May 8, 2018
Chile: An Overview
Chile, a nation of 18.4 million people, is located along the
to reduce inequality. President Michelle Bachelet, who had
Pacific coast of South America. Chile traditionally has been
previously served as president from 2006 to 2010, won a
one of the United States’ strongest partners in Latin
second, nonconsecutive term, and the coalition won
America due to the countries’ common commitments to
majorities in both houses of the Chilean Congress. Between
democracy, human rights, and free trade. Chile also has
2014 and March 2018, Bachelet and her congressional
worked with the United States to promote peace and
allies enacted numerous policy changes, including a
stability in the Western Hemisphere, as the country’s
revenue-raising fiscal reform, a series of education reforms,
transition to a higher level of economic development has
and a new proportional representation electoral system.
enabled it to take on additional regional responsibilities.
Figure 1.Chile at a Glance
Political and Economic Situation
Chile has a long democratic tradition but experienced 17
years of authoritarian rule after a 1973 military coup led by
General Augusto Pinochet deposed the democratically
elected Socialist government of President Salvador Allende
(1970-1973). More than 3,200 people were killed or
“disappeared,” and some 38,000 people were imprisoned
and/or tortured during the Pinochet dictatorship. Chile
ultimately restored democracy in 1990.
The center-left Coalition of Parties for Democracy (CPD)
governed Chile from 1990 to 2010. Its ability to implement
policy changes was constrained, however, by provisions of
the Pinochet-era constitution and the specter of another

democratic breakdown. As a result, CPD leaders pursued
Sources: CRS Graphics, Instituto Nacional de Estadísticas de Chile;
consensus-based reforms that largely maintained the
Pew Research Center; and the International Monetary Fund.
market-oriented economic framework inherited from
Pinochet while gradually strengthening Chile’s social safety
Despite acting on many of their campaign promises,
net. The CPD’s cautious approach enabled Chile to
Bachelet and her coalition enjoyed little popular support.
consolidate democratic governance and produced
While leftist sectors of the New Majority had hoped for
considerable improvements in living standards. According
more radical policy changes, other Chileans expressed
to International Monetary Fund (IMF) and Chilean
concerns about the manner in which the reforms had been
government data, the economy grew by an average of 5.2%
drafted and implemented. Bachelet lost additional popular
per year between 1990 and 2010 and the country’s poverty
support as a result of a corruption scandal that implicated
rate fell from 39% to 25% during the same time period.
her son and her perceived mismanagement of the economy.
Chile’s economic growth slowed from 4.1% in 2013 to
Nevertheless, many Chileans have been dissatisfied with
1.5% in 2017, according to the IMF. Economists have
the limits of the post-Pinochet policy consensus. They
attributed the deceleration to a drop in the international
argue that Chile’s economic growth has disproportionately
price of copper, which accounts for about half of the
benefited the country’s wealthiest families and that most
country’s exports, and a decline in business confidence
Chileans still lack economic security and access to quality
stemming from the New Majority’s reform agenda.
public services. Over the past decade, this dissatisfaction
has manifested itself through repeated electoral swings and
In December 2017, former President Sebastián Piñera
mass mobilizations. Chileans elected President Sebastián
(2010-2014) of the center-right Let’s Go Chile coalition
Piñera in 2009, leading to the country’s first alternation of
was elected to a second, nonconsecutive term. He defeated
power since the return to democracy. Piñera’s center-right
Senator Alejandro Guillier of the ruling New Majority
administration generally adhered to the same policy mix
coalition in a second-round runoff election by a margin of
that had been favored by the CPD, however, and Piñera
54.6% to 45.4%. Piñera campaigned on the economic
struggled with protests and low approval ratings throughout
record of his first term, when the Chilean economy
his 2010-2014 term.
expanded by an average of 5.3% per year, and appears to
have won over centrist voters with his argument that the
After four years in opposition, the former CPD rebranded
country needs stronger economic growth to address the
itself as the New Majority, incorporated the Communist
concerns of the middle class. Piñera also benefited from the
Party and social movement leaders into the coalition, and
fragmentation of the New Majority; the centrist Christian
adopted a platform of ambitious structural reforms intended
Democrats split from the coalition to run its own slate of
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Chile: An Overview
candidates, and some of the coalition’s traditional voters
2007—as a result of insufficient intellectual property rights
drifted to a new leftist Broad Front coalition.
