Chile

NATIONAL TRADE ESTIMATES REPORT 2014

  • Ad valorem tariffs and value-added tax (VAT) on alcohol and tobacco imports
  • Import licensing and authorisations apply to products valued over $3000
  • Pharmaceuticals and weapons are subject to more rigorous procedures
  • Imported vehicles, motorcycles and retreated tires are banned
  • Customs agents must be used for imports or exports of goods valued over $1000
  • Complex price band system for sugar, wheat, wheat flour (to be phased out by 2015)
  • Outstanding intellectual property issues under the US FTA
  • Patent issues in connection with applications to market pharmaceutical products
  • More protection for data generated for marketing approval of pharmaceutical products
  • Implement protections against the circumvention of technological protection measures
  • Amend internet service provider liability regime for copyright infringement
  • Implement protections for encrypted program-carrying satellite and cable signals
  • Ensure effective administrative and judicial procedures and deterrent remedies for rights holders
  • Legislation to implement the international Convention for the Protection of New Varieties of Plans
  • High mobile termination rates

REPORT ON TECHNICAL BARRIERS TO TRADE 2014

  • Ongoing US concerns over new nutritional regionals and labeling of food products
  • Burdens of safety and energy efficiency labeling and certification for printers
  • New labeling, testing and certification for electrical and fuel products appear duplicative and burdensome

REPORT ON SANITARY AND PHYTOSANTARY MEASURES 2014

  • Impediments to imports of fresh and chilled pork from U.S.
  • Ban on live cattle imports from the U.S.
  • Import of salmonid eggs from the U.S. suspended, risk assessments and approval time-consuming and unwarranted
  • Fumigation or cold treatment of U.S. table grapes

SPECIAL 301 (IP) REPORT 2014

  • Patent issues in connection with applications to market pharmaceutical products
  • Protections against the unlawful circumvention of technological protection measures
  • Protections for encrypted program-carrying satellite signals
  • On-going concerns with decoder boxes
  • Protection for data generated to obtain market approval for pharmaceutical products
  • Extend Internet service provider (ISP) liability regime for action against Internet piracy
  • Improve the protection of plant varieties
NATIONAL TRADE ESTIMATES REPORT: Chile
http://www.ustr.gov/sites/default/files/2014%20NTE%20Report%20on%20FTB%20Chile.pdf


IMPORT POLICIES

Tariffs

Chile has one of the most open trade regimes in the world with a uniform applied tariff rate of 6 percent for nearly all goods not covered under an FTA. However, there are several exceptions to the uniform tariff. Ad valorem excise tariffs are between 15 percent and 27 percent for alcoholic beverages and between 52 percent and 60 percent for tobacco depending on the type of tobacco product. Importers also must pay a 19 percent value-added tax (VAT) calculated based on the CIF value (Cost, Insurance, and Freight) plus the import tariff. In the case of duty-free imports, the VAT is calculated based on the CIF value alone.

Import Controls

There are virtually no restrictions on the types or amounts of goods that can be imported into Chile, nor any requirements to use the official foreign exchange market. However, Chilean customs authorities must approve and issue a license for all imports valued at more than $3,000. After customs authorities issue the license, the goods must generally be imported within 30 days. Commercial banks may authorize imports of less than $3,000. Importers and exporters must also report their import and export transactions to the Central Bank. Commercial banks may sell foreign currency to any importer to cover the price of imported goods and related expenses as well as to pay interest and other financing expenses that are authorized in the import report. The licensing requirements appear to be primarily used for statistical purposes; legislation requires that most import licenses be granted as a routine procedure. More rigorous licensing procedures apply for certain products such as pharmaceuticals and weapons.  Chile prohibits the importation of used vehicles (with some exceptions for Chileans returning to Chile after more than one year abroad and for specialized vehicles such as armored cars and ambulances), used motorcycles, and used retreaded tires (with the exception of wheel-mounted tires). Some used items originating from a country that does not have an FTA with Chile are subject to an additional importation charge of 3 percent over the CIF value. Depending on the product, this additional charge can be eliminated or reduced if the used item is imported from a third country that has an FTA with Chile.

