Free Trade with Chile: Significant New U.S. Access to South America's Most Dynamic Economy

Highlights of the U.S.-Chile Free Trade Agreement

New Opportunities for U.S. Workers and
More than 85% of two-way trade
in consumer and industrial products becomes tariff-free immediately,
with most remaining tariffs eliminated within four years. Key U.S. export sectors benefit,
such as agricultural and construction equipment, autos and auto parts, computers and other
information technology products, medical equipment, and paper products. Luxury tax on
U.S. automobiles phased out.

Expanded Markets for U.S. Farmers and Ranchers: More than three-quarters of U.S. farm goods will enter Chile tariff-free within 4 years, with all
tariffs phased out within 12 years. Key U.S. farm products will benefit from improved market access,
including pork, beef, soybeans, durum wheat, feed grains, potatoes, and processed food products
such as french fries, pasta, distilled spirits and breakfast cereals. Tariffs on U.S. and
Chilean wine equalized at low U.S. levels, then eliminated. The agreement also continues the
bilateral process that has successfully addressed some non-tariff barriers, such as meat and dairy
inspection issues, and meat grading.

"Chile is a remarkable country. It's a country that is a strong democracy that has shown people in this hemisphere the importance of rule of law. It's in our nation's best trade agreement] with interest to [conclude a free Chile." -- President George W. Bush

Access to A Fast-Growing Chilean Services Market: New access for U.S. banks, insurance companies, telecommunications companies, securities firms, express delivery companies, and professionals. U.S. firms may offer financial services to participants in Chile’s highly
successful privatized pension system. Ground-breaking transparency rules to ensure that service regulators operate

A Trade Agreement For The Digital Age: State-of-the-art protections for digital products such as U.S. software, music, text, and videos. Protection for U.S. patents and trade
secrets exceeds past trade agreements.

Strong Protections for U.S. Investors: The agreement will establish a secure, predictable legal framework for U.S. investors operating in Chile.

Open and Fair Government Procurement: Ground-breaking anti-corruption rules in government contracting, setting a new standard for trade
agreements. U.S. firms are guaranteed fully transparent procurement procedures to sell goods and
services to a wide range of Chilean government entities, including airports and

Strong Protections for Labor and the Environment: Both parties commit to effectively enforce their domestic labor and environmental laws. An innovative
enforcement mechanism includes monetary penalties to enforce commercial, labor and environmental
obligations of the trade agreement. Cooperative projects will include efforts to protect
wildlife and improve resource management, reduce the use of dangerous chemicals such as methyl
bromide, reduce environmental hazards from mining, and promote internationally
recognized labor principles.

Some Key Benefits of the U.S.-Chile Free Trade Agreement

Levels the Playing Field for U.S. Products and Farm

o U.S. companies currently operate
at a significant competitive disadvantage in Chile, because competitors such as Canada, Mexico and the European Union
all have freetrade agreements with Chile.

o For example, a U.S.-made
Caterpillar 140 Horsepower Motor Grader sold in Chile pays $13,090 in tariffs. But the same tractor made in Canada pays ZERO

o The National Association of
Manufacturers (NAM) estimates that the current lack of a U.S. FTA with Chile costs U.S. exporters $800 million per year in
sales, affecting 10,000 U.S. jobs.

o NAM estimates that the largest
losses of U.S. market share in recent years were in wheat, corn, soybeans, paper, plastics, paints & dyes,
fertilizers, heating equipment, and construction equipment.

o The U.S.-Chile FTA will remedy
these competitive disadvantages.

Economic Growth and Increased Opportunities, Especially for the

o A study by the University of
Michigan and Tufts University estimates that a U.S.-Chile FTA will expand U.S. GDP by $4.2 billion, and Chilean GDP by $700

o Poverty in Chile was cut in half
between 1987 and 2000 as a direct result of Chile’s economic reforms and trade liberalization. Persons living in
extreme poverty declined from 17.4% in 1987 to 5.7% in 2000. An FTA will contribute to
continued economic growth and poverty reduction in Chile

A State-of-the-Art Trade Agreement: The U.S. FTA with Chile contains ground-breaking provisions new to any free trade agreement:

o New anti-corruption rules in
government contracting, and commitments to make end-user piracy of copyrighted works a criminal offense.

o New customs procedures will
increase transparency, efficiency and timeliness of customs clearance procedures, while maintaining strong border

o New regulatory transparency
commitments will govern the interaction of service regulators with private parties, increasing public access to rulemaking procedures.

o Unprecedented transparency in the
dispute settlement process, including public panel hearings, access to legal submissions, and the right of third parties to submit

The U.S.-Chile FTA contains more than 800 pages of text and
annexes. Talks began in December 2000, and 14 negotiating rounds have been held.
In the final round, 230 negotiators from the U.S. and Chile worked nine straight
days to reach agreement.