Canada-Israel Free Trade Agreement

CHAPTER FIVE
CUSTOMS PROCEDURES

Section A – Certification of Origin

Article 5.1: Certificate of Origin

1. The Parties shall establish a Certificate of Origin for the purpose of certifying that a good being exported from the territory of a Party into the territory of the other Party qualifies as an originating good, and may thereafter revise the Certificate by mutual consent.

2. Each Party may require that a Certificate of Origin for a good imported into its territory be completed at the option of the exporter in an official language of either Party.

3. Each Party shall:

• (a) require that, for a Certificate of Origin to be considered valid by the Party into whose territory a good is imported with respect to which a claim for preferential tariff treatment is made, the Certificate of Origin be completed and signed by the exporter of that good in the territory of the Party from which the good is exported; and
• (b) provide that, where an exporter in its territory is not the producer of the good, the exporter may complete and sign a Certificate of Origin on the basis of:
  • (i) its knowledge of whether the good qualifies as an originating good, or
  • (ii) its reasonable reliance on the producer’s written representation that the good qualifies as an originating good.

4. Each Party shall provide that a Certificate of Origin that has been completed and signed by an exporter in the territory of the other Party may, at the option of that exporter, be applicable to:

• (a) a single importation of a good into the Party’s territory; or
• (b) multiple importations of identical goods into the Party’s territory that occur within a specified period, not exceeding 12 months, set out therein by the exporter.

Article 5.2: Obligations Regarding Importations

1. Except as otherwise provided in this Chapter, each Party shall require an importer in its territory that claims preferential tariff treatment for a good imported into its territory from the territory of the other Party to:

• (a) make a written declaration, based on a valid Certificate of Origin, that the good qualifies as an originating good;
• (b) have the Certificate of Origin in its possession at the time the declaration is made;
• (c) provide, at the request of that Party’s customs administration:
  • (i) a copy of the Certificate of Origin,
  • (ii) documentary evidence such as bills of lading or waybills that indicate the shipping route and all points of shipment and transhipment prior to the importation of the good into its territory, and
  • (iii) when the good is shipped through or transhipped in the territory of a non-Party referred to in Article 3.12.1(b) (Direct Shipment and Shipment Through a Non-Party), a copy of the customs control documents that indicate, to the satisfaction of the customs administration, that the good remained under customs control while in the territory of  that non-Party; and
• (d) promptly make a corrected declaration and pay any duties owing where the importer has reason to believe that a Certificate of Origin on which a declaration was based contains information that is not correct.

2. Each Party shall provide that, where an importer in its territory claims preferential tariff treatment for a good imported into its territory from the territory of the other Party, the Party may deny preferential tariff treatment to the good if the importer fails to comply with any requirement under this Chapter.

3. Each Party shall provide that, where a good would have qualified as an originating good when it was imported into the territory of that Party but the importer of the good did not have a valid Certificate of Origin for the good at the time of its importation, the importer of the good may, within a period of not less than three months after the date on which the good was imported, apply for a refund of any excess duties paid as the result of the good not having been accorded preferential tariff treatment, provided that the importer:

• (a) if required by that Party, declared at the time of importation of the good that the good would qualify as an originating good; and
• (b) presents:
  • (i) a written declaration that the good qualified as an originating good at the time of importation,
  • (ii) a copy of the Certificate of Origin, and
  • (iii) any other documentation relating to the importation of the good as that Party may require.

Article 5.3: Obligations Regarding Exportations

1. Each Party shall provide that:

• (a) at the request of its customs administration, an exporter in its territory shall provide a copy of the Certificate of Origin to that customs administration; and
• (b) an exporter in its territory that has completed and signed a Certificate of Origin, and that has reason to believe that the Certificate of Origin contains information that is not correct, must promptly notify in writing all persons to whom the Certificate of Origin was given by the exporter of any change that could affect the accuracy or validity of the Certificate of Origin.

2. Each Party:

• (a) shall provide that a false certification by an exporter in its territory that a good to be exported to the territory of the other Party qualifies as an originating good shall have the same legal consequences, with appropriate modifications, as would apply to an importer in its territory for a contravention of its customs laws regarding the making of a false statement or representation; and
• (b) may apply measures warranted by the circumstances if an exporter in its territory fails to comply with any requirement of this Chapter.

