WORLD TRADE
ORGANIZATIONWT/REG125/3
4 March 2003
(03-1260)
Committee on Regional Trade Agreements Original:  Spanish
FREE-TRADE AGREEMENT BETWEEN CHILE AND MEXICO
GOODS ASPECTS
Communication from the Parties
I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Membership and dates of signature, ratification and entry into force
The Parties to the Agreement are the Government of the Republic of Chile and the
Government of the United Mexican States.  The Free-Trade Agreement between Chile and Mexico(ALCCM) was signed on 18 April 1998 and later ratified  by the two countries' legislative bodies.  It
entered into force on 1 August 1999.
The Agreement was notified to the Council for Trade in Goods on 27 February 2001, in
accordance with Article XXIV:7(a) of the General Agreement on Tariffs and Trade 1994 (GATT1994).
2. Type of agreement
The Agreement establishes a free-trade area. It was preceded by an Economic
Complementarity Agreement (ACE No. 17) signed on 22 September 1991 under the umbrella of the
Latin American Integration Associ ation (LAIA).  This instrument was notified to the GATT 1947,
pursuant to the relevant provisions of the Enabling Clause, and was circulated as documentL/6985/Add.1.  It represented a new model of integration between Chile and Mexico, the objective
being to step up bilateral economic relations by freeing imports from the Parties from all duties and
restrictions, under a free-trade regime covering all reciprocal trade and 98 per cent of tariff lines.
3. Scope
In view of the successful results in trade in  goods achieved with the ACE No. 17 and the
desire to foster relations encompassing all other spheres of economic activity, it was decided to
negotiate a new Agreement.  In addition to the traditional disciplines covering trade in goods, this new
Agreement lays down rules governing investment, cross-border trade in services (including air
transport), intellectual property and a modern dispute settlement system to protect rights andobligations undertaken.
The objectives of the ALCCM, as set out in Article 1-02, are as follows:  To encourage the
expansion and diversification of trade among the Parties;  to eliminate barriers to trade and facilitate
the movement of goods and services in the free-trade area;  to promote conditions of fair competitionin the free-trade area;  to increase substantially investment opportunities in the free-trade area;  to
protect and appropriately and effectively enforce intellectual property rights in the free-trade area;  to
establish a framework for further bilateral, regional and multilateral cooperation to expand andWT/REG125/3
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enhance the benefits of the Agreement;  and to establish effective procedures for the application and
observance of the Agreement, for its joint administration and for dispute settlement.
The ALCCM encompasses all trade in industri al products (Chapters 25-97 of the HS) and
essentially all trade in agricultural and fish products (Chapters 1-24 of the HS).  To be eligible underthe preferential tariff regime, the products covered by the Agreement must originate in Chile or
Mexico, in conformity with the rules of origin laid down therein.  Except as provided in Annexes 3-
04(3) and 3-04(4), the Parties agree to eliminate all customs duties on originating goods on the date of
the Agreement's entry into force.
4. Trade data
Trade Balance between Mexico and Chile
(In US$ Thousand)
Year Exports Imports Balance Total Trade
1995 489,752 154,266 335,486 644,017
1996 688,663 170,768 517895 859,431
1997 842,307 372,387 469,921 1,214,694
1998 625,049 551,953 73,096 1,177,003
1999 366,441 683,465 -317,024 1,049,907
2000 431,352 893,727 -462,375 1,325,079
2001 374,424 974,990 -600,566 1,349,143
  20021236,682 907,681 -670,999 1,144,363
1 Figures available up to November.
Source:  Ministry of the Economy, using data provided by the Bank of Mexico.
In 2000, Mexican imports from Chile increased to US$893.7 million1, while Chilean imports
from Mexico totalled US$615.1 million2.
Mexican Imports from Chile
(in US$ million)
Total Covered by the ALCCM % of the total covered
1998 552.0 551.8 99.96
1999 683.5 683.3 99.97
2000 893.7 893.6 99.99
2001 975.0 974.8 99.98
  Source:  Ministry of the Economy, using data provided by the Bank of Mexico.
