WORLD TRADE  
ORGANIZATION  WT/REG160/6 
17 March 2006 
 (06-1205) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN THE UNITED STATES AND CHILE 
 
Questions and Replies
 
  
 The following communication, dated 14 March 2006, is being circulated at the request of the 
Delegations of the United States and Chile.   This document reproduces the questions addressed  to the Parties and the responses submitted.  
The questions and replies set out below are or ganized in accordance with document WT/REG160/3 
for the goods aspects of the Agreement, and WT/R EG160/4 for the services aspects of the Agreement. 
 
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GOODS ASPECTS
 
 
 
I. BACKGROUND INFORMATION ON THE AGREEMENT 
 
3. Scope 
1. Thank the Parties for their answers in Au gust provided following the last round of 
examination. However, we would appreciate some more detailed clarification of the fill rates for 
each product subject to a TRQ and whether th ese fill rates have increased in line with the 
increases specified in the text.     
 For calendar year 2005, the TRQ fill rates fo r Chilean exports to the United States under the 
FTA were as follows: 
 
o Chile did not utilize any of the in-quota quantities for beef, tobacco, tableware or 
chinaware, or bus/truck tires under the FTA TRQs.   
 
o The TRQ on copper cathodes was eliminated beginning in 2005. 
 
o Chile fully utilized the in-quota quantities related to the TRQs for other dairy 
products, condensed milk, avoca does, and processed artichokes.  
 o The in-quota fill rates on the remaining TRQs are butter, 90%; milk powder, 75%; 
cheese, 29%; and auto tires, 49 %. 
  For calendar year 2005, the TRQ fill rates for U.S. exports to Chile under the FTA were as follows:  
o The United States  did not ship any beef to Chile under the FTA TRQs.   WT/REG160/6 
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  2. Have fill rates increased proportionally wi th the increase  in in-quota volumes?   
 The data above indicate that it is difficult to determine any consistent relationship between the 
in-quota volume and the fill rates.    
3. The United States shall allow access to their sugar market in 12 years, accepting the 
referred prices fixed by the agreed mechanism at  the WTO. According to article XXIV.5.c in 
principle “reasonable length of time” is considered to be 10 years, being able to exceed it only in 
exceptional cases. In such cases the Parties sha ll provide a full explanation to the Council for 
Trade in Goods (point 3 of the Understanding on the Interpretation of Article XXIV of the GATT 1994). Could the United States explain why a longer transition period applies for sugar?     
Neither GATT Article XXIV nor the 1994 Understanding on Article XXIV require  that 
transition periods be limited to ten years.  Artic le XXIV does require, however, that the agreement 
eliminate tariffs on substantially all the trade .   Focusing, therefore, on that requirement, the Parties 
worked to negotiate as comprehensive an agreement as possible.   In the process of those negotiations, 
however, it became clear to each Party that a limite d number of agricultural products were particularly 
sensitive, and hence would require longer transition pe riods.  The relevant produc ts were of particular 
importance to the U.S. or Chilean economies, sensi tive to import competition, and mutually agreed 
upon.   As a result of the negotiations, the Parties decided to extend the transition period, but in the 
end, to include sugar and the other import sens itive products in the liberalization process.   
  II. TRADE-RELATED PROVISIONS 
 
4. Standards 
 
4. Article 7.4 calls on the parties to intensify their joint work in the field of standards, 
technical regulations, and conformity assessment pr ocedures with a view to facilitating access to 
each other’s markets, in particular by identify ing bilateral initiatives that are appropriate for 
particular issues or sectors. Could the parti es provide examples of products or sectors which 
have been identified or where this regulatory  cooperation is already taking place?    
 A Committee on Technical Barriers has been est ablished as part of this Agreement. This 
committee meets regularly and has addressed issues of  mutual interest in specific sectors or for 
specific products such as grapes in order to clarify some aspects of the appli cation of quality standards 
for imported grapes.    
5. Safeguards 
 
5. Chapter 8 “commercial defence”, Section A “saf eguards”, of the FTA, and in particular, 
article 8.2.5 points out certain characteristics for agricultural goods whose duty rates are to be 
removed (annex 3.3).  Could the Parties elaborate on the application of this agricultural safeguard:    
“On the termination of a safeguard measure, th e rate of duty shall be no higher than the 
rate that, according to the Party’s Schedule to Annex 3.3 (Tariff Elimination), would have 
been in effect one year after the imposition of the measure. Beginning on January 1 of the 
year following the termination of the action, th e Party that has applied the measure shall: 
 (a) apply the rate of duty set out in th e Party’s Schedule to Annex 3.3 (Tariff 
Elimination) as if the safeguard measure had never been applied; or 
  WT/REG160/6 
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  (b) eliminate the tariff in equal annual stag es ending on the date set out in the Party’s 
Schedule to Annex 3.3 (Tariff Elimination) for the elimination of the tariff?”  
 
