WORLD TRADE  
ORGANIZATION  WT/REG272/2 
24 November 2010 
 
 (10-6339) 
Committee on Regional Trade Agreements  Original:   Spanish 
  
 
FREE TRADE AGREEMENT BETWEEN COLOMBIA AND CHILE 
 
Questions and Replies
 
  
 The following communication, dated 18 November 2010, is being circulated at the request of 
the delegations of Colombia 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
 
 1. Have products originating fr om or manufactured in Chile's or Colombia's free zones 
been included in the Agreement and,  if so, under what conditions? 
 The Free Trade Agreement between Colombia and Chile has no provisions relating to free 
zones.  In the absence of any such provisions , free zones are understood to be included in the 
Agreement, which implies that products originating or manufactured in Chile's  or Colombia's free 
zones are eligible for the benefits granted under the Agreement. 
 
2. What is the tariff treatment for bovine meat from Chile imported by Colombia in excess 
of the quota established in the Agreement? 
 The Sixth Additional Protocol to  the Partial Scope Agreement (" Acuerdo de 
Complementación Económica  No. 24") (hereinafter "ACE No. 24") of August 1997 established a 
tariff elimination programme for bovine meat.  Furthermore, a reciprocal duty-free quota of 
3,000 tonnes of bovine meat was negotiated at  the IV Special Session of the Administrative 
Commission in 2006 and recorded in the Eighth Additional Protocol to the ACE No. 24.   Out-of-quota imports are subject to the followi ng tariff treatment:  a tariff preference of 67%  
for 2010, a tariff preference of 83% for 2011 and a tariff preference of 100% as of 1 January 2012. 
 
 The base rate for applying the preference to  imports in excess of the 3,000 tonnes originating 
in Chile is 20%, as negotiated in  the Sixth Additional Protocol. 
 
3. In which sectors have Colombia and Chile in creased their commitments in relation to 
prior GATS undertakings? 
 The framework used in the Agreement for services and investment follows the 
NAFTA model, whereby Modes 1, 2 and 4 supply of  services are covered by the disciplines in the 
Chapter on Cross-border trade in services, while the Chapter on Investment covers Mode 3 supply of 
services as well as investment in other non-services sectors. WT/REG272/2 
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   Furthermore, and on the basis of the above-men tioned model, the liberalization plan is based 
on negative lists, contrary to the positive-list appro ach used at multilateral level.  Cross-border trade 
in services and investment in both services and non- services sectors are fully liberalized, with the 
exception of what each country has included in the Annexes of non-conforming measures.  Annex I incorporates existing legislation which goes agains t the obligations under the said Chapters, while 
Annex II preserves the possibility of issuing future  legislation in relation to certain services and 
non-services sectors which violates such obligations.   A comparison of Colombia's Uruguay Round Schedule of Specific Commitments with the liberalization commitments under this Agreement re veals that the level of liberalization achieved 
under the latter is much higher.  This is eviden ced by the liberalization of sectors which are not 
included in the GATS commitments, as in the case of  the following sectors, in accordance with the 
Services Sectoral Classification List (document MTN.GNS/W/120, dated 10 July 1991):  1. BUSINESS SERVICES
 
A. Professional Services  
 d. Architectural services  e. Engineering services  f. Integrated engineering services  g. Urban planning and landscape architectural services  h. Medical and dental services 
 i. Veterinary services 
 j. Services provided by midwives, nurses, ph ysiotherapists and para-medical personnel 
C. Research and Development Services
 
D. Real Estate Services  
E. Rental/Leasing Services without Operators  
 a. Relating to ships 
 b. Relating to aircraft  d. Relating to other machinery and equipment F. Other Business Services
 
 a. Advertising services  b. Market research and public opinion polling services 
 d. Services related to management consulting 
 e. Technical testing and analysis services  f. Services incidental to agriculture, hunting and forestry  g. Services incidental to fishing  i. Services incidental to manufacturing 
 j. Services incidental to energy distribution 
 k. Placement and supply services of personnel  l. Investigation and security  m. Related scientific and technical consulting services  n. Maintenance and repair of equipment  o. Building-cleaning services 
 p. Photographic services 
 q. Packaging services  r. Printing, publishing  s. Convention services 2. COMMUNICATION SERVICES
 
 A. Postal services 
 B. Courier services  D. Audiovisual services  WT/REG272/2 
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  3. CONSTRUCTION AND RELATED ENGINEERING SERVICES  
 D. Building completion and finishing work 4. DISTRIBUTION SERVICES
 
