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Country Commercial Guides for FY 2000: Chile Report prepared by U.S. Embassy Santiago, released July 1999

CHAPTER VI:   TRADE REGULATIONS AND STANDARDS

Trade Barriers

Chile generally has few barriers to imports or investment. Foreign firms operating in Chile enjoy the same protection and operate under the same conditions as local firms. The Chilean tariff rate is currently 10 percent on nearly all products from most countries, although many products from countries with which Chile has trade agreements enter with lower or no duties. No tariffs are levied on computer products. Imported automobiles are also subject to luxury tax based on 85 percent on the value above $10,300 (this value is currently revised by the Chilean Congress), which is adjusted annually for U.S. inflation and engine size (a sliding scale--this is being phased out). Other imported luxury goods such as yachts, some types of jewelry, furs, and others are also subject to luxury taxes. Duties on capital goods purchased for use in export production may be deferred for a period of seven years and waived under some circumstances. Imports are subject to the same 18 percent Value Added Tax (VAT) as are domestic goods.

One of Chile's most important non-tariff barriers was the enforcement of quarantine regulations on U.S. wheat that made imports commercially non-viable. This issue was resolved in 1997, so U.S. wheat can now enter subject to inspection. Import restrictions on fresh fruit are gradually being resolved, with U.S. products now entering Chile. Many of Chile's regulations are not based on widely accepted scientific principles. Imports of unprocessed U.S. poultry are still prohibited. Chilean grading and quality standards on beef are unique in the world and effectively prohibit imports from the U.S. as well.

Chilean law hurt sales of certain other industries. For example, international pharmaceutical companies argue that current law does not provide effective patent protection, and the Chilean tax system discriminates against U.S. whiskey (as well as whiskey from other nations.)

Customs Valuation

Chilean customs valuation uses the normal value of merchandise, without special discounts, plus freight and insurance (CIF). Used goods are valued by the customs service according to the current new value of similar merchandise, discounting 10 percent per year of use, up to a 70 percent discount.

Import Licenses

All imports require a license, but, according to legislation governing the Central Bank since 1990, import licenses are granted as a routine procedure for nearly all goods. Licensing requirements are maintained largely as a statistical gathering mechanism, not as a control. The general licensing requirements will disappear in an upcoming modernization of Chile's customs procedures. However, more rigorous licensing procedures apply for pharmaceuticals and weapons. Current rules make imports of over-the-counter drugs largely impossible.

Export Control

Chile applies export controls through the requirement of an export license, as well as phytosanitary and quality controls on certain products controlled by the National Health Service (Servicio Nacional de Salud, SNS), the Agricultural and Livestock Service (Servicio Agricola y Ganadero, SAG), and the National Fishing Service (Servicio Nacional de Pesca, SERNAP). Again, the licenses are required more as a means of gathering statistics.

Import/Export Documentation

Chile's Central Bank requires importers to obtain a registration certificate for goods valued over $3,000. Exporters must fill out a registration certificate when exporting goods valued over $2,000 FOB. This is to help the government gather trade data. Other commercial forms used by both local importers and exporters are commercial invoice, certificate of origin, bill of lading, freight insurance and packing list.

Temporary Entry

Temporary imports of goods are authorized for government-approved exhibitions and for temporary demonstrations. For Chilean government-approved exhibitions, no duty or VAT is levied. Goods may remain in the country up to six months, but must be kept in a warehouse. Goods imported for temporary demonstration purposes require the resident end-user or potential purchaser to obtain a temporary admission certificate from Chilean customs, and are taxed based upon the number of days they are in the country.

Labeling, Marking Requirements

Imported products customarily consumed by the public must display the country of origin on them before being sold in Chile. Packaged goods must be marked to show the quality, purity, ingredients, or mixtures, and the net weight or measure of the contents.

Canned or packaged foodstuffs imported into Chile must bear labels in Spanish for all ingredients, including additives, manufacturing and expiration dates of the products, and the name of the producer or importer. All sizes and weights of the net contents also must be converted to the metric system. Goods not complying with these requirements may be imported but not sold to consumers until conversion is made. Thus, foodstuffs labeled in English have to be re-labeled in Chile before they can be sold.

