WT/TPR/S/28 Trade Policy Review
Page 36
III. TRADE POLICIES BYMEASURE
(1) Overview
1. Themajor trade policy instrument inChile istheuniform tariff, which hasbeenapplied since
thelate1970s. Therate,originally setat15percent,wasreduced to11percentin1991, theauthorities
arenowplanning afurther reduction, reported tobeoftheorder of3-4percentage points. The
uniformity oftariff treatment provides foragenerally predictable andtransparent trading system.
However, under several regional trade agreements (Chapter II),there aredifferent tariff phase-out
periods andvarying rulesoforigin bothbetween theagreements andthesectors; these arrangements
introduce some distortion between partners andsectors, potentially encouraging sub-optimal sourcing
ofimports.
2. Over thelast20years, Chile hashadconsiderable success inreducing theanti-export bias
ofitsimport regime byadopting moreneutral policies, supported byanenvironment ofmacroeconomic
andexchangeratestability(ChapterI).Continuedpursuitofthesepoliciescoupledwithtradefacilitation,
should further enhance thesupply response ofexports. What islessclear isthedegree towhich
Chile'sexport performance canbeattributed toitsexport subsidies (notified totheWTO), which have
anintricate regulatory framework. These programmes areintended tobenefit non-traditional minor
exporters through simplified dutydrawback theautomotive industry, andimported capital equipment,
under thesystem ofdeferred payments ofcustom duties.
3. Theopening upoftheeconomy hasalsobecome animportant element inChile'scompetition
policy, providing external disciplines onmarket behaviour. Inaddition, theCompetition Law, drafted
intheearly1970s, provides acheck onsectoral lawsthatestablish exclusivity; however, thislegislation
istobeupdated, Inaddition, Chile'sintellectual property legislation isintheprocess ofbeing revised
toensure that,bytheendofthetransition period (2000), itwillbeinaccordance withtheTRIPS
Agreement. Theauthorities estimate thatoneofthebiggest challenges toensuring property rights
depends onthetraining ofjudicial andadministrative personnel.
(2) Measures Directly Affecting Imports
(i) Registration, documentation, andrules oforigin
4. Thebasic import documentation hasremained unchanged since theprevious review in1991;
theintroduction ofasingle document forimports toclearcustoms isenvisaged for1998. Atpresent,
thefollowing documents arerequired: billoflading (conocimiento deembarque ),import declaration
(informe deimportación ),commercial invoice, pro-forma invoice, packing list,insurance certificate,
certificate oforigin when required (seebelow), andanImporter 'sSworn Declaration ofthevalue of
themerchandise ifthisexceeds US$1,500.1Customs procedures takeamaximum of24hours, and
insome customs houses onlyacouple ofhours, because oftheElectronic DataInterchange System.2
5. Ingeneral, theimport declaration hastobeapproved bytheCentral Bank prior toshipment
ofthegoods, andpriortopayment, although itcanbeobtained andprocessed through thecommercial
banks.3Theimport declaration isrequired forallimports except those withavalue oflessthan
1Normas aduaneras, Modificación No.53,Cap. III,Declaración deimportación .
2TheElectronic Data Interchange System wasintroduced inFebruary 1997. Since itsintroduction customs
procedures takelesstimeanddocuments canbesentelectronically.
3Dun&Bradstreet Information Services (1996).Chile WT/TPR/S/28
Page 37
US$3,000 f.o.b. thatarepaidforbytheimporter withhis/her ownmeans. Itispossible toimport
merchandise ofuptoUS$100,000 without priorapproval oftheimport declaration bytheCentral Bank,
although, thedeclaration mustbeapproved expost.Approval oftheimport declaration isautomatic;
however, thedocument isusedbytheCentral Bank ofChile tocheck onthedeclared value asthe
Central Bank compares thepriceoftheimported merchandise withnormal international market prices.
TheCentral Bank could, intheory, object toanimport ifthereisadiscrepancy intheprice. However,
inpractice thishasnever happened.
6. Since 1990, inorder tofacilitate importation, several changes havebeenmade totheprocedures
anddocuments required forimports byland, courier, temporary admission andtrade viafreezones.
7. ImportsbylandrequireonlytheInternationalManifestforVehicles/CustomsTransitDeclaration
which allows clearance ofthemerchandise atthelocalcustoms point (aduanas depasodefrontera );
themerchandise would otherwise havetobetransferred totheregional customs point.4
8. Newregulationswereputinplacein1996formerchandisearrivingbycourier.Theseprovisions
include: thespecifications forbagsandsuitcases carrying documents andmerchandise tobecleared
bycustoms; theresponsibilities ofcourier companies transporting these goods; andtheprocedures
andoperations tobecarried outatcustoms.5
9. Forgoods entering thecountry temporarily, anewsystem hasbeenimplemented tocontrol
containers entering under theSimplified Regime forTemporary Admission. Thenewsystem isagood
faithsystem ofself-assessment andsome customs administrative functions havebeentransferred to
theoperator.6Theoperator fillsoutthenecessary document (título deadmisión temporal de
contenedores ,TAC) which includes information suchastheoperator 'sidentification number, the
container 'sidentification number, thetypeofcontainer, andindicates whether thecontainer isloaded.
Inaddition, theoperator keeps control ofthenumber ofcontainers thatcome inandgooutandprovides
areport tocustoms. Customs examines containers atrandom. Thecontainers mayenterChile under
thisregime foramaximum ofoneyearand,ifloaded, themerchandise isexempt ofallimport duties
andother taxes.
10. Asystem of"long distance visas" (visación remota )wasputinplace in1995 forimports by
andexports fromthefreezones. Customs formalities cannowbehandled electronically viathemain
computer centre where alltheinformation isregistered, either directly from thefreezoneorfrom
aspecial transmission centre.7Theinformation required isessentially thesame asforother imports.
11. Rules oforigin arenotapplicable toimports receiving MFN treatment.8Certificates oforigin
arerequired inChile onlywhen goods areimported under preferential regimes. Origin isalsospecified
onthecommercial certificate.9
4Resolution No.9190/92.
5Resolution No.8240/1996.
6Resolution No.2808/1995.
7Resolution No.6150/1995.
8WTO document G/RO/N/6, 19December 1995.
9Dun&Bradstreet Information Services (1996).WT/TPR/S/28 Trade Policy Review
Page 38
12. Thebasis forChile'spreferential rulesoforigin applying toother Latin American countries
iscontained inthe1987Resolution No.78 oftheCommittee ofRepresentatives oftheLatin America
Integration Association (LAIA). These rules oforigin arebased upon theprinciple ofsubstantial
transformation(i.e.tariffclassificationchange).Ifthereisnosubstantialtransformation(i.e.theprocess
ofproduction entails onlymounting orassembly) thec.i.f. value offoreign inputs must notexceed
50percentofthef.o.b. value ofthegoodproduced, or60percentofthef.o.bvalue forgoods produced
incountries atalower stageofdevelopment. Inaddition, awiderange ofproducts aresubject tospecific
rules oforigin.10
13. Within thepreferential agreements signed byChile withLAIA partners, there areexceptions
totheuseofResolution No.78;forexample, under Chile'sEconomic Complementarity Agreements
withEcuador, Colombia, MERCOSUR, Mexico, andVenezuela. Theruleoforigin fortheautomotive
sector intheagreements withMexico, Venezuela, Colombia andEcuador isdifferent ineachcase,
asshowninTableIII.1.TheAdministrativeCommission(Comisión Administrativa )ofeachpreferential
agreement isallowed tovarytheestablished rulesoforigin. However, rulesoforigin havenever been
changed aftertheratification ofanagreement.
14. Therules oforigin stipulated intheagreement signed withMERCOSUR varyaccording to
theproduct. Therulesarebased ontheprinciple ofsubstantial transformation withatariffclassification
change, regional content, specific rules similar tothose ofResolution No.78,andspecific rules for
thetextile andinformatics sector. Under theMERCOSUR framework, Chile alsooffers preferential
rulesoforigin toParaguay. Therulesapplied intheChile-Canada free-trade agreement are,according
totheauthorities, based onthose ofNAFTA (i.e.essentially HStariff-shift withspecific rules for
automotive goods, textiles andfootwear) modified toprovide greater flexibility incertain sectors;
however, nodetails havebeenprovided.
(ii) Customs valuation
15. There havebeennochanges inthecustoms valuation procedures usedinChile sincetheprevious
review in1991. Asestablished inLawNo.18.225 of1986, theseprocedures arebased ontheBrussels
Definition ofValue.11TheLawallows twomethods forestablishing customs values. Thefirstmethod,
which isthemostcommonly used, determines custom value according tothetransaction price, i.e.the
price paidortobepaidforthemerchandise atthetimeofimportation.12Thesecond method allows
theauthorities toimpute acustoms value onthebasis ofaprice setunder competitive conditions or
onthebasisofthepriceofanidentical orsimilar goodsoldonthesamecommercial basis. Thissecond
method isusedintwoinstances: first,ifthebuyer andseller arenotindependent (thetransaction is
notat"arm'slength"); and,second, ifthere isreason tobelieve thatthedeclared value ofthe
merchandise isnotthetruevalue, (i.e.there isunder- orovervaluation).
16. Value fordutyisthec.i.f. (cost, insurance andfreight) value, which hasahigher percentage
incidence thanthef.o.b. (freeonboard) value ofgoods from more distant trading partners.
10Resolution No.78oftheCommittee ofRepresentatives oftheLatin American Integration Association
(LAIA), 1987.
11Articles 5to8ofLawNo.18.525, Official Journal, 30June 1986.
12Theauthorities noted thatthisvaluation method isused for90percentofallimports.Chile WT/TPR/S/28
Page 39
Table III.1
Rules oforigin
Product Rule oforigin requirement
MERCOSUR
-Inorganic andorganic chemicalsaSubstantial transformation (i.e.aprocess thatcreates anew
chemical)
Arange of:b
-oilsandfoodproducts
-paper products
-textiles andtextile articles
-stoves andradiators
-table, kitchen andother household articles
-sanitary ware andparts thereof
-articles ofbeddingTariff classification change andregional content (i.e.thec.i.f.
value ofthenon-original materials should notexceed 40per
centofthef.o.b. value offinalmerchandise)c
-Products assembled andmounted withnon-originating
materials, eveniftheprocess causes achange intariff
classificationdRegional content (i.e.thec.i.f. value ofthenon-originating
materials should notexceed 40percentofthef.o.b. value of
finalgood)e
Arange of:f
-products ofmilling industry
-preparations ofvegetables, nutsorother parts of
plants
-waters
-plastics andarticles thereof
-rubber andarticles thereof
-cartons, boxes, cases, bagsandother packaging
containers ofpaper orpaperboard
-products oftheprinting industry
-footwear, gaiters andthelike
-glass andglassware
-tools
-miscellaneous articles ofbasemetal
-nuclear reactors, boilers
-railway ortramway locomotives andparts thereof
-vehicles other thanrailway andtramway andparts
thereof
-aircraft andparts thereof
-ships andboats andfloating structures
-optical, photographic, cinematographic, measuring,
checking, medical orsurgical instruments and
apparatus andparts andaccessories thereof
-furniture
-toysandgames
-miscellaneous manufactured articles suchasbrooms
andtooth brushes, ballpoint pens, andvacuum
flasksRegional content (i.e.when original materials arenotlessthan
the60percentoff.o.b. value ofthemerchandise produced)g
Table III.1 (cont'd)WT/TPR/S/28 Trade Policy Review
Page 40
Product Rule oforigin requirement
Arange of:h
-beverages andtobacco products
-pharmaceutical products
-cosmetics andtoilet preparations
-insecticides androdenticides
-plastic andarticles thereof
-paper andpaperboard articles
-products oftheprinting industry
-carpets andother textile floor coverings
-articles andapparel andclothing accessories, both
knitted orcrocheted andnot-knitted orcrocheted
-other made uptextile articles
-articles ofjewellery
-articles ofironandsteel
-boilers, machinery, mechanical appliances andparts
thereof
-electrical machinery andequipment andparts
thereof
-bicycles andother cycles
-furniture
-toysandgamesPreferential regime forParaguay of50percentregional
content until31.12.2003i
Arange of:j
-fresh milkanddairy products
-wheat andmeslin products
-maltproducts
-soaps produced withalmond oil
-insecticides, etc.
-plastic sheets, plates, etc.
-sheets ofpolymer ofstyrene
-some paper productskarticles ofapparel and
clothing accessories knitted orcrocheted
-articles ofapparel andclothing accessories,
not-knitted orcrochetedl
-ironandsteel, andironandsteelproducts
-photographic andcinematographic goods (process)Specific rules oforigin:m
a.themajor input usedintheproduction process must
originate 100percentintheregion
or
b.aspecified procedure intheproduction process must be
performed wholly intheregion
-telecommunication andcomputer products Specific rules oforigin:n
value added of60percent
Colombia
-Motor vehicles forthetransport oftenormore
persons (HS8702)
-Motor carsandother motor vehicles, principally
designed forthetransport ofpersons (HS8703)
-Motor vehicles forthetransport ofgoods
(HS8704)Regional content:
Thec.i.f. value oftheinputs from outside theregion usedin
theprocess ofassembly must notexceed 60percentofthe
f.o.b. value ofthevehicle
Ecuador
-Motor vehicles forthetransport oftenormore
persons (HS8702)
-Motor carsandother motor vehicles, principally
designed forthetransport ofpersons (HS8703)
-Motor vehicles forthetransport ofgoods
(HS8704)Regional content:
Thec.i.f. value oftheinputs from outside theregion usedin
theprocess ofassembly must notexceed 65percentofthe
f.o.b. value ofthevehicle
Table III.1 (cont'd)Chile WT/TPR/S/28
Page 41
Product Rule oforigin requirement
Venezuela
-Motor vehicles forthetransport oftenormore
persons (HS8702)
-Motor carsandother motor vehicles, principally
designed forthetransport ofpersons (HS8703)
-Motor vehicles forthetransport ofgoods
(HS8704)oRegional content:
Thec.i.f. value oftheinputs from outside theregion usedin
theprocess ofassembly must notexceed 65percentofthe
f.o.b. value ofthevehicle
Mexico
-Motor vehicles forthetransport oftenormore
persons (HS8702)
-Motor vehicles forthetransport ofgoods
(HS8704)Regional content:
Thec.i.f. value oftheinputs from outside theregion usedin
theprocess ofassembly must notexceed 68percentofthe
f.o.b. value ofthevehicle
-Motor carsandthemotor vehicles principally
designed forthetransport ofpersons (HS8703)Regional content:
Thec.i.f. value oftheinputs from outside theregion usedin
theprocess ofassembly must notexceed 68percentofthe
f.o.b. value ofthevehicle
or
Regional content:
Thec.i.f. value oftheinputs from outside theregion usedin
theprocess ofassembly must notexceed 85percentofthe
f.o.b. value ofthevehicle
only
ifthenumber ofunits under thisHSlineexported from Mexico
toChile doesnotexceed by50percenttheunits exported
from Mexico toChile intheprevious calendar year.
and
ifthenumber ofunits classified under thisHSlineexported
form Chile toMexico doesnotexceed 5000 units.
a Appendix 1AtoAnnex 13ofEconomic Complementarity Agreement MERCOSUR -Chile.
b Appendix 1BtoAnnex 13ofEconomic Complementarity Agreement MERCOSUR -Chile.
c Article 3,par.6.
d Article 8.
e Article 3,par.8.
f Appendix 1CtoAnnex 13ofEconomic Complementarity Agreement MERCOSUR -Chile.
g Article 3,par.10.
h Thislistmayhavechanged since Paraguay hadsixmonths toamend itaftersigning thisAgreement (Appendix 2ofAnnex 13
ofEconomic Complementarity Agreement MERCOSUR -Chile).
i Asof1.1.2004 general rules oforigin would apply. (Article 3,par12).
j Appendix 3toAnnex 13ofEconomic Complementarity Agreement MERCOSUR -Chile.
k Transitory measure until31.12.2000.
l Forsome ofthese items thisruleoforigin willchange in01.01.1998.
m Article 4.
n Thiscriteria willholdonlyuntiltheAdministrative Comission establishes specific requirements foreachitem.
o Adifferentiation ismade between carsandmotor vehicles forthetransport ofgoods -those thatcould carry amaximum weight
of3.6tonsandthose thatcancarry aheavier load; however, thesame ruleoforigin applies inbothinstances.
