Note: Advance written questions by WTO Members and replies provided by Chile are reproduced  
in document WT/TPR/M/124/Add.1. and will be available online at:  http://www.wto.org/  
english/tratop_e/tpr_e/tp_rep_e.htm. 
  WORLD TRADE  
ORGANIZATION  WT/TPR/M/124 
6 February 2004 
 (04-0467) 
Trade Policy Review Body 
2 & 4 December 2003  
 
  
 
TRADE POLICY REVIEW 
 
CHILE 
 
Minutes of Meeting
 
 
Chairperson:  H.E. Mrs. Mary Whelan (Ireland) 
 
 
   P a g e  
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF CHILE 4 
III. STATEMENT BY THE DISCUSSANT 6 
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 7 
V. REPLIES BY THE REPRESENTATIVE OF CHILE AND ADDITIONAL COMMENTS 13 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 15 
 
  WT/TPR/M/124 
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 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The third Trade Policy Review of Chile was held on 2 and 4 December 2003.  The 
Chairperson (H.E. Ms. Mary Whelan) welcomed the delegation of Chile, headed by State Secretary 
of the Ministry of Foreign Affairs, Mr. Osvaldo Rosales, and the discussant H.E. Mr. Tim Groser (New Zealand).  As usual, the discussant would speak  in his personal capacity and, in accordance with 
established procedures, he had made available in a dvance a broad outline of the themes he intended to 
raise (document WT/TPR/D/102). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of the meeting.  The Report by the Government of Chile was contained in document 
WT/TPR/G/124 and that of the Secretariat in doc ument WT/TPR/S/124.  Copies of advance written 
questions, submitted by:  Argentina;  Australia,  Brazil;  Canada;  Chinese Taipei;  Colombia;  the 
European Union;  Hong Kong, China;  India;  Japan;  Mexico;  Switzerland;  the United States;  and Venezuela, had been transmitted to the delegation of  Chile.  These questions and the replies provided 
by the delegation of Chile are reproduced in document WT/TPR/M/124/Add.1.  
3. The Chairperson noted that both the Governme nt and the Secretariat Reports highlighted 
Chile's commitment to trade liberalization thro ugh multilateral and regional initiatives.  However, 
while economic reforms had been wide  in scope, growth rates had remain ed modest in recent years.  It 
would thus be interesting to hear whether Chile's development strategy faced structural problems, or 
was only undergoing a cyclical downturn.  Also, against the background of the increasing role of 
regional initiatives in Chilean trade policy, it would be interesting to hear the views of the Chilean 
delegation on this form of trade liberalization a nd how the Chilean authorities intended to balance it 
with its multilateral objectives. 
 WT/TPR/M/124 
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 II. OPENING STATEMENT BY THE REPRESENTATIVE OF CHILE 
4. The representative of Chile
 (Secretary of State Osvaldo Rosales) recalled recent 
developments in his country's macroeconomic envir onment and trade policy.  He noted a marked link 
between the two issues, with trade liberaliza tion and macroeconomic stability being mutually 
supportive.  The period under review, from 1997 to 2003, was a critical time, both world-wide and 
regionally.  It included financial and currency cri ses in a number of countries, various major corporate 
scandals, the bursting of the IT bubble, and a str ong global downturn in 2000-01.  Chile suffered from 
a considerable fall in the external demand of its ma in trading partners, falling prices of its main export 
goods, high oil prices, and reduced capital inflows.  As a result, growth rates were about 50% lower 
than during the previous six-year period.  On  the other hand, Chile was successful in reducing 
inflation rates and maintaining fiscal stability. 
5. Over recent years, Chile's macroeconomic po licy environment had been characterized by 
three major changes.  First, monetary policy had been modified by introducing an inflation goal, currently in the 2% to 4% range.  Second, a floa ting exchange rate regime had been introduced in 
September 1999, with a view to increasing Chile's cap acity to resist external shocks.  And third, the 
concept of a structural surplus of 1% of GDP ha d been introduced in order to allow for counter-
cyclical policy. 
6. Macroeconomic projections for 2004 indicated a re covery with an estimated GDP growth of 
4% to 5%, with balanced fiscal and external account s and inflation rates under control.  Estimates 
showed particular optimism regarding the impact on  economic activity of the entry into force of the 
free-trade agreement with the United States in 2004. 
7. The main goals of Chile's trade policy were :  improving access for Chilean goods and services 
on its main markets;  fostering private, domestic and foreign investment;  increasing Chile's competitiveness and macroeconomic stability;  and c ontributing to the eradication of poverty.  
Additional intermediate objectives included transpar ency and legal certainty.  Chile pursued these 
trade policy objectives through unilateral tariff redu ction, new free-trade agreements with major 
trading partners, and an active participation in the WTO.  Chile's trade policy had experienced 
increased attention over recent years due to the country 's difficult external environment, but generally 
enjoyed broad support among the population.  The lo w and flat tariff guaranteed transparency and 
predictability as well as, sectoral neutrality, and mini mized the risk of trade diversion.  All these 
characteristics contributed to a pro-investment and pro-growth environment. 
8. At the national level, Chile's trade policy over the last six years had been characterized by 
further unilateral tariff reductions, the introduction of a safeguards regime with stricter provisions 
than the WTO Agreement, the modification of subs idy programmes to be in conformity with the 
respective WTO Agreement, and the enactment in November 2003 of an Omnibus Law on WTO 
Compliance with adjustments related to TRIMs, TRI PS, customs valuation, and technical barriers to 
trade. 
9. At the bilateral level, there had been a need for bilateral negotiations with key partners, as 
unilateral liberalization did not provide mark et access opportunities for national exporters.  
Furthermore, multilateral negotiations, which otherwise were the best alternative, had been slow and 
might converge to the lowest common denominator.  Ch ile also pursued bilatera l negotiations in order 
to attract foreign investment and to avoid being discriminated against in countries that had already 
engaged in FTAs.  About 90% of trade with other Latin American countries had been liberalized due 
to the various agreements Chile had in place with  these countries.  Since 1997, Chile had concluded 
further FTAs with several OECD members (Canada, Mexico, the European Union, the United States, 
the members of the European Free Trade Associati on, and the Republic of Korea).  Negotiations for 
additional FTAs had started with Bolivia, New Zeala nd, and Singapore.  As a consequence, more than  WT/TPR/M/124 
 Page 5 
 