protections. The Chilean government maintains that it has
developed a solid institutional framework to protect
Piñera was inaugurated to his second four-year term on
intellectual property rights and asserts that the USTR report
March 11, 2018. He has pledged to boost economic growth
reflects the views of U.S. industry rather than an objective
by creating new incentives for entrepreneurship and
analysis. The United States negotiated the inclusion of more
innovation and increasing investment in infrastructure. He
stringent intellectual property rights standards in the Trans-
may struggle to implement portions of his business-friendly
Pacific Partnership trade agreement, which was signed by
agenda, however, since his center-right coalition lacks
Chile, the United States, and 10 other nations in the Asia-
majorities in both houses of the Chilean Congress. The
Pacific region in 2016. Those provisions were suspended,
opposition likely would block any attempts to repeal
however, after the Trump Administration withdrew from
reforms enacted during the Bachelet Administration, but
the accord. The remaining signatories agreed to a revised
Piñera could find support among centrist parties to
Comprehensive and Progressive Agreement for Trans-
implement some modifications. Piñera also may have to
Pacific Partnership in March 2018.
contend with student groups and other social movements
that are likely to remain mobilized throughout his term to
International Affairs
push for further changes to the education and pension
Chile has supported a variety of regional peace and security
systems, among other demands. The IMF expects Chile’s
efforts in recent years. The country was one of the top
economic growth to accelerate to 3.4% in 2018.
contributors to the U.N. Stabilization Mission in Haiti, with
more than 12,000 Chilean peacekeepers rotating through
U.S.-Chile Relations
Haiti between 2004 and 2017. Chile also has facilitated the
As noted above, the United States and Chile have enjoyed
peace process in Colombia, worked with the Lima Group of
close relations since Chile’s return to democracy. In
countries to push for the restoration of democracy in
addition to maintaining close commercial ties and
Venezuela, and supported security and development efforts
cooperating to address international political and security
in Central America. The United States and Chile maintain a
concerns, the countries collaborate on matters such as
High-Level Bilateral Political Consultative Mechanism to
scientific research and environmental protection.
coordinate efforts on security cooperation, human rights,
and other topics of mutual concern. They also work
Trade and Investment Relations
together under the U.S.-Chile Trilateral Development
U.S.-Chile trade relations have grown considerably since
Cooperation Initiative to jointly implement foreign aid
the U.S.-Chile Free Trade Agreement entered into force on
projects in other Latin American nations.
January 1, 2004. As result of the agreement, 100% of U.S.
consumer and industrial goods now enter Chile duty free.
The United States provides some assistance to Chile to
Total bilateral trade in goods has increased 276% since
support the country’s security efforts. Chile received
2003, reaching $24.2 billion in 2017, according to U.S.
$689,000 in U.S. security assistance in FY2017, including
Department of Commerce data. U.S. exports have increased
$489,000 in military education and training to strengthen
faster than imports, and the United States has run a trade
the capabilities of the Chilean armed forces and $200,000 to
surplus with Chile since 2008. In 2017, U.S. exports
help Chile develop a strategic trade control system that
amounted to $13.6 billion, with refined oil products, heavy
meets international nonproliferation standards. It is
machinery, civilian aircraft and parts, electric machinery,
currently unclear how much aid Chile may receive in
and motor vehicles accounting for a majority. U.S. imports
FY2018, but the Trump Administration has requested
from Chile amounted to $10.6 billion, with copper, fruit,
$500,000 in security assistance for Chile in FY2019.
and seafood accounting for a majority. Bilateral services
trade amounted to $6 billion in 2016, with $4.3 billion in
Although the U.S. and Chilean governments have continued
U.S. exports and $1.7 billion in U.S. imports from Chile.
to collaborate on many foreign policy matters, they have
diverged on some issues over the past year. In June 2017,
According to the U.S. State Department, Chile’s open
for example, the Bachelet Administration expressed
economy, well-developed institutions, and strong rule of
“profound disappointment” at the Trump Administration’s
law make it an attractive destination for investment. As of
decision to withdraw from the Paris Agreement on climate
2016, the accumulated stock of U.S. foreign direct
change. Chile has ratified the accord and has pledged to
investment in Chile was $29.4 billion, including nearly
reduce its carbon emissions per gross domestic product
$13.2 billion invested in the mining industry and $7 billion
(GDP) unit by 30% below 2007 levels by 2030. The
invested in the finance industry. In comparison, the stock of
Chilean public is among the most concerned in the world
Chilean foreign direct investment in the United States was
about climate change, according the Pew Research Center,
$2.2 billion. A bilateral treaty (Treaty Doc. 112-8) designed
with 86% of the population viewing it as a “major threat.”
to encourage investment in both countries by preventing
President Piñera has echoed his predecessor’s remarks
double taxation was ratified by Chile but has been awaiting
regarding the Paris Agreement and has criticized President
the advice and consent of the U.S. Senate since 2012.
Trump for “defending protectionism.” According to Gallup,
74% of Chileans disapproved of President Trump in 2017.
Despite these growing commercial ties, some
disagreements have emerged regarding trade policy. The
Peter J. Meyer, Specialist in Latin American Affairs
U.S. Trade Representative (USTR) placed Chile on its
IF10880
“priority watch list” in 2018—as it has every year since
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Chile: An Overview


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