COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 
COM(95)530 final 
Recommendation for a 
COUNCIL DECISION 
AUTHORIZING THE COMMISSION TO NEGOTIATE 
A FRAMEWORK AGREEMENT ON 
TRADE AND ECONOMIC COOPERATION WITH CHILE 
(presented by the Commission) 

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RECOMMENDATION FOR A COUNCIL DECISION 
AUTHORIZING THE COMMISSION TO NEGOTIATE 
A FRAMEWORK AGREEMENT ON 
TRADE AND ECONOMIC COOPERATION WITH CHILE 
EXPLANATORY MEMORANDUM 
I. EC-Chile relations are governed by the "third-generation" cooperation framework 
agreement signed in December 1990. Developments in Chile, however, have led the EU 
to examine the need for closer relations - something which the Chilean authorities 
officially requested in July 1994. 
In its conclusions of 9 and 10 December 1994, the Essen European Council invited the 
Commission to put its ideas on strengthening ties with Chile into concrete form. 
In May 1995, the Commission approved a Communication to the Council and Parliament 
on closer relations with Chile. 
The communication set out four avenues to achieve this. 
In June, the Council approved the communication and invited the relevant Council bodies 
to start talks on these four options. 
On 17 July, the Council asked the Commission to present to it the draft negotiation 
directives for a new agreement and expressed its desire to intensify political dialogue by 
such means as a consultation mechanism. 
H. The basic text on relations between the EU and the countries of Latin America and 
the Caribbean, along with the Commission communication of last May on closer relations 
with Chile and the Council conclusions of 17 July 1991 are the starting points for the 
attached recommendation on negotiating directives which the Commission is presenting to 
the Council. 
III. The new framework agreement with Chile shcuid, in the Commission's view, be an 
agreement of an interim and evolving nature, with a view to the eventual establishment of 
an EU-Chile association of a political and economic nature. The agreement is part of the 
Community's policy on cooperation with the developing countries. 
The ultimate move to an association, and in particular the liberalization of trade, should be 
considered by the parties in the light of circumstances and the progress made under the 
framework cooperation agreement. 
The association would not take effect without an agreement reached by the parties in 
accordance with their respective procedures. Given the sensitivity of certain products, 
particular attention should be paid to the interests of the producers and regions most 
seriously affected. 
t 
In line with the policy adopted by the Community and the Member States, the agreement 
would include three references to respect for human rights and democratic principles, in 
accordance with the Commission communication COM(95)216, of 23 May 1995, 
approved by the Council on 29 May: a reference in the preamble, a clause stipulating that 
it is an essential element of the agreement, and a "non-execution" clause. 
IV. The framework agreement proposed by the Commission would have the following 
structure: 
Preamble and General Principles 
Title ITrade cooperation and preparations for the liberalization of trade 
Title IIEconomic cooperation 
Title mother areas of cooperation 
Title IVMeans 
Title VPolitical dialogue 
Title Vllnstitutional framework 
Final Provisions 
There will also be a protocol on mutual assistance between the parties' customs 
administrations. 
V. Trade cooperation and preparations for the liberalization of trade 
Chile's economy is very open to the outside world, with low customs protection and close 
trade links with the EC, which is still its largest trading partner. The government is 
pursuing an active policy of integration into the global economy (known as "open 
regionalism") and has expressed an ultimate desire for a free trade association with the EC 
and Mercosur. 
The negotiating terms for a new agreement with the country should therefore take into 
consideration the interregional framework cooperation agreement between the EC and its 
Member States and Mercosur and its member countries, which was initialled in 
Montevideo on 29 September. 
The Commission believes that a political and economic association between the 
Community and Chile is in the parties' interest. It nevertheless feels that an intermediate 
stage is needed to allow both to establish conditions that will ease the passage to free 
trade. 
The Commission is therefore proposing that the agreement provide for a range of 
instruments that will, on the one hand, enable the parties to exchange information, seek 
ways of aligning their practice and analyse economic and trade relations and, on the other, 
target cooperation on fields directly affecting the conditions of trade. 
The Commission considers, as does the Council, that the liberalization of trade must cover 
the bulk of trade, while taking account of the sensitivity of certain products and the 
relevant rules of the new WTO. 
To that end, the Commission proposes that trade cooperation be founded on the following 
instruments: 
1. A joint subcommittee made up of officials of the European Commission and Chile 
would be set up to handle trade questions. 
This subcommittee would meet at least once a year for the purpose of exploratory 
talks aimed at defining the future liberalization of trade and bringing into motion the 
interim machinery for facilitating trade and preventing unfair trading practices. 
This dialogue would cover all areas affecting trade in goods and services between the 
parties, culminating in the presentation, at the annual meeting of the joint committee, 
of specific recommendations for the friture liberalization of trade. 
The subcommittee would be able to set up whatever working parties were necessary 
to facilitate its work. 
One such working party (the monitoring group) would monitor trade developments, 
coordinate the activities of the other working parties, provide back-up for the joint 
subcommittee and, lastly, serve as a permanent trade liaison body between Chile and 
the Union. This framework for dialogue would be backed up by such studies, analyses 
and exchanges of information as proved necessary. 
