WORLD TRADE  
ORGANIZATION   
 WT/REG179/M/1  
1 October  2007  
 
 (07-4153 ) 
  Committee on Regional Trade Agreements  
Forty Seventh Session   
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN THE  
EFTA STATES AND CHILE, GOODS AND SERVICES  
 
Note on the Mee ting of 13 September 2007  
 
Chairman:  Mr J. Metcalfe (United Kingdom)  
 
1. The meeting was convened in document WT O/AIR/3031 and Corrigendum 1, dated 11 June 
and 6 July, respectively.  
2. Under Agenda Item B.II of its 47th Session, the Committee on Regional Trade Agreements 
(CRTA or the Committee) took up the consideration of the Free Trade Agreement between the 
EFTA  States and Chile, goods and services.  
3. The Chairman  welcome d the representatives of the  Parties.  He proposed to deal with the 
goods aspects first, fol lowed by the serv ices aspects.  The Agreement had been  signed by EFTA and 
Chile on 26 June 2003;  it had entered into force on 1 December 2004.  On 10 December 2004, the 
Parties had notified the goods and services aspects of the Agreement to the WTO under 
Article  XXIV:7(a) of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of 
GATT  1994, as an Agreement forming a free -trade area (WT/REG179/N/1), and under 
GATS  Article  V:7(a) as an Agreement providing for the liberalization of trade in services within the 
meaning of Article V of the GATS (S/C/N/309).  The text of the Agreement had been  circulated to 
Members as d ocument WT/REG179/1, and was  also available, together with its Annexes, on the 
Parties' official websites.   
4. The Factual P resentations on the goods and servic es aspects of the Agreement had  been 
prepared by the Secretariat in accordance with paragraph 7(b) of the Transparency Mechanism for 
Regional Trade Agreements (document WT/L/671) at t he request of the Parties. The Factual 
Presentation on the goods aspects (document WT/REG179/3 dated 29 May 2007 ) had  been drawn up 
by the WTO Secretariat on its own responsibility in full consultation with the Parties.  In addition, 
written questions and replies on the good s aspects of the Agre ement had been  recently distributed in 
document WT/REG179/5 dated 5 September 2007.  Given the late receipt of answers from the Parties, 
it had not been possible to translate this docu ment into French and Spanish ahead o f the meeting.   
Goods Aspects  
5. He pr oposed to organize the consideration of the goods aspects of the Agreement by asking 
for general comments from  the Parties and then other Members  followed by the specifics of the 
Agreement using the Factual Presentation,  WT/REG179/3, to guide the debate.  He proposed to go  
through the Factual Presentation by broad s ections  and then the  questions and replies document.  
6. The representative of Chile  said it was an honour for Chile and the EFTA States to  participate 
in one of the first examination s of RTAs  under the new M echanism .  Chile and the EFTA States were WT/REG179/M/1  
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  founding  members of  the GATT and the WTO , and multilateral agreements we re an integral part of 
their domestic legal system.   Chile and EFTA actively participate d in the multilateral trading system.  
The Ch ile-EFTA Free Trade Agreement had deepened Chile 's ties with Europe and had creat ed 
conditions for the expansion and diversification of trade and mutual invest ment .  The Agreement wa s 
the main instrument establishing a free trade area between  the Parties.   It was complemented by three 
agreements on trade in agricultural goods, concurrently concluded between Chile and each individual  
EFTA State ( Switzerland and Liechtenstein had negotiated as one block).  The Agreement and the 
Complementary Agreements on tra de in agricultural goods were to be jointly applied as stated in 
Article 107 of the Agreement.  
7. The EFTA -Chile Joint Committee, comprising Ministers of each Party, or senior officials 
deleg ated by them for this purpose, wa s responsible for the administrati on of the Agreement.  The 
Joint Committee had held its first meeting in Geneva  on 31 January 2006.   The Agreement had also 
establishe d a Sub -Committee on Customs and Origin M atters and  bilateral committees on trade i n 
agricultural goods.  
