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Beyond Virginia
 
Chile-U.S. Free Trade Agreement Update
The U.S.-Chile Free Trade Agreement eliminated tariffs on 80% of U.S. exports to Chile when it was enacted in January 2004. In the first quarter of 2004, total U.S. exports to Chile increased by 24 percent compared to the same period in 2003. For the first half of the year, January - June, exports from the U.S. to Chile were valued at US $1.69 billion, considered a 32.39% increase from the same time period in 2003. Chances are the increase was aided by the FTA.

Chile, with a population of 15.2 million people, shares borders with Argentina, Bolivia, and Peru and is an associate member of Mercado del Sur (MercoSur) with founding members, Argentina, Brazil, Paraguay and Uruguay.

Chile’s GDP growth rate is expected to remain strong, growing from 3.4% in 2003 to 4.8% for this year as forecasted by Latin Sectors LLC. Source: www.latin-sectors.com
Time Warner was an early supporter of the U.S.-Chile FTA (as were GE, UPS, Caterpillar, and Merck). For trademark and copyrights, the FTA offers a “first in time, first in right” - if your trademark is first in Chile, then that trademark gets exclusive rights nationwide, and the FTA addresses better provisions in protecting Intellectual Property rights and copyrights. For example, it spells out that illegal use of software is a crime - a counterfeiter in Chile faces statutory damages and any equipment used in their operation would be taken away, versus a “slap on the wrist.”

America Online, the Internet division of Time Warner (previously AOL Time Warner), and based in Dulles, VA noted the FTA as setting a precedent in its support for online products with no duty on electronic transmissions, clearer classification of digital products and more attention in treating digital products for national market access, according to Laura Lane, VP, International Public Policy, AOL-Time Warner, Inc.

Known for its top export of copper, (which is forecasted to increase in cents per pound for 2004, further helping the strength of its economy), Chile has also increased investments in information technology. Chile’s first wireless network consortium, Blue Two Chile, was created last year, combining Bluetooth and Wi-Fi technology to install internet access networks in airports, hotels, highway service stations, restaurants and malls. In addition, Microsoft has partnered with the Chilean construction industry e-marketplace company, Iconstruye, and developed a new purchase order solution for small-to medium-sized enterprises (SMEs) last year. Source: Business News Americas www.BNamericas.com

Along with growth in its Information Technology sector, Chile’s environmental technology market has also seen some “firsts.” For example the consortium operating the Santa Marta landfill serving the southern suburbs of Santiago recently announced plans to convert the facility into the country's first "dry" landfill. This project will require doubling the landfill's liquid-treatment capacity and eliminating the accumulation of percolated liquid leached from waste dumped at the site. Local companies Agua Santa, Constructora Trebol, Hidrosan and Empreterra make up the consortium. Source: Business News Americas www.BNamericas.com

Coinciding with the FTA’s enactment, Virginia-based AES Corporation’s Chilean subsidiary, AES Gerner, announced plans in February 2004 for a US $210 million investment in a new thermoelectric natural gas burning plant near the port of Valparaiso to meet growing electricity demands in central Chile. Source: AES http://www.aes.com

This FTA, even before its first anniversary, already seems to be exemplifying the benefits of free trade. In the first half of 2004, exports of industrial machinery has been the top category exported from the U.S. to Chile valued at half a billion dollars, an estimated 22.76% increase from the same time period in 2003. This included such products as computers and components, self-propelled dozers and mechanized shovels, and parts for derricks, dozers, and mining machinery.

Electrical machinery with a 15.91% increase was valued at US $180.32 million with products such as telecommunications equipment and integrated circuits. Exports under the category of vehicles were valued at US $126.40 million, a 35.26% increase from the same time period in 2003, with products such as trucks, automotive parts, and tractors. Source: World Trade Atlas www.gtis.com

Chilean exports to the U.S. have also grown, valued at more than two billion dollars in the first half of the year. Imports from Chile via Norfolk, VA in the same time period were valued at more than US $13 million, double the amount from the same time period in 2003. Source: www.USAtradeonline.gov

Exports via Virginia to Chile in the first half of this year were valued at US $10.94 million, with top three categories of industrial machinery, plastic, and vehicles/parts. Other categories with large increases were miscellaneous chemicals with a 290% increase at US $823,546.00, optical/medical products with a 104% increase at US $446,970.00, and pharmaceuticals at US $282,843.00, considered a 422% increase as compared to the first half of 2003 before the FTA went into effect. Source: World Trade Atlas

In order to take advantage of the FTA benefits for U.S. goods under this agreement, U.S. exporters need to determine if their goods are originating or qualify for preferential duty treatment under the U.S.-Chile FTA. A good place to start is the U.S. exporters Guide to the U.S.-Chile Free Trade Agreement which includes a link to a sample Certificate of Origin for the U.S.-Chile FTA.

This year the VEDP’s Division of International Trade led two trade missions to Chile, most recently in August. In March 2005, there will also be an opportunity for Virginia exporters to take advantage of a trade mission scheduled for Chile, Brazil and Argentina during March 14-22. Virginia companies are invited to join us in one, two or all three countries. Click here to register online for this event.For more information contact Jaap van Groll, International Trade Manager by telephone at 540-438-1525 or e-mail JVanGroll@YesVirginia.org. For a complete listing of VEDP’s international trade events, please see the “Events” link at our website www.ExportVirginia.org.

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DISCLAIMER – The contents of this article are intended to provide pertinent inform-ation for Beyond Virginia subscribers interested or already involved in international trade. While every effort is made to convey accurate and timely information, the contents of this article are not intended as specific advice to its readers. Our intent is solely to convey information.