Terms Are Set for U.S.-Chile Trade Pact

The United States and Chile concluded negotiations Wednesday on a free-trade agreement that will lower barriers for U.S. farm goods, machinery and services, expanding the U.S. campaign to create a trade zone stretching from Alaska to the tip of South America.

Beneficiaries of the wide-ranging pact include California beef and pork producers and Midwest grain and soybean growers. The deal also would provide Silicon Valley technology firms tougher intellectual property protection and allow U.S. banks to offer pension services to Chilean consumers. Two-way trade between the two countries totaled $8.8 billion in 2001.

Under the proposed U.S.-Chile agreement -- the first between the United States and a South American country -- tariffs on more than 85% of consumer and industrial goods would be lifted immediately and tariffs on three-quarters of farm goods would disappear within four years, according to the U.S. Trade Representative’s Office. The remaining tariffs and quotas on agriculture goods, one of the most sensitive arenas, would be phased out over 12 years.

The pact would open the door wider for Chilean products that have already made dramatic inroads in the United States, particularly in fruits and vegetables and processed foods. For that reason, the U.S. farm community had mixed feelings.

“They have the potential to export more to us than we have the ability to export there,” said Bruce Berven, executive director of the California Beef Council in Pleasanton. “But we believe in free trade, and this is precedent-setting.”

Activists vowed to oppose the deal, which must be submitted to the two governments for approval. The deal also was attacked by tobacco foes, who accused the Bush administration of caving in to tobacco interests by dropping plans to exclude their products from tariff cuts.

“This last-minute, closed-door reversal is only the latest example of this administration’s willingness to appease Big Tobacco at the expense of public health,” said Rep. Lloyd Doggett (D-Texas), who along with Rep. Henry A. Waxman (D-Los Angeles) called for an investigation.

U.S. and Chilean trade officials emphasized that the implications extend far beyond the trade relationship, giving a boost to the proposed regional trade bloc known as the Free Trade Area of the Americas. It also bolsters a key free-trade supporter in a region where economic and political turbulence has unleashed anti-trade sentiments.

“Chile is an ideal free-trade partner for the United States because of its sound macroeconomic policies and commitment to free trade,” U.S. Trade Representative Robert B. Zoellick said in a statement announcing the agreement’s completion.

President Bush has made the hemisphere-wide free-trade agreement a top priority, and the United States has recently started free trade talks with five Central American countries, Australia, and six African countries. The U.S., which also is wrapping up a trade agreement with Singapore, currently has free-trade agreements with Canada, Mexico, Israel and Jordan.

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Times staff writer Myron Levin contributed to this report.