When Trade Policy is Not Enough: Opportunities and Challenges for Chile's International Insertion

Abstract

In the last decades Chile's relationship with the world has been driven by matters related to its economic policy. This article argues that Chile privileges trade relations over politics and neglects deeper relationships with neighbouring countries. While the erosion of the United States' influence has provided some opportunities for participation in regional political projects; a close examination of the country's foreign policy will show that there has been a consistent hegemony of economic over neighbourly interests enacted. This situation is strengthened by the strong presence of an economic elite who is influential in shaping national foreign policy. For the most part, the election of right-wing president Sebastián Piñera, has signified continuity with the previous policies of the centre-left governments. At the same time; this stability is nuanced–in particular in regards to the relationships with neighbouring states where some deterioration is evidenced.

Keywords::

• Chile
• Foreign Policy
• regionalism
• International Economic Relations

Acknowledgements

Funded by Project N°11110377 of The National Fund for Scientific and Technological Development (FONDECYT) and Program U-Apoya, University of Chile. A previous version of this article was presented at the Conference Latin America and the Shifting Sands of Global Power, Canberra, September 22, 2011. I am deeply grateful to Sean Burges, Jael Goldsmith Weil, Alejandro Olivares and the anonymous reviewers of JILAR.

Notes

^1. OECD, Maintaining Momentum, OECD Perspectives on Policy Challenges in Chile, Paris, OECD Publishing, 2011.

^2. Central Bank of Chile, http://www.bcentral.cl/index.asp and http://www.ine.cl/, accessed 10 February 2013.

^3. OECD, ‘OECD perspectives’, 2011.

^4. Mario Waissbluth, ‘Manifestaciones estudiantiles en Chile’, Foreign Affairs Latinoamérica, 11:4, 2011, pp. 32-39. Lorena Oyarzún, ‘Educación es acceso al desarrollo: las movilizaciones estudiantiles en Chile’, in Manuela Mesa (ed.), Cambio de Ciclo: crisis, resistencias y respuestas globales, Anuario CEIPAZ 2012-2013, Madrid, Icaria, 2012, pp. 221-234. Manuel Antonio Garretón et al, Movimiento social, nuevas formas de hacer política y enclaves autoritarios. Los debates del consejo asesor para la educación del gobierno de Michelle Bachelet en Chile, 2011, http://www.revistapolis.cl/30/art05.htm, accessed 1 April, 2012.

^5. El Mostrador, Antonio Rubio, http://www.elmostrador.cl/opinion/2013/01/27/a-un-ano-del-aniversario-de-las-movilizaciones-en-aysen-lecciones-y-desafios/, accessed 10 February, 2013.

^6. José Aylwin, ‘Los conflictos en el territorio mapuche: antecedentes y perspectivas’, Revista Perspectivas, 3:2, 2000, pp. 277-300; Rolf Foerster and Jorge Vergara, ‘Los mapuche y la lucha por su reconocimiento en la sociedad chilena’, http://www.archivochile.cl/Pueblos_originarios/otros_doc/POotrosdoc0010.pdf, accessed February 7, 2012.

^7. Ben Ross Schneider, ‘Business Politics and Regional Integration: the Advantages of Organization in NAFTA and MERCOSUR’, in Victor Bulmer-Thomas (ed.), Regional Integration in Latin America and the Caribbean: The Politics of Open Regionalism, London, ILAS, University of London, 2001, pp. 167-93. Daniel Flemes and Leslie Wehner, ‘Drivers of Strategic Contestation in South America’, Giga Working Papers, N° 207, October 2012, pp. 1-31. Leslie Wehner, ‘Chile's Rush to Free Trade Agreements’, Revista de Ciencia Política, 31:2, 2011, pp. 207-26. Jaime Baeza, ‘Revolving Doors: Elites and Democracy in Argentina and Chile’, Ph.D dissertation, University of Essex, 2008. For a general panoramic view of the presence of economic group of interest and business men in Latin American politics: Francisco Durand, ‘Empresarios a la presidencia’, Nueva Sociedad, 225 (enero-febrero), 2010, pp. 68-85.

