported in bond into free-trade zones or zones of

similar status, that is exported for repair and is not re-imported in bond into free-trade zones or

zones of similar status.

& /en 108

4. A Party shall not apply customs duties to a good, regardless of its origin, imported

temporarily from the customs territory of the other Party for repair.

SECTION B

NON-TARIFF MEASURES

ARTICLE 10.6

Fees and other charges on imports and exports

1. Each Party shall ensure, in accordance with Article VIII of GATT 1994, including its Notes

and Supplementary Provisions, that all fees and other charges of whatever character **[1]**, other than

import and export duties imposed on or in connection with importation or exportation, are limited in

amount to the approximate cost of services rendered, shall not be calculated on an _ad valorem_ basis

and shall not represent an indirect protection for domestic goods or a taxation of imports or exports

for fiscal purposes.

2. Each Party may impose charges or recover costs only if specific services are rendered, in

particular for the following:

(a) attendance, if requested, by customs staff outside official office hours or at premises other

than customs premises;

**1** For greater certainty, "tasa consular" of the Oriental Republic of Uruguay and "tasa
estadística" of the Argentine Republic are governed by paragraph 3.

& /en 109

(b) analyses or expert reports on goods and postal fees for the return of goods to an applicant,

particularly in respect of decisions relating to binding information or the provision of

information concerning the application of customs laws and regulations;

(c) the examination or sampling of goods for verification purposes, or the destruction of goods, if

costs other than the cost of using customs staff are involved; or

(d) exceptional control measures, where these are necessary due to the nature of the goods or to a

potential risk.

3. A Party shall not require consular transactions, including related fees and charges, in

connection with the importation of goods from the other Party. The Parties shall have a transitional

period of 3 (three) years from the date of entry into force of this Agreement to fulfil the

requirements of this paragraph **[1]** .

4. Each Party shall publish a list of the fees and charges it imposes in connection with the

importation or exportation of goods.

**1** Notwithstanding this paragraph, for the Republic of Paraguay the transitional period will
be 10 (ten) years after the date of entry into force of this Agreement.

& /en 110

ARTICLE 10.7

Import and export licensing procedures

1. The Parties shall ensure that all import and export licensing procedures applicable to trade in

goods between the Parties are neutral in application and administered in a fair, equitable, non

discriminatory and transparent manner.

2. Each Party shall only adopt or maintain licensing procedures as a condition for importation

into its territory from that of the other Party or exportation from its territory to that of the other

Party if other appropriate procedures to achieve an administrative purpose are not reasonably

available.

3. The Parties shall not adopt or maintain non-automatic import or export licensing procedures **[1]**

unless it is necessary to implement a measure that is consistent with this Part of the Agreement.

A Party adopting non-automatic import or export licensing procedures shall indicate clearly the

measure being implemented through such licensing procedure.

**1** For the purposes of this Article, "non-automatic import or export licensing procedures" is
defined as licensing procedures where approval of the application is not granted for all legal
and natural persons who fulfil the requirements of the Party concerned for engaging in the
importation or exportation of goods subject to licensing procedures.

& /en 111

4. The Parties shall introduce and administer any licensing procedures in accordance with

Articles 1 to 3 of the WTO Import Licensing Agreement (hereinafter referred to as "Import

Licensing Agreement"). To that end, Articles 1 to 3 of the Import Licensing Agreement are

incorporated into and made part of this Agreement, _mutatis mutandis_, and shall apply to any export

licensing procedures.

5. Any Party introducing or modifying any import and export licensing procedures shall make

the relevant information available on an official website. This information shall be made available,

whenever practicable, 21 (twenty-one) days prior to the date of the application of the introduction

of, or modification to, licensing procedures but in any event no later than such date. The

information available on the Internet shall contain the data required under Article 5 of the Import

Licensing Agreement. Each Party shall notify the other Party of any introduction or modification of

export licensing procedures and such notification shall contain the same information as referred to

in Article 5 of the Import Licensing Agreement.

6. On request of a Party, the other Party shall promptly provide any relevant information

regarding any import and or export licensing procedures that the Party to which the request is

addressed intends to adopt or has adopted or maintained, including the information referred to in

Articles 1 to 3 of the Import Licensing Agreement, _mutatis mutandis_ .

& /en 112

ARTICLE 10.8

Export competition

1. The Parties affirm their commitments expressed in the Export Competition Ministerial

Decision of 19 December 2015 (WT/MIN(15)/45, WT/L/980) of the WTO (hereinafter referred to

as the "Export Competition Ministerial Decision").

2. For the purposes of this Article, "export subsidies" means subsidies within the meaning of

Articles 1 and 3 of the SCM Agreement that are contingent upon export performance, including the

subsidies listed in Annex I to the SCM Agreement and the subsidies listed in Article 9 of the

Agreement on Agriculture.

3. A Party shall not maintain, introduce or reintroduce export subsidies on an agricultural good

that is exported or incorporated in a product that is exported.

4. A Party shall not maintain, introduce or reintroduce export credits, export credit guarantees,

insurance programmes, state trading enterprises or international food aid, or other measures that

have an effect equivalent to an export subsidy, on an agricultural good that is exported or

incorporated in a good that is exported to the territory of the other Party, unless those measures

comply with the obligations of the exporting Party under the WTO Agreements and Decisions of

the Ministerial Conference and the General Council of the WTO, including in particular the Export

Competition Ministerial Decision.

& /en 113

5. The Parties affirm their commitment in the Bali Ministerial Declaration adopted on 7

December 2013 (WT/MIN(13)/DEC) of the WTO, strengthened by the Export Competition

Ministerial Decision, to enhance transparency and to improve monitoring in relation to all forms of

export subsidies and export credits, export credit guarantees, insurance programmes, state trading

enterprises and international food aid, as well as other measures that have an effect equivalent to an

export subsidy.

6. The Parties affirm the commitments taken under the Export Competition Ministerial

Decision with regard to international food aid and shall work together to encourage the best practice

in the delivery of food aid in the relevant international fora by seeking to limit the monetisation of

food aid and the delivery of in-kind food aid only to emergency situations.

ARTICLE 10.9

Duties, taxes and other fees and charges on exports

A Party shall not introduce or maintain any duties or charges of any kind on or in connection with

the exportation of a good to the other Party, other than in accordance with Annex 10-B,

3 (three) years from the date of entry into force of this Agreement.

& /en 114

ARTICLE 10.10

State trading enterprises

1. Nothing in this Part of the Agreement shall prevent a Party from maintaining or establishing

a state trading enterprise in accordance with Article XVII of GATT 1994, including its Notes and

Supplementary Provisions and the WTO Understanding on the Interpretation of Article XVII of

GATT 1994, which are incorporated into and made part of this Part of the Agreement,

_mutatis mutandis_ .

2. If a Party requests information from the other Party on individual cases of state trading

enterprises, their operation or the effect of their operations on bilateral trade, the requested Party

shall ensure full transparency in accordance with Article XVII of GATT 1994.

3. Notwithstanding paragraph 1, a Party shall not designate or maintain a designated import or

export monopoly, except for those already established by a Party or prescribed by in its Constitution

as listed in Annex 10-C. For the purposes of this paragraph, an import or export monopoly means

the exclusive right or grant of authority by a Party to an entity to import a good from, or to export a

good to, the other Party.

& /en 115

ARTICLE 10.11

Prohibition of quantitative restrictions

1. A Party may not adopt or maintain any prohibition or restriction on the importation of any

good from the other Party or on the exportation or sale for export of any good destined for the other

Party, whether applied by quotas, licences or other measures, except in accordance with Article XI

of GATT 1994, including its Notes and Supplementary Provisions. To that end, Article XI of

GATT 1994 and its Notes and Supplementary Provisions are incorporated into and made part of this

Part of the Agreement, _mutatis mutandis_ .

2. A Party may not adopt or maintain export or import price requirements, except as permitted

in the enforcement of antidumping and countervailing duty orders or price undertakings.

ARTICLE 10.12

Preference utilisation

1. For the purpose of monitoring the functioning of this Part of the Agreement and calculating

preference utilisation rates, the Parties shall annually exchange import statistics for a period

starting 1 (one) year after the date of entry into force of this Agreement and ending 10 (ten) years

after the tariff elimination is completed for all goods in accordance with Annex 10-A. Unless the

Joint Committee in trade configuration decides otherwise, this period shall be automatically

extended for 5 (five) years, and the Joint Committee in trade configuration may decide to further

extend it.

& /en 116

2. The exchange of import statistics referred to in paragraph 1 shall cover data pertaining to the

most recent year available, including value and, if applicable, volume, at the tariff line level for

imports of goods of the other Party benefitting from preferential duty treatment under this Part of

the Agreement and those that received non-preferential treatment.

3. Without prejudice to paragraph 2 and subject to confidentiality requirements under each

Party's laws and regulations a Party shall not be obliged to exchange import statistics.

ARTICLE 10.13

Specific measures concerning the management of preferential treatment

1. The Parties shall cooperate in preventing, detecting and combating breaches of their laws

and regulations, irregularities and fraud related to the preferential treatment granted under this

Chapter, in accordance with Chapter 11 and Annex 12-A.

2. A Party may, in accordance with the procedure laid down in paragraph 4, decide to

temporarily suspend the relevant preferential treatment of the products concerned, if that Party

makes a finding, based on objective, compelling and verifiable information, that:

(a) large-scale systematic breaches in the relevant laws and regulations, irregularities or fraud

have been committed in order to obtain preferential tariff treatment granted under this

Chapter; and

(b) the other Party systematically refuses or otherwise fails to comply with its obligations referred

to in paragraph 1, in accordance with Chapter 11 and Annex 12-A.

& /en 117

3. For the purposes of this Article, a failure to comply with the obligations referred to in

paragraph 1 means, among others, a clearly demonstrated and systematic:

(a) failure to fulfil the obligation to verify the originating status of the products concerned, in

accordance with the procedures established in Articles 11.24 and 11.25 and;

(b) refusal or unjustifiable delay in communicating the result of a verification of origin carried

out in accordance with Articles 11.25 and 11.26; or

(c) lack of administrative cooperation pursuant to Annex 12-A.

4. The Party which has made a finding referred to in paragraph 2 shall, without undue delay,

notify the Joint Committee in trade configuration thereof and provide it with the information that

constitutes the basis for its finding.

5. When the requirements of paragraph 4 are fulfilled, the Party which has made a finding shall

enter into consultations with the other Party, in the Joint Committee in trade configuration, with a

view to reaching a solution that is acceptable to both Parties. If the Parties fail to agree on a

mutually acceptable solution within 3 (three) months after the date of notification, the Party which

has made the finding may decide to suspend temporarily the relevant preferential treatment of the

products concerned. In such cases, the Party which has made the finding shall notify the temporary

suspension to the Joint Committee in trade configuration without undue delay.

& /en 118

6. A decision to suspend temporarily the relevant preferential treatment of the product

concerned pursuant to paragraph 4 shall apply only for a period commensurate with the impact on

the financial interests of the Party concerned and not for longer than 3 (three) months. If it can be

objectively and verifiably ascertained that the conditions that gave rise to that decision to suspend

persist at the expiry of the suspension period, the Party concerned may decide to renew that

decision to suspend for an equal period of time. Any suspension shall be subject to periodic

consultations in the Joint Committee in trade configuration. In case of renewal, consultations shall

take place in the Joint Committee in trade configuration at least 15 (fifteen) days prior to the expiry

of the suspension period.

7. Each Party shall publish, in accordance with its internal procedures, notices to importers

about any notification of a finding pursuant to paragraph 4 and decision to suspend temporarily

referred to in paragraphs 5 and 6.

& /en 119

SECTION C

INSTITUTIONAL PROVISIONS

ARTICLE 10.14

Subcommittee on trade in goods

1. The Subcommittee on trade in goods, established pursuant to Article 9.9(4), shall have the

following functions, in addition to those listed in Articles 2.4, 9.9 and 13.14:

(a) promote trade in goods between the Parties;

(b) evaluate annually the use and the administration of quotas and of preferences granted by this

Part of the Agreement; and

(c) discuss, clarify and address any technical issues that may arise between the Parties on matters

related to the application of each Party's tariff nomenclature as defined in paragraphs 3 and 4

of Annex 10-A.

& /en 120

ARTICLE 10.15

Subcommittee on trade in wine products and spirits

1. The Subcommittee on trade in wine products and spirits, established pursuant to

Article 9.9(4), shall have the following functions, in addition to those listed in Articles 2.4 and 9.9:

(a) ensure the timely notification of amendments to laws and regulations on matters covered by

Annex 10-D that have an impact on wine products and spirits traded between the Parties; and

(b) adopt decisions to determine the details of the rules set out in paragraph 2 of

Appendix 10-D-3, in particular the forms to be used and the details of the information to be

provided in the analysis report.

ARTICLE 10.16

Cooperation on trade in wine products and spirits and focal points

1. The Parties shall cooperate on and address issues related to trade in wine products and

spirits, in particular:

(a) product definitions, certification and labelling of wine products;

(b) the use of vine varieties in winemaking and the labelling thereof; and

(c) product definitions, certification and labelling of spirits.

& /en 121

2. The Parties shall closely cooperate and seek ways to improve assistance to each other in the

application of Annex 10-D, in particular in order to combat fraudulent practices.

3. To facilitate mutual assistance between the enforcement bodies and authorities of the Parties

as regards matters covered by this Annex, each Party shall designate the bodies and authorities

responsible for the application and enforcement of Annex 10-D. If a Party designates more than one

competent body or authority, it shall ensure that the work of those bodies and authorities is

coordinated. In such cases, a Party shall also designate a single liaison body or authority that serves

as the single focal point for the body or authority of the other Party.

4 The Parties shall, via the Subcommittee on trade in wine products and spirits, inform each

other of the contact details of the bodies, authorities and focal points referred to in in paragraph 3 no

later than 6 (six) months after the date of entry into force of this Agreement. The Parties shall

inform each other of any changes of the contact details to such bodies, authorities and focal points.

& /en 122

CHAPTER 11

RULES OF ORIGIN AND ORIGIN PROCEDURES

SECTION A

RULES OF ORIGIN

ARTICLE 11.1

Definitions

For the purposes of this Chapter:

(a) "classified" refers to the classification of a product or material under a particular section,

Chapter, heading or subheading of the Harmonized System;

(b) "consignment" means products which are either sent simultaneously from one exporter to one

consignee or covered by a single transport document covering their shipment from the

exporter to the consignee or, in the absence of such a document, by a single invoice;

& /en 123

(c) "customs authority or competent governmental authority" refers to:

(i) in the European Union, the services of the European Commission responsible for

customs matters, and the customs administrations and any other authorities of the

Member States of the European Union responsible for the application and enforcement

of customs legislation; and

(ii) in MERCOSUR, the competent authorities of the Signatory MERCOSUR States or their

successors, as listed below:

(A) Argentina: Secretaría de Industria y Gestión Comercio of the Ministerio de

Economía;

(B) Brazil: Secretaria de Comércio Exterior do Ministério do Desenvolvimento,

Indústria, Comércio e Serviços and Secretaria Especial da Receita Federal do

Brasil of the Ministério da Fazenda;

(C) Paraguay: Subsecretaría de Estado de Comercio y Servicios of the Ministerio de

Industria y Comercio; and

(D) Uruguay: Asesoría de Política Comercial of the Ministerio de Economía y

Finanzas;

(d) "exporter" means a person located in a Party who exports the originating product and makes

out a statement on origin;

& /en 124

(e) "fungible materials" means materials that are of the same kind and commercial quality, with

the same technical and physical characteristics, and which cannot be distinguished from one

another once they are incorporated into the product;

(f) "goods" means both materials and products;

(g) "importer" means a person who imports the originating product and claims preferential tariff

treatment for it;

(h) "manufacture" means any kind of working or processing, including assembly or specific

operations;

(i) "material" means any ingredient, raw material, component or part used in the manufacture of

a product; and

(j) "product" means the product being manufactured, even if it is intended for later use in another

manufacturing operation.

& /en 125

ARTICLE 11.2

General requirements

1. For the purposes of applying the preferential tariff treatment by a Party to the originating

goods of the other Party in accordance with this Part of the Agreement, the following products shall

be considered as originating in the European Union, provided that they satisfy all other applicable

requirements in this Chapter:

(a) products wholly obtained in the European Union pursuant to Article 11.4;

(b) products obtained in the European Union exclusively from originating materials; or

(c) products obtained in the European Union incorporating non-originating materials, provided

that they have fulfilled the conditions set out in Annex 11-B.

2. For the purposes of applying the preferential tariff treatment by a Party to the originating

goods of the other Party in accordance with this Part of the Agreement, the following products shall

be considered as originating in MERCOSUR, provided that they satisfy all other applicable

requirements in this Chapter:

(a) products wholly obtained in MERCOSUR pursuant to Article 11.4;

(b) products obtained in MERCOSUR exclusively from originating materials; or

(c) products obtained in MERCOSUR incorporating non-originating materials, provided that they

have fulfilled the conditions set out in Annex 11-B.

& /en 126

3. If a product has acquired originating status, the non-originating materials used in the

manufacture of that product shall not be considered non-originating if that product is incorporated

into another product as a material.

ARTICLE 11.3

Bilateral cumulation of origin

1. Products originating in the European Union shall be considered as materials originating in

MERCOSUR when incorporated into a product obtained there, provided that they have undergone

working or processing going beyond the operations referred to in Article 11.6.

2. Products originating in MERCOSUR shall be considered as materials originating in the

European Union when incorporated into a product obtained there, provided that they have

undergone working or processing going beyond the operations referred to in Article 11.6.

ARTICLE 11.4

Wholly obtained products

1. The following shall be considered as wholly obtained products in the European Union or in

MERCOSUR:

(a) mineral products and other natural substances extracted from their soil or from their seabed;

(b) plants and vegetable products grown or harvested there;

& /en 127

(c) live animals born and raised there;

(d) products from live animals raised there;

(e) products from slaughtered animals born and raised there;

(f) products obtained through hunting or fishing conducted there;

(g) products of aquaculture where the fish, crustaceans, molluscs and other aquatic invertebrates

are born and raised there;

(h) products of fishing and other products taken from the sea by their vessels **[1]** ;

(i) products made aboard their factory ships exclusively from products referred to in point (h);

(j) mineral products and other non-living natural resources, taken or extracted from the seabed,

subsoil or ocean floor of:

(i) the exclusive economic zone of Signatory MERCOSUR States or of Member States of

the European Union, as determined by their laws and regulations and in accordance with

Part V of UNCLOS;

(ii) the continental shelf of Signatory MERCOSUR States or of Member States of the

European Union, as determined by their laws and regulations and in accordance with

Part VI of UNCLOS; or

**1** This point is without prejudice to the sovereign rights and obligations of the Parties under
UNCLOS in particular within the exclusive economic zone and continental shelf.

& /en 128

(iii) the Area, as defined in Article 1(1) of UNCLOS, where a Party or a person of a Party

has exclusive exploitation rights, in accordance with Part XI of UNCLOS and the

Agreement relating to the implementation of Part XI of UNCLOS;

(k) used articles collected there fit only for the recovery of raw materials;

(l) waste and scrap resulting from manufacturing operations conducted there **[1]** ; or

(m) goods produced there exclusively from the products specified in points (a) to (l).

2. The terms "their vessels" and "their factory ships" in points (h) and (i) of paragraph 1 apply

only to vessels and factory ships which:

(a) are registered in a Member State of the European Union or in a Signatory MERCOSUR State

and, where appropriate, have fishing licences issued by a Signatory MERCOSUR State or the

European Union in the name of fishing companies duly registered to operate in that Member

State of the European Union or that Signatory MERCOSUR State;

**1** Points (k) and (l) are without prejudice to each Party's laws and regulations regarding the
import of the goods mentioned therein.

& /en 129

(b) sail under the flag of the same registering Member State of the European Union or Signatory

MERCOSUR State **[1]** ; and

(c) meet one of the following conditions:

(i) they are at least 50 % (fifty per cent) owned by one or more natural persons **[2]** of

the Parties;

(ii) they are owned by juridical persons **[3]** :

(A) which have their head office and their main place of business in a Party; and

(B) in which at least 50 % (fifty per cent) of the ownership belongs to natural persons

or juridical persons of the Parties; or

(iii) at least a minimum of two thirds of the crew are natural persons of the Parties.

**1** Products of fishing or other products taken from the sea by chartered vessels sailing under the
flag of a Member State of the European Union or a Signatory MERCOSUR State are
considered to originate in the Member State of the European Union or the Signatory
MERCOSUR State in which the vessel is chartered and the license is issued, provided that
they fulfil all criteria in this paragraph.
**2** For the purposes of this Article, the definition of point (m) of Article 18.2 applies.
**3** For the purposes of this Article, the definition of point (h) of Article 18.2 applies.

& /en 130

ARTICLE 11.5

Tolerances

1. If a non-originating material used in the manufacture of a product does not satisfy the

requirements set out in Annex 11-B, such product shall nonetheless be considered as originating in

a Party if:

(a) the total value of non-originating materials does not exceed 10 % (ten per cent) of the

ex-works price of the product; and

(b) any of the percentages for the maximum value or weight of non-originating materials set out

in Annex 3-B are not exceeded through the application of this paragraph.

2. Paragraph 1 does not apply to products falling within Chapters 50 to 63 of the Harmonized

System, for which the tolerances set out in Notes 6 and 7 of Annex 11-A apply.

ARTICLE 11.6

Insufficient working or processing operations

1. Notwithstanding point (c) of Article 11.2(1) and point (c) of Article 11.2(2), a product shall

not be considered as originating in a Party if the manufacture of that product consists only of the

following operations conducted on non-originating materials in that Party:

(a) preserving operations to ensure that the products remain in good condition during transport

and storage;

& /en 131

(b) changes of packaging and breaking-up and assembly of packages;

(c) washing, cleaning or removing dust, oxide, oil, paint or other coverings;

(d) ironing or pressing of textiles;

(e) simple painting and polishing operations;

(f) husking, partial or total bleaching, polishing and glazing of cereals and rice;

(g) operations to colour or flavour sugar or form sugar lumps, and partial or total milling of

crystal sugar;

(h) peeling, stoning and shelling of fruits, nuts and vegetables;

(i) sharpening, simple grinding, separating or simple cutting;

(j) sifting, screening, sorting, classifying, grading and matching, including the making-up of sets

of articles;

(k) simple placing in bottles, cans, flasks, bags, cases or boxes, fixing on cards or boards and all

other simple packaging operations;

(l) affixing or printing marks, labels, logos and other similar signs on products or their

packaging;

(m) simple mixing of products, whether or not of different kinds, and simple mixing of sugar with

any material;

& /en 132

(n) simple assembly of non-originating parts to constitute a complete product, or disassembly of

products into parts;

(o) simple addition of water, dilution, dehydration or denaturation of products;

(p) a combination of two or more operations specified in points (a) to (o); or

(q) slaughter of animals.

2. For the purposes of paragraph 1, operations shall be considered simple if neither special

skills nor machines, apparatus or tools specially produced or installed for those operations are

required for their performance.

ARTICLE 11.7

Unit of qualification

1. The unit of qualification for the application of this Chapter shall be the particular product as

classified in accordance with the Harmonized System.

2. For a product composed of a group or assembly of articles which is classified under a single

heading of the Harmonized System, the whole constitutes the unit of qualification.

3. For a consignment consisting of a number of identical products classified under the same

heading of the Harmonized System, each product shall be taken individually when applying

this Chapter.

& /en 133

ARTICLE 11.8

Packaging materials, packing materials and containers

1. If, under General Rule 5 for the Interpretation of the Harmonized System, packaging is

included with the product for classification purposes, it shall be included for the purposes of

determining origin.

2. Packing materials and containers for shipment that are used to protect products during

transportation shall be disregarded in determining the origin of such products.

ARTICLE 11.9

Accessories, spare parts and tools

Accessories, spare parts and tools dispatched with a piece of equipment, machine, apparatus or

vehicle which are customary for that product and included in the price thereof or which are not

separately invoiced shall be regarded as one product with the piece of equipment, machine,

apparatus or vehicle in question.

& /en 134

ARTICLE 11.10

Accounting segregation

1. If originating and non-originating fungible materials are used in the manufacture of a

product, those materials shall be physically segregated, according to their origin, during storage in

order for the originating materials to maintain their originating status.

2. Notwithstanding paragraph 1, physical segregation of originating and non-originating

fungible materials is not needed in the manufacture of a product if the origin of such product is

determined pursuant to the accounting segregation method for managing stocks.

3. The accounting segregation shall be recorded and applied in accordance with the generally

accepted accounting principles applicable in the Party in which the product is manufactured.

4. The accounting segregation method may be used only if it can be ensured that, at any time,

no more products receive originating status than would be the case if the materials had been

physically segregated.

5. A Party may require that the application of the accounting segregation method be subject to

prior authorisation by the relevant competent authorities. The competent authorities may grant

authorisation subject to any conditions deemed appropriate and, in such cases, they shall monitor

the use of the authorisation. Those authorities may withdraw the authorisation at any time if the

beneficiary of the authorisation makes improper use of the accounting segregation method in any

manner or fails to fulfil any of the other conditions laid down in this Chapter.

& /en 135

ARTICLE 11.11

Sets

Sets, as defined in General Rule 3 for the Interpretation of the Harmonized System, shall be

regarded as originating if all their component products are originating. Nevertheless, if a set

is composed of originating and non-originating products, the set as a whole shall be regarded

as originating, provided that the value of the non-originating products does not

exceed 15 % (fifteen per cent) of the ex-works price of the set.

ARTICLE 11.12

Neutral elements

In order to determine whether a product is originating, it is not necessary to determine the origin of

the following elements used in its manufacture:

(a) energy and fuel;

(b) plant and equipment;

(c) machines and tools; or

(d) goods which do not enter and which are not intended to enter into the final composition of

the product.

& /en 136

ARTICLE 11.13

Principle of territoriality

1. The conditions set out in this Chapter relating to the acquisition of originating status shall be

fulfilled without interruption in the European Union or MERCOSUR.

2. If originating goods exported from the European Union or MERCOSUR to a third country

are returned, they shall be considered to be non-originating unless it can be demonstrated to the

satisfaction of the customs authorities that the goods returned:

(a) are the same as those exported; and

(b) have not undergone any operation beyond that necessary to preserve them in good condition

while in that third country or while being exported.

ARTICLE 11.14

Transport conditions

1. The products declared for importation into a Party shall be the same products as exported

from the Party in which they are considered originating. They shall not have been altered,

transformed in any way or subjected to operations other than those to preserve them in good

condition or to add or affix marks, labels, seals or any other distinguishing signs, in order to ensure

compliance with specific domestic requirements of the importing Party, prior to being declared

for import.

& /en 137

2. Storage of products or consignments and splitting of consignments may take place if carried

out under the responsibility of the exporter or of a subsequent holder of the goods, and if the

products remain under customs supervision in the country or countries of transit.

3. In case of doubt as to whether the requirements provided for in paragraphs 1 and 2 are

complied with, the customs authorities of the importing Party may request the importer to provide

evidence of compliance, which may be given by any means, including contractual transport

documents such as bills of lading, factual or concrete evidence based on marking or numbering of

packages or any evidence related to the product itself.

ARTICLE 11.15

Exhibitions

1. Originating products sent for exhibition in a third country and sold after the exhibition for

importation into the European Union or MERCOSUR shall benefit on importation from the

provisions of this Part of the Agreement if it is shown to the satisfaction of the customs authorities

of the importing Party that:

(a) an exporter has consigned the products from the European Union or MERCOSUR to

the third country in which the exhibition is held and has exhibited them there;

(b) the products have been sold or otherwise disposed of by that exporter to a person in the

European Union or MERCOSUR;

& /en 138

(c) the products have been consigned during the exhibition or immediately thereafter in the state

in which they were sent for exhibition; and

(d) the products have not, since they were consigned for exhibition, been used for any purpose

other than demonstration at the exhibition.

2. A statement on origin shall be made out pursuant to Section B and submitted to the customs

authorities of the importing Party. The name and address of the exhibition shall be indicated

thereon.

3. Paragraph 1 applies to any trade, industrial, agricultural or crafts exhibition, fair or similar

public show or display which is organised for purposes other than private purposes in shops or

business premises with a view to the sale of foreign products, and during which the products remain

under customs control.

& /en 139

SECTION B

ORIGIN PROCEDURES

ARTICLE 11.16

General requirements

Products originating in the European Union on importation into MERCOSUR, and products

originating in MERCOSUR on importation into the European Union, shall benefit from preferential

tariff treatment under this Part of the Agreement upon submission of a statement on origin in

accordance with Article 11.17 and each Party's laws and regulations **[1]** .

ARTICLE 11.17

Conditions for making out a statement on origin

1. A statement on origin as referred to in Article 11.16 may be made out by:

(a) an exporter in accordance with the relevant laws and regulations of the Party of export; or

**1** A certificate of origin will be valid in accordance with the transitional measures contained in
Annex 11-D, for the time period specified therein.

& /en 140

(b) any exporter for any small consignment consisting of one or more packages containing

originating products whose total value does not exceed the threshold stipulated in the relevant

laws and regulations of the Party of export.

2. The Parties shall exchange information on the relevant laws and regulations as referred to in

paragraph 1:

(a) on the date of entry into force of this Agreement;

(b) if there are any modifications to such laws and regulations, prior to the entry into force of

such modifications; and

(c) on request of either Party, at any time after the entry into force of this Agreement.

3. A statement on origin may be made out if the products concerned are products originating in

the European Union or MERCOSUR and fulfil the other requirements of this Chapter.

4. The exporter making out a statement on origin shall be prepared to submit at any time, at the

request of the customs authorities or competent governmental authorities of the Party of export, all

appropriate documents proving the originating status of the products concerned and the fulfilment

of the other requirements of this Chapter.

5. The exporter shall make out a statement on origin on the invoice, the delivery note, or any

other commercial document that describes the originating product in sufficient detail to enable its

identification using one of the language versions set out in Annex 11-C and in accordance with the

laws and regulations of the Party of export.

& /en 141

6. A statement on origin shall bear the original, handwritten signature of the exporter unless

otherwise provided in the relevant laws and regulations of the Party of export.

7. A statement on origin may be made out by the exporter when the products to which it relates

are exported, or after exportation provided that it is presented in the Party of import no later

than 2 (two) years after the importation of the products to which it relates.

ARTICLE 11.18

Validity of a statement on origin

1. A statement on origin shall be valid for 12 (twelve) months from the date on which it was

made out by the exporter, and shall be submitted within that time period to the customs authorities

of the Party of import.

2. Statements on origin submitted after the time period specified in paragraph 1 may be

accepted for the purposes of applying preferential treatment only if the failure to submit them

within that time period was due to exceptional circumstances.

3. In other cases of belated submission, the customs authorities of the Party of import may

accept the statement on origin if the products have been submitted before the final date.

& /en 142

ARTICLE 11.19

Importation by instalments

If, at the request of the importer and subject to the conditions set by the customs authorities of the

Party of import, dismantled or non-assembled products within the meaning of General Rule 2(a) for

the Interpretation of the Harmonized System that are classified within Sections XV to XXI of the

Harmonized System are imported by instalments, a single statement on origin for such products

shall be submitted to the customs authorities upon importation of the first instalment.

ARTICLE 11.20

Exemptions from a statement on origin

1. Products sent as small packages from private persons to private persons or forming part of

travellers' personal luggage shall be admitted as originating products without requiring the

submission of a statement on origin if such products are not imported by way of trade and have

been declared as meeting the requirements of this Chapter, and if there is no doubt as to the veracity

of the declaration. In the case of products sent by post, the declaration can be made on the customs

declaration CN22/CN23 or on a sheet of paper annexed to that document.

2. Imports which are occasional and consist solely of products for the personal use of the

recipients or travellers or their families shall not be considered to be imports by way of trade if it is

evident from the nature and quantity of the products that no commercial purpose is intended.

& /en 143

3. The total value of the products referred to in paragraph 1 shall not exceed the values

stipulated in the laws and regulations of the Party of import. The Parties shall exchange information

on those values.

ARTICLE 11.21

Supporting documents

The documents referred to in Article 11.17(4) may include:

(a) direct evidence of the processes carried out by the exporter or supplier to obtain the goods

concerned, contained, for example, in their accounts or internal book-keeping;

(b) documents proving the originating status of materials used, issued or made out in the

European Union or MERCOSUR, if those documents are used, issued or made out in

accordance with that Party's laws and regulations;

(c) documents proving the working or processing of materials in the European Union or

MERCOSUR, issued or made out in the European Union or MERCOSUR, if those documents

are used, issued or made out in accordance with that Party's laws and regulations; and

(d) a statement on origin proving the originating status of materials used made out in the

European Union or MERCOSUR in accordance with this Chapter.

& /en 144

ARTICLE 11.22

Record-keeping requirements

The exporter making out a statement on origin shall keep, for at least 3 (three) years as of the date

of making out the statement on origin, a copy of that statement on origin and of the documents

referred to in Article 11.17(4). The importer shall keep that statement of origin, or a copy thereof if

the original is held by the customs authority or competent governmental authority, for at

least 3 (three) years as of the date of importation of the products to which that statement on origin

refers.

ARTICLE 11.23

Discrepancies and formal errors

1. Slight discrepancies between the statements on origin and the documents submitted to the

customs office for the purposes of carrying out the formalities for importing the products shall not

render the statement on origin null and void if it is duly established that the statement on origin

corresponds to the products submitted.

2. Obvious formal errors on a statement on origin shall not cause the statement on origin to be

rejected if such errors do not create doubts concerning the correctness of the information contained

in the statement on origin.

& /en 145

ARTICLE 11.24

Cooperation between customs authorities and competent governmental authorities

1. The customs authorities or competent governmental authorities of the Member States of the

European Union and of the Signatory MERCOSUR State shall provide each other, by means of

communication between the European Commission and the Secretariat of MERCOSUR, with the

addresses of the customs authorities or competent governmental authorities responsible for

verifying statements on origin.

2. In order to ensure the proper application of this Chapter, the European Union and

MERCOSUR shall assist each other, through their customs authorities or competent governmental

authorities, in checking the authenticity of statements on origin and the correctness of the

information given in these statements.

3. To prevent, investigate and combat breaches of customs legislation, Annex 12-A provides

for cooperation between customs authorities or competent governmental authorities, including the

presence of duly authorised officials of one Party in the territory of the other, subject to the

agreement of and the conditions set by the Party in whose territory the assistance is being given.

& /en 146

ARTICLE 11.25

Verification of statements on origin

1. Verifications of statements on origin shall be carried out at random or whenever the customs

authorities or competent governmental authorities of the Party of import have reasonable doubts as

to the authenticity of such statements, the originating status of the products concerned or the

fulfilment of the other requirements of this Chapter.

2. For the purposes of implementing paragraph 1, the customs authorities or competent

governmental authorities of the Party of import shall return the statement on origin, or a copy

thereof, to the customs authorities or competent governmental authorities of the Party of export,

providing the reasons for the request of verification. Any documents or information obtained

suggesting that the information provided on the statement on origin is incorrect shall be included in

support of the request for verification.

3. The request for verification and the subsequent reply shall be submitted in an official

language of the customs authority or competent governmental authority of the Party of import

requesting the verification, in a language acceptable to that Party or in accordance with Article 5(3)

of Annex 12-A.

4. The verification shall be carried out by the customs authorities or competent governmental

authorities of the Party of export. For this purpose, they have the authority to call for any evidence

and to carry out any inspections of the exporter's accounts or any other check that they consider

appropriate.

& /en 147

5. If the customs authorities or competent governmental authorities of the Party of import

decide to suspend the granting of preferential treatment to the products concerned while awaiting

the results of the verification, they shall offer to release the products to the importer subject to any

precautionary measures that the customs authorities or competent governmental authorities deem

necessary. Any suspension of preferential treatment shall be terminated as soon as possible after the

Party of import has determined the origin of the products.

6. The customs authorities or competent governmental authorities of the Party of export shall

inform the authorities of the Party of import requesting the verification of the results thereof as soon

as possible. The Party of export shall provide to the customs authorities or competent governmental

authorities of the Party of import the following information:

(a) the results of the verification;

(b) a description of the product subject to verification and the tariff classification relevant for the

application of the rules of origin;

(c) a description and explanation of the manufacture sufficient to support the rationale concerning

the originating status of the product;

(d) information on the manner in which the verification was conducted; and

(e) if appropriate, supporting documentation.

& /en 148

7. If there is no reply within 10 (ten) months of the date of the verification request or if the

reply does not contain sufficient information to determine the authenticity of the statement in

question or the origin of the products, the requesting customs authorities or competent

governmental authorities shall, except in exceptional circumstances, refuse preferential tariff

treatment to the products covered by the statement on origin. The period of 10 (ten) months may be

extended by mutual agreement between the Parties, taking into account the number of verification

requests and the complexity of the verifications.

8. The customs authorities or competent governmental authorities of the Party of import

requesting the verification shall, at the request of the customs authorities or competent

governmental authorities of the Party of export, notify those authorities of their decision on the

verification process.

ARTICLE 11.26

Consultations

1. If, in relation to the verification procedures set out in Article 11.25, the customs authorities

or competent governmental authorities of the Party of import intend to make a determination of

origin that is not consistent with the reply provided by the customs authorities or competent

governmental authorities of the Party of export in accordance with Article 11.25(6), the Party of

import shall notify this intention to the Party of export within 60 (sixty) days of receiving the reply

in accordance with Article 11.25(6).

& /en 149

2. At the request of either Party, the Parties shall hold consultations within 90 (ninety) days of

the date of the notification referred to in paragraph 1 or within an agreed period of time, with a view

to resolving differences in relation to the verification procedures. The period for consultation may

be extended on a case-by-case basis by mutual written agreement between the Parties.

3. If there are differences in relation to the verification procedures which cannot be settled

between the customs authorities or competent governmental authorities of the Party of import

requesting a verification and the customs authorities or competent governmental authorities of the

Party of export responsible for carrying out this verification, or if such differences raise questions as

to the interpretation of this Chapter, such differences or questions shall be submitted to the

Subcommittee on customs, trade facilitation and rules of origin, referred to in Article 11.32.

4. The customs authorities or competent governmental authorities of the Party of import

requesting a verification may make the determination on origin after consultations in the

Subcommittee on customs, trade facilitation and rules of origin and only on the basis of sufficient

justification, after having granted the importer the right to be heard. The determination shall be

notified to the Party of export.

5. Nothing in this Article shall affect the procedures or the rights of the Parties under

Chapter 29.

6. In all cases, disputes between the importer and the customs authorities or competent

governmental authorities of the Party of import shall be settled under the law of that Party.

& /en 150

ARTICLE 11.27

Confidentiality

1. Each Party shall maintain, in conformity with its law, the confidentiality of the information

collected pursuant to this Chapter and shall protect that information from disclosure.

2. Information obtained by the authorities of the importing Party may only be used by those

authorities for the purposes of this Chapter. Each Party shall ensure that the confidential

information collected pursuant to this Chapter is not used for purposes other than the administration

and enforcement of determination of origin and of customs matters, except with the permission of

the person or Party that provided such confidential information.

3. Notwithstanding paragraph 2, the importing Party may allow information collected pursuant

to this Chapter to be used or disclosed in any administrative, judicial or jurisdictional proceedings

instituted for failure to comply with customs related laws implementing this Chapter. In such a case

the importing Party shall notify the exporting Party of the use or disclosure of the information.

ARTICLE 11.28

Administrative measures and sanctions

A Party shall impose, in accordance with its laws and regulations, administrative measures and

sanctions on any person who draws up, or causes to be drawn up, a document which contains

incorrect information for the purposes of obtaining a preferential treatment for products.

& /en 151

SECTION C

FINAL PROVISIONS

ARTICLE 11.29

Ceuta and Melilla

1. For the purposes of this Chapter, in the case of the European Union, the term "Party" does

not include Ceuta and Melilla.

2. Products originating in MERCOSUR, when imported into Ceuta and Melilla, shall in all

respects be subject to the same customs treatment under this Agreement as that which is applied to

products originating in the customs territory of the European Union under Protocol 2 of the Act of

Accession of the Kingdom of Spain and the Portuguese Republic to the European Union.

MERCOSUR shall grant to imports of products covered by this Agreement and originating in Ceuta

and Melilla the same customs treatment as that which is granted to products imported from and

originating in the European Union.

3. The rules of origin and origin procedures referred to in this Chapter shall apply, _mutatis_

_mutandis_, to products exported from MERCOSUR to Ceuta and Melilla and to products exported

from Ceuta and Melilla to MERCOSUR.

4. Ceuta and Melilla shall be considered to be a single territory.

& /en 152

5. The exporter shall indicate "MERCOSUR" or "Ceuta and Melilla" in field 2 of the text of

the statement on origin, depending on the origin of the product.

6. The customs authorities of the Kingdom of Spain shall be responsible for the application and

implementation of this Chapter in Ceuta and Melilla.

ARTICLE 11.30

Tariff rate quotas

Products exported under tariff rate quotas granted by the European Union shall be accompanied by

an official document issued by the Signatory MERCOSUR States, the model of which should be

communicated to the European Union by MERCOSUR no later than the date of entry into force of

this Agreement **[1]** .

ARTICLE 11.31

Goods in transit or storage

This Agreement may be applied to goods which comply with this Chapter and which, on the date of

entry into force of this Agreement, are either in transit or in temporary storage in bonded

warehouses or in free zones in the European Union or in MERCOSUR, subject to the submission to

the customs authorities of the importing Party, within 6 (six) months of said date, of a statement on

origin and, if appropriate, the documents showing that the goods comply with Article 11.14.

**1** This provision applies without prejudice to the other provisions in this Chapter.

& /en 153

ARTICLE 11.32

Subcommittee on customs, trade facilitation and rules of origin

1. The Subcommittee on customs, trade facilitation and rules of origin established pursuant to

Article 9.9(4) shall have the following functions, in addition to those listed in Articles 2.4, 9.9,

12.6(10) and 12.21:

(a) conduct the preparatory internal work necessary for the Joint Committee in trade

configuration on:

(i) the implementation and operation of this Chapter; and

(ii) any amendments to this Chapter proposed by a Party;

(b) adopt explanatory notes to facilitate the implementation of this Chapter; and

(c) conduct, where necessary, the consultations provided for in Article 11.26.

ARTICLE 11.33

Explanatory notes

The Subcommittee on customs, trade facilitation and rules of origin shall adopt, as appropriate,

explanatory notes regarding the interpretation, application and administration of this Chapter.

& /en 154

ARTICLE 11.34

Amendments to this Chapter

The Joint Council in trade configuration may amend this Chapter pursuant to point (f) of

Article 9.7(1).

CHAPTER 12

CUSTOMS AND TRADE FACILITATION

ARTICLE 12.1

Objectives and scope

1. The Parties recognise the importance of customs and trade-facilitation matters in the

evolving global trading environment.

2. The Parties recognise that international trade and customs instruments and standards are the

basis for import, export and transit requirements and procedures.

& /en 155

3. The Parties recognise that their legislation should be non-discriminatory and that customs

and other trade-related procedures should be based upon the use of modern methods and effective

controls to combat fraud, protect consumer health and safety and promote legitimate trade. Each

Party should periodically review its legislation and customs procedures. The Parties also recognise

that their customs and other trade-related procedures should not be more administratively

burdensome or trade-restrictive than necessary to achieve legitimate objectives and that they should

be applied in a predictable, consistent and transparent manner.

4. The Parties shall reinforce their cooperation with a view to ensuring that the relevant laws

and regulations, as well as the administrative capacity of the relevant administrations, fulfil the

objectives of promoting trade-facilitation while ensuring effective control of import, export and

transit of goods at the border.

5. The Parties shall cooperate with a view to support the development of regional integration

within both the European Union and MERCOSUR.

ARTICLE 12.2

Customs cooperation

1. The Parties, through their respective authorities, shall cooperate on customs and other trade

related matters in order to ensure that the objectives set out in Article 12.1 are attained.

& /en 156

2. Cooperation may include:

(a) exchanging information concerning customs and other trade-related legislation, the

implementation of such legislation and customs procedures, particularly in the following

areas:

(i) simplification and modernisation of customs procedures;

(ii) enforcement of intellectual property rights by the customs authorities;

(iii) free circulation of goods and regional integration;

(iv) facilitation of transit movements and transhipment;

(v) interagency coordination at the border;

(vi) relations with the business community;

(vii) supply chain security and risk management; and

(viii) use of information technology, data and documentation requirements and single window

systems, including work towards their future interoperability;

(b) exchanging information concerning international trade and customs instruments and

standards;

& /en 157

(c) collaborating on the customs-related aspects of securing and facilitating the international trade

supply chain in accordance with the Framework of Standards to Secure and Facilitate Global

Trade (hereinafter referred to as the "SAFE Framework" of the World Customs Organization

(hereinafter referred to as the "WCO");

(d) developing joint initiatives related to import and export procedures, including technical

assistance, capacity building and measures aimed at providing an effective service to the

business community;

(e) strengthening cooperation between the Parties in the fields of customs and trade-facilitation in

international organisations such as the WTO, the WCO and the United Nations Conference on

Trade and Development (hereinafter referred to as "UNCTAD");

(f) establishing, if relevant and appropriate, mutual recognition of trade partnership programmes

and customs controls, including equivalent trade-facilitation measures;

(g) fostering cooperation between customs and other government authorities or agencies in

relation to authorized economic operator programmes for example by aligning requirements,

facilitating access to benefits and minimising unnecessary duplication;

(h) working together with a view to reaching a common approach to issues relating to customs

valuation; and

(i) working together to further reduce release times and to release goods without undue delay, in

particular perishable goods.

& /en 158

3. The Parties shall provide each other with mutual administrative assistance in customs

matters in accordance with the provisions of Annex 12-A.

