Presentation by Economy Under Review - Chile

Transcription

1 2008/SOM3/013anx3 Agenda Item: IV Presentation by Economy Under Review - Chile Purpose: Consideration Submitted by: APEC Secretariat Third Senior Officials Meeting Lima, Peru August 2008

2 CHILE IAP PEER REVIEW IGOR GARAFULIC DIRECTOR FOR MULTILATERAL ECONOMIC AFFAIRS SENIOR OFFICIAL FOR APEC Lima, 21 August 2008 OVERVIEW 1. Macroeconomic Enviroment 2. Trade Policy 3. Conclusions

3 MACROECONOMIC ENVIRONMENT ( ) Sharp Sharp increase on on world world prices prices of of oil, oil, food food and and other other commodities. Inflation Inflation increases increases Central Central Bank Bank raises raises interest interest rates rates (7.75%) (7.75%) Financial fragility and and uncertainty due due to to the the sub sub prime prime crisis crisis No No effect effect on on Chilean Chilean banks banks solvency solvency Strong Strong fiscal fiscal position Record Record high high copper copper price price (USD (USD per per pound) pound) Surplus Surplus of of 8.7% 8.7% of of GDP GDP in in Real Real expenditure expenditure will will increase increase by by 9% 9% in in MACROECONOMIC ENVIRONMENT ( ) Reduction of of structural surplus surplus to to 0.5% 0.5% of of GDP GDP (previously 1%) 1%) Increase Increase of of spending spending in in education education Mitigation Mitigation of of social social impact impact of of inflation inflation Targeted Targeted social social assistance assistance Fuel Fuel subsidies subsidies and and temporary temporary tax tax reduction reduction Sovereign Wealth Funds Funds Fund Fund for for Economic Economic and and Social Social Stabilization Stabilization (FESS): (FESS): US$21 US$21 billion billion (13% (13% of of GDP) GDP) US$6 US$6 billion billion to to finance finance studies studies abroad abroad for for 10,000 10,000 people people in in the the next next years years Pension Pension Reserve Reserve Fund Fund (PRF): (PRF): 1,5% 1,5% of of GDP GDP It It will will contribute contribute to to cover cover the the costs costs of of the the new new pension pension system system

4 MACROECONOMIC ENVIRONMENT MACROECONOMIC POLICY PILLARS Inflation targets 2 to 4% range, centered on 3% Exchange rate flexibility Floating exchange regime since Sept Gradual liberalization of capital account Structural surplus fiscal rule 1% of GDP (0.5% 2008 budget) Allows for counter-ciclical fiscal policy TRADE POLICY (1) Main Main goals goals of of Chilean trade trade policy policy Improve access for Chilean goods and services to our main markets Foster domestic and foreign investment Increase the competitiveness of the Chilean economy Increase macroeconomic stability Contribute to poverty eradication

5 TRADE POLICY (2) Chile Chile has has continued and and deepened its its multidimensional trade trade policy policy Unilateral tariff reduction Active participation in WTO FTAs with major partners Strong Commitment towards APEC TRADE POLICY (3) Main Main features Broad political consensus within the Chilean society Low flat tariff Transparency and predictability Minimise risk of trade diversion due to FTAs Reduces resource allocation distortions

6 FREE TRADE AGREEMENTS (1) Need Need for for bilateral negotiations with with key key partners because: Unilateral liberalization does not provide market access for Chilean exporters. Multilateralism is optimal, yet slow and tends to converge to the lowest (OR SLOWEST) common denominator. To avoid being discriminated in markets of economies that have engaged in FTAs. To develop rules and disciplines FREE TRADE AGREEMENTS (2) 19 Agreements covering 55 trade partners Chile s FTAs are comprehensive in scope and WTO-consistent Comprehensive coverage (or at least substantial) in Goods, Services, and Investment (pre and post establishment) Comprehensive disciplines: trade remedies, intellectual property, mobility of business people, e-commerce, competition, government procurement, trade facilitation, and dispute settlement In many cases the benefits of disciplines in FTAs are extensive to non-participants

7 CHILE AND THE WTO Strong and consistent commitment to the WTO Founding member of the GATT and WTO Active participation in the DDA negotiations For Chile, the WTO is not just about rounds of trade negotiations. 1. Rules-based multilateral trade system 2. Transparency 3. Integrated Dispute Settlement Mechanism CHILE AND APEC (1) Chile Chile is is committed to to the the APEC APEC process APEC is an important part of Chile s strategy towards the Asia Pacific region Approximately 55.1% of Chile s trade involves APEC Economies (56.9% exp. 53,3% import.) 60% of the Foreign Direct Investment comes from APEC economies

8 CHILE AND APEC (2) Chile Chile is is committed to to the the APEC APEC process Chile lowered its MFN flat tariff from 11% to 6% between 1999 and 2008, reflecting its strong Commitment with the Bogor Goals. Chile s weighted average tariff is 1.3% CHILE AND APEC (3) Chile Chile is is committed to to the the APEC APEC process Chile has successfully negotiated FTAs with 11 APEC economies: The United States, Canada, Peru, Korea, Mexico, Singapore, New Zealand, Brunei Darussalam, Japan, Australia and P.R. of China and is currently negotiating with Vietnam and Malaysia.

9 Chile s Bilateral FTAs Canada EU (27) + EFTA P. R. of China Japan USA Korea Latinamerica Australia P4 CHILE S BILATERAL FTAs Canada Mexico CentralAmerica (5) European Union (27) Korea USA EFTA (Iceland( Iceland, Norway, Switzerland,, Liechtenstein) Venezuela Colombia Ecuador Peru Mercosur (Uruguay, Brazil, Paraguay, Argentina) Cuba Australia (**) negotiation is concluded and now waits for congress approval Bolivia P4 (New( Zealand, Singapore and Brunei Darussalam) Japan India Panama P.R. of China Malasia Vietnam Turkey Total 19 Agreements 55 countries 89% of trade. (*) currently under negotiation

10 Chile s APEC FTAs Canada Mexico Korea USA Peru Singapore New Zealand Brunei Darussalam Japan P. R. of China Malaysia Vietnam (*) currently under negotiation Australia (**) negotiation is concluded and now waits for congress approval CONCLUSION (1) Chile Chile is is right right on on track track to to reach reach the the Bogor BogorGoals by by (or (or even even before) as as stated stated in in its its IAP. IAP. FTAs/RTAs are are one one of of the the means means to to reach reach Bogor. Bogor. Active Active participation in in the the WTO WTO and and a strong strong multilateral trade trade system system are are essential components of of Chile s Chile s trade trade policy. policy. APEC APEC must must provide a sound sound political support to to the the successful conclusion of of the the DDA DDA negotiations. This This would would strenghten the the multilateral system and and would would facilitate the the achievement of of the the Bogor BogorGoals.

11 CONCLUSION (2) ACHIEVEMENT OF THE BOGOR GOALS IS JUST AROUND THE CORNER... Very Very low low MFN MFN tariff tariff across across the the board board Over Over 92.1% 92.1% of of our our trade trade with with APEC APEC economies is is covered by by FTAs FTAs Ongoing negotiations with with 2 APEC APEC economies There There are are not not significant NTMs NTMsin in place place Chile Chile has has already one one of of the the most most opened, transparent, and and nondiscriminatory regimes for for Services Trade Trade and and Foreign Investment on on a MFN MFN basis non- basis THANK YOU