WT/REG365/2  
22 September  2016 
(16-5066) Page: 1/6 
Committee on Regional Trade Agreements  Original:  English/Spanish  
 
  FREE TRADE AGREEMENT BETWEEN VIET NAM AND CHILE  
(GOODS)  
QUESTIONS AND REPLIES  
 The following communication, dated 22 September  2016, is being circulated at the re quest 
of the delegations of Viet Nam and Chile.  
 
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 This document reproduces t he questions addressed to the Parties and the 
responses  submitted.  
 
Questions from the delegation of the European Union  
 
Provisions on trade in goods  
Customs -related procedures  
 
1.1.  Could the Parties clarify whether the electronic system of C ertification of Origin has 
been already  implemented?  
a. If not, could the Parties present the reaso ns for its delayed application?  
b. Could the Parties give further information on the rules applicable to the 
retroactive certificates?  
 An electronic system of Certificate of Origin  application for Viet Nam and Chile is not 
available at present. However , Viet Nam and Chile can check the authenticity of issued 
Certification of Origins (Form VC) through notified websites after the VCFTA came into effect.  
 
Both Parties will evaluate the  possibility of implementing such a system in their next 
meeting in 2017.  
 
General provisions of the agreement  
Relationship with other agreements concluded by the Parties  
 
Both parties are also signatories to the Trans -Pacific Partnership (TPP).  
 
1.2.  In view o f on-going ratification of the Trans -Pacific Partnership Agreement, could 
the Parties explain the benefits of maintaining the current FTA in place?  
Amongst the benefits foreseen in maintaining the current FTA in place, is to give economic 
operators the opt ion to choose the agreement that gives them a more favourable treatment, 
whether it is in the TPP or in the FTA.  
 
1.3.  Could the Parties clarify whether, the agreement under discussion, will be 
maintained once the TPP will enter into force?  
VCFTA will continue to co-exist once the TPP will enter into force.  
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  1.4.  If so, could the Parties clarify how the two a greements are going to coexist 
in practice?  
 For each specific case, the most favourable provisions among the two agreements will be 
chosen by the economic opera tors. 
 
1.5.  In particular, could the Parties indicate how can the concerned operators be fully 
aware of the applicable legislation (among others tariffs and rules of origin)?  
 Vietnamese and Chilean competent agencies launch awareness raising and information 
exchange campaigns on the agreements so that Vietnamese and Chilean enterprises are fully 
aware of information and implementation.  
 
Others  
 
Reference is made  to the rendez -vous clause incorporated into Article 14.5 of 
the Agreement.  
 
1.6.  Could Chile and Viet Nam  indicate if any modifications are foreseen in the future to 
this Agreement in respect to scope or level of commitments?  
 The Agreement foresees the possibility to start negotiations on Services, Financial Services 
and Investment. Article 14.5, Chapter 14 (Final Provisions) states that unless otherwise agreed the 
Parties shall consider the possibility to commence negotiations with a view to including a Chapter 
on Trade in Services, a Chapter on Financial Services and a Chapter on Investment to the 
Agreement  no later than three (3) ye ars after its entry into force.  
 
 Both Parties have addressed services, investment and financial services in the context of the 
Trans -Pacific Partnership. Taking the latter into consideration, no formal commitment has 
materialize d in order to begin bilateral negotiations on the above -mentioned chapters.  
 
Questions from the delegation of Mexico  
 
Regulatory cooperation  
1.7.  Paragraph  4.17: According to this paragraph, Chapter 9 establishes a framework for 
cooperation in numerous areas, i ncluding climate change . Could you please explain what 
the initiatives in this area consist of?  
The purpose of Chapter 9 of the Chile -Viet Nam FTA is to establish a framework for 
cooperation activities between the two countries, as a way to  extend and incr ease the benefits of 
the Agreement with a view to building an economic partnership between them . The Parties 
reaffirm the importance of all forms of cooperation, including – but not limited  to – the areas listed 
in Article 9.3, such as climate change . It should be pointed out that no development activities have 
yet been carried out in this field. 
 