^8. Lorena Oyarzún, ‘Integración regional en América Latina: su papel como proyecto identitario, de construcción de comunidad y de gobernanza autónoma’, Ph.D dissertation, Autonomous University of Barcelona, 2011.

^9. This center-left coalition of political parties was created in the 1980s to organize opposition to the dictatorship of Augusto Pinochet. Between 1990 and 2010, the Concertación consistently won presidential elections.

^10. DIRECON, http://www.direcon.gob.cl/inversion/1429, accessed February 7, 2013.

^11. Since 1978 both countries only have consular relations. Lorena Oyarzún, ‘La agenda de integración en América del Sur y sus posibles efectos en la relación Bolivia- Chile’, in Mario Artaza and Paz Milet (eds), Nuestros vecinos, Santiago: RIL Editores e Instituto de Estudios Internacionales de la Universidad de Chile, 2007, pp. 303-17.

^12. Walter Carlsnaes, ‘Foreign Policy’, in W. Carlsnaes, T. Risse and B. Simmons (eds), Handbook of International Relations, Los Angeles, London, New Delhi, Singapore and Washington DC: Sage Publications, 2008, p. 335.

^13. Daniel Flemes and Leslie Wehner, ‘Drivers of Strategic Contestation in South America’, Giga Working Papers, N° 207, October 2012, pp. 1-31.

^14. Andrés Serbin, ‘De anarquías y despertares’, Foreign Affairs Latinoamérica, 10:3, 2010, pp. 6-11; Roberto Russell and Juan Gabriel Tokatlian, ‘Resistencia y cooperación: opciones estratégicas de América Latina frente a Estados Unidos’, in Ricardo Lagos (ed.), América Latina: ¿integración o fragmentación?, Buenos Aires, EDHASA, 2008. Claudio Fuentes and Francisco Rojas, ‘El patio trasero. Estados Unidos y América Latina post-Irak’, Nueva Sociedad, 185, 2003, pp. 64-82. Heraldo Muñoz, ‘Latinoamérica y Estados Unidos: ¿la hora del adiós?’, in Heraldo Muñoz (ed.), Globalización XXI. América Latina y los desafíos del nuevo milenio, Santiago de Chile, Aguilar, 2000, pp. 119-43.

^15. Francisco Rojas, ‘América Latina y los desafíos de la integración regional’, in Manuela Meza (ed.), Escenarios de crisis: fracturas y pugnas en el sistema internacional, Anuario 2008-2009, Madrid, CEIPAZ- Icaria, 2008, pp. 105-25.

^16. Lorena Oyarzún, ‘El papel de la UNASUR en el multilateralismo latinoamericano’, Foreign Affairs Latinoamérica, 10:3, 2010, pp. 39-44; Félix Peña, ‘La integración del espacio sudamericano. ¿La Unasur y el Mercosur pueden complementarse?’, Nueva Sociedad, 219 (enero-febrero), 2000, pp. 46-58.

^17. Sean Burges, ‘Brazil International Development Cooperation: Old and New Motivations’, presented at the Latin American Studies Association Congress, San Francisco, U.S., 2012 and at the Chilean Political Science Association Congress, Santiago, Chile, 2012; David Scott Palmer, ‘América Latina: estrategias para enfrentar los retos de la globalización’, Nueva Sociedad, 214 (marzo/abril), 2008, pp. 105-11. Peter Smith, ‘Opciones estratégicas para América Latina’, in Joseph Tulchin and Ralph Espach (eds), América Latina en el nuevo sistema internacional, Barcelona, Bellaterra, 2004, pp. 66-114.

^18. Diego Cardona, ‘¿Tiene futuro la Comunidad Sudamericana de Naciones?’, Foreign Affairs en Español, 5:2, 2005, pp. 84-92.

