Foreign Trade In Chile Essay, Research Paper

Chile has developed considerably over the past 50 years. Birth rates have halved and death rates have reduced from 14 per 1000 to 6 out of every thousand people in 1997. Infant Mortality has plummeted form 126 to13 deaths out of every 1000 live births under I year old. Life expectancy for males has increased by 20 years from 52 to 72 years old and for females it has increased by 22 years from 56 to 78 years old.

The population has become urbanised and the total percentage of people living in cities has increased from 59% in 1950 to 85% in the year 2000.

All of the above statistics show the trends of an emerging nation.

Foreign Trade

Chile’s economy is highly dependent on international trade. In 1998, exports fell to $14.8 billion US from $17.0 billion US in 1997, imports also slid to $17.8 billion US in 1998 from $18.9 billion US in 1997. At this point in time exports accounted for about 20% of GDP. Chile has traditionally been dependent upon copper exports and the state-owned CODELCO is the world’s largest copper producing company. Foreign and private investment has developed many new mines, and the private sector now produces more copper than CODELCO. Copper output increased in 1998 as the world prices dropped.

Other areas of exports have grown faster than the areas of copper and other minerals have grown. In 1975, non-mineral exports made up just over 30% of total exports, today now they now account for around 42% (1999 figures). The most important non-mineral exports are forestry and wood products, fresh fruit and processed food, fishmeal and seafood, and other manufactured products.

Chile’s export market is fairly balanced between Europe, Asia, Latin America, and North America. The US is Chile s largest export market and accounts for almost one fifth of Chile’s exports. Latin America s export market has been rapidly growing in the last few years. The Chilean government has and is continuing to seek and promote Chile’s export industry globally. Since 1991 the Chilean government has signed free trade agreements with countries including Canada, Mexico, Venezuela, Colombia, and Ecuador and has formed an association with Argentina, Brazil, Paraguay, and Uruguay went came into effect in October 1996. Chile is also a member of APEC and is currently seeking to improve commercial relations with the various Asian markets. Chile and the European Union have discussed the possibility of a trade agreement somewhere in the near future.

In keeping with its trade-oriented development strategy, Chile stands ready to negotiate a free trade agreement with the US. Chile’s free trade agreement with Canada (1996) and Mexico (1998) was based on NAFTA in the anticipation of an eventual trade partnership with the USA.

After Chile s import/export market growing for several years, imports had dropped in 1998 and are expected to continue to drop in 1999. Chile s high investment rate is reflected by the fact that capital goods make up 30% of there total imports. The United States is Chile’s largest importer supplying 23% (in 1998) of Chile s total imports. Chile also has a policy of lowering its import tariff (for all countries that it does not have a trade agreement with) by one percent each year. Higher tariffs are charged only on imports of wheat, wheat flour, vegetable oils, and sugar.