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Chilean govt open to forging free-trade agreement with RP

Business Mirror, Manila

Chilean govt open to forging free-trade agreement with RP

By Cai U. Ordinario

21 October 2008

The government of Chile is open to forging some form of free-trade pact with the Philippines, seeing that Asian countries, most especially those in the Asean, would be among the major global economic growth drivers in the next few years.

Chile’s Ambassador to the Philippines Ovid A. Harasich said while there is still no joint study group formed to discuss this, the Chilean government is open to it. He said that the Chilean government already has around 60 free-trade agreements (FTAs) with several countries, including China and India.

Currently, the government of Chile is conducting trade negotiations with Asean member-countries such as Vietnam, Thailand and Malaysia. Chile is also currently negotiating a trade pact with Turkey.

“In the future, we can think about this. Right now, our priority is the Asia and the Pacific. We need to start to work together in one or two years but [the important thing is] we have to start,” Harasich said during a discussion at the University of Asia and the Pacific late Monday afternoon.

Harasich said that if ever the governments of the Philippines and Chile will start an FTA, it would take at least three years to conduct preliminary talks.

From preliminary talks, Harasich said, FTA negotiations can take as long as 10 years to complete. But he said that, on the average, forging a free-trade pact or a partial trade agreement would require around four to five years to complete.

Alejandro Gutierrez, Chile Ministry of Foreign Affairs general directorate for international economic affairs, said that since trade pacts will be used for a very long time, it is necessary to put in a lot of time, effort and thought into FTAs or any agreement with another country.

Gutierrez explained that while physical trade is important in creating FTAs, agreements can be crafted in different ways that could include financial services and industrial inputs like technology.

He also said the Chilean government also has partial trade pacts with some countries wherein they conduct free trade in only one sector, like the automotive industry.

Gutierrez said Chile’s tariff rate for countries that it does not have trade agreements with like, the Philippines, is around 6 percent. But, on the average, considering the number of countries it has forged trade pacts with, the tariff rate could even be lower than 1.8 percent.

Harasich said around 90 percent of Chile’s imports come from the 60 countries it has FTAs with.

To date, the Philippines trade relations with Chile is at a deficit on the part of the Philippines. The Embassy of Chile said the Philippines only earned $40 million from exports to Chile, while Chile earned $400 million in exports to the Philippines.

The embassy said around 85 percent of Chile’s exports to the Philippines is copper, making the Philippines its fifth-largest market for copper alone.