^19. José Morandé, ‘Chile. The invisible hand and contemporary foreign policy’, in Frank Mora and Jeanne Hey (eds), Latin America and Caribbean Foreign Policy, Oxford, Rowman & Littlefield Publisher, 2003, pp. 243-64; Roberto Durán y Lorena Oyarzún, ‘Chile. El escenario regional como complemento a los tratados de libre comercio’, in Diana Tussie y Pablo Trucco (eds), Nación y Región en América del Sur, Buenos Aires, Teseo, 2010, pp. 203-260; Joaquín Fermandois, Mundo y fin de mundo. Chile en la política mundial 1900-2004. Santiago de Chile, Ediciones Universidad Católica de Chile, 2005; Miryam Colacrai y María Lorenzini, ‘La política exterior de Chile: ¿excepcionalidad o continuidad? Una lectura combinada de fuerzas profundas y tendencias’, Confines, (agosto/diciembre), 2005, pp. 45-63; Manfred Wilhelmy y Roberto Durán, ‘Los principales rasgos de la política exterior chilena entre 1973 y el 2000’, Revista de Ciencia Política, 23:2, 2003, pp. 273-86; José Morandé, ‘Visiones globales y opciones transnacionales en la agenda exterior chilena con Estados Unidos. Un estudio de caso’, Revista de Estudios Internacionales, 37:144, 2004, pp. 117-32.

^20. Notwithstanding the massive socioeconomic differences between the richest fifth and the poorest fifth of the population, Chile has a substantial middle class. Also, in recent decades the conflict with the Mapuche indigenous population has become increasingly visible, and Chilean society is beginning to recognize the debt owed to this group.

^21. Andrés Malamud, ‘Presidential Diplomacy and the Institutional Underpinnings of MERCOSUR: An Empirical Examination’, Latin American Researcher Review, 2005, 40:1, pp. 138-64; Sergio Danese, Diplomacia presidencial. Historia e crítica, Rio de Janeiro, Top Books.

^22. Durán y Oyarzún, ‘Chile. El escenario regional’, 2010; Colacrai y Lorenzini, ‘La política exterior de Chile’, 2005.

^23. Ministry of Foreign Affairs, http://www.minrel.gob.cl/prontus_minrel/site/artic/20080802/pags/20080802193244.php#T3, accessed February 7, 2013.

^24. These include ten reforms to overcome economic crisis including applying fiscal discipline, reordering priorities for public spending, begining a tributary reform, liberalizing interest rates, utilizing a competitive exchange rate, liberalizing trade and FDI, privatization, deregulation and protection of property rights. John Williamson, ‘What Washington Means by Policy Reform’, in John Williamson (ed.), Latin American Adjustment: How Much Has Happened?, Washington, Instituto de Economía Internacional, 1990. For further information: José Machinea and Narcís Serra (eds), Visiones del desarrollo en América Latina. Santiago de Chile, CEPAL y Fundación CIDOB, 2007; Albert Fishlow, ‘América Latina y los Estados Unidos en una economía mundial cambiante’, in Abraham Lowenthal and Gregory Treverton (eds), América Latina en un mundo nuevo, México, Fondo de Cultura Económica, 1994, pp. 83-98.

^25. Manfred Wilhelmy y Roberto Durán, ‘Los principales rasgos de la política exterior chilena entre 1973 y el 2000’, Revista de Ciencia Política, 23:2, 2003, pp. 273-86.

^26. Flemes and Wehner, ‘Drivers of Strategic’, 2012; Oyarzún, ‘Integración regional’, 2011; José Ignacio Porras, La estrategia chilena de acuerdos comerciales: un análisis político, Santiago de Chile, CEPAL, 2003. For a more specific assessment: Félix Peña, Concertación de intereses, efectividad de las reglas del juego y calidad institucional del MERCOSUR, Montevideo, Programa de Apoyo y Asesoría al Foro Consultivo Económico y Social del MERCOSUR, 2003 and Joaquín Fermandois and María Henríquez, ‘Contradicción o díada? Política Exterior chilena ante MERCOSUR’, Estudios Internacionales, 38:148, January-March, 2005, pp. 55-77.

