SANTIAGO, Chile, Dec. 11 (UPI) -- Chilean President Ricardo Lagos announced Wednesday that the United States and Chile had reached a "good agreement" on free trade, after more than a decade of negotiations.
"After 11 years we have achieved a good agreement with the United States, the world's main economy, and Chile will have an agreement that will bring more work, more development, and more growth for this country," Lagos said during an event organized by the Education Ministry.
"I believe this is good news for Chile," the Chilean president added. Lagos's announcement came as Chilean Finance Minister Nicolas Eyzaguirre and Foreign Minister Soledad Alvear met with U.S. Trade Representative Robert Zoellick in Washington.
Lagos commended the work done by Chilean negotiators and gave special thanks to former finance minister and current Sen. Alejandro Foxley -- a member of Chile's Christian Democrat Party -- who held the first talks for an agreement with U.S. trade authorities in the early '90s.
"This task began when Senator Foxley served as minister of finance. It was started with Bush senior and concluded with Bush junior," Lagos said. "I want to thank our ministers Alvar and Eyzaguirre as well as the more than 100 negotiators," he added
Eyzaguirre spoke to the Chilean press from Washington, saying that in the past few days the parties had managed to iron out final differences on such controversial issues of capital flows, intellectual property rights, and the access of Chilean agricultural products to the U.S. market. Both Zoellick and Eyzaguirre postponed previous commitments to secure the signing of the agreement by Wednesday morning.
"We are a bit stunned due to so much emotion given that this was an epic session, almost comparable to the highest points in our country's history," Eyzaguirre said.
"We have negotiated with the world's largest power, we have managed to place Chile's name up high, and resolve issues that other countries way more developed than us were not able to, such as Singapore."
Although Foxley stated that he was not yet acquainted with the agreement's details, he said that it would highlight Chile's position within Latin America, as the region's countries will now have to concentrate on the formation of an eventual Free Trade Area of the Americas.
Chile's agreement with the United States marks the completion of a successful strategy by the Lagos administration to actively court trade partners in an effort to boost the domestic economy, presently enduring its fourth year of economic slowdown. The deal comes in the wake of Chile's recent free trade agreement with South Korea in November as well as April's completion of a commercial pact with the European Union.
In addition, given Chile's standing free trade agreements with both Canada and Mexico, the present pact will grant the nation full access to the three markets comprising the North American Free Trade Agreement.
Local analysts have commended the benefits that Chile obtained from negotiations, in spite of its small market and the fact that it will be the first South American nation to sign an FTA with the United States.
Among these figure the consolidation of the U.S. Generalized System of Preferences, or GSP, for Chile. The GSP provides for the duty-free importation of a wide range of products that would otherwise be subject to customs duty if imported from non-GSP-status countries.
Until now, the GSP had been periodically reviewed by U.S. trade authorities to either remove or add products subject to tariff preferences, whereas now the agreement will give a permanent status to the free access of Chilean exports such as copper -- which accounts for over 40 percent of Chilean shipments abroad -- methanol, wood and fruits.
In addition, most of Chile's industrial, fruit, agriculture, agribusiness and textile products will enjoy a zero-tariff status as soon as the agreement is in force.
The last days of negotiations had not been exempt, however, from turbulence as the thorny issue of capital flows stalled conversations, previously scheduled to end Tuesday.
The intervention of Eyzaguirre is said to have been pivotal, as he managed to secure the Chilean Central Bank's faculty to apply reserve requirements to foreign capitals. The issue had been a matter of heated debate between negotiators, as the United States wanted to remove these requirements.
Reserve requirements, a fraction of a bank's deposits that it must withhold from loans or investments to maintain a protective reserve, were widely used by Chile in the past decade in order to prevent capital flight.
In 2001, commercial exchange between Chile and the United States reached $5.7 billion, further consolidating the latter's status as the local economy's main trade partner.
