Heraldo Muñoz, Chile’s minister of foreign affairs, talks to Silvia Pavoni about the country’s influence on Latin American trade and what China’s One Belt, One Road initiative means for the region.

Heraldo Munoz

Q: Latin American trade integration has been discussed relentlessly over the years with mixed results. What effective, politically acceptable measures could be introduced now?

A: I can speak for Chile. Our policy of opening up trade and diversifying our exports to the world has allowed us to grow economically, create jobs, boost trade and increase direct investment flows to and from our country.

Both our extensive network of trade agreements – 26 in total with 64 economies – and our participation in various regional integration schemes reflect the long-term institutional efforts that Chile has made in the past decades. However, we believe that there is still room to grow in this area.

The Pacific Alliance [formed by Chile, Peru, Colombia and Mexico], for example, has established itself as a group of Latin American countries with a common vision on matters of trade integration. And its impact transcends the region, with its 52 observer states and the new category created by Chile of ‘associate state’, which Canada, Australia, Singapore and New Zealand will acquire once the negotiations of high standards of free-trade agreements are concluded, which we hope will be soon.

At the same time, we have set out to promote pragmatic convergence between the Pacific Alliance and Mercosur [whose members are Brazil, Argentina, Paraguay and Uruguay], with the conviction that a more integrated Latin America will improve the competitive position of the countries of the region in relation to external markets, increase our mutual trade and allow for a stronger presence of our countries in international forums.

Furthermore, within our plurilateral agenda, I would like to highlight Chile’s leadership in the successful conclusion of the Comprehensive and Progressive Agreement for the Transpacific Partnership, which is scheduled to be signed on March 8 in Santiago. This treaty restates our firm commitment to open markets and the free flow of goods, services and investment, and constitutes a call for progress in terms of openness and the strengthening of an international trading system based on clear rules.

In short, we believe that trade agreements have indisputably strengthened regional integration, and we are aware that the current challenge is to move towards more inclusive and progressive trade, where the benefits of globalisation are shared by all our citizens.

Q: How can 2018’s elections across Latin America affect trade integration? Would those governments undergoing elections have the ability to focus on international and regional trade?

A:Given the protectionist pressures that we are all aware of, I do not foresee a regression in trade integration resulting from the presidential elections in several countries of the region. For example, whatever the outcome of the elections in Mexico and Colombia, the Pacific Alliance will continue to be important. For Mexico, the Pacific Alliance and trade with Asia-Pacific partner countries could be an alternative platform within the context of the North American Free Trade Agreement’s possible outcomes. In Brazil, there was an interest in a Mercosur agreement with the EU and in a rapprochement with the Pacific Alliance long before the administration of Michel Temer, under Dilma Rousseff. In short, the various electoral alternatives in the region will require more trade, more investment and more employment, for which trade agreements are hardly disposable.

Q: How can China’s One Belt One Road initiative help support Latin America’s international trade in practice?

A:The One Belt One Road initiative seeks, in the words of Chinese leaders, greater coordination of economic development policies, the harmonisation of technical standards for infrastructure, the elimination of barriers to trade and investment, and the establishment of free-trade areas, financial co-operation and ‘people to people’ connections. When there are protectionist pressures emerging, China’s initiative is welcome.

This 21st Century Maritime Silk Road [part of One Belt One Road] can create opportunities amid challenges and changes, enhancing connectivity not only within Asia, and Asia with Europe, but between Asia and Latin America, adapting it to our current circumstances.

Within One Belt One Road, Chile could become a platform to connect with the rest of Latin America, considering its reputation as a regional leader in the exchange of goods, services and capital.

Today, Chile is more than fit to participate and join the 21st Century Maritime Silk Road, hence, looking towards aligning with One Belt One Road goals, Chile is undergoing important processes with regards to connectivity both domestically and within Latin America.

On road connectivity, both outside and inside the country, Chile is currently developing important public tenders, which have attracted the interest of Chinese companies, for projects that better connect Chile with Argentina (tunnels and roads), Paraguay, Uruguay and Brazil.

Chile is also the only country that has a bank, China Construction Bank, authorised by the central banks of both countries for the clearing of renminbi in Latin America.

And Chile is a prospective member of the Asian Infrastructure Investment Bank [AIIB], which will allow the AIIB to finance projects that benefit integration with Asia, such as the construction of airports, ports, highways, tunnels, fibreoptic cables, and so on.

Given the aforementioned, One Belt One Road offers an opportunity to Latin American countries to be part of a process of global interconnection and co-operation.

Q: Chile has long been an example of an open, business-friendly country. How can it exert its positive influence on others in the region? Can its ‘single window’ initiative and more efficient border policies be replicated effectively?

A:In its strategy for strengthening its logistics chain, Chile has decidedly made progress in implementing the interoperability of the single window for foreign trade in the Pacific Alliance in order to reduce costs and ensure agile, expeditious and secure operations for our exporters.

Through these types of initiatives, we hope that the Pacific Alliance will become a world-class logistics platform contributing to the reduction of costs and time, while benefiting our small and medium-sized enterprises with the potential to increase intra-Pacific Alliance trade.

In the context of the Summit of Puerto Varas, Chile, in June 2016, ministers of the Pacific Alliance signed an agreement for the recognition of the validity of electronic signatures for the interoperability of the single window for foreign trade. Currently, we can [execute] the exchange of electronic phytosanitary certificates, the approval of digital certificates of origin and [procedures] to reduce shipping costs, among others.

Thus, taking advantage of these achievements, together with the benefits of cumulation of origin resulting from intra-Pacific Alliance integration, businessmen, entrepreneurs and foreign investors from the four countries will be able to benefit through the production of goods with greater added value in significant areas, improving our insertion in global value chains. It is these concrete examples and achievements, as well as the exchange of good practices between the various regional blocs, that contribute to improving the investment climate in the region.  

Q: The Pacific Alliance has undoubtedly become a poster child for free trade in the region, but is its convergence with Mercosur a real possibility?

A:Chile is interested in strengthening the Pacific Alliance convergence process with other regional integration schemes such as Mercosur. This strategy is a priority for our foreign policy and we are confident that we can continue to build a joint agenda between the Pacific Alliance and Mercosur on issues of common interest.

Since 2014, Chile has promoted a proposal for convergence in Latin American regional integration matters, prioritising the Latin American and Caribbean region and, in particular, South America, and strengthening the country’s presence in the various integration mechanisms existing in the region. Following the Ministerial Meeting of the Pacific Alliance with Mercosur in Cartagena de Indias on November 1, 2014, and the Convergence Seminar held in Santiago on November 24, 2014, and under Chile’s pro tempore presidency in the Pacific Alliance, a great success was achieved at the II Ministerial Meeting of the Pacific Alliance – Mercosur, held on April 7, 2017, in Buenos Aires. 

On that occasion, the Pacific Alliance and Mercosur adopted a concrete roadmap that is currently being developed between the two mechanisms and sets out lines of work in areas such as regional value chains and accumulation of origin; trade facilitation and single window for foreign trade; customs co-operation; trade promotion and small and medium-sized businesses; non-tariff barriers; and facilitation of trade in services.

We believe in the richness and potential of the different models of integration in Latin America, and that convergence can be a positive step for us to have a stronger and more persuasive voice as a region, where diverse platforms and visions coexist, but collaboration between countries can prevail in core issues.


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