Source: WTO Secretariat, based onvarious Agreements.WT/TPR/S/28 Trade Policy Review
Page 42
17. Chile isavailing itself ofthefive-year period allowed fordeveloping countries toapply the
provisions oftheWTO Agreement onCustoms Valuation.13However, since January 1997Chile has
started toapply theWTO rules ofvaluation totheMERCOSUR countries. WTO customs valuation
rules arealsousedtoestablish thevalue ofCanadian products under thefree-trade agreement with
thatcountry. According totheauthorities, thisexperience willprepare Chile forthefullimplementation
oftheWTO Agreement onCustoms Valuation.
18. ThePresident isempowered toestablish minimum customs values when thenormal price of
agoodistemporarily reduced anditisbelieved thatimports arecausing serious actual damage orcould
imminently cause damage tonational production (causa grave dañoactual oimminente enlaproducción
nacional) .14However, theNational Commission, responsible forinvestigating distortions intheprice
ofimported goods, isrequired toconduct aninvestigation toassess thedamage tonational production.
Since 1994 nominimum customs values havebeenapplied.
19. Reference prices areusedasthebasisoftheprice bandsystem forwheat, wheat flour, edible
oilandsugar (section 2(iv)). Inthese cases, theprices usedaref.o.b. prices pertonne inrelevant
international commodity markets suchasNewYork, London andBuenos Aires.
(iii) Tariffs
(a) Structure (average tariff levels, tariff range andtariff escalation)
20. Chile'stariff, based ontheHarmonized System (HS)1996, consists ofsome 5,848 tarifflines
attheeight-digit level. Most ofthese lines aresubject toauniform applied advalorem tariff of
11percentbased onc.i.f. value. Exception ismade for21items, shown inTable III.2, which have
a0percenttariff rate. There isalsoacomplement totheChilean tariff, section 0,which includes
specific goods forwhich concessionary treatment maybegranted (section (d)below).
21. Theuniform applied tariffrateof11percentwasadopted inJune1991, reduced fromauniform
rateof15percent;15there areplans tofurther reduce tariffs.16Thisuniform tariff system, inplace
since late1970, grants predictability andtransparency tothetrading system.
22. However, under thepricebandsystem (section (v)below), specific duties orrebates areapplied
toimports ofwheat, wheat flour, edible oilsandsugar iftheduty-paid pricefallsbelow orrisesabove
acertain level.17
13Article 20.1, WTO Agreement ontheImplementation ofArticle VIIoftheGATT 1994.
WTO document WT/Let/1/Rev.1.
14Article 9,Law18.525, 30June 1986.
15Theprevious rateof15percentuniform tariff ratehadbeen inplace since January 1988.
16Theamount ofthereduction hasnotbeen determined atthetime ofwriting (mid-1997).
17Article 12,Law18.525, Official Journal, 30June 1986.Chile WT/TPR/S/28
Page 43
Table III.2
Goods withatariff rateof0percent
H.S. Product
4901 9940 Documentation consigned tocompanies
4906 0010 Non-commercial documentation
4907 0010 Bank bills
4907 0020 Travellers 'cheque forms
8401 1000 Nuclear reactors
8543 1910 Accelerators ofnuclear particles
8705 3000 Firefighting vehicles
8710 0000 Tanks andother armoured fighting vehicles, motorized, andparts
8802 1100 Helicopters ofanunladen weight notexceeding 2,000 kg.
8802 1200 Helicopters ofanunladen weight exceeding 2,000 kg.
8802 2000 Aircraft ofanunladen weight notexceeding 2,000 kg.
8802 3000 Aircraft ofanunladen weight exceeding 2,000 kg.butnotexceed 15,000 kg.
8802 4000 Aircraft ofanunladen weight exceeding 15,000 kg.
8802 6000 Spacecraft (including satellites) andspacecraft launch vehicles
8901 1010 Cruise ships, excursion boats etc.principally designed forthetransportation ofpersons, exceeding 3,500
tons
8901 2010 Tankers exceeding 3,500 tons
8901 3010 Refrigerated vessels other thantankers, exceeding 3,500 tons
8901 9010 Cargo vessels forthetransport ofbothpersons andgoods, exceeding 3,500 tons
8902 0091 Other fishing vessels andfactory ships, exceeding 3,500 tons
8906 0010 Other warships notincluded elsewhere
8906 0091 Other warships notincluded elsewhere, exceeding, 3,500 tons
Source: Government ofChile.
23. Imported usedgoods, other thancapital equipment, bearasurcharge of50percentabove the
normal import duty. Atpresent, thecombined dutyonusedgoods is16.5percentofthec.i.f. value
(i.e., the11percentapplied tariff plusthe50percentsurcharge equalling 5.5percent). Used
ambulances, armoured cars,public roadcleaning vehicles, mobile homes, prison vans, street cleaning
vehicles, andcement making vehicles areexempt fromthisadditional duty. These goods paythenormal
import dutyplusVAT (currently 18percent). Fire-fighting vehicles arenotsubject toimport duty
andpayonlytheVAT onthec.i.f. value.18
24. Adutyof10percentischarged onthevalue ofrepairs orwork done abroad onnational
products.
25. Goods admitted under theSimplified Regime forTemporary Admission payaproportion of
thecustoms duties according tothenumber ofdaysforwhich themerchandise isadmitted. For
temporary admission of1-15daysthedutyis2.5percentofthenormal duty,for16-30 days5percent,
18Dun&Bradstreet Information Services (1996).WT/TPR/S/28 Trade Policy Review
Page 44
for31-60 days10percent, for61-90 days15percent,for91-120 days20percentandformore
than121days100percent. Anadditional taxof10percentonthecustoms value islevied upon
application foranextension oftheperiod ofentry under thetemporary admission regime.19
26. Merchandise leftinacustoms warehouse formore than90days, ispresumed tobeabandoned.
Iftheowner wants torecover thegoods acharge of5percentofthecustoms value islevied, and
asurcharge ischarged forevery additional daythatthemerchandise iskeptinthecustoms warehouse.
27. There isnoescalation intheuniform MFN tariffperse.However, concessional entry (e.g.for
automotive parts), theprice band system, andadditional duties ortaxes levied ondifferent imports
giverisetosome escalation, andtherefore, higher effective protection forproducts affected bysuch
concessions orhigher rates. Inaddition, many goods aresubject todifferent ratesofdutywhile various
FTAs arebeing introduced, creating considerable variation intariff rates. Nostudy hasbeenmade
oftheeffective protection thatsoresults, except inthecaseofagriculture (seeChapter IV).
(b) Tariff bindings intheUruguay Round
28. IntheUruguay Round, Chile bound alltariff lines contained inChapters 1to97ofthe
Harmonized System atauniform advalorem ceiling rateof25percent, withtheexception ofthe
agricultural products included inChile'sUruguay Round Schedule andofthose goods thatalready
hadlower bound ratesasaresult ofpre-Uruguay Round commitments.20
29. Theagricultural goods included insection Iwere bound ataceiling rateof31.5percent.
Thislistincludes goods suchasdairy products, wheat andwheat flour, oil-seeds andoleaginous fruit,
vegetable fatsandoils,andbeetorcanesugar.
(c) Seasonal tariffs
30. Chile doesnothaveseasonal tariffs, except within theframework ofpreferential agreements
andonlyforveryspecific goods. Forinstance, seasonal tariffs havebeenapplied tooilcake imported
from Bolivia anddurum wheat imported from Canada.
(d) Concessional entry
31. Section 0wascreated in1967asacomplement totheChilean customs tariffandincludes most
products covered byaspecial customs regime. Tariff concessions included insection 0aregranted
onthebasis oftheuseoftheimport orthenature oftheimporter.
32. Thetariffratesspecified insection 0arelevied onlyiftheyarelower thanthecurrent applied
rate. Most ofthese goods enter dutyfree,butsection 0alsostipulates advalorem ratesof1,5,6,
and9percent. Goods imported under anyofthese special regimes arealsoexempt fromanyimport
restrictions orprohibitions, anddonotrequire theimport document issued bytheCentral Bank.
19Ronda Uruguay ,Chile Schedule (Lista VII).
20Geneva(1993),ProtocolRelatingtotheHarmonizedCommodityDescriptionandCodingSystem(Harmonized
System).Chile WT/TPR/S/28
Page 45
33. Themostimportant economic activity covered byconcessions under section 0appears tobe
theautomotive assembly industry. Parts andcomponents aredutiable at11percent; however, these
canbetotally orpartially exempt fromtariffs under theexport balancing requirement (Chapter IV(4)).
34. Other activities thatenjoy preferential treatment include: public entities; diplomatic missions;
international organizations; benevolent institutions; educational institutions; religious communities;
maritime andairtransportation companies; fishing innational vessels; official international trade
fairs; special customs zones. Inaddition, diplomatic officials, Chilean officials posted abroad returning
toChile, andreturning passengers, benefit from thispreferential treatment.
(e) Tariff preferences
35. Chile doesnotapply tariff treatment lessfavourable thanMFN toanycountry. Preferential
treatment isgranted onlytothose countries withwhich Chile hastradeagreements, forinstance, LAIA
countries andCanada (Chapter II).
36. These bilateral trade agreements aimatreducing almost alltariffs to0percent. Asshown
inTable III.3asubstantial proportion oftariff linesalready beararateof0percentandreduction
oftheremaining tariffs tozeroisintended. Under thefree-trade agreement between Chile andCanada
some 80percentoftariff linesaretobedutiable atarateof0percent.
Table III.3
Tariff preferences granted byChile under preferential agreements (years inparentheses)
Country Coverage
(%oftariff lines)Stages oftariff reduction to0%
(%oftariff lines)Cumulative percentage ofzerorateitems
(%oftariff lines)
Ecuador 96.8 96.4(1997)
0.4(2000)96.4(1997)
96.8(2000)
Colombia 91.1 85.3(1997)
5.8(1999)85.3(1997)
91.1(1999)
MERCOSUR 100.0 63.0(2004)
15.4(2006)
19.7(2011)
0.8(2012)
1.1(2014)63.0(2004)
78.4(2006)
98.1(2011)
98.9(2012)
100(2014)
Mexico 98.3 95.2(1996)
3.1(1998)95.2(1996)
98.3(1998)
Venezuela 96.4 91.1(1997)
5.3(1999)91.1(1997)
96.4(1999)
Note: Information regarding thepreferences granted toCanada under theChile-Canada free-trade agreement were notavailable at
thetimethereport wasfinalized.
Source: Government ofChile.
(iv) Tariff quotas
37. Chile doesnotmaintain anytariff quotas.WT/TPR/S/28 Trade Policy Review
Page 46
(v) Variable import levies andother measures
38. Theprice band system, amechanism established tostabilize internal prices, isinplace for
edible oils,sugar, wheat and,since 1993, wheat flour.21Theprice stabilization mechanism works
asavariable levysince thedutyimposed onthese goods varies according theirimport price. Thus,
iftheprice oftheimported good fallsbelow areference price, aspecific dutyinUSdollars isadded
totheadvalorem ratetobring theimport price uptothereference price (within thelimits ofthe
31.5percentceiling binding). Ontheother hand, iftheimport price risesabove thereference price,
therecould beareduction oftheapplied tariff. Under thissystem, in1995and1996nospecific duties
were applied inthecaseofsugar orwheat; instead, there wasareduction of100percentofthe
advalorem import duty, while edible oilswererebated in1995, aspecific dutywasapplied in1996.
39. Price bands areestablished onceayearbyPresidential Decree. They arevalidforayearbut
theprecise dates vary according toproduct. Price-band years forwheat andwheat flour are
16December-15 December, foroil,1November-31 October, andforsugar 1April-31 March. The
method ofcalculation ofthepricebandandthespecific dutyorcutinthetariffisdescribed inBoxIII.1.
(vi) Other levies andcharges
40. Most imports aresubject tothe18percentVAT, which alsoapplies todomestic production.
TheVAT iscalculated onthebasisofthec.i.f. value plustheimport duty. Imports ofcapital goods,
forinvestment purposes, maybeexempted fromtheVAT iftheyareimported under Chile'sForeign
Investment Law(Decree Law600)of1974, orifthere isnolocalproduction or"insufficient" local
production oftheimported goods.22
21Thespecific dutyorthetariff reduction forwheat flour iscalculated bymultiplying theparameters applied
forwheat byafactor of1.56. LawNo.19.193, Official Journal, 16January 1993; andLaw19.446, Official
Journal, 8February 1996.
22Dun&Bradstreet Information Services (1996).Chile WT/TPR/S/28
Page 47
BoxIII.1 Determination ofprice bands, specific duties, andtariff cuts
Atime series ofaverage monthly international prices iscompiled forwheat, oilandsugar. These
comprises 60months forwheat andoiland,120months forsugar.
Theinternational prices used are:
Wheat - thef.o.b. price ofHard RedWinter No.2 attheGulf ofMexico;
Edible oils- thef.o.b. price ofrawsoya inNew York;
Sugar - aweighted price iscalculated byusing twoprices quoted ontheLondon
market, London f.o.b. with aweight of0.9andNew York f.o.b. with a
weight of0.1.
These time series aredeflated tocorrect forinternational inflation. Thedeflator used isanindex
calculated bytheCentral Bank, which takes intoaccount inflation inChile 'smajor trading partners.
Inorder todetermine theprice band ofwheat andoilthelowest andhighest 25percentiles aredeleted,
andinthecaseofsugar thelowest andhighest 35percentiles aredeleted. Thevalue oftheceiling and
thefloor oftheband arefurther determined byadjusting theextreme values forcosts such asfreight,
insurance, import duties, unloading, etc.
Specific tariffs areapplied when thef.o.b. price ofanimported good isbelow thefloor oftheband. This
specific tariff isdetermined bysubtracting theimport price (f.o.b.) from thefloor price. Theapplied
tariff of11percentandthespecific dutytogether maynotexceed thebound tariff rateof31.5percent.
Similarly, tariff cuts(rebates) arecalculated bysubtracting theceiling price from theimport price, and
maygotoazerotariff rate.
41. Further domestic taxes arelevied upon several goods, including anumber ofluxury goods,
alcoholic beverages, fuelsandvehicles (Table III.4). Inprinciple, these taxes arelevied atthesame
rateondomestically produced andimported goods, butinpractice anumber ofthese goods arenot
produced inChile. Table III.5illustrates thecharges andtaxes levied onthree representative goods
imported toChile.
