WORLD TRADE  
ORGANIZATION  WT/REG234/M/1 
19 December 2008 
 
 (08-6250) 
Committee on Regional Trade Agreements 
Fifty-first Session  
 
 
 
CONSIDERATION OF THE STRATEGIC ECONOMIC PARTNERSHIP AGREEMENT 
BETWEEN JAPAN AND CHILE, GOODS AND SERVICES  
 
Note on the Meeting of 27-28 November 2008  
 
Chairman:  Mr. D. Brauns (Germany) 
 
 
1. The meeting was convened in document WTO/AIR/3261, dated 16 October 2008. 
2. Under Agenda Item B.III of its 51st Session, the Committee on Regional Trade Agreements 
(CRTA or the Committee) took up consideration of the Strategic Economic  Partnership Agreement 
between Japan and Chile (hereinafter referre d to as 'the Agreement'), goods and services. 
3. The Chairman  said that the Agreement had entered into force on 3 September 2007 and had 
been notified by the Parties to the WTO on 24 August 2007 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/REG 234/N/1) and under GATS Article V:7(a) as an 
Agreement providing for the liberalization of trade in services within the meaning of Article V of the 
GATS (document S/C/N/398).  The text of the Agreem ent was available, together with its Annexes, 
on the Parties' official websites. 
4. The Factual Presentation on the goods and services aspects (document WT/REG234/1 dated 
18 September 2008) had been prepared by the Secret ariat on its own responsibility in full consultation 
with the Parties, in accordance with paragraph 7(b) of the Transparency Mechanism for Regional 
Trade Agreements (document WT/L/671).  In a ddition, written questions and replies on this 
Agreement had been recently distributed in document WT/REG234/2/Rev.1 dated 24 November 
2008.  He proposed to organize the consideration of the Agreement by first asking the Parties and then 
other Members to give any general comments.  The Committee would then turn to the specifics of the 
Agreement using the Factual Presentation, documen t WT/REG234/1, to guide the debate and the 
Committee would go through the Factual Presenta tion section by section, and then look at the 
questions and replies document. 
5. The representative of Japan  said the Agreement covered a wide  range of areas beyond trade in 
goods, including Chapters on investment, trade in services, financial services, entry and temporary 
stay of nationals for business purposes, government procurement, intellectual property, competition, 
and improvement of the business environment.  Th is was the fourth Economic Partnership Agreement 
that Japan had concluded, following those with Singa pore, Mexico and Malaysia.  The key objectives 
of the Agreement were the liberalization of trade and investment between the Parties, as well as the 
strengthening of economic relations by promotin g a comprehensive economic partnership that 
encompassed a broad scope of subject matters, as stated  earlier.  Of all the countries in Latin America 
and the Caribbean, Chile had been the most successfu l in taking great strides in terms of economic 
modernization, and was also a major supplier of mineral resources.  Moreover, Chile was actively 
promoting economic open-door policies around the wo rld, having concluded free trade agreements WT/REG234/M/1 
Page 2 
 
