Agreement

establishing an association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part

THE KINGDOM OF BELGIUM,

THE KINGDOM OF DENMARK,

THE FEDERAL REPUBLIC OF GERMANY,

THE HELLENIC REPUBLIC,

THE KINGDOM OF SPAIN,

THE FRENCH REPUBLIC,

IRELAND,

THE ITALIAN REPUBLIC,

THE GRAND DUCHY OF LUXEMBOURG,

THE KINGDOM OF THE NETHERLANDS,

THE REPUBLIC OF AUSTRIA,

THE PORTUGUESE REPUBLIC,

THE REPUBLIC OF FINLAND,

THE KINGDOM OF SWEDEN,

THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,

Contracting Parties to the Treaty establishing the European Community and the Treaty on European Union, hereinafter referred to as the "Member States", and

THE EUROPEAN COMMUNITY, hereinafter referred to as "the Community",

of the one part, and

THE REPUBLIC OF CHILE, hereinafter referred to as "Chile",

of the other part,

CONSIDERING the traditional links between the Parties and with particular reference to:

- the common cultural heritage and the close historical, political and economic ties which unite them;

- their full commitment to the respect for democratic principles and fundamental human rights as set out in the United Nations Universal Declaration of Human Rights;

- their attachment to the principles of the rule of law and of good governance;

- the need to promote economic and social progress for their peoples, taking into account the principle of sustainable development and environmental protection requirements;

- the desirability of enlarging the framework of relations between the European Union and the Latin American regional integration with a view to contributing to a strategic association between the two regions as foreseen in the Declaration adopted at the Summit of Heads of State and Government of Latin America and the Caribbean and the European Union in Rio de Janeiro on 28 June 1999;

- the importance of strengthening the regular political dialogue on bilateral and international issues of mutual interest, as already established in the Joint Declaration which is part of the Framework Cooperation Agreement between the Parties of 21 June 1996, hereinafter referred to as the "Framework Cooperation Agreement";

- the importance that the Parties attach to:

- coordinating their positions and undertaking joint initiatives in the appropriate international fora;

- the principles and values set out in the Final Declaration of the World Summit for Social Development held in Copenhagen in March 1995;

- the principles and rules which govern international trade, in particular those contained in the Agreement establishing the World Trade Organisation (the "WTO") and to the need to apply them in a transparent and non-discriminatory manner;

- the fight against all forms of terrorism and the commitment to establish effective international instruments to ensure its eradication;

- the desirability of a cultural dialogue in order to achieve a better mutual understanding between the Parties, and to foster the existing traditional, cultural and natural links between the citizens of both Parties;

- the importance of the Cooperation Agreement between the European Community and Chile of 20 December 1990 and of the Framework Cooperation Agreement in sustaining and fostering the implementation of these processes and principles,

THE PARTIES HAVE DECIDED TO CONCLUDE THIS AGREEMENT:

PART I

GENERAL AND INSTITUTIONAL PROVISIONS

TITLE I

NATURE AND SCOPE OF THE AGREEMENT

Article 1

Principles

1. Respect for democratic principles and fundamental human rights as laid down in the United Nations Universal Declaration of Human Rights and for the principle of the rule of law underpins the internal and international policies of the Parties and constitutes an essential element of this Agreement.

2. The promotion of sustainable economic and social development and the equitable distribution of the benefits of the Association are guiding principles for the implementation of this Agreement.

3. The Parties reaffirm their attachment to the principle of good governance.

Article 2

Objectives and scope

1. This Agreement establishes a Political and Economic Association between the Parties, based on reciprocity, common interest and on the deepening of the relationship in all areas of application.

2. The Association is a process that will lead to a growing relationship and cooperation between the Parties structured around the bodies created in this Agreement.

3. This Agreement covers in particular the political, commercial, economic and financial, scientific, technological, social, cultural and cooperation fields. It may be extended to other areas to be agreed upon by the Parties.

4. In accordance with the objectives defined above, this Agreement provides for the following:

(a) the enhancement of political dialogue on bilateral and international matters of mutual interest, which will be conducted through meetings at different levels;

(b) the strengthening of cooperation in the political, commercial, economic and financial, scientific, technological, social, cultural and cooperation fields, as well as other areas of mutual interest;

(c) the upgrading of the participation of each Party in the framework programmes, specific programmes and other activities of the other Party, insofar as permitted by each Party's internal procedures governing access to the programmes and activities concerned, in accordance with Part III; and

(d) the expansion and diversification of the Parties' bilateral trade relation in conformity with WTO provisions and with the specific objectives and provisions set out in Part IV.

TITLE II

INSTITUTIONAL FRAMEWORK

Article 3

Association Council

1. An Association Council is hereby established, which shall supervise the implementation of this Agreement. The Association Council shall meet at ministerial level at regular intervals, not exceeding a period of two years, and extraordinarily whenever circumstances so require, if the Parties so agree.

2. The Association Council shall examine any major issue arising within the framework of this Agreement, as well as any other bilateral, multilateral or international question of common interest.

3. The Association Council shall also examine proposals and recommendations from the Parties for the improvement of this Agreement.

Article 4

Composition and rules of procedures

1. The Association Council shall be composed, on the one hand, of the President of the Council of the European Union, assisted by the Secretary General/High Representative, the incoming Presidency, other Members of the Council of the European Union or their representatives and Members of the European Commission, and, on the other hand, of the Minister of Foreign Affairs of Chile.

2. The Association Council shall establish its own rules of procedure.

3. Members of the Association Council may arrange to be represented, in accordance with the conditions laid down in its rules of procedure.

4. The Association Council shall be chaired in turn by a Member of the Council of the European Union and by the Minister of Foreign Affairs of Chile, in accordance with the provisions laid down in its rules of procedure.

Article 5

Decision-making powers

1. In order to attain the objectives of this Agreement, the Association Council shall have the power to take decisions in the cases provided for in this Agreement.

2. The decisions taken shall be binding on the Parties, which shall take all the measures necessary to implement them in accordance with each Party's internal rules.

3. The Association Council may also make appropriate recommendations.

4. The Association Council shall adopt decisions and recommendations by mutual agreement between the Parties.

Article 6

Association Committee

1. The Association Council shall be assisted in the performance of its duties by an Association Committee composed of representatives of the Members of the Council of the European Union and of the Commission of the European Communities, on the one hand, and representatives of the Government of Chile, on the other, normally at senior officials level.

2. The Association Committee shall be responsible for the general implementation of this Agreement.

3. The Association Council shall establish the rules of procedure of the Association Committee.

4. The Association Committee shall have the power to take decisions in the cases provided for in this Agreement or where such power has been delegated to it by the Association Council. In this event the Association Committee shall take its decisions in accordance with the conditions laid down in Article 5.

5. The Association Committee shall generally meet once a year for an overall review of the implementation of this Agreement, on a date and with an agenda agreed in advance by the Parties, in Brussels one year and in Chile the next. Special meetings may be convened, by mutual agreement, at the request of either of the Parties. The Association Committee shall be chaired alternately by a representative of each of the Parties.

Article 7

Special Committees

1. The Association Council shall be assisted in the performance of its duties by the Special Committees established in this Agreement.

2. The Association Council may decide to set up any Special Committee.

3. The Association Council shall adopt rules of procedure which determine the composition and duties of such committees and how they shall function, insofar as not provided for by this Agreement.

Article 8

Political Dialogue

The political dialogue between the Parties shall be conducted within the framework provided for in Part II.

Article 9

Association Parliamentary Committee

1. An Association Parliamentary Committee is hereby established. It shall be a forum for members of the European Parliament and the Chilean National Congress (Congreso Nacional de Chile) to meet and exchange views. It shall meet at intervals which it shall itself determine.

2. The Association Parliamentary Committee shall consist of members of the European Parliament, on the one hand, and of members of the Chilean National Congress (Congreso Nacional de Chile), on the other.

3. The Association Parliamentary Committee shall establish its rules of procedure.

4. The Association Parliamentary Committee shall be chaired in turn by a representative of the European Parliament and a representative of the Chilean National Congress (Congreso Nacional de Chile), in accordance with the provisions to be laid down in its rules of procedure.

5. The Association Parliamentary Committee may request of the Association Council relevant information regarding the implementation of this Agreement, and the Association Council shall supply the Committee with the requested information.

6. The Association Parliamentary Committee shall be informed of the decisions and recommendations of the Association Council.

7. The Association Parliamentary Committee may make recommendations to the Association Council.

Article 10

Joint Consultative Committee

1. A Joint Consultative Committee is hereby established with the task of assisting the Association Council to promote dialogue and cooperation between the various economic and social organisations of civil society in the European Union and those in Chile. Such dialogue and cooperation shall encompass all economic and social aspects of the relations between the Community and Chile, as they arise in the context of implementation of this Agreement. The Committee may express its view on questions arising in these areas.

2. The Joint Consultative Committee shall be composed of an equal number of members of the Economic and Social Committee of the European Union, on the one hand, and of members of the corresponding institution dealing with economic and social matters in the Republic of Chile, on the other.

3. The Joint Consultative Committee shall carry out its activities on the basis of consultation by the Association Council or, for the purposes of promoting the dialogue between various economic and social representatives, on its own initiative.

