A Comparative Guide to the Chile-United States Free Trade Agreement and the
The two Agreements have very similar structures in the customs area. All the provisions are concentrated in a single Chapter and the Articles are presented in the same order. In the Chile-U.S. FTA this Chapter is entitled “Customs Administration”, while DR-CAFTA more ambitiously terms it “Customs Administration and Trade Facilitation”. At the start of the text both include a Chapter on “General Definitions”, which includes a definition of customs authority.
Publication: the structure and substance of this Article in both Agreements are very similar. Both texts establish the obligation to publish customs laws and regulations, the means and the timing of the dissemination of that information, and the designation of inquiry points to address inquiries from interested persons concerning customs matters.
Release of goods: although the form of the two Articles is different in both Agreements, both make provisions for the simplification of procedures as a prime element of the release of goods.
Automation: both the Chile-U.S. FTA and DR-CAFTA contemplate the automation of procedures as a means of facilitating and expediting processes in customs. DR-CAFTA is more specific in establishing the elements to be considered when deciding on the type of information technology to be used for this purpose.
In both Agreements the Articles on risk management, cooperation, confidentiality, express shipments, review and appeal, penalties and advance rulings are presented in the same order.
Implementation: both Agreements feature this Article, where certain provisions are deferred for a given period following the Agreement’s entry into force. Chile and the Central American countries shall defer some provisions of the Articles on publication, express shipment and advance ruling, but the Central American countries will also defer, those related to release of goods, risk management and automation.
Institutional management: only DR-CAFTA has these provisions, which propose that the working group on customs administration and trade facilitation should work on the implementation of this Chapter in light of its importance for trade and on any other priorities that the Committee on Trade designates.
In the Chapters on “Customs Administration” or “Customs Administration and Trade Facilitation” the Agreements reveal no major conceptual differences in the area of customs procedures. The principles are the same in each of them, although in some cases there is greater detail about the application of some of those principles. From the viewpoint of coverage, and apart from the apparently more ambitious title of the Article in DR-CAFTA, the Agreements address the same issues, the details of which are as follows:
Publication: in essence, the following concepts are posited in these Articles: a) Internet publication as the medium for disclosing the laws and customs regulations for all the Agreements. The Chile-U.S. FTA allows the use of comparable alternative media for publishing laws, regulations and procedures, however, in the DR-CAFTA text, publication on the internet is mandatory; b) advance publication of any regulation on customs matters prior to the Agreement’s entry into force when possible; c) the Parties shall designate and maintain contact points to which those interested can send enquiries on customs matters.
Both Agreements include an Article on implementation that defers the date for applying some subsections of this Article. For Chile the publication of regulations on the Internet and the designation of contact points is postponed for three years after the Agreement’s entry into force, and for Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic these matters are deferred for two years after the entry into force.
Release of goods: both Agreements make provision for the simplification of procedures as a chief element of the release of goods, and establish a period of less than 48 hours as desirable. For that purpose, various steps based on similar principles define the procedures: i) to release goods at their point of arrival without temporary transfer to warehouses; ii) to release goods prior to the final determination of the duties and taxes to be paid.
Automation: both make provision for this issue as a means of facilitating and expediting procedures; the latter should be designed in a way that takes account of international standards. DR-CAFTA adds that the electronic systems should meet certain conditions: i) they should be accessible to the trading community; ii) the information should be processed before the goods arrive; iii) systems for risk analysis and targeting should be used; iv) the systems should be compatible, so as to facilitate government-to-government exchange of international trade data; and v) the Parties should work towards a set of common data in accordance with the recommendations and guidelines of the World Customs Organization (WCO) and the World Trade Organization (WTO).
According to DR-CAFTA’s Article on implementation, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic should implement this Article within three years of the Agreement’s entry into force.
Risk management: the Agreements make provision for risk analysis systems as a crucial means of focusing inspection activities on high-risk goods, thereby simplifying procedures for clearances of low-risk goods. While the issue is addressed in the same level of detail in both Agreements, DR-CAFTA highlights the importance of the confidential nature of the information obtained through such activities.
According to DR-CAFTA’s Article on implementation, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic should implement this Article within two years of the Agreement’s entry into force.
