WORLD TRADE  
ORGANIZATION  WT/REG263/M/1 
18 June 2010 
 (10-3358) 
Committee on Regional Trade Agreements 
Fifty-seventh Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN 
AUSTRALIA AND CHILE GOODS AND SERVICES 
 
Note on the Meeting of 14 June 2010  
 
Chairman:  Mr A. Suescum (Panama) 
  1. The meeting was convened in document WTO/AIR/3553/Rev.1, dated 4 June 2010. 
2. Under Agenda Item C.III of its 57
th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) considered the Free Trade Agreement (FTA) between Australia 
and Chile (hereinafter the 'Agreement'), goods and services.  
3. The Chairman  noted that the Agreement had entere d into force on 6 March 2009 and had 
been notified by the Parties to the WTO on 3 Ma rch 2009 under Article XXIV:7(a) of the GATT 1994 
and the Understanding on the Interpretation of Article XXIV of GATT 1994 as an Agreement 
establishing a free trade area (document WT/REG263/N/1) and under GATS Article V:7(a) as an 
Agreement providing for the liberalization of trade in services within the meaning of GATS Article V 
(document S/C/N/484).  The text of the Agreement w as available, together with its Annexes, on the 
Parties' official websites.  The Factual Presentation on the goods and services aspects (document WT/REG263/1, dated 1 April 2010) had b een prepared by the Secretariat on its own 
responsibility in full consultation with the Parti es, in accordance with paragraph 7(b) of the 
Transparency Mechanism (TM) fo r Regional Trade Agreements (doc ument WT/L/671).  In addition, 
written questions and replies on the Agreem ent had been recently distributed in 
document WT/REG263/2, dated 2 June 2010.  He pr oposed to organize the consideration of the 
Agreement by first asking the Parties and then ot her Members for general comments.  The Committee 
would then turn to the specifics of the Agreement using the Factual Presentation to guide the debate.  
He proposed to go through the Factual Presentation sec tion by section, and then look at the questions 
and replies document.  
4. The representative of Chile
 joined other delegations in supporting the Chairman in his new 
assignment.  He informed the Committee that the Parties had started the second round of negotiations 
in San Francisco, California, in the framework of th e Trans-Pacific Partnership, in order to promote 
the future development of the Pacific region.  He thanked the Secretariat for the preparation of the 
Factual Presentation, the visiting Australian aut horities from Canberra, and the Australian and Chilean 
WTO Delegations who had played a fundamental ro le throughout the process.  He welcomed the 
questions from other delegations a nd hoped that the answers supplied by the Parties would help to 
resolve any doubts and questions on the Agreement.  Chile had always valued the functioning of the 
Transparency Mechanism:   more than ten of Chile's agre ements had been submitted through the 
Mechanism, and close to 90% of Chile's current trade was covered by FTAs or RTAs.  The Agreement had been signed on 30 July 2008, and had entered into force on 6 March 2009.   It 
reflected Chile's commitment towards the establishmen t of a close trading relationship with the Asia 
Pacific region, in order to improve bilateral tr ade and services and investment flows with a fast WT/REG263/M/1 
Page 2  
 
