Commentary: When the U.S. – Chile FTA took effect on January 1, 2004, more than 85 percent of two-way trade in consumer and industrial products immediately became duty-free. The majority of remaining industrial and consumer items will become duty-free within four years, and all tariffs on these goods will be phased out within 10 years. Customs duties on all goods originating in either Party will be eliminated within 12 years. Key export sectors that benefit from the FTA include mining and construction equipment, automobiles and auto parts, medical equipment, paper products, computers, and other information technology products.
Before and After the U.S.-Chile FTA:
Overall Trade in Goods between the United States and Chile grew from $6.43 billion in 2003 to $16.35 billion in 2006, an increase of 154%.
U.S. exports to Chile grew from $2.72 billion in 2003 to $6.79 billion in 2006, an increase of 150%.
U.S. imports from Chile grew from $3.71 billion in 2003 to $9.56 billion in 2006, an increase of 158%.
In 2006, Chile was the 28th largest global market for U.S. exports and was the 32nd largest source of U.S. imports.
Benefits of the FTA:
The U.S.-Chile FTA helped consolidate Chile’s status as a secure location for foreign investment. All forms of investments are covered by the FTA including direct ownership of companies, real estate, intellectual property rights, government concessions, and debt instruments. U.S. foreign direct investment in Chile reached $9.8 billion in 2005, up from $9.0 billion in 2003. Chilean foreign direct investment in the U.S. totaled $129 million in 2005, up from $70 million in 2003.
The FTA provides new access for service industries, including groundbreaking transparency rules to ensure that service regulators operate fairly. Among the wide range of sectors benefiting from the agreement are such key areas as computer and related services, telecommunications services, financial services, construction and engineering, express delivery, professional services (architects, engineers, accountants, legal services), and distribution services (wholesaling, retailing, franchising), with very few limitations or restrictions.
The government procurement obligations in the FTA include requirements for publishing procurement opportunities, developing technical specifications, setting qualification procedures, and sharing contract award information while ensuring confidentiality. U.S. companies can access the government of Chile procurement website (www.chilecompra.cl) which was established to increase transparency, enhance opportunities and reduce government procurement costs. The site serves as a central source for all Chilean government procurement.
The intellectual property rights provisions of the FTA clarify and build on existing international standards, with an emphasis on new and emerging technologies. The FTA includes state-of-the-art protection for trademarks and copyrights, as well as expanded protection for patents and undisclosed information. The FTA also calls for strong enforcement mechanisms.
Prepared by International Trade Administration
Market Access and Compliance, Spring 2007