WT/REG303/2  
28 June 2013  
(13-3362)  Page: 1/9  
Committee on Regional Trade Agreements  Original: English/Spanish  
 
  FREE TRADE AGREEMENT BETWEEN CHILE AND HONDURAS 
(GOODS AND SERVICES) 
QUESTIONS AND REPLIES 
 The following communication, dated 14 June 2013, is being circulated at the request 
of the delegations of Chile and Honduras.  
_______________ 
   This document reproduces the questions addressed to the Parties and the responses 
submitted. 
 Questions from the delegation of Australia 
 General comment 
 
 Tables 4.1 and 4.2 clearly show the significant improvements in the level 
of commitments made by Chile and Honduras on services compared with both countries' GATS commitments. Australia supports on going liberalization of services trade 
and the reduction in gaps between commitments on services and actual levels of market 
openness, and commends both Chile and Honduras on their efforts. 
 1.1.  Paragraph 4.6: Why did the Parties deci de not to include a provision of the type 
under GATS Article XVI (marke t access)? Why did the Parties opt to have an article 
on non-discriminatory quantitative restrict ions, which does not guarantee preferential 
access to each other's markets? 
Response from the delegation of Chile 
 
 First, it is necessary to clarify that this approach guarantees preferential access to each 
other's markets. This approach produces the same effect as a market access provision; in effect 
there is no substantive difference between a market access provision and a non-discriminatory 
quantitative restriction.  
Response from the delegation of Honduras 
 
 For the sake of consistency, the same language has been used as that in other free trade 
agreements. There is no substantive difference between a market access provision 
and a non-discriminatory quantitative restriction.  1.2.  Paragraph 4.22: Could the Parties el aborate on Annex 11.13 of the Agreement 
which contains rules to be followed in the pr ofessional services sector on harmonization 
of requirements and procedures for granting licences? 
Annex 11.13 on Professional Services contains provisions that are specific to professional 
services concerning recognition of qualifications, criteria for the recognition of qualifications 
and authorization to exercise a profession. The intention is to encourage the relevant organizations (government authorities, professional associations) to facilitate the development WT/REG303/2 
- 2 - 
  of mutually acceptable standards and criteria for granting licences and permits to providers 
of professional services.  1.3.  
 Paragraph 4.31 and 4.34: Australia notes that, under the Agreement, 
Chile has introduced a general reservation requiring companies established in Chile 
and employing over 25 persons to ensure at least 85% of their staff are Chilean, 
which was not included in Chile's GATS schedule. We also note that, under the 
Agreement, Honduras has registered a horizo ntal limitation, requiring that companies 
established in Honduras employ at least 90% of Honduran staff, representing at least 
85% of the total payroll of the company,  which was not included in Honduras' 
GATS schedule. 
Response from the delegation of Chile 
 
 Chile registered this requirement under GATS horizontal limitations. 
 
1.4.  Could Chile and Honduras explain the requirements of the underlying measures and advise when these respective measures were introduced? 
Response from the delegation of Chile 
 
 This requirement is established by the D.F.L. 1 of the Ministry of Labour and Social Welfare. 
A minimum of 85% of employees who work for the same employer shall be Chilean natural 
persons. This rule applies to employers wi th more than 25 employees under a contract 
of employment ( contrato de  trabajo ). Expert technical personnel who cannot be replaced 
by Chilean personnel shall not be subject to this provision, as determined by the Directorate 
of Labour ( Dirección del Trabajo ). 
 Response from the delegation of Honduras 
  Honduras did include this limitation among the horizontal commitments in its GATS Schedule. The reservation is based on legal provisions laid down in the Constitution of the Republic and Honduras' Labour Code. 
 
Questions from the delegation of Colombia 
 
1.5.  The FTA entered into force on 19 July 2008 and was notified to the WTO on 
28 November 2011. It would be much apprecia ted if the Members involved could explain 
the reasons why the notification took so long in the light of Articles XXIV:7(a) of the 
GATT and Article V:7(a) of the GATS (paragraph 2.2). 
After the overall framework for the FTA betw een Chile and the regional group had been 
negotiated, bilateral protocols were negotiated between Chile and each of the Central American 
countries defining the particular features of opening up trade with each of these countries. 
 
 At the XVIIth Bilateral Meeting of the Free Trade Commission of the FTA between Chile 
and Honduras, held on 27 September 2011, it was agreed to notify this FTA to the WTO 
at the same time as those countries that had not yet done so (Chile, Guatemala and Honduras). 
Honduras proposed the draft of the notifica tion, on which Chile and Guatemala submitted 
their comments. 
 