                                                     
1 Source:  Ministry of the Economy, using data provided by the Bank of Mexico.
2 Source:  General Directorate of International Economic Relations (DIRECON).WT/REG125/3
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Mexican Imports from Chile:  10 Main Products
(In US$ Million)
SACH 1/ DESCRIPTION 1998 % 1999 % 2000 %
7403.11.01 Cathodes and sections of
cathodes126,756 22.9 190,315 27.8 256,582 28.71
7402.00.01 Unrefined copper;
copper anodes forrefining113,262 20.5 68,908 10.0 98,645 11.04
8704.31.99 Transport vehicles, other 0 0.0 47,645 9.20 82,260 9.20
0806.10.01 Fresh grapes* 20,320 3.6 23,956 4.06 36,284 4.06
8703.23.01 Motor cars, of a cylinder
capacity exceeding
1,750cc5,642 1.0 9,021 2.61 23,363 2.61
8703.22.01 Motor cars, of a cylinder
capacity exceeding
1,000cc0 0.0 6,773 2.28 20,337 2.28
4407.10.02 Wood, in plates, panels
or beams0 0.0 2,629 1.79 16,003 1.79
0808.10.01 Apples 17,346 3.1 22,155 1.67 14,930 1.67
2008.70.01 Peaches 9,748 1.7 18,695 1.55 13,896 1.55
0809.30.01 Peaches, including
nectarines6,755 1.2 9,544 1.49 13,330 1.49
TOTAL 551,953 683,465 893,726
1 Chilean Harmonized System.
*  Excluded from the Agreement.
Source:  Ministry of the Economy, using data provided by the Bank of Mexico.
Chilean Imports from Mexico
(In US$ Million)
Total Covered by the ALCCM % of the total covered
1998 849.9 840.1 98.8
1999 578.8 578.4 99.9
2000 615.7 615.1 99.9
2001 532.9 532.6 99.9
               Source:  DIRECON.WT/REG125/3
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Chilean Imports from Mexico:  Main Products
(in US$ Million)
SACH DESCRIPTION 1998 1999 2000
8703.23.90Other motor vehicles, principally designed for the
transport of persons, with spark-ignition internalcombustion reciprocating piston engine, of a cylindercapacity exceeding 1,500cc but not exceeding 3,000cc84,231 30,989 32,196
8704.31.20Other motor vehicles, designed for the transport of goods,
with spark-ignition internal combustion piston engine and
a load capacity exceeding 2,000kg.38,458 39,335 32,517
8528.12.00 Colour television sets 104,318 76,864 80,049
8528.10.00 Colour television sets* 0 0 0
3904.10.20 Polyvinyl chloride, not mixed with any other substances 14,154 10,163 12,640
8471.91.00 Other numerical or digital processing units 0 0 0
3103.10.00 Superphosphates 23,833 20,148 22,261
8471.20.00 Numerical or digital automatic data-processing machines 0 0 0
8704.22.70Chassis, fitted with cabs, for goods vehicles, with
compression-ignited internal combustion piston engine
(diesel or semi-diesel) an d a load capacity exceeding
500kg. but not exceeding 2,000kg.6,159 542 2,017
3907.60.00 Polyethylene terephthalate 11,803 9,927 19,788
TOTAL MAIN PRODUCTS                                      (A) 282,956 187,968 201,468
TOTAL EXPORTS TO MEXICO                             (B) 849,919 578,779 615,727
PERCENTAGE                                                     (A)/(B) 33.3% 32.5% 32.7%
* Change in classification.
II. TRADE PROVISIONS
Article 3-09 on import and export restrictions provides that, with the exception of the
measures listed in Annex 3-09 (see II.1.2 and II.2 belo w), neither Party may adopt or maintain import
or export restrictions other than those consistent  with Article XI of the GATT 1994.  Under Article 3-
09, both Parties further agree to prohibit both export price and import price requirements.
1. Import restrictions
1.1 Duties and charges
Article 3-04 stipulates the elimination of import duties on Mexican and Chilean goods that
satisfy the conditions laid down in the rules of origin in Chapter 4 of the Agreement, with the
exception of the products listed in Annexes 3-04(3) and 3-04(4).
All duties on most originating goods traded between Mexico and Chile were abolished
following the Agreement's entry into force on 1 August 1999.  Among these goods are productsaccounting for a major share of industrial trade between Chile and Mexico.  Chile's main products
include copper and copper minerals, cellulose and fish meal;  Mexico's main products include
passenger transport vehicles, chassis complete with cabs, and colour television sets.
