Free Trade Agreements
Summary of the U.S. - Chile Free Trade Agreement
Status: Entered into force on January 1, 2004.
**The information presented on this website is meant to serve as a guide.
Only the agreement text and the customs regulations issued to implement the agreement
are definitive. For complex issues or where interpretation is required, U.S. exporters should seek legal assistance or an advanced ruling from the customs administration in the country to which they are exporting.**
If you have any questions about this Agreement, please contact Robert Carrigg
at the U.S. Department of Commerce Office of Textiles and Apparel at 202-482-3400 or by email.
How U.S. Textile and Apparel Companies Benefit
Through duty elimination, the U.S.-Chile FTA allows U.S. textile and apparel exporters to be more price-competitive in the Chilean market when competing with domestic suppliers and with third country suppliers that do not have duty benefits. Through the elimination of a variety of non-tariff barriers, the FTA further opens the Chilean market to U.S. products. The FTA affords substantial benefits in a broad range of service sectors; enhances the protection of intellectual property; facilitates U.S. investments through predictable access and a stable business environment; and provides for open and fair government procurement.
Under the U.S.-Chile FTA, all U.S. textile and apparel products (generally included in HS Chapters 50 through 63) entering into Chile have duty-free treatment as of the entry date of the Agreement. All footwear exported to Chile is duty-free except HS numbers 6406.91.00 and 6406.99.00, which will be phased out in equal increments over four years and ten other HS numbers, which will be phased out in equal increments over eight years. The ten HS numbers are 6401.10.00, 6401.91.00, 6401.92.00, 6401.99.00, 6402.99.00, 6403.40.00, 6403.91.10, 6403.99.00, 6404.19.00, and 6406.20.00. Travel goods exported to Chile will be duty-free as of the entry date of the Agreement.
To determine when your product can enter Chile duty-free:
1) It is first necessary to obtain the appropriate HS number for your product
2) With this number it is then possible to check the Tariff Elimination Schedule for Chile, which is found in Annex 3.3 to Chapter Three of the FTA to find out at what rate the duties on your product will be reduced. The U.S.-Chile FTA tariff schedules code each line item with a letter, indicating the staging by which the current tariff for each item is reduced and ultimately eliminated. The schedules also note the base rate of customs duty, which is used to determine the starting point and interim rate at each stage of reduction for an item.
All footwear from Chile is duty-free except for 17 rubber/fabric and plastic/protective footwear items. Duties on these 17 items will be phased out over a ten year period. The 17 rubber/fabric and plastic/protective footwear items are: 6401.10.00, 6401.91.00, 6401.92.90, 6401.99.30, 6401.99.60, 6401.99.90, 6402.30.50, 6402.30.70, 6402.30.80, 6402.91.50, 6402.91.80, 6402.91.90, 6402.99.20, 6402.99.80, 6402.99.90, 6404.11.90, 6404.19.20.
All non-textile travel goods from Chile originally facing duties:
1) 5% or under are duty-free immediately
2) 5-10% will be phased out in equal increments over 4 years
3) 15% and above will be phased out in equal increments over 8 years
For importing goods from Chile to the United States, you would check the U.S. Tariff Elimination Schedule, which is also located in Annex 3.3 to Chapter Three.
Also see ITA's FTA Tariff Tool to determine current and future tariffs for qualifying products, as well as the date on which products are duty-free.
Qualifying Products/Rules of Origin
In order to take advantage of the duty reduction/elimination, products must qualify as "originating" goods under the terms of the Agreement. In general, the product must have sufficient U.S. or Chilean content or processing to meet the criteria.
Textile and Apparel Goods
For textile and apparel products, goods containing only U.S. or Chilean inputs qualify. Goods containing inputs from other countries still might qualify if they meet specific criteria set out in Article 3.20: Rules of Origin and Related Matters of the Textile and Apparel Chapter of the Agreement. Textile and apparel products are subject to specific rules, based on HS tariff classification.
The rules for textile and apparel products are generally referred to as "yarn forward," which requires that the yarn production and all operation forward occur in either Chile or the United States, but the fiber may be from anywhere. There are some exceptions in the rules requiring "fiber forward," and some requiring "fabric forward".