 
  (FTAs) with more than 40 countries.  This Agre ement was of great signifi cance to Japan for several 
reasons:  first, it improved trade and investment  conditions for Japanese companies operating or 
investing in Chile;  second, it ensured the supply of mineral resources such as copper;  and third, it 
provided an economic gateway to South America.  The Agreement was expected to contribute to 
strengthening political and diploma tic relations between the Parties and also to developing a closer 
relationship between Japan and the Latin American and Caribbean region as a whole.  In November 
2005, at the Japan-Chile Summit meeting held on  the occasion of the APEC Economic Leaders’ 
Meeting, it had been agreed that negotiations would be launched to conclude an  agreement.  The first 
round of negotiations on the Agreement had been sub sequently held in February 2006.  During the 
course of negotiations, the Japanese delegation had ur ged Chile to offer immediate tariff elimination 
for automobiles, which was the most important item exported from Japan to Chile.  For its part, the 
Chilean delegation had proposed a "request list" on various agricultural, forestry, and fisheries 
products.  Throughout the negotiations, both Parties ha d engaged in intense discussions that had taken 
into account each others particular interests and sensitivities across the spectrum of issues, 
concluding in an agreement reached in September 2006.  Subsequently, at the Japan-Chile Summit 
meeting held concurrently with the APEC Economic Leaders’ meeting of the same year, it had been 
confirmed that the negotiations had been successful ly completed, to be followed by the required 
finalization of the legal texts of the Agreement.   The Agreement had been signed by the Foreign 
Ministers of both countries on 27 March 2007 in Tokyo, and had entered into force on 3 September 
2007. 
6. Japan believed that the Agreement was a compre hensive economic partnership and attained a 
high level of liberalization of tariffs;  for example,  within ten years, it would eliminate up to 92% of 
tariffs in terms of the volume of two-way trade in  2005.  In addition, the liberalization of trade in 
goods under the Agreement covered a ll major sectors.  Moreover, the Parties did not implement any 
other restrictive regulations of commerce that would be incompatible with the GATT, and the 
Agreement did not maintain or establish any restri ctions on commerce.  Thus, from his delegation’s 
point of view, this Agreement met the GATT requi rement that other restrictive regulations of 
commerce should be eliminated on substantially all the trade and therefore, was compatible with 
GATT Article XXIV.  Moreover, the Agreement provid ed for national treatment for a broad range of 
sectors/sub-sectors concerning trade in services, and was therefore compatible with GATS Article V.  
The Agreement also aimed to ensu re full transparency concerning  the Parties’ commitments by 
adopting a “negative list” approach with respect to the sectors/sub-sectors for which the Parties had 
made reservations.  The economic effects of the Agreement would become clearer and more tangible 
in the coming months, but it was already evident that  actual trade and investment between the Parties 
had increased significantly even during the period immediately after the entry into force of the 
Agreement.  In particular, the export of autom obile parts, machinery and construction and mining 
machinery had significantly increased.  Also, with resp ect to investment, after the entry into force of 
the Agreement, large-scale investments had been made in mining and other sectors, and a number of 
subsidiaries of Japanese enterprises had been establishe d in Chile in fields other than mining.  Chile 
was one of Japan’s largest trading partners in La tin America and the Caribbean, and the total trade 
volume between the Parties in 2007 had been a pproximately US$8.7 billion as compared to US$7.2 
billion in 2006.  Given that the Agreement serve d as a new tool to boost trade and investment, a 
further increase in trade and investment could be ex pected in the coming months and years.  It was 
noteworthy that a Commission and other subordi nate bodies, namely seven committees and two 
working groups, had been established to ensure  effective implementation and operation of the 
Agreement.  In particular, the Agreement es tablished a Committee on Improvement of Business 
Environment in order for both Parties to activ ely discuss any issues related to the business 
environment, with a view to promoting trade and investment activities of private companies.  The first 
meeting of the Committee had been held last Apr il.  Representatives from the private sectors of both 
Parties had been invited and had engaged in very  productive discussions.  In conclusion, he expressed 
his delegation’s confidence that the Agreement had laid a solid foundation for further growth in 
bilateral trade and investment as well as strengt hening the economic ties between the Parties.   WT/REG234/M/1 
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  Although the Agreement was a cornerstone in devel oping economic relations between the Parties, it 
could also be considered as a building block to ward strengthening the multilateral trading system 
enshrined in the WTO. 
7. The representative of Chile  thanked the Secretariat for having prepared the Factual 
Presentation and her Japanese colleagues for the coordi nation undertaken for this  consideration.  Her 
delegation was profoundly satisfied with the developm ent of trade relations between the Parties.  
Japan was Chile's third largest trading partner which had been reinforced through the Agreement.  The 
