Preamble
Recognizing the unique difficulties faced by the machine tool i-
ndustry in the territory represented by AIT;
Recognizing the efforts of AIT to revitalize the machine tool i-
ndustry in the territory represented by AIT;
Recognizing that CCNAA, upon request by AIT, has responded in g-
ood faith to cooperate with AIT in this regard;
And noting the decisions on machine tools of the President of t-
he territory represented by AIT dated May 20,1986, and December
27, 1991, which affirmed the importance which AIT places upon t-
he machine tool industry in the territory represented by AIT; C-
CNAA and AIT have reached the following Understanding:
1.SELF-MONITORING MEASURES
The authorities represented by CCNAA will implement self-moni-
toring measures for the specific purpose of creating a period
of continued stability of trade in certain categories of mach-
ine tools between CCNAA and AIT. To this effect, CCNAA will m-
onitor the total number of certain machine tools, defined her-
eafter, exported to and destined for consumption in the terri-
tory represented by AIT for the period of January 1, 1992, th-
rough December 31, 1993.
2.DEFINITIONS
The following definitions apply to this Understanding:
A."Monitored Product" means the products (assembled or unasse-
mbled) listed in Appendix A to this Understanding, includi-
ng substantially complete machine tools and parts thereof,
as defined in Annex A. Appendix A contains a description of
each product as well as the current tariff classification
number of each product in the territory represented by AIT
under the "Harmonized Tariff Schedules of the United State-
s" ("HTSUSA") and in the territory represented by CCNAA un-
der the "Classification of Import and Export Commodities"
used in that territory (CCC Code). If any change in these
classification numbers occurs during the period that this
Understanding is in effect, Appendix A shall be modified to
reflect such change. The HTSUSA classification number cont-
rols the definition of each Monitored product. Each of the
Appendices and Annex A to this Understanding constitutes an
integral part of this Understanding.
B. "Destined for consumption in the territory represented by
AIT" means exported directly to the territory represented
by AIT, or indirectly through one or more territories other
than a territory represented by a party to this Understand-
ing .
C. "Territory represented by AIT" means the customs territory
of the United States of America and foreign trade zones lo-
cated in the territory of the United States of America.
D. "Monitored Period" means each of the 6-moth periods descri-
bed in Article 3 hereof. The "First Monitored Period" runs
from January 1, 1992 through June 30, 1992. The "Second Mo-
nitored Period" runs from July 1, 1992 through December 31,
1992. The "Third Monitored Period" runs from January 1, 199
3 through June 30, 1993. The "Fourth Monitored Period" runs
from July 1,1993 through December 31,1993.
E. "Term" means the term of this Understanding, i.e., the per-
iod commencing January 1,1992 through December 31, 1993.
3.EXPORT LIMITS
A. Between January 1, 1992 and December 31, 1993, CCNAA shall
ensure that in each of the Periods specified below, export
permits shall be issued to exporters in the territory repr-
esented by CCNAA for each of the following categories and
sub-ca-tegories of Monitored products destined for consump-
tion in the territory represented by AIT in quantities that
shall not exceed in the aggregate the following number of
units.
──────────────────────────────
JAN- JULY- JAN- JULY-
JUNE DEC JUNE DEC
1992 1992 1993 1993
CATEGORY
──────────────────────────────
NC Lathes 72 100 119 144
──────────────────────────────
NC Milling
Machines 181 181 181 181
-with
controls 23 23 23 23
attached
──────────────────────────────
Machining
Centers 112 140 186 227
──────────────────────────────
B. Except as provided in paragraph 3.D., commencing January 1,
1992, until the expiry or termination of this Understanding
, CCNAA shall ensure, during the Term, that in each period
each Monitored Product destined for consumption in the ter-
ritory represented by AIT shall be exported from the terri-
tory represented by CCNAA under an export permit in the fo-
rm shown in Appendix C to this Understanding issued by the
competent authorities in the territory represented by CCNAA
.
