Opportunities for Chile in the TPP

As every country has its own benefits and opportunities from the TPP, we will look into how the deal will impact Chile.

  • Trade exchanges and access markets

In regards to access to markets, the TPP does not provide benefits since those are already obtained in the bilateral negotiations between Chile and all other TPP countries. Important partners of Chile are the U.S., Mexico, Peru, Canada and Australia which have already reached full trade liberalization, but Japan allows for a bilateral negotiation which will deepen the agreements between them. Regarding Peru and Mexico, the active trade agreements will provide wide market liberalization, and current parallel negotiations taking place should lead to improvement in much less time than TPP.

  • Relation to main Asian economies

One issue to be incorporated into the analysis is Chile’s relationship with the large Asian economies that are not part of TPP. It is known that the Asian region has become the main market for Chilean exports, as just over 40 % of Chilean exports are directed to that region, especially China, Japan and Korea. It should be highlighted that in recent years China has displaced the U.S. as the main destination for Chilean exports and is its largest trading partner. There is considerable scope for improving the access of Chilean products in the negotiations with Japan and Korea given the high level of protection of those countries on agricultural production, and therefore it should be a priority. In the case of China, Chile has already negotiated a FTA including a much broader tariff reduction program. Therefore, the Chilean efforts should be directed to the removal of non-tariff barriers, in particular, to the signing of the sanitary protocols that allow greater access to agricultural exports.

  • Behavior of direct foreign investment

Several evaluation studies of FTAs conducted by Direcon show that FDI received in Chile has not suffered significant changes in their amounts and sources after signing the FTAs. The flows as well as the stocks have not been altered in their dynamics, origin and priority production. This is consistent with the fact that the bulk of foreign investment that receives Chile is concentrated in mining, by virtue of its competitive advantages, and to the recognition of favorable macroeconomic and regulatory conditions that go beyond the FTAs.

  • Convergence of trade disciplines

Another point to analyze regarding the benefits of Chile’s incorporation to TPP, is the possible negotiation of commitments allowing simplification and convergence of trade disciplines. This is an issue on which APEC has been working and seeks essentially to reduce transaction costs and facilitate trade. In the case of Chile, this may be interesting precisely because it has negotiated FTAs with all other TPP members and, therefore, a simplification and harmonization of disciplines and standards might benefit its exporters and ease the work of public agencies responsible for monitoring of compliance with rules and procedures, such as customs and agricultural services.

Full report https://www.derechosdigitales.org/wp-content/uploads/TPP-furche-EN.pdf (Page 9-17)

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