Canada - Chile Amending Free Trade Agreement

Agreement to Amend the Free Trade Agreement Between the Government of Canada and the Government of the Republic of Chile, Done at Santiago on 5 December 1996, as Amended, Between the Government of Canada and the Government of The Republic of Chile

The Government of Canada and the Government of the Republic of Chile,

being parties to the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, done at Santiago on 5 December 1996, as amended by the First Additional Protocol to the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile,done at Toronto on 4 November 1999, and by the Second Additional Protocol to the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile,done at Ottawa on 25 October 2001, and by the Third Additional Protocol to the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, done at Santiago on 8 November 2004, and by the Exchange of Letters between the Government of Canada and the Government of the Republic of Chile rectifying Annex C‑00‑B, Annex D-01 and Annex D-03.1 and the Uniform Regulations for Chapter D of the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, done at Santiago on December 5, 1996,done at Ottawa on 9 November 2004 and at Santiago on 25 November 2004, and by the Agreement between the Government of Canada and the Government of the Republic of Chile to amend the Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, done at Hanoi on 15 November 2006, (the “CCFTA”);

desiring to further amend the CCFTA under Article P-02;

have agreed as follows:

Article I

Addition of Chapter H bis (Financial Services)

The CCFTA is amended by adding to Part Three of the CCFTA the Financial Services Chapter, entitled “Chapter H bis (Financial Services)”, set forth in Appendix I to this Agreement.

Article II

Addition of Annex VI

The provisions set forth in Appendix II to this Agreement:

(a) Annex VI: Reservations Relating to Financial Services (Chapter H bis);

(b) Annex VI Schedule of Canada; and

are added to the CCFTA.

Article III

Amendments to the Table of Contents

1. The Table of Contents of the CCFTA is amended by adding the following immediately before “Part Four: Administrative and Institutional Provisions”:

“Part Threebis: Government Procurement

Chapter Kbis: Government Procurement”.

2. The Table of Contents of the CCFTA is amended by adding the following immediately before “Chapter I: Telecommunications”:

“Chapter H bis: Financial Services”.

3. The Table of Contents of the CCFTA is amended by adding the following immediately after the reference to Annex IV and its contents:

“Annex VI: Reservations Relating to Financial Services (Chapter H bis)

Schedule of Canada
Schedule of Chile”.

Article IV

Amendments to Chapter B (General Definitions)

1. The definition of Customs Valuation Code in Article B-01 of the CCFTA is deleted and replaced with the following:

“Customs Valuation Agreement means the World Trade Organization (WTO) Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, done at Marrakesh on 18 April 1994;”;

2. The definition of province in Article B-01 of the CCFTA is deleted and replaced with the following:

“province means a province of Canada, and includes Yukon, the Northwest Territories, and Nunavut, and their successors;”.

Article V

Amendments to Chapter C (National Treatment and Market Access for Goods)

1. Article C-16 of the CCFTA is deleted and replaced with the following:

Article C-16: Customs Valuation Agreement

The Customs Valuation Agreement shall govern the customs valuation rules applied by the Parties to their reciprocal trade. The Parties agree that they will not make use in their reciprocal trade of the options and reservations permitted under Article 20 and paragraphs 2, 3 and 4 of Annex III of the Customs Valuation Agreement”.

2. The definition of agricultural goods in Article C-18 of the CCFTA is deleted and replaced with the following:

agricultural goods means a good provided for in any of the following:⁷

(a) Harmonized System (HS) Chapters 1 through 24 (other than a fish or fish product); and

(b)

HS subheading - 2905.43 - mannitol

HS subheading - 2905.44 - sorbitol

HS heading - 33.01 - essential oils

HS headings - 35.01 to 35.05 - albuminoidal substances, modified starches, glues

HS subheading - 3809.10 - finishing agents

HS subheading - 3824.60 - sorbitol n.e.p.

HS headings - 41.01 to 41.03 - hides and skins

HS heading - 43.01 - raw furskins

HS headings - 50.01 to 50.03 - raw silk and silk waste

HS headings - 51.01 to 51.03 - wool and animal hair

HS headings - 52.01 to 52.03 - raw cotton, cotton waste and cotton carded or combed

HS heading - 53.01 - raw flax

HS heading - 53.02 - raw hemp;”

footnote 7 is unchanged.