C. Except as provided in paragraph 3.D., during the Term refe-
rred to in paragraph 3.B., CCNAA shall ensure that the com-
petent authorities in the territory that it represents sha-
ll issue export permits containing the represents shall is-
sue export permits containing the information prescribed in
Appendix C to this Understanding. Except as provided in pa-
ragraph 3.D., AIT shall ensure that the authorities in the
territory it represents shall require presentation of an o-
riginal export permit as a condition of entry into the ter-
ritory represented by AIT of Monitored Products. To the ex-
tent provided under the laws applicable in the territory r-
epresented by AIT, noting in particular the necessary exis-
ting enforcement authority prescribed in C to this provided
under section 1501(c) of the Omnibus Trade and Competitive-
ness Act of 1988, AIT shall ensure that the authorities in
the territory it represents prohibit entry to such products
not accompanied by such an export permit.
D.Except as provided in paragraph 3.F., during the First Moni-
tored Period, Monitored Products may be exported from the t-
erritory represented by CCNAA destined for consumption in t-
he territory represented by AIT without an export permit, p-
rovided that the total number of units of each category and
sub-category of Monitored Products so exported during this
period shall count against the export ceilings provided in
paragraph 3.A. for the Fist Monitored Period.
E.CCNAA shall provide AIT by July 31, 1992 with a report rega-
rding the number of units of Monitored Products exported to
the territory represented by AIT during the First Monit ored
Period. This report shall indicate, for each individual exp-
ort under each category and subcategory of Monitored Product
,the name of the manufacturer, the number of units exported,
the model and serial number of each unit, and the date of e-
xport to the territory represented by AIT. AIT shall determ-
ine, based on its records of the number of units imported i-
nto the territory represented by AIT and all records and any
other information supplied by CCNAA as provided in this par-
agraph, the number of units of Monitored Products exported
from the territory represented by CCNAA during the First Mo-
nitored Period, and shall provide its determination to CCNAA
by September 30, 1992. In case of a significant discrepancy
between the statistics of the respective territories regard-
ing thenumber of units of Monitored Products imported into
the territory represented by AIT, CCNAA may request AIT to
provide, and upon such request AIT shall provide, nonconfid-
ential information to document the number of units imported
into the territory represented by AIT.
F.If the number of units of any category or sub-category of M-
onitored Products which AIT thus determines have been expor-
ted during the First Monitored Period exceeds the levels set
out for this period, the category and sub-category levels p-
rovided in paragraph 3.A. for the Second and Third Monitored
Periods shall be equally reduced by such corresponding exce-
ss or excesses.
G.AIT shall ensure that the Customs Service of the territory
represented by AIT determines the date of export, based on
the date of the relevant bill of lading for each Monitored
Product exported from the territory represented by CCNAA wi-
thout an export permit, provided, however, that the export
date for each withdrawal of a Monitored Product without exp-
ort permit from a bonded warehouse shall be the date such w-
ithdrawal took place and the product was entered for consum-
ption in the territory represented by AIT. CCNAA shall dete-
rmine the date of export, based on the date of export stamp-
ed by the customs authorities in the territory represented
by CCNAA on the relevant export permit issued by the compet-
ent authorities represented by CCNAA, of each Monitored Pro-
duct exported from the territory represented by CCNAA desti-
ned for consumption in the territory represented by AIT und-
er valid export permit issued by the competent authorities
represented by CCNAA.
H.Commencing January 1, 1992,AIT shall promptly report to CCN-
AA any importation into the territory represented by AIT of
a Monitored Product without export permit, based on the date
of the relevant bill of lading, including the date of export
of that product from the territory represented by CCNAA. The
quantity so reported shall be counted toward the export lim-
it for that Monitored Product for the period in which the p-
roduct was exported from the territory represented by CCNAA.