 In addition, for over a decade it has been common practice in Central America to negotiate FTAs jointly or by group of countries; the notifi cation was made jointly by Chile and Honduras. 
In this particular case, the bilateral protocols were signed in different years, which made it difficult 
to agree on prompt notification and, combined with  other events that placed Honduras in political 
isolation for almost two years, this was a major co ntributing factor to this delayed notification. WT/REG303/2 
- 3 - 
  Technical barriers to trade 
1.6.  With reference to Article 3.36 of documents WT/REG303/1 and WT/REG312/1 
of 20 March 2013 and paragraph 4 of Article 9.04, and taking acco unt the definitions 
of "international standard" and "interna tional standardizing body" in Chapter 9 
of the FTA: 
a. What is the international standardizin g body that fits this definition? 
As mentioned in the Chapter, the Parties agreed to apply international standards 
and, as Members of the WTO, Honduras and Chile apply the standards adopted by the competent 
standardizing organizations, unless these do not represent an effective means of achieving their legitimate objectives. 
 
 Honduras and Chile, like many other countries, take as a reference the prevailing reference 
standards of international organizations when preparing national standards. In this case, the definition of standards of competent bodies includes as a minimum all Members 
of the TBT Agreement, including the International Organization for Standardization (ISO), 
the International Electrotechnical Commission (IEC), the Codex Alimentarius Commission, the International Organization of Legal Metrology (OIML) and the International Commission 
on Radiation Units and Measurements (ICRU) or any other body designated by the Parties, 
inter alia , depending on the need for a reference standard. 
  Paragraph 3.36 of document WT/REG303/1 only reaffirms the fundamental principle 
in the TBT Agreement that unnecessary barriers to trade should not be created when national 
standards are drawn up.  
b. Are the Parties already using the inte rnational standards adopted by that 
international standardizing body? 
Response from the delegation of Chile 
 
Chile bases itself on the principles and obligations laid down in the WTO's TBT Agreement, 
therefore, when the National Standardization Institute (INN) prepares a technical standard, 
it bases itself on international standards where these exist. If they do not exist, regional 
standards, those of other countries or enterprises in the sector are taken into account 
 Response from the delegation of Honduras 
  In view of the recommendations and principl es in the TBT Agreement, Honduras utilizes 
the standards of competent international bodies wh en developing national standards and technical 
regulations, for example, those of the Codex Alimentarius, FDA, ISO, as already indicated. 
 1.7.  With reference to paragraph 3.37  of documents WT/REG303/1 and WT/REG312/1 
of 20 March 2013 and to paragraph 4 of Articl e 9.07, in order to facilitate the free 
movement of goods between the Parties, was any consideration given during 
the negotiating process to: 
a. Acceptance by the importing Party of th e supplier's declaration of conformity?  
b. Designation of conformity assessmen t bodies in the territory of the 
other Party? 
c. If so, will the supplier's declaration of conformity be accepted 
as a demonstration of compliance  with the Technical Regulations 
between the Parties? 
d. Will it be possible to designate conformi ty assessment bodies in the territory 
of the other Party? WT/REG303/2 
- 4 - 
  Response from the delegation of Chile 
 
 There is no specific mention of this or other mechanisms. However, the aforementioned Article gives sufficient flexibility to allow the Parties unilaterally and bilaterally to recognize 
the results of conformity assessment procedures, as well as some of their desirable principles, 
in order to lessen technical barriers to trade (transparency, efficiency, national treatment, etc.)  
Response from the delegation of Honduras 
 
 According to the provisions in paragraphs 3,  4, 5, 6 and 7 of Article 9.07 of the FTA, 
Conformity Assessment, mention is made of the provisions on consultations set out 
in subparagraphs (a) and (d), with the aim of fa cilitating trade between the Parties to the FTA. 
 1.8.  Regarding paragraph 3.39 of documents WT/REG303/1 and WT/REG312/1 
of 20 March 2013 and in relation to Article 9.10, was any consideration given during 
the negotiating process to the recommendation made in 2000 by the Committee on Technical Barriers to Trade, which stated th at "[a]ny Member whic h is able to provide 
a time-limit beyond 60 days, such as 90 days, is encouraged to do so"; and if so, why 
was the minimum period of 90 days not adopted? 
Response from the delegation of Chile 
 
 Chile is obliged (by internal regulations) to give 60 days for comments, but if a country 
requests an extension, Chile usually extends this period to 90 days.  
Response from the delegation of Honduras 
 
 It should be mentioned that, when the Chapter on TBT in the Agreement with Chile was 
negotiated, national legislation in some countries did not take into account time-limits exceeding 
60 days, which is why the provision was agreed as laid down in the WTO's TBT Agreement. 
Nevertheless, it is up to each Party to grant an extension up to 90 days when the interested party so requests. 
 
