A cargo ship in the port of Arica in northern Chile in August 2021. John Moore (Getty Images)
Chile this Tuesday officially joined the Trans-Pacific Partnership Agreement (CPTPP), the ambitious free trade network linking 11 countries on both shores of the Pacific, also known as TPP11. After almost five years of deliberation, Gabriel Boric’s government has announced the entry into force of the controversial trade deal that his coalition, the Broad Front, rejected in Congress. With the announcement of the agreement, around 1,200 products will be tax-exempt. “In some cases it will benefit our exports to the contracting states, and in other cases we can import some products at a lower cost,” Economy Minister Mario Marcel said this afternoon.
The South American country is the tenth economy to become a full member of the 2018-sponsored accord under the second government of Michelle Bachelet. The other countries that are part of the fourth largest integration deal in the world are: Australia, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and Brunei Darussalam. All that remains for the latter is ratification. Together they represent 12.2% of the global economy. Other countries have expressed an interest in membership or have officially applied. The furthest along is the UK, which is working to become the first European member to join the bloc this year and, as the UK government reported, “negotiations are progressing well”.
Representatives of the CPTPP countries at a meeting in Tokyo in January 2019. Eugene Hoshiko (AP)
With the entry into force of the CPTPP, there will be reductions in around 3,000 tariff lines: 1,228 sub-headings or products, of which 48% are manufacturing, 33% agriculture and 15% fisheries and aquaculture. In 2022, 14% of Chilean exports went to the other signatory states. The 10 countries represent approximately 34% of foreign investment in Chile through 2021 and 31% of Chilean investment abroad.
This Monday evening, Chile participated for the first time as a full member in a virtual meeting of senior officials of the CPTPP, coordinated by New Zealand as the host country, according to the Chilean Ministry of Foreign Affairs. During the meeting, the strategic priorities of the contract for this year were discussed, such as green economy, electronic commerce and the integration of new members.
Undersecretary for International Economic Relations José Miguel Ahumada said Tuesday that the department he heads will assess the treaty’s impact on the export matrix, “emphasizing the analysis of products with greater technological content, environmental issues, gender and trade, as well as the Involvement of small and medium-sized enterprises”.
Ahumada has insisted the deal brings “marginal” trade gains and has worked with the other member countries to exclude Chile from the investor-state dispute settlement mechanisms included in the text. Last Friday, Chile and New Zealand signed a bilateral side letter canceling the mechanism. Mexico and Malaysia have also committed to this. “The Undersecretariat for International Economic Relations (Subrei) will continue to work with its trading partners within the CPTPP and in other bilateral and multilateral spaces to fundamentally reform investor-state dispute settlement mechanisms to advance the state’s autonomy strategy,” the Subrei said on Tuesday .
In 2019, the Chamber of Deputies approved Chile’s accession to the treaty by 77 votes in favor and 68 against. The right en bloc and some members of the Christian Democrats, the Radical Party and the Socialist Party gave the bill the green light for further processing in the Senate. The majority of left-wing parliamentarians, including then MP Gabriel Boric, opposed it, arguing that it could have a negative impact on Chilean interests on labour, environmental and agricultural issues.
The Senate approved the entry in October last year by 27 votes to 10. “Many at the time questioned the government’s obligation to formally ratify, deposit and enter into force,” Minister Marcel said this afternoon, alluding to criticism leveled at the slowness of ratification. “We already have the entry into force of this contract shortly after the start of the year, which is very important. Many of the fears, apprehensions and suspicions of the time are largely belied by reality,” he added.
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