 
 75% of Chile's foreign trade would be duty-free in 2004.  Chile's FTAs were comprehensive in scope 
and WTO-consistent;  besides their full or at least substantial coverage of trade in goods and services 
they dealt with a broad range of themes, including Singapore issues. 
10. At the plurilateral level, Chile had shown a st rong commitment to a comprehensive FTAA.  It 
would chair the APEC meeting in 2004, and it had fo rmally applied to become member of the OECD. 
11. At the multilateral level, Chile was firmly a nd consistently committed to the WTO.  It had 
actively participated in the negotiations of th e Doha Development Agenda and submitted several 
proposals.  For Chile, the WTO was the most impo rtant forum for addressing trade distortions in 
agriculture and the abuse of anti-dumping measure s.  The Doha Round offered Chile additional 
market access opportunities, in particular in the bi g and dynamic markets in Asia.  However, Chile 
considered the WTO not just as a forum for trade ne gotiations.  It was a commitment to a rules-based 
multilateral system, to transparency in internati onal economic relations, and to a dispute settlement 
mechanism, all of which strengthened trade flows.   The Dispute Settlement Understanding had to be 
respected by all Members, particularly the bigger ones, in all cases.   
12. In conclusion, Chile's participation in the WTO was an essential component of its trade 
strategy.  Chile put high expectations on a successf ul Doha Round.  Agriculture was the cornerstone 
of the DDA because of its development implications ;  thus, progress in agriculture would facilitate 
movement in other areas.  The Doha Round was th e main economic policy and trade initiative at the 
beginning of the 21st century, an opportunity that Members should not lose. WT/TPR/M/124 
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 III. STATEMENT BY THE DISCUSSANT 
13. The discussant
 (Mr. Tim Groser) called Chile's development over the last ten years an 
economic success story, which included a successfu l transformation to a sustained low inflation 
environment, a very respectable growth record, and a substantial poverty reduction.  Recalling a 1999 
World Bank study ("Growth is Good for the Poor"), he underlined the crucial role of growth for 
poverty reduction.  While there had certainly been a slowdown in Chile's growth rate over the last 
years, this had to be seen against the backgroun d of an unusual combination of negative external 
factors such as the Asian financial crisis, low growth rates in neighbouring countries, and low 
commodity prices.  Chile's example demonstrat ed, however, that a small open economy was better 
able to adjust to such shocks th an closed economies, as witnessed by  current IMF growth prospects of 
about 5% for 2004. 
14. As far as the macroeconomic environment w as concerned, Chile had adopted a floating 
exchange rate regime, the only policy instrument that made sense for a small and open economy.  The 
independence of Chile's Central Ba nk and its general non-interference in  the foreign exchange market 
had been key to the overall coherence of economic policy.  Even during the period of peso weakness 
the Central Bank had been very reluctant to interven e, other than to preserve its liquid foreign assets.  
Chile's diversification strategy, its prudent mana gement of public debt, and its transparent public 
accounts had also contributed to increased resilien ce in the face of the various external shocks. 
15. Turning to trade policy, the discussant noted th at Chile was a remarkable example for the 
superiority of open versus closed economies.  Moreover, it had been one  of the first countries to put in 
practice the idea of a uniform tariff, thereby reducing effective protection rates and increasing 
allocative efficiency.  Chile's adjustment to an y conceivable outcome from the Doha Development 
Agenda would be vastly facilitated by the significan t and continued unilateral reforms of the past.  
However, with Chile's applied MFN tariffs appro aching zero and a high number of FTAs in place, the 
tariff as a policy instrument might have run its course. 
16. Chile's trade policy demonstrated the relevan ce of the WTO for smaller countries, as certain 
policy instruments could only be adjusted multilaterally .  But Chile's example also showed that small 
countries should follow a multi-dimensional strate gy by maintaining complementarity with regional 
and unilateral initiatives.  At the multilateral level, Chile was indeed a very active participant in the 
WTO.  The WTO represented the rule of law;  in  its absence, power alone would prevail.  While 
power was certainly present in the organization, this would not allow the conclusion that small countries such as Chile would be better off without  a multilateral legal framework, as demonstrated 
by a dispute case Chile had brought successfully ag ainst the European Union in the early 1980s. 
17. Although it had actively pursued regional trade agreements, Chile had obviously not removed 
political attention from the multilate ral level, obviously it had concl uded that both were necessary.  
Furthermore, trade diversion might play a minor role in view of Chile's relatively low MFN tariffs.  It 
was, however, a paradox that many of the countries w ith which Chile had bilateral investment treaties 
were adamant opponents of even cons idering this issue multilaterally. 
18. Chile did not believe in having a set of independe nt sectoral policies;  there was broad policy 
coherence across sectors.  Its flat tariff policy w as itself a statement of Ch ile's wish to reduce the 
sectoral bias in terms of resource allocation;  and it had reduced most of its subsidies programmes.  As 
a result of all these policy adjustments, Chile could today be considered one of the most open economies in the world    WT/TPR/M/124 
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 IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 
19. The representative of the United States  underlined the close trade ties between the economies 
of the U.S. and Chile, which were expected to in tegrate even more with the implementation of the 
bilateral FTA on 1 January 2004.  R ecalling bilateral trade and investment levels, she expected U.S. 
direct investment to increase with the implementa tion of the FTA, thereby further stimulating trade 
flows.  Following trade liberalization, Chile ha d achieved significant progress in poverty reduction 
through a combination of strong growth and social  programmes.  Prudent fiscal and monetary policy 
had allowed Chile to control inflation.  Trad e represented a significant and increasing portion of 
Chile’s GDP, accompanying Chile’s policy of ope n markets and increasing commercial ties through 
trade agreements.  Chile had been a strong supp orter of the Free Trade Area of the Americas 
negotiations, and likewise, it had worked toward a successful conclusion of the WTO Doha round, 
looking for a far reaching agreement that would bri ng the benefits of trade liberalization to all.  
20. Chile’s trade agenda included negotiation of bila teral trade agreements with a diverse group 
of trading partners, including the United States.  Th is reflected Chile’s reliance on trade as an engine 
of economic growth, as well as the energy and e xpertise of its team of trade negotiators, and 
illustrated the complementarity of bilateral and multilateral agreements.  While the representative 
applauded Chile’s approach to ec onomic growth and trade policy, she encouraged it to notify its 
legislation on customs valuation and the WTO Checklist to the WTO Committee on Customs 
Valuation.  These notifications would increase transparency, which was particularly important in the customs valuation process.   The United States also  requested information on Chile's revision of its 
price band system and on new legislation on intell ectual property rights, and expressed concerns 
regarding the potential effect of new Chilean legisla tion on U.S. investors in the electricity sector.   
21. The representative of Japan
 recalled the level of bilateral trade and investment flows between 
the two countries, and Japan's role as a principal donor for technical assistance through the Japan - 
Chile Partnership Program.  The two governments had agreed to hold consultations on a regular basis, 
which should contribute to closer economic relations .  Japan expressed appreciation for Chile's GDP 
growth rates and its unilateral tr ade liberalization, hoping that Chile would make further commitments 
for liberalization in the on-going Doha negotiations.  Regarding FTAs, Japan expressed concerns that 
these agreements might adversely affect the interest s of those not party to the agreement and asked 
Chile to ensure that the provisions in its FTAs were fully WTO-compliant.  Noting the difference 
between bound and applied rates in Chile's tariff sche dule, Japan requested Chile to further reduce its 
bindings.  It welcomed Chile’s efforts to enhance the protection of IPRs, such as revising the existing 
legislation on industrial property and copyrights, and hoped that Chile would enhance IPR-protection 
through full implementation of the TRIPS Agreement. 
22. Regarding agriculture and fisheries, certain issu es seemed to require clarification in terms of 
the WTO-conformity and transparency of Chile's policies.  Being one of the major importers of 
agricultural and fisheries products from Chile, Japa n hoped that Chile would maintain its fair and 
transparent policies.  Turning to financial servi ces, Japan believed that the public-interest test 
contained in Chile's Schedule of Commitments as we ll as the solvency and liquidity criteria were too 
vague and should be specified to ensure more tr ansparency.  In telecommunications and maritime 
services, Japan encouraged Chile to expand its commitments in the current round of multilateral 
negotiations.  Both countries were members of  APEC and Japan looked forward to further 
cooperating with Chile in this forum as well as in the current WTO round. 
23. The representative of Canada  viewed Chile as a key regional partner and one of the most open 
and stable economies in Latin America, with a dyna mic trade policy at the bilateral, regional, and 
multilateral levels.  Canada was the first G7 nati on to sign an FTA with Chile, which formed the 
cornerstone of bilateral trade and investment rela tions.  A current government-led trade mission to 
Santiago and the launch of a direct flight between  Toronto and Santiago unde rlined Canada's strong WT/TPR/M/124 
Page 8  
 