ARTICLE 12.3

Customs and other trade-related laws and regulations

1. Each Party's customs and trade-related laws and regulations **[1]** shall be based upon:

(a) international instruments and standards applicable in the area of customs and trade, including:

the WTO Trade Facilitation Agreement done at Bali on 7 December 2013 (hereinafter

referred to as "WTO Trade Facilitation Agreement"); the International Convention on the

Harmonized Commodity Description and Coding System, done at Brussels on 14 June 1983;

the Safe Framework and the WCO data model, adopted in June 2005, and, to the extent

possible, the substantive elements of the Revised Kyoto Convention on the Simplification and

Harmonisation of Customs Procedures, done at Kyoto on the 18 May 1973;

(b) the common objective of facilitating legitimate trade through effective enforcement of and

compliance with legislative requirements; and

(c) legislation that is proportionate and non-discriminatory, avoids unnecessary burdens on

economic operators, provides for further facilitation for operators with high levels of

compliance, including favourable treatment with respect to customs controls prior to the

release of goods, and ensures safeguards against fraud and illicit or damaging activities.

**1** For greater certainty, reference to laws and regulations covers procedures enshrined therein.

& /en 159

2. In order to improve working methods, as well as to ensure non-discrimination, transparency,

efficiency, integrity and accountability of operations, each Party shall:

(a) simplify and review requirements and formalities wherever possible with a view to the rapid

release and clearance of goods;

(b) work towards the further simplification and standardisation of data and documentation

required by customs authorities and other agencies; and

(c) ensure that the highest standards of integrity be maintained, through the application of

measures reflecting the principles of the relevant international conventions and instruments in

this field.

ARTICLE 12.4

Release of goods

1. Each Party shall adopt or maintain requirements and procedures that:

(a) provide for the prompt release of goods within a period no greater than that required to ensure

compliance with its customs and other trade-related laws and formalities;

& /en 160

(b) provide for advance electronic submission and processing of documentation and any other

required information prior to the arrival of the goods, to enable the release of goods on

arrival **[1]** ; and

(c) allow for the release of goods prior to the final determination of customs duties, taxes, fees

and charges, if such a determination is not done prior to, upon, or as rapidly as possible after

arrival, and if all other regulatory requirements have been met.

2. For the purposes of point (c) of paragraph 1, as a condition for such release, each Party may

require a guarantee for any amount not yet determined in the form of a surety, a deposit or another

appropriate instrument provided for in its laws and regulations. Such guarantee shall not be greater

than the amount the Party requires to ensure payment of customs duties, taxes, fees and charges

ultimately due for the goods covered by the guarantee. The guarantee shall be discharged when it is

no longer required **[2]** .

3. Each Party shall strive to further reduce release-times and release the goods without undue

delay.

**1** Signatory MERCOSUR States shall comply with the commitments in this paragraph in
accordance with Article 16 (Notification of definitive dates for implementation of Category B
and Category C) of the WTO Trade Facilitation Agreement.
**2** Signatory MERCOSUR States shall comply with the commitments in this paragraph in
accordance with Article 16 (Notification of definitive dates for implementation of Category B
and Category C) of the WTO Trade Facilitation Agreement.

& /en 161

ARTICLE 12.5

Perishable goods

1. For the purposes of this provision, perishable goods are goods that rapidly decay due to their

natural characteristics, in particular in the absence of appropriate storage conditions.

2. Each Party shall give appropriate priority to perishable goods when scheduling and

performing any examinations that may be required.

3. On request of an economic operator, each Party shall, if practicable and consistent with its

laws and regulations:

(a) provide for the clearance of a consignment of perishable goods outside the business hours of

customs and other relevant authorities; and

(b) allow consignments of perishable goods to be cleared at the premises of the economic

operator.

& /en 162

ARTICLE 12.6

Advance rulings

1. For the purposes of this Article, "advance ruling" means a written decision provided to an

applicant prior to the importation of a good covered by the application that sets forth the treatment

that the Party shall provide to the good at the time of importation with regard to:

(a) the good's tariff classification; and

(b) the origin of the good.

2. Each Party shall issue, through its customs authorities, an advance ruling that sets forth the

treatment to be provided to the goods concerned. If an applicant submits a written request, including

in electronic format, containing all necessary information in accordance with the laws and

regulations of the issuing Party, that ruling shall be issued in a reasonable, time-bound manner.

3. The advance ruling shall be valid for a period of at least 3 (three) years after its issuance

unless the law, facts or circumstances supporting the original advance ruling change.

4. A Party may decline to issue an advance ruling if the question raised is the subject of

administrative or judicial review or if the application does not relate to any intended use of the

advance ruling. If a Party declines to issue an advance ruling, it shall promptly notify the applicant

in writing, setting out the relevant facts and the basis for its decision.

& /en 163

5. Each Party shall publish, at least:

(a) the requirements for the application for an advance ruling, including the information to be

provided and the format;

(b) the time period by which it will issue an advance ruling; and

(c) the length of time for which the advance ruling is valid.

6. If a Party revokes, modifies or invalidates an advance ruling, it shall provide written notice

to the applicant setting out the relevant facts and the basis for its decision. A Party may revoke,

modify or invalidate an advance ruling with retroactive effect, only if the ruling was based on

incomplete, incorrect, false or misleading information.

7. An advance ruling issued by a Party shall be binding on that Party in respect of the applicant

that sought it. The Party may provide that the advance ruling be binding on the applicant.

8. Each Party shall provide, upon written request of an applicant, a review of the advance

ruling or of the decision to revoke, modify or invalidate it **[1]** .

9. Subject to any confidentiality requirements, substantive elements of these rulings shall be

published, online or in other appropriate formats.

**1** Under this paragraph, a review may, either before or after the ruling has been acted upon, be
provided by the official, office, or authority that issued the ruling, a higher or independent
administrative authority, or a judicial authority.

& /en 164

10. To facilitate trade, the Subcommittee on customs, trade facilitation and rules of origin,

referred to in Article 12.21, shall regularly discuss updates on changes in the respective laws and

regulations of the Parties on the matters listed in this Article.

11. The Parties may agree upon advance rulings on any other matter.

ARTICLE 12.7

Transit and transhipment

1. Each Party shall ensure freedom of transit through its territory via the route most convenient

for transit.

2. Without prejudice to legitimate control, each Party shall accord to traffic in transit to or from

the territory of the other Party, treatment no less favourable than that accorded to its own like goods

and their movement, including imports and exports, when such goods are transported on the same

route under like conditions.

3. Each Party shall, to the extent possible, apply to transhipped goods customs procedures that

are less burdensome than those applied to traffic in transit.

4. Each Party shall operate bonded transport regimes that allow the transit of goods without

payment of customs duties or other charges subject to the provision of an appropriate guarantee.

5. Each Party shall promote and implement regional transit arrangements with a view to

facilitating traffic in transit and reducing trade barriers.

& /en 165

6. Each Party shall draw upon and use international standards and instruments relevant to

transit.

7. Customs transit procedures may be used also if the transit of goods begins or ends in the

territory of a Party (inland transit).

8. The Parties shall ensure that all concerned authorities and agencies in their respective

territories cooperate and coordinate on customs matters with a view to facilitating traffic in transit.

ARTICLE 12.8

Authorized economic operator

1. Each Party shall establish or maintain a trade-facilitation partnership programme for

operators who meet specified criteria, hereinafter referred to as authorized economic operators

(hereinafter referred to as "AEO").

2. The specified criteria that operators need to meet in order to qualify as authorized economic

operators, hereinafter referred to as "the specified criteria", shall be related to compliance, or the

risk of non-compliance, with requirements specified in each Party's laws and regulations. The

specified criteria, which shall be published, may include:

(a) the absence of any serious infringement or repeated infringements of customs and taxation

laws and regulations, including no record of serious criminal offences relating to the

economic activity of the applicant;

& /en 166

(b) the demonstration by the applicant of a high level of control of his or her operations and of the

flow of goods, by means of a system of managing commercial and, where appropriate,

transport records which allows appropriate customs controls;

(c) financial solvency, which shall be deemed to be proven if the applicant has good financial

standing, which enables him or her to fulfil his or her commitments, with due regard to the

characteristics of the type of business activity concerned;

(d) proven competences or professional qualifications directly related to the activity carried out;

and

(e) appropriate security and safety standards.

3. The specified criteria shall not be designed or applied so as to afford or create arbitrary or

unjustifiable discrimination between operators where the same conditions prevail and shall allow

the participation of SMEs.

4. The trade-facilitation partnership programme shall include at least four of the following

benefits:

(a) fewer documentary and data requirements, as appropriate;

(b) low rate of physical inspections and examinations, as appropriate;

(c) rapid release time, as appropriate;

(d) deferred payment of duties, taxes, fees and charges;

& /en 167

(e) use of comprehensive guarantees or reduced guarantees;

(f) a single customs declaration for all imports or exports in a given period; and

(g) clearance of goods at the premises of the authorized economic operator or another place

authorised by the customs authorities.

5. The Parties should ensure coordination between customs authorities and other border

agencies in the development of their respective authorized economic operator programmes through

means such as the alignment of requirements, the minimisation of unnecessary duplication and the

access to benefits related to controls and requirements administered by agencies other than customs

authorities.

ARTICLE 12.9

Single window

Each Party shall endeavour to establish single window systems, enabling traders to submit through

a single entry point documentation and data requirements for importation, exportation or transit of

goods to the participating authorities or agencies.

& /en 168

ARTICLE 12.10

Transparency

1. The Parties recognise the importance of timely consultations with trade representatives on a

Party's proposed laws and procedures related to customs and trade facilitation matters.

2. Each Party shall ensure that its respective customs and other trade-related requirements and

procedures continue to meet the needs of the trading community, follow best practices and remain

as less trade-restrictive as possible.

3. Each Party shall, as appropriate, provide for regular consultations between its border

agencies and traders or other stakeholders located within its territory.

4. Each Party shall promptly publish, in a non-discriminatory and easily accessible manner,

and as far as possible through electronic means, new laws, regulations and general procedures

related to customs and trade-facilitation matters prior to the application of any such laws,

regulations or general procedures, as well as changes to and interpretations of such laws, regulations

and general procedures. This shall include:

(a) importation, exportation and transit procedures, including port, airport, and other entry-point

procedures and hours of operation, and required forms and documents;

(b) applied rates of duties and taxes of any kind imposed on or in connection with importation or

exportation;

(c) fees and charges imposed by or for governmental agencies on or in connection with

importation, exportation or transit;

& /en 169

(d) rules for the classification or valuation of products for customs purposes;

(e) laws, regulations and administrative rulings of general application relating to rules of origin;

(f) import, export or transit restrictions or prohibitions;

(g) penalty provisions against breaches of import, export or transit formalities;

(h) appeal procedures;

(i) agreements or parts thereof with any country or countries relating to importation, exportation

or transit;

(j) procedures relating to the administration of tariff quotas;

(k) points of contact for information enquiries; and

(l) other relevant notices of an administrative nature in relation to the above.

5. Each Party shall ensure there is a reasonable time period between the publication of new or

amended laws, regulations and general procedures and fees or charges and their entry into force.

6. Each Party shall make available online and update, as appropriate, the following:

(a) a description of its importation, exportation and transit procedures, including appeal

procedures, informing of the practical steps needed to import and export and for transit;

& /en 170

(b) the forms and documents required for importation into, exportation from, or transit through

the territory of that Party; and

(c) contact information on enquiry points.

7. Each Party shall establish or maintain one or more enquiry points to answer within a

reasonable time enquiries from governments, traders and other interested parties on customs and

other trade-related matters. The Parties shall not require the payment of a fee for answering

enquiries or providing required forms and documents. The enquiry points shall answer enquiries

and provide the forms and documents within a reasonable time period set by each Party, which may

vary depending on the nature or complexity of the enquiry.

ARTICLE 12.11

Customs valuation

The Agreement on the Implementation of Article VII of GATT (1994) shall govern customs

valuation rules applied to reciprocal trade between the Parties. Its provisions are hereby

incorporated into and made an integral part of this Agreement.

ARTICLE 12.12

Risk management

1. Each Party shall adopt or maintain a risk management system for customs control.

& /en 171

2. Each Party shall design and apply risk management in such a manner as to avoid arbitrary or

unjustifiable discrimination, or disguised restrictions on international trade.

3. Each Party shall concentrate customs control and other relevant border controls on high-risk

consignments and expedite the release of low-risk consignments. Each Party may also select, on a

random basis, consignments for such controls as part of its risk management.

4. Each Party shall base risk management on assessment of risk through appropriate selectivity

criteria.

5. The provisions of this Article are, whenever possible, applicable to procedures administered

by other border agencies.

ARTICLE 12.13

Post-clearance audit

1. With a view to expediting the release of goods, each Party shall adopt or maintain post

clearance audit to ensure compliance with customs and other related laws and regulations.

2. Each Party shall conduct post-clearance audits in a risk-based manner.

3. Each Party shall conduct post-clearance audits in a transparent manner. If an audit is

performed and conclusive results have been achieved, the Party shall, without delay, notify the

person whose record is audited of the results, the person's rights and obligations and the reasons for

the results.

& /en 172

4. The Parties acknowledge that the information obtained in a post-clearance audit may be

used in further administrative or judicial proceedings.

5. The Parties shall, wherever practicable, use the results of a post-clearance audit in applying

risk management.

ARTICLE 12.14

Customs brokers

Each Party shall publish its measures on the use of customs brokers. Each Party shall apply

transparent, non-discriminatory and proportionate rules if and when licensing customs brokers.

A Party shall not adopt new measures introducing the mandatory use of customs brokers.

ARTICLE 12.15

Pre-shipment Inspections

A Party shall not require the mandatory use of pre-shipment inspections as defined in the WTO

Agreement on Pre-shipment Inspection or any other inspection activity performed at destination,

before customs clearance, by private companies.

& /en 173

ARTICLE 12.16

Appeals

1. Each Party shall provide effective, prompt, non-discriminatory and easily accessible

procedures to guarantee the right of appeal against the administrative actions, rulings and decisions

of customs or other competent authorities affecting import or export of goods or goods in transit.

2. Appeal procedures may include administrative review by the supervising authority and

judicial review of decisions taken at the administrative level according to each Party's laws and

regulations.

3. Any person who has applied to the customs authorities for a decision and has not obtained a

decision on that application within the applicable time-limits shall also be entitled to exercise the

right of appeal.

4. Each Party shall provide a person to whom it issues an administrative decision with the

reasons for that decision, so as to enable that person to have recourse to appeal procedures if

necessary.

& /en 174

ARTICLE 12.17

Import, export and transit formalities and data and documentation requirements

1. Each Party shall ensure that import, export and transit formalities and data and

documentation requirements are:

(a) adopted or applied with a view to a rapid release of goods, in particular perishable goods,

provided the conditions for the release are fulfilled;

(b) adopted or applied in a manner that aims to reduce the time and cost of compliance for traders

and operators;

(c) the least trade-restrictive measure chosen, if two or more alternative measures are reasonably

available for fulfilling the policy objective or objectives in question; and

(d) not maintained, including parts thereof, if they, or parts of them are no longer required.

2. MERCOSUR shall work towards applying common customs procedures and uniform

customs data requirements for the release of goods.

ARTICLE 12.18

Use of information technology

1. Each Party shall use information technologies that expedite procedures for the release of

goods in order to facilitate trade between the Parties.

& /en 175

2. Each Party shall:

(a) make available by electronic means customs declarations and, whenever possible, other

documents required for the import, transit or export of goods;

(b) allow a customs declaration and, whenever possible, any other data requirements for the

import and export of goods to be submitted in electronic format;

(c) establish means of providing for the electronic exchange of customs information with its

trading community;

(d) promote the electronic exchange of data between its respective traders, customs

administrations and other trade-related agencies; and

(e) use electronic risk management systems for assessment and targeting that enable its customs

authorities and, whenever possible, other border agencies to focus their inspections on high

risk goods and that facilitate the release and movement of low-risk goods.

3. Each Party shall adopt or maintain procedures allowing the option of electronic payment for

duties, taxes, fees and charges incurred upon importation and exportation collected by customs

authorities and, whenever possible and applicable, by other border agencies.

& /en 176

ARTICLE 12.19

Penalties

1. Each Party shall ensure that its customs laws and regulations provide that any penalties

imposed for breaches of customs regulations or procedural requirements be proportionate and non

discriminatory.

2. Penalties for a breach of a Party's customs law, regulation or procedural requirement are

imposed only on the person responsible under that Party's law for such breach.

3. Penalties imposed shall depend on the facts and circumstances of the case and shall be

commensurate with the degree and severity of the breach. Each Party shall avoid incentives for the

assessment or collection of a penalty or conflicts of interest in the assessment and collection of

penalties.

4. In the event of voluntary prior disclosure to a customs administration of the circumstances

of a breach of a customs law, regulation or procedural requirement, each Party is encouraged to

consider this as a potential mitigating factor when establishing a penalty.

5. When a penalty is imposed for a breach of a customs law, regulation or procedural

requirement, an explanation in writing is provided to the person upon whom the penalty is imposed

specifying the nature of the breach and the applicable law, regulation or procedure under which the

amount or range of penalty for the breach has been prescribed.

& /en 177

ARTICLE 12.20

Temporary admission

1. For the purposes of this Article, the term "temporary admission" means the customs

procedure under which certain goods, including their means of transport, that are brought into a

customs territory for a specific purpose are conditionally relieved from payment of import duties

and taxes, without application of import prohibitions or restrictions of economic character. Such

goods must be intended for re-exportation within a specified period and without having undergone

any change except normal depreciation due to the use made of them.

2. Nothing in this Article should be construed as to relieve imported goods from meeting trade

related requirements of non-economic character, in particular sanitary and phytosanitary measures.

3. Each Party shall, in accordance with its law, grant temporary admission, with total

conditional relief from import duties and taxes and without application of import restrictions or

prohibitions of economic character to the following goods:

(a) goods for display or use at exhibitions, fairs, meetings or similar events;

(b) professional equipment for the press or for sound or television broadcasting; cinematographic

equipment; any other equipment necessary for the exercise of the calling, trade or profession

of a person visiting the territory of another country to perform a specified task;

(c) goods imported in connection with a commercial operation but whose importation does not in

itself constitute a commercial operation;

& /en 178

(d) goods imported in connection with a manufacturing operation (such as plates, drawings,

moulds, plans and models, for use during a manufacturing process); replacement means of

production;

(e) goods imported exclusively for educational, scientific or cultural purposes;

(f) personal effects of passengers and goods imported for sports purposes;

(g) tourist publicity material;

(h) goods imported for humanitarian purposes; and

(i) animals imported for specific purposes.

3. Each Party shall, for the temporary admission of the goods referred to in paragraph 2 and

regardless of their origin, accept A.T.A. carnets issued and endorsed by the other Party in

accordance with the Customs Convention on the A.T.A. Carnet for the temporary admission of

goods done at Brussels on 6 December 1961, and guaranteed by an association forming part of the

international guarantee chain, certified by the competent authorities and valid in the territory of the

importing Party **[1]** .

**1** This provision shall apply only in respect of the European Union and of those Signatory
MERCOSUR States that are Contracting parties to the Convention on Temporary Admission
done at Istanbul on 26 June 1990 and according to the commitments undertaken in that
Convention.

& /en 179

ARTICLE 12.21

Subcommittee on customs, trade facilitation and rules of origin

The Subcommittee on customs, trade facilitation and rules of origin, established pursuant to

Article 9.9(4) shall, in addition to the functions listed in Articles 2.4, 9.9, 11.32 and 12.6(10), have

the function to enhance cooperation on the development, application and enforcement of customs

and trade-related procedures, mutual administrative assistance in customs matters, rules of origin

and administrative cooperation.

ARTICLE 12.22

Joint Council in trade configuration

With a view to implementing the relevant provisions in this Chapter, the Joint Council in trade

configuration shall have the power to adopt decisions relating to AEO programmes and their mutual

recognition as well as to joint initiatives relating to customs procedures and trade-facilitation.

& /en 180

CHAPTER 13

TECHNICAL BARRIERS TO TRADE

ARTICLE 13.1

Objective

The objective of this Chapter is to facilitate trade in goods between the Parties by identifying,

preventing and eliminating unnecessary technical barriers to trade (hereinafter referred to as "TBT")

and to enhance cooperation between the Parties in matters covered by this Chapter.

ARTICLE 13.2

Relation to the TBT Agreement

1. The Parties reaffirm their rights and obligations under the TBT Agreement, which is hereby

incorporated into and made part of this Agreement.

2. References to "this Agreement" in the TBT Agreement are to be read, as appropriate, as

references to the Partnership Agreement between the European Union and its Member States, of the

one part, and the Common Market of the South, the Argentine Republic, the Federative Republic of

Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay, of the other part.

3. The term "Members" in the TBT Agreement means the Parties to this Agreement.

& /en 181

ARTICLE 13.3

Scope

1. This Chapter applies to the preparation, adoption and application of standards, technical

regulations and conformity assessment procedures that may affect trade in goods between

the Parties.

2. This Chapter does not apply to:

(a) purchasing specifications prepared by governmental bodies for production or consumption

requirements of governmental bodies; and

(b) sanitary and phytosanitary measures as defined in Annex A to the SPS Agreement.

ARTICLE 13.4

Definitions

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

(a) the definitions set out in Annex 1 to the TBT Agreement;

(b) "supplier's declaration of conformity" means a first-party attestation issued by the

manufacturer on his sole responsibility based on the results of an appropriate type of

conformity assessment activity and excluding mandatory third-party assessment;

& /en 182

(c) "ISO" means the International Organization for Standardization;

(d) "IEC" means the International Electrotechnical Commission;

(e) "ITU" means the International Telecommunication Union;

(f) "Codex Alimentarius" means the Codex Alimentarius Commission (hereinafter referred to as

"Codex Alimentarius");

(g) "ILAC" means the International Laboratory Accreditation Cooperation;

(h) "IAF" means the International Accreditation Forum; and

(i) "IECEE CB Scheme" means the Scheme of the IEC System of Conformity Assessment

Schemes for Electrotechnical Equipment and Components for Mutual Recognition of Test

Certificates for Electrical Equipment.

ARTICLE 13.5

Joint cooperation on trade-facilitating initiatives

1. The Parties recognise the importance of intensifying their cooperation with a view to

increasing mutual understanding of their respective systems and helping to eliminate or avoid the

creation of TBT. In this regard, the Parties shall work towards the identification, promotion,

development and implementation, as appropriate, of trade-facilitating initiatives, on a case-by-case

basis.

& /en 183

2. A Party may propose to the other Party sector-specific initiatives in matters covered by this

Chapter. Those proposals shall be transmitted to the TBT Chapter coordinator, nominated pursuant

to Article 13.13, and may include:

(a) information exchange on regulatory approaches and practices;

(b) joint analysis of a sector or group of products;

(c) initiatives to further align technical regulations and conformity assessment procedures with

relevant international standards;

(d) the promotion of the use of accreditation to assess the competence of conformity assessment

bodies; and

(e) the consideration of mutual or unilateral recognition of conformity assessment results.

3. Whenever one of the Parties proposes a specific trade-facilitating initiative, the other Party

shall duly consider such proposal and reply within a reasonable period of time. If the other Party

rejects the proposed initiative, it shall explain the reasons for its decision to the proposing Party.

4. The terms of the work envisaged in this Article shall be defined by, of the one hand, the

European Union and, of the other hand, MERCOSUR or the Signatory MERCOSUR States

engaged in each trade-facilitating activity, if needed, and may include establishing ad hoc working

groups. In order to benefit from non-governmental perspectives on matters related to this Article,

each Party may, as appropriate and in accordance with its rules and procedures, consult with

stakeholders and other interested parties.

& /en 184

5. The Subcommittee on trade in goods, established pursuant to Article 9.9(4), shall discuss the

results of the work carried out pursuant to this Article and may consider appropriate actions.

6. Nothing in this Article shall be construed as obliging a Party to:

(a) deviate from domestic procedures for preparing and adopting regulatory measures;

(b) take actions that would undermine or impede the timely adoption of regulatory measures to

achieve its public policy objectives; or

(c) adopt any particular regulatory outcome.

7. If initiatives referred to in this Article are agreed and if that is necessary for their

implementation, each Party shall facilitate the interaction of technical teams to demonstrate their

conformity assessment schemes and systems in order to increase mutual understanding.

8. For the purposes of this Article, the European Union shall act through the European

Commission.

ARTICLE 13.6

Technical regulations

1. Each Party shall make best use of good regulatory practices with regard to the preparation,

adoption and application of technical regulations, as provided for in the TBT Agreement, including,

for example, preference for performance-based technical regulations, use of impact assessments or

stakeholder consultation.

& /en 185

2. In particular, the Parties shall:

(a) use relevant international standards as a basis for their technical regulations, including any

conformity assessment elements therein, except if such international standards would be an

ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued; if

international standards are not used as a basis for a technical regulation which may have a

significant effect on trade, a Party shall, upon request of the other Party, explain the reasons

why such standards are considered inappropriate or ineffective for the fulfilment of the

legitimate objective pursued;

(b) when reviewing their respective technical regulations, in addition to Article 2.3 of the TBT

Agreement and without prejudice to Articles 2.4 and 12.4 of the TBT Agreement, increase the

alignment of those regulations with relevant international standards; a Party shall consider

among others any new development in the relevant international standards and whether the

circumstances that have given rise to any divergence from any relevant international standards

continue to exist;

(c) promote the development of regional technical regulations and encourage that these are

adopted at national level and replace existing ones, in order to facilitate trade between

the Parties;

(d) allow a reasonable interval between the publication of technical regulations and their entry

into force for economic operators of the other Party to adapt **[1]** ;

**1** "Reasonable interval" shall be understood to mean normally a period of not less
than 6 (six) months, except when this would be ineffective in fulfilling the legitimate
objectives pursued.

& /en 186

(e) carry out the impact analysis of planned technical regulations in accordance with their

respective rules and procedures; and

(f) when preparing technical regulations, take due account of the characteristics and special needs

of SMEs.

ARTICLE 13.7

Standards

1. The Parties reaffirm their obligations under Article 4.1 of the TBT Agreement, particularly

in respect of taking all reasonable measures to ensure that all standardising bodies within their

territories accept and comply with the Code of Good Practice for the Preparation Adoption and

Application of Standards in Annex 3 to the TBT Agreement.

2. International standards developed by ISO, IEC, ITU or the Codex Alimentarius shall be

considered as the relevant international standards within the meaning of Articles 2 and 5 and

Annex 3 to the TBT Agreement.

& /en 187

3. A standard developed by other international organisations may also be considered a relevant

international standard within the meaning of Articles 2 and 5 and Annex 3 to the TBT Agreement,

if:

(a) it has been developed by a standardising body which seeks to establish consensus either:

(i) among national delegations of the participating WTO Members representing all the

national standardising bodies in their territory that have adopted, or expect to adopt,

standards for the subject matter to which the international standardisation activity

relates; or

(ii) among governmental bodies of participating WTO Members; and

(b) it has been developed in accordance with the WTO TBT Committee Decision on Principles

for the Development of International Standards, Guides and Recommendations with relation

to Articles 2 and 5 and Annex 3 to the TBT Agreement.

4. With a view to harmonising standards on a basis as wide as possible each Party shall

encourage, within the limits of its competence and resources, the standardising bodies within its

territory, as well as the regional standardising bodies of which that Party or the standardising bodies

within its territory are members, to:

(a) participate, within the limits of their resources, in the preparation of international standards by

relevant international standardising bodies;

(b) cooperate with the relevant national and regional standardising bodies of the other Party in

international standardisation activities;

& /en 188

(c) use relevant international standards as a basis for the standards they develop, except where

such international standards would be ineffective or inappropriate, for instance because of an

insufficient level of protection or fundamental climatic or geographical factors or fundamental

technological problems;

(d) avoid duplication of, or overlap with, the work of international standardising bodies;

(e) promote the development of standards at regional level and the adoption of such standards by

national standardising bodies, thereby replacing existing national standards;

(f) review national and regional standards not based on relevant international standards at regular

intervals, with a view to increasing their alignment with relevant international standards; and

(g) foster bilateral cooperation with the standardising bodies of the other Party.

5. The Parties should exchange information through the TBT Chapter coordinators, nominated

pursuant to Article 13.13, on:

(a) their use of standards as a basis for, or in support of, technical regulations;

(b) cooperation agreements implemented by either Party on standardisation, for example on

standardisation issues in free trade agreements with third countries; and

(c) their respective standardisation processes, and the use of international, regional or sub

regional standards as a basis for their national standards.

& /en 189

ARTICLE 13.8

Conformity assessment procedures and accreditation

1. The provisions set out in Article 13.6 with respect to the preparation, adoption and

application of technical regulations also apply to conformity assessment procedures.

2. If a Party requires conformity assessment as a positive assurance that a product conforms

with a technical regulation, it shall:

(a) select conformity assessment procedures proportionate to the risks involved;

(b) consider, in the regulatory process, the use of the supplier's declaration of conformity as

assurance of conformity, among other options, for showing compliance with technical

regulations; and

(c) if requested, provide information to the other Party on the reasons for selecting a particular

conformity assessment procedure for specific products.

3. If a Party requires third-party conformity assessment as a positive assurance that a product

conforms with a technical regulation, and it has not reserved this task to a governmental body as

specified in paragraph 4, it shall:

(a) preferentially use accreditation to qualify conformity assessment bodies;

& /en 190

(b) make best use of international standards for accreditation and conformity assessment, as well

as international agreements involving the Parties' accreditation bodies, for example, through

the mechanisms of ILAC and IAF;

(c) consider to join or, as applicable, encourage its testing, inspection and certification bodies to

join any functioning international agreements or arrangements for harmonisation or

facilitation of acceptance of conformity assessment results;

(d) within its territory, promote competition between conformity assessment bodies designated by

the authorities for a particular product or set of products with a view to enabling economic

operators to choose amongst them;

(e) ensure that conformity assessment bodies are independent of manufacturers, importers and

distributors, in the sense that they carry out their activities with objectivity and independence

of judgment;

(f) ensure that there are no conflicts of interest between accreditation bodies and conformity

assessment bodies, or between activities of market surveillance authorities and activities of

conformity assessment bodies;

(g) allow, to the extent possible, conformity assessment bodies to use subcontractors to perform

testing or inspections in relation to the conformity assessment, including subcontractors

located in the territory of the other Party; and

(h) publish online a list of the bodies that it has designated to perform such conformity

assessment and relevant information on the scope of each such body's designation.

& /en 191

4. Nothing in point (g) of paragraph 3 shall be construed as prohibiting a Party from requiring

subcontractors to meet the requirements that the conformity assessment body to which it is

contracted would be required to meet in order to perform the contracted tests or inspection itself.

5. Nothing in this Article shall preclude a Party from requesting that conformity assessment in

relation to specific products is performed by specified government authorities of that Party. In such

cases, that Party shall:

(a) establish the conformity assessment fees in accordance with the approximate cost of the

services rendered and, upon request of an applicant for conformity assessment, provide the

different elements included in those fees; and

(b) in principle, make the conformity assessment fees publicly available or, publicly available or,

when such information is not publicly available, provide it upon request.

& /en 192

6. Notwithstanding paragraphs 3 to 5 of this Article, in the fields which are listed in

Annex 13-A, in which the European Union accepts supplier's declaration of conformity as

assurance that a product conforms to a technical regulation, and in which a Signatory MERCOSUR

State requires mandatory third-party testing or certification for these fields, the Signatory

MERCOSUR State shall, as an assurance that a product conforms with the requirements of a

Signatory MERCOSUR State's technical regulations, accept certificates or, in cases where such

acceptance is not provided for under its relevant laws and regulations, accept test reports issued by

conformity assessment bodies that are located in the territory of the European Union and which

have been accredited for the relevant scopes by an accreditation body member of the international

arrangements for mutual recognition of the ILAC and the IAF; or accept certificates that have been

issued under the IECEE CB Scheme. In order to accept such certificates or test reports, a Signatory

MERCOSUR State may require in its relevant laws and regulations that bilateral arrangements,

including memoranda of understanding, exist between the conformity assessment body located in

the territory of the European Union and the conformity assessment body located in the territory of

the Signatory MERCOSUR State.

7. If supplier's declarations of conformity are considered a valid conformity assessment

procedure in the European Union, test reports issued by conformity assessment bodies that are

located in the territory of the Signatory MERCOSUR State, shall be accepted as a valid document

in the process of demonstrating that a product conforms with the European Union's technical

regulation requirements. The manufacturer shall remain responsible in all cases for the conformity

of the product.

& /en 193

8. Paragraph 6 also applies where a Signatory MERCOSUR State introduces new mandatory

third-party testing or certification requirements for the fields specified in Annex 13-A, in

accordance with paragraph 10 of this Article. If the European Union introduces mandatory third

party testing or certification requirements for the fields specified in Annex 13-A, in accordance with

paragraph 10 of this Article, the Parties shall discuss in the Subcommittee on trade in goods,

referred to in Article 13.14, whether any steps need to be taken to ensure reciprocity as regards the

acceptance of tests reports or certificates issued by conformity assessment bodies that are located in

the territory of the Signatory MERCOSUR State.

9. The Joint Council in trade configuration may adopt a decision to amend Section A of

Annex 13-A.

10. Notwithstanding paragraph 6 of this Article, either Party may introduce requirements for

mandatory third-party testing or certification for the fields specified in Annex 13-A, for products

falling within the scope of that Annex under the following conditions:

(a) the introduction of such requirements or procedures are justified under the legitimate

objectives referred to in Article 2.2 of the TBT Agreement;

(b) the reasons for the introduction of any such requirements or procedures are supported by

substantiated technical or scientific information regarding the performance of the products in

question;

(c) any such requirements or procedures are not more trade-restrictive than necessary to fulfil the

Party's legitimate objective, taking account of the risks that non-fulfilment would create; and

& /en 194

(d) the Party could not have reasonably foreseen the need for introducing any such requirements

or procedures at the date of entry into force of this Agreement.

11. Paragraph 6 is without prejudice to the exercise, on a non-discriminatory basis, of market

surveillance competences by the authorities of a Party, including additional testing on samples at

the point of entry.

ARTICLE 13.9

Transparency

1. With regard to the preparation, adoption and application of standards, technical regulations

and conformity assessment procedures, each Party shall:

(a) take the other Party's views into account if the process of developing a technical regulation is

open to public consultation, wholly or partially;

(b) when developing major technical regulations and conformity assessment procedures which

may have a significant effect on trade ensure in accordance with its respective laws and

regulations that transparency procedures are in place that allow persons of the Parties to

provide input through a formal public consultation process, except when urgent problems of

safety, health, environmental protection or national security arise or threaten to arise;

(c) allow persons of the other Party to participate in the consultation process referred to in point

(b) on terms no less favourable than those accorded to its own persons and, whenever

possible, make the results of that consultation process public;

& /en 195

(d) allow, in principle, a period of at least 60 (sixty) days for the other Party to provide written

comments on the proposed technical regulations and conformity assessment procedures, and

consider a reasonable request to extend the comment period;

(e) provide, in cases where the notified text is not in one of the official WTO languages, a clear

and comprehensive description of the content of the measure in the WTO notification format;

(f) if it receives written comments on its proposed technical regulation or conformity assessment

procedure from the other Party:

(i) discuss, upon request by the other Party, the written comments, whenever possible with

the participation of its competent regulatory authority and at a time when they can be

taken into account; and

(ii) reply in writing to the comments, whenever possible no later than the date of

publication of the technical regulation or conformity assessment procedure;

(g) provide, if requested by the other Party, information regarding the objectives of, legal basis

and rationale for, a technical regulation or conformity assessment procedure that the Party has

adopted or is proposing to adopt;

(h) provide information on the adoption and the entry into force of the technical regulation or

conformity assessment procedure and the adopted final text through an addendum to the

original notification to the WTO;

& /en 196

(i) consider a reasonable request from the other Party, received prior to the end of the comment

time period following the transmission of a proposed technical regulation, to extend the time

period between the adoption of the technical regulation and its entry into force, except when

the delay would be ineffective in fulfilling the legitimate objectives pursued; and

(j) provide free of charge access to the electronic version of the notified text with the

notification.

2. For the purposes of point (d) of paragraph 1, where urgent problems of safety, health,

environmental protection or national security arise or threaten to arise, Articles 2.10 and 5.7 of the

TBT Agreement shall apply.

3. If standards are made mandatory through incorporation or referencing in a draft technical

regulation or conformity assessment procedure, the transparency obligations related to TBT

notification set out in this Article and in Article 2 or 5 of the TBT Agreement shall be fulfilled.

4. Each Party shall ensure that all technical regulations and mandatory conformity assessment

procedures adopted and in force are publicly available on an official website free of charge. Each

Party shall always provide unrestricted access to all information relevant to the achievement of

conformity with a technical regulation. If standards provide a presumption of conformity with

technical regulations and these standards are not referred to in those technical regulations, each

Party shall ensure access to the information on corresponding standards.

5. Each Party shall, upon a reasonable request of the other Party or its economic operators,

provide information on technical regulations in force and, as appropriate and available, written

guidance on compliance with the technical regulations, without undue delay.

& /en 197

ARTICLE 13.10

Marking and labelling

1. The Parties' technical regulations including or dealing exclusively with mandatory marking

or labelling shall observe the principles of Article 2 of the TBT Agreement.

2. In particular, if a Party requires mandatory marking or labelling of products:

(a) it shall only require information which is relevant for consumers or users of the product or

authorities to indicate the product's conformity with the mandatory technical requirements;

(b) and if a Party requires any prior approval, registration or certification of the labels or

markings of the products, as a precondition for placing on the market products that otherwise

comply with its mandatory technical requirements, it shall ensure that the requests submitted

by the economic operators of the other Party are decided without undue delay and on a non

discriminatory basis;

(c) and if a Party requires the use of a unique identification number, the Party shall issue such

number to the economic operators of the other Party without undue delay and on a non

discriminatory basis;

& /en 198

(d) and provided that it is not misleading, contradictory or confusing in relation to the importing

Party's regulatory requirements and the legitimate objectives under the TBT Agreement are

not compromised thereby, the Party shall permit:

(i) information in other languages in addition to the language required in the importing

Party of the products; and

(ii) nomenclatures, pictograms, symbols or graphics adopted in international standards;

(e) it shall accept, whenever possible, that supplementary labelling and corrections to labelling

take place in customs warehouses or other designated areas at the point of import as an

alternative to labelling in the country of origin;

(f) if it considers that the protection of public health and the environment, the protection against

deceptive practices and any other legitimate objectives under the TBT Agreement are not

compromised thereby, it shall endeavour to accept non-permanent or detachable labels, rather

than labels physically attached to the product, or inclusion of relevant information in the

accompanying documentation.

3. Paragraph 2 shall not apply to marking or labelling of medicinal products.

4. If a Party considers that marking or labelling requirements for a product or a sector in the

other Party could be improved, it may propose a trade-facilitating initiative to address its concerns

in conformity with Article 13.5.

& /en 199

ARTICLE 13.11

Cooperation and technical assistance

1. To contribute to the fulfilment of the objectives of this Chapter, each Party shall, inter alia:

(a) promote cooperation and joint activities and projects between their respective organisations,

public or private, national or regional, in the fields of technical regulations, standardisation,

conformity assessment, metrology and accreditation;

(b) promote good regulatory practices through the exchange of information, experiences and best

practices about, inter alia, regulatory impact assessment, regulatory stock management and

risk assessment and public consultation;

(c) exchange views on market surveillance;

(d) strengthen the technical and institutional capacity of the national regulatory, metrology,

standardisation, conformity assessment and accreditation bodies, supporting the development

of their technical infrastructure, including laboratories and testing equipment, and sustaining

the continuous training of human resources;

(e) promote, facilitate and, whenever possible, coordinate their participation in international

organisations and other fora related to technical regulations, conformity assessment,

standards, accreditation and metrology;

& /en 200

(f) support technical assistance activities by national, regional and international organisations in

the areas of technical regulations, standardisation, conformity assessment, metrology and

accreditation; and

(g) endeavour to share available scientific evidence and technical information among regulatory

authorities of the Parties, to the extent necessary to cooperate or pursue technical discussions

under this Chapter, with the exception of confidential or other sensitive information.

2. A Party shall give appropriate consideration to proposals of the other Party for cooperation

under this Chapter.

ARTICLE 13.12

Technical discussions

1. Each Party may request to discuss any concern that arises under this Chapter, including any

draft or proposed technical regulation or conformity assessment procedure of the other Party that

the Party considers might significantly adversely affect trade between the Parties. The requesting

Party shall deliver its request to the TBT Chapter coordinator of the other Party nominated pursuant

to Article 13.13 and shall identify:

(a) the issue;

(b) the provisions of this Chapter to which the concerns relate; and

(c) the reasons for the request, including a description of the requesting Party's concerns.

& /en 201

2. Any information or explanation requested in accordance with paragraph 1 shall be provided

no later than 60 (sixty) days after the date of the request of a Party in accordance with paragraph 1.

The deadline may be extended with prior justification by the requested Party.

3. If an issue has been previously addressed between the Parties in any forum, a Party may

request directly a discussion, in person or via video or teleconference, no later than 60 (sixty) days

after the date of such request. In such cases, the requested Party shall make every effort to be

available for such discussion.

4. If the Parties have not had a discussion under this Article in the previous 12-month period,

the request may not be refused by the other Party. If the requesting Party believes that the matter is

urgent, it may request that a meeting take place within a shorter timeframe. In such cases, the

responding Party shall give positive consideration to such a request. The Parties shall make every

attempt to arrive at a mutually satisfactory resolution of the matter.

5. For greater certainty, a Party may request technical discussions with the other Party pursuant

to paragraph 2 also with regard to technical regulations or conformity assessment procedures of

national, regional or local governments, as the case may be, on the level directly below that of the

central government that may have a significant effect on trade.

6. Following the technical discussion, the Parties may conclude that the issue could be better

addressed through a trade-facilitating initiative, in accordance with Article 13.5.

7. This Article is without prejudice to a Party's rights and obligations under Chapter 29.

& /en 202

ARTICLE 13.13

TBT Chapter coordinator

1. Each Party shall nominate a TBT Chapter coordinator and notify the other Party in the event

of any changes. The TBT Chapter coordinators shall work jointly to facilitate the implementation of

this Chapter and cooperation between the Parties in all TBT matters.

2. The functions of the TBT Chapter coordinators include:

(a) supporting the Subcommittee on trade in goods, referred to in Article 13.14, in the exercise of

the functions;

(b) supporting trade-facilitating initiatives and technical discussions, as appropriate, in

accordance with Articles 13.5 and 13.12 respectively;

(c) exchanging information on work undertaken in non-governmental, regional and multilateral

fora related to standards, technical regulations and conformity assessment procedures; and

(d) reporting any relevant development related to the implementation of this Chapter to the

Subcommittee on trade in goods, referred to in Article 13.14, whenever appropriate.

3. The TBT Chapter coordinators shall communicate with one another by any agreed method

that is appropriate to carry out their functions, which may include email, teleconferences, video

conferences and meetings.

& /en 203

ARTICLE 13.14

Subcommittee on trade in goods

The Subcommittee on trade in goods, established pursuant to Article 9.9(4), shall have the

following functions, in addition to those listed in Articles 2.4, 9.9 and 10.14:

(a) discuss the results of the work carried out pursuant to Article 13.5 and consider appropriate

actions;

(b) provide a forum for the Parties to discuss the need to take steps to ensure reciprocity in

accordance with Article 13.8(8);

(c) foster cooperation in accordance with Article 13.11 and support technical discussions, as

appropriate, in accordance with Article 13.12;

(d) endeavour to discuss at least annually the issues covered under paragraph 2 of Section C of

Annex 13-B; and

(e) provide a forum for the Parties to cooperate and exchange information on any issues relevant

for the implementation of Annex 13-B.

& /en 204

CHAPTER 14

SANITARY AND PHYTOSANITARY MEASURES

ARTICLE 14.1

Objectives

The objectives of this Chapter are to:

(a) protect human, animal or plant life or health in the territory of the Parties while facilitating

trade between the Parties in so far as sanitary and phytosanitary (hereinafter referred to

as "SPS") measures are concerned;

(b) establish cooperation on the implementation of SPS Agreement;

(c) ensure that SPS measures do not create unjustified barriers to trade between the Parties;

(d) enhance cooperation on technical and scientific issues related to the adoption and application

of SPS measures;

(e) improve the exchange of information and consultations between the Parties on SPS matters;

and

& /en 205

(f) establish cooperation concerning multilateral fora dealing with SPS matters.

ARTICLE 14.2

Scope

1. This Chapter applies to all SPS measures **[1]** that may, directly or indirectly, affect trade

between the Parties.

2. This Chapter applies to cooperation concerning multilateral fora dealing with SPS matters.

ARTICLE 14.3

Definitions

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

(a) the definitions set out in Annex A of the SPS Agreement;

(b) the definitions adopted by the Codex Alimentarius;

(c) the definitions adopted by the World Organisation for Animal Health (hereinafter referred to

as the "OIE");

**1** In case of conflict, this Chapter prevails over other Chapters of this Part of the Agreement
when applied to SPS measures, including when such measures are part of a measure.

& /en 206

(d) the definitions adopted by the International Plant Protection Convention (hereinafter referred

to as the "IPPC"); and

(e) "protected zone" means an officially defined geographical part of the territory of the European

Union in which a specific regulated pest is known not to be established in spite of favourable

conditions and its presence in other parts of the territory of the European Union.

Protected zones are pest-free areas under European Union control in the European Union

territory. They are recognised by Regulation (EU) 2016/2031 of the European Parliament of

the Council of 26 October 2016 on protective measures against pests of plants, amending

Regulations (EU) No 228/2013, (EU) No 652/2014 and (EU) No 1143/2014 of the European

Parliament and of the Council and repealing Council Directives 69/464/EEC, 74/647/EEC,

93/85/EEC, 98/57/EC, 2000/29/EC, 2006/91/EC and 2007/33/EC **[1]** . This concept is not

applied outside the European Union territory. For trade purposes, the European Union shall

not require the other Party to establish protected zones in its territory. In such cases, the

conditions of pest-free areas shall apply. For the purposes of Chapter 6 and for the recognition

of protected zones, the same conditions as for pest-free areas shall apply.

2. In the event of any inconsistency between the definitions in Annex A to the SPS Agreement

and the definitions agreed by the Parties or the definitions adopted by the Codex Alimentarius, OIE

and IPPC, the definitions set out in Annex A of the SPS Agreement shall prevail.

