TPP and the Pacific Alliance:TPP and the Pacific Alliance:Opportunities for the Economic Relationship between Chile and Japan in the futurebetween Chile and Japan in the future

Mr. Pablo UrriaDirector for Bilateral Economic Affairs

DIRECON

CHILE & JAPAN: ECONOMIC & SOCIAL INDICATORS (2013)

CHILE

GDP US$ 277 billion

GDP per capita (PPP) US$ 22,534

JAPAN

GDP US$ 4,899 billion

GDP per capita (PPP) US$ 36,654

GDP growth rate 4.2%

Unemployment rate 5.9%

Exports US$ 77.4 billion

p p ( ) ,

GDP growth rate 1.5%

Unemployment rate 4%

Exports US$ 715.1 billion

Imports US$ 79.6 billion Imports US$ 833.2 billion

India´s relevance CHILE           JAPAN          

Population 17.6 million

Literacy rate 98.6%

Life expectancy 79 years

Population 127.3 million

Literacy rate 99%

Life expectancy 84 years

Source: DIRECON, based on data of November 2014; International Monetary Fund, World Economic Outlook, October 2014; Central Bank of Chile; TradeMap; National Statistics Institute; UNESCO; CIA, The World Factbook, 2014.

MILESTONES IN CHILE – JAPAN TRADE RELATIONS

» Official bilateral relations between Chile and Japan can be traced back over a century, beginning with

the signing of the Treaty of Amity, Commerce and Navigation in 1897.

» One of the major milestones in the economic field is the Strategic Economic Partnership Agreement» One of the major milestones in the economic field is the Strategic Economic Partnership Agreement

(EPA) which entered into force on September 3rd 2007.

» The EPA between Chile and Japan is based on long and fruitful relationship between the two

f fcountries, which celebrated 110 years of establishment of trade and diplomatic relations in 2007.

» The EPA is a comprehensive agreement that addresses not only tariff matters but also deals with

trade in services and disciplines governing trade in both goods and services. In addition to that, also

takes care of issues related to investments and government procurement, among others.

» The Agreement allows greater opportunities for Japanese investment in the country, interested in

optimizing its industrial and financial presence in key global markets. It also improves thep g p y g p

competitiveness of our economy (better access to capital and technology).

» Japan is Chile´s third largest trading partner being only surpassed by Chile´s exchange with China

and the United Statesand the United States.

CURRENT TARIFF REDUCTION CONDITIONS UNDER THE AGREEMENT

Japan

Category Nº items %

Chile

Category Nº items %

Immediate 7,502  82.8%Quotas 38  0.4%10 years 291  3.2%

Immediate 6,809  88.4%Quotas 29  0.4%10 years 307  4%

Between 12 and 15 years 60  0.7%Renegotiation 254  2.8%Exceptions  910  10%

Between 12 and 15 years 104  1.3%Renegotiation 162  2.1%Exceptions  294  3.8% p

Total 9,055  100%Total 7,705  100%

Source: Market Access Department, DIRECON.

CHILE – JAPAN TRADE RELATIONS

» Between 2006 and 2013 exports growth averaged 5% per year and imports grew 8% yearly» Between 2006 and 2013, exports growth averaged 5% per year and imports grew 8% yearly.

» Exports of industrial goods have increased US$ 90 million since 2006.

» In 2013 food exports to Japan reached US$ 1.3 billion (17% of total exports). Salmon was the main

product with US$ 438 million in exports.

» Chile main imports from Japan are consumer goods. In 2013 they reached US$ 953 million.

9

10

Bilateral Trade Chile – Japan(billion US$)

EPA7.68

Exports and Imports 2006 – 2013(billion US$)

5

6

7

8

9 6.5

4

5

6

7

0

1

2

3

4

1.5

2.5

0

1

2

3

5

Source: Studies Department, DIRECON, based on data of the Central Bank of Chile

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Exports (FOB) Imports (CIF) Industrial exports

Exports (FOB) Imports (CIF)

2006 2013

CHILE‐JAPAN TRADE FEATURES:MAIN EXPORTS AND IMPORTS SECTORS

1%

Exports (FOB)Mining

» Chile main exports to Japan are mining products.

