Trade Agreement Between Us And Chile

Chile is almost twice as big as California and is home to more than 17.8 million people and renowned copper mines. In 2003, Chile`s economy began to recover from a fall in 1999, with GDP growth of 3.3% in volume terms. GDP grew by 5% in 2012. Since 1990, more than $50 billion in foreign direct investment has been made in Chile. Chile has the most stable and fastest economy in the region, which puts it in the best position to promote democracy and political freedom. Chile has 59 bilateral or regional trade agreements, more free trade agreements than any other country. In addition to tariff cuts, trade aid has posed considerable challenges for negotiators. In the United States, low tariffs on most products have led domestic industry to rely on trade assistance laws to combat import competition. Perhaps the most controversial issue was the application of U.S. anti-dumping legislation (to determine whether products are sold at fair value) that Chile wanted to address under the bilateral free trade agreement. This was not a new topic and was addressed in the Canada-Chile Free Trade Agreement, which provides for “mutual exemption from the application of anti-dumping legislation” except in “exceptional circumstances.” (14) The direction of this agreement does not appear to impose the abolition of anti-dumping means, but rather to use it as a last traffic, in accordance with WTO guidelines. For the United States, market access and, in particular, tariff reduction were a central objective of the negotiations.

For countries that have trade agreements with Chile, such as Canada, the uniform 6% tariff will be waived for most goods, a benefit that the United States wanted to eliminate. On the other hand, U.S. imports from Chile face different tariffs, although some products enter the United States duty-free under normal trade relations (see Appendix C for the customs processing of Chile`s major exports). Major U.S. imports from Chile are not eligible for duty-free treatment under the Generalized Preference System (GSP), a preferential trade agreement made by industrialized countries for imports from developing countries. The United States and Chile negotiated the timetable for phased tariff reductions on the product negotiation schedule, which differentiates the processing of sensitive products, as was the case with the North American Free Trade Agreement (NAFTA). Bilateral negotiations have been a difficult task for both countries and, although a comprehensive agreement has been reached, many members of Congress have faced controversial issues, as expressed in hearings in the House of Representatives and the Senate. Overall, given that several free trade agreements are now being considered, the general concern was that the provisions of the free trade agreement with Chile`s free trade agreements could become a “model” for others to follow.

Particular attention was drawn to the language of dispute resolution concerning labour rules and financial transfers (capital controls) as well as the temporary entry of businessmen. These and other issues are addressed in this report, which provides context and analysis of the economy, trade relations and the bilateral free trade agreement.