42. Anadditional airport taxat2percentoftheapplied dutyapplies toallimports transported
byair(e.g.theairport taxiscurrently 0.22percent). However, goods originating inCanada will
beexempt from thistax.
43. Adispatch taxof5percentonthecustoms value applies tomerchandise thathasbeenpartially
ortotally exempt from duties. Thedispatch taxisnotlevied ongoods originating incountries with
which Chile hastrade agreements.
44. Nosurcharges havebeenapplied since 1995. Atthetimeoftheprevious review in1991,
products suchaswheat flour, rice,powder milkandmaize (maíz)weresubject tosurcharges atrates
varying from 1to12percent(Table III.6).23
23Theauthoritiesnotedthatthesurchargesappliedtoricewereeliminatedin1992,towheatflourandpowdered
milk in1993 andtomaize in1995.WT/TPR/S/28 Trade Policy Review
Page 48
Table III.4
Taxes levied onimports anddomestic goods
Tax Product Rate Base
(Percent) Imports Domestic goods
Value-added tax Allgoods 18 C.i.f. price plus
import dutySaleprice atall
transaction levels
Additional tax Articles made ofgold,
platinum andivory;
jewellery, synthetic or
natural precious stones;
andfinefurs50 C.i.f. price plus
import dutySaleprice atall
transaction levels
Rugs andfinetapestries;
vehicles, motor-homes;
caviar; fireworks; and
airguns50 C.i.f. price plus
import dutySaleprice atall
transaction levels
Yachts 30 C.i.f. price plus
import dutySaleprice atall
transaction levels
Taxonbeverages Non-alcoholic beverages
Alcoholic beverages13 C.i.f. price plus
import dutySaleprice atall
transaction levels,
except forretail sales
Wines 15
Beer 15
Pisco 25
Spirits 30
Whisky 70
Cylinder tax Vehicles (ofmore
cylinder than1500cc)(cc.*0.03-45)*fbC.i.f. price
Luxury tax Vehicles thatexceed a
c.i.f. price of
US$10,330.6885 Levied onthe
proportion ofthe
customs value that
exceeds US$10,330.68Value offinished
vehicle exceeding
US$10,330.68
Taxontobacco
productsTobacco products
Cigars 46.4 Final consumer price Final consumer price
Cigarettes 45.4+10=55.4 Final consumer price Final consumer price
Manufactured tobacco 42.9+10=52.9 Final consumer price Final consumer price
Taxonfuels Gasoline 4.4084 UTM/m3
(1UTM =US$55)C.i.f. price +import
duty+VATProducer price
including VAT
(primera venta)
Diesel 1.5UTM/m3
(1UTM =US$55)C.i.f. price +import
duty+VATProducer price
including VAT
(primera venta)
a Spirits including eau-de-vie ,aromatic (licoroso )wines similar tovermouth (Article 42,Paragraph 3,Decree LawNo.825,
12March 1976).
b f=0.2in1997.
Source: Government ofChile.Chile WT/TPR/S/28
Page 49
Table III.5
Structure ofcharges levied onimports ofselected products, 1997
Description Durum wheat
1001.10Flat-rolled stainless steel
7219.24Cars (1600 cc)d
8703.23
Percent Value (US$) Percent Value (US$) Percent Value (US$)
1.Value f.o.b. 100.00 100.00 100.00
2.Freight (on1) 6.47a6.47 2.73a2.73 4.50a4.50
3.Insurance (on1) 0.26a0.26 1.02a1.02 0.58a0.58
4.Value c.i.f. 106.73 103.75 105.08
5.Import duty(on4) 11.00 11.74 11.00 11.41 11.00 11.56
6.Sub-total 118.47 115.16 116.64
7.Other costs 8.18b2.30a2.3c1.50e
8.Final value ofimports 122.26 117.46 118.14
9.Value-added tax(on6) 18.00 21.32 18.00 20.73 18.00 21.00
10.Other taxes 2.14f
11.Wholesale costinChile 143.58 138.19 141.27
a Percentages provided bytheauthorities.
b Bank commission onc.i.f. value 0.1percent(US$0,23); transportation fromporttoprocessing plant(US$7), costofinspection
andanalysis (US$0.95).
c Includes bank commission, freight from port, commission tocustoms broker.
d Calculation based onapassenger caroff.o.b. value ofUS$10,000.00.
e Freight from port. etc..
f Other taxes include luxury taxUS$150.72 =(c.i.f. value -10,330.68) *0.85; andcylinder tax0.6percent=(1600 cc*0.03-
45)*0.2(seeTable III.4).
Source: WTO Secretariat, based ondatasupplied bytheGovernment.
Table III.6
Products subject tosurcharges
Product HS Rate (percent)
Wheat flour 1101.00 5and12
Rice 1006.10; 20,30,and40 10
Powdered milk 0402.10 and0402.21 5
Maize 1005.90 5
Source: Government ofChile.
45. Bylaw,surcharges canstillbeimposed andthere arenoplans toeliminate thismechanism.24
However, inorder toapply asurcharge andtodetermine itsrate,aninvestigation mustbeundertaken
todetermine whether there isaprice distortion. Theinvestigation would follow therulesestablished
inLawNo.18.525 andRegulation No.575.Surcharges areapplied onanMFN basisandthesurcharge
plustheapplied tariff (11percentin1997) cannot exceed theWTO bound rates.
24Article 10ofLawNo.18.525 authorizes thePresident todetermine those goods thatcould besubject to
surcharges, anti-dumping andcountervailing duties, andtherateandlength ofthemeasure.WT/TPR/S/28 Trade Policy Review
Page 50
(vii) Import prohibitions
46. TheConstitutionalOrganicLawoftheCentralBankofChilestipulatesfreedomofimportation.25
However, certain import prohibitions remain.
47. Importsofusedautomobilesareprohibited,accordingtotheauthoritieshealthandenvironmental
reasons, tocombat airpollution inthemain cities. However, thisprohibition doesnotapply toused
vehicles imported under section 0oftheCustom Tariff ortovehicles thatmaybeimported withpartial
ortotaldutyexemptions.
48. Import prohibitions alsoaffect goods thatareoffensive topublic morality orforsanitary and
phytosanitary reasons. Forinstance, imports offruitinfested withfruitfly(mosca delafruta)are
prohibited.
49. Imports ofplants andanimals indanger ofextinction arealsoprohibited inaccordance with
theConvention onInternational Trade ofEndangered Species (CITES), ratified byChile. Nevertheless,
eventhese goods maybeimported ifaspecial import permit isissued bytheNational Commission
ofTechnological andScientific Research.
50. TheMinistry ofFinance isempowered toprohibit theimportation ofmerchandise originating
incountries thathaveimposed trade restrictions towards Chile.26However, thismeasure hasnever
beenimposed andtheauthorities noted thatthese would notbeapplied iftheycontravened Chile's
WTO obligations.
(viii) Import licensing andauthorization
51. Noimport licensing system exists inChile.27
(ix) Import quotas
52. Import quotas andother quantitative import restrictions areprohibited inChile.28However,
import quotas canbeapplied within theframework ofpreferential trade agreements negotiated within
ALADI andother free-trade agreements thathaverecently beennegotiated (e.g.theagreements with
Bolivia, MERCOSUR andCanada). Ithasnotyetbeendecided howthesequotas willbeadministered.
(x) Import surveillance
53. There arenoimport surveillance mechanisms inChile.
25Law No.18.840, LeyOrgánica Constitucional delBanco Central deChile ,10October 1989.
26Article 88ofLawNº18.840.
27WTO document G/LIC/N/3/CHL/1, 5June 1996.
28Law No.18.840, LeyOrgánica Constitucional delBanco Central deChile ,10October 1989.Chile WT/TPR/S/28
Page 51
(xi) Import cartels
54. Import cartels areprohibited inChile bythelawregulating competition policy (section (4)).29
(xii) State-owned enterprises
55. According totheauthorities theonlystate-owned enterprise thatparticipates inmarketing
activities isthewheat marketing company (Comercializadora deTrigo S.A.,COTRISA).30COTRISA
purchases wheat andothercereals fromdomestic producers tostabilize domestic prices. Theinstitution
doesnotparticipate ininternational trade operations anditsparticipation inthedomestic market is
almost negligible. During 1991-96, COTRISA marketed anaverage of0.57percentofthetotalnational
wheat crop, andduring 1991-95 itmarketed 1.92percentofthetotalmaize cropand0.73percent
ofthericecrop.
56. Other state-owned enterprises, which theauthorities donotconsider tobe"state-trading
enterprises" inthesense ofArticle XVII oftheGATT, include theenterprise incharge ofprovisioning
isolated areas (Empresa deAbastecimiento delasZonas Aisladas ,EMAZA), theNational Mining
Enterprise (ENAMI), andtheNational Copper Corporation (CODELCO). CODELCO exploits copper
andmarkets itsproducts. CODELCO isthebiggest producer ofcopper intheworld andisalsothe
most important exporter inChile. ENAMI promotes theexploitation, processing andmarketing of
allminerals atthesmall andmedium scale. Theprocessed minerals aremainly marketed internationally
(Chapter IV(3), Mining).
(xiii) Countertrade
57. Chile doesnotengage incountertrade orbarter transactions.
(xiv) Standards andother technical requirements
(a) Standards, testing andcertification
58. TheAgreement onTechnical Barriers toTrade came intoforce asalawinChile on
17May1995, when theAgreement Establishing theWorld Trade Organization wasratified.31On
20September 1995, theNational Standardization Institute (INN) accepted theCode ofGood Practice
forthePreparation, Adoption andApplication ofStandards.
59. Chile'spolicy forthepreparation andapplication ofstandards, technical regulations and
conformity assessment procedures, isbased on:(i)non-interference withthefreeoperation ofmarkets
andfreedom oftrade; (ii)non-discriminatory treatment between domestic andforeign products; and
(iii)theuseofinternational standards asabasis fornational standards, when possible.
29Law No.211of1973. Thiscompetition lawwasrevised in1980, ithasnotbeen reformed since then.
30WTO document G/STR/N/1/CHL, 22December 1995.
31Decree No.16oftheMinistry ofForeign Affairs, Official Journal, 17May 1995.WT/TPR/S/28 Trade Policy Review
Page 52
60. TheINNhasoverall responsibility regarding standards, andavoluntary system ofaccreditation
oflaboratories, certification bodies andcertification auditors.32Other institutions such asthe
Superintendency ofElectricity andFuels (SEC)33,theAgricultural andLivestock Service (SAG) of
theMinistryofAgriculture,theNationalFisheriesService(SERNAPESCA)alsointerveneintheprocess
ofcertification. Theresponsibility forimplementing andadministering theAgreement onTechnical
Barriers toTrade lieswiththeForeign Trade Department oftheMinistry ofEconomy, Development
andReconstruction.
61. Theexamination ofstandards iscarried outinaccordance withinternationally accepted ISO
andIECcriteria. Standards areadopted through aprocess ofconsensus-building among theparties
invited toparticipate from boththepublic andprivate sectors; thepublic consultation process is
announced inoneofthemajor newspapers, andthetextsofstandards aremade available toanyone
requesting them. Once standards havebeenapproved bytheINNCouncil, theyaregiven official status
bytherelevant Ministry, bymeans ofdecrees orresolutions, andarepublished inoneoftheprincipal
newspapers.
62. Technical regulations aremandatory andtheauthority toissuethemlieswiththeMinistry or
other government body withcompetence inthespecific areatoberegulated. Such regulations take
theform oflaws, decrees orresolutions, asappropriate, andarepublished intheOfficial Journal.
63. Chile alsohassome 1,976 voluntary standards, ofwhich some 340newstandards havebeen
adopted sincetheprevious review. These affect mainly awiderange ofintermediate specialized goods
andfewer consumer goods. Consumer goods subject tonewstandards include foodproducts, livestock,
fuels, stoves, vehicles andother manufactured goods. However, according totheauthorities, some
70percentoftheChilean standards elaborated inthelasttenyears areequivalent tointernational
standards. Thedegree ofequivalency varies according totheareaofstandardization (Table III.7).
Table III.7
Official Chilean standards andtheir equivalency withinternational standards
Area Total number of
Chilean standardsNumber ofChilean standards
equivalent tointernationalEquivalency
(inpercentage)
Basic standards 65 58 90
Computers 7 7 100
Quality oflife,safety 32 13 40
Containers, packaging materials,
handling andtransportation10 5 50
Energy 53 5 10
Construction 12 2 17
Food andagricultural products 8 7 88
Chemicals 28 7 25
Metalurgy andmining 0 0 0
Mechanics 1 0 0
Electricity 50 44 88
Textiles andleather 2 1 50
Wood products 11 0 0
Source: Government ofChile.
32TheINNisaprivate-lawfoundationrunbytheProductionPromotionCorporation(CORFO)anditrepresents
Chile asamember oftheInternational Organization forStandardization (ISO).
33Themain roleoftheSuperintendency ofElectricity andFuels (SEC) istoauthorize laboratories orother
institutions tocarry outthenecessary testsforthecertification ofelectrical products, gasproducts, andliquid
fuelproducts (Law No.18.410, Official Journal, 22May 1985).Chile WT/TPR/S/28
Page 53
64. Certain international standards areconsidered inadequate inChile. These include standards
regarding seismic designs andstructures, because oflocalseismic conditions; anddefinition oflive
bovine animals tobeslaughtered, because ofdifferences regarding theageatwhich animals maybe
slaughtered. Inaddition, Chilean standards regarding sampling ofwater quality, statistical methods
andsoilanalysis methods (métodos deensayo parasuelos )differ from international standards when
international standards require hightechnology equipment notavailable inChile.
65. Chile doesnotalways apply thestandards ofother countries, butsome aretaken intoaccount
when establishing Chilean standards.
66. TheSERNAPESCA recognizes allofficial testresults andcertificates provided bythecountry
oforigin, andtheSEC recognizes testresults from aspecified listoforganizations from the
United States, mostEUmembers, Norway, Switzerland, Japan andSouth Africa, aswellasthose of
theInternational Electrotechnical Commission (IEC).
67. Chile hasintroduced aneco-labelling scheme, theChilean Ozone SealofApproval System,
toimplement theMontreal Protocol toprotect theozone layer. Allproducts thatdonotcause damage
totheozone layer, thatdonotcontain ozone-depleting substances andwhose production hasatnotime
required theuseofsubstances which damage theozone layer, willbesolabelled.34
68. TheNational Commission fortheEnvironment authorizes companies thatmeettherequirements
tousetheSealfortwoyears.Suchproductsandproductionprocessesareanalyzedbycertifyingagencies
accredited bytheNational Corporation fortheEnvironment, prior toobtaining theSeal. Producers
ofbothgoods andservices areeligible tousethisSeal.
69. Tocomply withChile'sobligations under theAgreement onTechnical Barriers toTrade, the
authorities arepreparing abilltoestablish aninstitutional andconsistent regulatory framework for
allaspects ofnational standardization practices, including standards, technical regulations, conformity
assessment andmetrology.
