WORLD TRADE  
ORGANIZATION  WT/REG263/2 
2 June 2010 
 (10-3033) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN AUSTRALIA AND CHILE 
 
Questions and Replies
 
  
 The following communication, dated 31 May 2010, is being circulated at the request of the 
delegations of Australia and Chile.   This document reproduces the questions addressed to the Parties and the responses submitted.  
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Questions from the Delegation of Brazil 
 
 Technical Regulations 
 
1. Art. 7.7 paragraph 3 of the Agreement states that its provision on technical regulations 
may not be subject to its dispute settlement mech anism. Brazil would like to know if the Parties 
have a specific mechanism to deal with eventual  disputes over each other's technical regulation 
standards, where relevant internatio nal standards are not available. 
 There is no specific mechanism in the Chile-Australia FTA to deal with disputes over 
acceptance of equivalence of technical regulations in  Article 7.7.  The Agreement's dispute settlement 
provisions do apply to the rest of the Chapter on Technical Regulations, Standards and Conformity 
Assessment Procedures.   The Chapter establishes a TBT Committee to facilitate implementation of the Free Trade 
Agreement in relation to TBT.  This mechanism w ould be the first avenue available to parties to 
discuss issues, consult and try to r esolve any discrepancies.  In additi on to this Committee, parties also 
have the option of pursuing matters releva nt to the WTO TBT Agreement through the 
WTO Technical Barriers to Trade Committee.   
 In the event that a dispute do es arise between the Parties in relation to technical regulations 
with respect to their rights and obligations unde r the WTO Agreements, the Parties may choose to 
avail themselves of the WTO Di spute Settlement Mechanism.  
 
Import Restrictions 
 
2. There is a provision in the Agreement which a llows Chile to impose restrictive measures 
on the import of used vehicles, but no further de tails are given in the Factual Report about these 
measures. Brazil whishes to know what type of re strictions the Chilean law provides for in this 
case. WT/REG263/2 
Page 2  
 
   The Constitutional Organic Law of the Cent ral Bank establishes freedom of importation, 
provided that there is compliance with the legisla tion in force and the goods are not specifically 
prohibited.
1  Chile has some prohibitions on imports in or der to protect the environment and human or 
animal health and to preserve plants, in accordance  with its domestic legislation and international 
commitments.  These prohibitions apply indi scriminately to all its trading partners 
 
 The import of used vehicles2, used motorcycles and used and retreaded tyres (with the 
exception of wheel-mounted tyres) is prohibited.3  The origin of this prohibition on importing used 
vehicles is to be found in Law No. 18.483, known as the Automotive Statute of 1985, whose original objective was to assist Chile's automobile indus try and promote its exports.  According to the 
authorities, the reason for maintaining the prohibition is to ensure that there is a modern, safe and 
environmentally friendly fleet of motor vehicles.  This prohibition does not apply to ready-mix cement trucks, ambulances, fire-fighting vehicles,  urban and highway cleansing vehicles, armoured 
vehicles, motor homes and penitentiary vehicles, inter alia , or to vehicles belonging to 
Chilean citizens who have resided abroad for one year or more and then returned to Chile, and 
vehicles intended for free zones.  The reason for prohibitin g used tyres is one of public health.  It is to 
ensure that the mosquito aedes albopictus, which transmits epidemic diseases such as dengue and 
yellow fever, is not introduced into Chile by means of used tyres.  
Intellectual Property 
 
3. From the point of view of Australia and Chile, do the provisions pertaining to 
intellectual property in this Agreement limit/diminish in any way the MFN clause (Art. 4) and National Treatment (Art. 3) of the TRIPS Agreement? 
 Australia and Chile's Intellectual property re gimes continues to be applied on a national 
treatment and most favoured nation basis to all WTO Members, additionally no amendments were 
made to the domestic intellectual laws of either  Australia or Chile as a result of the FTA.    
 
Agriculture 
 4. Brazil would like to have more informatio n about how the "price band" system to 
agriculture products operates in the context of  the Agreement between Australia and Chile. 
 The regulation that explains how the price ba nds system to agriculture products operates can 
be found in Annex 3B of the Agre ement between Chile and Australia. 
 
