RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/REG164/M/1 
6 October 2005 
 
 (05-4504) 
Committee on Regional Trade Agreements 
Fortieth Session  
 
 
 
EXAMINATION OF THE INTERIM AGREEMENT 
BETWEEN THE EC AND CHILE 
 
Note on the Meeting of 28 July 2005  
 
Chairman:  Mr. A. Egger (Switzerland) 
  
1. The meeting was convened in document WTO/AIR/2624. 
2. Under Agenda Item C.VII of its Fortie th Session, the Committee on Regional Trade 
Agreements (hereinafter CRTA or  the Committee) took up the first round of examination of the 
Interim Agreement between the European Commun ities (EC) and Chile.  The following topics were 
discussed: 
 A. General Remarks 
 B. Background Information on the Agreement 
 C. Trade Provisions 
 D. General Provisions of the Agreement  3. The Chairman
 said that the Agreement had been  signed on 18 November 2002 and had 
entered into force on 1 February 2003;  it had been notified to the WTO on 18 February 2004, as 
document with symbol WT/REG164/N/1, with the text of the Agreement appearing in document 
WT/REG164/1, and the EC's Council Decision on the si gnature and provisional application of certain 
provisions of the Association Agr eement in document WT/REG164/2.  He proposed to organize the 
examination by first asking the Parties and other Me mbers for general comments, and then to turn to 
the specifics of the Agreement using the Standard Format (WT/REG164/4) to guide the debate.  The 
terms of reference for the examination of the Ag reement which had been ad opted by the Council for 
Trade in Goods on 27 April 2004 could be found in document WT/REG164/3. 
A. GENERAL REMARKS  
4. The representative of the European Communities  said that this was an important Agreement 
for a number of reasons. One was that the EC c onsidered it to be a model Agreement, which in 
academic circles was called a "third generation" EC  Agreement, and it had been very important in 
developing the EC's approach to regional trade agreements (RTAs).   He stressed the EC's long-
standing political and economic ties with Chile, not on ly during periods when the EC had evolved but 
also during periods when Chile had also evolved.  This was a cross-continental, cross-regional RTA 
which of course attracted a lot of attention, not on ly among academics, but also in Secretariat reports 
and the like on RTAs.  This was the first RTA th at the EC had concluded with a South American 
partner, though it had of course concluded an RTA w ith Mexico which would be discussed later that 
day.  He said that negotiations on the EC-Chile Association Agreement had started in April 2000 and 
had been concluded at the tenth round on 26 Apr il 2002.  This conclusion had been announced and 
welcomed by the Heads of State at the European  Union (EU)-Latin America Summit in Madrid in WT/REG164/M/1 
Page 2  
 
 2002.  The trade provisions of the Agreement had ente red into force on an interim basis on 1 February 
2003.  The trade part of the Agreement had give n the most innovative and ambitious results ever 
negotiated by the EU.  The Agreement covered a ll areas of trade relations going well beyond the 
Parties' WTO commitments.  By the progressive and reciprocal elimination of barriers to trade and by 
establishing clear, stable and transp arent rules for exporters, importers and investors, the Agreement 
favoured bilateral trade and investment flows, opened new markets and opportunities, increased the 
choices of Chilean and European consumers and ultimat ely set a framework for sustainable growth.  It 
covered a free-trade area in goods, services and govern ment procurement; liberalization of investment 
and capital flows; the protection of intellectual pr operty rights; co-operation for competition and an 
efficient and binding dispute settlement mechanism.   The free-trade area in goods was underpinned by 
transparent and strong rules, including provisions wh ich aimed at the facilitation of trade (in particular 
in the area of wines and spirits and sanitary an d phytosanitary (SPS) measure for which specific 
agreements were annexed to the Association Agreem ent) and also in the customs and related areas 
and standards, technical regula tions and conformity assessment pr ocedures.  The institutional 
arrangements included in the Agreement would ensure  that its implementation was effectively carried 
out and new opportunities were explored in an ongoi ng manner.  In this regard, it was important to 
mention the built-in agenda securing the evolution of the trade provisions.  Numerous chapters 
provided for concrete ac tions to be taken, including review in the future of the situation with a view to 
even further deepen the level of  preferences granted under the Agreement.  Although trade formed an 
important part of the Agreement, he underlined th at the Agreement went far beyond trade.  It was 
based on three pillars, notably a political dialogue, co-operation and trade, thus covering the broad 
range of EC-Chile relations. 
