VZCZCXYZ0003
PP RUEHWEB

DE RUEHSG #0267 0461624
ZNR UUUUU ZZH
P 151624Z FEB 07
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC PRIORITY 1017
INFO RUEHBR/AMEMBASSY BRASILIA PRIORITY 3497
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 0102
RUEHCV/AMEMBASSY CARACAS PRIORITY 1279
RUEHLP/AMEMBASSY LA PAZ FEB 5035
RUEHPE/AMEMBASSY LIMA PRIORITY 4929
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 3532
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SANTIAGO 000267 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC 
COMMERCE FOR SARA MCDOWELL 
STATE PLEASE PASS TO USTR FOR SUE CRONIN 
 
E.O. 12958: N/A 
TAGS: ETRD EFIN PREL KIPR CI
SUBJECT: WITH FTA, U.S.-CHILE TRADE GROWS 133 PERCENT IN 
THREE YEARS 
 
¶1. Summary. The Chilean-American Chamber of Commerce released 
on February 12 its 2006 report on U.S.-Chile trade.  The 
numbers showed continued strong growth under the Free Trade 
Agreement (FTA), with bilateral trade up by 32 percent. 
Chilean exports to the U.S. jumped 43 percent compared to 
2005, reaching almost USD 9 billion.  U.S. exports to Chile 
rose a more modest 18 percent in 2006, surpassing USD 5.5 
billion.  The headline news was the stellar growth, 133 
percent, in bilateral trade over the first three years of the 
FTA.  The MFA is working on a similar study of the FTA's 
effects.  Preliminary data showed substantial growth over the 
first three years of the FTA, even when accounting for 
factors like the high price of copper and inflation.  Despite 
the roaring success of the FTA, issues remain such as market 
access for some U.S. products, such as poultry and beef, and 
the overarching challenge of a poor Chilean record on 
protecting intellectual property rights.  End Summary. 
 
¶2. The Chilean-American Chamber of Commerce (AmCham) released 
on February 12 its end-of-year study of the U.S.-Chile trade 
relationship in 2006.  The relationship showed continued 
strong growth, with bilateral trade growing by an aggregate 
32 percent.  Chilean exports to the U.S. totaled almost USD 9 
billion in 2006, surging 43 percent over last year.  The 
major Chilean exports to the U.S. were refined copper, salmon 
and unrefined copper.  Factoring out the high price of copper 
in 2006, AmCham estimated that Chilean exports to the U.S. 
still grew by 18 percent.  AmCham reported that 2,084 Chilean 
firms exported 1,993 different products to the U.S. market in 
2006, a slight drop in the number of firms and products over 
¶2005. 
 
¶3. The growth in U.S. exports to Chile was a more modest 18 
percent, totaling over USD 5.5 billion.  The major U.S. 
exports to Chile were petroleum products, automobiles, and 
mining and construction equipment.  High oil prices during 
parts of 2006 inflated the value somewhat of U.S. exports to 
Chile, but AmCham estimated that even factoring out higher 
oil prices, U.S. exports to Chile grew a very respectable 16 
percent.  AmCham listed 11,795 U.S. firms as exporting 4,995 
products to Chile in 2006.  This represented growth in both 
the number of U.S. companies dealing with Chile and U.S. 
products reaching the Chilean market. 
 
¶4. The Chilean government is also trying to assess the 
benefits of the first three years of the FTA.  Though its 
study is not complete, GOC officials told Senior Econoff that 
the initial data supported an equally rosy view of the FTA's 
success.  The GOC study factored out inflation and the high 
prices of copper and oil to look at real rather nominal trade 
growth.  According to GOC sources, removing those factors 
still showed growth of 62 percent in U.S.-Chile bilateral 
trade during the FTA's first three years. 
 
¶5. Comment:  However, as with all fairy tales, it is not 
perfect in paradise.  Significant issues remain in the 
implementation of the FTA, especially from the U.S. 
perspective.  The GOC has been slow to get over the technical 
hurdles that will allow the U.S. to export poultry and beef 
to the Chilean market.  Agricultural talks are scheduled in 
Washington for April 17 and 18 that will hopefully allow more 
U.S. exports into Chile. 
 
¶6. Comment Continued:  The other major issue marring the 
otherwise stellar performance of the FTA is Chile's poor 
record on intellectual property rights (IPR).  On January 8, 
2007, USTR placed Chile on the Priority Watch List.  Chile 
has a particularly poor record of protecting proprietary data 
and patents in the pharmaceutical sector.  There was also 
evidence in 2006 that piracy of music, films and movies 
worsened.  The major obstacle facing improved protection of 
IPR is the absence of any explicit GOC policy on IPR or the 
political will to make substantive improvements in IPR 
protection a priority. 
KELLY