Article 5.4: Exceptions

Each Party shall provide that a Certificate of Origin shall not be required for:

• (a) a commercial importation of a good whose value does not exceed Can$1,600 or its equivalent amount in New Israeli Shekels (NIS) or such higher amount as it may establish, except that it may require that the invoice accompanying the importation include a statement by the exporter of the good certifying that the good qualifies as an originating good; or
• (b) an importation of a good for which the Party into whose territory the good is imported has waived the requirement for a Certificate of Origin;

provided that the importation does not form part of a series of importations that may reasonably be considered to have been undertaken or arranged for the purpose of avoiding the certification requirements of this Chapter.

Section B – Administration and Enforcement

Article 5.5: Records

Each Party shall provide that:

• (a) an exporter in its territory that completes and signs a Certificate of Origin must maintain in its territory, for five years after the date on which the Certificate of Origin was signed or for a longer period the Party may specify, all records relating to the origin of a good for which preferential tariff treatment was claimed in the territory of the other Party, including records associated with:
  • (i) the purchase of, cost of, value of, and payment for, the good that is exported from its territory,
  • (ii) the sourcing of, purchase of, cost of, value of, and payment for, materials, including neutral elements, used in the production of the good that is exported from its territory, and
  • (iii) the production of the good in the form in which the good is exported from its territory; and
• (b) an importer claiming preferential tariff treatment for a good imported into the Party’s territory must maintain in that territory, for five years after the date of importation of the good or for a longer period the Party may specify, any documentation, including a copy of the Certificate of Origin, the Party may require relating to the importation of the good.

Article 5.6: Origin Verifications

1. For the purposes of determining whether a good imported into its territory from the territory of the other Party qualifies as an originating good, a Party may, through its customs administration, conduct a verification of origin, subject to paragraph 2, by means of:

• (a) written questionnaires to an exporter or a producer in the territory of the other Party for the purposes of obtaining the information on the basis of which a Certificate of Origin referred to in Article 5.1 was completed and signed;
• (b) visits to the premises of an exporter or a producer in the territory of the other Party for the purposes of reviewing the records referred to in Article 5.5 and to observe the facilities used in the production of the good; or
• (c) other procedures as the Parties may decide.

2. Notwithstanding any other treaties, agreements or memorandums of understanding between the Parties as contemplated under Article 5.11.3, if, pursuant to paragraph 10, a Party notifies the other Party that the origin verification referred to in paragraph 1 is required to be conducted by its customs administration on behalf of the other Party, such verification shall be conducted, subject to the procedures, conditions and time frames set out in Annex 5.6, in accordance with the verification standards and framework established under Article 5.11.

3. Prior to conducting a verification visit referred to in subparagraph 1(b), the customs administration of the Party proposing to conduct the visit or, if the circumstances contemplated under paragraph 2 exist, the customs administration of the Party acting on behalf of the other Party, as the case may be, shall deliver a written notification of the intention to conduct a visit at least 30 days in advance of the  date of the proposed visit to the exporter or producer whose premises are to be visited and obtain the written consent of that exporter or producer to such visit.

4. The notification referred to in paragraph 3 must include:

• (a) the identity of the customs administration issuing the notification and, where the circumstances referred to under paragraph 2 exist, the identity of the customs administration on whose behalf the notification is being sent;
• (b) the name of the exporter or producer whose premises are to be visited;
• (c) the date and place of the proposed verification visit;
• (d) the object and scope of the proposed verification visit, including specific reference to the good that is the subject of the verification;
• (e) the names and titles of the officials performing the verification visit; and
• (f) the legal authority for the verification visit.

5. If an origin verification referred to under paragraph 1 is to be conducted by the customs administration of the Party into whose territory a good was imported, the customs administration of that Party shall:

• (a) in the case of a written questionnaire, deliver a copy of the questionnaire; or
• (b) in the case of a verification visit, not less than 30 days prior to conducting the visit, deliver a copy of the written notification referred to in paragraph 3;

to the customs administration of the Party from whose territory the good was exported.

6. If an exporter or producer does not respond to a written questionnaire or does not give its written consent to a proposed verification visit within 30 days of delivery to the exporter or producer of the questionnaire or of the notification referred to in paragraph 3, as the case may be, or fails to provide sufficient information in response to a questionnaire or denies access to the records referred to in Article 5.5 during the conduct of a visit, the Party into whose territory the good was imported may deny preferential tariff treatment to the good that was the subject of the origin verification.