The products listed as exceptions in Annex 3-04(3) are in approximately 100 tariff
classifications representing about 2 per cent of the range of products.  Some of these products enjoyWT/REG125/3
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preferential tariff treatment.  The tariff reduction programme in Annex 3-04(4) covers only one
product, namely apples, full elimination of the duty being scheduled for 2006.  As regards the
products listed as exceptions in Annex 3-04(3), the Parties may consult to consider and agree on
accelerating the scheduled elimination or to include products listed as exceptions in the tariff
reduction programme.
1.2 Quantitative restrictions
Article 3-09 prohibits all quantitative restrictions on the importation of any good of the other
Party, other than those consistent with the rights and obligations of the Parties under Article XI of the
GATT 1994, including its interpretative notes, or th ose laid down in Annex 3-09.  Chile has reserved
the right to adopt and maintain measures relating to the domestic sale of domestically producedcopper and other metals and to impose measures relating to the importation of used vehicles.  Mexico
has laid down prohibitions or provided for prior authorization for the importation of used clothing,
petroleum products, and both used and new automotive goods.
2. Export restrictions
Under Article 3-09, the Parties may not apply any export prohibitions or restrictions other
than those consistent with the rights and obligations of the Parties under Article XI of the GATT
1994, including its interpretative notes, or those laid down in Annex 3-11.
2.1 Duties and charges
Article 3-10 rules out the application of any customs processing fee on goods originating in
either Party.  In another sphere, Article 3-11 prohi bits the imposition of any tax, duty or other charge
on the exportation of goods, unless such a measure applies on any such good when destined for
domestic consumption.
Annex 3-11 describes the exception provided for Mexico to apply a tax, duty or other charge
on exports of basic foodstuffs.  This concerns a basic basket of edible products, where it is necessary
to ensure the availability of these products under a domestic food aid programme or to relieve a
critical shortage.  Such restrictions may be applied, provided that the aim is not to increase protection
of the domestic industry, for a period of up to one year or such longer period as the Parties may agree.
2.2 Quantitative restrictions
Article 3-09 prohibits all restrictions on the exportation of any good of the other Party, other
than those consistent with the rights and obligations of the Parties under Article XI of the GATT
1994.  The exceptions are listed in Annex 3-09.  As indicated above, Annex 3-09 refers to thediscretion that Mexico may exercise in restricting export (and import, see 1.2 above) authorization
inter alia  for fuels such as naphtha, oils, gasoline, petroleum gases and bitumens, in order to reserve
foreign trade in such goods for itself.
3. Rules of origin
Rules of origin are covered by Chapter 4 of the Agreement.  Annex 4-03 contains specific
rules of origin, detailed by tariff classification number and encompassing the entire Harmonized
System.  The fact that a rule is provided for each product ensures transparency in the implementation
and interpretation of the rules.
The Chapter lays down general rules to determin e goods originating in the free-trade area, i.e.
goods wholly obtained or produced in the territory of either Party;  goods manufactured with non-WT/REG125/3
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originating materials but meeting the requirements of Annex 4-03 or satisfying the regional content
requirement where the corresponding change in tariff classification cannot be made;  and goods
classified in subheadings for which a transition period regarding the mandatory minimum regional-
content value has been agreed.
The Agreement contains general provisions allowing a certain degree of flexibility in the
implementation of its rules.  Special rules for this purpose are set out in Articles 4-03(f)
(Circumstances precluding any change in tariff classification), 4-08 (Accumulation) and 4-06 ( De
Minimis ).  There are also provisions on how to deal with certain materials in the determination of
product origin (for example packing materials and containers, fungible materials, and indirect
materials used in the production of goods).
In developing the specific rules of origin in Annex 4-03, Mexico and Chile sought to ensure
that Mexican and Chilean producers using imported inputs could avail themselves of the Agreement
without incurring serious disruptions in their regular sources of supply.  Chapter 5 of the Agreement
contains a series of provisions for the harmonization of customs procedures, including certification of
origin, which is the responsibility of the exporter and – where the exporter does not produce the goods– the producer (Article 5-02), and the administration and implementation of the determination-of-
origin procedure.  The Agreement establishes a Committee on Trade in Goods (Article 3-16), a Sub-
Committee on Rules of Origin (Article 4-18), a nd a Sub-Committee on Customs (Article 5-14) to
monitor compliance with, and facilitate cooperation in the effective administration of, the
Agreement's customs provisions.
