WT/COMTD/PTA/2/1
11 March 2015
(15-1403)  Page: 1/10
Committee on Trade and Development 
Dedicated Session on Preferential Trade Arrangements   
 
FACTUAL PRESENTATION 
CHILE - DUTY-FREE AND QUOTA-FREE SCHEME FOR LEAST DEVELOPED COUNTRIES 
Report by the Secretariat 
This report, prepared for the consideration of Chile's duty-free and quota-free scheme for 
least developed countries, has been drawn up by th e WTO Secretariat on its own responsibility and 
in full consultation with the notifying Member. The factual presentation reproduces as closely as possible the terminology used in the preferential  trade arrangement and in the comments provided 
and does not imply official endorsement or acceptan ce by the Secretariat of such terminology. The 
report has been drawn up in accordance with th e rules and procedures contained in the Decision 
for a Transparency Mechanism for Preferential Trade Arrangements (WT/L/806) and thus does not imply any value judgement by the Secretariat rega rding the contents of the preferential trade 
arrangement.  
 Any questions arising from this report may be addressed to Harish Iyer (tel: +41 22 739 6212)  
or Thomas Verbeet (tel: +41 22 739 6596). 
   WT/COMTD/PTA/2/1 
 
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  1  BACKGROUND INFORMATION 
1.1.  Chile's duty-free and quota-free (DFQF) scheme for least developed countries (LDCs) legally 
entered into force on 1 November 2013. Subseque nt implementing regulations entered into force 
on 28 February 2014. The scheme was notified under paragraph 1(b) of the Transparency 
Mechanism for Preferential Trade Arrangements (PTAs) on 10 April 2014 (WT/COMTD/N/44).1 
1.2.  Information on the scheme can be accessed from the WTO's Database on PTAs.2 Information 
can also be found on the website of Chile's National Customs Service.3 
2  REGULATORY AND PROCEDURAL FRAMEWORK 
2.1  Regulations 2.1.  The legal basis for Chile's DFQF scheme is Law No. 20.690 published on 28 September 2013 -
"Eliminating Import Tariffs on Goods from the Least Developed Countries". This Law, which 
entered into force on 1 November 2013, stipulates, inter alia , that customs duties on imports of 
goods from LDCs shall be fixed at 0%, with th e exception of wheat, wheat flour and sugar. 
2.2.  The implementing regulations relating to Law No. 20.690 are contained in Decree No. 1.432, 
which entered into force on 28 February 2014. Decree No. 1.432 provides the list of beneficiary 
countries, the conditions for their inclusion and exclusion and the operational requirements to be met for goods to qualify as originating goods under the DFQF scheme. Decree No. 910, which 
entered into force on 29 August 2014, amended el ements of Decree No. 1.432 with respect to the 
Certificate of Origin requirements.
4  
2.2  Eligibility and related procedures 2.3.  A total of 49 countries are listed in Decree No. 1.432 as beneficiaries of the DFQF scheme. 
The list of beneficiary countries is provided in Annex 1 of this report. 
2.4.  The beneficiary countries of the scheme are de termined on the basis of the UN's list of LDCs. 
The Ministry of Finance of Chile will review th e beneficiary countries of the scheme every three 
years to ensure consistency with the UN list.
5 
2.5.  A good will only be eligible for preferential tariff treatment under the DFQF scheme if it can 
be considered to originate in a beneficiary country by satisfying the rules of origin requirements 
(see Box 1). Furthermore, a good originating from a beneficiary country will only qualify for 
preferential tariff treatment under the DFQF scheme after a Certificate of Origin is issued by the 
competent authority in the beneficiary country.  
2.6.  The format for the Certificate of Origin is  contained in the Annex to Decree No. 1.432. The 
certificate may be drawn up in English, French, Portuguese or Spanish and will be valid for one 
year from the date on which it was issued.6  
                                               
1 The scheme was also notified on the same date  under paragraph 2 of the waiver decision on 
Preferential Tariff Treatment for LDCs (WT/L/304 and WT/L/ 759).  This notification was circulated in document 
G/C/W/695.  
2 http://ptadb.wto.org   
3 http://www.aduana.cl/ley-20-690-eliminacio n-aranceles-pma/aduana/2014-03-07/092144.html  
4 The Certificate of Origin requirements, as amended, are described below. A communication from Chile 
concerning the Certificate of Origin was circulated in documents WT/COMTD/N/44/Add.1/Rev.1 and G/C/W/695/Add.1/Rev.1. 
5 The LDCs are identified by the UN . More information can be found at 
http://www.un.org/en/development/desa/policy/cdp/ldc_info.shtml . As per the latest UN list, the number of 
LDCs is 48. Samoa, which graduated from LDC status on 1 January 2014, is currently included as one of the 
49 beneficiaries of Chile's DFQF scheme.  
6 Decree No. 910, which amended Decree 1.432, additionally indicates that other formats for the 
Certificate of Origin may be accepted, provided that some minimum specified information is supplied. The 
Chilean delegation has informed the Secretariat that, to date, three beneficiary countries (Angola, Cambodia and Haiti) have submitted a Certificate of Origin.  WT/COMTD/PTA/2/1 
 
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  Box 1: Rules of origin 
• For a good to be considered as originating from a bene ficiary country, it must meet at least one of three 
requirements laid out in Decree No. 1.432 and also satisfy other procedural requirements. 
  