8. The Agreement was based on a Preamble and 108 A rticles divided in to 12 Chapters, and 
17 Annexes with i ts Appendices and Notes.  The complementary a greements on trade in agricultural 
goods were based on 15 Articles and 4 A nnexes.  The main characteristics of the Agreement, 
comprised  all the areas of trade relation s between Chile and EFTA and went further than  the Parties' 
WTO obligat ions.  The Agree ment favoured  bilateral trade through progressive and reciprocal 
elimination of trade barriers and the establishment of clear, st able and transparent rules for exporters, 
importers and investors.   It comprise d a free trade area for goods, services and government 
procurement, liberalization of investments and capital flows;  protection of intellectual property 
rights;   cooperation on  competition ;  and an efficient mandatory dispute settlement mechanism .  
9. The free trade area in goods wa s backed by a complete liberalization program me for trade 
flows and  transparent rules that included  rules on customs matters,  origin and administrative 
cooperation, fees and charges, sanitary and phytosanitary measures as well as technical regulations 
and conformity assessment procedures.  There was also an evolving agenda whose purpose was  to 
ensure the development of the Agreement, including review ing the status of the Agreement in order to 
further deepen  tariff reductions.  
10. The free trade area applie d to trade between the P arties in products included in the 
complementary a greements on trade in agricultural goods under Chapters 1 -24 of the Harmonized 
Comm odity Description and Coding System  (HS) ;  products specified in Annex IV, with due regard 
to the arrangements provided for in that Annex;  and fish and other marine prod ucts as provided for in 
Annex V;  and p roducts falling in Chapters 25 -97 of the HS, excluding those  listed in Annex III which 
were beyond the scope of the Agreement.  Trade disciplines established in the Agreement were : 
(a)  Customs and origin matters, including rules for qualifying and verifying the origin of products.   
The Agreement estab lished general rules and specific requirement s that would  allow originating 
goods to profit from trade liberalization;  (b)  Sanitary and phytosanitary measures would  be governed 
by the WTO Agreement on the Application of Sanit ary and Phytosanitary Measure s.  To facilitate 
access to the Parties'  respective markets , the Agreement established  cooperation, expert consultations, 
contact points and the possibility to convene bilateral a greements between the Parties;  ( c)  Technical 
regulations, standards and con formity assessments would also  be governed by the WTO  Agreement 
on Tech nical Barriers to Trade.  T he Agreement establishe d cooperation between the Parties and 
consultations to reduce obstacles to trade;  (d)  A Party could  not apply  anti-dumping measures o n 
goods from  the other Party , while countervailing measures could be applied in accordance with  the 
WTO Agreement on Subsid ies and Countervailing Measures;  ( e)  The Parties could  apply global 
safeguard measures in accordance with Article XIX of GATT 1994 and the WTO  Agreement on  WT/REG179/M/1  
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  Safeguards.  The Parties had also agreed on the possibility to apply emergency measures on imports 
of particular goods.  
 
11. The l iberalization process for trade in goo ds aimed  to fulfill two main objectives:  first, to 
open reciprocal  markets through the elimination of custom s duties and non -trade barriers;  and  
second, to obtain for similar goods originating from other countries the same treatment that Chile and 
the EFTA m ember states had  granted  to each other  through bilateral trade agreements.  
12. There were some peculiarities in the l iberalization of trade in g oods :  (i)  There we re 
two different modalities for liberalization: one for agriculture (HS C hapter s 1-24) and another for 
non-agriculture;  (ii)  The general principle wa s that custom duties were eliminated immediately  with 
the entry into force of the agreem ent and customs duties for 36 tariff items would  be dismantled by 
Chile gradual ly in periods of 4 and 6 years;  (iii)  Custom duties for around 10% of the tariff were to 
be re viewed in the future, or had  been excluded from the liberalization program me;  (iv)  Schedules 
for dismantling tariffs had been  agreed bilaterally between Chile  and each of the 
EFTA  member  States for agricultural goods.   In other words, there wa s no single  liberalization 
program me for exports of such products from Chile  to the EFTA m ember s. 
