Institute Provides Comments Regarding U.S.-Chile Free Trade Agreement

Washington, DC, January 29, 2001 - The Institute submitted a letter in response to a request by the Office of the United States Trade Representative (USTR) for public comment regarding the U.S. negotiations with the Republic of Chile on a free trade agreement. To assist the USTR in formulating negotiating objectives for a U.S.-Chile free trade agreement, the Institute provided information about market access and other issues in Chile for U.S. asset management firms.

The Institute's letter noted that Chile expressly made no market access commitments for asset management in the 1997 World Trade Organization Financial Services Agreement, although the Chilean government generally has permitted U.S. firms to manage mutual funds and pension assets. The Institute urged U.S. trade negotiators to seek binding commitments from Chile to allow foreign firms to provide asset management services to mutual funds and pension clients on both a commercial presence and cross-border basis.

The letter also stated that Chilean laws prohibiting or restricting mutual or pension funds from making foreign investments are not necessary for the protection of investors and prevent U.S. firms from investing for clients in markets where they may have expertise.

With respect to portfolio investment in Chile by U.S. mutual funds, the Institute's letter described the cumbersome and costly restrictions imposed on foreign investors. The Institute requested that the Chilean government work to ease the burden on foreign institutional investors by streamlining the process for making portfolio investments in Chile.