Title
Free Trade Agreement between the Government of the United States of America and the Government of the Republic of Chile
Preamble
The Government of the Republic of Chile and the Government of the United States of America, resolved to:
STRENGTHEN the special bonds of friendship and cooperation between their nations;
CONTRIBUTE to the harmonious development and expansion of world trade and provide a catalyst to broader international cooperation;
CREATE an expanded and secure market for the goods and services produced in their territories;
AVOID distortions in their reciprocal trade;
ESTABLISH clear and mutually advantageous rules governing their trade;
ENSURE a predictable commercial framework for business planning and investment;
BUILD on their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organization and other multilateral and bilateral instruments of cooperation;
ENHANCE the competitiveness of their firms in global markets;
FOSTER creativity and innovation, and promote trade in goods and services that are the subject of intellectual property rights;
CREATE new employment opportunities and improve working conditions and living standards in their respective territories;
BUILD on their respective intemational commitments and strengthen their cooperation on labor matters;
PROTECT, enhance, and enforce basic workers' rights;
IMPLEMENT this Agreement in a manner consistent with environmental protection and conservation;
PROMOTE sustainable development;
CONSERVE, protect, and improve the environment, including through managing natural resources in their respective territories and through multilateral environmental agreements to which they are both parties;
PRESERVE their flexibility to safeguard the public welfare; and
CONTRIBUTE to hemispheric integration and the fulfillment of the objectives of the Free Trade Area of the Americas;
HAVE AGREED as follows:
Body
Chapter One. Initial Provisions
Article 1.1. Establishment of a Free Trade Area
The Parties to this Agreement, consistent with Article XXIV of the General Agreement on Tariffs and Trade 1994 and Article V of the General Agreement on Trade in Services, hereby establish a free trade area.
Article 1.2. Objectives
1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation treatment, and transparency, are to:
(a) encourage expansion and diversification of trade between the Parties;
(b) eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the Parties;
(c) promote conditions of fair competition in the free trade area; (d) substantially increase investment opportunities in the territories of the Parties;
(e) provide adequate and effective protection and enforcement of intellectual property rights in each Party's territory;
(f) create effective procedures for the implementation and application of this Agreement, for its joint administration, and for the resolution of disputes; and
(g) establish a framework for further bilateral, regional, and multilateral cooperation to expand and enhance the benefits of this Agreement.
2. The Parties shall interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1 and in accordance with applicable rules of international law.
Article 1.3. Relation to other Agreements
The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and other agreements to which both Parties are party.
Article 1.4. Extent of Obligations
The Parties shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance, except as otherwise provided in this Agreement, by state governments.
Chapter Two. General Definitions
Article 2.1. Definitions of General Application
For purposes of this Agreement, unless otherwise specified:
central level of government means:
(a) for the United States, the federal level of govemment; and
(b) for Chile, the national level of government;
Commission means the Free Trade Commission established under Article 21.1 (The Free Trade Commission);
covered investment means, with respect to a Party, an investment in its territory of an investor of the other Party in existence as of the date of entry into force of this Agreement or established, acquired, or expanded thereafter;
customs authority means the competent authority that is responsible under the law of a Party for the administration of customs laws and regulations; customs duty includes any customs or import duty and a charge of any kind imposed in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but does not include any:
(a) charge equivalent to an intemal tax imposed consistently with Article III:2 of the GATT 1994; in respect of like, directly competitive, or substitutable goods of the Party, or in respect of goods from which the imported good has been manufactured or produced in whole or in part;
(b) antidumping or countervailing duty; and
(c) fee or other charge in connection with importation commensurate with the cost of services rendered;
Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
days means calendar days;
enterprise means any entity constituted or organized under applicable law, whether or not for profit, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture, or other association;
enterprise of a Party means an enterprise constituted or organized under the law of a Party; existing means in effect on the date of entry into force of this Agreement;
GATS means the General Agreement on Trade in Services, which is part of the WTO Agreement;
GATT 1994 means the General Agreement on Tariffs and Trade 1994, which is part of the WTO Agreement;
goods of a Party means domestic products as these are understood in the GATT 1994 or such goods as the Parties may agree, and includes originating goods of that Party. A good of a Party may include materials of other countries;
Harmonized System (HS) means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, and Chapter Notes, as adopted and implemented by the Parties in their respective tariff laws;
heading means the first four digits in the tariff classification number under the Harmonized System;
measure includes any law, regulation, procedure, requirement, or practice;
national means a natural person who has the nationality of a Party according to Annex 2.1 ora permanent resident of a Party;
originating means qualifying under the rules of origin set out in Chapter Four (Rules of Origin and Origin Procedures);
person means a natural person or an enterprise; person of a Party means a national or an enterprise of a Party;
preferential tariff treatment means the duty rate applicable under this Agreement to an originating good;
procurement means the process by which a government obtains the use of or acquires goods or services, or any combination thereof, for govemmental purposes and not with a view to commercial sale or resale, or use in the production or supply of goods or services for commercial sale or resale;
regional level of government means, for the United States, a state of the United States, the District of Columbia, or Puerto Rico. For Chile, as a unitary state, "regional level of government" is not applicable;
Safeguards Agreement means the Agreement on Safeguards, which is part of the WTO Agreement;
SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measures, which is part of the WTO Agreement;
state enterprise means an enterprise that is owned, or controlled through ownership interests, by a Party;
subheading means the first six digits in the tariff classification number under the Harmonized System;
TBT Agreement means the Agreement on Technical Barriers to Trade, which is part of the WTO Agreement;
territory means for a Party the territory of that Party as set out in Annex 2.1;
TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, which is part of the WTO Agreement; and
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on April 15, 1994.