 Taking into account the fact that in all the three-yearly reviews of the TBT Agreement, countries are urged both to notify promptly (60 days) and to allow extension up to 90 days, 
if a Member requests an extension of the time-limit for submitting comments on a regulation that 
has been notified, Honduras always tries to allo w this and extend the period by 30 days, which 
are calculated from the last day of the regular notification. 
 
1.9.  Finally, with regard to para graph 3.39 of documents WT/REG303/1 
and WT/REG312/1 of 20 March 2013 and in rela tion to Article 9.11, why was it not 
pointed out that the "entity designated as the information centre" was not the same 
as the one established under Article 10 of  the WTO Agreement on Technical Barriers 
to Trade (document G/TBT/ENQ/)? 
Response from the delegation of Chile 
 
 Chile designated the official WTO/TBT enquiry point in order to avoid duplicating functions. 
 
Response from the delegation of Honduras 
 
 Although Article 9.11 does not specifically mention what institution will act as the information centre in each of the Parties, for Honduras the government institutions 
designated at the domestic level as information centres in FTAs are the same as those notified 
to the WTO as the enquiry point for TBT matters. This is for the sake of consistency with what is notified to the WTO and in order not to duplicate functions if a structure already exists 
in accordance with each institution's competence. 
 WT/REG303/2 
- 5 - 
  Services 
1.10.  Are we to understand that the GATS Ar ticle V:1(a) substantia l sectoral coverage 
requirement was met when Chile libera lized 42 of 152 services sectors? 
(paragraph 4.29). 
Response from the delegation of Chile 
 
  Article V.1(a) of the GATS establishes the concept of "substantial sectoral coverage", 
which means in terms of the number of sectors, volume of trade affected and modes of supply. 
To meet this criterion, in the agreements, no  mode of supply should a priori be excluded. 
  Chile did not determine a priori the exclus ion of any mode of supply and liberalized 
42 sectors, so it has fully complied with this criterion. 
 1.11.  What are the criteria for establishing  national treatment limitations in relation 
to personal services and local pr esence? (paragraphs 4.31 and 4.34). 
Response from the delegation of Chile 
 
 The national treatment limitations listed by Chile in Annex I to the FTA with Honduras 
are based on the domestic legislation allowing for such reservations, and the sectors are not specifically in relation to personal services but cover many sectors.  
Response from the delegation of Honduras 
 
 Paragraph 4.34, Limitation on national trea tment and local presence, listed by Honduras 
in Annex I to the FTA with Chile, are based on the domestic legislation allowing for such 
reservations, and the sectors are not specifically in relation to personal services.  
1.12.  With regard to trade remedies, Chile agreed with Honduras and Guatemala 
on three types of safeguards: global, b ilateral and balance of payments. Can the 
safeguard measures be applied simultaneo usly, or are they mutually exclusive? 
Response from the delegation of Chile 
 
 Article 6.02 determines the criteria for applying a bilateral safeguard measure if the tariff reduction provided in the FTA leads to an increase in imports that causes injury. 
 
 Article 6.03 determines that the Parties shall maintain their rights and obligations with regard to the application of global safeguard measures, in accordance with the WTO's regulations 
on such measures. It also provides that the im ports of the other Party shall only be subject 
to a safeguard measure if they account for a substantial share of total imports and make an important contribution to the injury or threat of injury to the domestic industry.  
 Both safeguard measures, therefore, have their own criteria for application, 
which correspond to different trade situations. Chapter 6 does not contain any clause providing for exclusion from simultaneous application of such measures. 
 