AIT shall effect redelivery, to the maximum extent possible,
of any Monitored Product not bearing a valid export permit.
If redelivery does not occur, AIT and CCNAA shall promptly
consult to discuss alternative measures and the chargeabili-
ty of such unpermitted Monitored Product to the applicable
export limit. If consultations do not result in a satisfact-
ory solution and both sides agree that continued application
of this paragraph undermines the objectives of this Underst-
anding and causes serious difficulties in the restraint of
exports by the authorities in the territory represented by
CCNAA envisioned in this Understanding, the Monitored Produ-
ct without export permit reported by AIT shall no longer be
counted toward the export limit for the relevant Monitored
Period. Nothing in this paragraph or paragraph 3.I. shall a-
ffect the rights and obligations under the Customs laws app-
licable in the territory represented by AIT.
I.During the period covered by this Understanding, if any Mon-
itored Product that has been imported into the territory re-
presented by AIT with a valid, original export permit, or o-
therwise counted against the export limits, is subsequently
reexported without having been used for its intended purpos-
e, orredelivered, or agreed no longer to be counted under P-
aragraph 3.H., the relevant export limit for the period in
which reexport or redelivery occurs, or the decision not to
count under Paragraph 3.H. is made, shall be increased by t-
he corresponding number of units.
J.CCNAA shall provide that the export of Monitored Products w-
ill be spaced as evenly as practicable on a quarterly basis
throughout each Monitored Period.
4. carry-over and advance use of export permits
A. CCNAA may adjust the export limits provided in paragraph 3 f-
or any period by an amount not to exceed five percent thereof
(the "adjustable portion"), and may permit any part or all of
the adjustable portion to be carried over for use in the next
Monitored Period or to be subject to advance use in the curr-
ent Monitored Period. AIT shall be notified of such advance
use or carry-over and all notifications of use shall be rece-
ived no later that two (2) months before the end of the Moni-
tored Period in which any such use is intended. The adjustab-
le portion may by increased beyond such five percent upon AIT
's prior agreement. With regard to carry-over, CCNAA may req-
uest an adjustment of an additional five percent, to which A-
IT shall agree in the absence of evidence that such addition-
al carry-over would adversely affect the machine tool market
in the territory represented by AIT.
B. All export permits issued by the competent authorities repre-
sented by CCNAA in reliance upon any such use of the adjusta-
ble portion or any part thereof shall be so marked. Advance
use of any adjustable portion or any part thereof of the exp-
ort limit for any Monitored Period shall be made not earlier
than one month before the end of the current Monitored Period
and carry-over of the adjustable portion or any part thereof
the export limit for any Monitored Period shall be made not
later than the first month of the following Monitored Period.
5. IMPLEMENTATION OF THIS UNDERSTANDING
A. The provisions of this Understanding shall be implemented by
AIT and CCNAA in accordance with the laws and regulations in
force in the territories that represent.
B. CCNAA shall provide AIT with a letter setting forth the sel-
fmonitoring measures and the statutory and/or regulatory pro-
visions that the competent authorities in the territory CCNAA
represents shall use to implement and enforce this Understan-
ding. Upon receipt of such letter, AIT shall provide CCNAA w-
ith the views of the competent authorities in the territory
represented by AIT regarding the applicability of antitrust
laws to actions taken pursuant to this Understanding.
C. AIT and CCNAA shall monitor trade in subassemblies between t-
he respective territories to ensure that the Criteria for Su-
bstantially Complete Machine tools, as provided in Annex A,
are fully and effectively implemented.
6. MONITORING
A. AIT and CCNAA shall exchange non-proprietary information nec-
essary for the implementation and enforcement of this Unders-
tanding. Each party to this Understanding shall report to the
other party any action it takes to implement or enforce this
Understanding .
B. CCNAA shall provide AIT with a report in English containing,
at a minimum, the following non-proprietary information; each
permit number, quantity, date of export or expected date of
export, and which Monitored product is covered by each export
permit, not later than 30 days after the end of each quarter
and after the end of each month requested by AIT.
