Trade volume leap reflects mainland interest in nation's natural wealth

PUBLISHED : Monday, 18 September, 2000, 12:00am
UPDATED : Monday, 18 September, 2000, 12:00am

For investors, South America can present a confusing mass of options. Once hindered by fragile currencies and military dictatorships, much of the region is now on track for rapid growth, propelled by a free trade bloc and an underlying commitment to economic and social reform.

Analysts speculate that Latin America may be on the verge of realising the economic promise locked within its abundant mineral resources and large consumer markets.

Among the emerging success stories, Chile appears an early runner along the path to reform, and is actively seeking foreign investment, especially in the mining and resource industry, said Consul-General Fernando Perez Egert.

Touching on the country's trade relationship with Asia, Mr Perez invited Hong Kong and mainland investors to look at the joint venture opportunities in Chile's resource sector.

He said a natural synergy existed between the trade partners, as China imports substantial amounts of semi- refined copper ore, along with iron, lithium and other minerals.

'The mainland is enthusiastic about participating in the mining in dustry in Chile,' said Mr Perez, pointing out that two-way trade with China has jumped from US$200 million in 1995 to US$1.2 billion in 1999. 'In the past, mainland investors made contacts with the Chilean mining sector and the state-owned mining company, Corporacion Nacional del Cobre de Chile.'

It is easy to understand why Chilean officials are keen to boost resource development. Chile stretches from the southern border of Peru along 6,435 kilometres of coastline to Cape Horn, encompassing a vast range of geographical regions ranging from the Atacama Desert, some of the highest summits of the Andes, and the barren wasteland of the southern Antarctica. Developing the country's resource base - which includes precious metals, petroleum and natural gas, and rich minerals deposits - would enhance economic development in the poorer areas.

The mining sector accounts for up to 40 per cent of all exports. A third of Chilean trade arrives on Asian shores, with Japan, South Korea and China as the largest importers.

Through its membership in the Asia Pacific Economic Cooperation (Apec) group, Chile enjoys trade privileges with many Asian nations. Major resource exports to China include wood, pulp, fertiliser and chemicals. In the global market, Chile is a major food exporter, supplying large quantities of fruit and vegetables, fish, livestock and processed foods. The country is especially well positioned to export fresh fruit and vegetables to northern hemisphere countries as Chile's growing season coincides with winter in the north.

Mr Perez, who assumed responsibil ities as Consul-General to Hong Kong in May, said he had been working at diplomatic levels to enhance the relationship between Hong Kong and Chile. Efforts have focused on preparing an air services agreement to permit landing rights to national airlines, and a legal co-operation agreement that would allow criminals to serve prison sentences in their country of origin.

'We are working hard to create a good framework for our relationship with Hong Kong,' said Mr Perez, adding that citizens in both countries enjoy visa-free travel. 'We strive to make better links, as there is no existing air agreement. The idea is to improve bilateral air links because there's a huge demand for direct cargo access.'

Mr Perez said he was also seeking to negotiate tax relaxation for the shipping industry and establish direct container cargo links to China.

'We maintain a dialogue with mainland authorities to avoid taxation of shipping transport,' Mr Perez said.

'Shipping movement between both sides is becoming important.'

Mr Perez points out that one of Chile's largest shipping companies, Compania Sud Americana de Vapores (CSAV), recently moved its regional headquarters from Tokyo to Hong Kong in August. The move will promote Hong Kong as a strategic distribution centre to service the export boom when China enters the WTO.

Explaining why Chile is not a member of the Mercosur - the free customs union agreement linking Uruguay, Brazil, Argentina and Paraguay, Mr Perez said Chile already enjoyed lower trade tariffs than those proposed under the trade bloc.

To promote Chile's regional trade interests, the government has launched a strategy to negotiate bilateral agreements on a country-by-country basis.

'We started to open our markets many years ago ,' Mr Perez said. 'We are working very hard, and taking part in all the free trade discussions. We believe that if trade becomes more free, the standard of living will improve.'

Mr Perez said Chile will take part in talks to join the proposed 34-nation Free Trade Area of the Americas (FTTA), which seeks to unite the Americas under a hemisphere-wide trading bloc.