2. Cooperation in the mutual interest, notably on issues directly affecting trade, would 
help bring the two regions' economies closer together: 
cooperation on standardization with a view to possible mutual recognition 
agreements; 
customs cooperation; 
statistical cooperation; 
cooperation on intellectual and industrial property issues; 
cooperation on competition; 
cooperation on reciprocal liberalization of public procurement and regulated 
sectors. 
VI. Economic cooperation 
The current EC-Chile framework agreement has enabled economic cooperation to 
develop to the satisfaction of both sides. The EC is one of Chile's top trade and investment 
partners and has a major stake in inter-business cooperation in the country. 
The need for changes in Chile's productive structure to smooth its integration into the 
world economy and create the right conditions for an association with the EC mean that 
economic cooperation must change tack to make it easier: 
- for both sides to foster a stable and attractive climate for two-way investment; 
- to boost cooperation between EU and Chilean business, particularly in the field of 
technology; 
- to strengthen joint scientific and technological research activities, focusing on applied 
research, development and advanced training; 
- to extend economic cooperation mechanisms more fully to the service sector arid 
SMEs; 
- to develop specific forms of economically valuable cooperation in the energy, 
transport, telecommunications and environment sectors. 
Oiven the degree of liberalization achieved by Chile in some areas, the parties undertake 
to make a special effort to expand and build up cooperation in services, investment and 
cooperation on science and technology. 
VII. Other areas of cooperation 
A. Interinstitutional cooperation 
- Chile's public administration faces a number of problems modernizing its productive 
structure and making it competitive. The JELPs experience could be of great help in this 
respect, which is why the framework agreement will bolster institutional aid 
programmes, focusing on projects to £arisfer experience and train administrative staff. 
Better institutional cooperation iJ?|J|irticu!ariy important in facilitating Chilean. 
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relations with Mercosur (the negotiating directives LÙÏ Û*W\IUU~I cgiuûâl fiamcwuiiv 
cooperation agreement with Mercosur included proposals for a heading on 
cooperation for closer integration, designed in part to draw the national laws of 
Mercosur countries nearer together and help the various processes in train for 
institutional integration). 
B. Other areas 
- The need to strengthen already close links between Chile and all EU countries in order 
to create an association also requires closer cooperation on cultural, educational and 
training matters and consumer protection. Joint efforts to combat drugs will also be 
included. 
Vm. Means 
The Commission considers that financial cooperation with Chile falls within the scope of 
Council Regulation (EEC) No 443/92 on financial and technical assistance to, and 
economic cooperation with, the developing countries in Asia and Latin America. 
Chile may likewise be eligible for funding from budgets for cooperation in some of the 
specific areas envisaged e.g. science, technology, the environment and energy. 
Chile will also be eligible for loans from the European Investment Bank. 
The Commission believes that a modest increase will have to be made to the 
appropriations in Part A of the Community budget to cover the participation of staff from 
Community institutions in individual technical assistance operations in Chile. 
IX. Political dialogue 
Political dialogue will focus primarily on bilateral and regional aspects of relations. Given 
their many mutual interests and the number of issues on which their views coincide, the 
dialogue should help Chile and the Community to consult each other more closely on a 
substantial range of multilateral issues and to coordinate their respective positions in a 
variety of multilateral institutions. 
This consultation will take the form of regular meetings and exchanges of views between 
policy-makers, officials and parliamentarians. The dialogue should preferably be 
conducted jointly with other partners in the region, coinciding wherever possible with 
meetings to further political dialogue already established with them. 
X. The institutional framework 
The Commission believes that the agreement should be supervised by a body responsible 
for its overall monitoring and implementation. 
That body would be composed of representatives of the Council of the European Union 
and the Commission, and of Chile. 
It would be assisted in its work by a joint committee on cooperation. A trade 
subcommittee would see to it that the agreement's trade objectives were met. 
X. Conclusion 
The Commission believes that the framework agreement between the EC and Chile 
(signed in December 1990) has achieved all its goals, providing the country with valuable 
support on its return to democracy and laying the foundations of mutually beneficial 
economic cooperation. In light of this and the interest shown by Chile in the swift 
conclusion of a commercial and economic association agreement with the EU, the 
Commission feels a new framework agreement is needed to achieve the final objective of a 
political and economic association between the two sides. 
The Commission therefore recommends that the Council authorize it to negotiate a 
framework cooperation agreement aimed ultimately at establishing an economic and 
political association with Chile, in accordance with the directives in Annex I and in 
consultation with a committee appointed specially by the Council to assist it in this task. 
ft 
> 
ANNEX I 
NEGOTIATING DIRECTIVES FOR A 
FRAMEWORK COOPERATION AGREEMENT LEADING ULTIMATELY 
TO A POLITICAL AND ECONOMIC ASSOCIATION 
BETWEEN THE EUROPEAN UNION AND CHILE 
1. CHARACTER AND SCOPE 
1. The aim of the negotiations is the conclusion of a framework cooperation 
agreement with Chile to replace the existing Framework Cooperation Agreement 
between the European Economic Community and the Republic of Chile. 1 The 
agreement is intended to strengthen existing relations between the parties on a basis of 
reciprocity and shared interests with a view to paving the way for the subsequent 
establishment of a political and economic association. 
