Title:Part Two Trade In Goods -- Chapter 3
Author: White House
Document-Date: 29 Sept 1993
Content-Type: text/plain; CHARSET=US-ASCII
Content-Length:151278

  
 
 
 
 
 
                                        PART TWO 
                                     TRADE IN GOODS 
 
                                     Chapter Three 
 
                     National Treatment and Market Access for Goods 
 
 
 
            Article 300:   Scope and Coverage 
 
                 This Chapter applies to trade in goods of a Party, 
            including: 
 
                 (a)  goods covered by Annex 300-A (Trade and Investment in 
                      the Automotive Sector), 
 
                 (b)  goods covered by Annex 300-B (Textile and Apparel 
                      Goods), and 
 
                 (c)  goods covered by another Chapter in this Part, 
 
            except as provided in such Annex or Chapter. 
 
 
                             Section A - National Treatment 
 
 
            Article 301:   National Treatment 
 
            1.   Each Party shall accord national treatment to the goods of 
            another Party in accordance with Article III of the General 
            Agreement on Tariffs and Trade (GATT), including its 
            interpretative notes, and to this end Article III of the GATT 
            and its interpretative notes, or any equivalent provision of a 
            successor agreement to which all Parties are party, are 
            incorporated into and made part of this Agreement. 
 
            2.   The provisions of paragraph 1 regarding national treatment 
            shall mean, with respect to a state or province, treatment no 
            less favorable than the most favorable treatment accorded by 
            such state or province to any like, directly competitive or 
            substitutable goods, as the case may be, of the Party of which 
            it forms a part. 
 
            3.   Paragraphs 1 and 2 do not apply to the measures set out in 
            Annex 301.3. 
 
 
                                  Section B - Tariffs 
 
 
 
                                          3-1  
 
 
 
 
 
 
  
 
 
 
 
 
            Article 302:   Tariff Elimination 
 
            1.   Except as otherwise provided in this Agreement, no Party 
            may increase any existing customs duty, or adopt any customs 
            duty, on an originating good. 
 
            2.   Except as otherwise provided in this Agreement, each Party 
            shall progressively eliminate its customs duties on originating 
            goods in accordance with its Schedule to Annex 302.2. 
 
            3.   On the request of any Party, the Parties shall consult to 
            consider accelerating the elimination of customs duties set out 
            in their Schedules.  An agreement between two or more Parties 
            to accelerate the elimination of a customs duty on a good shall 
            supersede any duty rate or staging category determined pursuant 
            to their Schedules for such good when approved by each such 
            Party in accordance with its applicable legal procedures. 
 
            4.   Each Party may adopt or maintain import measures to 
            allocate in-quota imports made pursuant to a tariff rate quota 
            set out in Annex 302.2, provided that such measures do not have 
            trade restrictive effects on imports additional to those caused 
            by the imposition of the tariff rate quota. 
 
            5.   On written request of any Party, a Party applying or 
            intending to apply measures pursuant to paragraph 4 shall 
            consult to review the administration of those measures. 
 
 
            Article 303:   Restriction on Drawback and Duty Deferral 
                           Programs 
 
            1.   Except as otherwise provided in this Article, no Party may 
            refund the amount of customs duties paid, or waive or reduce 
            the amount of customs duties owed, on a good imported into its 
            territory, on condition that the good is: 
 
                 (a)  subsequently exported to the territory of another 
                      Party, 
 
                 (b)  used as a material in the production of another good 
                      that is subsequently exported to the territory of 
                      another Party, or 
 
                 (c)  substituted by an identical or similar good used as a 
                      material in the production of another good that is 
                      subsequently exported to the territory of another 
                      Party, 
 
            in an amount that exceeds the lesser of the total amount of 
            customs duties paid or owed on the good on importation into its 
 
 
                                          3-2  
 
 
 
 
 
 
  
 
 
 
 
 
            territory and the total amount of customs duties paid to 
            another Party on the good that has been subsequently exported 
            to the territory of that other Party. 
 
            2.   No Party may, on condition of export, refund, waive or 
            reduce: 
 
                 (a)  an antidumping or countervailing duty that is applied 
                      pursuant to a Party's domestic law and that is not 
                      applied inconsistently with Chapter Nineteen (Review 
                      and Dispute Settlement in Antidumping and 
                      Countervailing Duty Matters); 
 
                 (b)  a premium offered or collected on an imported good 
                      arising out of any tendering system in respect of the 
                      administration of quantitative import restrictions, 
                      tariff rate quotas or tariff preference levels; 
 
                 (c)  a fee applied pursuant to section 22 of the U.S. 
                      Agricultural Adjustment Act, subject to Chapter Seven 
                      (Agriculture and Sanitary and Phytosanitary 
                      Measures); or 
 
                 (d)  customs duties paid or owed on a good imported into 
                      its territory and substituted by an identical or 
                      similar good that is subsequently exported to the 
                      territory of another Party. 
 
            3.   Where a good is imported into the territory of a Party 
            pursuant to a duty deferral program and is subsequently 
            exported to the territory of another Party, or is used as a 
            material in the production of another good that is subsequently 
            exported to the territory of another Party, or is substituted 
            by an identical or similar good used as a material in the 
            production of another good that is subsequently exported to the 
            territory of another Party, the Party from whose territory the 
            good is exported: 
 
                 (a)  shall assess the customs duties as if the exported 
                      good had been withdrawn for domestic consumption; and 
 
                 (b)  may waive or reduce such customs duties to the extent 
                      permitted under paragraph 1. 
 
            4.   In determining the amount of customs duties that may be 
            refunded, waived or reduced pursuant to paragraph 1 on a good 
            imported into its territory, each Party shall require 
            presentation of satisfactory evidence of the amount of customs 
            duties paid to another Party on the good that has been 
            subsequently exported to the territory of that other Party. 
 
 
 
                                          3-3  
 
 
 
 
 
 
  
 
 
 
 
 
            5.   Where satisfactory evidence of the customs duties paid to 
            the Party to which a good is subsequently exported under a duty 
            deferral program described in paragraph 3 is not presented 
            within 60 days after the date of exportation, the Party from 
            whose territory the good was exported: 
 
                 (a)  shall collect customs duties as if the exported good 
                      had been withdrawn for domestic consumption; and 
 
                 (b)  may refund such customs duties to the extent 
                      permitted under paragraph 1 on the timely 
                      presentation of such evidence under its laws and 
                      regulations. 
 
            6.   This Article does not apply to: 
 
                 (a)  a good entered under bond for transportation and 
                      exportation to the territory of another Party; 
 
                 (b)  a good exported to the territory of another Party in 
                      the same condition as when imported into the 
                      territory of the Party from which the good was 
                      exported (processes such as testing, cleaning, 
                      repacking or inspecting the good, or preserving it in 
                      its same condition, shall not be considered to change 
                      a good's condition).  Except as provided in Annex 
                      703.2, Section A, paragraph 12, where such a good has 
                      been commingled with fungible goods and exported in 
                      the same condition, its origin for purposes of this 
                      subparagraph, may be determined on the basis of the 
                      inventory methods provided for in the Uniform 
                      Regulations established under Article 511 (Uniform 
                      Regulations); 
 
                 (c)  a good imported into the territory of a Party that is 
                      deemed to be exported from its territory, or used as 
                      a material in the production of another good that is 
                      deemed to be exported to the territory of another 
                      Party, or is substituted by an identical or similar 
                      good used as a material in the production of another 
                      good that is deemed to be exported to the territory 
                      of another Party, by reason of 
 
                      (i)  delivery to a duty-free shop, 
 
                      (ii) delivery for ship's stores or supplies for ships 
                           or aircraft, or 
 
                      (iii)     delivery for use in joint undertakings of 
                                two or more of the Parties and that will 
                                subsequently become the property of the 
 
 
                                          3-4  
 
 
 
 
 
 
  
 
 
 
 
 
                                Party into whose territory the good was 
                                imported; 
 
                 (d)  a refund of customs duties by a Party on a particular 
                      good imported into its territory and subsequently 
                      exported to the territory of another Party, where 
                      that refund is granted by reason of the failure of 
                      such good to conform to sample or specification, or 
                      by reason of the shipment of such good without the 
                      consent of the consignee; 
 
                 (e)  an originating good that is imported into the 
                      territory of a Party and is subsequently exported to 
                      the territory of another Party, or used as a material 
                      in the production of another good that is 
                      subsequently exported to the territory of another 
                      Party, or is substituted by an identical or similar 
                      good used as a material in the production of another 
                      good that is subsequently exported to the territory 
                      of another Party; or 
 
                 (f)  a good set out in Annex 303.6. 
 
            7.   Except for paragraph 2(d), this Article shall apply as of 
            the date set out in each Party's Section of Annex 303.7. 
 
            8.   Notwithstanding any other provision of this Article and 
            except as specifically provided in Annex 303.8, no Party may 
            refund the amount of customs duties paid, or waive or reduce 
            the amount of customs duties owed, on a non-originating good 
            provided for in item 8540.11.aa (color cathode-ray television 
            picture tubes, including video monitor tubes, with a diagonal 
            exceeding 14 inches) or 8540.11.cc (color cathode-ray 
            television picture tubes for high definition television, with a 
            diagonal exceeding 14 inches) that is imported into the Party's 
            territory and subsequently exported to the territory of another 
            Party, or is used as a material in the production of another 
            good that is subsequently exported to the territory of another 
            Party, or is substituted by an identical or similar good used 
            as a material in the production of another good that is 
            subsequently exported to the territory of another Party. 
 
            9.   For purposes of this Article: 
 
            customs duties are the customs duties that would be applicable 
            to a good entered for consumption in the customs territory of a 
            Party if the good were not exported to the territory of another 
            party; 
 
            identical or similar goods means "identical or similar goods" 
            as defined in Article 415 (Rules of Origin - Definitions); 
 
 
                                          3-5  
 
 
 
 
 
 
  
 
 
 
 
 
            material means "material" as defined in Article 415;  
 
            used means "used" as defined in Article 415; and 
 
            where a good referred to by a tariff item number in this 
            Article is described in parentheses following the tariff item 
            number, the description is provided for purposes of reference 
            only. 
 
 
            Article 304:   Waiver of Customs Duties 
 
            1.   Except as set out in Annex 304.1, no Party may adopt any 
            new waiver of customs duties, or expand with respect to 
            existing recipients or extend to any new recipient the 
            application of an existing waiver of customs duties, where the 
            waiver is conditioned, explicitly or implicitly, on the 
            fulfillment of a performance requirement. 
 
            2.   Except as set out in Annex 304.2, no Party may, explicitly 
            or implicitly, condition on the fulfillment of a performance 
            requirement the continuation of any existing waiver of customs 
            duties. 
 
            3.   If a waiver or a combination of waivers of customs duties 
            granted by a Party with respect to goods for commercial use by 
            a designated person can be shown by another Party to have an 
            adverse impact on the commercial interests of a person of that 
            Party, or of a person owned or controlled by a person of that 
            Party that is located in the territory of the Party granting 
            the waiver, or on the other Party's economy, the Party granting 
            the waiver shall either cease to grant it or make it generally 
            available to any importer. 
 
            4.   This Article shall not apply to measures subject to 
            Article 303. 
 
 
            Article 305:   Temporary Admission of Goods 
 
            1.   Each Party shall grant duty-free temporary admission for: 
 
                 (a)  professional equipment necessary for carrying out the 
                      business activity, trade or profession of a business 
                      person who qualifies for temporary entry pursuant to 
                      Chapter Sixteen (Temporary Entry for Business 
                      Persons), 
 
                 (b)  equipment for the press or for sound or television 
                      broadcasting and cinematographic equipment, 
 
 
 
                                          3-6  
 
 
 
 
 
 
  
 
 
 
 
 
                 (c)  goods imported for sports purposes and goods intended 
                      for display or demonstration, and 
 
                 (d)  commercial samples and advertising films, 
 
            imported from the territory of another Party, regardless of 
            their origin and regardless of whether like, directly 
            competitive or substitutable goods are available in the 
            territory of the Party. 
 
            2.   Except as otherwise provided in this Agreement, no Party 
            may condition the duty-free temporary admission of a good 
            referred to in paragraph 1(a), (b) or (c), other than to 
            require that such good: 
 
                 (a)  be imported by a national or resident of another 
                      Party who seeks temporary entry; 
 
                 (b)  be used solely by or under the personal supervision 
                      of such person in the exercise of the business 
                      activity, trade or profession of that person; 
 
                 (c)  not be sold or leased while in its territory; 
 
                 (d)  be accompanied by a bond in an amount no greater than 
                      110 percent of the charges that would otherwise be 
                      owed on entry or final importation, or by another 
                      form of security, releasable on exportation of the 
                      good, except that a bond for customs duties shall not 
                      be required for an originating good; 
 
                 (e)  be capable of identification when exported; 
 
                 (f)  be exported on the departure of that person or within 
                      such other period of time as is reasonably related to 
                      the purpose of the temporary admission; and 
 
                 (g)  be imported in no greater quantity than is reasonable 
                      for its intended use. 
 