  expanding and growing region.  He emphasized that  the Agreement did not take into account only 
trade in goods, but also incorporated provisions  on innovation, technology,  movement of persons, 
training, e-commerce, government procurement, and foreign direct investment.  Chile's exports to 
Australia had risen constantly during the last five years, by more than 40% annually since 2005, despite the international financial crisis.  At pr esent, Chile supported Australia's development in 
technology, by forwarding copper, cellulose, and other material goods, whereas Chile benefited from 
Australia's exports of coal and machinery to ener gize its economy.  Imports from Australia had risen 
at an average rate of 10%, to a peak of more th an US$300 million in 2008.  Bilateral trade had also 
risen, reaching US$650 million in 2009, with a peak  of US$787 million in 2008.  Although trade had 
decreased by 25% in 2009, mostly due to the ec onomic crisis, during the first trimester of 2010 
bilateral trade flows had sharply increased.  In th e same period, exports to Australia had reached 
US$320 million, rising more than 380% compared to the same period in 2009.  On the other hand, 
imports had reached US$44 million, which equale d the total amounts traded in 2008.  In his 
delegation's view, a very important element of negotia tion was the true commitment shared by Parties.  
Negotiations had been carried out in an atmosphere  of friendship, which was also reflected in the 
quality of the Agreement and the results and bene fits obtained by the Parties.  Although the 
Agreement reflected commitments in trade, services,  and investment flows, there had also been a 
steadfast relationship with regard to people:  more than 1,000 Chilean youth graduates from universities were traveling to Australia to continue th eir studies, mostly reinforced by the fact that the 
Parties had undertaken the Agreement.  The Agre ement also included di sciplines on market access, 
intellectual property, government procurement, services and investment, among many others.  As a 
result of the negotiations, 99% of Ch ile's exports to Austra lia were covered under the Agreement at its 
entry into force.  The Agreement not only supplied lower tariff benefits to the Parties' economies, but 
also offered different mechanisms to facilitate  trade alliances, simplify trade regulations, and 
standardize procedures and public tenders.  In this regard, he informed the Committee that the Parties 
had concluded an agreement on beef grading in May 2010, and the authorities responsible for beef 
grading and the export of these products from Australia to abroad had been ratified by the Chilean 
health authorities.  From Chile's perspective, the Agreement met all the requirements to be considered 
consistent with the WTO principles, and provided impor tant reciprocal liberalization in all key areas.  
In relation to services, investment and governme nt procurement, the Agreement supplied legal 
certainty to foreign investors, through a secure an d stable legal framework for all investments.  
Chilean suppliers were also able  to compete under the same conditions as Australian suppliers for 
public tenders in all sectors.  A dispute settle ment mechanism, as well as a commission and 
committees, had been established to facilitate co mmunication and the settlement of any future 
disputes.  Finally, he noted that due to the dramatic  earthquake in Chile in February 2010 a lot of key 
areas of the Chilean economy had been affected;  in  this respect, he commended Australian suppliers' 
engagement with Chilean initiatives to bring ba ck a certain level of normality into Chilean 
communities.  Australia also represented one of the key investors in the mining area and in the 
development of new mining mechanisms to be established.  
5. The representative of Australia
 welcomed the consideration of the Agreement by the CRTA.  
The Agreement had entered into force on 6 Marc h 2009.  It was Australia's first FTA with a 
Latin American country, and reflected Australia's  commitment to strengthening its ties with the 
region, including through the promotion of stronger trade and investment.  Ch ile was Australia's third 
largest trading partner in Latin America after Me xico and Brazil and accounted for around 15% of its 
trade.  A major consideration in the negotiations of the Agreement had been the Parties' shared 
commitments to trade liberalization in the region, including trade in agriculture, with a particular 
focus on the dynamic Asia-Pacific region.  The Agreem ent also reflected the growing interest of the 
Australian business community;  at present, more than 120 Australian companies were engaged in 
business activities in Chile, by far the largest concentr ation of Australian companies in Latin America.  
According to the Australian Bureau of Statistics, bi lateral trade was valued at A$1.2 billion in 2009;  
such figure had grown from A$233 million in 1999.  An important contribution to growth has derived 
from the services sector;  in 2009, total services  trade had reached A$417 million from A$55 million  WT/REG263/M/1 
 Page 3 
 