(b) Sanitary andphytosanitary regulations
70. ThreeinstitutionsareresponsibleforsanitaryandphytosanitarymeasuresinChile.TheMinistry
ofAgriculture, through theAgriculture andLivestock Service (SAG), isresponsible foradministering
regulations concerning animal andplant health measures applied toimports andexports ofanimals,
plants, andtheirproducts; andanimal andplanthealth measures designed toreduce theriskofentry,
establishment orspread ofanimal diseases andplantpestsanddiseases. TheMinistry ofHealth, through
theEnvironmental Programme Department, isresponsible foradministering regulations concerning
sanitary measures toprotect human health, applied toimported andlocally produced foodstuffs; and
sanitary measures designed toavoid orreduce theriskofentry, establishment orspread ofepidemics
ofhuman diseases. TheMinistry oftheEconomy, Development andReconstruction, through the
National Fisheries Service, isresponsible foradministering regulations concerning sanitary measures
inthefisheries sector applied toimports andexports ofhydrobiological resources; measures designed
toreduce theriskofentry, establishment orspread ofpests ordiseases; andthevectors for
hydrobiological resources.35
34WTO document, WT/CTE/W/23, G/TBT/W/23, 19March 1996.
35LeydePescayAcuicultura,DecreeNo.430of1991,MinistryofEconomy,DevelopmentandReconstruction.WT/TPR/S/28 Trade Policy Review
Page 54
71. Inorder todetermine thesanitary andphytosanitary measures applicable totheentryofanimals,
plants andrelated products, ariskanalysis iscarried outtaking intoaccount theplace oforigin and
theproduct. Agricultural andforestry products mayenterthecountry following inspection, verification
ofcompliance withrequirements, andacheck toensure thatthesanitary certification issued bythe
exporting country isinconformity withtherelevant standards ofinternational scientific organizations.
72. Allagricultural products thatcould carry pestsordiseases require theauthorization oftheSAG
toenterthecountry. These products include allprimary agricultural andforestry products and,among
animal (livestock) products, some processed goods susceptible tothetransmission ofzoosanitary
problems. TheSAG evaluates alldocuments toassess compliance with national sanitary and
phytosanitary requirements before entry intothecountry. Incertain instances, inspections, laboratory
analysis andpost-entry quarantines mayberequired. TheMinistry ofHealth isresponsible forsetting
tolerancelevelsandcheckingresiduesofagrochemicalproductsinfoodstuffsconsumedinChile,whether
locally produced orimported. Forthispurpose, itusesthestandards laiddown intheCodex
Alimentarius, andinspects foods forthepossible presence ofillegal contaminants, veterinary or
pharmaceutical products, agrochemical residues, microbiological pathogens, andfoodadditives and
colouring agents.36
73. TheSAGandtheMinistry ofHealth accept phyto- andzoosanitary certificates issued byofficial
sanitary services incountries oforigin which follow theguidelines outlined byinternational scientific
organizations suchastheFAO, Commission forPhytosanitary Protection andtheInternational Office
ofEpizootics (OIE). TheNational Fisheries Service alsoaccepts certificates issued bythecompetent
authorities inthecountry oforigin forproducts suchaslivespecies, bait,foodandother inputs used
infisheries. However, theSAG, theMinistry ofHealth, andtheNational Fisheries Service reserves
therighttoverify thesanitary conditions outlined inthecertificate.
74. Agricultural andforestry products intransit aresubject tospecial treatment. Ariskanalysis
iscarried outtaking intoaccount variables including thesanitary conditions ofthecountry oforigin,
thetransit route, thesanitary services enroute andtheconditions oftransportation.37Thelegislation
alsostipulates theports ofentry andexit.38
75. Thepresent legislation allows theapplication oftheWTO Agreement onSanitary and
PhytosanitaryMeasures,henceitisnotconsiderednecessarytoamendthenationallegislation.However,
amending legislation regarding foodstandards hasbeendrafted onthebasisoftheCodex Alimentarius;
thisdraftlegislation iscurrently being reviewed bytheMinistry ofHealth andwillenter inforce in
November 1997. Inaddition, newregulations regarding thecontrol ofhigh-risk diseases for
hydrobiological species willbeenacted. These newregulations aretobeinaccordance withtheWTO
Agreements onSanitary andPhytosanitary Measures andtheAgreement onTechnical Barriers toTrade.
76. Apart from theWTO, Chile isamember ofseveral regional sanitary organizations. Ithas
alsosigned several multilateral andbilateral phyto- andzoosanitary agreements (Table III.8andIII.9);
anadditional agreement isbeing negotiated withEuropean Union. These agreements areaimed at
eliminating barriers totradebyachieving greater transparency instandards; enabling products toenter
36WTO Document G/SPS/W/39, 6December 1995.
37Resolution No.985of1985 (Agricultural andLivestock Service), andResolution No.139of1986
(Agricultural andLivestock Service).
38Exempt Decree (Decreto exento) No.115of1996 (Ministry ofAgriculture) andDecree No.18of1996
(Ministry ofAgriculture).Chile WT/TPR/S/28
Page 55
without endangering thesanitary situation oftheparties; andobtaining more detailed knowledge of
thesanitary situation inothercountries, while providing information onthesanitary situation inChile.39
77. According totheauthorities, Chile seeks toachieve thefullest possible harmonization with
international sanitary andphytosanitary standards, following suchguidelines inamanner compatible
withthecountry 'ssanitary andphytosanitary needs.
Table III.8
Main phyto andzoosanitary organizations towhich Chile belongs
Title Type ofconvention
oragreementStarting
dateMember countries
International Office ofEpizootics (IOE) Animal health 1924 IOEMembers
FAO International Plant Protection Convention (IPPC) Plant health 1952 FAO Convention Members
FAO/WHO Codex Alimentarius Commission (Codex) Food safety 1962 CODEX Members
Interamerican Institute forAgricultural Cooperation (IICA) Plant andanimal
health programmes1980 IICA Members
Source: WTO Secretariat.
Table III.9
Main bilateral andmultilateral phyto andzoosanitary agreements
Country Type ofagreement Starting date
Bilateral
Argentina Joint Presidential Declaration, Economic Complementarity Agreement, with
twoArticles establishing thatthesignatory countries willsignplant health and
animal health agreements.
Bi-national Agreement ontheregulations forthetransit ofanimals, poultry
andanimal products from andtothirdcountries.1991
1992
Brazil Phytosanitary andZoosanitary Protocol 1995
Bolivia Phytosanitary Agreement, partoftheEconomic Complementarity Agreement 1994
Colombia Phytosanitary andZoosanitary Agreement, partoftheEconomic
Complementarity Agreement1993
Peru Phytosanitary andZoosanitary Agreement 1995
Venezuela Phytosanitary andZoosanitary Agreement 1995
Ecuador Phytosanitary andZoosanitary Agreement, partoftheEconomic
Complementary Agreement1995
Cuba Phytosanitary Agreement 1993
Mexico Phytosanitary Protocol 1991
Canada Phytosanitary Agreement 1991
United States Phytosanitary, Cooperation Agreement between USDA-SAG-ASOEXPORT 1979
NewZealand Phytosanitary Agreement 1990
Australia Phytosanitary Memorandum 1993
Philippines Phytosanitary Memorandum 1989
China Phytosanitary Memorandum
Supplementary Phytosanitary Memorandum1990
1994
Brazil Agreement onPlant andAnimal Health 1996
Multilateral
WTO Members WTO Agreement onSanitary andPhytosanitary Measures 1995
Argentina, Brazil,
Chile, Paraguay
andUruguayMinisterial Council forPlant Health oftheSouthern Cone -COSAVE 1990
Argentina, Brazil,
Chile, Paraguay
andUruguayMinisterial Council forAnimal Health oftheSouthern Cone -CORESA 1991
Bolivia, Chile and
PeruPlant Health Agreement 1991
Source: WTO Secretariat.
39WTO document G/SPS/W/38, 6December 1995.WT/TPR/S/28 Trade Policy Review
Page 56
(c) Marking, labelling andpackaging
78. Chile'snational requirements regarding marking, labelling andpackaging arebased on
international requirements. However, when thisisnotpossible, national requirements arenotintended
tocreate abarrier totrade.
79. Legislation regarding marking, labelling andpackaging isissued bytheMinistries ofHealth,
Agriculture, andEconomy. Such legislation regulates thelabelling ofimported foodproducts, the
entrance ofwood packaging materials, winezoning (appelation )andthelabelling ofpesticides.
80. Imported foodproducts oflowsanitary riskhavetobelabelled inthecountry oforigin, with
theauthorization number andthedateonwhich theHealth Service authorized thefirstimportation
oftheproduct intoChile.40Theaimofthisrequirement istoexpedite theentry process, sinceproducts
labelled inthiswaydonothavetoundergo sanitary clearance.41However, these products mayhave
tocomply withother, normal labelling requirements.
(xv) Government procurement
81. Chile hasnotadopted theWTO Plurilateral Agreement onGovernment Procurement.
82. Since theprevious review in1991, there have been nomajor changes regarding public
procurement inChile; theexception isprocurement intheareaofpublic works, where newlegislation
hasbeenpassed. Chile lacksasingle procurement system orprocedure forthepublic sector. Ingeneral,
public procurement should observe theprinciples ofnon-discrimation, efficiency, transparency and
integrity embodied inconstitutional andlegalstandards. TheOffice oftheComptroller-General, an
independent agency, isresponsible forensuring thatthese principles areobserved. Public entities and
municipalities (local governments) areresponsible fortheirownprocurement and,according tothe
authorities, moreautonomy hasbeengranted totheseentities. According totheauthorities, state-owned
enterprises thatarerunonacommercial basis, determine theirownprocurement policies andpurchase
independently,fromnationalorforeignsources,applyingthesamecriteriaasusedbyprivateenterprises.
TwoStateinstitutions, theStateDirectorate ofProcurement (DAE)42,andtheNational Health Supplies
Centre (CENABAS) areincharge ofacquiring, storing anddistributing movable goods (bienes muebles )
necessary forthefunctioning ofthePublic Administration. TheDirectorate willpurchase adomestically
produced goodrather thanaforeign good, ifthenational goodisofequal priceandquality totheforeign
one.43Theauthorities noted thatitisnotmandatory forpublic entities topurchase from these
twoinstitutions; only2-3percentoftotalpublic procurement wasundertaken bytheDAE inthepast
three years.
40Goods considered oflowsanitary riskare:biscuits; noodles; processed cereal; honey andsugar; coffee,
teaandmate; salt,dehydrated soups; spices; candy; edible oilsandfatsofanimal andvegetable origin; bread;
snacks; pickled products; sauces without eggsormeat; fresh, sweetened, dehydrated orpreserved fruitand
vegetables; marmalades andsweets; non-alcoholic beverages except natural fruitandvegetable juices; and
sweeteners. Exempt Resolution (Resolución exenta) No.600,Ministry ofHealth, November 1993; Exempt
Resolution No.1089, Ministry ofHealth, July1996, Exempt Resolution No.173, February 1994.
41Decree No.1.655, 13August 1993.
42Law No.353, LeyOrgánica delaDirección deAprovisionamiento delEstado (1960).
43Article 3,LawNo.353, LeyOrgánica delaDirección deAprovisionamiento delEstado (1960).Chile WT/TPR/S/28
Page 57
83. Themethod ofpurchasing (public orprivate tender, ordirect purchase) isdetermined according
tothevalue ofthecontract andthebuyer (Table III.10). However, direct purchasing isallowed,
whatever thevalue ofthecontract, inanemergency situation, when products havetobebought, or
imported fromanexclusive supplier.44According totheChilean Civil Code, foreigners areallowed
toparticipate inpublic tenders without anyrestrictions.45
Table III.10
Public purchasing procedures according tovalue ofpurchase
Public tender Private tender Direct purchase
Public service Higher thanUS$150.000 LessthanUS$150.000 LessthanUS$10.000
Municipalities Higher thanUS$10.000 LessthanUS$10.000
Source: Government ofChile (November 1996).
84. Given thedecentralization ofpublic purchases theChilean authorities wereunable tosupply
theSecretariat withdetailed dataregarding totalpublic sector purchases orimports. Themostrecent
datashow that,in1994, central government purchases alone amounted tosome US$2.5 billion, of
which roughly 56percentwasspent onconstruction, 26percentonother services and18percent
ongoods.
(xvi) Local-content schemes
85. Theautomotive industry istheonlysector inChile affected byalocal-content scheme.
Local-content requirements fortheautomotive sector havenotchanged since 1990 (Chapter IV(4)).
(xvii) Anti-dumping andcountervailing measures
86. Thelawsregulating anti-dumping andcountervailing measures inChile, aretheAgreement
onImplementation ofArticle VIoftheGATT 1994, theAgreement onSubsidies andCountervailing
Duties, Article VIofGATT 1994, andtheWTO Agriculture Agreement, allofwhich apply withthe
force oflawinChile since theenactment oftheMarrakesh Agreement (Chapter II),LawNo.18.525
anditsregulation Decree No.575.46According totheauthorities, thelegislation isinaccordance with
theWTO Agreements, theonlyexception being thatthenational legislation lacks: (i)asystem ofjudicial
review tochallenge administrative decisions; (ii)asystem foraprompt refund, uponrequest, ofany
dutypaidinexcess oftheactual margin ofdumping, according toArticle 9.3.2. oftheAgreement
onImplementationofArticleVIoftheGATT1994;and(iii)acceleratedinvestigationsfornewexporters
whohavenotexported theproduct toChile, during theperiod ofinvestigation. However, adraftlaw,
44Law No.353, LeyOrgánica delaDirección deAprovisionamiento delEstado (1960).
45Article 57,Código Civil Chileno ,29October 1993.
46LawNo.18.525, Official Journal, 30June1986; andDecree No.575oftheMinistry ofFinance, Official
Journal, 20August 1993. Thislegislation hasbeen notified totheCommittees onAnti-Dumping Practices and
SubsidiesandCountervailingMeasures(WTOdocumentG/ADP/N/1/CHL/1-G/SCM/N/1/CHL/1,7April1995).WT/TPR/S/28 Trade Policy Review
Page 58
nowbeing discussed inCongress, provides fortheintroduction ofthese provisions.47Thedraftlaw
alsoextends thelength oftheinvestigation period from90to150days, withthepossibility ofextension
uptoamaximum of180days.
87. According totheChilean legislation, countervailing andanti-dumping duties maybeimposed
onimports ofgoods whose entry intothecountry causes orthreatens tocause serious injury toChilean
industry byentering atreduced prices asaresult ofartificial conditions suchassubsidies anddumping,
intherespective home markets oftheexporters.
88. TheNational Commission incharge ofinvestigating theexistence ofdistortions intheprice
ofimported goods isalsoresponsible forproposing tothePresident, through theMinister ofFinance,
theapplication ofcountervailing duties, anti-dumping duties, minimum customs values ortariff
surcharges, where relevant.
89. TheCommission comprises theEconomic National Prosecutor 'sOffice: tworepresentatives
oftheCentral BankofChile; arepresentative oftheMinistry ofFinance, theMinistry oftheEconomy,
Development andReconstruction, theMinistry ofForeign Affairs, andtheMinistry ofAgriculture,
andtheNational Director ofCustoms. TheCentral BankofChile actsprovides theTechnical Secretariat
forthisCommission.