**1** OJ EU L 317, 23.11.2016, p. 4.

& /en 207

ARTICLE 14.4

Rights and obligations

The Parties affirm their rights and obligations under the SPS Agreement. Nothing in this Chapter

shall affect the rights and obligations of each Party under the SPS Agreement.

ARTICLE 14.5

Competent authorities

1. For the purposes of this Chapter, the official competent authority of a Party is the authority

that, in accordance with a Party's law, is empowered to enforce its laws and regulations falling

within the scope of this Chapter to ensure compliance with its requirements, or any other authority

to which those authorities have delegated that power (hereinafter referred to as "competent

authorities").

2. Upon the date of entry into force of this Agreement, each Party shall provide in writing to

the other Party the name of the competent authorities referred to in paragraph 1, specifying where

this information is made publicly available and a description of the distribution of competences

between the respective competent authorities.

3. The Parties shall, in accordance with paragraph 4 of Article 14.11, inform each other of any

change to these competent authorities.

& /en 208

ARTICLE 14.6

General obligations

1. Products exported from a Party shall meet the applicable SPS requirements of the

importing Party.

2. The SPS requirements of the importing Party shall be the same for the entire territory of the

exporting Party, as long as the same sanitary and phytosanitary conditions prevail throughout that

territory, without prejudice to decisions and measures adopted in accordance with Article 14.10.

Each Party shall ensure that their SPS measures are applied in a proportionate manner and do not

arbitrarily or unjustifiably discriminate between Member States of the European Union or Signatory

MERCOSUR States where identical or similar conditions prevail, including between its own

territory and that of the other Party. SPS measures shall not be applied in a manner which would

constitute a disguised restriction on trade between the Parties.

3. The procedures referred to in this Chapter shall be applied without undue delay and in a

transparent manner, and information requested shall be limited to what is necessary for appropriate

approval, control, inspection and verification purposes.

4. Each Party shall ensure that any fees imposed for import procedures to check and ensure the

fulfilment of SPS requirements are equitable in relation to any fees charged on like domestic

products or products originating in any other WTO Member and shall not be higher than the actual

cost of the service.

& /en 209

5. Except as provided for in Article 14.14, when modifying SPS import requirements, each

Party, and where appropriate MERCOSUR, shall allow for a transitional period, taking into account

the nature of the modification, in order to avoid the unnecessary interruption or disruption of trade

flows of products and to allow the exporting Party to adjust its export procedures accordingly to

such modification.

6. The implementation of this Chapter shall not jeopardise the SPS requirements for trade

between the Parties existing at the date of entry into force of this Agreement.

7. Without prejudice to similar provisions in other Chapters of this Part of the Agreement,

nothing in this Chapter shall affect the rights and obligations of each Party to protect confidential

information, in accordance with each Party's relevant laws and regulations. Each Party shall ensure

that procedures are in place to prevent the disclosure of confidential information that is acquired

during procedures referred to in this Chapter.

8. Each Party shall ensure that the necessary resources are available for the effective

implementation of this Chapter.

& /en 210

ARTICLE 14.7

Trade-facilitation measures

Approval of establishments for the import of animals, animal products, products of animal origin

and animal by-products

1. The importing Party may require the approval of establishments situated in the territory of

the exporting Party for the import of animals, animal products, products of animal origin and animal

by-products from such establishments.

2. Such approval shall be granted without prior inspection of individual establishments by the

importing Party if:

(a) the importing Party has recognised the official control system of the competent authority of

the exporting Party;

(b) the importing Party has authorised the import of the concerned products; and

(c) the competent authority of the exporting Party has provided sufficient guarantees that such

establishments comply with the sanitary requirements of the importing Party.

3. The exporting Party shall only authorise exports from approved establishments as referred to

in paragraph 1. The exporting Party shall suspend or withdraw its approval of establishments that do

not comply with the sanitary requirements of the importing Party and shall notify such suspension

or withdrawal to the importing Party.

& /en 211

4. The exporting Party shall propose to the importing Party a list of establishments to be

approved. This list shall be accompanied by guarantees of the competent authority of the exporting

Party that the establishments comply with the guarantees referred in to point (c) of paragraph 2.

5. The importing Party shall authorise imports from approved establishments no later

than 40 (forty) working days after the receipt of the list and guarantees referred to in in paragraph 4

of the exporting Party. If additional information is requested and as a result an authorisation cannot

be granted within the deadline of 40 (forty) working days, the importing Party shall inform the

exporting Party and establish a new deadline for such authorisation. That deadline shall not

exceed 40 (forty) working days after the receipt of the additional information.

6. The importing Party shall draw up lists of approved establishments and shall make those

lists publicly available.

7. The importing Party may refuse the approval of establishments that are not compliant with

its sanitary requirements. In such cases, the importing Party shall inform the exporting Party about

such refusal, including the justification therefor.

8. The importing Party may carry out verifications of the official control system in accordance

with Article 14.15. Based on the results of these verifications, the importing Party may amend the

lists of approved establishments.

SPS import checks

9. Each Party shall adopt or maintain procedures relating to SPS import checks allowing for

the expedited release of products for import without undue delay.

& /en 212

10. Each Party shall, where appropriate, simplify controls and verifications and reduce the

frequency of the SPS import checks made by the importing Party on products of the exporting

Party. Each Party shall base its decision on the following:

(a) the risks involved;

(b) the controls carried out by the producers or importers which are validated by the competent

authorities of the Parties;

(c) the guarantees given by the competent authority of the exporting Party that the establishments

comply with the sanitary requirements of the importing Party; and

(d) the international guidelines, standards and recommendations of the Codex Alimentarius, OIE

or IPPC, as applicable.

11. Each Party may apply other criteria to simplify the controls and verifications pursuant to

paragraph 10 if they do not undermine the commonly agreed criteria that are listed therein.

12. If import checks reveal non-compliance with SPS import requirements and products or

consignments are rejected, the importing Party shall notify the exporting Party thereof in

accordance with the procedure referred to in Article 14.12, as soon as possible and no later

than 5 (five) working days after the date of the rejection.

13. If import checks reveal non-compliance with the relevant SPS import requirements, the

action taken by the importing Party shall be justified, based on the identified non-compliance, and

not more trade-restrictive than required to achieve the Party's appropriate level of sanitary or

phytosanitary protection.

& /en 213

Simplification of the import and approval procedures of MERCOSUR

14. The Parties recognise the different levels reached by regional integration processes within

the European Union, on the one hand, and MERCOSUR on the other. With a view to facilitating

trade between their respective territories, MERCOSUR shall make its best efforts to gradually adopt

for import and approval procedures for products and establishments of the European Union, if

applicable:

(a) one single questionnaire;

(b) one single certificate; and

(c) one list of approved establishments.

15. MERCOSUR will make its best efforts to harmonise the SPS import requirements,

certificates and import checks of the individual Signatory MERCOSUR States.

ARTICLE 14.8

Alternative measures

1. Upon request of the exporting Party, the importing Party shall examine whether

exceptionally an alternative SPS measure to the SPS measure of the importing Party ensures the

appropriate level of protection of the importing Party. The alternative measure may be based on

international guidelines, standards and recommendations of the Codex Alimentarius, OIE or IPPC

or on SPS measures of the exporting Party.

& /en 214

2. Article 14.9 shall not apply to alternative SPS measures.

ARTICLE 14.9

Equivalence

1. An exporting Party may request a determination of equivalence from the importing Party

that a specific SPS measure or specific SPS measures related to a product or group of products or on

a system-wide basis is equivalent to its own SPS measures.

2. In order to implement this Article, the Subcommittee, referred to in Article 14.18, shall

make recommendations to establish a procedure for the recognition of equivalence based on the

Decision on the implementation of Article 4 of the Agreement on Sanitary and Phytosanitary

Measures of the WTO Committee on Sanitary and Phytosanitary Measures **[1]** and any subsequent

updates thereof, and international guidelines, standards and recommendations adopted in the

framework of the Codex Alimentarius, OIE and IPPC. This procedure should include a process

whereby the Parties hold consultations in order to determine the equivalence of SPS measures, the

information to be required from the Parties, the responsibilities of the Parties and the deadlines for

the recognition of equivalence.

3. Upon receipt of a specific request, the Parties shall enter into consultations based on the

procedure to be established pursuant to paragraph 2, with the aim of achieving an agreement on

recognition of equivalence.

**1** WTO Document G/SPS/19/Rev.2, dated 13 July 2004.

& /en 215

4. Upon request of the exporting Party, the importing Party shall inform the exporting Party of

the stage of the procedure for the assessment of equivalence.

ARTICLE 14.10

Recognition of animal health and plant pest status and regional conditions

1. The Parties recognise the concept of zoning and compartmentalisation, including pest free

areas or disease free areas and areas of low pest or low disease prevalence and shall apply it in the

trade between the Parties, in accordance with the SPS Agreement, including the Guidelines to

further the practical implementation of Article 6 of the Agreement on the Application of Sanitary

and Phytosanitary measures adopted by the WTO Committee on Sanitary and Phytosanitary

Measures **[1]** and the relevant guidelines, recommendations and standards of the OIE or IPPC.

2. At the request of the exporting Party, the importing Party shall decide whether to recognise

pest and disease free areas, areas of low pest and low disease prevalence and compartments of the

exporting Party, whether for the first time or after an outbreak of an animal disease or a plant pest.

The importing Party shall base this decision on the information provided by the exporting Party in

accordance with the SPS Agreement and OIE and IPPC standards, and take into account the

establishment of pest and disease free areas, areas of low pest and low disease prevalence and

compartments by the exporting Party. The Parties shall follow the procedures set out in

Annex 14-A.

**1** WTO Document G/SPS/48, dated 16 May 2008.

& /en 216

3. The decision of the importing Party pursuant to paragraph 2 shall be taken without undue

delay. If, without prejudice to Article 14.14, the importing Party decides to recognise pest and

disease free areas, areas of low pest and low disease prevalence and compartments of the exporting

Party, it shall allow trade from those areas or compartments without undue delay.

4. The Subcommittee, referred to in Article 14.18, may define further details for the procedure

for the recognition of pest and disease free areas, areas of low pest and low disease prevalence and

compartments set out in paragraph 2, taking into account the SPS Agreement and the guidelines,

standards and recommendations of the IPPC and OIE.

Animals, animal products, products of animal origin and animal by-products

5. The procedure for the recognition of the disease free zones or compartments for animals,

animal products, products of animal origin and animal by-products is set out in paragraphs 7 to 9

and in Annex 14-A.

6. When establishing or maintaining the zones or compartments referred to in paragraph 2 for

animals, animal products, products of animal origin and animal by-products, the Parties shall

consider factors such as geographical location, ecosystems, epidemiological surveillance and the

effectiveness of sanitary controls.

7. No later than 60 (sixty) working days after the receipt of the information referred to in

paragraph 2 from the exporting Party, the importing Party may:

(a) explicitly object to the request for recognition of disease-free zones or compartments for

animals, animal products, products of animal origin and animal by-products;

& /en 217

(b) request additional information from the exporting Party; or

(c) request verifications pursuant to Article 14.15.

The importing Party shall assess any additional information no later than 30 (thirty) working days

after its receipt. If verifications are required by the importing Party, the deadline for assessing the

additional information shall be interrupted.

8. The importing Party shall expedite the procedure established in paragraph 7 if the zones or

compartments for which recognition is sought by the exporting Party are officially recognised by

the OIE as having disease free status or if disease-free status has been recovered after an outbreak.

9. If after following the procedure in paragraph 7, the importing Party decides not to recognise

the zones or compartments for which recognition was sought by the exporting Party, it shall notify

its decision to the exporting Party and explain the reasons for not recognising the zones or

compartments concerned and, upon request, hold consultations in accordance with Article 14.13.

Plants and plant products

10. Each Party shall establish a list of regulated pests and regulated plants and plant products for

which phytosanitary requirements exist. The importing Party shall make available to the other Party

its list of regulated pests, and regulated plants and plant products and the phytosanitary import

requirements that apply thereto. The phytosanitary import requirements for regulated plants and

plant products shall be limited to what is necessary to protect plant health or safeguard the intended

use of the plants and plant products. The importing Party shall inform the other Party about any

required additional declaration.

& /en 218

11. The phytosanitary requirements of the importing Party shall be established taking into

account the phytosanitary status in the exporting Party and, if required by the importing Party, the

result of a pest risk analysis (hereinafter referred to as "PRA"). The PRA shall be carried out in

accordance with the relevant International Standards for Phytosanitary Measures (hereinafter

referred to as "ISPM") of the IPPC. Such risk analysis shall take into account available scientific

and technical information as well as the intended use of the plants and plant products under

consideration.

12. The importing Party shall update the lists referred to in paragraph 10 when the exporting

Party makes a request to export new products to the other Party. When the importing Party requires

a PRA to authorise the import of a certain product, in order to expedite the process, a PRA already

carried out for the same or similar products may be used as a basis, together with any additional

information that the importing Party considers necessary to be analysed.

13. The importing Party, when conducting the process for the determination of the pest status of

the exporting Party, shall take into account paragraphs 10 to 17 of this Article, Annex 14-A and the

recommendations of the ISPM of the IPPC.

14. The Parties recognise the concepts of pest free areas, pest free places of production and pest

free production sites, as well as areas of low pest prevalence as specified in the ISPM of the IPPC,

and of protected zones which they shall apply in trade between them.

15. When establishing or maintaining phytosanitary measures, the importing Party shall take

into account pest free areas, pest free places of production, pest free production sites and areas of

low pest prevalence, as well as protected zones if they are established by the exporting Party.

& /en 219

16. The exporting Party shall communicate pest free areas, pest free places of production, pest

free production sites or areas of low pest prevalence to the other Party and provide, upon request, an

explanation and supporting information as provided for in the relevant ISPM or as otherwise

deemed appropriate. Unless the importing Party:

(a) explicitly objects to the request for approval of pest free areas, pest free places of production,

pest free production sites or areas of low pest prevalence to the other Party or protected zones

if they are established by the exporting Party;

(b) requests additional information from the exporting Party;

(c) requests verifications pursuant to Article 14.15; or

(d) initiates consultations pursuant to Article 14.13 no later than 150 (one hundred and fifty)

working days after receiving such information, the status of the exporting Party shall be

recognised by the importing Party.

17. The importing Party shall assess any additional information requested pursuant to

paragraph 16 no later than 90 (ninety) days after its receipt. Any verifications requested by the

importing Party pursuant to paragraph 16 shall be carried out in accordance with Article 14.15

taking into account the biology of the pest and the plant concerned. If the importing Party requests

such verifications, the deadline for assessing additional information shall be interrupted.

& /en 220

18. If, after following the procedure in paragraph 16, the importing Party decides not to approve

pest free areas, pest free places of production, pest free production sites or areas of low pest

prevalence or protected zones if they are established by the exporting Party for which recognition

was sought by the exporting Party, it shall notify its decision to the exporting Party and explain the

reasons for not approving them and, upon request, hold consultations in accordance with Article

14.13.

ARTICLE 14.11

Transparency and exchange of information

1. Upon request of a Party and no later than 15 (fifteen) working days after the date of such

request, the Parties shall exchange information on:

(a) procedures for the authorisation to import a product, including, if possible, the expected

timeframe;

(b) requirements for the import of specific products, including the model for a certificate, as

appropriate;

(c) their pest status, including surveillance, eradication and containment programmes and the

results thereof in order to support such pest status and import phytosanitary measures;

(d) the stage of progress of the procedure for import approval of specific products; and

& /en 221

(e) the relationship between a SPS measure and the international guidelines, standards and

recommendations and, if an SPS measure is not based on international guidelines, standards

and recommendations, the scientific information as to how the SPS measure is not in

conformity with international guidelines, standards and recommendations and an explanation

of the reasons for such measure.

2. In cases where the relevant scientific evidence is insufficient, a Party adopting a provisional

SPS measure shall provide the available pertinent information on which the measure is based and, if

available, additional information for a more objective assessment of the risk, and shall review the

SPS measure within a reasonable period of time.

3. The Parties shall make publicly available, by any means, updated information about their:

(a) SPS import requirements and approval procedures; and

(b) a list of regulated pests.

4. The Parties shall inform each other of:

(a) any change in the sanitary and phytosanitary status that may affect trade between the Parties;

(b) matters related to the development and application of SPS measures that may affect trade

between the Parties; and

(c) any other information relevant for the effective implementation of this Chapter.

& /en 222

5. Without prejudice to paragraph 1, if the information referred to in this Article has been made

available by the Parties through a notification to the WTO or to the relevant international

standard-setting body in accordance with its relevant rules, or on publicly accessible and free of

charge websites of the Parties, the exchange of information pursuant to paragraph 1 shall not be

required.

6. Each Party shall designate a contact point for communication on all matters covered by this

Chapter and inform the other Party thereof no later than 1 (one) month after the date of entry into

force of this Agreement. Each Party shall promptly notify the other Party of any change to its

contact point.

ARTICLE 14.12

Notifications

1. Any serious or significant risk to human, animal or plant life or health, including any food or

feed control emergencies, shall be notified to the contact points of the other Party designated in

Article 14.11, within 2 (two) working days from the identification of that risk.

2. Risks to human, animal or plant life or health which are not serious shall also be notified to

the contact points of the other Party within a reasonable period of time that is sufficient to avoid

threatening human, animal or plant life or health or jeopardising existing trade between the Parties.

& /en 223

3. Notifications referred to in paragraphs 1 and 2 shall be done through an established system

of notifications or through specific ad hoc notifications, in accordance with the legislation of the

notifying Party. In both cases, the notification shall be sent to the competent authorities of the

concerned Parties.

4. If the notifying Party adopts or maintains any SPS measure in relation to the notification

(including the rejection of a product or consignment), that notification shall be accompanied by an

explanation of the reasons justifying such measure.

5. The notifying Party shall withdraw any notification based upon information which is

subsequently found to be unsubstantiated or which was transmitted erroneously. Such withdrawal

shall take place as soon as possible, and be notified to the exporting Party, in order to avoid a

negative impact on trade between the Parties.

6. The Parties shall identify contact points for the notifications under this Article and inform

the other Party thereof, if they are not the same as the contact points identified pursuant to

paragraph 6 of Article 14.11.

ARTICLE 14.13

Consultations

1. Without prejudice to Chapter 29, if the SPS measures or draft measures of the importing

Party, or the implementation thereof, are considered to be inconsistent with this Chapter, the Parties

shall enter into consultations no later than 60 (sixty) days after the exporting Party has introduced a

reasoned request for such consultations.

& /en 224

2. Notwithstanding paragraph 1, if a notification has been made by a Party pursuant to

Article 14.12 or if a Party has serious concerns regarding a risk to public, animal or plant health,

affecting products traded between the Parties consultations shall, upon request of a Party, be held as

soon as possible. Each Party shall endeavour, in such conditions, to provide the information

necessary to avoid a disruption in trade, including a limitation thereof.

3. At the request of the exporting Party, the importing Party shall provide the information

necessary to avoid a disruption in trade, including a limitation thereof. Such information includes

the information referred to in Article 14.11(1).

4. Consultations may be held for a reasonable period of time that allows the Parties to reach a

mutually satisfactory solution.

5. Consultations may be held by e-mail, video, audio conference or any other means of

communication which are available to both Parties. The Party which requested consultations shall

be responsible for preparing the minutes. The minutes shall be formally approved by the parties to

the consultations.

6. If the parties to the consultations do not reach a mutually satisfactory solution, the matter

may be submitted to the Subcommittee, referred to in Article 14.18.

& /en 225

ARTICLE 14.14

Emergency measures

1. If a Party adopts any measure to control any serious risks to human, animal and plant life or

health, such measure shall, without prejudice to paragraph 2, also aim to prevent the introduction of

any sanitary and phytosanitary risk into the territory of the other Party.

2. The importing Party may, in the event of serious risks to human, animal or plant life or

health, adopt emergency measures against such risks.

3. For products in transit between the Parties, the importing Party shall consider the most

suitable and proportional solution in order to avoid unnecessary disruptions to trade.

4. Measures referred to in paragraph 2 may be adopted without prior notification pursuant to

Article 14.12. The Party adopting emergency measures shall notify the other Party as soon as

possible of the adoption of these measures and, in any case, no later than 48 (forty-eight) hours

thereafter.

5. Each Party may request any information related to the sanitary and phytosanitary situation

and the emergency measures adopted. Each Party shall answer such requests as soon as the

requested information is available.

6. Upon request of either Party and in accordance with Article 14.13, the Parties shall hold

consultations regarding the emergency measure no later than 15 (fifteen) working days of the

notification of the emergency measures. The Parties may consider options to facilitate the

implementation, or the replacement, of the emergency measures.

& /en 226

ARTICLE 14.15

Verifications of the official control system

1. Each Party, within the scope of this Chapter, has the right to:

(a) carry out verifications, including audits, of the official control system of the other Party,

including verification visits; and

(b) receive information about the official control system of the other Party and the results of the

controls carried out under that system.

2. The nature and frequency of verifications, including audits, shall be determined by the

importing Party, taking into account the import requirements, the inherent characteristics of the

product concerned, the track record of past import checks and other available information, such as

audits and inspections undertaken by the competent authority of the exporting Party.

3. The objective of the verifications shall be to evaluate the capacity of the competent

authorities of the exporting Party to ensure that the products exported or to be exported meet the

SPS requirements of the importing Party.

4. Verification visits shall be carried out without undue delay and be notified to the exporting

Party at least 60 (sixty) working days before such verifications are carried out, except in cases of

emergency or if the Parties decide otherwise. Any modification to the date of the visit shall be

agreed by the Parties.

& /en 227

5. Verifications shall be conducted in accordance with the audit plan agreed by the Parties

concerned, based on the Guidelines for the Design, Operation, Assessment and Accreditation of

Food Import and Export Inspection and Certification Systems **[1]** . The importing Party shall provide to

the other Party the reasons for any modification to the audit plan of the visit.

6. The expenses incurred by the Party carrying out the verification shall be borne by that Party.

7. The Party carrying out the verification shall send a draft report on the verification to

the Party subject to the verification no later than 60 (sixty) working days after the end of the

verification visit. The Party subject to the verification may comment on the draft report no later

than 60 (sixty) working days after its receipt. Comments and an action plan, if required, shall be

attached to the final report. The Party carrying out the verification shall send the final report to the

Party subject to the verification no later than 30 (thirty) working days after the receipt of the

comments on the draft report.

8. Any measure taken as a consequence of verifications shall be proportionate to shortcomings

or risks identified. If requested, technical consultations regarding the matter shall be held in

accordance with Article 14.13.

9. If a significant public, animal or plant health risk has been identified during the verification,

the Party subject to the verification shall be informed as quickly as possible and, in any case, no

later than 10 (ten) working days after the end of the verification.

**1** FAO, CAC/GL 26-1997.

& /en 228

ARTICLE 14.16

Cooperation on multilateral fora

1. The Parties shall promote cooperation between them on all the multilateral fora relevant for

SPS issues, in particular in international standard-setting bodies recognised in the framework of the

SPS Agreement and shall exchange information to that end.

2. The Subcommittee on SPS matters, referred to in Article 14.18, shall be the forum for

promoting cooperation as referred to in paragraph 1.

ARTICLE 14.17

Cooperation

1. The Parties shall endeavour to cooperate in implementing this Chapter and to optimise the

results thereof with a view to expanding opportunities and obtaining the greatest benefits for the

Parties. Such cooperation shall be developed within the legal and institutional framework governing

cooperation relations between the Parties.

2. To achieve the objectives referred to in paragraph 1, the Parties shall give consideration to

the cooperation needs identified by the Subcommittee on SPS matters, referred to in Article 6.18.

& /en 229

ARTICLE 4.18

Subcommittee on SPS matters

1. The Subcommittee on SPS matters, established pursuant to Article 9.9(4), shall meet for the

first time no later than 1 (one) year after the entry into force of this Agreement.

2. The Subcommittee shall have the following functions, in addition to those listed in

Articles 2.4 and 9.9:

(a) provide a forum to discuss problems arising from the application of the SPS measures with a

view to reaching mutually acceptable solutions provided that the Parties have first attempted

to address them through technical consultations pursuant to Article 14.13 and the matter has

then been referred to the Subcommittee.

(b) provide a forum to discuss the information exchanged in accordance with Article 14.11;

(c) promote exchange of information and cooperation on multilateral fora pursuant to

Article 14.16;

(d) exchange the lists of contact points pursuant to Article 14.11(6) to share information related to

this Chapter;

(e) conduct the preparatory internal work necessary for the amendment of Annex 14-A by the

Joint Council in trade configuration;

(f) make recommendations to establish a procedure for the recognition of equivalence in

accordance with Article 14.9(2);

& /en 230

(g) may define further details for the procedure for the recognition of pest and disease free areas,

areas of low pest and low disease prevalence and compartments in accordance with

Article 14.10(4); and

(h) identify cooperation needs in implementing this Chapter, pursuant to Article 14.17(2).

ARTICLE 14.19

Special and differential treatment

In accordance with Article 10 of the SPS Agreement, if Paraguay identifies difficulties with a

proposed measure notified by the European Union, Paraguay may request, in its comments

submitted to the European Union, pursuant to Annex B to the SPS Agreement, an opportunity to

discuss the issue. The European Union and Paraguay shall, without prejudice to Article 14.13, enter

into consultations in order to agree on:

(a) alternative import conditions to be applied by the importing Party in accordance with

Article 14.8 of this Chapter;

(b) the provision of technical assistance in accordance with Article 14.17 of this Chapter; or

(c) a transitional period of 6 (six) months for proposed measures to apply to products from

Paraguay, which could be exceptionally extended for another period of no longer

than 6 (six) months.

& /en 231

CHAPTER 15

DIALOGUES ON ISSUES RELATED TO THE AGRI-FOOD CHAIN

ARTICLE 15.1

Objectives

With a view to strengthen their mutual trust and respective understanding, the Parties shall establish

dialogues and exchange information on the following subjects:

(a) animal welfare;

(b) application of agricultural biotechnology;

(c) combating antimicrobial resistance (hereinafter referred to as "AMR"); and

(d) scientific matters related to food safety, animal and plant health.

& /en 232

ARTICLE 15. 2

Subcommittee on dialogues on issues related to the agri-food chain

The Subcommittee on dialogues on issues related to the agri-food chain, established pursuant to

Article 9.9(4), shall in addition to functions listed in Articles 2.4, 9.9 and 15.7, meet at expert level

to conduct the dialogues referred to in Article 15.1.

ARTICLE 15.3

Animal welfare

Recognising that animals are sentient beings, the Subcommittee on dialogues on issues related to

the agri-food chain shall conduct a dialogue covering, inter alia, the following matters:

(a) specific topics on animal welfare that may affect mutual trade;

(b) exchange of information, expertise and experiences in the field of animal welfare to improve,

to the benefit of the Parties, their respective approaches on regulatory standards related to the

breeding, holding, handling, transportation and slaughter of animals;

(c) strengthening of their research collaboration; and

(d) collaboration in international fora with a view to promoting the further development of

international standards on animal welfare by the OIE and best animal welfare practices and

their implementation.

& /en 233

ARTICLE 15.4

Agricultural biotechnology

The Subcommittee on dialogues on issues related to the agri-food chain shall conduct a dialogue on

agricultural biotechnology that will cover, among others, the following matters:

(a) exchange of information on policies, legislation, guidelines, good practices and projects on

biotechnology products;

(b) discussions on specific topics related to biotechnology that may affect mutual trade, including

cooperation on genetically modified organisms (hereinafter referred to as "GMOs") testing;

(c) exchange of information on topics related to asynchronous authorisations of GMOs in order to

minimise the possible impact on trade;

(d) exchange of information on the economic and trade outlook for authorisations of GMOs; and

(e) exchange of information on cases of low-level presence of GMOs non-authorised by the

importing Party but authorised by the exporting Party.

& /en 234

ARTICLE 15.5

Combating antimicrobial resistance

The Subcommittee on dialogues on issues related to the agri-food chain shall conduct a dialogue on

combatting antimicrobial resistance that will cover, among others, the following matters:

(a) collaboration to follow up on existing and future guidelines, standards, recommendations and

actions developed in relevant international organisations, initiatives and national plans aiming

to promote the prudent and responsible use of antibiotics and in relation to animal production

and veterinary practices;

(b) collaboration in the implementation of the recommendations of the OIE, World Health

Organisation (hereinafter referred to as "WHO") and Codex Alimentarius, in particular the

Code of Practice to Minimize and Contain Foodborne Antimicrobial Resistance

(CAC/RCP 61-2005);

(c) exchange of information on good farming practices;

(d) the promotion of research, innovation and development; and

(e) the promotion of multidisciplinary approaches to combat AMR, including the "One Health"

approach of the WHO, OIE and Codex Alimentarius.

& /en 235

ARTICLE 15.6

Scientific matters related to food safety, animal and plant health

1. The Parties should foster cooperation between their respective official scientific bodies

responsible for food safety, animal and plant health science. Such cooperation shall aim to deepen

the scientific information available to the Parties in order to support their respective approaches on

regulatory standards that may affect mutual trade.

2. The Subcommittee shall conduct a dialogue on scientific matters related to food safety,

animal and plant health that will cover, among others, the following matters:

(a) exchange of scientific and technical information on food and feed safety, animal and plant

health areas, including risk assessment and the scientific information supporting the

establishment of maximum residue levels;

(b) collection of data; and

(c) collaboration in the building of a common understanding regarding OIE, IPPC and the Codex

Alimentarius standards.

& /en 236

ARTICLE 15.7

Additional provisions

1. The Parties shall ensure that the activities of the Subcommittee, referred to in Article 15.2,

do not endanger the independence of their respective national or regional agencies. The

Subcommittee on dialogues on issues related to the agri-food chain shall establish the rules on

conflicts of interest for the participants of its meetings.

2. Nothing in this Chapter shall affect the rights and obligations of each Party to protect

confidential information, in accordance with each Party's relevant legislation. Each Party shall

ensure that procedures are in place to prevent the disclosure of confidential information that is

acquired during the process established in this Chapter.

3. Fully respecting the Parties' right to regulate, nothing in this Chapter shall be construed to

oblige a Party to:

(a) deviate from domestic procedures for preparing and adopting regulatory measures;

(b) take action that would undermine or impede the timely adoption of regulatory measures to

achieve its public policy objectives; or

(c) adopt any particular regulatory outcome.

& /en 237

CHAPTER 16

TRADE DEFENCE AND GLOBAL SAFEGUARDS

SECTION A

GENERAL PRINCIPLES

ARTICLE 16.1

Relationship with the WTO Agreements

1. This Chapter applies without prejudice to the rights and obligations of the Parties under the

ADA, the SCM Agreement, the Safeguards Agreement and the DSU.

2. The Parties shall exempt bilateral trade subject to preferential treatment from the application

of the Special Agricultural Safeguard of the Agreement on Agriculture.

3. The preferential rules of origin under this Part of the Agreement do not apply to trade

defence and global safeguard investigations conducted in accordance with this Chapter.

& /en 238

ARTICLE 16.2

Transparency

1. Trade defence and safeguard measures should be used in full compliance with the relevant

WTO requirements and be based on a fair and transparent system.

2. As soon as possible after the imposition of a provisional measure, a Party shall give to the

interested parties full access to the facts that are the basis for the determinations, the injury

assessment, calculations of the dumping and subsidies margins and causality. In addition, before the

final determination, a Party shall fully and meaningfully disclose all essential facts and

considerations which form the basis for the decision to apply a measure. This paragraph is without

prejudice to Article 6.5 of the ADA, Article 12.4 of the SCM Agreement and Article 3.2 of the

Safeguards Agreement.

3. A Party shall send all of the information referred to in paragraph 2 in writing, preferably in

electronic format, and the interested parties should be given enough time to make comments. For

Parties whose investigating authorities keep electronic case files, all the information referred to in

paragraph 2 may be made available online.

& /en 239

SECTION B

ANTI-DUMPING AND COUNTERVAILING MEASURES

ARTICLE 16.3

Considerations concerning anti-dumping and countervailing measures

Each Party shall:

(a) analyse with special care proposals of price undertakings made by exporters of the other

Party;

(b) favour the imposition of a duty that is lower than the margin of dumping or subsidy, if that

level is sufficient to remove the injury to the domestic industry;

(c) analyse with special care requests for the extension of measures in force against exporters of

the other Party; and

(d) take into consideration the information provided by industrial users of the product under

investigation, importers and, if applicable, representative consumer organisations in the

context of Article 6.12 of the ADA and Article 12.10 of the SCM Agreement.

& /en 240

SECTION C

GLOBAL SAFEGUARDS

ARTICLE 16.4

Transparency on global safeguards

1. Upon request of the exporting Party, and provided that it has a substantial interest in

exporting the product concerned as defined in paragraph 3 of this Article, the Party initiating a

safeguard investigation or intending to adopt provisional or definitive safeguard measures shall

immediately provide:

(a) the information referred to in Article 12.2 of the Safeguards Agreement, in the format

prescribed by the WTO Committee on Safeguards;

(b) the public version of the complaint filed by the domestic industry, if relevant; and

(c) the public report setting forth the findings and reasoned conclusions on all pertinent issues of

fact and law considered in the safeguard investigation.

The public report referred to in point (c) of this paragraph shall include an analysis that attributes

injury to the factors causing it and shall set out the method used in defining the safeguard measures.

2. If information is provided under this Article, the importing Party shall offer to hold informal

consultations with the exporting Party in order to review the information provided.

& /en 241

3. For the purposes of this Article, it is considered that a Party has a substantial interest if it is

among the 5 (five) largest suppliers of the imported products concerned during the most recent

period of 3 (three) years, measured in terms of either absolute volume or value.

ARTICLE 16.5

Application of definitive measures

1. A Party adopting safeguard measures shall endeavour to apply them in the way that least

affects bilateral trade.

2. The importing Party shall offer to hold informal consultations with the exporting Party in

order to review the matter referred to in paragraph 1. The importing Party shall not adopt measures

within 30 (thirty) days of the date on which the offer to hold informal consultations was made.

& /en 242

SECTION D

DISPUTE SETTLEMENT

ARTICLE 16.6

Non-application of dispute settlement

No Party shall have recourse to dispute settlement under Chapter 29 for any matter arising under

this Chapter.

& /en 243

CHAPTER 17

BILATERAL SAFEGUARD MEASURES

SECTION A

SCOPE

ARTICLE 17.1

Scope

1. Sections B to I of this Chapter apply to any goods other than vehicles classified under

HS headings 8703 and 8704.

2. The provisions applicable to vehicles classified under HS headings 8703 and 8704 are

detailed in Annex 17-A.

& /en 244

SECTION B

DEFINITIONS

ARTICLE 17.2

Definitions

For the purposes of this Chapter the following definitions apply:

(a) "competent investigating authority" means:

(i) for the European Union, the European Commission; and

(ii) for MERCOSUR, the Ministerio de Economía or its successor in Argentina, the

Secretaria de Comércio Exterior of the Ministério do Desenvolvimento, Indústria,

Comércio e Serviços or its successor in Brazil, the Ministerio de Industria y Comercio

or its successor in Paraguay, and the Asesoría de Política Comercial del Ministerio de

Economía y Finanzas or its successor in Uruguay;

(b) "domestic industry" means the producers as a whole of the like or directly competitive

products operating in the territory of a Party or, failing that, those whose collective output of

the like or directly competitive products normally constitutes more than 50 % (fifty per cent)

and in exceptional circumstances not less than 25 % (twenty-five per cent) of the total

production of such products;

& /en 245

(c) "interested parties" includes:

(i) exporters or foreign producers or importers of a product subject to investigation, or a

trade or business association a majority of whose members are producers, exporters or

importers of such product;

(ii) the government of the exporting Party; and

(iii) producers of the like or directly competitive product in the importing Party or a trade

and business association a majority of whose members produces the like or directly

competitive product in the territory of the importing Party;

this list does not preclude the Parties from allowing domestic or foreign parties other than

those mentioned above to be included as interested parties;

(d) "like or directly competitive product" means:

(i) a product which is identical, meaning alike in all aspects, to the product under

consideration;

(ii) another product which, although not alike in all aspects, has characteristics closely

resembling those of the product under consideration; or

& /en 246

(iii) a product which directly competes within the internal market of the importing Party,

given its degree of substitutability, basic physical characteristics and technical

specifications, final uses and channels of distribution;

this list of factors is not exhaustive nor can one or several of these factors necessarily give

decisive guidance;

(e) "serious injury" means a significant overall impairment in the position of a domestic industry;

(f) "threat of serious injury" means a serious injury that is clearly imminent, based on facts and

not merely on allegation, conjecture or remote possibility; and

(g) "transition period" means:

(i) 12 (twelve) years from the date of entry into force of this Agreement; or

(ii) for goods other than vehicles classified under HS headings 8703 and 8704 for which the

Tariff Elimination Schedule of the Party applying the measures provides for tariff

elimination in 10 (ten) years or more, 18 (eighteen) years from the date of entry into

force of this Agreement.

& /en 247

SECTION C

CONDITIONS FOR APPLICATION OF BILATERAL SAFEGUARD MEASURES

ARTICLE 17.3

Application of bilateral safeguard measures

1. Without prejudice to the rights and obligations referred to in Chapter 16, a Party may, in

exceptional circumstances, for goods other than vehicles classified under HS headings 8703

and 8704, apply bilateral safeguard measures under the conditions established in this Section if,

after the date of entry into force of this Agreement, imports from the other Party of a product under

preferential terms have increased in such quantities, absolute or relative to domestic production or

consumption and under such conditions as to cause or threaten to cause serious injury to its

domestic industry of the like or directly competitive products.

2. For goods listed in paragraph 1, bilateral safeguard measures shall be applied only to the

extent necessary to prevent or remedy serious injury or the threat of serious injury.

3. Bilateral safeguard measures shall be applied following an investigation by the competent

investigating authorities of the importing Party under the procedures established in this Chapter.

& /en 248

ARTICLE 17.4

Timeframe for the application of bilateral safeguard measures

A Party shall not apply, extend or maintain in force a bilateral safeguard measure beyond the

expiration of the transition period.

ARTICLE 17.5

Conditions and limitations

1. MERCOSUR may adopt bilateral safeguard measures to imports from the European Union:

(a) as a sole entity, provided that all requirements to determine the existence of serious injury or

the threat of serious injury being caused by the imports of a product under preferential terms

have been fulfilled, on the basis of conditions applied to MERCOSUR; or

(b) on behalf of one or more of the Signatory MERCOSUR States, in which case the

requirements for the determination of the existence of serious injury or the threat of serious

injury being caused by the imports of a product under preferential terms shall be based on the

conditions prevailing in the relevant Signatory MERCOSUR State or Signatory MERCOSUR

States of the customs union; and the measure shall be limited to that Signatory MERCOSUR

State or those Signatory MERCOSUR States. The adoption of a bilateral safeguard measure

by MERCOSUR on behalf of one or more Signatory MERCOSUR States shall not prevent

another Signatory MERCOSUR State from adopting a measure regarding the same product

afterwards.

& /en 249

2. The European Union may apply bilateral safeguard measures to imports from MERCOSUR

as a sole entity or from one or more Signatory MERCOSUR States if the serious injury or threat of

serious injury is being caused by imports of products under preferential terms.

3. In case the European Union determines that a measure shall apply to MERCOSUR as a sole

entity, Paraguay shall be exempted from the application of the measure, unless the result of an

investigation demonstrates that the existence of serious injury or the threat of serious injury is also

being caused by imports of products from Paraguay under preferential terms.

SECTION D

FORM AND DURATION OF BILATERAL SAFEGUARD MEASURES

ARTICLE 17.6

Form of bilateral safeguard measures

For goods other than vehicles classified under HS headings 8703 and 8704, bilateral safeguard

measures adopted pursuant to this Chapter shall consist of:

(a) a temporary suspension of Annex 10-A for the product concerned as provided for under this

Agreement; or

& /en 250

(b) a temporary reduction of the tariff preference for the product concerned so that the rate of

customs duty does not exceed the lesser of:

(i) the most-favoured-nation applied rate of customs duty on the product in effect at the

time the measure is taken; and

(ii) the base rate of customs duty on the product referred to in Annex 10-A.

ARTICLE 17.7

Margin of preference

Upon termination of the bilateral safeguard measure, the margin of preference shall be the one that

would be applied to the product in the absence of the measure under Annex 10-A.

ARTICLE 17.8

Duration of bilateral safeguard measures

Bilateral safeguard measures shall be applied only for the period necessary to prevent or remedy the

serious injury and to facilitate adjustment of the domestic industry. That period, including the

period of application of any provisional measure, shall not exceed 2 (two) years.

& /en 251

ARTICLE 17.9

Extension of bilateral safeguard measures

1. Bilateral safeguard measures may be extended once for a maximum period equal to the

initially foreseen period of application, if it has been determined, in accordance with the procedures

set out in this Chapter, that the measure continues to be necessary to prevent or remedy serious

injury and if the domestic industry provides evidence that it is adjusting. The extended measure

shall not be more restrictive than it was at the end of the initial period.

2. No safeguard measure shall be applied again to the import of a product under Annex 10-A

which has been subject to such a measure, unless a period of time equal to half of the total duration

of the previous safeguard measure has elapsed.

& /en 252

SECTION E

INVESTIGATION AND TRANSPARENCY PROCEDURES

ARTICLE 17.10

Investigation

1. In conducting the investigation to determine whether increased imports have caused or are

threatening to cause serious injury to a domestic industry as referred to in Article 17.3, the

competent investigating authority shall evaluate all relevant factors of an objective and quantifiable

nature having a bearing on the situation of that industry, in particular the rate and amount of the

increase in imports of the product concerned in absolute and relative terms; the share of the

domestic market taken by increased imports; and changes in the level of sales, including prices,

production, productivity, capacity utilisation, profits and losses, and employment.

2. The competent investigating authority shall demonstrate, on the basis of objective evidence,

the existence of a causal link between increased imports of the product concerned and serious injury

or the threat of serious injury. The competent investigating authority shall also evaluate all known

factors other than increased imports under preferential terms of this Agreement that might be at the

same time causing injury to the domestic industry. The effects of an increase in imports of the

products concerned from other countries shall not be attributed to the imports under

preferential terms.

& /en 253

3. In conducting an injury investigation as referred to in paragraph 1, a competent investigating

authority should collect data over a period of at least 36 (thirty-six) months ending as close to the

date of the presentation of a request to initiate an investigation as is practicable.

ARTICLE 17.11

Initiation of an investigation

1. If there is sufficient prima facie evidence to justify such initiation, a bilateral safeguard

investigation may be initiated upon request of:

(a) the domestic industry or a trade and business association acting on behalf of domestic

producers of the like or directly competitive products in the importing Party; or

(b) one or more importing Member States of the European Union or Signatory

MERCOSUR States.

2. The request to initiate an investigation shall contain at least the following information:

(a) the name and description of the imported product concerned, its tariff heading and the tariff

treatment in force, as well as the name and description of the like or directly competitive

product;

(b) the names and addresses of the producers or association that submit the request, if applicable;

& /en 254

(c) if reasonably available, a list of all known producers of the like or directly competitive

product; and

(d) evidence that the conditions for imposing the safeguard measure set out in Article 17.3(1)

are met.

For the purposes of point (d) of this paragraph, the request to initiate an investigation shall contain

the following information:

(i) the production volume of producers submitting or represented in the application and an

estimation of the production of other known producers of the like or directly

competitive product;

(ii) the rate and amount of the increase in total and bilateral imports of the product concerned in

absolute and relative terms, for at least over the 36 (thirty-six) months prior to the date of the

presentation of a request to initiate an investigation, for which information is available;

(iii) the level of import prices during the same period; and

(iv) if information is available, objective and quantifiable data regarding the like or directly

competitive product, on the volume of total production and of total sales in the internal

market, inventories, prices for the internal market, productivity, capacity utilisation,

employment, profits and losses, and market share of the requesting firms or of those

represented in the request, for at least the last 36 (thirty-six) months previous to the

presentation of the request, for which information is available.

& /en 255

ARTICLE 17.12

Confidential information

1. The competent investigating authorities shall, upon cause being shown, treat any

information which is by nature confidential or which is provided on a confidential basis, as such.

Such information shall not be disclosed without the permission of the interested party submitting it.

An interested party providing confidential information may be requested to furnish non-confidential

summaries thereof or, if such interested party indicates that such information cannot be

summarised, the reasons why a summary cannot be provided.

2. Notwithstanding paragraph 1, if the competent authorities find that a request for

confidentiality is not warranted and if the interested party is either unwilling to make the

information public or to authorise its disclosure in generalised or summary form, the authorities

may disregard such information unless it can be demonstrated to their satisfaction from appropriate

sources that the information is correct.

3. If information regarding production, production capacity, employment, wages, volume and

value of domestic sales or average price is presented on a confidential basis, the competent

investigating authorities shall ensure that meaningful non-confidential summaries disclosing at least

aggregated data or, in cases in which the disclosure of aggregated data would endanger the

confidentiality of the company's data, indexes for each period of 12 (twelve) months under

investigation are submitted, so as to ensure the appropriate right of defence of the interested parties.

In this regard, requests for confidentiality should be considered in situations in which particular

market or domestic industry structures so justify it. This provision does not prevent the presentation

of more detailed non-confidential summaries.

& /en 256

4. Requests for confidentiality shall not be warranted in respect of information regarding basic

technical and quality standards or uses of the product concerned. Requests for confidentiality in

respect of information regarding the identity of the applicants and other known manufacturing

companies not part of the petition shall be warranted only in exceptional circumstances, which shall

be duly justified by the competent investigating authorities. In this regard, mere allegations shall not

suffice for justifying confidentiality requests. If the identity of the applicants cannot be disclosed,

competent investigating authorities shall disclose the total number of producers included in the

domestic industry and the proportion of the production that the applicants represent in relation to

the total production of the domestic industry.

ARTICLE 17.13

Timeframe for the investigation

The period between the date of publication of the decision to initiate the investigation and the

publication of the final decision should not exceed 1 (one) year. Under exceptional circumstances

this period may be extended, but, in any case, shall not exceed 18 (eighteen) months. A Party shall

not apply safeguard measures if this timeframe has not been observed by the competent

investigating authorities.

