( ) Page: 1/79 FACTUAL PRESENTATION

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1 19 January 2015 ( ) Page: 1/79 Committee on Regional Trade Agreements FACTUAL PRESENTATION TRADE AGREEMENT BETWEEN THE EUROPEAN UNION AND ITS MEMBER STATES, OF THE ONE PART AND COLOMBIA AND PERU, OF THE OTHER (GOODS AND SERVICES) Report by the Secretariat This report, prepared for the consideration of the Trade Agreement between the European Union and its Member States, of the one Part and Colombia and Peru of the other, has been drawn up by the WTO Secretariat on its own responsibility and in full consultation with the Parties. The factual presentation reproduces as closely as possible the terminology used in the Agreement and in the comments provided and does not imply official endorsement or acceptance by the Secretariat of such terminology. The report has been drawn up in accordance with the rules and procedures contained in the Decision for a Transparency Mechanism for Regional Trade Agreements (WT/L/671) and thus does not imply any value judgement by the Secretariat regarding the contents of the Agreement. Any technical questions arising from this report may be addressed to Mr Jean-Daniel Rey (tel: ). Any statistical questions arising from this report may be addressed to Ms Rowena Cabos ( ) or to Ms Alejandra Barajas Barbosa ( ).

2 - 2 - TABLE OF CONTENTS Page 1 TRADE ENVIRONMENT Merchandise trade Trade in services and investment CHARACTERISTIC ELEMENTS OF THE AGREEMENT Background Information Structure of the Agreement PROVISIONS ON TRADE IN GOODS Import duties and charges, and quantitative restrictions General provisions Liberalization of trade and tariff lines Liberalization schedules European Union Colombia Peru Tariff rate quotas Rules of origin Export duties and charges, and quantitative restrictions Regulatory provisions on trade in goods Standards Sanitary and phytosanitary measures (SPS) Technical barriers to trade (TBT) Safeguard mechanisms Global safeguards Bilateral safeguards Special safeguards on agricultural products Safeguard measures related to balance of payment (BOP) difficulties Anti-dumping and countervailing measures Subsidies and State-aid Customs-related procedures Other regulations State Trading Enterprises Sector-specific provisions on trade in goods Agricultural goods PROVISIONS ON TRADE IN SERVICES Scope and definitions Denial of benefits General provisions on trade in services National treatment and MFN... 30

3 Market access Commercial presence Performance requirements Movement of natural persons Liberalization commitments The European Union Sector specific commitments Colombia Sector specific commitments Peru Sector specific commitments Regulatory provisions Domestic regulation Recognition Subsidies Safeguards Other Investment Monopolies and exclusive service suppliers Transfers and payments Transparency Sector specific provisions on trade in services Computer services Postal and courier services Telecommunications services Financial services International maritime transport services Electronic commerce GENERAL PROVISIONS OF THE AGREEMENT Transparency Current payments and capital movements Exceptions General exceptions Security exceptions Taxation Accession and Withdrawal Government procurement Intellectual property rights Others Environment and labour... 51

4 Competition policy Technical assistance and trade-capacity building Dispute settlement Institutional framework Relationship with other agreements concluded by the Parties ANNEX ANNEX ANNEX

5 - 5 - Key Facts Parties to the Agreement: European Union and its Member States, Colombia and Peru Date of Signature: 26 June 2012 Date of Entry into Force: EU - Peru: 1 March 2013 EU - Colombia: 1 August 2013 Date of Notification: EU Peru; 26 February 2013 Full implementation: EU Colombia: 29 November 2013 Goods EU - Peru: 1 March 2030 EU - Colombia: 1 August 2028 Services EU - Peru: 1 March 2013 EU - Colombia: 1 August TRADE ENVIRONMENT The Trade Agreement between the European Union and its Member States (hereinafter the EU), on the one part and Colombia and Peru, of the other, (hereinafter referred to as the Agreement) is the EU's 33 rd, Colombia's 10 th and Peru's 17 th regional trade agreement (RTA) In 2012, with a population of 504 million, the EU's GDP was estimated at US$16,604 billion, while that of Colombia, with a population of 47.7 million, and of Peru, with a population of 30 million, and was estimated respectively at US$370 billion and US$197 billion. The EU mainly traded manufactured products (representing 79% of the EU's exports and 54% of imports). Colombia and Peru mainly exported fuels and mining products (representing 67% of Colombia's exports and 50% of Peru's exports), and mainly imported manufactured products (76% of Colombia's imports, and 73% of Peru's imports). Averaged over the period , the Parties' trade (goods and services) to GDP ratio was 33.8 for the EU, 35.1 for Colombia and 50.5 for Peru. 1.1 Merchandise trade 1.3. In 2012, the EU's shares in total world exports and imports were 14.7% and 15.4% respectively, while those for Colombia were 0.33% for exports and 0.32% for imports and 0.25% for exports and 0.23% for imports for Peru. With total merchandise exports of US$2,167 billion and imports of US$2,301 billion, the EU was the world largest global exporter and second largest importer, while Colombia ranked 39 th largest exporter and 32 nd largest importer (with exports of US$60.3 billion and imports of US$59 billion), and Peru ranked 43 rd largest exporter and 41 st largest importer (with exports of US$45.6 billion and imports of US$42.5 billion) In 2012, the EU was Colombia and Peru's 3 rd largest source of imports 3, and Colombia's 2 nd and Peru's 1 st largest destination for exports 4. Colombia was the EU's 42 nd largest source of 1 Source for this section: WTO Trade Profiles 2013 (2012 data). Export figures are calculated f.o.b. and import figures are calculated c.i.f. Ranking in world trade excluding intra-eu trade. For bilateral trade, the figures are based on UNSD Comtrade. 2 Agreements in goods and services counted as one and only agreements in force, notified to the WTO. 3 In 2012, the five top sources of imports for Colombia were: the US (24.3%); China (16.5%); the EU(27) (12.6%); Mexico (10.9%); and Brazil (4.8%). The five top sources of imports for Peru were: the US (19%); China (18.5%); the EU(27) (11.9%); Brazil (6.1%); and Ecuador (4.8%).