3. Appendix 1.1 of Annex C-00-B of the CCFTA is deleted and replaced with a new Appendix 1.1 as set out in Appendix III to this Agreement.

Article VI

Amendments to Chapter D (Rules of Origin)

1. Article D-02(5)(b) of the CCFTA is amended by replacing “Customs Valuation Code” with “Customs Valuation Agreement”.
2. Article D-02(6) of the CCFTA is amended by replacing “Customs Valuation Code” with “Customs Valuation Agreement”.
3. Article D-02(9)(a) of the CCFTA is amended by replacing “Customs Valuation Code” with “Customs Valuation Agreement”.
4. Article D-02(9)(b) of the CCFTA is amended by replacing the two references to “Customs Valuation Code” with “Customs Valuation Agreement”, as follows:
"in the event that there is no transaction value or the transaction value of the material is unacceptable under Article 1 of the Customs Valuation Agreement, be determined in accordance with Articles 2 through 7 of the Customs Valuation Agreement; and".
5. Article D-05(1) of the CCFTA is amended by replacing “Customs Valuation Code” with “Customs Valuation Agreement”.
6. Article D-05(2) of the CCFTA is amended by replacing “Customs Valuation Code” with “Customs Valuation Agreement”.
7. Article D-13(d) of the CCFTA is amended by replacing the four references to “Customs Valuation Code” with “Customs Valuation Agreement”, as follows:
"(d)      in applying the Customs Valuation Agreement under this Chapter,
(i)         the principles of the Customs Valuation Agreement shall apply to domestic transactions, with such modifications as may be required by the circumstances, as would apply to international transactions,
(ii)        the provisions of this Chapter shall take precedence over the Customs Valuation Agreement to the extent of any difference, and
(iii)       the definitions in Article D-16 shall take precedence over the definitions in the Customs Valuation Agreement to the extent of any difference; and”.
8. The definition of identical or similar goods in Article D-16 of the CCFTA is amended by replacing “Customs Valuation Code” with “Customs Valuation Agreement”.
9. The definition of transaction value is amended by replacing “Customs Valuation Code” with “Customs Valuation Agreement”.

Article VII

Amendments to Chapter E (Customs Procedures)

1. Article E-02(3) of the CCFTA is deleted and replaced with the following:
"3.       Where a good would have qualified as an originating good when it was imported into the territory of a Party, but no claim for preferential tariff treatment was made at that time, the importing Party shall permit the importer, within a period of one year or for such longer period specified by its domestic law after the date on which the good was imported, to apply for a refund of any excess duties paid as the result of the good not having been accorded preferential tariff treatment, on presentation of:
(a)        a written declaration that the good qualified as an originating good at the time of importation;
(b)        a copy of the Certificate of Origin; and
(c)        such other documentation relating to the importation of the good as that Party may require.”
2. Article E-09(1)(c) of the CCFTA is amended by replacing the reference to “Customs Valuation Code” with “Customs Valuation Agreement”.
3. The following paragraph is added after Article E-12(2) of the CCFTA:
"3. With respect to goods considered originating in accordance with Article D-04 (Rules of Origin – Accumulation), the Parties may cooperate with a non‑Party to develop customs procedures based on the principles of this Chapter.”

Article VIII

Amendments to Chapter G (Investment)

1. Article G-01(2) of the CCFTA is deleted and replaced with the following:
“2. This Chapter does not apply to measures adopted or maintained by a Party to the extent that they are covered by Chapter H bis of this Agreement.”.
2. Article G-01(3) of the CCFTA is deleted.
3. Article G-01(4) of the CCFTA is renumbered as “G-01(3)”.
4. Article G-40 of the CCFTA is amended as described below:
(a) the definition of financial institution is deleted;
(b) paragraph (k) of the definition of investment is deleted, the “or” immediately preceding paragraph (k) is deleted, and the semi-colon immediately preceding that “or” is replaced with a period; and
(c) the definition of person of Party is amended by deleting “and (3)”.
5. Annex G-01.3(b) of the CCFTA is deleted.

Article IX

Amendments to Chapter H (Cross-Border Trade in Services)

1. Article H-01(2)(a) of the CCFTA is deleted and replaced by the following:
“(a) financial services, as defined in Chapter H bis (Financial Services) of this Agreement;”.
2. Article H-12(2) of the CCFTA is amended by deleting the definition of financial service.

