Foreign Affairs Minister, Soledad Alvear

With the passing of the Trade Promotion Authority by the Senate, the horizon opens up for free trade agreement negotiations as President George W. Bush receives the authority to submit trade agreements to Congress under expedited "fast-track" procedures. This omnibus bill, in addition to renewing fast track after an eight-year lapse, would establish preferential trade treatment to the U.S. for four Andean countries and expand federal income and medical insurance aid for workers who lose their jobs because of free trade agreements.

This long and awaited fast-track opens a clearer path for the United States to successfully achieve free trade agreements with countries like Chile and Singapore as well as furthering the negotiations of the Free Trade Area of the Americas. According to statements from the U.S. Trade Representative, Robert Zoellick, “Open trade is at the foundation of President Bush’s strategy to advance hope, opportunity, prosperity and the rule of law to benefit Americans and others around the world.”

Amid all the internal commotion, within the United States, caused by this bill, Chile and the United States have been negotiating a bilateral trade agreement for the last year and a half. The finalization of this agreement would further enhance and deepen the already existing trading partnership between the two countries. Yet one interesting aspect is that simultaneous to this negotiation, Chile has been negotiating a free trade agreement with the European Union, which was successfully signed on May 17, 2002. This has restated the importance of having a politically, economically and socially stable partner in Latin America.

According to Minister of Foreign Affairs Soledad Alvear, “Chile is a country that has made a transition to its democracy, that has strengthened its rule of law, that has implemented responsible macro economic policies, and that has entered the globalized world. We are not asking for aid from the developed world, we are asking for access to the markets. With a greater access to developed markets, Latin American countries will have more possibilities of growth and better chances of competing with equal conditions. This is extremely important.”

Minister Alvear also mentioned that Chile’s foreign policy has focused on establishing bilateral trade agreements with key countries around the world in an effort to better position its exports. Among these are agreements with Canada, Mexico and Costa Rica. Chile is also attempting to negotiate an agreement with Korea and is holding talks with Japan.

Developing better trade relations with the Asian Pacific countries is a main priority in Chilean foreign affairs; however, the most important item on the agenda right now is signing the free trade agreement with the United States.

The negotiating teams are lead by Osvaldo Rosales, general director of International Economic Relations of Chile’s Foreign Affairs Ministry and by Regina Vargo, the United States Representative of Commerce for the Americas. During the last 18 months, the negotiating teams have been alternating between Washington and Santiago in order to discuss the 19 central themes of the deal. These themes were grouped in seven distinct baskets: commerce, industrial and agricultural products, mechanisms of commercial protection, standards and norms, investment services, issues relating to commerce, institutional issues, labor and environmental issues.

“The most important message for the U.S.,” says Rosales, “is to conclude a well-balanced negotiation with Chile, one that provides for democratic and institutional stability. The events that have been happening in the region generate the conditions for anti-openness and anti-globalization movements and it has not been disregarded that countries return to populist options. The challenge in this day and age as we are entering the 21st century, is to effectively reconcile liberalization of the markets and democracy. Right now, Chile is the only Latin American country that complies with these conditions.”

As both countries reach the final rounds of negotiations, the items being discussed become tougher and more detailed, particularly in the areas of agriculture, mechanisms to resolve differences, anti-dumping, subsidies, band of prices, environmental and labor aspects and issues relating to market access.

Nevertheless, government authorities from both Chile and the United States agree that this free trade agreement should be a model for developing and emerging countries that are hesitant to enter the globalized world. “Since we initiated the conversations for the trade agreement that were confirmed by President Lagos’ and President Bush’s meeting last April, the political signs have been splendid and President Bush has used Chile as an example of a country with good free trade practices in various multilateral forums - like the Monterrey Summit,” stated Minister Alvear.

The minister also emphasized that it is important for Washington to realize that by not having a free trade agreement with a reliable partner like Chile, the U.S. business community will miss out on an opportunity to enter other markets in the region with comparative advantages offered through Chile, which has complementary agreements with other countries of Latin America. Canada was able to increase its trade with the rest of Latin America after it signed an agreement with Chile.

“The United States has always been concerned about Latin America, specially when countries are going through rough times, when there are narco-traffic situations, when there are attempts against democratic practices and when human rights have been violated,” said Alvear. “By all means, we welcome this. However, we believe that currently it is of vital importance that the United States gives a sign of [support] to a country that does not have any of the conflictive situations that I just mentioned, but that instead, has a rule of law and has grown during 2001, a year of a difficult economic panorama. To give Chile such positive recognition, that it has done things right, is a potent political signal that allows us to advance in the direction of the Free Trade Area of the Americas (FTAA),” said Alvear.