» Chile main imports from Japan are consumer goods.68%

31%

1%Industry

Agriculture, forestry and fishing

» Industrial goods (salmon, trout and forestry

products) are the 2nd main exports to Japan.

g

Imports (CIF)

MAIN PRODUCTS 2013

Exports (million US$) Imports (million US$)

31%31%

p ( )

Consumer

Intermediate

Exports (million US$) Imports (million US$)

1 Copper 4,797 Cars 1,038

2 Salmon 335 Tires 195

3 Trouts 273 Chassis for trucks 106 38%

Capital

3 Trouts 273 Chassis for trucks 106

4 Wood in chips or particles 264 Aircraft fuel 74

5 Molybdenum 256 Sulfuric acid 68

Source: Studies Department, DIRECON, based on data of the Central Bank of Chile

JAPANESE INVESTMENTS IN CHILE

» Japan is the 4th investor (FDI D.L.

600) after United States, Canada andOthers19%

Foreign Direct Investment in Chile (1974 ‐ 2013)

Spain.

» Japanese FDI stock (D.L. 600)

represents 10% of total investment

United States24%

United Kingdom

Australia4%

19%

represents 10% of total investment

materialized in Chile until 2013.

» Japanese FDI flows (D.L. 600) in

2013 h d US$ 2 525 illi

Canada19%

Spain17%

Japan10%

g7%

2013 reached US$ 2,525 millions.

» Mining has received 93% of total FDI

stock from Japan between 1974 andForeign Direct Investment in Chile (D.L. 600) 1974 ‐ 2013Million US$ %

17%

2013.Million US$ %

Mining 9,052 93%Wood & paper products 134 1.4%

Financial services 126 1.3%Food, beverages & tobacco 99 1%

7

Source: Studies Department, DIRECON, based on data of the CIE (2013 and June 2014)

Others 290 3%Total 9,702 100%

TRANS‐PACIFIC PARTNERSHIP:FRAMEWORK

» Chile takes part in TPP negotiation because of his membership in Trans-Pacific

Strategic Partnership Agreement P4 (2005) with Brunei, New Zealand and Singapore.

P4 is an agreement with a view to integrate new members.

» In 2009 United States announces its wish to join the P4 Subsequently Australia» In 2009 United States announces its wish to join the P4. Subsequently Australia,

Canada, Malaysia, Mexico, Peru and Vietnam also indicate their interest.

» Because of its disciplines depth and the potential joiningof new countries, TPP is the

most important trade liberalization process in negotiation today.

» TPP will be part of the APEC free trade zone, the most dynamic region in the world

and focus of the Chilean trade policy in the last years.

Source: DIRECON

TRANS‐PACIFIC PARTNERSHIP:MACROECONOMIC INDICATORS

Population GDP GDP per capita(PPP)

TRADE

W ld TPP(million people) (billion US$) (PPP)US$

World (billion US$)

TPP(%)

Australia 23 1,505 45,138 485 29%

Brunei 0.4 16 73,823 15 64%

Canada 35 1,827 43,253 918 72%

Chile 18 277 22,534 156 31%

Japan 127 4,898 36,654 1,548 28%

Malaysia 30 313 23,160 435 39%

Mexico 118 1,261 17,390 761 72%

New Zealand 4 182 33,626 78 41%

Peru 31 202 11,557 85 35%

Singapore 5 298 78,761 784 30%

United States 316 16,768 53,001 3,906 40%

Vietnam 90 171 5,295 228 33%

Source: Studies Department, DIRECON, based on data of IMF (WEO, October 2014) and TradeMap.