4. The Joint Consultative Committee shall adopt its rules of procedure.

Article 11

Civil Society

The Parties will also promote regular meetings of representatives of the European Union's and the Chilean civil societies, including the academic community, social and economic partners and non-governmental organisations in order to keep them informed of the implementation of this Agreement and gather their suggestions for its improvement.

PART II

POLITICAL DIALOGUE

Article 12

Objectives

1. The Parties agree to reinforce their regular dialogue on bilateral and international matters of mutual interest. They aim at strengthening and deepening this political dialogue with a view to consolidating the Association established by this Agreement.

2. The main objective of the political dialogue between the Parties is the promotion, dissemination, further development and common defence of democratic values, such as the respect for human rights, the freedom of the individual and the principles of the rule of law as the foundation of a democratic society.

3. To this end, the Parties shall discuss and exchange information on joint initiatives concerning any issue of mutual interest and any other international issue with a view to pursuing common goals, in particular, security, stability, democracy and regional development.

Article 13

Mechanisms

1. The Parties agree that their political dialogue shall take the form of:

(a) regular meetings between Heads of State and Government;

(b) periodic meetings between Foreign Ministers;

(c) meetings between other Ministers to discuss matters of common interest in cases in which the Parties consider that such meetings will result in closer relations;

(d) annual meetings between senior officials of both Parties.

2. The Parties shall decide on the procedures to be used for the abovementioned meetings.

3. The periodic meetings of Foreign Ministers referred to under paragraph 1(b) shall take place either within the Association Council established by Article 3, or on other agreed occasions of an equivalent level.

4. The Parties shall also make maximum use of diplomatic channels.

Article 14

Cooperation in the field of foreign and security policy

The Parties shall, as far as possible, coordinate their positions and undertake joint initiatives in the appropriate international fora, and cooperate in the field of foreign and security policy.

Article 15

Cooperation against terrorism

The Parties agree to cooperate in the fight against terrorism in accordance with international conventions and with their respective laws and regulations. They shall do so in particular:

(a) in the framework of the full implementation of Resolution 1373 of the United Nations Security Council and other relevant United Nations Resolutions, international conventions and instruments;

(b) by exchange of information on terrorist groups and their support networks in accordance with international and domestic law;

(c) by exchange of views on means and methods used to counter terrorism, including in technical fields and training, and by exchange of experiences in respect of terrorism prevention.

PART III

COOPERATION

Article 16

General objectives

1. The Parties shall establish close cooperation aimed inter alia at:

(a) strengthening the institutional capacity to underpin democracy, the rule of law, and respect for human rights and fundamental freedoms;

(b) promoting social development, which should go hand in hand with economic development and the protection of the environment. The Parties shall give particular priority to respect for basic social rights;

(c) stimulating productive synergies, creating new opportunities for trade and investment and promoting competitiveness and innovation;

(d) increasing the level of and deepening cooperation actions, while taking into account the Association relation between the Parties.

2. The Parties re-affirm the importance of economic, financial and technical cooperation, as a means of contributing towards implementing the objectives and principles derived from this Agreement.

TITLE I

ECONOMIC COOPERATION

Article 17

Industrial cooperation

1. Industrial cooperation shall support and promote industrial policy measures to develop and consolidate the Parties' efforts and establish a dynamic, integrated and decentralised approach to managing industrial cooperation, so as to create a favourable environment to serve their mutual interests.

2. The central aims shall be:

(a) to boost contacts between the Parties' economic operators, with the aim of identifying sectors of mutual interest, especially in the area of industrial cooperation, transfers of technology, trade and investment;

(b) to strengthen and promote dialogue and exchanges of experience between networks of European and Chilean economic operators;

(c) to promote industrial cooperation projects, including projects deriving from the process of privatisation and/or opening-up of the Chilean economy; these could cover the establishment of forms of infrastructure stimulated by European investment through industrial cooperation between businesses; and

(d) to strengthen innovation, diversification, modernisation, development and product quality in businesses.

Article 18

Cooperation on standards, technical regulations and conformity assessment procedures

1. Cooperation on standards, technical regulations and conformity assessment is a key objective in order to avoid and reduce technical barriers to trade and to ensure the satisfactory functioning of trade liberalisation as provided for in Part IV, Title II.

2. Cooperation between the Parties shall seek to promote efforts in:

(a) regulatory cooperation;

(b) compatibility of technical regulations on the basis of international and European standards; and

(c) technical assistance to create a network of conformity assessment bodies on a non-discriminatory basis.

3. In practice, cooperation shall:

(a) encourage any measures aimed at bridging the gaps between the Parties in the areas of conformity assessment and standardisation;

(b) provide organisational support between the Parties to foster the establishment of regional networks and bodies, and increase coordination of policies to promote a common approach to the use of international and regional standards and similar technical regulations and conformity assessment procedures; and

(c) encourage any measure aimed at improving convergence and compatibility between the respective system of the Parties in the abovementioned areas, including transparency, good regulatory practices and the promotion of quality standards for products and business practices.

Article 19

Cooperation on small and medium-sized enterprises

1. The Parties shall promote a favourable environment for the development of small and medium-sized enterprises (SMEs).

2. Cooperation shall consist, amongst other actions, of:

(a) technical assistance;

(b) conferences, seminars, prospecting for industrial and technical opportunities, participation in round tables and general and sectoral fairs;

(c) promoting contacts between economic operators, encouraging joint investment and establishing joint ventures and information networks through existing horizontal programs;

(d) facilitating access to finance, providing information and stimulating innovation.

Article 20

Cooperation on services

In compliance with the WTO General Agreement on Trade in Services (the "GATS") and within the bounds of their own fields of competence, the Parties shall support and intensify cooperation with each other, reflecting the growing importance of services in the development and growth of their economies. Cooperation aimed at promoting the development and diversification of productivity and competitiveness in Chile's service sector shall be stepped up. The Parties shall determine the sectors on which cooperation will concentrate, and they shall also focus on the means available for this purpose. Activities shall be directed particularly at SMEs and at facilitating their access to sources of capital and market technology. In that connection, special attention shall be devoted to promoting trade between the Parties and third countries.

Article 21

Promoting investment

1. The aim of cooperation shall be to help the Parties to promote, within the bounds of their own competence, an attractive and stable reciprocal investment climate.

2. Cooperation shall cover in particular the following:

(a) establishing mechanisms for providing information, identifying and disseminating investment rules and opportunities;

(b) developing a legal framework for the Parties that favours investment, by conclusion, where appropriate, of bilateral agreements between the Member States and Chile to promote and protect investment and avoid dual taxation;

(c) incorporating technical assistance activities for training initiatives between the Parties' government agencies dealing with the matter; and

(d) developing uniform and simplified administrative procedures.

Article 22

Cooperation on energy

1. The aim of the cooperation between the Parties shall be to consolidate economic relations in key sectors such as hydroelectricity, oil and gas, renewable energy, energy-saving technology and rural electrification.

2. Among the objectives of cooperation shall be:

(a) exchanges of information in all suitable forms, including developing databases shared by institutions of both Parties, and training and conferences;

(b) transfers of technology;

(c) diagnostic studies, comparative analyses and implementation of programmes by institutions from both Parties;

(d) involvement of public and private operators from both regions in technological development and common-infrastructure projects, including networks with other countries in the region;

(e) conclusion, where appropriate, of specific agreements in key fields of mutual interest; and

(f) assistance for Chilean institutions dealing with energy matters and the formulation of energy policy.

Article 23

Transport

1. Cooperation shall focus on restructuring and modernising Chile's transport systems, improving the movement of passengers and goods and providing better access to the urban, air, maritime, rail and road transport markets by refining the management of transport from the operational and administrative points of view and by promoting operating standards.

2. Cooperation shall cover matters including the following:

(a) exchanges of information on the Parties' policies, especially regarding urban transport and the interconnection and interoperability of multimodal transport networks and other issues of mutual interest;

(b) training programmes in economics, legislation and technical matters for economic operators and senior civil servants; and

(c) cooperation projects for transfers of European technology in the Global Navigation Satellite System and urban public transport centres.

Article 24

Cooperation on agriculture and rural sectors and sanitary and phytosanitary measures

1. Cooperation in this area is designed to support and stimulate agricultural policy measures in order to promote and consolidate the Parties' efforts towards a sustainable agriculture and agricultural and rural development.

2. The cooperation shall focus on capacity-building, infrastructure and technology transfer, addressing matters such as:

(a) specific projects aimed at supporting sanitary, phytosanitary, environmental and food quality measures, taking into account the legislation in force for both Parties, in compliance with WTO rules and other competent international organisations;

(b) diversification and restructuring of agricultural sectors;

(c) the mutual exchange of information, including that concerning the development of the Parties' agricultural policies;

(d) technical assistance for the improvement of productivity and the exchange of alternative crop technologies;

(e) scientific and technological experiments;

(f) measures aimed at enhancing the quality of agricultural products and supporting trade promotion activities;

(g) technical assistance for the strengthening of sanitary and phytosanitary control systems, with a view to supporting as far as possible the promotion of equivalence and mutual recognition agreements.

Article 25

Fisheries

1. In view of the importance of fisheries policy in the relations between them, the Parties undertake to develop closer economic and technical collaboration, possibly leading to bilateral and/or multilateral agreements covering fisheries on the high seas.