Chapter 20 (Final Provisions) provides for cooperation on rules of origin (Article 20-09).
4. Standards
In Article 1-03, the Parties affirm their rights and obligations under the WTO Agreements.
Article 1-05 establishes the validity of all references to any other international treaty or agreement to
which both countries are party.
Part Three of the ALCCM deals with technical standards, including sanitary and
phytosanitary (Chapter 7) and standards-related (Chapter 8) measures.
4.1 Technical barriers to trade
Chapter 8 deals with standards-related measures, i.e. official rules, government technical
regulations and procedures for monitoring compliance.  The Parties undertake not to use such
measures to create unnecessary obstacles to trade.
In this particular sphere, the ALCCM represents an advance over the WTO Agreement on
Technical Barriers to Trade, since its scope includes cross-border services.  The commitments are
deeper and, in some cases, more operational (being established as functions of the Committee).  The
ALCCM also provides for greater transparency in requiring bilateral notification of all standards-
related measures prior to their publication.
Chapter 8 recognizes the provisions of the WTO Agreement on Technical Barriers to Trade
and strengthens certain commitments regarding the consistency of measures, which are defined as
technical standards, technical regulations and conformity assessment procedures.
In particular, the Parties undertake to work to ensure the consistency of their respective
standards-related measures.  They may request steps to promote such consistency or ask for aWT/REG125/3
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technical regulation to be recognized as equivalent.  Where recognition is denied, the Party concerned
is required to state its reasons in writing.
The Parties also commit themselves to giving favourable consideration to the negotiation of
agreements for mutual recognition of their conformity assessment procedures.
With the exception of emergency situations, the Parties undertake to notify each other at least
60 days prior to the adoption or modification of a technical regulation or conformity assessment
procedure.
The Agreement establishes a Committee on Standards-Related Measures to monitor
implementation of the Chapter's provisions, with responsibility, inter alia , for the incorporation of
particular services sectors or subsectors in Annex 8-01.  In view of the specific nature of
telecommunications, special provision is made for the establishment of a Sub-Committee on
Telecommunications Standards.
4.2 Sanitary and phytosanitary measures
The Parties agree on their rights and obligations as stipulated in the WTO Agreement on the
Application of Sanitary and Phytosanitary Measures.  They undertake to base their measures as far as
possible on international standards, guidelines or recommendations and to establish harmonization
systems, in the sanitary and phytosanitary spheres, for sampling, diagnosis, inspection andcertification of animals, plants and the products and byproducts thereof.  The Parties also agree to
recognize their respective measures as equivalent to the fullest extent possible.
The Parties further undertake to recognize disease- or pest-free areas to the extent that the
Party concerned provides objective evidence of th at condition, to the satisfaction of the other Party.
Lastly, the ALCCM establishes a Committee on Sanitary Measures responsible for coordinating the
relevant provisions and, where necessary, for setting up sub-committees in specific fields.
5. Safeguards
Chapter 6 lays down rules and procedures for the adoption by the Parties of bilateral
safeguard measures to prevent any injury that might arise from an excessive and unforeseen increase
in imports of a product originating in the territory of  the other Party, as a result of tariff reductions
under the Agreement.  Such measures may not be adopt ed for longer than a specified period, the Party
imposing the measure being required to provide comp ensation to the other Party.  If the Parties are
unable to agree on compensation, the exporting country may take action having equivalent effect in
order to offset the trade effects of the safeguard.
Bilateral measures may be adopted solely during the transition period and apply exclusively
to products subject to tariff reduction.  At present, apples are the only product undergoing such a
reduction process.  Bilateral safeguard measures may be adopted beyond the transition period, but
only with the consent of the country ag ainst whose goods the action is taken.
In the long term, both countries – as WTO Members – retain the option of imposing global
non-discriminatory safeguard measures, in accordance with Article XIX of the GATT 1994, beyond
the transition period, provided that exports from the other Party account for a substantial share of total
imports of the goods in question and contribute significantly to the serious injury or threat thereof.