 The safeguard provision in Section A of Chapter 8 of the Agreement is not an agricultural 
safeguard.  Rather, it is the Agreement’s standard  safeguard provision, which allows a Party to 
impose temporary duties on a product imported from th e other Party if specified criteria are met.  
Article 8.2.5 in particular addresses the rate of duty that a Party may apply to a product following the 
termination of a safeguard measure on that product.    Neither Chile nor the United States has imposed a safeguard measure under Chapter 8, so it is 
not possible to provide any examples of its applica tion in practice.  However, in the interest of 
transparency, we are pleased to provide the follo wing hypothetical example of a safeguard imposed 
on footwear, tariff line 6401.10.00, in 2005, and terminated in 2008.    Under Article 8.2.5, the applicable rate of duty on tariff line 6401.10.00 from the date of 
termination through the end of 20 08 would be 31.8% - the rate of duty applicable in 2006 (the year 
after the imposition of the hypothetical measure) acco rding to the U.S. Schedule to Annex 3.3.  On 
January 1, 2009, the United States would have the option of (1) reducing the rate of duty to 26.2% 
(the rate applicable in 2009 under the original  phase-in schedule), and then continuing to 
eliminate the duty in accordance with  the U.S. Schedule to Annex 3.3; or (2) reducing the tariff  in 
equal annual stages until its elimination in 2013.     8. Sector-Specific Provisions  
Agriculture
 
 
6. In Section VIII, pg. 8, it is stated that “t he Parties agreed not to introduce or maintain 
export subsidies on agricultural goods destined fo r the other Party. An exception is provided in 
the event that one party considers that a non-Pa rty is subsidizing agricultural exports to the 
territory of the other Party. In this situation,  the parties may agree upon measures to be taken 
by the importing party.”  Could the parties in form whether some measures have been taken 
regarding export subsidies on agricultural goods?     
 No measures have been taken regarding export subsidies on agricultural goods.   
 
7. The Agreement states that “the Parties agreed to the use of an automatic and 
transitional “agricultural safeguard mechanism” for specified products [.]”. Has the Agricultural safeguard measure being invoked?     
 No agricultural safeguards have been invoked.   
 
9. Other 
 
Government Procurement (Chapter 9) 
 
  8. In government procurement (Annex 9.1) Chile has given access to American enterprises 
to participate in contracts of 13 regional governments, 11 seaports and airports and 350 
townships; meanwhile the United States has a llowed access to government procurements at 
federal and state level when the quantity of the contract exceeds US$ 56.190 and US$ 460.000 respectively. Why does the United States not provide access to government procurement at a 
lower level, such as municipalities, as Chile does?     
 The coverage of each Party is based  on negotiations between the Parties. WT/REG160/6 
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  Intellectual Property Rights (IPR) (Chapter 17)
 
 
9. Can you confirm that trademarks that meet the definition in footnote 8 of the 
Agreement constitute geographical indications?   
 Footnote 3 of the Agreement (to which it is  assumed the question means to refer) addresses 
the extent to which a geographic indication is capab le of constituting a trademark.  A trademark may 
constitute a geographical indication where it consists  of an indication that meets the definition of 
article 17.4.1 of the Agreement and meets othe r domestic law requirements of the Parties.   
 
10. Does the Agreement prevent from or limit in any way the right of the Parties of 
establishing or maintaining a sui generis  system for the protection of Geographical Indications? 
 No, provided that the system fulfils the obligations in the Agreement.   
 
11. The Agreement does not include a specific section on Geographical Indications, as the 
TRIPS Agreement does, but only refers to Geographical Indications protected through 
trademarks. In addition, the level of protection set in the Agreement for trademarks 
corresponds to the level established in the TRIPS Agreement (Art. 16). Does this in any way affect the minimum level of protection that th e Parties are obliged to implement in their 
legislation in accordance with Articles 22 an d 23 of the TRIPS? If yes, in which respect? 
 Contrary the assertion in the question, the Ag reement includes both an Article 17.2, entitled 
“Trademarks” and a separate Ar ticle 17.4, entitled “Geographical Indications”.  In any case, the 
Agreement does not affect the obligations of th e Parties arising under the TRIPS Agreement with 
respect to the levels of protection for geographical indications.   
 
12. Does the Agreement in any way seek to implem ent or enhance the level of protection for 
geographical indications enshrined in Sectio n 3, Part II of the TRIPS Agreement?  
 The Agreement does not specifically address the level of protection for geographical 
indications provided for under the TRIPS Agreement.  
 
a. If the answer is no: 
 
− What is the purpose of including geographical indications in the Agreement if it 
is not to implement the minimum protect ion or more extensive protection for 
geographical indications that is required by the TRIPS Agreement? 
 