Technical barriers to trade  
 
1.8.  Paragraph  3.27:  
a. What type of bilateral initiatives regarding standards, technical regulations and 
conformity assessment procedures do es this paragraph refer to?  
 Regarding  trade facilitation, the Parties sh ould work cooperatively  in the fields of standards, 
technical regulations and conformity assessment procedures with a view to facilitating trade 
between the Parties , in particular , to identify bilateral initiatives regarding standards, technical 
regulations and conformity assessment procedures  that are appropriate for particular issues or 
sectors . According to Article 7.6, such initiatives may include:  
 
(a) cooperation on regulatory is sues, such as convergence or equivalence of technical 
regulations and standards ; WT/REG365/2  
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  (b) alignment with international standards ; 
(c) reliance on a supplier's declaration of conformity ; and 
(d) use of accreditation to qualify conformity assessment bodies, as we ll as cooperation 
through recognition of conformity assessment procedures . 
b. Is it possible to propose regulatory cooperation initiatives in specific sectors?  
 VCFTA encourages each Party to propose technical cooperation , firstly upon request to work 
on any specif ic sector, the n the other Party should give consideration, through which cooperation 
is enhanced (Article 7.9). Through a  Committee on Technical Barriers to Trade can, the Parties will 
facilitate  sectoral cooperation among Government agencies and non-government  agencies  on 
conformity assessment in the territories of the Parties ; and management cooperation in specific 
sectors , after being approved by  the Committee.  
 
c. Where there are no expeditious mechanisms for addressing urgent TBT 
enquiries concernin g the other Party's technical regulations or conformity 
assessment procedures, could a Chapter 7 initiative be considered the 
establishment of an enquiry mechanism, with specific contact points for the 
Parties, which would help prevent Specific Trade Conce rns against the other 
Party from being submitted to the WTO TBT Committee?  
 The Parties have establish ed the Committee on Technical Barriers to Trade  in order to 
facilitate implementation of the TBT Chapter and cooperation between  the Parties . The 
Committe e's functions include facilitating technical consultation s, and the Parties may furthermore  
agree on the procedure that is most appropriate for them.  
 
1.9.  Paragraph 3.29 : Does the FTA establish specific time -limits for responding to the 
comments made by person s from the other Party on draft technical regulations and 
conformity assessment procedures that a Party has notified to the WTO?  
 Regarding the agreement on  Article 7.5 on International Standards, each Party shall use 
relevant international  standards to th e extent provided in Article 2.4 of the TBT Agreement, as well 
as the principles set out in the "Decisions and Recommendations adopted by the Committee since 
1 January  1995" which establishes that the normal limit for comments on notifications should be 
60 days, with the exception for urgent problems according to the TBT Agreement.  
Questions from the delegation of Peru  
 
General provisions of the Agreement  
Dispute settlement  
 
1.10.   Paragraph 4.8 : "Chapter 12 applies to disputes related to the interpretation or 
application of the Agreement if a measure of the other Party is inconsistent with the 
Agreement or the other Party has failed to carry out its obligations under the 
Agreement . Dispute settlement is not available for nullification or impairment " 
(emphasis adde d). 
a. What mechanism is established in this Agreement for cases of nullification 
or impairment?  
 The Agreement does not establish  a mechanism for cases of non -violat ion nullification 
or impairment.  
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   Article 12.1 , Chapter 12 (Dispute Settlement) regarding th e scope of application, as 
stipulated in the VCFTA, is applied to dispute settlement or prevention between contracting parties 
concerning the application, interpretation or application of this Agreement, when a Party 
considers : 
 
(a) a measure of the other Party is inconsistent with the obligations defined in the 
Agreement.  
(b) the other Party has not fulfilled its obligations under this Agreement . 
 Representatives of Chile and Viet Nam did not agree to extend the application coverage of 
dispute settlement m echanism in cases of non -violation nullification and impairment  that may 
arise, taking into account that those could not be settled through dispute settlement mechanism 
embedded  in the Agreement . 
 
b. Do you consider this to be compatible with Article XXIII of  the GATT?  
 The e xclusion of non -violation nullification and impairment in the VCFTA is to be considered  
inconsistent with Article XX III of the GATT . The afore-cited exclusion was the result based on 
rounds  of negotiations and  balanc e of offensive interest s between contracting parties, that not 
always necessarily coincide with the requirements of Article XXIII of GATT . 
Why have the parties to this Agreement specified that "[d]ispute settlement is not 
available for nullification or impairment" when in other agreements such as the Trans 
Pacific Partnership, to which both countries are party, the dispute settlement 
mechanism is used for cases of nullification or impairment?  
The wording : "the dispute settlement does not apply to cases of nullification or impairm ent" 
is not found in the Agreement text. It is elaborated in the report prepared by the WTO Secretariat.  
Article 12.1 in the Agreement simply does not include the non -violation nullification or 
impairment as the basis to trigger the dispute settlement mech anism.  
 