ARTICLE 17.14

Transparency

Each Party shall establish or maintain transparent, effective and equitable procedures for the

impartial and reasonable application of safeguard measures, in accordance with this Chapter.

& /en 257

SECTION F

PROVISIONAL SAFEGUARD MEASURES

ARTICLE 17.15

Provisional safeguard measures

1. In critical circumstances where delay may cause damage which would be difficult to repair,

a Party, after due notification, may take a provisional safeguard measure pursuant to a preliminary

determination that there is clear evidence that imports under preferential terms have increased and

that such imports have caused or are threatening to cause serious injury. The duration of the

provisional measure shall not exceed 200 (two hundred) days, during which period the requirements

of this Chapter shall be met. If the final determination concludes that there was no serious injury or

threat to the domestic industry caused by imports under preferential terms, the increased tariff or

provisional guarantee, if collected or imposed under provisional measures, shall be promptly

refunded, in accordance with the domestic regulation of the relevant Party.

2. Provisional safeguard measures shall not be taken against Paraguay, unless the result of the

preliminary determination pursuant to paragraph 1 demonstrates that the existence of serious injury

or the threat of serious injury is also being caused by imports of products from Paraguay under

preferential terms.

& /en 258

SECTION G

PUBLIC NOTICE

ARTICLE 17.16

Public notice on the initiation of an investigation

The public notice of the initiation of a safeguard investigation shall include the following

information:

(a) the name of the applicant;

(b) the complete description of the imported product under investigation and its classification

under the Harmonized System;

(c) the deadline for the request for hearings;

(d) the deadlines to register as an interested party and for the submission of information,

statements and other documents;

(e) the address where the application and other documents related to the investigation can be

examined;

(f) the name, address and email address or telephone or fax number of the institution which can

provide further information; and

& /en 259

(g) a summary of the facts on which the initiation of the investigation was based, including data

on imports that have allegedly increased in absolute or relative terms to total production and

an analysis of the domestic industry situation based on all the elements conveyed in the

application.

ARTICLE 17.17

Public notice on the application of bilateral safeguard measures

The public notice of the decision to apply a provisional safeguard measure and to apply or not apply

a definitive safeguard measure shall include the following information:

(a) the complete description of the products subject to the safeguard measure and their tariff

classification under the Harmonized System;

(b) information and evidence leading to the decision, such as:

(i) the increasing or increased preferential imports, where applicable;

(ii) the situation of the domestic industry;

(iii) the existence of a causal link between the increased preferential imports of the products

concerned and the serious injury or threat of serious injury to the domestic industry,

where applicable; and

(iv) in the case of preliminary determination, the existence of critical circumstances;

& /en 260

(c) other reasoned findings and conclusions on all relevant issues of fact and law;

(d) a description of the measure to be adopted, where applicable; and

(e) the date of entry into force of the measure and its duration, where applicable.

SECTION H

NOTIFICATIONS AND CONSULTATIONS

ARTICLE 17.18

Notifications

1. The importing Party shall notify the exporting Party in writing of the decision to:

(a) initiate the investigation under this Chapter;

(b) apply a provisional safeguard measure; and

(c) apply or not apply a definitive safeguard measure.

& /en 261

2. The decision shall be notified by the importing Party no later than 10 (ten) days after its

publication and shall be accompanied by the appropriate public notice. In the case of a decision to

initiate an investigation, a copy of the request to initiate the investigation shall be included in the

notification.

ARTICLE 17.19

Consultations

1. If a Party determines that the conditions to impose a definitive measure are met, it shall

notify in writing and at the same time invite the other Party for consultations.

2. The notification and the invitation for consultations referred to in paragraph 1 shall be made

at least 30 (thirty) days before a definitive measure is expected to enter into force. A Party shall not

apply a definitive measure in the absence of such notification.

3. The notification referred to in paragraph 1 shall include:

(a) the data and objective information demonstrating the existence of serious injury or the threat

of serious injury to the domestic industry caused by the increased imports under preferential

terms;

(b) a complete description of the imported product subject to the measure and its classification

under the Harmonized System;

(c) a description of the measure proposed;

& /en 262

(d) the date of entry into force of the measure and its duration; and

(e) the invitation for consultations.

4. The objective of the consultations referred to in paragraph 1 shall be to acquire a mutual

understanding of the publicly known facts and to exchange opinions, with a view to reaching a

mutually satisfactory solution. If no satisfactory solution is reached within 30 (thirty) days of the

notification referred to in paragraph 1, the Party may apply the measure at the end of the period

of 30 (thirty) days.

5. At any stage of the investigation, the notified Party may request consultations with the other

Party or any additional information that it considers necessary.

& /en 263

SECTION I

OUTERMOST REGIONS OF THE EUROPEAN UNION **[1]**

ARTICLE 17.20

Outermost Regions of the European Union

1. Notwithstanding Article 17.3, if a product originating in one or more Signatory

MERCOSUR States is imported under preferential terms into the territory of one or several of the

European Union's outermost regions in such increased quantities and under such conditions as to

cause or threaten to cause serious deterioration in the economic situation of the European Union's

outermost region(s), the European Union may exceptionally take safeguard measures limited to the

territory of the region(s) concerned, unless a mutually satisfactory solution is reached.

**1** At the entry into force of this Agreement, the outermost regions of the European Union are:
Guadeloupe, French Guiana, Martinique, Mayotte, Reunion, St. Martin, the Azores, Madeira
and the Canary Islands. This Article shall also apply to a country or an overseas territory that
changes its status to an outermost region by a decision of the European Council in accordance
with the procedure set out in Article 355(6) of the Treaty on the Functioning of the European
Union following the entry into force of that decision. In the event that an outermost region of
the European Union changes its status by the same procedure, this Article shall cease to be
applicable following the entry into force of the European Council's decision. The European
Union shall notify in writing the other Party of any change in the territories considered as
outermost regions of the European Union.

& /en 264

2. Without prejudice to paragraph 1, other rules laid down in this Chapter applicable to

bilateral safeguards also apply to any safeguard adopted under this Article.

3. For the purposes of paragraph 1, serious deterioration means major difficulties in a sector of

the economy producing like or directly competitive products. The determination of serious

deterioration shall be based on objective factors, including the following elements:

(a) the increase in the volume of imports in absolute or relative terms to domestic production and

to imports from other countries; and

(b) the effect of such imports on the situation of the relevant industry or the economic sector

concerned, including on the level of sales, production, financial situation and employment.

& /en 265

CHAPTER 18

TRADE IN SERVICES AND ESTABLISHMENT

SECTION A

GENERAL PROVISIONS

ARTICLE 18.1

Objective and scope

1. The Parties, reaffirming their respective commitments under the WTO Agreement, hereby

lay down the necessary arrangements for the liberalisation of trade in services and establishment.

2. Nothing in this Chapter shall be construed as requiring the privatisation of public services or

imposing any obligation with respect to government procurement.

3. The provisions of this Chapter shall not apply to subsidies granted or grants provided by a

Party, including government-supported loans, guarantees and insurance.

4. Consistent with the provisions of this Chapter, each Party retains the right to regulate, to

introduce new regulations or to supply services to meet its policy objectives.

5. The provisions of this Chapter shall not apply to each Party's social security systems.

& /en 266

6. The provisions of this Chapter do not apply to services supplied or activities carried out in

the exercise of governmental authority, namely any service which is supplied or any activity which

is carried out neither on a commercial basis, nor in competition with one or more service suppliers

or investors.

7. This Chapter applies to measures of each Party affecting trade in services and establishment,

with the exception of:

(a) national maritime cabotage **[1]** ;

(b) domestic and international air transport services, whether scheduled or non-scheduled, and

services directly related to the exercise of traffic rights, other than:

(i) aircraft repair and maintenance services during which an aircraft is withdrawn from

service;

(ii) the selling and marketing of air transport services;

(iii) computer reservation system (CRS) services; and

**1** Without prejudice to the scope of activities which may be considered as cabotage under the
relevant national legislation, national maritime cabotage under this Chapter covers
transportation of passengers or goods between a port or point located in a Signatory
MERCOSUR State or a Member State of the European Union and another port or point
located in the same Signatory MERCOSUR State or Member State of the European Union,
including on its continental shelf, as provided in UNCLOS, as well as traffic originating and
terminating in the same port or point located in the Signatory MERCOSUR State or Member
State of the European Union.

& /en 267

(iv) ground handling services;

(c) inland navigation; and

(d) audio-visual services.

For the purposes of this Chapter:

ARTICLE 18.2

Definitions

(a) "consumption abroad" means the supply of a service in the territory of a Party to the service

consumer of the other Party (mode 2);

(b) "cross-border supply of services" means the supply of a service from the territory of a Party

into the territory of the other Party (mode 1);

(c) "economic activity" includes any activity of an economic nature, irrespective of whether it is

related to services or non-services sectors, subject to the provisions of Article 18.1;

(d) "enterprise" means a juridical person of a Party, or a branch or a representative office of such

juridical person of a Party, set up through establishment, as defined pursuant to this Article;

& /en 268

(e) "temporary entry and stay of natural persons" means the entry and temporary stay of key

personnel, graduate trainees, business sellers, contractual service suppliers and independent

professionals of a Party in the territory of the other Party, in accordance with Section B of

this Chapter;

(f) "establishment" means:

(i) the constitution, acquisition or maintenance of a juridical person **[1]** ; or

(ii) the creation or maintenance of a branch or representative office of a juridical person,

within the territory of a Party for the purpose of performing an economic activity;

(g) "investor" of a Party means any person that seeks to perform or performs an economic activity

through establishment in the territory of the other Party **[2]** ;

**1** The terms "constitution" and"acquisition" of a juridical person shall be understood as
including capital participation in a juridical person with a view to establishing or maintaining
lasting economic links.
**2** If the economic activity is not performed directly by a juridical person but through other
forms of establishment such as a branch or a representative office, the investor (namely, the
juridical person) shall, nonetheless, through such establishment, be accorded the treatment
provided for investors under Part III of the Agreement. Such treatment shall be extended to
the establishment through which the economic activity is performed and does not need to be
extended to any other parts of the investor located outside the territory where the economic
activity is performed.

& /en 269

(h) "juridical person" means any legal entity duly constituted or otherwise organised under

applicable law, whether for profit or otherwise, and whether privately-owned or

governmentally-owned, including any corporation, trust, partnership, joint venture, sole

proprietorship or association;

(i) a juridical person is:

(i) "owned" by natural or juridical persons of a Party if more than 50 % of the equity

interest in it is beneficially owned by natural or juridical persons of that Party; and

(ii) "controlled" by natural or juridical persons of a Party if those natural or juridical

persons have the power to name a majority of its directors or to legally direct its actions;

(j) "juridical person of a Party" means a juridical person which is either:

(i) constituted or otherwise organised under the law of that Party, and is engaged in

substantive business operations in the territory of that Party or the other Party; or

(ii) in the case of establishment, owned or controlled by:

(A) natural persons of that Party; or

(B) juridical persons of that Party identified under point (j) (i);

& /en 270

Notwithstanding point (ii), shipping companies established outside the European Union or

MERCOSUR and controlled by natural persons having the nationality of a Member State of

the European Union or of a Signatory MERCOSUR State, respectively, shall also be

beneficiaries of the provisions of this Chapter, if their vessels are registered in accordance

with the laws and regulations in that Member State of the European Union or Signatory

MERCOSUR State and fly the flag of a Member State of the European Union or of a

Signatory MERCOSUR State **[1]** ;

(k) "measure" means any measure by a Party, whether in the form of a law, regulation, rule,

procedure, decision, administrative action, or any other form;

(l) "measures adopted or maintained by a Party" means measures taken by:

(i) central, regional or local governments and authorities; and

(ii) non-governmental bodies in the exercise of powers delegated by central, regional or

local governments or authorities;

(m) "measures by Parties affecting establishment, the cross-border supply of services,

consumption abroad, and the entry and temporary stay of natural persons" include measures in

respect of:

(i) the purchase, payment or use of a service;

**1** Point (j) of this Article shall not, under any circumstances, be interpreted in such a way as to
allow a shipping company constituted or established in, or incorporated, established or
otherwise organized under the laws applicable to a territory subject to a sovereignty dispute
involving the Argentine Republic to benefit from the provisions of this Chapter. This
provision shall not be interpreted as implying the legitimacy of the laws applied to such
territories.

& /en 271

(ii) the access to and use of, in connection with the performance of an economic activity,

services which are required by those Parties to be offered to the public generally; and

(iii) the access, including through establishment, of persons of a Party to the territory of the

other Party to perform an economic activity in that territory;

(n) "natural person" means a person having the nationality, or a permanent resident **[1]**, of one of the

Signatory MERCOSUR States or one of the Member States of the European Union according

to their respective legislation;

(o) "sector" of an economic activity means:

(i) with reference to a specific commitment, one or more, or all, subsectors of that service or non

service, as specified in the specific commitments contained in Annexes 18-A to18-E; or

(ii) otherwise, the whole of that service or non-service sector, including all of its subsectors;

(p) "service supplier" means any person that seeks to supply or supplies a service **[2]** ; and

(q) "supply of a service" includes the production, distribution, marketing, sale and delivery of

a service.

**1** If a Party accords substantially the same treatment to its permanent residents as it does to
natural persons having the nationality of that Party, its permanent residents shall be covered
by the definition of natural persons, in respect of measures affecting the cross-border trade in
services, consumption abroad and establishment.
**2** If the service is not supplied directly by a juridical person, the treatment provided under this
Chapter shall be extended to the branch or representative office through which the service is
supplied and need not be extended to any parts of the supplier located outside the territory
where the service is supplied.

& /en 272

ARTICLE 18.3

Market access

1. With respect to market access through establishment, the cross-border supply of services,

consumption abroad, and the entry and temporary stay of natural persons as provided in Section B,

each Party shall accord to enterprises, investors, services and services suppliers of the other Party

treatment no less favourable than that provided for under the terms, limitations and conditions

agreed and specified in the specific commitments contained in Annexes 18-A to 18-E.

2. In sectors where market access commitments are undertaken, the measures which a Party

shall not maintain or adopt, either on the basis of a regional subdivision or on the basis of its entire

territory, unless otherwise specified in Annexes 18-A to 18-E, are defined as:

(a) limitations on the number of services suppliers or enterprises in the form of numerical quotas,

monopolies, exclusive rights or the requirements of an economic needs test;

(b) limitations on the total value of transactions or assets in the form of numerical quotas or the

requirement of an economic needs test;

(c) limitations on the total number of operations or on the total quantity of output expressed in

terms of designated numerical units in the form of quotas or the requirement of an economic

needs test;

(d) limitations on the participation of foreign capital in terms of maximum percentage limit on

foreign shareholding or the total value of individual or aggregate foreign investment;

& /en 273

(e) measures which restrict or require specific types of legal entity or joint ventures through

which an investor or service supplier of the other Party may perform an economic activity; or

(f) limitations on the total number of natural persons that may be employed in a particular sector

or that an enterprise may employ and who are necessary for, and directly related to, the

performance of the economic activity in the form of numerical quotas or the requirement of an

economic needs test.

3. Economic needs tests shall be described concisely and clearly, indicating the elements that

render them inconsistent with this Article and specifying the criteria on which the test is based.

ARTICLE 18.4

National treatment

1. In the sectors listed in Annexes 18-A to 18-E, and subject to any conditions and

qualifications set out therein, with respect to all measures affecting establishment **[1]**, the cross-border

supply of services, consumption abroad and the entry and temporary stay of natural persons as

provided in Section B, each Party shall accord to enterprises, investors, services and service

suppliers of the other Party treatment no less favourable than that it accords to its own like

enterprises, investors, services and service suppliers.

**1** The obligation in this paragraph applies also to measures governing the composition of boards
of directors of an enterprise, such as nationality and residency requirements.

& /en 274

2. A Party may meet the requirement of paragraph 1 by according to enterprises, investors,

services and services suppliers of the other Party either formally identical treatment or formally

different treatment to that which it accords to its own like enterprises, investors, services and

services suppliers.

3. Formally identical or formally different treatment shall be considered to be less favourable if

it modifies the conditions of competition in favour of enterprises, investors, services or services

suppliers of the Party compared to like enterprises, investors, services and services suppliers of the

other Party.

4. Specific commitments assumed under this Article shall not be construed to require any Party

to compensate for any inherent competitive disadvantages which result from the foreign character

of the relevant enterprises, investors, services or services suppliers.

ARTICLE 18.5

List of specific commitments

1. The sectors liberalised by each Party pursuant to this Chapter and, by means of reservations,

the market access and national treatment limitations applicable to services, services suppliers,

enterprises and investors of the other Party in those sectors are set out in Annexes 18-A to 18-E.

2. The Parties shall not apply any market access or national treatment restrictions other than

those contained in Annexes 18-A to 18-E.

& /en 275

SECTION B

ENTRY AND TEMPORARY STAY OF NATURAL PERSONS

SUPPLYING SERVICES AND FOR BUSINESS PURPOSES

ARTICLE 18.6

Scope

1. This Section applies to measures of a Party concerning the entry and temporary stay in its

territory of key personnel, graduate trainees, business sellers, contractual service suppliers and

independent professionals of the other Party in accordance with paragraphs 2 and 3.

2. The provisions of this Section do not apply to measures affecting natural persons seeking

access to the employment market of a Party, nor to measures of a Party regarding citizenship,

residence or employment on a permanent basis.

3. The provisions of this Section do not prevent either Party from applying measures necessary

to regulate the entry, temporary stay and orderly movement of natural persons in its territory or to

protect the integrity of its borders, if such measures do not nullify or impair the benefits accruing to

either Party under the terms of a specific commitment **[1]** .

**1** The sole fact of requiring a visa for a natural person of certain countries and not for those of
other countries shall not be regarded as nullifying or impairing benefits under a specific
commitment.

& /en 276

4. Subject to Articles 18.17 and 18.18, nothing in this Section shall prevent a Party from

requiring that natural persons possess the necessary qualifications or professional experience in the

territory where the service is supplied, for the sector of activity concerned.

ARTICLE 18.7

Definitions

1. For the purposes of this Section, the following definitions apply:

(a) "business sellers" means natural persons who are representatives of a juridical person of a

Party seeking entry and temporary stay in the territory of the other Party for the purpose of

negotiating the sale of services or goods or entering into agreements to sell services or goods

for that supplier. They do not engage in making direct sales to the general public, do not

receive remuneration from a source located within the host Party and are not a commission

agent;

(b) "contractual service suppliers" means natural persons employed by a juridical person of a

Party which is not established in the territory of the other Party and which has concluded a

contract to supply services with a final consumer in the latter Party requiring the presence on

a temporary basis of its employees in that Party in order to fulfil the contract to provide

services **[1]** ;

**1** The service contract referred to in point (b) shall be a _bona fide_ contract and comply with the
laws and regulations of the Party where the contract is executed.

& /en 277

(c) "graduate trainees" means natural persons who have been employed by a juridical person of a

Party for at least 1 (one) year, who possess a university degree and who are temporarily

transferred to an enterprise in the territory of the other Party for career development purposes

or to obtain training in business techniques or methods **[1]** ;

(d) "independent professionals" means natural persons engaged in the supply of a service and

settled as self-employed in the territory of a Party who have not established in the territory of

the other Party and who have concluded a contract to supply services with a final consumer in

the territory of the other Party, requiring their presence on a temporary basis in that Party in

order to fulfil the contract to provide services **[2]** ;

(e) "key personnel" means natural persons employed within a juridical person of a Party, other

than a non-profit organisation, and who are responsible for the establishment or the proper

control, administration and operation of an enterprise, and consists of:

(i) "business visitors": natural persons working in a senior position who are responsible for

establishing an enterprise; they do not engage in direct transactions with the general

public and do not receive remuneration from a source located within the host Party; and

**1** The recipient enterprise may be required to submit a training programme covering the
duration of stay for prior approval, demonstrating that the purpose of the stay is for training.
The competent authorities may require that training be linked to the university degree which
has been obtained.
**2** The service contract referred to in point (d) shall be a _bona fide_ contract and comply with the
laws and regulations of the Party where the contract is executed.

& /en 278

(ii) "intra-corporate transferees": natural persons who have been employed by a juridical

person of a Party, or have been partners in it, for at least 1 (one) year, who are

temporarily transferred to an enterprise or a head office of that juridical person in the

territory of the other Party and who belong to one of the following categories:

(A) managers:

Natural persons working in a senior position within a juridical person, who

primarily direct the management of the enterprise receiving general supervision or

direction principally from the board of directors or stockholders of the business or

their equivalent, including:

–
directing the enterprise or a department or sub-division thereof;

–
supervising and controlling the work of other supervisory, professional or

managerial employees; or

–
having the authority personally to recruit and dismiss or to recommend

recruiting, dismissing or other personnel actions;

(B) specialists:

Natural persons working within a juridical person who possess specialised

knowledge essential to the enterprise's economic activity, techniques or

management.

& /en 279

ARTICLE 18.8

Key personnel and graduate trainees

For each sector for which commitments have been undertaken for establishment as listed in

Annexes 18-B and 18-E, and subject to any reservations listed in Annexes 18-C and 18-E, each

Party shall allow investors of the other Party to employ in their enterprise natural persons of that

other Party, if such employees are key personnel or graduate trainees as defined in Article 18.7. The

temporary entry and stay of key personnel and graduate trainees shall be:

(a) for the period of time necessary for the fulfilment of the contract or up to 3 (three) years for

intra-corporate transferees, whichever is less;

(b) up to 60 (sixty) days in any period of 12 (twelve) months for business visitors; and

(c) up to 1 (one) year for graduate trainees.

& /en 280

ARTICLE 18.9

Business sellers

For each sector for which commitments have been undertaken for the cross-border supply of

services and for establishment, listed in Annexes 18-A, 18-B and 18-E, and subject to any

reservations listed in Annexes 18-C and 18-E, each Party shall allow the temporary entry and stay

of business sellers for a period of up to 90 (ninety) days in any period of 12 (twelve) months **[1]** .

ARTICLE 18.10

Contractual service suppliers and independent professionals

1. For the sectors specified in Annexes 18-D and 18-E and subject to any reservations listed

therein, each Party shall allow the supply of services into its territory by contractual service

suppliers of the other Party, through the presence of natural persons, subject to the following

conditions:

(a) the juridical person employing the natural person must have obtained a service contract for a

period not exceeding 12 (twelve) months;

(b) the natural persons entering the other Party must have an appropriate education or experience

relevant to the service to be provided;

**1** This Article is without prejudice to the rights and obligations deriving from bilateral visa
waiver agreements between individual Signatory MERCOSUR States and individual Member
States of the European Union.

& /en 281

(c) the natural person shall not receive remuneration for the supply of a service other than the

remuneration paid by the contractual service supplier during the stay of the natural person in

the other Party;

(d) the temporary entry and stay of natural persons in the territory of the Party concerned shall be

for a cumulative period of not more than 6 (six) months in any period of 12 (twelve) months

or for the duration of the contract, whichever is less; and

(e) access accorded pursuant to the provisions of this Article relates only to the service activity

which is the subject of the contract and it does not confer entitlement on to natural persons to

exercise the professional title of the Party where the service is provided.

2. For the sectors specified in Annexes 18-D and 18-E, and subject to any reservations listed

therein, each Party shall allow the supply of services into its territory by independent professionals

of the other Party, through the presence of natural persons, subject to the following conditions:

(a) the natural persons must have obtained a service contract for a period not

exceeding 12 (twelve) months;

(b) the natural persons entering the other Party must have an appropriate education and

professional qualifications relevant to the service to be provided;

(c) the temporary entry and stay of natural persons within the Party concerned shall be for a

cumulative period of not more than 6 (six) months in any period of 12 (twelve) months or for

the duration of the contract, whichever is less; and

& /en 282

(d) access accorded pursuant to the provisions of this Article relates only to the service activity

which is the subject of the contract and it does not confer entitlement to the natural person to

exercise the professional title of the Party where the service is provided.

SECTION C

REGULATORY FRAMEWORK

SUB-SECTION 1

PROVISIONS OF GENERAL APPLICATION

ARTICLE 18.11

Mutual recognition

1. Nothing in this Chapter shall prevent a Party from requiring that natural persons possess the

necessary qualifications or professional experience specified in the territory where the service is

supplied, for the sector of activity concerned.

2. For the purposes of the fulfilment, in whole or in part, of its standards or criteria for the

authorisation, licensing or certification of investors and services suppliers, a Party may recognise

the education or experience obtained, requirements met, or licences or certifications granted in the

other Party. Such recognition, which may be achieved through harmonisation or otherwise, may be

based upon an agreement or arrangement or may be accorded autonomously.

& /en 283

ARTICLE 18.12

Transparency

1. Each Party shall publish promptly, and except in emergency situations, at the latest by the

time of their entry into force, all relevant measures of general application which pertain to or affect

this Chapter.

2. The measures referred to in paragraph 1 shall include measures applying to all modes of

supply, including on the process of entry and temporary stay of the categories of natural persons

defined in Article 18.7. Information about these measures shall be kept up to date. Each Party shall

facilitate access to relevant information by indicating to the other Party where relevant publications

and websites can be found.

3. If publication of the measures referred to in paragraph 1 is not practicable, such measures

shall be made otherwise publicly available.

4. Each Party shall respond promptly to all requests by the other Party for specific information

on any of its relevant measures of general application referred to in paragraph 1, including measures

regarding the entry and temporary stay of services suppliers as referred to in paragraph 2.

5. Each Party shall establish one or more enquiry points to provide specific information to

services providers of the other Party, upon request, on any of its measures of general application

referred to in paragraph 1. The Parties shall notify each other of these enquiry points no later than

one year after the entry into force of this Agreement. Enquiry points need not be depositories of

laws and regulations.

& /en 284

6. Nothing in this Chapter shall require any Party to provide confidential information, the

disclosure of which would impede law enforcement or otherwise be contrary to the public interest,

or which would prejudice legitimate commercial interests of particular enterprises, public or private.

SUB-SECTION 2

DOMESTIC REGULATION

ARTICLE 18.13

Scope

1. This Sub-Section only applies to sectors for which a Party has undertaken specific

commitments as listed in Annexes 18-A to 18 E and to the extent that these specific

commitments apply.

2. This Sub-Section does not apply to measures to the extent that they constitute limitations

pursuant to Articles 18.3 and 18.4.

3. In sectors where specific commitments are undertaken as listed in Annexes 18-A to 18-E,

each Party shall ensure that all measures of general application affecting trade in services and

establishment are administered in a reasonable, objective and impartial manner.

4. Each Party shall comply with this Sub-Section with regard to measures relating to licensing

requirements and procedures and qualification requirements and procedures.

& /en 285

5. This Sub-Section applies to measures of each Party relating to licensing and qualification

requirements and procedures that affect:

(a) the cross-border supply of services;

(b) the establishment in their territory of an enterprise defined in Article 18.2; or

(c) the temporary stay in their territory of categories of natural persons defined in Article 18.2.

ARTICLE 18.14

Definitions

For the purposes of this Sub-Section:

(a) "competent authority" means any central, regional or local government or authority, or any

non-governmental body in the exercise of powers delegated by central, regional or local

governments or authorities and which is entitled to take a decision concerning the

authorisation to supply a service, or concerning the authorisation to establish an enterprise in

order to perform an economic activity;

(b) "licensing procedures" means administrative and procedural rules that a service supplier or an

investor seeking authorisation to supply a service or to establish an enterprise must adhere to

in order to demonstrate compliance with licensing requirements;

& /en 286

(c) "licensing requirements" means substantive requirements other than qualification

requirements with which a services supplier or investor is required to comply in order to

obtain, from a competent authority, a decision concerning the authorisation to supply a service

or concerning the authorisation to establish an enterprise in order to perform an economic

activity, including a decision to amend or renew such authorisation;

(d) "qualification procedures" means administrative or procedural rules that a natural person must

adhere to in order to demonstrate compliance with qualification requirements, for the purpose

of obtaining authorisation to supply a service; and

(e) "qualification requirements" means substantive requirements relating to the competence of a

natural person to supply a service and which are required to be demonstrated for the purpose

of obtaining authorisation to supply a service.

ARTICLE 18.15

Conditions for licensing

1. Measures of each Party relating to licensing requirements shall be based on criteria which

are:

(a) proportionate to a public policy objective;

(b) clear and unambiguous;

(c) objective; and

(d) made public in advance.

& /en 287

2. A licence should be granted by the competent authority as soon as it is established, in the

light of an appropriate examination, that the conditions for obtaining a licence have been met.

3. If the number of licences available for a given activity is limited because of the scarcity of

available natural resources or technical capacity, each Party shall select candidates through an

impartial and transparent selection procedure which provides, in particular, adequate publicity about

the launch, conduct and completion of the procedure. Subject to the provisions specified by this

Article, each Party may take into account public policy objectives when establishing the rules for

the selection procedures.

ARTICLE 18.16

Licensing procedures

1. Licensing procedures shall be clear and made public in advance. Each Party shall ensure that

the licensing procedures used by, and the related decisions of, their competent authorities are

objective and impartial with respect to all applicants.

2. Licensing procedures shall not be dissuasive and shall not unduly complicate or delay the

provision of the service.

& /en 288

3. Any licensing fees **[1]** which applicants may incur from their application shall be reasonable

and shall not in themselves restrict the supply of the service. To the extent practicable, those fees

should be proportionate to the cost of the licensing procedures in question.

4. The competent authorities of a Party shall, to the extent practicable, provide an indicative

timeframe for processing an application. Applications shall be processed within a reasonable period

of time. The period shall run only from the time when all documentation has been received by the

competent authorities. If justified by the complexity of the issue, the time period may be extended,

by the competent authority, for a reasonable time. The extension and its duration shall be duly

motivated and shall be notified to the applicant, to the extent practicable, before the original period

has expired.

5. In the case of an incomplete application, the applicant shall be informed as quickly as

possible of the need to supply any additional documentation. In such a case, the period referred to in

paragraph 4 may be suspended by the competent authorities until they have received all

documentation.

6. If a request is rejected because it fails to comply with the required procedures or formalities,

the applicant shall be informed of the rejection and of the available means of redress as quickly as

possible.

**1** Licensing fees do not include payments for auction, tendering or other non-discriminatory
means of awarding concessions, or mandated contributions to the provision of universal
services.

& /en 289

ARTICLE 18.17

Qualification requirements

1. Qualification requirements shall be based on criteria which are:

(a) proportionate to a public policy objective;

(b) clear and unambiguous;

(c) objective; and

(d) made public in advance.

2. If a Party imposes qualification requirements for the supply of a service, it shall ensure that

adequate procedures exist for the verification and assessment of qualifications held by service

suppliers of the other Party. If the competent authority of a Party considers that membership in a

relevant professional association in the territory of another Party is indicative of the level of

competence or extent of experience of the applicant, such membership shall be given due

consideration.

3. For the supply of professional services, the scope of examinations and of any other

qualification requirements by a competent authority shall be related to the rights to practise a

profession for which authorisation is being sought, so as to avoid unduly restricting persons of the

other Party from applying.

& /en 290

4. Provided that an applicant has presented all necessary supporting evidence of his or her

qualifications, the competent authority, in verifying and assessing such qualifications, shall identify

any deficiency and inform the applicant of requirements to meet this deficiency. Such requirements

may include course work, examinations and training. The presentation by an applicant of a Party of

evidence of qualifications obtained in the territory of a third country shall not in itself constitute an

a priori reason for the competent authority of the other Party to reject the application and refrain

from making an assessment of the qualifications presented.

5. If examinations are required, each Party shall ensure that they are scheduled at reasonably

frequent intervals. Applicants for examinations shall be allowed a reasonable period to submit

applications.

6. Once qualification requirements and any other applicable regulatory requirements have been

fulfilled, each Party should ensure that a service supplier is allowed to supply the service without

undue delay.

ARTICLE 18.18

Qualification procedures

1. Qualification procedures shall be based on criteria which are:

(a) clear and unambiguous;

(b) objective; and

(c) made public in advance.

& /en 291

2. Each Party shall ensure that the qualification procedures used by, and the related decisions

of, their competent authorities are impartial with respect to all applicants.

3. An applicant shall, in principle, not be required to approach more than 1 (one) competent

authority for qualification procedures.

4. If specific time periods for applications exist, an applicant shall be allowed a reasonable

period for the submission of an application. The competent authority shall initiate the processing of

an application without undue delay. To the extent practicable, the competent authority shall accept

applications in electronic format under the same conditions of authenticity as an application

submitted in paper format.

5. Authenticated copies should be accepted by the competent authority, if possible, in place of

original documents.

6. If the competent authority rejects an application, it shall inform the applicant, to the extent

practicable in writing, without undue delay. It shall inform the applicant, upon request, of the

reasons for the rejection of the application and identify any deficiencies and ways in which those

deficiencies can be addressed. It shall inform the applicant of the timeframe for an appeal against

the decision, if available. It shall permit an applicant to resubmit an application within a reasonable

time limit.

7. Each Party shall ensure that the processing of an application, including the verification and

assessment of a qualification, is completed within a reasonable timeframe from the date of the

submission of a complete application. Each Party shall endeavour to establish a normal timeframe

for the processing of an application.

& /en 292

8. Each Party shall ensure that any fees relating to qualification procedures are commensurate

with the costs incurred by the competent authorities and do not in themselves restrict the supply of

the service.

ARTICLE 18.19

Review of administrative decisions

Each Party shall maintain or institute judicial, arbitral or administrative tribunals or procedures

which provide, on request of an affected investor or service supplier of the other Party, for the

prompt review of, and if justified, appropriate remedies for, administrative decisions affecting

establishment, cross border supply of services or the temporary stay of natural persons supplying

services. If such procedures are not independent of the agency entrusted with the administrative

decision concerned, each Party shall ensure that the procedures in fact provide for an objective and

impartial review.

& /en 293

SUB-SECTION 3

POSTAL SERVICES

ARTICLE 18.20

Scope

1. This Sub-Section sets out the principles of the regulatory framework for postal services

regarding which each Party has undertaken specific commitments, as listed in Annexes 18-A

and 18-E, in accordance with this Sub-Section.

2. This Sub-Section does not require a Party to liberalise services reserved to 1 (one) or more

designated operators as listed in Annexes 18-A and 18-E.

ARTICLE 18.21

Definitions

For the purposes of this Sub-Section:

(a) "essential requirements" means general non-economic reasons for imposing conditions on the

supply of postal services and may include the confidentiality of correspondence, the security

of the network as regards the transport of dangerous goods, data protection, environmental

protection and regional planning;

& /en 294

(b) "licence" means any form of authorisation or permission **[1]** setting out rights and obligations

specific to the postal sector, granted to an individual supplier by a regulatory authority, or any

other competent body, and which is required before supplying a given service;

(c) "postal item" means an item addressed in the final form in which it is to be carried by a postal

service provider, whether public or private, and may include items such as a letter, parcel,

newspaper, catalogue and others;

(d) "postal service" **[2]** means services involving the collection, sorting, transport and delivery of

postal items, irrespective of the destination (domestic or foreign), the speed of the service,

(priority, non-priority, urgent, express or others), or the operator (public or private);

(e) "regulatory authority" means the independent body or bodies charged with the regulation of

postal services mentioned in this Sub-Section; and

(f) "universal service" means the permanent provision of a postal service of specified quality at

all points in the territory of a Party at affordable prices for all users.

**1** For greater certainty, this includes the grant of a concession, registration, declaration,
notification or individual licences.
**2** "Postal services" covers the CPC, CPC 7511 and CPC 7512.

& /en 295

ARTICLE 18.22

Prevention of anti-competitive practices in the postal sector

Each Party shall ensure that a supplier of postal services subject to a universal service obligation or

a postal monopoly does not engage in anti-competitive practices such as:

(a) using revenues derived from the supply of such service to cross-subsidise the supply of an

express postal service or any non-universal postal service, and

(b) differentiating among customers such as businesses, large volume mailers or consolidators

with respect to tariffs or other terms and conditions for the supply of a service subject to a

universal service obligation or a postal monopoly, if such differentiation is not based on

objective or impartial criteria.

ARTICLE 18.23

Universal services

Each Party has the right to define the kind of universal service obligation it wishes to maintain and

to decide on its scope and implementation. Each Party may adopt the necessary measures in order to

safeguard the implementation, development and maintenance of the universal postal service. Such

measures and obligations shall not be regarded as anti-competitive per se if they are applied in a

transparent, non-discriminatory and proportionate way.

& /en 296

ARTICLE 18.24

Licences to provide postal services

1. Each Party may require licences for the supply of postal services. A licence should be

granted wherever possible, by means of a simplified authorisation procedure in accordance with

national laws and regulations.

2. A licence may require compliance with essential requirements, including quality standards

and respect for the exclusive and special rights of designated operators of reserved services or of

universal postal services.

3. If a Party requires a licence:

(a) it shall make publicly available in an easily accessible form:

(i) the rights and obligations resulting from such a licence;

(ii) the criteria, terms and conditions for licensing; and

(iii) to the extent possible, the period of time normally required to reach a decision

concerning an application for a licence.

(b) the procedures for granting a licence shall be transparent, non-discriminatory, proportionate

and based on objective criteria; and

& /en 297

(c) any licensing fees **[1]** which the applicants may incur from their application shall be reasonable

and shall not in themselves restrict the supply of the service.

4. The status of an application for a licence and the reasons for the refusal to grant a licence

shall be made known to the applicant upon request. Each Party shall, in accordance with its laws

and regulations, maintain or establish a procedure for applicants to appeal against the refusal to

grant a licence to a domestic independent body. Such a procedure shall be transparent, non

discriminatory and based on objective criteria.

ARTICLE 18.25

Independence of the regulatory body

Each Party may designate a regulatory body, whether specific to the postal service sector or not.

The regulatory body shall be legally separate from, and not accountable to, any supplier of postal

services. The decisions of, and the procedures used by, the regulatory bodies shall be impartial with

respect to all market participants.

**1** Licensing fees do not include payments for auction, tendering or other non-discriminatory
means of awarding concessions or mandated contributions to the provision of universal
services.

& /en 298

SUB-SECTION 4

TELECOMMUNICATIONS SERVICES

ARTICLE 18.26

Scope

1. This Sub-Section sets out principles of the regulatory framework for telecommunications

services, other than broadcasting **[1]**, regarding which each Party has undertaken specific

commitments in accordance with this Chapter.

2. Nothing in this Sub-Section shall be construed:

(a) as requiring a Party to authorise a supplier of telecommunications services of the other Party

to establish, construct, acquire, lease, operate, or supply telecommunications transport

networks or services, other than as provided for in Annexes 18-A, 18-B, 18-C and 18-E; or

**1** "Broadcasting" means radiocommunication in which transmissions are intended for direct
reception by the general public, and may include sound transmission and television
transmission. Suppliers of broadcasting services shall be considered as suppliers of public
telecommunications transport services, and their networks, as public telecommunications
transport networks, if and to the extent that such networks are also used for providing public
telecommunications transport services.

& /en 299

(b) as requiring a Party to oblige service suppliers under its jurisdiction, to establish, construct,

acquire, lease, operate or supply telecommunications transport networks or services not

offered to the public generally.

ARTICLE 18.27

Definitions

For the purposes of this Sub-Section:

(a) "essential telecommunications facilities" **[1]** means facilities of a public telecommunications

transport network and public telecommunications transport service that:

(i) are exclusively or predominantly provided by a single or limited number of suppliers;

and

(ii) cannot feasibly be economically or technically substituted in order to provide a service;

(b) "interconnection" means linking with suppliers of telecommunications transport networks or

telecommunications transport services in order to allow the users of one supplier of

telecommunications services to communicate with users of another supplier of

telecommunications services and to access telecommunications services provided by another

supplier of telecommunications services;

**1** For the Republic of Paraguay and the Oriental Republic of Uruguay, "essential
telecommunications facilities" means facilities of a public telecommunications transport
network and a public telecommunications transport service in accordance with the definition
provided in ~~t~~ heir national law.

& /en 300

(c) "licence" means any form of authorisation, including registration, declaration or notification

procedures or others as defined in the laws and regulations of a Party, setting out rights and

obligations specific to the telecommunications sector granted to an individual service supplier

of telecommunications services by a regulatory authority which is required for the provision

of a telecommunications service;

(d) "major supplier" in the telecommunications sector is a supplier of telecommunications

transport networks or services which has the ability to materially affect the terms of

participation, having regard to price and supply, in a relevant market for telecommunications

services as a result of control over essential facilities or the use of its position in that market;

(e) "public telecommunications transport network" means the public telecommunications

infrastructure which permits telecommunications between and among defined network

termination points;

(f) "public telecommunications transport service" means any telecommunications transport

service required, explicitly or in effect, by a Party to be offered to the public generally;

(g) "regulatory authority" means the body or bodies charged with the regulation of

telecommunications mentioned in this Sub-Section;

(h) "service supplier" means a person that has been granted a licence to supply

telecommunications services;

(i) "telecommunications services" means all services which consist in the transmission and

reception of electro-magnetic signals and excludes services providing, or exercising editorial

control over, the content transmitted; and

& /en 301

(j) "universal service" means the set of services of specified quality that must be made available

to all users in the territory of a Party regardless of their geographical location and at an

affordable price.

ARTICLE 18.28

Regulatory authority

1. Each Party shall ensure that its regulatory authority for telecommunications services is

legally distinct and functionally independent from any supplier of telecommunications services.

2. The regulatory authority shall be sufficiently empowered and resourced to regulate the

sector. The competences of regulatory authority shall be made public in an easily accessible and

clear form, in particular if those tasks are assigned to more than one body.

3. The decisions of, and the procedures used by, the regulatory authority shall be impartial with

respect to all market participants.

4. A supplier of telecommunications services affected by a decision of a regulatory authority

shall have the right to appeal against that decision to a domestic appeal body that is independent of

the parties involved and of the regulatory authority. If the appeal body is not judicial in character,

written reasons for its decision shall be given and its decisions shall also be subject to review by an

impartial and independent domestic judicial or administrative authority.

& /en 302

ARTICLE 18.29

Licences to provide telecommunication services

1. Each Party shall ensure that a licence is granted, by means of a simplified procedure

wherever possible.

2. Each Party shall ensure that the terms and conditions for the granting of rights of use of

numbers and frequencies are made publicly available.

3. If a licence is required by a Party:

(a) all the licensing criteria shall be made publicly available;

(b) the reasonable period of time normally required to reach the decision on whether to grant a

licence, after the submission of the complete application, shall be public;

(c) if the grant of a licence is refused, the reasons for such a refusal shall be made known in

writing to the applicant on request; and

(d) the applicant for a licence shall be able to seek recourse to a domestic appeal body to establish

whether a licence has been unduly refused.

& /en 303

ARTICLE 18.30

Anti-competitive practices

Each Party shall adopt or maintain appropriate measures for the purpose of preventing all suppliers

of telecommunications services who, alone or together, are a major **[1]** supplier, from engaging in or

continuing anti-competitive practices. These anti-competitive practices may include an abuse of a

dominant position, and all individual or concerted practices, conduct or recommendations which

have the effect of restricting, limiting, hindering, distorting or preventing current or future

competition in the relevant market.

ARTICLE 18.31

Access to essential telecommunications facilities

Each Party shall ensure that a major supplier **[2]** in its territory grants access to its essential

telecommunications facilities to suppliers on reasonable and non-discriminatory **[3]** terms and

conditions, including in relation to rates, technical standards, specifications, quality and

maintenance.

**1** For the Oriental Republic of Uruguay, the scope of this Article applies to all suppliers of
telecommunications services.
**2** For the Oriental Republic of Uruguay, the scope of this Article applies to all suppliers.
**3** For the purposes of this Subsection, "non-discrimination" is understood to refer to national
treatment as defined in Article 18.4, as well as to reflect sector-specific usage of the term to
mean terms and conditions no less favourable than those accorded to any other user of like
public telecommunication transport networks or public telecommunications transport services
under like circumstances.

& /en 304

ARTICLE 18.32

Interconnection

1. Each Party shall ensure that any supplier authorised to provide telecommunications services

in its territory shall have the right to negotiate interconnection with other suppliers of public

telecommunications transport networks and public telecommunications transport services.

Interconnection should in principle be agreed on the basis of commercial negotiation between the

suppliers concerned.

2. Each Party shall ensure that suppliers of telecommunications services that acquire

information from another supplier of telecommunications services during the process of negotiating

interconnection arrangements use that information solely for the purpose for which it was supplied

and respect, at all times, the confidentiality of information transmitted or stored.

3. Interconnection with a major supplier **[1]** shall be ensured at any technically feasible point in

the network. Such interconnection shall be provided:

(a) under non-discriminatory terms, conditions, including technical standards and specifications,

and rates, and of a quality no less favourable than that provided for their own like services of

such a major supplier, or for like services of non-affiliated service suppliers, or for its

subsidiaries or other affiliates;

**1** For the Oriental Republic of Uruguay, the scope of this Article applies to all suppliers of
telecommunications services.

& /en 305

(b) in a timely fashion, on terms and conditions, including technical standards and specifications,

that are transparent, reasonable having regard to economic feasibility and sufficiently detailed,

so that the supplier need not pay for network components or facilities that it does not require

for the service to be provided; and

(c) on request by another supplier of telecommunication services, and subject to an assessment by

the regulatory authority if appropriate, at any technically feasible points in addition to the

network termination points offered to the majority of users, subject to reasonable charges.

4. The rules applicable for interconnection to a major supplier shall be made publicly available.

5. Major suppliers shall make publicly available either their interconnection agreements or

their reference interconnection offers, as appropriate.

6. Each Party shall ensure that a supplier of telecommunications services requesting

interconnection with a major supplier has a right of recourse, either at any time or after a reasonable

period of time which has been made publicly known, to an independent domestic body to resolve

disputes regarding appropriate terms, conditions and rates for interconnection. Such an independent

domestic body may be the regulatory authority referred to in Article 18.28.

& /en 306

ARTICLE 18.33

Scarce resources

Each Party shall conduct its procedures for granting rights of use of scarce resources including

frequencies, numbers and rights of way, in an objective, timely, transparent and non-discriminatory

manner. To the extent possible, each Party shall make publicly available the current state of

allocated frequency bands, but detailed identification of frequencies for specific government uses is

not required.