C. AIT shall furnish to CCNAA all non-proprietary information a-
nd data relating to administration of paragraph 3 of this Un-
derstanding.
7. CONSULTATIONS
Representatives of CCNAA and AIT shall consult annually, and at
any other time at the request of either party, regarding any ma-
tter concerning this Under-standing or its implementation, oper-
ation, enforcement, or circumvention, including but not limited
to retrofitting and/or up-grading.
8. CREATION OF SUB-CATEGORIES OF MONITORED PRODUCTS
A. CCNAA shall ensure, through export permits issued by the app-
ropriate authorities in the territory it represents, that the
number of units of various types and sizes of machines within
each Monitored Product category reflects a representative pr-
oduct mix of units in that Monitored Product category export-
ed from the territory represented by CCNAA destined for cons-
umption in the territory represented by AIT. IfAIT considers
that exports from the territory represented by CCNAA destined
for consumption in the territory represented by AIT of a par-
ticular type of Monitored Product increases significantly re-
lative to the representative product mix (from time to time
defined after taking into account market conditions in the t-
erritory represented by AIT), and that material distortions
of trade within a Monitored Product category are sufficient
to substantially impair or threaten to impair the attainment
of the objectives of this Understanding, AIT may request con-
sultations with CCNAA.
B. The consultations so requested shall be completed no later t-
han 90 days after the date of the request for consultations.
No later than 30 days after the conclusion of consultation,
CCNAA shall ensure that the competent authorities in the ter-
ritory it represents take such mutually agreed upon measures
as are necessary and appropriate to eliminate such material
distortion as provided under the laws and regulations of the
territory represented by CCNAA. Such measures shall in c-
lude the establishment of appropriate sub-categories of Moni-
tored Products as set forth in appendix D. If agreement is n-
ot reached in 90 days, either party may take such measures as
it determines are necessary to attain the objectives of this
Understanding. For the purposes of paragraph 8.A., the allow-
able quantity of each separate sub-category shall be calcula-
ted on the basis of the representative product mix set forth
below:
Machining centers: At least thirty to fifty percent of expor-
ts from the territory represented by CCNAA to the territory
represented by AIT must remain in the "small vertical" sub-c-
ategory; the remainder shall be distributed among the other
sub-c8tegories specified in Appendix D to the Understanding (
i.e., they shall not be concentrated in any single sub-categ-
ory).
Numerically Controlled (NC) Lathes: The territory represented
by CCNAA shall maintain at least eighty percent of its NC la-
the exports to the territory represented by AIT in the "small
horizontal" sub-category.
Either side may request consultations to discuss mutually agree-
able modifications to this guidance to take account of major ch-
anges in market conditions.
9. SPECIAL ISSUE PERMITS
A. Whenever the authorities of the territory represented by AIT
determine that the attainment of the objectives of this Unde-
rstanding requires the importation into the territory repres-
ented by AIT of any Monitored Product in excess of its appli-
cable export limit for any period of this Understanding, AIT
shall ask CCNAA to request that the competent authorities in
the territory it represents issue special export permits for
that Monitored Period and for that Monitored Product in such
quantity as AIT deems appropriate, in excess of the applicab-
le export limit.
B. In cases where a machine tool user in the territory represen-
ted by AIT asserts that no comparable tool can be obtained f-
rom domestic suppliers, AIT shall ensure that the authorities
in the territory represented by AIT shall immediately begin
an investigation upon receipt of a properly completed special
issue permit application. If AIT does not identify a domestic
source of comparable machine tools within thirty(30) days, A-
IT shall automatically request that CCNAA issue the requested
permits.
C. AIT shall ensure that the authorities in the territory repre-
sented by AIT shall give special consideration to requests f-
rom CCNAA or individual companies for special issue permits
associated with direct investment in the territory represent-
ed by AIT consistent with the December 27, 1991 decision of
the authorities in the territory represented by AIT.