Nontariff Barriers

Chile maintains a complex price band system for sugar (mixtures containing more than 65 percent sugar or sugar substitute content are subject to the sugar price band), wheat, and wheat flour that, under the FTA, will be phased out by 2015 for imports from the United States. The price band system was created in 1985 and is intended to guarantee a minimum and maximum import price for the covered commodities. When certain CIF prices (as calculated by Chilean authorities) fall below the set minimum price, a special tax is added to the tariff rate to raise the price to the minimum price. Since 2008, the minimum price has been adjusted downward by 2 percent per year on U.S. imports. In recent years, the price band system has not had a strong impact on U.S. exports because the world prices of the agricultural products governed by the price band system have consistently fallen in between the permitted minimum and maximum import prices. In 2014, Chile’s President will evaluate whether to continue the price band system for other trading partners.

Companies are required to contract the services of a customs agent when importing or exporting goods valued at over $1,000 free on board (FOB). The customs agent is the link between the exporter or importer and the National Customs Service. The agent is responsible for facilitating foreign trade operations and acting as the official representative of the exporter or importer in the country. Customs agents’ fees are not standardized. A list of customs agents and information about their responsibilities is available on the National Customs Service’s website. Companies established in any of the Chilean duty-free zones are exempt from the obligation to use a customs agent when importing or exporting goods. Individuals who import non-commercial goods valued at less than $500 are not required to use a customs agent.

EXPORT POLICIES

Chile currently provides a simplified duty drawback program for nontraditional exports. The program reimburses a firm up to 3 percent of the value of the exported good if 50 percent of that good consists of imported raw materials. Exported goods produced with imported capital equipment must have a minimum CIF value of $3,813 in order to be eligible for duty drawback. The net value of the invoice is used if the capital equipment in question is also manufactured domestically. Another export promotion measure allows all exporters to defer import duties for up to seven years on imported capital equipment or receive an equivalent government subsidy for domestically produced capital goods. In accordance with its FTA commitments, Chile is eliminating, over a transition period, the use of duty drawback and duty deferral for imports that are incorporated into any goods exported to the United States. Beginning in 2012, the amount of drawback allowed is reduced by 25 percent of the original value each year until it reaches zero in 2015.

Under Chile’s separate VAT reimbursement policy, exporters have the right to recoup the VAT they have paid when purchasing goods and using services intended for export activities. Any company that invests in a project in which production will be for export is eligible for VAT reimbursement. Exporters of services can only benefit from the VAT reimbursement policy when the services are rendered to people or companies with no Chilean residency. Also, the service must qualify as an export through a resolution issued by the Chilean customs authority.

GOVERNMENT PROCUREMENT

The FTA requires procuring entities subject to the Agreement to use fair and transparent procurement procedures, including advance notice of purchases and timely and effective bid review procedures for procurement covered by the Agreement. The FTA also contains nondiscrimination provisions that require Chilean entities covered by the FTA to allow U.S. suppliers to participate on the same basis as Chilean suppliers in covered procurements. Most Chilean central government entities, 13 regional governments, 10 ports, state-owned airports, and 341 municipalities are covered by the FTA and must comply with the government procurement obligations. Chile is not a signatory to the WTO Agreement on Government Procurement, but it is an observer to the Committee on Government Procurement.

INTELLECTUAL PROPERTY RIGHTS PROTECTION

Chile was listed on the Priority Watch List in the 2013 Special 301 Report. The report notes the United  States’ serious concerns regarding outstanding intellectual property rights (IPR) issues under the FTA. The United States has urged Chile to create a system to expeditiously address patent issues in connection with applications to market pharmaceutical products and to provide adequate protection against unfair commercial use as well as unauthorized disclosure of undisclosed test or other data generated to obtain marketing approvals for pharmaceutical products.