^27. Other issues of mutual interest include the monitoring of the political process currently underway in Cuba and the consequences that this could have for the region, and overall relations between the so-called ABC countries (Argentina, Brazil and Chile). In addition, there is a common interest in MERCOSUR's relations with other countries, such as Mexico.

^28. Heraldo Muñoz, Una guerra solitaria. La historia secreta de EE.UU. en Irak, la polémica en la ONU y el papel de Chile, Santiago, Mondadori, 2005.

^29. José Sanahuja, ‘Multilateralismo y regionalismo en clave suramericana: el caso de UNASUR’, Revista Pensamiento Propio, 16: enero-junio16, 2011, pp. 115-58 and Lorena Oyarzún, ‘Debilidades en los procesos de integración latinoamericanos. Una aproximación el caso de UNASUR’, http://lasa.international.pitt.edu/members/congress-papers/lasa2009/files/OyarzunSerranoLorena.pdf, accessed 12 April 2012.

^30. Verónica Schild, ‘Engendering the New Social Citizenship in Chile: NGOs and Social Provisioning Under Neo-Liberalism’, Prepared as part of UNRISD's work for the Beijing +5 review, June 2000: Gender, Justice, Development and Rights: Substantiating Rights in a Disabling Environment, p. 5.

^31. It had been fifty years since a center-right government was democratically elected in Chile. The Alliance for Chile is of the sum of two political parties Renovación Nacional (RN) and Unión Demócrata Independiente (UDI), the latter being slightly more conservative. However, in the presidential elections of 2009, Piñera was supported by a wider and more heterogeneous sector of the population, united under the Coalición Por el Cambio, which consisted of the Alliance for Chile parties, the Chile First party and the Norte Grande and Christian Humanist movements.

^32. Ministry of Foreign Affairs of Chile, http://www.minrel.gob.cl/prontus_minrel/site/artic/20080802/pags/20080802194424.php, accessed 2 May 2012.

^33. Francisco Rojas, ‘La Comunidad de Estados Latinoamericanos y Caribeños’. Foreign Affairs Latinoamérica, 10:3, 2010, pp. 24-31.

^34. Canada was incorporated into the regional bloc; nevertheless it has not yet been able to become a legitimate reference for all countries in the region. Heraldo Muñoz, ‘Una OEA para los nuevos tiempos’, in Abraham Lowenthal and Gregory Treverton (eds), América Latina en un mundo nuevo, México, Fondo de Cultura Económica, 1994, pp. 227-40.

^35. For more information: http://www.icare.cl/

^36. More information about CELAC-UE Summit see: http://www.gob.cl/cumbres/celac-noticias-ue/2013/01/27/declaracion-de-santiago.htm, accessed 11 February 2013.

^37. South America maintains balanced trade margins with China and the rest of Asia, a slight surplus with Europe and a small deficit with the United States. In contrast, Mexico and Central America have achieved a significant surplus with the United States, a deficit with the European Union and an enormous deficit with China and the rest of the Asia-Pacific region. CEPAL, Panorama de la inserción internacional de América Latina y el Caribe 2010-2011, www.eclac.org, accessed 12 September 2011.

^38. DIRECON, ‘Informe de comercio exterior de Chile al primer trimestre de 2011’, Santiago, Ministerio de Relaciones Exteriores, 2011c.

^39. Idem.

^40. Alexis Guardia, ‘La inconclusa inserción económica-comercial de Chile’, in Jaime Ensignia; Cristián Fuentes and María Fernández (eds), La política exterior del nuevo gobierno: entre el discurso y un necesario pragmatismo, Santiago, Fundación Chile 21-Friedrich Ebert Stiftung, 2011, pp. 61-83.