 interest in the Chilean market.  Chile has made gr eat efforts to unilaterally lower import barriers, and 
to become more transparent in both  its regulatory and legal frameworks.   
24. Canada commended Chile on its overall level of transparency, but expressed concerns with 
the lack of clarity regarding customs procedures a nd the appeal of customs decisions.  Noting Chile's 
very positive contribution in trade negotiations in  the WTO, Canada stated that both countries 
benefited from a strong, rules-based multilateral tr ading system, and underlined that bilateral and 
regional trade negotiations should not detract from th e WTO.  Canada shared many common interests 
with Chile in the Doha Development Agenda on th e core issues of fundamental agricultural trade 
reform, market access for goods and services, and trade rules.  
25. The representative of Hong Kong, China
 stated that there was good potential for further 
expansion of currently moderate bilateral trad e volumes, as the two economies had open trade and 
investment regimes.  Chile and Hong Kong, China were also close partners in promoting trade 
liberalization and economic cooperati on in the APEC forum.  Hong Kong, China congratulated Chile 
on its success in maintaining resilience and steady ec onomic growth in spite of the difficult external 
environment, and expressed appreciation for Chile's  unilateral tariff reduction over the last years.  
However, Chile could effect improvements by narrowing the gap between bound and applied rates 
and restricting the use of specific duties on agriculture goods under the price band system. 
26. Hong Kong, China commended Chile on its new Government Procurement Law, suggesting 
that, to facilitate trade, the contents of the pub lic procurement web sites might also be provided 
in English, and encouraged Chile to join th e WTO Agreement on Government Procurement.  
Hong Kong, China shared with Chile the disappoint ment on the setback in Cancún, but appreciated 
Chile's commitment to the Doha Development Age nda.  The two economies also shared the goal of 
further liberalization of trade in services in this Round;  in this regard Hong Kong, China appreciated 
Chile’s contribution to the ongoing services negotiati ons. By the same token, both economies were 
friends of anti-dumping negotiations and shared th e goal of improving and tightening rules and the 
disciplines on anti-dumping.  Turning to Chile’s re gional and bilateral trade initiatives, Hong Kong, 
China hoped that Chile's FTA initiatives would cont ribute to multilateral liberalization efforts and 
would be fully consistent with the WTO rules. 
27. The representative of Australia  noted the substantial reform and liberalization initiatives 
carried out by Chile since its last Review, and r ecalled the significant level of Australian investment 
in Chile, concentrated primarily in the mining industry.  The two countries shared a common and long-standing commitment to trade liberalization at the multilateral level and cooperated to promote 
the reform of international agricultural trade in th e Cairns Group.  Australia shared Chile’s concerns 
about the failure of the Cancun Ministerial conf erence and welcomed Chile 's constructive and 
thoughtful contribution across the entire Doha work programme.  Turning to Chile's engagement in 
free-trade agreements, Australia underlined that re gional and bilateral agre ements should strengthen 
and complement the multilateral system.   
28. The representative of Colombia
 highlighted the continuity in Chile's economic and trade 
policy since its last Review in 1997.  While the slowdown in Chile's growth rates could be an 
indication of vulnerability, growth remained highe r than in Latin American and developing countries 
as a whole.  Like other developing countries, Ch ile was affected by the global crisis and low 
international prices.  The introduction of a fl oating exchange rate in  September 1999 may have 
increased the flexibility of Chile's economy, while th e concept of a structural  fiscal surplus was an 
example be studied by other developing countries.   Chile was an active participant in the DDA 
negotiations and had a strong commitment to its successful completion.  Colombia commended Chile 
on the continuity in its tariff reduction, the st reamlining of customs procedures, and the recent 
approval of a law on miscellaneous WTO issues.  Ag ricultural trade played a special role for Chile, 
consistent with its position with regards to greater lib eralization in this area.  Chile's trade agreements  WT/TPR/M/124 
 Page 9 
 