5. The representative of Chile
 said that since the entry into force of the Agreement there had 
been a significant increase in trade.  In Chile's case, the positive trad e balance with EU countries had 
practically tripled in value over the preceding two y ears.  In volume terms, exports to the EC had 
increased by 17.2 per cent in the second year the Ag reement was in force and imports had increased 
by 10 per cent over that period.  As pointed out by the EC representative, this Agreement went further 
than just trade and embraced a political and co-o peration dialogue.  Those who had consulted the 
website would have seen that the Agreement was st ructured on the basis of a preamble with 206 
Articles divided into five Parts.  Part IV of the Agreement contained the rules applicable to trade and 
trade-related issues.  She wished to highlight a fe w of the trade aspects.  The Agreement covered all 
areas of the Parties' trading relations and went mu ch further than their respective WTO commitments.  
A free-trade area had been established for goods, se rvices and government procurement.  There was 
liberalization of investment and capital flows, prot ection of intellectual property rights, co-operation 
on competition and an efficient and binding disput e settlement mechanism.  It was important to 
mention the built-in agenda in the Agreement, i. e. an evolutionary clause which was intended to 
deepen the negotiated liberalization and improve provisions.  As far as tariff liberalization was 
concerned, there were six different categories of ta riff cuts to totally liberalize tariffs and non-tariff 
measures in trade in goods excluding just a few agri cultural and fisheries products.  Details of these 
tariff cuts could be found in the information provided by the Parties in the Standard Format.  A whole 
series of provisions had been agreed to as a comp lement to tariff reductions such as in customs 
procedures and ethical standards for customs, rules of origin, SPS standards, technical regulations and 
procedures and so on.  She concluded that this  Agreement of political, economic and co-operation 
association between the EC and Chile was one of the great landmarks of Chile's foreign policy 
because it represented a strategic alliance with one of Chile's major partners. 
B. BACKGROUND INFORMATION ON THE AGREEMENT  
6. The representative of the United States  remarked that given that neither the WTO notification, 
nor the text of the Agreement notified to the WTO had indicated that the Parties had filed the 
Annexes, Appendices, Protocols and such with the WTO Secretariat, nor had they provided a web 
address where those documents could be found, she wondered if those documents had in fact been  WT/REG164/M/1 
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 filed.  Second, when reference w as made to the entry into force of  the Agreement, she wondered to 
which entry date it referred:  th e entry into force of the Interi m Agreement which was 1 February 
2003;   or the entry into force of the Association Agreement which was 1 March 2005?    
7. The representative of the European Communities  replied that at the end of the Standard 
Format there was a reference to the website where th e full text of the agreement was available.  This 
information had been included in the Standard Fo rmat, though not in the initial notification; his 
delegation was ready to discuss within the contex t of the Negotiating Group on Rules (NGR) whether 
such website links should be made available in the original notification.  He added that all the EC's 
Agreements with their Annexes and Protocols were av ailable on the EC website.  As for the entry into 
force of the Agreement, he replied that the trade pr ovisions of some of the EC's Agreements entered 
into force prior to the finalization of the ratifica tion procedure.  This was called a "decision on the 
application of the trade provisions".  As to how this  should be interpreted lega lly, he drew delegations' 
attention to paragraphs 3 and 4 of Article 198 of the Agreement:  paragraph 3 foresaw the early 
application of a range of Articles,  while paragraph 4 explained that for those provisions any reference 
in the Agreement to the date of en try into force meant the date of early application in accordance with 
paragraph 3.  For all other Articles, the entry into fo rce meant the date of entry into force of the full 
Agreement, that is the Association Agreement wh ich had entered into force immediately after the 
completion of ratification, i.e. approval by parliame nts.  He added that this was an issue which had 
already been discussed in this Committee and in th e NGR.  He explained that the distribution of 
competence within the EC was su ch that the European Commissi on or the Community as a whole 
could take a decision on the entry of force of cer tain issues.  Other issues such as services, which 
required ratification by national pa rliaments, could not enter into force before ratification.  The 
Commission had the possibility of taking a decision through the Council, without ratification, for the 
application of certain goods articles.  Those were al ways listed in the Agreem ent, and he had provided 
the reference to the relevant Articles for de legations' benefit in understanding how it worked. 
