U.S.-Chile Free Trade Agreement

Tariff Elimination Schedule

The U.S.-Chile FTA will eliminate tariffs on U.S. and Chilean goods over a ten-year period for industrial goods and a twelve-year period for agricultural products. However, over 85 percent will become duty-free immediately upon implementation of the FTA.

To determine when your product can enter Chile duty-free:

1) It is first necessary to obtain the appropriate HS number for your product

2) With this number it is then possible to check the Chilean tariff elimination schedule, which is found in Annex 3.3 to Chapter Three of the FTA to find out at what rate the duties on your product will be reduced. The U.S.-Chile FTA tariff schedules code each line item with a letter, indicating the staging by which the current tariff for each item is reduced and ultimately eliminated. The schedules also note the base rate of customs duty, which is used to determine the starting point and interim rate at each stage of reduction for an item. For purposes of eliminating duties, interim stage rates shall be rounded down, at least to the nearest tenth of a percentage point. (See Sample Calculations below.)

For importing goods from Chile to the United States, you would check the U.S. tariff elimination schedule, which is also located in Annex 3.3 to Chapter Three.

Staging Categories

Except as otherwise noted in the headnotes section to each tariff schedule, the codes are generally defined as follows:

Category A: Goods will be duty-free immediately upon the date that the FTA enters into force (2004).

Category B: Duties will be eliminated in four equal annual stages beginning on the date that the FTA enters into force, and shall be duty-free effective January 1 of year four (2007).

Category C: Duties will be eliminated in eight equal annual stages beginning on the date that the FTA enters into force, and shall be duty-free effective January 1 of year eight (2011).

Category D: Duties will be eliminated in ten equal annual stages beginning on the date that the FTA enters into force, and shall be duty-free effective January 1 of year ten (2013).

Category E: Duties will be eliminated in twelve equal annual stages beginning on the date that the FTA enters into force, and shall be duty-free effective January 1 of year twelve (2015).

Category F: Goods already receiving duty-free treatment shall continue to receive duty-free treatment under the FTA.

Category G: Duties shall remain at their base rates during years one through four. Duties on these goods shall be reduced by 8.3 percent of the base rate on January 1 of year five, and by 8.3 percent of the base rate each year thereafter through year eight. Beginning January 1 of year nine, duties on these goods shall be reduced by 16.7 percent of the base rate annually through year twelve, and shall be duty-free effective January 1 of year twelve (2015).

Category H: Duties shall remain at their base rates during years one and two. Beginning January 1 of year three, duties on these goods shall be removed in eight equal stages, and such goods shall be duty-free effective January 1 of year ten (2013).

Categories J, K, L, M, and N are described in the Headnotes to the U.S. tariff schedule, located in Annex 3.3 of Chapter Three.

Categories O, P, and V are described in the Headnotes to the Chilean tariff schedule, located in Annex 3.3 of Chapter Three.

Tariff Elimination Schedule for Exports to Chile

A table that summarizes the rate of duty elimination for exports of U.S. products to Chile by category and year is available. Since Chile currently uses a uniform tariff of 6 percent for most U.S. products, the base rate is the same for all items. (Imports from Chile cannot be represented in a table format, since the United States uses different base rates for different products.)

Sample Calculations for Exports to Chile

The following examples are expressed in terms of the Customs Tariff Schedule of Chile (SACH), which closely follow the Harmonized Tariff Schedule of the United States (HTSUS), but are not exactly identical.

Tomato Juice or Paste (HS 2002.90.10): According to the Chilean tariff schedule, this product has been designated Category G staging with a base rate of 6 percent. Upon entry into force of the FTA, the duty will remain at 6 percent until the end of year four. The duty will be reduced by 8.3 percent of the base rate annually from year five through year eight (e.g. 5.5 percent on January 1 of year five, 5 percent on January 1 of year six, 4.5 percent on January 1 of year seven, and 4 percent on January 1 of year eight). The duty will further be reduced by 16.7 percent of the base rate annually from year nine through year twelve (e.g., 3 percent on January 1 of year nine, 2 percent on January 1 of year ten, and 1 percent on January of year eleven). Effective January 1 of year twelve, the product will be duty-free.

Grape Wine, with denomination of origin (HS 2204.21.10): According to the Chilean tariff schedule, this product has been designated Category V staging (as described in the headnotes to the Chilean tariff schedule in Annex 3.3) with a base rate of 6 percent. Upon entry into force of the FTA, the duty will remain at 6 percent until the end of year six. Beginning January 1 of year seven, duties will be reduced by 3.3 percent of the base rate, for an effective duty of 5.8 percent. Beginning January 1 of year eight, duties will be reduced by 21.7 percent of the base rate, for an effective duty of 4.5 percent. Beginning January 1 of year nine, duties will be reduced by 40 percent of the base rate, for an effective duty of 2.7 percent. Beginning January 1 of year ten, duties will be reduced by 58.3 percent of the base rate, for an effective duty of 1.1 percent. Beginning January 1 of year eleven, duties will be reduced by 76.7 percent of the base rate, for an effective duty of 0.2 percent. Effective January 1 of year twelve, the product will be duty-free.

Shampoo (HS 3305.10.00): According to the Chilean tariff schedule, this product has been designated Category C (eight-year) staging with a base rate of 6 percent. Upon entry into force of the FTA, the duty will drop from 6 percent to 5.2 percent. (Note: Because interim duties are rounded down to the nearest tenth of a percent, 5.25 will become 5.2) The duty will continue to drop incrementally, to 4.5 percent on January 1 of year two, 3.7 percent on January 1 of year three, 3 percent on January 1 of year four, etc., until the product become duty-free on January 1 of year eight.

Firetrucks (HS 8705.30.00): According to the Chilean tariff schedule, this product has been designated Category A staging with a base rate of 6 percent. Upon entry into force of the FTA, the 6 percent duty will be eliminated and the product will become immediately duty-free.

Prepared by the Trade Information Center