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).
  

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 U.S., explains how Chile will benefit from the U.S.-Chile FTA.


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.
 

Ms. Selina Jackson of United Parcel Service describes how businesses in the US and Chile will benefit from the agreement.


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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Links to speakers' presentations:

Ms. Regina Vargo
 
Amb. Andrés Bianchi