Agreement involved two distant regions, i.e. Asia a nd Latin America.  In addition, it was the first 
trade agreement signed by Japan with a South Amer ican country and, for Chile, had represented an 
important step forward in its strategy in Asia.  The Agreement was an addition to Chile's FTAs with 
Korea (1 April 2004), China (1 October 2006) and the Partial Scope Agreemen t with India (17 August 
2007), just to mention a few FTAs with countries in Asia.  Furthermore, through the P4 Agreement – 
which had been considered at the last meeting of  the CRTA in September– Chile had also established 
links with other important economies of the Asia P acific region, such as New Zealand, Singapore and 
Brunei Darussalam.  In this connection, negotiati ons were underway with Malaysia and Viet Nam. 
8. The Agreement between the Parties was not rest ricted to goods.  In addition to providing 
market access, the Agreement also established a series of laws relating to tariffs and other matters.  Furthermore, in relation to the signing of the Ag reement, the Ministers of the Parties had signed a 
Joint Declaration which contained Annexes relati ng to anti-dumping measures, technical barriers to 
trade, and labour and environmental issues.  One y ear after the Agreement had come into force, trade 
between the Parties had increased by 18.7%.  In particular, during the period covering the second half 
of 2007 and the first half of 2008, as compared w ith the same period before, Chile's exports to Japan 
had increased by 8.9%.  Similarly, imports from Japan  had risen by 72%.  Wh ile a large part of the 
increase in Chilean exports involved the mining sector, it should be pointed out that other sectors, 
such as the industrial sector also ha d contributed, with a higher growth rate than that of mining (24% 
and 13%, respectively).  The industrial products con cerned included, in particular, foodstuffs, forestry 
products and wooden furniture.  T hus, Chile's exports had become di versified, focusing on exports of 
higher added value.  Fuel and automobile industry products continued to head the lists of the main 
products imported from Japan, constituting the ma in increases since the Agreement had come into 
force.  Naturally, a longer period was required in or der to be able to evaluate the Agreement, but it 
was her delegation's opinion that in the medium-ter m it would help to strengthen even more the trade 
relations between the Parties and, very likely, cont ribute to the longer term objective of bringing both 
sides of the Pacific closer together.  Accordi ngly, it was an honour for the Chilean delegation to 
present to Members a comprehensive Agreement which could continue to be improved in the future 
through its established mechanisms. 
9. The representative of the United States
 thanked the Parties and the Secretariat for the 
information provided on the Agreement.  His de legation regretted the imbalance between tariff 
elimination in industrial and agricultural goods whic h was striking.  He questioned how the Parties 
could consider the limited coverage of agricultu ral goods as appropriate under the requirement of 
GATT Article XXIV.  His delegation noted that Japan had contributed significantly less to the Agreement than Chile with regard to tariff eliminati on.  His delegation hoped in the future that Japan 
would undertake trade liberalization as required under GATT Article XXIV, just as Japan’s trading 
partners had demonstrated in their other FTAs. 
10. With regard to products subject to negotiati on in 2009 and 2011, the representative of the 
United States
 questioned, what real changes Jap an or Chile expected to occur vis-à-vis  sensitivities 
and/or domestic structural adjustment that would a llow the Parties to liberalize trade in these products.  
In addition, he asked what criteri a distinguished products subject to negotiation in 2009 from those to 
be negotiated in 2011. The representative of Japan  responded that it was prem ature to predict what 
kind of changes would occur in terms of sensitiviti es and/or domestic structural adjustment to those WT/REG234/M/1 
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  products subject to negotiation in 2009 and 2011.  Japan could not prejudge the result at this point.  
For the latter question, he explained that those products were decided by the Parties during the 
negotiations taking into account each Party’s specific interests. 
11. The representative of the European Communities (EC)  referred to the EC's written question 
on the products subject to future negotiation in 20 09 and 2011.  Her delegation wished to stress that 
although future plans for further liberalization were  welcomed, this could not be taken onboard when 
assessing the actual coverage of the Agreement.  The representative of Japan  explained that Japan did 
not include products which were subject to nego tiation in its calculations of trade coverage. 
12. The representative of Chile  added that, with regard to the issue of renegotiation, namely 
products under category R, from her delegation's poi nt of view, these products had export potential, 
but at the moment of the negotiation, Chile had not  registered significant exports of these products to 
Japan for various reasons.  Therefore, her delegati on felt that once the Agreement had been enforced 
for sufficient time, perhaps the tr ade flows specifically for these products could be analyzed and 
evaluated to take into account the need for greater liberalization. 
13. The representative of the United States  thanked the Parties for their explanation and asked 
whether the trade flows to Japan reflected trade coming solely from Chile even though those products 
