WORLD TRADE  
ORGANIZATION  WT/REG165/4 
18 January 2005 
 (05-0202) 
Committee on Regional Trade Agreements Original:   Spanish 
  
 
FREE TRADE AGREEMENT BETWEEN CHILE AND EL SALVADOR 
 
GOODS ASPECTS
 
 
Communication from the Parties  
 
  The following communication, dated 14 January 2005, is being circulated at the request of the delegations of Chile and El Salvador.  
_______________ 
 
 
I. BACKGROUND INFORMATION ON THE AGREEMENT  
 During the Second Summit of the Americas held in Santiago de Chile in April 1998, the 
Presidents of Costa Rica, El Salvador, Guatemala,  Honduras, Nicaragua and Chile agreed on the need 
to strengthen trade relations among their countries inter alia  through a trade agreement.  
  The government representatives of the Centra l American countries and Chile accordingly 
decided on an organizational framework for the negotiation of a free-trade agreement.  The 
framework provided that the legal aspects of the agreement would be jointl y negotiated between the 
Central American countries and Chile but that its  provisions would apply, on a bilateral basis, 
between Chile and each individual Central Americ an country.  As regards market access, it was 
decided that both the tariff elimination programme  and some specific rules of origin would be 
negotiated bilaterally between each Ce ntral American country and Chile. 
  The Free Trade Agreement between Central America and Chile is divided into seven parts, 
sub-divided into 21 chapters:  initial provisions, general definitions, national treatment and market 
access for goods, rules of origin, customs procedur es, emergency action, unfair trading practices, 
sanitary and phytosanitary measures, standards-rela ted measures, metrology and approval procedures, 
investment, cross-border trade in services, air tran sportation, telecommunications, temporary entry for 
business persons, competition policy, government pr ocurement, transparency, administration of the 
Agreement, dispute settlement, exceptions and final provisions. 
  The Bilateral Protocol to the Agreement conc luded between the Republics of El Salvador and 
Chile contains Annexes pertaining to the tariff elim ination programme;  specific rules of origin;  and 
matters relating to cross-border trade in services. 
 
1. Membership and dates of signature,  ratification and entry into force 
 The Free Trade Agreement between Central America and Chile, si gned on 18 October 1999, 
and its Bilateral Protocol, si gned between the Republics of El Salvador and Chile on 
30 November 2000, form an accord that appli es bilaterally between El Salvador and Chile. 
 WT/REG165/4 
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  In El Salvador, the Agreement was ratified by  Legislative Decree No. 567 of 4 October 2001, 
published in the Diario Oficial  (Official Journal) No. 218, Volume No. 353, of 19 November 2001. 
  In Chile, the Agreement was enacted by Su preme Decree No. 127, published in the Diario  
Oficial  of 1 June 2002. 
 
 On 3 May 2002, the Parties exchanged their instruments of ratification certifying the completion of legal procedures and formalities.  In  accordance with its Artic le 21.03, the Agreement 
officially entered into force on 1 June 2002, i.e. 30 days after the exchange of instruments.  2. Type of agreement 
 In Article 1.01 of the Agreement, the Parties lay the groundwork for establishing and 
implementing a free-trade area in conformity with Article XXIV of the GATT 1994 and Article V of the GATS.  3. Scope 
 The scope of the Agreement extends to trade in goods between each of the Central American 
countries and Chile.  Each Party agrees to afford na tional treatment to goods from the other Party, in 
accordance with Article III of the GATT 1994 , to which no exceptions are provided. 
  Each Party undertakes to eliminate cust oms duties pursuant to the provisions of 
Annex 3.04(2) (Tariff Elimination Programme).  In the case of the bilateral negotiations between 
El Salvador and Chile, the goods are listed in six different staging categories.  Each tariff line under 
the Harmonized System for the classification of good s is assigned a category specifying the timetable 
and conditions for bringing down customs duties to zero per cent.  
 
