WORLD TRADE  
ORGANIZATION   
WT/REG304/2 
14 November 2012  
 
(12-6266) 
Committee on Regional Trade Agreements Original:   English/ 
 Spanish 
 
 
 
FREE TRADE AGREEMENT BETWEEN PERU AND CHILE 
(GOODS AND SERVICES) 
 
Questions and Replies 
   The following communication, dated 9 November 2012, is being circulated at the request of the delegations of Peru and Chile.  
_______________ 
 
  This document reproduces the questions addressed to the Parties and the responses submitted.  
Questions from the Delegation of Australia 
 Scope and definitions 
 
1. Paragraph 61, Australia notes that an a nnual review of non-conforming measures are 
foreseen by Chile and Peru.  
 
 We would be interested to understand why it is necessary to have a mechanism to clarify 
non-conforming measures? 
 
Article 11.14 states that the Parties shall consu lt annually, or otherwise agreed, in order to 
review the implementation of the Investment Chapter,  and shall consider issues of mutual benefit for 
both Parties, including the development of proce dures that may contribute to achieve greater 
transparency of the Non-Conforming M easures (NCMs) under this Agreement. 
  This obligation has the aim of transparency and a better understanding of the non-conforming measures established in the Agreement. 
 
 To that respect, one example could be that su ch mechanisms may be related to the adjustment 
in the Agreement of the reference to any modificati on of internal legislation - such adjustments must 
be consistent with Article 11.8(c)  - provided under a NCM in order to  reflect the updated status of the 
internal law.  Such mechanisms shoul d be developed by the Joint Commission. 
 
Market access 
 
2. Paragraph 65, Australia notes that Chile a nd Peru have set out their GATS-plus market 
access commitments with a reservation under Anne x II of the Agreement (non-conforming 
measures) which amounts to a po sitive listing of commitments. 
 WT/REG304/2 
Page 2  
 
  (a) We would be interested to hear why Chile  and Peru has chosen this approach to 
listing commitments? 
 
 This approach was chosen because of its benefits  in terms of market access regulation.  It is 
more practical and transparen t and facilitates negotiation. 
 
 Furthermore, in the case of Peru, it is the approach  that Peru has used in almost all its bilateral 
trade agreements containing A nnexes of non-conforming measures. 
 
(b) What do Chile and Peru see as the benefits of this approach? 
 
 The main benefits of this approach are tran sparency and clarity.  This approach makes it 
possible to identify clearly the modes of supply in each service subsector in which reservations 
are maintained.  
 Furthermore, an Annex II reservation is usually broadly worded, which gives the country 
significant scope for action.  This is because countri es wish to maintain significant scope to issue a 
law or regulation in a certain service subsector.  For instance, an Annex II reservation normally establishes the following:  "A Party may adopt any measure in sector X".   However, the approach adopted by the Parti es for market access includ es the affected modes 
of supply and, in almost all cases, specific refere nces to legislation (e.g. Law on the Recruitment of 
Foreign Workers) or includes the same reservations or limitations described in domestic legislation.  
Thus, to a certain extent, the approach adopted by the Parties limits the discretional nature of an 
Annex II reservation.  Communication services 
 
3. Paragraph 97, Australia notes that Chile's reservation to maintain its rights to take 
future measures on basic telecommunications in the Agreement does not always match and 
potentially goes further than Chile's limitations in the GATS. 
 
 Could Chile please explain the reservation on future measures on basic telecommunications? 
 
 Given that the approach used in the FTA is di fferent to the GATS, we do not consider there to 
be any inconsistency.  The purpose of this reserva tion is to maintain a certain amount of regulatory 
space in this sector. 
 
Domestic regulation 
 
4. Paragraph 109, Australia is encouraged to note that Chile and Peru, through a Working 
Group, will work towards a temporary licensing of professionals. 
 
 We would be interested to hear more on  Chile and Peru's commitment to develop 
procedures for the licensing of professionals. 
 