had been excluded from the Agreement or was it th e overall trade flow.  The representative of Chile  
responded that it referred to bilateral trade flows. 
14. The representative of the United States  then wished to follow-up on its written question 
no.14.  The Parties had noted that the reservati ons on the Agreement's obligations on national 
treatment (Article 107 of the Agreement) and on lo cal presence (Article 109 of the Agreement) for 
cross-border services, “can be construed as disc riminatory or non-discriminatory quantitative 
restrictions” and “could be interpreted as settin g forth a commitment of the kind included in 
subparagraph 2 of GATS Article XVI.”  He asked whet her they could confirm that to the extent that 
quantitative restrictions imposed by either Part y did not contravene the Agreement’s national 
treatment or local presence obligations, these restricti ons had not been identified in the text nor in the 
Annexes of the Agreement.  In addition, w ith respect to the non-discriminatory quantitative 
restrictions that might be maintained or imposed  by the Parties, his delegation asked whether it was 
accurate to say that the Agreement provided no further liberalization beyond the Parties' GATS 
commitments.  The representative of Japan  confirmed that those restricti ons had not been identified in 
the text nor in the Annexes of the Agreement.  He explained that certain services were not stipulated 
in the cross-border services Chapter, as market ac cess for financial services which was stipulated in 
Chapter 10.  He further responded that the commitments made by the Parties regarding non-
discriminatory quantitative restrictions with respect  to local presence went far beyond those under the 
GATS, where market access commitments were undert aken only in the sectors specified in Members’ 
Schedules.  As the Parties had decided to adopt a “negative list” approach in the services Chapter 
including local presence, they were committe d not to adopt non-discriminatory quantitative 
restrictions except those for which they ha d made reservations in Annexes 6 and 7. 
15. The representative of the United States  referred to its written question no.15 and noted that 
Japan had suggested in its response that paragr aph 59.B.2 of the Introduction to the Provisional 
Central Product Classification (CPC) "admits that certain services may not be classified under the 
categories specified in the CPC."  Paragraph 59. B. of the CPC addressed the situation in which 
particular services might appear to be classifiable under two or more CPC categories.  The paragraph 
prescribed rules for determining the most appropriate classification for a particular service and did not 
suggest that there were services, existing or new, th at might not be classified under the CPC.  On the 
contrary, it recognized that not all services woul d be explicitly described and provided guidance on 
how to determine which category provided the best  fit.  Paragraph 59 did not detract from, or 
contradict, the essential principle expressed in the pr eface in paragraph 21 of the CPC that it was a  WT/REG234/M/1 
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  system of categories covering goods and services that was exhaustive and complete.  Paragraph 
59.B.2 reinforced this principle by providing for a method of classification for every possible service. 
16. Referring to written question no.16, th e representative of the United States  said Japan had 
suggested in its response that its broad reservations  for regulations of services which had not been 
technically feasible at the time of the entry of th e Agreement were necessary to "reserve the right to 
impose appropriate measures in respect of new servic es ".  He asked whether Japan could explain in 
the absence of the reservations in the Annexes how the obligations under the Agreement would 
interfere with its ability to "impose appropriate measures".  Japan’s Annex 7 reservations for "new 
services" applied only to its obliga tions on national and MFN treatment, and local presence.  He asked 
if Japan could explain why it envisaged having to  impose regulations on new services in a manner that 
discriminated against or among foreign suppliers.  The representative of Japan  responded that there 
might be a case where new services which could not have  been foreseen at the time of the entry into 
force of the CPC and later the Agreement emerge d as a consequence of technological advances.  
Japan had wished to reserve the right to impose appropriate measures in respect of new and unknown 
services in order that such measures would not be  construed as contravening the obligations under the 
Agreement. 
17. The Chairman  noted that the consideration of the go ods and services aspects of the Strategic 
Economic Partnership Agreement between Japan a nd Chile had allowed the Committee to clarify a 
number of questions and oral discussion of the Ag reement could be concluded in accordance with 
paragraph 11 of the Transparency Mechanism.  Given the late distribution of the questions and replied 
document he proposed to extend the period given to delegations for the submission of follow up 
questions by one week.  If any delegations wished to ask follow-up questions they were invited to 
forward submissions in writing to the Secretaria t by 11December 2008 and Parties were asked to 
submit replies in writing by no later than 24 Decemb er  2008.  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 langua ges, and would be made available on the WTO 
website. 
18. The Committee took note  of the comments made. 
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