90. TheCommission isrequired toconduct aninvestigation when thecomplainant isableto
demonstrate thatadistortion ofprices exists andthatitcauses significant actual orimminent prejudice
tonational production. Thecomplaint, submitted totheCommission viatheTechnical Secretariat,
hastoindicate thedistortion andthemanner inwhich itcauses orthreatens material injury tothe
domestic industry affected. TheCommission 'sroleconsists ofverifying andcorroborating whether
thedistortion exists and,ifso,whether itinjures orthreatens toinjure national production. The
complaint hastobesubmitted byanindustry group orinthename ofanindustry group fulfilling the
"standing" requirement contemplated inthelegislation. However, theCommission may, onitsown
initiative andunder special circumstances, conduct aninvestigation when itpossesses therelevant
information.48
91. TheCommission hasoneyeartoundertake theinvestigation, however untilnow,investigations
havetypically taken around sixmonths. Theinterested parties receive aquestionnaire onthefirstday
oftheinvestigation andhaveamaximum of30daystorespond. However, theresponse timemay
beextended attherequest oftheinterested parties. Throughout theinvestigation theparties mayappear
before theCommission topresent evidence. Before reaching afinaldecision, theCommission notifies
theinterested parties oftheessential elements tobeconsidered inreaching afinalconclusion.
92. IftheCommissionfindsthattheimportsunderinvestigationcauseorthreatenactualorimminent
serious injury tothedomestic industry andthatitsprincipal cause isapricedistortion, itcanrecommend
theestablishment ofminimum customs values, surcharges, anti-dumping duties orcountervailing duties.
Themeasure recommended maynotbegreater thanthemargin ofprice distortion andisapplied for
47Thebillhadatthetimeofwriting (mid-1997) been approved bytheChamber ofDeputies andwasbeing
discussed intheSenate.
48Insuchcases, theinvestigation follows thesame procedures established forinvestigations upon complaint.Chile WT/TPR/S/28
Page 59
onlyoneyear.49Ifitisnotpossible onthebasis oftheinformation collected toconclude thatthere
areprice distortions orthatthese distortions aregiving risetotheeffects indicated above, the
investigation isterminated.
93. Provisional anti-dumping duties andcountervailing duties mayalsobeestablished during the
course oftheinvestigation. Provisional duties maynotbeapplied within 60daysofthedateofinitiation
oftheinvestigation.Atanytimeduringaninvestigation,measuresadoptedprovisionallycanbemodified
orrepealed bytheauthorities. Intheevent that,oncompletion ofaninvestigation, theCommission
decides thatthereisnopricedistortion, orthatdistortions doexistbutdonotcause orthreaten serious
injury tothenational economy, persons affected byprovisional anti-dumping duties andcountervailing
duties mayapply fortherefund ofsuchpayments, including interest.
94. Asshown inTable III.11, intheperiod 1990-96, Chile imposed definitive anti-dumping and
countervailing measures inonlytencases, outofatotalof22investigations initiated.50
Table III.11
Investigations anddefinitive applied countervailing andanti-dumping measures classified bycategory ofproduct, 1990-1996
Definitive measure
Category Total investigations
initiatedCountervailing
dutiesAnti-dumping
dutiesTotal
Agriculture 4 1 1 2
Food 1 0 0 0
Electrical, mechanical orfuel-
consuming articles3 1 0 1
Capital goods 0 0 0 0
Leather andfootwear 1 0 1 1
Forest, paper andwood 0 0 0 0
Dairy 2 1 0 1
Metals andmetal manufactures 3 0 1 1
Mining 1 0 0 0
Tyres, rubber andplastic 0 0 0 0
Fisheries 0 0 0 0
Chemicals 2 0 2 2
Textiles 2 2 0 2
Glass andceramics 0 0 0 0
Total 22 5 5 10
Source: Government ofChile.
49After ayear, ifthecomplainant considers thatthemeasure should bekeptinplace, thecomplaint canbe
re-submitted totheCommission.
50Allthese measures have been notified totheSecretariat.WT/TPR/S/28 Trade Policy Review
Page 60
(xviii) Safeguard actions
95. Chile hasnolawsorregulations forimplementing safeguards actions under Article XIXof
theGATT.51Asamember oftheLAIA, Chile mayapply transitory andnon-discriminatory safeguard
clauses, since procedures fortheapplication ofsuchmeasures arestipulated ineachpartial-scope
agreement.52Since 1990, within theframework oftheLAIA, Chile tookonesafeguard action (against
Brazilian veneer sheets during 1992-95).
(xix) Measures implemented inexporting countries
96. Asof1990Chilehasnotnegotiatedanyvoluntaryagreementsthatwouldlimitexportsbyforeign
partners.
(xx) Balance-of-payments measures
97. Chile doesnotmaintain anyimport restrictions forbalance-of-payment purposes.
(xxi) Import privileges extended tofreezones
98. There aretwofreezones inChile, Iquique andPunta Arenas. Allforeign goods inthefree
zones benefit from dutyandVAT exemptions, since merchandise inthefreezones isconsidered to
beoutside theChilean customs territory.
(3) Measures Directly Affecting Exports
(i) Registration anddocumentation
99. Allexporters mustnormally register attheCentral Bank bycompleting arecord card(tarjeta
deantecedentes ),however, where exporters arelocated outside Santiago, registration takes place at
acommercial bank. Thesoleexport document required oftheexporter atthetimeofshipping isthe
shipment order (orden deembarque ).Theshipment order, issued bycustoms broker, must be
countersigned byanagent oftheNational Customs Service before theshipment canproceed. Anexport
declaration (declaración deexportación )should beprovided tocustoms 25daysafterexportation, for
customs tocertify thattheshipment islegal. Thedocuments required toprocess theshipment order
andtheexport declaration, which canbearranged through acustoms broker, include aletter ofcredit,
aninsurance policy, apro-forma invoice, andacommercial invoice. Additional export documents
required onlyforcertain shipments include adocument describing volume, size,weight, etc.ofthe
merchandise being shipped (planilla decalibraje ),required fortheexport ofsalmon, wood, vegetables,
fruitandfrozen fruit; adocument certifying theexport revenue (planilla deingreso decomercio visible );
areport onchange invalue (informe devariación devalor);anexport document (informe de
exportación )and,where necessary, certificates required byimporting countries, suchascertificates
oforigin orsanitary certificates. Certain foreign countries alsorequire thatthesedocuments beendorsed
withaconsular visa.
51SeeWTO document G/SG/N/1/CHL/1, 26April 1995.
52Under theLAIA, safeguard measures restricting imports could beapplied tocorrect balance-of-payment
imbalances ortoprotect local producers from severe market disruptions (GATT, 1991), however, these would
stillneed toconform toWTO requirements.Chile WT/TPR/S/28
Page 61
100. Thedocument certifying theexport revenue isissued byacommercial bankandsenttothe
Central Bank toallow theinflow offoreign exchange tobemonitored. Theexport document, issued
bytheCentral Bank andvalid for90days, includes information about theexporter andtheexport
transaction. Itisonlyrequired when theexport price hasnotbeendetermined before theshipment
leaves Chile. Inthiscase,areport onthechange ofvalue ofthemerchandise exported mustsubsequently
besubmitted totheCentral Bank toshow thedefinitive value atwhich themerchandise wassold.
101. Certificates oforigin areusually required forgoods subject topreferential treatment inforeign
markets. These certificates areissued bydifferent institutions, depending ontheproduct. Forinstance,
certificates oforigin forindustrial andmining products areissued bytheSociety fortheDevelopment
oftheManufacturing Industry. Certificates oforigin within theframework oftherecent free-trade
agreementwithCanadawillbeissuedbytheproducersorexportersthemselves.SinceJuly1997sanitary
certificates foragricultural, livestock andtimber exports havebeenissued bytheNational Chamber
ofCommerce,specificallytheExportersAssociation.TheexceptionsareexportstotheEuropeanUnion
andproducts withanalcoholic content; inthese cases, certificates willcontinue tobeissued bythe
Agriculture andLivestock Service (SAG).
102. Export formalities carried outbycustoms (preparation andissue oftheshipment order and
export declaration) takeamaximum of24to48hours.
(ii) Export taxes, charges andlevies
103. Chile doesnotapply taxes, charges orlevies onexports.
(iii) Minimum prices
104. Reference prices forexports arenotused.
(iv) Export prohibitions andother controls
105. According toLawNo.18.840, allcommodities canbeexported freely. Forinstance, atpresent
theMinistry ofFinance maynotprohibit exports ofagricultural goods evenincaseofscarcity.53
However, theMinistry ofFinance isempowered toprohibit exports tocountries thathaveimposed
restrictions ontrade withChile.
106. Export prohibitions orcontrols doapply togoods whose trade isregulated bytheConvention
onInternational Trade inEndangered Species (CITES), which, asaninternational treaty, takes legal
precedence overLaw18.840. Goods included inAppendices I,II,andIIIoftheConvention require
anexport permit. Thispermit isgranted bytheNational Forestry Corporation (CONAF) which follows
theguidelines laiddown byCITES. Chile alsoprohibits exports ofgoods suchas:(i)anthropological,
archaeological, ethnic, historic andpaleontological objects andtheirparts; (ii)sawn wood without
anti-stain treatment (sinbaño antimancha );(iii)Chilean pineandpehuen (both under thebotanical
name araucaria araucana );and(iv)psychotropic substances andother chemicals.
53Law No.18.840, LeyOrgánica Constitucional delBanco Central ,10October 1989, modified by
LawNo.18.901 of6January 1990; Law No.18.970 of10March 1990; andLaw No.19.041 of
11February 1991.WT/TPR/S/28 Trade Policy Review
Page 62
107. Chile hassubscribed toother international conventions including theProtocol ofMontreal (on
ozone-depleting substances), andtheBasel Convention (onhazardous waste), which could result in
theprohibition ofcertain exports. Chile alsoapplies traderestrictions inconformity withUnited Nations
sanctions.54
(v) Export licensing
108. Chile doesnothaveanexport licensing regime. NoChilean exports aresubject toexport quotas
thatwould require administration bylicences.
(vi) Export quotas
109. Theimposition ofexport quotas isprohibited bylawinChile.55
(vii) Export cartels
110. TheCompetition Lawprohibits allcartels inChile, including export cartels (section (4)(iv)).
ThePresident oftheRepublic isempowered, afterreceiving areport from theSuperior Council of
National Security, theCouncil oftheCentral Bank andtheChilean Copper Commission, todecree
amonopoly fortheexport ofcopper anditsby-products foruptooneyearatatime, ifthereisserious
instability intheinternational market orinternational conflicts which prevent individual producers from
exporting (section (2)(xii) ofthischapter andChapter IV(3) Mining).56
(viii) Voluntary restraints, surveillance andsimilar measures
111. Chile doesnotapply voluntary export restraints oranysimilar measures.
(ix) Measures maintained byimporting countries
112. Theauthorities noted thatalthough market access conditions forChilean exports aregenerally
good,certainpoliciesappliedinimportingcountriesnegativelyaffectthedevelopmentofChile'sexports;
examplesincludetariffescalation,non-tariffmeasuressuchastechnicalstandards,eco-labelling,sanitary
andphytosanitary measures, andanti-dumping measures. Existing barriers inareas suchastextiles
andclothing havealsobecome athreat tothedevelopment ofthese sectors inChile.
54Within theframework ofSecurity Council resolutions, economic sanctions arecurrently applied toIraq
(Resolution No.1051).
55Law No.18.840, LeyOrgánica Constitucional delBanco Central deChile ,10October 1989.
56Article No.18ofLeyOrgánica delaComisión Chilena delCobre .Chile WT/TPR/S/28
Page 63
(x) Export subsidies
113. Chile hasnotified three export subsidies totheCommittee onSubsidies andCountervailing
Measures: (i)thesimplified dutydrawback; (ii)thesystem ofdeferred payment ofcustoms duties,
fiscal credit andother taxbenefits; and(iii)themotor vehicle statute. Theauthorities arecommitted
tophasing outthese measures inaccordance withtheWTO Agreement.57
114. Thesimplified dutydrawback system, established in1985, benefits exporters ofnon-traditional
minor products orthose whoexport them asinputs ingoods thatareinthemselves excluded from
entitlement totherefund.58Non-traditional minor exports arethose exports whose f.o.b. value did
notexceed US$2.5 million during 1983-84 orUS$5 million in1990. Products thatdonotqualify
asnon-traditional minor exports arecompiled inalistofaround 200items, suchascopper, cellulose,
fishflour andfruit, which comprise some 90percentofChile'strade.
115. There aretwodistinct mechanisms. Thefirstallows exporters toobtain reimbursement of
10,5or3percentofthef.o.b. value ofthefinalgoods exported, depending onthetotalvalue of
goods exported. Thesecond provides forreimbursement atthesameratesforinputs ofdomestic origin
orimported against payment ofimport duties ortaxes (nationalized) used orconsumed inthe
manufacture, processing, orproduction ofexported goods. Inthiscase, reimbursement isclaimed
onthenetinvoiced value oftheinputs oncethegoods havebeenexported.59
116. Thelimits (i.e.maximum values ofexports) which determine therateoftherefund areset
eachyearandadjusted according toapriceindex calculated bytheCentral Bank. In1996a10percent
refund wasallowed onexports notexceeding US$11.6 million, 5percentonexports notexceeding
US$17.4million,and3percentonexportsnotexceedingUS$20.9million.Ifanexportingfirmexceeds
thelimitofonetranche, itautomatically moves intoanother. When exports inonecalendar yearexceed
allthelimits, thesegoods areexcluded fromthescheme. Alistofsuchitems isupdated andpublished
eachyearbefore 31March byadecree issued bytheMinistry ofEconomic Affairs, Development and
Reconstruction andendorsed bytheMinistry ofFinance.
117. Exporters mayopttoparticipate ineither version ofthesystem, butnotboth. However,
exporters excluded from thefirstversion, because exports inthepreceding yearhaveexceeded the
limits, mayonlybenefit from thesecond.
118. Thereimbursement granted under thesimplified dutydrawback isnotequivalent totheduty
paidontheimported inputs; itmayinpractice belower orhigher, hence thepossible subsidy component
thathasbeennotified. Moreover, thevalue ofthesubsidy component islikely tohaveincreased over
time, given thattariff rateshavebeenreduced since 1985. There arenoofficial calculations ofthe
subsidy component ofthesimplified refund system; however, thetotalamount refunded in1995was
US$166.5 million.60
57WTO documents G/SCM/N/2/CHL, 2May 1995; andG/SCM/N/2/CHL/Suppl.1, 16October 1995.
58Law No.18.480, Official Journal No.32.351 of19December 1985.
59Thereimbursement corresponds toanestimated percentage ofpaidtaxes (indirect) onthebasis ofthenet
invoiced value ofinputs once thegoods have been exported.
60WTO document, G/SCM/N/3/CHL, G/SCM/N/16/CHL, 7November 1996.WT/TPR/S/28 Trade Policy Review
Page 64
119. LawNo.18.634 of1987 established asystem ofdeferred payments ofcustoms duties, fiscal
credit andother taxbenefits forimporters ofcapital goods andforthefirstbuyer ofadomestically
produced capital good. Capital goods covered bythesebenefits include machinery, vehicles, equipment
andtoolsdirectly orindirectly intended fortheproduction ormarketing ofgoods orservices, which
haveaminimum lifeofthree years. Thevalue ofthese goods must notbelessthanUS$3,716 or
US$4,708 inthecaseofvehicles.61
120. Exporters ofgoods andservices whousecapital goods acquired under thedeferred payment
ortaxcredit schemes mayreduce therepayment oftheinstalments andevenwrite offthedebt. Such
reductions depend upon thefirms'export performance, asdetermined bytheratiooftotalexports to
totalsalesinthetwoyears prior tothedateonwhich thedebtfallsdue.62
121. Themotor vehicle statute (Law 18.483) allows theautomotive industry tobenefit from the
partial ortotalreduction ofimport duties aswellasfiscal credits fortheuseandexport ofnational
components (Chapter IV(4)).