D. Each special permit issued under the preceding paragraph 9,
shall be marked "special" and shall be used within 90 days f-
rom the date of issuance, unless AIT agrees to an extension
of such 90-day period .
E. No Monitored Product exported to the territory represented by
AIT under special permit shall be counted for the purposes of
determining the export limit; or representative product mix
under this Understanding.
10. ADDITIONAL MONITORING
AIT shall ensure that the competent authorities in the territory
represented by AIT shall take appropriate measures to ensure th-
at imports of Monitored Products from other territories dot not
impair the attainment of the attainment of the objectives of th-
is Understanding.
11. FAIR AND EQUITABLE TREATMENT
A. The authorities of the territory represented by AIT shall pr-
ovide treatment which is fair and equitable, and generally
no less favorable in effect, for the territory represented by
CCNAA vis-a-vis any other country which is a party to a comp-
arable Understanding on machine tools with AIT.
B. If the authorities of the territory represented by CCNAA con-
sider that, as a result of the application of this Understan-
ding, CCNAA is placed in a position materially unfair and in-
equitable, or generally less favorable in effect, vis-a-vis
any other country which is a party to a comparable Understan-
ding on machine tools with AIT, the authorities of the terri-
tory represented by CCNAA may request consultations with the
authorities of the territory represented by AIT. Such consul-
tations will be held and concluded promptly with a view to d-
etermining appropriate remedial action, and AIT will take su-
ch appropriate remedial measures as may be mutually agreed to
by the two authorities in such consultation .
12. SPECIAL PROVISION
A. If in the last quarter of 1992,
(1) the aggregate market share accounted for by imports of all
Understanding products into the territory represented by
AIT from countries and territories other than Japan and t-
he territory represented by CCNAA for the most recent twe-
lve-month period increases by more than ten percent from
the previous twelve-month period aggregate market share,
and
(2) aggregate forecasted 1993 apparent consumption in the ter-
ritory represented by AIT for all Monitored Products incr-
eases by more than fifteen percent from their 1991 level,
the authorities of the territory represented by CCNAA may
consult with the authorities of the territory represented
by AIT.
B. If it is confirmed that both of the above conditions are met,
then CCNAA may choose to limit its machine tool exports as f-
rom January 1, 1993 during the two periods January 1, 1993 t-
hrough June 30, 1993, and July 1, 1993 through December 31,
1993, to either the number of units specified in paragraph 3.
A. for all Monitored Products or a market share level for al-
l Monitored Products, as indicated below:
──────────────────────────────
Jan-June 1993 July-Dec 1993
──────────────────────────────
GATE GORY Units Market Units Market
Share share
──────────────────────────────
NC LATHES 119 4.46 144 6.29
──────────────────────────────
NC MILLING 181 25.21 181 25.21
MACHINES
--with controls 23 3.00 23 3.00
attached
──────────────────────────────
MACHINING 186 5.82 227 8.94
CENTERS
──────────────────────────────
C. If CCNAA chooses these market share levels for calendar year
1993, these levels would amend the levels specified in parag-
raph 3.A., and the number of units which the territory repre-
sented by CCNAA may export to the territory represented by A-
IT in each of these two periods shall be calculated by multi-
plying the above percentages time one-half the Data Resources
, Incorporated forecast of annual 1993 apparent consumption
of each category and sub-category of Monitored Product in the
territory represented by AIT. The first projection of annual
1993 apparent consumption shall be prepared in November 1992,
and it shall be revised in May 1993 and September 1993.
13. DURATION
In the event that the duration of any comparable arrangement on
machine tools is shorter than the duration of this Under-standi-
ng, the Term shall be reduced to have the same duration as that
of such arrangement.
