Decade of 'free trade' drives China-Chile ties
Synergy Media Specialists asked Minister of Foreign Affairs of Chile Heraldo Munoz about his country's relations with China.
Synergy Media Specialists asked Minister of Foreign Affairs of Chile Heraldo Munoz about his country's relations with China.
How would you characterise Chile-China relations today?
Relations between Chile and China today are among the most solid our country has worldwide and, certainly, in the Asia-Pacific region. Chile was the first Latin American country to sign a free-trade agreement (FTA) with China, as well as the first South American nation to establish diplomatic relations with China and grant market economy status to China. Another "first" was achieved during Premier Li Keqiang's official visit in May, when Chile took steps to become a financial platform for the internationalisation of the renminbi in Latin America.
Throughout the last decade, Chile furthered its already positive relationship with China in the political and economic fields. In political terms, in 2012, both countries agreed to elevate their bilateral relationship to the status of "strategic association", implementing high-level cooperation mechanisms in the political and economic areas.
In the economic sphere, the entry into force of the Chile-China FTA has brought about an important increase in bilateral trade. Since then, our countries have negotiated supplementary agreements in services (in force since 2010) and investment (in force since 2014), with the objective of deepening trade and investment ties.
How strong is the present state of bilateral trade between Chile and China today?
Today, China is Chile's first trading partner in the world. Moreover, during the visit of Premier Li Keqiang, we were able to make important progress beyond the area of trade in goods, with the signing of significant cooperation agreements promoting reciprocal investment and cooperation in new sectors.
For Chile, one of the main objectives of the FTA with China is to diversify our exports to China and progressively include new goods and services.
During 2014, trade between Chile and China reached US$32.671 billion, representing 24 per cent of the Chilean foreign trade. Chilean exports reached US$18.437 billion. Moreover, China is our second partner on non-copper shipments, with US4.215 billion in 2014, and a 6 per cent more than the previous year. Trade increased last year due to the growth of agricultural and forest industry goods, which grew by US$245 million and US$169 million, respectively.
The trade balance has been favourable for Chile since 2002 and in 2014 the surplus reached US$4.204 billion. Also, between 2002 and 2014, trade grew at an average annual rate of 24 per cent while exports to China increased by 25 per cent yearly.
What sectors will benefit the most from a closer relationship?
Chile is focusing its effort in diversifying its export basket to the world, including China. In this context, during the next few years, Chile will promote trade opportunities in the areas of agricultural and manufactured products.
The free-trade agreement between Chile and China went into effect nine years ago this October. Since January 1 this year, all Chilean exports to China enter tariff free. This means that 1,611 additional Chilean products were added to the 5,725 that had this benefit.
Among the main Chilean goods to benefit are fresh grapes, wine, fish flour, frozen trout, salmon, olive oil and iron manufacturing.
To mention just a few examples, in 2004 less than 0.2 per cent of fresh fruits shipments from Chile had China as their destination; nowadays, 16.6 per cent goes to that market. Food products also increased their participation going from 1.4 to 7.9 per cent. The same happened with the wine macro-sector that increased from 2 to 8 per cent and the forest industry from 11 to 24 per cent, all of them in the same period.
Imports coming from China have also shown a constant increase, with an annual increase of 19 per cent during the 2005-2014 period.
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