2. Duration: The parties will decide when to proceed with an association in the light of 
the progress made under the agreement and that of Latin American integration and 
relations with the EC. 
3. The agreement will include a clause maintaining in force existing bilateral agreements 
between the Community and Chile, in the event of Chile's joining Mercosur, as long as 
they do not run counter to the recently-initialled EC-Mercosur interregional 
framework agreement. 
4. A clause will be included stating that adherence to democratic principles and 
respect for human rights, which inform both Chile's and the Community's internal and 
international policies, are the cornerstones of relations between the parties, form the 
basis of all the agreement's provisions and are one of its essential elements.2 
H. STRUCTURE 
The future agreement is of the "framework cooperation" type and will contain provisions 
covering trade cooperation, including gradual and reciprocal trade liberalization in line 
with the relevant WTO rules. It will also cover economic and other matters in which 
cooperation is mutually advantageous. 
The ultimate goal of the economic and other cooperation activities will be to prepare the 
Chilean economy for closer ties with the EU, paving the way for a political and economic 
association between the EC and Chile. 
IThe current Agreement was signed on 12 December 1990 and entered into force on 
1 May 1991 (OJL 79, 26.3.1991, p.l). 
2In accordance with the policy set out in Council Document 7255/95. 
9 
HI. CONTENTS 
The preamble will refer to the following: 
the long-standing ties between the EC and Chile and the new impetus given them by 
the 1990 Framework Agreement; 
the importance attached by the two parties to respect for human rights, democratic 
principles and the market economy, which are the cornerstones of the agreement; 
the importance attached by the parties to the values and principles set out in the final 
declaration of March's Copenhagen Social Summit; 
the desire of the parties for sustainable development, taking account of the need to 
conserve and protect the environment; 
the mutual interest in the establishment of contractual links with a view to expanding 
cooperation, developing and diversifying trade and boosting investment flows; 
the will of the parties ultimately to establish a political and economic EU-Chile 
association. This will focus on closer political cooperation, including a consultation 
procedure. It will also aim at gradual, reciprocal liberalization of all trade, taking 
account of the sensitivity of certain products and the relevant rules of the WTO. 
Investment promotion and closer cooperation will also be mentioned; 
the parties' commitment to establishing political dialogue including consultation 
mechanisms with a view to developing their relationship in the long term. 
TITLE I 
TRADE COOPERATION AND PREPARATIONS FOR THE LIBERALIZATION 
OF TRADE 
Objective: strengthening trade cooperation between the two parties to promote the 
growth and diversification of trade and pave the way for trade liberalization, so as to 
provide favourable conditions for the establishment, in due course, of a political and 
economic association. 
Chapter I: Trade cooperation 
There will be systematic cooperation through the establishment of a regular economic and 
trade dialogue conducted by a joint subcommittee, which will pursue the agreement's 
trade objectives and prepare the move, in due course, to trade liberalization. 
The dialogue will involve meetings between senior officials from the European 
Commission and Chile at least once a year. It will result in annual recommendations being 
put to the joint committee with a view to future trade liberalization. 
The subcommittee will be assisted in its work by working parties meeting as necessary. 
Cooperation will be backed by the requisite studies and technical reports. 
The main fields of cooperation will be: 
market access and trade liberalization: studies and forecasts on the practicalities of 
liberalizing trade between the parties (timetable and structure of negotiations, 
transition periods, etc.) 
tariff and non-tariff barriers, quantitative restrictions and measures having equivalent 
effect: analysis, studies and administration, including quotas, foreign trade rules, anti­
dumping duties, safeguard clauses, technical standards, plant health legislation, mutual 
recognition of certification systems, etc.; 
tariffs applicable to third countries: 
compatibility with GATT/WTO rules on trade liberalization; 
identification of sensitive products by the parties; 
identification of priority products by the parties; 
services: cooperation and exchanges of information, with particular reference to 
transport, insurance and financial services; 
competition: monitoring of restrictive practices; 
identification of possible tariff reductions. 
One working party (the monitoring group) will coordinate the various activities and 
continuously monitor trends in trade between the parties. It will provide a permanent link 
between the Community and Chile for all trade issues. 
Chile could be involved in moves towards trade liberalization under the interregional 
framework Agreement between the EC and its Member States and Mercosur and its 
member countries, initialled at Montevideo on 29 September, and benefit from the range 
A*> 
of cooperation programmes proposed in the Mercosur Agreement subject to the parties' 
agreement, under arrangements to be fixed at a later date. 
Chapter H: Cooperation on technical standards and standardization with a view to 
concluding mutual recognition agreements 
Cooperation between the Community and Chile will seek to promote efforts to provide 
the necessary conditions for uninterrupted trade in terms of technical standards, 
standardization, health regulations, consumer protection, employee safety and 
environmental protection. It will also be geared to bringing the EC and Chile closer 
together by means of the negotiation in the longer term of mutual recognition agreements 
and agreements on the protection and mutual recognition of designation of origin and 
geographical ascriptions. 
In practice, cooperation will: 
encourage any measure aimed at bridging the quality gap between the Community and 
Chile and generally improving product and business standards; 
provide organizational support to help Chile develop a quality control policy. 