14. GATT ACCESSION
The authorities represented by AIT understand that the authorit-
ies represented by CCNAA are presently seeking CCNAA accession,
and hereby state that nothing provided in this Understanding is
intended to contravene the GATT or is intended to operate to pr-
ejudice CCNAA's application for GATT accession. Should, however,
such a situation arise, AIT and CCNAA will hold emergency consu-
ltations with the objective of remedying this situation.
15. ENTRY INTO FORCE
This Understanding shall enter into force upon the date of sign-
ature.
16. TERMINATION
This Understanding will terminate on December 31, 1993, and will
not be extended. Thereafter, trade in machine tools between the
territory represented by CCNAA and the territory represented by
AIT shall be governed by the rules and provisions of the General
Agreement on Tariffs and Trade (GATT). Consistent with the GATT,
the territory represented by CCNAA shall receive treatment that
is fair, equitable, and generally not less favorable in effect
than that accorded to any other country or territory exporting
machine tools covered by this Understanding to the territory re-
presented by AIT.
17. DETERMINATION REPORT TO THE COMPETENT AUTHORITIES IN THE TE-
RRITORY REPRESENTED BY AIT
Provided that it is determined that CCNAA is effectively implem-
enting this Understanding and continues to effectively implement
and enforce this Understanding during the period of this Unders-
tanding, the competent authorities in the territory represented
by AIT shall take no action under section 232 of the Trade Expa-
nsion Act of 1962 to adjust imports of Monitored Products from
the territory represented by CCNAA.
18. NOTICES
For all purposes hereunder AIT and CCNAA shall be represented by
and all communications and notices shall be addressed and deliv-
ered to:
Done, in duplicate, at Washington, D.C. on this 30 th day ofJune
, 1992.
For AIT
(Signed)
Chairman of the Board and
Managing Director
American Institute
in Taiwan
For CCNAA
(Signed)
Representative
Coordination Council for
North American Affairs

APPENDIX A
(CONCORDANCE)
CATEGORY CCC CODE HTSUSA*
NC LATHES 8458.11.00.00.8 8458,11.0010
8458.91.00.00.1 8458.11.0030
8458.11.0050
8458.11.0090
8458.91.1060
8458.91.1080
8458.91.5050
8458.91.5070
8466.93.00.00.9 8468.93.1060
8466.93.7080
MACHINING

CENTERS 8457.10.00.00.0 8457.10.0005
8457.30.00.00.0 8457.10.0015
8457.10.0025
8457.10.0035
8457.10.0045
8466.93.00.00.9 8466.93.1060
8466.93.7080
NC MILLING
MACHINES 8459.51.000.8 8459.51.0080
8459.61.000.6 8459.61.0080
8466.93.00.00.9 8466.93.1060
8466.93.7080
-- NC MILLING
MACHINES 8459.51.000 8459.51.0080
WITH CONTROLS 8459.61.000 8459.61.0080
ATTACHED 8466.93.00.00.9 8466.93.1060
8466.93.7080
*NOTE: Consistent with U.S. Customs Service practice, if the nu-
merical control unit is not imported with the machine to-
ol, the latter is nevertheless classified as a numerical-
ly controlled machine tool, provided it has the specific
characteristics of this type of machine, including facin-
gs for a numerical control and a system for measuring di-
splacements or the position of the moving elements.
1 Covered if part of a substantially complete machine tool, as
defined by Annex A, but not covered if spare parts or replace-
ment components, for machine tools or substantially complete
machine tools already in the territory represented by AIT.
2 Included in sub-category if numerical control is attached.

ANNEX A
The following principles should be used to determine when expor-
ts of components of any Monitored Product constitute unassembled
machine tools (hereinafter referred to as "substantially comple-
te machine tools") for purposes of paragraph 2.A of the Underst-
nding, and thus should be consequently counted in the export l-
imits provided for in the Understanding. These principles apply
to Numerically Controlled Lathes, Machining Centers, and NC Mil-
ling Machines.
