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Summary of key obligations

Chapter 3: Market Access for Goods

The ACl-FTA specifies that, on entry into force, Chile will
eliminate tariffs on 91.9 per cent of tariff lines covering
96.9 per cent of trade and Australia will eliminate tariffs on
90.8 per cent of lines covering 97.1 per cent of trade.
All remaining tariffs on both sides will be eliminated by year
six of the agreement (2015) except for one component of
Chile's sugar tariff which will remain subject to its
current 'price band' system.

The chapter also includes commitments on national treatment
(ie to treat goods of the other Party no less favourably than a
Party's own like goods), a general prohibition on import
and export restrictions (with some exceptions), and agreement
not to apply export taxes or agricultural export
subsidies.

The agreement establishes a Committee on Trade in Goods. The
Committee will meet at the request of either Party or the Joint
Free Trade Agreement (FTA) Committee (see Chapter 20).
The Committee's functions include promoting trade in
goods and addressing barriers to trade, especially in relation
to non-tariff measures.

Chapter 4: Rules of Origin

The rules of origin (ROO) chapter and associated Schedule of
Product Specific Rules (PSRs) establish the criteria for
determining whether goods will qualify for preferential tariff
treatment under the FTA (whether a good
"originates" in Australia or Chile). The
chapter also sets out the procedures for demonstrating that a
good qualifies for preferential treatment and, if necessary,
verifying that this is the case.

The ACl-FTA establishes a ROO based on the 'change in
tariff classification' model preferred by Australian
industry. Under ACl-FTA, exporters with the capacity to
self assess will be able to issue their own certificates of
origin while others can seek certificates of origin from
relevant industry bodies.

Chapter 5: Customs Administration

The Customs Administration chapter establishes a modern,
harmonised and simplified system of customs procedures for
trade in goods. It aims to ensure that customs procedures and
practices are consistent with international standards and will
be administered in a uniform, impartial and reasonable
manner. In addition, the customs procedures are intended
to facilitate the clearance of low-risk goods and allow the
customs administrations to focus on high-risk goods.

The chapter provides for 'advance rulings',
which enable exporters to verify with the customs
administration the tariff classification of their goods and
whether those goods will qualify for preferential tariff
treatment before the goods are exported.

The chapter includes provisions to ensure transparency and
for protecting the confidentiality of information received in
accordance with the chapter. Any importer unsatisfied
with any determination on customs matters will have access to
administrative and judicial review of the determination.
Australia and Chile have also undertaken to work towards the
use of paperless trading.

Chapter 6: Sanitary and Phytosanitary Measures (SPS)

The chapter acknowledges the dual objectives of facilitating
bilateral trade between the Parties and protecting human,
animal or plant life or health in their territory. The
Parties reaffirm their commitment to the rights and obligations
of the World Trade Organization (WTO) SPS Agreement and commit
to cooperation both in international bodies on SPS related work
and on priority proposals which can contribute to the
objectives of the chapter. The chapter acknowledges the
value of exchanging information on the SPS measures in place in
either Party and enshrines transparency in the implementation
of those measures. The text articulates the arrangements
for consultation between the Parties on any SPS matter which
may arise between them including the establishment of an SPS
Contact Point in each administration. The provisions of
the Chapter are not subject to dispute settlement under the
ACl-FTA.

Chapter 7: Technical Regulations, Standards and Conformity Assessment Procedures

This chapter applies to all standards, technical regulations
and conformity assessment procedures of the central government
which affect trade in goods between them and includes a
commitment to take reasonable steps to ensure that other bodies
with shared responsibilities (regional or local government or
non-government) also comply with its provisions. The
Parties reaffirm their commitment to the WTO Technical Barriers
to Trade (TBT) Agreement. The chapter emphasises the use
of international standards to underpin technical regulations
and recognises that a range of mechanisms exist to facilitate
the acceptance by a Party of the conformity assessment
procedures of the other Party. The Chapter establishes a
TBT Committee to facilitate its implementation which will meet
by mutual agreement between the Parties.

Chapter 8: Trade Remedies

This chapter protects the Parties' rights and
obligations under the WTO relating to the application of
safeguards and anti-dumping and countervailing duties in the
appropriate circumstances.

