Commodity Fact Sheet
What’s at Stake for Deciduous Fruits?
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.
U.S. Deciduous Fruits Gain Improved Access to Chile’s Market
Before the agreement… U.S. deciduous fruits faced Chilean import tariffs of 6 percent. Without preferential access, U.S. deciduous fruits were at a disadvantage to fruit from Canada, Mexico, Brazil, and the European Union. Also, U.S. fresh fruits such as peaches, nectarines, and other stone fruits faced phytosanitary barriers in Chile.
The U.S. share of Chile’s import market was more than 50 percent for some fresh deciduous fruits. On the other hand, the U.S. market share for dried fruits was less than 2 percent since Chile is a major dried fruit producer. Likewise, the United States had less than a 5-percent share of Chile’s frozen fruit import market. As for some specific cases, exports of U.S. fresh apples averaged $15,000 from 2001-2003. On the other hand, U.S. table grape exports to Chile averaged $23,000 per year from 2001 to 2003.
With the agreement… U.S. deciduous fruits gained preferential access, as the 6-percent import tariff was immediately eliminated.
Chilean Deciduous Fruits Secure Improved Access to U.S. Buyers
Before the agreement… Most fresh and processed fruits from Chile entered the U.S. market duty-free. In the case of table grapes, Chilean product faced a tariff of $1.13 per ton. U.S. annual imports of table grapes from Chile were valued at about $427 million from 2001-2003 and accounted for about 66 percent of all table grapes imported by the United States. Table grapes from Chile were shipped from December through May providing a reliable supply during the winter and spring months. Thus, Chilean table grapes do not generally compete with domestic-grown grapes because harvests run counter seasonal. The one exception is table grapes grown in and around the Coachella Valley of southern California and western Arizona which are marketed in the spring and which account for 10-15 percent of domestic production.
In the case of fresh berries, Chile had either duty-free access or faced negligible tariffs up to 1.1 cents/kg., depending on the product. For canned deciduous fruit, Chile had either duty-free access or tariffs ranging from 4.5 percent to 29.8 percent, depending on the product. In the case of raisins (HTS Code 080620), Chile had either duty-free access to the U.S. market or faced negligible tariffs up to 1.8 cents/kg.
With the agreement… Since Chile already has duty-free access for most deciduous fruits, the agreement was expected to have little impact on Chile’s total freshfruit shipments to the U.S. market. The nominal duties were immediately eliminated on table grapes. In the case of fresh berries, nominal duties were immediately eliminated. The tariffs on most frozen berries will be eliminated in 8 or 12 years, depending upon the product. The agricultural safeguard mechanism will apply to frozen cherry products.
In the case of canned pears, canned apricots, canned nectarines, and canned fruit mixtures, a 12-year, non-linear tariff reduction schedule applies as well as the agricultural safeguard provision. Under the non-linear formula, the tariff remained at current rates for the first 4 years, then reduce by one-third over the next four years, and the remaining duty is phased out over the subsequent four years. The non-linear formula also applies to canned peaches. An 8-year tariff reduction schedule will apply to dried apricots and most other dried fruit. The non-linear tariff reduction formula will be used to eliminate the tariff on dried plums.
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