 Within the framework of the Pacific Alliance, to which both Chile and Peru are Parties, work 
is being carried out to facilitate the intra-Allia nce supply of professional services, starting with 
engineering services and subsequently moving on to the area of architectural and health services, 
in particular general medical services, a nd dentistry, nursing and veterinary services. 
  WT/REG304/2 
 Page 3 
 
 
   The Parties have been encouraging professional bodies to develop temporary licensing 
mechanisms.  Both countries have held meetings with various professional bodies, including with the 
academic sector, to evaluate mechanisms of this type.  
Intellectual property rights 
 
5. Paragraph 120 
 
(a) What type of measures and mechanism are envisaged in the exchange of letters 
with a view to safeguard and respect the rights related to biological and genetic 
resources as well as to traditional knowledge? 
 
 In order to safeguard and respect the rights of biological and genetic  resources and traditional 
knowledge of the Parties, they promised to study,  within one year from the entry into force of 
the Agreement, the adoption of effective measures a nd mechanisms to achieve this end.  During the 
first meeting of the Administrative Commission (11 June 2010), Parties agreed to continue with the 
coordination on this issue.  
(b) Australia would welcome a more detailed explanation on the relevance of the 
second sentence of paragraph 120 (which seems to deal with respecting and recognizing Indigenous People 's rights) to IP rights. 
 
 The second sentence of paragraph 120 recognizes the historical contribution of indigenous 
peoples to the development of biological and ge netic resources, and the general contribution of 
traditional knowledge to culture and social  and economic developm ent of our nations. 
 
 This recognition was included in Article 19.7 of  the Agreement and is part of the Convention 
on Biological Diversity, to which Peru and Chile are Parties.  
Questions from the Delegation of El Salvador 
 6. We can see in "Table I.1.  Trade in comme rcial services and investment with Chile and 
the world, 2006 2008, A.  Peru" that Peru has not included data for Chile.  Why is this?  
 This is because no statistics on bilateral trad e in services are available.  The only figures 
available are the amounts exported to the wo rld, from balance-of-payment statistics. 
 7. Was the Agreement under review, like Economic Complementarity Agreement (ACE) No. 38, concluded in accordance with the 1980 Montevideo Treaty Establishing the 
Latin American Integration Association (LAIA)? 
 
 Yes, the Agreement under review was conc luded in accordance with the provisions of 
the 1980 Montevideo Treaty Establishing the La tin American Integration Association (LAIA), 
as stated in paragraph 1 of Article 1.1 (Est ablishment of a Free Trade Zone) in Chapter 1 
(Initial Provisions) of the Agreement:   The Parties to this Agreement hereby est ablish a free trade zone in accordance with 
Article XXIV of the General Agreement on Tariffs and Trade 1994, Article V of the 
General Agreement on Trade in Servi ces and the 1980 Montevideo Treaty. 
  The Agreement was registered as the Third Pr otocol to ACE No. 38 and was deposited with 
the LAIA General Secretariat on 26 February 2009. WT/REG304/2 
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  8. Would the Parties please provide further explanatory information on and grounds for 
the adoption of provisions on special treatment for goods produced or originating in free zones, which have been incorporated into the Agreement through Article 20.5.3 and Annex 3.2 B(11). 
 
 Pursuant to Article 3.4 of the Agreement, goods  produced or originating in free zones shall be 
excluded from the liberalization programme.  Howe ver, Article 20.5 of the Agreement on future 
negotiations establishes that in the year following the entry into for ce of the Agreement, the Parties 
shall analyse the special regimes in  effect in both countries with a view to assessing the possibility of 
granting special treatment for goods originating or produ ced in free zones.  At the first meeting of the 
Administrative Commission (11 June 2010), it was agreed to continue coordination in this area. 
 
 Chile established the Iquique free zone with a view to enhancing industrial potential in the 
north of the country.  Both Peru and Bolivia have conducted a number of trade transactions from 
this zone.  For its part, Peru has established ZOFRATACNA, which includes a free zone and a trade 
zone also used by Chile.  In this context, in order to assess possible special treatment for goods 
originating in free zones, within the framework of  the negotiations on ACE No. 38, it was established 
that goods originating in free zones would not be able to benefit from the tariff preferences of that ACE.  This provision was later reflected in the Free Trade Agreement. 
 
