The negotiation of the Australia-Chile Free Trade Agreement
Update on fourth round of negotiations
The fourth round of negotiations on the Australia-Chile FTA was held in Santiago from 31 March to 4 April 08. Both Chile and Australia worked very hard and made substantial progress towards finalising the agreement. Text on a range of chapters was agreed and some previously unresolved issues, which had been troubling the negotiation for some time, were successfully concluded, subject to Ministerial endorsement.
Some chapters involving detailed or technical negotiations proved more time consuming than others. Government procurement negotiators remained in Santiago after the main team departed to continue their discussions. There have been a series of video and telephone conversations since the round on intellectual property issues – another area where Australia was determined to achieve a comprehensive agreement in line with our domestic regulatory environment. It is now up to Ministers – that is, the Australian Trade Minister, the Hon Simon Crean MP, and his counterpart the Chilean Minister for Foreign Affairs, Alejandro Foxley, to conclude the negotiations and, we hope, begin the process of ratification.
Ministers are expected to conclude the negotiations shortly. Pending finalisation, work has begun on the legal scrub of the text – which is the process during which inconsistencies between provisions, or ambiguities or drafting anomalies are identified and rectified. This will be the first free trade agreement that Australia has concluded, assuming Ministers agree to do so, which will be official in two languages. This involves special arrangements for verification of the Spanish language version which Chile will provide.
When Ministers have agreed on the final outcome for the FTA, there will be a press announcement and information on its content will be publicly available. The team will then be available to discuss the provisions and detail as necessary.
Update on third round of negotiations
It was agreed with Chile that the third round of negotiations would be split, in order to accommodate the different holiday seasons in each country and inevitable staff absences. The first half of the round took place in Canberra in the week of 10 December and covered mostly goods issues. The rest of the Chilean team came to Canberra in the last week of January to continue negotiations on the services, investment and intellectual property issues.
The December sessions made important progress on goods and related issues. Goods, customs, technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS) and competition policy texts are substantially agreed – in several cases only one issue remains outstanding before those texts can be put aside until the end of the negotiations. A lot of time at this session was spent on government procurement and on rules of origin (ROO). Important progress was made on each. The group worked on product specific rules of origin for two days and achieved much, but more work remains to be done. The government procurement group spent three days resolving some thorny issues but, like the ROOs group, still have a way to go. Australia intends to refine the government procurement text intersessionally and will also need to consult with State and Territory governments, and other Commonwealth agencies, to ensure that they are comfortable with likely provisions. We began detailed discussions on dispute settlement and other legal issues and Australia and Chile each agreed to draft some of the necessary provisions for the next round.
The goods market access negotiations were positive – while the process is not over and the detail is confidential between governments at this stage, we have made a promising start and both sides are committed to a strong, liberalising outcome. Each of us does have sensitivities, however, so each will be concentrating on ensuring that our key trade interests are addressed satisfactorily.
The Chilean services and investment and intellectual property teams travelled to Canberra in the week of 28 January to engage with their counterparts here. Those are particularly complex subjects and some very intense negotiations over several very long days resulted. Chile sent a widely-representative team and Australia’s own delegation included officers from DFAT, the Attorney General’s Department, Treasury, Customs, the Industry Department, the Departments of Broadband, Communications and the Digital Economy, of Immigration and Citizenship and of Education, Employment and Workplace Relations.
Some important progress was made in the session. Australia tabled a basic text for a cooperation chapter, an inclusion in the Agreement to which Chile attaches a deal of importance. Our willingness to talk about such a chapter was an important step forward and was well received by the Chilean negotiators. For its part, Chile indicated some flexibility on a couple of key services and investment issues that, until then, had been quite problematic. The conversation is not over, but it is heading in the right direction. The intellectual property team made steady progress, with considerable work remaining.
Although there is still a lot to be done, both sides have acknowledged that the end of these negotiations is in sight. We have made substantial progress in a relatively very short period and it is possible, but not certain, that the negotiations could be finalised in the next few months. We have scheduled intersessional meetings in both Chile and Australia in early March and plan to hold the fourth round in Santiago early in April. .
