U.S.-Chile Free Trade Agreement

The U.S.-Chile Free Trade Agreement (FTA) will further open Chile's markets for U.S. manufactured goods, agricultural products, services, and investors. It will increase competition and consumer choice. The FTA will enhance prosperity in the United States and Chile, serve the interest of expanding U.S. commerce, and advance overall U.S. national interests. The U.S.-Chile FTA is the first United States free trade agreement with a South American country. The FTA will add momentum to continued implementation of the free market economic policies that have made Chile a model for its Latin American neighbors.

Key Facts on Chilean Economy

• In 2002 Chile's exports totaled $18.3 billion, while its imports totaled $15.8 billion.

• The U.S. exported $2.6 billion worth of goods to Chile in 2002. Major exports to Chile included computer accessories and construction equipment.

• Chile exported $3.8 billion worth of goods to the U.S. in 2002, with major products including copper, fruit, fish and seafood, and wine.

• Chile's export markets are fairly balanced among Europe (24%), Asia (25%), Latin America, and North America (27%). Asia has been the fastest-growing export market in recent years.

• The U.S., the largest national market, takes in 20.8% of Chile's exports. The United States provided 16.5% of Chilean imports in 2002.

• Chile unilaterally lowered its across-the-board import tariff--for all countries with which it does not have a trade agreement--to 6% in early 2003.

• Chile has pursued generally strong economic policies for over three decades. The government's role in the economy is mostly limited to regulation, although the state continues to operate copper giant Codelco and a few other enterprises.

• Chile is strongly committed to free trade and has welcomed large amounts of foreign investment. High domestic savings and investment rates also helped propel Chile's economy to average growth rates of 8% during the 1990s.

• Successive Chilean governments have actively pursued liberalizing trade agreements. During the 1990s, Chile signed FTAs with Canada, Mexico, and Central America. Chile also concluded preferential trade agreements with Venezuela, Colombia, and Ecuador. An association agreement with Mercosur--Argentina, Brazil, Paraguay, and Uruguay--went into effect in October 1996.

• A member of the Asia-Pacific Economic Cooperation (APEC) organization, Chile is seeking to boost commercial ties to Asian markets. Continuing its export-oriented development strategy, Chile completed landmark free trade agreements in 2002 with the European Union and South Korea.

• Chile's welcoming attitude toward foreign direct investment is codified in the country's Foreign Investment Law, which gives foreign investors the same treatment as Chileans. Registration is simple and transparent, and foreign investors are guaranteed access to the official foreign exchange market to repatriate their profits and capital.

• The privatized national pension system has encouraged domestic investment and contributed to an estimated total domestic savings rate of approximately 20.7% of gross domestic product in 2002.

• Wages have risen faster than inflation as a result of higher productivity, boosting national living standards.

• Chile’s independent Central Bank pursues a policy of maintaining inflation between 2% and 4%. Inflation has not exceeded 5 percent since 1998. Chile registered an inflation rate of 2.8% in 2002.

• The Chilean Government committed in early 2002 to undertake a series of microeconomic reforms designed to create new incentives for private investment. The government has also encouraged the use of Chile as an “investment platform” for multinational corporations planning to invest in the region.

• Chile's financial sector has grown faster than other areas of the economy over the last few years; a banking reform law approved in 1997 broadened the scope of permissible foreign activity for Chilean banks.

• Chileans have enjoyed the recent introduction of new financial tools such as home equity loans, currency futures and options, factoring, leasing, and debit cards. The introduction of these new products has been accompanied by increased use of traditional instruments such as loans and credit cards.