International trade and the Fundación Chilena del Pacífico

By Alberto Salas Muñoz, chairman of Fundación Chilena del Pacífico 

(This is a machine translation)

I would like to highlight international trade in these lines, both for what it says about our country's experience of growth and development over the last three decades, and for the way in which it is linked to the role the Fundación Chilena del Pacífico has developed regarding the promotion and support of Chile's insertion in the world through an open, active trade policy with a long-term strategic vision.

It is key to highlight this aspect at a time when we are getting ready to start what many describe as a new political cycle marked by a "social pact" substantially different from the one that has prevailed since the return to democracy, with a new government from March 2022 and with a constituent process that will make a proposal for a new Constitution to the country.

International trade, in effect, has been and I believe should continue to be a cornerstone for our country's development prospects. I believe it is important to insist on this, without ambiguity of any kind, in light of the discussions that we have witnessed for much of the year on the steps that our country must continue to take in this field and as a result of some initial definitions, the responsibility of those who will take the reins of the Executive Branch shortly, with respect to the management and stability of current trade agreements our country has successfully negotiated and sealed over the last three decades.

Indeed, the agreements to promote international trade that all Chileans have, of different types and scope and whose most visible face are the free trade agreements (FTAs), constitute a true asset of our nation that we must feel proud of.

At the Foundation that I have the honor to chair, we have always understood the absolutely strategic sense of this way (trade policy) of incorporating Chile into the forces of globalization that shape the contemporary world, with the vibrant Pacific Basin as a geographical frame of reference particular to our case.

“At the Foundation that I have the honor to chair, we have always understood the absolutely strategic sense of this way (trade policy) of incorporating Chile into the forces of globalization that shape the contemporary world, with the vibrant Pacific Basin as a geographical frame of reference particular to our case”

The network of trade agreements with which Chile has given us access to about 65% of world GDP and any non-ideologized analysis of its effects, during the last decades, cannot ignore its colossal role in the development of our export capacity in multiple productive sectors, its correlate in the general modernization of our economy, in the creation of associated jobs and in attracting foreign direct investment; in the adequacy, in short, of a medium-sized economy such as Chile's today (much smaller before) to perform reasonably successfully in the enormously competitive global scenario.

Chile, in short, would currently be a much poorer country with even more dramatic social urgencies if it had not undertaken, in a visionary manner in the Latin American concert, a determined commercial policy of insertion into multiple regions through multilateral and bilateral agreements.

With the Foundation, we wanted to contribute strongly this year to laying some factual bases to nurture the discussion that will take place in the future on the most appropriate trade policy for our country. Along with addressing the issue in face-to-face and digital meetings, directly and indirectly, we commissioned high-level research to put on the table, more than opinions, numbers about the real effects of trade agreements in our country and the most likely scenarios in case of changes or a significant slowdown in trade policy.

The study (carried out by Guillermo Le Fort et al.) concludes that “Chile's trade performance with each of its trading partners shows a positive average effect on trade volume, the diversification of Chilean exports and its penetration into new markets … Weighting by the importance of the countries and trading blocks with which Chile has an FTA, the average effect of FTAs increases the volume of bilateral trade by 20% after the first five years after signing. Ten years after an FTA, the accumulated increase in the volume of exports reaches 50% … The diversification of exports shows a general increase, both in the number of products exported and in the growth of non-mining exports. Taking an average weighted by the importance of trading partners, the increase in the number of exported products amounts to 70%, while non-mining exports as a percentage of GDP increase by 40 percentage points five years after the signing of the FTAs.”

Regarding the effects of trade policy on foreign direct investment flows, the research concludes that they were close to those seen as an effect of increased trade, although it added the political stability that has characterized Chile in recent decades as a determining element for attracting investment.

Chile, as I highlighted, seems to be preparing to begin a stage marked by transformations, and international trade policy, like any other, should always be subject to adjustments and improvements.

Undoubtedly, new trends such as digital commerce, the growing incorporation of services, the inclusion of small and medium-sized companies in the export productive force, environmental emergencies and sustainability challenges, among many others, impose new challenges that will force, once again, our next political leaders to sharpen negotiating strategies and priorities. 

At the Foundation we see this as part of normal and expected modernization processes of any agreement, but we do not lose sight of the fact that the pillars of the base of Chile's insertion into the world is one of the great stories of satisfaction for our country over the past three decades.

Due to its public-private nature, its history, present and, above all, its future, the Fundación Chilena del Pacífico is called upon to play an important role in the informed and respectful discussion of everything that is at stake in the country when it comes to designing the next steps of insertion into the world. From now on, we mobilize our team and dedication to add to this new stage.

"Due to its public-private nature, its history, present and, above all, its future, the Fundación Chilena del Pacífico is called upon to play an important role in the informed and respectful discussion of everything that is at stake in the country when it comes to designing the next steps of insertion into the world. From now on, we mobilize our team and dedication to add to this new stage"

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