            3.   Except as otherwise provided in this Agreement, no Party 
            may condition the duty-free temporary admission of a good 
            referred to in paragraph 1(d), other than to require that such 
            good: 
 
                 (a)  be imported solely for the solicitation of orders for 
                      goods, or services provided from the territory, of 
                      another Party or non-Party; 
 
                 (b)  not be sold, leased or put to any use other than 
                      exhibition or demonstration while in its territory; 
 
 
                                          3-7  
 
 
 
 
 
 
  
 
 
 
 
 
                 (c)  be capable of identification when exported; 
 
                 (d)  be exported within such period as is reasonably 
                      related to the purpose of the temporary admission; 
                      and 
 
                 (e)  be imported in no greater quantity than is reasonable 
                      for its intended use. 
 
            4.   A Party may impose the customs duty and any other charge 
            on a good temporarily admitted duty-free under paragraph 1 that 
            would be owed on entry or final importation of such good if any 
            condition that the Party imposes under paragraph 2 or 3 has not 
            been fulfilled. 
 
            5.   Subject to Chapters Eleven (Investment) and Twelve (Cross- 
            Border Trade in Services): 
 
                 (a)  each Party shall allow a vehicle or container used in 
                      international traffic that enters its territory from 
                      the territory of another Party to exit its territory 
                      on any route that is reasonably related to the 
                      economic and prompt departure of such vehicle or 
                      container; 
 
                 (b)  no Party may require any bond or impose any penalty 
                      or charge solely by reason of any difference between 
                      the port of entry and the port of departure of a 
                      vehicle or container; 
 
                 (c)  no Party may condition the release of any obligation, 
                      including any bond, that it imposes in respect of the 
                      entry of a vehicle or container into its territory on 
                      its exit through any particular port of departure; 
                      and 
 
                 (d)  no Party may require that the vehicle or carrier 
                      bringing a container from the territory of another 
                      Party into its territory be the same vehicle or 
                      carrier that takes such container to the territory of 
                      another Party. 
 
            6.   For purposes of paragraph 5, "vehicle" means a truck, a 
            truck tractor, tractor, trailer unit or trailer, a locomotive, 
            or a railway car or other railroad equipment. 
 
 
            Article 306:   Duty-Free Entry of Certain Commercial Samples 
                           and Printed Advertising Materials 
 
 
 
 
                                          3-8  
 
 
 
 
 
 
  
 
 
 
 
 
                 Each Party shall grant duty-free entry to commercial 
            samples of negligible value, and to printed advertising 
            materials, imported from the territory of another Party, 
            regardless of their origin, but may require that: 
 
                 (a)  such samples be imported solely for the solicitation 
                      of orders for goods, or services provided from the 
                      territory, of another Party or non-Party; or 
 
                 (b)  such advertising materials be imported in packets 
                      that each contain no more than one copy of each such 
                      material and that neither such materials nor packets 
                      form part of a larger consignment. 
 
 
            Article 307:   Goods Re-Entered after Repair or Alteration 
 
            1.   Except as set out in Annex 307.1, no Party may apply a 
            customs duty to a good, regardless of its origin, that re- 
            enters its territory after that good has been exported from its 
            territory to the territory of another Party for repair or 
            alteration, regardless of whether such repair or alteration 
            could be performed in its territory. 
 
            2.   Notwithstanding Article 303, no Party may apply a customs 
            duty to a good, regardless of its origin, imported temporarily 
            from the territory of another Party for repair or alteration. 
 
            3.   Annex 307.3 applies to the Parties specified in that Annex 
            respecting the repair and rebuilding of vessels. 
 
 
            Article 308:   Most-Favored-Nation Rates of Duty on Certain 
                           Goods 
 
            1.   Annex 308.1 applies to certain automatic data processing 
            goods and their parts. 
 
            2.   Annex 308.2 applies to certain color television tubes. 
 
            3.   Each Party shall accord most-favored-nation duty-free 
            treatment to any local area network apparatus imported into its 
            territory, and shall consult in accordance with Annex 308.3. 
 
 
                            Section  C - Non-Tariff Measures 
 
            Article 309:   Import and Export Restrictions 
 
            1.   Except as otherwise provided in this Agreement, no Party 
            may adopt or maintain any prohibition or restriction on the 
 
 
                                          3-9  
 
 
 
 
 
 
  
 
 
 
 
 
            importation of any good of another Party or on the exportation 
            or sale for export of any good destined for the territory of 
            another Party, except in accordance with Article XI of the 
            GATT, including its interpretative notes, and to this end 
            Article XI of the GATT and its interpretative notes, or any 
            equivalent provision of a successor agreement to which all 
            Parties are party, are incorporated into and made a part of 
            this Agreement. 
 
            2.   The Parties understand that the GATT rights and 
            obligations incorporated by paragraph 1 prohibit, in any 
            circumstances in which any other form of restriction is 
            prohibited, export price requirements and, except as permitted 
            in enforcement of countervailing and antidumping orders and 
            undertakings, import price requirements. 
 
            3.   In the event that a Party adopts or maintains a 
            prohibition or restriction on the importation from or 
            exportation to a non-Party of a good, nothing in this Agreement 
            shall be construed to prevent the Party from: 
 
                 (a)  limiting or prohibiting the importation from the 
                      territory of another Party of such good of that non- 
                      Party; or 
 
                 (b)  requiring as a condition of export of such good of 
                      the Party to the territory of another Party, that the 
                      good not be re-exported to the non-Party, directly or 
                      indirectly, without being consumed in the territory 
                      of the other Party. 
 
            4.   In the event that a Party adopts or maintains a 
            prohibition or restriction on the importation of a good from a 
            non-Party, the Parties, on request of any Party, shall consult 
            with a view to avoiding undue interference with or distortion 
            of pricing, marketing and distribution arrangements in another 
            Party. 
 
            5.   Paragraphs 1 through 4 shall not apply to the measures set 
            out in Annex 301.3. 
 
 
            Article 310:   Customs User Fees 
 
            1.   No Party may adopt any customs user fee of the type 
            referred to in Annex 310.1 for originating goods. 
 
            2.   The Parties specified in Annex 310.1 may maintain existing 
            such fees in accordance with that Annex. 
 
 
 
 
                                          3-10  
 
 
 
 
 
 
  
 
 
 
 
 
            Article 311:   Country of Origin Marking 
 
                 Annex 311 applies to measures relating to country of 
            origin marking. 
 
 
            Article 312:   Wine and Distilled Spirits 
 
            1.   No Party may adopt or maintain any measure requiring that 
            distilled spirits imported from the territory of another Party 
            for bottling be blended with any distilled spirits of the 
            Party. 
 
            2.   Annex 312.2 applies to other measures relating to wine and 
            distilled spirits. 
 
 
            Article 313:   Distinctive Products 
 
                 Annex 313 applies to standards and labelling of the 
            distinctive products set out in that Annex. 
 
 
            Article 314:   Export Taxes 
 
                 Except as set out in Annex 314, no Party may adopt or 
            maintain any duty, tax or other charge on the export of any 
            good to the territory of another Party, unless such duty, tax 
            or charge is adopted or maintained on: 
 
                 (a)  exports of any such good to the territory of all 
                      other Parties; and 
 
                 (b)  any such good when destined for domestic consumption. 
 
 
            Article 315:   Other Export Measures 
 
            1.   Except as set out in Annex 315, a Party may adopt or 
            maintain a restriction otherwise justified under Articles 
            XI:2(a) or XX(g), (i) or (j) of the GATT with respect to the 
            export of a good of the Party to the territory of another 
            Party, only if: 
 
                 (a)  the restriction does not reduce the proportion of the 
                      total export shipments of the specific good made 
                      available to that other Party relative to the total 
                      supply of that good of the Party maintaining the 
                      restriction as compared to the proportion prevailing 
                      in the most recent 36-month period for which data are 
                      available prior to the imposition of the measure, or 
 
 
                                          3-11  
 
 
 
 
 
 
  
 
 
 
 
 
                      in such other representative period on which the 
                      Parties may agree; 
 
                 (b)  the Party does not impose a higher price for exports 
                      of a good to that other Party than the price charged 
                      for such good when consumed domestically, by means of 
                      any measure, such as licenses, fees, taxation and 
                      minimum price requirements.  The foregoing provision 
                      does not apply to a higher price that may result from 
                      a measure taken pursuant to subparagraph (a) that 
                      only restricts the volume of exports; and 
 
                 (c)  the restriction does not require the disruption of 
                      normal channels of supply to that other Party or 
                      normal proportions among specific goods or categories 
                      of goods supplied to that other Party. 
 
            2.   The Parties shall cooperate in the maintenance and 
            development of effective controls on the export of each other's 
            goods to a non-Party in implementing this Article. 
 
 
                              Section D  -  Consultations 
 
 
            Article 316:   Consultations and Committee on Trade in Goods 
 
            1.   The Parties hereby establish a Committee on Trade in 
            Goods, comprising representatives of each Party. 
 
            2.   The Committee shall meet on the request of any Party or 
            the Commission to consider any matter arising under this 
            Chapter. 
 
            3.   The Parties shall convene at least once each year a 
            meeting of their officials responsible for customs, 
            immigration, inspection of food and agricultural products, 
            border inspection facilities, and regulation of transportation 
            for the purpose of addressing issues related to movement of 
            goods through the Parties' ports of entry. 
 
 
            Article 317:   Third-Country Dumping 
 
            1.   The Parties affirm the importance of cooperation with 
            respect to actions under Article 12 of the Agreement on 
            Implementation of Article VI of the General Agreement on 
            Tariffs and Trade. 
 
            2.   Where a Party presents an application to another Party 
            requesting antidumping action on its behalf, those Parties 
 
 
                                          3-12  
 
 
 
 
 
 
  
 
 
 
 
 
            shall consult within 30 days respecting the factual basis of 
            the request, and the requested Party shall give full 
            consideration to the request. 
 
 
                                Section E - Definitions 
 
 
            Article 318:   Definitions 
 
            For purposes of this Chapter: 
 
            advertising films means recorded visual media, with or without 
            sound-tracks, consisting essentially of images showing the 
            nature or operation of goods or services offered for sale or 
            lease by a person established or resident in the territory of 
            any Party, provided that the films are of a kind suitable for 
            exhibition to prospective customers but not for broadcast to 
            the general public, and provided that they are imported in 
            packets that each contain no more than one copy of each film 
            and that do not form part of a larger consignment; 
 
            commercial samples of negligible value means commercial samples 
            having a value, individually or in the aggregate as shipped, of 
            not more than one U.S. dollar, or the equivalent amount in the 
            currency of another Party, or so marked, torn, perforated or 
            otherwise treated that they are unsuitable for sale or for use 
            except as commercial samples; 
 
            consumed means: 
 
                 (a)  actually consumed; or 
 
                 (b)  further processed or manufactured so as to result in 
                      a substantial change in value, form or use of the 
                      good or in the production of another good; 
 
            customs duty includes any customs or import duty and a charge 
            of any kind imposed in connection with the importation of a 
            good, including any form of surtax or surcharge in connection 
            with such importation, but does not include any: 
 
                 (a)  charge equivalent to an internal tax imposed 
                      consistently with Article III:2 of the GATT, or any 
                      equivalent provision of a successor agreement to 
                      which all Parties are party, in respect of like, 
                      directly competitive or substitutable goods of the 
                      Party, or in respect of goods from which the imported 
                      good has been manufactured or produced in whole or in 
                      part; 
 
 
 
                                          3-13  
 
 
 
 
 
 
  
 
 
 
 
 
                 (b)  antidumping or countervailing duty that is applied 
                      pursuant to a Party's domestic law and not applied 
                      inconsistently with Chapter Nineteen (Review and 
                      Dispute Settlement in Antidumping and Countervailing 
                      Duty Matters); 
 
                 (c)  fee or other charge in connection with importation 
                      commensurate with the cost of services rendered; 
 
                 (d)  premium offered or collected on an imported good 
                      arising out of any tendering system in respect of the 
                      administration of quantitative import restrictions, 
                      tariff rate quotas or tariff preference levels; and 
 
