Chile bets on APEC meeting to advance digital partnership initiative

Greater participation in the digital economy and export of services will be key talking points for Chile as the country hosts the APEC Economic Leaders' Meeting this year.

The meeting will be held in capital Santiago on November 16-17.

Chile kicked off negotiations with New Zealand and Singapore in May during a meeting of APEC trade ministers in the Chilean city of Viña del Mar with the goal of reaching the world’s first Digital Economy Partnership Agreement (DEPA). The talks are expected to be hammered out over the next few months.

"We want to make progress in the area of digital economy and services. In Viña del Mar we launched negotiations with New Zealand and Singapore for the first digital economy agreement worldwide to regulate the trade of digital goods so we’re interested that this advances at APEC," the country’s undersecretary for international economic relations, Rodrigo Yañez, told press.

The DEPA aims to address issues such as governance for artificial intelligence, e-payments, e-invoicing and digital identities, in order to set standards and strengthen existing economic ties.

Chile, New Zealand and Singapore were architects of the P4 Agreement, which was the foundation for the TPP and CPTPP trade agreements. The idea of the three countries is to become digital centers through which it is easy and fast to export.

The parties intend to consider all aspects of the digital economy that might support trade in the digital era, building on existing trade agreement commitments they have in e-commerce, customs duties on electronic transactions, electronic signatures, and personal data protection.

There is also interest in heightening cyber security to address the terrorist threat.

Chile is also keen to export services in the areas of IT, mining, forestry, logistics and agriculture.

DIGITAL TAX

Chile is following a trend in fellow members of the OECD in charging VAT or other duties on digital services, an issue that will be a topic on the agenda at APEC, according to Yáñez.

A proposal to charge the likes of Netflix, Spotify and Uber the 19% VAT that other companies pay is part of a tax reform bill currently being discussed in the senate.

"We have adopted a position on this issue but we are aware of the debate worldwide both in the OECD and G20. There's not a single model," Yáñez said.

DIGITAL INFRASTRUCTURE

Though not specifically an issue on the agenda for the APEC summit, building out digital infrastructure is a key strategy for Chile, particularly its plans to build a submarine fiber optic cable that connects with Asia.

Earlier this month, telecom regulator Subtel awarded a feasibility study that will research the technical, legal, financial and economic parameters of the project, which would involve 24,000km of cabling and cost an estimated US$650mn.

"Though not on the agenda, from a bilateral relations perspective this is a very important issue. For the digital economy we need cross border data flows, regulatory frameworks and open systems."

Having a direct link to Asia - not having to go through the US or Europe - is seen as key for reducing latency that will be key for the introduction of new digital services though it has been ruled out that the move is related to the trade war between the US and China.

"It’s more an issue of capacity and the relevance of Asia Pacific for Chile and the region. Today 60% of our shipments go to Asia," Yáñez said.