WORLD TRADE  
ORGANIZATION  WT/REG239/3 
27 January 2010 
 
 (10-0393) 
Committee on Regional Trade Agreements Original:   Spanish 
  
 
FREE TRADE AGREEMENT BETWEEN CHILE AND PANAMA 
(GOODS AND SERVICES) 
 
Questions and Replies
 
 
 
 The following communication, dated 23 Oc tober 2009 and 21 January 2010, is being 
circulated at the request of the delegations of Chile and Panama.   This document reproduces the follow-up
 questions addressed to the Parties following the 
54th Session of the Committee on Regional Trade Agreements and the replies submitted. 
 
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Questions from the delegation of the United States  
 
Goods  
 
1. Table III.1 notes that Panama is excluding 254 lines.  However, Table III.2 notes that 
241 lines are excluded.  What explains the difference? 
 
 The difference between Table III.1 and Table III.2 c an chiefly be explained by the fact that the 
former does not take into account the MFN rate;  it only distributes the categories in terms of the 
tariff applied at the time of the conclusion of th e negotiations, while the latter already takes into 
account those lines for which the MFN rate in 2008 was already free. 
  In order to clarify this discrepancy, we propo se that the Secretariat add the following footnote 
at the end of Table III.2: 
 "The tariff lines which were already duty free on an MFN basis in 2008 are not counted as 
lines to be liberalized;  thus, the total number of tariff lines by year of duty elimination and 
the number of lines remaining dutiable may not be the same as the total number of tariff lines 
by elimination category presented in Table III.1."  
 It should be noted that Table III.2 does not refe r to lines "excluded", but rather to lines that 
"remain dutiable".  Intellectual Property Rights
 
 
2. On page 39 of the Factual Presentation, para graph 133 indicates that Chile and Panama 
recognize and protect the geographical indications/ denominations of origin (GI/DO) of the other 
Party.  Please clarify whether recognition and protection is provided after a national 
process/examination is conducted, in which thir d Parties may submit opposition requests. WT/REG239/3 
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 Protection is afforded for geographical indications  and denominations of or igin that have been 
notified to the other Party, provided that they are protected under the domestic legislation of the Party 
that is claiming protection and that the definition thereof is consistent with Article 22.1 of the 
TRIPS Agreement. 
 
 In this connection, it should  be recalled that Article 22.1 of the TRIPS Agreement defines 
geographical indications as indications which iden tify a good as originating in the territory of a 
Member, or a region or locality in that territo ry, where a given quality, reputation or other 
characteristic of the good is essentially attributable  to its geographical origin.  Article 22.2 further 
stipulates that Members shall provide the legal means for interested parties to prevent (a) the use of 
any means in the designation or presentation of a good that indicates or suggests that the good in 
question originates in a geographical area other th an the true place of origin in a manner which 
misleads the public as to the geographical origin of  the good;  and (b) any use which constitutes an act 
of unfair competition within the meaning of Article 10 bis of the Paris Convention.  Article 22.3 
provides that any Member shall, ex officio ... or at  the request of an interested party, refuse or 
invalidate the registration of a trademark which contai ns or consists of a geographical indication with 
respect to goods not originating in the territory indi cated, if use of the indication in the trademark for 
such goods in that Member is of such a nature as to mislead the public as to the true place of origin. 
  In the case of Panama, the procedure is laid down in Chapter V of Executive Decree No. 7 of 
17 February 1998 regulating Law No. 35 of 10 May 1996 on Industrial Prope rty.  In the case of Chile, 
the provisions governing industrial property, geographi cal indications and denomi nations of origin are 
contained in Industrial Property Law No. 19.039.  
Services
 
 
Market Access  
 
3. Paragraph 84 of the Factual Presentation no tes that the Treaty's services chapter does 
not contain an obligation along the lines of GATS Article XVI, but that, pursuant to Art. 10.6 of the Treaty, Parties have listed quantitativ e restrictions in Annex III of the Treaty. 
(a) Do the quantitative restrictions listed in Annex III of the Treaty reflect any 
liberalization of by either Party, or are they simply a reflection of all restrictions in force at the time the Treaty was negotiated? 
 