                 (e)  fee applied pursuant to section 22 of the U.S. 
                      Agricultural Adjustment Act, subject to Chapter Seven 
                      (Agriculture and Sanitary and Phytosanitary 
                      Measures); 
 
            distilled spirits include distilled spirits and distilled 
            spirit-containing beverages; 
 
            duty deferral program includes measures such as those governing 
            foreign-trade zones, temporary importations under bond, bonded 
            warehouses, "maquiladoras", and inward processing programs; 
 
            duty-free means free of customs duty; 
 
            goods imported for sports purposes means sports requisites for 
            use in sports contests, demonstrations or training in the 
            territory of the Party into whose territory such goods are 
            imported; 
 
            goods intended for display or demonstration includes their 
            component parts, ancillary apparatus and accessories; 
 
            item means a tariff classification item at the eight- or 10- 
            digit level set out in a Party's tariff schedule; 
 
            local area network apparatus means a good dedicated for use 
            solely or principally to permit the interconnection of 
            automatic data processing machines and units thereof for a 
            network that is used primarily for the sharing of resources 
            such as central processor units, data storage devices and input 
            or output units, including in-line repeaters, converters, 
            concentrators, bridges and routers, and printed circuit 
            assemblies for physical incorporation into automatic data 
            processing machines and units thereof suitable for use solely 
            or principally with a private network, and providing for the 
            transmission, receipt, error-checking, control, signal 
 
 
 
                                          3-14  
 
 
 
 
 
 
  
 
 
 
 
 
            conversion or correction functions for non-voice data to move 
            through a local area network; 
 
            performance requirement means a requirement that: 
 
                 (a)  a given level or percentage of goods or services be 
                      exported; 
 
                 (b)  domestic goods or services of the Party granting a 
                      waiver of customs duties be substituted for imported 
                      goods or services; 
 
                 (c)  a person benefitting from a waiver of customs duties 
                      purchase other goods or services in the territory of 
                      the Party granting the waiver or accord a preference 
                      to domestically produced goods or services;  
 
                 (d)  a person benefitting from a waiver of customs duties 
                      produce goods or provide services, in the territory 
                      of the Party granting the waiver, with a given level 
                      or percentage of domestic content; or 
 
                 (e)  relates in any way the volume or value of imports to 
                      the volume or value of exports or to the amount of 
                      foreign exchange inflows; 
 
            printed advertising materials means those goods classified in 
            Chapter 49 of the Harmonized System, including brochures, 
            pamphlets, leaflets, trade catalogues, yearbooks published by 
            trade associations, tourist promotional materials and posters, 
            that are used to promote, publicize or advertise a good or 
            service, are essentially intended to advertise a good or 
            service, and are supplied free of charge; 
 
            repair or alteration does not include an operation or process 
            that either destroys the essential characteristics of a good or 
            creates a new or commercially different good; 
 
            satisfactory evidence means: 
 
                 (a)  a receipt, or a copy of a receipt, evidencing payment 
                      of customs duties on a particular entry; 
 
                 (b)  a copy of the entry document with evidence that it 
                      was received by a customs administration; 
 
                 (c)  a copy of a final customs duty determination by a 
                      customs administration respecting the relevant entry; 
                      or 
 
 
 
 
                                          3-15  
 
 
 
 
 
 
  
 
 
 
 
 
                 (d)  any other evidence of payment of customs duties 
                      acceptable under the Uniform Regulations established 
                      in accordance with Chapter Five (Customs Procedures); 
 
            total export shipments means all shipments from total supply to 
            users located in the territory of another Party; 
 
            total supply means all shipments, whether intended for domestic 
            or foreign users, from: 
 
                 (a)  domestic production; 
 
                 (b)  domestic inventory; and 
 
                 (c)  other imports as appropriate; and 
 
            waiver of customs duties means a measure that waives otherwise 
            applicable customs duties on any good imported from any 
            country, including the territory of another Party. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-16  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
                                      Annex 301.3 
 
                           Exceptions to Articles 301 and 309 
 
                             Section A - Canadian Measures 
 
 
            1.   Articles 301 and 309 shall not apply to controls by Canada 
            on the export of logs of all species. 
 
            2.   Articles 301 and 309 shall not apply to controls by Canada 
            on the export of unprocessed fish pursuant to the following 
            existing statutes, as amended as of August 12, 1992: 
 
                 (a)  New Brunswick Fish Processing Act, R.S.N.B. c. F- 
                      18.01 (1982), and Fisheries Development Act, S.N.B. 
                      c. F-15.1 (1977); 
 
                 (b)  Newfoundland Fish Inspection Act, R.S.N. 1990, c. F- 
                      12; 
 
                 (c)  Nova Scotia Fisheries Act, S.N.S. 1977, c. 9; 
 
                 (d)  Prince Edward Island Fish Inspection Act, R.S.P.E.I. 
                      1988, c. F-13; and 
 
                 (e)  Quebec Marine Products Processing Act, No. 38, S.Q. 
                      1987, c. 51. 
 
            3.   Articles 301 and 309 shall not apply to: 
 
                 (a)  except as provided in Annex 300-A, Appendix 300-A.1, 
                      paragraph 4, measures by Canada respecting the 
                      importation of any goods enumerated or referred to in 
                      Schedule VII of the Customs Tariff, R.S.C. 1985, c. 
                      41 (3rd Supp.), as amended, 
 
                 (b)  measures by Canada respecting the exportation of 
                      liquor for delivery into any country into which the 
                      importation of liquor is prohibited by law under the 
                      existing provisions of the Export Act, R.S.C. 1985, 
                      c. E-18, as amended, 
 
                 (c)  measures by Canada respecting preferential rates for 
                      certain freight traffic under the existing provisions 
                      of the Maritime Freight Rate Act, R.S.C. 1985, c. M- 
                      1, as amended, 
 
 
 
                                          3-17  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
                 (d)  Canadian excise taxes on absolute alcohol used in 
                      manufacturing under the existing provisions of the 
                      Excise Tax Act, R.S.C. 1985, c. E-15, as amended, and 
 
 
                 (e)  measures by Canada prohibiting the use of foreign or 
                      non-duty paid ships in the coasting trade of Canada 
                      unless granted a license under the Coasting Trade 
                      Act, S.C. 1992, c. 31,   
 
            to the extent that such provisions were mandatory legislation 
            at the time of Canada's accession to the GATT and have not been 
            amended so as to decrease their conformity with the GATT. 
 
            4.   Articles 301 and 309 shall not apply to quantitative 
            import restrictions on goods that originate in the territory of 
            the United States, considering operations performed in, or 
            materials obtained from, Mexico as if they were performed in, 
            or obtained from, a non-Party, and that are indicated by 
            asterisks in Chapter 89 in Annex 401.2 (Tariff Schedule of 
            Canada) of the Canada - United States Free Trade Agreement for 
            as long as the measures taken under the Merchant Marine Act of 
            1920, 46 App. U.S.C.   883, and the Merchant Marine Act of 
            1936, 46 App. U.S.C.    1171, 1176, 1241 and 1241o, apply with 
            quantitative effect to comparable Canadian origin goods sold or 
            offered for sale into the U.S. market. 
 
            5.   Articles 301 and 309 shall not apply to: 
 
                 (a)  the continuation or prompt renewal of a non- 
                      conforming provision of any statute referred to in 
                      paragraph 2 or 3; and 
 
                 (b)  the amendment to a non-conforming provision of any 
                      statute referred to in paragraph 2 or 3 to the extent 
                      that the amendment does not decrease the conformity 
                      of the provision with Articles 301 and 309.  
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-18  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
                              Section B - Mexican Measures 
 
 
            1.   Articles 301 and 309 shall not apply to controls by Mexico 
            on the export of logs of all species. 
 
            2.   Articles 301 and 309 shall not apply to: 
 
                 (a)  measures under the existing provisions of Articles 
                      192 through 194 of the General Ways of Communication 
                      Act ("Ley de Vias Generales de Comunicaci n") 
                      reserving exclusively to Mexican vessels all services 
                      and operations not authorized for foreign vessels and 
                      empowering the Mexican Ministry of Communications and 
                      Transportation to deny foreign vessels the right to 
                      perform authorized services if their country of 
                      origin does not grant reciprocal rights to Mexican 
                      vessels; and 
 
                 (b)  export permit measures applied to goods for 
                      exportation to another Party that are subject to 
                      quantitative restrictions or tariff rate quotas 
                      adopted or maintained by that other Party.  
 
            3.   Articles 301 and 309 shall not apply to: 
 
                 (a)  the continuation or prompt renewal of a non- 
                      conforming provision of the statute referred to in 
                      paragraph 2(a); and 
 
                 (b)  the amendment to a non-conforming provision of the 
                      statute referred to in paragraph 2(a) to the extent 
                      that the amendment does not decrease the conformity 
                      of the provision with Articles 301 and 309. 
 
            4.   (a)  Notwithstanding Article 309, for the first 10 years 
                      after the date of entry into force of this Agreement, 
                      Mexico may adopt or maintain prohibitions or 
                      restrictions on the importation of used goods 
                      provided for in the items, as of August 12, 1992, in 
                      the Tariff Schedule of the General Import Duty Act 
                      (Tarifa de la "Ley del Impuesto General de 
                      Importaci n") set out below: 
 
                 (For purposes of reference only, descriptions are provided 
            next to the corresponding item.) 
 
 
 
 
                                          3-19  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            Item           Description 
 
            8407.34.99          Gasoline engines of more than 1,000 cm3, 
                                except for motorcycles. 
 
            8413.11.01          Distributors fitted with a measuring device 
                                even if it includes a totalizing mechanism. 
 
            8413.40.01          Trailer type, from 36 up to 60 m3/hr 
                                capacity; without hydraulic elevator for 
                                the discharge hose. 
 
            8426.12.01          Mobile portals on tires and straddle 
                                carriers. 
 
            8426.19.01          Other (overhead travelling cranes, bridge 
                                cranes and straddle carriers). 
 
            8426.30.01          Portal cranes. 
 
            8426.41.01          Cranes with structural iron jib (lattice) 
                                with mechanical working, self-propelled, 
                                with unit weight up to 55 tons. 
 
            8426.41.02          Cranes with hydraulically actuated rigid 
                                jib, self-propelled with maximum capacity 
                                above 9.9 tons and not exceeding 30 tons. 
 
            8426.41.99          Other (machinery and apparatus, self 
                                propelled, on tires.) 
 
            8426.49.01          Cranes with structural iron jib (lattice) 
                                with mechanical working, with unit weight 
                                up to 55 tons. 
 
            8426.49.02          Cranes with hydraulically actuated rigid 
                                jib, self-propelled, with load capacity 
                                above 9.9 tons and not exceeding 30 tons. 
 
            8426.91.01          Cranes, other than those provided for in 
                                items 8426.91.02, 8426.91.03 and 
                                8426.91.04. 
 
            8426.91.02          Cranes with hydraulic working, with 
                                articulated or rigid booms, with capacity 
                                up to 9.9 tons at 1 meter radius. 
 
 
 
 
                                          3-20  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8426.91.03          Isolated elevating cranes, basket type, 
                                with carrying capacity equal to or less 
                                than 1 ton and up to 15 meters lift. 
 
            8426.91.99          Other (machinery and apparatus; designed 
                                for mounting on road vehicles). 
 
            8426.99.01          Cranes, other than those provided for in 
                                items 8426.91.02 
 
            8426.99.02          Swivel cranes. 
 
            8426.99.99          Other (cranes and air cables ("blondines"); 
                                overhead travelling cranes, handling or 
                                unloading frames, bridge cranes, straddle 
                                carriers and straddle cranes). 
 
            8427.10.01          With load capacity up to 3,500 kilograms, 
                                measured at 620 millimeters from the 
                                frontal surface of the forks, without 
                                battery or loader. 
 
            8427.20.01          With explosion or internal combustion 
                                engine, with carrying capacity up to 7,000 
                                kilograms, measured at 620 millimeters from 
                                the frontal surface of the forks. 
 
            8428.40.99          Other (escalators and moving walkways). 
 
            8428.90.99          Other (machinery and apparatus for lifting, 
                                loading, unloading or handling). 
 
            8429.11.01          Caterpillar type. 
 
            8429.19.01          Other (bulldozers and angledozers). 
 
            8429.20.01          Graders. 
 
            8429.30.01          Scrapers. 
 
            8429.40.01          Tamping machines. 
 
            8429.51.02          Front-end loader with hydraulic working, 
                                wheel-type, with capacity equal or less 
                                than 335 HP. 
 
            8429.51.03          Mechanical shovels, other than those 
                                provided for in item 8429.51.01. 
 
 
                                          3-21  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8429.51.99          Other (mechanical shovels, excavators, 
                                loaders and front-end shovel loaders). 
 
