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 … Although Chile was not an important cotton importer (HTS Codes 140420 and 520100), Argentina, Brazil, and the United States compete for market share. U.S. cotton faced a 6-percent import tariff, and other suppliers faced similar tariffs. The U.S. share of Chile’s $14 million import market averaged 27 percent from 2001-2003. The United States exported an averaged of $4.5 million from 2001-2003.

With the agreement … U.S. cotton gained preferential access as Chile’s import tariff were immediately eliminated.

With the agreement … Chile gained preferential access as U.S. import tariffs on cotton are phased out over 12 years. However, since Chile does not produce or export cotton, there will not be any impact on the U.S. cotton industry.