Chile occupies a strategic position for world trade in goods and services, of both the analogue and digital variety. In line with its policy of international integration, Chile has built a network of trade agreements that gives the country’s businesses privileged access to markets not only in the American continent, but also in Europe and Asia.
In 2002, Chile sealed Free Trade Agreements (FTAs) with the United States, the European Union and South Korea and, in early 2003, went on to conclude negotiations with the European Free Trade Association (EFTA), adding to its existing agreements with Mexico, Canada, Costa Rica and El Salvador. Moreover, Chile has Economic Complementation Agreements (ECAs) with almost all South American countries, including the MERCOSUR block, formed by Argentina, Brazil, Paraguay and Uruguay, as well as Colombia, Ecuador, Peru and Venezuela. In addition, it has an ECA with Bolivia, which the two countries now propose to expand into a Free Trade Agreement.
Considering the agreements that are already in force, Chilean exporters have access to a target market of 858 million people. And, once the country’s FTAs with the United States, South Korea and the EFTA have been ratified, this will increase to 1,189 potential customers, including 378 million in the European Union, 272 million in the United States, 47 million in South Korea and 12 million in the EFTA. Building on this foundation, Chile is now seeking to develop into a business platform, attracting foreign direct investment that can tap into the vast market created by these trade agreements.
Through its network of FTAs, ECAs and other bilateral agreements, Chile has improved its access to different markets, thereby facilitating the growth of exports. In addition, lower import tariffs mean cheaper inputs, machinery and equipment and, by reducing production costs, this encourages technological change and gives consumers the benefit of access to a wider variety of high-quality goods and services at international prices.
As part of our commitment to inserting Chilean products into overseas markets, the government’s Exports Promotion Bureau ProChile -which forms part of the Division for International Economic Relations (DIRECON)- has a mandate to support the development of exports and the international expansion of Chilean firms. Its efforts in this direction reflect Chile’s policy of international integration and are carried out within the terms of the country’s trade agreements and of World Trade Organization rules.
Chile understands international integration in its widest sense, including not only the promotion of goods and services, but also of investment, business development and strategic commercial alliances. We aim to encourage the growth and diversification of exports of goods and services (especially non-traditional products), to ensure that the export sector has access to the necessary market information and to assist in the development of contacts with potential overseas customers.
In another important area of activity, ProChile also seeks to position Chile economically and commercially in world markets, fostering a favorable country-image based on a wide range of high-quality competitively-priced products. As part of this policy, ProChile -which has 62 representative offices around the world, as well as in each of Chile’s twelve regions- also participates actively in more than thirty international trade fairs each year.
The position from which Chile presents itself to the rest of the world is extremely advantageous: it has trade agreements with a large part of America and Europe and, through the FTA it has successfully negotiated with South Korea, has taken a pioneering role in Asia. Similarly, building on the guarantees provided by Chile’s stable financial system and predictable legal environment, the government ensures appropriate conditions for foreign investment, facilitating capital management and, through its active negotiation of double-taxation agreements, reducing tax barriers.
The Chilean economy and its labor market are driven by exports. In a country -like Chile- with a small domestic market, participation in international markets is crucial for sustained growth, high employment, technological innovation and an effective allocation of resources. Today, foreign trade in goods represents over 50% of Chile’s GDP and, if services are included, this reaches more than 70%.
The consolidation and deepening of Chile’s international integration are the focus of a foreign trade policy that combines the development of exports with the promotion and protection of investment. This enhances the country’s competitiveness and encourages the incorporation of new technologies within a context of stable rules, safeguards against unfair competition and social policies that seek to ensure that all citizens share in the resulting benefits.
Chile has opted for an open, competitive economy that is geared to free trade and is disciplined in its respect for international rules. Its trade policy, which is compatible with the country’s prudent macroeconomic management, is grounded in a strategy of open regionalism that includes unilateral openness as well as multilateral negotiations and bilateral agreements. Our experience shows a clear and positive correlation between exports and economic growth and between trade agreements and export dynamism that has produced little trade distortion.
As well as expanding its ECA with Bolivia, Chile plans to start negotiations with New Zealand and Singapore in 2003. In addition, it is a member of MERCOSUR, the APEC forum and the World Trade Organization, as well as participating actively in talks on the proposed Free Trade Area of the Americas and in other multilateral forums, such as the OECD.
The network of FTAs that Chile has established with its main trading partners can, within the context of international economic cycles, only yield positive results. The ground has been prepared; the initiative of exporters and importers is now required to harvest the benefits.