            8429.52.02          Draglines or excavators, other than those 
                                provided for in item 8429.52.01. 
 
            8429.52.99          Other (machinery with a 360  revolving 
                                superstructure). 
 
            8429.59.01          Trenchers. 
 
            8429.59.02          Draglines, with dragging load capacity up 
                                to 4,000 kilograms. 
 
            8429.59.03          Draglines or excavators, other than those 
                                provided for in item 8429.59.04. 
 
            8429.59.99          Other (self-propelled bulldozers, 
                                angledozers, graders, scrapers, mechanical 
                                shovels, excavators, loaders, shovel 
                                loaders, tamping machines and road 
                                rollers). 
 
            8430.31.01          Rotation and/or percussion perforators. 
 
            8430.31.99          Other (self-propelled cutters, pullers or 
                                wrenchers and machines to open tunnels or 
                                galleries). 
 
            8430.39.01          Boring shields. 
 
            8430.39.99          Other (not self-propelled cutters, pullers 
                                or wrenchers and machines to open tunnels 
                                or galleries). 
 
            8430.41.01          Boring or sinking machinery, other than 
                                those provided for in item 8430.41.02. 
 
            8430.41.99          Other (self-propelled probing or boring 
                                machinery). 
 
            8430.49.99          Other (not self-propelled probing or boring 
                                machinery). 
 
            8430.50.01          Excavators, frontal carriers with hydraulic 
                                mechanism, with capacity equal to or less 
                                than 335 h.p. 
 
 
 
                                          3-22  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8430.50.02          Scrapers. 
 
            8430.50.99          Other (self-propelled machinery and 
                                apparatus). 
 
            8430.61.01          Graders (pushers). 
 
            8430.61.02          Tamping or compacting rollers. 
 
            8430.61.99          Other (machinery and apparatus, not self- 
                                propelled). 
 
            8430.62.01          Scarification machine (ripping machine). 
 
            8430.69.01          Scrapers, not self-propelled. 
 
            8430.69.02          Trencher machine, other than those provided 
                                for in item 8430.69.03. 
 
            8430.69.99          Other (trenchers, other than those provided 
                                for in items 8430.69.01, 8430.69.02 and 
                                8430.69.03). 
 
            8452.10.01          Sewing machines of the household type. 
 
            8452.21.04          Industrial machines, other than those 
                                provided for in items 8452.21.02, 
                                8452.21.03 and 8452.21.05. 
 
            8452.21.99          Other (automatic sewing machines). 
 
            8452.29.05          Machines or heads for industrial use, with 
                                straight seams, straight needle and a 
                                rotating and oscillating thread linking 
                                device, double backstitching, flat bed and 
                                transportation only. 
 
            8452.29.06          Industrial machines, other than those 
                                provided for in items 8452.29.01, 
                                8452.29.03 and 8452.29.05. 
 
            8452.29.99          Other (non-automatic sewing machines). 
 
            8452.90.99          Other (parts of sewing machines). 
 
            8471.10.01          Analogue or hybrid automatic data 
                                processing machines. 
 
 
 
                                          3-23  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8471.20.01          Digital or numerical automatic data 
                                processing machines, containing in the same 
                                housing at least a central processing unit 
                                and an input and output unit. 
 
            8471.91.01          Numerical or digital processing units, even 
                                if presented with the rest of the system, 
                                including one or two of the following types 
                                of units contained in the same housing:  
                                storage units, input units, output unit. 
 
            8471.92.99          Other (input or output units whether or not 
                                entered with the rest of a system and 
                                whether or not containing storage units in 
                                the same housing). 
 
            8471.93.01          Storage units, including the rest of the 
                                system. 
 
            8471.99.01          Other (automatic data processing machines 
                                and units thereof). 
 
            8474.20.01          Crushing and grinding with two or more 
                                cylinders. 
 
            8474.20.02          Crushing jawbone and grinding millstone. 
 
            8474.20.03          Blade crushing machines. 
 
            8474.20.04          Crushing machines of balls or bars. 
 
            8474.20.05          Drawer cone crushing, with diameter no more 
                                than 1200 millimeters. 
 
            8474.20.06          Grinding hammer percussion. 
 
            8474.20.99          Other (machines and apparatus to break, 
                                crush or grind or pulverize dirt, stones 
                                and other solid mineral materials). 
 
            8474.39.99          Other (mixing machines). 
 
            8474.80.99          Other (machines and apparatus to classify, 
                                sieve, separate, break, crush, grind, mix, 
                                or knead dirt, stones and other mineral 
                                materials). 
 
            8475.10.01          Machines for assembling lamps. 
 
 
                                          3-24  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8477.10.01          Injection-molding machines for 
                                thermoplastic materials, up to 5 kg 
                                capacity for one molding model. 
 
            8701.30.01          Caterpillar tractors with an engine power 
                                at the flywheel equal to or above 105 h.p., 
                                but less than 380 h.p. measured at 1,900 
                                rpm, including pushing blade. 
 
            8701.90.02          Railroad tractors, on tires with mechanical 
                                mechanism for pavement. 
 
            8711.10.01          Motorcycles fitted with an auxiliary motor 
                                with reciprocating piston engine not 
                                exceeding 50 cm3. 
 
            8711.20.01          Motorcycles fitted with an auxiliary motor 
                                with reciprocating piston engine over 50 
                                cm3 but not over 250 cm3. 
 
            8711.30.01          Motorcycles fitted with an auxiliary motor 
                                with reciprocating piston engine over 250 
                                cm3 but not over 500 cm3. 
 
            8711.40.01          Motorcycles fitted with an auxiliary motor 
                                with reciprocating piston engine over 500 
                                cm3 but less than 550 cm3. 
 
            8711.90.99          Other (motorcycles, cycles fitted with an 
                                auxiliary motor and sidecars without a 
                                reciprocating piston engine, and that are 
                                not sidecars for motorcycles and 
                                velocipedes of any kind presented 
                                separately). 
 
            8712.00.02          Bicycles, other than of the type for 
                                racing. 
 
            8712.00.99          Other (cycles, not motorized, except 
                                bicycles, and tricycles for the transport 
                                of merchandise). 
 
            8716.10.01          Trailers and semi-trailers for housing and 
                                camping, of the caravan type. 
 
            8716.31.02          Steel-tank type tankers, including 
                                cryogenic or hoppers. 
 
 
 
                                          3-25  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8716.31.99          Other (tankers except of the steel-tank 
                                type, and of the thermal type for the 
                                transportation of milk). 
 
            8716.39.01          Trailers or semi-trailers of the platform 
                                type, with or without stakes, including 
                                those accepted for the transport of boxes 
                                or metal baskets for cans and bottles or 
                                container carriers, or low beds, except 
                                those with hydraulic or pneumatic 
                                suspension and collapsible goose-neck.  
 
            8716.39.02          Trailers or semi-trailers for the transport 
                                of vehicles. 
 
            8716.39.04          Trailers of the modular-platform type with 
                                directional axis, including transporter 
                                bridge section, hydraulic couplings or 
                                goose-neck or motor for hydraulic 
                                conditioning of the equipment. 
 
            8716.39.05          Semi-trailers of the low-bed type, with 
                                pneumatic or hydraulic suspension and 
                                collapsible goose-neck. 
 
            8716.39.06          Trailers and semi-trailers of the 
                                closed-box type, including refrigerated. 
 
            8716.39.07          Trailers and semi-trailers of the steel- 
                                tank type, including cryogenic and hoppers. 
 
            8716.39.99          Other (trailers and semi-trailers for the 
                                transportation of goods, other than those 
                                provided for in items 8716.39.01, 
                                8716.39.02, 8716.39.04, 8716.39.05, 
                                8716.39.06 and 8716.39.07, and that are not 
                                vehicles for the transport of goods, with 
                                solid rubber wheels, nor double-decker 
                                trailers or semitrailers of the type 
                                recognized as used exclusively for hauling 
                                cattle. 
 
            8716.40.01          Other trailers and semi-trailers not used 
                                for transporting goods. 
 
            8716.80.99          Other (non-automotive vehicles except 
                                trailers or semi-trailers, wheel barrows 
 
 
 
                                          3-26  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
                                and hand-carts, or wheel barrows of 
                                hydraulic operation). 
 
                 (b)  Notwithstanding subparagraph (a), Mexico shall not 
                      prohibit or restrict the importation, on a temporary 
                      basis, of used goods provided for in the items set 
                      out in subparagraph (c) for the provision of a cross- 
                      border service subject to Chapter Twelve (Cross- 
                      Border Trade in Services) or the performance of a 
                      contract subject to Chapter Ten (Government 
                      Procurement), provided that the imported goods 
 
                      (i)  are necessary to the provision of the cross- 
                           border service or the performance of the 
                           contract awarded to a supplier of another Party, 
 
                      (ii) are used solely by or under the supervision of 
                           the service provider or the supplier performing 
                           the contract, 
 
                      (iii)     are not sold, leased or loaned while in the 
                                territory of Mexico, 
 
                      (iv) are imported in no greater quantity than is 
                           necessary for the provision of the service or 
                           the performance of the contract, 
 
                      (v)  are re-exported promptly on completion of the 
                           service or the contract, and 
 
                      (vi) comply with other applicable requirements on the 
                           importation of such goods to the extent they are 
                           not inconsistent with this Agreement. 
 
                 (c)  Subparagraph (b) applies to used goods provided for 
                      in the following items: 
 
 
            Item           Description 
 
 
            8413.11.01          Distributors fitted with a measuring device 
                                even if it includes a totalizing mechanism. 
 
            8413.40.01          Concrete pumps for liquids, not fitted with 
                                a measuring device from 36 up to 60 m3/hr 
                                capacity. 
 
 
 
                                          3-27  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8426.12.01          Mobile portals on tires and straddle 
                                carriers. 
 
            8426.19.01          Other (overhead travelling cranes, bridge 
                                cranes and straddle carriers). 
 
            8426.30.01          Portal cranes. 
 
            8426.41.01          Cranes with hydraulically actuated rigid 
                                jib, self-propelled with maximum capacity 
                                above 9.9 tons and not exceeding 30 tons. 
 
            8426.41.02          Cranes with structural iron jib (lattice) 
                                with mechanical working, self-propelled, 
                                with unit weight up to 55 tons. 
 
            8426.41.99          Other (machinery and apparatus, self 
                                propelled, on tires.) 
 
            8426.49.01          Cranes with structural iron jib (lattice) 
                                with mechanical working, with unit weight 
                                up to 55 tons. 
 
            8426.49.02          Cranes with hydraulically actuated rigid 
                                jib, self-propelled, with load capacity 
                                above 9.9 tons and not exceeding 30 tons. 
 
            8426.91.01          Cranes, other than those provided for in 
                                items 8426.91.02, 8426.91.03 and 
                                8426.91.04. 
 
            8426.99.01          Cranes, other than those provided for in 
                                items 8426.91.02 
 
            8426.99.02          Swivel cranes. 
 
            8426.99.99          Other (cranes and air cables ("blondines"); 
                                overhead travelling cranes, handling or 
                                unloading frames, bridge cranes, straddle 
                                carriers and straddle cranes). 
 
            8427.10.01          With load capacity up to 3,500 kilograms, 
                                measured at 620 millimeters from the 
                                frontal surface of the forks, without 
                                battery or loader. 
 
            8428.40.99          Other (escalators and moving walkways). 
 
 
 
                                          3-28  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8428.90.99          Other (machinery and apparatus for lifting, 
                                loading, unloading or handling). 
 
            8429.11.01          Caterpillar type. 
 
            8429.19.01          Other (bulldozers and angledozers). 
 
            8429.30.01          Scrapers. 
 
            8429.40.01          Tamping machines. 
 
            8429.51.02          Front-end loader with hydraulic working, 
                                wheel-type, with capacity equal or less 
                                than 335 HP. 
 
            8429.51.03          Mechanical shovels, other than those 
                                provided for in item 8429.51.01. 
 
            8429.51.99          Other (mechanical shovels, excavators, 
                                loaders and front-end shovel loaders). 
 
            8429.52.02          Draglines or excavators, other than those 
                                provided for in item 8429.52.01. 
 
            8429.52.99          Other (machinery with a 360  revolving 
                                superstructure). 
 
            8429.59.01          Trenchers. 
 
            8429.59.02          Draglines, with dragging load capacity up 
                                to 4,000 kilograms. 
 
            8429.59.03          Draglines or excavators, other than those 
                                provided for in item 8429.59.04. 
 
            8429.59.99          Other (self-propelled bulldozers, 
                                angledozers, graders, scrapers, mechanical 
                                shovels, excavators, loaders, shovel 
                                loaders, tamping machines and road 
                                rollers). 
 
