TSUKUBA, IBARAKI PREF. – As the United States and China exchange barbs amid a trade war that could drag the global economy into turmoil, a South American country with a solid record in trade engagement is ready to step up to soften the tension, a top Chilean trade official said.
Rodrigo Yanez, Chile’s vice minister of trade, told The Japan Times in an interview that his country can demonstrate its leadership at global conferences by building consensus on the importance of trade, as well as on the issue of an effective trade dispute settlement mechanism. He was visiting the city of Tsukuba in Ibaraki Prefecture this past weekend to attend the Group of 20 trade and digital economy ministers meeting.
Chile is not part of the G20, but it is among the countries invited to this year’s summit. In November, the country will host the annual Asia Pacific Economic Cooperation summit in its capital city Santiago.
“We need to send clear signals to the world of commitment, coordination and goodwill when it comes to successfully addressing and surpassing these tensions and differences,” he said Saturday. “Because our citizens demand so. The stability of growth demands so.”
With 26 trade agreements with 64 markets under its belt, the South American country has openly embraced trade. Chile is known as a primary exporter of minerals such as copper and food products including processed salmon. Exports, Yanez said, make up 57 percent of the county’s gross domestic product.
Yanez warned that ongoing U.S.-China trade tensions have already had repercussions on the Chilean economy and will hamper its outlook. China and the United States are Chile’s first and second trading partners, respectively.
Exports have gone down by 15 percent in the past few months as a direct consequence of the trade dispute, he said.
“The level of uncertainty is impacting global growth projections and certainly impacting the price of commodities such as copper,” he said.
Chile has shown leadership in the crafting of multilateral trade deals, with a 2006 trade pact between Chile, New Zealand, Singapore and Brunei evolving into the Trans-Pacific Partnership Agreement.
Even though the U.S. initially signed the deal under the Obama administration, which would have made it the largest trade deal in the world, U.S. President Donald Trump withdrew the country early in his presidency. Spectators say the move symbolized the U.S. retreat from multilateralism in pursuit of protectionist measures encapsulated in his “America First” doctrine. The U.S. since then has opted for bilateral, “reciprocal” trade agreements.
Despite the setback, the remaining countries held tight and crafted a successor known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP-11. The trade agreement — covering 13 percent of worldwide trade — went into effect last December.
The Chilean vice trade minister expects Chile will fully ratify the TPP-11 “in the next few months” as it is under deliberation in the country’s Senate.
Asked about the direction multilateral trade is heading, Yanez said it is heading toward a “pragmatic, ‘plurilateral’ approach” involving fewer countries, something he described as “the second-best solution.”
“We are seeing that in the ongoing negotiations, for instance, in e-commerce and others,” he said. While Chile would like to see multilateral-based solutions, “that seems difficult.”
During the interview he touched on calls for reforming the World Trade Organization, one of the agendas to be discussed at the G20 summit at the end of the month in Osaka. Some countries have criticized its trade dispute settlement framework as being dysfunctional and ill-equipped to deal with new issues such as digital trade.
Yanez said 21 APEC signatories are united on trade facilitation agreement reform, but there are other issues that have yet to be agreed upon.
Last year’s APEC summit in Papua New Guinea ended in disarray, with China and the United States colliding head-to-head over trade disagreements with heated rhetoric.
Yanez, however, shared his optimistic view that this year might be different, emphasizing that both countries were working toward reaching an agreement at the APEC trade ministers meeting last month.
“It was a concern. It is a concern. It will be a concern throughout the year,” he said regarding the fear that this year’s APEC would turn into a battlefield between them. “But what we’ve seen so far among us, in the APEC discussions, is on (a) much more positive tone than last year.”
Regarding Japan-Chile relations, Yanez said both countries have long political and commercial ties marked by mutual trust. Chilean exports to Japan grew by 22.4 percent between 2016 and 2017, according to the Japan External Trade Organization.
“For us the future of Chile-Japan relations is extremely important and it is also a pillar of our Asia-Pacific projection,” he said.