RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/220 
2 September 2009  
 
(09-4071) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
CHILE 
 
  
 
This report, prepared for the fourth Tr ade Policy Review of Chile, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Chile on its trade policies and practices. 
 
Any technical questions arising from this  report may be addressed to Mrs Martha 
Lara de Sterlini (tel. 022 739 6033), Mr  Angelo Silvy (tel. 022 739 5249) and 
Mr Raymundo Valdés (tel. 022 739 5346). 
 
Document WT/TPR/G/220 contains the policy statement submitted by Chile. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Chile. Chile WT/TPR/S/220 
 Page iii 
 
 
CONTENTS 
 
  Page 
SUMMARY OBSERVATIONS vii 
 (1) E CONOMIC ENVIRONMENT  vii 
 (2) T RADE AND INVESTMENT POLICY FRAMEWORK  vii 
 (3) M ARKET ACCESS FOR GOODS  viii 
 (4) O THER MEASURES AFFECTING TRADE  ix 
 (5) S ECTORAL POLICIES  x 
I. ECONOMIC ENVIRONMENT 1 
 (1) O VERVIEW  1 
 (2) M ACROECONOMIC TRENDS  2 
 (i) Economic structure and trends 2  (ii) Fiscal policy 5 
 (iii) Monetary and exchange policy 7 
 (iv) Balance of payments 9 
 (3) M
ERCHANDISE TRADE AND INVESTMENT FLOWS  10 
 (i) Composition of trade 10 
 (ii) Direction of trade 11 
 (iii) Trade in services 11 
 (iv) Foreign direct investment 11 
 (4) O UTLOOK  11 
II. TRADE POLICY REGIME 13 
 (1) O VERVIEW  13 
 (2) T RADE POLICY AND INVESTMENT FRAMEWORK  13 
 (i) General legal and institutional framework 13 
 (ii) Trade policy formulation and objectives 15 
 (3) F OREIGN INVESTMENT  16 
 (i) Legal framework 16 
 (ii) International investment agreements 19 
 (4) I NTERNATIONAL TRADE RELATIONS  19 
 (i) World Trade Organization 19 
 (ii) Regional Trade Agreements 21  (iii) Other agreements and arrangements 23 
III. TRADE POLICIES AND PRACTICES BY MEASURE 25 
 (1) O
VERVIEW  25 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  26 
 (i) Procedures, documentation and registration 26 
 (ii) Customs valuation 29 
 (iii) Rules of origin 29 
 (iv) Tariffs 31  (v) Other charges affecting imports 35 
 (vi) Import prohibitions, restrictions and licensing 37 
 (vii) Anti-dumping, countervailing and safeguard measures 39 WT/TPR/S/220 Trade Policy Review 
Page iv 
 
 
 
  Page 
 
 (viii) Technical regulations and standards 44  (ix) Sanitary and phytosanitary measures 48 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  53 
 (i) Procedures, documentation and registration 53  (ii) Export taxes and duties 54 
 (iii) Export prohibitions and rest rictions and licensing regimes 54 
 (iv) Tariff and tax concessions 55  (v) Export financing and guarantees 57 
 (vi) Export promotion 60 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  61 
 (i) Establishment and taxation of enterprises 61 
 (ii) Competition policy and price control 63 
 (iii) Incentives 66  (iv) State-owned enterprises and privatization 70 
 (v) Government procurement 71 
 (vi) Protection of intellectual property 75 
IV. TRADE POLICIES BY SECTOR 83 
 (1) O
VERVIEW  83 
 (2) A GRICULTURE AND FORESTRY  84 
 (i) General characteristics 84 
 (ii) Policy objectives and institutional framework 85  (iii) Agricultural support indicators 86 
 (iv) Policy instruments 88 
 (v) Forestry 92 
 (3) F
ISHING AND AQUACULTURE  93 
 (4) M INING   95 
 (i) General characteristics 95  (ii) Policy objectives and le gal and institutional framework 97 
 (5) M
ANUFACTURING  99 
 (6) E NERGY   101 
 (i) General characteristics 101 
 (ii) Hydrocarbons 102 
 (iii) Electricity 104 
 (7) S ERVICES  106 
 (i) General characteristics and multilateral commitments 106 
 (ii) Telecommunications 108 
 (iii) Financial services 111 
 (iv) Air transport and airports 118  (v) Maritime transport and ports 123 
 (vi) Professional services 126 
 REFERENCES 131 
 