            8430.31.01          Rotation and/or percussion perforators. 
 
            8430.31.99          Other (self-propelled cutters, pullers or 
                                wrenchers and machines to open tunnels or 
                                galleries). 
 
            8430.39.01          Boring shields. 
 
 
                                          3-29  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8430.39.99          Other (not self-propelled cutters, pullers 
                                or wrenchers and machines to open tunnels 
                                or galleries). 
 
            8430.41.01          Boring or sinking machinery, other than 
                                those provided for in item 8430.41.02. 
 
            8430.41.99          Other (self-propelled probing or boring 
                                machinery). 
 
            8430.49.99          Other (not self-propelled probing or boring 
                                machinery). 
 
            8430.50.01          Excavators, frontal loaders with hydraulic 
                                mechanism, with capacity equal to or less 
                                than 335 h.p. 
 
            8430.50.02          Scrapers. 
 
            8430.50.99          Other (self-propelled machinery and 
                                apparatus). 
 
            8430.61.01          Graders (pushers). 
 
            8430.61.02          Tamping or compacting rollers. 
 
            8430.62.01          Scarification machine (ripping machine). 
 
            8430.69.01          Scrapers, not self-propelled. 
 
            8430.69.02          Trencher machine, other than those provided 
                                for in item 8430.69.03. 
 
            8430.69.99          Other (trenchers, other than those provided 
                                for in items 8430.69.01, 8430.69.02 and 
                                8430.69.03). 
 
            8452.10.01          Sewing machines of the household type. 
 
            8452.21.04          Industrial machines, other than those 
                                provided for in items 8452.21.02, 
                                8452.21.03 and 8452.21.05. 
 
            8452.21.99          Other (automatic sewing machines). 
 
            8452.29.06          Industrial machines, other than those 
                                provided for in items 8452.29.01, 
                                8452.29.03 and 8452.29.05. 
 
 
                                          3-30  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
            8452.29.99          Other (non-automatic sewing machines). 
 
            8452.90.99          Other (parts of sewing machines). 
 
            8471.10.01          Analogue or hybrid automatic data 
                                processing machines. 
 
            8474.20.01          Crushing and grinding with two or more 
                                cylinders. 
 
            8474.20.03          Blade crushing machines. 
 
            8474.20.04          Crushing machines of balls or bars. 
 
            8474.20.99          Other (machines and apparatus to break, 
                                crush or grind or pulverize dirt, stones 
                                and other solid mineral materials). 
 
            8474.39.99          Other (mixing machines). 
 
            8474.80.99          Other (machines and apparatus to classify, 
                                sieve, separate, break, crush, grind, mix, 
                                or knead dirt, stones and other mineral 
                                materials). 
 
            8477.10.01          Injection-molding machines for 
                                thermoplastic materials, up to 5 kg 
                                capacity for one molding model. 
 
            8701.30.01          Caterpillar tractors with an engine power 
                                at the flywheel equal to or above 105 h.p., 
                                but less than 380 h.p. measured at 1,900 
                                rpm, including pushing blade. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-31  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 301.3                                              
                  ___________ 
 
 
 
                               Section C - U.S. Measures 
 
 
            1.   Articles 301 and 309 shall not apply to controls by the 
            United States on the export of logs of all species. 
 
            2.   Articles 301 and 309 shall not apply to: 
 
                 (a)  taxes on imported perfume containing distilled 
                      spirits under existing provisions of section 
                      5001(a)(3) and 5007(b)(2) of the Internal Revenue 
                      Code of 1986, 26 U.S.C.    5001(a)(3), 5007(b)(2), 
                      and 
 
                 (b)  measures under existing provisions of the Merchant 
                      Marine Act of 1920, 46 App. U.S.C.   883; the 
                      Passenger Vessel Act, 46 App. U.S.C.    289, 292, and 
                      316; and 46 U.S.C.   12108,  
 
            to the extent that such measures were mandatory legislation at 
            the time of the United States' accession to the GATT and have 
            not been amended so as to decrease their conformity with the 
            GATT. 
 
            3.   Articles 301 and 309 shall not apply to: 
 
                 (a)  the continuation or prompt renewal of a non- 
                      conforming provision of any statute referred to in 
                      paragraph 2; and 
 
                 (b)  the amendment to a non-conforming provision of any 
                      statute referred to in paragraph 2 to the extent that 
                      the amendment does not decrease the conformity of the 
                      provision with Articles 301 and 309. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-32  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 302.2                                              
                  ___________ 
 
 
                                      Annex 302.2 
 
                                   Tariff Elimination 
 
 
            1.   Except as otherwise provided in a Party's Schedule 
            attached to this Annex, the following staging categories apply 
            to the elimination of customs duties by each Party pursuant to 
            Article 302(2): 
 
                 (a)  duties on goods provided for in the items in staging 
                      category A in a Party's Schedule shall be eliminated 
                      entirely and such goods shall be duty-free, effective 
                      January 1, 1994; 
 
                 (b)  duties on goods provided for in the items in staging 
                      category B in a Party's Schedule shall be removed in 
                      five equal annual stages beginning on January 1, 
                      1994, and such goods shall be duty-free, effective 
                      January 1, 1998; 
 
                 (c)  duties on goods provided for in the items in staging 
                      category C in a Party's Schedule shall be removed in 
                      10 equal annual stages beginning on January 1, 1994, 
                      and such goods shall be duty-free, effective January 
                      1, 2003; 
 
                 (d)  duties on goods provided for in the items in staging 
                      category C+ in a Party's Schedule shall be removed in 
                      15 equal annual stages beginning on January 1, 1994, 
                      and such goods shall be duty-free, effective January 
                      1, 2008; and 
 
                 (e)  goods provided for in the items in staging category D 
                      in a Party's Schedule shall continue to receive duty- 
                      free treatment. 
 
            2.   The base rate of customs duty and staging category for 
            determining the interim rate of customs duty at each stage of 
            reduction for an item are indicated for the item in each 
            Party's Schedule attached to this Annex.  These rates generally 
            reflect the rate of duty in effect on July 1, 1991, including 
            rates under the U.S. Generalized System of Preferences and the 
            General Preferential Tariff of Canada. 
 
            3.   For the purpose of the elimination of customs duties in 
            accordance with Article 302, interim staged rates shall be 
            rounded down, except as set out in each Party's Schedule 
 
 
                                          3-33  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 302.2                                              
                  ___________ 
 
 
            attached to this Annex, at least to the nearest tenth of a 
            percentage point or, if the rate of duty is expressed in 
            monetary units, at least to the nearest .001 of the official 
            monetary unit of the Party. 
 
            4.   Canada shall apply a rate of customs duty no higher than 
            the rate applicable under the staging category set out for an 
            item in Annex 401.2, as amended, of the Canada - United States 
            Free Trade Agreement which Annex is hereby incorporated into 
            and made a part of this Agreement, to an originating good 
            provided that: 
 
                 (a)  notwithstanding any provision in Chapter Four, in 
                      determining whether such good is an originating good, 
                      operations performed in or materials obtained from 
                      Mexico are considered as if they were performed in or 
                      obtained from a non-Party; and 
 
                 (b)  any processing that occurs in Mexico after the good 
                      would qualify as an originating good in accordance 
                      with subparagraph (a) does not increase the 
                      transaction value of the good by greater than seven 
                      percent. 
 
            5.   Canada shall apply a rate of customs duty no higher than 
            the rate applicable under the staging category set out for an 
            item in Column I of its Schedule to this Annex to an 
            originating good provided that: 
 
                 (a)  notwithstanding any provision in Chapter Four, in 
                      determining whether such good is an originating good, 
                      operations performed in or materials obtained from 
                      the United States are considered as if they were 
                      performed in or obtained from a non-Party; and 
 
                 (b)  any processing that occurs in the United States after 
                      the good would qualify as an originating good in 
                      accordance with subparagraph (a) does not increase 
                      the transaction value of the good by greater than 
                      seven percent. 
 
            6.   Canada shall apply to an originating good to which neither 
            paragraph 4 nor 5 applies a rate of customs duty no higher than 
            the rate indicated for its corresponding item in Column II of 
            its Schedule to this Annex.  The rate of customs duty in Column 
            II for such good shall be: 
 
 
 
 
                                          3-34  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 302.2                                              
                  ___________ 
 
 
                 (a)  in each year of the staging category indicated in 
                      Column I, the higher of 
 
                      (i)  the rate of customs duty under the staging 
                           category set out for the item in Annex 401.2, as 
                           amended, of the Canada - United States Free 
                           Trade Agreement, and 
 
                      (ii) the General Preferential Tariff rate of customs 
                           duty for the item applied on July 1, 1991, 
                           reduced in accordance with the applicable 
                           staging category set out for the item in Column 
                           I of its Schedule to this Annex; or 
 
                 (b)  where specified in Column II of its Schedule to this 
                      Annex, the most-favored-nation rate of customs duty 
                      for the item applied on July 1, 1991, reduced in 
                      accordance with the applicable staging category set 
                      out for the item in Column I of its Schedule to this 
                      Annex, or reduced in accordance with the applicable 
                      staging category otherwise indicated. 
 
            7.   Paragraphs 4 through 6 and 10 through 13 shall not apply 
            to textile and apparel goods identified in Appendix 1.1 of 
            Annex 300-B (Textiles and Apparel Goods). 
 
            8.   Paragraphs 4, 5 and 6 shall not apply to agricultural 
            goods as defined in Article 708.  For these goods, Canada shall 
            apply the rate applicable under the staging category set out 
            for an item in Annex 401.2, as amended, of the Canada - United 
            States Free Trade Agreement to an originating good when the 
            good qualifies to be marked as a good of the United States 
            pursuant to Annex 311, without regard to whether the good is 
            marked.  When an originating good qualifies to be marked as a 
            good of Mexico, pursuant to Annex 311, whether or not the good 
            is marked, Canada shall apply the rate applicable under the 
            staging category set out for an item in Column I of its 
            Schedule to this Annex. 
 
            9.   As between the United States and Canada, Articles 401(7) 
            and 401(8) of the Canada - United States Free Trade Agreement 
            are hereby incorporated and made a part of this Annex.  The 
            term "goods originating in the territory of the United States 
            of America" in Article 401(7) of that agreement shall be 
            determined in accordance with paragraph 4 of this Annex.  The 
            term "goods originating in the territory of Canada" in Article 
            401(8) of that agreement shall be determined in accordance with 
            paragraph 12 of this Annex. 
 
 
                                          3-35  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 302.2                                              
                  ___________ 
 
 
            10.  Mexico shall apply a rate of customs duty no higher than 
            the rate applicable under the staging category set out for an 
            item in Column I of its Schedule to this Annex to an 
            originating good when the good qualifies to be marked as a good 
            of the United States, pursuant to Annex 311, without regard to 
            whether the good is marked. 
 
            11.  Mexico shall apply a rate of customs duty no higher than 
            the rate applicable under the staging category set out for an 
            item in Column II of its Schedule to this Annex to an 
            originating good when the good qualifies to be marked as a good 
            of Canada, pursuant to Annex 311, without regard to whether the 
            good is marked. 
 
            12.  The United States shall apply a rate of customs duty no 
            higher than the rate applicable under the staging category set 
            out for an item in Annex 401.2, as amended, of the Canada -  
            United States Free Trade Agreement to an originating good when 
            the good qualifies to be marked as a good of Canada pursuant to 
            Annex 311, without regard to whether the good is marked. 
 
            13.  The United States shall apply a rate of customs duty no 
            higher than the rate applicable under the staging category set 
            out for an item in its Schedule to this Annex to an originating 
            good when the good qualifies to be marked as a good of Mexico 
            pursuant to Annex 311, whether or not the good is marked. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-36  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 302.2                                              
                  ___________ 
 
 
                                   Schedule of Canada 
 
                            (TARIFF SCHEDULE TO BE ATTACHED) 
 
 
                                   Schedule of Mexico 
 
                            (TARIFF SCHEDULE TO BE ATTACHED) 
 
 
                             Schedule of the United States 
 
                            (TARIFF SCHEDULE TO BE ATTACHED) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-37  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 303.6                                              
                  ___________ 
 
 
                                      Annex 303.6 
 
                            Goods Not Subject to Article 303 
 
 
            1.   For exports from the territory of the United States to the 
            territory of Canada or Mexico, a good provided for in U.S. 
            tariff item 1701.11.02 that is imported into the territory of 
            the United States and used as a material in the production of, 
            or substituted by an identical or similar good used as a 
            material in the production of, a good provided for in Canadian 
            tariff item 1701.99.00 or Mexican tariff items 1701.99.01 and 
            1701.99.99 (refined sugar). 
 