Category Tariff elimination schedule 
A Immediate elimination upon entr y into force of the Agreement 
B Phasing out over a period of 5 years from the date of ratification of the Agreement 
C Phasing out over a period of 8 years from the date of ratification of the Agreement  
D Phasing out over a period of 10 years from the date of ratification of the Agreement 
E Phasing out over a period of 16 years from the date of ratification of the Agreement 
TP Special treatment/petroleum products (applies only to Chile)  
 
 
 As regards Chilean market access for Salva doran products, the Agreement provides for 
immediate, duty free entry into Chile of practically all products (83 per cent) in  El Salvador's Customs 
Tariff.  There are, however, certain exceptions to the general principle of symmetry.  A framework for 
reciprocity in market access conditions was establis hed for products for which El Salvador granted 
Chile a 16-year phasing-out period (Category E) for the entry of Chilean products.  This concerns 
decaffeinated coffee and sausages, for example.  Lastly, there are specific provisions governing access 
for some petroleum products.  Excluded products re present around 4.4 per cent of Chile's tariff lines. 
  As to Salvadoran market access for Chilean products, 63 per cent are provided immediate access and the rest is subject to the staging categories in the Tariff Elimination Programme. 
 WT/REG165/4 
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  Approximately 47 per cent of El Salvador's  tariff lines enjoyed most-favoured-nation duty-
free treatment at the time of the Agreement's entr y into force.  Hence El Salvador granted Chile 
immediate access for those tariff lines.  Chile w as also accorded immediate access for products not 
produced by El Salvador and of substantial inte rest to Chile, which represent around 26 per cent of 
tariff lines. 
 
 It should be noted that 17 per cent of El Sa lvador's tariff lines are in Category B (phasing out 
over five years), 1.3 per cent in Category C (phasing out over eight years),  13.7 per cent in Category 
D (10 years) and 0.5 per cent in Category E (16 years);  4.5 per cent of tariff lines are excluded from the reduction programme.  In the case of Chile, all cat egories combined (other than that providing for 
immediate elimination) represent 12.3 per cent of tariff lines. 
  
Percentage of Tariff Lines
 
by Staging Category  
 
 
Category El Salvador Chile 
A 62.9% 83.2% 
B 17.1% 1.5% 
C 1.3% 10.2% 
D 13.7% 0.0% 
E 0.5% 0.3% 
TP 0.0% 0.3% 
Excluded 4.5% 4.4% 
TOTAL 100.0% 100.0% 
 
  Both countries agreed to exclude ten types of product from the tariff elimination programme 
on account of sensitivities in their production sectors.  Chile excluded goods imports of which were subject to the price band mechanism, i.e. wheat, wh eat flour, edible oils and sugar.  El Salvador 
excluded beef, chicken meat, pork, dairy products, so me vegetables, rice, oranges, lemons, beer and 
vehicles.  It was agreed that the exclusions w ould be common to both Parties, so each Party's 
Schedule excludes ten types of product in all.   As regards trade data in relation to the tariff elimination or liberalization process, it has been 
determined that for Chile over 70 per cent of the to tal amount of trade will be liberalized within a 
period of five years following the signing of the Ag reement, and for El Salvador over 99 per cent, 
taking the trade figures for 2001, the year prior to th e entry into force of the Agreement.  This is 
shown in the table and charts below.  WT/REG165/4 
Page 4  
 
 Free Trade Agreement (FTA) between El Salvador and Chile Bilateral Trade
 
According to Market Access Under the FTA  
2001 (in Thousands of US Dollars)  
  
Category US$ Share (%) 
Chilean market access for Salvadoran exports 
Immediate free trade 2,613.0  99.8% 
8 years 4.0  0.2% 
Total exports to Chile 2,617.0 100.0% 
Salvadoran market access for Chilean exports 
Immediate free trade 9,960.0 60.3% 
5 years 760.0 9.6% 
8 years 1,000.0 6.1 % 
10 years 4,250.0 25.7% 
16 years  137.0 0.8% 
Excluded 406.0 2.5% 
Total imports from Chile 16,153.0 100.0% 
 
 
  
 
FTA El Salvador/Chile
Chilean market access for Salvadoran exports, 2001
5 years
0.2%Free trade
99.8%
 
 WT/REG165/4 
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4. Trade data  
 Trade between El Salvador and Chile has intensified since the mid-1990s.  In 1995, the flow 
of trade between the two countries amounted to US $8.5 million.  In 2002, the amount practically 
tripled to US$23.2 million.  However, this dynami c trend stemmed mainly from a steady increase in 
Chilean imports into El Salvador.  Over the past sev en years, these have grown at an average rate of 
40 per cent per year, which explains the traditional ba lance in Chile's favour in trade between the two 
countries. 
  For the year 2002, around 7 per cent of Salva doran exports to Chile concerned agricultural 
goods and about 93 per cent industrial products, includi ng medicines, paper and paperboard waste, 
towels and telephones.  These products alone account for more than 70 per cent of total exports to this 
market. 
 