APPENDIX TABLES 135 
 
 Chile WT/TPR/S/220 
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TABLES 
 
Page 
 I. ECONOMIC ENVIRONMENT 
 
I.1 Structure of the economy, 2003-2009 2 I.2 Evolution and structure of GDP by type of expenditure, 2003-2009 4 
I.3 Central Government finances, 2003-2009 5 
I.4 Key monetary indicators, 2003-2009 8 I.5 Balance of payments, 2003-2009 9 
II. TRADE POLICY REGIME 
 II.1 WTO dispute settlement cases involving Chile, January 2003-June 2009 21 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 III.1 MFN tariff structure, January 2009 31 
III.2 Breakdown of the MFN tariff, January 2009 32 
III.3 Taxes levied on imports and domestic goods, January 2009 36 
III.4 Goods subject to import formalities 38 
III.5 Interest rates:  lines of financing for exports - CORFO 58 III.6 Overview of intellectual property rights in Chile, 2009 77 
IV. TRADE POLICIES BY SECTOR 
 IV.1 Estimated support for agriculture, 2004-2007 86 
IV.2 Manufacturing sector GDP, constant prices 2003-2008 100 
IV.3 Rights for foreign airlines in Chile 122  
 
APPENDIX TABLES 
 
 
I. ECONOMIC ENVIRONMENT  
AI.1 Merchandise exports (f.o.b.) by product, 2002-2008 137 
AI.2 Merchandise imports (c.i.f.) by product, 2002-2008 139 AI.3 Merchandise exports (f.o.b.) by trading partner, 2002-2008 140 
AI.4 Merchandise imports (c.i.f.) by trading partner, 2002-2008 141 
AI.5 Trade in services, 2003-2008 142 
AI.6 Foreign direct investment (under Decree Law No. 600) by sector, 2003-2008 143 
AI.7 Foreign direct investment (under Decree Law No. 600) by selected country  of origin, 2003-2008 144 
II. TRADE POLICY REGIME 
 AII.1 Restrictions on foreign investment 145 
AII.2 Selected notifications to the WTO, June 2009 147 
AII.3 Overview of Chile's current regi onal trade agreemen ts, January 2009 150 
IV. TRADE POLICIES BY SECTOR 
 
AIV.1 Summary of Chile's commitments under the GATS 156 
 Chile WT/TPR/S/220 
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SUMMARY OBSERVATIONS 
 
