Recent modernization of the Canada-Chile Free Trade Agreement (CCFTA) adds new chapters on trade and gender, sanitary and phytosanitary measures, and technical barriers to trade.
The modernized CCFTA also updates the existing investment chapter with new inclusive elements, and makes technical amendments to the existing government procurement chapter.
How is the modernized CCFTA inclusive? How does it benefit Canadians?
Canada is committed to pursuing free, open and inclusive trade with its partners around the world. Inclusive trade means working to ensure that all segments of society can take advantage of the opportunities flowing from trade and investment.
With the addition of a trade and gender chapter, the modernized CCFTA is a concrete demonstration of the Government of Canada’s firm commitment to open and inclusive trade. The trade and gender chapter is the first time Canada has included a dedicated chapter on gender in a free trade agreement (FTA) and reinforces Canada’s commitment to advancing gender equality.
In the modernized chapter on investment, both countries reaffirmed their commitment to international guidelines on corporate social responsibility (CSR) as well as the need to encourage their respective enterprises to incorporate the guidelines into their business practices.
Modifications also reaffirm Canada’s and Chile’s right to regulate on issues such as the protection of the environment or the promotion of cultural diversity.
Under this modernized agreement, Canadian businesses, including SMEs, will benefit from increased transparency and improved mechanisms to address potential trade barriers.
How are labour and environment treated under the original CCFTA?
The CCFTA contains complementary labour and environmental parallel agreements, which came into force at the same time as the original CCFTA, in 1997.
The existing Canada-Chile Agreement on Labour Cooperation commits Canada and Chile to broad objectives for the promotion and protection of workers’ rights. It also provides for the establishment of mechanisms for cooperative activities between Canada and Chile and the enforcement of obligations in the agreement.
The existing Canada-Chile Agreement for Environmental Cooperation (CCAEC) commits Canada and Chile to the conservation, protection and enhancement of the environment for the well-being of present and future generations. In addition to committing Canada and Chile to effectively enforce their environmental laws, the CCAEC creates institutions and mechanisms for cooperative activities and public participation, as well as for independent dispute settlement related to enforcing domestic environmental laws.
Why do we need a chapter on trade and gender?
Trade liberalization has been a significant stimulus to economic growth and prosperity around the world, including here in Canada.
However, trade affects people differently, based on a wide range of factors, including gender. Trade is not gender neutral.
The new trade and gender chapter formally acknowledges the relationship between trade and gender and the importance of applying a gender perspective to economic and trade issues to ensure that economic growth benefits everyone.
The chapter reflects Canada’s and Chile’s commitment to work together to help break down barriers and create a better environment for women’s economic empowerment and participation in trade and investment.
The new trade and gender chapter also reflects the Canadian economy of today, one in which women are increasingly taking the helm, starting businesses and innovating.
As the first G20 country to include a dedicated chapter on trade and gender in an FTA, Canada reaffirms its commitment to advancing gender equality both at home and abroad.
What is the status of trade and investment relations between Canada and Chile?
Canada’s merchandise exports to Chile averaged $793 million annually between 2015 and 2017. Canadian exports to Chile consist mainly of agricultural products, machinery, metals and minerals, and medical and pharmaceuticals products.
Imports from Chile averaged $1.9 billion annually between 2015 and 2017, and consisted primarily of metals and minerals, agricultural products, fish and seafood, forest products, and chemicals and plastics.
At the end of 2017, the stock of Canadian direct investment in Chile stood at $17.1 billion, making Chile Canada’s top investment destination in South and Central America and 10th worldwide.
When did the CCFTA come into force? Has it been subsequently updated?
The CCFTA came into force on July 5, 1997. It is a comprehensive FTA that covers trade in goods, services and investment, with parallel agreements on environment and labour cooperation.
Canada and Chile have subsequently taken several steps to broaden and modernize the CCFTA’s scope:
in 2002, the parties signed notes of interpretation on transparency in investor-state dispute settlement and on the minimum standard of treatment for investments;
in 2008, the addition of a government procurement chapter came into force;
in 2010, the parties signed the Note of Interpretation on Indirect Expropriation; and,
in 2013, a financial services chapter was added and updates were made to existing chapters on government procurement, dispute settlement and customs procedures.
Updates were also made to the rules of origin chapter in 2005 to align them with the most-recent nomenclature of the Harmonized System, making them consistent with the parties’ tariff laws.
Finally, three additional protocols (in 1999, 2001 and 2004) were concluded with regard to tariffs, providing for the acceleration of tariff elimination and further tariff reductions for select products.
Will the modernized CCFTA still apply once Chile ratifies the CPTPP?
The modernized CCFTA will continue to apply and eventually co-exist with the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
Businesses have the choice of whether to use the CCFTA or the CPTPP, depending on whichever applies more favourably to their goods or services.