2. Furthermore, the Parties underline the importance they attach to fulfilment of the mutual commitments specified in the Arrangement that they signed on 25 January 2001.

Article 26

Customs cooperation

1. The Parties shall promote and facilitate cooperation between their respective customs services in order to ensure that the objectives set out in Article 79 are attained, particularly in order to guarantee the simplification of customs procedures; facilitating legitimate trade while retaining their control capabilities.

2. Without prejudice to the cooperation established by this Agreement, mutual assistance between the administrative authorities in customs matters shall be given in conformity with the Protocol of 13 June 2001 on Mutual Assistance in Customs Matters to the Framework Cooperation Agreement.

3. The cooperation shall give rise among other things, to:

(a) the provision of technical assistance, including where appropriate, the organisation of seminars and the placement of trainees;

(b) the development and sharing of best practices; and

(c) the improvement and simplification of customs matters relating to market access and rules of origin and the customs procedures related to them.

Article 27

Cooperation on statistics

1. The main aim shall be to approximate methods, so that the Parties are able to use each other's statistics on trade in goods and services and more generally on any area covered by this Agreement for which statistics can be collected.

2. Cooperation shall focus on:

(a) homologation of statistical methods to generate indicators that are comparable between the Parties;

(b) scientific and technological exchanges with statistical institutions of the Member States of the European Union, and with Eurostat;

(c) statistical research directed at developing common methods for collecting, analysing and interpreting data;

(d) organising seminars and workshops; and

(e) statistical training programmes, including other countries of the region.

Article 28

Cooperation on the environment

1. The aim of cooperation shall be to encourage conservation and improvement of the environment, prevention of contamination and degradation of natural resources and ecosystems, and rational use of the latter in the interests of sustainable development.

2. In this connection, the following are particularly significant:

(a) the relationship between poverty and the environment;

(b) the environmental impact of economic activities;

(c) environmental problems and land-use management;

(d) projects to reinforce Chile's environmental structures and policies;

(e) exchanges of information, technology and experience in areas including environmental standards and models, training and education;

(f) environmental education and training to involve citizens more; and

(g) technical assistance and joint regional research programmes.

Article 29

Consumer protection

Cooperation in this field shall seek to make the consumer-protection programmes in the Parties compatible, and shall as far as possible cover:

(a) making consumer legislation more compatible, so as to avoid trade barriers;

(b) establishing and developing mutual information systems for dangerous goods, and interconnecting those systems (early-warning systems);

(c) exchanges of information and experts, and encouraging cooperation between both Parties' consumer bodies; and

(d) organising projects for training and technical assistance.

Article 30

Data protection

1. The Parties agree to cooperate on the protection of personal data in order to improve the level of protection and avoid obstacles to trade that requires transfers of personal data.

2. Cooperation on personal data protection may include technical assistance in the form of exchange of information and experts and the establishment of joint programmes and projects.

Article 31

Macroeconomic dialogue

1. The Parties shall promote exchanges of information on their respective macroeconomic policies and trends, and exchanges of experience regarding coordination of macroeconomic policies in the context of regional integration.

2. With this aim in mind, the Parties shall seek more in-depth dialogue between their authorities on macroeconomic matters, in order to exchange ideas and opinions on issues such as:

(a) macroeconomic stabilisation;

(b) consolidation of public finances;

(c) tax policy;

(d) monetary policy;

(e) financial policy and regulation;

(f) financial integration and opening of the capital account;

(g) exchange-rate policy;

(h) international financial architecture and reform of the international monetary system; and

(i) coordination of macroeconomic policy.

3. The methods of implementing such cooperation shall include:

(a) meetings between macroeconomic authorities;

(b) organising seminars and conferences;

(c) providing training opportunities, where there is a demand; and

(d) producing studies on issues of mutual interest.

Article 32

Intellectual property rights

1. The Parties agree to cooperate, according to their own capabilities, in matters relating to the practice, promotion, dissemination, streamlining, management, harmonisation, protection and effective application of intellectual property rights, the prevention of abuses of such rights, the fight against counterfeiting and piracy, and the establishment and strengthening of national organisations for control and protection of such rights.

2. Technical cooperation may focus on one or more of the activities listed below:

(a) legislative advice: comments on draft laws relating to the general provisions and basic principles of the international conventions listed in Article 170, copyright and related rights, trademarks, geographical indications, traditional expressions or complementary quality mentions, industrial designs, patents, layout-designs (topographies) of integrated circuits, protection of undisclosed information, control of anti-competitive practices in contractual licences, enforcement and other matters relating to the protection of intellectual property rights;

(b) advice on the ways of organising administrative infrastructure, such as patent offices and collecting societies;

(c) training in the field of intellectual property rights administration and management techniques;

(d) specific training of judges and Customs and Police Officers, in order to make the enforcement of laws more effective; and

(e) awareness-building activities for the private sector and civil society.

Article 33

Public procurement

Cooperation between the Parties in this field shall seek to provide technical assistance on issues connected with public procurement, paying special attention to the municipal level.

Article 34

Cooperation on tourism

1. The Parties shall promote mutual cooperation in developing tourism.

2. Such cooperation shall focus on:

(a) projects intended to create and consolidate tourist products and services of mutual interest or which hold an attraction for other markets of mutual interest;

(b) consolidation of long-haul tourist flows;

(c) reinforcing tourism promotion channels;

(d) training and education in tourism;

(e) technical assistance and pilot projects for developing special-interest tourism;

(f) exchanges of information on tourism promotion, integral planning of tourist destinations and quality of services; and

(g) using promotion instruments to develop tourism at local level.

Article 35

Cooperation on mining

The Parties commit themselves to promoting cooperation on mining, mainly through agreements aimed at:

(a) fostering exchanges of information and experience, in the application of clean technologies in the mining productive processes;

(b) promoting joint efforts to develop scientific and technological initiatives in the field of mining.

TITLE II

SCIENCE, TECHNOLOGY AND INFORMATION SOCIETY

Article 36

Cooperation on science and technology

1. The aims of cooperation on science and technology, carried out in the mutual interest of both Parties and in compliance with their policies, particularly as regards the rules for use of intellectual property resulting from research, shall be:

(a) policy dialogue and exchanges of scientific and technological information and experience at regional level, particularly in respect of policies and programmes;

(b) promotion of lasting relations between the two Parties' scientific communities; and

(c) intensification of activities to promote linkage, innovation and technology transfer between European and Chilean partners.

2. Special emphasis shall be placed on human potential building as the real long-lasting basis of scientific and technological excellence and the creation of permanent links between both scientific and technological communities, at both national and regional levels.

3. The following forms of cooperation shall be encouraged:

(a) joint applied research projects in areas of common interest, with active participation by business undertakings where appropriate;

(b) exchanges of researchers to promote project preparation, high-level training and research;

(c) joint scientific meetings to foster exchanges of information and interaction and to identify areas for joint research;

(d) the promotion of activities linked to scientific and technological forward studies which contribute to the long term development of both Parties; and

(e) the development of links between the public and private sectors.

4. Furthermore, the evaluation of joint work and the dissemination of results shall be promoted.

5. Higher-education institutions, research centres and productive sectors, including SMEs, on both sides shall be involved in this cooperation in an appropriate manner.

6. The Parties shall promote their respective entities' participation in their respective scientific and technological programmes in pursuit of mutually beneficial scientific excellence and in accordance with their respective provisions governing the participation of legal entities from third countries.

Article 37

Information society, information technology and telecommunications

1. Information technology and communications are key sectors in a modern society and are of vital importance for economic and social development and the smooth transition to the information society.

2. Cooperation in this area shall aim in particular to promote:

(a) dialogue on the various issues of the information society, including promotion and monitoring of the emergence of the information society;

(b) cooperation on regulatory and policy aspects of telecommunications;

(c) exchange of information on standards, conformity assessment and type approval;

(d) dissemination of new information and communication technologies;

(e) joint research projects on information and communication technologies and pilot projects in the field of information society applications;

(f) promotion of exchange and training of specialists, in particular for young professionals; and

(g) exchange and dissemination of experiences from government initiatives which apply information technologies in their relationship with society.

TITLE III

CULTURE, EDUCATION AND AUDIO-VISUAL

Article 38

Education and training

1. The Parties shall significantly support, within their respective competencies, pre-schooling, basic, intermediate and higher education, vocational training and life-long learning. Within these fields, special attention shall be paid to access to education for vulnerable social groups, such as the disabled, ethnic minorities and the extremely poor.

2. Special attention shall be paid to decentralised programmes, which forge permanent links between specialised bodies of both Parties and encourage the pooling and exchange of experience and technical resources as well as the mobility of students.

Article 39

Cooperation in the audio-visual field

The Parties agree to promote the cooperation in this area, mainly through training programmes in the audio-visual sector and means of communication, including co-production, training, development and distribution activities.

Article 40

Exchange of information and cultural cooperation

1. In view of the Parties' very close cultural ties, cooperation in this sphere, including information and media contacts, should be enhanced.

2. The objective of this Article shall be to promote the exchange of information and cultural cooperation between the Parties, and account shall be taken of bilateral schemes with the Member States.