 
 with other Latin American countries were an importa nt source of growth for the Chilean economy, as 
witnessed by the evolution of bilatera l trade between Colombia and Chile. 
29. Turning to the sugar sector, Colombia w as concerned about the high number of trade 
measures imposed by Chile in this  area, such as a safeguard, the renegotiation of the bound rate, the 
introduction of a tariff quota without acknowledging Colombia as a main provider, and the tariff 
classification of sugar products.  These measures l acked transparency and introduced a clear bias 
against Colombian sugar.  Therefore, Colombia ur ged Chile to reverse these measures and to correct 
the discrimination against its sugar producers. 
30. The representative of Uruguay  highlighted the intelligence a nd consistency of Chile's trade 
policy, which had contributed to growth and deve lopment as well as to Chile's efficient regional and 
global integration.  Chile's activ e and constructive participation in all WTO fora, and its firm 
commitment to the multilateral trade system deserved special mention.  As a member of the Cairns 
Group, Chile worked for the legitimate inte rests of efficient agricultural exporters. 
31. The representative of the European Union  noted that Chile was a young democracy which had 
managed to get back on the track of economic prosper ity even with a troubled political past.  The EU 
and Chile enjoyed good and strong re lations, as witnessed by their full-fledged association agreement.  
The active opening-up of Chile's economy was an im portant reason for its success.  While bilateral 
and regional trade arrangements were  important tools for promoting trade and growth in Chile, they 
could not replace the benefits of global trade and the need for continuing liberalization in the context 
of the WTO.  A number of developing countries th at were substantially poorer than Chile might 
require greater preferences and assistance.  The EU shared, with Chile, a full commitment to the 
DDA.   
32. The representative of Switzerland  stressed Chile's macroeconomic stability despite financial 
crises in the region.  Lower copper and higher oil pr ices as well as other adverse external factors had 
affected the Chilean economy, but thanks to prudent fiscal and monetary policies the confidence of investors and consumers had returned.  Switzerland c ongratulated Chile on its considerable efforts in 
the reform of the public administration and on the un ilateral reduction of tari ffs, the streamlining of 
customs procedures, the lifting of capital controls, and the floating of the exchange rate.  Intersectoral 
neutrality, the almost uniform applied MFN tari ff, and the granting of national treatment in 
government procurement to foreign investors we re the right steps towards an open trade and 
investment regime.  Therefore, Chile should c onsider joining the WTO Government Procurement 
Agreement.  Chile's strong involvement in a wi de range of FTAs enhanced market access and 
increased Chilean competitiveness.  As a member of EFTA, Switzerland was pleased about the 
recently signed FTA and looked forward to its entry into force at the beginning of 2004.  Moreover, a 
bilateral investment agreement entered into force in May 2002 and negotiations for an agreement on 
double taxation should be concluded soon.   
33. Switzerland expressed appreciation for Chile's lo w average tariff of 6% and hoped that the 
Chilean Congress would soon approve new legislation on industrial pr operty and copyrights.  Chile's 
commitment to the multilateral trading system and its ratification of the Fourth and Fifth Protocols to the GATS were important contributions to the a dvancement of the multilateral liberalization of 
services. 
34. The representative of Chinese Taipei
 commended Chile on the unilateral reduction of its 
tariffs, the streamlining of its customs procedur es, and the lifting of capital controls.  Recalling 
current bilateral trade volumes, Chinese Taipei belie ved that there was a great potential to strengthen 
the bilateral economic relationship in the years ahead.  Turning to restrictions on the transfer of capital 
in Chile's horizontal commitments in its Servi ces Schedule, Chinese Taipei enquired whether Chile 
might consider bringing its commitments into li ne with its more liberal applied regulations.  WT/TPR/M/124 
Page 10  
 