ARTICLE 18.34

Universal service

1. Each Party has the right to define the kind of universal service obligations it wishes to

maintain and to decide on their scope and implementation. Each Party shall administer the universal

service obligations in a transparent, objective, non-discriminatory and proportionate manner.

2. If the designation of a universal service provider is open to multiple service suppliers of

telecommunications networks or services, such procedures shall be open to all service suppliers.

The designation shall be made through an efficient, transparent and non-discriminatory mechanism.

& /en 307

ARTICLE 18.35

Confidentiality of information

Each Party shall ensure the confidentiality of telecommunications and related traffic data

transmitted by means of public telecommunications transport networks and public

telecommunications transport services, subject to the requirement that measures applied to that end

do not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on

trade in services.

ARTICLE 18.36

Disputes between suppliers

Each Party shall ensure that, in the event of a dispute arising between suppliers, the regulatory

authority **[1]** concerned issues, on request of either party to the dispute, a binding decision to resolve

the dispute in the shortest possible timeframe.

**1** For greater certainty, in the case of MERCOSUR, this refers to the regulatory authority of
each Signatory MERCOSUR State.

& /en 308

ARTICLE 18.37

International mobile roaming services

1. Each Party shall endeavour to cooperate on promoting transparent and reasonable rates for

international roaming services with a view to promoting the growth of trade between the Parties and

enhancing consumer welfare.

2. Each Party shall ensure that suppliers of telecommunications services providing

international mobile roaming services for voice, text messaging and data provide those services:

(a) with a similar quality to that provided to their own retail customers in their country of

establishment; and

(b) with clear and readily available information in respect of access to the services and the prices

thereof.

3. The Parties shall cooperate on monitoring the achievement of paragraphs 1 and 2 as well as

on other issues related to international mobile roaming services that may be identified.

4. This Article does not oblige a Party to regulate rates or conditions for international mobile

roaming services.

& /en 309

SUB-SECTION 5

FINANCIAL SERVICES

ARTICLE 18.38

Scope

This Sub-Section applies to measures by a Party affecting the supply of financial services.

ARTICLE 18.39

Definitions

1. For the purposes of this Sub-Section, the following definitions apply:

(a) "financial service" means any service of a financial nature offered by a financial service

supplier of a Party; financial services comprise the following activities:

(i) insurance and insurance-related services:

(A) direct insurance (including co-insurance):

(1) life; and

(2) non-life;

& /en 310

(B) reinsurance and retrocession;

(C) insurance inter-mediation, such as brokerage and agency; and

(D) services auxiliary to insurance, such as consultancy, actuarial, risk assessment and

claim settlement services; and

(ii) banking and other financial services (excluding insurance):

(A) acceptance of deposits and other repayable funds from the public;

(B) lending of all types, including consumer credit, mortgage credit, factoring and

financing of commercial transaction;

(C) financial leasing;

(D) all payment and money transmission services, including credit, charge and debit

cards, travellers cheques and bankers drafts;

(E) guarantees and commitments;

(F) trading for own account or for account of customers, whether on an exchange, in

an over-the-counter market or otherwise, the following:

(1) money market instruments (including cheques, bills, certificates of

deposits);

(2) foreign exchange;

& /en 311

(3) derivative products including, but not limited to, futures and options;

(4) exchange rate and interest rate instruments, including products such as

swaps, forward rate agreements;

(5) transferable securities; and

(6) other negotiable instruments and financial assets, including bullion;

(G) participation in issues of all kinds of securities, including underwriting and

placement as agent (whether publicly or privately) and the provision of services

related to such issues;

(H) money broking;

(I) asset management, such as cash or portfolio management, all forms of collective

investment management, pension fund management, custodial, depository and

trust services;

(J) settlement and clearing services for financial assets, including securities,

derivative products, and other negotiable instruments;

(K) provision and transfer of financial information, and financial data processing and

related software by suppliers of other financial services; and

& /en 312

(L) advisory, intermediation and other auxiliary financial services on all the activities

listed in points (A) to (K), including credit reference and analysis, investment and

portfolio research and advice, advice on acquisitions and on corporate

restructuring and strategy;

(b) "financial service supplier" means any natural or juridical person of a Party, except public

entities, wishing to supply or supplying financial services;

(c) "new financial service" means a service of a financial nature, including services related to

existing and new products or the manner in which a product is delivered, that is not supplied

by any financial service supplier in the territory of a Party but which is supplied in the

territory of the other Party;

(d) "self-regulatory organisation" means a non-governmental body, including any organisation or

association, that exercises regulatory or supervisory authority over financial service suppliers

by delegation from a Party;

(e) "public entity" means:

(i) a government, a central bank or a monetary authority of a Party, or an entity owned or

controlled by a Party, that is principally engaged in carrying out governmental functions

or activities for governmental purposes, not including an entity principally engaged in

supplying financial services on commercial terms; or

(ii) a private entity, performing functions normally performed by a central bank or

monetary authority, when exercising those functions.

& /en 313

2. For the purposes of this Sub-Section and only in relation to services covered by this Sub

Section "services supplied in the exercise of governmental authority" means:

(a) activities conducted by a central bank or monetary authority or by any other public entity in

pursuit of monetary or exchange rate policies;

(b) activities forming part of a statutory system of social security or public retirement plans; and

(c) other activities conducted by a public entity for the account of, with the guarantee of, or using

the financial resources of, the government.

If a Party allows any of the activities referred to in points (b) or (c) to be conducted by its financial

service suppliers in competition with a public entity or a financial service supplier, "financial

services" shall include such activities, which will then fall within the scope of this Chapter.

3. The general definition of "services supplied in the exercise of governmental authority"

included in Article 18.1(6) of this Chapter shall not apply to services covered by this Sub-Section.

ARTICLE 18.40

Prudential carve-out

1. Nothing in this Part of the Agreement shall be construed as preventing a Party from taking

measures for prudential reasons, including:

(a) the protection of investors, depositors, financial market participants, policyholders or persons

to whom a fiduciary duty is owed by a financial service supplier; or

& /en 314

(b) ensuring the integrity and stability of a Party's financial system.

2. If such measures do not conform with the provisions of this Sub-Section, they shall not be

used as a means of avoiding the Party's commitments or obligations under this Sub-Section.

3. Nothing in this Part of the Agreement shall be construed as requiring a Party to disclose

information relating to the affairs and accounts of individual customers or any confidential or

proprietary information in the possession of public entities.

ARTICLE 18.41

Effective and transparent regulation in the financial services sector

1. Each Party shall make its best endeavours to provide in advance to all interested persons any

measure of general application that the Party proposes to adopt. Such a measure shall be provided:

(a) by means of an official publication; or

(b) in other written or electronic form.

2. Each Party's appropriate financial authority shall make available to interested persons its

requirements for completing applications relating to the supply of financial services.

3. On the request of an applicant, the appropriate financial authority shall inform the applicant

of the status of its application. If such authority requires additional information from the applicant,

it shall notify the applicant without undue delay.

& /en 315

4. Each Party shall make its best endeavours to ensure that internationally agreed standards for

regulation and supervision in the financial services sector and for the fight against tax evasion and

avoidance are implemented and applied in its territory. Such internationally agreed standards

include those adopted by the G20, the Financial Stability Board, the Basel Committee on Banking

Supervision, the International Association of Insurance Supervisors, the International Organisation

of Securities Commissions, the Financial Action Task Force on Money Laundering, the Global

Forum on Transparency and Exchange of Information for Tax Purposes of the OECD and the

International Financial Reporting Standards. To this end, the Parties shall cooperate and exchange

information and experience on these matters.

ARTICLE 18.42

New financial services

1. Each Party shall permit a financial services supplier of the other Party, established in its

territory, to provide in its territory any new financial services within the scope of the sub-sectors of

financial services committed in Annexes 18-A, 18-B, 18-C and 18-E and subject to the terms,

limitations, conditions and qualifications established therein.

2. A new financial service shall be provided in accordance with the laws and regulations of the

Party in whose territory it is intended to be supplied and is subject to the approval, regulation and

supervision of the competent authorities of that Party.

& /en 316

ARTICLE 18.43

Recognition of prudential measures

1. A Party may recognise prudential measures of the other Party in determining how the Party's

measures relating to financial services shall be applied. Such recognition, which may be achieved

through harmonisation or otherwise, may be based upon an agreement or arrangement or may be

accorded autonomously.

2. A Party that is party to an agreement or arrangement with a third country such as those

referred to in paragraph 1, whether future or existing, shall afford adequate opportunity for the other

Party to negotiate its accession to such agreements or arrangements, or to negotiate comparable

ones with it, under circumstances in which there would be equivalent regulation, oversight,

implementation of such regulation, and, if appropriate, procedures concerning the sharing of

information between the Parties to the agreement or arrangement. Where a Party accords

recognition autonomously, it shall afford adequate opportunity for the other Party to demonstrate

that such circumstances exist.

& /en 317

ARTICLE 18.44

Self-regulatory organisations

1. If a Party requires membership or participation in, or access to, any self-regulatory

organisation, in order for financial service suppliers of the other Party to supply financial services

on an equal basis with financial service suppliers of the Party, or if a Party provides directly or

indirectly to a self-regulatory organisation privileges or advantages in supplying financial services,

that Party shall ensure that such self-regulatory organisations observe the application of Article 18.4

to financial service suppliers established in the territory of that Party.

2. For greater certainty, nothing in this Article prevents a self-regulatory organisation referred

to in paragraph 1 from adopting its own non-discriminatory requirements or procedures. Insofar as

such measures are taken by non-governmental bodies and are not taken in relation to the exercise of

powers delegated by central, regional, or local governments or authorities, they are not considered

to be measures of a Party and do not fall within the scope of this Chapter.

ARTICLE 18.45

Payment and clearing systems

On the basis of regulatory requirements and in accordance with Article 18.4, each Party shall grant

to financial services suppliers of the other Party established in its territory access to payment and

clearing facilities operated by public entities and to official funding and refinancing available in the

normal course of ordinary business. This Article is not intended to confer access to a Party's

lender-of-last-resort facilities (the national central bank or any other monetary authority).

& /en 318

SUB-SECTION 6

E-COMMERCE

ARTICLE 18.46

Objective and scope

1. The Parties, recognising that electronic commerce increases trade opportunities in many

economic activities, agree to promote the development of electronic commerce between them,

including by co-operating on the issues raised by electronic commerce under the provisions of this

Sub-Section.

2. This Sub-Section applies to measures that affect trade by electronic means.

3. The Parties recognise the principle of technological neutrality in electronic commerce.

4. The provisions of this Sub-Section shall not apply to gambling services, broadcasting

services, audio-visual services, services of notaries or equivalent professions and legal

representation services.

& /en 319

ARTICLE 18.47

Definitions

For the purposes of this Sub-Section:

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

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

defined in point (e) of Article 18.27, for purposes outside their trade, business or profession;

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

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

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

multimedia messages (SMS and MMS);

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

(i) the electronic identification of a person; or

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

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

associated with other electronic data and fulfils the following requirements:

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

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

alteration in the data is detectable; and

& /en 320

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

which it relates; and

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

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

ARTICLE 18.48

Customs duties on electronic transmissions

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

Party and a person of the other Party.

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

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

imposed in a manner consistent with this Part of the Agreement.

ARTICLE 18.49

Principle of no prior authorisation

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

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

maintain any other requirement having equivalent effect.

& /en 321

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

Article 18.27 and financial services as defined in point (a) of Article 18.39(1).

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

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

(a) Article 18.1(4);

(b) Article 18.40;

(c) Article 28.1; and

(d) Article 28.2.

ARTICLE 18.50

Conclusion of contracts by electronic means

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

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

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

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

regulations **[1]** .

**1** This Article shall not apply to contracts that create or transfer rights in real estate; contracts
requiring by law the involvement of courts, public authorities or professions exercising public
authority; contracts of suretyship granted or collateral securities furnished by persons acting
for purposes outside their trade, business or profession; and contracts governed by family law
or by the law of succession.

& /en 322

ARTICLE 18.51

Electronic signature and authentication services

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

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

electronic form.

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

authentication services that would:

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

electronic methods for their transaction; or

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

and administrative authorities that their electronic transaction complies with any legal

requirements with respect to electronic signature and electronic authentication services.

ARTICLE 18.52

Unsolicited direct marketing communications

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

marketing communications.

& /en 323

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

communications to consumers who have not given their consent **[1]** to receive such communications.

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

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

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

similar products or services.

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

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

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

ARTICLE 18.53

Consumer protection

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

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

when they engage in electronic commerce transactions.

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

& /en 324

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

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

Such measures shall provide for, among others:

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

provider;

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

response to questions by consumers;

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

authorised by the consumer; and

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

remedies for services paid and not provided as agreed.

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

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

in order to protect consumers and enhance consumer trust.

& /en 325

ARTICLE 18.54

Regulatory cooperation on e-commerce

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

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

following issues, among others:

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

authentication services;

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

information;

(c) the treatment of direct marketing communications;

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

(e) the promotion of paperless trading; and

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

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

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

laws and regulations.

& /en 326

ARTICLE 18.55

Understanding on computer services

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

Articles 18.3 and 18.4, the following shall be considered as computer and related services,

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

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

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

management of or for computers or computer systems;

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

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

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

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

use of or for computer programmes;

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

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

and

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

systems, and not elsewhere classified.

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

be regarded as computer and related services in themselves.

& /en 327

SECTION D

FINAL PROVISIONS AND EXCEPTIONS

ARTICLE 18.56

Contact points

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

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

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

Chapter, such as:

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

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

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

a Party.

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

& /en 328

ARTICLE 18.57

Subcommittee on trade in services and establishment

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

Article 9.9(4), shall have the following functions, in addition to those listed in Articles 2.4 and 9.9:

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

with Article 18.58; and

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

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

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

the necessary expertise relevant to the issues to be addressed.

ARTICLE 18.58

Review clause

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

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

& /en 329

ARTICLE 18.59

Denial of benefits

A Party may deny the benefits of this Chapter to:

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

third country; or

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

CHAPTER 19

TRANSFERS OR PAYMENTS

FOR CURRENT ACCOUNT TRANSACTIONS,

CAPITAL MOVEMENTS AND TEMPORARY SAFEGUARD MEASURES

ARTICLE 19.1

Capital account

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

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

investments as provided for in Chapter 18. Such movements shall include the liquidation or

repatriation of such capital.

& /en 330

ARTICLE 19.2

Current account

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

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

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

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

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

Agreement.

ARTICLE 19.3

Application of laws and regulations relating to transfers

or payments for current account transactions and capital movements

Nothing in Articles 19.1 and 19.2 shall be construed as preventing a Party from applying in an

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

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

laws and regulations relating to:

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

(b) issuing, trading or dealing in securities;

& /en 331

(c) criminal or penal offences **[1]** ;

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

financial regulatory authorities; or

(e) the satisfaction of judgments in adjudicatory proceedings.

ARTICLE 19.4

Temporary safeguard measures

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

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

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

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

exceeding 6 (six) months.

**1** For greater certainty, this includes laws and regulations on anti-money laundering and
combating the financing of terrorism.

& /en 332

ARTICLE 19.5

Restrictions to safeguard the balance of payments

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

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

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

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

2. The measures referred to in paragraph 1 shall:

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

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

applicable;

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

Party; and

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

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

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

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

& /en 333

ARTICLE 19.6

Final provisions

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

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

bilateral or multilateral agreement to which a Party is party.

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

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

Agreement.

CHAPTER 20

GOVERNMENT PROCUREMENT

ARTICLE 20.1

Objectives

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

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

procurement markets.

& /en 334

ARTICLE 20.2

Definitions

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

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

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

buyers for non-governmental purposes;

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

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

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

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

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

ranking of tenders;

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

reproduced and later communicated, which may include electronically transmitted and stored

information;

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

supplier or suppliers of its choice;

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

action of a procuring entity relating to a covered procurement;

& /en 335

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

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

than once;

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

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

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

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

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

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

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

investment requirements, counter-trade or similar requirements;

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

tender;

(l) "procuring entity" means an entity covered under the Appendices to Annexes 20-A to 20-E;

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

conditions for participation;

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

invited by the procuring entity to submit a tender;

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

& /en 336

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

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

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

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

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

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

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

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

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

or provision; or

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

apply to a good or a service.

ARTICLE 20.3

Scope

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

governmental purposes:

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

(i) as specified in each Party's Appendices to Annexes 20-A to 20-E; and

& /en 337

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

supply of goods or services for commercial sale or resale;

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

without an option to buy;

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

Appendices to Annex 20-A to 20-E, at the time of publication of a notice in accordance with

Article 20.13;

(d) by a procuring entity as specified in each Party's Appendices to Annexes 20-A to 20-E; and

(e) that is not otherwise excluded from coverage.

2. Except where provided otherwise in each Party's Appendices to Annexes 20-A to 20-E, this

Chapter does not apply to:

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

thereon;

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

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

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

& /en 338

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

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

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

other securities;

(d) public employment contracts; or

(e) procurement conducted:

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

development aid;

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

stationing of troops;

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

joint implementation by the signatory countries of a project; or

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

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

condition would be inconsistent with this Chapter.

3. Each Party shall specify in each of the Appendices to Annexes 20-A to 20-E the following

information:

(a) in Appendices 20-A-1, 20-B-1, 20-C-1, 20-D-1 and 20-E-1, the central government entities

whose procurement is covered by this Chapter;

& /en 339

(b) in Appendices 20-A-2, 20-B-2, 20-C-2, 20-D-2 and 20-E-2, the sub-central government

entities whose procurement is covered by this Chapter;

(c) in Appendices 20-A-3, 20-B-3, 20-C-3, 20-D-3 and 20-E-3, all other entities whose

procurement is covered by this Chapter;

(d) in Appendices 20-A-4, 20-B-4, 20-C-4, 20-D-4 and 20-E-4, the goods covered by

this Chapter;

(e) in Appendices 20-A-5, 20-B-5, 20-C-5, 20-D-5 and 20-E-5, the services, other than

construction services, covered by this Chapter;

(f) in Appendices 20-A-6, 20-B-6, 20-C-6, 20-D-6 and 20-E-6, the construction services covered

by this Chapter; and

(g) in Appendices 20-A-7, 20-B-7, 20-C-7, 20-D-7 and 20-E-7, any General Notes.

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

covered under a Party's Appendices to Annex 20-A to 20-E to procure on its behalf, Article 20.6

shall apply _mutatis mutandis_ .

& /en 340

ARTICLE 20.4

Valuation of contracts

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

covered procurement, a procuring entity shall:

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

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

partially excluding it from the application of this Part of the Agreement; and

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

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

including:

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

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

options.

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

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

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

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

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

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

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

& /en 341

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

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

procuring entity's fiscal year.

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

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

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

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

maximum value for its duration; or

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

maximum value, including any estimated residual value;

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

by 48 (forty-eight); and

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

point (b) shall apply.

& /en 342

ARTICLE 20.5

Security and general exceptions

1. Nothing in this Chapter shall be construed as preventing a Party from taking any action or

not disclosing any information that it considers necessary for the protection of its essential security

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

procurement indispensable for national security or for national defence purposes.

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

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

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

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

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

or of prison labour;

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

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

or

(d) necessary to protect intellectual property.

& /en 343

ARTICLE 20.6

Non-discrimination

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

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

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

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

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

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

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

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

treatment accorded to its domestic goods, services and suppliers.

& /en 344

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

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

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

the basis of the degree of foreign affiliation to, or ownership by persons of the other Party **[1]** **[2]** ;

or

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

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

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

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

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

this Chapter.

**1** Notwithstanding Article 20.3(1), in the case the European Union and Argentina,
paragraph 2(a) shall apply to all procurement in Argentina with regard to suppliers of the
European Union which are juridical persons established in Argentina, and in the European
Union with regard to suppliers of Argentina which are juridical persons established in the
European Union. This remains subject to security and general exceptions as defined in Article
20.5.
**2** Notwithstanding Article 20.3(1), in the case of the European Union and Brazil, paragraph 2(a)
shall apply to all procurement in Brazil with regard to suppliers of the European Union which
are juridical persons established in Brazil, and in the European Union with regard to suppliers
of Brazil which are juridical persons established in the European Union. This remains subject
to security and general exceptions as defined in Article 20.5.

& /en 345

ARTICLE 20.7

Use of electronic means

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

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

government procurement systems.

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

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

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

available and interoperable with other generally available information technology systems and

software; and

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

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

ARTICLE 20.8

Conduct of procurement

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

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

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

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

& /en 346

ARTICLE 20.9

Rules of origin

For the purposes of Article 20.6, determination of the origin of goods shall be made on

a non-preferential basis.

ARTICLE 20.10

Denial of benefits

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

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

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

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

territory of that other Party.

ARTICLE 20.11

Offsets

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

enforce offsets.

& /en 347

ARTICLE 20.12

Publication of procurement information

1. Each Party shall:

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

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

by reference in notices and tender documentation and procedure regarding covered

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

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

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

such provisions;

(c) list, in Appendices 20-F-1, 20-G-1, 20-H-1, 20-I-1 and 20-J-1, the electronic or paper media

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

(d) list, where available in Appendices 20-F-2, 20-G-2, 20-H-2, 20-I-2 and 20-J-2, the electronic

media, in which the Party publishes the notices required by Articles 20.13, 20.15(4)

and 20.23(2).

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

listed in its Appendices to Annexes 20-F to 20-J. The Joint Council in trade configuration shall

amend Annexes 20-F to 20-J accordingly, pursuant to point (f) of Article 9.7(1).

& /en 348

ARTICLE 20.13

Publication of notices

Notice of intended procurement

1. For each covered procurement, except in the circumstances described in Article 20.20, a

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

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

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

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

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

notice. The electronic medium shall be listed by each Party in its Appendices to Annexes 20-F

to 20-J. Each such notice shall include the information set out in Annex 20-O.

Summary notice

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

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

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

include the information set out in Annex 20-K.

Notice of planned procurement

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

listed in Appendices to Annexes 20-F to 20-J as early as possible in each fiscal year a notice

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

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

& /en 349

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

12-D-3, 12-E-2 and 12-E-3 to Annexes 20-A to 20-E may use a notice of planned procurement as a

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

Annex 20-O as is available and a statement that interested suppliers should express their interest in

the procurement to the procuring entity.

ARTICLE 20.14

Conditions for participation

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

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

technical abilities to undertake the relevant procurement.

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

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

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

procuring entity.

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

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

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

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

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

that it has specified in advance in notices or tender documentation.

& /en 350

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

(a) bankruptcy;

(b) false declarations;

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

prior contract or contracts;

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

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

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

(g) failure to pay taxes.

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

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

documentation required by the tender or through equivalent documentation.

& /en 351

ARTICLE 20.15

Qualification of suppliers

Selective tendering

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

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

(b), (c), (i), (j) and (k) of: Annex 20-O and invite suppliers to submit a request for

participation; and

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

specified in points (d) to (h) of Annex 20-O to the qualified suppliers.

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

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

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

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

suppliers.

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

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

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

& /en 352

Multi-use lists

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

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

(a) published annually; and

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

medium listed in Appendices to Annexes 20-F to 20-J. Such a notice shall include the

information set out in Annex 20-L.

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

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

period of validity of the list, provided that the notice:

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

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

its validity.

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

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

& /en 353

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

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

time period provided for in Annex 20-M, a procuring entity shall examine the request. The

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

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

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

within the time period allowed for the submission of tenders.

Entities listed in Appendices to Annexes 20-A to 20-F

8. A procuring entity listed in Appendices to Annexes 20-A to 20-F may use a notice inviting

suppliers to apply for inclusion on a multi-use list as a notice of intended procurement, provided

that:

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

Annex 20-L, as much of the information listed in Annex 20-O as is available and a statement

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

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

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

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

procurement, including all remaining information required in Annex 20-D, to the extent such

information is available.

& /en 354

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

may be allowed by a procuring entity covered under Appendices to Annexes 20-A to 20-F to tender

in a given procurement, if there is sufficient time for the procuring entity to examine whether it

satisfies the conditions for participation.

Information on procuring entity decisions

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

participation in a procurement or an application for inclusion on a multi-use list of the procuring

entity's decision with respect to the request or application.

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

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

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

a multi-use list;

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

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

& /en 355

ARTICLE 20.16

Technical specifications

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

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

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

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

procuring entity shall, where appropriate:

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

rather than design or descriptive characteristics; and

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

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

shall be accompanied by the words "or equivalent".

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

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

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

"or equivalent" in the tender documentation.

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

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

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

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

"or equivalent" in the tender documentation.

& /en 356

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

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

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

procurement.

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

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

resources or protect the environment.

ARTICLE 20.17

Tender documentation

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

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

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

description of the following issues:

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

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

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

instructional materials;

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

that suppliers are required to submit in connection therewith;

& /en 357

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

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

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

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

by electronic means;

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

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

conducted;

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

appropriate, the persons authorised to be present;

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

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

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

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

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

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

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

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

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

environmental characteristics and terms of delivery.

& /en 358

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

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

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

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

that the request was presented within the applicable time limits.

5. Where, prior to the assessment of tenders in accordance with Article 20.22, a procuring

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

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

modifications:

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

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

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

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

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

& /en 359

ARTICLE 20.18

Time periods

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

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

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

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

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

interested or participating suppliers. The applicable time periods are set out in Annex 20-M.

ARTICLE 20.19

Negotiations

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

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

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

intended procurement; or

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

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

& /en 360

2. A procuring entity shall:

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

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

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

submit any new or revised tenders.

ARTICLE 20.20

Limited tendering

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

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

circumstances:

(a) where:

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

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

submitted;

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

& /en 361

(iv) the tenders submitted have involved collusion,

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

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

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

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

particular supplier and no reasonable alternative or substitute exists;

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

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

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

interchangeability or interoperability with existing equipment, software, services or

installations procured under the initial procurement; and

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

procuring entity;

(d) for goods purchased on a commodity market;

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

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

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

goods or services shall be subject to this Chapter;

& /en 362

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

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

means of an open tendering procedure or selective tendering;

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

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

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

winner; or

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

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

disposals of assets of businesses in liquidation or receivership.

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

justification for any contract awarded under paragraph 1.

ARTICLE 20.21

Electronic auctions

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

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

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

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

ranking or re-ranking during the auction;

& /en 363

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

awarded on the basis of the most advantageous tender; and

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

ARTICLE 20.22

Treatment of tenders and award of contracts

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

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

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

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

entity.

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

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

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

participation.

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

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

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

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

the sole criterion, the lowest price.

& /en 364

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

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

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

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

in a manner that circumvents the obligations under this Chapter.

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

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

the execution of the contract referred to in Article 20.17 or does not comply with the contract terms,

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

ARTICLE 20.23

Transparency of procurement information

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

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

3 of Article 20.24, a procuring entity shall, on request, provide an unsuccessful supplier with an

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

successful supplier's tender.

& /en 365

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

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

appropriate paper or electronic media listed in Appendices to Annexes 20-F to 20-J. Where only an

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

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

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

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

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

(c) the name of the successful supplier;

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

award of the contract;

(e) the date of the award; and

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

circumstances justifying the use of limited tendering.

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

data relevant to the procurement covered by this Chapter.

& /en 366

ARTICLE 20.24

Disclosure of information

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

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

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

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

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

information.

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

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

suppliers.

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

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

(a) would impede law enforcement;

(b) might prejudice fair competition between suppliers;

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

protection of intellectual property; or

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

& /en 367

ARTICLE 20.25

Domestic review procedures

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

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

(a) a breach of the Chapter; or

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

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

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

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

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

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

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

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

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

measures under the administrative or judicial review procedure.

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

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

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

& /en 368

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

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

arising in the context of a covered procurement.

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

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

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

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

procedural guarantees which shall provide that:

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

to the review body;

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

body being made on the challenge;

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

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

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

public and that witnesses may be presented; and

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

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

recommendation.

& /en 369

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

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

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

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

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

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

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

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

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

paragraph 1.

ARTICLE 20.26

Amendments and rectifications of coverage

1. A Party may propose to amend or rectify its respective Annexes 20-A to 20-E.

Amendments

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

(a) notify the other Party in writing; and

& /en 370

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

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

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

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

control or influence.

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

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

comparable level of mutually agreed coverage; or

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

or influence under paragraph 3.

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

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

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

proposed amendment.

Rectifications

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

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

Chapter:

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

& /en 371

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

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

added to the entities listed in the same Appendix.

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

for compensatory adjustments.

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

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

of this Agreement.

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

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

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

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

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

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

rectification.

Consultations and Dispute resolution

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

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

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

dispute settlement procedure established in Chapter 29 unless the Parties agree to extend the

deadline.

& /en 372

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

provided for in Chapter 29.

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

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

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

Chapter 29, the Joint Council in trade configuration shall amend the relevant Annex to reflect the

agreed amendment or rectifications or the agreed compensatory adjustments.

ARTICLE 20.27

Subcommittee on government procurement

1. The Subcommittee on government procurement, established pursuant to Article 9.9(4), shall

have the following functions, in addition to those listed in Articles 2.4 and 9.9:

(a) review the mutual opening of procurement markets;

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

including exchanges on procurement statistical data; and

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

Parties as referred to in Article 20.28.

& /en 373

ARTICLE 20.28

Cooperation in government procurement

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

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

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

through:

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

areas of mutual interest;

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

areas of mutual interest;

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

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

Signatory MERCOSUR States; and

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

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

particular for SMEs.

& /en 374

CHAPTER 21

INTELLECTUAL PROPERTY

SECTION A

GENERAL PROVISIONS AND PRINCIPLES

ARTICLE 21.1

General provisions

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

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

a Party.

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

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

and principles of the TRIPS Agreement and this Chapter.

& /en 375

ARTICLE 21.2

Objectives

The objectives of this Chapter are to:

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

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

and inclusive economy for the Parties;

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

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

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

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

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

knowledge, including to a rich public domain.

ARTICLE 21.3

Nature and scope of obligations

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

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

Agreement and Articles 21.9 to 21.43 of this Agreement.

& /en 376

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

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

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

as "Paris Convention").

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

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

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

that such measures are consistent with this Chapter.

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

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

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

they do not violate this Chapter.

ARTICLE 21.4

Principles

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

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

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

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

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

& /en 377

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

4. The Parties support the attainment of the United Nations SDGs.

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

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

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

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

Health Assembly on 24 of May 2008 (Resolution WHA 61.21 as amended by Resolution WHA

62.16).

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

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

as "WIPO").

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

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

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

avoid unwarranted curtailment of the period of protection.

& /en 378

ARTICLE 21.5

National treatment

Each Party shall accord to the nationals **[1]** of the other Party treatment no less favourable than that it

accords to its own nationals with regard to the protection **[2]** of intellectual property rights covered by

this Chapter, subject to the exceptions provided for in Articles 3 and 5 of the TRIPS Agreement **[3]** .

**1** For the purposes of this Chapter, "national" means, in respect of the relevant intellectual
property right, a person of a Party that would meet the criteria for eligibility for protection
provided for in the TRIPS Agreement or multilateral agreements concluded and administered
under the auspices of WIPO, as appropriate, to which a Party is a contracting party.
**2** For the purposes of Article 21.5, "protection" includes matters affecting the availability,
acquisition, scope, maintenance and enforcement of intellectual property rights as well as
those matters affecting the use of intellectual property rights specifically addressed in this
Chapter.
**3** In respect of performers, producers of phonograms and broadcasting organisations, this
obligation only applies in respect of the rights provided under this Chapter.

& /en 379

ARTICLE 21.6

Protection of biodiversity and traditional knowledge

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

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

communities **[1]** . The Parties furthermore affirm their sovereign rights over their natural resources and

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

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

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

genetic resources.

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

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

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

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

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

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

conclusions of multilateral discussions.

**1** For the purposes of Article 21.6, "indigenous and local communities" may include
descendants of enslaved Africans and small-scale farmers.

& /en 380

ARTICLE 21.7

Exhaustion

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

subject to the TRIPS Agreement.

ARTICLE 21.8

TRIPS Agreement and public health

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

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

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

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

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

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

& /en 381

SECTION B

STANDARDS CONCERNING INTELLECTUAL PROPERTY RIGHTS

SUB-SECTION 1

COPYRIGHT AND RELATED RIGHTS **[1]**

ARTICLE 21.9

International agreements

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

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

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

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

as "the Berne Convention");

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

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

"Rome Convention");

**1** The Parties shall be free, in their laws and regulations, to use different names for the rights set
out in this Sub-section, provided the agreed level of protection is ensured.

& /en 382

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

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

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

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

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

ARTICLE 21.10

Authors

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

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

whole or in part, of their works;

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

copies thereof;

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

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

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

& /en 383

ARTICLE 21.11

Performers

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

(a) the fixation of their performances;

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

whole or in part of fixations of their performances;

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

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

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

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

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

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

by them.

& /en 384

ARTICLE 21.12

Producers of phonograms

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

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

whole or in part, of their phonograms;

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

thereof; and

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

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

ARTICLE 21.13

Broadcasting organisations

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

considered a broadcasting organisation and shall provide broadcasting organisations with the

exclusive right to authorise or prohibit:

(a) the fixation of their broadcasts;

& /en 385

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

whole or in part, of fixations of their broadcasts;

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

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

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

individually chosen by them;

(d) the distribution to the public, by sale or otherwise, of fixations of their broadcasts **[1]** ; and

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

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

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

of an entrance fee **[2]** .

**1** Points (c) and (d) of Article 21.13 shall not apply to a Party to the extent that that Party does
not provide in its laws and regulations for the rights set out therein. In such case, the other
Parties may exclude broadcasting organisations of that Party from the protection granted in
points (c) and (d) of Article 21.13, and the obligation under Article 21.5 shall not apply in
respect of the rights provided for in points (c) and (d) of Article 21.13.
**2** Each Party may grant more extensive rights as regards the communication to the public by
broadcasting organisations.

& /en 386

ARTICLE 21.14

Right to remuneration for broadcasting and communication

to the public of phonograms published for commercial purposes

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

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

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

communication to the public **[1]** .

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

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

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

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

remuneration.

**1** Each Party may grant more extensive rights, in place of the right to remuneration or in
addition to this right, as regards the broadcasting and communication to the public of
phonograms published for commercial purposes, to performers and producers of phonograms.

& /en 387

ARTICLE 21.15

Term of protection

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

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

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

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

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

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

calculated from the death of the last surviving author.

3. In the case of anonymous or pseudonymous works, the term of protection shall run for at

least 50 (fifty) years after the work is lawfully made available to the public or, if the Party's laws

and regulations so provide, for 70 (seventy) years after the work is lawfully made available to the

public. Notwithstanding the first sentence, if the pseudonym adopted by the author leaves no doubt

as to the author's identity, or if the author discloses his or her identity during the period referred to

in the first sentence, the term of protection applicable shall be that laid down in paragraph 1.

4. The rights of performers in a performance other than fixed in a phonogram shall expire not

less than 50 (fifty) years after the date of the performance.

& /en 388

5. The rights of performers and producers of phonograms shall not expire for at

least 50 (fifty) years after the fixation is lawfully published or lawfully communicated to the public

or, if the Party's laws and regulations so provide, 70 (seventy) years after the fixation is lawfully

published or lawfully communicated to the public **[1]** . Each Party may, in accordance with its laws and

regulations, adopt effective measures to ensure that the profits generated during

the 20 (twenty) years of protection beyond 50 (fifty) years are fairly shared between performers and

producers.

6. The term of protection of the rights of the broadcasting organisations shall be at

least 20 (twenty) years from the first broadcast or, if a Party's laws and regulations so provide,

50 (fifty) years from the first broadcast.

7. The terms laid down in this Article shall be calculated from the 1st (first) of January of the

year following the event which gives rise to them.

8. Each Party may provide for longer terms of protection than those provided for in this

Article.

**1** Each Party may provide that the publication or lawful communication to the public of the
fixation of the performance or of the phonogram must occur within a defined period of time
of the date of the performance (in the case of the performers) or the date of the fixation (in the
case of producers of phonograms).

& /en 389

ARTICLE 21.16

Resale right

1. Each Party may provide, for the benefit of the author of graphic or plastic art, a resale right,

defined as an inalienable right, which cannot be waived, even in advance, to receive a percentage of

the price obtained from any resale of that work, after the first transfer of that work by the author.

2. The right referred to in paragraph 1 applies to all acts of resale involving as sellers, buyers

or intermediaries art market professionals, such as salesrooms, art galleries and, in general, any

dealers in works of art.

3. Each Party may provide that the right referred to in paragraph 1 does not apply to acts of

resale if the seller has acquired the work directly from the author less than 3 (three) years before

that resale and if the resale price does not exceed a minimum amount.

4. Each Party may provide that authors who are nationals of the other Party and their

successors in title enjoy the resale right in accordance with this Article and the laws and regulations

of the Party concerned provided that the laws and regulations of the country of which the author or

the author's successor in title is a national permits resale right protection in that country for authors

from the Party concerned and their successors in title.

& /en 390

ARTICLE 21.17

Cooperation on collective management of rights

1. The Parties shall promote cooperation, transparency and non-discrimination of collective

management organisations, in particular as regards the revenues they collect, the deductions they

apply to such revenues, the use of the royalties collected, the distribution policy and their repertoire,

including in the digital environment.

2. If a collective management organisation established in the territory of a Party represents a

collective management organisation established in the territory of another Party by way of a

representation agreement, the former Party shall seek to ensure that the representing collective

management organisation:

(a) does not discriminate against entitled members of the represented organisation; and

(b) pays the amounts owed to the represented organisation accurately, regularly, diligently and in

a fully transparent manner and provides the represented organisation with information on the

amounts of revenues collected on its behalf and the deductions made.

ARTICLE 21.18

Exceptions and limitations

1. Each Party shall confine exceptions and limitations to the rights in this Sub-Section to

certain special cases which do not conflict with a normal exploitation of the work or other subject

matter and do not unreasonably prejudice the legitimate interests of the right holders.

& /en 391

2. Each Party shall exempt from the reproduction right temporary acts of reproduction which

are transient or incidental, which are an integral and essential part of a technological process and the

sole purpose of which is to enable:

(a) a transmission in a network between third parties by an intermediary; or

(b) a lawful use of a work or other subject matter to be made, and which have no independent

economic significance.

ARTICLE 21.19

Protection of technological measures

1. Each Party shall provide adequate legal protection and effective legal remedies against the

circumvention of effective technological measures that are used by right holders in connection with

the exercise of their rights under this Sub-Section and that restrict acts which are not authorised by

the right holders concerned or permitted by law.

2. Each Party may, if permissible under its law, ensure that right holders make available to the

beneficiary of an exception or limitation the means for benefiting, to the extent necessary, from that

exception or limitation.

& /en 392

ARTICLE 21.20

Obligations concerning rights management information

1. For the purposes of this Article, "rights-management information" means any information

provided by right holders which identifies the work or other subject-matter referred to in this Sub

Section, the author or any other right holder, or information about the terms and conditions of use of

the work or other subject matter, and any numbers or codes that represent such information.

2. Each Party shall provide adequate legal protection against any person knowingly performing

without authority any of the following acts, if that person knows, or has reasonable grounds to

know, that by so doing that person is inducing, enabling, facilitating or concealing an infringement

of any copyright or any related rights:

(a) the removal or alteration of any electronic rights-management information; and

(b) the distribution, importation for distribution, broadcasting, communication or making

available to the public of works or other subject matter protected under this Sub-Section from

which electronic rights-management information has been removed or altered without

authorisation.

3. Paragraph 1 applies when any of the items of information referred to in that paragraph is

associated with a copy of, or appears in connection with the communication to the public of, a work

or other subject matter referred to in this Sub-Section.

4. The Parties shall ensure that the obligations set out in this Article do not harm non

infringing uses.

& /en 393

SUB-SECTION 2

TRADEMARKS

ARTICLE 21.21

International agreements

Each Party shall:

(a) comply with the Nice Agreement Concerning the International Classification of Goods and

Services for the Purposes of the Registration of Marks, done at Nice on 15 June 1957

(hereinafter referred to as "Nice Classification") **[1]** ; and

(b) make best efforts to accede to the Protocol relating to the Madrid Agreement concerning the

International Registration of Marks, done in Madrid on 27 June 1989, as last amended

on 12 November 2007.

**1** This obligation only applies to trademarks registered after the date of adoption of the Nice
Classification criteria or of accession to the instrument.

& /en 394

ARTICLE 21.22

Registration procedure

1. Each Party shall establish a system for the registration of trademarks in which each final

negative decision, including the partial refusal of registration, issued by the relevant trademark

administration, shall be notified in writing, duly reasoned and open to challenge.

2. Each Party shall provide for the possibility to oppose applications to register trademarks or,

if appropriate, the registration of trademarks. Such opposition proceedings shall be adversarial.

3. Each Party shall provide a publicly available electronic database of applications and

registrations of trademarks.

ARTICLE 21.23

Rights conferred by a trademark

A registered trademark shall confer on the proprietor exclusive rights therein. The proprietor shall

be entitled to prevent all third parties not having the proprietor's consent from using in the course of

trade:

(a) any sign which is identical to the trademark in relation to goods or services which are

identical to those for which the trademark is registered; and

& /en 395

(b) any sign which is identical to, or similar to, the trademark and is used in relation to goods or

services which are identical to, or similar to, the goods or services for which the trademark is

registered, if there exists a likelihood of confusion on the part of the public, which includes

the likelihood of association between the sign and the trademark.

ARTICLE 21.24

Well-known trademarks

1. Article 6bis of the Paris Convention shall apply, _mutatis mutandis_, to services. In

determining whether a trademark is well-known, each Party shall take account of the knowledge of

the trademark in the relevant sector of the public, including knowledge in the Party concerned

which has been obtained as a result of the promotion of the trademark.

2. Article 6bis of the Paris Convention shall apply, _mutatis mutandis_, to goods or services

which are not similar to those in respect of which a trademark is registered, provided that use of that

trademark in relation to those goods or services would indicate a connection between those goods or

services and the owner of the registered trademark and provided that the interests of the owner of

the registered trademark are likely to be damaged by such use.

& /en 396

3. For the purpose of giving effect to protection of well-known trademarks, as referred to in

Article 6bis of the Paris Convention and paragraphs 2 and 3 of Article 16 of the TRIPS Agreement,

each Party shall take into due consideration the principles established in the Joint Recommendation

Concerning Provisions on the Protection of Well-Known Marks adopted by the Assembly of the

Paris Union for the Protection of Industrial Property and the General Assembly of the WIPO at the

Thirty-Fourth Series of Meetings of the Assemblies of the Member States of WIPO on 20

to 29 September 1999.

ARTICLE 21.25

Bad faith applications

Each Party shall provide that a trademark may be declared invalid if the application for the

registration thereof was made in bad faith by the applicant. Each Party may also provide that such a

trademark shall not be registered.

ARTICLE 21.26

Exceptions to the rights conferred by a trademark

1. Each Party shall provide for limited exceptions to the rights conferred by a trademark such

as the fair use of descriptive terms including in the case of geographical indications, and may

provide other limited exceptions if such exceptions take account of the legitimate interests of the

owner of the trademark and of third parties.

& /en 397

2. The trademark shall not entitle the owner to prohibit a third party from using the following

when used in accordance with honest practices in industrial and commercial matters:

(a) his or her own name or address if that third party is a natural person;

(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical

origin, the time of production of goods or of rendering of the service, or other characteristics

of goods or services; or

(c) the trademark, if it is necessary to indicate the intended purpose of a product or service, in

particular as accessories or spare parts.

SUB-SECTION 3

DESIGNS

ARTICLE 21.27

International agreements

Each Party shall make best efforts to accede to the Geneva (1999) Act of the Hague Agreement

Concerning the International Registration of Industrial Designs, done at Geneva on 2 July 1999.

& /en 398

ARTICLE 21.28

Protection of registered designs

1. Each Party shall provide for the protection of independently created designs that are new

and original **[1]** **[2]** . This protection shall be provided by registration and shall confer an exclusive right

upon their holders in accordance with this Sub-Section.

2. The holder of a registered design shall have the right to prevent third parties not having the

holder's consent from making, offering for sale, selling, putting on the market, importing, exporting,

stocking such a product or using articles bearing or embodying the protected design if such acts are

undertaken for commercial purposes.

ARTICLE 21.29

Term of protection

The duration of protection available, including renewals, shall amount to at least 15 (fifteen) years

from the date of filing the application.

**1** For the purposes of this Article, a Party may consider that a design having individual
character is original.
**2** Argentina shall provide for the protection of independently created designs that are new or
original.

& /en 399

ARTICLE 21.30

Protection of unregistered designs

Each Party may establish legal means to prevent the use of unregistered designs.

ARTICLE 21.31

Exceptions and exclusions

1. Each Party may establish limited exceptions to the protection of designs, provided that such

exceptions do not unreasonably conflict with the normal exploitation of protected designs and do

not unreasonably prejudice the legitimate interests of the holder of the protected design, taking

account of the legitimate interests of third parties.

2. The protection of designs shall not extend to designs dictated essentially by technical or

functional considerations.

ARTICLE 1.32

Relation to copyright

Each Party shall, to the extent that it is provided for in its laws and regulations, ensure that a design

shall also be eligible for protection under its law of copyright as from the date on which the design

was created or fixed in any form. Each Party shall determine the extent and conditions of such

protection, including the level of originality required.

& /en 400

SUB-SECTION 4

GEOGRAPHICAL INDICATIONS

ARTICLE 21.33

Protection of geographical indications

1. This Sub-Section applies to the recognition and protection of geographical indications

originating in the territory of the Parties.

2. The Parties shall take the necessary measures to implement the protection of geographical

indications referred to in paragraph 1 in their territories, determining the appropriate method for

such implementation within their own legal system and practice.

3. Geographical indications of a Party shall only be subject to this Article if they are protected

as geographical indications in the territory of the Party of origin under its system of registration and

protection of geographical indications.

4. Each Party, having examined the legislation of the other Party in Annex 21-A and the

geographical indications in Annex 21-B, and having completed an objection procedure or public

consultation related to the geographical indications in Annex 21-B, undertake to protect since the

date of entry into force of this Agreement those geographical indications in accordance with the

level of protection laid down in this Sub-Section including the specific level of protection, notably

as set out in Article 21.35(8) and Appendix 21-B-1.