^41. World Economic Forum, http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf, accessed 2 May 2012. The report is based on the opinions of over 13,000 businessmen interviewed. Their visions are complemented with official data in order to create the Global Competitiveness Index. Chile is among the 31 (out of 142) most attractive countries in the world for venture capital foreign investment.

^42. ProChile is an organization that is part of the General Board of International Economic Relations within the Ministry of Foreign Affairs, and was created in 1974. The baseline for 2010 to 2014 also includes positioning ProChile and its services for national companies, entrepreneurs and Chilean professionals; generating and disseminating timely, pertinent and high-quality commercial information; achieving efficiency in the administration and execution of ProChile's budget; and assigning resources in a timely manner to projects that promote the internationalization of companies, www.rc.prochile.gob.cl, accessed 17 February 2012.

^43. For a complete list of free trade agreements, http://www.direcon.gob.cl/pagina/1897, accessed 6 May 2012.

^44. Directorate for International Economic Cooperation (DIRECON), http://www.direcon.gob.cl/, accessed 12 March 2012.

^45. DIRECON, ‘Evaluación de las relaciones económicas y comerciales entre Chile y la Unión Europea a ocho años de la entrada en vigencia del acuerdo de Asociación Estratégica’, Santiago, Ministerio de Relaciones Exteriores, 2011b.

^46. Guardia, ‘Comercial de Chile’, 2011.

^47. Fermandois and Henríquez, ‘MERCOSUR’, 2005.

^48. Forum for East Asia - Latin America Cooperation, http://www.fealac.org/2011/about/info.asp, accessed 18 March 2012.

^49. In 1986 a diverse group of developed and developing countries, which shared the common characteristic of being agricultural producers and exporters, met in Australia with the goal of liberalizing international agricultural trade. Currently, the group is made up of 19 countries, www.cairnsgroup.org, accessed 21 October 2011.

^50. The other agreements that include e-commerce are those with Colombia and the United States. DIRECON, ‘Evaluación de las relaciones económicas y comerciales entre Chile y Australia a dos años de la entrada en vigencia del Tratado de Libre Comercio’, Santiago, Ministerio de Relaciones Exteriores, 2011a. Carlos Furche, ‘Balance de la política comercial: impacto y lineamientos para una nueva agenda’, Documento de Trabajo, Taller de Política Exterior de la UDP, Santiago, Chile, 2011, pp. 1-48.

^51. Sugar, wheat and wheat flour remained in special categories: the ad valorem tariff for sugar (equivalent to 6 percent) would drop 0 percent by 2012, while wheat and wheat flour would have their tariffs reduced in seven stages, starting with the signing of the Free Trade Agreement and continuing until 2015. There are exceptions for some cheeses, dairy products, rice and chemically pure fructose, among others, which remained in the longest time period category of six years. Furche, ‘Balance’, 2011.

^52. DIRECON, ‘Evaluación de las relaciones económicas y comerciales entre Chile y Australia a tres años de la entrada en vigencia del Tratado de Libre Comercio’, Santiago, Ministerio de Relaciones Exteriores, 2012, p. 7.

^53. DIRECON, 2011a.

^54. Author's translation. Durán and Oyarzún, ‘Libre comercio’, 2010, p. 223

^55. Furche, ‘Balance’, 2011.

^56. Guardia, ‘Comercial de Chile’, 2011.

^57.Diario Pyme (Santiago), http://www.diariopyme.com/2011/05/prochile-estamos-trabajando-para-fortalecer-la-capacidad-exportadora/, accessed 30 August 2011.

^58. Guardia, ‘Comercial de Chile’, 2011. Also Helio Jaguaribe, ‘El proyecto sudamericano’, Foreign Affairs en Español, 5:2, 2005, pp. 80-83.

^59. Cristián Fuentes, ‘Una política exterior progresista para Chile’, In Jaime Ensignia; Cristián Fuentes and María Fernández (eds), La política exterior del nuevo gobierno: entre el discurso y un necesario pragmatismo, Santiago, Fundación Chile 21 – Friedrich Ebert Stiftung, 2011, pp. 99-111.