7. Each Party shall provide that, if its customs administration receives notification, pursuant  to paragraph 5, from the customs administration of the other Party or is contacted to conduct a verification visit on behalf of that other Party, pursuant to Annex 5.6, it may, within 15 days of receipt of the notification or from the date of contact, as the case may be, postpone the proposed verification visit for a period not exceeding 60 days from the date of such receipt or contact, or for such longer period as the Parties may agree.

8. Each Party shall provide that, if its customs administration conducts a verification visit pursuant to subparagraph 1(b) or if a verification visit is required to be conducted on its behalf by the customs administration of the Party from whose territory the goods were exported pursuant to paragraph 2, the exporter or producer whose goods are the subject of the verification visit may designate two observers to be present during the visit, provided that:

• (a) the observers do not participate in a manner other than as observers; and
• (b) the failure by the exporter or producer to designate observers does not result in the postponement of the verification visit.

9. The customs administration of the Party into whose territory the good is imported, regardless of the manner in which, under either paragraph 1 or 2, a verification of origin is conducted, shall provide the exporter or producer whose good is the subject of the verification with a written determination of whether the good qualifies as an originating good, including the findings of fact and the legal basis on which the determination was made.

10. Each Party shall, before 1 January 1997, notify the other Party as to whether an origin verification referred to under paragraph 1 is required to be conducted in its territory by:

• (a) the customs administration of the other Party; or
• (b) its customs administration on behalf of that other Party.

11. Notwithstanding paragraph 10, either Party may, at any time after this Agreement enters into force, upon 60 days notice to the other Party, change the manner in which an origin verification is required to be conducted in its territory from subparagraph 10(a) to (b) or vice versa, as the case may be.

Article 5.7: Confidentiality

1. Each Party shall maintain, in accordance with its law, the confidentiality of confidential business information collected pursuant to this Chapter and shall protect that information from disclosure that could prejudice the competitive position of the persons providing the information.

2. The confidential business information collected by a Party pursuant to this Chapter may only be disclosed in accordance with the Agreement on Mutual Assistance in Customs Matters.

Article 5.8: Advance Rulings

1. Each Party shall, through its customs administration, provide for the issuance of written advance rulings, prior to the importation of a good into its territory, to an importer in its territory or an exporter or producer in the territory of the other Party, on the basis of the facts and circumstances presented by such importer, exporter or producer of the good, concerning whether the good qualifies as an originating good under the requirements of Chapter Three (Rules of Origin).

2. Each Party shall provide that its customs administration:

• (a) may, at any time during the course of an evaluation of an application for an advance ruling, request supplemental information from the person requesting the ruling; and
• (b) shall, after it has obtained all necessary information from the person requesting an advance ruling, issue the ruling within 120 days.

3. Subject to paragraph 4, each Party shall apply an advance ruling to importations into its territory of the good for which the ruling was requested, beginning on the date of its issuance or a later date that may be specified in the ruling.

4. The Party issuing an advance ruling may modify or revoke the ruling:

• (a) if the ruling is based on an error
  • (i) of fact, or
  • (ii) in the tariff classification of a good or a material that is the subject of the ruling;
• (b) if there is a change in the material facts or circumstances on which the ruling is based;
• (c) to conform with a modification of Chapter Three (Rules of Origin); or
• (d) to conform with a judicial decision or a change in its laws.

Article 5.9: Penalties

Each Party shall maintain measures imposing criminal, civil or administrative penalties for violations of its laws and regulations relating to this Chapter.

Section C – Review and Appeal of Origin Determinations

Article 5.10: Review and Appeal

1. Each Party shall grant substantially the same rights of review and appeal with respect to a decision relating to the origin of imported goods represented as meeting the requirements of Chapter Three (Rules of Origin) as are provided with respect to the tariff classification of imported goods.

2. Each Party shall provide that the rights of review and appeal referred to in paragraph 1 include access to:

• (a) at least one level of administrative review independent of the official or office responsible for the determination under review; and
• (b) in accordance with its laws, judicial or quasi-judicial review of the determination or decision taken at the final level of administrative review.