            2.   For trade between Canada and the United States: 
 
                 (a)  imported citrus products; 
 
                 (b)  an imported good used as a material in the production 
                      of, or substituted by an identical or similar good 
                      used as a material in the production of, a good 
                      provided for in U.S. items 5811.00.20 (quilted cotton 
                      piece goods), 5811.00.30 (quilted man-made piece 
                      goods) or 6307.90.99 (furniture moving pads), or 
                      Canadian items 5811.00.10 (quilted cotton piece 
                      goods), 5811.00.20 (quilted man-made piece goods) or 
                      6307.90.30 (furniture moving pads), that are subject 
                      to the most-favored-nation rate of duty when exported 
                      to the territory of the other Party; and 
 
                 (c)  an imported good used as a material in the production 
                      of, or substituted by an identical or similar good 
                      used as a material in the production of, apparel that 
                      is subject to the most-favored-nation rate of duty 
                      when exported to the territory of the other Party. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-38  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 303.7                                              
                  ___________ 
 
 
                                      Annex 303.7 
 
                   Effective Dates for the Application of Article 303 
 
 
                                   Section A - Canada 
 
            For Canada, Article 303 shall apply to a good imported into the 
            territory of Canada that is: 
 
                 (a)  subsequently exported to the territory of the United 
                      States on or after January 1, 1996, or subsequently 
                      exported to the territory of Mexico on or after 
                      January 1, 2001; 
              
                 (b)  used as a material in the production of another good 
                      that is subsequently exported to the territory of the 
                      United States on or after January 1, 1996, or used as 
                      a material in the production of another good that is 
                      subsequently exported to the territory of Mexico on 
                      or after January 1, 2001; or  
 
                 (c)  substituted by an identical or similar good used as a 
                      material in the production of another good that is 
                      subsequently exported to the territory of the United 
                      States on or after January 1, 1996, or substituted by 
                      an identical or similar good used as a material in 
                      the production of another good that is subsequently 
                      exported to the territory of Mexico on or after 
                      January 1, 2001. 
 
 
                                   Section B - Mexico 
 
            For Mexico, Article 303 shall apply to a good imported into the 
            territory of Mexico that is: 
 
                 (a)  subsequently exported to the territory of another 
                      Party on or after January 1, 2001; 
 
                 (b)  used as a material in the production of another good 
                      that is subsequently exported to the territory of 
                      another Party on or after January 1, 2001; or 
 
                 (c)  substituted by an identical or similar good used as a 
                      material in the production of another good that is 
                      subsequently exported to the territory of another 
                      Party on or after January 1, 2001. 
 
 
                                          3-39  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 303.7                                              
                  ___________ 
 
 
 
                               Section C - United States 
 
                 For the United States, Article 303 shall apply to a good 
            imported into the territory of the United States that is: 
 
                 (a)  subsequently exported to the territory of Canada on 
                      or after January 1, 1996, or subsequently exported to 
                      the territory of Mexico on or after January 1, 2001; 
 
                 (b)  used as a material in the production of another good 
                      that is subsequently exported to the territory of 
                      Canada on or after January 1, 1996, or used as a 
                      material in the production of another good that is 
                      subsequently exported to the territory of Mexico on 
                      or after January 1, 2001; or 
 
                 (c)  substituted by an identical or similar good used as a 
                      material in the production of another good 
                      subsequently exported to the territory of Canada on 
                      or after January 1, 1996, or substituted by an 
                      identical or similar good used as a material in the 
                      production of another good subsequently exported to 
                      the territory of Mexico on or after January 1, 2001. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-40  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 303.8                                              
                  ___________ 
 
 
                                      Annex 303.8 
 
                              Exception to Article 303(8) 
                 for Certain Color Cathode-Ray Television Picture Tubes 
 
 
                                         Mexico 
 
            Mexico may refund customs duties paid, or waive or reduce the 
            amount of customs duties owed, on a good provided for in item 
            8540.11.aa (color cathode-ray television picture tubes, 
            including video monitor cathode-ray tubes, with a diagonal 
            exceeding 14 inches) or 8540.11.cc (color cathode-ray 
            television picture tubes for high definition television, with a 
            diagonal exceeding 14 inches) for a person who, during the 
            period July 1, 1991 through June 30, 1992, imported into its 
            territory no fewer than 20,000 units of such good that would 
            not have been considered to be an originating good had this 
            Agreement been in force during that period, where the good is: 
 
                 (a)  subsequently exported from the territory of Mexico to 
                      the territory of the United States, or is used as a 
                      material in the production of another good that is 
                      subsequently exported from the territory of Mexico to 
                      the territory of the United States, or is substituted 
                      by an identical or similar good used as a material in 
                      the production of another good that is subsequently 
                      exported to the territory of the United States, in an 
                      amount, for all such persons combined, no greater 
                      than 
 
                      (i)  1,200,000 units in 1994, 
 
                      (ii) 1,000,000 units in 1995, 
 
                      (iii)     800,000 units in 1996, 
 
                      (iv) 600,000 units in 1997, 
 
                      (v)  400,000 units in 1998, 
 
                      (vi) 200,000 units in 1999, and 
 
                      (vii)     zero units in 2000 and thereafter, 
 
                      provided that the number of units of the good on 
                      which such customs duties may be refunded, waived or 
                      reduced in any year shall be reduced, with respect to 
 
 
                                          3-41  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 303.8                                              
                  ___________ 
 
 
                      that year, by the number of units of such good that 
                      qualifies as an originating good during the year 
                      immediately preceding that year, considering 
                      operations performed in, or materials obtained from, 
                      the territories of Canada and the United States as if 
                      they were performed in, or obtained from, a non- 
                      Party; or 
 
                 (b)  subsequently exported from the territory of Mexico to 
                      the territory of Canada, or is used as a material in 
                      the production of another good that is subsequently 
                      exported from the territory of Mexico to the 
                      territory of Canada, or is substituted by an 
                      identical or similar good used as a material in the 
                      production of another good that is subsequently 
                      exported to the territory of Canada, for all such 
                      persons combined, in an amount no greater than 
 
                      (i)  75,000 units in 1994, 
 
                      (ii) 50,000 units in 1995, and 
 
                      (iii)     zero units in 1996 and thereafter. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-42  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 304.1                                              
                  ___________ 
 
 
                                      Annex 304.1 
 
                        Exceptions for Existing Waiver Measures 
 
 
                 Article 304(1) shall not apply in respect of existing 
            Mexican waivers of customs duties, except that Mexico shall 
            not: 
 
                 (a)  increase the ratio of customs duties waived to 
                      customs duties owed relative to the performance 
                      required under any such waiver; or 
 
                 (b)  add any type of imported good to those qualifying on 
                      July 1, 1991, in respect of any waiver of customs 
                      duties in effect on that date. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-43  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 304.2                                              
                  ___________ 
 
 
                                      Annex 304.2 
 
                   Continuation of Existing Waivers of Customs Duties 
 
 
                 For purposes of Article 304(2): 
 
                 (a)  as between Canada and Mexico, Canada may condition on 
                      the fulfillment of a performance requirement the 
                      waiver of customs duties under any measure in effect 
                      on or before January 1, 1989, on any goods entered or 
                      withdrawn from warehouse for consumption before 
                      January 1, 1998; 
              
                 (b)  as between Canada and the United States, Article 405 
                      of the Canada - United States Free Trade Agreement is 
                      hereby incorporated and made a part of this Annex 
                      solely with respect to measures adopted by Canada or 
                      the United States prior to the date of entry into 
                      force of this Agreement; 
 
                 (c)  Mexico may condition on the fulfillment of a 
                      performance requirement the waiver of customs duties 
                      under any measure in effect on July 1, 1991, on any 
                      goods entered or withdrawn from warehouse for 
                      consumption before January 1, 2001; and 
 
                 (d)  Canada may grant waivers of customs duties as set out 
                      in Annex 300-A (Trade and Investment in the 
                      Automotive Sector). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-44  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 307.1                                              
                  ___________ 
 
 
                                      Annex 307.1 
 
                      Goods Re-Entered after Repair or Alteration 
 
 
                                   Section A - Canada 
 
                 Canada may impose customs duties on goods, regardless of 
            their origin, that re-enter its territory after such goods have 
            been exported from its territory to the territory of another 
            Party for repair or alteration as follows: 
 
                 (a)  for goods set out in Section D that re-enter its 
                      territory from the territory of Mexico, Canada shall 
                      apply to the value of the repair or alteration of 
                      such goods the rate of customs duty for such goods 
                      applicable under its Schedule to Annex 302.2; 
 
                 (b)  for goods other than those set out in Section D that 
                      re-enter its territory from the territory of the 
                      United States or Mexico, other than goods repaired or 
                      altered pursuant to a warranty, Canada shall apply to 
                      the value of the repair or alteration of such goods 
                      the rate of customs duty for such goods applicable 
                      under the Tariff Schedule of Canada attached to Annex 
                      401.2 of the Canada - United States Free Trade 
                      Agreement, as incorporated into Annex 302.2 of this 
                      Agreement; and 
 
                 (c)  for goods set out in Section D that re-enter its 
                      territory from the territory of the United States, 
                      Canada shall apply to the value of the repair or 
                      alteration of such goods the rate of customs duty for 
                      such goods applicable under its Schedule attached to 
                      Annex 401.2 of the Canada - United States Free Trade 
                      Agreement, as incorporated into Annex 302.2 of this 
                      Agreement. 
 
 
                                   Section B - Mexico 
 
                 Mexico may impose customs duties on goods set out in 
            Section D, regardless of their origin, that re-enter its 
            territory after such goods have been exported from its 
            territory to the territory of another Party for repair or 
            alteration, by applying to the value of the repair or 
            alteration of those goods the rate of customs duty for such 
 
 
 
                                          3-45  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 307.1                                              
                  ___________ 
 
 
            goods that would apply if such goods were included in staging 
            category B in Mexico's Schedule to Annex 302.2. 
 
 
                               Section C - United States 
 
            1.   The United States may impose customs duties on: 
 
                 (a)  goods set out in Section D, or 
 
                 (b)  goods that are not set out in Section D and that are 
                      not repaired or altered pursuant to a warranty, 
 
            regardless of their origin, that re-enter its territory after 
            such goods have been exported from its territory to the 
            territory of Canada for repair or alteration, by applying to 
            the value of the repair or alteration of such goods the rate of 
            customs duty applicable under the Canada - United States Free 
            Trade Agreement, as incorporated into Annex 302.2 of this 
            Agreement. 
 
            2.   The United States may impose customs duties on goods set 
            out in Section D, regardless of their origin, that re-enter its 
            territory after such goods have been exported from its 
            territory to the territory of Mexico for repair or alteration, 
            by applying to the value of the repair or alteration of such 
            goods a rate of customs duty of 50 percent reduced in five 
            equal annual stages beginning on January 1, 1994, and the value 
            of such repair or alteration shall be duty-free on January 1, 
            1998. 
 
 
                               Section D - List of Goods 
 
                 Any vessel, including the following goods, documented by a 
            Party under its law to engage in foreign or coastwise trade, or 
            a vessel intended to be employed in such trade: 
 
                 (a)  cruise ships, excursion boats, ferry-boats, cargo 
                      ships, barges and similar vessels for the transport 
                      of persons or goods, including 
 
                      (i)  tankers, 
 
                      (ii) refrigerated vessels, other than tankers, and 
 
 
 
 
 
                                          3-46  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 307.1                                              
                  ___________ 
 
 
                      (iii)     other vessels for the transport of goods 
                                and other vessels for the transport of both 
                                persons and goods, including open vessels; 
 
                 (b)  fishing vessels, including factory ships and other 
                      vessels for processing or preserving fishery products 
                      of a registered length not exceeding 30.5m; 
 
                 (c)  light-vessels, fire-floats, dredgers, floating 
                      cranes, and other vessels the navigability of which 
                      is subsidiary to their main function, floating docks, 
                      floating or submersible drilling or production 
                      platforms; and drilling ships, drilling barges and 
                      floating drilling rigs; and 
 
                 (d)  tugboats. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-47  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 307.3                                              
                  ___________ 
 
 
                                      Annex 307.3 
 
                            Repair and Rebuilding of Vessels 
 
 
                                     United States 
 
                 For the purpose of increasing transparency regarding the 
            types of repairs that may be performed in shipyards outside the 
            territory of the United States that do not result in any loss 
            of privileges for such vessel to: 
 
                 (a)  remain eligible to engage in coastwise trade or to 
                      access U.S. fisheries,  
 
                 (b)  transport U.S. government cargo, or 
 
                 (c)  participate in U.S. assistance programs, including 
                      the "operating difference subsidy," 
 
            the United States shall,  
 
                 (d)  provide written clarification no later than July 1, 
                      1993, to the other Parties of current U.S. Customs 
                      and Coast Guard practices that constitute, and 
                      differentiate between, the repair and the rebuilding 
                      of vessels, including clarifications with respect to 
                      "jumboizing", vessel conversions and casualty 
                      repairs, and 
 
                 (e)  begin a process, no later than the date of entry into 
                      force of this Agreement, to define the terms 
                      "repairs" and "rebuilding" under U.S. maritime law, 
                      including the Merchant Marine Act of 1920, 46 App. 
                      U.S.C.   883, and the Merchant Marine Act of 1936, 46 
                      App. U.S.C.    1171, 1176, 1241 and 1241(o). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-48  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.1                                              
                  ___________ 
 
 
                                      Annex 308.1 
 
                          Most-Favored-Nation Rates of Duty on 
                Certain Automatic Data Processing Goods and Their Parts 
 
 
                             Section A - General Provisions 
 
            1.   Each Party shall reduce its most-favored-nation rate of 
            duty applicable to a good provided for under the tariff 
            provisions set out in Tables 308.1.1 and 308.1.2 in Section B 
            to the rate set out therein, to the lowest rate agreed by any 
            Party in the Uruguay Round of Multilateral Trade Negotiations, 
            or to such reduced rate as the Parties may agree, in accordance 
            with the schedule set out in Section B, or with such 
            accelerated schedule as the Parties may agree. 
 