1. Chile's trade and investment regime 
continues to be characterized by openness, 
transparency, predictability and inter-sectoral 
neutrality.  Chile applies an almost uniform MFN tariff and grants national treatment to foreign investors in all but a few cases.  Since its last Review in 2003, Chile has adopted 
measures to modernize customs and facilitate 
trade, abolished some import taxes and export subsidies, and introduced significant reforms to its competition policy, government procurement and intellectual property systems.  Regional Trade Agreements (RTAs) have 
continued to play a central role in Chile's 
liberalization strategy.  At the same time, Chile remains strongly committed to the multilateral trading system, where it participates actively. 
2. Open trade and investment policies, 
together with sound macroeconomic management, underpin Chile's solid economic growth and its capacity to implement aggressive counter-cyclical measures to respond to the current global financial crisis.  
Nevertheless, benefits could arise from 
re-examining with a view to changing measures such as the imposition of non-ad valorem  tariffs on a couple of 
agricultural products, import prohibitions on 
certain used goods, and the application of 
reciprocity requirements in a handful of activities. 
(1) E
CONOMIC ENVIRONMENT  
3. The Chilean economy grew at an 
annual average rate of 4.8 per cent between 
2003 and 2008, reflecting strong domestic demand and, to a lesser degree, export growth.  However, amidst the global economic crisis, 
the economy has cooled off since mid-2008 and was experiencing a contraction in the first 
half of 2009.  Sustained economic growth has 
allowed Chile to attain one of the highest per capita income in Latin America, of some US$10,000 per person.  At the same time, Chile has implemented internal policies to 
ensure that the gains from trade are more broadly distributed;  this and sustained growth 
have reduced the proportion of the population living in poverty from 21 per cent in 2000 to 14 per cent in 2008. 
4. Chile maintains a floating exchange 
rate system.  Monetary policy seeks to achieve an annual inflation target of 2 per cent to 4 per cent, and has generally kept inflation under control.  Fiscal policy aims at obtaining 
a structural surplus, which saw Chile enter the 
present global crisis with room for discretionary action.  As a result, Chile has been able to adopt an expansionary fiscal policy since 2008, using public assets accumulated when commodity prices were 
high.  Sound macroeconomic policies and 
open trade have allowed Chile to profit from economic specialization while lessening the vulnerabilities associated with it. 
5. Chile's external current account posted 
a positive balance for much of the period 
under  review, reflecting mainly a trade balance surplus.  Its exports consist mostly of primary products, which represented some 87 per cent of total merchandise exports in 2008.  Chile's main trading partners are the EU 
and the United States.  Chile has continued to 
record a deficit in its services balance, particularly in financial services and insurance.  FDI inflows have traditionally played an important role in Chile's economy;  
they were equivalent to some 3 per cent of 
GDP in 2008.  The main recipient sectors were mining, electricity and communications. 
(2) T
RADE AND INVESTMENT POLICY 
FRAMEWORK  
6. Since its last Review, Chile has not 
introduced fundamental changes in its trade policy, which, the authorities state, continues to aim at furthering Chile's integration into the world economy within a framework of predictable rules and under policies that 
promote social equity. 
7. Chile participates actively in the WTO 
and the DDA.  It considers that the multilateral trading system should be further strengthened WT/TPR/S/220 Trade Policy Review 
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and that certain issues on the trade agenda, 
such as the elimination of agricultural subsidies, can only be resolved in the multilateral sphere.  During the period under 
review, Chile has made regular notifications to 
the WTO.  It has been involved in several dispute settlement procedures, in four cases as a defendant, three as a complainant and 11 as a third party.  Chile is not a party to any of the 
WTO plurilateral agreements. 
8. One of the most prominent features of 
Chile's trade policy regime is the central role it gives to RTAs.  As at mid-2009 Chile had in force 21 RTAs with 57 trading partners;  13 of these agreements, with 18 partners, were 
concluded during the review period.  As a 
result, just over 92 per cent of Chile's total merchandise trade is carried out with preferential partners.  As in the case of other WTO Members, the overall economic 
implications of Chile's RTAs are complex.  In 
the case of Chile, concerns about its wide and expanding network of RTAs are allayed by Chile's strong support to the multilateral trading system. 
9. Chile considers foreign investment as 
an essential engine of growth, and an integral 
part of its open economic policy.  It grants national treatment to foreign investors, with a few exceptions in areas such as fisheries, air and maritime transport, and audiovisual 
services.  Chile has in force a large number of 
bilateral agreements to promote and protect foreign investment, and to avoid double taxation. 
(3) M
ARKET ACCESS FOR GOODS  
10. Since its last Review, Chile has 
continued to adopt measures to facilitate trade and to modernize customs, including new valuation regulations.  As a result of previous unilateral tariff reduc tions, since 2003 Chile 
has applied a single MFN tariff rate of 6 per 
cent, with a few exceptions that reduce 
somewhat the otherwise noteworthy simplicity and neutrality of Chile's tariff structure.  The exceptions are:  a 12.5 per cent rate on poultry products, a price band system applied to a handful of agricultural products, and a tariff 
surcharge of 50 per cent collected on almost all used goods.  Under the RTA with the United States, the MFN tariff on poultry 
