Canada-Costa Rica Free Trade Agreement

Appendix III.1.5.1 - Flexibility Provisions

Adjustments to annual specific limits (SLs), may be made as follows:

The exporting Party may increase the SL for a calendar year by no more than six per cent ("swing").

In addition to any increase of its SL under subparagraph (a), the exporting Party may increase its unadjusted SL for that year by no more than 11 per cent by allocating to such SL for that calendar year (the "receiving year") an unused portion ("shortfall" ) of the corresponding SL for the previous calendar year ("carryover") or a portion of the corresponding SL for the following calendar year ("carryforward"), as follows:

• a. subject to subparagraph (iii), the exporting Party may utilize carryover, as available, up to 11 per cent of the unadjusted SL for the receiving year;
• b. the exporting Party may utilize carryforward charged against the corresponding SL for the following calendar year, up to six per cent of the unadjusted SL for the receiving year;
• c. the combination of the exporting Party's carryover and carryforward shall not exceed 11 per cent of the unadjusted SL in the receiving year; and
• d. carryover may be utilized only following confirmation by the importing Party that sufficient shortfall exists. If the importing Party does not consider that sufficient shortfall exists, it shall promptly provide data to the exporting Party to support that view. Where substantial statistical differences exist between the import and export data on which the shortfall is computed, the Parties shall seek to resolve these differences promptly.

Appendix III.1.6.1 - Special Provisions

Preferential Tariff Treatment for Non-Originating Goods of the Other Party

Apparel

Each Party shall apply the rate of duty applicable to originating goods set out in its Schedule to Annex III.3.1 (Tariff Elimination), up to the annual quantities specified in Schedule 6.B.1, in SME, to apparel goods provided for in Chapters 61 and 62 that are both cut (or knit to shape) and sewn or otherwise assembled in the territory of a Party from fabric or yarn produced or obtained outside the free trade area, and that meet other applicable conditions for preferred tariff treatment under this Agreement. The SME shall be determined in accordance with the conversion factors set out in Appendix III.1.6.2.

The annual tariff preference levels (TPLs) set out in Schedule 6.B.1 shall be increased annually by two per cent for three consecutive years beginning one year after the entry into force of this Agreement.

Fabric and Made-Up Goods

Each Party shall apply the rate of duty applicable to originating goods set out in its Schedule to Annex III.3.1 (Tariff Elimination), up to the annual quantities specified in Schedule 6.B.2, in SME, to cotton or man-made fibre fabric and cotton or man-made fibre made-up textile goods provided for in Chapters 52 through 55 (excluding goods containing 36% or more by weight of wool or fine animal hair), 58 through 60and 63 that are woven or knit in a Party from yarn produced or obtained outside the free trade area, or knit in a Party from yarn spun in a Party from fibre produced or obtained outside the free trade area, and to goods of subheading 9404.90 that are finished and cut and sewn or otherwise assembled from fabrics of subheadings 5208.11 through 5208.29, 5209.11 through 5209.29, 5210.11 through 5210.29, 5211.11 through 5211.29, 5212.11, 5212.12, 5212.21, 5212.22, 5407.41, 5407.51, 5407.71, 5407.81, 5407.91, 5408.21, 5408.31, 5512.11, 5512.21, 5512.91, 5513.11 through 5513.19, 5514.11 through 5514.19, 5516.11, 5516.21, 5516.31, 5516.41 or 5516.91 produced or obtained outside the free trade area, and that meet other applicable conditions for preferred tariff treatment under this Agreement. The SME shall be determined in accordance with the conversion factors set out in Appendix III.3.1.6.2.

Each Party shall apply the rate of duty applicable to originating goods set out in its Schedule to Annex III.3.1 (Tariff Elimination), up to the annual quantities specified in Schedule 6.B.2, in SME, to wool fabric and wool made-up textile goods provided for in Chapters 51 through 55 (containing 36% or more by weight of wool or fine animal hair), 58, 60, and 63 that are woven or knit in a Party from yarn produced or obtained outside the free trade area, or knit in a Party from yarn spun in a Party from fibre produced or obtained outside the free trade area, and that meet other applicable conditions for preferred tariff treatment under this Agreement. The SME shall be determined in accordance with the conversion factors set out in Appendix III.1.6.2.

Spun Yarn

Each Party shall apply the rate of duty applicable to originating goods set out in its Schedule to Annex III.3.1 (Tariff Elimination), up to the annual quantities specified in Schedule 6.B.3, in kilograms (kg), to cotton or man-made fibre yarns provided for in headings 52.05 through 52.07 or 55.09 through 55.11 that are spun in a Party from fibre of headings 52.01 through 52.03 or 55.01 through 55.07, produced or obtained outside the free trade area and that meet other applicable conditions for preferred tariff treatment under this Agreement.

Textile or apparel goods that enter the territory of a Party under paragraph 1, 2 or 3 shall not be considered to be originating goods.

Certification and Verification Requirements

In order that goods may be traded under the TPL regime, prior to the entry into force of this Agreement, the Parties shall:

Agree on and establish the documentation or certification requirements for the importation of the goods for which the benefit of TPL will be claimed; and

Notify each other of the method of verification, by the administration of the Party from which the goods are exported, of the eligibility of the goods for TPL status.