Prohibited Imports

The importation of used passenger and cargo transportation vehicles is prohibited. Exceptions to this import restriction include used ambulances, armored cars, mobile homes, prison vans, street and highway cleaning vehicles, and cement-making vehicles. Importers of these goods pay 10 percent import duty plus the VAT. Fire-fighting vehicles are not subject to import duty, and VAT is paid on their CIF value only.

Special laws allow new/used car imports by persons returning from exile, returning after working or studying abroad for a number of years, or domiciled in domestic free trade zones. These imports are also tax-exempt.

Standards

The National Standards Institute (Instituto Nacional de Normalizacion, or INN), has included the ISO 9000 standards as part of Chilean standards, and is in charge of their promotion among local manufacturers. The chemical industry is one of the few industries that has incorporated the ISO 9000 standards to its industrial processing lines.

In general, standards are not mandatory, but companies can voluntarily comply with them, especially in industries where such compliance constitutes a sort of "seal of approval." However, certain imported products, such as those pertaining to industrial safety, building and construction materials, and the gas and electricity industries, must comply with specific resolutions applying to the supervising entity.

Free Trade Zones/Warehouses

Chile's two free trade zones are the Free Zone of Iquique (ZOFRI) in the northern tip (Region I) of Chile, and the Free Zone of Punta Arenas in the southern tip (Region XII). ZOFRI encompasses the free ports of Arica and Iquique. ZOFRI is a major entry point for products bound for Bolivia, and to a lesser extent for products going to Peru, Paraguay, and northern Argentina. Punta Arenas also has a free port. Modern facilities for packaging, manufacturing, and exporting exist in each zone.

Duties and VAT requirements are as follows:

1. imports entering and remaining in Chile's free trade zones pay no duty or VAT;
2. imports leaving the free trade zones, but remaining in regions I or XII (considered "extended" duty-free zones) pay a six percent import duty, but no VAT;
3. imports leaving the free trade zones to enter the greater Chilean market pay full tariff and VAT charges;
4. subject to negotiations with Chilean customs officials, imports can remain in-bond for extended periods while awaiting transshipment to other countries.

Imported goods may remain in customs warehouses for 90 days. If said goods are unclaimed after the 90-day period, the goods will be declared abandoned by Customs and sold at public auction.

Special Import Provisions

Animal Health and Phytosanitary Requirements: Chile occasionally uses animal health and phytosanitary requirements that impede imports. The application of certain phytosanitary requirements for poultry is a non-tariff barrier seemingly meant to discourage imports. Chilean authorities have in some instances eliminated or liberalized specific requirements when presented scientific evidence by U.S. animal health or phytosanitary officials. All food products entering Chile are subject to sampling and analysis by health authorities.

Firearms can be imported, but they require a special permit from a military authority in Chile.

The import of pharmaceutical specialties, cosmetics, and most biological and bio-chemical preparations requires prior registration with the Institute of Public Health (Instituto de Salud Publica), and may be subject to special labeling and other requirements, depending on the nature of the individual product.

Imported goods that are considered inconsistent with Chilean "morals, public health, national security, or environment" require special authorization to enter into Chile. These include certain personal security products such as mace sprays, certain chemicals/processes, and some media products that face review and possible censorship. It should be noted that all films, videos, and TV programs, imported or locally produced, are reviewed for suitability.

Membership in Free Trade Arrangements

Chile has free trade agreements with Canada, Mexico, Colombia, Venezuela, Ecuador, Costa Rica, and Mercosur (Argentina, Brazil, Paraguay and Uruguay) that provide for duty-free trade in most products. Chile also has a trade liberalization agreement with Bolivia. Negotiations are underway with Peru and, in a longer-term process, the European Union.

In 1995, Chile began negotiations to join the NAFTA. Those talks have been stalled because the U.S. Congress has not approved so-called "fast track" negotiating authority for the Executive Branch, but any approval this year is unlikely. However, were fast track authorized it would facilitate USTR negotiation of Chilean accession to NAFTA or a bilateral trade agreement with the U.S.