(xi) Duty andtaxconcessions
122. ChileanexporterscanobtainareimbursementoftheVATpaidonacquireddomesticorimported
goods andservices usedintheproduction process.63Reimbursement ofVAT amounted toanaverage
ofUS$13 million intheperiod 1990 toSeptember 1996.
123. Law18.708 establishes adutydrawback system which benefits allexporters whohaveused
imported inputs. Exporters arereimbursed forimport duties paidonallinputs incorporated orconsumed
during theproduction process. Payments ofsurcharges andcountervailing duties arenotreimbursed.
Asshown inTable III.12 theindustries thathavebenefited themostfromthisscheme since 1990are
petrochemicals andcertain designated manufacturing industries ("techno-industries").
124. Chile hasnotified asanexport subsidy asimplified drawback system which applies onlyto
minor exports ofnon-traditional items (section (x)above). Table III.13 shows totalreimbursements
tonon-traditional exporters under thesimplified dutydrawback system.
125. Chile hasalsonotified totheWTO asanexport subsidy ascheme whereby import duties on
capital goods tobeusedinproduction forexport canbepostponed (thesystem ofdeferred payments
ofcustoms duties, fiscal credit andother taxbenefits mentioned insection (x)). Under thisscheme,
payment ofimport duties maybedeferred uptoamaximum ofseven years andpaidinthreeinstalments,
theymaysubsequently bepartially ortotally reduced (seeabove).
61Vehicleswhoseexclusivefunctionistransportbyroadareonlyentitledtothesebenefitsiftheloadingcapacity
exceeds 2,000 kg.orthevehicle hasaminimum seating capacity of15persons (including thedriver).
62Law No.18.634, Diario Oficial ,5August 1987.
63Article36ofDecreeLaw825/74,asregulatedbySupremeDecreeoftheMinistryofEconomy,Development
andReconstruction No.348, Official Journal, 28May 1975.Chile WT/TPR/S/28
Page 65
Table III.12
Value ofrebate onimported inputs, bysector, 1990-95
(US$ '000andpercent)
Sector 1990 1991 1992 1993 1994 1995
US$'000
Value ofimported inputs benefiting from
thescheme25,597 33,870 39,117 22,572 26,100 43,400
Distribution bysector: Percent
Food 1.9 3.8 2.0 3.3 3.3 4.5
Forestry 1.0 1.3 1.0 1.8 2.8 2.2
Fruit 4.9 6.8 4.7 6.9 5.6 5.1
Mining 19.7 36.6 20.1 24.9 23.9 16.3
Milling 0.0 0.0 0.0 0.1 0.0 0.0
Fishing 5.0 3.8 2.9 3.2 2.6 6.7
Petro-chemicals 52.1 36.2 55.0 41.4 40.8 22.9
Techno-industry 15.3 11.5 14.3 18.4 20.9 42.2
Textiles andclothing 0.0 0.0 0.0 0.0 0.0 0.0
Source: Servicio Nacional deAduanas .
Table III.13
Reimbursements tonon-traditional exporters under thesimplified dutydrawback system
(US$ million)
Criteria 1991 1992 1993 1994 1995
10percentscheme 80.1 104.6 110.9 119.7 133.2
5percentscheme 4.5 7.8 8.6 10.2 12.8
3percentscheme 0.0 0.4 1.5 1.8 2.0
General drawback scheme 11.8 26.2 30.3 18.0 18.5
Total reimbursements 96.4 139.0 151.3 149.7 166.5
Source: Tesorería General delaRepública .
126. Inaddition, industrial andmanufacturing firms maystore imported goods inprivate export
warehouses without paying duties orVAT, aslongasthese goods areexported within amaximum
period of180daysafterundergoing aprocess oftransformation.64Inputs imported under thisregime
64Privateexportwarehousescanbeestablishedanywhereinthecountry,andtheprincipleofextra-territoriality
does notapply tothese warehouses.WT/TPR/S/28 Trade Policy Review
Page 66
cannot exceed more than50percentofthef.o.b. value ofthefinalgood. However, exceptions to
thislimitarepossible onrequest bytheinterested party. Inprinciple, theprocess ofproduction should
notexceed 180days, butthistime-frame maybeextended byDirector ofNational Customs.65
127. Forfinalgoods processed inaprivate export warehouse andsoldinChile, duties arepaidon
theinputs used. Inaddition, goods thathavebeenstored inawarehouse, which aretransferred without
processing, aredutiable at11plus1percentonthec.i.f.value. Theauthorities noted thatthisregime
isunderutilized; in1996only90exporters wereusing itandinputs imported intowarehouses amounted
toUS$50 million.
128. Mining andpetroleum refineries benefit fromasimilar regime. These industries enjoy duty
andtaxconcessions onimported rawmaterials, aslongasthese areexported afterbeing processed.
However, thelegislation provides forexceptions tothisgeneral rule. Forinstance, theDirector of
National Customs canauthorize: (i)thatthestipulated timeframe processing andexporting (which
bylawshould notexceed 60days) canbeextended; (ii)thattheprocess ofproduction cantakeplace
outside theprivate export warehouses; (iii)thattheimported rawmaterials canbemixed withdomestic
materials; and(iv)thatoneormore oftherefined by-products canbesoldlocally66
(xii) Export finance
129. There arenopreferential interest ratesforexport activities. However, theProduction Promotion
Corporation (CORFO) provides financing atmarket rates, through Chilean andforeign commercial
banks, toimporters ofnon-traditional Chilean exports. Thistypeoffinancing isonlyavailable for
non-traditional exports (allexports except copper, iron, cellulose, fishflour, andfruits). CORFO
channels therequired funds forthese credit linesthrough private financial institutions, anddoesnot
itself compete withtheprivate sector intheprovision offinance.
(xiii) Export insurance andguarantees
130. There arenopreferential insurance mechanisms forexports.
131. TheGuarantee Fund fornon-traditional exporters, established in1987, guarantees upto
50percentofbothpublic andprivate loans.67Thisfundcanbeusedbyexporters whoqualify for
thesimplified drawback system fornon-traditional minor exports andwhose average exports (f.o.b.
value) havenotexceeded US$16,723,785 inthetwoprevious calendar years.
132. According totheauthorities, theFund hasbeenunderutilized inthelasttwoyears. In1995,
three guarantees were approved amounting toUS$100,000 andin1996, twoguarantees amounting
toUS$70,000.
65Decreto Supremo deHacienda No.224Official Journal, 28June 1986.
66Decreto Supremo deHacienda No.135Official Journal, 18April 1983.
67Law No.18.645 of1987. TheGuarantee Fund wasinitially created in1987 with anendowment of
US$5 million andismanaged bytheState Bank ofChile.Chile WT/TPR/S/28
Page 67
(xiv) Export promotion andmarketing assistance
133. TheDirectorate ofExport Promotion andMarketing Assistance (PROCHILE), which ispart
oftheMinistry ofForeign Affairs, operates programmes aimed atbroadening theexport baseand
increasing thecompetitiveness ofChilean exports. PROCHILE supports exporters, including newly
andalready established exporting firms, whoareexploring newmarkets. PROCHILE provides logistic
support, information regarding markets, andfinancial support tocontract theservices ofspecialized
consultants, ifrequired. Atpresent, PROCHILE isproviding support tojustoveronethird ofall
exportingcompanies.ManyofPROCHILE'sprogrammesareco-financedbyprivateenterprises,through
theExport Promotion Fund.68
134. Since thelastTrade Policy Review ofChile, special funds havebeenestablished topromote
certain activities. Forexample, in1993, onesuchfunds, "Market International", wascreated tomarket
Chile internationally, andanAgricultural Fund wascreated in1995tospecifically promote agricultural
exports. Since 1990therehasalsobeenanexport development programme fortheautomotive industry,
aimed atincreasing theannual volume ofexports beyond theaverage for1989 and1990. This
programme enables firms assembling vehicles from CKD units tobenefit from anextension ofthe
period during which taxconcessions canbegranted (section (x)above).69
135. In1996, theCORFO implemented aprogramme topromote theadoption ofinnovative
management techniques andenhance production quality insmall andmedium-sized firms exporting
manufactured goods orsoftware.70CORFO co-finances theservices ofmanagement consulting firms
withabudget ofUS$847,000 forthisproject; firms areeligible forthisincentive onlyonce. The
Chilean authorities notified thisprogramme asasubsidy totheCommittee onSubsidies and
Countervailing Measures.71
(xv) Export performance requirements
136. Certain dutyconcessions onimported automotive parts arelinked tothequantity orvalue of
exports bytheautomotive industry; certain taxconcessions forvehicle assemblers arealsolinked to
export performance (Chapter IV).
68TheExport Promotion Fund oftheGeneral Directorate ofInternational Economic Affairs (abody ofthe
Ministry ofForeign Affairs) isco-financed byprivate enterprises. PROCHILE ispartoftheGeneral Directorate
ofInternational Economic Affairs.
69Forfirms participating intheexport development programme, thedatefrom which thetaxcredit starts
todecrease by10percentage points perannum waspostponed untilJanuary 1996. Theprovision istoremain
ineffect forfirms whose excess from theyear1991 totals atleastthree times theamount ofexcess taxcredit
granted tothem inrespect oflocal content (Article 10,LawNo.18.483, Diario Oficial, 28December 1985,
asamended byLawNo.19.090).
70Support Programme fortheManagement ofExport Firms (PREMEX), Resolution No.429, CORFO,
9August 1996.
71WTO document G/SCM/N/3/CHL -G/SCM/N/16/CHL, 7November 1996.WT/TPR/S/28 Trade Policy Review
Page 68
(xvi) Freezones andtax-free areas
137. Thefreezones inChile werecreated topromote regional development andexport industries.
In1975 twofreezones were created, oneinIquique andanother inPunta Arenas. Thepreferential
regime applied tofreezones applies alsotomanufacturing industries established inArica.72
138. Most foreign products canbeimported intothefreezones withtheexception ofarms, their
parts, ammunition andallother products thatthreaten public morals, safety andnational security.
Mining andfishprocessing activities cannot operate under thefree-zone regime. However, themining
industry canoperate under thePrivate Export Warehouses regime (seeabove, section (xi)).
139. Benefits granted toindustries established inthefreezones include: (i)theexemption from
payment oftariffs, charges, surcharges, VAT andother additional taxes (sales andservice tax,and
income taxonfinancial transactions); (ii)theexemption fromotherimport requirements (e.g.provision
ofthenormal import document); (iii)adutydrawback oninputs incorporated indomestically
manufactured merchandise thatislaterexported toafreezone; (iv)exemption frompayment ofVAT
onoperations undertaken byadministrators andusers ofthezones (within thezone); and(v)exemption
from payment ofthefirstcategory income taxoncapital returns.
140. Firms located inthefreezones maystore, transform, finish ormarket merchandise. However,
most ofthefirms located inthefreezones aremarketing companies, rather thanmanufacturing
operations; in1996, 96percentofthefirms established inthefreezones ofIquique andArica were
marketing companies.
141. Merchandise canbeexported orforwarded without restriction fromthefreezones. Merchandise
mayalsobeexported toChile, subject tothegeneral andspecial legislation thatwould apply ineach
case.73Duties onassembled ormounted merchandise willonlybecharged ontheimported components.
142. Thefree-zone regime extends toneighbouring cities orregions, which arecalled "extended
freezones".74These cities orregions enjoy tariffandVAT exemptions when importing fromthefree
zones. However, imported merchandise, which hasnotbeenprocessed ortransformed inafreezone
before being transferred toanextended freezonearesubject toadomestic taxof5.6percent. While
Arica isanextended freezone, firms established inthiscitymaybegranted thesame benefits that
apply intheIquique freezone.
(4) Measures Affecting Production andTrade
(i) Adjustment orregional assistance
143. Since theprevious Trade Policy Review in1991, Chile hasnotimplemented anymeasures
orpoliciestosupportactivitiesnegativelyaffectedbyeconomicpolicies.However,theNationalTraining
andEmployment Service (SENCE) hasimplemented twoprogrammes tosupport themovement of
72Thefreezones enjoy theprinciple ofextra-territoriality; therefore, allgoods inthezones areconsidered
tobeoutside theChilean customs territory.
73Special legislation refers imports made under special regimes such assection 0oftheChilean tariff
(seeearlier).
74Regions IandXIIareconsidered extended freezones.Chile WT/TPR/S/28
Page 69
labour. Oneprogramme, begun in1990toassist displaced labour throughout thecountry, ismanaged
bythemunicipalities. Thesecond programme, begun in1995, assists workers inthecoal, textiles
andclothing sectors; thisisconsidered tobeapilotprogramme, which SENCE hopes toexpand to
other sectors oftheeconomy in1997.75
144. There arealsospecial programmes, such astheTechnical Assistance Fund (FAT) and
Development Projects (PROFO) toassist small andmedium-size enterprises.76These programmes
areintended toassist suchenterprises, inallsectors oftheeconomy, toadopt more efficient managerial
andmarketing techniques, andmore up-to-date technology. Producers ofexportables canalsobenefit
from these programmes, provided thevalue oftheirexports doesnotexceed US$2.5 million and
domestic salesdonotexceed US$3.14 million. CORFO manages these programmes andpartially
funds them.77In1997, Ch$10.7 billion were spent onthese programmes. Thebenefit granted to
individual firms under theprogrammes islimited. Under theFATamaximum of75U.F.(US$2,550)
maybeallocated toeachfirm, while under thePROFO amaximum of400U.F. (US$13,600) may
besoallocated.78
145. Insupport oftheagricultural sector, until1999 theGovernment willcontinue tofinance, up
to75percent,irrigation projects whose costsdonotexceed US$752,682. Public expenditure onthis
programme amounted tosomeUS$104 million during 1990-1996, andin1996theGovernment financed
some 60percentofthecostofthese programmes (Table III.14).79Decisions onproposed projects,
which aresubject topublic competition, arebased onthefollowing criteria: theshare ofprivate funds
invested intheproject; theareatobeirrigated; andthecostoftheproject perhectare andper
beneficiary. Theirrigation programmes supported bytheGovernment benefit some 46,734 farmers
andcover about 178,341 hectares.
146. There isalsosomepublic investment inlarger projects (i.e.thosecosting overUS$20 million).80
TheseprojectsaredesignedbytheDirectorateofIrrigationoftheMinistryofPublicWorksandevaluated
andapprovedbytheNationalIrrigationCommission,abranchoftheMinistryofEconomy,Development
andReconstruction.
75Expenditure under bothprogrammes amounted toUS$11.3 million in1996.
76Thesizeofanenterprise isdetermined according toannual sales. Hence, amicro-enterprise isanenterprise
whose annual sales amount toamaximum ofUS$75,000; asmall enterprise isonewhose annual sales exceed
US$75,00 uptoamaximum ofUS$790,000; amedium-size enterprise isonewhose annual sales exceed
US$790,001 uptoamaximum ofUS$3.14 million, andalarge enterprise isonewhose sales exceed
US$3.14 million.
77CORFOisapublicholdingcompany,whichowns13firms.Theseincludeonefirmwhichprovidessanitary
services, oneelectrical company which isintheprocess ofprivatization, twotransport companies, andthree
enterprises which provide services intheagricultural sector (e.g. COTRISA). Several ofthese companies are
notfully owned byCORFO, since CORFO welcomes private participation.