Chapter HI: Customs cooperation 
Customs cooperation will seek to consolidate and improve the legal framework for EC-
Chile trade. 
This cooperation will result in: 
exchanges of information; 
improved working methods; 
the simplification of customs clearance formalities for goods; 
the alignment of laws in the field of customs and indirect taxation; 
schemes to facilitate exchanges of officials and senior personnel from customs and tax 
departments; 
the development of new training techniques and coordination of activities in the 
relevant international organizations; 
technical assistance, where appropriate. 
Without prejudice to other forms of cooperation provided for under this agreement, 
notably cooperation against drug abuse, mutual assistance between the parties' customs 
authorities will be governed by a protocol annexed to this agreement. 
Chapter IV: Cooperation in the field of statistics 
The main objective here will be to align methods, thus enabling the parties to use each 
other's statistics on trade in goods and services and, more generally, any field covered by 
this agreement for which statistics can be drawn up. 
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Chapter V: Cooperation in the field of intellectual and industrial property 
Cooperation in this field will seek to avoid distortions of trade between the two parties 
and promote investments, technology transfer, trade, cultural and artistic activities and 
associated economic activities. 
To this end, the parties will offer a level of protection of intellectual and industrial 
property equivalent to the most exacting international standards. Consultations will be 
held to avoid trade conflicts in connection with the protection of industrial property. The 
two parties will also consider technical cooperation in this field. 
Chapter VI: Cooperation on public procurement 
The parties will cooperate on opening up public procurement on a reciprocal basis, and 
consider establishing technical cooperation in this field. Such cooperation will mainly 
involve annual consultations, possibly set up by the working parties created by the joint 
subcommittee on trade cooperation. 
n 
TITLE H 
ECONOMIC COOPERATION 
Articles 2 to 6 of the 1990 Framework Cooperation Agreement with Chile provided for 
various forms of economic cooperation which have since helped build closer economic 
ties between the parties. 
Economic cooperation between Chile and the Community is intended to benefit both 
parties, strengthen relations between them, cultivate synergies in their economies, create 
new opportunities and increase their economic competitiveness. 
Priority will be given to areas of cooperation that generate economic and social links and 
networks between businesses (trade, investment, technology, information and 
communications systems, etc.). 
New areas of cooperation will include the definition and alignment of macroeconomic and 
microeconomic policies: budgetary policy, the balance of payments, monetary and fiscal 
policy and industrial/service sector policy. Studies will be undertaken to ensure regular 
monitoring of developments in the parties' macroeconomic policies and balances and the 
efficient operation of the market. 
Given the degree of liberalization achieved by Chile in some areas, the parties undertake 
to make a special effort to expand and build up cooperation in services, investment and 
cooperation on science and technology. 
Conservation of the environment and ecological balances will be a consideration in the 
implementation of the various areas of economic cooperation that affect it. 
The parties will recognize the importance of social development, which must accompany 
economic progress, and will pay particular attention to the fundamental rights of 
employees, in the first instance by promoting the relevant ILO Conventions. 
Chapter VH: Industrial cooperation and services 
The aim is to support and promote industrial policy measures enabling the contracting 
parties to develop a dynamic approach to the management of cooperation on industry and 
services with a view to creating a favourable environment for their mutual interests, and in 
particular: 
identifying and removing obstacles to industrial cooperation between the two parties 
by promoting compliance with competition laws and an awareness of market 
requirements reflecting the need for participation by, and cooperation between, 
economic operators; 
ensuring that the cooperation instruments available to the parties are used jointly and 
in a coordinated fashion; 
ensuring a coherent package of activities to promote cooperation between the parties' 
businesses; 
supporting common industrial policy goals with the aim of promoting the 
modernization, diversification and restructuring of industries - including those 
producing raw materials - through appropriate action (training, networks, research, 
3 
meetings between businessmen in a range of sectors including tourism, energy, 
transport, telecommunications, etc.); 
fostering cooperation between Chilean and EC economic operators, especially small 
and medium-sized enterprises (joint ventures, information networks, trade bureaux, 
know-how transfers, subcontracting, applied research, licences, franchising, etc.); 
developing an integrated, decentralized approach to cooperation between operators of 
the two parties in order to foster industrial innovation, making the most of R&D and 
standards/certification policies that strengthen and complement cooperation; 
building up organized contacts between operators of the two parties in the form of 
conferences, seminars, missions to prospect industrial and technical opportunities, 
round tables and general and sector-specific fairs with the aim of identifying and 
exploiting mutual interests to boost trade, investment and industrial cooperation 
projects; 
promoting increased cooperation between economic operators in Chile and European 
associations, with a view to establishing and stepping up dialogue between networks 
aimed at developing decentralized industrial cooperation programmes and operations; 
promoting moves to streamline regulations and legislation so as to facilitate 
international business cooperation; 
introducing schemes for institutional collaboration between the EC and Chile to grant 
the two parties' economic operators easier access to public procurement and other 
service contracts subject to special regulations. 
Chapter VQI: Investment promotion 
The aim of cooperation will be to help the two parties promote, within the scope of their 
respective competences, an attractive and stable environment for reciprocal investment. 
