The respective provisions on exceptions of the Chile-U.S. FTA and DR-CAFTA are also virtually the same in terms of substantive content.

General Exceptions: paragraph 1 of Article 23.1 of the Chile-U.S. FTA and paragraph 1 of Article 21.1 of DR-CAFTA incorporate and make part of the respective FTA, mutatis mutandis Article XX (General Exceptions) of the GATT 1994 and its interpretive notes, for purposes of Chapters three through seven related to goods in the respective Agreements. This means that subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in the above-mentioned Chapters related to goods shall be construed to prevent a Party to the respective FTA from adopting or enforcing the kinds of measures enumerated in Article XX of the GATT. Both Chapters specify the respective Parties’ understanding that measures referred to in GATT Article XX(b), thus incorporated, include environmental measures necessary to protect human, animal or plant life or health, and that Article XX(g) applies to measures relating to the conservation of living and non-living exhaustible natural resources.

Paragraph 2 of Article 23.1 of the Chile-U.S. FTA and paragraph 2 of Article 21.1 of DR-CAFTA incorporate and make part of the respective FTA, mutatis mutandi Article XIV of GATS including its footnotes for purposes of the respective Chapters eleven, thirteen and fifteen (Chile-U.S. FTA) or fourteen (DR-CAFTA) related to trade in services, telecommunications and electronic commerce. This means that subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services, nothing in the above-mentioned Chapters related to services shall be construed to prevent a Party to the respective FTA from adopting or enforcing the kinds of measures enumerated in GATS Article XIV (which are similar to but not the same as GATT Article XX).

Incorporating these WTO provisions makes them a part of the respective FTA, as well as enforceable and subject to dispute settlement under the FTA.

Essential Security: Article 23.2 of the Chile-U.S. FTA and Article 21.2 of DR-CAFTA both specify that nothing in the respective Agreement shall require a Party to disclose information contrary to its essential security interests or shall preclude a Party from applying measures it considers necessary to protect those interests. The Chile-U.S. FTA cabins the essential interest exception by specifying that nothing in the Agreement shall preclude a Party from applying measures that it considers necessary for the fulfillment of its obligations under the United Nations Charter with respect to maintaining or restoring international peace or security. The reference to the U.N. Charter is absent in DR-CAFTA.

Taxation: both Chapters set forth the extent to which the rules and disciplines of the respective Agreement apply to or govern taxation measures (Chile-U.S. FTA Art.23.3 and DR-CAFTA Art.21.3). Both Articles provide for exceptions on taxation measures with certain carve-outs and/or conditions. Therefore, in some cases, other disciplines of the FTA do apply to taxation measures, for instance:

Paragraph 1 of Article 23.3 of the Chile-U.S. FTA and paragraph 1 of Article 21.3 of DR-CAFTA both provide that nothing in the respective FTA shall apply to taxation measures except as specified in the respective Article.

Paragraph 2 of both Articles provides that nothing in the respective Agreement shall affect the rights and obligations of a Party under any tax convention. The competent tax authorities have the sole responsibility for determining whether any inconsistency exists between the respective Agreement and the tax convention concerned, the latter prevailing over the trade Agreement in the event of conflict.

Notwithstanding this basic exception in paragraph 2 relating to rights and obligations under a tax convention, certain national treatment and market access provisions for goods in the respective FTA do apply to taxation measures (an exception to the exception). Paragraph 3(a) provides that the national treatment obligation set out in the FTA with respect to goods (Article 3.2, which incorporates GATT Article III and successor Agreements by reference) applies to taxation measures to the same extent as GATT Article III. Paragraph (3b) provides that the prohibitions of export taxes in the FTA (Chile-U.S. FTA Art.3.13 and DR-CAFTA Art.3.10) apply to taxation measures.

Subject to the basic exception for tax conventions, national treatment and most-favored-nation provisions in the respective services and investment Chapters apply to certain specified kinds of taxation measures, again with additional conditions/exceptions attached thereto.

Paragraph 4(a) provides that the national treatment provision in Article 11.2 of the Chapter on cross-border trade in services and Article 12.2 of the Chapter on financial services apply to taxation measures on income, capital gains, or on the taxable capital of corporations that relate to the purchase or consumption of particular services, except that nothing in paragraph 4(a) shall prevent a Party from conditioning the receipt or continued receipt of an advantage relating to the purchase or consumption of particular services on requirements to provide the service in its territory. So, a capital tax on banks or a tax on the premium income of insurance companies would be covered by the national treatment provision. Moreover, a Party could impose a performance requirement to provide a service as a condition to receive an investment incentive.