8. The representative of Japan  said that it appeared from document WT/REG164/N/1 that there 
had been a time lag of about one year between entry into force and notification.  Given that one of the 
transparency issues currently bein g discussed in the NGR was the timing of notification, he wondered 
why there had been such a time lag.  The representative of the European Communities  replied that his 
delegation was ready to clarify when the notifica tion should be submitted within the context of the 
negotiations taking place in the NGR.  In the meantime no defined time period for notification existed.   
9. The representative of Australia
 had a number of questions which she agreed to put in writing.  
She asked the Parties to explain what would happen  to the Agreement after ten years:  would the 
interim Agreement move to being a fully-fledged fr ee trade agreement (FTA)?  In Section III.6 of the 
Standard Format, under "duration", it was stated th at the Agreement was valid for an unlimited period 
and she wondered how that related to the ten year period:  would the Agreement be notified to the 
WTO at that stage, would it be reviewed throughout  the ten year period and was there a mechanism to 
speed it up to become a fully-fledged FTA?   
10. The representative of the European Communities  thanked the representative of Australia for 
the advance submission of her question which would f acilitate a fuller response.  He intended to raise 
this issue in the NGR as it was an excellent way of preparing for the meeting.  As regards the 
question, he said that perhaps there was a mis understanding about the nature of the Interim 
Agreement.  It was not "interim" in that it would cease to exist at some point and another agreement 
would be negotiated in its place.  Rather, the In terim Agreement provided a means to provisionally 
apply the goods provisions which had been notified to  the CTG and were now subject to review in the 
CRTA. Once ratification had been completed in na tional parliaments, the Association Agreement 
would enter into force.  So, the en try into force and the ten year tran sition period were incorporated in 
the entire Agreement.  Once it had expired there was no other transition period in the Agreement.  He WT/REG164/M/1 
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 stressed that from the perspective of his delegati on, the goods parts of this Association Agreement 
which had entered into force prior to the rati fication by EC Parliaments, provided for the 
establishment of a fully-fledged FTA.  In addition, it included a number of evolutionary clauses which 
were basic top-ups.   He hoped that this clear ed up any misunderstanding of what the Agreement 
contained.  Regarding the duration of th e Agreement, the representative of Chile
 clarified that the 
Agreement had been signed for an unlimited period which was different from the transition period of 
ten years.  It was of unlimited duration, unless some sort of escape clause existed. 
11.   The Chairman  remarked that the EC representative's proposal regarding the facilitation of 
future meetings on receiving written questions a c ouple of days in advance of the meeting would 
contribute to the working of the Committee and that it should be kept in mind for the NGR. 
12. The representative of Australia  thanked the Parties for their explanation.  Under Scope, the 
Standard Format stated that the Agreement covere d all Chapters of the Harmonized System (HS).  
She wondered what percentage of tariff lines were covered in all Chapters, and in the agricultural 
Chapters in particular and what percentage of trade was covered.  She was happy to provide the 
question in writing if necessary. 
13. The representative of th e European Communities  replied that since this question was directed 
at both Parties it required that the tariff lines be put together and given that tari ff lines were different it 
was like adding apples and oranges.  He said he woul d provide a flavour for the EC side and provide 
detailed replies on the aggregate coverage of tariff lin es at a later point.  As for coverage in terms of 
tariff lines under the Agreement, all tariff lines were included in the Agreement, but this did not mean 
that all tariff lines were scheduled for liberalizati on or elimination.  In terms of liberalization 
commitments, he said that for the EC, there was no liberalization commitment at all on six per cent of 
tariff lines.  That was the starting point and di d not take into account the review clause.   
14. The representative of Chile  replied that she had been unabl e to obtain information on tariff 
reductions and tariff lines in time for the meeting but  that she would provide a written response if the 
question was submitted in writing.  She added th at Chile performed a calculation on tariff lines 
because it was the view of her country that RTAs ha d to be measured in terms of tariff lines as this 
reflected not only actual trade but also potential trade.   
15. The representative of the United States  said she would welcome the information to be 
provided by the Parties on tariff-line coverage.  Sh e said that the EC currently had tariff-rate quotas 
(TRQs) in the WTO for many of the products where TRQ access was provided to Chile as part of this 
Agreement,  e.g., bovine meat, swine meat, sheep  and goat meat, poultry meat and cheeses.  She 
wondered what the  relationship was between the preferential access provided under the Agreement 
using TRQs and whether Chile's preferential access was in addition to the EC's WTO TRQ 
commitments. 