            2.   Notwithstanding Chapter Four (Rules of Origin), when the 
            most-favored-nation rate of duty applicable to a good provided 
            for under the tariff provisions set out in Table 308.1.1 in 
            Section B conforms with the rate established under paragraph 1, 
            each Party shall consider the good, when imported into its 
            territory from the territory of another Party, to be an 
            originating good. 
 
            3.   A Party may reduce in advance of the schedule set out in 
            Table 308.1.1 or Table 308.1.2 in Section B, or of such 
            accelerated schedule as the Parties may agree, its most- 
            favored-nation rate of duty applicable to any good provided for 
            under the tariff provisions set out therein, to the lowest rate 
            agreed by any Party in the Uruguay Round of Multilateral Trade 
            Negotiations, or the rate set out in Table 308.1.1 or 308.1.2, 
            or to such reduced rate as the Parties may agree. 
 
            4.   For greater certainty, most-favored-nation rate of duty 
            does not include any other concessionary rate of duty. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-49  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.1                                              
                  ___________ 
 
 
                  Section B - Rates of Duty and Schedule for Reduction 
 
                                     Table 308.1.1 
 
                                                    Tariff Rate              
                                                                        Sch 
                                                                        edu 
                                                                        le1 
 
 
            Automatic Data Processing 
             Machines (ADP): 
 
                 8471.10                            3.9%           S 
 
                 8471.20                            3.9%           S 
 
 
            Digital Processing Units: 
 
                 8471.91                            3.9%           S 
 
            Input or Output Units: 
 
                 Combined Input/Output Units:                  ____________________________ 
 
                 Canada: 
 
                 8471.92.10                              3.7%           S 
 
                 Mexico: 
 
                 8471.92.09                              3.7%           S 
 
                 United States: 
 
                 8471.92.10                              3.7%           S 
 
                 Display Units:                  ______________ 
 
                 Canada: 
 
                 8471.92.32                              3.7%           S 
                                         ____________________ 
 
               1    R    on the date of entry into force of this Agreement 
 
               S    in five equal annual stages commencing January 1, 1999. 
 
 
                                          3-50  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.1                                              
                  ___________ 
 
 
                 8471.92.33                              Free           S 
                 8471.92.34                              3.7%           S 
                 8471.92.39                              3.7%           S 
 
                 Mexico: 
 
                 8471.92.10                              3.7%           S 
                 8471.92.11                              Free           S 
 
                 United States: 
 
                 8471.92.30                              Free           S 
                 8471.92.40.75                           3.7%           S 
                 8471.92.40.85                           3.7%           S 
 
                 Other Input or Output Units:                  ____________________________ 
 
                 Canada: 
 
                 8471.92.40                              3.7%           S 
                 8471.92.50                              Free           S 
                 8471.92.90                              Free           S 
 
                 Mexico: 
 
                 8471.92.12                              3.7%           S 
                 8471.92.99                              Free           S 
 
                 United States: 
 
                 8471.92.20                              Free           S 
                 8471.92.80                              Free           S 
                 8471.92.90.20                           Free           S 
                 8471.92.90.40                           3.7%           S 
                 8471.92.90.60                           Free           S 
                 8471.92.90.80                           Free           S 
 
            Storage Units 
 
                 8471.93                            Free           S 
 
 
            Other Units of Automatic Data Processing 
             Machines 
 
                 8471.99                            Free           S 
 
 
 
 
                                          3-51  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.1                                              
                  ___________ 
 
 
            Parts of Computers 
 
                 8473.30                            Free           R 
 
 
            Computer Power Supplies 
 
                 Canada: 
 
                 8504.40.40                              Free           S 
                 8504.90.80                              Free           S 
 
                 Mexico: 
 
                 8504.40.12                              Free           S 
                 8504.90.08                              Free           S 
 
                 United States: 
 
                 8504.40.00A                             Free           S 
                 8504.40.00B                             Free           S 
                 8504.90.00B                             Free           S 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-52  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.1                                              
                  ___________ 
 
 
                                     Table 308.1.2 
 
                                                    Tariff Rate              
            Schedule2 
 
            Metal Oxide Varistors: 
 
                 Canada: 
 
                 8533.40.10                              Free           R 
 
                 Mexico: 
 
                 8533.40.07                              Free           R 
 
                 United States: 
 
                 8533.40.00A                             Free           R 
 
 
            Diodes, Transistors and Similar 
            Semiconductor Devices; Photosensitive 
            Semiconductor Devices; Light Emitting 
            Diodes; Mounted Piezo-electric Crystals 
 
                 8541.10                            Free           R 
                 8541.21                            Free           R 
                 8541.29                            Free           R 
                 8541.30                            Free           R 
                 8541.50                            Free                R 
                 8541.60                            Free           R 
                 8541.90                            Free           R 
 
 
                 Canada: 
 
                 8541.40                            Free           R 
 
 
                 Mexico: 
 
                 8541.40                            Free           R 
 
                                         ____________________ 
 
               2    R    on the date of entry of this Agreement 
 
               S    in five equal annual stages commencing January 1, 1999. 
 
 
                                          3-53  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.1                                              
                  ___________ 
 
 
                 United States: 
 
                 8541.40.20                              Free           S 
                 8541.40.60                              Free           R 
                 8541.40.70                              Free           R 
                 8541.40.80                              Free           R 
                 8541.40.95                              Free           R 
 
 
            Electronic Integrated Circuits 
            and Microassemblies 
 
                 8542                               Free           R 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-54  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.2                                              
                  ___________ 
 
 
                                      Annex 308.2 
 
                           Most-Favored-Nation Rates of Duty 
                 on Certain Color Cathode-Ray Television Picture Tubes 
 
 
            1.   Any Party considering the reduction of its most-favored- 
            nation rate of customs duty for goods provided for in item 
            8540.11.aa (color cathode-ray television picture tubes, 
            including video monitor cathode-ray tubes, with a diagonal 
            exceeding 14 inches) or 8540.11.cc (color cathode-ray 
            television picture tubes for high definition television, with a 
            diagonal exceeding 14 inches) during the first 10 years after 
            the date of entry into force of this Agreement shall consult 
            with the other Parties in advance of such reduction. 
 
            2.   If any other Party objects in writing to such reduction, 
            other than a reduction in the Uruguay Round of Multilateral 
            Trade Negotiations, and the Party proceeds with the reduction, 
            any objecting Party may raise its applicable rate of duty on 
            originating goods provided for in the corresponding tariff item 
            set out in its Schedule to Annex 302.2, up to the applicable 
            rate of duty as if such good had been placed in staging 
            category C for purpose of tariff elimination. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-55  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 308.3                                              
                  ___________ 
 
 
                                      Annex 308.3 
 
                             Most-Favored-Nation Duty-Free 
                       Treatment of Local Area Network Apparatus 
 
 
                 To facilitate the operation of Article 308(3), the Parties 
            shall consult regarding the tariff classification of local area 
            network apparatus and shall endeavor to agree, no later than 
            January 1, 1994, on the classification of such goods in each 
            Party's tariff schedule. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-56  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 310.1                                              
                  ___________ 
 
 
                                      Annex 310.1 
 
                               Existing Customs User Fees 
 
 
                                   Section A - Mexico 
 
                 Mexico shall not increase its customs processing fee 
            ("derechos de tr mite aduanero") on originating goods, and 
            shall eliminate such fee on originating goods by June 30, 1999. 
 
 
                               Section B - United States 
 
            1.   The United States shall not increase its merchandise 
            processing fee and shall eliminate such fee according to the 
            schedule set out in Article 403 of the Canada - United States 
            Free Trade Agreement on originating goods where those goods 
            qualify to be marked as goods of Canada pursuant to Annex 311, 
            without regard to whether the goods are marked. 
 
            2.   The United States shall not increase its merchandise 
            processing fee and shall eliminate such fee by June 30, 1999, 
            on originating goods where those goods qualify to be marked as 
            goods of Mexico pursuant to Annex 311, without regard to 
            whether the goods are marked. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-57  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 311                                               
                   _________ 
 
 
                                       Annex 311 
 
                               Country of Origin Marking 
 
 
            1.   The Parties shall establish by January 1, 1994, rules for 
            determining whether a good is a good of a Party ("Marking 
            Rules") for purposes of this Annex, Annex 300-B and Annex 
            302.2, and for such other purposes as the Parties may agree. 
 
            2.   Each Party may require that a good of another Party, as 
            determined in accordance with the Marking Rules, bear a country 
            of origin marking, when imported into its territory, that 
            indicates to the ultimate purchaser of that good the name of 
            its country of origin. 
 
            3.   Each Party shall permit the country of origin marking of a 
            good of another Party to be indicated in English, French or 
            Spanish, except that a Party may, as part of its general 
            consumer information measures, require that an imported good be 
            marked with its country of origin in the same manner as 
            prescribed for goods of that Party. 
 
            4.   Each Party shall, in adopting, maintaining and applying 
            any measure relating to country of origin marking, minimize the 
            difficulties, costs and inconveniences that the measure may 
            cause to the commerce and industry of the other Parties. 
 
            5.   Each Party shall: 
 
                 (a)  accept any reasonable method of marking of a good of 
                      another Party, including the use of stickers, labels, 
                      tags or paint, that ensures that the marking is 
                      conspicuous, legible and sufficiently permanent; 
 
                 (b)  exempt from a country of origin marking requirement a 
                      good of another Party that 
 
                      (i)  is incapable of being marked, 
 
                      (ii) cannot be marked prior to exportation to the 
                           territory of another Party without causing 
                           injury to the goods, 
 
                      (iii)     cannot be marked except at a cost that is 
                                substantial in relation to its customs 
                                value so as to discourage its exportation 
                                to the territory of the Party, 
 
 
                                          3-58  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 311                                               
                   _________ 
 
 
                      (iv) cannot be marked without materially impairing 
                           its function or substantially detracting from 
                           its appearance, 
 
                      (v)  is in a container that is marked in a manner 
                           that will reasonably indicate the good's origin 
                           to the ultimate purchaser, 
 
                      (vi) is a crude substance, 
 
                      (vii)     is imported for use by the importer and is 
                                not intended for sale in the form in which 
                                it was imported, 
 
                      (viii)    is to undergo production in the territory 
                                of the importing Party by the importer, or 
                                on its behalf, in a manner that would 
                                result in the good becoming a good of the 
                                importing Party under the Marking Rules, 
 
                      (ix) by reason of its character, or the circumstances 
                           of its importation, the ultimate purchaser would 
                           reasonably know its country of origin even 
                           though it is not marked, 
 
                      (x)  was produced more than 20 years prior to its 
                           importation, 
 
                      (xi) was imported without the required marking and 
                           cannot be marked after its importation except at 
                           a cost that would be substantial in relation to 
                           its customs value, provided that the failure to 
                           mark the good before importation was not for the 
                           purpose of avoiding compliance with the 
                           requirement, 
 
                      (xii)     for purposes of temporary duty-free 
                                admission, is in transit or in bond or 
                                otherwise under customs administration 
                                control, 
 
                      (xiii)    is an original work of art, or 
 
                      (xiv)     is provided for in subheading 6904.10, or 
                                heading 8541 or 8542. 
 