5. EDUCATIONAL SERVICES  
6. ENVIRONMENTAL SERVICES  
8. HEALTH-RELATED AND SOCIAL SERVICES  
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES  
11. TRANSPORT SERVICES  
  A higher level of liberalization was also ach ieved in certain sectors included in the Uruguay 
Round Schedule of Commitments, such as: 
 1. BUSINESS SERVICES
 
 A. Professional Services  
a. Legal services 
b. Accounting, auditing and bookkeeping services 
c. Taxation services 
 B. Computer and Related Services  
3. CONSTRUCTION AND RELATED ENGINEERING SERVICES  
 A. General construction work for buildings  B. General construction work for civil engineering 
 C. Installation and assembly work 
 D. Building completion and finishing work  E. Other 9. TOURISM AND TRAVEL-RELATED SERVICES
 
 A. Hotels 
 
 As far as Chile is concerned, the commitme nts it has made in the following sectors go beyond 
those undertaken under the GATS:  1. BUSINESS SERVICES
 
 B. Computer and related services  
 C. Research and development services  
 D. Real estate services  
 F. Other business services  
3. CONSTRUCTION AND RELATED ENGINEERING SERVICES  
 A. General construction work for buildings  
 B. General construction work for civil engineering  
 C. Installation and assembly work  
 D. Building completion and finishing work  
 E. Other  
4.  DISTRIBUTION SERVICES  
 A. Commission agents' services  
 B. Wholesale trade services  
 C. Retailing services  
 D. Franchising  
 E. Other  
6. ENVIRONMENTAL SERVICES  
 A. Sewage services  
 B. Refuse disposal services  
 C. Sanitation and similar services  
 D. Other  WT/REG272/2 
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  10. RECREATIONAL, CULTURAL AND SPORTING SERVICES
 
 A. Entertainment services (including theatre, live bands and circus services)  
 B. News agency services  
 C. Libraries, archives, museums and other cultural services  
 D. Sporting and other recreational services  
 E. Other  
11. TRANSPORT SERVICES  
 A. Maritime transport services  
 B. Internal waterways transport  
 C. Air transport services  
 D. Space transport  
 E. Rail transport services  
 F. Road transport services  
 G. Pipeline transport  
 H. Services auxiliary to all modes of transport  
 I. Other transport services  
  It should be noted that, as previously mentioned, liberalization is based on domestic legislation, which in many cases includes national treatment restrictions or market access restrictions.  This means that, although certain sectors are opening up,  such liberalization is subject to restrictions.  
It should also be borne in mind that liberalization is subject to any future reservations recorded by 
each country. 
  Finally, it should be noted that, with regard to Mode 4, the Agreement goes beyond what is currently provided for in the multilateral forum, gi ven that it contains a Chapter on Temporary entry 
of Business Persons which establishes disciplines to facilitate the movement of persons related to 
service and investment activities, unlike the Multil ateral Agreement which only covers services 
providers.  
4. The Agreement establishes that returns in kind relating to a covered investment are to 
be made as authorized or specified in a written agreement (Article 9.9.2).  Was this agreement negotiated and, if so, on what basis? 
Response from Chile
 
  No, Chile currently has no written agreements with national or foreign investors authorizing 
returns in kind.  
Response from Colombia
   
  The written agreement mentioned in Article 9.9. 2 does not refer to an international agreement 
between Chile and Colombia, but to a "written agreem ent" as defined in Article 9.28:  Definitions 
(transcribed hereunder).  As explained therein, th is is an agreement not between the Parties, but 
between a Party and an investor or a covered inv estment.  For this reason, there is no provision for 
any kind of further development of this commitment. 
 
 "Written agreement means an agreement in writin g, which has been executed and entered 
into, between the Party and a covered investment or  an investor of the other Party, which sets 
forth an exchange of rights and obligations, for value.  Neither a unilateral act of an 
administrative or judicial authority, such as a decree, order, judgment, permit or licence, nor 
an authorization issued by a Party in exercise of its regulatory powers, shall be considered a written agreement." 
  WT/REG272/2 
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  5. The Agreement contains a Colombian reserv ation that local presence (branch) is 
required to obtain a licence in any sector in  which cross-border trade in services involves 
activity in Colombia.  To which ac tivities does this requirement apply? 
 It should be noted that the measure included by Colombia in Annex I is the requirement to be 
established in Colombia in order to obtain a licence from the State, and also that commercial presence 
is not required to obtain a licence in any sector.  Moreover, a licence is not per se  a restriction on 
international trade (unless it is discriminatory) an d, to that extent, is an issue which falls under 
domestic regulation.   A licence is an authorization granted by the Stat e to a person (natural or legal) to use a public 
good, that is to say, a national good, for a specified period of time. 
  As far as Colombia is concerned, there are certain sectors for which the State can grant a 
licence subject to a commercial presence requirement, as established by the measure in Annex I.  This 
is the case, for example, of telecommunication services, radio-broadcasting services, free-to-air 
television services and port services. 
 