16.  The representative of the European Communities  replied that the simple answer was that the 
FTA did not interfere with the EC's commitments in the WTO context.  Basically this was a top-up, so 
there were two separate arrangements, the WTO a nd the FTA.  Under the FTA there were separate 
rights and obligations, so preferential access came in  addition to WTO commitments.  He added that 
this was one of the key aspects that his delegation had raised with the United States with respect to 
services and the quotas applicable for Mode 4 commitme nts, especially with regard to the negotiations 
between the United States and Chile and Singapore.  It  was of course the effect on third parties that 
was interesting.  Thanking the representative of  the European Communities for his response, the 
representative of the United States  asked if he could give an idea of  what percentage of tariff lines 
were covered by these TRQs.    WT/REG164/M/1 
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 17. The representative of the European Communities  replied that the response would be provided 
in writing and added that there were reciprocal TRQs  as well.  As for the category called "TQ" in the 
Agreement, he stressed that the EC-Chile Agreem ent was to some extent different from the EC's 
previous agreements in that a full schedule was pr ovided with an indication of whether or not there 
were any commitments, to allow Members to make cal culations easily.  From a transparency point of 
view, this was, in his delegation's opinion, the b est way of providing schedules in the future; it would 
be the basis of their future RTA negotiations.  Any delegation with a ques tion on tariff lines would 
find it easy to calculate the response, but his delegati on would be happy to assist.  As for the number 
of tariff lines under agricultural preferential TRQs, he  said that 10.8 per cent of  the EC's agricultural 
tariff lines, (i.e. 202 tariff lines) fell into this cate gory.  This represented 1.9 per cent of the total 
number of tariff lines under the Agreement.  For fish , ten tariff lines which was 0.1 per cent of the 
EC's total tariff lines, and 2.6 per cent of the to tal number of tariff lines in that sector fell under 
preferential TRQs.  He agreed to provide an answ er in writing as well.  The representative of the 
United States  thanked the previous speaker for his elucidation on tariff line percentages and 
appreciated the greater transparency provided by the schedules.  She asked if the information could be 
provided in an Excel format as this would great ly facilitate her capital's investigations.  
18. The representative of Australia  asked for the breakdown of agri cultural tariff lines, in general 
terms as well as for TRQs.  She asked what percen tage of tariff lines was covered in each different 
category in the elimination schedule.  In relation to agriculture, she asked what the 19.1 per cent of 
non-covered agricultural trade included and what percen tage of agricultural trade was covered at entry 
into force of the Interim Agreement. 
19. The representative of the European Communities  said that despite the generous early warning 
of the question, he had not had the opportunity to dig out the response.  Thus he would provide a 
general reply orally and a detailed response in writi ng.  In reference to the 19.1 per cent of non-
covered agricultural trade, he said that different categories applied  The calculation of the residual 
80.1 per cent included only the trade in agriculture wh ich was subject to the complete elimination of 
duties and quotas;  this corresponded to a strict inte rpretation of Article XXIV in terms of coverage.  
The 19.1 per cent related to various categories in the Agreement, such as lines subject to partial 
liberalization, or subject to zero duties within TRQs, or goods for which the ad valorem duty was 
eliminated but the specific duty remained.  He agreed to revert with details of  how much each of those 
categories accounted for.  As for the percentage of  agriculture trade which was covered at the entry 
into force, he presumed that the representative of  Australia was referring to coverage in the strict 
sense of complete elimination of duties and quotas a nd any other restrictive regulations of commerce, 
and said he would provide a written response.  His te ntative figure was that more than 50 per cent of 
trade in agriculture was covered at the entry into force of the Agreement.  He added that while for 
industrial goods the maximum transition period was th ree years, the bulk of agricultural trade would 
be liberalized by the EC in year four.   
20. The representative of Chile  added that as far as exceptions in the Agreement were concerned, 
it was important to look at the e volutionary clauses, because the Parties had committed to revise the 
coverage of agricultural products.  For example, fo r products subject to quotas the Parties would look  
at the viability of further measures.  Although th e evolutionary clauses contained certain guidelines, 
they represented commitments for review.  Th e representative of the European Communities  
concurred. 
21.   In relation to rules of origin, the representative of Australia  said that the Standard Format 
stated that bilateral cumulation was foreseen:  did th is mean that a rule had been negotiated, and how 
did this fit with the pan European system of cumu lation of origin?  The representative of the European 
Communities  replied that it did not relate at all to the pan European system of cumulation of origin.  
