NEWS RELEASES
CANADA AND CHILE REACH FREE TRADE AGREEMENT
November 14, 1996 No. 209
CANADA AND CHILE REACH FREE TRADE AGREEMENT
The Honourable Art Eggleton, Minister for International Trade, announced today
that Canada and Chile have reached a free trade agreement that significantly
increases Canadian access to Chilean markets. The agreement includes two parallel
agreements on environmental and labour co-operation, modelled on the North
American Free Trade Agreement (NAFTA) side agreements.
"This is a solid deal for both nations, and will boost Canadian exports and create
jobs in both countries," said Mr. Eggleton. "This agreement demonstrates our
commitment to economic growth through expanded trade and is an important first
step in further trade liberalization throughout the hemisphere and beyond."
On December 11, 1994, the Prime Minister of Canada and the presidents of the
United States, Mexico and Chile announced their intention to pursue Chile's
accession to the NAFTA. In January 1995, Prime Minister Jean Chrétien led a trade
delegation to Chile, the first such mission to Chile by a Canadian leader. He was
accompanied by more than 250 business people.
On December 29, 1995, Canada and Chile committed to negotiate an interim free
trade agreement as a bridge to Chile's accession to the NAFTA. The first round of
negotiations took place in January 1996 in Santiago. Since then, nine further
negotiating rounds, generally alternating between Canada and Chile, have taken
place.
The agreement's key features are:
Immediate duty-free access for most industrial goods, which account for 80 per
cent of Canadian exports, and the elimination of Chile's 11 per cent import duty
on almost all remaining industrial and resource-based goods over five years.
Better access for a range of agricultural goods, including durum wheat, barley,
lentils, seed potatoes, pork, canola products and beef. Canadian exporters'
overall access to Chilean markets will now be better than that of their
competitors in the United States, the European Union, Argentina and Brazil.
Significant new protection for Canadian investments in Chile, including an
agreement to automatically grant Canadian investors the benefits of any further
liberalization that may occur in the future.
Important new guarantees for Canadian exporters of services.
The creation of a Free Trade Commission and secretariat to ensure the timely and
effective resolution of disputes.
Side agreements on environment and labour that reflect both countries' emphasis
on increased co-operation and effective enforcement of domestic laws in these
areas. These are the first agreements of this nature ever signed by the
Government of Chile.
The mutual elimination of anti-dumping duties within a maximum of six years.
This will further guarantee barrier-free access for Canadian exports to Chile and
contribute to making further progress in reforming anti-dumping law
internationally.
The agreement also exempts cultural industries, the Auto Pact, and supply-managed
products, and fully protects social and health services. The agreement will be
approved during the November 17-19 visit to Canada of Chilean President Eduardo
Frei, and should be implemented on June 2, 1997.
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Highlights of the agreement are attached.
For further information, media representatives may contact:
Nicole Bourget
Director of Communications
Office of the Minister for International Trade
996-6271
Media Relations Office
Department of Foreign Affairs and International Trade
(613) 995-1874
This document is also available on the Department's Internet site:
http://www.dfait-maeci.gc.ca
HIGHLIGHTS OF THE CANADA-CHILE FREE TRADE AGREEMENT
Barrier-Free Access to Chile
Immediate elimination of the 11 per cent Chilean duty for the vast majority of
Canadian industrial and resource-based exports, providing significantly improved
access to the Chilean market. Tariffs on the remainder of these goods will be
reduced immediately to at least 8 per cent and be phased-out over a maximum period
of five years.
Canadian exporters gain important advantage over their principal competitors in
the Chilean market, including the U.S., European and Asian suppliers, as well as
Chile's regional trading partners.
Immediate duty-free access for exports of Canadian durum wheat (from April to
November), barley, lentils, canary seed, seed potatoes, malt, beer, raspberries,
maple syrup, mustard products, flavoured waters and various fruit juices.
Immediate duty-free access for important quantities of beef, pork and canola oil.
Rules of Origin
Familiar rules of origin modelled on those found in the North American Free Trade
Agreement (NAFTA) with a transitionally reduced value content level for certain
sectors, which provides Canadian manufacturers with preferential access without
requiring major changes to their current sourcing of materials and parts.
Investment
Additional benefits and guarantees, unprecedented outside the NAFTA context, for
Canadian investors in Chile.
National treatment and most-favoured-nation clauses, ensuring non-discriminatory
treatment for Canadian investors and guaranteeing the automatic extension of the
benefits of any future liberalization to Canada.
Limitations on the conditions for expropriation and guarantees of fair and
adequate compensation if an expropriation were ever to occur.
Access to investor-state dispute settlement provisions that offer access to
expedient international arbitration procedures.
No screening mechanisms which could block entry or otherwise impede Canadian
commercial interests.
Services
Locks in Chile's open regulatory regime to ensure that Canadian services
providers will continue to benefit from a transparent, largely barrier-free
business environment. Service sectors that will benefit include consulting
engineering, and mining, forestry and environmental enhancement services.
Canada will also automatically benefit from any future liberalization by Chile
related to trade in services.
Retention of NAFTA-level protection, including a very broad carve-out covering
social services, including health services.
Trade Remedies
The agreement gradually phases out the use of anti-dumping measures between the
parties over a six-year period. This will ensure that market access commitments
gained by Canada are not interrupted by the imposition of anti-dumping actions by
Chile. As a potential NAFTA member, a mutual exemption from the application of
anti-dumping duties in this free trade agreement (FTA) is consistent with the
Canadian government's long-standing objective to reform and eventually eliminate
the use of anti-dumping duties within the NAFTA. The right of each party to take
countervailing duty action against subsidized imports and to utilize safeguard
measures is not affected.
Other Benefits
The Auto Pact remains unaffected.
Cultural industries are exempted.
Over-quota tariffs for dairy, poultry and eggs are preserved.
Improved temporary entry provisions that provide for expedited entry for Canadian
investors, business visitors, inter-company transferees and other business
professionals.
An effective and timely procedure for the settlement of disputes that is not
subject to appeal.
An agreement on competition policy modelled on the NAFTA.
Side agreements on environment and labour that complement the FTA, reflecting the
priority the two countries place on enhanced co-operation and effective
enforcement in these areas.
These side agreements provide a unique opportunity for Canada to participate
actively in the further modernization of Chile's labour and environmental laws and
practices, as Chile does not have such agreements with any other country.
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