Cooperation will take the form of: 
machinery for information about, and identification and dissemination of, investment 
legislation and opportunities; 
development of a stable macroeconomic climate attractive to investors. 
development of a legal framework favourable to investment on both sides; 
development of uniform and simplified administrative procedures; 
development of joint investment machinery, especially for both parties' SME. 
Chapter IX: Scientific and technical cooperation 
The aim of cooperation in science and technology, carried out in the mutual interest of the 
two parties and in accordance with their policies, especially as regards rules on the 
exploitation of research-based intellectual property, shall be: 
exchanges of information and experience at regional level, especially on the 
implementation of policies and programmes, with the emphasis on standardization; 
promotion of durable relations between the two parties' scientific communities; 
intensification of activities to promote innovation in Chilean and European businesses. 
This cooperation will involve: 
joint (applied) research projects in areas of common interest, with active business 
participation as appropriate; 
exchanges of scientists to promote research, project preparation and high-level 
training; 
joint scientific meetings to foster exchanges of information and interaction, and 
identify areas for joint research; 
dissemination of results and development of links between the public and private 
sectors; 
evaluation of the activities concerned. 
Higher education institutions, research centres and manufacturers (especially SMEs) on 
both sides will be involved in this cooperation in an appropriate manner. 
Chapter X: Energy cooperation 
EC-Chile energy cooperation will aim to strengthen economic links in key energy sectors 
such as hydroelectric power, hydrocarbons, renewable energy and energy-efficient 
technology. 
Cooperation will take the form of: 
exchanges of information in all appropriate forms, including the development of data 
banks shared by economic and social operators of Chile and the Community, training 
and joint conferences; 
technology transfers; 
preparatory studies and project implementation by the relevant institutions of both 
parties; 
the participation of economic operators from the two regions in technology 
development projects and joint infrastructure; 
the signing of specific agreements in key areas of mutual interest, where appropriate; 
aid for Chilean institutions dealing with energy issues and the formulation of energy 
policy. 
Chapter XI: Transport 
Cooperation is intended to support the restructuring and modernization of Chile's 
transport system, improved circulation of persons and goods and better access to air, sea 
and road transport markets, via the removal of administrative, technical and other 
obstacles. In international maritime transport, the parties will see that there is unrestricted 
market access on commercial terms. 
Cooperation will take the form of: 
information exchanges on respective policies, particularly with regard to the 
interconnection and interoperability of networks and multimodal transport, and other 
subjects of mutual interest; 
is 
training programmes in economics, law and technical subjects for economic operators 
and senior public officials. 
Chapter XII: Telecommunications and information technology 
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. 
Cooperation in this area shall aim to promote: 
dialogue about different aspects of the information society; 
exchanges of information on standards, conformity testing and certification in the 
information technology and telecommunications fields; 
the spread of new information and telecommunications technologies, particularly in 
the fields of integrated services digital networks (ISDN), data transmission and the 
development of new communications and information technology facilities; 
stimulation and implementation of joint research, technological development and 
industrial projects in the fields of new information technology, communications, 
telematics and the information society. 
Chapter XIII: Environmental cooperation 
The aim of cooperation will be: 
to promote the protection of the environment and the rational use of natural resources 
in pursuit of sustainable development; 
to integrate that objective into all fields of cooperation between the Community and 
Chile. 
Cooperation will focus on: 
projects aimed at strengthening Chile's environmental organizations and policies; 
exchanges of information and know-how, for example on rules and standards; 
environmental training and education; 
technical assistance and the introduction of regional joint research programmes. 
u 
TITLE m 
OTHER AREAS OF COOPERATION 
The 1990 Framework Cooperation Agreement provided for cooperation on social 
development (Article 11), public administration (Article 12), information and 
communication (Article 13), training (Article 14), and regional integration (Article 15). To 
these, the new framework agreement will add new priorities emerging from closer 
relations with a view to a political and economic association between the EU and Chile. 
Financial and technical cooperation relating to social development 
Social and regional inequalities, exacerbated in some cases by industrial restructuring, 
have led to serious problems that will continue to require a substantial stream of technical 
and financial cooperation projects geared to combating extreme poverty and generally 
assisting the most deprived sections of the community. 
Such cooperation may involve: 
job creation and vocational training programmes; 
social service management and administration projects; 
development, rural housing or land management projects; 
health and primary education programmes; 
support for civil society and grass-roots initiatives; 
any other programmes and projects which help combat poverty by creating business 
and employment opportunities; 
Public administration and regional integration 
Cooperation will be aimed at adapting Chilean systems of administration to expanded 
trade in goods and services with Europe, and smoothing the way for the organizational 
changes entailed in Latin American integration. 
Given the Chilean administration's drive towards modernization, decentralization and 
regionalization, this cooperation could encompass overall organizational efficiency (the 
legislative and institutional framework), drawing lessons from the instruments and policies 
of the European Community. 
Means 
technical assistance to Chilean policy-making and executive bodies, including 
meetings between staff of the European institutions and their Chilean counterparts; 
regular exchanges of information taking whatever form is appropriate, including the 
use of computer networks; personal data protection will be ensured in all areas where 
data is to be exchanged; 
transfers of know-how; 
preliminary studies and joint project implementation; 
training and organizational support. 
