RESTRICTED
WORLD TRADE WT/REG38/1
10April 1997
ORGANIZATION(97-1517)
Original:English/French/Spanish Committee onRegional Trade Agreements
FREE TRADE AGREEMENT BETWEEN
CANADA AND CHILE
Thefollowing communication, dated 26March 1997, hasbeenreceived fromthePermanent
Missions ofCanada andChile, withtherequest thatitbedistributed toWTO Members.
_________________________
ThePermanent Mission ofCanada andthePermanent Mission ofChile wish toinform
WTO Members thattheirauthorities haveconcluded negotiations fortheestablishment ofafreetrade
agreement. TheAgreement iscurrently submitted toourrespective parliaments forratification. The
Agreement isscheduled toenter intoforce on2June1997.
Upon ratification, Canada andChile willpromptly submit anotification totheCouncil for
Trade inGoods inaccordance withparagraph 7(a)ofArticle XXIV ofGATT andtotheCouncil for
Trade inServices inaccordance withparagraph 7(a)ofArticle VofGATS.
Ashort description ofthecontent oftheCanada-Chile FreeTrade Agreement isattached for
information.WT/REG38/1
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SUMMARY OFCANADA-CHILE FREE TRADE AGREEMENT
TheCanada–ChileFreeTradeAgreement(CCFTA)isacomprehensivetradeagreement,covering
tradeingoodsandservices,investmentanddisputesettlementmechanisms.TheAgreementalsoincludes
twoparallel agreements onenvironmental andlabour co-operation, modelled ontheNorth American
FreeTrade Agreement (NAFTA) sideagreements.
TheCCFTA wasconcluded withthesigning ofaprocès verbal byCanadian Prime Minister
JeanChrétien andChilean President Eduardo FreiinOttawa on18November 1996. Thetextwas
signed byCanadian Minister forInternational Trade Arthur Eggleton andChilean Finance Minister
Eduardo Aninat on5December 1996 inSantiago.
TheCCFTA isscheduled toenter intoforce on2June1997, following legislative approval
inbothcountries.
TheCCFTA islargely modelled ontheNorth American FreeTrade Agreement (NAFTA),
notablyintermsofitsstructure,scopeandcoverage,andcustomsadministrationmodalities,inparticular,
therules oforigin.
Trade inGoods
Canada andChile haveagreed totheimmediate elimination oftariffs forabroad range of
products. Tariffs onsome industrial andresource-based goods, willbephased-out overamaximum
offiveyears.
Fortextiles andapparel, theCCFTA provides foralonger tariff phase-out ofuptosixyears,
forCanada andfiveyears forChile, andaspecial safeguard provision toguard against import surges
during thephase-out period. Footwear tariffs willbephased-out oversixyears inbothcountries.
Therulesoforigin intheCCFTA areessentially based onchanges intariffclassification under
theHarmonized System. Therulesoforigin forcertain manufactured products havebeenmade less
restrictive thanthoseunder NAFTA toprovide manufacturers withpreferential access without requiring
major changes totheircurrent sourcing ofmaterials andparts.
Foragricultural products, themajority oftariffs willbeeliminated by1January 2003. Canada
willretain itsover-quota tariffs fordairy, poultry andeggproducts, while Chile willretain itstariffs
forthesamecommodities. Allother Canadian agriculture tariffs willbeeliminated by1January 2003,
however, some Chilean tariffs willhavealonger phasing. Chile willprovide Canada withimmediate
duty-free access forimportant quantities ofpork, canola oilandbeef, however, theover-quota tariff
forporkandvegetable oilswillbephased outovertenyears while thebeefover-quota tariff willbe
phased outover15years. Other Chilean agricultural tariffs tobephased outovertenyears include
potato products, cornflourandcertain sugar products. Alonger phasing applies tosugar (16years),
milling wheat andwheat flour(17years). Allfishandfishproducts willreceive duty-free treatment
upon implementation oftheCCFTA.
Canada andChile haveagreed tomaintain theirrespective dutydrawback programs which
allow fortherefund ofcustoms duties levied onimported materials andcomponents incorporated into
exported goods. TheCCFTA prohibits theimposition ormaintenance ofcustoms userfeesandChile
hasagreed toeliminate itsexisting fees.Thecustoms procedures aredesigned tofacilitate trade, while
ensuring effective administration andenforcement oftherules oforigin andother customs matters.WT/REG38/1
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TheCCFTA alsocontains provisions regarding thetemporary duty-free entry ofnecessary professional
equipment andtoolsofthetradeforbusiness persons. These rulesalsocover goods imported forsports
purposes, display anddemonstration, commercial samples andgoods thathaveundergone repair or
alteration intheother country.
