WORLD TRADE  
ORGANIZATION  WT/REG165/6 
1 July 2005 
 
 (05-2864) 
Committee on Regional Trade Agreements Original:   English/ 
 Spanish 
 
 
 
FREE TRADE AGREEMENT BETWEEN CHILE AND EL SALVADOR 
 
Questions and Replies  
 
 
 The following communication, dated 25 April 2005,  is being circulated at the request of the 
delegations of El Salvador and Chile.   This document reproduces the questions ad dressed to the Parties and the responses 
submitted.  The questions and replies set out be low are organized in acco rdance with document 
WT/REG165/4.  
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I. BACKGROUND INFORMATION ON THE AGREEMENT  
3. Scope
 
 
The EC would appreciate if Chile could ex plain the reasons for applying 16 years 
transition periods for products of which there is no or only minimal imports, and in what way 
these reasons should, in Chile's opinion, be cons idered as an "exceptional case" in accordance 
with GATT Article XXIV. 
 The products included in Category E, which est ablishes a 16-year transition period for tariff 
elimination, reflect domestic sensitivities in El Sa lvador and the overall bala nce of the negotiation.  
We can confirm that these are exceptional cases only,  and that only 28 tariff lines are included in that 
category. 
 
Excluded products (Annex 3.04(6) - Price Bands) 
  This annex lists the products Chile subjects to a price band and which are excluded 
from the FTA.  Page 3 of the Standard Format (WT/REG165/4) notes El Salvador also has a list 
of excluded products, but this is not clear from the actual text of the FTA. 
 
 Can the Parties clarify the goods El Salvador has excluded (if any)? 
 
 What percentage of bilateral trade do these excluded products represent? 
  We understand that Chile has committed to eliminate the price band mechanism as it relates to the United States over a 12 year transition period.  Is a similar amendment with regards to El Salvador envisaged? 
 WT/REG165/6 
Page 2  
 
  Under the Agreement, exclusions are symmetr ical, that is, a product excluded from tariff 
reduction would be so excluded in both countries.  The products excluded at the request of El Salvador are the following:  bovine, poultry and po rk meat;  dairy products, some vegetables, rice, 
oranges, lemons, beer, water, cements and vehicles.    
 In 2001, the year when the Agreement was negotiated, the proportion of bilateral trade 
excluded from tariff reduction was 2.16 per cent.     With respect to the price band system, it is true that, under the FTA with the United States, there is a commitment to reduce tariffs on all products  subject to price bands, under Category G of the 
tariff elimination schedule (12 years, non-linear reduc tion).  In any event, in the case of sugar, the 
tariff reduction will depend on fulfilment of the surp lus production requirement .  Such products are 
excluded under the FTA with El Salvador.  
In the chart of WT/REG/165/4, on page 2, Category TP provides special treatment to 
petroleum products from Chile.  We would like to  request the Parties to explain in a concrete 
manner, this "special treatment." 
Category TP refers to special treatment only,  under the tariff elimination schedule for 
petroleum and its derivatives, as follows: 
- The duties pertaining to tariff items 2709.00.00 and 2711.11.00 shall be eliminated 
entirely on 1 January 2004, according to the following timetable: 
Date Category TP 
1 January 2001 1.8% 
1 January 2002 1.1% 
1 January 2003 0.4% 
As of 1 January 2004 0.0% 
 
- The duties pertaining to tariff items 2710.00.10, 2710.00.21, 2710.00.29, 2710.00.31, 
2710.00.32, 2710.00.33, 2710.00.40, 2710.00.51, 2710.00.59, 2710.00.61, 
2710.00.62, 2710.00.63, 2710.00.64, 2711.12.00 and 2711.13.00 shall be eliminated 
entirely on 1 January 2006, according to the following timetable: 
Date Category TP 
1 January 2001 4.0% 
1 January 2002 2.8% 
1 January 2003 1.8% 
1 January 2004 1.2% 
1 January 2005 0.6% 
As of 1 January 2006 0.0% 
  WT/REG165/6 
 Page 3 
 
 
 II. TRADE-RELATED PROVISIONS 
 
5. Safeguards  
 
Have any safeguards measures been invoked?  What are the significant differences 
between the safeguards chapter and the WTO Safeguards Agreement? 
No bilateral safeguards have been adopted  between the Parties to the Agreement. 
Chapter 6, Emergency Action, refers to two types of safeguard: 
(ii) bilateral emer gency actions;  and 
(iii) global emergency actions. 
According to the provisions set forth in that chapter, bilateral emerge ncy actions constitute a 
safety mechanism the purpose of which is to libera lize bilateral trade, and therefore apply only to 
reciprocal trade between the Parties to the Agreement. 
Global emergency actions are those referred to  in Article XIX of the GATT and the WTO 
Agreement on Safeguards.  The main differen ces between the present Agreement and the WTO 
provisions concern exclusion from an emergenc y action and compensation or retaliation in 
accordance with the provisions of Chapter 6, Article 6. 03 of the Agreement, i.e.:  (1) the possibility of 
excluding the trading partner from the measure;  (2 ) compensation applies if the measure affects the 
trading partner;  and (3) if there is no ag reement on compensation, retaliation applies.  
The above-mentioned exclusions will apply provi ded that the imports from the other Party do 
not account for a substantial share of total imports and do not contribute significantly to the serious 
injury or threat thereof caused by total imports. 
In the paper WT/REG/165/4, II.5, it is stat ed that "A Party taking global emergency 
actions may not do so in respect of the other Party except where imports from the other Party 
accounts for a substantial share of the tota l imports and imports from the other Party 
contribute significantly to the serious injury ca used by total imports".  At the meeting on 
February 17-18, Chile stated that the so-called "p arallelism" is ensured.  The parallelism in this 
case means the Party subjected to the investigation for injury determination is also subjected to 
the application of the relevant safeguard measures .  We would like to seek further clarification 
in how the "parallelism" is ensured. 
 In fact, as Japan has stated, the principle of  parallelism implies that if imports originating 
from the other Party have been the subject of an investigation to determine injury, the safeguard 
measure to be adopted shall also apply to those imports. 
  In other words, if the rule mentioned by Japan is applied at all, in order for the imports from 
the other Party to escape application of the me asure, they must also be excluded from the 
investigation and not taken into account  for the determination of injury. 
 
 
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