3. Panellists may furnish separate opinions on matters not unanimously agreed.
4. A Party may submit written comments to the panel on its initial report within 14 days of presentation of the report.
5. In such an event, and after considering such written comments, the panel, on its own initiative or on the request of a Party, may:
(a) make any further examination that it considers appropriate; and
(b) reconsider its report.
Article 18-14. Final Report
1. The panel shall present to the Commission a final report, including any separate opinions on matters not unanimously agreed, within 30 days of presentation of the initial report, unless the Parties otherwise agree.
2. The Parties may send written comments on the final report to the Commission.
3. No panel may, either in its initial report or its final report, disclose which panellists are associated with majority or minority opinions.
4. Unless the Commission decides otherwise, the final report of the panel shall be published 15 days after it is transmitted to the Commission.
Implementation of Panel Final Reports
Article 18-15. Implementation of Final Reports
1. The final report of the panel shall be binding on the Parties. Unless the Parties otherwise agree, they shall implement the final report in the terms and conditions ordered in it.
2. Where a final report by an arbitral panel finds that the measure is non-conforming with this Agreement or causes nullification or impairment in the sense of Annex 18-02., the Party complained against shall, wherever possible, not implement the measure or remove it.
Article 18-16. Non-Implementation - Suspension of Benefits
1. The complaining Party may suspend application of benefits of equivalent effect to the Party complained against if the panel determines:
(a) that a measure is inconsistent with the obligations of this Agreement and the Party complained against fails to comply with the final report within 30 days of its receipt; or
(b) that a measure is the cause nullification or impairment in the sense of Annex 18-02 and the Parties are unable to reach a mutually satisfactory settlement of the dispute within 30 days of receipt of the final report.
2. Benefits shall be suspended until such time as the Party complained against complies with the final report of the arbitral panel or until the Parties reach a mutually satisfactory settlement of the dispute.
3. In considering what benefits to suspend pursuant to paragraph 1:
(a) the complaining Party should first seek to suspend benefits in the same sector or sectors as that affected by the measure or other matter that the panel has found to be inconsistent with the obligations of this Agreement or to have caused nullification or impairment in the sense of Annex 18-02; and
(b) if the complaining Party considers that it is not practicable or effective to suspend benefits in the same sector or sectors, it may suspend benefits in other sectors.
4. On the written request of a Party delivered to the other Party and its Section of the Secretariat, the Commission shall establish a panel to determine whether the level of benefits suspended by a Party pursuant to paragraph 1 is manifestly excessive.
5. The panel proceedings under paragraph 4 shall be conducted in accordance with the Model Rules of Procedure. The panel shall present its determination within 60 days after the last panellist is selected or such other period as the Parties may agree.
Section B. Domestic Proceedings and Private Commercial Dispute Settlement
Article 18-17. Referrals of Matters from Judicial or Administrative Proceedings
1. If an issue of interpretation or application of this Agreement arises in any domestic judicial or administrative proceeding of a Party, that the other Party considers would merit its intervention, or if acourt or administrative body of a Party solicits the views of the other Party, the Party in whose territory the body is located shall notify the other Party and its Section of the Secretariat. The Commission shall endeavour to agree on an appropriate response as expeditiously as possible.
2. The Party in whose territory the court or administrative body is located shall submit any agreed interpretation of the Commission to the court or administrative body in accordance with the rules of that forum.
3. If the Commission is unable to agree, each Party may submit its own views to the court or administrative body in accordance with the rules of that forum.
Article 18-18. Private Rights
Neither Party may provide for a right of action under its domestic law against the other Party on the ground that a measure of the other Party is inconsistent with this Agreement.
Article 18-19. Alternative Dispute Resolution
1. Each Party shall, to the maximum extent possible, encourage and facilitate the use of arbitration and other means of alternative dispute resolution for the settlement of international commercial disputes between private parties in the free trade area.
