It is with this approach in mind that this report integrates a discussionof Chile's economic growth and development with trade policy issues raised in both the United Statesand Chile. Table 1. It is currently courting other countries including Japan, New Zealand, and Singapore,and closing in on an agreement with the European Free Trade Association (EFTA), see AppendixD . Japan and Canada follow at adistance with 3% and 2%, respectively. Other Latin American countries had much slower growth of manufacturedexports. This is in keeping with general expectations from the outset of the negotiations thatrecognized the limited benefits that could be achieved by the FTA given Chile is already a relativelysmall open economy with a relatively small trade position with the United States. Because the changes are computed from relatively small bases on a dollarvalue basis, however, the effects on industry production are expected to be small. Chile has signed the Trade Related Intellectual PropertyRights (TRIPS), but its congress has yet to pass legislation implementing the provisions. This has led to a strong divergence of opinion, bothamong groups within the United States, and between developed and developing countries. The U.S.-Jordan bilateral FTA (theimplementing legislation was signed into law by President Bush on September 28, 2001 -- P.L.107-43 ) took labor and environmental provisions a step farther. One or more of these issues were raised inhearings before the House Ways and Means and Senate Finance Committees, as well as bothJudiciary Committees. The U.S.-Chile FTA in Brief

With implementation of the U.S.-Chile free trade agreement, Chile joined a select group ofonly five other countries that have an FTA with the United States (Canada, Mexico, Jordan, Israel,and Singapore). Market access was a critical provision, with duty-free access negotiated for allgoods traded between the two countries. When the agreement enters into force on January 1, 2004,fully 87% of bilateral trade in consumer and industrial products will become duty-free immediately,with the rest receiving reduced tariff treatment over time. Some 75% of U.S. farm exports will enterChile duty-free within four years and duties on all goods will be fully phased out within 12 years. (26) Importantly, the chapteron trade remedies deals only with the safeguards provision, so there is no change to the antidumpingand countervailing duty options currently available to both countries under WTO rules. For Chile, 95% of its export products will gain immediate duty-free status and only 1.2% willfall into the longest 12-year phase-out period. Other achievements of importance to the United States include consolidating and stabilizingrules governing openness of services trade, telecommunications, intellectual property rights (IPR),e-commerce trade, and investment. These involve the treatment of labor and financial transfers in disputesettlement, and the temporary entry for business persons. There is a final point. (32) 

		Capital Controls

A second controversial provision in the agreement relates to capital controls. Title IV of S. 1416 / H.R. Appendix A.
On June 6, 2003, the United States and Chile signed a long anticipated bilateral free tradeagreement (FTA) in Miami, Florida, concluding a 14-round negotiation process that began onDecember 6, 2000. Following hearings before the House Ways and Means, Senate Finance, and bothJudiciary Committees, the House passed the U.S.-Chile Free Trade Implementation Act( H.R. 2738 ) by a vote of 270 to 156, followed by the Senate one week later, 66 to 31. President George W. Bush signed the bill into law on September 3, 2003 ( P.L. 108-77 ) and it willtake effect on January 1, 2004.
Chile has now joined a select group of only five other countries that have an FTA with theUnited States (Canada, Mexico, Jordan, Singapore, and Israel). Although many point to the potentialfor trade growth between the two countries, the significance of this FTA runs deeper: 1) it is the firstagreement with a South American country; 2) it is an agreement with one of the most open andreformed economies in Latin America; 3) it exemplifies how trade policy issues, including thosewith social and economic implications, can be resolved between a small developing country and alarge developed one; and, 4) it may prove to be a step toward completing the Free Trade Area of theAmericas.
The FTA allows increased market access, with 85% of bilateral trade in consumer andindustrial products eligible for duty-free treatment immediately, and other product tariff rates beingreduced over time. Some 75% of U.S. farm exports will enter Chile duty-free within four years andall duties will be fully phased out within 12 years after implementation of the agreement. For Chile,95% of its export products gain duty-free status immediately and only 1.2% fall into the longest12-year phase-out period. Other critical issues resolved included environment and labor provisions,more open government procurement rules, increased access for services trade, greater protection ofU.S. investment and intellectual property, and creation of a new e-commerce chapter. The traderemedies chapter is limited to safeguards so there is no change to the antidumping and countervailingduty options currently available to both countries.
The bilateral negotiation was a challenging exercise for both countries and although abroad-based agreement was struck, a few issues were controversial for many Members of Congress,as expressed at hearings in both the House and the Senate. Overall, because there are now multipleFTAs being contemplated, there was an overarching concern that provisions in the Chile FTA mightbecome a "template" for others that follow. In particular, attention turned to language governingdispute resolution treatment of labor provisions, and financial transfers (capital controls), as well asthe temporary entry for business persons. These and other issues are discussed in this report, whichprovides background and analysis on Chile's economy, trade relations, and the bilateral FTA. Because Congress has completed action on this FTA and it has become law, this is the final versionof the report.