U.S. Chile Free Trade Agreement example essay topic

Benefits of the US- Chile Free Trade Agreement The meeting of minds between Chile and the United States has brought about a long awaited union pertaining to free trade. Chile responded enthusiastically when presented with the opportunity to become a part of 1994's North American Free Trade Agreement (NAFTA) but because of the issue of presidential fast-track trade negotiation authority, the merger did not come to fruition. Now, nearly a decade later -- after negotiations began in the year 2000 -- Chile and America have come to their own agreement with regard to free trade, one that is both historic and comprehensive in nature. On September 3, 2003, President George W. Bush signed the United States - Chile Free Trade Agreement (FTA). Which went into effect on January 1, 2004. Chile was the first country in Latin America to sign this type of agreement with the United States.

The United States - Chile Free Trade Agreement allows two nations to strengthen and develop economic relations and to establish free trade between them. The Government of the United States of America and the Government of the Republic of Chile, resolve to: (a) Strengthen the special bonds of friendship and cooperation between their nations (b) Contribute to the harmonious development and expansion of world trade and provide catalyst to broader international cooperation. (c) Create an expanded and secure market for the goods and services produced in their territories. (d) Avoid distortions in their reciprocal trade. (e) Establish clear and mutually advantageous rules governing their trade. (f) Ensure a predictable commercial framework for business planning and investment. (g) Build on their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organization and other multilateral and bilateral instruments of cooperation. (h) Enhance the competitiveness of their firms in global markets. (i) Foster creativity and innovation, promote trade in goods and services that are the subject of intellectual property rights. (j) Create new employment opportunities and improve working conditions and living standards in the respected territories. (k) Build on their respective international commitments and strengthen their cooperation on labor matters. (l) Protect and enhance and enforce basic workers' rights. (m) Implement this agreement in a matter consistent with environmental protection and conservation. (n) Promote sustainable development. (o) Conserve protect and improve the environment, including through managing natural resources in their respective territories and through multilateral environmental agreements to which they are both parties. (p) Preserve their flexibility to safeguard the public welfare; and (q) Contribute to hemispheric integration and the fulfillment of the objectives of the Free Trade Area of the Americas (web United States Text. pdf). The benefits of a Free Trade Agreement for the United States are significant. A major factor in the agreement is that Chile has free trade agreements with Canada, and the European Union, two main competitors of the United States. The National Association of Manufacturers estimates that, due to the lack of a free trade agreement with Chile, American exporters lost $800 million in sales last year. A Free Trade Agreement will help to ensure that we enjoy market access, treatment, prices and protection at least as good as our competitors.

Consumers will benefit from lower prices and more choices. With a free trade agreement, the United States will improve its competitive position. One of the immediate benefits of the US-Chile FTA will be the rapid elimination of tariffs on industrial goods. More than 85 percent of bilateral trade in industrial and consumer products became duty free immediately upon the entry into force of the FTA. The Agreement will eliminate tariffs on goods and services, over a 10-year period for industrial goods and a 12-year period for agricultural products. Chile's luxury tax on automobiles will be phased out over four years, while the number of vehicles subject to the tax will drop quickly upon implementation of the Agreement.

Immediate duty-free access includes heavy machinery and equipment, automobiles and automotive parts, computers and other IT products, medical equipment, and wood and paper products. Service providers will receive important benefits in the Chilean market. In addition to facilitating market access, the FTA includes provisions to ensure that regulatory authorities use open and transparent administrative procedures, consult with interested parties before issuing regulations, provide advance notice and comment periods for proposed rules, and publish all regulations. While commitments to improve market access apply to nearly every service division, the FTA includes special provisions regarding financial services, telecommunications, and e-commerce. The Agreement with Chile also expands access to larger markets in South America, such as Argentina and Brazil, which already have free trade agreements with Chile.

One of the most important benefits of the Agreement is that it establishes a secure predictable legal structure for United States investors in Chile. Added to the political and economic stability of Chile, this creates a great environment for American businesses. According to Mr. Christopher Padilla, Assistant US Trade Representative, Intergovernmental Affairs and Public Liaison "Small and medium-sized enterprises will benefit from the tariff-eliminating provisions of the U.S. -Chile FTA. In recent years, U.S. companies have faced competition from firms in Canada and Mexico who already enjoy the benefits of these countries' free trade agreements with Chile. Additionally U.S. small businesses will substantially benefit for the progressive agreements on transparency in law, customs facilitation and intellectual property rights protection".