2. Each Party shall provide appropriate procedures to ensure observance of agreements to arbitrate and for the recognition and enforcement of arbitral awards in such disputes. To this end, the Parties shall conform to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards or the 1975 Inter-American Convention on International Commercial Arbitration.
3. The Commission shall establish an Advisory Committee on Private Commercial Disputes comprising persons with expertise or experience in the resolution of private international commercial disputes. The Committee shall report and provide recommendations to the Commission on general issues referred to it by the Commission respecting the availability, use and effectiveness of arbitration and other procedures for the resolution of such disputes in the free trade area.
Chapter 19. EXCEPTIONS
Article 19-01. Definitions
For the purposes of this Chapter:
international capital transactions means "international capital transactions" as defined under the Articles of Agreement of the IMF;
IMF means the International Monetary Fund;
payments for current international transactions means "payments for current international transactions" as defined under the Articles of Agreement of the IMF;
tax convention means a convention for the avoidance of double taxation or other international taxation agreement or arrangement;
taxes and taxation measures do not include:
(a) a "customs duty" as defined in Article 2-01 (Definitions of General Application); or
(b) the measures listed in exceptions (b), (c) and (d) of that definition; and
transfers means international transactions and related international transfers and payments.
Article 19-02. General Exceptions
1. Article XX of the GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement for the purposes of:
(a) Part Two (Trade in Goods), except to the extent that a provision of that Part applies to services or investment;
(b) Chapter 7 (Sanitary and Phytosanitary Measures), except to the extent that a provision of that Chapter applies to services or investment; and
(c) Chapter 8 (Standardization-Related Measures), except to the extent that a provision of that Chapter applies to services.
2. Article XIV (a), (b) and (c) of GATS, is incorporated into and made part of this Agreement for the purposes of:
(a) Part Two (Trade in Goods), to the extent that a provision of that Part applies to services;
(b) Part Three (Technical Standards);
(c) Chapter 10 (Cross-Border Trade in Services);
(d) Chapter 11 (Air Transportation Services); and
(e) Chapter 12 (Telecommunications).
Article 19-03. National Security
1. Nothing in this Agreement shall be construed:
(a) to require either Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests;
(b) to prevent either Party from taking any actions that it considers necessary for the protection of its essential security interests:
(i) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services and technology undertaken directly or indirectly for the purpose of supplying a military or other security establishment,
(ii) taken in time of war or other emergency in international relations, or
(iii) relating to the implementation of national policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; or
(c) to prevent either Party from taking action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
Article 19-04. Exceptions to Disclosure of Information
Nothing in this Agreement shall be construed to require a Party to furnish or allow access to information the disclosure of which would impede compliance with or be contrary to its Constitution or laws protecting personal privacy or the financial affairs and accounts of individual customers of financial institutions.
Article 19-05. Taxation
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of either Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency.
3. Notwithstanding paragraph 2:
(a) Article 3-03 (National Treatment) and such other provisions of this Agreement as are necessary to give effect to that Article shall apply to taxation measures to the same extent as does Article Ill of the GATT 1994; and
(b) Article 3-11 (Export Taxes) shall apply to taxation measures.
4. Article 9-11 (Expropriation and Compensation) shall apply to taxation measures except that no investor may invoke that Article as the basis for a claim under Article 9-17 (Claim by an Investor of a Party on Its Own Behalf) or 9-18 (Claim by an Investor of a Party on Behalf of an Enterprise), where it has been determined pursuant to this paragraph that the measure is not an expropriation. The investor shall refer the issue of whether the measure is not an expropriation for a determination to the appropriate competent authorities set out in Annex 19-05 at the time that it gives notice under Article 9-20 (Notice of Intent to Submit a Claim to Arbitration). If the competent authorities do not agree to consider the issue or, having agreed to consider it, fail to agree that the measure is not an expropriation within a period of six months of such referral, the investor may submit its claim to arbitration under Article 9-21 (Submission of a Claim to Arbitration).
Article 19-06. Balance of Payments
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures that restrict transfers where the Party experiences serious balance of payments difficulties, or the threat thereof, and such restrictions are consistent with this Article.
