Chile has been producing wine since the 16th century and today offers quality reds in the European style that are extraordinary bargains. None of the really fine Chilean wines are available here. There are, however, very good so-called table wines sold here that clearly undercut those of similar smoothness from France and California.

The better Chilean exports, those with age and body, are equally competitive. Strict government controls on exported wine require a minimum standard of quality and alcoholic content that assures the wine is drinkable, even if a Chilean cabernet, say, costs only $2.50, which in fact many of them do.

The country, a narrow corridor along the Pacific coast of South America, is subject to continual ocean winds. A desert to the north and the Andes -- which separate Chile from Argentina -- prevented phylloxera, the plant louse that devastated most of the world's wine industry a century ago, from ever reaching Chilean vineyards. The original vines, probably muscat, were planted by Spanish missionaries. In the middle of the 19th century European grape varieties were introduced, some from cuttings brought directly from France, after a Chilean patriot, Silvestre Ochagavia, recognized the grape-growing potential on his country's central valley.

French viniculturists went with the French vines, and it is not surprising that some Chilean wines bear a resemblance to the less exalted wines of Bordeaux. Cabernet is the best, but good merlot and even pinot noir are also produced, as well as riesling, sauvignon blanc and chardonnay. The whites have less distinction, but can still be quite good for the price. The best wine-producing provinces are Valparaiso, Santiago, O'Higgins, Colchagua, Curico, Talca, all watered by the Andean snow pack and blessed with sun and dry air.

Chilean winemakers have production quotas that may not be exceeded, which tends to elevate quality. The wines must be at least a year old before they can be exported. The classifications are: Special, two years old; Reserva, four years; and Gran Vino, at least six years. The excessive woodiness of old- fashioned winemaking is less frequent with Chilean wines than it once was; the younger wines are often more appealing due to more modern techniques that preserve the fruit of the classic reds.

Among the best Chilean wines available here in quantity come from Concha y Toro, south of Santiago, a baronial bodega and a popular tourist attraction. The '80 Marques de Casa Concha is 100 percent cabernet, light in appearance but powerful and not too subtle. It costs about $7.

The Casillero del Diablo is, despite the name, a more restrained cabernet for only $5.50. Concha y Toro also makes a $3 blend of semillon and sauvignon blanc, a kind of Chilean white bordeaux, a $5.50 pure sauvignon blanc under the Casillero del Diablo label and a $3 blend of cab and merlot that is an ideal everyday wine.

An equally good everyday cabernet is made by Santa Carolina, and widely available. Their fresh and fruity one-star '82 cabernet costs only $3. The three-star '79 ($4.50) has more body but less pizazz. The Reserva de Famiglia, 12 years old ($11), is smooth and mellow as an older cabernet should be, without a trace of tannin.

Santa Carolina's '83 chardonnay is light, lemony, slightly rough, and a very reasonable $6.