If a good does not meet the rule of origin requirements as indicated above, a textile or apparel product might be considered originating if all non-originating fibers and yarns make up less than a "de minimis" seven percent of the total weight of the product. Special provisions also apply to textile and apparel goods put up in sets for retail sale. To see more details on these provisions, see Article 3.20: Rules of Origin and Related Matters of the Textile and Apparel Chapter of the Agreement.
Two rules of origin cover footwear:
- For footwear classified under HS numbers: 6402.12, 6402.19, 6402.20, 6403, 6405, 6406. There are no restrictions on the use of imported uppers. A change to headings 6401 through 6405 from any heading outside that group, provided there is a regional value content of not less than 35 percent of the adjusted value of the product. The 35% regional value content requirement can be comprised of a combination of value from Chile and the United States.
- For footwear classified under HS numbers: 6401, 6402.30, 6402.91, 6402.99, 6404.11, and 6404.19. A change to headings 6401 through 6405 from any heading outside that group, except from heading 6406.10, provided there is a regional value content of not less than 55 percent of the adjusted value of the product. Under this rule of origin, to qualify for the duty benefits, uppers can only be made in the United States or Chile.
For non-textile travel goods the rule of origin is a change to subheading 4202.11, 4202.19 through 4202.21, 4202.29 through 4202.31, 4202.39 through 4202.91, or 4202.99 from any other chapter.
For textile travel goods a change to subheading 4202.12, 4202.22, 4202.32 or 4202.92 from any other chapter, provided that the product uses fabric made in the United States or Chile.
For more information, see the U.S. Customs and Border Protection presentation--How do I Read Tariff Shift Rules.
Under the terms of the FTA, Chile will permit duty-free temporary admission of professional equipment necessary for carrying out the business activity of a businessperson who qualifies for temporary entry under Chilean law. emporary duty-free admission of goods intended for display or demonstration and commercial samples is allowed.
It is the responsibility of the importer to claim preferential treatment for a given shipment at the time that the good is cleared through the customs authority. (Under the U.S.-Chile Free Trade Agreement (U.S.-Chile FTA), the ultimate responsibility for the validity of the claim lies with the importer, not the exporter as under the North American Free Trade Agreement (NAFTA). For more specific information on this, see Article 4.14 of the U.S.-Chile FTA.) In order to claim eligibility for a preferential duty rate, the importer must provide to National Customs Service of Chile (Chilean Customs) a written declaration in the importation document that the good is originating. The importer must also be prepared to provide Chilean Customs, upon request, with a certificate of origin (or other information demonstrating that the good qualifies as originating).
The importer may pay the non-preferential duties at the time the goods clear customs and then has up to one year from the date on which the goods were imported to apply for a refund of excess duties paid as a result of the good not being accorded preferential tariff treatment. For multiple shipments of identical goods sent to the same Chilean importer, it is not necessary to generate new supporting documentation (e.g., certificate of origin) for each individual shipment. The importer may maintain one such "blanket" certificate of origin (or other information demonstrating that a good originates) to be presented to the customs authority at the acceptance of each shipment. It is recommended to identify the "blanket period" on the certificate of origin. Chilean Customs suggests that the "blanket period" not exceed a period of one year.
Certificate of Origin
In general, a certification of origin can take many forms, for instance: a statement on company letterhead, a statement on a commercial invoice, or a formal certificate of origin. While no official form is required in order to demonstrate origin under the U.S.-Chile Free Trade Agreement, the Chilean Customs issued a list of required data elements. These data elements, as well as a sample certificate of origin, can be found at the link below. Shipments under $2,500 in value do not require a certificate of origin or other supporting information of a preferential claim unless the customs authority suspects a claim is fraudulent (see Article 4.13 of the Agreement).
Sample certificate of origin:
Despite the fact that the ultimate responsibility for making the declaration lies with the importer, more often than not the information needed to support the declaration will have to be provided by the producer/exporter. The supporting information (e.g., certificate of origin) behind a claim of preferential treatment may be produced by the exporter, importer, or producer of the good. If this supporting information is not generated by the producer (i.e., the importer or exporter), it must be based upon either 1) a certificate of origin issued by the producer or 2) the exporter's or importer's knowledge that the good qualifies as originating. In other words, the importer is heavily dependent upon the assistance and cooperation of U.S. suppliers in producing accurate and well-documented declarations of origin.
