. /.WORLD TRADE
ORGANIZATIONWT/REG38/6
20 February 2003
(03-1095)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN CANADA AND CHILE, SERVICES
Questions and Replies
This document reproduces questions addressed to the Parties and the joint responses provided
by them.  The questions and replies set out below are organized in accordance with document
WT/REG38/5.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
3. Scope
In Chapter H (Cross-Border Tr ade in Services), under paragraph 2, air services other
than aircraft repair and maintenance services and specialty air services are excluded from the
scope of the Agreement.  On the other hand, the Annex on Air Transport Services of GATS lists
the following as those measures applicable under the GATS:
(a) Aircraft repair and maintenance services.
(b) The selling and marketing of air transport services.
(c) Computer reservation system (CRS) services.
Does this mean that Chapter H excludes from its scope of services (b) and (c) from
above?  If so, we would like to know the reason why they are excluded.
Yes.  Canada-Chile Free Trade Agreement (CCFTA) Parties agreed that the Agreement
should not apply to air services and related services in support of air services.  Obligations concerning
the selling and marketing of air transport services are negotiated within the context of bilateral air
services agreements.  While computer reservation systems (CRS) services are excluded from theapplication of Chapter H on cross-border trade in services, Chapter G on investment fully applies.
The MFN clause of the CCFTA does not specifically provide for the relationship
between the benefits provided to a CCFTA member under CCFTA and those provided to the
same member under other FTAs.  Lacking such provision, it could be construed that benefitsgranted by a CCFTA member (e.g. Canada) to another FTA Agreement (e.g. NAFTA) shall also
be accorded to a service supplier of the other CCFTA member (in this case Chile) pursuant to
the MFN clause of the CCFTA.  Is this understanding correct?  If so, does this mean that a
service supplier of Chile is provided with the same treatment in Canada as a service supplier of
the United States and Mexico (members of NAFTA)?  Is it correct to assume that the level ofcommitment by Canada under NAFTA is almost identical to the level of commitment by
Canada under this agreement?
With respect to the first and second parts of the question, a service supplier of one CCFTA
Party is entitled, under Article H-03, to receive from the other CCFTA Party a treatment that is no lessfavourable than that accorded by that Party, in like circumstances, to the service supplier of a non-WT/REG38/6
Page 2
CCFTA Party under another trade agreement, for instance the NAFTA.  Article G-03 contains a
similar obligation with respect to investors and invest ments.  These obligations must of course be read
in conjunction with, respectively, Articles H-01 and G-01 which set out the scope for the application
of the MFN obligations contained in Chapters H and G.  Also, these obligations are subject to certain
exceptions and reservations, in particular those listed in Annexes I, II and III of the CCFTA.  Withrespect to the third part of the question, the response is no, given that there are differences in the scope
and application of the two agreements.
We would like know if any progress has been made on the work on various fronts,
including the liberalization of the financial services sector.  We are also interested in being
notified of any future plan for holding negoti ations between the Parties to the Agreement.
With respect to financial services, there is extensive application of key investment disciplines
(Mode 3) dealing with expropriation, transfers and a comprehensive investor-state dispute settlement
mechanism (Articles G-09, G-10 and Section II of Chap ter G).  Both Canada and Chile have agreed to
seek further liberalization in the financial services sector (Annex G-01.3 (b)).  Officials of both
governments have undertaken preliminary exchanges in order to discuss and assess the desirability ofmoving ahead with bilateral negotiations in the area of financial services.
II. PROVISIONS AFFECTING TRADE IN SERVICES
1. Provisions of the Agreement Relating to the Elimination of Article XVII Inconsistent
Measures
Chapter H-10, Licensing and Certification, paragraph 3 provides that "Each party
shall, within two years of the date of entry into force of this Agreement, eliminate any
citizenship or permanent residency requirement set out in this Schedule…".  We would like to
know if any progress has been made on the work towards this.
Pursuant to Article H-06, both Canada and Chile lodged reservations for certain non-
confirming measures that they wished to maintain after the entry into force of the Agreement.  These
measures included some citizenship and residency requirements.
Citizenship and permanent residency requirements for several professional services have
since been eliminated by Canada, both at the federal and provincial level.  Chile has only one
citizenship requirement for lawyers who want to plead a case in Chilean courts, in accordance with
and subject to Article H-10.3.
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