As for bilateral cumulation, this question came up in  all reviews of the EC's RTAs and the reply was 
standard.  He would provide a written response to it.  He asked the representative of Australia in WT/REG164/M/1 
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 formulating her question to look at the response provided in the examination of the EC-Mexico 
Agreement as the same question had been posed.   
22. The representative of the United States
 said that the SPS provisions contained in Annex IV of 
the Agreement appeared to go well beyond the WTO SPS Agreement in its application.  For example, 
she asked if the Parties could explain the justifica tion for including animal welfare in the text.  The 
representative of the European Communities  replied that the Agreement was a reflection of the 
Parties' priorities and this was an area where the Parties considered it important to go beyond their 
WTO commitments which was the purpose of RTAs.  He agreed to provide a written response if the 
question was more specific. 
23. The representative of Australia  asked if any safeguard measur es had been invoked and what 
the significant differences were between the safe guard provisions in this Agreement and the WTO 
Agreement on Safeguards.  The representative of Chile  replied that under Article 92 of the 
Association Agreement, both Parties maintained  their rights and obligations to apply overall 
safeguards according to the provisions of Article XIX of the GATT and to the WTO Agreement on Safeguards.  However in Article 92, the Parties agreed on certain provisions which regulated the 
bilateral treatment of safeguards such as written no tification, consultation and negotiation of time 
periods for the rights under Article 8 of the Agreemen t on Safeguard to be applied.  She added that 
both Parties had applied overall meas ures which had been approved in the WTO, and these particular 
procedures were being continued and had been agre ed upon.   The Agreement had another safeguard 
mechanism, in Article 7, which related to  emergency clauses in agriculture.     
24. In response to a question by the representative of Australia, 
the representative of Chile  
clarified that the agricultural safe guard mechanism  in the Agreemen t had never been invoked; As the 
Parties had no experience, she could not give much  information on how they would be applied.  These 
safeguards referred to bilateral trade in agricu ltural and processed agricultural products and the 
requirements for their application were defined in Ar ticle 73.  They were applied in the framework of 
liberalization and offered an opportunity to ta ke measures in the event of severe disruptions. 
25.  In relation to Sector-Specific Pr ovisions, the representative of Australia  said she had some 
questions similar to those posed by the representa tive of the United States on TRQs, which she agreed 
to put in writing.  On services, she asked the Parties to explain what provisions the Agreement 
contained.  In the Standard Format it was stat ed that the Chapter on services foresaw reciprocal 
liberalisation in trade in services in conformity with Article V of the GATS and she wondered what 
that meant.  The representativ e of the European Communities  replied that the Parties would soon 
provide the notification of the services aspects of th e Agreement.  He added that the Parties stood 
ready to explain in detail what the services chapter, which in thei r view was fully compliant with 
GATS Article V, contained once the review of the services aspects commenced, and he suggested 
putting the question on hold until then.   
D. G ENERAL PROVISIONS OF THE AGREEMENT  
26. Regarding the protection for geographical indica tions (GIs) of names for wines established in 
Article 5 of Annex V, and the designation of spirit dr inks and aromatized drin ks established in Article 
5 of Annex VI, the representative of the United States  asked whether these provisions expanded 
protection offered by the WTO Agreement on Trade- Related Aspects of Intellectual Property Rights 
(TRIPS) and if so, how; she also asked whether these provisions adversely affect imports from third countries.  The representative of Chile
 said he could provide a written response to the question but 
agreed to provide some general comments.  He  said that this provision expanded the protection 
offered by the TRIPS Agreement in the sense that ea ch Party recognized the other Party's GIs;  there 
was thus protection for specific GIs.  The TRIPS Agreement did not protect specific GIs, but provided a framework within which the GIs of WTO Members ha d to be accepted.  In this sense the Agreement  WT/REG164/M/1 
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 went beyond the TRIPS Agreement.  Chile had accepted certain GIs from the EC and the EC had 
accepted certain GIs from Chile. 
27. The Chairman  said that the first round of the EC-C hile Interim Agreement had allowed the 
Committee to clarify a number of questions, but ot hers remained pending.  He invited delegations 
wishing to submit questions to forward them in writin g to the Secretariat by 23 September and for the 
Parties to provide written responses by 31 October.     
28. The Committee took note  of the comments made. 
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