3. Special attention shall be paid to promoting joint activities in various fields, including the press, cinema and television, and to encouraging youth exchange schemes.

4. This cooperation could cover inter alia the following areas:

(a) mutual information programmes;

(b) translation of literary works;

(c) conservation and restoration of national heritage;

(d) training;

(e) cultural events;

(f) promotion of local culture;

(g) cultural management and production; and

(h) other areas.

TITLE IV

PUBLIC ADMINISTRATION AND INTERINSTITUTIONAL COOPERATION

Article 41

Public administration

1. Cooperation in this area shall aim at the modernisation and decentralisation of public administration and encompass overall organisational efficiency and the legislative and institutional framework, drawing lessons from both Parties' best practices.

2. Such cooperation may involve programmes of the following types:

(a) modernisation of the State and of public administration;

(b) decentralisation and the strengthening of regional and local government;

(c) strengthening of civil society and its incorporation into the process of defining public policies;

(d) job creation and vocational training programmes;

(e) social service management and administration projects;

(f) development, rural housing or land management projects;

(g) health and primary education programmes;

(h) support for civil society and grass-roots initiatives;

(i) any other programmes and projects which help to combat poverty by creating business and employment opportunities; and

(j) promotion of culture and its several manifestations and strengthening of cultural identities.

3. The means of cooperation in this area shall be:

(a) technical assistance to Chilean policy-making and executive bodies, including meetings between staff of the European institutions and their Chilean counterparts;

(b) regular exchanges of information taking whatever form is appropriate, including the use of computer networks; personal data protection shall be ensured in all areas where data are to be exchanged;

(c) transfers of know-how;

(d) preliminary studies and joint project implementation, involving comparable financial input; and

(e) training and organisational support.

Article 42

Interinstitutional cooperation

1. The purpose of interinstitutional cooperation between the Parties is to promote closer cooperation between the institutions concerned.

2. To that end, Part III of this Agreement shall seek to encourage regular meetings between these institutions; cooperation shall be as broad as possible and include:

(a) any measures promoting regular exchanges of information, including the joint development of computerised communication networks;

(b) advice and training; and

(c) transfers of know-how.

3. The Parties may, by common agreement, include other, additional fields of action.

TITLE V

SOCIAL COOPERATION

Article 43

Social dialogue

The Parties recognise that:

(a) the participation of the social partners will be promoted as regards living conditions and integration into society,

(b) particular account will be taken of the need to avoid discrimination in the treatment of nationals of one Party residing legally in the territory of the other Party.

Article 44

Social cooperation

1. The Parties recognise the importance of social development, which must go hand in hand with economic development. They shall give priority to the creation of employment and respect for fundamental social rights, notably by promoting the relevant conventions of the International Labour Organisation covering such topics as the freedom of association, the right to collective bargaining and non-discrimination, the abolition of forced and child labour and equal treatment between men and women.

2. Cooperation may cover any area of interest to the Parties.

3. Measures may be coordinated with those of the Member States and the relevant international organisations.

4. The Parties shall give priority to measures aimed at:

(a) promoting human development, the reduction of poverty and the fight against social exclusion, by generating innovative and reproducible projects involving vulnerable and marginalised social sectors. Special attention shall be paid to low-income families and disabled persons;

(b) promoting the role of women in the economic and social development process and promoting specific programmes for youth;

(c) developing and modernising labour relations, working conditions, social welfare and employment security;

(d) improving the formulation and management of social policies, including social housing, and improving access by beneficiaries;

(e) developing an efficient and equitable health system, based on solidarity principles;

(f) promoting vocational training and development of human resources;

(g) promoting projects and programmes which generate opportunities for the creation of employment within micro-, small and medium-sized enterprises;

(h) promoting programmes of land management with special attention to areas with higher social and environmental vulnerability;

(i) promoting initiatives contributing to social dialogue and the creation of consensus; and

(j) promoting respect for human rights, democracy and citizens' participation.

Article 45

Cooperation related to gender

1. Cooperation shall contribute to strengthening policies and programmes that improve, guarantee and extend the equitable participation of men and women in all sectors of political, economic, social and cultural life. Cooperation shall contribute to easing women's access to all necessary resources for the full exercise of their fundamental rights.

2. In particular, cooperation should promote the creation of an adequate framework to:

(a) ensure that gender and gender-related issues can be taken into account at every level and in all areas of cooperation including macroeconomic policy, strategy and development operations; and

(b) promote the adoption of positive measures in favour of women.

TITLE VI

OTHER COOPERATION AREAS

Article 46

Cooperation on illegal immigration

1. The Community and Chile agree to cooperate in order to prevent and control illegal immigration. To this end:

(a) Chile agrees to readmit any of its nationals illegally present on the territory of a Member State, upon request by the latter and without further formalities;

(b) and each Member State agrees to readmit any of its nationals, as defined for Community purposes, illegally present on the territory of Chile, upon request by the latter and without further formalities.

2. The Member States and Chile will also provide their nationals with appropriate identity documents for such purposes.

3. The Parties agree to conclude, upon request, an agreement between Chile and the Community regulating the specific readmission obligations of Chile and the Member States, including an obligation to readmit nationals of other countries and stateless persons.

4. Pending the conclusion of the agreement with the Community referred to in paragraph 3, Chile agrees to conclude, upon request by a Member State, bilateral agreements with individual Member States regulating the specific readmission obligations between Chile and the Member State concerned, including an obligation to readmit nationals of other countries and stateless persons.

5. The Association Council shall examine what other joint efforts can be made to prevent and control illegal immigration.

Article 47

Cooperation on drugs and combating organised crime

1. Within their respective competencies, the Parties undertake to coordinate and increase their efforts to prevent, and reduce the illicit production of, trade in and consumption of drugs and the laundering of profits from drug-trafficking, and to combat related organised crime through the intermediary of international organisations and bodies.

2. The Parties shall cooperate in this area to implement in particular:

(a) projects for the treatment, rehabilitation and family, social and labour reinsertion of drug addicts;

(b) joint training programmes relating to prevention of consumption and trafficking of narcotic drugs and psychotropic substances and related crimes;

(c) joint study and research programmes, using methodologies and indicators applied by the European Monitoring Centre for Drugs and Drug Addiction, the Inter-American Observatory of Drugs of the Organisation of American States and other international and national organisations;

(d) measures and cooperation actions aimed at reducing the supply of drugs and psychotropic substances, as part of the international conventions and treaties on the matter which have been signed and ratified by the Parties to this Agreement;

(e) information exchange on policies, programmes, actions and legislation linked to production, trafficking and consumption of narcotic drugs and psychotropic substances;

(f) exchange of relevant information and adoption of appropriate standards to combat money laundering comparable to those adopted by the European Union and the international bodies active in this field, such as the Financial Action Task Force on Money Laundering; and

(g) measures to prevent diversion of precursors and chemical substances essential to the illicit production of narcotic drugs and psychotropic substances, equivalent to those adopted by the European Community and competent international organisations and in accordance with the Agreement between the Republic of Chile and the European Community on the prevention of the diversion of precursors and chemical substances frequently used in the illicit manufacture of narcotic drugs or psychotropic substances of 24 November 1998.

TITLE VII

GENERAL PROVISIONS

Article 48

Participation of civil society in cooperation

The Parties recognise the complementary role and potential contribution of civil society (social interlocutors and Non-Governmental Organisations) in the cooperation process. To that end, subject to the legal and administrative provisions of each Party, civil society actors may:

(a) be informed of, and participate in, consultations on cooperation policies and strategies, including strategic priorities, particularly in the areas concerning or directly affecting them;

(b) receive financial resources, insofar as the internal rules of each Party allow it; and

(c) participate in the implementation of cooperation projects and programmes in the areas that concern them.

Article 49

Regional cooperation and regional integration

1. Both Parties should use all existing cooperation instruments to promote activities aimed at developing an active and reciprocal cooperation between the Parties and the Mercado Común del Sur (Mercosur) as a whole.

2. Such cooperation shall be an important element in the Community's support for the promotion of regional integration among the Southern Cone countries of Latin America.

3. Priority shall be given to operations aimed at:

(a) promoting trade and investment in the region;

(b) developing regional cooperation on the environment;

(c) encouraging development of the communications infrastructure required for the economic development of the region; and

(d) developing regional cooperation on fisheries matters.

4. The Parties shall also cooperate more closely on regional development and land-use planning.

5. To this end, they may:

(a) undertake joint action with regional and local authorities in the area of economic development; and

(b) set up mechanisms for the exchange of information and know-how.

Article 50

Triangular and bi-regional cooperation

1. The Parties recognise the value of international cooperation for the promotion of equitable and sustainable development processes and agree to give impetus to triangular cooperation programmes and programmes with third countries in areas of common interest.

2. This cooperation may also be applied to bi-regional cooperation in accordance with the priorities of Member States and other countries of Latin America and the Caribbean.

Article 51

Future developments clause

Within the Parties' respective competencies, no opportunity for cooperation should be ruled out in advance and the Parties could use the Association Committee to explore together the practical possibilities for cooperation in their mutual interest.

Article 52

Cooperation within the Association relationship

1. Cooperation between the Parties should contribute to achieving the general objectives of Part III by identifying and developing innovative cooperation programmes capable of providing added value to their new relationship as associated partners.

