MercoPress. South Atlantic News Agency

Chile's exporters hit by their own success

Beginning October 1, a new tariff of 7.4% will be imposed on Chilean agricultural exports to the United States due to restrictions mandated by the Free Trade Agreement (FTA) between the two countries.

The restrictions require Chile to pay taxes on agricultural products when they exceed 50% of total U.S. imports in that category.

Since Chile's exports to the U.S. of apple, quince, and pear pastes and purees exceeded the 50% quota in 2005, the tax will take effect October 1. Until recently no such duties were paid on these goods.

Other successful Chilean agriculture exports to the U.S. that may soon surpass the 50% mark include raspberries, blueberries, peppers, and fruit and vegetable juices.

"We never expected that this part of the law (in Chapter 3) was going to be applied," said Hugo Baierlein, director of the Federation of Chilean Industry (SOFOFA). SOFOFA is a non-profit organization in Chile that represents industrial interests. Its members account for 80% of Chilean industrial output and 30% of GDP.

SOFOFA is now asking Chile's government to have the proviso removed from the free trade agreement at the next meeting with US trade officials.

"The objective of our free trade agreement with the United States was to sell more untraditional products in US markets. But since the agreement was signed, sales of certain fruits have exploded, undermining the FTA," said Baierlein.

Chile has asked the U.S. Secretary of Commerce to take another look at Chapter 3, in hopes that this year's agricultural exports will not be subjected to the new duty, said Igor Garafulic, director of International Affairs at the Ministry of Agriculture.

By Matthew D. Silverman The Santiago Times