13. The Parties’ liberalization programme was to be accomplished through four main modalities: 
(i)  Immediate dismantling of tariffs, at entry into force of the Agreement, w ith different levels, for 
goods in Annex IV with content originating from the EFTA -EU Agreement;  (ii)  Products included in 
the three complementary agreements on trade in agricultural goods, with different levels of 
dismantling;  (iii)  Tariff lines whose  dismantling was to be agreed in a specified period;  and 
(iv) Tariff lines excluded from dismantling.  
14. To better explain the scope of liberalizati on in the Agreement it wa s necessary to consider 
two main elements:  first, t he provisions for origin for  good s to benefit from  the elimination of duties ;  
and s econd, the review provisions mentioned above, includin g the general review provision.  The 
EFTA  States would also grant, following a review that could be requested by either Party, treatment 
no less favour able than that granted to goods from the European Community, for products originating 
in Chile and l isted in Tables II, III and IV .  For agricultur e there wa s a general review clause to 
improve market access  between the first and third year after the entry  into force of the Agreement.   
Finally, in the industrial sector, Chile had agreed to examine the market access conditions for certain 
products which did not receive benefits under  the Agreement.  
15. The Chairman  then opened the floor for general comments.  
16. The representative of the United States  thanked the Parties for their answers to questions as 
well as the presentation at the meeting.  The United States was concerned about whether the 
Agreement met the GATT Article XXIV requirement to eliminate tariffs on  substantially all trade.  
She noted that Switzerland had eliminated duties on fewer than 80 per cent of its tariff lines which 
accounted for less than 57 per cent of its imports from Chile.  Most notably Switzerland had refused 
to eliminate tariffs on Chi le's largest export to Switzerland – wine, which accounted for over 
36 per cent of its exports to Switzerland in 2003.  It seemed that such an exclusion undermined the 
intention of free trade agreements to liberalize almost all the trade between the Partie s.  The 
United  States had specific questions which would be addressed later.  
17. The Chairman  asked whether the Parties wished to respond to the general comment.  
18. The delegate from Switzerland  noted that the question had been raised in written questions 
and the  Parties would revert back when discussing the questions and answers.  WT/REG179/M/1  
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  19. There were no comments on Sections I, II, and II.A.  On Section II.B the representative of 
Australia  said she shared concerns about the level of coverage in the Agreement both in terms o f tariff 
lines and trade volume.  The Parties had rightly pointed out in their response to question 14 that there 
was no definition of substantially all trade.  As Members would be aware, Australia had been active in 
the RTAs rules negotiations to reach ag reement on a robust definition of substantially all trade.  The 
current Agreement was a good example of why such a definition would be useful.  Australia was 
disappointed that the Parties considered that the substantially all trade requirement would allow for 
the low levels of tariff line and trade volume coverage and significant carve -outs, particularly in the 
area of agriculture.  She asked if the Parties could explain the reasons for the creation of artificial 
deadlines for the conclusion of the negotiat ions in the Agreement as this had resulted in a number of 
sectors being left out of the Agreement or scheduled for discussion in the future.  In the light of this, 
how could the Parties contend that the Agreement met the substantially all trade in goods an d 
substantial sectoral coverage in services tests.  
20. The representative of the United States  had two follow -up questions on the responses.  In 
response to question 11 on the Joint Committee that had met in January of 2006 and had started the 
process for furt her liberalization in trade in processed agricultural goods, she asked for more 
information on the process, how often the meetings were held and whether there was list of processed 
agricultural goods that were under discussion.  In  response to question 21,  the Parties had explained 
that Decision No 4 of 2006 of the Joint Committee had reduced the number of products  subject to 
exclusion.  She had understood that to mean that it was expanding the list of products subject to tariff 
elimination.  The Agreement  had been adopted on 31 January 2006, but it was not yet in force and she 
wondered when it was expected to go into force and what events needed to occur for the Parties to 
implement the Decision.   
