By Elizabeth Pietanza

Once Congress granted President Bush Trade Promotion Authority in August 2002, it became a priority for the Bush Administration to negotiate and establish the Chile-US Free Trade Agreement (FTA). In researching the Chile-US FTA, I have come to learn more about how the agreement fits into Chile’s overall commitment to both criminal and economic reform. The effects of Chile’s recent and dramatic Reforma Procesal Penal (Criminal Procedure Reform), which employs concepts such as due process and transparency, goes well beyond the practice of criminal law. Its existence factored strongly in the U.S.’ decision to enter the FTA because the Reforma has helped U.S. companies feel much more secure about pursuing business in Chile. Investors and trade partners can devalue their risk just by knowing due process of law and transparency exist in government procedures. So in what ways can the Reforma, transferred into enactment of the FTA, eventually impact both the Chile and the U.S.?

Currently, U.S. trade with Chile represents less than one half of one percent of the U.S. GDP, while the U.S. is Chile’s largest single country trading partner. With the enactment of the FTA, over 85% of trade in consumer and industrial products becomes duty-free. The increase in trade is expected to boost the Chilean GDP by U.S. $700 million and the U.S. GDP by U.S. $4.2 billion. There will evidently be a greater financial impact on the Chilean economy than there will be on the U.S. economy. If no dramatic economic benefit, what then, is the source of the hype and promotion in the U.S. for the Chile-U.S. FTA?

Chile has one of the most open and reformed economies in South America, as evidenced by its recent enactments of other FTAs with the European Union, Canada and Mexico. The Economist magazine recently named Chile as the best place in Latin America to do business in the next five years. The 2002 Index on Corruption Perceptions ranks Chile 17th, just behind the U.S. and ahead of Germany, Japan and France. The U.S. earnestly pursued the FTA with Chile to set an example for other countries: commitment to democratic ideals can eventually raise economic standards. The U.S. also hopes that successful free trade with Chile will help serve as a step toward completing the Área de Libre Comercio de las Américas (ALCA), known in the U.S. as the Free Trade Area of the Americas, or FTAA. From January 12-13, 2004, President Bush traveled to Monterrey, Mexico to meet with 33 other national leaders from North, Central and South America and the Caribbean (except Cuba) at the Special Summit for the Americas. Though the goal of the Summit for the Americas is establishment of the FTAA, the meeting in Monterrey focused more on social development, democratic governance, and as President Lagos of Chile advocated, economic growth with equity, rather than just economic growth.

Time will be the true test for determining whether there is success is raising Chile’s economic standards with equity. Chile’s commitment to fair and open criminal justice may serve as an indicator that it is dedicated to establishing such ideals in all areas of law. And, the dependable rule of law is necessary to establish both economic growth and equity.

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