. /.   WORLD TRADE  
ORGANIZATION  WT/COMTD/RTA/4/2 
4 May 2010 
 
 (10-2458) 
Committee on Trade and Development 
Dedicated Session on Regional Trade Agreements Original:  English 
 
 
 
PREFERENTIAL TRADE AGREEMENT BETWEEN CHILE AND INDIA 
(GOODS) 
 
Questions and Replies  
 
  The following communication, dated 13 April 2010,  is being circulated at the request of the 
delegations of Chile and India.  
 This document reproduces the questions addressed to the Parties and the responses submitted. 
 
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Question from the delegation of Japan
 
 
1. Paragraph 15 of page 5 and paragraph 19 of  page 8:  Given that the additional 
liberalization in Market Access by this Agreemen t can hardly be achieved, Japan would like to 
know what the main purpose and expected added val ue of this Agreement for both Parties are.  
If each Party attaches importance of this Agreeme nt to other areas than Market Access, please 
kindly indicate us which area is significant for Parties. 
Questions from the delegation of the United States  
 
2. According to the Factual Presentation, Chile will eliminate tariffs on only four lines 
covering 0.5 per cent of trade from India for th e three year period of 2004-2006.  Chile will 
lower tariffs on only 3.7 per cent of tariff lines covering 75.7 per cent of India's trade.  On the 
products where Chile is providing a preferential  tariff rate, Indian exporters will still face an 
average tariff of 4.7 per cent, down only slig htly from the MFN rate of 6.0 per cent.  
95.8 per cent of Chile's tariffs remain dutiable (at MFN rates), accounting for 23.8 per cent of 
India's trade.  Of the 79 tariff lines making up In dia's top 25 exports, all 70 tariff lines remain 
dutiable under the Agreement and only 9 of the 79 tariff lines see any duty reduction. 
India will not eliminate any tariffs under the Agreement and will provide preferential 
rate on only 1.6 per cent of tariff lines covering 94.8 per cent of Chile's trade.  On the products 
where India is providing a preferential tariff rate, Chile will still face an average tariff of 17 per cent, down only slightly from the MFN rate of 21.1 per cent.  Chilean exporters will 
benefit from MFN duty-free tariffs and reduced preferential tariffs on only 3.7 per cent of 
India's tariff schedule, leaving 96.3 per cent of India's tariffs untouched.  Of the 50 tariff lines 
making up Chile's top 25 exports, all 50 rem ain dutiable under the Agreement and only 
approximately 10 of the 50 tariff lines see any duty reduction. 
We note that paragraph 3(a) of the Enabling Clause states that "Any differential and 
more favourable treatment provided under this clau se:  shall be designed to facilitate and WT/COMTD/RTA/4/2 
Page 2  
 
  promote the trade of developing countries".  It is not clear how this Agreement satisfies the 
conditions of paragraph 3(a) if duties on those goods that are the most highly traded between 
the Parties are not eliminated under the Agreement.   
(i) We would appreciate further clarification from the Parties to the Agreement on 
how the Agreement facilitates and promot es the trade of developing countries 
given that 100 per cent of Chile's top 25 exports and 100 per cent of India's top 
25 exports remain dutiable under the Agreement.  
(ii) What benefits does either Party see from this Agreement when almost no tariffs 
are eliminated and, among the tariffs that are reduced, the difference between the MFN tariff and the preferential ta riff is so little in many cases?  
3. Paragraph 11 of the Factual Presentation states that "the parties may consider 
accelerating the elimination or reductions of these  tariffs in their schedules, or to include new 
products in their schedules, upon the request of either party."  
(i) Do the Parties have any plans to make further commitments to narrow this gap 
and ensure that tariffs are eliminated or  further reduced on more trade between 
the Parties? 
 The Framework Agreement to Promote Economic  Cooperation between the Republic of Chile 
and the Republic of India was signed on 20 January  2005.  The aim of this Framework Agreement 
was "to strengthen relations between the Parties, to  promote the expansion of trade and to provide the 
conditions and mechanisms to nego tiate a Free Trade Agreement in conformity with the rules and 
disciplines of the WTO and in accordance with the provisions of Article 4 of this Framework 
Agreement" (Article 1). 
  As it is mentioned in the Factual Presentation, 94.8 per cent of the Indian exports to Chile are 
covered by the Agreement.  Similarly, 75.7 per cen t of Chilean exports to India receive preferences 
under the Agreement.  That means that a significant amount of trade between both countries was 
included in the PTA. 
  On the other hand, the reference to paragraph 3(a) of the Enabling Clause has to be made to 
the entire phrase and not to a portion of it.  Thus, agreements negotiated under the Enabling Clause 
are supposed to promote trade between developing c ountries and not to "to raise barriers to or create 
undue difficulties for the trade of any other contrac ting parties" as it read the whole paragraph above 
mentioned.  Clearly Chile-India PTA satisfies the cond itions of paragraph 3(a).  Furthermore, there is 
no requirement under the Enabling Clause for agreemen ts negotiated by developi ng countries to cover 
"substantially all the trade" as it is  the case of Article XXIV of GATT. 
  As a first step towards the ultimate aim of establishing a free trade agreement the Framework 
Agreement, under Article 2, ma ndated the conclusion of a lim ited scope Preferential Trading 
Agreement (PTA).  The PTA would be subject to peri odic review with the aim of expanding the list of 
concessions.    The concessions offered by Chile and India to  each other under the PTA are limited since the 
PTA is only a stepping stone towards a future fu ll-fledged free trade agreement.  The process of 
deepening and widening the concessions under the PTA  has already commenced.  Request lists have 
been exchanged and negotiations are underway. 
 
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