21. The representative of Chile  explained that the meetings of  the Joint Committee were part of 
an ongoing negotiation process that had started in January 2006.  Thus the Parties were exchanging 
information on a continuous basis.  The Joint Committee was expected to start meeting again in 2008 
but there was no specif ic calendar in light of the fact that the treaty had created very few institutions 
and was not bureaucratic.  The Joint Committee met every two years and there were other committees 
dealing with specific issues such as for customs etc.  What the Parties ha d wished to transmit was that 
it was a process that was being negotiated and discussed with the aim of improved market access.  
Decision No. 4 still had to be ratified by Chile and would be notified to the WTO when it entered into 
force.   
22. The representati ve of Switzerland  noted that a ll the  Parties were very interested , and had been 
participating actively, in the discussions on substantially all the trade.  A s these were still on -going, it 
was difficult to make a judgement whether an Agreement had fulfille d the criteria.  The Parties to the 
Agreement believed there was substantial sectoral coverage, including agriculture , and almost 90 per 
cent of trade was covered.  There was one problem in that one product which wa s important for both 
Parties had been exc luded.  Switzerland had so far not been in a position to grant a concession on this 
tariff heading and had not done it in any of its FTAs.  The CRTA  would further engage in discussions 
to have a clear definition of substantially all trade.  However, he bel ieved that the Agreement had 
fulfilled the current criteria  although it may have to be re -examined at a later stage.  The Parties were, 
in any event, interested in continuing the discussion on substantially all the trade in the CRTA . 
23. The Chairman  noted the  consideration of the Goods Aspects of the EFTA -Chile Agreement 
had allowed Members to clarify a number of questions and oral discussion of the RTA could be 
concluded in accordance with paragraph 11 of the Transparency Mechanism.  If any delegations 
wished  to ask follow -up questions they were invited to forward submissions in writing to the 
Secretariat by 21 September and Parties were asked to submit replies in writing by no later than 
5 October.  In accordance with paragraph 13 of the Transparency Mechanis m all written submissions,  WT/REG179/M/1  
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  as well as minutes of the meeting would be circulated promptly, in all WTO official languages and 
would be made available on the WTO website.  
24. The Committee took note  of the comments made.  
Services Aspects  
25. The Chairman  noted that the Factual P resentation on the services aspects 
(document  WT/REG179/4 dated 1 June 2006 ) had  been drawn up by the WTO Secretariat on its own 
responsibility in full consultation with the Parties.  In addition, written questions and replies on the 
services aspects of the EFTA -Chile Agreement  had been  recently distributed in document 
WT/REG179/5 dated 5 September 2007.  He proposed to  organize the consideration  of the services 
aspects of the  Agreement  by asking first the Parties and then other Members to give  any general 
comments.  Members would then turn to the specifics of the  Agreement, using the Factual 
Presentation,  WT/REG179/4, to guide the debate , followed by the questions and replies document .   
26. The representative of Norway  noted that like for goods , the services agreement had been  
signed on 26 June 2003 and had entered into force on 1 December 2004 .  Chile and the EFTA States  
were committed to a rules -based multilateral trading system under the WTO and reaffirm ed their 
support for strengthened WTO rule s, disciplines and mechanisms on RTAs, in order to enhance their 
transparency. In this regard, they welcome d the new Transparency M echanism.  
27. The Parties were convinced that the EFTA -Chile Agreement added  value to the 
WTO  framework.  It went  into depth for some provisions and included services commitments in 
addition to those provided for under the GATS.   Furthermore, it included  provisions on investment for 
the non -services sectors. Art icle 2 of the Agreement had foreseen  that one of the objectiv es of the 
Agreement wa s to “achieve the liberalisation of trade in services, in conformity with Article V of the 
GATS”.   Both Parties had  also negotiated bilateral agreements covering service s trade with other 
WTO Members in accord ance with Article V of the GATS.  
28. In terms of s tructure, the Agreement contained  general rules on services  in Chapter III, 
Sections I, III and IV.  The Agreement also contained Annexes on trade in services, including:  the 
schedules of specific commitments;   on telecommunication services; and  on current payments and 
capital movement s.  The Agreement was  based on the GATS structure  and the specific commitments 
were contai ned in GATS -type positive lists with one schedule for Chile and four individual schedules 
for the EFTA States .  The Agreement  replicated  - with some  modifications - the scope, definitions and 
the principal disciplines of the GATS. There wa s no a priori  sectoral exclusion.  
