WT/REG356/2  
17 September 2015  
(15-4809)  Page: 1/7  
Committee on Regional Trade Agreements  Original: English/Spanish  
 
  FREE TRADE AGREEMENT BETWEEN HONG KONG, CHINA AND CHILE 
(GOODS AND SERVICES) 
QUESTIONS AND REPLIES 
 The following communication, dated 14 Septem ber 2015, is being circulated at the request 
of the delegations of Hong Kong, China and Chile.  
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   This document reproduces the questions addressed to the parties and the responses 
submitted. 
 Questions from the delegation of the European Union 
 Investment 
 
1.1.  Could the parties give additional informatio n about the progress in the negotiations 
of the separate agreement on investments? In  particular, what provisions are likely to 
be included in the investment negotiations that are going on between the two parties? 
 The first round of investment negotiation between Hong Kong, China and Chile was held in 
February 2015, and the second round will be held later in 2015. At this stage, it is envisaged that 
the agreement on investment would cover, inter alia, provisions on non-discriminatory treatment, investment protection and dispute settlement. 
 
Environment 
 
1.2.  Chapter 14 of the Agreement contains the parties' best endeavour commitments to 
pursue a high level of environmental protecti on and to fulfil their respective multilateral 
environmental commitments in conformity with sustainable development objectives. 
 How will the parties facilitate and promote trade and investment in environmental 
goods and services? In particular, what actu al actions have been carried out so far by 
the parties to advance the common commitments on environmental protection?  
 Under the Agreement, Hong Kong, China and Chile have agreed on a set of shared principles 
and measures and framework for collaboration between the two sides to advance the common commitments on environmental protection. Pursuant to Article 14.4.1, Hong Kong, China and Chile 
have designated their respective contact points in order to facilitate communication between the 
Parties for the purpose of this Chapter on Environment.  Labour  
 
1.3.  The parties' dialogue and cooperation on labour matters shall be enhanced through 
the Memorandum of Understanding on Labour  Cooperation that they have concluded 
separately but alongside the Agreement (Article 19.5). According to the MoU the parties 
agree to establish a dialogue on labour ma tters of mutual interest and may explore 
opportunities for cooperation. WT/REG356/2 
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   Could the parties submit additional inform ation on what actions have been carried 
out in this respect?   Pursuant to Article 4.1 of the Memorandum of Understanding on Labour Cooperation (MOU), 
Hong Kong, China and Chile have designated their respective contact points in order to facilitate 
communication between the Parties for the purposes of the MOU.  
Questions from the delegation of Mexico 
 
PROVISIONS ON TRADE IN GOODS 
 
Paragraph 3.46 
 
1.4.  Are the customs-related procedures mentio ned in this paragraph (advance rulings, 
use of automated systems, procedures to expedite the cl earance of express 
consignments, adoption of procedures allowing goods to be released within 48 hours, etc.) in effect and have they been implemente d since the FTA's date of entry into force? 
Response from the delegation of Hong Kong, China 
 
 In respect of Hong Kong, China, HK Customs attaches great importance to the facilitation of legitimate trade on importation and exportatio n of goods. Hong Kong, China is a free port. 
Shipments would enjoy seamless Customs clearance at the boundary except those selected for 
Customs inspection. Given Hong Kong, China's free port status with no tariff imposed on imported goods, advance rulings on tariff classification and origin of goods are not applicable. 
 To provide timely Customs clearance service of air, land or sea consignments, HK Customs 
has been adopting well-developed electronic cargo clearance systems (i.e. Air Cargo Clearance System, Road Cargo System and Electronic System for Cargo Manifests, etc.) which allow the 
submission of advance electronic cargo information by shippers or their agents for HK Customs to 
conduct risk assessment on a pre-shipment basis. Normally, Customs clearance would take less than 0.5 hours (actual clearance time varies subject to the volume of consignment) calculated from the time the shipments are presented to Customs for examination. 
 
