The real deal.(Trade Talk)(Interview)

At the beginning of 2004, Chile's long-awaited free-trade agreement with the United States took effect. Chilean Foreign Minister Soledad Alvear played a pivotal role in those negotiations, as well as in Chile's previous deal with the European Union (EU), moving the region's economic-reform leader far along in its long-stated goal of getting 90% of its foreign trade under free-trade terms. Alvear, considered a potential presidential candidate in 2005 for the center-left Christian Democrats, talks with LATIN TRADE Correspondent Daniel A. Joelson about Chile's economic future.

Now that Chile has signed free trade deals with the United States and European Union, what are its trade priorities?

We are going to continue working multilaterally in the World Trade Organization, and we are going to explore alternatives for agreements, such as the exchange of goods with some Asian countries. We have begun conversations with New Zealand and Singapore, in addition to having received suggestions to begin negotiations with Thailand and Japan.

What concrete results has Chile seen since it signed the free-trade deal with the European Union?

Just a few months after this treaty went into force we saw significant effects. According to figures from the national customs service, exports rose 15% to date to the EU.

Exports have risen 15%?

Exactly. Between February and September 2003 the EU was a big purchaser of products from our Second Region, from the Metropolitan Region and from the Eighth Region. And there's a great dynamism in the growth, in that this means that we export products with great added value and that we have introduced new products into the member countries of the EU. There are even figures that reflect 250% growth for honey exports concentrated among small and medium-sized agricultural firms, something very important for us. We're not only interested in the traditional agricultural companies or traditional exporters but also that new exporters, especially small and medium-sized companies, join this process. Our agreement with the EU already reflects this.

When will Chile be completely free of tariffs?

At the moment we have a unilateral reduction of tariffs to 6%. However, it's less than that if we consider the commercial agreements that we have reached. There is a discussion at the academic level that suggests it would be convenient to unilaterally lower tariffs. If we already have more than 70% of our foreign trade covered by commercial agreements at zero tariffs, then we have taken a great step. And we'll just have to wait and see how we continue this strategy that we have developed of open regionalism, that is, unilateral tariff reduction, bilateral deals, and regional and multilateral agreements.

What are Chile's goals for the Southern Common Market (Mercosur)?

We have given great importance to Mercosur, which is a kind of integration process for South American countries, very important in the spheres of justice, health, education, women's issues, et cetera. That gives Mercosur great richness as a process of integration in these sectors of Latin America. And we certainly think that this is much more than a customs union, without affecting, certainly, that we have complementary deals with these countries.

Will you be a candidate for president of Chile?

It isn't the moment yet to make a decision of that type. Municipal elections are going to come up in 2004, and after these it is probable that one resolves how the parliamentary and presidential elections will shake out. That will be the right moment to make a decision. I am working as Foreign Relations Minister with great dedication to President Lagos. And that is my work for now, to do this task well.

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