 Category W (wheat and wheat flour):  duties on goods provided for in the items in staging 
category W shall be reduced by 16,7% of the base ra te on 1 January of entry into force, and by an 
additional 8,3% of the base rate each year thereaf ter through year three.  Beginning 1 January of 
year four, duties on these goods shall be reduced by an additional 16,7% of the base rate annually 
through year eight and shall be duty -free effective 1 January 2015;  and 
 
 Entry into force  01/01/2010  01/01/2011  01/01/2012  01/01/2013  01/01/2014  01/01/2015  
Margin of  
preference  
16,7%  
25%  
33,3%  
50%  
66,7%  
83,3%  
100% 
 
 
                                                      
1 Article 88 of the Constitutional Organic Law of the Central Bank of Chile (Law No. 18.840, 
published on 10 October 1989). 
2 Article 21 of Law No. 18 .483 of 28 December 1985. 
3 Exempt Resolution No. 1.108 of the Ministry of Health.  WT/REG263/2 
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   Sugar Category :  the ad valorem  duty (6%) will be charged in accordance with the following 
schedule:  
Date  Ad valorem  duty to be charged  
01/01/2009 3,00 % 
01/01/2010 1,98 % 
01/01/2011 1,02 % 
01/01/2012 0,00 % 
 
 For greater certainty it is understood that th is phase out schedule is only applicable to the 
ad valorem duty (6%) imposed by Chile to other countries for the following tariff lines (1701.11.00, 
1701.12.00, 1701.91.00, 1707.99.10, 1701.99.20, and 1701.99.90). 
 
 The specific tariff will continue to apply for th e products considered under Law No. 18.525 or 
its successor.   
Questions from the Delegation of Japan
 
 
5. What is the schedule of tariff elimination with regard to the seven lines which are 
subject to compound duties? 
 
 The tariffs on the seven lines were eliminated on entry into force. 
 6. What percentages of tariff lines under Categor y "W" account for Chile's imports from 
Australia? 
 There are not imports records from Australia of  products in this category.  The tariff lines 
represent 0.08%.  
 7. What percentages of tariff lines under the "Sugar" Category account for Chile's 
imports from Australia? 
 There are not imports records from Australia of  products in this category.  The tariff lines 
represent 0.08%.  
8. Japan recognizes that the relation between "Market Access" and "Local Presence" as 
well as that between "National Treatment" and "Local Presence" is unclear, therefore Japan 
would like to ask the Parties to explain the di fference among these three elements.  In addition, 
Japan would like to ask the Parties whether "Local Presence" is a part of the restriction or requirement of specific types of legal entities or joint ventures which are stipulated in Article 9.5(b) and also a part of the residentia l requirement.  If so, what is the purpose of 
stipulating "Local Presence" in addition to "Market Access" or "National Treatment"? 
 In the case of stipulating "Local Presence" in a reservation list, how do the Parties 
intend to make a clear distinction from "Marke t Access" and "National Treatment"?   Japan 
also would like to ask that the Parties think of what kind of elements should be stipulated in the reservation list as a part of "Local Presence". 
  Local presence requirements can be a significant obstacle to cross-border trade in services. 
The local presence discipline usefully adds to the other substantive obligations  in the services chapter 
and clarifies the position with respect to residency requirements.  We agree that there is some overlap with the Market Access provision, but note that th e position with regard to residency requirements 
and National Treatment is not clear.  WT/REG263/2 
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  Questions from the Delegation of the United States 
 
 
Scope and Definitions 
 
9. Paragraph 90 of the Factual Presentation states that, under Article 9.10 of the 
Agreement, a Party may deny the benefits of Chapter 9 to a service supplier of the other Party if 
that service supplier is an enterprise owned or co ntrolled by the persons of a non-Party or of the 
denying Party.  It then notes that such benefits "may also be denied" if a service supplier is an enterprise having no substantial business operati ons in the territory of the other Party. 
 The Secretariat Report's description of Ar ticle 9.10 in paragraph 90 seems to suggest 
that a Party could deny the benefits of Chapter 9 to an enterprise of the other Party if 
either of two conditions exist:  the enterprise is owned or controlled by persons of a non-Party (or the denying Party), or
 the enterprise does not conduct substantial operations 
in the territory of the other Party. 
 
(a) Could the Parties please confirm wheth er Paragraph 90 of the Secretariat's 
Report is accurate in its description of Article 9.10? 
(b) If the Report's description is accurate , how does Article 9.10 comply with the 
GATS Article V.6 requirement that a juridical person of any WTO Member that is constituted under the laws of  a Party and has substantial business 
activities there be entitled to treatment granted under Article V agreements? 
 The Secretariat Report's description of Art. 9.10 in paragraph 90 requires clarification: 
 
 Article 9.10: Denial of Benefits reads:  Subj ect to prior notification and consultation, a Party 
may deny the benefits of this Chapter to a service supplier of the other Party if the service supplier is 
an enterprise:  
(a) owned or controlled either by persons of a non-Party or of the denying Party;  and 
(b) has no substantive business operations in  the territory of the other Party. 
 A party may only deny benefits if both cond itions in Article 9.10 (a) and (b) are met. 
 
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