• A good will firstly be considered as originating when it is wholly obtained or produced entirely in the 
territory of a beneficiary country. Second, it will also  be considered as originating when it is produced 
entirely in the territory of a bene ficiary country exclusively from originating materials. Third, a good 
will be deemed to originate in a beneficiary country even if it uses non-originating materials and 
components when it is produced in the territory of a beneficiary country but has a regional value 
content (RVC)7 of not less than 50% or if it satisfies a change in tariff heading.8 In any case, a good 
must undergo more than certain simple operations in order to originate in a beneficiary country. 
Operations such as assembly, packaging, splitting into lots, pieces or volumes, selection and 
classification, marking, the putting together of assortments of goods or other similar operations 
cannot change the origin of a final good.   
 
• The Decree also lays out guidelines for the treatment of packing materials and containers as well as of 
accessories, spare parts and tools.   
 
• Finally, the Decree contains provisions relating to th e transit of eligible goods through third countries as 
well as provisions related to the possibility of claiming back customs duties paid in excess.    
 
2.3  Timeframes for the applicat ion of preferential treatment 
2.7.  As indicated above, the DFQF scheme legally entered into force on 1 November 2013, while 
the implementing regulations entered into force on 28 February 2014. The scheme has no expiry 
date. 
2.8.  Decree No. 1.432 identifies three categories of beneficiary countries, classified on the basis of 
each country's export product concentration index (EPCI).9 A first category comprises countries 
having an EPCI greater than 0.75. In a second cate gory are placed countries with an EPCI of less 
than 0.75 but greater than 0.49. The remaining co untries are placed in the third category. Upon 
entry into force of the implementing regulations, the beneficiary countries with an EPCI of more 
than 0.49 referred to in the first two categori es were eligible for preferential treatment.10 As of 
1 January 2015, the beneficiary countries in the third category were also eligible. Annex 2 of this report lists the beneficiary countries according to this categorization. 
3  OVERVIEW OF PREFERENTIAL TREATMENT 
3.1.  Chile's 2014 customs schedule is based on the Harmonized Commodity Description and 
Coding System (HS2012) and specifies 7,785 national tariff lines (HS chapter 01-97).  
3.2.  An ad valorem  tariff of 6% is applied on a most-favoured-nation (MFN) basis on 7,709 lines 
(99% of national tariff lines). Under Chile's DFQF scheme, beneficiaries are eligible for DFQF 
                                               
7 The RVC is obtained by first subtracting the cost, insurance and freight (CIF) value of non-originating 
materials from the free on board (FOB) va lue of the final good. The resulting figure is then divided by the FOB 
value of the final good and multiplied by 100. 
8 There is a change in tariff heading when the final good is classified under a different heading of the 
Harmonized System from the headings under which the no n-originating materials used in the final production 
process are classified. 
9 The EPCI referred to in Decree No. 1.432 is the Herfindahl-Hirschmann index, as used by the UN in the 
context of criteria for identifying LD Cs. More information can be found at 
http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_definitions.shtml . The Herfindahl-Hirschmann 
index ranges in value from 0 to 1, with a higher valu e indicating that exports are concentrated in fewer 
sectors. Chile's source for data was http://unctadstat.unctad.org/EN . The index values used were based on an 
average over the 2008-2010 period.  
10 In fact, beneficiary countries in the first category  were eligible for DFQF treatment upon legal entry 
into force of the scheme on 1 November 2013, while the second category of countries was eligible as of 1 January 2014. However, the Chilean delegation informed the Secretariat that, in light of the implementing 
regulations (that contain the list of beneficiary countri es) entering into force on 28 February 2014 - which was 
later than initially envisaged - DFQF eligibility was extended on this date to beneficiaries in the first two categories.  WT/COMTD/PTA/2/1 
 
