Speaking to journalists from the sidelines of an Asia-Pacific conference in the Chilean capital on Wednesday, Australian trade minister Mark Vaileto said the deal would take effect from 1 January 2005.
The two sides did not renegotiate the original terms of the trade agreement, Vaile said.
"There were issues of interpretation in terms of language, so there were clarifications and confirmation of our intentions and that was all that was needed," the Australian minister said.
"It was professionally worked out. We are absolutely delighted the process has now been concluded, and we are going to implement the agreement in January next year."
Last minute delays
The deal had been delayed by Washington's misgivings over last-minute Australian amendments designed to protect access to cheap generic medicines.
Washington had raised concerns with Australia that its FTA implementing legislation would not fully implement commitments made on intellectual property, particularly related to drug patents.
According to a report in The Australian newspaper, US pharmaceutical giants also were concerned about an election pledge by Australian Prime Minister John Howard to cut the price of generic medicines by 12.5 percent.
But US trade representative Robert Zoellick confirmed that the arrangements for the deal had been finalised.
"We have addressed US concerns over Australia's implementation of the agreement and I am pleased to announce that it [free trade agreement] will go into force on 1 January, the earliest possible opportunity," Zoellick said.
"This FTA will eliminate more than 99% of tariffs on industrial goods between the two countries."