Imports are not normally deemed to represent a substantial share if the Party concerned has not beenamong the five top suppliers of the product during the most recent three-year period.  Such measures
are also subject to restrictions (e.g. immediate compensation or retaliation), and action is limited to
tariff measures.WT/REG125/3
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6. Anti-dumping and countervailing measures
The Parties undertake to begin negotiations as from the second year following the
Agreement's entry into force with a view to the reciprocal elimination of anti-dumping duties (Article
20-08(b)).
7. Subsidies and State aid
Such provisions are governed by the WTO Agreement on Subsidies and Countervailing
Measures.
The ALCCM provides for the elimination of all export subsidies on agricultural products as
from 1 January 2003.  Until that date, should a Party introduce, re-introduce or increase exportsubsidies, the other Party may raise the most-favoured-nation rate of duty applied on the product in
question.
8. Sector-specific provisions
The ALCCM contains specific provisions concerning the automotive sector.  These are set
out in Annex 3-15 and stipulate that Mexico will automatically grant import permits for vehicles
originating in Chile.  The Parties also establish a quota for vehicles.
III. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions and reservations
General exceptions under the Agreement are laid down in Chapter 19.  This Chapter first of
all incorporates the general exceptions in Article XX of the General Agreement on Tariffs and Trade
1994 and Article XIV of the General Agreement on Trade in Services.
Chapter 19 secondly establishes that the Parties are not required to furnish information
regarding national security and may take any action deemed necessary to protect their essential
security interests, in particular measures relating to trade in weapons and transactions in goods,
services and technology carried out for the purpose of provisioning a defence establishment.
Thirdly, the Chapter generally excludes internal taxation measures, providing that rights
deriving from tax conventions are not affected and that the latter prevail in the event of any
inconsistency.
As regards balance of payments, the Agreement provides for the adoption of measures
restricting transfers in the event of serious balance-of-payments difficulties or the threat thereof.  The
Party concerned is required to submit the restrictions imposed to the International Monetary Fund for
review.  The measures must avoid any unnecessary damage and be of a temporary nature.
2. Accession
Pursuant to the Montevideo Treaty of 1980 (Agreement Establishing the Latin American
Integration Association), the ALCCM is open for accession, after negotiation, to all other countries
party to the 1980 Treaty.WT/REG125/3
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3. Dispute settlement procedures
Chapter 18 establishes the Agreement's dispute settlement system.  It regulates the settlement
of disputes arising between the Parties in respect of the ALCCM or of measures that are inconsistent
with the Agreement or liable to cause nullification or impairment of some of the benefits it provides.
The system may not be invoked in the event of disagreement in connection with safeguard measuresthat have simply been proposed or with matters excluded from the scope of the Agreement, as
specified in Chapter 19.
The complaining Party may opt either for the procedure provided by the World Trade
Organization or that established by the ALCCM, in which case the procedure is as follows.
The Agreement first provides for consultations among  the Parties.  If this fails to resolve the
dispute, either Party may refer the matter to the Free-Trade Commission, which then initiates a
conciliation or mediation phase.
If, within a specified period of time, the Parties still fail to agree, the Commission is required
to establish an arbitral panel made up of five members, acting in conformity with rules of procedure tobe laid down by the Commission.  Panellists are normally selected from a roster, drawn up by the
Parties, of experts with international expertise and experience.  Each Party selects two panellists who
are citizens of the other Party.  The chair is designated jointly by the Parties;  should they prove
unable to reach consensus, one of the Parties, chosen by lot, selects as chair an individual from the
roster who is not a citizen of either Party.  A Pa rty may select a panellist who is not on the roster, but
its choice may be challenged by the other Party.
Within a specified time-limit and once the relevant information is before it, the arbitral panel
issues an initial report containing findings of fact, a determination as to whether the measure at issue
is inconsistent with the Agreement, and a recommendation.  The Parties are given a period of time tosubmit their comments, whereupon the panel issues its final report;  this is communicated to the
Parties as well as the Commission and then published, unless the latter otherwise decides.
The final report of the arbitral panel is binding on the Parties, unless they agree otherwise.
