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Viewing cable 06SANTIAGO2031, TRADE AGREEMENT COMPLIANCE AND MONITORING --

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Reference ID Created Released Classification Origin
06SANTIAGO2031 2006-09-27 22:11 2011-08-25 00:00 UNCLASSIFIED Embassy Santiago
VZCZCXYZ0000
PP RUEHWEB

DE RUEHSG #2031 2702211
ZNR UUUUU ZZH
P 272211Z SEP 06
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC PRIORITY 0058
INFO RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHMFISS/HQ USSOUTHCOM MIAMI FL PRIORITY
UNCLAS SANTIAGO 002031 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD CI
SUBJECT: TRADE AGREEMENT COMPLIANCE AND MONITORING -- 
U.S-CHILE FTA 
 
REF: STATE 152063 
 
1. Per reftel, Post is providing an overview of the 
U.S.-Chile Free Trade Agreement, information on compliance 
and monitoring efforts and Post's POC for FTA-related issues. 
 
2. The U.S.-Chile Free Trade Agreement came into force on 
January 1, 2004.  In the two and a half years since, 
bilateral trade is up over 100 percent.  U.S. and Chilean 
exports have both enjoyed strong double digit growth.  The 
growth in trade has far exceeded all projections.  There are 
no indications that continued strong bilateral trade growth 
will abate in 2006.  The U.S. remains the largest single 
country market for Chilean exports.  In 2005, just over 
seventeen percent of Chilean exports went to the U.S. 
 
3. The strong surge in U.S. exports to Chile has not been 
followed by a similar jump in U.S. investment in Chile.  On 
the contrary, new U.S. investment in Chile in 2005 hit a 
ten-year low.  The U.S. remains the largest investor in Chile 
over the last twenty-five year period, but current U.S. 
investment interest in Chile is low.  One reason for that may 
be the lack of Chilean enforcement of intellectual property 
rights, the one dark lining of an otherwise highly-successful 
FTA.  However, beyond anectodal evidence from some U.S. 
pharmaceutical companies, Post finds it difficult to draw a 
direct correlation between the decline in new U.S. investment 
and the lack of IPR protection. 
 
4. The USG believes Chile is not complying with its FTA 
obligations in the area of intellectual property right 
protection.  Chile has been on the Watch List under the 
Special 301 Process since 1989.  However, in recent years and 
despite specific provisions in the FTA, there have been a 
number of violations of pharmaceutical patents held by U.S. 
companies operating in Chile.  For some of these companies, 
the losses have been significant.  The Government of Chile 
has taken some limited steps to address the problem, but 
these steps have been belated and it is far from clear they 
form the necessary and obligatory framework under the FTA to 
protect intellectual property rights in Chile.  In April 
2005, the USG announced that Chile would be subject to an Out 
of Cycle Review under the Special 301 process.  That OCR is 
ongoing and can be expected to conclude before the end of 
2006. 
 
5. On the specific issue of IPR protection, Post has an IPR 
Committee that consists of the Foreign Commercial Service, 
Foreign Agricultural Service, Legatt and State (the economic 
and public affairs sections).  That committee meets on a 
regular basis to discuss compliance with the FTA and to 
develop strategies, including training, to advance IPR 
protection in Chilean society and government. 
 
6. Post's main POC for periodic reporting and general 
compliance issues related to the FTA is Senior Economic 
Officer Michael Keller, KellerMR@state.gov.  Mr. Keller's 
telephone numbers are:  office (56-2) 330-3425, cell (56) 
9-158-4650, home (56-2) 955-0808 and fax (56-2) 330-3118. 
KELLY