Title
FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF CHILE
Preamble
The Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation (hereinafter referred to as "the EFTA States"), and The Republic of Chile (hereinafter referred to as "Chile"), hereinafter collectively referred to as "the Parties", resolved to:
STRENGTHEN the special bonds of friendship and co-operation between their nations;
CONTRIBUTE to the harmonious development and expansion of world trade by removing obstacles to trade and provide a catalyst to broader international cooperation;
ESTABLISH clear and mutually advantageous rules governing their trade; CREATE an expanded and secure market for goods and services in their territories;
ENSURE a stable and predictable environment for business planning and investment;
FOSTER creativity and innovation by protecting intellectual property rights; BUILD on their respective rights and obligations under the Marrakech Agreement establishing the World Trade Organization and other multilateral and bilateral instruments of co-operation;
ENSURE that the gains from trade liberalisation are not offset by the erection of private, anti-competitive barriers;
ENHANCE the competitiveness of their firms in global markets;
CREATE new employment opportunities and improve working conditions and living standards in their respective territories;
PROMOTE environmental protection and conservation, and sustainable development;
REAFFIRMING their commitment to democracy, the rule of law, human rights and fundamental freedoms in accordance with their obligations under international law, including principles and objectives set out in the United Nations Charter and the Universal Declaration of Human Rights; and
CONVINCED that this Agreement will create conditions encouraging economic, trade and investment relations between them;
HAVE AGREED, in pursuit of the above, to conclude the following Agreement (hereinafter referred to as "this Agreement"):
Body
Chapter I. Initial Provisions
Article 1. Establishment of a Free Trade Area
The EFTA States and Chile hereby establish a free trade area by means of this Agreement and the complementary agreements on trade in agricultural goods, concurrently concluded between Chile and each individual EFTA State.
Article 2. Objectives
1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, are to:
(a) achieve the progressive and reciprocal liberalisation of trade in goods, in conformity with Article XXIV of the General Agreement on Tariffs and Trade (hereinafter referred to as "the GATT 1994");
(b) achieve the liberalisation of trade in services, in conformity with Article V of the General Agreement on Trade in Services (hereinafter referred to as "the GATS");
(c) open the government procurement markets of the Parties;
(d) promote conditions of fair competition in the free trade area;
(e) substantially increase investment opportunities in the free trade area;
(f) provide adequate and effective protection and enforcement of intellectual property rights; and
(g) establish a framework for further bilateral and multilateral cooperation to expand and enhance the benefits of this Agreement.
Article 3. Territorial Application
1. Without prejudice to Annex I, this Agreement shall apply to the territory of each Party, as well as to areas beyond the territory in which each Party may exercise sovereign rights or jurisdiction in accordance with international law.
2. Annex II shall apply with respect to Norway.
Article 4. Relation to other International Agreements
The Parties confirm their rights and obligations under the Marrakech Agreement establishing the World Trade Organization and the other agreements negotiated thereunder (hereinafter referred to as "the WTO Agreement") to which they are party, and under any other international agreement to which they are a party.
Article 5. Trade and Economic Relations Governed by this Agreement
1. The provisions of this Agreement apply to the trade and economic relations between, on the one side, the individual EFTA States and, on the other side, Chile, but not to the trade relations between individual EFTA States, unless otherwise provided for in this Agreement.
2. As a result of the customs union established by the Treaty of 29 March 1923 between Switzerland and the Principality of Liechtenstein, Switzerland shall represent the Principality of Liechtenstein in matters covered thereby.
Article 6. Regional and Local Governments
Each Party is fully responsible for the observance of all obligations and commitments under this Agreement and shall ensure their observance by its respective regional and local governments and authorities and by non-governmental bodies in the exercise of governmental powers delegated by central, regional and local governments or authorities within its territory.
Chapter II. Trade In Goods
Article 7. Coverage
This Chapter applies to trade between the Parties relating to:
(a) products falling within chapters 25 through 97 of the Harmonized Commodity Description and Coding System (hereinafter referred to as "the HS"), excluding the products listed in Annex III;
(b) products specified in Annex IV, with due regard to the arrangements provided for in that Annex; and
(c) fish and other marine products as provided for in Annex V.