The United States has also urged Chile to implement protections against the circumvention of technological protection measures, to amend its Internet service provider liability regime to permit effective action against any act of infringement of copyright and related rights, to implement protections for encrypted program-carrying satellite and cable signals, and to ensure that effective administrative and judicial procedures and deterrent remedies are made available to rights holders.

Additionally, the United States has urged Chile to approve legislation to implement the International Convention for the Protection of New Varieties of Plants (1991) (UPOV ‘91). In 2014, the United States will continue to work with Chile to address these concerns.

SERVICES BARRIERS

Telecommunications Services

Chile maintains high mobile termination rates: (the wholesale per-minute rate paid by an originating mobile provider to the terminating mobile provider when a call is placed from subscribers from one network to subscribers of another). The OECD average mobile termination rate is $0.065 per minute, while Chile has one of the highest rates at $0.165 per minute (the United States has one of the lowest rates at $0.0007 per minute).

TBT REPORT (pg. 54): Chilehttp://www.ustr.gov/sites/default/files/2014%20TBT%20Report.pdf

Bilateral Engagement

The United States and Chile discuss TBT related matters in the context of the United States –Chile Free Trade Agreement, during annual Free Trade Commission and TBT Chapter Committee meetings, as well as during the WTO TBT Committee meetings.

Nutritional Labelling and Food Advertising

The Chilean Congress adopted Law No. 20,606 on nutrition and composition of food and food advertising on July 6, 2012, and the Chilean Ministry of Health (MOH) published the corresponding final implementing regulations in Chile’s Official Journal on December 17, 2013. The regulations will be implemented in stages beginning June 17, 2014. The implementing regulations set limits for maximum levels of certain nutrients including saturated fat, calories, sugar, and sodium according to portion size of specific foods. Chile set nutrient limits for 24 categories of foods, including those preferred by children. If the limits in the food categories are exceeded, an icon must be placed on the front label panel, indicating the product is “High In” that nutrient. The icon must account for approximately 7.5 percent of the total surface of the packaging. Trade in processed and packaged foods to Chile amounts to $255 million annually. Chile notified the draft implementing regulations and accompanying guidance on advertising to the WTO.

The United States delivered initial WTO TBT comments on February 26, 2013on a proposed version of the implementing regulations. The United States discussed this issue with Chile in the framework of the WTO TBT Committee, the United States –Chile FTA, on the margins of the TPP Agreement negotiations, and with senior level officials in Santiago. Other countries shared U.S. concerns over the proposed labeling requirements. Eleven countries, including the United States, expressed concerns at the June 2013 WTO TBT Committee, and eight countries, including the United States, spoke at the October 2013 TBT WTO Committee.

After this engagement, when Chile published the final implementing regulations in December 2013, they contained significant improvements over previous draft versions. Chile has decreased the total size of the icon from 20 percent of the total surface of the package to 7.5 percent. There is a choice of background colors of the square (red, blue, or green) where previously red or black was dictated. The font for the “High In” declaration is normal where previously it was bold and exaggerated. The Ministry of Health declaration inside the icon has been replaced with a statement that ties the icon to 2003 World Health Organization (WHO) diet recommendations. Chile also reduced the number of food categories subject to the requirements substantially from its original proposal. According to industry, roughly 80 percent of all prepackaged foods might have needed the “High In” icons. In narrowing the scope of the food categories, however, Chile created questions about the scientific basis for food category selection.

Chile also created concerns about how it will categorize domestic foods versus imported prepackaged foods. The MOH also made some improvements to the nutrient thresholds for yogurt and bread and standardized the majority of the nutrient thresholds at 20 percent of the daily recommended value for the nutrient. The MOH authorities also responded positively to U.S. comments with respect to other aspects of the regulations, confirming that 1) foods served in restaurants will not be subject to the labeling requirements; 2) existing commercial inventories will not be subject to the labeling requirements, and 3) food importers can comply with the law by using supplemental labels or stickers.

