(May 30) Chile’s decision to withhold support from the U.S. during the war with Iraq cost it a little prestige, but the U.S.-Chile Free Trade Agreement will be signed nonetheless.

About a month after the U.S.-Singapore Free Trade Agreement was signed, the U.S.-Chile trade pact will be signed June 6 in Miami by U.S. Trade Representative Robert Zoellick and Chilean Foreign Minister Soledad Alvear.

The trade agreement with Chile is seen as a precedent for the Free Trade Area of the Americas, an ambitious 34-country trade pact that has a deadline of early 2005.

The agreement with Chile won’t cause big shifts in horticultural trade.

A spokesman for the Chilean Embassy in Washington, D.C., said most of Chile’s fruit and vegetable exports to the U.S. enter duty free. Meanwhile, Chile has a flat rate of 6% for imports. The free trade agreement will eliminate tariffs over 12 years, but 8% of the $6 billion in bilateral trade of all goods will be duty free from the onset of the agreement, the spokesman said.

Chile, a country of 15 million with a economy generating $68 billion, has been aggressively pursing trade pacts. Chile has inked trade deals with Canada, Mexico, the European Union, Brazil, Argentina, Uruguay and Paraguay. A trade pact with South Korea waits approval by Chile’s legislature, the spokesman said.

He said the trade deal with Europe gives Chile larger quotas of duty-free access to the European Union market, though it retains the duty if the quotas are exceeded. Those quotas will increase over time.

Chile is already a big supplier of fruit to the U.S. market, shipping $758 million of both fresh and frozen fruit to the U.S. in 2002. Shipments of fresh grapes alone from Chile to the U.S. totaled nearly $460 million last year.

Shipments of fresh and processed vegetables from Chile to the U.S. totaled $11.7 million in 2002.

In contrast, shipments of fruits and vegetables from the U.S. to Chile in 2002 totaled only $9 million, according to the U.S. Department of Agriculture.

Robert Guenther, vice president of public policy for the United Fresh Fruit & Vegetable Association, Washington, D.C., said recent trade deals with Singapore and Chile and coming agreements with Latin American countries aren’t providing U.S. produce marketers with the market access they need.

“Chile right now is not a strong market for the domestic industry,” he said. “We need to expand our horizons.”

The U.S. has trade agreements with Canada, Mexico, Israel and Jordan, with Chile and Singapore pending congressional approval. Other trade deals with Central and South American countries and South Africa are in the works.

Produce industry observers stress that trade gains for the domestic horticulture industry must likely be won in ongoing World Trade Organization negotiations, since bilateral and regional trade deals either signed or in negotiations don’t seem to favor U.S. interests.

As a market, Chile roughly equals Los Angeles County, noted Kam Quarles, Washington, D.C.-based director of international trade policy and federal affairs for Sunkist Growers Inc., Sherman Oaks, Calif.

He said tariffs between the two countries are already low for fruit and vegetable products.

“There is not a lot to give away,” he said.

However, Quarles said a primary concern in free trade negotiations between the U.S. and other countries is that there is no weakening of the Uruguay Round sanitary and phytosanitary agreement. Quarles said he was still investigating particulars of the Chilean trade agreement.

Chile has accepted California citrus for years, but Quarles noted Chilean citrus growers and marketers have tried to pressure Chilean agricultural officials to exclude citrus from the market as late as this year.

“We were trying to send some loads down to Chile in March, and they cleared the port of entry with no problem, but local agricultural inspectors went to the owner of the retail stores with allegations that the fruit had phytosanitary problems, which was completely erroneous,” he said.

The ag inspectors, Quarles said, were acting on the allegation made by a Chilean citrus marketer.