Cooperation: with a greater or lesser degree of detail, the two Agreements express the same desire for cooperation. In both cases, cooperation refers to the exchange of information and the provision of technical assistance in particular areas, including: i) risk assessment techniques; ii) simplifying procedures; and iii) upgrading personnel skills. The Agreements enter into a similar level of detail about the kind of information to be provided, how to ask for it, and how the country from which the information is requested should respond. The Articles also make provision for the countries to analyze and explore other channels of communication for the purpose of facilitating the secure and rapid exchange of information.
The areas of cooperation mentioned in each of the Agreements are the same: everything related to the Agreement, rules of origin, origin procedures, customs valuation and other customs matters as the Parties may agree.
Confidentiality: these Articles are practically identical in the Chile-U.S. FTA and DR-CAFTA. They specify how confidential information should be handled by each Party, and when a Party can decline to provide such information to another if the other has failed to comply with the principle of confidentiality. They further state that the Parties should adopt procedures to ensure the confidentiality of the information, especially when the competitive position of the person providing the information might be prejudiced by its disclosure.
Express shipments: the two Agreements mention the need for a simplified procedure for such shipments, and stipulate the conditions in which these operations should be handled: there should be a separate manifest, preferably electronic, processed before the transport arrives; and, under normal circumstances, the goods should be cleared within six hours of arrival at customs.
Again, the Article on implementation postpones application of this provision for some countries. In Chile’s case the requirement of a separate electronic manifest for such shipments is deferred for three years following the Agreement’s entry into force. For Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, implementation of the whole Article is deferred for a year.
Review and appeal: from a conceptual standpoint the two Agreements are identical in this regard. They guarantee that importers in the Parties’ territory will have access to an administrative review independent of the office issuing the determination, and a judicial review of any decision taken at the highest administrative level.
Penalties: the Agreements are very similar in this area; there are no differences. They impose civil and administrative penalties, and criminal sanctions where appropriate, for violations of some laws and regulations related to tariff classification, customs valuation, country of origin, and claims for preferential treatment under the Agreement.
Advance rulings: both Agreements stipulate that each Party’s customs authority can issue advance rulings on the goods to be imported at the request of importers in their own country, or exporters and producers in the territory of another Party. Both Agreements accept these rulings on tariff classification, the application of customs valuation and origin criteria.
Advance rulings shall be in force from their date of issue or a date stipulated in the ruling, provided that the circumstances on which the ruling is based are unchanged. A Party may modify or revoke an advance ruling when it has been based on inaccurate or false information.
The main difference between the Agreements concerns the matters on which an advance ruling can be requested, an area in which DR-CAFTA goes further than the Chile-U.S. FTA. They concur in stipulating that the customs authority shall also issue advance rulings for the application of quotas, duty drawback and such other matters as the Parties may agree.
As regards these Articles’ entry into force, the implementation Article states that: a) for Chile, advance rulings on valuation matters will begin three years after the Agreement’s entry into force. Within 120 days of the entry into force the Parties will consult on the procedures that Chile must adopt to implement this Article, and on the technical assistance that the United States should provide so that it can be implemented. Within 18 months of the Agreement’s entry into force the Parties will analyze the progress that Chile has made on implementation, and will assess the need for further cooperation; and b) Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic will implement this Article within two years of the Agreement’s entry into force.
Implementation: each of the Articles defines the implementation schedules of the Chile-U.S. FTA and DR-CAFTA. Both Agreements postpone the entry into force of some provisions related to publication, express shipment and advance rulings. DR-CAFTA also postpones some provisions related to the release of goods, risk management and automation.
Institutional management: only DR-CAFTA has these provisions, which establish that the working group on customs administration and trade facilitation should prioritize the implementation of this Chapter in light of its importance for trade.
In both Agreements, Chapter 2 on “General Definitions”, defines customs authority as the competent authority responsible under the law of a Party for the administration of customs laws and regulations.
Regarding the issue of Customs Cooperation, which is included in both Agreements in Chapter 3, National Treatment and Market Access for Goods, there are no differences between Article 3.24 of DR-CAFTA and Article 3.21 of the Chile-U.S. FTA, from the standpoint of content on a general level. Both establish cooperation between customs authorities to enforce the application of laws, regulations and procedures that affect trade in textile and apparel goods, and to ensure the accuracy of claims of origin of these goods. Both Agreements establish inspection visits for verification of origin. On comparing the texts, DR-CAFTA is much more specific and detailed than is the Chile-U.S. FTA, in outlining the procedures to be followed in terms of the steps and deadlines that must be respected for the verification visits.