Article X

Amendments to Chapter Kbis (Government Procurement)

Annex Kbis-01.1-7 of the CCFTA is deleted and replaced with the following:

“Annex Kbis-01.1-7

Threshold Adjustment Formulas

1. The thresholds referred to in Annexes Kbis-01.1-1 and Kbis-01.1-2 shall be adjusted at two-year intervals with each adjustment taking effect on January 1, beginning January 1, 2008.
2. For Canada:
(a) the thresholds referred to in Annex Kbis-01.1-1, except the threshold for construction services, shall be the adjusted thresholds of the thresholds listed in Article 1001.1(c)(i) of the North American Free Trade Agreement (NAFTA) for goods and services procured by federal government entities, converted into Canada’s national currency according to that agreement;
(b) the threshold for construction services referred to in Annex Kbis-01.1-1 shall be the threshold for construction services listed in Canada’s Appendix 1, Annex 1 of the WTO Agreement on Government Procurement, done at Marrakesh on 15 April 1994, converted into Canada’s national currency according to the WTO Agreement on Government Procurement, GPA/1, Annex 3;
(c) the thresholds referred to in Annex Kbis-01.1-2 shall be the adjusted thresholds of the thresholds listed in Article 1001.1(c)(ii) of the NAFTA for goods, services and construction services procured by government enterprises, converted into Canada’s national currency according to that agreement.
3. For Chile:
(a) the thresholds referred to in Annex Kbis-01.1-1 shall be the adjusted thresholds of the thresholds listed in Annex 9.1, Section A, of the Chile-United States Free Trade Agreement, done at Miami, on 6 June 2003, for goods, services and construction services procured by the Central Level of Government Entities, converted into Chile’s national currency according to that agreement;
(b) the thresholds referred to in Annex Kbis-01.1-2, except the threshold for construction services, shall be the adjusted thresholds of the thresholds listed in Section C of the Chile United States Free Trade Agreement, for goods and services procured by Other Covered Entities, converted into Chile’s national currency according to that agreement;
(c) the threshold for construction services in Annex Kbis 01.1 2, shall be the adjusted threshold of the threshold for construction services procured by government enterprises as listed in Article 1001.1(c)(ii) of the NAFTA. Canada will notify Chile of the NAFTA threshold in U.S. dollars in December of the year before the adjusted threshold takes effect. The adjusted threshold shall be converted into Chile’s national currency in accordance with the Chile United States Free Trade Agreement.
4. Each Party shall notify the other in writing of its adjusted thresholds in their domestic currencies no later than January 15 of the year the adjusted threshold takes effect.
5. Where during a year a major change in a national currency of either Party were to create a significant problem with regard to the application of this Chapter, the Parties shall consult as to whether an interim adjustment is appropriate.
6. In the event that:
(a) Canada withdraws from the NAFTA pursuant to Article 2205 of that agreement, or the WTO Agreement on Government Procurement pursuant to Article XXIV of that agreement;
(b) Chile withdraws from the Chile-United States Free Trade Agreement pursuant to Article 24.4 of that agreement;
(c) the NAFTA, or the WTO Agreement on Government Procurement or the Chile-United States Free Trade Agreement are terminated; or
(d) a threshold adjustment formula referenced in paragraphs 2 and 3 is altered;
the Committee on Procurement shall agree on a suitable alternate threshold adjustment formula.
7. The Committee shall recommend to the Commission any modification of Annex Kbis-01.1-7.”

Article XI

Amendments to Chapter M (Anti-dumping and Countervailing Duty Matters)

Article M-07 of the CCFTA is amended as described below:

(a) paragraph 6 is amended by replacing the reference to “Article N-16” with a reference to “Article N-15”;

(b) paragraph 8 is amended by replacing the reference to “Article N-18” with a reference to “Article N-17”; and

Article XII

Amendments to Chapter N (Institutional Arrangements and Dispute Settlement Procedures)

1. Article N-02(3)(b) of the CCFTA is amended by replacing the reference to “Article N 12” with a reference to “Article N-11”.
2. Article N-09 of the CCFTA is deleted and replaced with the following:

