U.S.-Chile Free Trade Agreement

Since the U.S.-Chile Free Trade Agreement was implemented on January 1, 2004, bilateral trade between Chile and the United States has more than quadrupled and both trade and investment opportunities abound. Upon entry into force of the U.S.-Chile Free Trade Agreement (FTA) in 2004, 80 percent of U.S. consumer and industrial goods exports to Chile immediately became duty free. Tariffs on the remaining products were then set to be phased out, and with 100 percent of products duty free in 2015. (U.S. Department of Commerce, April 2014)

Two-way trade in goods between the United States and Chile was approximately $38.9 billion in 2022. According to the U.S. Department of Commerce, U.S. goods exports to Chile increased over 450 percent in the 18 years since the FTA went into effect, from $2.7 billion in 2003 to $23.3 billion in 2022, making it the U.S.’ 20th largest export destination. Top exports to Chile included petroleum and coal products ($9.8 million), chemicals ($2.5 million), non-electrical machinery ($2.1 million), transportation equipment ($1.6 billion), and computer and electronic products ($1.5 million).

Imports to the U.S. from Chile totaled $15.5 billion in 2022. Top imports from Chile to the United States include primary metal manufacturing ($4.7 billion), livestock and livestock products ($2.1 billion), agricultural products ($1.8 billion), and wood products($1.7 billion).

Nearly 12,000 US firms export approximately 5,000 different products to Chile. Over 2,000 Chilean firms exported as many different products to the US.

US foreign direct investment (FDI) in Chile totaled $22.58 billion in 2021, and Chilean FDI into the US totaled $4 billion in the same year. Chilean FDI supports about 8,700 jobs in the U.S. Chilean FDI into the U.S. invested $1 million into research, and contributed $125 million to expanding US exports. The top industries that received FDI from Chile were food and beverages, software & IT services, business services, industrial equipment, transportation, and wood products (Select USA).

According to the American Chamber of Commerce in Chile, over 300 US companies have investments in Chile, with over 40 of them using Chile as a platform for services in the region. Chilean affiliates of US direct investors are estimated to employ over 58,500 people and their value-added contributed 3.2 percent to Chile’s gross domestic product.

Chile is nearly twice the size of California and home to nearly 19 million people and renowned copper mines. In 2003, the Chilean economy began to recover after a 1999 slump, reaching a 3.3 percent growth in real GDP. According to the most recent figures, Chile, has a GDP of $282 billion. Since 1990, there has been more than $50 billion in direct foreign investment in Chile. Chile has the most stable and fastest growing economy in the region which puts it in the best position to promote democracy and political freedom. Chile has 26 trade agreements, of which 25 have entered into force, covering 65 different markets and 88% of the world’s GDP (ITA).

In 2022, Chile was California’s 26th largest export destination with $1.5 billion in exports. Top exports from California to Chile include petroleum & coal products, computer and electronic products, transportation equipment, chemicals, and non-electrical machinery. Imports from Chile to California totaled $1.89 billion in 2022. Top imports from Chile to California include agricultural products, wood products, processed foods, and beverages and tobacco.

History of the US-Chile FTA Negotiations

The terms of the bilateral FTA were concluded in December 2002 after over a decade of waiting for an agreement between Chile and the United States which was promised at the Summit of the Americas. The U.S.-Chile FTA will be considered a template for a host of future free trade agreements, including a Free Trade Area of the Americas. The United States and Chile concluded the comprehensive (800 page) bilateral free trade agreement on December 11, 2002. The FTA builds on the progress made by the U.S.-Chile Joint Commission on Trade and Investment that was established during President Bill Clinton’s state visit to Chile in April 1998.

The U.S.-Chile FTA was signed in Miami on June 6, 2003 by then U.S. Trade Representative Robert Zoellick and Chilean Foreign Minister Soledad Alvear. It is the first free trade agreement between the United States and a South American country.

The U.S. House of Representatives and Senate passed the FTA in July 2003 by a vote of 270-156 and 66-31 respectively. The vote was held under the Trade Promotion Authority which allows for an up or down vote with an expedited time frame or ‘fast track.’ Chile also approved the agreement.

Other Free Trade Agreements

Chile joined MERCOSUR (the South American Common Market) in 1996. Chile has negotiated FTAs with Canada (1977), Mexico (1998), and Central America (2001). In 2006, Chile signed or ratified trade several trade agreements, including those with China and India. In total, Chile has trade agreements with over approximately 60 economies throughout the world.

On May 17, 2002 in Madrid, President Ricardo Lagos President of Chile, Spanish Head of Government, José María Aznar, and the President of the European Commission, Romano Prodi, signed a historical agreement between Chile and the European Union. After three years of talks, a pact was struck which frees most of the trade between Chile and Europe, including contentious areas like fish and wine.

The CalChamber, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.

A U.S.-Chile Free trade Agreement reinforces the idea that the United States can fashion successful trade relations with developing nations.
A FTA with Chile builds momentum to the ongoing effort to establish a Free Trade Area of the Americas.