Annex 2.1. Country-Specific Definitions
For purposes of this Agreement, unless otherwise specified:
natural person who has the nationality of a Party means:
(a) with respect to Chile, a chileno as defined in Article 10 of the Constitución Política de la República de Chile; and
(b) with respect to the United States, "national of the United States" as defined in the existing provisions of the Immigration and Nationality Act; and
territory means:
(a) with respect to Chile, the land, maritime, and air space under its sovereignty, and the exclusive economic zone and the continental shelf within which it exercises sovereign rights and jurisdiction in accordance with intemational law and its domestic law; and
(b) with respect to the United States,
(i) the customs territory of the United States, which includes the 50 states, the District of Columbia, and Puerto Rico,
(ii) the foreign trade zones located in the United States and Puerto Rico, and
(iii) any areas beyond the territorial seas of the United States within which, in accordance with intemational law and its domestic law, the United States may exercise rights with respect to the seabed and subsoil and their natural resources.
Chapter Three. National Treatment and Market Access for Goods
Article 3.1. Scope and Coverage
Except as otherwise provided, this Chapter applies to trade in goods of a Party.
Section A. National Treatment
Article 3.2. National Treatment
1. Each Party shall accord national treatment to the goods of the other Party in accordance with Article Ill of GATT 1994, including its interpretative notes, and to this end Article Ill of GATT 1994, and its interpretative notes, are incorporated into and made part of this Agreement, mutatis mutandis.
2. The provisions of paragraph 1 regarding national treatment shall mean, with respect to a regional level of government, treatment no less favorable than the most favorable treatment that regional level of goverment accords to any like, directly competitive, or substitutable goods, as the case may be, of the Party of which it forms a part. (1)
3. Paragraphs 1 and 2 shall not apply to the measures set out in Annex 3.2.
Section B. Tariff Elimination
Article 3.3. Tariff Elimination
1. Except as otherwise provided in this Agreement, neither Party may increase any existing customs duty, or adopt any customs duty, on an originating good.
2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with Annex 3.3.
3. The United States shall eliminate customs duties on any non-agricultural originating goods that, after the date of entry into force of this Agreement, are designated as articles eligible for duty-free treatment under the U.S. Generalized Sysiem of Preferences, effective from the date of such designation.
4. On the request of either Party, the Parties shall consult to consider accelerating the elimination of customs duties set out in their Schedules to Annex 3.3. An agreement between the Parties to accelerate the elimination of a customs duty on a good shall supercede any duty rate or staging category determined pursuant to their Schedules to Annex for such good when approved by each Party in accordance with Article 21.1(3)(b) (The Free Trade Commission) and its applicable legal procedures.
5. For greater certainty, a Party may:
(a) raise a customs duty back to the level established in its Schedule to Annex 3.3 following a unilateral reduction; or
(b) maintain or increase a customs duty as authorized by the Dispute Settlement Body of the WTO.
Article 3.4. Used Goods
On entry into force of this Agreement, Chile shall cease applying the 50 percent surcharge established in the Regia General Complementaria N° 3 of Arancel Aduanero with respect to originating goods of the other Party that benefit from preferential tariff treatment.
Article 3.5. Customs Valuation of Carrier Media
1. For purposes of determining the customs value of carrier media bearing content, each Party shall base its determination on the cost or value of the carrier media alone.
2. For purposes of the effective imposition of any intemal taxes, direct or indirect, each Party shall determine the tax basis according to its domestic law.
