About Chile

Market Overview

Nestled between the Andes mountain range and the Pacific Ocean, Chile is one of Latin America’s most open, stable and attractive markets. Its strengths include sound economic policy-making, a transparent regulatory system, an educated workforce and good basic infrastructure. Prudent economic policies and an open attitude towards trade and investment have provided Chile with stable long-term growth.

The U.S. Chile Free Trade Agreement (FTA) came into force January 1, 2004. Some 90 percent of U.S. goods now enter Chile duty-free. All remaining tariffs on U.S. goods will be phased out by 2015.

U.S. merchandise exports to Chile increased 32 percent in the first ten months of 2004, compared to the same period of 2003, growing from $2.24 billion to $2.96 billion. 15 percent of Chile’s imports come from the United States.

Chile’s economy grew 5.8 percent in 2004. The Central Bank of Chile projects 2005 GDP growth of between 5.25 and 6.25 percent.

Strong GDP growth, low inflation and prudent fiscal and monetary policies mean Chile’s credit rating remains the best in Latin America, with a long-term foreign currency sovereign credit rating of A (Standard and Poor’s, June 2004).

Market Challenges

Perhaps the greatest challenge to a U.S. firm seeking to export to Chile is the high degree of competition. Chile is relatively open to trade and investment and, as a result, many foreign firms are already present in the market.

Chile has free trade agreements with most of its major trading partners: Canada, Mexico, Central America, the European Union, the European Free Trade Area, South Korea and the United States. Chile has trade agreements with its Latin American neighbors, is an associate member of Mercosur and a participant in the Free Trade Area of the Americas negotiations. Chile is also negotiating FTAs with China, India, New Zealand and Singapore.

A key to competing is finding the right Chilean partner. A good Chilean agent or distributor can use their business or social connections to open doors. They can also help overcome regulatory, as well as cultural and language barriers.

For businesses in certain sectors, intellectual property rights protection (IPR) can also be a challenge in Chile.

Market Opportunities

The fast growing Chilean economy is generating investment and new opportunities for foreign investors and suppliers. The U.S. Chile FTA coupled with a more competitive U.S. dollar offers further advantages for U.S. exporters. See chapter 4 for some key best prospects.

The Chilean peso has appreciated by as much as 20 percent against the U.S. dollar since 2003. U.S. products are likewise more competitive vis-à-vis goods from Europe and elsewhere.

The U.S. Chile FTA leveled the playing field and wiped out duties on 90 percent of U.S. exports to Chile. In the first 10 months of the Agreement, U.S. exports to Chile rose 32% while Chilean exports to the U.S. rose 27%.

  • U.S. industrial goods exports increased 35.5 percent in the period.
  • Construction equipment exports rose 65 percent.
  • Medical equipment exports grew 39 percent

Chile’s mining sector represents over 50 percent of all Chile’s exports, and its expansion is helping drive growth in the economy as a whole. The value of Chile’s mineral exports leaped 94% last year. Billions of dollars of investment in mine expansion and new mine projects are planned.

Significant investment in key sectors such as forestry, agriculture, aquaculture, energy and construction is underway. Upcoming major non-mining investment projects include:

  • CMPC (pulp & paper plants): $900 million
  • El Chamisero (housing development): $700 million
  • Agrosuper (agri-business): $500 million
  • Chiloe Bridge (infrastructure): $410 million
  • Endesa (hydropower generation): $375 million
  • Enap (oil & gas processing): $270 million