 On the other hand, overseas companies shipping goods through Hong Kong, China to and from Mainland China may enjoy seamless clearance under our Intermodal Transhipment 
Facilitation Scheme (for air-land and sea-land  transhipments). Under the Scheme, goods with 
designated e-locks and monitored by GPS will only be subject to customs inspection once if selected when passing through Hong Kong, China.  
 The computerized systems and facilitation schemes have been running smoothly and proven 
to be successful in expediting customs clearance as well as the flow of general cargoes and 
express consignments. 
Response from the delegation of Chile 
 
Regarding the customs-related procedures mentioned in paragraph 3.46:  
 Advance rulings by customs authorities (Article 5.6) 
 
Advance rulings were implemented in Chile in 2008 and the procedure was recently updated 
by Exempt Resolution No. 4378 of 31 July 2014 
(http://www.aduana.cl/aduana/site/artic/20140 103/asocfile/2014010317 0904/resoluci__n_4378_
31_07_2014_de_nuevo_procedimiento_para_emisi__n_de_resoluciones_anticipadas.pdf ).  
 
Advance rulings may refer to: 
 
(a) the tariff classification of goods; 
(b) the application of valuation criteria or methods; 
(c) the recognition of the right to a tariff pr eference or the evaluation of the originating 
status of goods, determined in accordance  with a trade agreement signed by Chile; WT/REG356/2 
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  (d) the application of rules on tariff reduction or exemption from the payment of customs 
levies; 
(e) the drawback of duties and other customs levies; (f) other customs-related matters. 
 
 Use of automated systems to support customs operations (Article 5.7)  
 Since 1996, the Chilean customs authorities ha ve been working on the implementation of 
electronic processing procedures for their various operations. As well as systems for processing import and export declarations (100%), we have computerized systems for processing transit, transhipment and redirection declarations and for controlling special storage, temporary admission 
and temporary admission for inward processing  duty-suspension regimes, amongst others. 
  Adoption of procedures to expedite the clea rance of express consignments while maintaining 
appropriate control (Article 5.8) 
  In the mid-1990s, the Chilean customs author ities implemented a simplified system for 
processing express consignments. This simplified system currently operates electronically both for 
the processing of air waybills and for export an d import destination declarations that may be 
processed by courier firms.   
 Adoption or maintenance of procedures allowi ng goods to be released within 48 hours of 
arrival, though with some exceptions (Article 5.9)  
 Where declarations of entry are submitted to the customs authorities by hand, Customs 
must provide notification of accepted or rejected  declarations by 4.30 p.m. on the day on which 
the declaration is submitted, although in some case s, it may be possible to provide this notification 
by the end of the working day on which the declar ation is submitted. To withdraw goods from the 
primary zone, the customs broker must present the warehouse operator with a copy of the 
declaration duly authenticated by the National Customs Service, showing payment of the levies, 
duties and taxes generated by the operation, where appropriate. 
 
The electronic transmission system for entry declarations of customs destination enables 
authorized users to send goods declarations to  the National Customs Service electronically. 
The Service validates the information contained in the messages and notifies users of the 
acceptance or rejection of the declaration, as appropriate.   
Customs declarations sent electronically to the Service by 6 p.m. on a working day or 4 p.m. 
on a Saturday will be processed electronically th at same day. If, for reasons of force majeure, 
a message has not been seen by that time, th e National Customs Service and the Value Added 
Network concerned will take the necessary steps to fully comply with the obligation to respond 
within the stipulated time frame. Customs broker s may, however, deposit messages for processing 
in the relevant National Customs Service mailbox after 6 p.m. Monday to Friday or after 4 p.m. 
on Saturday, the only restriction being that the date of submission must be that of the next 
working day. 
 
Where goods have been selected for a physical inspection, a documentation check or a value 
assessment, such operations will be notified in the relevant daily statement ( estado diario ) 
by 12.30 p.m. on the day on which the declaration is submitted, although in some cases they may 
be notified by the end of the working day on whic h the declaration is submitted. For declarations 
processed electronically, these operations will be notified at the same time as the acceptance for 
processing and legalization of the declaration, in the customs destination document, while for 
declarations processed in advance, operations will be notified once the goods have been declared and prior to their withdrawal. 
 