Section C. Special Regimes
Article 3.6. Waiver of Customs Duties
1. Neither Party may adopt any new waiver of customs duties, or expand with respect to existing recipients or extend to any new recipient the application of an existing waiver of customs duties, where the waiver is conditioned, explicitly or implicitly, on the fulfillment of a performance requirement.
2. Neither Party may, explicitly or implicitly, condition on the fulfillment of a performance requirement the continuation of any existing waiver of customs duties.
3. This Article shall not apply to measures subject to Article 3.8.
Article 3.7. Temporary Admission of Goods
1. Each Party shall grant duty-free temporary admission For:
(a) professional equipment, including equipment for the press or television, software and broadcasting and cinematographic equipment, necessary for carrying out the business activity, trade or profession of a business person who qualifies for temporary entry pursuant to the laws of the importing Party;
(b) goods intended for display or demonstration;
(c) commercial samples and advertising films and recordings; and
(d) goods admitted for sports purposes, regardless of their origin.
2. Each Party shall, at the request of the person concemed and for reasons deemed valid by its customs authority, extend the time limit for temporary admission beyond the period initially fixed.
3. Neither Party may condition the duty-free temporary admission of goods referred to in paragraph 1, other than to require that such goods:
(a) be used solely by or under the personal supervision of a national or resident of the other Party in the exercise of the business activity, trade, profession, or sport of that person;
(b) not be sold or leased while in its territory;
(c) be accompanied by a security in an amount no greater than the charges that would otherwise be owed on entry or final importation, releasable on exportation of the good;
(d) be capable of identification when exported;
(e) be exported on the departure of the person referenced in subparagraph (a), or within such other period, related to the purpose of the temporary admission, as the Party may establish, or within one year, unless extended;
(f) be admitted in no greater quantity than is reasonable for their intended use; and
(g) be otherwise admissible into the Party's territory under its laws.
4. If any condition that a Party imposes under paragraph 3 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on the good plus any other charges or penalities provided for under its domestic law.
5. Each Party, through its customs authority, shall adopt procedures providing for the expeditious release of goods admitted under this Article. To the extent possible, such procedures shall provide that when such a good accompanies a national or resident of the other Party who is seeking temporary entry, the good shall be released simultaneously with the entry of that national or resident.
6. Each Party shall permit a good temporarily admitted under this Article to be exported through a customs port other than that through which it was admitted.
7. Each Party, through its customs authority, consistent with domestic law, shall relieve the importer or other person responsible for a good admitted under this Article from any liability for failure to export the good on presentation of satisfactory proof to customs authorities that the good has been destroyed within the original period fixed for temporary admission or any lawful extension.
8. Subject to Chapters Ten (Investment) and Eleven (Cross-Border Trade in Services):
(a) each Party shall allow a vehicle or container used in international traffic that enters its territory from the territory of the other Party to exit its territory on any route that is reasonably related to the economic and prompt departure of such vehicle or container;
(b) neither Party may require any bond or impose any penalty or charge solely by reason of any difference between the port of entry and the port of departure of a vehicle or container;
(c) neither Party may condition the release of any obligation, including any bond, that it imposes in respect of the entry of a vehicle or container into its territory on its exit through any particular port of departure; and
(d) neither Party may require that the vehicle or carrier bringing a container from the territory of the other Party into its territory be the same vehicle or carrier that takes such container to the territory of the other Party.
9. For purposes of paragraph 8, vehicle means a truck, a truck tractor, tractor, trailer unit or trailer, a locomotive, or a railway car or other railroad equipment.
Article 3.8. Drawback and Duty Deferral Programs
1. Except as otherwise provided in this Article, neither Party may refund the amount of customs duties paid, or waive or reduce the amount of customs duties owed, on a good imported into its territory, on condition that the good is:
(a) subsequently exported to the territory of the other Party;
(b) used as a material in the production of another good that is subsequently exported to the territory of the other Party; or
(c) substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of the other Party.
2. Neither Party may, on condition of export, refund, waive, or reduce: (a) an antidumping or countervailing duty;
(b) a premium offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions, tariff rate quotas, or tariff preference levels; or
(c) customs duties paid or owed on a good imported into its territory and substituted by an identical or similar good that is subsequently exported to the territory of the other Party.
3. Where a good is imported into the territory of a Party pursuant to a duty deferral program and is subsequently exported to the territory of the other Party, or is used as a material in the production of another good that is subsequently exported to the territory of the other Party, or is substituted by an identical or similar good used as a material in the production of another good that is subsequently exported to the territory of the other Party, the Party from whose territory the good is exported shall assess the customs duties as if the exported good had been withdrawn for domestic consumption.
4. This Article does not apply to:
(a) a good entered under bond for transportation and exportation to the territory of the other Party;