The restrictions listed in Annex III are a reflection of the restrictions in force at the 
time the Agreement was negotiated. 
 
(b) Under the terms of the Treaty, can quantitative restrictions listed in Annex III 
be made more restrictive? 
 
Since Annex III is solely for transparency  purposes, the standstill and ratchet clauses 
do not apply to Annex III. 
 
(c) Can Parties confirm whether there is an y provision in the Treaty calling for 
Parties to progressively reduce the Annex III quantitative restrictions, for example by entering into future negotiations? 
 
As indicated in the preceding reply, Annex III is solely for the purposes of 
transparency. 
  WT/REG239/3 
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  Domestic Regulation  
 
4. Paragraph 109 of the Factual Presentation not es that Parties' obligations with respect to 
domestic regulations (Art. 10.8) do not apply to requests for authorization in relation to 
measures in Parties' Annex of non-conformi ng measures (Annex II), scheduled pursuant to 
Art. 10.5(2) of the Treaty.  
 According to paragraph 83 of the Factual Presentation, Art. 10.5 non-conforming 
measures relate to Parties' obligations on na tional treatment, MFN treatment, and local 
presence in certain sectors.  Notwithstanding th ese reservations, why could Parties not ensure 
that authorization requests in these sectors are otherwise treated in accordance with Art. 10.8 
(i.e. in a timely and transparent manner)?  
 The Parties will apply the domestic regulation di sciplines in all services sectors;  this does not 
mean that where a new regulation is issued in sect ors subject to reservations in the annexes, the 
disciplines will necessary be in breach of the nati onal treatment, MFN treatment and local presence 
commitments.  
5. Paragraph 109 of the Factual Presentation also  notes that Parties "will strive to ensure" 
that measures relating to qualification require ments and procedures, technical standards and 
licensing requirements do not constitute unnece ssary barriers to trade in services, and "will 
seek to ensure" that such requirements are based on objective criteria, are not more 
burdensome than necessary, and, in case of licen sing procedures, not in of themselves restrict 
the supply of the service. 
 
(a) Do the Parties consider the requirements  under Art. 10.8.2 that the Parties 
"strive to ensure" that certain domest ic regulations do not constitute 
unnecessary barriers to trade, and that th at the Parties will "seek to ensure" 
that those domestic regulations are "not  more burdensome than necessary," to 
be equivalent to the corresponding re quirements under article VI.4 of the 
GATS? 
 
The Parties consider that their commitments under the Article relating to domestic 
regulation are consistent with those undertaken under the GATS. 
 
(b) Do the Parties or their service supp liers have access to binding dispute 
resolution or judicial review in which they can raise an allegation that they 
consider a domestic regulation:  (1) to be an unnecessary barrier to trade, (2) to 
be more burdensome than necessary, or (3 ) to restrict the supply of the service in 
and of itself? 
 
The domestic regulation disciplines are part of the Chapter on trade in cross-border 
services and hence are covered by the Agreement's Chapter on dispute settlement. 
 
(c) Can the Parties provide any examples of criteria for obtaining permission to 
supply any service which have been removed pursuant to Article 10.8.2 because they were considered to be insufficiently objective? 
 
Neither Panama nor Chile has modified any of the criteria for obtaining permission to 
supply a service covered by the Agreement. 
 WT/REG239/3 
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  Recognition
 
 
6. Paragraph 111 of the Factual Presentation no tes that Art. 10.9 of the Treaty requires 
Parties to encourage relevant authorities to el aborate mutually acceptable "mechanisms, rules 
and criteria for the accreditation and certificat ion" of education qualifications, and "licences 
and authorizations" for professional service suppliers.  
 Can Parties provide an update as to the ra nge of mechanisms, rules and criteria, and 
mutually acceptable licences and authorizations that have been elaborated between their authorities pursuant to Art. 10.9? 
 