9. Have the Parties adopted and applied im port, export and transit requirements and 
procedures for goods on the basis of the objectives and principles listed in Article 6.1 of 
the Agreement?  If so, please provide information on them.  
 Article 6.1 enables the Parties to apply bila teral safeguard measures in accordance with the 
conditions and requirements described therein.  To date, neither of the Parties to the Agreement has 
activated this mechanism.  The question appears to assume that the Parties would have to agree on a 
supplementary regulation on this mechanism before applying such bilateral measures;  this is, 
however, not necessary, since the provenance require ments for resorting to such measures are duly 
described in Article 6.1 and also supplemented by th e other relevant provisions in the same Chapter. 
 
10. Please provide publicly available information on the measures adopted by each of the 
Parties to implement the commitments in the provisions of Chapter 5 that are subject to the 
transition periods under Article 5.12 of the Agreement.  
 Article 5.12 establishes time-frames for the impl ementation of the obligations set forth in 
Chapter 5 (Customs Procedures and Trade Facilitation) concerning publi cation;  express shipments;  
and advance rulings as to whether a good qualifies as originating under Chapter 4. 
 
 The measures adopted by Peru to implement these commitments in the transition period under 
Article 5.12 of the Agreement are:  
 Legislative Decree No. 1053, General Cust oms Law, published on 27 June 2008. 
 Supreme Decree No. 002-2009-MINCETUR, Regulations on advance rulings 
concerning the origin and marking of orig in of goods, published on 15 January 2009. 
 Supreme Decree No. 010-2009-EF, Approval of the Regulations to Legislative Decree 
No. 1053, General Customs Law, published on 16 January 2009. 
 Supreme Decree No. 11-2009-EF, Approval of the special customs regime for express 
shipments and other provisions, published on 16 January 2009. 
 
This legislation may be viewed  on the Official Journal ( El Peruano ) website at 
http://www.elperuano.pe/Edicion .  WT/REG304/2 
 Page 5 
 
 
   The measures adopted by Chile to implem ent the above mentioned commitments in the 
transition period under Article 5.12 of the Agreement are:  
 Publication:  A link has been set up on th e Customs Service website through which new 
draft regulations may be published in adva nce for comment by interested parties: 
 http://www.aduana.cl/prontus_aduana/site /artic/20071123/pags /20071123161057.html  
 
Customs regulations and new Customs decrees,  circulars and rulings are available for 
public viewing at: http://normativa.aduana.cl/p rontus_normativa/site/edic/base/port/normativa.html  
 
 Clearance:  The advance processing regime is  dealt with in Chapter III (Entry of 
Goods) of the Compendium of Customs Regulations and Article 80 of the Customs Ordinance: http://normativa.aduana.cl/p rontus_normativa/site/ar tic/20070705/pa gs/2007070515520
8.html  
 
 Express shipments:  Regulations covering the procedure for this type of shipment are 
included in the Compendium of Customs Re gulations.  This is a special procedure 
different from that applied to other forms of goods shipments: http://normativa.aduana.cl/p rontus_normativa/site/ar tic/20070216/pa gs/2007021613545
4.html%23T28  
 
 Advance rulings:  Ruling No. 9422/2008 issues instructions on the advance ruling 
procedure and its application: http://normativa.aduana.cl/p rontus_normativa/site/ar tic/20081231/pa gs/2008123113071
2.html  
 
11. Would the Parties please explain why the financial services sector has been completely 
excluded from the Agreement. 
 
 Financial services have been excluded from th e chapter on cross-border trade in services and 
the chapter on investment with a view to the futu re negotiation of a specific chapter on this subject. 
  It should be noted that both countries are cu rrently negotiating financial services within the 
framework of the Trans-Pacific Partnership Agreement (TPP). 
 
12. What type of export programmes for servic es do Article 6.3 and 6.4 of the Agreement 
refer to?  Which services sectors are expected to benefit from this  type of programme? 
 
 For clarification purposes, the Parties request that El Salvador reformulate its question, 
given that Article 6 of the Agreement do es not regulate export programmes for services. 
 
13. Would the Parties please provide information on how they determine which " subsidies 
and loans […] may distort trade in services ", as mentioned in paragraph 111 of the 
factual presentation? 
 