products was increased to 25 per cent but is 
being progressively reduced back to 6 per cent.   A zero rate on certain capital goods reduces nominal tariff protection, but increases effective protection on final goods. 
11. The MFN tariffs applied to wheat, 
wheat flour and sugar vary with international prices as a result of the price band system applied to these products;  reflecting the high prices prevailing in recent years, the use of this system appears to have resulted in tariffs no 
higher than the general 6 per cent rate.  Two 
Panels found the price band system WTO-inconsistent.  Draft legislation under consideration aims to bring the system into conformity with WTO rules by introducing a 
fixed compound tariff;  the proposed change 
would increase tariff protection over the level actually applied in recent years. 
12. All tariff lines are bound, most at 
25 per cent;  a number of agricultural products are bound at 31.5 per cent.  Chile renegotiated 
the bound rate for sugar, resulting in an 
increase of the bound rate to 98 per cent and the introduction of a tariff quota in 2002.  Although Chile's applied tariff rates have been stable in practice, reducing bound rates would 
enhance certainty to MFN traders. 
13. Chile imposes other charges on certain 
import operations, some on an ad valorem  
basis.  Imports are subject to the same internal taxes as domestic goods, most notably to a 
19 per cent Value Added Tax (VAT).  Certain 
goods, such as alcoholic beverages, tobacco products, vehicles and jewellery, are subject to excise taxes.  Since 2003 Chile has abolished the airport tax and the customs dispatch tax. 
14. Chile does not apply quantitative 
import restrictions or import licenses.  
However, it prohibits, among others, the importation of most used motor vehicles, and used and retreaded tyres (except those wheel-mounted).  Initially introduced to assist the Chile WT/TPR/S/220 
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domestic vehicle assembly industry, the 
import prohibition on used motor vehicles is ostensibly maintained for safety and environmental reasons.  The import prohibition 
on used and retreaded tyres seeks public health 
objectives.  It would be valuable to study whether less trade-restrictive measures could achieve the same objectives sought through outright import prohibitions on used motor 
vehicles and tyres.  Also on safety, health and 
environmental grounds, Chile applies administrative formalities to certain imports. 
15. As at January 2009, Chile maintained 
only one anti-dumping measure in force.  During the period under review, Chile 
introduced two anti-dumping measures (on 
wheat flour) and three safeguard measures (on wheat flour and certain dairy products);  some of these measures have been challenged under multilateral rules.  On the other hand, by 
setting short application periods, Chile's 
legislation would seem to discourage the use of contingency measures for protectionist purposes.  Moreover, Chile supports stricter multilateral disciplines on the use of contingency measures, and has agreed to the 
reciprocal non-application of these measures 
under some RTAs. 
16. Since 2003, Chile has introduced no 
major changes to the legal or institutional framework governing the adoption and 
application of technical regulations or sanitary 
and phytosanitary measures (SPS).  Such framework aims to ensure non-discrimination and transparency, although there are no general guidelines for the elaboration and 
notification of SPS measures.  Chile has 
submitted numerous notifications on both types of measures during the period under review;  a reduced number of SPS notifications provided for shorter comment periods than those multilaterally recommended. 
(4) O
THER MEASURES AFFECTING 
TRADE  
17. Chile maintains a number of export 
promotion programmes that offer administrative facilities for the payment and reimbursement of import duties and VAT.  
During the period under review, Chile phased out certain aspects of these programmes that it had previously notified as providing export 
subsidies.  Several public financing and 
guarantee schemes are also offered to exporters, mainly to small- and medium-sized enterprises.  Chile does not apply export taxes. 
18. Chile has in place numerous other 
incentive programmes, but most eschew 
targeting particular sectors in favour of horizontal measures targeting small- and medium-sized enterprises, technological innovation or regional development.  Incentives generally consist of fiscal benefits, 
investment and R&D financing, and support 
for the development of entrepreneurial skills. 
19. Chile has introduced important reforms 
to its competition policy framework, most notably by establishing a competition tribunal 
to increase the autonomy of the competition 
system.  Further reforms to strengthen the investigative powers of the competition authority, in particular against cartels, are expected to come into force in late 2009. 
20. Chile is not a signatory to the WTO 
Agreement on Government Procurement but it 
is an observer in the respective WTO committee.  Since 2003, Chile has implemented significant reforms to increase the transparency and efficiency of public 
procurement, particularly through the adoption 
of new legislation and the use of electronic tendering.  The reforms have led to greater participation in the public procurement market.  There is no discrimination based on 
the origin of products, services or providers.  
Public procurement by state enterprises and procurement of construction works are subject to separate regulations. 
21. Reforms have also been made to 
Chile's intellectual property system with the 
aim of strengthening and adapting it to Chile's 
international commitments.  In some instances, the Chilean legislation goes further than the obligations of the TRIPs Agreement, for example, in certain aspects relating to the WT/TPR/S/220 Trade Policy Review 
Page x 
 