The measure found to be inconsistent should be repealed wherever possible.  If the Parties fail to
reach a mutually satisfactory settlement, the complaining Party may suspend the application of
benefits of equivalent effect to the respondent Party, as far as possible in the sector affected by themeasure.  Where the respondent Party deems the benefits suspended by the complaining Party to be
excessive, it may request the establishment of an arbitral panel to rule on the matter.
4. Relations with other trade agreements
In Article 1-03, the Parties affirm their mutual rights and obligations under the Agreement
Establishing the World Trade Organization, the Montevideo Treaty of 1980 and other agreements to
which they are party.  In the event of any inconsistency between the aforementioned instruments and
this Free-Trade Agreement, the latter prevails to the extent of the inconsistency.
According to Article 3-04.6, the preferences negotiated or granted among the Parties under
the Montevideo Treaty of 1980 are rescinded from the time of entry into force of the Agreement.
Article 3-03 incorporates Article III of the GATT 1994.  Article 19-02 incorporates
Article XX of the GATT 1994 and its interpretative notes.
Under Article 3-05, the customs valuation rules applied by the Parties in their reciprocal trade
are governed by the Agreement on Customs Valuation.  The Parties undertake not to make use, inWT/REG125/3
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their reciprocal trade, of the options and reservations allowed under Article 20 and paragraphs 2, 3
and 4 of Annex III of the Customs Valuation Agreement.
Article 3-09.1 stipulates that, except as otherw ise provided in the Agreement, neither Party
may adopt or maintain any prohibition or restricti on on the importation of any good of the other Party,
or on the exportation or sale for export of any good destined for the territory of the other Party, except
in accordance with Article XI of the GATT 1994, including its interpretative notes.  To this end,
Article XI of the GATT 1994 and its in terpretative notes are incorporated into and made a part of the
Agreement.
Article 3-12 establishes the requirement for a Party, prior to the adoption of a measure under
an inter-governmental agreement on goods pursuant  to Article XX(h) of the GATT 1994, to consult
the other Party in order to prevent the nullification or impairment of a concession granted by that
Party under Article 3-04.
Article 3-13.2 specifies that as of 1 January 2003 neither Party may maintain or introduce
agricultural export subsidies in its trade with the other Party.  As of that date, the Parties alsorenounce the rights conferred under the GATT 1994 to use export subsidies and the rights in respect
of the use of such subsidies.
As regards domestic support for agricultural goods, Article 14 provides for compliance by the
Parties with the Agreement on Agriculture, which is part of the WTO Agreement. 
In Article 7-01, the Parties undertake to use the definitions and terms established: (a) in the
Agreement on the Application of Sanitary and Phytosanitary Measures, which is part of the WTO
Agreement;  (b) by the Office International des Epizooties (OIE);  (c) in the International Plant
Protection Convention;  and (d) by the Codex Alimentarius  Commission.  Article 7-13 specifies that
Article XX(b) of the GATT 1994, as incorporated  in Article 19-02.1 (General Exceptions) of the
Agreement, does not apply to any sanitary or phytosanitary measure.  Article 8-02 stipulates the
application of the provisions in the Chapter on Standards-Related Measures in addition to those
contained in the Agreement on Technical Barriers to Trade, which is part of the WTO Agreement.
 Under Article 1-06 (Relation to Environmental and Conservation Agreements), in the event of
any inconsistency between the Agreement and the specific trade obligations set out in the Conventionon International Trade in Endangered Species of Wild Fauna and Flora, the Montreal Protocol on
Substances that Deplete the Ozone Layer and the Basel Convention on the Control of Transboundary
Movements of Hazardous Wastes and Their Disposal, such obligations prevail to the extent of the
inconsistency, due account being taken of the conditions specified in the Agreement.
Article 15-3 provides that no provision of Chapter 15 (Intellectual Property) relating to
intellectual property rights may derogate from any mutual obligations of the Parties under the Paris
Convention, the Berne Convention, the Rome Conven tion and the Geneva Convention.  In order to
guarantee adequate and effective protection and enforcement of the intellectual property rights
referred to in the Chapter, the Parties also undertake to give effect to, at a minimum, the substantiveprovisions of those conventions.