Article 8. Rules of Origin and Administrative Co-operation
1. The provisions on rules of origin and administrative co-operation applicable to Article 9(1) and Article 19 are set out in Annex I.
2. For the purpose of Article 9(2), Article 13(1) and Article 18, the term "goods of a Party" shall mean domestic goods as understood within the meaning of GATT 1994 or such goods as the Parties may agree, and shall include originating products of that Party.
Article 9. Elimination of Customs Duties
1. The Parties shall, on the date of entry into force of this Agreement, abolish all customs duties on imports of products originating in an EFTA State or in Chile, except as provided for in Annex VI.
2. The Parties shall, on the date of entry into force of this Agreement, abolish all customs duties on exports of goods of a Party in trade between the Parties.
3. No new customs duty shall be introduced nor shall those already applied be increased in trade between the EFTA States and Chile.
Article 10. Customs Duty
A customs duty includes any duty or charge of any kind imposed in connection with the importation or exportation of a product, including any form of surtax or surcharge in connection with such importation or exportation, but does not include any:
(a) charge equivalent to an internal tax imposed consistently with Article 15;
(b) anti-dumping or countervailing duty applied consistently with Article 18; or
(c) fee or other charge imposed consistently with Article 11.
Article 11. Fees and other Charges
Fees and other charges referred to in Article 10(c) shall be limited in amount to the approximate cost of services rendered and shall not represent an indirect protection for domestic products or a taxation of imports or exports for fiscal purposes.
Article 12. Basic Duties
1. For each product the basic duty, to which the successive reductions set out in Annex VI are to be applied, shall be the most-favoured nation rate of duty applied on 1 January 2003.
2. If, before, by or after entry into force of this Agreement, any tariff reduction is applied on an erga omnes basis, in particular reductions in accordance with commitments resulting from multilateral negotiations under the World Trade Organization (hereinafter referred to as "the WTO"), such reduced duties shall replace the basic duties referred to in paragraph 1 as from the date when such reductions are applied, or from the entry into force of this Agreement if this is later.
3. The reduced duties calculated in accordance with Annex VI shall be applied rounded to the first decimal place or, in case of specific duties, to the second decimal place.
Article 13. Import and Export Restrictions
1. On the date of entry into force of this Agreement, all import or export prohibitions or restrictions on trade in goods of a Party between the EFTA States and Chile, other than customs duties and taxes, whether made effective through quotas, import or export licenses or other measures, shall be eliminated, except as provided for in Annex VII.
2. No new measures as referred to in paragraph 1 shall be introduced.
Article 14. Classification of Goods and Customs Valuation
1. The classification of goods in trade between the EFTA States and Chile shall be determined in accordance with each Party's respective tariff nomenclature in conformity with the HS.
2. The WTO Agreement on Implementation of Article VII of the GATT 1994 shall govern customs valuation rules applied to trade between the EFTA States and Chile.
Article 15. National Treatment
The Parties shall apply national treatment in accordance with Article III of the GATT 1994, including its interpretative notes, which is hereby incorporated into and made part of this Agreement.
Article 16. Sanitary and Phytosanitary Measures
1. The rights and obligations of the Parties in respect of sanitary and phytosanitary measures shall be governed by the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (hereinafter referred to as "the SPS Agreement").
2. The Parties shall strengthen their co-operation in the field of sanitary and phytosanitary measures, with a view to increasing the mutual understanding of their respective systems and facilitating access to their respective markets.
3. At the request of a Party, expert consultations shall be convened if any Party considers that another Party has taken measures which are likely to affect, or have affected, access to its market. Such experts, representing the Parties concerned on specific issues in the field of sanitary and phytosanitary matters, shall aim at finding an appropriate solution in conformity with the SPS Agreement.
4. The Parties shall exchange names and addresses of "contact points" with sanitary and phytosanitary expertise in order to facilitate communication and the exchange of information.
5. In order to permit the efficient use of resources, the Parties shall, to the extent possible, endeavour to use modern technological means of communication, such as electronic communication, video or telephone conference, or arrange for meetings referred to in paragraph 3 to take place back-to-back with Joint Committee meetings or with sanitary and phytosanitary meetings in the framework of the WTO. The results of expert consultations convened in accordance with paragraph 3 shall be reported to the Joint Committee.