6. In some sectors, access to the Colombian market is subject to authorization and an 
economic needs test.  How is "economic need" defined? 
 There is no single definition of "economic need", given that it varies according to sector;  the 
specific defining criteria are established in domestic legislation.  Set out hereunder are two specific 
cases provided for in Columbian legislation which refe r to the conditions relating to the provision of 
an economic needs-testing service. 
 (a) Notary and Registrar Services 
 Decree No. 960 of 1970 
 Issuing the Law on the Notarial Profession 
 
 Art. 121. - (…) With regard to the provision of notarial services, the territory of the Republic shall be divided into notarial circuits corresponding to the territory of one or more municipalities in 
the same department, one of which sha ll be the main office and headquarters. 
  Art. 122.- A notarial circuit may have more  than one notary, in which case the various 
notaries shall be identified by numerical order. 
  Art. 123.- The annual average number of not arial instruments drawn up in the preceding 
five years in each notarial circuit shall determine the number of notaries who are to provide their services in the circuit during the subsequent peri od.  Where this averag e exceeds three thousand 
instruments per notary, one additional office may be created for each three thousand notarial 
instruments or fraction thereof over this figure, if th e circuit is first category, and one office for each 
two thousand notarial instruments or fraction thereof over this figure, if the circuit is second or third 
category.  
 Art. 124.- Where a circuit has three or more notary's offices, the number of offices created in 
each period pursuant to Article 123 above may not exceed 50% of the number of existing offices.  
This procedure shall be repeated in subsequent peri ods until the total number of notary's offices to be 
created in accordance with the said Article has been reached. (…) 
. WT/REG272/2 
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   Art. 126.- If the annual average number of notarial instruments drawn up in the preceding five 
years in a notarial circuit is less than three thousand per notary, for those in the first category, or less 
than two thousand per notary, for those in the second and third categories, surplus offices may be 
closed, according to numerical order and by decree of the National Government.  
 Art. 127.- The creation of a new notarial circuit requires that the municipality or 
municipalities involved have, when taken together, not fewer than 30,000 inhabitants and that a circuit 
of dispersed municipalities have at least an equa l number of inhabitants.  Service requirements, 
communications facilities and other factors which could pl ay a significant role also shall be taken into 
consideration. (…) 
 
(b) Free-to-air television  
 Agreement No. 24 
 Regulating the provision of profit-making a nd non-profit-making local television services  
 
 Article 9. Number of licences.  The National Television Commission shall grant the following 
number of licences for the provision of profit-making local television services:  
(a) One (1) licence for all departmental capitals and cities with from 
one hundred thousand (100,000) up to one million (1,000,000) inhabitants.  It is 
understood that, in such cases, a licence sha ll be granted for a single local television 
station. 
(b) Two (2) licences for municipalities with more  than one million and one (1,000,001) 
inhabitants. 
 With regard to the operation of non-profit- making local stations, the National Television 
Commission shall grant licences for as many stations as there are available frequencies, in accordance 
with the respective technical studies by the said Commission.  (…) 
 
7. The Agreement establishes that its provi sions concerning national treatment and 
most-favoured-nation treatment for services and in vestment apply to all taxation measures, 
other than those on income, capital gains, or on the taxable capital of corporations, taxes on estates, inheritances, gifts, and generation ski pping transfers.  Is there a different tax treatment 
in such cases and, if so, what would it be? 
 Differences in treatment could indeed exis t;  the countries do not therefore undertake to 
eliminate such differences.  An example would be pr operty tax on an agency of a foreign bank, which 
does not apply to a local bank.  Simply put, the Articles on national treatment and most-favoured-nation treatment are only applicable to  value-added tax, which is the most important 
tax and is not excluded from the said commitments. 
 
8. Although the Agreement specifies that Chap ter 10, concerning services, does not apply 
to air services, including domestic and intern ational air transportation services, whether 
scheduled or non-scheduled, and related services  in support of air services other than aircraft 
repair and maintenance services, specialty ai r services, and computer reservation system 
services (Article 10.1.4), the air transport sect or is included in Chile's non-conforming 
measures.  Why is this so?  WT/REG272/2 
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   Article 10 does indeed establish the scope of  the Chapter on Services.  Although domestic and 
international air transportation services are excluded, other air transportation services are covered by the Agreement.   Furthermore, the reservations set out in A nnex I apply both to the Chapter on Cross-border 
Trade in Services and to the Chapter on Investment. 
  
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