2. The participation of each Party as an associated partner in framework programmes, specific programmes and other activities of the other Party shall be promoted, in so far as it is permitted by each Party's internal rules governing access to the programmes and activities concerned.

3. The Association Council may make recommendations to that effect.

Article 53

Resources

1. With the aim of contributing to fulfilling the cooperation objectives established in this Agreement, the Parties commit themselves to providing, within the limits of their capacities and through their own channels, the appropriate resources, including financial resources.

2. The Parties shall take all appropriate measures to promote and facilitate the European Investment Bank's activities in Chile, in accordance with its own procedures and financing criteria and with their laws and regulations, and without prejudice to the powers of their competent authorities.

Article 54

Specific tasks of the Association Committee in cooperation matters

1. When the Association Committee performs any of the tasks conferred upon it in Part III, it shall be composed of representatives of the Community and Chile with responsibility for cooperation matters, normally at senior official level.

2. Notwithstanding the provisions of Article 6, the Association Committee shall have, in particular, the following functions:

(a) to assist the Association Council in the performance of its functions regarding cooperation related matters;

(b) to supervise the implementation of the cooperation framework agreed between the Parties;

(c) to make recommendations on the strategic cooperation between the Parties, which shall serve to set long-term objectives, the strategic priorities and specific fields for action, on the multiannual indicative programmes, which shall contain a description of sectoral priorities, specific objectives, expected results and indicative amounts, and annual action programmes; and

(d) to report regularly to the Association Council on the application and fulfilment of the objectives and matters of Part III.

PART IV

TRADE AND TRADE-RELATED MATTERS

TITLE I

GENERAL PROVISIONS

Article 55

Objectives

The objectives of this Part shall be as follows:

(a) the progressive and reciprocal liberalisation of trade in goods, in conformity with Article XXIV of General Agreement on Tariffs and Trade 1994 ("the GATT 1994");

(b) the facilitation of trade in goods through, inter alia, the agreed provisions regarding customs and related matters, standards, technical regulations and conformity assessment procedures, sanitary and phytosanitary measures and trade in wines and spirit drinks and aromatised drinks;

(c) the reciprocal liberalisation of trade in services, in conformity with Article V of General Agreement on Trade in Services ("the GATS");

(d) the improvement of the investment environment and, in particular, the conditions of establishment between the Parties, on the basis of the principle of non-discrimination;

(e) the liberalisation of current payments and capital movements, in conformity with the commitments undertaken in the framework of the international financial institutions and with due consideration for each Party's currency stability;

(f) the effective and reciprocal opening of the government procurement markets of the Parties;

(g) the adequate and effective protection of intellectual property rights, in accordance with the highest international standards;

(h) the establishment of an effective cooperation mechanism in the field of competition; and

(i) the establishment of an effective dispute settlement mechanism.

Article 56

Customs unions and free trade areas

1. Nothing in this Agreement shall preclude the maintenance or establishment of customs unions, free trade areas or other arrangements between either of the Parties and third countries, insofar as they do not alter the rights and obligations provided for in this Agreement.

2. At the request of a Party, consultations between them shall take place within the Association Committee concerning agreements establishing or adjusting customs unions or free trade areas and, where required, on other major issues related to the Parties' respective trade policies with third countries. In particular, in the event of accession, such consultation shall take place so as to ensure that account can be taken of the mutual interests of the Parties.

TITLE II

FREE MOVEMENT OF GOODS

Article 57

Objective

The Parties shall progressively and reciprocally liberalise trade in goods over a transitional period starting from the entry into force of this Agreement, in accordance with the provisions of this Agreement and in conformity with Article XXIV of the GATT 1994.

CHAPTER I

ELIMINATION OF CUSTOMS DUTIES

Section 1

Common provisions

Article 58

Scope

1. The provisions of this Chapter concerning the elimination of customs duties on imports shall apply to products originating in one Party and exported to the other Party. For the purposes of this Chapter, "originating" means qualifying under the rules of origin set out in Annex III.

2. The provisions of this Chapter concerning the elimination of customs duties on exports shall apply to all goods exported from one Party to the other Party.

Article 59

Customs duty

A customs duty includes any duty or charge of any kind imposed in connection with the importation or exportation of goods, including any form of surtax or surcharge in connection with such importation or exportation, but does not include any:

(a) internal taxes or other internal charges imposed consistently with Article 77;

(b) antidumping or countervailing duties applied consistently with Article 78;

(c) fees or other charges imposed consistently with Article 63.

Article 60

Elimination of customs duties

1. Customs duties on imports between the Parties shall be eliminated in accordance with the provisions of Articles 64 to 72.

2. Customs duties on exports between the Parties shall be eliminated as from the date of entry into force of this Agreement.

3. For each product, the basic customs duty to which the successive reductions are to be applied pursuant to Articles 64 to 72 shall be that specified in each Party's Tariff Elimination Schedule set out in Annexes I and II, respectively.

4. If a Party reduces its applied most favoured nation customs duty rate after the entry into force of this Agreement and before the end of the transitional period, the Tariff Elimination Schedule of that Party shall apply to the reduced rates.

5. Each Party declares its readiness to reduce its customs duties more rapidly than is provided for in Articles 64 to 72, or otherwise improve the conditions of access under such Articles, if its general economic situation and the situation of the economic sector concerned so permit. A decision by the Association Council to accelerate the elimination of a customs duty or otherwise improve conditions of access shall supersede the terms established in Articles 64 to 72 for the product concerned.

Article 61

Standstill

1. No new customs duties shall be introduced nor shall those already applied be increased in trade between the Parties as from the date of entry into force of this Agreement.

2. Nothwithstanding paragraph 1, Chile may maintain its price band system as established in Article 12 of Law 18,525 or succeeding system for the products covered by that law, provided it is applied consistently with Chile's rights and obligations under the WTO Agreement and in a manner that does not afford more favourable treatment to imports of any third country, including countries with which Chile has concluded or will conclude in the future an agreement notified under Article XXIV of the GATT 1994.

Article 62

Classification of goods

The classification of goods in trade between the Parties shall be that set out in each Party's respective tariff nomenclature in conformity with the Harmonised Commodity Description and Coding System ("HS").

Article 63

Fees and other charges

Fees and other charges referred to in Article 59 shall be limited in amount to the approximate cost of services rendered and shall not represent an indirect protection for domestic products or a taxation of imports or exports for fiscal purposes. They shall be based on specific rates that correspond to the real value of the service rendered.

Section 2

Elimination of customs duties

Subsection 2.1

Industrial products

Article 64

Scope

This sub-section applies to products of HS chapters 25 to 97 not covered by agricultural and processed agricultural products as defined in Article 70.

Article 65

Customs duties on industrial imports originating in Chile

Customs duties on imports into the Community of industrial products originating in Chile listed in Annex I (Tariff Elimination Schedule of the Community) under category "Year 0" and "Year 3" shall be eliminated in accordance with the following timetable, so that these customs duties are completely eliminated by the entry into force of the Agreement and on 1 January 2006, respectively:

Percentages of annual tariff reduction

>TABLE>

Article 66

Customs duties on industrial imports originating in the Community

Customs duties on imports into Chile of products originating in the Community listed in Annex II (Tariff Elimination Schedule of Chile) under category "Year 0", "Year 5" and "Year 7" shall be eliminated in accordance with the following timetable, so that these customs duties are completely eliminated by the entry into force of this Agreement, 1 January 2008 and 1 January 2010, respectively:

Percentages of annual tariff reduction

>TABLE>

Subsection 2.2

Fish and fisheries products

Article 67

Scope

This sub-section applies to fish and fisheries products as covered by HS chapter 3, HS headings 1604 and 1605, HS subheadings 0511 91 and 2301 20, and HS heading ex 1902 20 (1).

Article 68

Customs duties on fish and fisheries imports originating in Chile

1. Customs duties on imports into the Community of fish and fisheries products originating in Chile listed in Annex I under category "Year 0", "Year 4", "Year 7" and "Year 10" shall be eliminated in accordance with the following timetable, so that these customs duties are completely eliminated by the entry into force of this Agreement, 1 January 2007, 1 January 2010 and 1 January 2013, respectively:

Percentages of annual tariff reduction

>TABLE>

2. Tariff quotas on imports into the Community of certain fish and fisheries products originating in Chile listed in Annex I under category "TQ" shall be applied as from the entry into force of this Agreement, in accordance with the conditions mentioned in that Annex. These quotas shall be managed on a first-come first-served basis.

Article 69

Customs duties on fish and fisheries imports originating in the Community

1. Customs duties on imports into Chile of fish and fisheries products originating in the Community listed in Annex II under category "Year 0" shall be eliminated at the entry into force of this Agreement.

2. Tariff quotas on imports into Chile of certain fish and fisheries products originating in the Community listed in Annex II under category "TQ" shall be applied as from entry into force of this Agreement, in accordance with the conditions mentioned in that Annex. These quotas shall be managed on a first-come first-served basis.

Subsection 2.3

Agricultural and processed agricultural products

Article 70

Scope

This sub-section applies to agricultural and processed agricultural products as covered by Annex I of the WTO Agreement on Agriculture.

