US widens free-trade deals

Chile's wines may now go further

Singapore and Chile have become the first Asian and first South American nations to gain free trade relationships with the US.

The US Senate's backing for the two free-trade deals follows the approval of the bills in the House of Representatives last week.

Such agreements free trade in most goods and services, set up a conflict resolution mechanism and provide for the protection of intellectual property.

Canada, Mexico, Jordan and Israel already have similar deals with the US.

Once Congress sends the bill back to the White House, President Bush has 10 days to sign the legislation.

The agreements, which are due to come into effect on 1 January next year, are the first to be negotiated by the Bush administration using special trading powers - the so-called Trade Promotion Authority.

US critics of the agreements, the BBC's Ian Pannell reports from Washington, say that with an ailing economy of its own the last thing America needs now is cheap and plentiful goods, services and labour from abroad.

Stepping stone

Both agreements were passed by large majorities in the Senate: 66 votes to 32 for Singapore and 66 to 31 for Chile.

Gum on Singapore's pristine streets seems to be a price worth paying

"Tonight's strong margins of victory show that when real free trade agreements with tangible benefits for businesses, workers, and consumers are on the table, Congress will have open markets for America," said US Trade Representative Robert Zoellick.

Democratic Senator Max Baucus said the agreement would "usher in a new era of enhanced economic ties" with the two nations.

The Asian nation was America's 12th largest trading partner last year, with bilateral trade of about $40bn.

Observers say Washington sees the deal as a stepping stone to millions of potential consumers in South-East Asia.

Earlier this year, President Bush described the agreement as "a crucial step forward for both countries".

"Singapore is a nation that is small in size, but large in influence."

Iraq hiccup

Chile's deal is being seen as a reward for the free market, export-oriented policies pursued by Chile in recent years:

• The US is Chile's biggest export market with copper, salmon, wine and grapes being the country's top exports

• The trade deal will see tariffs cut on 85% of goods traded between the two countries

• Chile estimates the agreement will lead to the value of its exports to the US rising to $5bn a year during the first three to four years of the deal from the current level of $3.6bn

The details of the agreement were settled as far back as February this year.

However, the actual signing was delayed until last month after relations between the two countries were reportedly strained by Chilean President Ricardo Lagos' opposition to the US-led war in Iraq.

Something to chew on

The agreements were the first to be negotiated by the Bush administration after a hard-fought battle for the Trade Promotion Authority.

Under this arrangement, legislators can accept deals done by the president in full or can reject them outright - but no changes can be made.

BBC business reporter Alex Ritson says the agreement contains one small victory for the makers of one of America's best known exports: chewing gum.

Banned for more than 10 years in Singapore, which prides itself on cleanliness, it will now go back on sale.

However, only sugar-free varieties will be allowed, and then only with a doctor's prescription.