& /en 401

5. Each Party may protect geographical indications for products other than agricultural

foodstuffs, wines, spirit drinks or aromatised wines in its laws and regulations. The Parties

acknowledge that geographical indications listed in Annex 21-D are protected as geographical

indications in the country of origin.

ARTICLE 21.34

Addition of new geographical indications

By request of a Party, and once completed the steps described in Article 21.33(4), the

Subcommittee on intellectual property rights referred to under Article 21.59 may recommend to the

Joint Council in trade configuration to adopt a decision, pursuant to point (f) of Article 9.7(1) to add

new geographical indications to Annex 21-B, including in order to transfer the geographical

indications listed in Annex 21-C to Annex 21-B.

& /en 402

ARTICLE 21.35

Scope of protection of geographical indications

1. Each Party shall provide, according to its laws and regulations, the legal means for

interested parties to prevent:

(a) the use of a geographical indication of the other Party listed in Parts 1 and 2 of Annex 21-B

for any product that falls within the relevant product class, as specified in Section 3 of

Annex 1-B and that either:

(i) does not originate in the country of origin specified in Annex 21-B for that geographical

indication; or

(ii) originates in the country of origin specified in Annex 21-B for that geographical

indication but was not produced or manufactured in accordance with the laws and

regulations of the other Party that would apply if the product was for consumption in the

other Party;

(b) the use of any means in the designation or presentation of a good that indicates or suggests

that the good in question originates in a geographical area other than the true place of origin,

in a manner which misleads the public as to the geographical origin of the good;

(c) any other use which constitutes an act of unfair competition within the meaning of

Article 10bis of the Paris Convention;

& /en 403

(d) any direct or indirect commercial use of a protected name for comparable products not

complying with the product specification of the protected name, or that exploits the reputation

of a geographical indication;

(e) the use of a geographical indication not originating in the place indicated by the geographical

indication, even if the true origin of the goods is indicated or the geographical indication is

used in translation or accompanied by expressions such as "kind", "type", "style", "imitation"

or the like; and

(f) any misuse, imitation or deceiving use of a protected name of a geographical indication; or

any false or misleading indication of a protected name of a geographical indication; or any

practice liable to mislead the consumer as to the true origin, provenance and nature of the

product.

2. Regarding the relationship between trademarks and geographical indications:

(a) if a geographical indication is protected under this Sub-Section, each Party shall refuse the

registration of a trademark for the same or a similar product the use of which would

contravene this Sub-Section, provided that an application for registration of the trademark was

submitted after the date of application for protection of the geographical indication on the

territory concerned; trademarks registered in breach of this paragraph shall be invalidated in

accordance with the law of the Parties;

(b) for geographical indications listed in Annex 21-B at the date of entry into force of this

Agreement, the date of submission of the application for protection referred to in point (a)

shall be the date of the publication of the opposition procedure or public consultation in the

respective territories;

& /en 404

(c) for geographical indications referred to in Article 21.34, the date of submission of the

application for protection shall be the date of the transmission of a request to another Party to

protect a geographical indication;

(d) without prejudice to point (e), each Party shall protect the geographical indications referred to

in Annex 21-B also if a prior trademark exists; a prior trademark shall mean a trademark

which has been applied for, registered or established by use, if that possibility is provided for

by the laws and regulations of the Party concerned, in good faith in the territory of one Party

before the date of application for protection of the geographical indication, as referred to in

paragraph 1 is submitted by the other Party under this Agreement;

such prior trademark may continue to be used, renewed and be subject to variations which

may require the filing of new trademark applications, notwithstanding the protection of the

geographical indication, provided that no grounds for the trademark's invalidity or revocation

exist in the trademark law under which the trademark has been registered or established;

neither the prior trademark nor the geographical indication shall be used in a way that would

mislead the consumer as to the nature of the intellectual property right concerned; and

(e) a Party shall not be obliged to protect a geographical indication in light of a famous, reputed

or well-known trademark, if the protection is liable to mislead the consumer as to the true

identity of the product.

3. Nothing in this Sub-Section shall prevent the use by a Party, with respect to any product, of

a customary name of a plant variety or an animal breed, existing in the territory of that Party **[1]** .

**1** The Parties define in Appendix 21-B-1 the plant varieties and animal breeds the use of which
shall not be prevented.

& /en 405

4. Nothing in this Sub-Section shall prevent the use by a Party of an individual component of a

multi-component term that is protected as a geographical indication in the territory of that Party if

such individual component is a term customary in the common language as the common name for

the associated good **[1]** .

5 Nothing in this Sub-Section shall require a Party to protect a geographical indication which

is identical to the term customary in common language as the common name for the associated

good in the territory of that Party.

6. If a translation of a geographical indication is identical with or contains within it a term

customary in common language as the common name for a product in the territory of a Party, or if a

geographical indication is not identical with but contains within it such a term, this Sub-Section

shall not prejudice the right of any person to use that term in association with that product.

7. With regard to homonymous geographical indications:

(a) in the case of existing or future homonymous geographical indications of the Parties for

products falling within the same product category **[2]**, both shall coexist per se, and each Party

shall determine the practical conditions under which the homonymous indications in question

shall be differentiated from each other, taking into account the need to ensure equitable

treatment of the producers concerned and that consumers are not misled; and

**1** The Parties define in Appendix 21-B-1 the terms for which protection is not sought or
granted.
**2** In accordance with the Nice Classification and its amendments.

& /en 406

(b) if a Party, in the context of negotiations with a third country proposes to protect a

geographical indication from that third country, and the name is homonymous with a

geographical indication of the other Party, the latter shall be informed and be given the

opportunity to comment before the name is protected.

8. Without prejudice to Articles 21.35(1) to 21.35(7), a specific level of protection is defined

for the following cases of geographical indications listed in Annex 21-B **[1]** :

(a) "Genièvre", "Jenever" or "Genever": the protection of the geographical indication "Genièvre",

"Jenever" or "Genever" shall not prevent prior users of the term "Ginebra" in the territory of

Argentina that have used the term in good faith and in a continuous manner for at

least 5 (five) years prior to the publication for opposition of the geographical indication

"Genièvre", "Jenever" or "Genever" in Argentina, and prior users of the term "Genebra" in the

territory of Brazil that have used the term in good faith and in a continuous manner prior to

the publication for opposition of the geographical indication "Genièvre", "Jenever" or

"Genever" in Brazil, to continue using the term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the genuine origin of

the geographical indication and provided the term is displayed in a font character substantially

smaller, while readable, than the brand name and is differentiated from it in a non-ambiguous

manner as regards to the origin of the product;

**1** For greater certainty, the specific level of protection by each Signatory MERCOSUR State as
defined in Article 21.35(8) applies only in favour of those prior users that are part of the prior
users' list of that particular Signatory MERCOSUR State.

& /en 407

(b) "Queso Manchego": the protection of the geographical indication "Queso Manchego" for

cheeses elaborated in Spain in accordance with the applicable technical specifications, using

sheep's milk, shall not prevent prior users of the term "Queso Manchego" in the territory of

Uruguay that have used the term in good faith and in a continuous manner for at

least 5 (five) years prior to the publication for opposition of the geographical indication

"Queso Manchego", if related to cheeses elaborated with cow's milk, to continue using this

term provided these products are not commercialised using graphics, names, pictures or flags

as references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name, and is

differentiated from it in a non-ambiguous manner as regards the origin and the composition of

the product;

(c) "Grappa": the protection of the geographical indication "Grappa" shall not prevent prior users

of the term "Grappamiel" or "Grapamiel" in the territory of Uruguay that have used the term

in good faith and in a continuous manner prior to the publication for opposition of the

geographical indication "Grappa" to continue using this term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the protected

European geographical indication and provided the term is displayed in a font character

substantially smaller, while readable, than the brand name and is differentiated from it in a

non-ambiguous manner as regards the origin of the product;

& /en 408

(d) "Steinhäger": the protection of the geographical indication "Steinhäger" shall not prevent

prior users of the term "Steinhäger" in the territory of Brazil that have used the term in good

faith and in a continuous manner prior to the publication for opposition of the geographical

indication "Steinhäger" to continue using this term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the protected

European geographical indication and provided the term is displayed in a font character

substantially smaller, while readable, than the brand name and is differentiated from it in a

non-ambiguous manner as regards the origin of the product;

(e) "Parmigiano Reggiano":

(i) the protection of the geographical indication "Parmigiano Reggiano" shall not prevent

prior users of the term "Parmesão" in the territory of Brazil and of the term "Parmesano"

in the territories of Argentina, Paraguay and Uruguay that have used these terms in good

faith and in a continuous manner prior to the publication for opposition of the

geographical indication "Parmigiano Reggiano" to continue using these terms, provided

these products are not commercialised using graphics, names, pictures or flags as

references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name

and is differentiated from it in a non-ambiguous manner as regards the origin of

the product;

& /en 409

(ii) the protection of the geographical indication "Parmigiano Reggiano" shall not prevent

prior users of the term "Reggianito" in the territory of Argentina that have used this

term in good faith and in a continuous manner prior to the publication for opposition of

the geographical indication "Parmigiano Reggiano", and in the territories of Paraguay

and Uruguay that have used this term in good faith and in a continuous manner for at

least 5 (five) years prior to the publication for opposition of the geographical indication

"Parmigiano Reggiano", to continue using this term, provided these products are not

commercialised using graphics, names, pictures or flags as references to the protected

European geographical indication and provided the term is displayed in a font character

substantially smaller, while readable, than the brand name and is differentiated from it

in a non-ambiguous manner as regards the origin of the product;

(f) "Fontina": the protection of the geographical indication "Fontina" shall not prevent prior users

of the term "Fontina" in the territories of Argentina, Brazil, Paraguay and Uruguay that have

used the term in good faith and in a continuous manner for at least 5 (five) years prior to the

publication for opposition of the geographical indication "Fontina", to continue using this

term, provided these products are not commercialised using graphics, names, pictures or flags

as references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name and is

differentiated from it in a non-ambiguous manner as regards the origin of the product;

& /en 410

(g) "Gruyère" (France):

(i) the protection of the geographical indication "Gruyère" (France) shall not prevent prior

users of the terms "Gruyère" and "Gruyere" in the territories of Argentina, Brazil,

Paraguay and Uruguay that have used the term in good faith and in a continuous manner

for at least 5 (five) years prior to the publication for opposition of the geographical

indication "Gruyère" (France), to continue using this term, provided these products are

not commercialised using graphics, names, pictures or flags as references to the

protected European geographical indication and provided the term is displayed in a font

character substantially smaller, while readable, than the brand name and is differentiated

from it in a non-ambiguous manner as regards the origin of the product;

(ii) the protection of the geographical indication "Gruyère" (France) shall not prevent prior

users of the terms "Gruyerito" and "Gruyer" in the territory of Uruguay that have used

the term in good faith and in a continuous manner for at least 5 (five) years prior to the

publication for opposition of the geographical indication "Gruyère" (France) to continue

using this term, provided these products are not commercialised using graphics, names,

pictures or flags as references to the protected European geographical indication and

provided the term is displayed in a font character substantially smaller, while readable,

than the brand name and is differentiated from it in a non-ambiguous manner as regards

the origin of the product;

& /en 411

(h) "Grana Padano": the protection of the geographical indication "Grana Padano" shall not

prevent prior users of the term "Grana" in the territory of Brazil that have used the term in

good faith and in a continuous manner for at least 5 (five) years prior to the publication for

opposition of the geographical indication "Grana Padano" to continue using this term,

provided these products are not commercialised using graphics, names, pictures or flags as

references to the protected European geographical indication and provided the term is

displayed in a font character substantially smaller, while readable, than the brand name and is

differentiated from it in a non-ambiguous manner as regards the origin of the product; and

(i) "Gorgonzola": the protection of the geographical indication "Gorgonzola" shall not prevent

prior users of the term "Gorgonzola" in the territory of Brazil that have used the term in good

faith prior to the publication for opposition to continue using the term, provided these

products are not commercialised using graphics, names, pictures or flags as references to the

genuine origin of the geographical indication and provided the term is displayed in a font

character substantially smaller, while readable, than the brand name and is differentiated from

it in a non-ambiguous manner as regards to the origin of the product.

9. Prior users as referred to in points (a) to (i) of paragraph 8 are listed in Annex 21-E.

Succession of prior users and the effects thereof shall be determined by the domestic laws and

regulations of each Signatory MERCOSUR State.

10. Protected geographical indications listed in Annex 21-B shall not become generic in the

territories of the Parties.

11. Nothing in this Chapter shall create an obligation for the Parties to protect geographical

indications which are not or cease to be protected in their place of origin.

& /en 412

12. This Chapter shall not prejudice the right of any person to make commercial use of that

person's name or the name of that person's predecessor in business, except if such name is used in

such a manner as to mislead the public.

ARTICLE 21.36

Right of use of geographical indications

1. Any operator marketing agricultural products, foodstuffs, wines, aromatised wines or spirit

drinks which conform to the corresponding specification may use a geographical indication under

this Part of the Agreement.

2. Once a geographical indication is protected under this Part of the Agreement, the use of such

protected name shall not be subject to any registration of users or further charges.

ARTICLE 21.37

Enforcement of protection

Each Party shall provide the legal means for interested parties to seek enforcement of the protection

provided for in Article 21.35 via appropriate administrative and judicial action within its own legal

system and practice.

& /en 413

ARTICLE 21.38

Import, export and marketing

Import, export and marketing of products carrying the names listed in Annex 21-B shall comply

with the laws and regulations applying in the territory of the Party in which the products are placed

on the market.

ARTICLE 21.39

Cooperation and transparency on geographical indications

1. The Subcommittee on intellectual property rights, referred to in Article 21.59, shall monitor

the proper functioning of this Sub-Section and may consider any matter related to its

implementation and operation. It shall be responsible for:

(a) exchanging information on legislative and policy developments on geographical indications

and any other matter of mutual interest in the area of geographical indications; and

(b) cooperating on the development of alternative names for products that were once marketed by

producers of a Party with terms corresponding to geographical indications of the other Party,

especially in cases subject to a phasing-out.

2. The Subcommittee on intellectual property rights may recommend to the Joint Council in

trade configuration to amend, pursuant to point (f) of Article 9.7(1):

(a) Annex 21-A as regards the references to the law applicable in the Parties;

& /en 414

(b) Annex 21-B as regards geographical indications and exchanging information for that purpose;

(c) Annex 21-C as regards the geographical indication; and

(d) Annex 21-E as regards prior users.

3. Each Party shall notify the other if a geographical indication listed in Annex 21-B ceases to

be protected in its territory. Following such notification, the Joint Council in trade configuration

shall amend Annex 21-B in accordance with point (f) of Article 9.7(1) to end the protection under

this Part of the Agreement. Only the Party in which the product originates is entitled to request the

end of the protection under this Sub-Section of a geographical indication listed in Annex 21-B.

4. MERCOSUR shall notify the European Union if, following the entry into force of this

Agreement, it identifies additional prior users that comply with the specific requirements set forth in

points (a) to (i) of Article 21.35(8). Following such a notification and provided that the Parties agree

that the proposed additional prior users meet the aforementioned requirements, the Joint Council in

trade configuration shall amend Annex 21-E pursuant to point (f) of Article 9.7(1) by adding such

additional prior users.

5. The Parties shall, either directly or through the Subcommittee on intellectual property rights,

remain in contact directly on all matters relating to the implementation and the functioning of this

Sub-Section. In particular, a Party may request from the other Party information relating to product

specifications and amendments thereto, and contact points for control.

6. A product specification referred to in this Sub-Section shall be the one approved, including

any amendments also approved, by the authorities of the Party in the territory from which the

product originates.

& /en 415

7. The Parties may make publicly available the product specifications or a summary thereof

corresponding to the geographical indications of the other Party protected pursuant to this

Sub-Section, in Portuguese, Spanish or English.

SUB-SECTION 5

PATENTS

ARTICLE 21.40

International treaties

Each Party shall make best efforts to accede to the Patent Cooperation Treaty, done in Washington

on 19 June 1970 **[1]** .

**1** For the European Union this provision can be fulfilled through adherence of its
Member States.

& /en 416

SUB-SECTION 6

PLANT VARIETIES

ARTICLE 21.41

International agreements

Each Party shall protect plant varieties rights, in accordance with the International Convention for

the Protection of New Varieties of Plants done in Paris on 2 December 1961, as revised in Geneva

on 10 November 1972, and on 23 October 1978 (1978 UPOV ACT) or on 19 March 1991

(1991 UPOV ACT), and shall cooperate to promote the protection of plant varieties.

& /en 417

SUB-SECTION 7

PROTECTION OF UNDISCLOSED INFORMATION

ARTICLE 21.42

Scope of protection of trade secrets

1. In fulfilling its obligation under Article 21.1(1) to comply with the TRIPS Agreement, and

in particular with paragraphs 1 and 2 of Article 39 of the TRIPS Agreement, each Party shall

provide for appropriate civil judicial procedures and remedies for any trade secret holder to prevent,

and obtain redress for, the acquisition, use or disclosure of a trade secret whenever carried out in a

manner contrary to honest commercial practices.

2. For the purposes of this Sub-Section:

(a) "trade secret" means information that:

(i) is secret in the sense that it is not, as a body or in the precise configuration and assembly

of its components, generally known among or readily accessible to persons within the

circles that normally deal with the kind of information in question;

(ii) has commercial value because it is secret; and

(iii) has been subject to reasonable steps under the circumstances, by the person lawfully in

control of the information, to keep it secret; and

& /en 418

(b) "trade secret holder" means any natural or legal person lawfully controlling a trade secret.

3. For the purposes of this Sub-Section, a Party shall consider at least the following conducts to

be contrary to honest commercial practices:

(a) the acquisition of a trade secret without the consent of the trade secret holder, whenever

carried out by unauthorised access to, appropriation of, or copying of any documents, objects,

materials, substances or electronic files, lawfully under the control of the trade secret holder,

containing the trade secret or from which the trade secret can be deduced;

(b) the use or disclosure of a trade secret whenever carried out without the consent of the trade

secret holder by a person who:

(i) acquired the trade secret unlawfully;

(ii) was in breach of a confidentiality agreement or any other duty not to disclose the trade

secret; or

(iii) was in breach of a contractual or any other duty to limit the use of the trade secret; and

(c) the acquisition, use or disclosure of a trade secret whenever carried out by a person who, at

the time of the acquisition, use or disclosure, knew or ought to have known, under the

circumstances, that the trade secret had been obtained directly or indirectly from another

person who was using or disclosing the trade secret unlawfully within the meaning of

point (b).

& /en 419

4. A Party shall not be required to consider any of the following conducts to be contrary to

honest commercial practices under this Sub-Section:

(a) independent discovery or creation by a person of the relevant information;

(b) reverse engineering of a product by a person who is lawfully in possession of that product and

who is free from any legally valid duty to limit the acquisition of the relevant information;

(c) acquisition, use or disclosure of information required or allowed by the relevant Party's law;

or

(d) use by employees of their experience and skills honestly acquired in the normal course of

their employment.

5. Nothing in this Sub-Section shall be understood as restricting freedom of expression and

information, including media freedom as protected in the jurisdiction of each of the Parties.

ARTICLE 21.43

Civil judicial procedures and remedies of trade secrets

1. Each Party shall ensure that any person participating in the civil judicial proceedings

referred to in Article 21.42 or having access to documents which form part of those legal

proceedings is not permitted to use or disclose any trade secret or alleged trade secret which the

competent judicial authorities have, in response to a duly reasoned application by an interested

party, identified as confidential and of which they have become aware as a result of such

participation or access.

& /en 420

2. In the civil judicial proceedings referred to in Article 21.42, each Party shall provide that its

judicial authorities have the authority to, at least:

(a) order provisional measures, as set out in its laws and regulations, to prevent the acquisition,

use or disclosure of the trade secret in a manner contrary to honest commercial practices;

(b) order injunctive relief to prevent the acquisition, use or disclosure of the trade secret in a

manner contrary to honest commercial practices;

(c) order the person that knew or ought to have known that he or she was acquiring, using or

disclosing a trade secret in a manner contrary to honest commercial practices to pay the trade

secret holder damages appropriate to the actual prejudice suffered as a result of the unlawful

acquisition, use or disclosure of the trade secret;

(d) take specific measures to preserve the confidentiality of any trade secret or alleged trade

secret produced in civil proceedings relating to the alleged acquisition, use and disclosure of a

trade secret in a manner contrary to honest commercial practices; such specific measures may

include, in accordance with the Party's law, restricting access to certain documents in whole

or in part, restricting access to hearings and the corresponding records or transcript and

making available a non-confidential version of judicial decision in which the passages

containing trade secrets have been removed or redacted; and

(e) impose sanctions on parties, or other persons subject to the court's jurisdiction, for violation of

judicial orders concerning the protection of a trade secret or alleged trade secret produced in

those proceedings.

& /en 421

3. A Party shall not be required to provide for the judicial procedures and remedies referred to

in Article 21.42 if the conduct contrary to honest commercial practices is carried out, in accordance

with that Party's law, to reveal misconduct, wrongdoing or illegal activity or for the purpose of

protecting a legitimate interest recognised by law.

SECTION C

ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

SUB-SECTION 1

CIVIL AND ADMINISTRATIVE ENFORCEMENT

ARTICLE 21.44

General obligations

1. Each Party reaffirms its commitments under the TRIPS Agreement and in particular under

Part III thereof, and shall ensure the enforcement of intellectual property rights in accordance with

its law and within its own legal system and practice.

2. For the purposes of this Section, "intellectual property rights" means, unless otherwise

provided, intellectual property rights as defined in Article 21.3(1) with the exception of the rights

referred to in Articles 21.42 and 21.43.

& /en 422

3. Procedures **[1]** adopted, maintained or applied to implement this Section shall be effective, fair

and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time

limits or unwarranted delays, and shall act as a deterrent to further infringements. Each Party shall

take into account the need for proportionality among the infringement, the rights of all parties

involved, the interests of third parties, and the applicable measures, remedies and penalties.

4. The Parties shall apply the procedures referred to in paragraph 3 concerning the enforcement

of intellectual property rights in such a manner as to avoid the creation of barriers to legitimate

trade and to provide for safeguards against their abuse.

5. Articles 21.44 to 21.58 do not create any obligation for a Party to put in place a judicial

system for the enforcement of intellectual property rights distinct from that for the enforcement of

law in general in accordance with that Party's law, nor does it affect the capacity of the Parties to

enforce their law in general.

ARTICLE 21.45

Persons entitled to apply for procedures

Each Party shall recognise at least the following persons as entitled to seek application of the

procedures concerning the enforcement of intellectual property rights referred to in this Section and

in Part III of the TRIPS Agreement, in accordance with the law where the procedure takes place:

(a) the holders of intellectual property rights;

**1** For the purposes of this Section, "procedures" includes measures and remedies.

& /en 423

(b) exclusive licensees provided they are authorised by the right holders; and

(c) intellectual property collective rights management bodies which are legally and expressly

recognised as having a right to represent holders of intellectual property rights.

ARTICLE 21.46

Evidence

1. Each Party shall ensure that the competent judicial authorities have the authority to order, on

application by a party which has presented reasonably available evidence to support the Party's

claims that that party's intellectual property right has been infringed or is about to be infringed,

prompt and effective provisional measures to preserve relevant evidence in respect of the alleged

infringement, subject to the protection of confidential information **[1]** .

2. The provisional measures referred to in paragraph 1 may include the detailed description,

with or without the taking of samples, or the physical seizure, of the alleged infringing goods, and

in appropriate cases the documents relating thereto.

3. Each Party shall take the measures necessary to, in cases of trademark counterfeiting or

copyright piracy on a commercial scale **[2]**, enable the competent judicial authorities to order, if

appropriate, on application by a party, and if necessary to determine the existence and extent of an

infringement, the communication of relevant banking, financial or commercial documents under the

control of the opposing party, subject to the protection of confidential information.

**1** For the purposes of this Article, "confidential information" may include personal data.
**2** A Party may extend the application of this paragraph to other intellectual property rights.

& /en 424

4. Each Party shall ensure that the judicial authorities have the competence to subject the

measures to preserve evidence to the lodging by the applicant of adequate security or an equivalent

assurance intended to ensure compensation for any prejudice suffered by the defendant.

5. If the measures to preserve evidence are revoked, if they lapse due to any act or omission by

the applicant, or if it is subsequently found that there was no infringement or threat of infringement

of an intellectual property right, the judicial authorities shall have the authority to order the

applicant, upon the request of the defendant, to provide the defendant appropriate compensation for

any injury caused by those measures.

ARTICLE 21.47

Right of information

1. Each Party shall ensure that, in cases of an infringement of intellectual property rights and in

response to a justified and proportionate request of the claimant, the competent judicial authorities

may order the infringer or any other person to provide relevant information on the origin and

distribution networks of the infringing goods or services.

2. For the purposes of this Article:

(a) "any other person" means a person who was:

(i) found in possession of the infringing goods on a commercial scale;

(ii) found to be using the infringing services on a commercial scale;

& /en 425

(iii) found to be providing on a commercial scale services used in infringing activities; or

(iv) indicated by the person referred to in points (i) to (iii) as being involved in the

production, manufacture or distribution of the goods or the provision of the services.

(b) "relevant information" may include information regarding any person involved on a

commercial scale in the infringement or alleged infringement and regarding the means of

production and distribution networks of the goods or services.

3. This Article applies without prejudice to other statutory provisions which:

(a) grant the right holder rights to receive fuller information;

(b) govern the use in civil proceedings of the information communicated pursuant to this Article;

(c) govern responsibility for misuse of the right of information;

(d) afford an opportunity for refusing to provide information which would force the person

referred to in paragraph 1 to admit their own involvement or that of their close relatives; or

(e) govern the protection of confidentiality of information sources or the processing of

personal data.

& /en 426

ARTICLE 21.48

Provisional and precautionary measures

1. Each Party shall provide that its judicial authorities have the authority to order prompt and

effective provisional and precautionary measures, including an interlocutory injunction, against a

party or, if appropriate, against a third party over whom the relevant judicial authority exercises

jurisdiction, to prevent an infringement of an intellectual property right from occurring and, in

particular, to prevent infringing goods from entering into the channels of commerce.

2. An interlocutory injunction may also be issued to order the seizure or delivery up of goods

suspected of infringing an intellectual property right, so as to prevent their entry into or movement

within the channels of commerce.

3. Each Party shall ensure that, in the case of an alleged infringement committed on a

commercial scale, if the applicant demonstrates circumstances likely to endanger the recovery of

damages, the judicial authorities are able to order the precautionary seizure of the movable and

immovable property of the alleged infringer, including the blocking of the alleged infringer's bank

accounts and other assets. To that end, each Party shall ensure that the competent authorities are

able to order the communication of bank, financial or commercial documents, or appropriate access

to the relevant information.

4. The judicial authorities shall have the authority to require the applicant to provide any

reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty

that the applicant is the right holder and that the applicant's right is being infringed or that such

infringement is imminent, and to order the applicant to provide a security or equivalent assurance

sufficient to protect the defendant and to prevent abuse.

& /en 427

ARTICLE 21.49

Remedies

1. Each Party shall ensure that the competent judicial authorities are able to order, on the

request of the applicant and without prejudice to any damages due to the right holder by reason of

the infringement, and without compensation of any sort, the destruction, or at least the definitive

removal from the channels of commerce, of goods that they have found to infringe an intellectual

property right. Such goods may be used for the public interest. The judicial authorities shall also

have the authority to order that materials and implements predominantly used in the creation of the

infringing goods be, without compensation of any sort, disposed of outside the channels of

commerce in such a manner as to minimise the risks of further infringements. In considering such

requests, the competent judicial authorities shall take the need for proportionality between the

seriousness of the infringement and the remedies ordered as well as the interests of third parties

into account.

2. The competent judicial authorities of each Party shall have the authority to order that those

measures be carried out at the expense of the infringer, unless particular reasons are invoked for not

doing so.

& /en 428

ARTICLE 21.50

Injunctions

Each Party shall ensure that, if a judicial decision finds an infringement of an intellectual property

right, the competent judicial authorities are able to issue against the infringer or, if appropriate,

against a third party over whom the relevant judicial authority exercises jurisdiction, an injunction

aimed at prohibiting the continuation of the infringement.

ARTICLE 21.51

Alternative measures

Each Party may provide that the judicial authorities, in appropriate cases and upon the request of the

person liable to be subject to the measures provided for in Article 21.49 or 21.50, may order

pecuniary compensation to be paid to the injured party instead of applying the measures provided

for in Article 21.49 or 21.50, if it is found that the former acted unintentionally and without

negligence, or if execution of the measures in question would cause them disproportionate harm or

if pecuniary compensation to the injured party appears reasonably satisfactory **[1]** .

**1** In deciding what is "reasonably satisfactory", the judge may take into consideration the public
interest.

& /en 429

ARTICLE 21.52

Damages

1. Each Party shall ensure that the judicial authorities have the authority, upon the request of

the injured party, to order an infringer who knowingly, or with reasonable grounds to know,

engaged in an activity infringing intellectual property rights to pay the right holder damages

appropriate to compensate for the actual prejudice suffered as a result of the infringement of the

intellectual property right. In setting the damages, the competent judicial authorities:

(a) shall take into account all appropriate aspects, such as the negative economic consequences,

including lost profits, which the injured party has suffered, any unfair profits **[1]** made by the

infringer and, if applicable, elements other than economic factors, such as the moral prejudice

caused to the right holder by the infringement; or

(b) as an alternative to point (a), they may, in appropriate cases, set the damages as a lump sum

on the basis of elements such as at least the amount of royalties or fees which would have

been due if the infringer had requested authorisation to use the intellectual property right in

question.

**1** "Unfair profits" are those derived from the infringement, in accordance with a Party's law.

& /en 430

ARTICLE 21.53

Legal costs

Each Party shall provide that its judicial authorities, if appropriate, have the authority to order, at

the conclusion of civil judicial proceedings concerning the enforcement of intellectual property

rights, that the prevailing party be awarded payment by the losing party of legal costs and other

expenses, as provided for under that Party's law.

ARTICLE 21.54

Publication of judicial decisions

Each Party shall ensure that its judicial authorities are able to order the publication of the decision

in cases of infringement of an intellectual property right, unless this would not be proportionate to

the seriousness of the infringement.

ARTICLE 21.55

Presumption of authorship or ownership

Each Party shall, at least in provisional measures requested in civil proceedings involving copyright

and related rights, provide for a presumption that, in the absence of proof to the contrary, the person

or entity whose name is indicated as the author or related right holder of the work or subject matter

in the usual manner is the designated right holder in such work or subject matter.

& /en 431

ARTICLE 21.56

Public awareness

The Parties shall take the necessary measures to enhance public awareness of protection of

intellectual property including educational and dissemination projects on the use of intellectual

property rights as well as on the enforcement thereof.

SUB-SECTION 2

BORDER ENFORCEMENT

ARTICLE 21.57

Consistency with GATT and the TRIPS Agreement

In implementing border measures for the enforcement of intellectual property rights by customs

authorities, whether or not covered by this Chapter, each Party shall ensure consistency with its

obligations under the GATT and the TRIPS Agreement and, in particular, with Article V of GATT

and Article 41 and Section 4 of Part III of the TRIPS Agreement.

& /en 432

ARTICLE 21.58

Border measures

1. With respect to goods under customs control, each Party shall adopt or maintain procedures

under which a right holder may submit applications requesting customs authorities to suspend the

release or detain goods suspected of, at least, trademark counterfeiting, copyright and related rights

piracy on a commercial scale or infringing of geographical indications (hereinafter referred to

as "suspect goods").

2. The Parties shall not be obliged to apply the procedures in this Sub-Section to goods in

transit.

3. Each Party shall encourage the use of electronic systems for the management by customs

authorities of the applications granted or recorded.

4. Each Party shall ensure that customs authorities inform the applicant within a reasonable

period of time whether they have granted or recorded the application.

5. Each Party shall provide for such application or recordation to apply to multiple shipments

when so allowed in accordance with the provisions of the Party's law.

6. Each Party may provide that its customs authorities have the authority, with respect to goods

under customs control, to suspend the release of or detain suspect goods on their own initiative.

7. Each Party shall ensure that customs authorities are able to use risk analysis to identify

suspect goods.

& /en 433

8. Each Party may have in place administrative or judicial procedures, in accordance with the

Party's law, allowing for the destruction of suspect goods, if the persons concerned accept or do not

oppose to the destruction thereof. If such goods are not destroyed, each Party shall ensure that they

are disposed of outside commercial channels in such a manner as to avoid any harm to the

right holder.

9. The Parties shall not be obliged to apply this Article to imports of goods put on the market

in another country by or with the consent of the right holders. A Party may exclude from the

application of this Article goods of a non-commercial nature contained in travellers'

personal luggage.

10. The Parties shall ensure that the customs authorities of each Party maintain a regular

dialogue and promote cooperation with the relevant stakeholders and with other authorities involved

in the enforcement of the intellectual property rights referred to in paragraph 1.

11. The Parties shall cooperate with respect to international trade in suspect goods and, in

particular, to share information on such trade.

12. Without prejudice to other forms of cooperation, Annex 12-A applies to breaches of

legislation on intellectual property rights the enforcement of which falls within the competence of

the customs authorities in accordance with this Article.

& /en 434

SECTION D

FINAL PROVISIONS

ARTICLE 21.59

Subcommittee on intellectual property rights

1. The Subcommittee on intellectual property rights, established pursuant to Article 9.9(4),

shall have the following functions, in addition to those listed in Articles 2.4, 9.9 and 21.39:

(a) to exchange information:

(i) on the legal framework concerning intellectual property rights and relevant rules of

protection and enforcement; and

(ii) related to public domain in the territories of the Parties; and

(b) to exchange experiences on:

(i) legislative progress;

(ii) the enforcement of intellectual property rights; and

(iii) enforcement at central and sub-central level by customs, police, administrative and

judiciary bodies.

& /en 435

ARTICLE 21.60

Cooperation

1. With a view to facilitating the implementation of this Chapter the Parties shall cooperate:

(a) within the Subcommittee on intellectual property rights;

(b) in international fora;

(c) via various agencies; or

(d) as otherwise deemed appropriate.

2. The areas of cooperation include the following activities:

(a) coordination to prevent exports of counterfeit goods, including with other countries;

(b) technical assistance, capacity-building, exchange and training of personnel;

(c) protection and enforcement of intellectual property rights and the dissemination of

information in this regard in, inter alia, business circles and civil society;

(d) public awareness of consumers and right holders and enhancement of institutional

cooperation, particularly between intellectual property offices;

& /en 436

(e) actively promoting awareness and education of the general public on policies concerning

intellectual property rights;

(f) engaging with SMEs, including at SME-focused events or gatherings, regarding the use,

protection and enforcement of intellectual property rights;

(g) the application of the CBD and related instruments and the domestic frameworks on access to

genetic resources and associated traditional knowledge, innovations and practices; and

(h) facilitation of voluntary stakeholder initiatives to reduce intellectual property rights

infringement, including over the internet and in other marketplaces.

CHAPTER 22

SMALL AND MEDIUM-SIZED ENTERPRISES

ARTICLE 22.1

General principles

1. The Parties recognise that SMEs contribute significantly to trade, economic growth,

employment and innovation. The Parties affirm their intention to support the growth and

development of SMEs by enhancing their ability to participate in, and benefit from, the

opportunities created by this Agreement.

& /en 437

2. The Parties acknowledge the importance of reducing non-tariff barriers which place a

disproportionate burden on SMEs. They also acknowledge that, in addition to the provisions in this

Chapter, there are other provisions in this Agreement that seek to enhance cooperation between the

Parties on issues of relevance to SMEs or that otherwise may be of particular benefit to SMEs.

ARTICLE 22.2

Information sharing

1. Each Party shall establish or maintain its own publicly accessible website containing

information regarding this Part of the Agreement, including:

(a) the text of this Part of the Agreement, including all Annexes, tariff schedules and product

specific rules of origin;

(b) a summary of this Part of the Agreement; and

(c) information designed for SMEs containing:

(i) a description of the provisions in this Part of the Agreement that such Party considers to

be relevant to SMEs; and

(ii) any additional information that such Party considers to be useful for SMEs interested in

benefitting from the opportunities provided by this Part of the Agreement.

& /en 438

2. Each Party shall include links on the website referred to in paragraph 1 to:

(a) the equivalent website of the other Party;

(b) the websites of its own government authorities and other appropriate entities that the Party

considers would provide useful information to persons interested in trading, investing or

otherwise doing business in the territory of that Party, including available information related

to the following:

(i) rates of most-favoured-nation and preferential customs duties and quotas, rules of origin

and customs or other fees imposed at the border;

(ii) customs regulations and procedures for importation, exportation and transit as well as

other required forms and documents therefor;

(iii) regulations and procedures concerning intellectual property rights;

(iv) technical regulations including, where necessary, obligatory conformity assessment

procedures;

(v) links to lists of conformity assessment bodies, as provided for in Chapter 13;

(vi) sanitary and phytosanitary measures relating to importation and exportation as provided

for in Chapter 14;

(vii) government procurement, transparency rules and publication of procurement notices as

well as other relevant provisions contained in Chapter 20;

& /en 439

(viii) business registration procedures; and

(ix) other information which the SMEs coordinators agree may be of assistance to SMEs.

(c) a database that is electronically searchable by tariff nomenclature code and that includes the

information referred to in point (b)(i) as well as the following information:

(i) excise duties;

(ii) taxes (value added tax or sales tax);

(iii) other tariff measures;

(iv) deferral or other types of relief that result in the reduction, refund or waiver of customs

duties;

(v) criteria used to determine the customs value of the good;

(vi) if applicable, country of origin marking requirements, including placement and method

of marking;

(vii) information needed for import procedures; and

(viii) information related to non-tariff measures.

& /en 440

3. Each Signatory MERCOSUR State shall make its best efforts to ensure that no later

than 3 (three) years after the entry into force of this Agreement, the websites and the database

referred to in paragraphs 1 and 2 are put into place, containing as much information as possible with

respect to access to its markets.

4. Each Party shall regularly, or if requested by the other Party, update the information and

links referred to in paragraphs 1 and 2.

5. Each Party shall ensure that information set out in this Article is presented in a manner that

is easy to use for SMEs. If possible, each Party shall endeavour to make the information available

in English.

6. A Party shall not apply any fee for access to the information provided pursuant to

paragraphs 1 and 2 to any person of a Party.

ARTICLE 22.3

SMEs coordinators

1. Each Party shall communicate through the SMEs coordinators to the other Party its SME

coordinator responsible for carrying out the functions listed in this Article as well as any change in

the contact details of its SMEs coordinator. The SMEs coordinators shall:

(a) develop a work plan to carry out the tasks referred to in this Article;

& /en 441

(b) carry out their work through the communication channels agreed by the SMEs coordinators,

which may include email, meeting in person, meeting or communicating by telephone

conference or by video conference or communicating by other means; and

(c) report periodically on their activities to the Joint Committee in trade configuration for its

consideration.

2. The tasks of the SMEs coordinators shall be to:

(a) ensure that SME needs are taken into account in the implementation of this Part of

the Agreement;

(b) monitor the implementation of Article 22.2 with a view to ensuring that it remains up to date

and relevant for SMEs;

(c) recommend additional information that may be included in the Parties' websites referred to in

Article 22.2;

(d) cooperate and exchange information so that SMEs of the European Union and of

MERCOSUR take advantage of new opportunities under this Part of the Agreement to

increase trade and investment;

(e) address any other matters of relevance to SMEs in connection with the implementation of this

Part of the Agreement;

(f) participate in, if appropriate, the work of subcommittees established pursuant to Article 9.9,

when those subcommittees consider matters of relevance to SMEs;

& /en 442

(g) exchange information to assist the Joint Committee in trade configuration in monitoring and

implementing this Part of the Agreement as it relates to SMEs; and

(h) consider any other matter arising under this Part of the Agreement pertaining to SMEs.

3. SMEs coordinators may cooperate with experts and external organisations, as appropriate, in

carrying out their activities.

ARTICLE 22.4

Non-application of dispute settlement

No Party shall have recourse to dispute settlement under Chapter 29 for any matter arising under

this Chapter.

& /en 443

CHAPTER 23

COMPETITION

ARTICLE 23.1

Definitions

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

(a) "anti-competitive practices" means any conduct or act defined under the competition law of a

Party which is subject to the imposition of penalties;

(b) "competition authority" means:

(i) for the European Union, the European Commission; and

(ii) for MERCOSUR, the competent authorities of each of the Signatory

MERCOSUR States;

& /en 444

(c) "competition law" means:

(i) for the European Union, Articles 101, 102 and 106 of the Treaty on the Functioning of

the European Union, Council Regulation (EC) No 139/2004 of 20 January 2004 on the

control of concentrations between undertakings **[1]** and implementing regulations **[2]**

concerning those Articles and that Regulation; and

(ii) for MERCOSUR, the competition law of each of the Signatory MERCOSUR States and

the respective implementing regulations;

(d) "concentrations between undertakings" means any transaction or act as defined under the

competition law of a Party; and

(e) "enforcement activities" means any application of competition law by way of investigation or

proceeding conducted by the competition authorities of a Party.

**1** OJ EC L 24, 29.1.2004, p. 1.
**2** For greater certainty, competition law in the European Union applies to the agricultural sector
in accordance with Regulation (EU) 1308/2013 of the European Parliament and of the
Council of 17 December 2013 establishing a common organisation of the markets in
agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79,
(EC) No 1037/2001 and (EC) No 1234/2007 (OJ EU L 347, 20.12.2013, p. 671).

& /en 445

ARTICLE 23.2

Principles

1. The Parties recognise the importance of free and undistorted competition in their trade

relations. The Parties acknowledge that anti-competitive practices and concentrations between

undertakings which significantly impede effective competition have the potential to affect the

proper functioning of markets and the benefits of trade liberalisation.

2. The following are incompatible with this Part of the Agreement, in so far as they may affect

trade between the Parties:

(a) agreements between undertakings, decisions by associations of undertakings and concerted

practices between undertakings which have as their object or effect the prevention, restriction

or distortion of competition **[1]** as defined under the respective competition law of each Party;

(b) any abuse by one or more undertakings of a dominant position as defined under the respective

competition law of each Party; and

(c) concentrations between undertakings, which significantly impede effective competition, as

defined under the respective competition law of each Party.

**1** For greater certainty, this point shall not be construed as limiting the scope of the analysis to
be carried out in the case of agreements between undertakings, decisions by associations of
undertaking and concerted practices between undertakings under the respective competition
law of each Party.

& /en 446

3. The Parties recognise the importance of applying competition law in a transparent, timely

and non-discriminatory manner, respecting the principles of procedural fairness towards all

interested parties including the rights of defence of the parties under investigation.

ARTICLE 23.3

Implementation

1. Each Party shall adopt or maintain in force comprehensive competition law which

effectively addresses the anti-competitive practices and concentrations between undertakings

referred to in Article 23.2(2) and respects the principles set out in Article 23.2(3). Each Party shall

establish or maintain competition authorities designated and appropriately equipped for the

transparent and effective implementation of their competition law.

2. The competition authorities of each Party shall designate a focal point and inform each other

thereof. The focal points may communicate and exchange information with regard to the

implementation of Articles 23.5, 23.6 and 23.7.

ARTICLE 23.4

State-owned enterprises and enterprises granted exclusive or special privileges

1. Nothing in this Chapter prevents a Party from designating or maintaining state-owned

enterprises, enterprises granted exclusive or special privileges or monopolies according to their

respective law.

& /en 447

2. The entities referred to in paragraph 1 shall be subject to competition law provided that the

application of such law does not obstruct the performance, in law or in fact, of the particular tasks

of public interest assigned to them by a Party.

ARTICLE 23.5

Exchange of non-confidential information and enforcement cooperation

1. With a view to facilitating the effective application of the competition law of each Party, the

competition authorities may exchange non-confidential information.

2. The competition authority of one Party may request the other Party's competition authority

to provide cooperation with respect to enforcement activities. Such cooperation shall not prevent the

Parties from taking autonomous decisions.

3. A Party shall not be required to communicate information to the other Party pursuant to this

Article. Notwithstanding the previous sentence, if a Party provides information to the other Party

pursuant to this Article, it may require that such information is used subject to the terms and

conditions it specifies.

& /en 448

ARTICLE 23.6

Consultations

1. A competition authority of a Party may request consultations with a competition authority of

the other Party if it considers that its interests are being substantially and adversely affected by:

(a) anti-competitive practices that are or have been engaged in by one or more undertakings

situated in the territory of the other Party;

(b) concentrations between undertakings as referred to in Article 23.2(2); or

(c) the enforcement activities of the competition authority of the other Party.

2. Entering into the consultations referred to in paragraph 1 is without prejudice to any action

by a competition authority of a Party under its competition law or to the autonomy of its decision

making.

3. A competition authority consulted pursuant to paragraph 1 may take whatever corrective

measures it deems appropriate, consistent with its laws and regulations, and without prejudice to its

discretion to enforce competition law.

& /en 449

ARTICLE 23.7

Non-application of dispute settlement

No Party shall have recourse to dispute settlement under Chapter 29 for any matter arising under

this Chapter.

CHAPTER 24

SUBSIDIES

ARTICLE 24.1

Principles

Each Party may grant subsidies if they are necessary to achieve a public policy objective.

Nevertheless, the Parties acknowledge that certain subsidies have the potential to distort the proper

functioning of markets and undermine the benefits of trade liberalisation.

& /en 450

ARTICLE 24.2

Cooperation

1. The Parties recognise the need to cooperate, both at multilateral and regional level, in order

to:

(a) seek effective ways to coordinate their positions and proposals regarding subsidies in the

framework of the WTO;

(b) explore ways to improve transparency regarding subsidies; and

(c) exchange information on the functioning of their subsidy control systems.

2. The Joint Council in trade configuration may consider ways to further enhance the Parties'

understanding of the impact of subsidisation on trade.

3. The Parties shall review the functioning of their cooperation no later than 3 (three) years

after the date of entry into force of this Agreement and at regular intervals thereafter. The Parties

shall consult each other on ways to improve their cooperation, in light of experience gained and any

initiative on subsidy rules developed in the context of the WTO.

