US-Chile Free Trade Agreement
Secret trade deal threatens ancient temperate rainforests (*)

The bilateral trade agreement that was agreed upon by United States and Chilean trade negotiators in December of 2002 will mean harmful new pressures on the already threatened, biologically significant ancient forests of Chile. In the absence of additional measures for forest conservation, the US-Chile Free Trade Agreement creates a more favorable investment climate for US multinational timber companies seeking to exploit Chile's remaining forests. Many fear that the trade deal will spur new risks for forests and biological diversity, such as the re-initiation of a proposal by Boise Cascade to construct a massive chip mill adjacent to Chile's temperate rainforests, or added incentive to build the Southern Coastal Highway through these forests, facilitating transport of logs to markets.

The Central Bank of Chile has estimated that Chile's native forests will be gone by 2015 or 2020 if logging continues at current levels. A bilateral trade deal with the United States can only accelerate that rate of deforestation. The Chilean government seems to have conceded that it is only a matter of time before all of the nation's forests-outside of existing national parks-will be converted to ecologically sterile plantations.

The office of the US Trade Representative has concurred that these threats are present. In the draft Environmental Review (1) , the USTR found:

"Further opening of native forests in Chile has the potential to continue these trends [of converting forests to plantations], especially through the development of relatively untouched and unmanaged native forests in southern Chile."

"…If enforcement, administration, and the accompanying cost-share burden in Chile prove to be significantly lower than those in the United States… U.S. logging companies may choose to operate in Chile, possibly transferring environmental impacts…"

Chile serves as a stark example of the steep price of free market fundamentalism. The country is the site of extensive logging of ancient forests, water and soil contamination, and habitat destruction. The Chilean export model is built on the extraction of the nation's natural wealth and the externalization of environmental costs.

Threat to Chilean and US forests

Chile is a land of high biological diversity, including one-third of the remaining old growth temperate forests in the world, and one of the world's last two extensive temperate rainforests. Due to their isolation, these forests have evolved as a virtual biological island, containing hundreds of tree and vascular plant species found nowhere else on earth. Chile's alerce tree, Fitzroya cupressoides, the southern hemisphere's equivalent to the redwoods of California, can live to be 4000 years and grow to almost 400 feet tall. Also residing in the Chilean forests are mountain monkeys (2) , austral parrots, the tiny pudu deer, woodpeckers. Many of these species have been identified as endangered, but they have been afforded insufficient protection.

The US-Chile Free Trade Agreement will likely increase pressure on Chilean forests through several specific mechanisms, including the creation of new legal rights for foreign investors (3) , and the further elimination of tariffs (4) and non-tariff measures (5).

The trade agreement may also increase threats to US forests, as more wood products imported from Chile could translate to heightened risk of invasive pest infestations to domestic forests and plants. Chilean corporations will benefit from new investor protections to bring legal challenge to US environmental safeguards, such as requirements that government agencies use paper with high recycled fiber content.

Chile's competitive advantage-subsidized forestry without environmental enforcement

More free trade with Chile will reinforce the domestic practices that provide it with a comparative advantage over US wood workers and producers. This is most evident in Chile's failure to enforce forest management standards and its environmentally harmful forestry subsidies.

Many of Chile's forestry laws and standards are routinely not enforced. For example, Chile's Forestry Action Plan found that almost all of the logging of Chilean native forests is done without proper management. Only twenty percent of forests logged are done under management plans (6). Despite federal protection of the alerce tree as a National Monument, poaching persists due to insufficient commitment by Chilean authorities to control illegal logging (7).

Meanwhile, Chile's Decree Law 701 subsidizes the conversion of natural forests to non-native tree plantations of radiata pine and eucalyptus, constituting much of the nation's wood industry. Chilean wood producers are thus provided with an economic incentive to destroy irreplaceable native forest habitat.

Lack of transparency, public participation

A more detailed critique of the US-Chile Free Trade Agreement has unfortunately not been possible, owing to the United States' and Chile's refusal to release the negotiated text to the public. After lawsuits were filed by both US and Chilean non-governmental organizations, a US District Court ruled in December of 2002 that the administration must make public many of the documents related to US-Chile trade negotiations (8).

The negotiating process was marred by secrecy, lack of transparency, and insufficient opportunity for public participation. For example, as part of the Environmental Review public comment process, respondents were allotted nine working days to review the 112-page draft document.

Notes:

1Executive Order 13141, signed by President Clinton on November 16, 1999, obligates the USTR to conduct a environmental review of proposed trade agreements.
2 "Mountain monkeys," Dromiciops australis, are actually marsupials; Chile does not have native monkeys.
3 The US-Chile FTA contains investment provisions, empowering foreign corporations to file claims when they believe their ability to profit from their investments has been harmed. These new rights, similar to controversial language contained in NAFTA's Chapter 11, may have the effect of limiting the forest protection measures that Chile and the US are capable of undertaking.
4 Chile's tariffs on forest products are currently low; the US-Chile FTA will likely eliminate them altogether.
5 Non-tariff measures (NTMs) constitute government regulations or laws that have the effect of limiting trade, whether intentional or not. Many of the NTMs identified in the forest products sector are genuine environmental safeguards, such as forestry certification standards and requirements for recycled paper content.
6 Austral University of Valdivia.
7 Wilcox, Ken. 1996. Chile's Native Forests: A Conservation Legacy. Ancient Forest International.
8 Chilean case filed by the Southern Environmental Law Center , RENACE, the National Federation of Small Fisherman, and the Chilean Mining Federation. US litigants: Center for International Environmental Law, Earthjustice, Public Citizen, and Friends of the Earth: Center for International Environmental Law v. Office of the United States Trade Representative, Civil Action No. 01-2350 (PLF).

(*) American Lands ALLIANCE

Jason Tockman
International Trade Director
PO Box 555
Athens, OH 45701
740-594-5441
740-594-3842
tockman@americanlands.org

Randi Spivak
Executive Director
726 7th Street, SE
Washington, DC 20003
202-547-9400