The March intersessionals involve the Chileans sending a small group of negotiators to Canberra. Agreeing on product specific schedules for Rules of Origin is a very labour intensive and time consuming task and it is vital that the negotiators have enough time to work through the tariff schedules. We will have an opportunity, in the margins of that meeting, to try and move the goods negotiations on as well. We also hope to agree on substantial areas of text on general provisions and dispute settlement. A few of our services and investment negotiators will travel to Santiago in the same week to push forward on as many areas as possible, including financial services (where progress has been slow to date), telecommunications and movement of persons. The IP and government procurement negotiators are considering video and telephone conferencing as a way of moving closer to agreement on those chapters.
Update on second round of negotiations
The second round of Australia-Chile Free Trade Agreement (FTA) negotiations was held from 8-12 October in Santiago. Good progress was made across all areas of the agreement and the discussions were undertaken in a spirit of cooperation and flexibility.
Conditional goods market access offers were exchanged with both sides demonstrating their commitment to a strong, liberalising outcome. It is only the beginning of the process, however, and we will be focussing our efforts now on formulating specific requests to ensure that our key trade interests are addressed satisfactorily. The final Australian offer on tariff elimination will depend on the extent to which Chile responds positively to our requests.
Both sides had intended also to exchange services and investment offers. The Chileans were not quite ready to exchange, however, so we agreed to postpone that process and the exchange has occurred intersessionally. There were plenty of other issues to discuss during the services and investment sessions, so it was not significant that the formal offers were delayed by a few weeks.
Although the discussions were conducted in a spirit of cooperation, there are some key areas of divergence between the two sides which will need some serious work. These areas include intellectual property (although the discussions took that set of issues forward considerably), services market access, investment, sanitary and phytosanitary measures, government procurement and competition policy. We intend to work hard to close those gaps while maximising the value of the agreement for Australian business.
We have agreed to split the next round, in order to work around the holiday season in each country. Some of the Chilean team will come to Canberra in early December to pursue the goods negotiations and most of the other issues around goods, including government procurement. The remainder of the team will visit in late January to further the negotiations across services and investment and any of the other issues not covered in December.
Update on first round of negotiations
This first substantive round of Australia-Chile FTA negotiations was held in Canberra on 7 - 9 August. It was designed to build on the preliminary meetings held by the FTA teams in February and April in Santiago and, on that foundation, we were able to exchange quite a lot of text prior to the meeting and make solid progress on much of that text when we got together. The Chileans sent a large delegation (from at least 7 agencies) and engaged constructively on all issues. We had shared the drafting responsibility and draft texts based to some extent on Australia’s and Chile’s FTAs with the United States were tabled on all likely substantive chapters including Market Access for Goods, Cross Border Trade in Services, Investment, Government Procurement and Intellectual Property. The Chileans also tabled a comprehensive draft text on Cooperation, which is a great interest of theirs, for our consideration.
The discussions on the goods aspects of the agreement were positive, with significant progress made towards agreement on language covering, for example, issues like national treatment and market access. The discussions on rules of origin, technical barriers to trade, customs administration and sanitary and phytosanitary measures were also useful, with both sides generally in alignment on many of the key issues.
On services, the engagement was complex but constructive and encompassed discussion of chapters on Cross Border Trade in Services, Investment, Temporary Entry, Telecommunications and Electronic Commerce. Both sides agreed to exchange more information on each other’s regimes affecting trade in services to better facilitate progress at the next negotiating round.
Discussions on government procurement and competition policy were also positive but still have a way to go. As expected, the conversation on intellectual property (IP) was more challenging but we used the opportunity to reiterate to Chile the importance to Australia of including substantive, high quality IP provisions in our FTA.
Overall, the negotiations were productive. We have a similar approach to trade negotiations and share similar views on trade liberalisation. There are, of course, divergences in our respective policy approaches but both sides are keen to resolve these issues both inter-sessionally and at the next negotiating round. We hope that we will be able to discuss market access offers in goods, services and investment at our next meeting following some consultations with states and territories. We are working towards a date in mid-October for that meeting.