 The informal meaning of the word "safeguard" is sometimes understood as any exceptional measure restricting trade; in this sense, the concept is similar to an "escape clause" 
or "emergency clause" or "excepti onal measure". In the FTA, however, the Parties agreed to call 
"safeguards" the measures set out in Chapter 6 of the FTA. Exceptional measures for balance-of-payments difficulties can be found in another chapter, Chapter 20, on Exceptions, 
in which the Parties do not call them safeguards and, lastly, in this section neither is there 
any clause providing for exclusion of th e possibility of applying the measures 
concerned simultaneously.  WT/REG303/2 
- 6 - 
  Response from the delegation of Honduras 
 
 Bilateral safeguard measures may be applied if, as a result of the reduction or elimination of a customs tariff in accordance with the provisio ns of the FTA, a good originating in the territory 
of one Party is imported into the territory of the other Party in such quantities that increase 
its share relative to domestic production and under such circumstances that the imports of this good into this Party alone are a substantial cause of serious injury, or threat thereof, 
to the domestic industry producing like or directly competitive goods. 
  A global safeguard measure is applied when, because of unforeseen circumstances and as a result of the obligations, including tariff concessions, undertaken by a Party under 
the GATT, there is an increase in imports that causes serious injury or threat thereof 
to the domestic industry.  
 Safeguard measures related to balance of payments are governed by the provisions 
in Article 20.04 of Chapter 20, Exceptions, in the FTA, in the case of goods and services. 
 
 A Party may adopt or maintain restrictive measures on trade in goods and services in 
the event of serious balance-of-payments or extern al financial difficulties, or threat thereof. 
The balance of payments is the account in which a country registers its transactions with the rest of the world over a specified period of time. 
 
Questions from the delegation of the European Union 
 
Provisions on trade in goods 
Regulatory provisions on trade in goods 
Subsidies and State aid 
 
1.13.  According to paragraph 3.48, the Parties agreed on the shared objective of the multilateral elimination of export subsidies for agricultural goods and committed 
to work together with a view to achieving an agreement in the WTO to eliminate export 
subsidies. In this respect: 
 Could the Parties explain which action s have been taken for the elimination 
of export subsidies for agricultural g oods and what are the results achieved? 
 
Response from the delegation of Chile 
 
 Chile does not have export subsidies for agricultural goods. 
 Response from the delegation of Honduras 
 
 Honduras does not apply agricultural export subsidies. This reply is in line with the one 
given by Chile. 
Provisions on trade in services 
General provisions on trade in services 
Provisions on investment 
 
1.14.  According to paragraph 4.25 and foot note 57, it seems that  the Parties agreed 
on possible future developments in rela tion to the provisions on investment. 
1.15.  Could the Parties clarify if they intend to develop and expand the rules 
and disciplines contained in the Investment Agreement? In this case, could the Parties 
submit details? 
Response from the delegation of Chile 
 
 The Parties agreed on possible future developments of the rules and disciplines contained 
in the Investment Agreement. However, the sco pe of the negotiation has not been defined, 
nor the beginning of the negotiation between the Parties. 
 WT/REG303/2 
- 7 - 
  Response from the delegation of Honduras 
 
 The Agreement provides for the future negotiation of investment disciplines, but the terms of negotiation have yet to be defined. 
General provisions of the Agreement 
Intellectual property rights (Paragraph 5.17) 
 
1.16.  According to the last sentence of  paragraph 5.17, the Parties may authorize 
homonymous GIs and origin designations, whic h may rightfully belong to a third party. 
In this respect: 
a. Could you please clarify how the Parties will, in practical terms, differentiate 
between/among homonymous GIs and DOs? 
Response from the delegation of Chile 
 
 The FTA does not specify how the Parties should differentiate in practice between 
homonymous geographical indications and appellati ons of origin. Each Party can therefore address 
the issue through its own domestic legislation and in accordance with the TRIPS Agreement. 
 Chilean legislation provides for the registration of geographical indications (GIs) 
and appellations of origin (AOs) by the National Institute of Industrial Property. Prior to registration, the Institute carries out a form and substance examination and then makes a final decision granting applicants exclusive use of the requested GI or AO. In the final decision 
approving registration, the Institute may state, in accordance with Article 96 bis 
A of Industrial Property Law No. 19.039, that it has arrived at the belief that coexistence between 
trademarks and geographical indications or appellations of origin, or of said indications 
and appellations between themselves, is possible, and determine the conditions in which 
the geographical indications and appellations of origin or trademarks shall be used, in order to avoid misleading or creating confusion among consumers. The Law also establishes that 
conditions of use shall form part of the registration and that failure to comply with the conditions 
of use shall deprive the holder of the right to bring the actions established in the Law 
for the exercise of his rights. If the examinat ion to determine a possible coexistence between 
goods involves agricultural and forestry produc ts or agro-industrial products, a report must 
be requested from the Ministry of Agriculture. 
Response from the delegation of Honduras 
 