29. The Agreement was dynamic  and had foreseen that the Parties would  review the schedules of 
commitments at lea st every thr ee years, with a view to including  more commitments in new sectors 
and to provide for a reduction or elimination of remaining restrictions. T he Agreement also contained 
an in -built agenda for  financial services, which had foreseen that the Part ies would  consider their 
inclusion in the services chapter two years after the entry into force of the Agreement.  
30. Finally, he noted a typing error in the answer to question 19  in docum ent WT/REG179/5 
raised by the United States and related  to the audiovisu al sector. The end of the answer after the last 
comma, should have read  “but this does not mean that the Parties may not take further commitment s 
in the future.”  He thanked Members for their interest and questions  which the Parties would  
endeavour to answ er during the meeting and looked forward to a fruitful discussion.  He also thanked 
his Chilean colleagues for their fri endly and efficient cooperation . 
 WT/REG179/M/1  
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  31. The representative of the United States  noted that a number of delegations in their questions 
had rais ed concern about the sectoral commitments in this Agreement which were less than those in 
the GATS, including in important sectors such as value -added telecommunications.  These 
delegations had further asked why Iceland had refrained from making the same c ommitments in the 
Agreement than it had already made in the GATS.  She asked whether it had been Iceland's intention 
to scale back its GATS commitments for these services.   
32. She also asked for further details on discussions that were taking place to open t rade in 
services and that if the Parties had made commitments globally, why they would take further 
commitments in a bilateral agreement.  In addition, she asked how leaving some service sectors for 
further discussion at a later date deepened free trade re lations between the Parties instead of 
weakening it.  She also asked for the expected time -frame for completing the discussions.  On a 
broader level, clauses to negotiate in the future, as the Parties had agreed to do for example with 
financial services, r aised some concerns.  An agreement to negotiate was not an agreement to 
liberalize and it was not clear how the CRTA was supposed to evaluate whether an agreement met the 
test of Article V of GATS when the Parties had not yet finished negotiating.   
33. The re presentative of Norway  stated that it was important to note that no sector had been 
excluded from the scope of the Agreement and that commitments under the Agreement had to be 
reviewed after three years.  For financial services, no commitments had been tak en when the 
Agreement was negotiated but there was a commitment by the Parties to review the situation after two 
years.  This was now work in progress and financial experts had exchanged information and ideas on 
the subject.  The Parties had still not deci ded to initiate negotiations on inclusion of commitments on 
financial services and there was no specific calendar for these talks and negotiations.  When it came to 
assessment by the Committee of an Agreement of this type, where there was an in -built agend a, it 
could be interpreted in many ways.  The fact remained, however, that what was before the Members 
and formed the basis of discussions was what had been notified by the Parties in accordance with the 
relevant procedures of the GATS.  
34. The representative of Iceland  stated that the general rules of the FTA with Chile could, to a 
certain extent, go further than those in the GATS.  Therefore taking a sectoral commitment equal to 
those under the GATS would indeed have meant additional commitment and had theref ore been left 
for consideration at a later stage.  This was without prejudice to Iceland's commitments in the GATS 
which it had no intentions of withdrawing.   
35. The Chairman  noted the consideration of the Services Aspects of the EFTA -Chile Agreement 
had all owed Members to clarify a number of questions and oral discussion could be concluded in 
accordance with paragraph 11 of the Transparency Mechanism.  If any delegations wished to ask 
follow -up questions they were invited to forward submissions in writing to  the Secretariat by 
21 September and Parties were asked to submit replies in writing by no later than 5 October.  In 
accordance with paragraph 13 of the Transparency Mechanism all written submissions as well as 
minutes of the meeting would be circulated pr omptly in all WTO official languages and would be 
made available on the WTO website.  
36. The Committee took note  of the comments made.  
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