1. Points are allocated for components not exported from the te-
rritory represented by CCNAA. Exports will be considered to
be substantially completed machine tools if components not e-
xported from the territory represented by CCNAA account for
less than 12 points.
2. In order for exports not to be counted in the export limits,
components not exported from the territory represented by CC-
NAA must account for 12 or more points. There must be a mini-
mum of six points in critical elements, of which at least two
points must be in the castings/machining/ fabrications sub-g-
roup.
3. These principles will be applied to all machine tool compone-
nts of all ;Monitored Products exported directly or indirect-
ly to the territory represented by AIT through one or more t-
hird countries.
4. These principles will be applied to each model and type of M-
onitored Product.
5. In the event that components for one Monitored Product are e-
xported from the territory represented by CCNAA in more than
one shipment, they will be treated as components being expor-
ted in one shipment.
6. CCNAA and AIT will cooperate in the implementation of these
principles and should problems arise, CCNAA and AIT will seek
solutions through mutual consultation.
CRITERIA FOR SUBSTANTIALLY COMPLETE NC LATHES
AIT and CCNAA will determine on the basis of the criteria outli-
ned below when imports of components of a Monitored Product con-
stitute a substantially complete machine tool for purposes of p-
aragraph 2.A. of this Understanding. This determination will be
made by machine tool model and irrespective of the number of se-
parate shipments in which the components destined for a particu-
lar consignee enter the territory represented by AIT.
Imports will be considered substantially complete machine tools
and be counted against the applicable Export Limit based on the
listed components that are imported from Japan or the territory
represented by CCNAA, directly or indirectly through third part-
ies. Points are scored for components that are not imported from
Japan or the territory represented by CCNAA.
Critical Elements (must have a minimum of 6 points, of which a
minimum of 2 points must be in the castings/fabrications/machin-
ing subgroup)
software: source code -- 1
servo drives (amplifiers) -- 1
servo motors -- 1
NC control -- up to 3*
major castings/fabrications -- up to 2**
machining of major fabrications/
castings -- up to 2**
spindle assembly (including speed change mechanism) -- 1
ballscrews -- 1
automatic tool changer and tool
magazine (if applicable) --1
Other Elements
spindle motor -- 1
electrical system -- 1
coolant system -- 1
hydraulic system -- 1
lubrication system -- 1
pneumatic system (if applicable) -- 1
sheet metal fabrications -- 1
chip removal system (if applicable) -- 1
need 12 points to pass
*for numerical control:
printed circuit board
circuit board assembly
circuit testing, cycling and burn-in,
functional systems testing
cabinet (including card racks)
microprocessors
wire harnesses and electric cables
operator's panel
CRT
power supply unit
1 point for 3 of above
2 points for 5 of above
3 points for 7+ of above
(must either get credit for printed
circuit boards or microprocessors to
qualify for any points)
**major castings/fabrications include:
bed
headstock
carriage
cross-slide and turret(s)
tailstock (if applicable)
1 point for 2 castings/fabrications
2 points for 3+ castings/fabrications
1 point for machining 2 castings/fabrications
2 points for machining 3+ castings/fabrications
CRITERIA FOR SUBSTANTIALLY COMPLETE MACHINING CENTERS AND NC MI-
LLING MACHINES
AIT and CCNAA will determine on the basis of the criteria outli-
ned below when imports of components of a Monitored Product con-
stitute a substantially complete machine tool for purposes of p-
aragraph 2.A. of this Understanding. This determination will be
made by machine tool model and irrespective of the number of se-
parate shipments in which the components destined for a particu-
lar consignee enter the territory represented by AIT.
Imports will be considered substantially complete machine tools
and be counted against the applicable Export Limit based on the
listed components that are imported from Japan or the territory
represented by CCNAA, directly or indirectly through third part-
ies. Points are scored for components that are not imported from
Japan or the territory represented by CCNAA.
