Chilean Trade: Factors Affecting U.S. Trade With and Investment in Chile

GAO discussed conditions affecting trade with and investment in Chile. GAO noted that: (1) since 1973, Chile has instituted various reforms to liberalize the country's trade and investment policies, by reducing tariffs and phasing out import licensing and quotas, and plans to further liberalize its foreign investment policies; (2) U.S. companies are concerned about a Chilean policy requiring them to retain in Chile 20 percent of capital borrowed from foreign sources, and about the lack of a U.S.-Chile tax treaty; (3) Chile now allows its state-owned copper company to enter joint ventures with foreign investors, but U.S. firms are concerned because companies with established mining operations often incur significant costs in defending their property rights in Chile; (4) Chile sells approximately 40 percent of its agricultural exports to the United States, but most of its exports do not compete with U.S. produce because of the difference in the two countries' growing seasons; (5) trade barriers in Chile's agricultural sector include price supports and preferential tariffs; (6) Chilean growers consider U.S. marketing orders to be a significant nontariff barrier; and (7) the United States has designated Chile as the next country with which it will negotiate a free trade agreement, but Chile's lack of a comprehensive environmental policy may affect U.S.-Chilean free trade negotiations.