 FTA El Salvador/Chile  
Salvadoran market access for Chilean  products, 2001  
Excluded
2.5%8 years  
1.0% 
10 years  
22.4%  
16 years
0.6%5 years
4.6% Free trade
60.3%
El Salvador:  Trade with Chile 
1995-2002  
-30 -20 -10 0 10 20 30 
Source:  Central Reserve Bank (BCR) of El Salvador  US$ millions  
Exports 0.799 0.448 3.727 1.44 6.043 1.571 1.859 0.282 
Imports 7.651 8.00 8.390 10.856 13.936 22.059 15.995 22.938 
Balance  -6.852 -7.550 -4.663 -9.416 -7.893 -20.488 -14.136 -22.656 1995 1996 1997 1998 1999 2000 2001 2002 WT/REG165/4 
Page 6  
 
  During the same period, 50.7 per cent of total Chilean imports into El Salvador concerned 
agricultural goods, while goods from the industrial sector accounted for 49.3 per cent.  Key imports 
from Chile include gasoline, apples, grapes, ju ice, wine, medicines and wooden furniture.  
 
II. TRADE-RELATED PROVISIONS 
1. Import restrictions  
 The Parties undertake to completely and immedi ately eliminate all non-tariff barriers.  This 
implies a commitment to refrain from imposing import restrictions that are not based on Articles XX and XXI of the GATT 1994 or those regulated in Chapter 8 (Sanitary and Phytosanitary Measures) 
and Chapter 9 (Standards-Related Me asures, Metrology and Approval Procedures) of the Agreement. 
 
 1.1 Duties and charges   The Free Trade Agreement between El Salvador and Chile does not establish any import duties or charges other than those specified in the attached Tariff Elimination Programme. 
 
 1.2 Quantitative restrictions   The Agreement stipulates the elimination of im port and export restrictions in accordance with 
Article XI of the GATT 1994 (General Elim ination of Quantitative Restrictions). 
 
 1.3 Common External Tariff 
  The Agreement does not include among its objectives the establishment of a common external tariff for third markets.  2. Export restrictions  
 2.1 Duties and charges 
 
• Article 3.14 (Export Taxes) stipulates th at no Party may adopt or maintain 
any duty, tax or other charge on the export of any good to the territory of another Party, unless such duty, tax or charge is adopted or maintained on any such good when destined for domestic consumption.   
 
 2.2 Quantitative restrictions   Requirement to eliminate import and export restrictions, as commented in section 1.2.  3. Rules of origin 
 Rules of origin are covered by Chapter 4 (Rules of Origin) of the Agreement.  Broadly 
speaking, the main criteria for qualification as originating goods are:  
 
(a) That the goods be wholly obtained or produced  entirely in the territory of one or more 
Parties belonging to the free-trade area;  this includes, inter alia , live animals born 
and raised;  animals obtained by hunting, trapping, fishing, gathering or capturing;  products obtained from such live animals;  plants and plant products harvested, picked or gathered;  minerals and other naturally occurring substances extracted or 
taken;  scrap and waste derived from manufacturing or processing operations or from consumption and fit only for the recovery  of raw materials;  goods obtained or WT/REG165/4 
Page 7 
 