TRANS‐PACIFIC PARTNERSHIP:PARTNERS' TRADE AGREEMENTS

CHILE CANADA NEW ZEALAND SINGAPORE BRUNEI USA AUSTRALIA VIETNAM PERU MEXICO MALAYSIA

CHILE FTA (1996)

FTA P4 (2006) FTA P4 (2006)

FTA P4 (2006) FTA (2004) FTA (2008) FTA

(2014) FTA (2009) FTAFTA

(In force25/2/12)

CANADA FTA (1996)

Under negotiation FTA FTA FTA

NEW ZEALAND FTA P4 (2006)

FTA P4 ‐ASEAN (2009)

FTA P4 (2006) FTA (2008) Negotiation 

in ASEAN FTA (2010)

SINGAPORE FTA P4 (2006)

Under negotiation

FTA P4 ‐ASEAN  FTA P4 ‐

ASEAN FTA (2003) FTA ‐ SAFTA (2004) ASEAN FTA (2009) Under

negotiation ASEAN(2006) negotiation (2009) ASEAN (2004) negotiation

BRUNEI FTA P4 (2006) FTA P4 (2006) FTA P4 ‐

ASEAN ASEAN ASEAN ASEAN

USA FTA (2004) FTA FTA (2003) FTA (2005) PTPA (2007) FTA

AUSTRALIA FTA (2008) FTA (2008) FTA ‐ SAFTA (2004) ASEAN FTA (2005) Negotiation 

in ASEAN TOR (agreed)(2004) in ASEAN

VIETNAM FTA(2014)

Negotiation in ASEAN ASEAN ASEAN Negotiation 

in ASEAN ASEAN

PERU FTA (2009) FTA FTA (2009) PTPA (2007) FTA

MEXICO FTA FTA Undernegotiation FTA FTAnegotiation

MALAYSIAFTA

(In force25/2/12)

FTA (2010) ASEAN ASEAN TOR (agreed) ASEAN

TOTAL 10 5 6 10 6 6 7 6 5 5 6

» Only Chile and Singapore have agreements with every member. However, the agreements differ indisciplines and coverage.

Source: DIRECON

JAPAN IN CHILE‐TPP TRADE

Chilean exports to TPP countries

» Exports to Japan represent

32% of Chilean exports to TPP.25 

30 

35 

Chilean exports to TPP countries(billion US$)

» Chilean exports to TPP reached

US$ 23 billion in 2013.

5

10 

15 

20 TPP

Japan

‐

5 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Chilean imports from TPP countries 

25 

30 

35 

(billion US$)» Imports from Japan represent

10% of Chilean exports to TPP.

5 

10 

15 

20 TPP

Japan» Chilean imports from TPP

reached US$ 26 billion in 2013.

Source: Studies Department, DIRECON, based on data of the Central Bank of Chile

‐2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

The Pacific Alliance is a regional integration initiative created on April 28 2011 by Chile Colombia

PACIFIC ALLIANCE ‐ JAPAN

The Pacific Alliance is a regional integration initiative created on April 28, 2011 by Chile, Colombia,

Mexico and Peru.

The main objective of the Pacific Alliance is to form an area of deeper integration to boost further

growth, development and competitiveness of the participating economies through the progressive

search of the free movement of goods, services, capital, people and cooperation.

Currently 32 countries have been accepted as observer states in the Alliance: Germany, Australia,Currently 32 countries have been accepted as observer states in the Alliance: Germany, Australia,

Belgium, Canada, China, South Korea, Costa Rica, Ecuador, El Salvador, Spain, USA, Finland,

France, Guatemala, Holland, Honduras , Israel, India, Italy, Japan, Morocco, New Zealand, Panama,

Paraguay, Portugal, United Kingdom, Dominican Republic, Singapore, Switzerland, Trinidad and

Tobago, Turkey, and Uruguay. Recently Austria and Haiti have formally applied for the observer

status.

Japan is an Observer State in the Pacific Alliance since February 2013. The group of externalp y g p

observers held their first meeting with nine observer states (Australia, Canada, China, South

Korea, Spain, USA, France, Japan, New Zealand) in April 2014 to identify possible areas of joint

work focused on the pillars of the Alliance. In particular, with Japan the areas of SMEs,

i f t t d bli i t ti d fi dinfrastructure and public-private cooperation were defined.

Source: DIRECON

CHALLENGES AHEAD 

22%2% 3%

Resto22%

31%

26%

17%

18%

PRODUCT PROMOTION OF 

Minería78%

DIVERSIFICATIONINVESTMENT

EDUCATION, SCIENCE AND

CULTURAL EXCHANGE

Source: DIRECON

SCIENCE AND TECHNOLOGY

EXCHANGE

ありがとうございます

www.direcon.gob.cl@direcon chile@direcon_chile