Section D – Cooperation

Article 5.11: Cooperation

1. In furtherance of their mutual interest in ensuring the effective administration of the certification process established under Articles 5.1 through 5.3, the Parties shall cooperate fully in the verification of origin certification and in the enforcement of their respective laws in accordance with this Agreement.

2. Pursuant to paragraph 1, the Parties shall:

• (a) cooperate in developing verification standards and a framework to ensure that both Parties act consistently in determining that goods imported into their respective territories meet the rules of origin set out in Chapter Three (Rules of Origin); and
• (b) exchange information to assist each other in the tariff classification, valuation and determination of origin, for tariff preference and country of origin marking purposes, of imported and exported goods.

3. In furtherance of their mutual interest in the prevention, investigation and repression of unlawful acts, the Parties shall cooperate fully in the enforcement of their respective customs laws in accordance with this Agreement and with other treaties, agreements and memorandums of understanding between them.

4. Each Party shall, to the extent allowed by its law with respect to the confidentiality of information, notify the other Party of any determination, measure or ruling, including, to the greatest extent practicable, any that is prospective in application, that:

• (a) establishes an administrative policy or principle that is likely to influence future determinations of origin; or
• (b) changes the scope of an existing administrative policy, principle, precedential decision, regulation or rule of general application regarding determinations of origin.

Article 5.12: Working Group on Rules of Origin and Other Customs-Related Market Access Issues

1. The Parties hereby establish a Working Group on Rules of Origin and Other Customs-Related Market Access Issues (“Working Group”), composed of representatives of each Party, to ensure the effective administration of Chapter Three (Rules of Origin) and this Chapter and any other customs-related provisions of this Agreement.

2. The Working Group shall meet at the request of either Party.

3. The Working Group shall:

• (a) monitor the administration by the Parties of Chapter Three (Rules of Origin) and this Chapter to ensure uniform interpretation;
• (b) endeavour to agree, at the request of either Party, on any proposed modification of or addition to Annex 2.3 (Requirements Concerning Verification of Repairs and Alterations), Chapter Three (Rules of Origin) or this Chapter;
• (c) propose to the Parties any modification of or addition to Chapter Three (Rules of Origin), this Chapter or any other provision of this Agreement as may be required to conform with any change to the Harmonized System;
• (d) endeavour to decide on:
  • (i) the uniform interpretation, application and administration of Chapter Three (Rules of Origin) and this Chapter,
  • (ii) tariff classification and valuation matters relating to determinations of origin,
  • (iii) revisions to the Certificate of Origin,
  • (iv) any other matter referred to it by either Party,
  • (v) any other customs-related matter arising under this Agreement; and
• (e) consider any proposed customs-related administrative and operational change that may affect the flow of trade between the Parties.

4. The Parties agree that Article 3.12.1(c) (Direct Shipment and Shipment Through a Non-Party) shall enter into effect only upon:

• (a) the decision by the Parties on the method of verification by a customs administration that a good has undergone no further production other than minor processing in the territory of a non-Party referred to in Article 3.12.1(c) (Direct Shipment and Shipment Through a Non-Party) or that any processing that occurs in the territory of that non-Party with respect to that good does not increase the transaction value of the good by greater than 10 percent, based on the principles of Article 5.6;
• (b) the establishment by the Parties of a Declaration of Minor Processing for the purpose of certifying that the good has undergone no further production other than minor processing in the territory of a non-Party referred to in Article 3.12.1(c) (Direct Shipment and Shipment Through a Non-Party) or that any processing that occurs in the territory of that non-Party with respect to that good does not increase the transaction value of the good by greater than 10 per cent; and
• (c) the establishment by the Parties of an obligation regarding the completion of the Declaration of Minor Processing and the obligations regarding importations, exportations and record-keeping with regard to a good that undergoes minor processing or any processing that does not increase the transaction value of the good by greater than 10 per cent referred to Article 3.12.1(c) (Direct Shipment and Shipment Through a Non-Party), based on the principles set out in Articles 5.1 through 5.5.