 
 produced from the goods referred to above ;  and marine produc ts taken or goods 
extracted from the seabed or marine subsoil outside the territorial waters and maritime zones where the Parties exercise ju risdiction by vessels flying the flag of a 
Party and registered or chartered by companies legally established in the free-trade area; 
(b) that the imported raw materials used in producing the goods have undergone a change 
in tariff classification, comply with a regional value content or meet other requirements, in accordance with the speci fic rules of origin in the Annex to 
Article 4.03.  Most of the rules of or igin are common to the Central American 
countries (Costa Rica, Honduras, Nicaragua, El  Salvador and Guatemala) and Chile.  
A number of tariff headings are governed by specific rules of origin that apply on a 
bilateral basis, for instance only between El Salvador and Chile. 
 The Agreement contains a series of provisions to help enterprises determine the origin of the 
goods they produce, including accumulation (Article 4.06),  de minimis  levels (Article 4.08), and sets 
and assortments of goods (Article 4.10).  There are al so provisions for determining the origin of raw 
materials used in producing export goods;  am ong the key provisions are indirect materials 
(Article 4.05), fungible goods (Article 4.09), a nd accessories, spare parts and tools (Article 4.11). 
  As regards direct transhipment and shipme nt and international transit, the Agreement 
specifies that goods do not lose their originating st atus when exported from one country to another 
within the free-trade area and in transit through the territory of a country that may or may not be a 
Party belonging to the free-trade area, provided that th e transit is justified for geographical reasons or 
international transport requirements, the goods are not  destined for trade or use in the country or 
countries of transit, they do not undergo, during their transport or storage, any operation other than 
packaging, packing, repacking, loading, unloading or handling to ensure their conservation and they 
remain under the control or supervision of the custom s authority in the territory of the Party or non-
Party .  Otherwise, the goods lose their originating status. 
  Chapter 5 (Customs Procedures) provides a gene ral reference framework of principles to be 
followed by the relevant authorities in the countries belonging to the free-trade area and by users, the objective being to reduce the burden of customs procedures.   
 This Chapter basically includes rules regul ating customs procedures for verifying the 
declaration made by an exporter that has been gran ted a tariff preference.  For example, it contains 
provisions relating to certificates of origin, the oblig ations of importers and exporters, procedures for 
verifying the origin of goods, and c ooperation between customs administrations. 
 4. Standards 
 4.1 Technical Barriers to Trade  
  Chapter 9 (Standards-Related Measures, Me trology and Approval Procedures) regulates 
national procedures for the preparation, adoptio n and implementation of  measures relating to 
standards, metrology and approval procedures so as to  ensure that they do not constitute unnecessary 
barriers to trade between El Salvador and Chile.  The Chapter thus contains specific provisions on 
basic rights and obligations, harmonization of measures, risk assessment, conformity assessment, metrological standards, and so forth.  It also provides an institutional fra mework for discussing these 
matters, and specific provisions re lating to technical cooperation. 
 WT/REG165/4 
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  4.2 Sanitary and Phytosanitary Measures  
  Chapter 8 (Sanitary and Phytosanitary M easures) provides a regulatory framework to 
facilitate trade in agricultural products and prot ect human, animal and plant life and health, under 
rules based on the WTO Agreement on the Applicati on of Sanitary and Phytosanitary Measures.  The 
Chapter stipulates that sanitary and phytosanitary st andards are to be based on scientific information, 
risk analysis and the international reference standa rds of the Office International des Épizooties, the 
Codex Alimentarius  and the International Plant Protection Convention. 
 