 Moreover, Chinese Taipei asked Chile to explain the consistency of its terms of patent protection and 
industrial design with the WTO TRIPS Agreement.  In  light of the many FTAs that Chile had signed, 
Chinese Taipei was interested in knowing whether th ese resulted in any other preferential treatment in 
terms of taxes, fees, and customs procedures, and al so whether Chile planned to liberalize its services 
market by way of FTAs in the future. 
35. The representative of Argentina
 stated that Chile's trade ach ievements were the result of 
policies with a high degree of continuity over the several decades, complemented by the negotiation 
of FTAs during the 1990s.  However, this had led Chile's proportion of MFN trade to shrink and may 
have increased the complexity of Chile's trading system.  It also raised general questions on the 
impact of the expansion of preferential agreemen ts on the multilateral trade negotiating process.  
Argentina and Chile shared one of the longest frontie rs in the world;  their bilateral relations were 
based on shared political values, which were rooted in similar cultural and social backgrounds.  Since 
the early 1990s, bilateral trade had grown strongl y as a consequence of the economic complementarity 
agreement between Chile and MERCOSUR, which ha d taken both countries to an important position 
in the league tables of their trade partners.  
36. The representative of Mexico,  underlining the importance his country attached to the 
relationship with Chile, stated that Chile had succ eeded in consolidating its  institutions and trade 
policies.  Chile represented an economic model in  the region.  Chile's macroeconomic stability and 
the openness of its trading system both promoted gr owth and employment, and were crucial to fight 
poverty.  Mexico recalled the FTA it had in place with  Chile and its role for bilateral trade flows.  
Mexico requested Chile to address the issue of its high bound tariff rates and expressed concerns 
about the price band system with regard to sugar. 
37. The representative of Venezuela  recalled bilateral trade relati ons within the complementation 
treaty between the two countries, which covered 97% of the tariff lines.  Venezuela hoped that this 
agreement could be updated to further improve ma rket access and pointed to numerous links and 
cooperation projects between the countries. 
38. The representative of Brazil  noted that Chile had continued th e process of liberalization of its 
already open foreign trade and investment regimes.   Among the measures carried out by the Chilean 
government, he highlighted the further reduction of MFN tariffs, the adoption of WTO-based rules on 
customs valuation, the granting of national treat ment in government procurement and to foreign 
investors, the elimination of capital controls, and th e floating of the exchange rate.  Chile had shown 
commitment to the multilateral trading system and played an active role in the ongoing WTO 
negotiations.  Brazil and Chile had been working t ogether in many spheres of the negotiations, in 
particular the Cairns Group and the G-20, and shared a strong common interest in the prompt resumption of the negotiations on the central issu e of agriculture.  Brazil commended Chile on the 
reforms undertaken and, in particul ar, on the considerable reduction of  poverty.  Brazil enquired about 
the impact of the uniform tariff on the Chilean economy and, underlining the concerns raised by 
Colombia in this regard, on Chile's intention to eliminate the price band system. 
39. The representative of India
 noted the significant slowdown of Chile's GDP over the last six 
years compared with the early 1990s, resulting from a difficult regional and international environment.  Its open trade and investment regime s, as well as the important role of bilateral and 
regional trade arrangements, were a noteworthy el ement in Chile’s economic strategy.  He was 
interested to learn how Chile administered th e multiplicity of preferential rules of origin. 
40. The representative of the Republic of Korea
 noted that the high bilateral trade volumes and 
the recently signed FTA were clear examples of a friendly relationship between the two countries.  
The Republic of Korea commended Chile for its effo rts to liberalize its economic and trade regime,  WT/TPR/M/124 
 Page 11 
 