10 
^> 
Interinstitutional cooperation 
The purpose of interinstitutional cooperation between the Community and Chile is to 
promote closer cooperation between the parties' institutions. 
The agreement will seek to encourage regular meetings between these institutions; 
cooperation will be as broad as possible, and will include: 
any measures promoting regular exchanges of information, including the joint 
development of computerized communication networks; 
advice and training; 
transfers of know-how. 
Media, information and culture 
In view of Chile's very close cultural ties with most of the Member States, cooperation in 
this sphere, including information and media contacts, should be enhanced. 
This will involve promoting meetings between representatives of the media from the two 
parties, supplying technical assistance where appropriate, and stepping up exchanges of 
information on questions of mutual interest. It could also include organizing cultural 
events. 
Training and education 
The parties will undertake to identify ways of improving training and education in the field 
of regional integration, focusing on young people and basic education, vocational training 
and cooperation between universities and between businesses. 
Priority will be given to measures designed to create permanent links between specialized 
Community and Chilean bodies, encouraging the pooling of technical resources and 
exchanges of know-how. 
Projects on these lines may be based on agreements between education and training 
institutions and meetings between bodies responsible for education and training. 
The parties may also conclude sectoral agreements on education and training. 
Drugs 
The parties will undertake to coordinate and increase their efforts to prevent and reduce 
the production, distribution and consumption of illegal drugs and laundering of profits 
from drug-trafficking. 
The parties will work through specialized agencies, in particular international bodies, to 
implement: 
projects to train, educate, treat and rehabilitate drug addicts in Chile; 
- joint research programmes, 
exchanges of relevant information, including measures relating to money laundering 
and the control of precursors; 
cooperation on drafting and enforcing the relevant legislation. 
Cooperation in this field should promote consultation and close cooperation between the 
parties. 
Consumer protection 
This should be geared to increasing the compatibility of consumer protection schemes in 
the Community and Chile, primarily: 
through professional and information exchanges; 
by organizing training schemes and supplying technical assistance. 
Additional areas 
No opportunity for cooperation should be ruled out in advance; rather, the parties should 
use the Joint Committee to explore together the practical possibilities for cooperation in 
their mutual interest. 
TITLE IV 
MEANS 
The contracting parties will undertake, in so far as their respective resources and 
regulations allow, to provide the means, including the financial means, required to 
implement the cooperation provided for by the agreement. 
The agreement will include a provision in which the Community undertakes to contribute 
to the realization of the agreement's objectives by means of financial cooperation executed 
in accordance with the appropriate procedures and using the appropriate financial 
resources. 
Chile will benefit from the Community's instruments for Latin America under legislation 
such as Regulation (EEC) No 443/92 on financial and technical assistance to, and 
economic cooperation with, the developing countries in Asia and Latin America. 
Chile will also have access to other budget headings such as those for ECIP, and 
scientific, technological, environmental and energy cooperation. 
The parties will encourage the EIB to step up its involvement in Chile in accordance with 
its financing procedures and criteria. 
12 
(/ 1<J 
TITLE V 
POLITICAL DIALOGUE 
The parties will establish an enhanced form of political dialogue, based on their mutual 
commitment to democracy and respect for human rights, to preserving peace and ushering 
in a fair and stable international order. 
It will cover any matter of mutual interest for the furtherance of common objectives and 
will lead to close cooperation in international institutions. 
Political dialogue between the parties will be conducted by means of contacts, exchanges 
of information and consultation between the various government bodies in Chile and the 
European Union, including the European Commission. The dialogue should preferably be 
conducted jointly with other partners in the region, coinciding wherever possible with 
meetings to further political dialogue already established with them. 
It will involve Heads of State, ministers, senior officials and parliamentarians. 
To this end, officials will negotiate a declaration on political dialogue to be annexed to the 
agreement. 
TITLE VI 
INSTITUTIONAL FRAMEWORK 
A body (comprising representatives of the Council of the European Union and the 
Commission and representatives of Chile), will be set up to supervise implementation of 
the agreement, consider any major problems that might arise and any other bilateral or 
multilateral matter of mutual interest concerning the achievement of the agreement's 
objectives. It will meet regularly at ministerial level, and whenever necessary. 
The Council will be assisted in its work by a joint committee on cooperation comprising 
representatives of the Community and Chile. A trade subcommittee will see to it that the 
agreement's trade objectives are met. 
The body in question may also create other specialized committees and working parties, 
and decide upon their composition, objectives and operations. 
13 
V 
ANNEX H 
JOINT DECLARATION ON POLITICAL DIALOGUE 
BETWEEN THE EUROPEAN UNION AND CHILE 
Preamble 
The European Union, on the one hand, and Chile, on the other, 
mindful of their common heritage and shared values, of the affinity between their 
cultures and of their close historical, political and economic ties, 
guided by their commitment to the United Nations Charter, and to upholding human 
rights and dignity and the freedom of the individual as cornerstones both of a 
democratic society and of institutions based on the rule of law, 
resolved to contribute to peace and international security in accordance with the 
principles of international law, 
committed to enhancing the political and economic freedoms underpinning their 
societies, 
recognizing their commitment to a model of economic management influenced by 
market economics and, in international relations, the concept of "open regionalism", 
have decided to develop relations with a view to a long-term economic and political 
association. 