Review and Consultations

Trade in the goods referred to in paragraphs 1, 2 and 3 shall be monitored by the Parties on request of any Party wishing to adjust any annual TPL, based on the ability to obtain supplies of particular fibres, yarns and fabrics, as appropriate, that can be used to produce originating goods. The Parties shall consult with a view to adjusting such level. Any adjustment in the TPL requires the mutual consent of the Parties.

The Parties shall review the rules of origin applicable to textiles and apparel goods, within four years of the date of entry into force of this Agreement to take into account the effect of increasing global competition on textile and apparel goods and the implications of any integration of these goods into the WTO. In this review, the Parties will take into account changed circumstances such as technological advances, changes in market conditions and developments with respect to international trade in textiles and apparel.

Schedule 6.B.1 - Preferential Tariff Treatment for Non-Originating Apparel

Imports into Canada from Costa Rica

1,300,000 SME

Imports into Costa Rica from Canada

1,300,000 SME

Schedule 6.B.2 - Preferential Tariff Treatment for Non-Originating Fabrics and Made-Up Goods

Imports into Canada from Costa Rica

• 1. Cotton or man made fibre fabrics and made up goods: 1,000,000 SME
• 2. Wool fabrics and made up goods: 250,000 SME

Imports into Costa Rica from Canada

• 1. Cotton or man made fibre fabrics and made up goods: 1,000,000 SME
• 2. Wool fabrics and made up goods: 250,000 SME

Schedule 6.B.3 - Preferential Tariff Treatment for Non-Originating Cotton or Man-made Fibre Spun Yarn

Imports into Canada from Costa Rica

150,000 kg

Imports into Costa Rica from Canada

150,000 kg

Appendix III.1.6.2 - Conversion Factors^{Footnote 1}

This Schedule applies to restrictions and consultation levels applied pursuant to Sections 4 and 5 and Appendix III.1.6.1.

Unless otherwise provided in this Annex, or as may be mutually agreed between the Parties with respect to trade between them, the rates of conversion into SME set out in paragraphs 3 through 6 shall apply.

The following conversion factors shall apply to the goods covered by the following U.S. categories:

The following conversion factors shall apply to the following goods not covered by a U.S. category:

The primary unit of measure for the following tariff items in U.S. category 666 shall be NO and shall be converted into SME by a factor of 5.5:

• 6301.10.0000: electric blankets
• 6301.40.0010: blankets (not electric) & travel rugs of synthetic fibre, woven
• 6301.40.0020: blankets (not electric) & travel rugs of synthetic fibre, nes
• 6301.90.0010: blankets and travelling rugs of artificial fibre
• 6302.10.0020: bed linen, knitted or crocheted fabric, excluding cotton
• 6302.22.1030: sheets with trim, napped, printed, manmade fibre
• 6302.22.1040: sheets with trim, not napped, printed, manmade fibre
• 6302.22.1050: bolster cases with trim, printed, manmade fibre
• 6302.22.1060: bed linen with trim, printed, manmade fibre, nes
• 6302.22.2020: sheets, not trimmed, printed, manmade fibre
• 6302.22.2030: bed linen, not trimmed, printed, manmade fibre, nes
• 6302.32.1030: sheets with trim, napped, manmade fibre
• 6302.32.1040: sheets with trim, not napped, manmade fibre
• 6302.32.1050: bolster cases with trim, manmade fibre
• 6302.32.1060: bed linen with trim, manmade fibre, nes
• 6302.32.2030: sheets, not trimmed, napped, manmade fibre
• 6302.32.2040: sheets not trimmed, not napped, manmade fibre
• 6302.32.2050: bolster cases, not trimmed, manmade fibre
• 6302.32.2060: bed linen nes, manmade fibre
• 6304.11.2000: bedspreads, knit/crocheted, manmade fibre
• 6304.19.1500: bedspreads with trim, manmade fibre, nes
• 6304.19.2000: bedspreads, manmade fibre, nes

The primary unit of measure for the following tariff items in u.s. category 666 shall be no and shall be converted into sme by a factor of 0.9:

• 6302.22.1010: pillowcases with trim, printed, napped, manmade fibre
• 6302.22.1020: pillowcases with trim, printed, not napped, manmade fibre
• 6302.22.2010: pillowcases, not trimmed, printed, manmade fibre
• 302.32.1010: pillowcases with trim, napped, manmade fibre
• 6302.32.1020: pillowcases with trim, not napped, manmade fibre
• 6302.32.2010: pillowcases, not trimmed, napped, manmade fibre
• 6302.32.2020: pillowcases not trimmed, not napped, manmade fibre

The primary unit of measure for garment parts of subheadings 6117.90 and 6217.90 shall be KG and shall be converted into SME by applying the following factors:

• Cotton apparel: 8.50
• Wool apparel: 3.70
• Man-made fibre apparel: 14.40
• Other non-cotton vegetable fibre apparel: 12.50

For the purposes of this Schedule:

• DPR means dozen pair;
• DZ means dozen;
• KG means kilogram;
• NO means number; and
• SM means square metre.

Appendix III.1.7 - Country-Specific Definitions

Definitions Specific to Canada

General import statisticsmeans statistics issued by Statistics Canada or, where available, import permit data provided by the Export and Import Permits Bureau of the Department of Foreign Affairs and International Trade, or their successors.

Definitions Specific to Costa Rica

General import statistics means statistics issued by the Instituto Nacional de Estadísticas y Censos (INEC) or its successor.

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