“Article N-09: Panel Selection

1. The panel shall comprise three panelists.
2. Each Party shall, within 30 days of the request for the establishment of a panel, appoint one panelist, and propose up to four candidates to serve as chair. Each Party shall then notify the other Party in writing of the panelist appointment and its candidates to serve as chair. If a Party fails to appoint a panelist in accordance with this paragraph, the panelist shall be selected by the other Party from the chair candidates.
3. The Parties shall endeavour to agree on and appoint the chair from among the chair candidates within 45 days of the request for the establishment of a panel. If the Parties are unable to agree on the chair within this time period, within a further 7 days the chair shall be selected by lot from the chair candidates.
4. If a panelist withdraws, is removed, or becomes unable to serve, a successor shall be appointed within 15 days in accordance with the procedure prescribed for the appointment of the original panelist in paragraph 2 or 3 applied respectively mutatis mutandis. If the appointment would require selecting from the chair candidates and there are no remaining chair candidates, each Party shall propose up to three additional candidates within a further 30 days. All time periods applicable to a panel’s proceedings shall be suspended until a replacement is appointed.”.

3. Article N-10 of the CCFTA is deleted and replaced with the following:

“Article N-10: Qualifications of Panelists

1. Each panelist shall:
(a) have expertise or experience in law, international trade, other matters covered by this Agreement, or in the settlement of disputes arising under international trade agreements;
(b) be chosen strictly on the basis of objectivity, reliability, and sound judgment;
(c) be independent of either Party;
(d) not have dealt with the matter at issue in any capacity; and
(e) comply with a Code of Conduct established by the Commission.
2. In addition to the qualifications in paragraph 1, the chair may not be a national of either Party, nor have his or her usual place of residence in the territory of either Party, nor be employed by either Party.”.
2. Article N-11 of the CCFTA is deleted.
3. Article N-12 of the CCFTA is renumbered as “N-11”, and paragraph 1 of that Article is deleted and replaced with the following:
“1. The Commission shall establish, by the date of entry into force of this Agreement, Model Rules of Procedure, in accordance with the following principles:
(a) the procedures shall assure a right to at least one hearing before the panel as well as the opportunity to provide initial and rebuttal written submissions;
(b) the panel’s deliberations and initial report shall be confidential;
(c) the panel shall meet in closed session except when meeting with the Parties;
(d) panel meetings with the Parties shall be open to the public except where information designated as confidential by a Party is being discussed; and
(e) the panel may allow non-governmental persons in the Parties’ territories to provide written views regarding the dispute that may assist the panel in evaluating the submission and arguments of the Parties.”.
4.
5.
6. The reference to Article “N-15(2)” in Article N-12(4) of the CCFTA (as it was before the renumbering described in paragraph 5) is deleted and replaced with a reference to “N-14(2)”.
7. Articles N-13 through N-21 of the CCFTA are renumbered N-12 through N-20.
8. Article N-14(2) of the CCFTA (as it was before the renumbering described in paragraph 7) is amended by replacing the reference to “Article N 12(1)” with a reference to “Article N-11(1)”.
9. Article N-15 of the CCFTA (as it was before the renumbering described in paragraph 7) is amended as described below:
(a) Article N-15(1) is amended by replacing the reference to “Article N-13 or N-14” with a reference to “Article N-12 or N-13”;
(b) Article N-15(2) is amended by replacing the reference to “Article N 12(1)” with a reference to “Article N-11(1)”; and
(c) Article N-15(2)(a) is amended by replacing the reference to “Article N 12(6)” with a reference to “Article N-11(6)”.
10. Article N-16(3) of the CCFTA (as it was before the renumbering described in paragraph 7) is amended by replacing the reference to “Article N-14” with a reference to “Article N-13”.
11. Article N-18(1) of the CCFTA (as it was before the renumbering described in paragraph 7) is amended by replacing the reference to “Article N-17(1)” with a reference to “Article N-16(1)”.
12. Annex N-01.2 of the CCFTA is deleted and replaced by the following:

“Annex N-01.2

Committees and Working Groups

A. Committees:

1. Committee on Trade in Goods and Rules of Origin (Article C-15)
- Sub-Committee on Agriculture (Article C-15(4))
- Customs Sub-Committee (Article E-13)
2. Committee on Telecommunications Standards (Article I-04(7))
3. Committee on Trade Remedies (Article M 05)
4. Advisory Committee on Private Commercial Disputes (Article N 20(4))
5. Committee on Procurement (Article Kbis-18)
6. Financial Services Committee (Article H bis-15)

B. Working Group:

Temporary Entry Working Group (Article K-05)”.

