The Center for Latin
American Issues
Presents
The U.S.-Chile Free Trade Agreement:
Implications and Prospects
Friday, February 21, 2003
Having concluded negotiations for the U.S.-Chile Free Trade Agreement (FTA)
last December, both countries now await ratification by their respective
legislatures. U.S. and Chilean officials are characterizing this FTA as
one of the most comprehensive, transparent, modern, and innovative
agreements ever signed.
Unlike most free-trade agreements, the U.S.-Chilean FTA eventually
eliminates all tariffs and quotas on goods – with no exceptions. Moreover,
it creates new opportunities for trade in services and government
procurement, institutes ground-breaking customs procedures, streamlines
rules of origin, and establishes unprecedented openness in dispute
settlements. Furthermore, the agreement takes a modern approach to
intellectual property rights and electronic commerce, reflecting the
realities and requirements of the digital age. Finally, in the areas of
labor and the environment, the agreement makes an innovative use of fines
and establishes effective enforcement mechanisms.
Assistant U.S. Trade Representative Regina Vargo sees the U.S.-Chile FTA
as an important building block for the Free Trade Area of the Americas
(FTAA), whose target for completion is January 2005. A second key building
block for the FTAA is the Central American Free Trade Agreement (CAFTA),
which could be concluded by the end of the year. The FTAA process is
moving forward, thanks in part to U.S. leadership that is comprehensive
(putting all tariffs on the table), bold (encouraging other countries to
be ambitious), and pragmatic (recognizing national differences).
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| Assistant U.S Trade Representative Regina
Vargo discusses the implications of the U.S.-Chile FTA for future hemispheric trade agreements. |
Dr. Andrés Bianchi,
Ambassador of Chile to the
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Assistant U.S. Trade Representative Regina Vargo sees the U.S.-Chile FTA
as an important building block for the Free Trade Area of the Americas
(FTAA), whose target for completion is January 2005. A second key building
block for the FTAA is the Central American Free Trade Agreement (CAFTA),
which could be concluded by the end of the year. The FTAA process is
moving forward, thanks in part to U.S. leadership that is comprehensive
(putting all tariffs on the table), bold (encouraging other countries to
be ambitious), and pragmatic (recognizing national differences).
Chilean Ambassador to the U.S. Andrés Bianchi sees globalization as a key
feature of development. The U.S.-Chile FTA is one more step in Chile’s
integration into the world economy through its policy of trade
liberalization and expansion. Amb. Bianchi believes that both Chilean
producers and consumers will benefit from the growth and diversification
of exports resulting from the eventual elimination of tariffs and quotas.
Moreover, increased competition from U.S. firms will force Chilean
industry to become more efficient. Chile’s main challenge, according to
the Ambassador, is to turn the opportunities created by its bilateral
agreements with the U.S., the European Union and South Korea into real
gains.
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| Ms. Selina Jackson of
United Parcel Service describes how businesses in the
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The U.S.-Chile FTA will have a positive affect in the United States
as well, although, due to the size differential, not to the same extent as
in Chile. Selina Jackson, Director of International Public Affairs for
United Parcel Service (UPS), says what benefits her customers, benefits
her company. Currently, Chile’s 6% import duty on foreign goods puts UPS’s
U.S. customers at a disadvantage vis-à-vis Canada and the European Union,
whose bilateral agreements with Chile exempt them from the import tax. The
U.S.-Chile FTA eliminates the import duty on U.S. goods. Also, the
agreement’s customs provisions will speed delivery of U.S. goods to Chile.
Finally, the U.S.-Chile FTA is the first free-trade agreement with
specific express delivery provisions, differentiating companies like UPS
from traditional postal services.
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