 
 including the reduction of tariffs and the adoption of  a flexible exchange-rate system.  This should 
lead to increased resilience of the Chilean economy.   
41. The representative of Norway  expressed his appreciation for Chile's very open and liberal 
trade and investment regime, which was an importa nt reason for the strong growth of the Chilean 
economy over many years.  Chile placed significant weight on the role of international trade in 
maintaining this trend.  Despite limited bilatera l trade, many Norwegian companies were represented 
in Chile.  The recently negotiated FTA between Ch ile and EFTA should furthe r liberalize and expand 
bilateral trade.  Chile played a very active and co nstructive role in WTO.  Norway appreciated the 
cooperation with Chile in the negotiation on rules a nd hoped that the work by the friends of anti-
dumping negotiations would prevent the abusive use of anti-dumping measures. In the negotiations on 
agriculture, a successful outcome would only be reach ed if the legitimate interests of all Members 
were duly taken into account.   
42. The representative of China  noted that Chile had been a dopting open economic development 
policies since the 1970s.  This included unilatera l tariff reductions, active participation in the 
multilateral trading system, as well as the conclusi on of free-trade agreements.  China evaluated the 
performance of Chile's overall foreign trade polic y and investment environment highly.  Recalling 
bilateral trade volumes, China noted that Chile had b een an important trade partner for many years.  
43. The representative of El Salvador  highlighted the great success of the Chilean economy, 
which was linked to its foreign trade and reform  policies.  Both economic growth and social 
programmes developed by Chile had had a positive imp act on the reduction of poverty.  El Salvador 
commended Chile for opening up its trade regime , for its commitment to the multilateral trading 
system, and for implementing a number of trade-related legal reforms.  
44. The representative of the Slovak Republic  noted that it was hard to find points to criticize in 
Chile's trade policy regime.  Chile's economy , despite  a number of external shocks, managed to keep 
modest GDP growth rates, while inflation rates a nd the current account deficit remained low.  Chile 
was committed to the multilateral trading system and trade liberalization, as witnessed by the 
unilateral reduction of tariffs, streamlined customs procedures, the quasi-absence of import licensing, 
limited use of non-tariff barriers, and an open servi ces sector.  The Slovak Republic was interested in 
obtaining more information on the price band system and the steps Chile planned to undertake in this 
regard. 
45. The representative of the Czech Republic  commended Chile's authorities for being able to 
maintain the process of reforms and liberalization of its trade and investment system and expressed 
appreciation for the reduction of applied MFN rates.  Recalling various characteristics of Chile's trade 
policy, the Czech Republic hoped that the two countries could intensify trade and economic 
cooperation.  Chile's continued commitments to ope n and free trade, and to multilateral rules were 
important for maintaining the liberalization momentum in the multilateral trading system.   
46. The representative of Singapore  noted that bilateral trade relations with Chile were improving 
and stated that intensive efforts were under way to increase the profile of Chilean products in Asia.  
Chile had maintained its trade lib eralization efforts despite difficu lt economic circumstances.  Chile 
had continued its unilateral tari ff reductions, streamlined its customs procedures, ceased capital 
controls, introduced a flexible exchange rate system , and played an active role in the WTO.  Like 
Singapore, Chile was a strong advocate of free trad e and had been an avid contributor to APEC 
discussions on how regional and bila teral agreements could serve as a mechanism to achieve the 
WTO goal of global trade liberalization.  Chile’s extensive FTA network had been comprehensive in 
its ambition to liberalize all aspects of trade, and complemented multilateral trade liberalization 
efforts.   WT/TPR/M/124 
Page 12  
 