The United States is pleased with modifications Chile made to the initial labeling proposal but remains concerned that Chile has adopted a staggered implementation approach, as opposed to giving 18 months for compliance for all foods. Some foods must comply in only six months, contributing to higher food production costs by limiting time for label redesign and use of existing labeling stock. Consumers may also interpret the six-sided icon on the package as a stop sign that will discourage consumption even when the product is consumed in the context of an overall healthy diet and active lifestyle.

The United States will continue to monitor the situation, especially the trade impact on imported prepackaged foods, and seek opportunities to work with Chile both bilaterally and in the WTO TBT Committee to address remaining concerns.

Printers–Safety and Energy Efficiency Labeling

In August 2012, Chile notified to the WTO measures concerning “Safety for Printers” and “Energy Efficiency for Printers.” These measures address safety and standby energy efficiency labeling for printers and require printers to be certified by a third party laboratory in Chile in order to be sold in Chile. Chile postponed the effective date to March 27, 2014, for the safety protocol and June 27, 2014, for the energy efficiency protocol. In December 2013, Chile also noted its intention to measure sleep versus standby mode for the energy efficiency protocol. It is unclear what will happen to existing inventory already in the marketplace that do not meet these requirements. Also, U.S. industry will need additional time to come into compliance; U.S. industry believes that implementation needs to be delayed at least one year after Chile finalizes the measures. U.S. industry is also concerned that Chile did not take its comments into account.

U.S. industry submitted comments in October 2012, and did not receive a reply until April 2013, well after the comment period was over. The United States raised this issue both bilaterally and multilaterally on the floor of the WTO TBT Committee in 2013, and will continue to engage with Chile in 2014 to ensure that these requirements do not impose undue burdens on U.S. exports.

Electrical Labeling, Testing and Certification Requirements.

In August 2013, Chile notified to the WTO a draft Decree 298-2005, titled “Adoption of the certification regulations for electrical products and fuel products.” The draft measure sets stringent requirements for labeling, testing and certifying products covered by the decree. Only three laboratories have been approved to certify products. The requirement for testing and certifying printers appears duplicative given other measures Chile maintains that already require testing and certification of printers (see previous entry). In addition, U.S. industry considers the labeling of each product with specific certification numbers and QR Codes as required under the decree to be especially burdensome. Chile stated that it would analyze comments through December 2013 and expects the decree to become effective in August 2014. In November, 2013, Chile put a hold on the process to revise Decree 298 in order to receive additional input and allow participation from stakeholders. The United States raised this issue both bilaterally and multilaterally on the floor of the WTO TBT Committee in 2013, and will continue to engage with Chile in 2014 to avoid unnecessarily burdensome labeling requirements.

SPS Report (pg. 34): Chilehttp://www.ustr.gov/sites/default/files/FINAL-2014-SPS-Report-Compiled.pdf

Food Safety

Pork

Chile requires pork produced in the United States to be shipped frozen or tested for trichinosis. Chile’s requirements constitute a significant impediment to U.S. fresh and chilled pork exports to Chile. The United States does not consider these requirements to be necessary as U.S. producers maintain stringent biosecurity protocols that serve to limit the presence of trichinae in the United States to extremely low levels in commercial swine. As an alternative, the United States proposed less trade restrictive risk mitigation measures to assure Chile that U.S. pork exports do not contain trichinae. According to USDA estimates, removal of these requirements could result in a gain of $25-$100 million annually. The United States has raised this issue on the margins of the Trans-Pacific Partnership (TPP) SPS negotiations on numerous occasions as well as in high level bilateral meetings and will continue to work with Chile to resolve this trade concern.

Live Cattle

Chile bans imports of U.S. live cattle following the detection of a BSE-positive animal in the United States in 2003, despite its long standing commitment to adhere fully to OIE guidelines. The United States raised this issue on numerous occasions in 2013, including during technical discussions and high level official visits. The United States will continue to urge Chile to open its market fully to U.S. live cattle based on science, the OIE guidelines, and the United States’ BSE negligible risk status.