6. Chile and any of the EFTA States may, for better implementation of this Article, develop bilateral arrangements including agreements between their respective regulatory agencies.
Article 17. Technical Regulations
1. The rights and obligations of the Parties in respect of technical regulations, standards and conformity assessment shall be governed by the WTO Agreement on Technical Barriers to Trade (hereinafter referred to as "the TBT Agreement").
2. The Parties shall strengthen their co-operation in the field of technical regulations, standards and conformity assessment, with a view to increasing the mutual understanding of their respective systems and facilitating access to their respective markets.
3. Without prejudice to paragraph 1, the Parties agree to hold consultations in the framework of the Joint Committee where a Party considers that another Party has taken measures which are likely to create, or have created, an obstacle to trade, in order to find an appropriate solution in conformity with the TBT Agreement.
Article 18. Anti-dumping and Countervailing Measures
1. A Party shall not apply anti-dumping measures as provided for under the WTO Agreement on Implementation of Article VI of the GATT 1994 in relation to goods of a Party.
2. The Parties recognise that the effective implementation of competition rules may address economic causes leading to dumping.
3. The rights and obligations of the Parties related to countervailing measures shall be governed by the WTO Agreement on Subsidies and Countervailing Measures.
Article 19. Emergency Action on Imports of Particular Products
1. Where any product originating in a Party, as a result of the reduction or elimination of a customs duty under this Agreement, is being imported into the territory of another Party in such increased quantities and under such conditions as to constitute a substantial cause of serious injury or threat thereof to the domestic industry of like or directly competitive products in the territory of the importing Party, the importing Party may take emergency measures to the minimum extent necessary to remedy or prevent the injury.
2. Such measures may consist in:
(a) suspending the further reduction of any rate of duty provided for under this Agreement on the product; or
(b) increasing the rate of duty on the product to a level not to exceed the lesser of:
i) the most-favoured nation rate of duty in effect at the time the action is taken;
ii) the most-favoured nation rate of duty in effect on the day immediately preceding the date of the entry into force of this Agreement.
3. Emergency measures shall be taken for a period not exceeding one year. In very exceptional circumstances, after review by the Joint Committee, measures may be taken up to a total maximum period of three years. In this case, the Party taking such measures shall present a schedule leading to their progressive elimination. No measures shall be applied to the import of a product which has previously been subject to such a measure for a period of, at least, five years since the expiry of the measure.
4. Emergency measures shall only be taken upon clear evidence that increased imports have caused or are threatening to cause serious injury pursuant to an investigation in accordance with the procedures laid down in the WTO Agreement on Safeguards.
5. The Party intending to take emergency measures under this Article shall promptly make a notification to the other Parties, containing all pertinent information which shall include evidence of serious injury caused by increased imports, precise description of the product involved, the proposed measure, the proposed date of introduction and expected duration of the measures. Any Party that may be affected shall simultaneously be offered compensation in the form of substantially equivalent trade liberalisation in relation to the imports from any such Party.
6. The Joint Committee shall, within 30 days from the date of notification to the Parties, meet to examine the information provided under paragraph 5 in order to facilitate a mutually acceptable solution of the matter. In the absence of such solution, the importing Party may adopt a measure pursuant to paragraph 2 to remedy the problem, and, in the absence of mutually agreed compensation, the Party against whose product the measure is taken may take retaliatory action. The emergency measure and any compensatory or retaliatory action shall be immediately notified to the Joint Committee. The retaliatory action shall consist of the suspension of concessions having substantially equivalent trade effects or concessions substantially equivalent to the value of the additional duties expected to result from the emergency action. In the selection of the emergency measure and the retaliatory action, priority must be given to the action which least disturbs the functioning of this Agreement.
7. In critical circumstances where delay would cause damage which would be difficult to repair, a Party may take a provisional emergency measure not exceeding 120 days pursuant to a preliminary determination that there is clear evidence that increased imports have caused or are threatening to cause serious injury. The Party intending to take such a measure shall immediately notify the other Parties thereof and, within 30 days of the date of such notification, the pertinent procedures set out in paragraphs 5 and 6, including for compensatory and retaliatory action, shall be initiated. Any compensation shall be based on the total period of application of the provisional measure. The period of application of any such provisional measure shall be counted as part of the duration of the definitive measure and any extension thereof.