5. Safeguards 
 Chapter 6 (Emergency Action) establishes th e rules and technical criteria for applying 
safeguard measures.  It distinguishes between me asures defined as bilateral emergency actions and 
global emergency actions.     Provision is made for bilateral emergenc y actions (i.e. between the importing and the 
exporting country) where imports of the other Pa rty have undergone a significant increase and are the 
main cause of injury or threat of injury resulti ng from the reduction or elimination of a duty provided 
for in the Agreement.  In  this case the affected Party may, during  a transitional period, either suspend 
the further reduction of the rate of duty provided fo r under the Agreement, or increase the rate of duty 
to a level not exceeding the lesser of the most-favour ed-nation rate of duty at the time the action is 
taken and the most-favoured-nation rate of duty in  effect on the day immediately preceding the entry 
into force of the Agreement.  The Chapter also specifies conditions concerning notification, 
time-frames for implementation, possible extens ion and compensation for the other Party, inter alia , 
in regard to the application of such measures.   As regards global emergency actions, each Pa rty retains its rights and obligations under 
Article XIX of the GATT 1994 and the WTO Agreem ent on Safeguards, except those regarding 
compensation or retaliation and exclusion from such an action to the extent that such rights or 
obligations are inconsistent with th is Chapter.  A Party taking such an action may not do so in respect 
of the other Party except where imports from the ot her Party account for a substantial share of total 
imports and imports from the other Party contribute si gnificantly to the serious injury caused by total 
imports.  The Party taking global acti on is required to provide to the ot her Party mutually agreed trade 
liberalizing compensation in the form of concessions having substantially equivalent trade effects or 
equivalent to the value of the additional duties expected to result from the action.  
  The Chapter includes provisions governing the administration of emergency action proceedings in general.  These refer to the co nsistent, transparent, equitable and impartial 
administration of domestic legislation and requirements to be met, in accordance with the WTO 
provisions, regarding the institution of proceedings, th e contents of a petition, consultations, notice of 
determinations, public hearings, handling of confidentia l information, evidence of  injury or threat of 
injury, and deliberation and report.  It is also expressly stated that, in the case of global actions, a 
Party is to deliver written notice, without delay, to the other Party of the institution of proceedings that 
may result in a global emergency action.  Moreover, a Party may not impose restrictions on goods in a 
global action without notifying the Free Trade Commission established under the Agreement and 
providing adequate opportunity for consultation with the other Party.    As far as dispute settlement is concerned, no Party may request the establishment of an 
arbitral panel under the Agreement regarding an em ergency action that has si mply been proposed.  
 
 Emergency measures are also covered in the ru les relating to exceptions, as explained below 
under Section III.1.  WT/REG165/4 
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 6. Anti-dumping and countervailing measures  
Chapter 7 (Unfair Trading Practices) regulates unfair trade practices.   
  Its main purpose is to state the commitment of  the Parties to avoid any unfair international 
trade practice that causes or threatens to cause trad e distortions and to define the conditions under 
which an anti-dumping or countervailing duty – as th e case may be – may be imposed, as well as the 
procedure for applying such a duty.   The Chapter consists of two Articles s tipulating that the rules on anti-dumping and 
countervailing duties applicable for the purposes of the Agreement are to be based on the standards 
and disciplines of the WTO Agreement on Subsidi es and Countervailing Measures and the Agreement 
on Implementation of Article VI of the GATT 1994.   As regards scope and coverage, the Chapte r establishes that each Party may initiate an 
investigation and apply countervailing or an ti-dumping duties, in accordance with the 
WTO Agreement on Subsidies and Countervailing Measures and the Agreement on Implementation 
of Article VI of the GATT 1994, and any ot her relevant legislation of each Party. 
  The Chapter further states that the Parties sh are the objective of promoting significant reforms 
in this field in order to prevent measures of this  kind from becoming disguised barriers to trade.  The 
Parties undertake to cooperate in the effort to achieve such reforms in  the frameworks of the 
WTO Agreement and the Free Trade Area of the Americas. 
 
7. Subsidies and State aid  
 The Free Trade Agreement between Central America and Chile does not provide for any 
subsidies or State aid. 
 
8. Sector-specific provisions  
 There are no specific provisions regarding trade in goods in any particular sector, other than 
those contained in each Party's Tariff Elimination Programme and other Annexes.  
9. Other provisions 
 Article 5.13 (Cooperation) sets out a number of  provisions concerning cooperation in customs 
administration, aimed at speeding up and facilitating th e flow of goods within the free-trade area.  In a 
commitment under Article 3.08, the countries belong ing to the free-trade area agree that customs 
valuation is to be governed by the rules of the relevant WTO Agreement.  III. GENERAL PROVISIONS OF THE AGREEMENT 
1. Exceptions and reservations 
 Chapter 20 (Exceptions) contains the rules rela ting to exceptions.  Their purpose is to identify 
specific situations in which the provisions of th e Agreement would not apply for any the following 
reasons:  public interest, national security, bala nce-of-payments difficulties or tax measures. 
 WT/REG165/4 
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  General exceptions
 
  As regards general exceptions, Article XX of  the GATT 1994 and its interpretative notes are 
incorporated into and made part of the Agreement for the purposes of:  
• Part Two (Trade in Goods);  
 
• Part Three (Technical Barriers to Trade), ex cept to the extent that any provision of 
that Part applies to services or investment;  and 
 
• the Chapters on Competition Policy and Govern ment Procurement, to the extent that 
any provision of those Chapters applies to goods. 
 