Declarations giving rise to duties, taxes, fees and other levies must include the relevant 
payment document, and payment must be made with in 15 days of notification. The importer is 
solely responsible for complying with this deadline. 
 WT/REG356/2 
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   Administration of customs procedures so as to facilitate the clearance of low-risk goods and 
focus on high-risk goods (Article 5.10)   At the end of the 1990s, the Chilean customs authorities introduced risk management as a 
key control tool. Improvements have been made  to this tool over the years. The model 
implemented is based on the conduct of operators involved in trade. Chile started by designing a model for classifying importers, exporters, cust oms agents and warehouse operators which allows 
them to be effectively controlled and is based on selectivity criteria (for example, complaints made 
by the Customs or customs fines not paid). In  2014, this model was further developed by 
incorporating new variables and information.  
 Disciplines on the Parties' review and appeal of customs administrative rulings, 
determinations or decisions (Article 5.11)  
 In 2009, Chile introduced Law No. 20.322, which strengthened and improved the tax and 
customs justice system. Under this Law, courts were created to settle tax- or customs-related disputes between operators and Customs. 
 
More information available at: http://www.tta.cl/opensi te_2009122915 3310.aspx . 
 
 Customs may also be directly requested to review decisions administratively, independently 
from the tax and customs courts. 
  Customs cooperation between the Parties (Article 5.12) 
 
 Regarding bilateral cooperation, there have as yet been no requests for assistance from either of the two customs authorities. 
 
 Establishes rules on the publication of customs laws and administrative procedures and the 
designation of enquiry points for customs matters (Article 5.13)  
 With a view to ensuring access to information and transparency, the National Customs 
Service has, since 2003, published information on its rules and administrative procedures on its website ( www.aduana.cl ). 
 
 This notwithstanding, all State bodies are subject to Law No. 20285, which governs the obligation of public bodies to provide certain relevant and up-to-date information every month. 
This obligation concerns public information relevant to citizens and the population in general; 
such information must be up-to-date, accessible, clear, and provided on a regular basis.  GENERAL PROVISIONS ON TRADE IN SERVICES 
 Paragraph 4.4.1.8 
 
1.5.  Regarding this paragraph, in which banking subsector has market access 
improved? 
Response from the delegation of Hong Kong, China 
 
 There is market access improvement with respect to the Mode 3 commitment on the banking subsector of "Acceptance of deposits and other repayable funds from the public". Please refer to Hong Kong, China's Schedule of Financial Services Commitments in Annex 12.5 of 
the Agreement for details. 
Paragraph 4.36 
 
1.6.  Within the framework of the Agreement, does Chile plan, in the medium or long 
term, to review the commitments for paymen ts and transfers, the special investment 
regime, commercial presence, regulations on private-limited companies, and the 
movement of natural persons? WT/REG356/2 
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  Response from the delegation of Chile 
 Without prejudice to the review mechanism prov ided for in Article 11.10, Chile is open to 
reviewing not only these areas, but others in which the Parties perceive there to be interest. Such a review would fall within the framework of this Agreement and Chile's other international 
commitments. 
Paragraph 4.4 
 
1.7.  Under Article 11.11, a Party may deny th e benefits of Chapter 11 to service 
suppliers of the other Party where the service is being supplied by a juridical person that 
is owned or controlled by persons of a th ird party or of the denying Party and the 
juridical person has no substantive business operation in the Area of the other Party. 
There is no specific provision on denial of benefits under Chapter 12 (financial services). 
What are the criteria for considering that  a juridical person has no substantive 
business operation in the Area of the other Pa rty for the purpose of denying the benefits 
of Chapter 11 to service supp liers of the other Party? 
 
Response from the delegations of Hong Kong, China and Chile 
 
 Noting that "substantive business operations" is used also in Articles V and XXVIII of the GATS, the two Parties did not attempt to define or elaborate on the term in the negotiations. As set out in Article 11.11 of the Agreement, denial of benefits is subject to prior notification and 
consultations, hence we envisage that the two Parties will have opportunities to discuss the criteria 
of "substantive business operations" in the consultations, should such a need arise.  
GENERAL PROVISIONS OF THE AGREEMENT 
 
Paragraph 5.3 
 1.8.  Within the framework of the Agreement, are there any plans to review, in the 
medium or long term, Chile's horizontal rese rvations related to payments and transfers 
with respect to the measures adopted or to be adopted by the Central Bank of Chile? 
Response from the delegation of Chile 
 
 Paragraph 5.3 of the Factual Presentation of the Free Trade Agreement between Chile and 
Hong Kong, China, states that although the Agreement does not contain specific provisions on 
current payments and capital movements, the commitments contain horizontal reservations related to payments and transfers with respect to  the measures adopted or to be adopted by the 
Central Bank of Chile.  
 Paragraph 5.24 
 