Article 12.1.3(d) of Chapter 12 on cross-border trade in services states that this chapter 
does not apply to "subsidies or grants provide d by a Party or a State enterprise, including 
government-supported loans, guarantees and insuran ce, except as provided for in Article 12.2". WT/REG304/2 
Page 6  
 
   Moreover, Article 12.2 on subsidies states that  the Parties shall exchange information on 
subsidies or grants that may distort trade in services,  and that a first exchange shall take place within 
one year of the entry into force of the Agreement.   The Agreement does not define the concept of a subsidy, only the scope of the chapter, which 
applies to measures taken or maintained by a Pa rty which affect cross-border trade in services 
supplied by service providers of the other Party, and which in the case of subsidies, may also be taken 
by the Government.  The concept of a grant or a loan is not defined either.  
14. What obligations have the Parties undertak en under the Agreement with respect to the 
protection of geographical names, geographical indications and appellations of origin?  
 The Chile-Peru Free Trade Agreement does not contain any provisions on the protection of geographical names, geographical indications or desi gnations of origin.  The Parties have therefore 
not adopted any obligations in this regard  within the framework of the Agreement. 
 
Questions from the Delegation of the European Union 
 Trade in services and investment 
 
15. With reference to the general investme nt-related provisions, could the Parties 
clarify whether they would encourage investors to adopt high standards of corporate social 
responsibility? 
 
 The Agreement under consideration does not contain any provisions on corporate social responsibility. 
 
Such provisions are, however, included in a separate instrument signed by both Parties, 
the OECD Declaration on International Investment  and Multinational Enterprises, which contains 
the OECD Guidelines for Multinational Enterpri ses.  These Guidelines establish a set of 
recommendations, issued by signatory Government s such as Chile and Peru, on corporate social 
responsibility for multinational enterprises. 
 
 The recommendations cover a wide range of s ubjects, issues and voluntary principles relating 
to socially responsible business conduct and aim not only to ensure that the activities of these 
enterprises are in harmony with government polici es, but to strengthen the basis of mutual trust 
between enterprises and the societi es in which they operate, help improve the foreign investment 
climate, and enhance the contribution to sustaina ble development made by multinational enterprises. 
  The countries adhering to the Guidelines make  a binding commitment to implement them by 
ensuring that they are properly disseminated, both to  enterprises established in  the country adhering to 
the Guidelines and to their own multin ational enterprises investing abroad. 
 Government procurement 
 
16. According to paragraph 118 of the Factual Presentation, the Parties, during 
the first year following the entry into force of the Agreement, will consider the modalities 
between them on government procurement. 
  WT/REG304/2 
 Page 7 
 
 
   Could the Parties inform whether these moda lities have been already agreed?  In this 
case, could the Parties give a brief presentation  on the salient aspects of such modalities? 
 
 Since the entry into force of the Chile-Per u FTA (1 March 2009), no discussion has been 
initiated by the Parties in this respect, and no pr oposals or progress have therefore been made.  
Nevertheless, it should be noted that  given the current situation, for both Peru and Chile, the Parties 
have preferred to reach agreement on these issu es within the framework of the Trans-Pacific 
Partnership Agreement (TPP) negotiations and in othe r integration forums in which they participate, 
such as the Pacific Alliance.  Dispute settlement 
 
17. Could the Parties clarify whether an investor is to state dispute settlement under 
Chapter 16 applicable to the pre-establishment phase of an investment? 
  The purpose of Chapter 16 on dispute settleme nt is to discuss and establish, through an 
exclusively State-State mechanis m, whether there has been any non-compliance by the Parties.  
This mechanism is applicable to State-State dis putes that may arise regarding the pre-establishment 
phase of an investment.  
Questions from the Delegation of Mexico 
 Trade in services and investment 
 
18. Would the Parties please indicate whic h sectors are reserved for the State under the 
Agreement with respect to foreign direct investment? 
 
 No sectors are reserved exclus ively for the State under the Peru -Chile Free Trade Agreement.  
As a general rule, any national or foreign investor may invest in the country without any restriction 
subject to compliance with domestic legislation.  On ly in certain specific circumstances established by 
law are there restrictions on foreign investme nt, mainly relating to national treatment. 
 