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  market access on these 7,709 lines, in addition to the 35 lines which are duty-free on an MFN 
basis.11 This amounts to DFQF treatment on close to 99.5% of tariff lines.  
3.3.  The remaining 41 tariff lines in Chile's customs schedule are not included in the DFQF 
scheme. These lines - which are found under HS headings 1001 ("wheat and meslin"), 1101 
("wheat or meslin flour"), and 1701 ("Cane or beet sugar and chemically pure sucrose, in solid 
form") - are listed in Annex 3 of this report.12  
4  TRADE ENVIRONMENT 
4.1.   In 2013, Chile was ranked 26th in the world in terms of merchandise imports. The average 
value of annual imports from all trading part ners over the 2011-2013 period was US$69 billion. 
Figure 1 shows the composition of Chile's global imports over this period. As can be seen, the most important product groups
13 imported by Chile are "petroleum" (18%), "minerals and metals" 
(14%), "non-electrical machinery (14%)", "transport equipment" (12%) and "chemicals" (11%), 
which are all non-agricultural products. The non-agricultural sector accounted on average for 91% of Chile's imports over the period, while agricu ltural products comprised 9% of the total. 
Figure 1: Composition of Chile's im ports from World (2011-2013 average) 
 
Source: WTO Integrated Database 
 
4.2.  Over the 2011-2013 period, the averag e annual value of Chile's imports from LDCs14 was 
US$387 million (0.56% of Chile's total imports on average). Figure 2 shows that Chile's imports 
from LDCs are concentrated in very few categories. In particular, the "minerals and metals" 
product category largely dominates, accounting for 89% of imports from LDCs. Furthermore, 
within this product category, imports from LDCs are exclusively of "natural gas" (HS subheading 
271111). The "clothing" category (8% of total imports from LDCs) is next in importance, followed 
by "leather, footwear, etc." (2% of total imports from LDCs).  Non-agricultural products account for more than 99% of imports from LDCs. 
                                               
11 These 35 lines, which are contained in HS chapters 49, 84, 85, 87, 88 and 89, concern products for 
power generation, military ve hicles, planes and boats. 
12 The 41 tariff lines that are not included in Chile' s DFQF scheme are subject to a price band system, 
whereby a specific duty is added to or deducted from the 6% ad valorem  duty. This system is described in 
document WT/TPR/S/220/Rev.1, Chapter IV(2)(iv). 
13 The definition of product groups is based on the Multilateral Trade Negotiat ions (MTN) categories. For 
more detailed information, see WTO World Tariff Profiles 2013, 
http://www.wto.org/english/res_e/booksp_e/tariff_profiles13_e.pdf , pages 28 and 29.  
14 LDCs are defined here as the countries listed in Decree No. 1.432 as beneficiaries of Chile's DFQF 
scheme. WT/COMTD/PTA/2/1 
 
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  Figure 2: Composition of Chile's imports from LDCs (2011-2013 average) 
 
 
Source: WTO Integrated Database 
 
4.3.  Table 1 shows Chile's imports from LDCs, by source country, over the 2011-2013 period. It 
m a y  b e  s e e n  t h a t  t w o  L D C s  -  G u i n e a  a n d  Y e m e n  -  a c c o u n t e d  f o r  8 9 %  o f  i m p o r t s  f r o m  L D C s .  Imports from these two countries consisted exclusively of "natural gas". The next countries in 
importance are Bangladesh and Cambodia, which together accounted for 10% of Chile's imports 
from LDCs. The exports of Bangladesh and Cambodia to Chile were largely concentrated on clothing-related products. 
Table 1: Chile's imports from LDCs, by source country (2011-2013 average) 
Country US$ million Share in total imports from LDCs 
(%) 
Guinea 265.7 68.7 
Yemen 78.7 20.4 
Bangladesh 24.8 6.4 
Cambodia 14.0 3.6 
Other 3.5 0.9 
 
Source: WTO Integrated Database   
 
4.4.  The annual growth in Chile's imports fr om the world and from LDCs during the 2011-2013 
period is shown in figure 3, taking 2010 as the base year. In 2011, Chile's imports from LDCs grew 
at a slightly faster rate than imports from all trading partners. While the growth in Chile's global imports remained positive in 2012 and 2013 (albeit at a lower rate than in 2011), imports from LDCs fell significantly below the 2010 value of US$553 million, to US$285 million in 2012 and 
down further to US$139 million in 2013.   
 WT/COMTD/PTA/2/1 
 
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  Figure 3: Chile's imports from World and from LDCs, 2010-2013 (index, 2010=100) 
 
Source: WTO Integrated Database 
 
4.5.  All products imported by Chile from LDCs during the 2011-2013 period are now eligible for DFQF treatment
15, as per the regulatory and procedural framework laid out above. 
 