5. The Parties agree that Article 3.12.2 (Direct Shipment and Shipment Through a Non-Party) shall enter into effect only upon:

• (a) the decision by the Parties on the method of verification by a customs administration that a good has undergone more than minor processing in the territory of a non-Party referred to in Article 3.12.2 (Direct Shipment and Shipment Through a Non-Party), based on the principles of Article 5.6;
• (b) the establishment by the Parties of a Declaration of Major Processing for the purpose of certifying that the good has undergone more than minor processing in the territory of a non-Party referred to in Article 3.12.2 (Direct Shipment and Shipment Through a Non-Party); and
• (c) the establishment by the Parties of an obligation regarding the completion of the Declaration of Major Processing and the obligations regarding importations, exportations and record-keeping with regard to a good that undergoes more than minor processing referred to Article 3.12.2 (Direct Shipment and Shipment Through a Non-Party), based on the principles set out in Articles 5.1 through 5.5.

6. The Parties shall endeavour to reach a decision on the matters described in paragraph 4 before this Agreement enters into force.

7. If a Party considers that a rule of origin for a good requires modification on the basis that the good undergoes significant production in its territory, it shall submit a proposed modification along with supporting rationale and studies to the other Party for that other Party’s consideration.

Article 5.13: Definitions

For the purposes of this Chapter:

good means “good” as defined in Article 3.14 (Definitions);

identical goods means goods that are the same in all respects, including physical characteristics, quality and reputation, irrespective of minor differences in appearance that are not relevant to a determination of origin of those goods under Chapter Three (Rules of Origin);

material means “material” as defined in Article 3.14 (Definitions);

neutral elements has the same meaning as “neutral elements” in Article 3.8 (Neutral Elements);

producer means “producer” as defined in Article 3.14 (Definitions); and

production means “production” as defined in Article 3.14 (Definitions).

ANNEX 5.6
PROCEDURES REGARDING AN ORIGIN VERIFICATION CONDUCTED
BY THE CUSTOMS ADMINISTRATION OF A PARTY ON BEHALF
OF THE OTHER PARTY PURSUANT TO ARTICLE 5.6.2

1. If the circumstances contemplated under Article 5.6.2 exist, the customs administration of the Party into whose territory a good is imported shall initiate an origin verification by sending:

• (a) the written questionnaire; or
• (b) a letter requesting that a verification visit be conducted on its behalf,

to the office designated for that purpose by the customs administration of the Party from whose territory the good is exported.

2. On receipt of a written questionnaire or a letter referred to in paragraph 1, the customs administration of the Party from whose territory the good was exported shall:

• (a) in the case of a questionnaire, forward a true copy thereof to the exporter or producer whose good is subject to the origin verification for completion and signature within 30 days from the date of delivery to such exporter or producer; and
• (b) in the case of a letter, on the basis of information provided therein, prepare and send the notification referred to in Article 5.6.3 to the exporter or producer whose good is subject to the verification visit and obtain the written consent thereof within 30 days from the date of delivery of the notification to that exporter or producer.

3. The customs administration of the Party from whose territory the good was exported shall:

• (a) notify the customs administration of the Party that initiated the origin verification under paragraph 1 of the date on which the questionnaire or the written notification referred to under paragraph 2 was delivered to the exporter or producer whose good is the subject of the origin verification; and
• (b) upon the 30th day after the date referred to in subparagraph 3(a), either:
  • (i) forward the completed questionnaire or written consent, as the case may be, to the customs administration of the Party that initiated the origin verification under paragraph 1, or
  • (ii) advise the customs administration of that Party that the questionnaire or written consent, as the case may be, has not been received from the exporter or producer whose good is the subject of the origin verification.

4. If the exporter or producer of the good that is the subject of the verification consents to a verification visit as contemplated by Article 5.6.3, officials of the customs administration of the Party that initiated the verification under paragraph 1 may be present in the offices of the customs administration of the other Party for purposes of directing the manner in which the verification visit is to proceed.

5. The customs administration of the Party from whose territory a good is exported shall, in conducting an origin verification on behalf of the other Party pursuant to this Annex, assume all ordinary expenses associated with conducting the origin verification within its territory except travel and incidental expenses of officials travelling to the territory of that Party as contemplated under paragraph 4.

6. The customs administration of the Party from whose territory a good is exported shall, in conducting an origin verification on behalf of the other Party pursuant to this Annex, if requested by that other Party pursuant to the Agreement on Mutual Assistance in Customs Matters, certify or authenticate, in the manner required by that other Party, copies of any documents and records obtained during the course of conducting the origin verification.