Final answer:
A Canadian-built Caterpillar grader tractor would not face import duties in Chile due to a Free Trade Agreement (FTA) between Chile and Canada. (option A)
Step-by-step explanation:
A Canadian-built Caterpillar grader tractor imported into Chile would not be subject to duty because Chile and Canada established a Free Trade Agreement (FTA). Free trade agreements are designed to reduce or eliminate tariffs or duties on traded goods between the signatory countries. The same principle applies to Chile's relations with the NAFTA countries; though not a full member, Chile has independent free-trade agreements with each NAFTA nation, including Canada.
Therefore, Canada's tractors and other machinery, irrespective of their durability or cost compared to local products, can be exported to Chile without the imposition of import duties. This is part of a broader pattern of intra-industry trade where countries often specialize in certain types of machinery or other goods, not necessarily because of overall skill levels, but due to sectors developing unique competencies tailored to specific products.