2. As soon as practicable after a Party imposes a measure under this Article, the Party shall:
(a) submit any current account exchange restrictions to the IMF for review under Article VIII of the Articles of Agreement of the IMF;
(b) enter into good faith consultations with the IMF on economic adjustment measures to address the fundamental underlying economic problems causing the difficulties; and
(c) adopt or maintain economic policies consistent with such consultations.
3. A measure adopted or maintained under this Article shall:
(a) avoid unnecessary damage to the commercial, economic or financial interests of the other Party;
(b) not be more burdensome than necessary to deal with the balance of payments difficulties or threat thereof;
(c) be temporary and be phased out progressively as the balance of payments situation improves;
(d) be consistent with paragraph 2(c) and with the Articles of Agreement of the IMF; and
(e) be applied on a national treatment or most-favoured-nation treatment basis, whichever is better.
4. A Party may adopt or maintain a measure under this Article that gives priority to services that are essential to its economic programme, provided that a Party may not impose a measure for the purpose of protecting a specific industry or sector unless the measure is consistent with paragraph 2(c) and with Article VIII(3) of the Articles of Agreement of the IMF.
5. Restrictions imposed on transfers:
(a) where imposed on payments for current international transactions, shall be consistent with Article VIII(3) of the Articles of Agreement of the IMF;
(b) where imposed on international capital transactions, shall be consistent with Article VI of the Articles of Agreement of the IMF and be imposed only in conjunction with measures imposed on current international transactions under paragraph 2(a);
(c) where imposed on transfers covered by Article 9-10 (Transfers) and transfers related to trade in goods, may not substantially impede transfers from being made in a freely usable currency at a market rate of exchange; and
(d) may not take the form of tariff surcharges, quotas, licences or similar measures.
Chapter 20. Final Provisions
Article 20-01. Annexes
The Annexes constitute integral parts of this Agreement.
Article 20-02. Amendments
1. The Parties may agree on any modification of or addition to this Agreement.
2. When so agreed, and approved in accordance with the applicable legal procedures of each Party, a modification or addition shall enter into force and constitute an integral part of this Agreement.
Article 20-03. Convergence
The Parties shall promote the convergence of this Agreement with other integration agreements of the Latin American countries, in accordance with the mechanisms established in the Montevideo Treaty 1980.
Article 20-4. Duration and Entry Into Force
1. This Agreement shall have an indefinite duration.
2 The Parties shall undertake the necessary legal procedures, including an exchange of communications accrediting that the legal formalities have concluded, to enable this Agreement to enter into force on 1 October 1998. Otherwise, the Agreement shall enter into force 30 days after the exchange.
Article 20-05. Reservations
This Agreement shall not be subject to reservations or interpretative statements on the occasion of ratification.
Article 20-06. Accession
1. In compliance with the Montevideo Treaty 1980, this Agreement is open to accession, after negotiation, to the other member countries of the Latin American Integration Association.
2. Accession shall be formalized once the terms have been negotiated by the Parties and the acceding country, through an Additional Protocol to this Agreement, which shall enter into force 30 days after it is deposited at the General Secretariat of the Latin American Integration Association.
Article 20-07. Termination
1. Either Party may terminate this Agreement. Termination shall be effective 180 days after notice to the other Party unless the Parties agree to a different period.
2. Regardless of whether a Party has terminated the Agreement, in the event of accession by a country or group of countries, as established in Article 20-06, it shall remain in force for the other Parties.
Article 20-08. Future Negotiations
Unless otherwise agreed, the Commission shall:
(a) begin negotiations on a chapter on financial services no later than 30 June 1999, at which time it shall appoint negotiators and establish appropriate procedures;
(b) begin negotiations to reciprocally eliminate antidumping duties, one year after this Agreement comes into force at which time it shall appoint negotiators and establish appropriate procedures; and
(c) begin negotiations on a chapter on government procurement one year after this Agreement comes into force, at which time it shall appoint negotiators and establish appropriate procedures.