 Article 17.2 of the Agreement (“Trademarks”), among other things, clarifies that geographical 
indications are capable of constituting trademarks an d of being protected through a trademark system, 
and clarifies that trademark owners (including of  trademarks constituting geographical indications) 
have rights vis-a-vis the confusing use of their si gns.  Article 17.3 of the Agreement (“Geographical 
Indications”) contains ten paragraphs addressi ng various aspects of geographical indications, 
including procedural and transparency obligations.   
 
b. If the answer is yes:  
 
− Would any use of a sign on goods or services indicating or suggesting that the 
good or service in question originates in a geographical area other than the true place of origin in a manner which mislea ds the public as to the true place of 
origin of the good or service, or constitutes an act of unfair competition within  WT/REG160/6 
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  the meaning of Art. 10 of the Paris Convention, be deemed to result in a 
likelihood of confusion in accordance with Art. 4.7 of the Agreement? 
 
− Would a geographical indication falling under Article 23 of the TRIPS and 
protected through a trademark in any of the Parties have recourse to protection 
under the Agreement?  Would any use of su ch protected geographical indication 
by third parties not having the owner’ s consent be deemed to result in a 
likelihood of confusion in all cases where th e goods or services do not originate in 
the place indicated, even where the tr ue origin of the goods or services is 
indicated or the geographical indication is used in translation or accompanied by expressions such as “kind”, type”, “style”, “imitation” or the like? If the answer 
to the preceding question is no, how does the Agreement comply with the 
minimum level of protection for geographical indications required under Art. 23 of the TRIPS Agreement? 
 
 Whether the particular use of a sign results in a likelihood of confus ion would depend on the 
particular facts at issue under the domestic laws of th e Parties, and cannot be determined in a vacuum.  
Further, it is useful to recall also that the Agreement does not take away from the rights and 
obligations of the Parties under the TRIPS Agreement.   
 
13. Does the Agreement in any way affect th e balance of the relationship between 
geographical indications and trademarks as est ablished in the TRIPS Agreement? If yes, in 
which respect? 
 No, the Agreement reflects the relationshi p set out in the TRIPS Agreement between 
trademarks and geographical indications.   
 
14. Does any of the Parties provide for the co existence of geographical indications and 
trademarks in certain cases, as a limited exception to the rights conferred by a trademark in 
accordance with Article 17.2.5 of the US-Chile FTA?  
 Article 17.2.4 of the Agreement (which paralle ls Article 16 of the TRIPS Agreement) sets out 
the right of owners of registered trademarks, subject  only to the limited exceptions of Article 17.2.5 of 
the Agreement (which parallels Article 17 of the TRIPS Agreement).  Therefore, any exceptions to 
trademark rights under the laws of the Parties w ould have to meet these obligations; such a 
determination would generally be  made under the domestic laws of the Parties on a case-by-case 
basis.    
 
15. In this respect, would it be possible in an y of the Parties for the local producers of a 
good that could qualify as a geographical indicati on to register their geographical indication 
even if it were the same as, or confusingly sim ilar to, a trademark not meeting the definition of 
footnote 8 of the Agreement but obtained be fore the application for registration of the 
geographical indication, so that both could coexist on the market? 
 Protection of any sign is decided on a case by case basis, as is whether or not the use of that 
sign vis-à-vis a prior trademark would cause a likeli hood of confusion.  Any de termination of whether 
the sign can be protected, and whether a prior trad emark owner can prevent its  use, would depend on 
the specific facts.  In addition, a registered trad emark has a presumption of validity, which any later 
claimant to a sign would have to address if the use of the later sign would create a likelihood of confusion.   WT/REG160/6 
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  III. GENERAL PROVISIONS OF THE AGREEMENT 
 
3. Dispute Settlement Procedures 
 
16. Concerning the bilateral dispute settlement and in particular article 22.3.2 of the FTA, 
‘once the complaining Party has requested a panel under an agreement referred to in 
paragraph 1, the forum selected shall be used to  the exclusion of the others’. Could the parties 
explain whether this article implies giving up th e use of the multilateral dispute settlement once 
the bilateral has concluded; or on the contrary , if this exclusion is only intended while the 
proceedings are taking place?    
 Article 22.3, the choice of forum clause, is si milar that included in all U.S. and Chile’s FTAs 
to avoid duplicative dispute proceedings and the potential for conflicting decisions.  The provision 
applies only to provisions of the FTA that incor porate WTO commitments, or if the FTA had identical 
or similar obligations to WTO commitments, even ab sent an explicit incorporation.  Pursuant to this 
subparagraph, the complaining party may choose the forum in which to bring the dispute.     
 
 
 
SERVICES
 
 
 II. PROVISIONS AFFECTING TRADE IN SERVICES  1. Elimination Of Discriminatory Restrictions 
 
17. We note from the answer provided by Parti es in April 2005 that the agreement contains 
a ratchet to bind any liberalisation of any non-conforming measure. 
− Has the ratchet mechanism been applied?   
 
 The ratchet mechanism would automatically appl y to any Annex I measure that either of the 
Parties liberalizes after entry into force of the FTA.     
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