 National security
 
  As far as national security is concerned, the Parties may provide for exceptions in order to 
protect their essential security interests or take action in pursuance of their obligations under the 
United Nations Charter for the maintena nce of international peace and security. 
 
 Balance of payments
 
  The Parties may establish exceptions in order to  adopt or maintain me asures that restrict 
transfers where a Party faces serious balance-of-pay ments difficulties or the threat thereof, provided 
that such restrictions are consistent with certain  requirements under the relevant Article.  As soon as 
practicable after a Party imposes a measure restricti ng transfers, in pursuance of its international 
obligations the Party is required to submit all rest rictions on current account operations for review by 
the International Monetary Fund (IMF) under Article VII of the IMF Articles of Agreement;  to enter 
into good faith consultations with the IMF on economic adjustment measures to address the 
underlying economic problems;  and to adopt or ma intain economic policies consistent with such 
consultations. 
  The measures applied or maintained must al so avoid unnecessary damage to the commercial, 
economic or financial interests of the other Party, not be more burdensome than necessary to deal with 
the balance-of-payments difficulties, be of a temporary nature and be progressively phased out as the 
situation improves. 
  A Party may adopt or maintain a measure that gi ves priority to services th at are essential to its 
economic programme, provided that the measure is not imposed for the purpose of protecting a specific industry or sector, unless the measure is consistent with the provisions of the IMF Articles of Agreement. 
 
 The Article further stipulates that restrictions on transfers imposed on payments for current international transactions must be consistent with  Article VIII(3) of the IMF Articles of Agreement;  
must be consistent with Article VI of the IM F Articles of Agreement and be applied only in 
conjunction with measures imposed on payments for current interna tional transactions;  and may not 
take the form of tariff surcharges, quotas, licences or similar measures. 
  Disclosure of information
 
  Concerning disclosure of information, the Parties may establish exceptions as regards the supply or access to information the disclosure of which could impede compliance with or would be 
contrary to their respective Constitutions or laws. WT/REG165/4 
Page 11 
 
 
  Taxation  
  None of the provisions of the Agreement app lies to tax measures or affects the rights and 
obligations of the Parties under tax conventions.  In the event of inconsistency between the 
Agreement and any such convention, that convention prevails to the extent of the inconsistency. 
 
 Notwithstanding the above, the national treatme nt provisions apply to tax measures to the 
same extent as does Article III of the GATT 1994 and the export tax provisions to tax measures. 
  Reservations
 
 
 The Parties made no reservations to the Agre ement, since Article 21.02 (Reservations) states 
that the Agreement may not be subject to reservations or interpretative statements on the occasion of its ratification.  2. Accession  
 There is no specific provision for othe r countries to accede to the Agreement. 
 