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15 Thus during this period Chile did not import any products from LDCs under the 41 tariff lines that are 
not included in the DFQF scheme. In addition, it may be  noted that no imports from LDCs were recorded under 
the 35 tariff lines that are duty -free on an MFN basis.    WT/COMTD/PTA/2/1 
 
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  ANNEX 1 
BENEFICIARY COUNTRIES OF CHILE'S DFQF SCHEME1 
Beneficiary countries 
Afghanistan Malawi 
Angola Mali 
Bangladesh Mauritania 
Benin Mozambique 
Bhutan Myanmar 
Burkina Faso Nepal 
Burundi Niger 
Cambodia Rwanda 
Central African Republic Samoa 
Chad Sao Tome and Principe 
Comoros Senegal 
Congo, Democratic Republic of the  Sierra Leone 
Djibouti Solomon Islands 
Equatorial Guinea Somalia 
Eritrea South Sudan 
Ethiopia Sudan 
The Gambia Tanzania 
Guinea Timor-Leste 
Guinea-Bissau Togo 
Haiti Tuvalu 
Kiribati Uganda 
Lao PDR Vanuatu 
Lesotho Yemen 
Liberia Zambia 
Madagascar  
 
 
 
                                               
1 Taken from Decree No. 1.432. The Decree places these 49 beneficiary countries into three regions 
identified as Africa (34 countries), Asia and the Pacific (14 countries) and Latin America and the Caribbean (one country). WT/COMTD/PTA/2/1 
 
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  ANNEX 2 
BENEFICIARY COUNTRIES CLASSIFIED ACCORDING TO THE EXPORT  
PRODUCT CONCENTRATION INDEX (EPCI)1 
EPCI ˂ 0.49 0.49 ˂EPCI ˂0.75 EPCI ˃ 0.75
Afghanistan Burkina Faso Angola 
Bangladesh Burundi Chad 
Benin Comoros Equatorial Guinea 
Bhutan Guinea Guinea-Bissau 
Cambodia Kiribati South Sudan 
Central African Republic Liberia Sudan 
Congo, Democratic Republic of the  Malawi Yemen 
Djibouti Mali   
Eritrea Samoa   
Ethiopia Solomon Islands   
The Gambia Timor-Leste   
Haiti Vanuatu   
Lao PDR Zambia   
Lesotho     
Madagascar     
Mauritania     
Mozambique     
Myanmar     
Nepal     
Niger     
Rwanda     
Sao Tome and Principe     
Senegal     
Sierra Leone     
Somalia     
Tanzania     
Togo     
Tuvalu     
Uganda     
 
 
 
                                               
1 As indicated in Decree No. 1.432. The countries wi th higher EPCIs in the second and third columns 
were eligible for DFQF treatment upon entry into forc e of the implementing regulations on 28 February 2014. 
The countries in the first column were eligible for DFQF treatment as of 1 January 2015. See also footnote 10 in the main text. WT/COMTD/PTA/2/1 
 
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  ANNEX 3 
TARIFF LINES NOT INCLUDED IN CHILE'S DFQF SCHEME 
HS heading Tariff line Description 
1001  Wheat and meslin 
10019100 -- Seed 
10019911 ---- With a wet gluten content, by weight, of 30% or more 
10019912 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019913 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019919 ---- Other 
10019921 ---- With a wet gluten content, by weight, of 30% or more 
10019922 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019923 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019929 ---- Other 
10019931 ---- With a wet gluten content, by weight, of 30% or more 
10019932 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019933 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019939 ---- Other 
10019941 ---- With a wet gluten content, by weight, of 30% or more 
10019942 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019943 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019949 ---- Other 
10019951 ---- With a wet gluten content, by weight, of 30% or more 
10019952 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019953 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019959 ---- Other 
10019961 ---- With a wet gluten content, by weight, of 30% or more 
10019962 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019963 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019969 ---- Other 
10019971 ---- With a wet gluten content, by weight, of 30% or more 
10019972 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019973 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019979 ---- Other 
10019991 ---- With a wet gluten content, by weight, of 30% or more 
10019992 ---- With a wet gluten content, by weig ht, of 25% or more, but less than 30% 
10019993 ---- With a wet gluten content, by weight, of 18% or more, but less than 25% 
10019999 ---- Other 
1101  Wheat or meslin flour 
11010000 Wheat or meslin flour 
1701 Cane or beet sugar and chemically pure sucrose, in solid form 
17011200 -- Beet sugar 
17011300 -- Cane sugar specified in Subheading Note 2 to this Chapter 
17011400 -- Other cane sugar 
17019100 -- Containing added flavouring or colouring matter WT/COMTD/PTA/2/1 
 
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  HS heading Tariff line Description 
17019910 --- Cane sugar, refined 
17019920 --- Beet sugar, refined 
17019990 --- Other 
 
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