Chapter 9: Cross-Border Trade in Services (CBTS)

The substantive obligations of this chapter include
obligations on market access, national treatment,
most-favoured-nation treatment and local presence.

The market access obligation prohibits certain limitations
on market access (eg limitations on the number of service
suppliers or the total value of services transactions or
assets). The national treatment obligation requires each
Party to accord, to services and service suppliers of the other
Party, treatment no less favourable than it accords to its own
like services and service suppliers. Most-favoured nation
requires each Party to provide no less favourable treatment
than it applies to the services and service suppliers of any
third country. The local presence obligation prohibits a
Party from requiring that services suppliers of the other
establish or maintain any form of enterprise or to be resident
as a condition for the cross-border supply of a service.

Each Party has a list of non-conforming measures to the CBTS
and Investment chapters (as well as the Financial Services
chapter). Annex I to the FTA represents a standstill
commitment, as a Party (at central and regional government
level) will be able to maintain measures listed there that do
not comply with these obligations, but it will not be able to
increase the trade restrictiveness of those measures. In
addition, if a Party unilaterally liberalises those measures,
such liberalisation will be locked into the FTA automatically
(a so-called "ratchet mechanism"). Annex II
is a broader carve-out, as a Party would be able to both retain
existing measures and introduce new, more trade restrictive
measures for the sectors, subsectors and activities described
there.

The CBTS chapter, like the WTO General Agreement on Trade in
Services (GATS), respects the right of governments to adopt
domestic regulation affecting trade in services, but requires
these to be administered in a reasonable, objective and
impartial manner. The chapter requires Parties to ensure
that qualification and licensing requirements do not constitute
unnecessary barriers to trade and strengthens the disciplines
on the authorisation processes, and includes some innovative
language to promote temporary licensing regimes and access to
examinations.

There is an Annex on Professional Services designed to
support any initiatives by professional bodies seeking to
facilitate recognition of qualifications or
registration/licensing of professionals in the other Party.

Chapter 10: Investment

The Investment chapter covers both the pre-establishment and
post-establishment stages of investment.

The key obligations of the chapter are national treatment,
most-favoured-nation treatment, performance requirements and
obligations in respect of senior management and boards of
directors.

The performance requirements obligation means that certain
requirements cannot be imposed by the FTA Parties on investors
setting up in either Australia or Chile. These include a
requirement to make a given level of exports, achieve a given
level of domestic content or to purchase locally produced
goods. In addition, grants and subsidies to investors
cannot be made conditional on an investment achieving a given
level of domestic content or purchasing locally produced
goods. However, there are exceptions for subsidies or
grants which are conditioned on locating production in
Australia or Chile, supplying services, constructing
facilities, training or employment or research and
development. There are also exceptions for measures
necessary to protect human or plant life or health and for
government procurement.

Senior management and boards of directors' obligations
provide that a Party cannot require that an enterprise that is
a covered investment appoint individuals of any particular
nationality to a senior management position. However, a
Party may require that a majority, or less, of the board of
directors be of a particular nationality or be resident in its
territory, provided this requirement does not materially impair
the ability of that investor to exercise control over its
investment.

Parallel to the chapter on CBTS, specific non-conforming
measures may be taken out to the application of these key
obligations through listing of measures in Annex I of the FTA
or of sectors, sub-sectors or activities in Annex II.
Annex I non-conforming measures are subject to ratchet
provisions. As with the CBTS chapter, States and
Territories are fully covered.

The chapter also provides that a Party must permit all funds
of an investor of the other Party related to an investment in
its territory to be transferred freely and without undue
delay. It prohibits the expropriation of an investment
unless it is taken on a non-discriminatory basis, for a public
purpose, in accordance with due process of law, and accompanied
by prompt, adequate and effective compensation equivalent to
the fair market value.

There are detailed provisions on investor-state dispute
settlement which provide that where an investor alleges that a
Party has breached one of its obligations under the chapter in
such a way as to cause loss or damage, and it has not been
possible to resolve the dispute by consultations, the dispute
may be referred for dispute settlement.
Investor–state dispute settlement will not apply to
investment screening or admission processes.