78OneU.F. (unidad defomento )wasequivalent toUS$34 onMarch 1997.
79Law 18.450 which hasbeen prorogated byLawNo.19.316 ofAugust 1994.
80Decree LawNo.1.123, Ministry ofJustice, Official Journal, 21December 1981.WT/TPR/S/28 Trade Policy Review
Page 70
Table III.14
Sources offinancing ofirrigation projects, 1990-96
Year No.ofbidsNo.of
applicationsNo.of
projects
selectedPrivate funds
US$
(A)Public funds
US$
(B)Total cost
US$
(C=A+B)(%)
B/C
1990 5 414 256 11,221,710 10,190,652 21,412,362 47.6
1991 9 620 302 14,053,545 10,744,840 24,798,385 43.3
1992 11 758 443 14,676,658 18,390,402 33,067,060 55.6
1993 7 504 263 12,999,716 8,902,576 21,902,292 40.6
1994 13 469 340 14,948,124 18,471,294 33,419,419 55.3
1995 12 685 429 13,930,384 19,590,776 33,521,160 58.4
1996 18 964 277 12,035,545 17,901,453 29,936,999 59.8
Total 75 4,414 2,310 93,865,682 104,191,993 198,057,677 52.6
Source: Secretaría Ejecutiva, Comisión Nacional deRiego .
147. Chile alsohasmany regional assistance programmes toencourage balanced growth throughout
thecountry. Onesuchscheme isthefree-zone regime which wasestablished in1975topromote regional
development (section (3)(xvi)). Since then, similar programmes havebeenimplemented topromote
development indifferent regions ofthecountry.
148. Another regional assistance scheme isthepreferential customs andtaxregime established in
1985 topromote theestablishment ofindustrial, mining, fishing, transport andtourism industries in
Region XII(theStrait ofMagellan andtheChilean Antarctica).81
149. In1992, asimilar Preferential Customs andFiscal Regime wasestablished forthecommunes
ofPorvenir andPrimavera intheProvince ofTierra delFuego.82Theaimistoattract investment
tothese communes. Under thescheme, industries suchasmanufacturing, agro-industry, agriculture,
livestock, mining, exploitation oftheoceans, transport andtourism located inthese communes are
eligible fortaxanddutyexemptions, ifatleast25percentoftheinputs andlabour usedoriginate
inthecommunes.83
150. Thewage subsidy granted toemployers incertain industries inRegion I,Region XI,northern
andmeridional Region XII,andtheProvince ofChile, willbephased outby31December 1999.
Thissubsidy, which isgranted totheemployer, isequivalent to17percentofamonthly taxable income
uptoamaximum amount ofCh$118,000 (approximately US$280). Thislimitisadjusted annually
onthebasisofmovements intheconsumer priceindex. Inaddition, apercentage ofthefeescollected
fromthelicences granted toexploit oilareputintoaspecial fund, theFund fortheDevelopment of
Magallanes, which isusedtofinance development projects inRegion XII.
81Law No.18.392, Ministry ofFinance, Official Journal, 14January 1985.
82Law No.19.149, Official Journal, 6July1992.
83Theexploitation andprocessing offuels isexcluded from these benefits.Chile WT/TPR/S/28
Page 71
151. Since 1995, investors intheProvinces ofArica andParinacota havebeenableobtain atax
credit onthe"first-category" tax,i.e.anincome taxcredit oncapital returns. Thecredit isequivalent
to20percentofthevalue ofthephysical investment (e.g.building, machinery andequipment, etc.).84
ThisprogrammewasnotifiedasasubsidytotheCommitteeonSubsidiesandCountervailingMeasures.85
152. In1994, theGovernment implemented another programme topromote development inthe
Province ofArauco andthecommunes ofLota andCoronel which belong totheProvince of
Concepción.86Thisprogramme includes fourdistinct schemes. First, there isascheme toattract
investment, i.e.theestablishment ofnewenterprises. Asecond scheme isaimed atincreasing public
investment ininfrastructure. Athirdscheme supports themovement ofdisplaced labour fromthecoal
industry. Themainbeneficiaries ofthesethreeprogrammes arethewood, fisheries andmetal-mechanic
sectors. Thefourth scheme promotes production inthetourism, forestry, textile, fisheries and
agricultural sectors. Asimilar scheme wasimplemented in1996topromote development intheZona
Austral.87Theextraction ofcoalwasthemost important activity inthiszone. Thegoalofthe
development programme istopromote thedevelopment ofother activities following thecrisis inthe
coalindustry.
(ii) Assistance forresearch anddevelopment
153. TheCorporation fortheDevelopment ofProduction promotes production intheprivate sector
byfostering competitiveness through theprovision, forinstance oftechnical assistance, anddevelopment
programmes.TheseprogrammesareevaluatedbytheCommitteetoAssignDevelopmentFunds(CAFF)
andCORFO provides mostofthefinancing forthese programmes. CORFO alsofinances enterprises
whicharetoimplementinnovativeprojectstoincreasecompetitiveness;suchfinanceisprovidedthrough
theNational Fund forTechnological andProductive Development (FONTEC).
154. TheScience andTechnology Programme, designed in1992, isfinanced bytheGovernment
topromote technological innovation inthepublic andprivate sectors. ThisProgramme consists of
fivefunds eachadministered byadifferent institution88,however, theExecutive Secretariat that
coordinates theProgramme ispartoftheMinistry ofEconomy, Development andReconstruction.
ThisSecretariat evaluates andmonitors eachofthefunds, andisalsoresponsible forthedesign of
technology policy. Theresources ofthefivefunds areallocated onthebasis ofpublic competition.
84Law No.19.420, Official Journal, 23October 1996.
85WTO document G/SCM/N/3/CHL -G/SCM/N/16/CHL, 7November 1996.
86Action PlantoPromote theDevelopment oftheArauco Zone, Exempt Resolution No.1.460, 7July1994.
87Plan fortheDevelopment oftheAustral Zone, Exempt Resolution No.238, 14May 1996.
88Thefivefunds included inthisProgramme are:(i)theFund forDevelopment andInnovation (FONSIP);
(ii)theNational Fund forTechnological andProductive Development (FONTEC), bothmanaged byCORFO;
(iii)theFundfortheDevelopmentofScientificandTechnologicalResearch(FUNDEF),managedbytheMinistry
ofEducation; (iv)theMining Investment Fund, managed bytheMinistry ofMining; and(v)theFoundation
forAgrarian Innovation, managed bytheMinistry ofAgriculture.WT/TPR/S/28 Trade Policy Review
Page 72
155. TheFisheries Research Fund (FIP) wasestablished in1991tofinance research andtoimprove
theadministration offisheries andaquaculture.89TheFund isfinanced withpublic funds andfees
forfishing andaquaculture licences (patentes );in1996, 56percentofthese feesweredeposited in
theFund (Chapter IV(2), Fishing). TheFund isadministered bytheCouncil fortheAdministration
ofFisheries. Research institutes, universities, andprivate consulting firms, thatwishtoreceive funding,
havetoparticipate inapublic competition. In1995, 34research projects were undertaken atacost
ofUS$3.3million,whilein1996,56projectswithabudgetofUS$4.6millionwereunderconsideration.
(iii) Production subsidies andtaxconcessions
156. Productionincentivessuchastaxexemptionsorrebatestopromoteoilexploration,smallmining
operations andforestry activities, reported during theprevious Trade Policy Review, arestillavailable.
However, Decree LawNo.701,which regulates thefiscal incentives granted totheforestry sector,
ispresently under review. Iftheproposed amendments areapproved, three changes would be
implemented. First, theexisting subsidy, which covers 75percentofthecostoftheplantation, would
onlybegranted tosmall producers orincases ofenvironmental degradation.90Second, natural forests
andsubsidized plantations would beexempt from paying real-estate taxandinheritance tax.Third,
theexemption onthepayment oftheglobal income taxwould bemodified.
157. Asdiscussed under therelevant sections ofthisreport, taxconcessions arealsogranted under
thefree-zone regime, several oftheregional assistance schemes, thePrivate Export Warehouses regime,
theincentive programme formining andpetroleum refineries, thedeferred payment system forcustoms
duties onimports ofcapital goods, theincentive totheautomotive industry, andtheVATreimbursement
toexporters.
(iv) Competition rules
158. TheChilean Competition Law, Decree LawNo.211of1973, asrevised andpublished on
27October 1980, established which practices were tobeconsidered tobeanti-competitive. These
aredescribed asanyactthattends tohinder, orisaimed ateliminating, restricting andobstructing
competition.91Thenorms thatregulate competition apply tobothnationals andforeigners, andtothe
goods andservices sectors. They alsoapply touncompetitive behaviour thattakes place outside the
country buthasdomestic repercussions. Theopening upoftheeconomy hasbecome another facet
ofcompetition policy inChile, inthatinternational competition provides adiscipline onanti-competitive
behaviour byfirms located inChile.
159. Laws regulating areassuchasintellectual property, mining (production andmarketing ofcopper
andpetroleum),financialservices,etc.,establishexclusivityfortheseactivities.However,uncompetitive
behaviour inanyofthese activities issubject tothecompetition law. Thecompetition authorities are
allowed toimpose price controls, forexample, maximum prices, asapreventive measure while an
investigation isbeing undertaken. These measures areimposed for15daysandmaybeextended for
upto30days. Theestablishment ofpublic monopolies inextractive, industrial, marketing andservices
89Law No.18.892, LeyGeneral dePesca yAcuicultura ,6September 1991.
90Small producers would alsobeeligible forasubsidy of90percentonthefirst15hectares planted. A
small producer istheowner ofamaximum 200hectares, or500hectares inRegions I,IV,XIandXIIandin
theProvince ofPalena inRegion X.
91Decree LawNo.211, Article 1(1973).Chile WT/TPR/S/28
Page 73
activities isallowed butthecreation ofprivate monopolies inthesesameactivities isprohibited (Art. 4
ofDecree LawNo.211). Nevertheless, thecreation ofprivate monopolies ortheconcentration of
market power inprivate hands isallowed bytheResolutary Commission, onrequest ofthePresident,
inorder toimprove public welfare; aQualified Quorum Lawmust beadopted forthispurpose.
160. TheinstitutionsinchargeofsafeguardingandpromotingcompetitionaretheCentralPreventative
Commission, theResolutary Commission, theRegional Preventative Commissions, andtheNational
Economic Prosecutor 'sOffice.
161. TheroleoftheRegional Preventative Commissions istoensure competitive behaviour, todeal
withanycomplaints regarding uncompetitive behaviour andtocarry outthepreliminary investigation
todetermine ifbehaviour isinfactanti-competitive. TheCentral Preventative Commission intervenes
ifthecaseisofnational character orinvolves more thanoneregion.92Opinions (dictámenes )expressed
bythese Commissions canbeappealed before theResolutary Commission, which supervises the
applicationoftheCompetitionLawandtheworkoftheRegionalandCentralPreventativeCommissions.
TheResolutary Commission deals withcases ofuncompetitive behaviour exofficio orattherequest
oftheNational Economic Prosecutor 'sOffice. IfthisCommission determines thatthereisaviolation
oftheLaw, itmayapply afineorrecommend theNational Economic Prosecutor 'sOffice topursue
apenal case. Itisalsowithin thejurisdiction ofthisCommission todetermine ifamarket requires
regulation because oflackofcompetition.
162. Incertain cases, uncompetitive behaviour hasnotbeencondemned. Forexample, because
thecostofthemonopoly could belower thanthecosts ofimplementing anti-monopolistic policies,
orbecause thereisalackofresources (both economic andhuman resources) tocarry outthenecessary
investigations.93Theauthorities noted that,despite thelimited resources, thecases undertaken are
being completed successfully. Inaddition, theyenvisage, inthenearfuture, hiring newpersonnel,
anddraftingamoreup-to-datecompetitionlaw;thesewoulddealwiththeafore-mentionedshortcomings.
(v) Pricing andmarketing arrangements
163. Thepricebandsystem isstillinplace forwheat, wheat flour, edible oilandsugar, asdiscussed
earlier (section (2)(v)).
164. Thewheat marketing company (COTRISA) purchases wheat andother grains especially from
small andmedium producers inorder tostabilize domestic prices. However, itsparticipation inthe
grain market since 1991 hasbeennegligible (section (2)(xii)).
165. Thetariffs forbasic services aresubject toregulation because oftheirmonopolistic character;
forinstance; thetransmission ofelectricity (inspecific cases), telecommunications, andwater and
sewage. Thepricing isinallcases according tomarginal costandthere isnodiscrimination among
sectors orconsumers. Theinstitutions incharge ofsetting these tariffs varyforeachservice.
92TheCentral Preventative Commission alsoactsasthePreventative Commission forthemetropolitan area
ofSantiago.
93Serra (1995).WT/TPR/S/28 Trade Policy Review
Page 74
(vi) Trade-related investment measures (TRIMs)
166. TheChilean authorities havenotified totheWTO theapplication oftrade-related measures
intheautomotive sector.94Thenotification concerns theChilean Automotive Statute (Law No.18.483)
which allows theexemption frompayment ofcustoms duties forimports ofCKD (completely-knocked
down) andSKD(semi-knocked down) unitsusedforvehicle assembly, totheextent thattheyareoffset
byexports ofdomestic components ofanequivalent value, within aperiod of12months, inaccordance
with aprogramme approved bytheMotor Vehicle Commission.95TheStatute, alsoentitles
end-processors (assemblers) toataxcredit "inrespect ofthelocalcontent ofvehicles produced and
transferred (sold) within thecountry foroffsetting exports orother exports oflocalcomponents", with
aceiling of35percentofthecustoms value ofthecorresponding finished vehicle (Chapter IV(4)).96
(vii) Intellectual property protection
167. TheChilean Constitution guarantees intellectual property rights (IPRs) which areregulated
byother national legislation, aswellasbyinternational treaties andagreements (Table III.15).
LawNo.19.039,enactedin1991,establishednewrulesapplicabletotheprotectionofindustrialproperty
rights suchaspatents, trademarks, utility models andindustrial designs; forthefirsttime,thepossibility
ofprotecting pharmaceutical products wasexplicitly included inthelegislation. Until theenactment
ofLawNo.19.039,onlypharmaceuticalprocesseswereprotected;however,protectionwasestablished
in1961 forpharmaceutical products obtained byapatented process. Chilean copyright legislation,
firstenacted in1970, hasbeenmodified several times toinclude provisions fortheprivate management
ofcopyrights andneighbouring rights.97Protection isprovided forcopyrights, neighbouring rights,
patents, trademarks, industrial models, secret technological processes, computer programmes andother
similar creations. Thelegislation ensures national treatment toforeign owners.98Inaddition,
enforcement procedures allow effective action against infringements ofIPRs, including remedies to
prevent infringement. Procedures toenforces IPRsareregulated mainly under theCivil andCriminal
ProcedureCodes,butalsounderspecialprovisionscontainedinspecificnationallegislation(asmentioned
above). Procedures areinwriting, andaccording totheauthorities fair,equitable andnotcostly.
Judicial decisions areadopted onthemerit ofeachcaseandaccording totheevidence presented by
eachparty; anyfinaldecision maybereviewed.
94WTO document G/TRIMS/N/1/CHL/1, 19January 1996.
95Article 3,Chilean Automotive Statute, LawNo.18.483. There arenolimits ontheimports ofcomponents.