 So far, the Parties have not elaborat ed any specific proposals in that respect. 
 
Institutional Framework
 
 
7. Paragraph 121 of the Factual Presentation notes that a role of the Free Trade 
Commission established under the Treaty is to appr ove "any modification of … (e) the lists of 
services reservations and exceptions". 
 
(a) Can Parties confirm that their servi ces commitments under the Treaty are 
subject to modification? 
 
Yes, the Parties confirm that their services commitments under the Agreement may 
be modified. 
 
(i) What would be the procedures for such modification? 
 
There are two procedures for modification:  - The general modification procedure established in Article 15.2 of the 
Agreement; 
 
- through a decision by the Free Trade Commission, pursuant to 
Article 12.1.3(b)(v). 
 
(ii) Would modification of a Party's services commitments require the 
agreement of the other Party? 
 
Yes, any modification of the Agreement on any matter requires the consent of 
the other Party. 
 
(iii) What mechanisms would apply if Parties were unable to reach 
agreement on a proposed modification? 
 
There is no mechanism for resolving such a situation.  Modification of the 
Agreement requires the consent of both Parties. 
 
Liberalization Commitments
 
 
8. The Factual Presentation notes that both  Parties have undertaken commitments in 
certain sectors that considerably extend their GATS commitments.  However, the Factual 
Presentation also emphasizes that financial services are entirely excluded from the Treaty;  that  WT/REG239/3 
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  the Treaty contains no market access obligations analogous to Art.  XVI of the GATS;  and that 
there are no liberalization commitments on Mode 3 in the Treaty. 
 
 Given the substantial exclusions highlighted  in the Factual Presentation, how does this 
Treaty comply with the GATS Art.  V(1) re quirements that economic integration agreements 
with respect to services have substantial sectoral coverage, provide for the absence or 
elimination of substantially all discrimination , and/or prohibit new or more discriminatory 
measures;  as well as the requirement that agreements should not provide for the a priori exclusion of any mode of supply? 
 
The exclusion of financial services, market access commitments and Mode 3 commitments is 
due to the design or architecture of the Agreement but implies no exclusion per se  that would be 
inconsistent with Article V.1 of the GATS.  In other words:  
(i) The exclusion of Mode 3 from the scope of  the Chapter on trade in cross-border 
services is in keeping with the Parties'  intent to provide for systemic and 
comprehensive treatment of mutual investment , without any exclusion.  Such intent is 
reflected in Chapter 9 (Trade and Investme nt), Article 9.2.2, of the Agreement.  
Consequently, there is no exclusion per se  of investment in services inconsistent with 
Article V.1 of the GATS. 
 
(ii) As to market access commitmen ts, it should be noted that the scope and coverage of 
the national treatment discipline negotiated in the Agreement are broader than those 
in the GATS.  The national treatment disci pline in the Bilateral Agreement between 
Chile and Panama comprises the market access measures applicable, on a discriminatory basis, between nationals a nd foreigners (discriminatory quantitative 
restrictions);  this is where most of the non-conforming measures are to be found. 
 
  Likewise, the qualitative restrictions appli cable to investment in services are not set 
forth in the Agreement, since they are covered by a comprehensive treatment of investment as explained above. 
 
(iii) The exclusion of financial services is c onsistent with the Chilean Government's 
official policy, to the extent that servi ces of a financial nature negotiated under a 
bilateral agreement must be addressed as a separate and self-contained issue in view 
of their technical complexity and the ec onomic and political sensitivities involved.  
This policy was established on a permanent b asis in Chile's bilateral negotiations with 
all of its trading partners. 
 
Investment
 
 9. Paragraph 134 of the Factual Presentation notes that Parties agreed to engage in 
discussions under the framework of the Treaty's Free Trade Commission to "deepen the 
promotion and the establishment of bilateral investment". 
 In light of the exclusion of Mode 3 liberali zing commitments in the Treaty, can Parties 
report on any progress under these discussions?  
 For the time being, the Parties have not set any date for addressing Chapter 9 issues. 
 
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