Chile

An Expert's View about Business Environment in Chile

Posted on: 28 Feb 2012

Recent Developments
•Thanks to its sound public finance and banking system, along with the relatively sustained world commodity demand, Chile continued to pick up fast last year, giving rise to an estimated economic growth of 6.2%. Look forward, the unassuming recovery of the global economy, as well as slower demand for commodities such as copper, will likely moderate the country’s economy, giving rise to a slower pace of growth of 4.3% for 2012
•Hong Kong’s total exports to Chile increased by 26% to US$497 million in 2011, while its imports from Chile rose by 7% to US$408 million.

Current Economic Situation

Despite the disastrous earthquake in February 2010, which caused serious damages at a total of about US$29.7 billion to the country’s key industries such as wine, fish and paper pulp, the Chilean economy posted a 5.2% growth in the year. Thanks to its sound public finance and banking system, along with the relatively sustained world commodity demand, the country continued to pick up fast, giving rise to an estimated growth of 6.2% for 2011.

Looking ahead, reviving domestic demand and investment in the energy and mining sectors, plus the country’s pro-business administrative regime, will continue to boost consumer and investor confidence, leading to further growth of the Chilean economy in 2012. However, the unassuming recovery of the global economy, as well as slower demand for commodities such as copper, will weigh on Chile’s industrial and external sectors, despite the continued boost from the reconstruction work for the disastrous earthquake. Taken together, the Chilean economy is forecast to expand by a slower pace of 4.3% in 2012.

Trade Policy

Chile’s import system is based on the principle that all goods may be freely imported and anyone may engage freely in international trade transactions. As such, importers are not subject to any registration requirements. However, they are required to hire an accredited customs broker to enter the merchandise if the FOB value of such merchandise is higher than US$500. The use of a customs broker is not mandatory in several other instances, including merchandise entering into a free trade zone.

Chile adopts the Harmonised System for Tariff Classification and affords at least most favoured tariff treatment to all its trading partners. Virtually all imports are subject to a most-favoured-nation (MFN) duty of 6% ad valorem. Apart from import duties, products imported and/or circulated in Chile are essentially subject to a value-added tax (VAT) of 19% as domestic goods, excise taxes and some other charges, including an airport tax.

Regarding safeguard measures, Chile has been extremely restrained in its use of trade remedies. It does not apply any anti-dumping (AD) or countervailing (CV) measures on imports from the Chinese mainland or Hong Kong. Besides, Chile does not have any import quotas in place, nor does it impose any licensing requirements on imports or have any pre-shipment inspection requirements. However, certain goods require approval or certification prior to importation, while other goods require approval or certification for customs clearance.

Concerning foreign exchange, Chile does not impose any limits on the amount of currency derived from trade operations that can be brought in or out of the country, although Chilean exporters and importers with a total export or import value of US$5 million or higher on an FOB basis in any single year are required to provide certain information to Chile’s Central Bank.

Over the past two decades, Chile has developed an extensive web of FTAs with a range of partner countries in the Americas, Asia, Europe and the Pacific region. Specifically, Chile has signed more than 20 FTAs with about 60 other countries or blocs including the US, the EU, Bolivia, China, Canada, Central America, Colombia, Ecuador, Japan, Mercosur (Argentina, Brazil, Paraguay, Uruguay and Venezuela), Mexico, Panama, Peru, South Korea, the Pacific-4 (New Zealand, Singapore and Brunei), the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), Australia and Malaysia. Meanwhile, Chile is negotiating an FTA with India, which is expected to be signed during the Asia Pacific Economic Cooperation (APEC) meeting scheduled to be held in Honolulu, Hawaii in November 2011.

On 18 November 2005, Chile signed its FTA with China, which entered into force on 1 October 2006. Roughly half of China’s exports to Chile in value terms were afforded duty-free treatment upon entry into force of the agreement. Duties for an additional 21% of China’s exports are to be phased out in equal stages over a five-year period, while duties on 26% of China’s exports will be phased out over a ten-year period. Only some 3% of China’s exports are excluded from the scope of the free trade agreement. Products subject to five-year staging is now tariff-free (since 1 January 2010), while products subject to ten-year staging currently face a 2.4% duty rate.

On 13 April 2008, China and Chile signed the Supplementary Agreement on Service Trade to the Free Trade Agreement According to the agreement, China’s 23 sectors and sub-sectors, including service in sector of computer, management and consulting, real estate, mining, environment, sports and air transport, and Chili’s 37 sectors and sub-sectors, including service in sector of legal service, construction and architecture, engineering, computer, R&D, real estate, advertisement, management and consulting, mining, manufacturing, leasing, distribution, education, environment, tourism, sports and air transport will further be opened up to each other under the WTO commitments.

Chilean standards and technical regulations do not distinguish between foreign and domestic goods. Chile has so far issued over 1,000 technical regulations covering a broad spectrum of products. Standards, on the other hand, are voluntary and are adopted through consensus among parties from both the public and private sectors who are invited to participate in the consultations. The National Institute for Standardisation (INN) has overall responsibility for the elaboration of standards. In addition, Chile is a member of the Pan-American Standards Commission (COPANT), the International Organisation for Standardisation (ISO), the Inter-American Metrology System (SIM) and the InterAmerican Accreditation Cooperation (IAAC).

Chile has labelling regulations in place for a wide range of products. In general, products commercialised in Chile must be labelled with the name or registered brand and address of the producer or importer, the country of origin and care instructions. The information included must be accurate and be provided in Spanish.

There are two free trade zones in Chile: the Free Zone of Iquique (ZOFRI), Region I, in the far north, and the Free Zone of Punta Arenas (PARANEZON), Region XII, in the far south. ZOFRI is a major entry point for products bound for Bolivia and Peru, Paraguay and northern Argentina. ZOFRI encompasses the free ports of Arica and Iquique, while PARANEZON also has a free port. Each free trade zone is equipped with manufacturing, packaging and exporting facilities. Imports entering the free zones of Iquique and Punta Arenas are duty-free. However, imports leaving the free trade zones to enter the Chilean market pay full tariff and VAT charges.

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Posted: 28 February 2012

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