Article 20-09. Cooperation on Rules of Origin
For closer trade integration and in accordance with Article 1-01 (Establishment of the Free Trade Zone), 1-03 (Relation to Other International Agreements) and 1-04 (Observance of the Agreement), the Parties shall seek to hold negotiations with non-member countries with which both Parties have entered into trade agreements similar to this Agreement, to study and establish mechanisms to achieve joint harmonization of the rules of origin.
Article 20-10. Revocations and Transitory Provisions
1. The Parties revoke ECA No. 17. However, with respect to Chapter 5 (Customs Procedures), importers may request that ECA No. 17 be applied for 30 days after this Agreement enters into force. To that effect, the certificates of origin issued under ECA No. 17 shall have been completed prior to the entry into force of this Agreement, be in effect and be made use of within that period.
2. With regard to Chapter 4 (Rules of Origin), for goods classified in subheadings 8422.40 and 8431.43, the applicable regional value content shall be determined in accordance with the following timetable:
(a) during the first year this Agreement is in force, forty-five per cent based on the transaction value method or thirty-six per cent based on the net cost method;
(b) during the second year this Agreement is in force, forty-six and one half per cent based on the transaction value method or thirty-eight per cent based on the net cost method; and
(c) during the third year this Agreement is in force, the regional value content established in Annex 4-03 (Specific Rules of Origin) shall be applied.
3. In the event that the roster referred to in Article 11-04(2)(c) (Dispute Settlement) has not been established, each Party shall appoint one panellist and the third shall be appointed by mutual agreement. Where a panel is not established in accordance with this paragraph within the term set out in Article 18-09 (Panel Selection), on the request of either of the Parties, the President of the Council of the International Civil Aviation Organization shall appoint the remaining panellists, following that organization's procedures.
Conclusion
Done in the city of Santiago, Chile, on the seventeenth day of April of the year one thousand nine hundred and ninety-eight, in two equally authenticated originals.
For the Government of the Republic of Chile:
The President of the Republic of Chile, Eduardo Frei Ruiz-Tagle.
The Minister of Foreign Affairs, José Miguel Insulza.
For the Government of the United Mexican States:
The President of the United Mexican States, Ernesto Zedillo Ponce de León.
The Secretary of Commerce and Industrial Development, Herminio Blanco Mendoza.
Attachments
Annex I. List of Chile
Sector: All Sectors
Subsector:
Industrial Classification:
Type of Reservation: National Treatment (Article 4, Annex Investments)
Measures: Decree Law 1939, Official Gazette, November 10, 1977, Norms on the acquisition, administration and disposition of State property, Title I. Decree with Force of Law 4 of the Ministry of Foreign Affairs, Official Gazette, November 10, 1967.
Description: Investment
Ownership or any other type of right over State lands may only be obtained by Chilean natural or juridical persons, except for the corresponding legal exceptions. State lands for these purposes include State lands up to a distance of 10 kilometers from the border line and up to a distance of 5 kilometers from the coast. Real property located on the border and declared a "border zone" by virtue of Decree with Force of Law 4 of 1967 by the Ministry of Foreign Affairs may not be acquired by ownership or other title by natural persons with nationality of border countries or juridical persons with their principal place of business in a border country or with 40 percent or more of their capital belonging to such natural persons or whose effective control is exercised by such natural persons. Notwithstanding the foregoing, nationals of a bordering country may be expressly and nominally exempted from such limitation by means of a supreme decree of the President of the Republic based on reasons of national interest. This reservation is without prejudice to a future claim that the Chile Schedule reservation in Annex II (page II-CH-1) may apply to the measure or any application of the measure in this reservation.
Reduction Schedule: None
Sector: All Sectors
Subsector:
Industrial Classification:
Type of Reservation: National Treatment (Article 4, Annex Investments) Senior executives and Boards of Directors (Article 9, Investments Annex)
Measures: As rated by the item Description
Description: Investment