Chapter 11: Telecommunications Services

The chapter on Telecommunications builds on the
Parties' obligations under the GATS Annex on
Telecommunications and the WTO Reference Paper on Basic
Telecommunications. It ensures that all service suppliers
of the other Party have access to and use of any public
telecommunications network or service offered in its territory
or across its borders in a timely fashion, on reasonable and
non-discriminatory terms and conditions.

Specifically, the chapter provides more detailed commitments
on interconnection and has additional commitments in the areas
of access to essential facilities and co-location, as well as
resale, dialling parity, number portability, submarine cable
systems and leased circuit services. The chapter contains
obligations on the independence of telecommunications
regulators and that decisions and the basis for such decisions,
of telecommunications regulators are clear and
non-discriminatory. The chapter includes procedures to
resolve telecommunications disputes and is also subject to the
dispute settlement procedures of the FTA.

Chapter 12: Financial services

Financial services are covered by a separate, stand alone,
chapter which contains obligations on market access, national
treatment, most-favoured-nation treatment, cross-border trade
in financial services and senior management and boards of
directors.

As per the Annexes to the CBTS and Investment chapters,
specific non-conforming measures can be identified against
these key obligations through listing of measures in Annex
III. Section 1 of Annex III contains a standstill
commitment and a ratchet mechanism. Section 2 of Annex
III contains a broader carve-out.

There is also a provision on new financial services which
provides that if a financial service is supplied in the
territory of one Party but not the other, and the second Party
would permit its own financial institutions to supply that
service without additional legislative action, then it must
allow financial institutions of the first Party to provide that
service in its territory.

The Financial Services chapter also contains additional
provisions that reflect the importance of regulation of this
sector to ensure the integrity and stability of the financial
system. These provisions draw on specific WTO provisions
relating to financial services and recognise the right of the
Parties to take measures necessary for prudential reasons while
seeking to ensure that these and other regulatory actions do
not become unnecessary or discriminatory barriers to trade

Chapter 13: Temporary Entry of Business Persons

The chapter sets out commitments for facilitating temporary
entry for business people engaged in bilateral trade and
investment. Four classes of business people are covered
by the chapter: business visitors; contractual service
suppliers; executives of a business headquartered in one Party
establishing a branch or a subsidiary in the other Party; and
intra-corporate transferees. The chapter also covers the
spouses of all the categories above except for short term
business visitors.

Chile's specific commitments provide that the four
categories of persons will be deemed to be engaged in
activities which are in Chile's interest and therefore
issued a temporary visa with unlimited opportunities for
renewal and with the right to obtain an identity card.
Spouses of persons granted the right to enter for periods of
longer than 12 months will automatically be granted work
rights.

Australia has committed to providing short and long term
temporary entry for periods consistent with the current Subclass 456 and Subclass 457
visas. Australia has also granted the spouses of long
term temporary entry automatic work rights.

The Parties commit themselves to process expeditiously
complete applications for immigration formalities and to
provide information on temporary entry requirements to enable
business persons to become acquainted with them. The
Parties also agree to consult on suggestions to further
facilitate temporary entry. Dispute settlement is
available where there has been a refusal to grant temporary
entry but only when: (a) the matter involves a pattern of
practice; (b) the natural persons affected have exhausted the
available domestic remedies regarding the particular matter;
and (c) the Parties have undertaken consultations to resolve
the issues.

Chapter 14: Competition Policy

This chapter affirms the Parties' commitment to
proscribing anti-competitive activities, with a view to
preventing distortions or restrictions of competition which may
affect trade in goods or services between them. The
Chapter provides for each Party to maintain a robust legal
framework to prohibit anti-competitive activities; imposes
disciplines on state enterprises, designated monopolies and
enterprises with special and exclusive rights; and allows for
exchange of information and cooperation on enforcement
activity. The Chapter is not subject to the Dispute
Settlement provisions of the ACl-FTA.

Chapter 15: Government Procurement

The provisions of the Government Procurement Chapter ensure
that the suppliers, goods and services of each Party have
non-discriminatory access to the government procurement market
of the other. The Chapter covers procurement above agreed
value thresholds by listed central and sub-central government
entities.