 47. The representative of New Zealand
 applauded Chile’s continuing commitment and efforts to 
open its trade and foreign investme nt regime and noted that Chile’s  sound policies helped to explain 
the resilience of the its economy in the face of vari ous external shocks over the past few years.  
New Zealand welcomed the passing of a law on mi scellaneous WTO-related matters in August 2003, 
and underlined the common interest of Chile and Ne w Zealand in the further liberalization of world 
trade.  The two countries shared an important tr ading relationship, and very close and friendly 
working relations.  With regard to the WTO a nd the current round of negotiations, Chile and New 
Zealand had similar interests in reforming agricu ltural trade and further liberalizing trade in non-
agricultural goods.  Both economies were strong supporte rs of the multilateral trading system, but also 
recognized the benefits that could be gained throu gh bilateral trade liberalization measures.  To this 
end, New Zealand, Chile and Singapore were negotiating a wide-ranging and high quality FTA called 
Closer Economic Partners hip Agreement (CEP).    WT/TPR/M/124 
 Page 13 
 
 
 V. REPLIES BY THE REPRESENTATIVE OF CHILE AND ADDITIONAL 
COMMENTS 
48. The Chairperson  invited the representative of Chile to  focus his responses on three main 
themes:  (i) economic and institutional environment, (ii) trade policies by measure, and (iii) sectoral 
policies. 
(i) Economic and institutional environment 
 49. The representative of Chile
 (H.E. Alejandro Jara) referred to the impact of Chile's trade 
liberalization on fiscal policy and noted that there ha d been a reduction in fiscal income as a result of 
trade liberalization.  However, at  the same Chile had successfully and responsibly managed its public 
accounts with a resulting fiscal structural surplu s, which was one of the pillars of Chile's 
macroeconomic policy.  So, whilst there had indeed been an increase in domestic taxes in order to 
compensate for the shortfall of fiscal income, the amount of the increase was less than the respective 
tariff reductions.  This allowed reconciliation of the objectives of trade liberalization and public 
investment to meet the needs of development.   
50. Chile's foreign investment regime provided fo r two principle means for channelling foreign 
investment capital.  The first and more important  one was the so-called Fo reign Investment Law, 
which set up the means of authorizing and register ing investment through the foreign investment 
committee.  The second was Chapter XIV of the Fo reign Exchange Compendium of the Chilean 
Central Bank.  The Foreign Investment Law set up a on e-year period before the repatriation of capital, 
which was intended to prevent the entry of sp eculative monies.  Chile's GATS commitments, by 
contrast, provided for a three-year period before the repatriation of capital (two years in the case of 
financial services).  Furthermore, Chile had enact ed in November an omnibus bill on WTO-related 
matters for which implementing regulations would be adopted within six months.  
(ii) Trade policies by measure 
 
51. Regarding its bilateral agreements, Chile noted  that these would have no effect on its WTO 
commitments.  They might have increased complexity and administrative costs, but major efforts had been made to modernize the customs service.  Mo reover, with an increasing number of agreements 
the rules of origin would become more standard.  The Free-Trade Area of the Americas would further 
increase uniformity and avoid costs.  Trade diversion should be minor in view of Chile's low MFN tariff of 6%.  Thus, Chile's agreements should rather be generating trade and investment.  
52. With regard to concerns voiced about its cust oms procedures, Chile referred to its written 
replies and noted that decisions could be appealed  before an independent authority. This system 
should satisfy the standards of the Customs Valuat ion Agreement.  On the difference between its 
bound and applied tariffs, Chile was prepared to en thusiastically negotiate the reduction of its bound 
tariffs during the current negotiations, but this would depend on the outcome of the agriculture 
negotiations.  Turning to questions on specific taxes, Chile stated that the tax applicable to luxury cars 
would be phased out over four years starting January 2004.  The entry into force of the omnibus bill on WTO-related issues would lead to improved transp arency in the field of standards and technical 
regulations, including better administration and appli cation of TBT rules.  With respect to government 
procurement, Chile was not intending to become party to the Government Procurement Agreement, 
which was too conditional at certai n levels and only had a limited c overage.   Chile had notified its 
export promotion measures and subsidies, of which some long-standing programmes had been 
adjusted or eliminated.  Regarding intellectual property, Chile had made considerable progress by 
drafting new and significantly improved legislation,  which should be approved at the beginning of 
2004.   WT/TPR/M/124 
Page 14  
 