6 - 6 - imports 5 and 47 th largest export 6, while Peru was the EU's 45 th largest source of imports and 90 th destination for exports Developments in global and intra-party trade are presented in Charts 1.1. and 1.2 over the period The EU's trade deficit with both partners and especially with Peru widened during this period. The EU also maintained a global deficit for much of the period, while Colombia's trade has been in balance and Peru has shown a steady surplus in its trade balance for most of the period. Chart 1.1 European Union and Colombia: bilateral and total merchandise trade 2,000 1,800 1,600 1,400 A. European Union (EUR$ Billions) Imports from Colombia (Right Axis) Exports to Colombia (Right Axis) Total Imports Total Exports B. Colombia (EUR$ Billions) Imports from EU (Right Axis) Exports to EU (Right Axis) Total Imports Total Exports , , Note: European Union covers data from EU (15) from , EU (25) from and EU (27) from Trade flows excludes intra-eu trade. Source: EUROSTAT and UNSD Comtrade database. Chart 1.2 European Union and Peru: bilateral and total merchandise trade, ,000 1,800 1,600 1,400 A. European Union (EUR$ Billions) Imports from Peru (Right Axis) Exports to Peru (Right Axis) Total Imports Total Exports B. Peru (EUR$ Billions) Imports from Peru (Right Axis) Exports to Peru (Right Axis) Total Imports Total Exports , , Note: European Union covers data from EU (15) from , EU (25) from and EU (27) from Trade flows excludes intra-eu trade. Source: EUROSTAT and UNSD Comtrade database. 4 In 2012, the five top destinations for Colombian exports were: the US (36.9%); the EU(27) (15.1%); China (5.6%); Panama (4.8%); Venezuela (4.3%). The five top destinations for Peruvian exports were: the EU(27) (17.1%); China (17.1%); the US (14.2%); Switzerland (11%); and Canada (7.5%). 5 In 2012, the five top sources of imports for the EU(28) were: China (16.5%); Russia (12.2%); the US (11.6%); Switzerland (5.6%); and Norway (5.3%). 6 In 2012, the five top destinations for the EU(28)'s exports were: Switzerland (16.5%); Russia (9.7%); the US (8.5%); China (6.9%); and Norway (4.5%).

7 The commodity structure of trade between Colombia and the EU, between Peru and the EU, and between each Party and the world, during the period , is shown in Charts 1.3 and 1.4, on the basis of Harmonized System (HS) Sections With regard to bilateral trade relations between Colombia and the EU, machinery and chemicals together accounted for 51% of Colombia's imports from the EU (26% for machinery and 25% for chemicals), while machinery represented 24% and chemicals 14% of Colombia's global imports. Machinery was the EU's largest global export sector (27%), while chemicals ranked 2 nd (representing 15% of the EU's global exports). Vehicles, Colombia's third largest import from the EU (22% of Colombia's imports from the EU), accounted for 16% of Colombia's global imports and represented 55% of the EU's global exports. These figures tend to show that Colombia's profile of imports from the EU is representative of both Colombia's global import profile and the EU's global export profile. In the case of the EU, minerals, its largest import from Colombia (representing 63% of the EU's imports from Colombia) is also the EU's largest global import (30% of the EU's global imports). This sector also corresponds to Colombia's largest global export sector (63%). Chart 1.3 Colombia and European Union (27) Product Composition of merchandise trade, annual average ( ) Colombia's imports from the EU Colombia's Global Imports EU's Global Exports Total: 5.1 billion EU's imports from Colombia Total: 38.4 billion EU's Global Imports Total: 1537 billion Colombia's Global Exports Total: 6.7 billion Total: 1686 billion Total: 39.3 billion Vegetables Prepared foods Chemicals Plastics, rubber Textiles Precious Stones Machinery Vehicles Miscellaneous Other Minerals Wood pulp Base Metals Optical Source: UNSD Comtrade Like between the EU and Colombia, machinery and chemicals together accounted for 58% of Peru's imports from the EU (43% for machinery and 15% for chemicals), but machinery represented 25% and chemicals 10% of Peru's global imports. Base metals, Peru's third largest import from the EU (10% of Peru's imports from the EU), accounted for 9% of Peru's global imports and represented only 7% of the EU's global exports. In the case of the EU, minerals, its

