- The Washington Times - Thursday, December 12, 2002

The United States and Chile yesterday completed an agreement to lower trade barriers and safeguard investments.
The free-trade pact is the United States' first with a South American country and adds momentum to the drive for a hemispheric trade pact, said U.S. Trade Representative Robert B. Zoellick.
The agreement must be approved by lawmakers in Washington and Santiago before it takes effect.
"The U.S.-Chile free-trade partnership extends beyond this agreement we are both working hard together to advance global trade negotiations and the Free Trade Area of the Americas," Mr. Zoellick said at a press conference yesterday.
Thirty-four countries are negotiating the FTAA. The United States and Brazil are often seen as presenting competing models as countries negotiate the agreement. Both countries want to establish trade positions and win adherents to those positions throughout the region.
Under the deal with Chile, tariffs on more than 85 percent of consumer and industrial products traded between the countries would be eliminated immediately. Most remaining tariffs would be phased out in another four years and all tariffs would be cut to zero during a 12-year span, Mr. Zoellick said.
"It not only slashes tariffs, it reduces barriers for services, protects leading-edge intellectual property, keeps pace with new technologies, ensures regulatory transparency and provides effective labor and environmental enforcement," Mr. Zoellick said.
Chilean Foreign Minister Soledad Alvear, also at the press conference, said the agreement would allow Chile to become "a platform for investment."
The U.S. Trade Representative's Office did not release the detailed, 800-page agreement; text is still being finalized. But an outline indicated that U.S. exports of agricultural and construction equipment, autos and auto parts, computers, medical equipment and paper products would immediately be of benefit.
The United States' biggest exports to Chile so far this year include parts and accessories for computers, radio equipment, construction equipment, gas turbines and fertilizers. Chile is sending copper products, grapes, fish, wood products and wine and other goods to the United States.
Two-way trade in goods and services between the United States and Chile totaled $8.8 billion in 2001.
Chile has used an export-led strategy to help its economy as neighbors Argentina and Brazil face economic crises. The three democratic governments elected since 1989 used trade liberalization to trigger export diversification and help the country avoid recession, according to a World Bank analysis.
Nevertheless, Chile remains a country of severe disparities with large inequality of income between the rich and poor, the World Bank said.
The immediate reaction to the deal from Republicans in Congress was positive. Sen. Charles E. Grassley, incoming chairman of the Finance Committee and an Iowa Republican, praised the agreement.
"The Bush administration deserves credit for not only completing this trade agreement but also for advancing the interests of U.S. agriculture and industry in the agreement," he said in a statement.
John O'Leary, the former U.S. ambassador to Chile and now head of the Chilean-American Chamber of Commerce, said the deal, initiated under President Clinton and completed under President Bush, is a score for bipartisan trade policy.
"International trade policy remains a contentious issue on [Capitol] Hill. But I'm confident that there will be broad recognition that approval of this agreement after close examination of the details will be in the best interest of United States," he said.
The agreement should formally be presented to Congress in January and voted on sometime next year, Mr. Zoellick said.
The agreement would be the first vote under trade-promotion authority, won by Mr. Bush in August. TPA allows the administration to negotiate a trade deal and then submit it to Congress for an up-or-down vote.
Mr. Zoellick in November announced conclusion of the substance of a free-trade pact with Singapore but the agreement is not final.

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