Thecomponents thatarenotbalanced byexports aresubject tothe11percenttariff.
96Article 9,Chilean Automotive Statute, LawNo.18.483.
97Chilean copyright legislation wasmodified in1972 (Law No.17.773), in1985 (Law No.18.443), in1990
(Law No.18.957), 1992 (Law No.19.166) andin1993 (Law No.19.227).
98There isnodifference intheguarantee ofintellectual property rights between domestic andforeign owners,
duetothenational treatment stipulated inChilean Constitution, theChilean Civil Code, theParis Convention
andtheTRIPS Agreement.Chile WT/TPR/S/28
Page 75
Table III.15
Laws, international conventions andagreements thatregulate intellectual property rights inChile
Patents Trademarks Copyrights Undisclosed
informationPlant varieties
Law Constitution
Article 19,
No.24and25
(24.10.1980)
LawNo.19.309
(30.09.1991)Constitution
Article 19,
No.24and25
(24.10.1980)
LawNo.19.309
(30.09.1991)Constitution Article 19,
No.24and25
(24.10.1980)
LawNo.17.336
(02.10.1970) and
Ammendments:
Laws:
No.17.773 (1972)
No.18.443 (1985)
No.18.957 (1990)
No.19.072 (1991)
No.19.166 (1992)Constitution Art.96
Civil Code, Arts.
1311, 1316, 1313,
2225
Penal Code, Arts.
109,146,156,158,
224,231,246,247,
284
Civil Procedure
Code, Arts. 349,
756
Penal Procedure
Code, Arts. 18,61,
78,92,104,105,
53bis,164,171,
189,201,330,598
Code ofJudiciary
Organization, Arts.
6,274,277,361,
380,431,439
TaxCode, Arts. 6.
60,61,101,130,
163,168
Code ofMilitary
Law, Arts. 7-C
No.4,144,
144bis,194,245,
298
Sanitary Code,
Art.134
LawNo.19.301,
Arts. 164to172Constitution
Article 19,Nos. 24
and25
LawNo.19.342 on
therights ofbreeders
ofnewvarieties of
plants (03.11.94)
Regulation Decree No.177
(30.09.1991)Decree No.177
(30.09.1991)Decree No.1.122
(17.06.1971) and
Ammendments:
Decree No.287(1973)
LawNo.19.166Decree No.1.876
(05.07.1996),
Art.43on
pharmaceutical
marketing approval
procedure.
Convention Paris Convention
(14.06.1991)
International
Convention forthe
Protection ofNew
Varieties ofPlants
(23.03.1996)Paris Convention
(14.06.1991)Berne Convention
(05.06.1970)
Convention forthe
Protection of
Performers, Producers
ofPhonograms and
Broadcasting
Organizations
(05.09.1974)
Convention forthe
Protection ofProducers
ofPhonograms Against
Unauthorized
Duplication oftheir
Phonograms
(24.03.1977)International
Convention forthe
protection ofnew
varieties ofplants
(1978 Act)
(23.03.96)
Table III.15 (cont'd)WT/TPR/S/28 Trade Policy Review
Page 76
Patents Trademarks Copyrights Undisclosed
informationPlant varieties
Agreements
andtreatiesTrade-Related
Aspects ofIntellectual
Property Rights
(Agreement shall
enter intoforce on
1January 2000)Trade-Related
Aspects ofIntellectual
Property Rights
(Agreement shall
enter intoforce on
1January 2000)Treaty onthe
International
Registrations of
Audiovisual Works
(29.12.1993)
Source: Escudero 1996.
168. TheChileanauthoritieshaveindicatedtotheWTOSecretariatatleastfiveareasofinconsistency
between Chilean intellectual property legislation andtheTRIPS Agreement. These include: (i)the
needtostipulate explicitly inthelegislation therighttoauthorize thecommercial rental ofcomputer
programs (inDecember 1996Chile signed buthasnotratified theGeneva Convention onCopyright,
which includes computer programs); (ii)thefactthattheduration ofapatent is15years from the
granting dateandnot20fromthefiling date(asstipulated intheTRIPS Agreement);99(iii)thatthere
isnospecific provision intheChilean patent lawtoextend theprocess patent totheproduct manufactured
thereof;100(iv)thatreversal oftheburden ofproof incaseofprocess patent infringement isnot
contemplated under Chilean law,sothejudicial authorities arenotempowered toorder thedefendant
toprove thattheprocess usedtoobtain andidentical product isdifferent from thepatented process;
and(v)thatthere isnolegalsystem toprotect integrated circuits.
169. Theauthorities areassessing whether theprotection granted under present legislation to
undisclosed information isinaccordance withtheTRIPS Agreement.
170. Patents andprecautionary patents aregranted under Chilean law. Precautionary patents are
granted toinventors whoneedtocarry outexperiments orconstruct machinery ordevices thatcompels
themtodisclose theinvention oridea. Patents arevalidforanon-renewable period of15years from
thedateonwhich theyaregranted. Autility model patent isgranted foranon-renewable period of
tenyears, fromthefiling date. Precautionary patents aregranted foroneyearandarerenewable for
another year. Under Chilean law,bothproducts andprocesses inventions canbeprotected; however,
certain products orprocesses arenotcovered, asindicated inTable III.16. Thelawprovides forthe
opportunity tooppose patent grants.
99Theduration ofapatent is15years from thedatethatitisgranted, butoncethepatent isgranted theowner
hastheright toprosecute infringements from thefiling date. Ittakes twotothree years from thefiling date
forthepatent tobegranted, which means thatpatent protection isgranted inChile for17to18years from the
filing date.
100Nevertheless,underlong-standinglegalpractice,theMinistryofEconomy,DevelopmentandReconstruction
hasnormally extended theprocess patent protection totheproduct manufactured thereof.Chile WT/TPR/S/28
Page 77
Table III.16
Products andprocesses thatcannot beprotected under Chilean intellectual property legislation
1 Discoveries, scientific theories andmathematical methods.
2 Plant varieties oranimal breeds, (bio-technological inventions other thanplant varieties oranimal breeds arenotexcluded
from thepatent protection).
3 Methods oftreatment ofthehuman andanimal body bysurgery ortherapy ordiagnosis methods practiced onthehuman
andanimal body, except products foruseinanyofthese methods.
4 Newuseofarticles, objects orelements known andalready usedforspecific purposes, andsimple changes inshape,
dimension, proportion ormaterials inthesubject matter forwhich protection isbeing sought, except where thequality of
thesubject matter isessentially altered orwhere itsusesolves atechnical problem thatdidnotpreviously havean
equivalent solution.
Source: Government ofChile.
171. Atrademark mayonlybesought andregistered forspecific products orforoneormore classes
oftheInternational Trademark Classification elaborated byWIPO. Similarly, services trademarks
may only besought andregistered forspecific services identified inthesame International
Classification.101Theduration ofatrademark istenyears fromthedateonwhich itisgranted. The
owner isentitled torequest renewal foranother tenyears, suchrequest being made before theexpiry
ofthetrademark orwithin 30daysfollowing itsexpiry. Asinthecaseofpatent protection, certain
items cannot beregistered astrademarks (Table III.17).102
Table III.17
Items thatcannot beregistered asatrademark under Chilean Intellectual Property Law
1 Thecoats ofarms, flags orother emblems, names orsymbols ofanyState, international organizations orpublic services
ofaState.
2 Technical orscientific names fortheobject forwhich theyareintended, common international names recommended bythe
World Health Organization andnames indicating therapeutic properties.
3 Thename, pseudonym orlikeness ofanyperson, except withtheconsent ofthatperson orhis/her heirs where he/she is
deceased. Thename ofhistorical persons mayberegistered ifatleast50years haveelapsed since theirdeath andon
condition thattheirhonour isnotthereby prejudiced. Names ofpersons mayinanyevent notberegistered when that
would constitute aninfringement ofNo.5,6,7and8below.
4 Trademarks thatreproduce orimitate official signs orhallmarks indicating warranty control orwarranty adopted bya
State, without theauthorization ofthelatter; those which reproduce orimitate medals, diplomas ordistinctions awarded at
national orforeign exhibitions, where theregistration thereof issought byaperson other thantheperson whowonthem.
5 Expressions usedtoindicate thetype, nature, origin, nationality, source, destination, weight, value orquality ofproducts,
services orestablishments; expressions thatmaybeingeneral usedintrade todescribe certain class ofproducts, services
orestablishments, andthose thathavenonovelty character ormerely describe theproducts, services orestablishments to
which theyaretobeapplied.
6 Expressions thatmislead ordeceive astothesource, quality ortypeofproducts, services orestablishments.
7 Identical trademarks ortrademarks thatgraphically orphonetically soresemble oneanother sothattheycould beconfused
withother trademarks registered abroad forthesame products, services orbusiness and/or industrial establishments, inso
farasthelatter trademark arefamous orwellknown.
8 Identical trademarks ortrademarks thatgraphically orphonetically resemble oneanother astobeconfused withother
trademarks thathavebeenpreviously registered orfiledinthesame class.
9 Theshape, colour, ornamentation andaccessories ofeither theproduct orthepackaging.
10 Trademarks contrary topublic order, morality, andgood habits, including principles offaircompetition andtrade ethics.
Source: Government ofChile.
101Tri-dimensional trademarks arenotprotected under Chilean Law.
102Regulations which apply totrademarks andservice marks seem toalsoapply totrade names, andrelated
marks.WT/TPR/S/28 Trade Policy Review
Page 78
172. Chilean lawoncopyrights andneighbouring rights protects atleast17different categories of
works including computer programs andvideograms.103Original works oftheliterary, artistic and
scientific domain areprotected under copyright law,bythefactoftheircreation, whatever themode
orform oftheirexpression. Assignment oftheexclusive rightmust beregistered intheCopyright
Register within aperiod of60daysfrom therespective contract.
173. Thetermofthecopyright protection isthelifeoftheauthor plusfiftyyears. Thetermof
protection forneighbouring rights isfiftyyears fromthelastdayoftheyearoffixation ofphonograms;
from thedateonwhich thework hasbeenbroadcast; orfrom thedateonwhich thework hasbeen
preformed. Thisalsoapplies tocomputer programs anddatabases.
174. Anauthor 'smoral rights arealsoprotected under Chilean copyright lawandareonly
transmissible tothesurviving spouse, ortotheestate oftheauthor onthedeath oftheauthor.
175. Incaseofinfringement ofaregistered copyright, theinterested party mustseekredress inan
ordinary civilorcriminal case, asappropriate. Violations ofthelawarepunishable byfines, aswell
asthepossibility ofimprisonment ofupto541days. Registration isnotmandatory, foracopyright
owner toavailhimself ofthese rights.104
176. While computer programs wereimplicitly protected under theChilean Copyright Law(since
thisprotects anywork arising from human intelligence), in1990, aspecific feefortheregistration
ofcomputer programs wasestablished, andin1992 computer programs were expressly mentioned
inthelegislation asanother example ofprotectable work. Thetermofcopyright protection forcomputer
programs isalsothelifeoftheauthor plusfiftyyears. While there isnospecific lawprotecting chip
topographies, thesecould beprotected under patent regulations when thetopography entirely complies
withpatent technical requirements.
177. Industrial property instruments areadministered bytheIndustrial Property Department ofthe
Ministry ofEconomy; theseinclude patents, trademarks, utility models andindustrial designs.105The
Copyright Department, incharge oftheCopyright Register ispartoftheLibrary, Public Records and
Museums Directorate. TheSeeds Department oftheAgriculture andCattle Service, anautonomous
institution, isincharge ofadministering applications forprotection ofnewplant varieties, while
plant-breeder rights aregranted bytheQualifying Committee ofPlant Varieties.
178. Onindustrial property matters, opposition trials, claims ofinvalidation ofgranted rights or
transfers ofrights, aswellasanyother claim related tothevalidity oreffects ofthese rights, must
besubstantiated before theHead oftheIndustrial Property Department oftheMinistry ofEconomy,
which actsasacourt ofthefirstinstance. TheIndustrial Property Appeals Court, aspecial court of
thesecondinstance,formedbythreejudges,reviewsfinaldecisionsoftheHeadoftheIndustrialProperty
Department andtheHead oftheSeeds Department onindustrial property matters andplants breeders
103Rowat (1993). TheChilean Copyright Lawprotects anywork arising from human intelligence, which
belongstotheliterary,artisticandscientificdomains,whatevertheformofexpression.The17differentcategories
ofworks thatareexpressly mentioned inthelawareonlyexamples ofthetypeofworks thatcanbeprotected
andarenotexclusive.
104Rowat (1993).
105TheChilean authorities areatpresent considering thecreation ofanIntellectual Property Institute, which
would beadecentralized public institution incharge intellectual property matters.Chile WT/TPR/S/28
Page 79
rights, respectively; andhears appeals against administrative decisions oftheIndustrial Property
Department.106Decisions oftheIndustrial Property Appeals Court maybereceived bytheSupreme
Court. Inaddition, intellectual property rights holders canresort tocivilandcriminal procedures to
enforce theirrights.
179. Thejudicial authorities havethepower toavert aninfringement ofanyintellectual property
right, forexample byordering customs houses toprevent theimportation ofthegoods inquestion.
They mayalsoorder theseizure orattachment ofmerchandise.
180. Theinfringement ofintellectual property rights inChile maybesubject tobothpenal sanctions
(prison orpenalties) andcivilredress (indemnity damages), including theseizure ofassets. Fines range
from US$4,250 toUS$21,350, while recurrence ispenalized withfines ranging from US$8,500 to
US$42,000. Breachs ofcopyrights andplant breeders rights aresanctioned withfinesranging from
US$213 toUS$2,153 and61to541days'imprisonment.
181. Inthelasttenyears, thestrengthening oftheintellectual property system anditsenforcement
havebeenemphasized, inthefirstinstance, because ofChile'sinterest inacceding toNAFTA and
inextending theeconomic cooperation pactwiththeEuropean Union toafullfree-trade agreement.107
Secondly, theopenness oftheChilean economy (i.e.considerable exchange ofgoods andservices)
hasresulted inChile becoming animportant "trademark centre".108
182. Thehighnumber ofapplications forregistration ofintellectual property rights iscurrently
straining theresources available fortheir examination. Annually, Chile nowreceives more than
3,700 applications forcopyrights, 1,700 forpatents, 100forutility models, 270forindustrial designs,
34,000 fortrademarks and50forplant-breeder rights. Moreover, thisvolume isexpected toincrease
whentheTRIPSprovisionsenterfullyintoforce,sinceprotectionforintegratedcircuitsandgeographical
indications willalsohavetobeprovided. Theimplementation oftheTRIPS Agreement willtherefore
entail notonlytheamendment ofexisting national legislation andtheenactment ofnewlaws, butalso
thestrengthening ofenforcement andthetraining ofjudicial andadministrative personnel.109The
provision ofsufficient, trained staffandinfrastructure tomeettheincreasing demand forintellectual
property protection willbemajor undertaking forChile.
106TheTribunal iscomposed ofthree members elected fortwoyears, withanarrangement tomeet asoften
asnecessary. Thisshould speed uptheprocess ofadministrative review ofpatent decisions. Rowat (1993).
107Financial Times, 14March 1997.
108Escudero (1996).
109Forinstance, inthelastfouryears, withthecooperation ofWIPO, several training courses dealing with
specific industrial property andcopyright matters have taken place inChile.