Critical Elements (must have a minimum of 6 points, of which a
minimum of 2 points must be in the castings/fabrications/machin-
ing subgroup)
software: source code -- 1
servo drives (amplifiers) -- 1
servo motors -- 1
NC control -- up to 3*
major castings/fabrications -- up to 2**
machining of major fabrications/
castings -- up to 2**
spindle assembly (including speed change mechanism) -- 1
ballscrews -- 1
automatic tool changer and tool
magazine (if applicable) --1
Other Elements
spindle motor -- 1
electrical system -- 1
coolant system -- 1
hydraulic system -- 1
lubrication system -- 1
pneumatic system (if applicable) -- 1
sheet metal fabrications -- 1
chip removal system (if applicable) -- 1
need 12 points to pass
*for numerical control:
printed circuit board
circuit board assembly
circuit testing, cycling and burn-in,
functional systems testing
cabinet (including card racks)
microprocessors
wire harnesses and electric cables
operator's panel
CRT
power supply unit
if 3 of above get 1 point
if 5 of above get 2 points
if 7+ of above get 3 points
(must either get credit for printed
circuit boards or microprocessors to
qualify for any points)
**major castings/fabrications include:
bed/base
saddle (if applicable)
column
table/pallet
head/ram
1 point for 2 castings/fabrications
2 points for 3 + castings/fabrications
1 point for machining 2 castings/fabrications
2 points for machining 3* castings/fabrications

APPENDIX B
CONCORDANCE OF U.S. SHIPMENTS, IMPORTS, AND EXPORTS
PRODUCT SHIPMENTS EXPORTS IMPORTS
(SIG NOS.)* (SCHEDULE B)* (HTSUSA)*
NC
LATHES 35415 15 8458.11.0010 8458.11.0010
35415 16 8458.11.0030 8458.11.0030
35415 17 8458.11.0050 8458.11.0050
35415 18 8458.11.0090 8458.11.0090
35415 21 8458.91.1060 8458.91.1060
35415 31 8458.91.1080 8458.91.1080
35415 33 8458.91.5050 8458.91.5050
8458.91.5070 8458.91.5070
NC MILLING
MACHINES 35416XX** 8459.51.0080 8459.51.0080
8459.61.0080 8459.61.0080
MACHINING 3541A 01 8457.10.0005 8457.10.0005
CENTERS 3541A 03 8457.10.0015 8457.10.0015
3541A 05 8457.10.0025 8457.10.0025
3541A 07 8457.10.0035 8457.10.0035
3541A 09 8457.10.0045 8457.10.0045
3541A 11
3541A 13
3541A 15
3541A 17
3541A 19

* These numbers are subject to revision when the authorities re-
presented by AIT adopt modifications to the applicable SIG, i-
mport or export nomenclatures. Technical adjustments will be
made as necessary.
**There is no SIC Code for numerically controlled milling machi-
nes. Milling machines are reported under SIC Code 35416.
NOTE: Consistent with Customs Service practice in the territory
represented by AIT, if the control unit is not imported w-
ith the machine tool, the latter is nevertheless to be co-
nsidered as a numerically controlled machine tool, provid-
ed it has the specific characteristics of this type of ma-
chine, including a system for measuring displacements or
the position of the moving elements.

APPENDIX C
(copy of CCNAA export permit)
APPENDIX D
SUBCATEGORIES OF MONITORED PRODUCTS
MACHINING CENTERS HTSUSA
Used or Rebuilt 8457.10.0005
Small, Vertical 8457.10.0015
Large, Vertical 8457.10.0025
Horizontal 8457.10.0035
Other 8457.10.0045
NC LATHES
Small, Horizontal 8458. 11.0010
8458. 11.0030
Medium, Horizontal 8458. 11.0050
Large, Horizontal 8458. 11.0090
Vertical 8458. 91.1060
8458. 91.1080
8458. 91.5050
8458. 91.5070