Paragraph 4(b) provides that the national treatment and the MFN treatment provisions in the investment, cross-border trade in services, and financial services Chapters apply to all taxation measures, other than those on income, capital gains, or on the taxable capital of corporations, taxes on estates, inheritances, gifts, and generation-skipping transfers.

Both 4(a) and 4(b) are subject to paragraph 2, which means that if there is an inconsistency between the FTA and the provisions of a tax convention, the tax convention prevails.

Paragraph 4(a) and Paragraph 4(b) do not apply to:

• MFN obligations in tax conventions;
• non-conforming measures (i.e. reservations) listed in the Party’s Annexes, new taxation measures aimed at the equitable and effective imposition of taxes that do not arbitrarily discriminate or nullify and impair the FTA benefits;
• the adoption or enforcement of any taxation measure aimed at ensuring the equitable or effective imposition or collection of taxes (as permitted by Article XIV(d) of GATS);
• a provision that conditions the receipt, or continued receipt, of an advantage relating to the contributions to, or income of, pension trusts or pension plans on a requirement that the Party maintain continuous jurisdiction over the pension trust or pension plan.

Additionally, paragraph 4(i) of Article 23.3 of the Chile-U.S. FTA provides that the national treatment and most-favored-nation treatment provisions in the services and investment Chapters of that Agreement, do not apply to any excise tax on insurance premiums adopted by Chile to the extent that such tax would, if levied by the United States, be covered by certain provisions regarding non-conforming measures.

Also subject to the basic exception for tax conventions, provisions in the respective investment Chapters relating to performance requirements and to expropriation and compensation as well as arbitration (with certain additional conditions), apply to taxation measures.

Paragraph 5 provides that the respective investment Chapter’s prohibition of performance requirements as a condition to receive an advantage (i.e. incentive) applies to taxation measures, without prejudice to the rights and obligations of the Parties under paragraph 3 (which covers national treatment and market access for goods). This means that advantages (incentives) offered as tax concessions for goods are subject to the Article on performance requirements. Therefore, this applies to taxes on capital gains, income, sales, and value-added taxes. Paragraph 5 is subject to paragraph 2, which means that if there is an inconsistency between the FTA and the provisions of a tax convention, the tax convention prevails.

Paragraph 6 provides that the expropriation and compensation provision of the investment Chapter applies to taxation measures. However, an investor may not invoke the provision on expropriation in the investment Chapter as a basis for a claim under the investor-State dispute settlement procedures if it is determined that the taxation measure is not an expropriation. This determination is made by the taxation authorities in the country imposing the measure. If the competent authorities do not agree to consider the issue or, having agreed to consider it, fail to agree that the measure is not an expropriation within a period of six months of such referral, the investor may submit its claim to arbitration under the investor-State dispute settlement mechanism.

Balance of Payments Measures on Trade in Goods: both Chapters provide that a Party which decides to impose measures on trade in goods for balance of payments purposes shall do so only in accordance with its WTO obligations (under the GATT 1994, the 1979 Declaration and BOP Understanding). In adopting such measures, the Party shall immediately consult with the other Part(y)(ies) under the respective Agreement (Chile-U.S. FTA Art.23.4 and DR-CAFTA Art.21.4).

Disclosure of Information: both Chapters specify that nothing in the respective Agreement shall require a Party to furnish or allow access to information, the disclosure of which would impede law enforcement (Chile-U.S. FTA Art.23.5 and DR-CAFTA Art.21.5).

Article 23.5 of the Chile-U.S. FTA provides an exception to disclosing information where disclosure would be contrary to the Party’s law protecting personal privacy or the financial affairs and accounts of individual customers of financial institutions. Article 21.5 of DR-CAFTA refers more broadly to where disclosure of confidential information would be contrary to the public interest, or which would prejudice the legitimate commercial interests of particular public or private enterprises.

Definitions: both Chapters provide the same definition of a tax convention, which means a convention for the avoidance of double taxation or other international taxation Agreement or arrangement (Chile-U.S. FTA Art.23.6 and DR-CAFTA Art.21.6). Both Chapters specify that taxes and taxation measures do not include a customs duty or measures listed as exceptions to the definition of customs duty.

Competent Authorities: the competent authorities listed for Chile in Annex 23.3 and for the Dominican Republic and the Central American countries in Annex 21.3 obviously differ.