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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!