An importer claiming preferential treatment for a good is required to have the certificate of origin and/or other supporting documentation used in demonstrating that the good qualifies as originating under the U.S.-Chile FTA rules of origin for a period of five years from the date of importation of the good.
A producer or exporter that generates a certificate of origin should maintain for a period of at least five years after the date the certificate was issued a copy of the certificate along with all records and supporting documents related to the origin of the good, including:
- purchase, cost, value of, and payment for, the good;
- where appropriate, the purchase, cost, value of, and payment for, all materials, including recovered goods, used in the production of the good; and
- where appropriate, the production of the good in the form in which it was exported.
For information on common export documents, such as transportation documents, export compliance documents, certificates of origin, certificates for shipments of specific goods, temporary shipment documents, and other export-related documents, see the Export.gov webpage on Common Export Documents.
Measures to Prevent Circumvention of the Agreement’s Rule of Origin
The U.S. - Chile FTA, as with other recent free trade agreements signed by the United States, contains additional measures to ensure that textile and apparel goods are not subject to fraud, such as transshipment. The parties agree that at the request of the importing Party, the exporting Party shall conduct verification procedures to determine that a claim for origin of a textile and apparel good is accurate, allow the exchange of information between Parties when a suspicious transaction occurs, and permits the importing Party to suspend preferential tariff treatment to the textile and apparel good under suspicion or any textile and apparel good produced or exported by a specific company. For further information, please see Article 3.21: Customs Cooperation of the Textile and Apparel Chapter of the Agreement.
Measures to Prevent Serious Damage, or Actual Threat Thereof, to the Domestic Industry
If there is serious damage, or threat thereof, to the domestic textile and apparel industry due to an increase of imports from the FTA partner country, the Agreement allows the importing Party to increase the preferential tariff rate on an originating good. The Safeguard can only be invoked after investigation by competent authorities, and can only be implemented for 3 years. The importing Party shall provide to the exporting Party mutually agreed trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the safeguard action. Such concessions shall be limited to textile and apparel goods, unless the Parties agree otherwise. For more information, please see Article 3.19: Bilateral Emergency Actions of the Textile and Apparel Chapter of the Agreement.
The FTA requires procuring entities 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. It also includes nondiscriminatory provisions that require Chilean entities covered by the FTA to allow U.S. suppliers to participate in their procurement on the same basis as Chilean suppliers. The FTA covers the procurement of most Chilean central government entities, 13 regional governments, 11 ports and airports, and more than 340 municipalities.
Technical Barriers to Trade:
Chapter seven of the FTA addresses technical barriers to trade and calls on the two parties to intensify their joint work in the field of standards, technical regulations, and conformity assessment procedures with a view to facilitating access to each other’s markets. The countries agreed to identify bilateral initiatives that are appropriate for particular issues or sectors. Such initiatives may include cooperation on regulatory issues, such as convergence or equivalence of technical regulations and standards, alignment with international standards, reliance on a supplier’s declaration of conformity, and use of accreditation to qualify conformity assessment bodies, as well as cooperation through mutual recognition. Each party is also required to allow persons of the other party--on terms no less favorable that those accorded to its own people--to participate in the development of standards, technical regulations, and conformity assessment procedures.
Intellectual Property Rights:
The U.S.-Chile FTA has stimulated further improvements in intellectual property protection. It established procedures in Chile to prevent or cancel the registration of marks that are similar or identical to a well-known trademark used internationally. The FTA seeks to have Chile strengthen its legal framework to provide copyrights and trademarks better protection. For example, the agreement increases the period of protection for copyrights and related rights to 70 years. The FTA also criminalizes end user piracy and mandates both statutory and actual damages for IPR violations. The U.S.-Chile FTA seeks to strengthen significantly protection for valid patents and their accompanying clinical test data. For example, the FTA provides for the extension of the protection period for patents when there are unjustified delays in the patenting process.
Office of the United States Trade Representative: Chile FTA Website
U.S. Commercial Service: Chile FTA Website
Export.Gov/Trade Information Center: U.S. - Chile FTA - How Can U.S. Companies Benefit