5. Institutional framework
Articles 17-01 and 17-02 of the Agreement es tablish the Free-Trade Commission and the
Secretariat of the ALCCM.  The main body created under the Agreement is the Chile-Mexico Free-Trade Commission, which convenes once a year.  The Commission's terms of reference are to
supervise proper implementation of the Agreement;  to evaluate the results of such implementation;
to consider any other matter that may affect the operation of the Agreement;  to resolve disputes thatWT/REG125/3
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may arise regarding its interpretation or application;  to supervise the work of committees, sub-
committees and groups of experts;  to establish and delegate responsibilities;  to seek the advice of
non-governmental experts;  to establish rules and procedures;  and to convene meetings.
The Secretariat is required to set up an office in each country.  It provides assistance to the
Commission and administrative support for the arbitral panels established under Chapter 18 (Dispute
Settlement).
The Commission oversees the operation of the following bodies created under the Agreement:
The Committee on Trade in Goods;  the Sub-Committees on Agriculture, Customs, Rules of Origin,
and Non-Agricultural Goods;  the Committee on Sanitary and Phytosanitary Measures;  the Sub-
Committees on Agricultural Chemicals, Food Safety, Fi sheries, Animal Health, and Plant Health;  the
Committee on Standards-Related Measures;  the Sub-Committee on Telecommunications Standards;
the Committees on Investment and Cross-Border Trade in Services, Air Transportation, Temporary
Entry, and Trade and Competition;  and the Ad visory Committee on Private Commercial Disputes.
IV. OTHER
1. Transparency
Chapter 16 deals with transparency.  The Parties commit themselves to publishing legislation
and administrative rulings of general application as far as possible in advance of adoption, so that
interested parties may submit their comments.
Each Party also undertakes to notify the other Party of any measure that may substantially
affect the operation of the Agreement or the other Party's interests.
As regards administrative proceedings, Chapter 16 specifies that each Party is to ensure that
the persons concerned are notified of the initiation of proceedings and given reasonable opportunity topresent arguments in support of their claims.  It also provides for the establishment of impartial
tribunals to correct administrative actions relating to the Agreement, gives the Parties the opportunity
to defend their respective positions, and requires decisions to be based on evidence.
2. Intellectual property
The Chapter on Intellectual property lays down substantive regulations governing copyright,
related rights, trademarks and appellations of origin.  It is largely devoted to enforcement, withprovisions identical to those of the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement).
The general provisions specify that only certain spheres of intellectual property are covered.
The Chapter stipulates inter alia  that the Parties may grant more extensive protection than is required
under the Agreement and provides for national and most-favoured-nation treatment and cooperation.
The copyright provisions are essentially the same as those of the TRIPS Agreement.The provisions on trademarks are also very si milar to those of the TRIPS Agreement;  the
term of protection is 10 years instead of seven, however, and may be renewed indefinitely.
As regards appellations of origin, "Tequila" and "Mezcal" are protected in Chile and "Pisco",
"Vino Asoleado" and "Pajarete" are protected in Mexico.  Protection is also afforded for wines with
Chilean appellations of origin, as determined by a bipartite commission.  Protection of the appellationWT/REG125/3
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of origin "Pisco" is without prejudice to rights which Mexico may grant exclusively to Peru, in
addition to Chile.
The ALCCM covers not only trade in goods but also a variety of other spheres such as
investment (Chapter 9);  cross-border trade in services (Chapter 10);  air transportation services(Chapter 11),   telecommunications (Chapter 12);  temporary entry for business persons (Chapter 13);
and policies governing competition, monopolies and State enterprises (Chapter 14).
3. Policies governing competition, monopolies and State-owned enterprises
Chapter 14 deals with policies governing competition, monopolies and State enterprises,
which are fully consistent with Chile's legislation in this area.  It lays down a general obligation for
the Parties to adopt or maintain measures that proscribe anti-competitive business practices and toconsult each other regarding the effectiveness of their respective measures.  The dispute settlement
system may not be invoked in respect of this obligation.
The Parties may establish monopolies.  In the case of a privately owned monopoly, each Party
is required to ensure that the private entity acts in  a manner that is not inconsistent with obligations
under the Agreement, taking its decisions solely on the basis of commercial considerations and
providing non-discriminatory treatment in its purchases and sales.  The Parties may also establish or
maintain State-owned enterprises.
4. Government procurement
The Parties undertake to begin negotiations on government procurement as from the second
year following the Agreement's entry into force (Article 20-08(c)).
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