4. Details of such cooperation may be set out in an administrative agreement.

& /en 451

CHAPTER 25

STATE-OWNED ENTERPRISES,

ENTERPRISES GRANTED EXCLUSIVE OR SPECIAL PRIVILEGES

ARTICLE 25.1

Definitions

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

(a) "commercial activities" means activities undertaken by an enterprise with a view to making a

profit, the end result of which is the production of a good or supply of a service which will be

sold in the relevant market in quantities and at prices determined by the enterprise **[1]** ;

(b) "commercial considerations" means price, quality, availability, marketability, transportation

and other terms and conditions of purchase or sale; or other factors that would normally be

taken into account in the commercial decisions of a privately owned enterprise operating

according to market-economy principles in the relevant business or industry;

(c) "enterprise granted exclusive or special privileges" means an enterprise, public or private,

including a subsidiary, to which a Party has granted, formally or in effect, exclusive or special

privileges;

**1** For greater certainty, this excludes activities undertaken by an enterprise that operates: (a) on
a not-for-profit basis; or (b) on a cost recovery basis.

& /en 452

(d) "exclusive or special privileges" means rights or privileges granted by a Party to a sole

enterprise or to a limited number of enterprises authorised to supply a good or a service, that

are not granted according to objective, proportional and non-discriminatory criteria, taking

into account the specific sectoral regulation under which the granting of the right or privilege

has taken place, thereby substantially affecting the ability of any other enterprise to supply the

same good or service in the same geographical area under substantially equivalent

conditions **[1]** ;

(e) "service supplied in the exercise of governmental authority" means a service supplied in the

exercise of governmental authority as defined in Article I:3(c) of GATS and, where

applicable, Articles 1 (b), (c) and (d) of the Annex on Financial Services to GATS; and

(f) "state-owned enterprise" means an enterprise owned or controlled by a Party **[2]** .

**1** For greater certainty, the granting of a licence to a limited number of enterprises in allocating
a scarce resource through objective, proportional and non-discriminatory criteria is not in and
of itself an exclusive or special privilege.
**2** For the purposes of this definition, the term "owned or controlled" refers to situations in
which a Party owns more than 50 % of the share capital or controls the exercise of more
than 50 % of the voting rights, or otherwise exercises an equivalent degree of control over the
enterprise according to the governance rules of that enterprise.

& /en 453

ARTICLE 25.2

Scope

1. This Chapter applies to state-owned enterprises and to enterprises engaged in commercial

activities to which a Party has granted, formally or in effect, exclusive or special privileges. If an

enterprise combines commercial and non-commercial activities, only the commercial activities of

that enterprise are covered by this Chapter.

2. This Chapter does not apply to the procurement by a Party of a good or service purchased

for governmental purposes and not with a view to commercial resale or with a view to use in the

production or the supply of a good or service for commercial sale, irrespective of whether that

procurement is a "covered procurement" within the meaning of Article 20.3.

3. This Chapter does not apply to a service supplied in the exercise of governmental authority.

4. This Chapter does not apply to state-owned enterprises or to enterprises granted exclusive or

special privileges, if in any one of the 3 (three) previous consecutive fiscal years the annual revenue

derived from the commercial activities covered by this Chapter of the enterprise concerned was less

than 200 (two hundred) million special drawing rights.

5. This Chapter does not apply to the commercial activities of state-owned enterprises and

enterprises granted exclusive or special privileges with respect to sectors or subsectors for which

specific commitments are not made pursuant to Appendices 25-A-1 and 25-A-2 or to sectors or

subsectors for which specific commitments are made subject to limitations pursuant to

Appendices 25-A-1 and 25-A-2, to the extent of those limitations and subject to the terms and

conditions set out therein.

& /en 454

6. This Chapter does not apply to state-owned enterprises in the defence sector.

7. This Chapter does not apply to state-owned enterprises or enterprises granted exclusive or

special privileges referred to in Appendices 25-A-1 and 25-A-2. Article 25.4 does not apply to

state-owned enterprises listed in Appendix 25-A-1.

ARTICLE 25.3

General provisions

1. Each Party affirms its rights and obligations under Article XVII of GATT 1994, the

Understanding on the Interpretation of Article XVII of GATT 1994, as well as under Article VIII

of GATS.

2. Nothing in this Chapter prevents a Party from establishing or maintaining state-owned

enterprises, designating or maintaining monopolies, or granting enterprises exclusive or special

privileges.

& /en 455

ARTICLE 25.4

Commercial considerations

1. Each Party shall ensure that its state-owned enterprises and enterprises granted exclusive or

special privileges, when engaging in commercial activities in the territory of a Party, act in

accordance with commercial considerations in their purchases or sales of goods or services, except

to fulfil their public mandate or purpose **[1]** as provided for in a Party's law.

2. Paragraph 1 does not preclude these enterprises from:

(a) purchasing or supplying goods or services on different terms or conditions, including those

relating to price, if such different terms or conditions are made in accordance with

commercial considerations; or

(b) refusing to purchase or supply goods or services, if such refusal is made in accordance with

commercial considerations.

**1** For greater certainty, the concept of "public mandate or purpose" includes, among others, the
activities of national banks regarding the purchase of goods and services under federal
procurement laws, and lending policies in support of affordable housing, exports or imports,
micro, small and medium-sized enterprises and farmers or any tasks assigned by a Party to its
state-owned enterprises and enterprises granted exclusive or special privileges by a Party. The
concept of "public mandate or purpose" also includes activities carried out by a public entity
or trust relating to social security or public retirement plans.

& /en 456

ARTICLE 25.5

Transparency

1. A Party which has reason to believe that its interests are being adversely affected by the

commercial activities of a state-owned enterprise or of an enterprise granted exclusive or special

privileges of the other Party may request the other Party to provide information in writing about the

commercial activities of that enterprise which are subject to the provisions of this Chapter. The

requested Party shall, to the extent possible, provide an answer in a timely manner.

2. Requests for information referred to in paragraph 1 shall indicate the enterprise, the goods

services and markets concerned and indicate the interests under this Chapter that the requesting

Party believes to be adversely affected.

ARTICLE 25.6

Cooperation

The Parties shall cooperate by:

(a) exploring the possibility to make additional commitments on state-owned enterprises and

enterprises granted exclusive or special privileges; and

(b) exchanging experiences in the development of best practices on the corporate governance of

state-owned enterprises.

& /en 457

ARTICLE 25.7

Amendment of Annex 25-A

Annex 25-A shall be subject to review by the Joint Council in trade configuration 5 (five) years

after the date of entry into force of this Agreement with a view to exploring the possibility of

making additional commitments. The Joint Council in trade configuration may adopt a decision to

amend Annex 25-A as appropriate.

CHAPTER 26

TRADE AND SUSTAINABLE DEVELOPMENT

ARTICLE 26.1

Objectives and scope

1. The objective of this Chapter is to enhance the integration of sustainable development in the

Parties' trade and investment relationship, notably by establishing principles and actions concerning

labour **[1]** and environmental aspects of sustainable development of specific relevance in a trade and

investment context.

**1** For the purposes of this Chapter, the term "labour" means the strategic objectives of the
International Labour Organization under the Decent Work Agenda, which is expressed in the
ILO Declaration on Social Justice for a Fair Globalization.

& /en 458

2. The Parties recall the Agenda 21 on Environment and Development, adopted at

the UN Conference on Environment and Development, held in Rio de Janeiro, on 3 to 14 June 1992

and the Rio Declaration on Environment and Development of 1992, the Johannesburg Declaration

on Sustainable Development and the Johannesburg Plan of Implementation of the World Summit on

Sustainable Development of 2002, the Ministerial Declaration of the United Nations Economic and

Social Council on creating an environment at the national and international levels conducive to

generating full and productive employment and decent work for all, and its impact on sustainable

development of 2006, the ILO Declaration on Social Justice for a Fair Globalization, and the

Outcome Document of the UN Conference on Sustainable Development of 2012 entitled

"The Future We Want" and the SDGs of the 2030 Agenda.

3. The Parties recognise that the economic, social and environmental dimensions of sustainable

development are interdependent and mutually reinforcing, and affirm their commitment to

promoting the development of international trade in such a way as to contribute to the objective of

sustainable development, for the welfare of present and future generations.

4. Consistent with the instruments referred to in paragraph 2, the Parties shall promote

sustainable development through:

(a) the development of trade and economic relations in a manner that contributes to the objective

of achieving the SDGs and supports their respective labour and environmental standards and

objectives in a context of trade relations that are free, open, transparent and respectful of

multilateral agreements to which they are party;

(b) the respect of their multilateral commitments in the fields of labour and of the environment;

and

& /en 459

(c) enhanced cooperation and understanding of their respective labour and environmental trade

related policies and measures, taking into account the different national realities, capacities,

needs and levels of development and respecting national policies and priorities.

5. Recognising the differences in their levels of development, the Parties agree that this

Chapter embodies a cooperative approach based on common values and interests.

ARTICLE 26.2

Right to regulate and levels of protection

1. The Parties recognise the right of each Party to determine its sustainable development

policies and priorities, to establish the levels of domestic environmental and labour protection it

deems appropriate and to adopt or modify its laws, regulations and policies. Such levels, laws,

regulations and policies shall be consistent with each Party's commitment to the international

agreements and labour standards referred to in Articles 26.4 and 26.5.

2. Each Party shall strive to improve its relevant laws, regulations and policies so as to ensure

high and effective levels of environmental and labour protection.

3. A Party should not weaken the levels of protection afforded in its environmental or labour

laws and regulations with the intention of encouraging trade or investment.

4. A Party shall not waive or derogate from, or offer to waive or derogate from, its

environmental or labour laws and regulations in order to encourage trade or investment.

& /en 460

5. A Party shall not, through a sustained or recurring course of action or inaction, fail to

effectively enforce its environmental or labour laws and regulations in order to encourage trade or

investment.

6. A Party shall not apply its environmental and labour laws and regulations in a manner that

would constitute a disguised restriction on trade or an unjustifiable or arbitrary discrimination.

ARTICLE 26.3

Transparency

1. Each Party shall, in accordance with Chapter 27, ensure that the development, enactment

and implementation of the following is done in a transparent manner, ensuring awareness and

encouraging public participation, in accordance with its rules and procedures:

(a) measures aimed at protecting the environment and labour conditions that may affect trade or

investment; and

(b) trade or investment measures that may affect the protection of the environment or labour

conditions.

& /en 461

ARTICLE 26.4

Multilateral labour standards and agreements

1. The Parties affirm the value of greater policy coherence in decent work, encompassing core

labour standards, and high levels of labour protection, coupled with their effective enforcement, and

recognise the beneficial role that those areas can have on economic efficiency, innovation and

productivity, including export performance. In this context, they also recognise the importance of

social dialogue on labour matters among workers and employers, and their respective organisations

and governments, and commit to the promotion of such dialogue.

2. The Parties reaffirm their commitment to promote the development of international trade in

a way that is conducive to decent work for all, including for women and young people. In this

context, each Party reaffirms its commitment to promote and effectively implement the ILO

Conventions and Protocols ratified by the signatory MERCOSUR States and by the Member States

of the European Union and classified as up to date by the ILO.

3. In accordance with the ILO Constitution and the ILO Declaration on Fundamental Principles

and Rights at Work and its Follow-up, adopted in Geneva on 18 June 1998 (hereinafter referred to

as "ILO Declaration on Fundamental Principles and Rights at Work"), each Party shall respect,

promote and effectively implement the internationally recognised core labour standards, as defined

in the fundamental ILO Conventions, which are:

(a) freedom of association and the effective recognition of the right to collective bargaining;

(b) the elimination of all forms of forced or compulsory labour;

& /en 462

(c) the effective abolition of child labour; and

(d) the elimination of discrimination in respect of employment and occupation.

4. Each Party shall make continued and sustained efforts towards ratifying the fundamental

ILO Conventions, Protocols and other relevant ILO Conventions to which it is not yet a party and

that are classified as up to date by the ILO. The Parties shall regularly exchange information on

their respective progress in this regard.

5. The Parties recall that among the objectives of the 2030 Agenda is the elimination of forced

labour and underline the importance of ratification and effective implementation of the 2014

Protocol to the Forced Labour Convention.

6. The Parties shall consult and cooperate, as appropriate, on trade-related labour issues of

mutual interest, including in the context of the ILO.

7. Recalling the ILO Declaration on Fundamental Principles and Rights at Work and the

ILO Declaration on Social Justice for a Fair Globalization, the Parties note that the violation of

fundamental principles and rights at work cannot be invoked or otherwise used as a legitimate

comparative advantage and that labour standards should not be used for protectionist trade

purposes.

& /en 463

8. Each Party shall promote decent work as provided by the ILO Declaration on Social Justice

for a Fair Globalization. Each Party shall pay particular attention to:

(a) developing and enhancing measures for occupational safety and health, including

compensation in case of occupational injury or illness, as defined in the relevant

ILO Conventions and other international commitments;

(b) decent working conditions for all, with regard to, among others, wages and earnings, working

hours and other conditions of work;

(c) labour inspection, in particular through effective implementation of relevant ILO standards on

labour inspections; and

(d) non-discrimination in respect of working conditions, including for migrant workers.

9. Each Party shall ensure that administrative and judicial proceedings are available and

accessible in order to permit effective action to be taken against infringements of labour rights

referred to in this Chapter.

& /en 464

ARTICLE 26.5

Multilateral environmental agreements

1. The Parties recognise that the environment is one of the three dimensions of sustainable

development – economic, social and environmental – and that those three should be addressed in a

balanced and integrated manner. Additionally, the Parties recognise the contribution that trade can

make to sustainable development.

2. The Parties recognise the importance of the United Nations Environment Assembly of the

United Nations Environment Programme (hereinafter referred to as "UNEP") and of multilateral

environmental agreements (hereinafter referred to as "MEAs") as a response of the international

community to global or regional environmental challenges, and stress the need to enhance the

mutual supportiveness between trade and environment policies.

3. Each Party affirms its commitments to promote and effectively implement MEAs, protocols

and amendments thereto to which it is a party.

4. The Parties shall regularly exchange information on their respective progress as regards the

ratification of MEAs, including their protocols and amendments.

5. The Parties shall consult and cooperate, as appropriate, on trade-related environmental

matters of mutual interest in the context of MEAs.

6. The Parties acknowledge their right to invoke Article 28.2 in relation to environmental

measures.

& /en 465

7. Nothing in this agreement shall prevent a Party from adopting or maintaining measures to

implement the MEAs to which it is a party if such measures are consistent with Article 26.2(6).

ARTICLE 26.6

Trade and climate change

1. The Parties recognise the importance of pursuing the ultimate objective of the UNFCCC, in

order to address the urgent threat of climate change and recognise the role of trade to this end.

2. Pursuant to paragraph 1, each Party shall:

(a) effectively implement the UNFCCC and the Paris Agreement, established thereunder; and

(b) consistent with Article 2 of the Paris Agreement, promote the positive contribution of trade to

a pathway towards low greenhouse gas emissions and climate-resilient development and to

increasing the ability to adapt to the adverse impacts of climate change in a manner that does

not threaten food production.

3. The Parties shall cooperate, as appropriate, on trade-related climate change issues

bilaterally, regionally and in international fora, particularly in the UNFCCC.

& /en 466

ARTICLE 26.7

Trade and biodiversity

1. The Parties recognise the importance of the conservation and sustainable use of biological

diversity in accordance with the Convention on Biological Diversity done at Rio de Janeiro

on 5 June 1992, the Convention on International Trade in Endangered Species of Wild Fauna and

Flora signed at Washington D. C. on 3 March 1973 (hereinafter referred to as "CITES"), the

International Treaty on Plant Genetic Resources for Food and Agriculture, and the decisions

adopted thereunder, and the role that trade can play in contributing to the objectives of those

Conventions and that Treaty.

2. Pursuant to paragraph 1, each Party shall:

(a) promote the use of CITES as an instrument for conservation and sustainable use of

biodiversity, including through the inclusion of animal and plant species in the Appendices to

CITES where the conservation status of those species is considered at risk because of

international trade;

(b) implement effective measures leading to a reduction in illegal trade in wildlife, consistent

with international agreements to which it is a party;

(c) encourage trade in natural resource-based products obtained through sustainable use of

biological resources or which contribute to the conservation of biodiversity, in accordance

with its laws and regulations; and

& /en 467

(d) promote the fair and equitable sharing of benefits arising from the use of genetic resources

and, if appropriate, measures for access to such resources and prior informed consent.

3. The Parties shall also exchange information on initiatives and good practices on trade in

natural resource-based products with the aim of conserving biological diversity and cooperate, as

appropriate, bilaterally, regionally and in international fora on issues covered by this Article.

ARTICLE 26.8

Trade and sustainable management of forests

1. The Parties recognise the importance of sustainable forest management and the role of trade

in pursuing this objective and of forest restoration for conservation and sustainable use.

2. Pursuant to paragraph 1, each Party shall:

(a) encourage trade in products from sustainably managed forests harvested in accordance with

the laws and regulations of the country of harvest;

(b) promote, as appropriate and with their prior informed consent, the inclusion of forest-based

local communities and indigenous peoples in sustainable supply chains of timber and non

timber forest products, as a means of enhancing their livelihoods and of promoting the

conservation and sustainable use of forests;

(c) implement measures to combat illegal logging and related trade;

& /en 468

(d) exchange information concerning trade-related initiatives on sustainable forest management,

forest governance and on the conservation of forest cover and cooperate to maximise the

impact and ensure the mutual supportiveness of their respective policies of mutual interest;

and

(e) cooperate, as appropriate, bilaterally, regionally and in international fora on issues concerning

trade and the conservation of forest cover as well as sustainable forest management,

consistent with the 2030 Agenda.

ARTICLE 26.9

Trade and sustainable management of fisheries and aquaculture

1. The Parties recognise the importance of conserving and sustainably managing marine

biological resources and marine ecosystems as well as of promoting responsible and sustainable

aquaculture, and the role of trade in pursuing these objectives and their shared commitment to

achieving SDG 14 of the 2030 Agenda, particularly targets 4 and 6 thereof.

2. Pursuant to paragraph 1 and in a manner consistent with its international commitments, each

Party shall:

(a) implement long-term conservation and management measures and sustainable exploitation of

marine living resources in accordance with international law as enshrined in the UNCLOS

and other relevant United Nations and Food and Agriculture Organization of the United

Nations (hereinafter referred to as "FAO") instruments to which it is a party;

& /en 469

(b) act in accordance with the principles of the FAO Code of Conduct for Responsible Fisheries

adopted by Resolution 4/95 of 31 October 1995 (hereinafter referred to as "the FAO Code of

Conduct for Responsible Fisheries");

(c) participate and cooperate actively within the regional fisheries management organisations and

other relevant international fora to which it is a member, observer or cooperating non

contracting party, with the aim of achieving good fisheries governance and sustainable

fisheries, including through effective control, monitoring and enforcement of management

measures and, if applicable, the implementation of catch documentation or certification

schemes;

(d) implement, in accordance with its international commitments, comprehensive, effective and

transparent measures to combat illegal, unreported and unregulated fishing, and exclude from

international trade products that do not comply with such measures, and cooperate to this end,

including by facilitating the exchange of information;

(e) work with a view to coordinating the measures necessary for the conservation and sustainable

use of straddling fish stocks in areas of common interest; and

(f) promote the development of sustainable and responsible aquaculture, taking into account its

economic, social and environmental aspects, including with regard to the implementation of

the objectives and principles contained in the FAO Code of Conduct for Responsible

Fisheries.

& /en 470

ARTICLE 26.10

Scientific and technical information

1. When establishing or implementing measures aimed at protecting the environment or labour

conditions that may affect trade or investment, each Party shall ensure that the scientific and

technical evidence on which they are based is from recognised technical and scientific bodies and

that the measures are based on relevant international standards, guidelines or recommendations

where they exist.

2. In cases when scientific evidence or information is insufficient or inconclusive and there is a

risk of serious environmental degradation or to occupational health and safety in its territory, a

Party may adopt measures based on the precautionary principle. Such measures shall be based upon

available pertinent information and be subject to periodic review. The Party adopting such measures

shall seek to obtain new or additional scientific information necessary for a more conclusive

assessment and shall review such measures as appropriate.

3. If a measure adopted in accordance with paragraph 2 has an impact on trade or investment, a

Party may request the Party adopting the measure to provide information indicating that scientific

evidence or information is insufficient or inconclusive in relation to the matter at stake and that the

measure adopted is consistent with its own level of protection, and may request discussion of the

matter in the Subcommittee on trade and sustainable development referred to in Article 26.14.

4. The measures referred to in this Article shall not be applied in a manner which would

constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on

international trade.

& /en 471

ARTICLE 26.11

Trade and responsible management of supply chains

1. The Parties recognise the importance of responsible management of supply chains through

responsible business conduct and corporate social responsibility practices based on internationally

agreed guidance.

2. Pursuant to paragraph 1, each Party shall:

(a) support the dissemination and use of relevant international instruments that it has endorsed or

supported, such as the ILO Tripartite Declaration of Principles concerning Multinational

Enterprises and Social Policy adopted in Geneva in November 1977, the United Nations

Global Compact, the United Nations Guiding Principles on Business and Human Rights

endorsed by the Human Rights Council in its resolution 17/4 of 16 June of 2011 and the

OECD Guidelines for Multinational Enterprises: Recommendations for Responsible Business

Conduct in a Global Context annexed to the OECD Declaration on International Investment

and Multinational Enterprises done in Paris on 21 June 1976.

(b) promote the voluntary uptake by enterprises of corporate social responsibility or responsible

business practices, consistent with the guidelines and principles referred to in point (a); and

(c) provide a supportive policy framework for the effective implementation of the principles and

guidelines referred to in point (a).

& /en 472

3. The Parties recognise the utility of international sector-specific guidelines in the areas of

corporate social responsibility and responsible business conduct and shall promote joint work in this

regard. In respect of the OECD Due Diligence Guidance for Responsible Supply Chains of

Minerals from Conflict-Affected and High-Risk Areas and its supplements, the Parties adhering to

or supporting that Guidance shall also promote the uptake thereof.

4. The Parties shall exchange information as well as best practices and, if

appropriate, cooperate on issues covered by this Article, including in relevant regional and

international fora.

ARTICLE 26.12

Other trade and investment-related initiatives favouring sustainable development

1. The Parties confirm their commitment to enhance the contribution of trade and investment

to the objective of sustainable development in its economic, social and environmental dimensions.

2. Pursuant to paragraph 1, the Parties shall:

(a) promote the objectives of the Decent Work Agenda, in accordance with the ILO Declaration

on Social Justice for a Fair Globalization, including the minimum living wage, inclusive

social protection, health and safety at work, and other aspects related to working conditions;

& /en 473

(b) encourage trade and investment in goods and services as well as the voluntary exchange of

practices and technologies that contribute to enhanced social and environmental conditions,

including those of particular relevance for climate change mitigation and adaptation, in a

manner consistent with this Part of the Agreement; and

(c) cooperate, as appropriate, bilaterally, regionally and in international fora on matters covered

by this Article.

ARTICLE 26.13

Working together on trade and sustainable development

1. The Parties recognise the importance of working together in order to achieve the objectives

of this Chapter. They may work together on, among others:

(a) labour and environmental aspects of trade and sustainable development in international fora,

including in particular the WTO, the ILO, the UNEP, the UNCTAD, the United Nations

High-level Political Forum for Sustainable Development and MEAs;

(b) the impact of labour and environmental law and standards on trade and investment;

(c) the impact of trade and investment law on labour and the environment; and

(d) voluntary sustainability assurance schemes, such as fair and ethical trade schemes and eco

labels, through the sharing of experience and information on such schemes.

& /en 474

2. In order to achieve the objectives of this Chapter, the Parties may also work together on the

trade-related aspects of:

(a) the implementation of fundamental, priority and other up to date ILO Conventions;

(b) the ILO Decent Work Agenda, including on the interlinkages between trade and full and

productive employment, labour market adjustment, core labour standards, decent work in

global supply chains, social protection and social inclusion, social dialogue, skills

development and gender equality;

(c) the implementation of MEAs and support for each other's participation in such MEAs;

(d) the dynamic international climate change regime under the UNFCCC, in particular the

implementation of the Paris Agreement;

(e) the Montreal Protocol on Substances that Deplete the Ozone Layer done at Montreal

on 16 September 1987 and any Amendments to it ratified by the Parties, in particular

measures to control the production and consumption of and trade in Ozone Depleting

Substances (ODS) and Hydrofluorocarbons (HFCs), and the promotion of environmentally

friendly alternatives to them, and measures to address illegal trade of substances regulated by

that Protocol;

(f) corporate social responsibility, responsible business conduct, responsible management of

global supply chains and accountability, including with regard to implementation, follow-up

and dissemination of relevant international instruments;

(g) the sound management of chemicals and waste;

& /en 475

(h) the conservation and sustainable use of biological diversity, and the fair and equitable sharing

of the benefits arising from the utilisation of genetic resources, including by appropriate

access to such resources, as referred to in Article 26.7;

(i) combatting wildlife trafficking, as referred to in Article 26.7;

(j) the promotion of the conservation and sustainable management of forests with a view to

reducing deforestation and illegal logging, as referred to in Article 26.8;

(k) private and public initiatives contributing to the objective of halting deforestation, including

those linking production and consumption through supply chains, consistent with SDGs 12

and 15 of the 2030 Agenda;

(l) the promotion of sustainable fishing practices and trade in sustainably managed fish products,

as referred to in Article 26.9; and

(m) sustainable consumption and production initiatives consistent with SDG 12 of the 2030

Agenda, including, but not limited to, circular economy and other sustainable economic

models aimed at increasing resource efficiency and reducing waste generation.

& /en 476

ARTICLE 26.14

Subcommittee on trade and sustainable development and contact points

1. The Subcommittee on trade and sustainable development, established pursuant to

Article 9.9(4), shall have the following functions, in addition to those listed in Articles 2.4 and 9.9:

(a) facilitate and monitor cooperation activities undertaken under this Chapter;

(b) carry out the tasks referred to in Articles 26.16 to 26.18; and

(c) conduct the preparatory internal work necessary for the Joint Committee in trade

configuration, including with regard to topics for discussion with Domestic Advisory Groups

referred to in Article 2.7.

2. The Subcommittee shall publish a report after each of its meetings.

3. Each Party shall designate a contact point within its administration to facilitate

communication and coordination between the Parties on any matter relating to the implementation

of this Chapter.

ARTICLE 26.15

Dispute resolution

1. The Parties shall make all efforts through dialogue, consultation, exchange of information

and cooperation to address any disagreement on the interpretation or application of this Chapter.

& /en 477

2. Any time period mentioned in Articles 26.16 and 26.17 may be extended by mutual

agreement of the Parties.

3. All time periods established under this Chapter shall be counted in calendar days from the

day following the act or fact to which they refer.

4. For the purposes of this Chapter, Parties to a dispute under this Chapter shall be as set out in

Article 29.3.

5. No Party shall have recourse to dispute settlement under Chapter 29 for any matter arising

under this Chapter.

ARTICLE 26.16

Consultations

1. A Party may request consultations with the other Party regarding the interpretation or

application of this Chapter by delivering a written request to the contact point of the other Party

designated pursuant to Article 26.14(3). The request shall present the matter at issue clearly and

provide a brief summary of the claims under this Chapter, including an indication of the relevant

provisions thereof and explaining how it affects the objectives of this Chapter, as well as any other

information the Party deems relevant. Consultations shall start promptly after a Party delivers a

request for consultations, and in any event no later than 30 (thirty) days after the date of receipt of

the request.

& /en 478

2. Consultations shall be held in person or, if so agreed by the Parties, by videoconference or

other electronic means. If the consultations are held in person, they shall be held in the territory of

the Party to whom the request is made, unless the Parties agree otherwise.

3. The Parties shall enter into consultations with the aim of reaching a mutually satisfactory

resolution of the matter. In matters related to the multilateral agreements referred to in this Chapter,

the Parties shall take into account information from the ILO or from relevant organisations or

bodies responsible for MEAs ratified by both Parties, in order to promote coherence between the

work of the Parties and these organisations. If relevant, the Parties may agree to seek advice from

such organisations or bodies, or any other expert or body they deem appropriate.

4. If a Party considers that the matter needs further discussion, it may request in writing that

the Subcommittee on trade and sustainable development be convened and notify that request to the

contact point designated pursuant to Article 26.14(3). Such a request shall be made no earlier

than 60 (sixty) days from the date of the receipt of the request under paragraph 1. The

Subcommittee on trade and sustainable development shall meet promptly and endeavour to reach a

mutually satisfactory resolution of the matter.

5. The Subcommittee on trade and sustainable development shall take into account any views

on the matter provided by the Domestic Advisory Groups referred to in Article 2.7 as well as any

expert advice.

6. Any resolution reached by the Parties shall be made publicly available.

& /en 479

ARTICLE 26.17

Panel of experts

1. If, within 120 (one hundred and twenty) days after a request for consultations under

Article 18.16, no mutually satisfactory resolution has been reached, a Party may request the

establishment of a panel of experts to examine the matter. Any such request shall be made in

writing to the contact point of the other Party designated pursuant to Article 26.14(3) and shall

identify the reasons for requesting the establishment of a panel of experts, including a description of

the measures at issue and the relevant provisions of this Chapter that it considers applicable.

2. Except as otherwise provided for in this Article, Articles 29.9, 29.11, 29.12, 29.26 and

29.27, as well as the Rules of Procedure in Annex 29-A and the Code of Conduct in Annex 29-B,

apply.

3. The Subcommittee on trade and sustainable development shall, at its first meeting after

the date of entry into force of this Agreement, establish a list of at least 15 (fifteen) individuals

who are willing and able to serve on a panel of experts. The list shall be composed

of 3 (three) sub-lists: 1 (one) sub-list proposed by the EU, 1 (one) sub-list proposed by

MERCOSUR and 1 (one) sub-list of individuals that are not nationals of either Party. Each Party

shall propose at least 5 (five) individuals for its sub-list. The Parties shall also select at

least 5 (five) individuals for the list of individuals that are not nationals of either Party. The

Subcommittee on trade and sustainable development shall ensure that the list is kept up to date and

that the number of experts is maintained at least at 15 (fifteen) individuals.

& /en 480

4. The individuals referred to in paragraph 3 shall have specialised knowledge of, or expertise

in, matters addressed in this Chapter, including labour, environmental or trade law, or in the

resolution of disputes arising under international agreements. They shall serve in their individual

capacities, be independent and not take instructions from any organisation or government with

regard to issues related to the disagreement, or be affiliated with the government of any Party.

They shall also comply with Annex 29-B.

5. A panel of experts shall be composed of 3 (three) members, unless the Parties agree

otherwise. The chairperson shall be from the sub-list of individuals that are not nationals of either

Party. A panel of experts shall be established according to the procedures set out in paragraphs 1

to 4 of Article 21.9. The experts shall be selected from the relevant individuals on the sub-lists

referred to in paragraph 3 of this Article, in accordance with the relevant provisions of paragraphs 2,

3 and 4 of Article 29.9.

6. Unless the Parties agree otherwise within 7 (seven) days after the date of establishment of

the panel of experts, as defined in Article 29.9(5), the terms of reference shall be:

"to examine, in the light of the relevant provisions of Chapter 26 of the Partnership Agreement

between the European Union and its Member States, of the one part, and the Common Market of

the South, the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and

the Oriental Republic of Uruguay, of the other part, the matter referred to in the request for the

establishment of the panel of experts, and to issue a report, in accordance with Article 26.17,

making recommendations for the resolution of the matter".

7. With regard to matters related to the respect of multilateral agreements referred to in this

Chapter, the opinions of experts or information requested by the panel of experts in accordance with

Article 29.12 should include information and advice from the relevant ILO or MEA bodies. Any

information obtained under this paragraph shall be provided to both Parties for their comments.

& /en 481

8. The panel of experts shall interpret the provisions of this Chapter in accordance with the

customary rules of interpretation of public international law.

9. The panel of experts shall issue to the Parties an interim report within 90 (ninety) days after

the establishment of the panel of experts, and a final report no later than 60 (sixty) days after issuing

the interim report. Those reports shall set out the findings of fact, the applicability of the relevant

provisions and the basic rationale behind any findings and recommendations. Either of the

involved Parties may submit written comments on the interim report to the panel of experts

within 45 (forty-five) days after the date of issue of the interim report. After considering any such

written comments, the panel of experts may modify the report and make any further examination it

considers appropriate. If it considers that the deadlines set in this paragraph cannot be met, the

chairperson of the panel of experts shall notify the Parties in writing, stating the reasons for the

delay and the date on which the panel plans to issue its interim or final report.

10. The Parties shall make the final report publicly available within 15 (fifteen) days after its

submission by the panel of experts.

11. The Parties shall discuss appropriate measures to be implemented, taking into account the

report and recommendations of the panel of experts. The Party complained against shall inform its

Domestic Advisory Group referred to in Article 2.7 and the other Party of its decisions on any

actions or measures to be implemented no later than 90 (ninety) days after the report has been made

publicly available. The Subcommittee on trade and sustainable development shall monitor the

follow-up to the report of the panel of experts and its recommendations. The Domestic Advisory

Group referred to in Article 2.7 may submit observations to the Subcommittee on trade and

sustainable development in this regard.

& /en 482

ARTICLE 26.18

Review

1. For the purposes of facilitating the achievement of the objectives of this Chapter, the Parties

shall discuss through the meetings of the Subcommittee on trade and sustainable development its

effective implementation, including a possible review of its provisions, taking into account, among

others, the experience gained, policy developments in each Party, developments in international

agreements and views presented by stakeholders.

2. The Subcommittee on trade and sustainable development may recommend to the Parties

amendments to the relevant provisions of this Chapter reflecting the outcome of the discussions

referred to in paragraph 1.

& /en 483

CHAPTER 27

TRANSPARENCY

ARTICLE 27.1

Definitions

For the purposes of this Chapter the following definitions apply:

(a) "administrative decision" means a decision that affects the rights or obligations of a person in

an individual case and covers an administrative action or failure to take an administrative

action or decision as provided for in a Party's laws and regulations;

(b) "interested person" means any natural or juridical person that may be affected by a measure of

general application; and

(c) "measure of general application" means a law, regulation, judicial decision, procedure or

administrative ruling of general application that may have an impact on any matter covered by

this Part of the Agreement.

& /en 484

ARTICLE 27. 2

Objectives

Recognising the impact which its regulatory environment may have on trade and investment

between the Parties, each Party shall aim to promote a transparent and predictable regulatory

environment and efficient procedures for economic operators, especially SMEs, in accordance with

the provisions of this Chapter.

ARTICLE 27.3

Publication

1. Each Party shall ensure that a measure of general application with respect to any matter

covered by this Part of the Agreement:

(a) is promptly published via an officially designated medium and, if feasible, by electronic

means or is otherwise made available in such a manner as to enable any person to become

acquainted with it;

(b) provides an explanation of its objective and rationale; and

(c) allows for sufficient time between its publication and entry into force, except when this is not

possible for reasons of urgency.

& /en 485

2. To the extent possible, when adopting or amending major laws or regulations of general

application with respect to any matter covered by this Part of the Agreement, each Party shall, in

accordance with its respective rules and procedures:

(a) publish in advance the draft law or regulation or consultation documents providing details of

the objective of, and rationale for, such law or regulation;

(b) provide interested persons and the other Party a reasonable opportunity to comment on such

draft law or regulation or consultation documents; and

(c) endeavour to take into consideration the comments received on such draft law or regulation or

consultation documents.

ARTICLE 27.4

Enquiries

1. No later than 3 (three) years after the date of entry into force of this Agreement, each Party

shall establish or maintain appropriate mechanisms for receiving and responding to enquiries from

any person regarding any measure of general application which is proposed or in force and how it

would be applied with respect to any matter covered by this Part of the Agreement.

2. Upon request of a Party, the other Party shall promptly provide information and respond to

enquiries pertaining to any measure of general application or any proposal to adopt or amend any

measure of general application with respect to any matter covered by this Part of the Agreement that

the requesting Party considers may affect the operation of this Part of the Agreement.

& /en 486

ARTICLE 27.5

Administration of measures of general application

1. Each Party shall administer in an objective, impartial and reasonable manner all measures of

general application with respect to any matter covered by this Part of the Agreement.

2. Each Party, when applying measures of general application to persons, goods or services of

the other Party in specific cases, shall:

(a) endeavour to provide persons that are directly affected by administrative proceedings **[1]** with

reasonable notice, in accordance with its laws and regulations, when administrative

proceedings are initiated, including a description of the nature of the proceedings, a statement

of the legal authority under which the proceedings are initiated and a general description of

any issues in question; and

(b) afford such interested persons a reasonable opportunity to present facts and arguments in

support of their positions prior to any final administrative decision, in so far as time, the

nature of the proceedings and the public interest permit.

**1** For greater certainty, in the case of matters covered by Chapter 23 such persons are the
addressees of a decision by a Party's competition authority.

& /en 487

ARTICLE 27.6

Review and appeal

1. Each Party shall establish or maintain judicial, arbitral or administrative tribunals or

procedures for the purpose of the prompt review or appeal and, if warranted, the correction of an

administrative decision with respect to any matter covered by this Part of the Agreement. Each

Party shall ensure that its procedures for review or appeal are carried out in a non-discriminatory

and impartial manner by tribunals that are impartial and independent of the authority entrusted with

administrative enforcement, and composed by individuals with no substantial interest in the

outcome of the matter.

2. Each Party shall ensure that the parties to the procedures referred to in paragraph 1 are

provided with the right to:

(a) a reasonable opportunity to support or defend their respective positions; and

(b) a decision based on the evidence and submissions of record or, if required by its law, the

record compiled by the administrative authority.

3. Each Party shall ensure that the decision referred to in point (b) of paragraph 2 shall, subject

to appeal or further review as provided for in its law, be implemented by, and govern the practice of

the authority entrusted with administrative enforcement with respect to the administrative decision

concerned.

& /en 488

ARTICLE 27.7

Regulatory quality and performance and good regulatory practices

1. The Parties recognise the principles of good regulatory practices and shall promote

regulatory quality and performance. In particular, the Parties shall endeavour to:

(a) encourage the use of regulatory impact assessments when developing major initiatives; and

(b) establish or maintain procedures to promote the regular retrospective evaluation of measures

of general interest.

2. The Parties shall endeavour to cooperate in regional and multilateral fora to promote good

regulatory practices and transparency in respect of international trade and investment in areas

covered by this Part of the Agreement.

ARTICLE 27.8

Relation to other Chapters

This Chapter applies without prejudice to any specific rules in other Chapters of this Part of

the Agreement.

& /en 489

CHAPTER 28

EXCEPTIONS

ARTICLE 28.1

Security Exceptions

Nothing in this Part of the Agreement shall be construed:

(a) to require a Party to furnish or allow access to any information the disclosure of which it

considers contrary to its essential security interests; or

(b) to prevent a Party from taking an action which it considers necessary for the protection of its

essential security interests:

(i) connected to the production of or traffic in arms, ammunition and implements of war

and to such traffic and transactions in other goods and materials, services and

technology, and to economic activities, carried out directly or indirectly for the purpose

of supplying a military establishment;

(ii) relating to fissionable and fusionable materials or the materials from which they are

derived; or

(iii) taken in time of war or other emergency in international relations; or

& /en 490

(c) to prevent a Party from taking any action in pursuance of its international obligations under

the UN Charter for the purpose of maintaining international peace and security.

ARTICLE 28.2

General exceptions

1. Subject to the requirement that such measures are not applied in a manner which would

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

conditions prevail, or a disguised restriction on international trade, nothing in Chapters 10, 12

and 25 shall be construed to prevent the adoption or enforcement by a Party of measures referred to

in Article XX of the GATT 1994. To that end, Article XX of the GATT 1994, including its Notes

and Supplementary Provisions, is incorporated into and made part of this Part of the Agreement,

_mutatis mutandis_ .

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

constitute a means of arbitrary or unjustifiable discrimination between countries where like

conditions prevail, or a disguised restriction on investment liberalization or trade in services,

nothing in Chapters 18 and 25 shall be construed to prevent the adoption or enforcement by either

Party of measures:

(a) necessary to protect public security or public morals or to maintain public order **[1]** ;

**1** The public security and public order exceptions may be invoked only where a genuine and
sufficiently serious threat is posed to one of the fundamental interests of society.

& /en 491

(b) necessary to protect human, animal or plant life or health;

(c) relating to the conservation of exhaustible natural resources, if such measures are applied in

conjunction with restrictions on domestic investors or on the domestic supply or consumption

of services;

(d) necessary for the protection of national treasures of artistic, historic or archaeological value;

(e) necessary to secure compliance with laws or regulations which are not inconsistent with the

provisions of this Part of the Agreement including those relating to:

(i) the prevention of deceptive and fraudulent practices **[1]** or to deal with the effects of a

default on contracts;

(ii) the protection of the privacy of individuals in relation to the processing and

dissemination of personal data and the protection of confidentiality of individual records

and accounts; or

(iii) safety.

**1** For greater certainty, this includes anti-money laundering and counter-terrorism financing
regulations.

& /en 492

3. Nothing in Chapter 18 shall be construed to prevent the adoption or enforcement of a

measure which implements a requirement imposed or enforced by a court, administrative tribunal or

competition authority to remedy a violation of competition laws and regulations.

4. For greater certainty, the Parties understand that, to the extent that such measures are

otherwise inconsistent with the provisions of Chapters 10, 12 and 25:

(a) the measures referred to in point (b) of Article XX of GATT 1994 include environmental

measures, which are necessary to protect human, animal or plant life or health;

(b) point (g) of Article XX of GATT 1994 applies to measures relating to the conservation of

living and non-living exhaustible natural resources; and

(c) measures taken to implement multilateral environmental agreements can fall under points (b)

or (g) of Article XX of GATT 1994.

5. Before a Party takes any measures in accordance with points (i) and (j) of Article XX of

GATT 1994, it shall provide the other Party with all relevant information, with a view to seeking a

solution acceptable to the Parties. If an agreement is not reached within 30 (thirty) days of

providing such information, the Party may apply the relevant measures. Whenever exceptional and

critical circumstances require immediate action, the Party intending to take the measures may apply

the measure necessary to deal with the circumstances without prior notification and shall inform the

other Party immediately thereof.

& /en 493

ARTICLE 28.3

Taxation

1. Nothing in this Part of the Agreement shall affect the rights and obligations of the European

Union or its Member States or of the Signatory MERCOSUR States under any tax convention. In

the event of any inconsistency between this Part of the Agreement and any such tax convention, the

tax convention shall prevail to the extent of the inconsistency.

& /en 494

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

constitute a means of arbitrary or unjustifiable discrimination between countries, where like

conditions prevail, or a disguised restriction on trade or investment, nothing in this Part of the

Agreement shall be construed to prevent the adoption, maintenance or enforcement by a Party of

any measure aimed at ensuring the equitable or effective imposition or collection of direct taxes **[1]**

that:

(a) distinguishes between taxpayers, who are not in the same situation, in particular with regard

to their place of residence or with regard to the place where their capital is invested; or

**1** For greater certainty, the Parties understand that such measures include measures inconsistent
with Article 18.4 aimed at ensuring the equitable or effective imposition or collection of direct
taxes, taken by a Party under its taxation system which:
(i) apply to non-resident investors and services suppliers in recognition of the fact that the
tax obligation of non-residents is determined with respect to taxable items sourced or
located in the Party's territory;
(ii) apply to non-residents in order to ensure the imposition or collection of taxes in the
Party's territory;
(iii) apply to non-residents or residents in order to prevent the avoidance or evasion of taxes,

including compliance measures;
(iv) apply to consumers of services supplied in or from the territory of another Party in order

to ensure the imposition or collection of taxes on such consumers derived from sources
in the Party's territory;
(v) distinguish investors and service suppliers subject to tax on worldwide taxable items
from other investors and service suppliers, in recognition of the difference in the nature
of the tax base between them; or
(vi) determine, allocate or apportion income, profit, gain, loss, deduction or credit of

resident persons or branches, or between related persons or branches of the same
person, in order to safeguard the Party's tax base.
Tax terms or concepts in this footnote are determined according to tax definitions and
concepts, or equivalent or similar definitions and concepts, under the domestic law of the
Party taking the measure.

& /en 495

(b) aims at preventing the avoidance or evasion of taxes pursuant to the provisions of any tax

convention or domestic fiscal legislation.

3. For the purpose of this Article:

(a) "residence" means residence for tax purposes; and

(b) "tax convention" means a convention for the avoidance of double taxation or any other

international agreement or arrangement relating wholly or mainly to taxation that the

European Union or its Member States or a Signatory MERCOSUR State is party to.

ARTICLE 28.4

Disclosure of information

1. Nothing in this Part of the Agreement shall be construed to require a Party to make available

confidential information, the disclosure of which would impede law enforcement, or otherwise be

contrary to the public interest, or which would prejudice the legitimate commercial interests of

particular enterprises, public or private, except where a panel requires such confidential information

in dispute settlement proceedings under Chapter 29. In such cases, the panel shall ensure that

confidentiality is fully protected.

2. When a Party provides information which is considered as confidential under its laws and

regulations, the other Party shall treat that information as confidential, unless the submitting Party

agrees otherwise.

& /en 496

ARTICLE 28.5

WTO Waivers

If an obligation in this Part of the Agreement is substantially equivalent to an obligation contained

in the WTO Agreement, any measure taken in conformity with a waiver adopted pursuant to

paragraphs 3 and 4 of Article IX of the WTO Agreement is deemed to be in conformity with the

substantively equivalent provision in this Part of the Agreement.

& /en 497

CHAPTER 29

DISPUTE SETTLEMENT

SECTION A

OBJECTIVE, DEFINITIONS AND SCOPE

ARTICLE 29.1

Objective

The objective of this Chapter is to establish an effective and efficient mechanism to:

(a) avoid and settle disputes between the Parties regarding the interpretation and application of

Part III of this Agreement with a view to reaching, if possible, a mutually agreed solution; and

(b) preserve the balance of concessions accorded by Part III of this Agreement, when applicable.