 The Agreement also follows a negative list a pproach, with the comprehensive inclusion of 
services sectors, unless otherwise indicated in the list of reservations, e.g. in the case of Peru, 
the constitutional provision relating to the restrict ion on foreign investment within 50 kilometres 
of borders.  
 With regard to the above, Annex I of Chile's list reserves certain activities for the State in the 
following sectors:  
- In mining, the following sectors are closed:  The exploration, exploitation and 
treatment of lithium, deposits of any kind f ound in maritime waters subject to national 
jurisdiction, and deposits situated, wholly or  partially, in areas classed as important to 
national security for mining purposes, as determ ined by law only, may be subject to 
administrative concessions or special operating contracts, with requirements and conditions to be established by the President of the Republic in each case. 
 
To ensure greater certainty, Chile has the right of first refusal to purchase, at the usual market 
price and in accordance with the usual market a rrangements, mineral products from mines in Chile 
where thorium or uranium are present in significant quantities.  WT/REG304/2 
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  Chile may also request that producers separate from mining products: 
 
(a) Liquid or gaseous hydrocarbons; (b) lithium; (c) deposits of any kind found in maritime wa ters subject to national jurisdiction;  and 
(d) deposits of any kind wholly or partially situated in areas classed as important to 
national security for mining purposes, as determined by law only, 
 which are present in significant quantities in such products and which may be separated economically 
and technically for their delivery or sale on behalf of  the State.  To this end, economic and technical 
separation implies that the costs incurred in obtai ning the four substances mentioned above through an 
appropriate technical procedure, and in their ma rketing and delivery, must be lower than their 
commercial value.  
Natural atomic materials and extracted lith ium, and extracts, derivatives and compounds 
thereof, may not be the object of any legal act, except when carried out or performed by 
the Chilean Nuclear Energy Commi ssion, therewith or with its prior authorization.  Where the 
Commission deems it appropriate to grant aut horization, it must determine its conditions. 
 
- For energy:  The exploration, exploitati on, and treatment of liquid or gaseous 
hydrocarbons, deposits of any kind found in maritime waters subject to national 
jurisdiction, and deposits of any kind wholly  or partially situated in areas classed as 
important to national security for mining purposes, as determined by law only, may be subject to administrative concessions or special operating contracts, with requirements and conditions to be establishe d by the President of the Republic in 
each case.  To ensure greater certainty, the term "treatment" is understood to exclude 
the storage, transport or refinement of the energy materials referred to in this 
paragraph. 
 
Nuclear energy for peaceful purposes will be pr oduced exclusively by the Chilean Nuclear 
Energy Commission or, with its authorization, in  conjunction with third parties.  Where the 
Commission deems it appropriate to grant such authorization, it will determine its conditions. 
 
Consideration should also be given to Chile 's Annex II reservations concerning future 
measures, through which Chile reserves the right to  adopt or maintain any measure relating to the 
subject-matter specified therein.  Scope and definitions 
 
19. This section states that the Parties forese e conducting an annual review of the matters 
covered by Chapter 11 on investment and Chapt er 12 on cross-border trade in services in order 
to, inter alia , consider the development of proce dures which may increase transparency, 
in particular in relation to non-conforming measures. 
 
 Would the Parties please tell us whether th ese reviews have been conducted?  If so, 
what has been the outcome?  Have new proce dures been implemented to increase transparency? 
 
 The reviews have not yet been conducted. 
  WT/REG304/2 
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  Liberalization of trade in services and investment 
 
20. This section mentions that the Parties agreed  to meet six months after the entry into 
force of the Agreement to negotiate additional commitments on non-discriminatory quantitative 
restrictions with a view to maintaining the general balance of rights and obligations. 
 
(a) What additional commitments have been negotiated? 
 
 The Parties have not met to negotiate additi onal commitments.  It should be noted that 
both countries are negotiating services under the Trans-Pacific Partnership Agreement (TPP). 
 
(b) As a follow-up to this provision, have  the Parties envisaged pursuing further 
liberalization with respect to the current commitments? 
 
 The Parties have not met to negotiate additi onal commitments.  It should be noted that 
both countries are negotiating services under the Trans-Pacific Partnership Agreement (TPP). 
 
Sector-specific commitments on trade in services 
Financial services 
 
21. It is mentioned that the financial servic es sector is excluded from the coverage of 
the Agreement.  
 What treatment is applied to this sector? 
 