Chapter 16: Electronic Commerce

The key provision of the Electronic Commerce chapter is to
maintain zero customs duties on electronic transmissions
between Chile and Australia. The chapter also makes
commitments to maintain domestic legal frameworks governing
electronic commerce that minimise the regulatory burden on
electronic commerce; support industry-led development of
electronic commerce; and provide protection for consumers using
electronic commerce that is at least equivalent to that
provided for consumers of other forms of commerce. The
chapter includes articles that promote the use of and trust in
cross-border e-commerce, including through electronic
authentication and personal data protection and an article on
paperless trading committing each Party to endeavour to accept
electronic versions of trade administration documents as the
legal equivalent of paper documents.

Chapter 17: Intellectual Property (IP)

The IP chapter reinforces the Parties' existing rights
and obligations under the WTO Agreement on Trade Related
Aspects of Intellectual Property Rights, and builds on them in
a number of areas to reflect the high standards of intellectual
property protection already provided in both Australia and
Chile.

Chile has agreed to ratify or take reasonable steps to
ratify a number of international IP agreements to which
Australia is already a signatory, such as the International
Convention for the Protection of New Plant Varieties (1991) and
the Patent Cooperation Treaty.

Chile and Australia have also agreed to accord national
treatment in respect of all intellectual property rights
covered by the Chapter, so that Australian IP rights holders
will be accorded the same treatment as Chilean nationals under
Chilean IP laws. The same also applies to Chilean rights
holders in Australia.

The Chapter contains a number of specific obligations on
protection of trade marks, patents, copyright and geographical
indications as well as detailed enforcement
provisions.

Chapter 18: Cooperation

The chapter establishes a framework for cooperation aimed at
building on existing relationships, creating new opportunities
for trade and investment, promoting competitiveness, innovation
and research and development and supporting the role of the
private sector to encourage economic growth and
development. The provisions do not commit either party to
contributing significant resources.

The chapter includes an indicative list of areas where
cooperation might be of mutual benefit to the Parties.
The list includes science, agriculture including wine, food
production and processing, mining, energy, environment, small
and medium enterprises, tourism, education, labour, human
capital development and cultural collaboration.
Cooperation in other areas is not excluded. The chapter
includes mention of labour, environment and innovation in the
context of international agreements, mutual interests and
strengthening of the trade relationship.

Nothing in the chapter represents a commitment to any
particular initiative. Areas of cooperation will be
developed through existing agreements, through implementing
arrangements and will be facilitated through the designation of
national contact points.

The chapter establishes a Cooperation Committee which will
meet in the first year of implementation of the FTA and
thereafter as required by the parties. The Committee will
consider and review activities, maintain information on
cooperation between the Parties and report periodically to the
Joint FTA Committee (see Chapter 20).

Chapter 19: Transparency

The transparency chapter includes obligations on the Parties
to ensure that all laws, regulations, procedures and
administrative rulings regarding matters covered by the ACl-FTA
are made publicly available and to maintain the appropriate
legal systems to ensure the prompt review of any measure
concerning the ACl-FTA.

Chapter 20: Institutional Arrangements

The chapter establishes a Joint FTA Committee, to be
co-chaired at officials' level, to review the operation
of the ACl-FTA and to supervise the work of the subsidiary
committees, working groups and contact points established under
the ACl-FTA. The Joint Committee will meet in or shortly
after the first year of entry into force of the FTA. The
chapter reflects the need for flexible institutional
arrangements to manage the FTA proportionate to the overall
trade relationship between the Parties.

Chapter 21: Dispute Settlement

This chapter establishes procedures for the avoidance or
settlement of disputes between the Parties in relation to the
implementation, interpretation, application or operation of the
FTA, unless otherwise provided. If a dispute arises under
the ACl-FTA and another agreement to which the Parties are
party, or the WTO, the complaining party has a choice of
forum. The chapter provides procedures including
timelines for consultations on measures and proposed measures,
for referral of matters to the Joint FTA Committee and for the
establishment, terms of reference and composition of arbitral
panels and, inter alia, for their proceedings and
reports. The rules established can be modified by mutual
consent and the Parties can agree not to apply any
provision.

As provided for in this chapter, Australia and Chile have agreed Rules of Procedure which provide for the details of the rules and procedures of arbitral panels established under Chapter 21.

Last Updated: 16 November 2012
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