Chile 2013 Blog: Japan Joins TPP, Boosts Trade Ties with Chile

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With Japan joining the fold of the Trans-Pacific Partnership, Chile and the Asian country will likely deepen already-strong trade ties.

Representatives from 11 of the Pacific Rim’s most open economies are currently converging in Malaysia for 10 days of talks. These market friendly countries make up the regional trade club called the Trans-Pacific Partnership. Member countries—Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam—have come together to work on a far-reaching regional trade agreement likely to change the terms of trade in one of the world’s most dynamic areas. Furthermore, this meeting will see the formal ascension of Japan to the group, adding clout to the pact.

Chile, a member of the trade group since its nascent P-4 form, already has bilateral agreements in place with all the constituent members of the TPP, making it the only country to do so. What this multilateral pact offers Chile is a chance for its trade-based economy to expand and diversify its access to these Asia-Pacific markets, both through more comprehensive direct trade but also through the liberalisation and standardisation of regional supply chains.

Japan’s ascension to the talks brings the total number of members to 12. The Asian country’s official entrance is significant for Chile, as it’s the country’s third-biggest trading partner after the United States and China. According to the Chilean foreign economic relations office (Direcon in Spanish) Japan made up 6.9 percent of Chile’s total foreign trade in 2012—amounting to a tidy $10.96 billion—and received 34.5 percent of Chile’s intra-TPP exports that same year.


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While Chile already has a bilateral trade pact in place Japan, signed in 2007, the two countries’ participation in the TPP will allow Chile’s commerce with the third-biggest economy in the world to become more comprehensive. Furthermore, trade between the two countries is expected to pick up as Japan continues to pull itself out of the economic doldrums with its new “Abenomics” growth strategy. The expansion of trade terms is sure to magnify these gains.

Copper is particularly important to the relationship, and accounted for 63 percent of all Chilean exports to Japan and 12.4 percent of Chile’s total global copper exports in 2012. Sales to Japan, however, were down 6 percent in 2011. Ascribed to the ongoing effects of the financial crisis, this drop could correct itself as global trade flows continue to heal and Japanese economic stimulus efforts take effect. Japan’s enormous electronics, automobile, and construction industries, all of which are expected to grow in the near term, use the red metal.

Food and beverage exports followed copper in importance, accounting for 10 percent of Chile’s total exports to the Japanese market. In particular, Chilean wine did well last year, with sales to Japan increasing a healthy 26 percent year on year. This sector, says former head of Direcon Carlos Furche in an interview with CNN Chile, is likely to experience the biggest benefits from Japan’s ascension to the TPP. This is due to the tangibly increased market access it would give Chile’s second-biggest export industry.