 Financial services are excluded from the chapte r on cross-border trade in services and the 
chapter on investment, and therefore no treatment is applied to these areas under the Agreement.  
Article 20.5, however, provides for future negotiati ons on financial services, for which the Parties 
were supposed to meet one year after the entry into  force of the Agreement.  This issue was addressed 
at the first meeting of the Administrative Commissi on (11 June 2010) and it was agreed to continue 
coordination in this area.  It should be noted that both countries are negotiating financial services 
under the Trans-Pacific Partnership Agreement (TPP). 
 
Regulatory provisions 
Recognition 
 
22. It is mentioned that a Party that is party to an existing or future agreement or 
arrangement on mutual recognition shall afford ad equate opportunity for the other Party, if the 
other Party is interested, to negotiate accession  to such an agreement or arrangement or to 
negotiate a comparable one. 
 
 With which countries have the Parties concluded mutual recognition agreements? 
  Peru has recognition agreements with the followi ng countries:  Argentina, Bolivia, Bulgaria, 
Chile, China, Colombia, Costa Rica, Cuba, Ecuador , El Salvador, Guatemala, Holy See, Honduras, 
Hungary, Mexico, Nicaragua, Panama, Paraguay, Ro mania, Russia, Spain, Ukraine, Uruguay and 
Venezuela.  
 Chile has concluded mutual recognition agre ements with Ecuador, Colombia, Argentina, 
Mexico, Peru and Spain.  WT/REG304/2 
Page 10  
 
  Questions from the Delegation of Saudi Arabia 
 
Denial of benefits 
 
23. Paragraph 63 states:  "Under Articles 11.12 and 12.12, a Party may deny the benefits of 
the relevant chapters to a service supplier or investor of the other Party if that person is an 
enterprise owned or controlled by persons of a Third Party and if the service supplier or 
investor has no substantive business operations in th e territory of the other Party.  Additionally, 
a Party may deny the benefits of the relevant chapters to a service supplier or investor, if that person is an enterprise owned or controlled by  persons of the denying Party and the service 
supplier or investor has no substantive business op erations in the territory of the other Party". 
 
(a) Could both Peru and Chile please provide more details of the above concept, 
i.e. "an enterprise owned or controlled by persons of a Third Party"? 
  According to Article 12.13 of the Agreement enterprise of a Party means an enterprise 
organized or constituted under the laws of a Party, a nd a branch located in the territory of a Party and 
carrying out business activities there.  Howe ver, this Agreement does not define " an enterprise owned 
or controlled by persons of a Third Party ".  In this sense, evaluation and application of the Denial of 
Benefits Article is done case by case.  
(b) Does Peru equally adopt the same requirements as Chile for determining 
whether a juridical person has substantive business operation? 
 
 No requirements have been defined in domestic  legislation to determine whether a juridical 
person has substantive business operations.  Subs tantive business operations will be assessed on a 
case-by-case basis. 
 
General provisions on trade in services 
 
24. Paragraph 64 states:  "General obligations on trade in services are found in Chapter 12.  
It applies to measures affecting cross border trad e in services taken by central, regional or local 
authorities of the Parties (Article 12.1.2).  Ho wever, although the definition of cross border 
trade in services in Article 12.13 does not include mode 3, Article 12.1.4 stipulates that the Chapter's provisions on market access, transparen cy, and domestic regulations shall also apply 
to measures by a Party affecting the supply of services by covered investments addressed in 
Chapter 11.  Non-conforming measures are listed in Annexes I and II and contain the Parties' 
reservations in relation with market access, nati onal treatment, MFN treatment, local presence, 
and the nationality of managers and composition of governing boards". 
 
 The cross border trade in services provisions of the Agreement appear to allow local 
presence requirements as a legitimate condition of providing cross border trade in services.  
With the development of electronic communicati ons, particularly the internet, pure mode 1 
service delivery is becoming increasingly common and local presence requirements are 
therefore a significant barrier. 
 
 Can Peru and Chile explain the treatmen t of local presence requirements in this 
Agreement? 
 
 In regard to local presence, Article 12.6 states that no Party may require a service supplier of 
the other Party to establish or maintain a representative office or any form of enterprise, or to reside in 
its territory as a condition for the cross-border supply of a service.   WT/REG304/2 
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   The Free Trade Agreement between Peru and Ch ile has a negative list approach.  According 
to the negative list approach all sectors and mode s of supply are automatically liberalized unless 
otherwise established limitations (non-conforming measures).  
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