Article 71

Customs duties on agricultural and processed agricultural imports originating in Chile

1. Customs duties on imports into the Community of agricultural and processed agricultural products originating in Chile listed in Annex I under category "Year 0", "Year 4", "Year 7" and "Year 10" shall be eliminated in accordance with the following timetable, so that these customs duties are completely eliminated by the entry into force of this Agreement, 1 January 2007, 1 January 2010 and 1 January 2013, respectively:

Percentages of annual tariff reduction

>TABLE>

2. For the agricultural products originating in Chile covered by chapters 7 and 8 and headings 20.09 and 22.04.30 of the Combined Nomenclature and listed in Annex I under category "EP", for which the Common Customs Tariff provides for the application of ad valorem customs duties and a specific customs duty, the tariff elimination shall only apply to the ad valorem customs duty.

3. For agricultural and processed agricultural products originating in Chile listed in Annex I under category "SP", for which the Common Customs Tariff provides for the application of ad valorem customs duties and a specific customs duty, the tariff elimination shall only apply to the ad valorem customs duty.

4. The Community shall allow imports of processed agricultural products originating in Chile listed in Annex I under category "R" to enter the Community with a customs duty of 50 % of the basic customs duty as from the entry into force of this Agreement.

5. Tariff quotas on imports into the Community of certain agricultural and processed agricultural products originating in Chile listed in Annex I under category "TQ" shall be applied as from the entry into force of this Agreement, in accordance with the conditions mentioned in that Annex. These quotas shall be managed on a first-come first-served basis, or, as applicable in the Community, on the basis of a system of import and export licences.

6. Tariff concessions shall not apply to imports into the Community of products originating in Chile listed in Annex I under category "PN" as these products are covered by denominations protected in the Community.

Article 72

Customs duties on agricultural and processed agricultural imports originating in the Community

1. Customs duties on imports into Chile of agricultural and processed agricultural products originating in the Community listed in Annex II under category "Year 0", "Year 5" and "Year 10" shall be eliminated in accordance with the following timetable, so that these customs duties are completely eliminated by the entry into force of this Agreement, 1 January 2008 and 1 January 2013, respectively:

Percentages of annual tariff reduction

>TABLE>

2. Tariff quotas on imports into Chile of certain agricultural products originating in the Community listed in Annex II under category "TQ" shall be applied as from the entry into force of this Agreement, in accordance with the conditions mentioned in that Annex. These quotas shall be managed on a first-come first-served basis.

Article 73

Emergency clause for agricultural and processed agricultural products

1. Notwithstanding Article 92 of this Agreement and Article 5 of the WTO Agreement on Agriculture, if, given the particular sensitivity of the agricultural markets, a product originating in a Party is being imported into the other Party in such increased quantities and under such conditions as to cause or threaten to cause serious injury or disturbance in the markets of like or directly competitive products of the other Party, that Party may take appropriate measures under the conditions and in accordance with the procedures laid down in this Article.

2. If the conditions in paragraph 1 are met, the importing Party may:

(a) suspend the further reduction of any customs duties on the products concerned provided for under this Title; or

(b) increase the customs duty on the product to a level which does not exceed the lesser of:

(i) the most-favoured-nation customs duty; or

(ii) the basic customs duty referred to in Article 60(3).

3. Before applying the measure as defined under paragraph 2, the Party concerned shall refer the matter to the Association Committee for a thorough examination of the situation, with a view to seeking a mutually acceptable solution. If the other Party so requests, the Parties shall hold consultations within the Association Committee. If no solution is found within 30 days of the request for such consultation, safeguard measures may be applied.

4. Where exceptional circumstances require immediate action, the importing Party may take the measures provided for in paragraph 2 on a transitional basis without complying with the requirements of paragraph 3 for a maximum period of 120 days. Such measures shall not exceed what is strictly necessary to limit or redress the injury or disturbance. The importing Party shall inform the other Party inmediately.

5. The measures taken under this Article shall not exceed what is necessary to remedy the difficulties which have arisen. The Party imposing the measure shall preserve the overall level of preferences granted for the agricultural sector. To achieve this objective, the Parties may agree on compensation for the adverse effects of the measure on their trade, including the period during which a transitional measure applied in accordance with paragraph 4 is in place.

To this effect, the Parties shall hold consultations to reach a mutually agreed solution. If no agreement is reached within 30 days, the affected exporting Party may, after notification to the Association Council, suspend the application of substantially equivalent concessions under this Title.

6. For the purposes of this Article:

(a) "serious injury" shall be understood to mean a significant overall impairment in the position of the producers as a whole of the like or directly competitive products operating in a Party;

(b) "threat of serious injury" shall be understood to mean serious injury that is clearly inminent based on facts and not merely on allegations, conjecture or remote possibility.

Article 74

Evolution clause

During the third year after the entry into force of this Agreement, the Parties shall assess the situation, taking account of the pattern of trade in agricultural products and processed agricultural products between the Parties, the particular sensitivities of such products and the development of agricultural policy on both sides. The Parties shall examine, in the Association Committee, product by product and on an orderly and appropriate reciprocal basis, the opportunities for granting each other further concessions with a view to improving liberalisation of trade in agricultural and processed agricultural products.

CHAPTER II

NON TARIFF MEASURES

Section 1

Common provisions

Article 75

Scope

The provisions of this Chapter shall apply to trade in goods between the Parties.

Article 76

Prohibition of quantitative restrictions

All import or export prohibitions or restrictions in trade between the Parties, other than customs duties and taxes, whether made effective through quotas, import or export licenses or other measures, shall be eliminated upon the entry into force of this Agreement. No new such measures shall be introduced.

Article 77

National treatment on internal taxation and regulation(2)

1. Imported products of the territory of the other Party shall not be subject, either directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, the Parties shall not otherwise apply internal taxes or other internal charges so as to afford protection to domestic production(3).

2. Imported products of the territory of the other Party shall be accorded treatment no less favourable than that accorded to like domestic products in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.

3. Neither Party shall establish or maintain any internal quantitative regulation relating to the mixture, processing or use of products in specified amounts or proportions which requires, directly or indirectly, that any specified amount or proportion of any product which is the subject of the regulation must be supplied from domestic sources. Moreover, neither Party shall otherwise apply internal quantitative regulations so as to afford protection to domestic production(4).

4. The provisions of this Article shall not prevent the payment of subsidies exclusively to domestic producers, including payments to domestic producers derived from the proceeds of internal taxes or charges applied consistently with the provisions of this Article and subsidies effected through governmental purchases of domestic products.

5. The provisions of this Article shall not apply to laws, regulations, procedures or practices governing public procurement, which shall be subject exclusively to the provisions of Title IV of this Part.

Section 2

Antidumping and countervailing measures

Article 78

Antidumping and countervailing measures

If a Party determines that dumping and/or countervailable subsidisation is taking place in its trade with the other Party, it may take appropriate measures in accordance with the WTO Agreement on Implementation of Article VI of the GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures.

Section 3

Customs and related matters

Article 79

Customs and related trade matters

1. In order to ensure compliance with the provisions of this Title as they relate to customs and trade-related matters, and to facilitate trade without prejudice to the need for effective control, the Parties undertake to:

(a) cooperate and exchange information concerning customs legislation and procedures;

(b) apply customs rules and procedures agreed by the Parties at a bilateral or multilateral level;

(c) simplify requirements and formalities in respect of the release and clearance of goods, including, to the extent possible, collaboration on the development of procedures enabling the submission of import or export data to a single agency; and to coordinate between customs and other control agencies so as to enable official controls upon import or export to be carried out, as far as possible, by a single agency;

(d) cooperate on all issues concerning rules of origin and the customs procedures related to them; and

(e) cooperate on all customs valuation matters, in accordance with the Agreement on Implementation of Article VII of the GATT 1994, particularly with the aim of reaching common views regarding the application of valuation criteria, the use of indicative or reference indices, operational aspects and working methods.

2. In order to improve working methods and to ensure transparency and efficiency of customs operations, the Parties shall:

(a) ensure that the highest standards of integrity be maintained, through application of measures reflecting the principles of the relevant international conventions and instruments in this field, as provided for in each Party's legislation;

(b) take further steps wherever possible, towards the reduction, simplification and standardisation of data in the documentation required by customs, including the use of a single customs entry document or data message and a single customs exit document or data message, based on international standards and relying as far as possible on commercially available information;

(c) collaborate wherever possible on legislative and operational initiatives relating to import, export and customs procedures, and, to the extent possible, towards improving the service to the business community;

(d) cooperate where appropriate on technical assistance, including the organisation of seminars and placements;

(e) cooperate on the computerisation of customs procedures and collaborate, where possible, towards the establishment of common standards;

(f) apply the international rules and standards in the field of customs, including wherever possible, the substantive elements of the revised Kyoto Convention on the Simplification and Harmonisation of Customs Procedures;

(g) as far as possible, establish common positions in international organisations in the field of customs such as the WTO, the World Customs Organisation (WCO), the United Nations Organization (UN) and the United Nations Conference on Trade and Development (UNCTAD);

(h) provide effective and prompt procedures enabling the right of appeal, against customs and other agency administrative actions, rulings and decisions affecting import or export of goods, in conformity with Article X of the GATT 1994; and

(i) collaborate wherever possible towards facilitating transhipment operations and transit movements through their respective territories.