8 - 8 - largest import from Peru (representing 43% of the EU's imports from Peru) is also the EU's largest global import and corresponds to Peru's second largest global export sector (15%). Chart 1.4 Peru and European Union (27): Product Composition of merchandise trade, annual average ( ) Peru's imports from the EU Peru's Global Imports EU's Global Exports Total: 3.0 billion Total: 27.6 billion Total: 1,537 billion EU's imports from Peru EU's Global Imports Peru's Global Exports Total: 6.0 million Total: 1,686 billion Total: 27.6 billion Animal products Minerals Wood pulp Base Metals Optical Vegetables Chemicals Textiles Machinery Miscellaneous Prepared foods Plastics, rubber Precious Stones Vehicles Other Source: UNSD Comtrade. 1.2 Trade in services and investment 1.9. In 2012, the EU's shares of total commercial services exports and imports were 24.8% and 20.13% respectively, while Colombia's and Peru's shares were 0.12% and 0.11% of world imports of services and 0.25% and 0.17% of world exports of services. With total commercial services exports of US$831 billion, and imports of US$651 billion, the EU was the world's largest exporter and largest importer of commercial services. Colombia's and Peru's shares in global trade are of the same magnitude, Colombia was the 47 th largest exporter (US$5.1 billion) and 43 rd largest importer (US$10.4 billion), while Peru was the 48 th largest exporter (US$4.9 billion) and 46 th largest importer (US$7.2 billion) Charts below show global trade in commercial services for Colombia, for Peru and for the EU (all based on data for the period ).While Colombia and Peru experienced a deficit and their global trade in services, the balance for the EU is positive, with a volume of trade one hundred times bigger than for Peru and fifty times bigger than for Colombia. For all the Parties, trade in services has grown during the period, though for Colombia and, to a certain extent, for Peru the trade volume momentarily slowed down in The financial crisis also had a negative, but temporary, impact on trade growth for all the Parties. Travel and

9 - 9 - transportation services account for a large share of services traded by all the Parties with other business services important exports and imports for the EU. Chart 1.5 Colombia: Trade in commercial services with the world, A. Colombia: Exports (EUR Billion) B. Colombia: Imports (EUR Billion) Transportation services Insurance services Royalties and license fees Travel Financial services Other business services Communications services Computer and information Personal, cultural and Construction services recreational services Note: Source: Data on Other business services for and 2007, may include more categories than the international agreed definition. WTO-iTip database and Central Bank of Colombia (Banco de la República). Chart 1.6 Peru: Trade in commercial services with the world, A. Peru: Exports (EUR Billion) B. Peru: Imports (EUR Billion) Transportation services Insurance services Royalties and license fees Travel Financial services Other business services Communications services Computer and information Personal, cultural and Construction services recreational services Note: Source: Data on Other business services for may include more categories than the international agreed definition. WTO-iTip database.

10 Chart 1.7 European Union: Trade in commercial services with the world, A. European Union: Exports (EUR Billion) B. European Union: Imports (EUR Billion) Transportation services Insurance services Royalties and license fees Travel Financial services Other business services Communications services Computer and information Personal, cultural and Construction services recreational services Note: European Union covers data from EU (15) from , EU (25) from and EU (27) from Trade flows excludes intra-eu trade. Source: EUROSTAT Chart 1.8 below depicts each Party's foreign direct investment stock with the world which has grown steadily during the period While the EU is a net investor in the world, both Colombia and Peru are net recipients of FDI. Chart 1.8 Colombia, Peru and the European Union: Foreign direct investment stock with the world, Inward Outward A. Colombia (EUR Billion) B. Peru (EUR Billion) Inward Outward (Right Axis) ,000 5,400 4,800 4,200 3,600 3,000 2,400 1,800 1, Inward Outward C. European Union (EUR Billion) 6,000 5,400 4,800 4,200 3,600 3,000 2,400 1,800 1, Note: European Union covers data from EU (15) from , EU (25) from and EU (27) from Trade flows excludes intra-eu trade.