Negotiators secured important benefits for agricultural goods, and with more than 75 percent of agricultural tariffs to be eliminated within four years, and remaining tariffs to be phased out over 12 years. An additional bonus for U.S. exporters is the phase-out of Chile's price bands on staple goods such as wheat, wheat flour, edible vegetable oil, and sugar. Special provisions in the FTA will help protect U.S. farmers and ranchers from surges in imports from Chile that may result from the pact. Key Farm products to benefit from improved market access include beef and beef products, pork and pork products, soybeans, durum wheat, potatoes feed grains and processed foods.

Tariffs on wine will be equalized with the current U.S. tariff rates and then phased out. The United States- Chile FTA will provide many other benefits, including government procurement guidelines, provisions for temporary entry of personnel, and protection of labor and environmental standards. The agreement contains high-level, state-of-the-art protection of intellectual property, such as copyrights, patents, trademarks, and trade secrets, as well as strong measures to counter piracy and counterfeiting. U.S. investors will be granted the right to make, acquire, and operate investments in Chile on equal footing with Chilean investors in almost all circumstances, in addition to receiving due process protection and expropriation rights. The Free Trade Agreement is a victory for the Chilean government.

Over 1,900 Chilean companies, 900 of which are small and medium-sized, sell their products to the United States. The obvious benefits these, and other Chilean exporters, reap from a free trade agreement with the world's political and economic super power is enormous. Chile will gain even more international prestige than it already has. This prestige will lead to the lowering of Chile's risk rating, which will depress interest rates and attracts investment from around the world. Chileans will be able to obtain much better and cheaper technology, giving them an edge over their competitors. An important provision for Chile is that 1,400 Chilean professionals per year will be able to enter the United States, as opposed to 200 in 2002.

These professionals will benefit from the experience of working in the United States. Chile's labor force is well trained, innovative and productive. Democratic administrations in Chile have understood the link between education and successful development. They have consistently invested in an expanded kindergarten-through-adulthood learning system.

Furthermore, Chile's innovative and widespread private-pension fund system provides workers with long-term financial security and stability. This is why the United Nations has recognized Chile as one of the world's 'High Human Development' countries. Chile's modern infrastructure, private telecommunications network, Internet penetration and high level of economic freedom provide for efficient, low-cost distribution channels and communications with the U.S. and Latin America. The Economist ranking of e-business readiness placed Chile ahead of the rest of Latin America in this area.

Chile has been the best-managed economy in Latin America, and the fourth fastest-growing in the world over the last decade and its growth continues. Chile is a symbol of economic and social progress and has surpassed numerous developed countries in international indices that measure the success of nations. Chile's democracy is solid, accountable and growing stronger. Its commitment to human rights, including worker rights, and to a free society under the rule of law is unwavering. Chile is also committed to sustainable development and environmental protection. Chile shares America's political and economic values and supports freedom at home and abroad.

It has been a reliable supporter of U.S. foreign policy initiatives in the Americas and around the world, including the effort to combat terrorism following September 11, 2001. The completion of the U.S. -Chile FTA emphasizes the Bush administration's intention to negotiate and conclude trade pacts in Latin America, and it opens the door for future trade agreements within the region. Currently, the United States is engaged in negotiations for the Free Trade Area of the Americas (FTAA); these talks are scheduled to conclude in January 2005. While the administration considers the unique circumstances of each economy with which it negotiates trade agreements, the broad scope and high standards of the U.S. -Chile FTA should spur additional trade and investment liberalization in Latin America and help set the tone for future trade negotiations. The free trade agreement will strengthen the already close commercial ties between the United States and Chile. The agreement will prove very positive for the integration of the hemisphere.

It offers another precedent for a free trade agreement between the United States and small economies. As Chile has a free trade agreement with most of the Latin American economies, it could potentially increase trade between these countries and the United States. Taking into account these factors, the free trade agreement between the United States and Chile represents a positive boost for negotiating a Free Trade Agreement of the Americas (FTAA). The Chile - United States Free Trade Agreement is a win - win situation for both nations.