3. The Parties agree that their respective trade and customs provisions and procedures shall be based upon:

(a) legislation that avoids unnecessary burdens on economic operators, that will not hinder the fight against fraud and provides further facilitation for operators that meet high levels of compliance;

(b) the protection of legitimate trade through the effective enforcement of legislative requirements;

(c) the application of modern customs techniques, including risk assessment, simplified procedures for entry and release of goods, post release controls, and company audit methods, whilst respecting the confidential nature of commercial data in accordance with the provisions applicable in each Party. Each Party shall take the necessary measures to ensure the effectiveness of the risk assessment methods;

(d) procedures that are transparent, efficient and where appropriate simplified, in order to reduce costs and increase predictability for economic operators;

(e) the development of information technology-based systems, for both export and import operations, between economic operators and customs administrations, and between customs and other agencies. Such systems may also provide for the payment of duties, taxes and other fees by electronic transfer;

(f) rules and procedures that provide for advance binding rulings on tariff classification and rules of origin. A ruling may be modified or revoked at any time but only after notification to the affected operator and without retroactive effect unless the ruling has been made on the basis of incorrect or incomplete information being provided;

(g) provisions that in principle facilitate the importation of goods through the use of simplified or pre-arrival customs procedures and processes; and

(h) import provisions that do not include any requirements for pre-shipment inspections as defined by the WTO Agreement on Pre-shipment Inspection;

(i) rules that ensure that any penalties imposed for minor breaches of customs regulations or procedural requirements are proportionate and, in their application, do not give rise to undue delays in customs clearance, in accordance with Article VIII of the GATT 1994.

4. The Parties agree:

(a) on the need for timely consultation with economic operators on substantial matters concerning legislative proposals and general procedures related to customs. To that end, appropriate consultation mechanisms between administrations and the operators shall be established by each Party;

(b) to publish, as far as possible through electronic means, and publicise new legislation and general procedures related to customs, as well as any modifications, no later than the entry into force of such legislation and procedures. They shall also make publicly available general information of interest to economic operators, such as the hours of operation for customs offices, including those at ports and border crossing points, and the points of contact for information enquiries;

(c) to foster cooperation between operators and customs administrations via the use of objective and publicly accessible Memoranda of Understanding, based on those promulgated by the WCO; and

(d) to ensure that their respective customs and related requirements and procedures continue to meet the needs of the trading community and follow best practices.

5. Notwithstanding paragraphs 1 to 4, the administrations of both Parties shall provide mutual administrative assistance in customs matters in accordance with the provisions of the Protocol of 13 June 2001 on Mutual Administrative Assistance in Customs Matters to the Framework Cooperation Agreement.

Article 80

Customs valuation

The WTO Agreement on Implementation of Article VII of the GATT 1994, without the reserves and options provided for in Article 20 and paragraphs 2, 3 and 4 of Annex III of that Agreement, shall govern customs valuation rules applied to trade between the Parties.

Article 81

Special Committee on Customs Cooperation and Rules of Origin

1. The Parties hereby establish a Special Committee on Customs Cooperation and Rules of Origin, composed of representatives of the Parties. The Committee shall meet on a date and with an agenda agreed in advance by the Parties. The office of chairperson of the Committee shall be held alternately by each of the Parties. The Committee shall report to the Association Committee.

2. The functions of the Committee shall include:

(a) monitoring the implementation and administration of Articles 79 and 80 and of Annex III and any other customs matters related to market access;

(b) providing a forum to consult and discuss on all issues concerning customs, including in particular, rules of origin and related customs procedures, general customs procedures, customs valuation, tariff regimes, customs nomenclature, customs cooperation and mutual administrative assistance in customs matters;

(c) enhancing cooperation on the development, application and enforcement of rules of origin and related customs procedures, general customs procedures and mutual administrative assistance in customs matters;

(d) any other issues agreed by the Parties.

3. In order to fulfil the tasks referred to in this Article, the Parties may agree to hold ad hoc meetings.

Article 82

Enforcement of preferential treatment

1. The Parties agree that administrative cooperation is essential for the implementation and control of the preferences granted under this Title and reaffirm their commitment to combat irregularities and fraud related to origin, including customs classification and customs value.

2. In this regard, a Party may temporarily suspend the preferential treatment granted under this Title for a product or products in respect of which that Party determines, in accordance with this Article, that there has been systematic failure to provide administrative cooperation or fraud by the other Party.

3. For the purpose of this Article, systematic failure to provide administrative cooperation shall mean:

(a) the absence of administrative cooperation, such as a failure to provide names and addresses of customs or government authorities responsible for issuing and checking certificates of origin, or specimens of stamps used to authenticate the certificates, or a failure to update that information where appropriate;

(b) a systematic lack or inadequacy of action in verifying the originating status of products and the fulfilment of the other requirements of Annex III and identifying or preventing contravention of the rules of origin;

(c) a systematic refusal or undue delay to carry out subsequent verification of the proof of origin at the request of the other Party, and to communicate its results in time;

(d) the absence or systematic lack of administrative cooperation in verifying conduct where there is a presumption of origin-related fraud. For this purpose, a Party may presume the existence of fraud, inter alia, where imports of a product or products under this Agreement massively exceed the usual levels of production and export capacity of the other Party.

4. The Party which has made a finding of systematic failure to provide administrative cooperation or presumption of fraud shall, before applying the temporary suspension provided under this Article, supply the Association Committee with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties. At the same time, it shall publish in its Official Journal a notice to the importers indicating the product or products for which a finding of systematic failure to provide administrative cooperation or presumption of fraud has been made. The legal consequences of this publication shall be governed by the domestic law of each Party.

5. Within 10 days after the day of notification of the information referred to in paragraph 4, the Parties shall hold consultations within the Association Committee. If the Parties do not reach an agreement on a solution to avoid application of the temporary suspension of the preferential treatment within 30 days from the initiation of such consultations, the Party concerned may suspend temporarily the preferential treatment of the product or products concerned.

The temporary suspension shall not exceed what is necessary to protect the financial interests of the Party concerned.

6. Temporary suspensions under this Article shall be notified immediately after their adoption to the Association Committee. They shall not exceed a period of six months which may be renewed. They shall be subject to periodic consultations within the Association Committee, particularly with a view to their abolition as soon as circumstances permit.

Section 4

Standards, technical regulations and conformity assessment procedures

Article 83

Objective

The objective of this section is to facilitate and increase trade in goods by eliminating and preventing unnecessary barriers to trade while taking into account the legitimate objectives of the Parties and the principle of non-discrimination, within the meaning of the WTO Agreement on Technical Barriers to Trade ("the TBT Agreement").

Article 84

Scope and coverage

The provisions of this section apply to trade in goods in the area of standards, technical regulations and conformity assessment procedures, as defined in the TBT Agreement. They do not apply to measures covered by section 5 of this Chapter. Technical specifications prepared by governmental bodies for public procurement purposes are not subject to the provisions of this section but are addressed in Title IV of this Part.

Article 85

Definitions

For the purpose of this section, the definitions of Annex I to the TBT Agreement shall apply. In this respect, the Decision of the WTO Committee on Technical Barriers to Trade on Principles for the Development of International Standards, Guides and Recommendations with relation to Articles 2, 5 and Annex 3 of that Agreement shall also apply.

Article 86

Basic rights and obligations

The Parties confirm their rights and obligations under the TBT Agreement and their commitment to its comprehensive implementation. In this respect and in line with the objective of this section, cooperation activities and measures pursued under this section shall be conducted with a view to enhancing and reinforcing the implementation of those rights and obligations.

Article 87

Specific actions to be pursued under this Agreement

With a view to fulfilling the objective of this section:

1. The Parties shall intensify their bilateral cooperation in the field of standards, technical regulations and conformity assessment with a view to facilitating access to their respective markets, by increasing the mutual knowledge, understanding and compatibility of their respective systems.

2. In their bilateral cooperation the Parties shall aim at identifying which mechanisms or combination of mechanisms are the most appropriate for particular issues or sectors. Such mechanisms include aspects of regulatory cooperation, inter alia convergence and/or equivalence of technical regulations and standards, alignment to international standards, reliance on the supplier's declaration of conformity and use of accreditation to qualify conformity assessment bodies, and mutual recognition agreements.

3. Based on progress made in their bilateral cooperation, the Parties shall agree on what specific arrangements should be concluded with a view to implementing the mechanisms identified.

4. To this end, the Parties shall work towards:

(a) developing common views on good regulatory practices, including, but not limited to:

(i) transparency in the preparation, adoption and application of technical regulations, standards and conformity assessment procedures;

(ii) necessity and proportionality of regulatory measures and related conformity assessment procedures, including the use of suppliers declaration of conformity;

(iii) use of international standards as a basis for technical regulations, except when such international standards would be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued;

(iv) enforcement of technical regulations and market surveillance activities;

(v) the necessary technical infrastructure, in terms of metrology, standardisation, testing, certification and accreditation, to support technical regulations; and

(vi) mechanisms and methods for reviewing technical regulations and conformity assessment procedures;

(b) reinforcing regulatory cooperation through, for example, exchange of information, experiences and data, and through scientific and technical cooperation with a view to improving the quality and level of their technical regulations and making efficient use of regulatory resources;

(c) compatibility and/or equivalence of their respective technical regulations, standards and conformity assessment procedures;

(d) promoting and encouraging bilateral cooperation between their respective organisation, public and/or private, responsible for metrology, standardisation, testing, certification and accreditation;

(e) promoting and encouraging full participation in international standard setting bodies, and reinforcing the role of international standards as a basis for technical regulations; and

(f) increasing their bilateral cooperation in the relevant international organisations and fora dealing with the issues covered by this section.