11 CHARACTERISTIC ELEMENTS OF THE AGREEMENT 2.1 Background Information 2.1. The Agreement was signed on 26 June 2012 and started its application, for the EU and Peru, on 1 March 2013, and, for the EU and Colombia, on 1 August The Parties notified the goods and services aspects of the Agreement to the WTO on 26 February 2013, for the EU and Peru, in document WT/REG333/N/1/Rev.1 - S/C/N/681/Rev.1, and on 29 November 2013, for the EU and Colombia, in documents WT/REG333/N/1 - S/C/N/681 and WT/REG333/N/2 - S/C/N/681/Rev.1/Add.1. The notification was made pursuant to Article XXIV:7(a) of GATT 1994 for goods, and to Article V:7(a) of GATS for services. The text of the Agreement, together with its annexes, is available on the Parties' official websites: European Union: Colombia: Peru: blog&id=52&itemid= According to Article 3, the Agreement establishes a free trade area consistent with Article XXIV of the GATT 1994 and Article V of the GATS While the provisions of the Agreement apply to the bilateral trade and economic relations between, on the one part, the EU (and its Member States within their respective areas of competence), and, on the other, Colombia and Peru, they do not apply to the trade and economic relations between Colombia and Peru, as individual signatory Andean Countries. The rights and obligations established by the Parties in the Agreement shall not affect the rights and obligations between the signatory Andean Countries as Member Countries of the Andean Community (Article 7) The Agreement was negotiated and signed at a time the EU had 27 Member States. It was applied between the EU and Peru before, and between the EU and Colombia shortly after, Croatia's accession to the EU, on 1 July As per Article 6 of the Act concerning Croatia's accession, all RTAs concluded by the EU become binding on Croatia as from 1 July Pending the conclusion of a Protocol to the Agreement, Croatia would apply the provisions of the Agreement, with the necessary adjustments. The relevant Protocol has been agreed between the Parties and is undergoing the respective internal procedures for its approval. The Protocol integrates the relevant new language versions of administrative remarks contained in Annex II to the Trade Agreement (Annex on the Rules of Origin) and adds the commitments of Croatia for trade in services, establishments and electronic commerce, as well as for government procurement. 2.2 Structure of the Agreement 2.5. The Agreement is composed of 14 Titles and related annexes, as well as Appendices and the Parties' tariff elimination schedules, lists of commitments on establishment and cross-border supply of services, and reservations on temporary presence of natural persons for business purposes. Box 2.1 below summarizes the structure of the Agreement. Box 2.1 Structure of the Agreement Chapters, Annexes, and Appendixes Title/description Preamble Title I Initial provisions

12 Title II Title III Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Title IV Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Title V Title VI Title VII Title VIII Title IX Title X Title XI Title XII Title XIII Title XIV Annex I Annex II Annex III Annex IV Annex V Annex VI Annex VII Annex VIII Annex IX Annex X Annex XI Annex XII Annex XIII Institutional provisions Trade in goods Market access for goods Trade remedies Customs and trade facilitation Technical barriers to trade Sanitary and Phytosanitary measures Movement of goods Exceptions Trade in services, establishment and electronic commerce General provisions Establishment Cross-border supply services Temporary presence of natural persons for business purposes Regulatory framework Electronic commerce Exceptions Current payments and movement of capital Government procurement Intellectual property Competition Trade and sustainable development Transparency and administrative proceedings General exceptions Dispute settlement Technical assistance and trade-capacity building Final provisions Tariff elimination Schedules Concerning the definition of the concept of "originating products" and methods for administrative cooperation Special provisions on administrative cooperation Agricultural safeguard measures Mutual administrative assistance in customs matters Sanitary and phytosanitary measures Lists of commitments on establishment Lists of commitments on cross-border supply of services Reservations regarding temporary presence of natural persons for business purposes Enquiry points regarding trade in services, establishment and electronic commerce Understanding concerning subparagraph (b) of the definition of "services supplied in the exercise of governmental authority" (Art. 152 of the Agreement) Government procurement Lists of geographical indications Annex XIV Mediation mechanism for non-tariff measures Source: WTO Secretariat based on the Agreement.

13 PROVISIONS ON TRADE IN GOODS 3.1. Title III of the Agreement contains disciplines applicable specifically to trade in goods. 3.1 Import duties and charges, and quantitative restrictions General provisions 3.2. The Parties agree to apply national treatment to each other's' imports in accordance with Article III of GATT 1994 and its interpretative notes, which are incorporated into and made part of the Agreement, mutatis mutandis (Article 21) No Party shall adopt or maintain any prohibition or restriction on the import of any good of another Party, except as provided in the Agreement or in accordance with Article XI of GATT 1994, which is, together with its interpretative notes, incorporated into and made part of the Agreement mutatis mutandis (Article 23) On the treatment of fees and charges, the Agreement replicates the provisions of Article VIII of GATT 1994 and states that no Party shall require consular transactions, including related fees and charges, in connection with the importation of any goods of another Party (Article 24). Information on all import and export fees and charges shall be made available, preferably on the internet. For the EU this the relevant customs authorities either publish this information online on their websites or make it available through printed publicly available notices. For Peru, the information on import and export fees and charges is available on In the case of Colombia, the information about the import and export fees and charges is available on The Agreement prohibits the use of measures that are inconsistent with the WTO Agreement on import licensing procedures, which is incorporated into and made part of the Agreement (Article 26) Liberalization of trade and tariff lines 3.6. The Parties' tariff elimination commitments are scheduled in Annex I to the Agreement. No Party may increase any customs duty set as the base rate in Annex I or adopt any new customs duty on a good originating in another Party In relation to agricultural goods, the Agreement authorizes Colombia and Peru to apply their Price Band Systems (Article 30). In the case of Colombia, the provision refers to the application of the Andean Price Band System (Price stabilization mechanism MEP) established in Decision 371 of the Andean Community and its modifications, or subsequent systems for agricultural goods covered by such Decision 7. In the case of Peru, this concerns the application of the Peruvian Price Band System (SPFP) established in the Supreme Decree EF and its modifications, or subsequent systems for agricultural goods covered by such Supreme Decree Upon request of a Party, the Parties shall consult to consider accelerating and broadening the scope of the duty elimination programme (Article 22). 7 The system operates by establishing a floor price (or lower band) and a ceiling price (or higher band). When the international price is below the floor price, a special import duty is imposed, but when total import costs exceed the higher limit, a tariff reduction is granted. The customs duties applicable to products subject to the price stabilization mechanism are composed of a fixed ad valorem component (subject or not to the liberalization programme established by the Agreement) and a variable ad valorem component. Annex II to the factual presentation summarizes the coverage of Price Band Systems for Colombia. 8 Under the SPFP, a product is subject to a specific custom duty in addition to its ad-valorem customs duty if a CIF reference, price is lower than a "floor" price. A tariff reduction can also apply if the CIF (reference) price is higher than a "ceiling" price. The customs duties applicable to products subject to the price band system are composed of a fixed ad valorem component (subject or not to the liberalization programme established by the Agreement) and a variable specific component. Annex II to the factual presentation summarizes the coverage of Price Band System for Peru.