& /en 498

ARTICLE 29.2

Definitions

For the purposes of this Chapter and Annexes 29-A, 29-B and 29-C:

(a) "adviser" means an individual retained by a party to advise or assist that party in connection

with the arbitration proceedings;

(b) "arbitration panel" means a panel established pursuant to Article 29.9;

(c) "arbitrator" means an individual who is a member of an arbitration panel;

(d) "assistant" means an individual who, under the terms of appointment of an arbitrator,

conducts researches or provides assistance to that arbitrator;

(e) "candidate" means an individual whose name is on the list of arbitrators referred to in

Article 29.8(3) and who is under consideration for selection as a member of an arbitration

panel established pursuant to Article 29.9;

(f) "complaining party" means a party that requests the establishment of an arbitration panel

pursuant to Article 29.7;

(g) "expert" means an individual with specialised and recognised knowledge and experience in a

certain field that is requested by an arbitration panel or mediator to provide an opinion, or

whose opinion in that field is submitted to or requested by any of the parties;

& /en 499

(h) "mediator" means an individual who conducts a mediation pursuant to Article 29.6;

(i) "representative of a party" means an employee or any person appointed by a government

department or agency or any other public entity of a Party who represents that Party for the

purposes of a dispute under this Chapter; and

(j) "staff" means, in respect of an arbitrator, individuals under the direction and control of an

arbitrator, other than assistants.

ARTICLE 29.3

Parties to the dispute

1. For the purposes of this Chapter, the European Union and MERCOSUR or one or more of

the Signatory MERCOSUR States, may be parties to a dispute. The parties to the dispute shall be

hereinafter referred to as "party" or "parties".

2. The European Union may initiate dispute settlement proceedings against MERCOSUR

regarding a measure that concerns the European Union or one or more of its Member States, if the

measure at issue is a measure of MERCOSUR.

3. The European Union may initiate dispute settlement proceedings against one or more of the

Signatory MERCOSUR States regarding a measure that concerns the European Union or one or

more of its Member States, if the measure at issue is a measure of such Signatory

MERCOSUR States.

& /en 500

4. MERCOSUR may initiate dispute settlement proceedings against the European Union

regarding a measure that concerns MERCOSUR or all of the Signatory MERCOSUR States, if the

measure at issue is a measure of the European Union **[1]** or of one or more of the European Union's

Member States.

5. One or more Signatory MERCOSUR States may individually initiate dispute settlement

proceedings against the European Union regarding a measure that concerns such Signatory

MERCOSUR State or Signatory MERCOSUR States, if the measure is a measure of the European

Union or of one or more of the European Union's Member States.

6. If more than one Signatory MERCOSUR State initiate dispute settlement proceedings

against the European Union on the same matter, Article 9 of the DSU shall apply _mutatis mutandis_ **[2]** .

**1** For greater certainty, a measure of the European Union referred to in this Article would also
cover a measure of one or more of the European Union's Member States.
**2** For greater certainty, paragraph 3 of article 9 of the DSU shall not prevent a Signatory
MERCOSUR State to appoint a member of the arbitration panel from the sub-list referred to
in point (b) of Article 29.8(3) of this Chapter different from the one that served or is serving
as arbitrator in a panel established to examine a complaint of another Signatory
MERCOSUR State on the same matter.

& /en 501

ARTICLE 29.4

Scope

The provisions of this Chapter apply with respect to any dispute:

(a) concerning the interpretation and application of the provisions of Part III of this Agreement

(hereinafter referred to as "covered provisions"), except if otherwise expressly provided; or

(b) concerning an allegation by a party that a measure applied by the other party nullifies or

substantially impairs any benefit accruing to it under the covered provisions in a manner

adversely affecting trade between the parties, whether or not such measure conflicts with the

provisions of Part III of this Agreement, except if otherwise expressly provided.

& /en 502

SECTION B

CONSULTATIONS AND MEDIATION

ARTICLE 29.5

Consultations

1. The parties shall endeavour to resolve any dispute regarding the alleged non-compliance

with the covered provisions referred to in point (a) of Article 29.4 or regarding the alleged

nullification or substantial impairment referred to in point (b) of Article 29.4 by entering into

consultations in good faith with the aim of reaching a mutually agreed solution. In this context,

additional consideration shall be given to the specific challenges of landlocked developing

countries.

2. A party shall seek consultations through a written request delivered to the other party and to

the Joint Committee in trade configuration, giving the reason for the request, including

identification of the measure at issue and, in the case of a dispute referred to in point (a) of

Article 29.4, the covered provisions that it considers applicable and not complied with by the other

party, or, in the case of a dispute referred to in point (b) of Article 29.4, the benefits it considers to

have been, as a result of the measure at issue, nullified or substantially impaired in a manner

adversely affecting trade between the parties.

& /en 503

3. Consultations shall be held no later than 15 (fifteen) days after the date of receipt of the

request, and shall, unless the parties agree otherwise, be held in the territory of the consulted party.

Consultations shall be deemed to have been concluded no later than 30 (thirty) days after the date of

receipt of the request, unless both parties agree to continue consultations. Consultations, and in

particular the positions taken by the parties therein, shall be confidential and without prejudice to

the rights of a party in any further proceedings.

4. Consultations on matters of urgency, including those regarding perishable goods or other

goods or services that rapidly lose their quality, current condition or commercial value in a short

period of time, shall be held no later than 15 (fifteen) days after the date of receipt of the request

and shall be deemed to have been concluded within those 15 (fifteen) days, unless both parties

agree to continue consultations.

5. During consultations, each party shall provide factual information, so as to allow a complete

examination of the manner in which the measure at issue could, in the case of a dispute referred to

in point (a) of Article 29.4, affect the application of Part III of this Agreement, or, in the case of a

dispute referred to in point (b) of Article 29.4, nullify or substantially impair the benefits accruing

to the requesting party under Part III of this Agreement in a manner adversely affecting trade

between the parties.

6. If consultations are not held within the time period laid down in paragraphs 3 or 4, as the

case may be, or if consultations are concluded and a mutually agreed solution is not reached, the

party which has requested consultations may have recourse to the establishment of an arbitration

panel in accordance with Article 29.7.

& /en 504

7. A request for consultations concerning a dispute referred to in point (a) of Article 29.4 shall

be without prejudice to the right of the requesting party to request, concurrently or subsequently,

consultations concerning a dispute referred to in point (b) of Article 29.4 in respect of the same

measure, and vice versa.

ARTICLE 29.6

Mediation

A party may request pursuant to Annex 29-C to enter into mediation with respect to any measure by

a party adversely affecting trade between the parties. Mediation may only be initiated by mutual

consensus of the parties.

& /en 505

SECTION C

ARBITRATION

ARTICLE 29.7

Initiation of arbitration panel proceedings

1. If the parties have failed to resolve the dispute through consultations in accordance with

Article 29.5, or if the complaining party considers that the defending party has failed to comply

with a solution mutually agreed during consultations, the complaining party may seek the

establishment of an arbitration panel by means of a written request delivered to the defending party

and to the Joint Committee in trade configuration.

2. The complaining party shall give the reasons for the request, including identification of the

measure at issue and explain, in the case of a dispute referred to in point (a) of Article 29.4, how

that measure constitutes a breach of the covered provisions in a manner that clearly presents the

legal basis for the complaint, or, in the case of a dispute referred to in point (b) of Article 29.4, how

the measure at issue nullifies or substantially impairs the benefits accruing to the complaining party

under Part III of this Agreement.

3. A request for establishment of an arbitration panel concerning a dispute referred to in point

(a) of Article 29.4 shall be without prejudice to the right of the complaining party to request,

concurrently or subsequently, the establishment of an arbitration panel concerning a dispute referred

to in point (b) of Article 29.4 in respect of the same measure, and vice versa.

& /en 506

4. If the complaining party has, at the same time and in respect of the same measure, requested

the establishment of an arbitration panel both concerning a dispute referred to in point (a) of

Article 29.4 and a dispute referred to in point (b) of Article 29.4, a single arbitration panel shall be

established conducting a single arbitration in respect of both disputes. In case of subsequent

arbitrations concerning the same measure, the latter arbitration shall be referred to the same panel as

the preceding dispute, wherever possible.

ARTICLE 29.8

Appointment of arbitrators

1. Arbitrators must have specialised knowledge or experience in law and international trade.

Arbitrators that are not nationals of a party shall be jurists.

2. Arbitrators shall:

(a) be independent;

(b) serve in their individual capacity;

(c) not take instructions from any organisation or government or be affiliated to any government

or governmental organisation of a Party to this Agreement; and

(d) comply with Annex 29-B.

& /en 507

3. The Joint Committee in trade configuration shall, no later than 6 (six) months after the date

of entry into force of this Agreement, establish a list of 32 (thirty-two) individuals who are willing

and able to serve as arbitrators. That list shall be composed of the following 3 (three) sub-lists:

(a) one sub-list of 12 (twelve) individuals proposed by the European Union;

(b) one sub-list of 12 (twelve) individuals proposed by MERCOSUR; and

(c) one sub-list of 8 (eight) individuals, proposed by both Parties, who are not nationals of either

Party and who shall act as chairperson of the arbitration panel.

4. The Joint Committee in trade configuration shall ensure that the list referred to in paragraph

3 of this Article contains the number of individuals therein required. The Joint Committee in trade

configuration may amend the list of arbitrators, in accordance with Rule 25 of the Rules of

Procedure as set out in Annex 29-A.

5. If, at the moment of the establishment of a particular arbitration panel pursuant to

Article 29.9, the list provided for in paragraph 3 of this Article has not been established or, once

established, not all individuals included in a particular sub-list are able to serve as arbitrator in a

dispute, the co-chair of the Joint Committee in trade configuration of the complaining party shall

draw by lot the arbitrators in accordance with Rules 10, 26 and 28 to 31 of the Rules of Procedure

as set out in Annex 29-A.

& /en 508

ARTICLE 29.9

Establishment of the arbitration panel

1. An arbitration panel shall be composed of 3 (three) arbitrators.

2. No later than 10 (ten) days after the date of receipt of the written request for the

establishment of an arbitration panel pursuant to Article 29.7(1), the parties shall consult one

another with a view to agreeing on its composition **[1]** . Expertise relevant to the subject matter of the

dispute may be taken into consideration by the parties for the selection of arbitrators. The arbitration

panel shall always be chaired by a non-national of either Party.

3. If there is no agreement on the composition of the arbitration panel within the time period

set out in paragraph 2 of this Article, each party shall appoint one member of the arbitration panel

from the sub-list of that party referred to in Article 29.8(3) no later than 10 (ten) days after the

expiry of the time period referred to in paragraph 2 of this Article. If a party fails to appoint an

arbitrator within that time period the co-chair of the Joint Committee in trade configuration of the

complaining party or his or her designee shall, no later than 5 (five) days after the expiry of the time

period referred to in the previous sentence, select the arbitrator by lot from the sub-list of that party.

**1** For greater certainty, when agreeing on the composition of the arbitration panel pursuant to
this paragraph, the parties may agree to select as arbitrators persons who are not included in
the list of arbitrators established pursuant to Article 29.8(3).

& /en 509

4. During the time period referred to in paragraph 2 of this Article, the parties shall endeavour

to agree on the chairperson of the arbitration panel. If they are unable to agree, either party shall

request the co-chair of the Joint Committee in trade configuration of the complaining party to select

the chairperson of the arbitration panel by lot from the sub-list referred to in Article 29.8(3) no later

than 5 (five) days after that request.

5. The date of the establishment of the arbitration panel shall be that on which all selected

arbitrators have accepted the appointment in accordance with the Rules of Procedure set out in

Annex 29-A.

6. If a party considers that an arbitrator does not comply with Annex 29-B, the procedures

provided for in Annex 29-A apply.

7. If an arbitrator is unable to participate in the proceedings, withdraws or needs to be replaced,

a new arbitrator shall be selected in accordance with the selection procedures set out in this Article

and the Rules of Procedure set out in Annex 29-A. The arbitration proceedings shall be suspended

during that period for up to a maximum of 25 (twenty-five) days.

8. The parties shall accept as binding, _ipso facto_ and with no need for a special agreement, the

authority of any arbitration panel established in accordance with this Chapter.

ARTICLE 29.10

Decision on urgency

If a party so requests, the arbitration panel shall decide, within 10 (ten) days of its establishment,

whether the case concerns matters of urgency.

& /en 510

ARTICLE 29.11

Hearings

The hearings of the arbitration panel shall be open to the public, unless the parties to the dispute

decide otherwise. The hearings of the arbitration panel shall be partially or completely closed to the

public when the submission or arguments of a party contain information which that party has

designated as confidential.

ARTICLE 29.12

Information and technical advice

1. The arbitration panel may request, in accordance with Annex 29-A, the opinion of experts or

obtain information from any source deemed relevant.

2. The opinions of experts as well as information obtained from any relevant source shall be

non-binding.

3. Experts must be persons of professional standing and experience in the relevant field. The

arbitration panel shall consult the parties before choosing such experts.

4. The arbitration panel shall set a reasonable time period for the submission of information or

the report of the experts.

& /en 511

5. Persons of the Parties shall be authorised to submit amicus curiae briefs to the arbitration

panels in accordance with the conditions set out in Annex 29-A. Those conditions shall ensure that

the amicus curiae briefs do not create an undue burden for the parties to the dispute or unduly delay

or complicate the arbitration panel proceedings.

6. Any information obtained under this Article shall be disclosed to each of the parties and

submitted for their comments.

ARTICLE 29.13

Applicable law and rules of interpretation

1. In the case of a dispute referred to in point (a) of Article 29.4, the arbitration panel shall

resolve the dispute in accordance with the covered provisions.

2. In all disputes referred to in Article 29.4, the arbitration panel shall interpret the covered

provisions in accordance with customary rules of interpretation of public international law. When

interpreting an obligation under this Agreement which is identical to an obligation under the WTO

Agreement, the arbitration panel shall take into consideration any relevant interpretation established

in the rulings of the WTO Dispute Settlement Body.

& /en 512

ARTICLE 29.14

Arbitral award

1. The arbitration panel shall deliver an interim arbitral report to the parties no later

than 90 (ninety) days after the date of establishment of the arbitration panel. The interim arbitral

report shall set out the findings of fact, the applicability of covered provisions where relevant, and

the basic rationale behind any findings and recommendations that the arbitration panel makes.

2. When the arbitration panel considers that the deadline referred to in paragraph 1 cannot be

met, the chairperson of the arbitration panel shall notify the parties and the Joint Committee in trade

configuration in writing, stating the reasons for the delay and the date on which the arbitration panel

plans to deliver its interim arbitral report. Under no circumstances shall the interim arbitral report be

delivered later than 120 (one hundred and twenty) days after the date of establishment of the

arbitration panel.

3. In cases of urgency, including those regarding perishable goods or other goods or services

that rapidly lose their quality, current condition or commercial value in a short period of time,

the arbitration panel shall make every effort to deliver its interim arbitral report

within 45 (forty-five) days and, in any case, no later than 60 (sixty) days after the date of

establishment of the arbitration panel.

& /en 513

4. A party may deliver a written request to the arbitration panel to review precise aspects of the

interim arbitral report no later than 14 (fourteen) days after its receipt or, in cases of urgency,

including those involving perishable goods or seasonal goods or services, no later

than 7 (seven) days after its receipt. After considering any written comments by the parties on the

interim arbitral report, the arbitration panel may modify it and make any further examination it

considers appropriate.

5. If no written request to review precise aspects of the interim arbitral report are delivered

within the time period referred to in paragraph 4, the interim arbitral report shall become the arbitral

award.

6. The arbitration panel shall deliver its arbitral award to the parties and the Joint Committee in

trade configuration no later than 120 (one hundred and twenty) days after the establishment of the

arbitration panel. If the arbitration panel considers that that deadline cannot be met, the chairperson

of the arbitration panel shall notify the parties and the Joint Committee in trade configuration in

writing, stating the reasons for the delay. Under no circumstances shall the arbitral award be

delivered later than 150 (one hundred and fifty) days after the establishment of the arbitration panel.

7. In cases of urgency, including those regarding perishable goods or other goods or services

that rapidly lose their quality, current condition or commercial value in a short period of time, the

arbitration panel shall make every effort to deliver its arbitral award no later than 60 (sixty) days

after the date of its establishment. Under no circumstances shall the arbitral award be delivered later

than 75 (seventy-five) days after such date.

& /en 514

8. The arbitral award shall set out the findings of fact, the applicability of covered provisions

where relevant, and the basic rationale behind the findings and recommendations. The arbitral

award shall include sufficient analysis of the arguments made by the parties, and shall clearly

respond to the questions and observations of both parties, including those made to the interim

arbitral report.

9. The arbitration panel shall make an objective assessment of the matter before it, including

an objective assessment of the facts of the case and of the arguments and evidence presented by

both parties and:

(a) in the case of a dispute referred to in point (a) of Article 29.4, the applicability of and

conformity with the covered provisions; or

(b) in the case of a dispute referred to in point (b) of Article 29.4, the existence of a nullification

or substantial impairment of any benefit accruing to the complaining party under the covered

provisions in a manner adversely affecting trade between the parties.

10. In the case of a dispute referred to in point (b) of Article 29.4, unless the parties agree

otherwise, the arbitration panel shall:

(a) determine if the measure at issue nullifies or substantially impairs any benefit accruing to the

complaining party under the covered provisions, in a manner adversely affecting trade

between the parties;

(b) if applicable, determine the level of benefits accruing to the complaining party under the

covered provisions which have been nullified or substantially impaired in a manner adversely

affecting trade between the parties;

& /en 515

(c) if it has found that the measure at issue nullifies or substantially impairs any benefit accruing

to the complaining party under the covered provisions, in a manner adversely affecting trade

between the parties, recommend that the defending party make a mutually satisfactory

adjustment; the defending party is not obliged to withdraw the measure at issue; and

(d) if applicable, and if so requested by both parties, suggest ways and means of reaching a

mutually satisfactory adjustment, including by means of compensation; such suggestions shall

not be binding on the parties.

11. The arbitration panel shall make every effort to take any decision by consensus. If,

nevertheless, a decision cannot be reached by consensus, the matter at issue shall be decided by

majority vote. The arbitrators shall not issue dissenting or separate opinions and shall maintain

confidentiality as regards the voting.

12. The Joint Committee in trade configuration shall make the arbitral award of the arbitration

panel publicly available in its entirety, unless the parties decide, by mutual agreement, not to make

public parts thereof which contain confidential information.

13. The arbitral award shall be binding on the parties from the date on which it is delivered and

shall not be subject to appeal.

14. The arbitral award cannot add to or diminish the rights and obligations provided for in the

covered provisions. The arbitral award shall not be construed as conferring rights on or imposing

obligations for persons.

15. Paragraphs 2, 4, 6, 8 and 11 shall be applicable to the rulings of the arbitration panel referred

to in Articles 29.18, 29.19, 29.20 and 29.21.

& /en 516

ARTICLE 29.15

Withdrawal, mutually agreed solution or suspension of a dispute

1. The complaining party may, subject to the consent of the defending party, withdraw its

complaint before the arbitral award has been issued.

2. If the parties reach a mutually agreed solution at any time either before or following the

issuance of the arbitral award, the Joint Committee in trade configuration shall be notified in writing

by both parties.

3. The arbitration panel shall, at the request of both parties, suspend its work at any time,

before the arbitral award has been issued, for a period agreed by the parties and not

exceeding 12 (twelve) consecutive months. Within that period, the arbitration panel shall resume its

work only at the written request of both parties. The request shall be notified to the Joint Committee

in trade configuration. The proceedings shall be resumed from the stage at which they were

suspended 20 (twenty) days after the date of receipt of the request. If the work of the arbitration

panel has been suspended for more than 12 (twelve) months, the authority of the arbitration panel

shall lapse, without prejudice to the right of the complaining party to request at a later point in time

the establishment of an arbitration panel on the same subject matter.

& /en 517

ARTICLE 29.16

Request for clarification

No later than 10 (ten) days the after the receipt of the arbitral award, a party may submit to the

arbitration panel, with the other party and the Joint Committee in trade configuration in copy, a

written request for clarification with regard to specific aspects of any finding or recommendation in

the arbitral award that the requesting party considers ambiguous. The other party to the dispute may

submit comments on that request to the arbitration panel no later than 5 (five) days after its receipt.

The arbitration panel shall respond to the request for clarification of the arbitral award no later

than 15 (fifteen) days after its receipt. Requests for clarification shall not be used as a means to

review the arbitral award.

ARTICLE 29.17

Compliance with the arbitral award

1. The defending party shall take any measure necessary to comply promptly and in good faith

with the arbitral award.

2. In the event that the arbitration panel concludes that the measure at issue nullifies or

substantially impairs any benefit accruing to the complaining party under the covered provisions, in

a manner adversely affecting trade between the parties, the parties shall engage in consultations

with the purpose of agreeing a mutually agreed solution. The parties shall endeavor to privilege a

solution which effectively expands market access by means of measures including the reduction of

tariffs or the elimination of non-tariff barriers.

& /en 518

ARTICLE 29.18

Reasonable period of time for compliance

1. If it is impracticable to comply immediately with the arbitral award, the defending party

shall have a reasonable period of time in which to do so. In that case, the defending party shall, no

later than 30 (thirty) days after the receipt of the arbitral award, notify the complaining party and the

Joint Committee in trade configuration of the length of the reasonable period of time it will require

for compliance.

2. If the parties have not agreed on the length of the reasonable period of time to comply with

the arbitral award, the complaining party shall, no later than 20 (twenty) days after the receipt of the

notification made under paragraph 1 by the defending party, request in writing the original

arbitration panel to determine the length of the reasonable period of time. Such request shall be

notified to the other party and to the Joint Committee in trade configuration. The arbitration panel

shall deliver its ruling to the parties and to the Joint Committee in trade configuration no later

than 20 (twenty) days after the date of the submission of the request.

3. The defending party shall inform the complaining party in writing of its progress in

complying with the arbitral award at least 1 (one) month before the expiry of the reasonable period

of time.

4. The reasonable period of time may be extended by mutual agreement between the parties.

& /en 519

ARTICLE 29.19

Review of any measure taken to comply with the arbitral award

1. Before the expiry of the reasonable period of time referred to in Article 29.18, the defending

party shall notify the other party and the Joint Committee in trade configuration of any measure it

has taken to comply with the arbitral award.

2. If the parties disagree on the existence or the conformity of the measure notified by the

defending party pursuant to paragraph 1 with the arbitral award or with the covered provisions, the

complaining party may deliver a request to the original arbitration panel to decide on the matter.

Such request shall identify the specific measure at issue and explain how that measure does not

comply with the arbitral award or is inconsistent with the covered provisions in a manner to present

the legal basis for the complaint clearly. The arbitration panel shall deliver its ruling to the parties

no later than 45 (forty-five) days after the date of delivery of the request.

ARTICLE 29.20

Temporary remedies in the event of non-compliance

1. If the defending party has not notified the measure it has taken to comply with the arbitral

award or with the covered provisions within the reasonable period of time determined according to

Article 29.18, or if the arbitration panel makes a ruling pursuant to Article 29.19(2) to the effect that

no measure taken to comply exists or that the measure notified pursuant to Article 29.19(1) is

inconsistent with the arbitral award or with the defending party's obligations under the covered

provisions, the defending party shall, if so requested by the complaining party, present an offer for

temporary compensation.

& /en 520

2. The complaining party may, upon notification to the defending party and the Joint

Committee in trade configuration, suspend concessions or other obligations under the covered

provisions if:

(a) the complaining party decides not to request an offer for temporary compensation under

paragraph 1; or

(b) such request is made and no agreement on compensation is reached within 30 (thirty) days

after:

(i) the end of the reasonable period of time determined pursuant to Article 29.18; or

(ii) the delivery of an arbitral award pursuant to Article 29.19(2) finding that no measure

taken to comply exists or that the measure notified pursuant to Article 29.19(1) is

inconsistent with the arbitral award or with the covered provisions.

3. The suspension of concessions or other obligations shall not exceed the level equivalent to

the nullification or impairment suffered as a result of the failure of the defending party to comply

with the arbitral award. The complaining party shall notify the other party of the concessions or

other obligations it intends to suspend 30 (thirty) days before the date on which the suspension is

due to enter into force.

4. In considering which concessions or other obligations to suspend, a complaining party

should first seek to suspend concessions or other obligations within the same sector or sectors as

that or those affected by the measure found not to be in conformity with the covered provisions or

to have nullified or substantially impaired benefits accruing to the complaining party under Part III

of this Agreement in a manner adversely affecting trade between the parties.

& /en 521

5. In the case of a dispute referred to in point (a) of Article 29.4, the suspension of concessions

may be applied to sectors other than the sector or sectors in which the arbitration panel has found

nullification or impairment, in particular if the complaining party is of the view that such

suspension is effective in inducing compliance.

6. In the case of a dispute referred to in point (b) of Article 29.4, if the complaining party

considers that suspension of concessions within the same sector or sectors as that or those adversely

affected by the measure at issue are not practicable or effective, it may seek to apply those to other

sectors. In such case, the complaining party shall take into account:

(a) the trade in the sector adversely affected by the measure at issue and the importance of such

trade to that party;

(b) the broader economic elements related to the nullification or substantial impairment; and

(c) the broader economic consequences of the application of the suspension of concessions,

including spreading the adoption of temporary remedies across multiple sectors in order to

account for the different economic size of the sectors involved.

7. In the case of a dispute referred to in point (b) of Article 29.4, the complaining party shall

continue to accord to the defending party, in the sector which is subject to the remedies in question,

treatment that is meaningfully more favourable than the treatment it accorded to that party prior to

the entry into force of this Agreement.

In particular, when a temporary remedy is adopted through the suspension of tariff concessions, the

complaining party shall prioritize goods that are subject to full tariff liberalization.

& /en 522

For goods subject to tariff rate quotas, any temporary remedies shall be applied in such a manner

that at least 50 (fifty) per cent of the quota volume specified in Annex 10-A, pertaining to the

defending party, remains unaffected and fully accessible under the terms of Part III of this

Agreement.

For goods subject to staged liberalization and for which the staging period until full liberalization is

longer than 11 (eleven) years, any temporary remedies in the form of suspension of tariff

concessions shall not exceed 50 (fifty) per cent of the difference between, on the one hand, the rate

set out in Annex 10-A applicable at the relevant time and, on the other hand, the suspending party's

applied non-preferential tariff rate, until trade in the goods concerned is fully liberalized.

8. In the case of a dispute referred to in point (b) of Article 29.4 involving a landlocked

developing country, the complaining party shall consider what further action it might take which

would be appropriate to the circumstances of that landlocked developing country, taking into

account not only the trade coverage of measures complained about, but also the impact of any

temporary remedies on the specific economic challenges of that landlocked developing country.

& /en 523

9. If the defending party considers that the notified level of suspension of concessions or other

obligations exceeds the level equivalent to the nullification or impairment caused as a result of the

failure of the defending party to comply with the arbitral award, it may deliver a written request to

the original arbitration panel to rule on the matter. Such a request shall be notified to the

complaining party and to the Joint Committee in trade configuration no later than 30 (thirty) days

after the date of receipt of the notification referred to in paragraph 2. Within 10 (ten) days of the

date of receipt of the request for the arbitration panel, the complaining party shall present a

document indicating the methodology used to calculate the level of the suspension of concessions or

other obligations. The arbitration panel shall deliver its ruling no later than 30 (thirty) days after the

date of the receipt of the request. During that time period, the complaining party shall not suspend

any concessions or other obligations.

10. The suspension of concessions or other obligations shall be temporary, and shall not replace

the objective of full compliance with the arbitral award and the covered provisions. Concessions or

other obligations shall only be suspended until:

(a) in the case of a dispute referred to in point (a) of Article 29.4, any measure that the arbitration

panel has found to be inconsistent with the covered provisions has been withdrawn or

amended so as to bring the defending Party into compliance with those provisions;

(b) in the case of a dispute referred to in point (b) of Article 29.4, any measure that the arbitration

panel has found to nullify or substantially impair a benefit accruing to the complaining party

under the covered provisions, in a manner adversely affecting trade between the parties, has

been withdrawn or amended so as to eliminate that nullification or substantial impairment;

(c) the parties have agreed that the measure notified pursuant to Article 29.19(1) brings the

defending party into compliance with the arbitral award or with the covered provisions; or

& /en 524

(d) the parties have reached a mutually agreed solution pursuant to Article 29.24.

11. Notwithstanding paragraph 1, in the case of a dispute referred to in point (b) of Article 29.4,

compensation may be part of a mutually satisfactory adjustment as final settlement of the dispute.

ARTICLE 29.21

Review of any measure taken to comply after the adoption

of temporary remedies for non-compliance

1. The defending party shall deliver a notification to the complaining party and the Joint

Committee in trade configuration of any measure it has taken to comply with the arbitral award

following the suspension of concessions or other obligations or following the application of

temporary compensation, as the case may be. With the exception of cases under paragraph 2,

the complaining party shall terminate the suspension of concessions or other obligations no later

than 30 (thirty) days after the delivery of the notification. If compensation has been applied, and

with the exception of cases under paragraph 2, the defending party may terminate the application of

such compensation no later than 30 (thirty) days after its notification that it has complied with the

arbitral award.

& /en 525

2. If the parties disagree on whether the notified measure brings the defending party into

compliance with the arbitral award or the covered provisions, any of the parties may, no later

than 30 (thirty) days after delivery of the notification of the measure, request in writing the

arbitration panel to rule on the matter. Such request shall be notified to the other party and to the

Joint Committee in trade configuration. The arbitration panel shall notify its ruling to the parties and

to the Joint Committee in trade configuration no later than 45 (forty-five) days after the receipt of

the request. If the arbitration panel rules that the measure taken to comply is in conformity with the

arbitral award and with the covered provisions, the suspension of concessions or other obligations

or compensation, as the case may be, shall be terminated. If relevant, the complaining party shall

adjust the level of suspension of concessions or other obligations to the level determined by the

arbitration panel.

3. The suspension of concessions or other obligations or the compensation, as the case may be,

shall also be terminated if no request to the arbitration panel is made in accordance with

paragraph 2.

ARTICLE 29.22

Annexes

1. Annexes 29-A, 29-B and 29-C shall form an integral part of this Chapter.

2. Disputes under this Chapter shall be conducted in accordance with Annexes 29-A and 29-B.

3. The Joint Committee in trade configuration may amend Annexes 29-A and 29-B.

& /en 526

SECTION D

GENERAL PROVISIONS

ARTICLE 29.23

Choice of forum

1. Disputes related to the same matter arising under the covered provisions and under the

WTO Agreement or under any other agreement to which the relevant parties are party may be

settled under this Chapter, under the DSU or under the dispute settlement procedures of that other

agreement at the discretion of the complaining party.

2. For the purposes of this Article:

(a) dispute settlement procedures under the WTO Agreement are deemed to be initiated by a

party's request for the establishment of an arbitration panel under Article 6 of the DSU;

(b) dispute settlement procedures under any other agreement are deemed to be initiated by a

party's request for the establishment of a dispute settlement panel or tribunal in accordance

with the provisions of that agreement; and

(c) dispute settlement procedures under this Chapter are deemed to be initiated by a party's

request for the establishment of an arbitration panel under Article29.7.

& /en 527

3. Notwithstanding paragraph 1 and subject to paragraph 4, when the European Union or

MERCOSUR or one or more of the Signatory MERCOSUR States has or have requested the

establishment of a panel under Article 6 of the DSU or under the relevant provisions of another

agreement to which the relevant parties are party, or an arbitration panel pursuant to Article 29.7,

that party may not initiate another set of proceedings on the same matter in any of the other fora,

except in cases where the competent body in the forum chosen has not taken a decision on the

substance of the matter due to jurisdictional or procedural reasons other than termination of the

proceedings following a request for withdrawal or suspension of the proceedings.

4. Once MERCOSUR has requested the establishment of an arbitration panel under Article

29.7, a Signatory MERCOSUR State shall not initiate another proceeding on the same matter in any

other forum. Once the European Union has requested the establishment of an arbitration panel

under Article 29.7 against MERCOSUR, the European Union shall not initiate another proceeding

against one or more Signatory MERCOSUR States in any other forum, if the contested measure of

that or those Signatory MERCOSUR State s is a measure implementing the contested measure of

MERCOSUR and the European Union alleges the violation of a substantially equivalent obligation.

5. Two or more disputes concern the same matter when they involve the same parties to the

dispute, refer to the same measure and deal with the alleged violation of a substantially equivalent

obligation **[1]** .

**1** For greater certainty, two or more disputes which involve the same parties to the dispute and
refer to the same measure, but do not concern an alleged violation of the covered provisions
or the WTO Agreement or any other agreement to which the relevant parties are party, shall
not be considered as concerning the same matter for the purpose of this Article.

& /en 528

6. Without prejudice to paragraph 3, nothing in this Agreement shall preclude a Party from

suspending obligations authorised by the Dispute Settlement Body of the WTO or authorised under

the dispute settlement procedures of another international agreement to which the disputing parties

are party. The WTO Agreement or the other international agreement between the parties shall not

be invoked to preclude a Party from suspending obligations under this Chapter.

ARTICLE 29.24

Mutually agreed solution

1. The parties may reach a mutually agreed solution at any time with respect to any dispute

referred to in Article 29.4. The parties shall agree upon a time period for the implementation of such

a solution.

2. If a mutually agreed solution is reached during the arbitration panel proceedings, the parties

shall jointly notify that solution to the chairperson of the arbitration panel. Upon such notification,

the arbitration panel proceedings shall be terminated.

3. Each party shall adopt the measures necessary to implement the mutually agreed solution

within the agreed time period.

4. The solution may be adopted by means of a decision of the Joint Council in trade

configuration. The conclusion of the mutually agreed solution between the parties may be subject to

the completion of any necessary internal procedures. Mutually agreed solutions shall be made

publicly available without containing information that a party has designated as confidential.

& /en 529

5. The implementing party shall, within the agreed time period, inform the other party, in

writing, of any measure that it has taken to implement the mutually agreed solution.

ARTICLE 29.25

Time periods

1. The arbitration panel or the mediator may at any time propose to the parties to modify any

time period referred to in this Chapter, stating the reasons for the proposal.

2. Any time period mentioned in this Chapter may be extended by mutual agreement of

the parties.

ARTICLE 29.26

Confidentiality

The deliberations of the arbitration panel shall be confidential. The arbitration panel and the parties

shall treat as confidential any information submitted by a party to the arbitration panel which that

party has designated as confidential. Where that party submits a confidential version of its written

submissions to the arbitration panel, it shall also, upon request of the other party, provide a

non-confidential summary of the information contained in its submissions that may be disclosed to

the public.

& /en 530

ARTICLE 29.27

Costs

1. Each party shall bear its own expenses in relation to the participation in an arbitration panel

or mediation proceedings.

2. The parties **[1]** shall share jointly and equally the expenses in relation to organisational matters,

including the remuneration and expenses of the arbitrators and of the mediator in accordance with

Annex 29-A.

**1** For greater certainty, such costs are to be shared jointly and equally between, on the one part,
the European Union and, on the other part, the Signatory MERCOSUR States that are parties
to the dispute and MERCOSUR, if the latter is also party to the dispute.

& /en 531

PART IV

FINAL PROVISIONS

CHAPTER 30

FINAL PROVISIONS

ARTICLE 30.1

Entry into force

1. This Agreement shall enter into force between the EU Party and the MERCOSUR Party on

the first day of the month following the date on which they have notified each other in writing of

the completion of their respective internal procedures required for this purpose.

2. Notifications shall be sent to the Secretary General of the Council of the European Union

and the Government of the Republic of Paraguay, or its successors, who are the Depositories of

this Agreement.

& /en 532

ARTICLE 30.2

Application before entry into force

1. This Agreement may be provisionally applied. Such provisional application may take place

between, on the one part, the European Union and, on the other part, MERCOSUR and/or one or

more of the signatory MERCOSUR States in accordance with their respective internal procedures.

2 The provisional application of this Agreement or of parts thereof shall begin on the first day

of the second month following the date on which:

(a) the European Union has notified the completion of its internal procedures, indicating the parts

of this Agreement that shall be provisionally applied; and

(b) following a notification by the European Union, MERCOSUR and/or the relevant signatory

MERCOSUR State or States, as applicable, has notified the completion of its internal

procedures or ratification of this Agreement and confirmed its agreement to provisionally

apply the parts of this Agreement proposed by the European Union.

3. Notifications shall be sent to the Depositaries of this Agreement.

4. The Joint Council and other bodies established under this Agreement may exercise their

functions during the period in which this Agreement or part thereof is being provisionally applied.

Any decisions adopted during this period in the exercise of their functions shall apply exclusively

between the Parties applying this Agreement provisionally and shall cease to be effective between

the Party or Parties that cease to apply this Agreement provisionally and the remaining Party

or Parties.

& /en 533

5. Where, in accordance with this Article, this Agreement or certain provisions of this

Agreement are provisionally applied, any reference to the date of entry into force shall be

understood to refer to the date from which that application takes place.

6. Where, in accordance with this Article, this Agreement or certain provisions of this

Agreement are provisionally applied by the European Union and one or more signatory

MERCOSUR States, any reference to MERCOSUR shall be understood to refer to such signatory

MERCOSUR State or States that have agreed to apply this Agreement provisionally.

7. Amendments to this Agreement or parts thereof may also provisionally apply in accordance

with this Article. If such amendments are adopted during the provisional application of this

Agreement, they shall apply to MERCOSUR and/or any signatory MERCOSUR State upon their

agreement to provisionally apply this Agreement or parts thereof in accordance with paragraph 2

and shall remain valid after the entry into force of this Agreement.

ARTICLE 30.3

References to laws and other Agreements

1. Unless otherwise specified, where reference is made to laws and regulations of a Party,

those laws and regulations shall be understood to include amendments thereto.

2. Unless otherwise specified, any reference, or incorporation by means of a reference in this

Agreement to other agreements or legal instruments in whole or in part shall be construed as

including related annexes, protocols, footnotes, interpretative notes and explanatory notes.

& /en 534

3. Unless otherwise specified, where international agreements are referred to or incorporated

into this Agreement, in whole or in part, they shall be understood to include amendments thereto or

their successor agreements entering into force for both Parties on or after the date of signature of

this Agreement. If any matter arises regarding the implementation or application of the provisions

of this Agreement as a result of such amendments or successor agreements, the Parties may, on

request of either Party, consult with each other via the Joint Council with a view to finding a

mutually satisfactory solution to this matter as necessary. As a result of such consultation, the

Parties may, by decision in the Joint Council, amend this Agreement accordingly.

4. Paragraph 3 applies _mutatis mutandis_, if the amendment or successor agreement of an

international agreement referred to or incorporated into this Agreement in whole or in part, has

entered into force for the European Union and one or more Signatory MERCOSUR States.

ARTICLE 30.4

Fulfilment of obligations

1. Based on the principles of mutual respect, equal partnership and respect for international

law, each Party shall take any general or specific measures required to fulfil their obligations under

this Agreement.

2. If either Party considers that the other Party has failed to fulfil any of the obligations under

Part III of this Agreement, the specific mechanisms provided for in that Part of the Agreement

shall apply.

& /en 535

3. If either Party considers, on the basis of the factual situation, that the other Party has

committed a violation of the obligations that are described as essential elements in Article 1.2(1),

Article 5.2(2) and Article 7.7(3), it may take appropriate measures.

It shall immediately notify the other Party of this fact and of the measures taken. A Party may

request to hold urgent consultations on the matter with a view to seeking a mutually agreed

solution. The Parties concerned shall endeavour to hold consultations before the appropriate

measures are taken. The notifying Party adopting the measures shall submit all relevant information

required for a thorough examination of the situation.

For the purpose of this paragraph, "appropriate measures" may include the suspension, in part or in

full, of this Agreement. Suspension of this Agreement is a measure of last resort and can be

imposed only in the event of particularly serious and substantial violations of the essential elements

set out in Article 1.2(1), Article 5.2(2) and Article 7.7(3). In such an event, the Parties shall be

released from the obligation to perform this Agreement, in full or in part, in their mutual relations

during the period of the suspension. Such suspension shall apply for the minimum period necessary

to resolve the issue in a manner acceptable to the Parties.

& /en 536

4. If either Party considers, on the basis of the factual situation, that the other Party has failed

to fulfil any obligation in this Agreement, save those falling within the scope of paragraphs 2 and 3,

it shall notify the other Party. The Parties shall intensify their efforts to consult and cooperate in

order to resolve the issues in a timely and amicable manner and shall hold consultations under the

auspices of the Joint Council with a view to reaching a mutually acceptable solution. The Joint

Council may ask the Joint Committee to convene within 15 days to hold urgent consultations. Each

Party shall provide the relevant information required for a thorough examination. Where the Joint

Council is unable to reach a mutually acceptable solution within 90 days of the date of notification,

the notifying Party may take appropriate measures. For the purpose of this paragraph, "appropriate

measures" may include the suspension only of Parts I, II and IV of this Agreement. In such an

event, the notifying and the notified Party shall be released from the obligation to perform the

suspended parts of this Agreement in their mutual relations during the period of the suspension.

5. "Appropriate measures", as referred to in paragraphs 3 and 4 shall be taken in full respect of

international law and shall be proportionate to the failure to fulfil the obligations under this

Agreement. Priority must be given to those appropriate measures which least disturb the functioning

of this Agreement.

6. The suspension of the operation of any part of this Agreement in relation to a Signatory

MERCOSUR State shall not entail the suspension of the operation of this Agreement in relation to

the other Signatory MERCOSUR States, save where the full suspension of this Agreement pursuant

to paragraph 3 is appropriate to redress a breach of the essential elements set out in Article 1.2(1)

and Article 5.2(2). When determining whether to suspend this Agreement in full, the EU Party shall

take into account any measures taken by MERCOSUR against the Signatory MERCOSUR State

that has committed the breach.

& /en 537

7. The suspension of this Agreement in the event of a violation of the essential element set out

in Article 7.7(3) committed by a Signatory MERCOSUR State shall not entail the suspension of the

operation of this Agreement in relation to the other Signatory MERCOSUR States.

ARTICLE 30.5

Amendments

1. The Parties may agree, in writing, to amend this Agreement. An amendment shall enter into

force after the Parties exchange written notifications certifying that they have completed their

respective applicable internal requirements and procedures necessary for the entry into force of the

amendment, or on such other date as they may agree.

2. Notwithstanding paragraph 1, the Joint Council in trade configuration or the Joint

Committee in trade configuration, as appropriate, may decide to amend the Annexes to or other

parts of Part III of this Agreement if the Agreement so provides. Such decision may provide that

such amendments apply as of the date agreed by the Parties or upon the notification of the

completion of legal requirements of a Party or Parties, if applicable.

ARTICLE 30.6

Accession of new Member States to the European Union

1. The European Union shall notify the MERCOSUR Party of any request for the accession of

a third country to the European Union.

& /en 538

2. During the negotiations between the European Union and the candidate country seeking

accession, the European Union shall:

(a) provide, upon the request of the MERCOSUR Party, and to the extent possible, any

information regarding any matter covered by this Agreement; and

(b) take into account any concerns expressed by the MERCOSUR Party.

3. The Joint Committee shall examine any effects of the accession of a third country to the

European Union on this Agreement sufficiently in advance of the date of such accession.

4. To the extent necessary, the Parties shall, before the entry into force of the agreement on the

accession of a third country to the European Union, put in place by decision of the Joint Council the

necessary adjustments or transitional arrangements regarding this Agreement.

5. Without prejudice to paragraph 4, Part III of this Agreement shall apply between the new

Member State of the European Union and the MERCOSUR Party from the date of accession of that

new Member State to the European Union.

ARTICLE 30.7

Accession of State Parties to MERCOSUR

1. MERCOSUR shall notify the EU Party of any request for the accession of a third country to

MERCOSUR.

& /en 539

2. During the negotiations between MERCOSUR and the candidate country seeking accession,

MERCOSUR shall:

(a) provide, upon the request of the EU Party, and to the extent possible, any information

regarding any matter covered by this Agreement; and

(b) take into account any concerns expressed by the EU.

3. Any State Party of MERCOSUR that is not a Party to this Agreement on the date of its

signature ("applicant MERCOSUR State Party") may accede to this Agreement by means of a

protocol of accession concluded by the EU Party and the applicant MERCOSUR State Party. The

protocol of accession shall incorporate the results of the accession negotiations and, if necessary,

any adjustments recommended by the Joint Committee pursuant to paragraph 4. This Agreement

shall be amended, pursuant to Article 30.5(1), to reflect the terms of accession as agreed in the

protocol of accession between the EU Party and the applicant MERCOSUR State Party.

4. During the negotiations on the protocol of accession referred to in paragraph 3,

MERCOSUR may accompany the delegation of the applicant MERCOSUR State Party and, before

the conclusion of the negotiations, either Party may request a meeting of the Joint Committee to

examine the possible effects on this Agreement of the accession of the applicant MERCOSUR State

Party and, if necessary, recommend adjustments.

& /en 540

ARTICLE 30.8

Annexes, Appendices and Protocols

The Annexes, Appendices and Protocols to this Agreement shall form an integral part thereof.

ARTICLE 30.9

Private rights

1. Nothing in this Agreement shall be construed as conferring rights or imposing obligations

on persons, other than those created between the Parties under public international law.

2. Nothing in this Agreement shall be construed as permitting this Agreement to be directly

invoked in the domestic legal systems of the Parties. A State Party to MERCOSUR signatory of this

Agreement may provide otherwise under its domestic law.

ARTICLE 30.10

Duration of validity

This Agreement is valid indefinitely.

& /en 541

ARTICLE 30.11

Denunciation

1. Either the EU Party or the MERCOSUR Party may give written notice to the other of its

intention to denounce this Agreement.

2. Denunciation shall take effect nine months after notification referred to in paragraph 1.

ARTICLE 30.12

Authentic languages

This Agreement is drawn up in the Bulgarian, Croatian, Czech, Danish, Dutch, English, Estonian,

Finnish, French, German, Greek, Hungarian, Italian, Irish, Latvian, Lithuanian, Maltese, Polish,

Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, each of these texts

being equally authentic.

& /en 542