Article 88

Committee on Standards, Technical Regulations and Conformity Assessment

1. The Parties hereby establish a Special Committee on Technical Regulations, Standards and Conformity Assessment in order to achieve the objectives set out in this section. The Committee, made up of representatives of the Parties, shall be co-chaired by a representative of each Party. The Committee shall meet at least once a year, unless otherwise agreed by the Parties. The Committee shall report to the Association Committee.

2. The Committee may address any matter related to the effective functioning of this section. In particular, it shall have the following responsibilities and functions:

(a) monitoring and reviewing the implementation and administration of this section. In this connection, the Committee shall draw up a work program aimed at achieving the objectives of the section and in particular those set out in Article 87;

(b) providing a forum for discussion and exchanging information on any matter related to this section and in particular as it relates to the Parties' systems for technical regulations, standards and conformity assessment procedures, as well as developments in related international organisations;

(c) providing a forum for consultation and prompt resolution of issues that act or can act as unnecessary barriers to trade, within the scope and meaning of this section, between the Parties;

(d) encouraging, promoting and otherwise facilitating cooperation between the Parties' organisations, public and/or private, for metrology, standardisation, testing, certification, inspection and accreditation; and

(e) exploring any means aimed at improving access to the Parties' respective markets and enhancing the functioning of this section.

Section 5

Sanitary and Phytosanitary Measures

Article 89

Sanitary and phytosanitary measures

1. The objective of this section is to facilitate trade between the Parties in the field of sanitary and phytosanitary legislation, whilst safeguarding public, animal and plant health by further implementing the principles of the WTO on the Application of Sanitary and Phytosanitary Measures ("the WTO SPS Agreement"). An additional objective of this section is to consider animal welfare standards.

2. The objectives of this section are pursued through the "Agreement on Sanitary and Phytosanitary Measures Applicable to Trade in Animals and Animal Products, Plants, Plant Products and other Goods and Animal Welfare", which is attached as Annex IV.

3. By way of derogation from Article 193, the Association Committee, when dealing with sanitary or phytosanitary measures, shall be composed of representatives of the Community and Chile with responsibility for sanitary and phytosanitary matters. This Committee shall then be called the "Joint Management Committee for Sanitary and Phytosanitary Matters". The functions of the Committee are set out in Article 16 of Annex IV.

4. For the purpose of Article 184, consultations held under Article 16 of Annex IV shall be deemed to constitute the consultations referred to in Article 183, unless the Parties decide otherwise.

Section 6

Wines and Spirits

Article 90

Wines and spirits

The Agreement on Trade in Wine and the Agreement on Trade in Spirit Drinks and Aromatised Drinks are attached as Annex V and VI, respectively.

CHAPTER III

EXCEPTIONS

Article 91

General exception clause

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties where the same conditions prevail, or a disguised restriction on trade between the Parties, nothing in this Title shall be construed to prevent the adoption or enforcement by either Party of measures which:

(a) are necessary to protect public morals;

(b) are necessary to protect human, animal or plant life or health;

(c) are necessary to secure compliance with laws or regulations which are not inconsistent with this Agreement, including those relating to customs enforcement, the protection of intellectual property rights, and the prevention of deceptive practices;

(d) relate to the importation or exportation of gold or silver;

(e) relate to the protection of national treasures of artistic, historic or archaeological value;

(f) relate to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; or

(g) relate to the products of prison labour.

Article 92

Safeguard clause

1. Unless otherwise provided by this Article, the provisions of Article XIX of the GATT 1994 and of the WTO Agreement on Safeguards shall apply between the Parties. The provisions of paragraphs 2, 3, 4, 5, 7, 8 and 9 of this Article shall apply only when a Party has a substantial interest as exporter of the product concerned, as defined in paragraph 10.

2. Each Party shall provide, immediately and in any case no later than seven days from the event, ad hoc written notification to the Association Committee of all pertinent information on the initiation of a safeguard investigation and on the final findings of the investigation.

3. The information provided under paragraph 2 shall include in particular an explanation of the domestic procedure on the basis of which the investigation will be carried out and an indication of the time schedules for hearings and other appropriate opportunities for interested parties to present their views on the matter. Furthermore, each Party shall provide advance written notification to the Association Committee of all pertinent information on the decision to apply provisional safeguard measures. Such notice must be received at least seven days before the application of such measures.

4. Upon notification of the final findings of the investigation and before applying safeguard measures pursuant to the provisions of Article XIX of the GATT 1994 and of the WTO Agreement on Safeguards, the Party intending to apply such measures shall refer the matter to the Association Committee for a thorough examination of the situation with a view to seeking a mutually acceptable solution. In order to find such a solution and if the Party concerned so requests, the Parties shall hold prior consultations within the Association Committee.

5. Notwithstanding paragraph 4, nothing shall prevent a Party from applying measures pursuant to the provisions of Article XIX of the GATT 1994 and of the WTO Agreement on Safeguards.

6. In the selection of safeguard measures referred to in this Article, the Parties shall give priority to those which cause least disturbance to the achievement of the objectives of this Agreement. Such measures shall not exceed what is necessary to remedy the serious injury, and shall preserve the level/margin of preference granted under this Title.

7. The Parties confirm their rights and obligations under paragraphs 1 and 2 of Article 8 of the WTO Safeguard Agreement.

8. The right of suspension referred to in Article 8(2) of the WTO Safeguard Agreement shall not be exercised between the Parties for the first 18 months that a safeguard measure is in effect, provided that the safeguard measure has been taken as a result of an absolute increase in imports and that such a measure conforms to the provisions of the WTO Safeguard Agreement.

9. Safeguard measures shall upon application be notified immediately to the Association Committee and shall be the subject of consultations once a year within the Committee, particularly with a view to their liberalisation or abolition.

10. For the purposes of this Article, it is considered that a Party has a substantial interest when it is among the five largest suppliers of the imported product during the most recent three-year period of time, measured in terms of either absolute volume or value.

11. In the event of either Party subjecting to a surveillance procedure imports of products liable to give rise to the conditions for the application of a safeguard measure pursuant to this Article, it shall inform the other Party.

Article 93

Shortage clause

1. Where compliance with the provisions of this Title leads to:

(a) a critical shortage, or threat thereof, of foodstuffs or other products essential to the exporting Party; or

(b) a shortage of essential quantities of domestic materials for a domestic processing industry during periods when the domestic price of such materials is held below the world price as part of a governmental stabilisation plan;

and where the situations referred to above give rise or are likely to give rise to major difficulties for the exporting Party, that Party may take appropriate measures under the conditions and in accordance with the procedures laid down in this Article.

2. In the selection of measures, priority must be given to those which least disturb the functioning of the arrangements in this Agreement. Such measures shall not be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination where the same conditions prevail, or a disguised restriction on trade, and shall be eliminated when the conditions no longer justify their maintenance. In addition, the measures which may be adopted pursuant to paragraph 1(b) shall not operate to increase the exports of or the protection afforded to the domestic processing industry concerned, and shall not depart from the provisions of this Agreement relating to non-discrimination.

3. Before taking the measures provided for in paragraph 1, or as soon as possible in cases to which paragraph 4 applies, the Party intending to take the measures shall supply the Association Committee with all relevant information, with a view to seeking a solution acceptable to the Parties. The Parties within the Association Committee may agree on any means needed to put an end to the difficulties. If no agreement is reached within 30 days of the matter being referred to the Association Committee, the exporting Party may apply measures under this Article on the exportation of the product concerned.

4. Where exceptional and critical circumstances requiring immediate action make prior information or examination impossible, the Party intending to take the measures may apply forthwith the precautionary measures necessary to deal with the situation and shall inform the other Party immediately thereof.

5. Any measures applied pursuant to this Article shall be immediately notified to the Association Committee and shall be the subject of periodic consultations within that body, particularly with a view to establishing a timetable for their elimination as soon as circumstances permit.

TITLE III

TRADE IN SERVICES AND ESTABLISHMENT

Article 94

Objectives

1. The Parties shall reciprocally liberalise trade in services, in accordance with the provisions of this Title and in conformity with Article V of the GATS.

2. The aim of Chapter III is the improvement of the investment environment, and in particular the conditions of establishment between the Parties, on the basis of the principle of non-discrimination.

CHAPTER I

SERVICES

Section 1

General provisions

Article 95

Scope

1. For the purposes of this Chapter, trade in services is defined as the supply of a service through the following modes:

(a) from the territory of a Party into the territory of the other Party (mode 1);

(b) in the territory of a Party to the service consumer of the other Party (mode 2);

(c) by a service supplier of a Party, through commercial presence in the territory of the other Party (mode 3);

(d) by a service supplier of a Party, through presence of