 
protection of copyrights and industrial 
property.  Chile has notified to the WTO the changes to its legislation. 
(5) S
ECTORAL POLICIES  
22. The agricultural sector has continued 
to play a major role in Chile's economic development, contributing both to the expansion and diversificati on of its exports.  In 
general, the sector enjoys a low level of 
support, which is mainly geared to small 
farmers and does not include production-based measures.  However, Chile has used contingency measures to protect domestic producers of wheat, wheat flower and certain dairy products, while the price band system it 
applies to wheat, wheat flour and sugar results 
in tariff protection that can vary inversely with the world price of these products.  This is at odds with Chile’s gene ral economic policies, 
and may hinder the reallocation of resources 
among activities that would support higher 
living standards in the long-run. 
23. Chile has managed to stabilize the 
production of its fishing sector.  Aquaculture has gained importance and now accounts for two-thirds of fish exports, but it is facing 
serious sanitary problems.  Foreigners must 
comply with residency and establishment requirements to invest in fishing or aquaculture activities, while companies must be Chilean majority-owned or be established 
in countries that grant r eciprocal treatment to 
Chileans. 
24. The mining sector consolidated its 
position as Chile's main export revenue generator and foreign investment recipient, 
benefiting from the high mineral prices that 
prevailed during much of the period since 2003.  The State continues to play a fundamental role as an operator in the sector, mostly in the production of copper.  During the review period, Chile introduced a new tax 
on mining activities.  A regulation remains in 
place requiring the main mining companies to deliver certain quantities of refined copper to domestic manufacturing enterprises;  in practice the quantities involved represent only 
a small fraction of Chile's copper production. 
25. The manufacturing sector has 
increased its productivity, and remains an 
important generator of value added and 
employment.  This reflects in part Chile's development strategy based on trade liberalization and inter-sectoral neutrality.  The sector continues to be largely based on the 
processing of natural resources, thus reflecting 
Chile's comparative advantage. 
26. Chile is highly dependent on imports 
of energy to satisfy domestic consumption, and restrictions on the foreign supply of gas in recent years have become a constraint to 
Chile's economic performance.  Chile has 
intervened in the domestic energy market to stabilize the price of certain fuels, possibly at a considerable fiscal cost;  it is also adopting policies aimed at ensuring a sustainable energy 
supply in the long-run. 
27. Chile made specific commitments in 
five of the 12 sectors of the GATS.  It adopted the Fifth Protocol on Financial Services and the Fourth Protocol on Basic Telecommunications, accepting also the 
Reference Paper on regulatory principles in 
telecommunications;  however, Chile made no commitments on basic local telecommunications.  In general, the market access provisions in Chile's legislation are 
considerably more liberal than the 
commitments it undertook under the GATS. 
28. Since 2003, no major changes have 
been made to the legal framework governing the telecommunications sector.  Concessions 
to operate public telecommunication services 
are granted to companies established in Chile, independently of the origin of capital.  However, concessions for radio broadcasting are not granted to companies with more than 10 per cent foreign capital unless their country 
of origin grants reciprocity to Chilean 
companies.  Generally, prices are market determined, except where a company has a dominant position in a sector subject to Chile WT/TPR/S/220 
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maximum price setting.  Interconnection fees 
are also fixed by law. 
29. Chile's financial sector shows 
significant diversification and 
internationalization.  Foreign banks and 
insurance companies may provide services in Chile through locally incorporated companies or branches with separate capital, which may engage in the same operations as domestic 
firms.  For reasons of national interest, 
approval is required to acquire more than 10 per cent of a bank's capital.  The establishment of branches by foreign insurance companies is possible since 2007;  cross-border supply of interna tional maritime and air 
transport insurance, as well as insurance of 
goods in transit, is also allowed since that year, but only for foreign companies from countries with which Chile has a treaty in this respect. 
30. Chile practices an "open skies" air 
transport policy based on reciprocity.  It has concluded 43 bilateral ai r transport agreements 
with different degrees of openness.  In maritime transport, cabotage is reserved to ships registered in Chile, with exceptions.  To 
register a ship in Chile, at least 50 per cent of the capital must be owned by Chilean persons 
or companies.  Subject to reciprocity considerations, cargo sharing requirements and a special tax may be applied to certain 
international maritime transport operations.  
There are no restrictions on foreign participation in concessions for the administration of ports and airports. 
31. A valid professional diploma is 
required to engage in a regulated profession in 
Chile, including law, engineering and accounting.  Foreign diplomas must be revalidated by the University of Chile or be otherwise recognized under one of Chile's international mutual recognition agreements.  
Only Chilean citizens or foreigners who have 
completed their law studies in Chile may appear before Chilean courts.  However, foreign legal consultants may provide legal advice on international or foreign law.  
Foreign engineers who have been hired to 
perform a particular job in Chile must receive temporal authorization from the national engineers professional association. Foreign accountants may establish a consultancy firm in Chile but must have at least one partner 
with a valid diploma to practice accountancy 
in Chile.