US signs free trade pact with Chile

<a href=www.nzherald.co.nz>The New Zeland Herald 07.06.2003

The United States signed a free trade agreement with Chile today and said its first such accord with a South American nation was a stamp of approval for Chile and a marker for future regional accords.

The agreement was signed in Miami, a US gateway to Latin America, by US Trade Representative Robert Zoellick and Chilean Foreign Minister Soledad Alvear. Congresses in both nations are likely to approve the pact this year.

Zoellick called Chile, an island of political and economic calm in a troubled region, "an exemplary economic partner."

"Chile is the freest, most competitive economy in Latin America and it has set a very high standard," he said.

The agreement, signed after 11 years of planning and negotiations that concluded in December 2002, makes Chile the only country in Latin America apart from Mexico to win Washington's blessing as a preferred trade partner.

Zoellick said the United States hoped the accord would encourage other nations to reach such agreements and would be a boost for talks on an Americas-wide free trade zone.

But critics in Santiago said it benefited only a small percentage of businesses, hurt small farmers and laid Chile open to cheap imports and "plastic American culture."

"We reject the agreement until we know the full impact it will have on Chile. There are other ways of negotiating trade without tying yourself to the biggest economy in the world," said Margarita Iglesias, director of the Chilean branch of French anti-globalisation group ATTAC.

Although negotiations on the pact were completed in December, the actual signing was apparently delayed because of a chill in relations over Chilean President Ricardo Lagos' opposition to the US-led war in Iraq.

Chile, a member of the UN Security Council, did not support US efforts before the war to win a second UN resolution authorizing the use of force to disarm Iraq.

Lagos said the pact would eventually produce a 40 per cent jump in exports to the US, its biggest export market and foreign investor.

Lagos, a left-leaning free trader who has signed free trade pacts with the European Union and South Korea, said exports to the US would increase during the first three or four years of the pact to US$5 billion ($8.74 billion) a year from the current $3.6 billion.

In a televised message to Chileans, he said the country would see the full impact three years after the pact went into effect, when 95 per cent of all Chilean exports would enter the United States duty free. Chile's main exports to the United States are copper, salmon, wine and grapes.

The United States has similar agreements with Canada and Mexico under the NAFTA deal, and with Israel and Jordan.

Washington also recently signed a free trade pact with Singapore that is pending Congressional approval.

The Bush administration hopes the Chile pact will give momentum to talks on the Free Trade Area of the Americas, which is meant to be completed by 2005 and would encompass all 34 countries in the Americas except for Cuba.

At a news conference Zoellick acknowledged the Americas project is far more complex than a bilateral deal but said he had a "cautious optimism" over prospects after a trip last month to Brazil, which is co-chairing talks toward the FTAA.

The Chile accord was welcomed by the Andean Community bloc, which groups Peru, Ecuador, Colombia, Venezuela and Bolivia. Chile was a member until it withdrew in 1976.