1.9.  Within the framework of the Agreement,  is there any possibility of mutual 
recognition of geographical indications in the future? 
Response from the delegations of Hong Kong, China and Chile 
 
 The Parties do not have such plan for the time being. The obligations of the Parties, in connection with Geographical Indications, are se t forth in Article 3.10 of the Agreement. Each 
Party shall ensure inter alia , that Geographical Indications are protected under its domestic laws in 
a manner consistent with TRIPS and shall provide the means for any person to apply for protection of Geographical Indications without the requirement for intercession by the other Party on behalf of its persons. 
 WT/REG356/2 
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  Questions from the delegation of the Separate Customs Territory of Taiwan, Penghu, 
Kinmen, and Matsu 
 
Provisions on trade in services and investment 
Denial of benefits 
 
1.10.  Paragraph 4.4 ,under Article 11.11, a Party may deny  the benefits of Chapter 11 to 
service suppliers of the other Party where th e service is being supplied by a juridical 
person that is owned or controlled by person s of a third-party or of the denying Party 
and the juridical person has no substantive business operation in the Area of the other 
Party. There is no specific provision on denial of benefits under Chapter 12 
(financial services). 
 Please explain why the denial of benefi ts does not apply to financial services? 
What concerns do you have? 
  For the purpose of financial services under the Hong Kong, China-Chile FTA, the definition 
for "juridical person of a Party", which is set out in Article 12.1 of the Agreement, generally shares 
the spirit of Article 11.11 on denial of benefits.  Liberalization commitments 
Financial services 
 1.11.  Paragraph 4.28, according to paragraph 4.28 of the WTO Se cretariat's Factual 
Presentation, Hong Kong, China broadly matches its GATS commitments in insurance 
and insurance-related services, though adjustments have been made to the extent and nature of its reservations and commitments.  With regard to banking services, there is 
some market access improvement in one of the banking subsectors under 
the Agreement. 
 Regarding the above-mentioned market access improvement in one of the banking 
subsectors, what are the contents of the market access improvement? Will the improved 
market access also be applicable to other Members of the WTO? 
  There is market access improvement with respect to the Mode 3 commitment on the 
banking subsector of "Acceptance of deposits and other repayable funds from the public". 
Please refer to Hong Kong, China's Schedule of Financial Services Commitments in Annex 12.5 of 
the Agreement for details. The commitments are applicable to Chile under the Hong Kong, 
China-Chile FTA in accordance with the terms and provisions of the Agreement.  
 Questions from the delegation of Thailand 
 
Customs-related procedures 
 
1.12.  Paragraph 3.46, regarding the provision on  Advance Ruling, we noticed that only 
advance ruling of tariff classification and or igin of goods were specified but advance 
ruling on Custom valuation has not been includ ed in this provision. We wonder if this 
provision may not be in line with the WCO (World Customs Organization) Recommended 
guideline which indicated advance ruling on cu stoms valuation, could the parties clarify 
on this? 
Given Hong Kong, China's free port status with no tariff imposed on imported goods, 
advance rulings on Customs valuation are not applicable to Hong Kong, China. 
On the other hand, the Agreement does not contain any provision with regard to advance 
ruling by value. In Chile nothing prevents any exporter or importer from requesting advance rulings according to the matters set forth in the Regulation 4378 (2014) issued by the Customs 
Service. Those matters are: (1) tariff classification; (2) application of criteria for valuation 
methods; (3) recognition of a preferential trea tment; (4) provisions on tariff payment or its 
exemption; (4) reimbursement of tariff duties; (5) any other customs matters. WT/REG356/2 
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  Therefore, Chilean regulation allows any private interested party to request for advance 
ruling, whether an advance ruling is foreseen in a trade agreement or not. 
Domestic regulation 
 
1.13.  Is the Article on Domestic Regulation in cluded as an Annex on Disciplines on 
Domestic Regulation in the Chapter on Trade in Services and Investment under the Free Trade Agreement between Hong Kong, China and Chile? 
The domestic regulation provisions in the Services Chapter are contained in Article 11.7 of 
the Chapter on Trade in Services. There is no annex on disciplines on domestic regulation. 
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