Article XIII

Amendments to Chapter O (Exceptions)

1. Article O-03(1) of the CCFTA is amended by deleting the words “and in Annex O-03.1”.
2. Article O-03(2) of the CCFTA is deleted and replaced with the following:
“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. If an issue arises as to whether a tax convention prevails over this Agreement, the issue shall be referred to the competent authorities of the Parties. The competent authorities shall consider the issue and decide whether the tax convention prevails. If within six months of the referral of the issue to the competent authorities, they decide with respect to the measure that gives rise to the issue that the tax convention prevails, no procedures concerning that measure may be initiated under Article N-08 (Institutional Arrangements and Dispute Settlement Procedures – Request for an Arbitral Panel) and no claim concerning that measure may be submitted under Article G-21 (Investment – Submission of a Claim to Arbitration). No procedures or claim concerning the measure may be initiated during the period that the issue is under consideration by the competent authorities.”
3. Articles O-03(4)(a) and O-03(4)(b) of the CCFTA are deleted and replaced, respectively, with the following:
“(a) Article H-02 (Cross-Border Trade in Services – National Treatment) and Article H bis-02 (Financial Services – National Treatment) shall apply to taxation measures on income, on capital gains or on the taxable capital of corporations, that relate to the purchase or consumption of particular services, except that nothing in this subparagraph shall prevent a Party from making the receipt, or continued receipt, of an advantage relating to the purchase or consumption of particular services conditional on requirements that the services be provided in its territory; and
(b) Articles G-02 and G-03 (Investment – National Treatment and Most-Favoured-Nation Treatment) and Articles H-02 and H-03 (Cross-Border Trade in Services – National Treatment and Most-Favoured-Nation Treatment) and Articles H bis-02 and H bis-03 (Financial Services – National Treatment and Most-Favoured-Nation Treatment) shall apply to all taxation measures, other than those on income, on capital gains or on the taxable capital of corporations, and taxes on estates, inheritances and gifts.”
4. The mid-amble between Articles O-03(4)(b) and O-03(4)(c) is deleted and replaced with:
“except that nothing in the Articles referred to in subparagraphs (a) and (b) shall apply:”.
5. Article O-03(4)(f) of the CCFTA is amended by deleting the word “or” and by replacing “at the time of the amendment” with “as it existed immediately before the amendment”.
6. Article O-03(4)(g) of the CCFTA is renumbered as “O-03(4)(i)” and the following are added after Article O-03(4)(f) and before the new Article O-03(4)(i):
“(g) to a provision that makes the receipt, or continued receipt of an advantage relating to the contributions to, or income of, a pension trust or fund, pension plan or other arrangement to provide pension or similar benefits conditional on a requirement that the Party maintains continuous jurisdiction, regulation or supervision over such trust, fund, plan or other arrangement;
(h) to the measures listed in Annex O-03.4; or”.
7. Chapter O (Exceptions) is amended by adding the following as Annex O-03.4 after Annex O-03.1 and before Annex O-03.6:

“Annex O-03.4

Financial Services – National Treatment and Most-Favoured-Nation Treatment

For the purpose of Article O-03(4)(h), the listed tax is any excise tax on insurance premiums adopted by Chile to the extent that such tax would, if levied by Canada, be covered by Article O-03(4)(d),(e) or (f).”.

8. Paragraph (b) of the definition of competent authority in Annex O-03.6 is deleted and replaced with the following:

“(b) in the case of Chile, the Director of the Internal Revenue Service, Ministry of Finance (“Director del Servicio de Impuestos Internos, Ministerio de Hacienda”).”.

Article XIV

Termination

1. The Parties may terminate this Agreement by mutual consent in writing.
2. This Agreement shall be terminated by the termination of the CCFTA. If the CCFTA is terminated, this Agreement shall terminate on the date of termination of the CCFTA.

Article XV

Entry into Force

This Agreement shall enter into force sixty (60) days after the date of the last notification by which each Party notifies the other that it has completed its domestic procedures necessary for this Agreement to enter into force.

In witness whereof, the undersigned, being duly authorized thereto, have signed this Agreement.

Done in duplicate at_________________________on this_____day of______________2012, in the English, French and Spanish languages, each version being equally authentic.

______________________________
For the Government
of Canada

______________________________
For the Government
of the Republic of Chile