What’s at Stake for Breakfast Cereals?

On Dec. 11, 2002, the United States concluded negotiations on a free trade agreement (FTA) with Chile, the first such arrangement with a South American country. The U.S. – Chile Free Trade Agreement entered into force on January 1, 2004. This agreement provides America’s farmers, ranchers, food processors, and the businesses they support with improved, and in many cases, new access to Chile’s market of 15 million consumers. This comprehensive agreement calls for duty-free access on all products and addresses other trade measures for both countries.

Before the agreement … U.S. breakfast cereals faced an import tariff of 6 percent in the Chilean market. Without preferential access, U.S. breakfast cereals were at a disadvantage to products from countries such as Argentina and Mexico. The United States was the third largest supplier in Chile’s $7.5 million import market from 2001-2003. The United States’ market share averaged 21 percent and exports averaged $1.6 million from 2001-2003.

With the agreement … U.S. breakfast cereals (HTS Codes 190410 and 190420) gained preferential access as tariffs were immediately eliminated. The agreement leveled the playing field and helped U.S. products expand and compete against Chile’s largest suppliers.

Before the agreement … Chilean breakfast cereals faced tariffs up to 14.9 percent when entering the U.S. market. Chile’s position in the U.S. import market is negligible.

With the agreement … Chilean breakfast cereals gained preferential access as tariffs were immediately eliminated for some products, while tariffs for other products were reduced and then eliminated over 4 years.