Trade inServices
TheCCFTAmarksasignificantfurtherguaranteeofliberalizationintheareaofservicesthrough
itssubstantialsectoralcoverageandtheprohibitionofnewormorediscriminatorymeasures.Inaddition,
anyfuture liberalization ofremaining discriminatory measures willbelocked in.Transparency isgreatly
enhanced bythelisting ofdiscriminatory measures intheAnnexes. TheCCFTA isdesigned tofacilitate
tradebetween Chile andCanada anddoesnotraisebarriers toservices tradewithWTO Members outside
theCCFTA. TheCCFTA alsoincludes provisions ontemporary entry which provide forexpedited
entry forinvestors, business visitors, intra-company transferees andother business professionals of
bothParties.
Canada andChile havealsoagreed tomonitor carefully theongoing implementation process
andtoseekfurther opportunities forliberalization following implementation.
Investment
Oninvestment, theCCFTA provides fordisciplines onnon-discriminatory treatment through
national treatment andMFN clauses. Inaddition, theCCFTA carefully limits theconditions for
expropriation andguarantees investors ofbothParties fairandadequate compensation ifanexpropriation
wereevertooccur. TheCCFTA allows investors totakeadvantage ofinvestor-state dispute settlement
provisions which offeraccess toexpedient international arbitration procedures. Alimited number of
exceptions havebeengranted tobothParties.
Competition Policy
TheCCFTA commits theparties tomaintain provisions toproscribe anti-competitive business
conduct inbothCanada andChile, andtotakeappropriate action asrequired. Thecompetition articles
oftheCCFTA alsoallow forconsultation ontheeffectiveness oftheParties 'respective competition
lawsandforcooperation intheenforcement ofcompetition lawsinthefreetrade area.
TheCCFTA affirms therightofthetwoParties todesignate monopolies andstateenterprises
inaccordance withthearticles oftheCCFTA. Italsosetsoutnewdisciplines related tothedesignation
ofmonopolies andstateenterprises toensure non-discriminatory treatment, tomaintain consistency
withcommercial considerations intheterritory ofbothParties, andtoguard against anti-competitive
practices innon-monopolized territories ofeither Party.WT/REG38/1
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Trade Remedies andSafeguards
Canada andChile havenegotiated amutual exemption from theapplication ofanti-dumping
duties intheagreement. Foreachgood, theanti-dumping exemption takes place when thetariffs on
thatgood havereached zeroinbothcountries, oraftersixyears, whichever isearlier. TheCCFTA
includes areview clause which requires bothcountries toreview theanti-dumping exemption nolater
thanfiveyears afterthecoming intoforceoftheagreement. TheCCFTA alsocontains an“exceptional
circumstances ”clause thatprovides forspecial consultations onspecific problems should these arise.
Inaddition, achapter onemergency (or"safeguard") procedures permits theimposition of
border restrictions toprovide temporary relief from increases andsurges inimports from theother
Party thatcause orthreaten tocause serious injury todomestic producers.
Institutional Arrangements andDispute Settlement Provisions
Theinstitutional arrangements setoutintheCCFTA ensure jointdecision-making andeffective
dispute resolution. Canada andChile willhaveanequal voice inresolving problems through ready
access toobjective dispute settlement panels providing authoritative interpretations. TheCCFTA
establishes theFreeTrade Commission andtheFTASecretariat. TheCommission willsupervise the
implementation andanyfurther elaboration oftheagreement andresolve anydisputes thatmayarise.
TheSecretariat willestablish offices ineachcountry andsupport theCommission, aswellasacting
asregistrar fordispute settlement panels andasthedepository forinvestor-state disputes.
TheCCFTA obliges Canada andChile toseekagreed interpretations andreach agreed solutions,
reflecting thecommitment ofthetwogovernments tomanage theirtrade relations amicably. Inthe
event thatanymatter arises thatmight affect theoperation oftheCCFTA, either country mayrequest
consultations withtheother. Should consultations failtoresolve thematter, either country mayrequest
ameeting oftheCommission. TheCCFTA directs theCommission tosettle thedispute promptly.
Ifthecountries areunable toagree onamutually acceptable solution, either mayinitiate arbitral panel
proceedings. These provisions provide aneffective, timely andfinalprocedure forthesettlement of
disputes.