            6.   Except for a good described in subparagraphs 5(b)(vi), 
            (vii), (viii), (ix), (x), (xii), (xiii) and (xiv), a Party may 
 
 
                                          3-59  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 311                                               
                   _________ 
 
 
            provide that, wherever a good is exempted under subparagraph 
            5(b), its outermost usual container shall be marked so as to 
            indicate the country of origin of the good it contains. 
 
            7.   Each Party shall provide that: 
 
                 (a)  a usual container imported empty, whether or not 
                      disposable, shall not be required to be marked with 
                      its own country of origin, but the container in which 
                      it is imported may be required to be marked with the 
                      country of origin of its contents; and 
 
                 (b)  a usual container imported filled, whether or not 
                      disposable, 
 
                      (i)  shall not be required to be marked with its own 
                           country of origin, but 
 
                      (ii) may be required to be marked with the country of 
                           origin of its contents, unless the contents are 
                           marked with their country of origin and the 
                           container can be readily opened for inspection 
                           of the contents, or the marking of the contents 
                           is clearly visible through the container. 
 
            8.   Each Party shall, wherever administratively practicable, 
            permit an importer to mark a good of a Party subsequent to 
            importation but prior to release of the good from customs 
            control or custody, unless there have been repeated violations 
            of the country of origin marking requirements of the Party by 
            the same importer and that importer has been previously 
            notified in writing that such good is required to be marked 
            prior to importation. 
 
            9.   Each Party shall provide that, except with respect to 
            importers that have been notified under paragraph 8, no special 
            duty or penalty shall be imposed for failure to comply with 
            country of origin marking requirements of that Party, unless 
            the good is removed from customs custody or control without 
            being properly marked, or a deceptive marking has been used. 
 
            10.  The Parties shall cooperate and consult on matters related 
            to this Annex, including additional exemptions from a country 
            of origin marking requirement, in accordance with Article 513 
            (Customs Procedures - Working Group and Customs Subgroup). 
 
            11.  For purposes of this Annex: 
 
 
 
                                          3-60  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 311                                               
                   _________ 
 
 
            conspicuous means capable of being easily seen with normal 
            handling of the good or container; 
 
            customs value means the value of a good for purposes of levying 
            duties of customs on an imported good; 
 
            legible means capable of being easily read; 
 
            sufficiently permanent means capable of remaining in place 
            until the good reaches the ultimate purchaser, unless 
            deliberately removed; 
 
            the form in which it was imported means the condition of the 
            good before it has undergone one of the changes in tariff 
            classification described in the Marking Rules; 
 
            ultimate purchaser means the last person in the territory of an 
            importing Party that purchases the good in the form in which it 
            was imported; such purchaser need not be the last person that 
            will use the good; and 
 
            usual container means the container in which a good will 
            ordinarily reach its ultimate purchaser. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-61  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 312.2                                              
                  ___________ 
 
 
                                      Annex 312.2 
 
                               Wine and Distilled Spirits 
 
 
                        Section A - Canada and the United States 
 
                 As between Canada and the United States, any measure 
            related to the internal sale and distribution of wine and 
            distilled spirits, other than a measure covered by Article 
            312(1) or 313, shall be governed under this Agreement 
            exclusively in accordance with the relevant provisions of the 
            Canada - United States Free Trade Agreement, which for this 
            purpose are hereby incorporated into and made a part of this 
            Agreement. 
 
 
                             Section B - Canada and Mexico 
 
            As between Canada and Mexico: 
 
            1.   Except as provided in paragraphs 3 through 6, in respect 
            of any measure related to the internal sale and distribution of 
            wine and distilled spirits, Article 301 shall not apply to: 
 
                 (a)  a non-conforming provision of any existing measure; 
 
                 (b)  the continuation or prompt renewal of a non- 
                      conforming provision of any existing measure; or 
 
                 (c)  an amendment to a non-conforming provision of any 
                      existing measure to the extent that the amendment 
                      does not decrease its conformity with Article 301. 
 
            2.   The Party asserting that paragraph 1 applies to one of its 
            measures shall have the burden of establishing the validity of 
            such assertion.  
 
            3.   (a)  Any measure related to the listing of wine and 
                      distilled spirits of the other Party shall: 
 
                      (i)  conform with Article 301, 
 
                      (ii) be transparent, non-discriminatory and provide 
                           for prompt decision on any listing application, 
                           prompt written notification of such decision to 
                           the applicant and, in the case of a negative 
 
 
 
                                          3-62  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 312.2                                              
                  ___________ 
 
 
                           decision, provide for a statement of the reason 
                           for refusal, 
 
                      (iii)     establish administrative appeal procedures 
                                for listing decisions that provide for 
                                prompt, fair and objective rulings, 
 
                      (iv) be based on normal commercial considerations, 
 
                      (v)  not create disguised barriers to trade, and 
 
                      (vi) be published and made generally available to 
                           persons of the other Party. 
 
                 (b)  Notwithstanding paragraph 3(a) and Article 301, and 
                      provided that listing measures of British Columbia 
                      otherwise conform with paragraph 3(a) and Article 
                      301, automatic listing measures in the province of 
                      British Columbia may be maintained provided they 
                      apply only to existing estate wineries producing less 
                      than 30,000 gallons of wine annually and meeting the 
                      existing content rule. 
 
            4.   (a)  Where the distributor is a public entity, the entity 
                      may charge the actual cost-of-service differential 
                      between wine or distilled spirits of the other Party 
                      and domestic wine or distilled spirits.  Any such 
                      differential shall not exceed the actual amount by 
                      which the audited cost of service for the wine or 
                      distilled spirits of the exporting Party exceeds the 
                      audited cost of service for the wine or distilled 
                      spirits of the importing Party. 
 
                 (b)  Notwithstanding Article 301, Article I (Definitions) 
                      except for the definition of "distilled spirits", 
                      Article IV.3 (Wine), and Annexes A, B, and C, of the 
                      Agreement between Canada and the European Economic 
                      Community concerning Trade and Commerce in Alcoholic 
                      Beverages, dated February 28, 1989, shall apply with 
                      such changes as the circumstances may require. 
 
                 (c)  All discriminatory mark-ups on distilled spirits 
                      shall be eliminated immediately on the date of entry 
                      into force of this Agreement.  Cost-of-service 
                      differential mark-ups as described in subparagraph 
                      (a) shall be permitted. 
 
 
 
 
                                          3-63  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                Annex 312.2                                              
                  ___________ 
 
 
                 (d)  Any other discriminatory pricing measure shall be 
                      eliminated on the date of entry into force of this 
                      Agreement. 
 
            5.   (a)  Any measure related to distribution of wine or 
                      distilled spirits of the other Party shall conform 
                      with Article 301. 
 
                 (b)  Notwithstanding subparagraph (a), and provided that 
                      distribution measures otherwise ensure conformity 
                      with Article 301, a Party may 
 
                      (i)  maintain or introduce a measure limiting on- 
                           premise sales by a winery or distillery to those 
                           wines or distilled spirits produced on its 
                           premises, and 
 
                      (ii) maintain a measure requiring existing private 
                           wine store outlets in the provinces of Ontario 
                           and British Columbia to discriminate in favor of 
                           wine of those provinces to a degree no greater 
                           than the discrimination required by such 
                           existing measure. 
 
                 (c)  Nothing in this Agreement shall prohibit the Province 
                      of Quebec from requiring that any wine sold in 
                      grocery stores in Quebec be bottled in Quebec, 
                      provided that alternative outlets are provided in 
                      Quebec for the sale of wine of the other Party, 
                      whether or not such wine is bottled in Quebec. 
 
            6.   Unless otherwise specifically provided in this Annex, the 
            Parties retain their rights and obligations under the GATT and 
            agreements negotiated under the GATT. 
 
            7.   For purposes of this Annex: 
 
            wine includes wine and wine-containing beverages. 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-64  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 313                                               
                   _________ 
 
 
                                       Annex 313 
 
                                  Distinctive Products 
 
 
            1.   Canada and Mexico shall recognize Bourbon Whiskey and 
            Tennessee Whiskey, which is a straight Bourbon Whiskey 
            authorized to be produced only in the State of Tennessee, as 
            distinctive products of the United States.  Accordingly, Canada 
            and Mexico shall not permit the sale of any product as Bourbon 
            Whiskey or Tennessee Whiskey, unless it has been manufactured 
            in the United States in accordance with the laws and 
            regulations of the United States governing the manufacture of 
            Bourbon Whiskey and Tennessee Whiskey. 
 
            2.   Mexico and the United States shall recognize Canadian 
            Whisky as a distinctive product of Canada.  Accordingly, Mexico 
            and the United States shall not permit the sale of any product 
            as Canadian Whisky, unless it has been manufactured in Canada 
            in accordance with the laws and regulations of Canada governing 
            the manufacture of Canadian Whisky for consumption in Canada. 
 
            3.   Canada and the United States shall recognize Tequila and 
            Mezcal as distinctive products of Mexico.  Accordingly, Canada 
            and the United States shall not permit the sale of any product 
            as Tequila or Mezcal, unless it has been manufactured in Mexico 
            in accordance with the laws and regulations of Mexico governing 
            the manufacture of Tequila and Mezcal.  This provision shall 
            apply to Mezcal, either on the date of entry into force of this 
            Agreement, or 90 days after the date when the official standard 
            for this product is made obligatory by the Government of 
            Mexico, whichever is later. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-65  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 314                                               
                   _________ 
 
 
                                       Annex 314 
 
                                      Export Taxes 
 
 
                                         Mexico 
 
            1.   Mexico may adopt or maintain a duty, tax or other charge 
            on the export of those basic foodstuffs set out in paragraph 4, 
            on their ingredients or on the goods from which such foodstuffs 
            are derived, if such duty, tax or other charge is adopted or 
            maintained on the export of such goods to the territory of all 
            other Parties, and is used: 
 
                 (a)  to limit to domestic consumers the benefits of a 
                      domestic food assistance program with respect to such 
                      foodstuff; or 
 
                 (b)  to ensure the availability of sufficient quantities 
                      of such foodstuff to domestic consumers or of 
                      sufficient quantities of its ingredients, or of the 
                      goods from which such foodstuffs are derived, to a 
                      domestic processing industry, when the domestic price 
                      of such foodstuff is held below the world price as 
                      part of a governmental stabilization plan, provided 
                      that such duty, tax, or other charge 
 
                      (i)  does not operate to increase the protection 
                           afforded to such domestic industry, and 
 
                      (ii) is maintained only for such period of time as is 
                           necessary to maintain the integrity of the 
                           stabilization plan. 
 
            2.   Notwithstanding paragraph 1, Mexico may adopt or maintain 
            a duty, tax or other charge on the export of any foodstuff to 
            the territory of another Party if such duty, tax or other 
            charge is temporarily applied to relieve critical shortages of 
            that foodstuff.  For purposes of this paragraph, "temporarily" 
            means up to one year, or such longer period as the Parties may 
            agree. 
 
            3.   Mexico may maintain its existing tax on the export of 
            goods provided for under tariff item 4001.30.02 of the Tariff 
            Schedule of the General Export Duty Act ("Tarifa de la Ley del 
            Impuesto General de Exportaci n") for up to 10 years after the 
            date of entry into force of this Agreement. 
 
 
 
                                          3-66  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 314                                               
                   _________ 
 
 
            4.   For purposes of paragraph 1, "basic foodstuffs" means: 
 
 
            Beans 
            Beef steak or pulp                 Ground beef 
            Beef liver                         Instant coffee 
            Beef remnants and bones            Low-priced cookies ("galletas 
            ("retazo con hueso")               dulces populares") 
            Beer                               Margarine 
            Bread                              Oat flakes 
            Brown sugar                        Pasteurized milk 
            Canned sardines                    Powdered chocolate 
            Canned tuna                        Powdered milk for children 
            Canned peppers                     Powdered milk 
            Chicken broth                      Rice 
            Condensed milk                     Roasted coffee 
            Cooked ham                         Salt 
            Corn tortillas                     Soft drinks 
            Corn flour                         Soup paste 
            Corn dough                         Tomato puree 
            Crackers                           Vegetable oil 
            Eggs                               Vegetable fat 
            Evaporated milk                    Wheat flour 
            French rolls ("pan blanco")        White sugar 
            Gelatine 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-67  
 
 
 
 
 
 
  
 
 
 
 
 
                                                                  Annex 315                                               
                   _________ 
 
 
                                       Annex 315 
 
                                 Other Export Measures 
 
 
                 Article 315 shall not apply as between Mexico and the 
                 other Parties. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                          3-68  
 
 
 
 
 
 