Article 20. Global Safeguard
The Parties confirm their rights and obligations under Article XIX of GATT 1994 and the WTO Agreement on Safeguards.
Article 21. General Exceptions
Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination of a Party where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Party of measures:
(a) necessary to protect public morals;
(b) necessary to protect human, animal or plant life or health;
(c) relating to the importations or exportations of gold and silver;
(d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the protection of intellectual property rights, and the prevention of deceptive practices;
(e) relating to the products of prison labour;
(f) imposed for the protections of national treasures of artistic, historic or archaeological value;
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;
(h) undertaken in pursuance of obligations under any intergovernmental commodity agreement which conforms to criteria submitted to the WTO and not disapproved by it or which is itself so submitted and not so disapproved;
(i) involving restrictions on exports of domestic materials necessary to ensure essential quantities of such materials to a domestic processing industry during periods when the domestic price of such materials is held below the world price as part of a governmental stabilization plan; provided that such restrictions shall not operate to increase the exports of or the protection afforded to such domestic industry, and shall not depart from the provisions of this Agreement relating to non-discrimination;
(j) essential to the acquisition or distribution of products in general or local short supply; provided that any such measures shall be consistent with the principle that all WTO members are entitled to an equitable share of the international supply of such products, and that any such measures, which are inconsistent with the other provisions of this Agreement shall be discontinued as soon as the conditions giving rise to them have ceased to exist.
Chapter III. Trade In Services and Establishment
Section I. Trade In Services
Article 22. Coverage
1. This Section applies to measures affecting trade in services taken by central, regional or local governments and authorities as well as by non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities.
2. This Section applies to measures affecting trade in all services sectors with the exception of air services, including domestic and international air transportation services, whether scheduled or non-scheduled, and related services in support of air services, other than:
(a) aircraft repair and maintenance services;
(b) the selling and marketing of air transport services;
(c) computer reservation system (CRS) services. (1)
3. Nothing in this Section shall be construed to impose any obligation with respect to government procurement, which is subject to the Chapter V.
Article 23. Definitions
For the purposes of this Section:
(a) "trade in services" is defined as the supply of a service:
(i) from the territory of a Party into the territory of another Party (mode 1);
(ii) in the territory of a Party to the service consumer of another Party (mode 2);
(iii) by a service supplier of a Party, through commercial presence in the territory of another Party (mode 3);
(iv) by a service supplier of a Party, through presence of natural persons in the territory of another Party (mode 4).
(b) "measure" means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action or any other form;
(c) "supply of a service" includes the production, distribution, marketing, sale and delivery of a service;
(d) "measures by a Party affecting trade in services" include measures in respect of:
(i) the purchase, payment or use of a service;
(ii) the access to and use of, in connection with the supply of a service, services which are required by that Party to be offered to the public generally;
(iii) the presence, including commercial presence, of persons of another Party for the supply of a service in the territory of that Party;
(e) "commercial presence" means any type of business or professional establishment, including through:
(i) the constitution, acquisition or maintenance of a juridical person; or
(ii) the creation or maintenance of a branch or a representative office; within the territory of a Party for the purpose of supplying a service;
(f) "service supplier" means any person that seeks to supply or supplies a service; (2)
(g) "natural person of a Party" is, in accordance with its legislation, a national or a permanent resident of that Party if he or she is accorded substantially the same treatment as nationals in respect of measures affecting trade in services;
(h) "juridical person" means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association;
(i) "services" includes any service in any sector except services supplied in the exercise of governmental authority;
(j) "juridical person of a Party" means a juridical person which is either:
(i) constituted or otherwise organised under the law of Chile or an EFTA State, and that is engaged in substantive business operations in Chile or in the EFTA State concerned, or (ii) in the case of the supply of a service through commercial presence, owned or controlled by:
(A) natural persons of that Party; or
(B) juridical persons identified under paragraph (j)(i); and
(k) "a service supplied in the exercise of governmental authority" means any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers.
Article 24. Most-favoured Nation Treatment
1. The rights and obligations of the Parties with respect to most-favoured nation treatment shall be governed by the GATS.