 
  in 2004.  After over one year's operation, it was premature to assess the impact of the Agreement. 
While total trade between the Parties had declined  by 14.5% in 2009, this was largely due to the 
impact of the global financial cris is.  However, she noted that the figures were rebounding, in part due 
to higher commodities prices which were important  for both economies.  She was sure that the 
Agreement met all the criteria of a high quality agr eement that promoted growth in goods and services 
trade.  It was fully consistent with WTO principl es and rules, it delivered WTO-plus outcomes, it was 
comprehensive and provided substan tial liberalization across all sectors.  The Agreement also met the 
most robust interpretation of the WTO threshol d requirement that an agreement should cover 
"substantially all trade".   
6. On the year of entry into force of the Agreem ent, 99.5% of Chilean exports to Australia had 
received duty-free access:  this represented duty -free access on 90.9% of Australia's tariff lines from 
day one.  Similarly, Australian expor ters had enjoyed duty-free access, at entry into force, for 98.6% 
of goods, representing 87% of Chilean tariff lines.  By  2015, when tariff phasing would be completed, 
Australia would eliminate duties on all tariff lines for imports from Chile.  In services and investment, 
the Agreement provided an open and non-discriminator y market for the Parties' respective services 
suppliers, including but not limited to educational,  professional, mining, engineering, management 
consulting and financial services.  The Agreemen t adopted a "negative-list approach" on services and 
investment, whereby all sectors were subject to commitments except those included in a list of 
reservations.  Such approach assisted the Parties to achieve substantial GATS-plus outcomes.  The 
Agreement ensured regulatory tr ansparency and would automati cally make future unilateral 
liberalization of many measures a binding part of th e Agreement, the so-called "ratchet mechanism".  
It also provided for effective business mobility provi sion, including under Mode 4.  The Agreement 
promoted further investment between the Partie s through an open and non-discriminatory treatment 
for investors and investments, and an effective me chanism for dispute resolution.  The Intellectual 
Property (IP) provisions in the Agreement reflected th e high level of protection already offered by the 
Parties:  national treatment had been granted to IP rights holders from the other country.  The 
Government Procurement Chapter ensured non-di scriminatory access to the government procurement 
markets for suppliers of the Partie s:  such access applied to listed central and sub-central government 
entities on procurement above agreed value thr esholds. In addition, the Cooperation Chapter 
contained commitments to cooperate on labour issues  and to strengthen environmental protection and 
promote sustainable development.  The Agreemen t further included mechanism to address issues 
relating to technical regulations, sanitary and ph yto-sanitary measures, conformity assessment, and a 
transparent, independent and binding dispute settleme nt mechanism.  All the chapters reflected the 
Parties' mutual commitments to promote and build  upon existing WTO commitments.  In conclusion, 
Australia considered that the Agreement embodi ed their commitments to negotiate FTAs which 
advance the multilateral trade agenda;  set a very high  level of ambition for the further integration of 
two open and sophisticated economies;  sought to expa nd rather than divert trade;  and sent a strong 
signal in support of an open global trading and inv estment environment.  She looked forward to a 
fruitful discussion in the Committee. 
7. The representative of New Zealand  congratulated the Parties on the high-quality of the 
Agreement, in particular on the c overage and extent of tariff libera lization, on the Parties' relatively 
small negative lists of services reservations, and on th e inclusion of a "ratchet  mechanism" to capture 
future liberalization in the services sector.  Sh e noted that high-quality FTAs that liberalized 
substantially all trade between the Parties could be  effective complements to the multilateral trading 
system and congratulated the Parties for their efforts. 
8. The representative of the European Union  also congratulated the Parties for the high-quality 
Agreement.  In her delegation's view, the Agre ement showcased the real meaning and objective of 
free trade agreements.   WT/REG263/M/1 
Page 4  
 
  9. The representative of the United States
 expressed appreciation for the detailed 
Factual Presentation, the information provided by  the Parties, and the opening statements which 
provided helpful overviews and detail ed auspicious developments in the bilateral relationship.  She 
also commended the Parties for their elimination of all tariffs on all trade.  It was a remarkable 
Agreement, since the Parties had gone beyond the elimin ation of tariffs on substantially all trade  to 
actually eliminate tariffs on all trade. 
10. The Chairman  noted that the consideration of the go ods and services aspects of the Free Trade 
Agreement between Australia and Chile had allowe d the Committee to clarify a number of questions 
and oral discussion of the Agreement could be co ncluded 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 June 2010  and the Parties were asked to 
submit replies  in writing by no later than 5 July 2010.  In accordance with paragraph 13 of the 
Transparency Mechanism all written submissions , as well as minutes of this meeting would be 
circulated promptly, in all WTO official la nguages, and would be made available on the 
WTO website. 
11. The Committee took note  of the comments made. 
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