 (iii) Sectoral policies 
 53. Chile stated that it would be willing to expa nd its GATS commitments, provided that progress 
was achieved in the agricultural negotiations, in partic ular with respect to the elimination of subsidies.  
With regard to the price band system, Chile had a dopted a law to make some significant adjustments 
to the system, including the elimination of the syst em for oil seeds and edible oils, and changes in the 
calculation of the price band.  On the questions  regarding sugar and hi gh-sugar-content products 
raised by Colombia, Chile abstained from answ ering them, since the Colombian Government had 
initiated a dispute under the Colombia-Chile free- trade agreement, which was a purely bilateral 
process.  Chile recalled the bound rates for the prod ucts subject to the price band system and added 
that the bound rate for sugar had been renegotiate d recently, also in view of lacking domestic support 
or any other subsidy.   
54. The representative of Colombia
 expressed disappointment on not obtaining answers with 
regard to Chile's measures in the sugar sector, under lining that Colombia's questions were with regard 
to WTO commitments.  Therefore, Colombia reiterat ed its interest in raising this issue in this 
multilateral forum and requested Chile  to answer to the questions. 
55. The representative of Chile  shared the sentiments of the Colo mbian delegation, regretting that 
he was not able to answer all the questions that Colo mbia raised;  he stressed that Chile did not initiate 
this bilateral difference.    WT/TPR/M/124 
 Page 15 
 
 
 VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
56. This third Trade Policy Review of Chile has b een highly informative.  Through our dialogue 
with the Chilean delegation we have obtained a be tter understanding of the trade-related policies and 
practices in place and of changes affecting them over th e last six years.  We owe this in considerable 
measure to the presence of a large Chilean delegation, led by Vice-Minister Rosales and 
Ambassador Jara, to the incisive comments of our  discussant, Ambassador Groser, and to the active 
involvement of many Members. 
57. Members expressed support for Chile's liberalizati on policies since its last Review in 1997.  
They welcomed Chile's generally transparent and sector-neutral trade policies, sound macroeconomic 
strategy, and strong progress in reducing poverty.  Ch ile's economy has thereby become more resilient 
and closely integrated into global  markets, which allowed it to cope  well with a number of external 
shocks over the last six years. 
58. The various autonomous, preferential and multilate ral initiatives Chile has taken to liberalize 
its trade and investment regimes have been ke y elements in its economic strategy.  Members 
highlighted Chile's active and constructive partic ipation in the multilateral trading system, but 
encouraged it to improve predictability by enhanc ing its tariff and service commitments in WTO.  
Members sought further information on preferential in itiatives, with some also raising concerns about 
the increased complexity and effects on third pa rties of Chile's growing number of preferential 
agreements. 
59. Members noted Chile's almost uniform applied MFN tariff, and welcomed the unilateral steps 
to reduce it to 6%.  However, a number of Memb ers expressed concerns about possible distortions 
induced by the price band system, which grants sp ecial protection to a small number of agricultural 
goods.  Several Members also requested details on ch anges to bring the system into compliance with 
Chile's WTO obligations. 
60. Questions were posed on customs procedur es and valuation, with some Members 
suggesting that Chile effect improvements and noti fy its legal framework to the WTO.  Members 
requested information on other measures affectin g imports, such as domestic taxes, contingency 
measures, and technical regulations.  Members also  sought clarification on the omnibus law on 
WTO compliance;  the foreign investment regime;  incentive schemes;  state-owned enterprises;  
government procurement;  specific activities such as electricity, maritime transport, and financial 
services;  and the protection of intellectual property rights. 
61. On sectoral policies, Members highlighted the sharp contrast between Chile's general aim to 
foster efficiency through sector-neutral policies, a nd the high assistance granted to the sugar industry.  
They also sought information on other prim ary industries and on several service activities. 
62. This brings us to the conclusion of our Review of Chile.  I was encouraged to hear that trade 
policy is at the heart of Chile's development stra tegy, and that further reforms are sought through a 
multi-dimensional strategy that has the WTO at its co re.  A process of continuous reforms has served 
Chile's interests well, and I trust Chile will conti nue to take advantage of the multilateral trading 
system to lock-in past changes, and as a catalyst for future reforms.  This will of course depend in 
good part on the success of our collective efforts in  the ongoing Doha Development Agenda, to which 
I note Chile is making a very valuable contribution. 
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