Objectives 
The political will to achieve a political and economic association, reaffirmed on the 
occasion of the signing of the framework cooperation agreement between the EC and 
Chile, also underpins the decision to intensify political dialogue. 
Dialogue will be rooted in the parties' common attachment to democracy and respect for 
human rights, and in their commitment to maintaining peace and ushering in a fair and 
stable international order, in accordance with the United Nations Charter. 
This enhanced political dialogue will enable the EU and Chile to assess and monitor 
regional integration schemes and strategies, and examine factors influencing the parties' 
position in international economic and political systems. 
It is also intended to ensure closer consultation on multilateral political and economic 
issues, for example by allowing them to coordinate their positions in the relevant 
multilateral organizations. 
Mechanisms 
The parties will conduct this enhanced political dialogue by means of contacts, 
information exchanges and consultation, especially meetings at an appropriate level 
between the various Chile and European Union institutions, including the European 
Commission, as well as by making full use of diplomatic channels. 
14 
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The dialogue should preferably be conducted jointly with other partners in the region, 
coinciding wherever possible with meetings to further political dialogue already 
established with them. Through enhanced political dialogue, the EU and Chile mean to 
work towards setting up a political and economic association, thereby consolidating the 
existing ties of culture, history and friendship between their peoples in accordance with 
the democratic process. 
15 
12 
Annex HI 
FINANCIAL STATEMENT 
1. TITLE OF OPERATION: 
Framework cooperation agreement with Chile 
Recommendation for a Council Decision authorizing the Commission to negotiate a 
framework cooperation agreement with Chile. 
2. BUDGET HEADING INVOLVED 
(a) Implementation of the agreement will directly involve the following items: 
B7-3010: 
B7-3011 
B7-5020 
B7-5000 
B7-5040 
B7-5041 
B7-5051 
B7-5080 
B7-5230: 
B7-5046: 
B7-5010: 
B7-5077: 
B7-5091: 
B7-5096: 
B7-5300: Financial and technical cooperation with Latin American developing 
countries 
Economic cooperation with Latin American developing countries 
Commercial and economic cooperation agreements with third countries 
Promotion of Community investment in developing countries in Asia, 
Latin America and the Mediterranean and in South Africa by economic 
cooperation and trade agreements 
Environment in the developing countries 
Tropical forests 
Women in development 
North-South cooperation schemes in the context of the campaign 
against drug abuse 
Democratization process in Latin America 
Health programmes and the fight against HIV/AID S in developing 
countries 
Community contributions towards schemes concerning developing 
countries carried out by non-governmental organizations 
Decentralized cooperation in the developing countries 
Coordination of development policy, evaluation of the results of 
Community aid and practical follow-up measures 
Development cooperation inspectorate 
Measures to combat fraud in the cooperation sector 
(b) Other items that may be used: 
B6-7211 : International cooperation with third countries and international 
organizations 
B4-1041: European Energy Charter and cooperation with third countries in the 
energy field 
B4-1000: Thermie II (Community programme of financial support for the 
promotion of energy technology in Europe) 
B7-5050: Aid for population policies and programmes in developing countries 
16 
1^ 
3. LEGAL BASIS 
Bilateral framework agreement on trade and economic cooperation. 
4. DESCRIPTION OF OPERATION 
4.1 General objective 
Conclusion of a framework cooperation agreement with Chile. 
4.2 Period covered and arrangements for renewal or extension 
This is an interim agreement intended to pave the way for a political and 
economic association between the Union and Chile. 
5. CLASSIFICATION OF EXPENDITURE OR REVENUE 
5.1 Non-compulsory expenditure 
5.2 Differentiated appropriations 
5.3 Type of revenue involved 
Not applicable 
6. TYPE OF EXPENDITURE OR REVENUE 
Expenditure will usually take the form of a 100% grant, though operations may 
sometimes be cofinanced by other donors (Member States). 
The recipients will systematically be required to contribute according to their means. 
7. FINANCIAL IMPACT 
7.1 Method of calculating total cost of operation (definition of unit costs) 
This agreement establishes a framework for new measures to reflect the 
changing content and methods of Community cooperation/relations with Chile 
in the light both of recent social and economic developments in the country and 
of the process of strengthening ties between the parties. 
Although the quality and quantity of cooperation with Chile will be improved, 
there will be no specific budget for new operations. 
8. FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN 
In order to ensure maximum accountability in the management of budget resources, 
projects are subject to the following procedures: 
committee for the assessment of restricted invitations to tender (technical 
assistance); 
system of co-directors (one local and one Community); 
17 
K 
project administration involving analytical accounts; 
supervisory missions by desk officers and/or technical and/or financial units; 
if necessary, evaluation by independent experts; 
if necessary, ad hoc evaluation in conjunction with the relevant units of 
DGVIII. 
For projects of above-average duration and involving large budgets, there will be 
annual audits by internationally recognized firms, e.g. Price Waterhouse or Ernst & 
Young. 
9. ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
9.1 Specific and quantified objectives; target population 
The specific objectives of each project worth over ECU 1 million are set out in 
the relevant financing proposal approved by the ALA Committee, which 
includes an economic and financial analysis. For all other projects, specific 
objectives are set out in the detailed commitment form that accompanies each 
one. 
The target population is everyone in Chile, but more particularly: 
- the manufacturing and service sectors, especially SME; 
- the most disadvantaged groups. 
9.2 Grounds for the operation 
The projects launched will be financed under existing budget items and are 
therefore underpinned by the financial statements accompanying those items in 
thePDB. 
10 ADMINISTRATIVE EXPENDITURE (PART A OF SECTION m OF THE 
BUDGET) 
10.1 Extra staff 
The administrative resources needed will be mobilized through the 
Commission's annual decision on resource allocation depending on the staff and 
finance approved by the budgetary authority. 
Staffing 
Relations with Chile have so far been handled by an A official assisted by a part-time 
C official. They are unable to cope with the steady increase in political contacts, 
cooperation programmes and the day-to-day workload of the desk office generated 
by the stepping-up of relations over the past year. 
The objective of the framework agreement is to strengthen relations between Chile 
and the Union in all areas with a view to a future political and economic association. 
The agreement will therefore bring with it qualitative requirements quite distinct from 
the volume of aid granted. 
IT 
This agreement has to reflect the Union's will to maintain closer relations not only in 
the context of cooperation but in the form of deeper political dialogue and trade 
cooperation geared to the future liberalization of trade. 
It is estimated, therefore, that the following extra staff will be needed: one new A 
official, one B official and one part-time C official. Their tasks will be as follows. 
Grade A official and temporary member of staff 
* Overall direction, general consistency, coordination of activities, in-house 
coordination, dealings with Chile, information and dissemination, overall 
administration; 
* technical monitoring of trade relations, supervision of the working parties that 
will be set up, coordination of trade-related issues with other departments, day-
to-day handling of trade questions, preparations for meetings of the joint trade 
subcommittee, drawing-up of reports, studies and analyses on trade aspects of 
the future bilateral association agreement; 
* cooperation: identification, implementation, management, monitoring, etc. 
Grade B official 
* Support for A officials, particularly data searches, processing of statistics, data 
processing, administration and accounting. 
Grade C officials 
* Secretarial back-up. 
The above estimates do not include extra staff that might be needed by other 
Directorates General as a result of closer ties with Chile. 
19 
Posts 
' 
A 
B 
C 
(Officials of 
temporary 
staff) 
Other 
resources 
TOTAL Staff to be allocated to Source 
administering operation 
Permanent 
: 
2 
1 
1 
4 Temporary Existing 
resources 
within DG or 
department 
1 
0.5 
1.5 Additional 
resources 
I 
I 
0.5 
2.5 Period 
Indefinite, 
starting 1996 
! 
The above remarks concerning the need for additional resources are subject to a 
Commission decision. 
The allocation of the additional posts will have to be considered in terms of the 
Commission's priorities when it examines the 1996 budget. 
10.2 Total financial implications of extra stalling 
Amounts Calculation method 
A officials 100 000 Gross salary. List of average 
B 90 000 annual cost of existing posts 
C 64000 
TOTAL 254 000 
The amounts represent the total cost of extra staff for the duration of the operation, if it is 
of fixed duration, or for one year if it is open-ended. 
11. MISSION EXPENSES 
From its very first contacts with the EC, Chile has expressed a desire for technical 
assistance from the EC in a number of fields in which Community institutions have 
acquired experience. To this end, it has expressly asked to be allowed to work 
directly with the officials of the institutions concerned. 
20 
l> 
In response to these requests, the Commission has attempted to involve its various 
DGs and departments in one-off projects to impart the benefits of its experience of 
integration. 
While a number of DGs have expressed a desire to take part in this type of project, 
they have been seriously hampered in financing the relevant missions and many of 
Chile's requests have had to be turned down for want of a specific budget for such 
assistance. 
If appropriate machinery is not set up to facilitate these specific projects, the situation 
will become even more serious with the advent of the framework cooperation 
agreement, which seeks to expand the scope of technical assistance. 
Since it is impossible to predict how much extra will be needed for each DG in the 
absence of agreements between DGs on mission authorizations, a budget of an extra 
ECU 50 000 a year from 1996 should be planned to finance projects solely in this 
field. The budget should be initiated and coordinated by the relevant departments of 
the DG responsible for relations with Chile. 
An extra allocation is therefore requested for EC-Chile know-how transfer projects 
concerned specifically with the Community institutions. 
The amounts requested represent the cost of organizing missions averaging one week 
for 10 officials. 
Budget heading Amount (ECU) Calculation method 
A-1300 50 000 See table below 
TOTAL 50 000 
CSTo of missions L\verage cost onAverage dailyfTotal (ECU) Rounded totaU 
fcnp expenses (ECU) 
10 P800 135 W7 450 50 000 
The amounts represent the total cost for the duration of the operation, if it is of fixed 
duration, or for one year if it is open-ended. 
21 
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ISSN 0254-1475 
COM(95) 530 final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-95-587-EN-C 
ISBN 92-77-95859-6 
Office for Official Publications of the European Communities 
L-2985 Luxembourg