14 Liberalization schedules 3.9. Annex I to the Agreement (Tariff elimination schedules) is divided in two parts (Appendices 1 and 2) The first Appendix contains the modalities agreed by the Parties in relation to the elimination of customs duties The second Appendix registers the EU's conventional rates of duty, including seasonal duties, for products from HS Chapters 07 (vegetables), 08 (Fruits and nuts), 20 9 (preparations of vegetables, fruits and nuts), and (beverages, spirits and vinegar), in connection with its Entry Price System 11 (Article 31). Section A of Appendix 2 lists the products and entry prices applied by the EU to products from Colombia, while Section B registers the products and entry prices applied by the EU to products from Peru European Union The EU's applied tariff in 2013 consisted of 9,720 lines at the HS eight-digit level (HS 2007). 89.8% of the tariffs was ad valorem and 991 lines had non-ad valorem tariffs 12. Before the entry into force of the Agreement, 2,453 lines were duty free, representing 25.2% of the EU's total tariff. Table 3.1 shows tariff elimination commitments by the EU under the Agreement Regarding the EU's relations with Colombia, the number of the EU's MFN duty free lines corresponded to 77.9% of its imports from Colombia during Following the entry into force of the Agreement, an additional 6,714 lines (69.1% of the EU's tariff) became duty-free for imports from Colombia. As a result, 94.3% of the EU's tariff was duty free for imports from Colombia (in 2013), corresponding to 87.5% of imports by value from Colombia. By the end of the implementation period, ten years after the entry into force of the Agreement (in 2023), 9,315 tariff lines, corresponding to 95.8% of its tariff or 87.5% of its imports from Colombia will be duty free. 405 tariff lines (corresponding to 4.2% of the EU's tariff) will remain dutiable, representing 12.5% of its imports from Colombia Regarding the EU's relations with Peru, the number of the EU's MFN duty free lines corresponded to 78.5% of its imports from Peru during Following the entry into force of the Agreement, an additional 6,766 lines (69.6% of the EU's tariff) became duty-free for imports from Peru. As a result, 94.8% of the EU's tariff was duty free for imports from Peru (in 2013), corresponding to 97.3% of imports by value from Peru. By the end of the implementation period, ten years after the entry into force of the Agreement (in 2023), 9,424 tariff lines, corresponding to 97% of its tariff or 97.3% of its imports from Peru will be duty free. 296 tariff lines (corresponding to 3% of the EU's tariff) will remain dutiable, representing 2.7% of the EU's imports from Peru. Table 3.1 European Union: Tariff elimination commitments under the Agreement and corresponding average trade Period No. of lines Commitments applied by the European Union to: % of lines Value of Imports ( ) (in million EUR) % of Total imports Colombia Peru Colombia Peru Colombia Peru Colombia Peru MFN Duty Free (2013) 2,453 2, , , ,714 6, , Only in the case of EU's Entry Price System applicable to Colombia. 10 Only in the case of EU's Entry Price System applicable to Colombia. 11 The EU Entry Price System is established by Commission Regulation (EC) No 1580/2207 of 21 December 2007 laying down implementing rules of Council Regulations (EC) No 2200/96, (EC) No 2201/96 and (EC) No 1182/2007 in the fruit and vegetable sector and its modifications or subsequent systems lines were specific, 196 consisted in compound duties, 72 were mixed, and 87 were classified as other duties.

