Institute Supports Efforts to Eliminate Chilean Capital Restrictions

Washington, DC, January 10, 2002 - The Institute has submitted a letter to Treasury Undersecretary John B. Taylor expressing support for continued negotiations with Chile for a commitment on eliminating capital restrictions in the Chile-U.S. bilateral free trade agreement (FTA).

Negotiations for a Chile-U.S. FTA began in December 2000. One of the issues that remains controversial as the negotiations with Chile draw to a close is Chile's restrictions on repatriation of capital for portfolio investments. Until recently, foreigners investing in Chile were not permitted to repatriate capital for a specified period, although Chile may not have been enforcing the restrictions in practice. In 2000, the Central Bank eliminated the capital repatriation restrictions for one method of investing, although it is unclear to what extent foreign investors that are already investing in Chile can take advantage of the liberalization.

In its letter, the Institute urges U.S. negotiators to obtain a binding commitment from Chile in the Chile-U.S. FTA to remove remaining capital restrictions or at least to commit not to impose repatriation measures that are more restrictive than the current law.