U.S. and Chile Free Trade Agreement: Frequently Asked Questions

Ever since the the U.S.-Chile Free Trade Agreement (FTA) was signed, I have received questions from exporters asking how the agreement works and how to qualify their products for preferential duty treatment under the agreement. I have compiled a list of the top 10 questions I have received and provided a short answer for each.

1. What Is the U.S.-Chile Free Trade Agreement?

The U.S.-Chile Free Trade Agreement is an agreement between the United States and Chile that allows both nations to develop economic relations and to establish free trade between the two nations through the reduction and elimination of tariffs.

2. Does the agreement require additional paperwork for all of my shipments to Chile?

No. Only goods that are deemed to be originating and claim eligibility for lower preferential rates of duty are affected by the U.S.-Chile FTA.

3. Can I use a United States-Mexico-Canada Agreement (USMCA) Certification of Origin to declare that my products qualify for preferential duty treatment under the U.S.-Chile FTA?

No. An example of a format can be found on the Shipping Solutions website in PDF format. Chilean Customs will not recognize origin claims for preferential duty made on a USMCA or other certificate of origin that references any agreement other than the U.S.-Chile Free Trade Agreement.

4. Who benefits from the lower duty rates negotiated under this agreement?

The importer and exporter both benefit. The importer pays for the duties as a matter of clearing the goods through customs, and will benefit if the good being exported to Chile qualifies as originating. Where the duty payable on a shipment is considered significant, it may affect the competitiveness of the U.S. supplier when the importer decides what to buy and from whom to buy it. An exporter that is able to prove that their goods are originating may afford their buyer considerable savings. In essence, they are discounting their product at no cost to themselves.

5. How can my product qualify to take advantage of the U.S.–Chile Free Trade Agreement?

The product must qualify as originating. See my article, U.S.-Chile FTA: How to Qualify and the Certificate of Origin Form.

6. To be eligible for preferential duty rates, is it necessary to fill out a certificate of origin?

For goods valued at less than US $2,500, it's not necessary to fill out a certificate of origin. If the goods are more than US $2,500, the exporter must complete a U.S.-Chile Certificate of Origin.

7. I've heard that packaging materials and containers are not considered when qualifying a good under the U.S.-Chile FTA. Is this true?

When the packing materials and containers are used for shipping purposes, they are disregarded in determining the origin of the shipped good.

In cases where the packaging material or container is for retail sale, it will be disregarded in qualifying the good only if it's classified with the good and the good qualifies using the tariff shift method. If the container is not such that its classification is contained within the classification of the good, or if the regional value content method is used, the material or container must be considered to determine whether or not the good qualifies as originating.

8. I often send accessories for my product separately from the product. Will these qualify automatically if the main product qualifies?

When accessories, spare parts or tools are delivered with a good, they are regarded as a material used in the production of the good as long as they 1) are classified with and not invoiced separately from the good, and 2) the quantities are not considered to be unusual. However, when these ancillary items are sent separately from the original good, they become the good and must qualify as such.

9. Does this agreement affect the treatment of used goods entering Chile from the United States?

Used goods from the U.S. that are originating will no longer be subject to a 50 percent surcharge upon entering Chile.

10. If the originating status of my products are unclear under the U.S.-Chile FTA, is there a way I can find out the position of Chilean customs prior to the arrival of my goods in Chile?

The customs authority of Chile will issue "advance rulings" at the written request of the importer, exporter or producer on questions of tariff classification, duty drawback, origin and treatment of goods entering temporarily for repair or alteration. Those wishing to request an advance ruling must do so in Spanish.

The request should be directed to the Director Nacional of the Subdireccion Tecnica de la DNA. All information regarding the facts and circumstances of the inquiry should be included with the request as it will be required by the Customs authority in order to make a determination. A fee of 50,000 pesos—approximately US $75—will also be required to cover associated administrative costs.

Advance rulings will remain in effect for at least three years from the date of their issuance and will be made publicly available, subject to confidentiality requirements in domestic Chilean law. Chilean customs has up to 150 days to issue an advance ruling from the date of the request.

This post was originally published in June 2004 and has been updated to include current information, links and formatting.