15 Commitments applied by the European Union to: Period No. of lines % of lines Value of Imports ( ) (in million EUR) % of Total imports Colombia Peru Colombia Peru Colombia Peru Colombia Peru Remain Dutiable Total 9,720 9, , , Note: Source: For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations; for the calculation of averages, specific rates are excluded and the ad valorem parts of alternate rates are included. Based on HS 2007 nomenclature. WTO estimates based on data provided by the European Union and WTO-IDB database Table 3.2 shows the EU's tariff elimination, by HS section with regard to Colombia and Peru In relation to Colombia, the 405 lines that will remain subject to duties once implementation is completed are found in sections I (live animals), II (vegetables), IV (prepared food) and VI (chemicals), with final average tariffs at between 8.5% and 12%, equal to the MFN applied rate, as illustrated by Chart 3.1 below. 13 For HS Chapters 8, 10, 11, 18 through 22, and 33 only the specific duty will remain. In the case of HS Chapters 7 and 17, the average of the preferential rates is higher than the MFN rate because the ad valorem component is liberalized in the preferential duties only for some of the lines under these Chapters. This is illustrated in Chart 3.1 (part a) below In relation to Peru, the 296 lines that will remain subject to duties once implementation is completed are found in sections I (live animals), II (vegetables), IV (prepared food) and VI (chemicals), with final average tariffs at between 8.4% and 13.3% and, for vegetables, with specific duties only remaining. For HS Sections 2, 16, 29 and 35 the remaining duties are equal to the MFN applied rate. For the other HS Sections where duties remain, the ad valorem part of the duty is removed while the non-ad valorem part is either the MFN applied level or has a preferential margin. This is illustrated in Chart 3.1 (part b) below Only the out-of-quota duty is included in the tariff-related calculations. 14 Only the out-of-quota duty is included in the tariff-related calculations.

16 Table 3.2 European Union: Tariff elimination commitments to Colombia and to Peru under the Agreement, by HS Section and corresponding average trade Partner Colombia Peru HS section MFN average % Total No. of lines MFN Duty- Free (2013) Number of duty-free lines under the Agreement Remain dutiable Avg. Duty I II III IV V VI 4.2 1, VII VIII IX X XI XII XIII XIV XV XVI 2.4 1, ,159 XVII XVIII XIX XX XXI Total 4.8 9,720 2,453 6, I II * III IV V VI 4.2 1, VII VIII IX X XI XII XIII XIV XV XVI 2.4 1, ,159 XVII XVIII XIX XX XXI Total 4.8 9,720 2,454 6, * Only includes specific duties. Note: Source: For tariff lines subject to TRQs, only the out-of-quota duty is included; for the calculation of averages, specific rates are excluded and the ad valorem parts of alternate rates are included. Based on HS 2007 nomenclature. WTO estimates based on data provided by the European Union and WTO-IDB database.

17 Chart 3.1 European Union: Average of dutiable rates, by HS Chapter, with regard to Colombia and Peru 25 a. EU-Colombia (HS 01-97) 25 b. EU-Peru (HS 01-97) 20 MFN Preferential 20 MFN Preferential *08 *10* *18 *19*20*21*22 29 * *04*07*08*10*11 16 *17*18*19*20*21*22 29 * * Only includes specific duties. The average of the preferential rates is higher than the MFN because the ad valorem component is liberalized in the preferential duties for some of the lines under this chapter. Note: Source: For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations; for the calculation of averages, specific rates are excluded and the ad valorem parts of alternate rates are included. Based on HS 2012 nomenclature. WTO estimates based on data provided by the European Union and WTO-IDB database Colombia Table 3.3 shows tariff elimination commitments by Colombia under the Agreement. Colombia's applied tariff in 2013 consisted of 7,454 lines 15 at the HS eight-digit level (HS 2012) % of the tariffs were ad valorem and 511 lines had non-ad valorem tariffs (all compound duties). In 2013, 264 lines were duty free, representing 3.5% of Colombia's total tariff, corresponding to 20.9% of its imports from the EU during Following the entry into force of the Agreement, an additional 4,291 lines (57.6% of Colombia's tariff) became duty-free resulting in 61.1% of Colombia's tariff becoming duty free corresponding to 66.4% of its imports from the EU (in 2013). Ten years after the entry into force of the Agreement (in 2023), 7,143 tariff lines, or 95.8% of its imports from the EU will be duty free. By the end of the implementation period (2028), 7,160 tariff lines, or 96.1% of its imports from the EU will be duty free. 294 tariff lines (corresponding to 3.9% of Colombia's tariff) will remain dutiable, representing 0.6% of Colombia's imports from the EU. This includes the tariff lines for which the fixed component resulting from the price stabilization mechanism 16 is liberalized under Colombia's price band system. 15 It should however be noted that the negotiations were based on HS 2007 classification and that the total number of lines, on that basis, was On the basis of HS 2007, 282 tariff lines remained dutiable. 16 The customs duties applicable to products subject to the price stabilization mechanism are composed of a fixed ad valorem component (subject or not to the liberalization programme established by the Agreement), and a flexible component (a specific amount added or deducted depending on the evolution of the international price for certain commodities).

