“Today, Chile has 29 trade agreements with 65 markets, representing 67% of the world population and 88% of the global GDP,” states the website of the Undersecretariat for International Economic Affairs (SUBREI), part of the Ministry of Foreign Affairs.
In an interview with ChileCarne’s team, SUBREI’s Undersecretary, Rodrigo Yáñez, shares an outlook for Chilean food exports in 2020 as part of the reopening that has begun on other continents. He provides an optimistic medium-term analysis and aims to address economic recovery from resilience. He also gave us an update on the TPP-11.
Mr. Undersecretary, how does the second half of 2020 look for Chile’s food exports as part of global reopening and the “return to normal” taking place in the United States, China, and the European Union?
The Covid-19 pandemic hit Chile at a time when foreign trade was weakened by the impact of various situations on the international stage, such as the trade war, the drop in the price of commodities, as well as the high volatility of currencies from emerging countries against the US dollar. The convergence of these circumstances led to a downturn in international demand, thus affecting our trade with the world.
Foreign trade, just like every Chilean productive sector, has been hit hard by the Covid-19 pandemic. Between January and May, it experienced a year-on-year drop of 14%, with a reduction in both our exports and imports.
The Chilean Government, and SUBREI in particular, is working hard, together with our trading partners, to facilitate trade and investment, and to preserve production flows and logistics chains.
According to an article from the Chilean Newspaper : citrus fruits, kiwi, pork, and wine are some of the products that have already seen an increase in demand. Which are the main markets that are beginning to reopen? Do you think the rise will continue?
Between January and May of this year, there was an increase in pork exports (43.6% when compared to 2019), caused by a significant growth in shipments to China, which increased by 294% in value (Source: SUBREI, with figures from Chilean Customs). Thanks to our efforts to introduce new products into the Chinese market, we will be able to export citrus fruits for the first time. This represents a huge opportunity for producers in the north of Chile.
Regarding other foods, trout and frozen fruit saw increases in their exports (15.6% and 15.1%, respectively, when compared to 2019), and we can also highlight smaller increases in shipments of poultry (7.8% compared to 2019), mollusks and crustaceans (11.2% compared to 2019), and canned fruit (3.5% compared to 2019).
Chile is a country open to the world, and 57% of our Gross Domestic Product (GDP) comes from our foreign trade operations. Therefore, it is crucial for the growth and development of our country, and a key component of a speedy economic recovery.
What role do multilateral organizations and institutions such as ProChile (the Chilean Exports Promotion Bureau) play in promoting exports of the most demanded products?
Since the very start, with the support of ProChile, Chilean Customs, and other institutions, we have been focused on providing a continuous and appropriate provision of medical supplies and tools for both public and private health services in Chile, as they experienced a surge in demand worldwide. That effort required coordination, as well as international agreements with our trading partners, to secure access to supplies to address the health emergency.
In light of the current scenario and future challenges, it is key to strengthen and deepen our network of 29 Free Trade Agreements (FTAs) that grant us preferential conditions to access 65 economies. To face the crisis, we need resilient trade while diversifying supply and opening new markets to create new trade opportunities.
Currently, we are focusing our efforts on markets with high importing potential, such as India, the Eurasian Economic Union, the Association of Southeast Asian Nations (ASEAN), as well as Middle Eastern and North African countries.
We also want to make a commitment to digitalization. We have just signed the first Digital Economy Partnership Agreement (DEPA) with New Zealand and Singapore, which undoubtedly represents a great contribution in times of uncertainty given that digital commerce is one of the most dynamic sectors in the global economy and we must make the most of it during the reactivation process.
What stage is the TPP-11 in? What is the likelihood it will be ratified (considering the situation of pork in Japan and the scenario for other industries)?
Currently, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (called TPP-11) is undergoing its second review in the Senate. On October 17th of last year, it was approved by the Senate’s Constitution Committee to be analyzed and voted on the floor.
The approval of this treaty, which is part of our market diversification strategy, would open up 3,000 opportunities for Chilean products from the agricultural, forestry, fishing, dairy, and meat sectors. Those products could enter relevant markets such as Japan, Vietnam, or Canada with zero tariff, thus benefiting Chile’s agricultural, fishing, and forestry regions, and providing us with new and better tools to adapt to new economic challenges and address the economic recovery that we are aiming for from a resilience standpoint.[:]