CHILE and the Asia-Pacific

Region:

Emphasis on Southeast Asia

Manfred Wilhelmy

Executive Director,

Chile Pacific Foundation

Professor, Institute of International Studies, University of Chile

September 2015

Southeast Asia and

Latin America

Two regions that are developing closer relations

• No large asymmetries

• Emerging countries

• Comparable public policy agendas

CHILE

(Republic of)

Land (excl. Antarctic Territory) 756,950 km2

Population (2014 est.) 17.819 million (INE)

GDP (2014) US$ 248.1 bn (World Bank)

GDP p.c. US$ 14,520 (World Bank)

The Economy

• Chile is an advanced emerging economy (OECD)

• A market economy

• An open economy

- Foreign trade: about 2/3 of GDP

- F D I, increasingly two - way

• A stable economy, has withstood external shocks

• Post – commodities boom challenges

The Political System

• Last 50 years: From democracy to authoritarianism

1960s – 1973, back to democracy, 1990 -

• Presidential system 4 yr. term, no reelection, popular

vote with runoff

• Bicameral Congress

- Senate

- Chamber of Deputies

Multiparty system, next general election due late

2017, with proportional representation system;

Automatic registration; no compulsory voting has not

been a good experience

The Political System (cont’d)

• Strong presence of interest groups in policy-making -

demands for transparency have led to regulations on

lobbying

• Independent Judiciary + Constitutional Court

• Rule of Law, corruption is low but a matter of concern,

especially the links between money and politics.

• Free and active media, plus Internet social networks

CHILE:

Some International Rankings

1. Freedom House (2015)

“Free”

2. Transparency International 2014

Corruption Perceptions Index:

Nº 21, 7.3 points, (best in Latin America)

3. The Heritage Foundation /

2015 Index of Economic Freedom:

Nº7, 1st in Latin America, “mostly free”

4. World Economic Forum 2014 - 15

Global Competitiveness Index Nº33

5. World Bank

Ease of Doing Business 2015 Nº41

(was Nº 49 in 2010)

6. UNDP

Human Development Index 2014

Rank 41 “very high” category, 0.819, inequality-

adjusted 0.661 (2013)

CHALLENGES

• Income distribution:

Spread benefits of development more

widely to reduce inequality

• Education:

Improve the quality of education at all

levels to raise literacy, “numeracy”, skills

• Science and technology:

Increase R & D investments for faster

innovation

Challenges (cont’d)

• More support for SMEs, microenterprises

• Regional development:

Reduce gap v – a – v Santiago

• Sustainable development: in mining, fisheries, forestry, energy, urban projects, tourism, etc.

• Modernization of the State:

cut “red tape”, develop e-government, etc.

• Adopt a new Constitution?

FOREIGN RELATIONS (I)

• Principles of self-determination, non-intervention,

peaceful settlement of disputes

• Abide by principles and rules of International Law,

especially international treaties

• Promote human rights and democracy

• Engage in international cooperation on issues of

global agenda and development

• Neighboring countries and Latin America: first

priority

• Three priority regions: North America, Asia-Pacific,

Europe

Chile in The Asia-Pacific Region (I)

The 19th Century

• Bernardo O’Higgins: free the Philippines from Spanish

rule

• 1820s: wheat exported to New South Wales

• Mid – century: Chilean grains and minerals traded in

Pacific islands, China, India, Chilean currency traded.

• First Consulates in Mumbai, Hong-Kong, Manila and

other locations

• 1897: Chile-Japan Treaty of Amity, Commerce and

Navigation.

Chile in the Asia-Pacific Region

Pacific Region (II)

The 20th Century

• World War I: Chilean neutrality; synthetic nitrates a

blow to the economy

• 1915: Republic of China recognized

• Great Depression: Severe effect on Chilean economy,

pressure to industrialize, turn inwards

• Wold War II: Break with Axis powers (January 1943),

war declared to Japan (April 1945)

The 20th Century (cont’d)

• Cold War: Chile aligned with the U.S; economy

dependent on copper exports, import substitution

• Diplomatic relations: Australia, New Zealand

1945, Philippines 1947, Japan 1952, relations

with China (Taiwan R.O.C.)

• 1962: Diplomatic relations with Thailand and

Korea

• 1979: Diplomatic relations with Singapore

Chile in The Asia-Pacific Region

1970s – 1990s

• 1970: Universidad de Chile Seminar on Chile in the

Pacific Basin

• Late 1970: Establishment of diplomatic relations with

P.R. of China, continued after military coup, 1973

• March 1980: Official visit of General Pinochet to the

Philippines cancelled

• 1983: 16th International General Meeting of PBEC

held in Santiago

• 1985: Chilean National Committee on Pacific

Economic Cooperation (CHILPEC) established;

Chile joins PECC, 1991

• 1992: President Aylwin visits Japan, China,

Malaysia, Australia

• 1993-94: Chile becomes member of APEC

• 1998: FEALAC established (P.M. Goh Chok

Tong – Pres. E. Frei)

Chilean Trade Policy

Since 1990

• Strategic decision within democratic transition:

Continue developing market economy, emphasize

social policies

• From unilateral opening to preferential agreements

• Asia-Pacific FTAs*

- Korea, in force April 2004

- P4 (New Zealand, Singapore, Brunei

Darussalam), in force July 2006, includes

accession clause, basis of TPP

- P. R. of China, in force September 2006

- Japan, in force September 2007

- Australia, in force March 2009

- Malaysia, in force February 2012

- Vietnam, in force January 2014

- Hong-Kong SAR, in force October 2014

* Thailand: ratification pending

* Indonesia: under negotiation

Source: DIRECON, Ministry of Foreign Relations, Chile

* Taiwan (Chinese Taipei) FTA negotiation to be considered

• TPP: The game changer, but what do we gain, and

when will the process be concluded?

ISSUES IN CHILEAN

ASIA-PACIFIC TRADE POLICY (I)

• Network of FTAs a remarkable achievement

- a sense of bilateral partnership

- more attention to markets involved, especially via

consultation & review of FTAs

- evidence about growth in numbers of products and

companies, for example:

• Chilean firms exporting to Korea were 288 (2003), 658

(2013)

• Chilean products exported to Korea were 131 (2003),

245 (2014), of which 177 were new (“non-traditional”)

(Source: ECLAC)

ISSUES IN CHILEAN

ASIA-PACIFIC TRADE POLICY (II)

• But FTAs not easy to evaluate

- preferences not always used by exporters

- increases in trade value reflect prices as

well as volumes

• Most trade is inter-industry; Little intra-industrial

exchanges

• Exports to Asia-Pacific still more concentrated in

commodities than exports to other regions- need to

evaluate, review, upgrade FTAs

• Beyond TPP, we support concept of FTAAP

Towards More Comprehensive

Relations With Asia-Pacific Region

• Towards closer economic relations:

Trade & investment, strategic alliances

• Pacific Alliance seeks cooperation with ASEAN

• Dialogue on global agenda

• Policy dialogues & cooperation on issues of common

concern

• The dimension of “Soft Power” – civil society, people-

to-people relations

Thank you for your attention!