18 Table 3.3 Colombia: Tariff elimination commitments under the Agreement and corresponding average trade Duty phase-out period Number of lines % of total lines in Colombia's tariff schedule Value of Colombia's imports from the European Union ( ) in million EUR a % of Colombia's total imports from the European Union ( ) MFN Duty Free , Remain dutiable 294 b Total 7, , a b Note: Source: Exchange rates used for converting from US dollars to Euros were: 0.76 (2010), 0.72 (2011) and 0.78 (2012). This number includes the 134 lines in relation to the price stabilization mechanism, where 53 tariff lines containing fixed component were liberalized under the Agreement. For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations. Based on HS 2012 nomenclature. WTO estimates based on data provided by Colombia and WTO-IDB database Table 3.4 shows Colombia's tariff elimination, by HS section. The 294 lines that will remain subject to duties once implementation is completed are found in sections I (live animals); II (vegetable products), III (animal or vegetable fats and oils), IV (prepared food) and VI (chemicals) with final average tariffs at between 10% and 32.9%, with differences between the MFN rate and the preferential rate in HS Chapters 2, 7, 8, 11, 12, 15, 16 through 21, 23 and 33, as illustrated by Chart 3.2 below. 17 The highest average tariffs are found in HS 5 (70%), 2 (36%) and 10 (35.8%). Table 3.4 Colombia: Tariff elimination commitments under the Agreement, by HS Section and corresponding average trade HS Section MFN average % Total No. of lines MFN dutyfree (2013) 2013 Number of duty-free lines No. of lines remaining dutiable Avg. Final Tariff (Dutiable) % I II III IV V VI 5.0 1, VII VIII IX X XI XII Only the out-of-quota duty is included in the tariff-related calculations. The Chart includes lines under Colombia's price band system. Moreover, in the case of HS Chapter 23, the average of the preferential rates is higher than the MFN because the fixed component only is liberalized for some of the lines under this Chapter.

19 HS Section MFN average % Total No. of lines MFN dutyfree (2013) 2013 Number of duty-free lines No. of lines remaining dutiable Avg. Final Tariff (Dutiable) % XIII XIV XV XVI 6.0 1, XVII XVIII XIX XX XXI Total 8.4 7, , , b 20.7 a Note: Source: This number includes the lines excluded from the agreement and those whose fix component was liberalized (i.e. 134) under Colombia's price band system. For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations. Based on HS 2012 nomenclature. WTO estimates based on data provided by Colombia and WTO-IDB database. Chart 3.2 Colombia: Average of dutiable rates, by HS Chapter Colombia (HS 01-97) MFN Preferential *02 * *10 *11 *12 *15 *16 * * *35 38 * Includes lines under Colombia's price band system. The average of the preferential rates is higher than the MFN because the fixed component is liberalized for some of the lines under this chapter. Note: For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations; for tariff lines under Colombia's price band system, only the ad valorem part is included in the calculation of averages. Based on HS 2012 nomenclature. Source: WTO estimates based on data provided by Colombia and WTO-IDB Peru Table 3.5 shows tariff elimination commitments by Peru under the Agreement. Peru's applied tariff in 2013 consisted of 7,370 lines at the HS eight-digit level (HS 2007) % of the

20 tariffs were ad valorem and 47 lines had non-ad valorem tariffs 47 with compound duties 18 ). In 2013, 4,054 lines were duty free, representing 55% of Peru's total tariff, corresponding to 76.2% of its imports from the EU during Following the entry into force of the Agreement, an additional 1,688 lines (22.9% of Peru's tariff) became duty-free, resulting in 77.9% of Peru's tariff becoming duty free, corresponding to 80.4% of imports by value from the EU. Ten years after the entry into force of the Agreement (in 2023), 7,219 tariff lines, or 98.5% of its imports from the EU will be duty free for the EU's exports. The same figures would be shown by the end of the implementation period (in 2030). 151 tariff lines (corresponding to 2% of Peru's tariff) will remain dutiable, representing 1.5% of Peru's imports from the EU. This includes the 47 tariff lines that are subject to Peru's price band system and are not fully liberalized. Table 3.5 Peru: Tariff elimination commitments under the Agreement and corresponding average trade Duty phase-out period Number of lines % of total lines in Peru's tariff schedule Value of Peru's imports from the European Union ( ) in million EUR a % of Peru's total imports from the European Union ( ) MFN duty free (2013) 4, , , Remain dutiable 151 b Total 7, , a b Note: Source: Exchange rates used for converting from US dollars to Euros were: 0.76 (2010), 0.72 (2011) and 0.78 (2012). This number includes the 47 lines subject to a specific duty under Peru's price band system. For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations; for tariff lines under Peru's price band system, only the ad valorem part is included in the calculation of averages. One tariff line which should become duty-free in 2025 is tariff line ex partly covered under category 12 (duty-free in 2025) and partly categorized as part of the out-of-quota duty under the TRQ. In relation to eight other tariff lines that should become duty-free in 2028, two tariff lines are under the price band system and six tariff lines are already duty-free at the MFN level. Based on HS 2007 nomenclature. WTO estimates based on data provided by Peru Table 3.6 shows Peru's tariff elimination, by HS section. The 151 lines that will remain subject to duties once implementation is completed are found in sections I (live animals); II (vegetable products), IV (prepared food) and VI (chemicals) with final average tariffs at between 4.1% and 7.9%, with differences between the MFN and preferential average rates in HS Chapters 7, 16 through 21, and 33, as illustrated by Chart 3.3 below. 19 Table 3.6 Peru: Tariff elimination commitments under the Agreement, by HS Section HS Section MFN average % Total No. of lines MFN dutyfree (2013) 2013 Number of duty-free lines No. of lines remaining dutiable Avg. Final Tariff (Dutiable) % I II III IV It should be noted that, out of the 47 lines, 44 lines have an ad valorem component of 0%. 19 Only the out-of-quota duty is included in the tariff-related calculations.