It is important to reiterate the reason why for such exclusion to exist, as to not apply the 
dispute settlement mechanism in cases of nullification and impairment, is due to the fact that both 
parties were pursuing that result through negotiations.  The latter Agreement does not prejudge 
the outcome of other negotiations and agreements concluded by Chile, in which the 
dispute  settlement mechanism in cases of non -violation nullification and impairment is applied as 
agreed bilaterally.  
Questions from t he delegation of the Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu  
Trade environment  
 
1.11.   Paragraph 2, o ver the period 2011 -2013, around three -quarters of Viet Nam's 
imports from Chile consisted of base metals, while footwear and textiles repr esented 
57% of Chile's imports from Viet Nam.  
 In order to place the above -mentioned statistics in the context of  the total imports  
of these goods by Viet Nam and Chile  respectively , please advise what proportion of 
Viet Nam's total imports of base metal i s imported from Chile, and what proportion of 
Chile's total imports of footwear and textiles is imported from Viet Nam?  
 In 2015, Viet Nam imports US$109.9 million worth of copper, which accounts for 24.97% of 
Viet Nam's total imports of ores and metals.  
 
 For further information, please visit the website: www.gso.gov.vn  
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  Share of Chilean imports of textiles and footwear from Viet Nam compared to total 
imports in these sectors  
(US$)  
 2011  2012  2013  2014  2015  
Imports of  textiles and 
footwear from Viet Nam  97,217,698  122,036,440  138,064,491  180,131,826  166,811,695  
Total imports of textiles 
and footwear  3,536,785,733  4,872,695,599  5,220,669,351  5,306,061,678  4,988,890,139  
Share  % (a)/ (b) 2.70%  2.50%  2.60%  3.40%  3.30%  
Source: Central Bank of Chile.  
Note: Calculations based on imports of Chapters 50 to 63 (Textiles) and Chapter 64 (Footwear ). 
 
Provisions on trade in goods  
 
Customs -related procedures  
 
1.12.   Paragraph  3.43, t he Agreement foresees that an electronic system of certi fication 
of origin will be implemented at the latest by December 2015; as of May 2016, no such a 
system was in place.  
 An electronic system of certification of origin is one of the most important 
measures in international trade facilitation. Could we pleas e have a report on progress 
to date on the implementation of the system in Chile and in Viet Nam?  
 
An electronic certification  of origin  system  is still under construction and not available for the 
electronic certificate of origin issuance at the moment.  
 
 Both Parties will evaluate the possibility of implementing such a system in their next 
meeting in 2017.  
 
Questions from the delegation of Thailand  
 
1.13.    Paragraph 3.13 : Chile is authorized to maintain its price -band system that applies 
to 41 tariff lines (Art icle 3.8 ; for a list of products, see Annex 2), provided it is applied 
consistently with the WTO . An MFN clause is however embedded in the Article so that 
any more favourable treatment granted to a third country, including in the context of 
existing or fut ure RTA notified to the WTO under Article  XXIV of the GATT 1994, is 
extended to Viet Nam .1 As of May 2016, no changes had been made as regards the 
application of price band.  
a. Could Chile explain in more details on the calculation criteria for the price  
band  system?  
Under the price  band system (PBS), the duty is calculated as follows:  
 
Specific duty  = 
 (Floor - reference price)  x (1 + general ad valorem  tariff in force as 
established in Customs Tariff)  
 
Where a rebate is applicable, it is calculated as follo ws: 
 
Tariff rebate  = (Reference price - ceiling price)  x (1 + general ad valorem  tariff in force as 
established in Customs Tariff)  
 
 The maximum possible rebate is the deduction of the full amount of the tariff, while the limit 
of the maximum applicable d uty is the tariff bound by Chile for these goods under the  
World  Trade  Organization.  
                                                
1 Under  the Chile -United States RTA, for example, price -band has been progressively reduced 
and has been fully eliminated on wheat as of 1  January  2015; for sugar, elimination of the 
price -band as of the same date applies in cases of surplus.  WT/REG365/2  
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   Considering the current floor and ceiling prices, as well as the international prices of the 
products affected by the PBS, this additional duty has not been levied in rec ent years. The aim of 
the PBS is not to protect domestic industry (it has, in fact, had the opposite effect), but to prevent 
major domestic price fluctuations due to distortion in international markets . 
 
b. Could Chile elaborate on the details of the price -band system measure?  
The price -band system (PBS) was introduced in Chile in 1986 to cushion the impact on 
domestic industry of external fluctuations in the distorted prices of some agricultural products. The 
PBS was initially implemented for sugar, wheat flo ur, wheat and edible oils, the latter being 
excluded in 2003.  
 
 The PBS allows for the application of specific duties or tariff reductions when imports of 
wheat, wheat flour or sugar are below a floor price or above a ceiling price, respectively. The law 
lays out the entire methodology for the application of the PBS, i.e. the products covered by the 
system, how they are determined, the floor and ceiling values, the method for determining 
reference prices, the relevant markets for reference prices, the frequ ency with which decrees 
establishing duties and rebates are issued, and publication dates . 
 
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