Salmonid Eggs

On July 14, 2010, Chile’s Ministry of Fisheries, SERNAPESCA, suspended imports of salmonid species from all countries, including the United States, due to Chile’s revised import regulations for aquatic animals, including salmonid eggs. Under the new regulation, U.S. industry can no longer export salmonid eggs into Chile under any conditions until SERNAPESCA completes a risk analysis of aquatic animal imports and an on-site audit of APHIS’ oversight of aquatic animal exports and U.S. salmonid egg production sites. An audit was conducted in December 2011 on USDA’s oversight of U.S. salmonid egg production sites in Washington and Maine. The United States had understood that the audit of Washington State was successful and that trade from that state could resume by the end of summer 2012. However, SERNAPESCA later informed USDA that additional information would be required to document the strength of the national surveillance program. USDA sent comments on SERNAPESCA’s risk assessment in May 2013 and another communication to SERNAPESCA in August 2013. In August, SERNAPESCA added a new disease, Totivirus, which is not an OIE listed disease, to the list of diseases not present tin Chile. As a result of this addition, SERNAPESCA suspended imports of all salmonid eggs from the United States, until an additional risk assessment is complete for this disease. USDA is currently preparing a response to SERNAPESCA’s October 2013 communication on the risk assessment and additional information requested on the new disease. Market access for products from the state of Maine is also pending the resolution of technical concerns raised by Chile.

This issue has been raised on the margins of the TPP SPS negotiations on numerous occasions, as well as in technical discussions and high level official visits. While Chile has expressed an interest in working with the United States to resolve this issue through continuing review of U.S. and state surveillance programs, it has also recommended that the states of Washington and Maine apply for equivalence determinations. However, such determinations would be time consuming and appear to be unwarranted given that Chile has yet to identify a specific health concern relevant to U.S. products.

Plant Health

Table Grapes

In September 2011, Chile issued new provisional phytosanitary requirements for potential imported hosts of SWD, including U.S. table grapes, which require a methyl bromide fumigation or cold treatment. These restrictions continue to apply. APHIS has been working with Chile’s Ministry of Agriculture to eliminate these restrictive treatment measures. SWD is not of quarantine concern for the United States, has never been intercepted in shipments destined to Chile originating from the United States, and is being controlled in place by industry’s best management practices. As commercially produced table grapes are not a suitable host to SWD, USDA is pursuing elimination of Chile’s emergency measures, has been working with California’s table grape industry, and is presenting options to the Chilean Ministry of Agriculture to eliminate these provisional SWD measures.

To address Chile’s provisional phytosanitary requirements on SWD, in May 2013, USDA proposed a protocol to Chile for consideration as a phytosanitary option to mitigate SWD. Chile responded to USDA in January 2014, and stated it will maintain its current treatment requirement restrictions for SWD (as well as for Light Brown Apple Moth regulated areas), and requested further information from the United States on these issues. The United States will continue to work with Chilean officials to resolve these issues.

 

Special 301 (IP) Report (pg. 44): Chilehttp://www.ustr.gov/sites/default/files/USTR%202014%20Special%20301%20Report%20to%20Congress%20FINAL.pdf 

Chile remains on the Priority Watch List in 2014. The United States continues to have serious concerns regarding outstanding IPR issues under the United States-Chile Free Trade Agreement. The United States continues to urge Chile to implement an effective system for addressing patent issues expeditiously in connection with applications to market pharmaceutical products.

The United States also continues to urge Chile to implement both protections against the unlawful circumvention of technological protection measures and protections for encrypted program-carrying satellite signals.

Chile must also ensure that effective administrative and judicial procedures, as well as deterrent remedies, are made available to rights holders and satellite and cable service providers, including measures to address ongoing concerns with decoder boxes.

The United States also urges Chile to provide adequate protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products.

Finally, the United States urges Chile to amend its Internet service provider (ISP) Liability regime to permit effective action against piracy over the internet and to also take steps to improve the protection of plant varieties.

The United States looks forward to continuing to work with Chile to resolve these and other issues, including through the TPP negotiations.