21 HS Section MFN average % Total No. of lines MFN dutyfree (2013) 2013 Number of duty-free lines No. of lines remaining dutiable Avg. Final Tariff (Dutiable) % V VI 2.0 1, VII VIII IX X XI XII XIII XIV XV XVI 1.1 1, XVII XVIII XIX XX XXI Total 3.2 7,370 4,054 1, Note: Source: For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations; for tariff lines under Peru's price band system, only the ad valorem part is included in the calculation of averages. Based on HS 2007 nomenclature. WTO estimates based on data provided by Peru. Chart 3.3 Peru: Average of dutiable rates, by HS Chapter HS MFN Preferential * * * * Includes lines under Peru's price band system, with an ad-valorem fixed component of 0. Includes lines under Peru's price band system, with an ad-valorem fixed component of 6%. Note: Source: For tariff lines subject to TRQs, only the out-of-quota duty is included in the tariff-related calculations; for tariff lines under Peru's price band system, only the ad valorem part is included in the calculation of averages. Based on HS 2007 nomenclature. WTO estimates based on data provided by Peru.

22 Tariff rate quotas Each Party shall implement and administer tariff rate quotas (TRQs) for imports of agricultural goods set out in Annex I to the Agreement (tariff elimination Schedules) in accordance with Article XIII of GATT 1994, including its interpretative notes, and the WTO Import Licensing Agreement (Article 33). TRQ administration shall take place on a first-come first-served basis. Consultations are also foreseen upon the request of an exporting Party on the administration of the TRQs. Annex 3 to this factual presentation identifies the tariff lines covered by each Party's TRQ commitments The tariff elimination Schedule of Colombia for goods originating in the EU 20 identifies 14 categories of tariff elimination 21 providing for transition periods during which a preferential TRQ is granted by Colombia to specific products originating in the EU. Each concerned category identifies: (i) the tariff lines covered; (ii) the in-quota customs duty; (iii) the quota quantity 22 on the entry into force of the Agreement; and (iv) the yearly increase in the quota. For 8 of these categories, goods imported in quantities exceeding the cumulated amount for each year shall receive MFN treatment. In the case of the 6 remaining categories, at the end of the transition periods, the TRQ and duties will be eliminated The tariff elimination Schedule of the EU for goods originating in Colombia 23 identifies 9 categories of tariff elimination 24 and 19 categories of tariff elimination programmes 25 for Peru providing for transition periods during which a preferential tariff rate quota (TRQ) is granted by the EU to specific products. Each concerned category identifies: (i) the tariff lines covered; (ii) the aggregate quota quantity on the entry into force of the Agreement; and (iii) the yearly increase in the quota. For one of these TRQ categories, a trigger import volume is connected to a stabilisation mechanism allowing in particular circumstances the suspension by the EU of the preferential customs duty and the opening of consultations between the Parties. Moreover, the EU and Colombia and Peru shall examine the improvement of tariff liberalization for the concerned goods in The tariff elimination schedule of Peru for goods originating in the EU 26 identifies 16 categories of products 27 which are, in certain cases to become duty free after a transition period, or in other cases excluded from tariff elimination. Nevertheless, for these categories Peru shall allow duty-free imports within preferential TRQs. Each concerned category identifies: (i) the tariff lines covered; (ii) the aggregate quota quantity on the entry into force of the Agreement; and (iii) the yearly increase in the quota. Customs duties on originating goods resulting from the application of the Peruvian Price Band System, which may be covered by these categories of products, are excluded from tariff elimination but shall be reduced as and if provided for in Peru's Schedule Annex 3 to the factual presentation identifies the products subject to TRQ commitments by the Parties. 3.2 Rules of origin The rules of origin applicable in the context of the Agreement are set out in Annex II to the Agreement (concerning the definition of the concept of "originating products" and methods for administrative cooperation). While definitions are provided for in section 1 of Annex II, the concept of "originating products" is defined in section 2. According to Article 2 of Annex II, a good is considered as originating when: a. it is wholly obtained in the EU, in Colombia or Peru; or 20 Contained in Section A of Appendix 1 of Annex I to the Agreement. 21 Out of a total of 31 different tariff elimination / reduction categories. 22 Aggregate for each category in general. 23 Contained in Section B of Appendix 1 of Annex I to the Agreement. 24 Out of a total of 21 different tariff elimination / reduction categories. 25 Out of a total of 26 different tariff elimination / reduction categories. 26 Contained in Section D of Appendix 1 of Annex I to the Agreement. 27 Out of a total of 25 different tariff elimination / reduction categories.