3. Dispute settlement procedures 
 The dispute settlement mechanism is establishe d in Chapter 19 of the Agreement. This 
Chapter applies to the settlement of any dispute that arises between the Parties regarding the 
application or interpretation of the Agreement or wherever a Party considers that an existing or 
proposed measure of the other Party is liable to prove inconsistent with the obligations of the 
Agreement or cause nullification or impairment (Annex to Article 19.03).   The Agreement stipulates that the complaining Party may opt for the procedure provided by 
the WTO or that established by the Agreement.  On ce a forum has been selected, it must be used to 
the exclusion of the other (Article 19.04).   If the mechanism established by the Agreement is chosen, it first provides for consultations 
between the Parties.  If this fails to resolve the di spute in a mutually satisfactory manner, either Party 
may refer the matter to the Free Trade Commission,  which then initiates a conciliation or mediation 
phase. 
  If, within a specified period of time, the Parti es still fail to agree, either Party may request in 
writing the establishment of an arbitral panel made up of three members, acting in conformity with 
rules of procedure to be laid down by the Commissi on.  Panellists are normally selected from a roster, 
drawn up by the Parties, of persons with interna tional expertise and experience.  Each Party selects 
one panellist who is a citizen of the other Party.  The chair is designated jointly by the Parties;  should 
they prove unable to reach  consensus, one of the Parties, chosen  by lot, selects as chair an individual 
from the roster who is not a citizen of either Party.    The Agreement provides for the right of third Par ties to attend the hearings, to be heard by the 
arbitral panel, and to make and receive written co mmunications to and from th e panel.  Third-party 
communications must be reflected in the final report of the arbitral panel.   Within a period of 90 days after the arbitral panel has been established, the panel issues its 
initial report containing findings of fact, a determination as to whether the measure imposed by the 
respondent Party is inconsistent with the Agreemen t, and a recommendation.  Once the Parties have 
submitted their comments on the initial report, the pane l issues its final report, which is binding on the 
Parties.  The measure found to be inconsistent shoul d be repealed wherever possible.  If the Parties WT/REG165/4 
Page 12  
 
 fail to reach a mutually satisfactory settlement, th e complaining Party may suspend the application of 
benefits of equivalent effect to the respondent Pa rty, as far as possible in the sector affected by the 
measure.  Where the respondent Party deems the bene fits suspended by the complaining Party to be 
excessive, it may request the establishment of an arbitral panel to rule on the matter.  4. Relation with other trade agreements 
 In the Agreement, the Parties affirm their ex isting rights and obligations with respect to each 
other under the WTO Agreement and other agreements to  which they are party.  In the event of any 
inconsistency with those agreements , the provisions of the Agreement will prevail to the extent of the 
inconsistency.  Nevertheless, it should be emphasized that obligations deriving from the Convention 
on International Trade in Endangered Species of W ild Fauna and Flora, the Montreal Protocol on 
Substances that Deplete the Ozone Layer and the Basel Convention on the Control of Transboundary 
Movements of Hazardous Wastes and Their Disposal prevail in the event of any inconsistency with 
the Agreement.  5. Institutional framework 
 The Agreement establishes a series of rules fo r its administration and for the settlement of 
disputes stemming from its implementation.   Administrative bodies
: 
 
 The Free Trade Commission (at ministerial level) supervises the proper implementation of 
the Agreement;  evaluates the results of such impl ementation;  settles disputes regarding interpretation 
or implementation of the Agreement;  and considers any other matter that may affect the operation of 
the Agreement.  
 The Commission may also seek the advice of indi viduals or groups;  amend the specific rules 
of origin, the Tariff Elimination Programme and th e Uniform Regulations;  prepare and approve the 
regulations needed for implementation of the Agreem ent;  and take any other action within its sphere 
of competence.   Although the Commission comprises Chile and the five Central American countries, the 
Commission may meet with a smaller quorum, that is , when Chile and one or more Central American 
countries meet to deal with matters of exclusive interest to those Parties (e.g. to accelerate tariff 
elimination, dispute settlement).   The Free Trade Sub-Commission  provides the Commission with technical advice;  follows 
up on the decisions of the Commission;  and, at the request of any Party, examines any other matter 
that could affect the operation of the Agreement.   The Secretariat  carries out administrative functions and provides support for the 
Commission.  
 The Committees, Sub-Committees or Groups of Experts  deal with matters relating to trade in 
goods, sanitary and phytosanitary measures, standard s-related, metrology and approval procedures, 
investment, cross-border trade in services, and the Advisory Committee on Private Commercial Disputes.  WT/REG165/4 
Page 13 
 
 
 IV. OTHER 
1. Final provisions 
 Chapter 21 (Final Provisions) contains the fina l provisions of the Agreement.  These rules 
regulate procedures ranging from amendments to wit hdrawal.  It is important to note that the 
Agreement has an indefinite duration. 
 
 The full text of the Agreement is available on the following websites:   In Chile:   http://www.direcon.c l/otros_acuerdos_tlc_camerica.php
 
 In El Salvador:  http://www.min ec.gob.sv/datco/default.asp?id=20&mnu=20  
 
 
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