Source: EURLEX
Language: en
Format: md

**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, antidumping 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 ECChile 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.

_/}/>_

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**

_**If**_

**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**

_**1 2**_

**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, dayto-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

Period

Indefinite,
starting 1996
!

**Permanent**

**:**

**2**

**1**

**1**

**4**

**Temporary** **Existing** Additional

**resources** resources

**within** **DG or**

**department**

**1**

**0.5**

**1.5**

I

I

0.5

2.5

**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**
#### **_If_**

**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**