 In accordance with the provisions contained in Title IV, Chapter IV, Article 156 
of the Industrial Property Law, each registration or publication that concerns a trademark application or registration shall indicate the g oods or services by their common names, grouped 
according to the classes of the classification established by the Nice Agreement Concerning 
the International Classification of Goods and Servic es for the Purposes of the Registration of Marks 
(1979), as revised and amended (Nice Classification). It is established that goods or services may not be considered as being similar to each other solely on the ground that, in any registration 
or publication concerning registration applications issued by the Honduran Industrial Property 
Registry, they appear in the same class of the Nice Classification. 
 Conversely, goods or services may not be considered as being dissimilar from each other 
solely on the ground that, in any registration or publication concerning registration applications 
issued by the Honduran Industrial Property Registry, they appear in different classes 
of the Nice Classification. There cannot be two identical or similar marks for the same 
class of product. 
 Our legislation does not allow for homonymous trademarks, geographical indications 
or appellations of origin, in accordance with Article 15 of the Law on Implementation of the Dominican Republic-Central America-Unit ed States Free Trade Agreement (CAFTA-DR), 
with regard to Article 84.1 and 84.7, and the Articles in Chapter V of the Industrial Property Law. WT/REG303/2 
- 8 - 
  In practice, the difference between homonymous  geographical indications and appellations 
of origin is established during the substance examination, as this is when the examiner conducts a search for previous registrations. 
 To provide further clarity, Article 15 of the Law on Implementation 
of the Dominican Republic-Central America-Unit ed States Free Trade Agreement (CAFTA-DR) 
is cited below: 
 "The recognition and protection of a geographical indication include a review of prohibitions 
deriving from third-party rights applied for or registered earlier, in cases where: 
(a)  The geographical indication is likely to be confusingly similar to a trademark that 
is the subject of a good-faith pending application or registration; or, 
(b)  The geographical indication is likely to be  confusingly similar to a pre-existing trademark, 
the rights to which have been acquired in accordance with the Party's law." 
b. Could the Parties clarify what criteria are used and what conditions are 
required to define what is "rightfu l" when referring to a third party 
(in "rightfully" belonging to the third party)? 
Response from the delegation of Chile 
 
 The FTA does not define what is to be understood by "rightfully". This is therefore an issue 
that each Party can address through its domestic legislation in accordance with the TRIPS Agreement. In this respect, a Party to the FTA is not under any obligation to protect geographical indications which are not or cease to be protected in their country of origin, or which have fallen 
into disuse in that country (Article 24.9 of the TRIPS Agreement). 
 Chilean domestic legislation (Article 96 of Industrial Property Law No. 19.039) provides 
for the possibility of registering foreign geographical indications and appellations of origin in Chile. 
Response from the delegation of Honduras 
 
 Registration is the act that determines rightful ownership. 
Relationship with other agreements concluded by the Parties  
Table 5.1 
 
1.17.  According to the information contained in Table 5.1, several agreements have not 
been notified. In particular, Chile has not no tified several bilateral agreements falling 
under the umbrella of LAIA. 
a. Could the relevant party (either Chile or Honduras, depending on the 
agreement) clarify why those agreements  have not been formally notified? 
Response from the delegation of Honduras 
 
 Six of the seven FTAs currently in force in Ho nduras have been notified, with the exception 
of the FTA with Mexico which entered into force on 1 January 2013. The way in which and when this FTA is notified may be agreed with the other Central American countries. 
b. Could the Parties clarify whether they envisage notifying them in the near 
future? 
Response from the delegation of Chile 
 
 "In full compliance with its obligations under the Transparency Mechanism 
for Regional Trade Agreements, Chile is holding bilateral consultations with its counterparts on how and when to jointly notify the aforem entioned regional trade agreements." WT/REG303/2 
- 9 - 
  Response from the delegation of Honduras 
 
 Over the course of this year. 
c. With reference to the agreements under the umbrella of LAIA, could Chile 
submit for each agreement the list of a dditional concessions granted bilaterally 
on goods?  
 This question is closely linked to that in point (b) and what Chile notifies under 
the WTO transparency mechanism must therefore be agreed upon bilaterally with the country 
in question before being submitted in the corresponding review.  
__________