TPP and the Pacific Alliance:

Mr. Pablo UrriaDirector for Bilateral Economic Affairs

DIRECON

Opportunities for the Economic Relationship between Chile and Japan in the future

CHILE

GDP US$ 277 billion

GDP per capita (PPP) US$ 22,534

GDP growth rate 4.2%

Unemployment rate 5.9%

Exports US$ 77.4 billion

Imports US$ 79.6 billion

Source: DIRECON, based on data of November 2014; International Monetary Fund, World Economic Outlook, October 2014; Central Bank of Chile; TradeMap; National Statistics Institute; UNESCO; CIA, The World Factbook, 2014.

JAPAN

GDP US$ 4,899 billion

GDP per capita (PPP) US$ 36,654

GDP growth rate 1.5%

Unemployment rate 4%

Exports US$ 715.1 billion

Imports US$ 833.2 billion

CHILE & JAPAN: ECONOMIC & SOCIAL INDICATORS (2013)

India´s relevanceCHILE

Population 17.6 million

Literacy rate 98.6%

Life expectancy 79 years

JAPAN

Population 127.3 million

Literacy rate 99%

Life expectancy 84 years

MILESTONES IN CHILE – JAPAN TRADE RELATIONS

» Official bilateral relations between Chile and Japan can be traced back over a century, beginning with

the signing of the Treaty of Amity, Commerce and Navigation in 1897.

» One of the major milestones in the economic field is the Strategic Economic Partnership Agreement

(EPA) which entered into force on September 3rd 2007.

» The EPA between Chile and Japan is based on long and fruitful relationship between the two

countries, which celebrated 110 years of establishment of trade and diplomatic relations in 2007.

» The EPA is a comprehensive agreement that addresses not only tariff matters but also deals with

trade in services and disciplines governing trade in both goods and services. In addition to that, also

takes care of issues related to investments and government procurement, among others.

» The Agreement allows greater opportunities for Japanese investment in the country, interested in

optimizing its industrial and financial presence in key global markets. It also improves the

competitiveness of our economy (better access to capital and technology).

» Japan is Chile´s third largest trading partner being only surpassed by Chile´s exchange with China

and the United States.

CURRENT TARIFF REDUCTION CONDITIONS UNDER THE AGREEMENT

Japan

Category Nº items %

Inmediata 7,502 82.8%

Quotas 38 0.4%

10 years 291 3.2%

Between 12 and 15 years 60 0.7%

Renegotiation 254 2.8%

Exceptions 910 10%

Total 9,055 100%

Chile

Category Nº items %

Immediate 6,809 88.4%

Quotas 29 0.4%

10 years 307 4%

Between 12 and 15 years 104 1.3%

Renegotiation 162 2.1%

Exceptions 294 3.8%

Total 7,705 100%

Source: Market Access Department, DIRECON.

5

CHILE – JAPAN TRADE RELATION

» Between 2006 and 2013, exports growth averaged 5% per year and imports grew 8% yearly.

» Exports of industrial goods have increased US$ 90 million since 2006.

» In 2013 food exports to Japan reached US$ 1.3 billion (17% of total exports). Salmon was the main

product with US$ 438 million in exports.

» Chile main imports from Japan are consumer goods. In 2013 they reached US$ 953 million.

Source: Studies Department, DIRECON, based on data of the Central Bank of Chile

0

1

2

3

4

5

6

7

8

9

10

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bilateral Trade Chile – Japan(billion US$)

Exports (FOB) Imports (CIF) Industrial exports

EPA6.5

1.5

7.6

2.5

0

1

2

3

4

5

6

7

8

Exports (FOB) Imports (CIF)

Exports and Imports 2006 – 2013(billion US$)

2006 2013

68%31%

1%

Exports (FOB)Mining

Industry

Agriculture,forestry andfishing

38%31%

31%

Imports (CIF)

Consumer

Intermediate

Capital

CHILE-JAPAN TRADE FEATURES:MAIN EXPORTS AND IMPORTS SECTORS

Source: Studies Department, DIRECON, based on data of the Central Bank of Chile

» Chile main exports to Japan are mining products.

» Chile main imports from Japan are consumer goods.

» Industrial goods (salmon, trout and forestry

products) are the 2nd main exports to Japan.

MAIN PRODUCTS 2013

Exports (million US$) Imports (million US$)

1 Copper 4,797 Cars 1,038

2 Salmon 335 Tires 195

3 Trouts 273 Chassis for trucks 106

4 Wood in chips or particles 264 Aircraft fuel 74

5 Molybdenum 256 Sulfuric acid 68

7

JAPANESE INVESTMENTS IN CHILE

» Japan is the 4th investor (FDI D.L.

600) after United States, Canada and

Spain.

» Japanese FDI stock (D.L. 600)

represents 10% of total investment

materialized in Chile until 2013.

» Japanese FDI flows (D.L. 600) in

2013 reached US$ 2,525 millions.

» Mining has received 93% of total FDI

stock from Japan between 1974 and

2013.

Source: Studies Department, DIRECON, based on data of the CIE (2013 and June 2014)

Foreign Direct Investment in Chile (D.L. 600) 1974 - 2013

Million US$ %

Mining 9,052 93%

Wood & paper products 134 1.4%

Financial services 126 1.3%

Food, beverages & tobacco 99 1%

Others 290 3%

Total 9,702 100%

United States24%

Canada19%

Spain17%

Japan10%

United Kingdom7%

Australia4%

Others19%

Foreign Direct Investment in Chile (1974 - 2013)

» Chile takes part in TPP negotiation because of his membership in Trans-Pacific

Strategic Partnership Agreement P4 (2005) with Brunei, New Zealand and Singapore.

P4 is an agreement with a view to integrate new members.

» In 2009 United States announces its wish to join the P4. Subsequently Australia,

Canada, Malaysia, Mexico, Peru and Vietnam also indicate their interest.

» Because of its disciplines depth and the potential joiningof new countries, TPP is the

most important trade liberalization process in negotiation today.

» TPP will be part of the APEC free trade zone, the most dynamic region in the world

and focus of the Chilean trade policy in the last years.

TRANS-PACIFIC PARTNERSHIP:FRAMEWORK

Source: DIRECON

Population(million people)

GDP(billion US$)

GDP per capita(PPP)US$

TRADE

World (billion US$)

TPP(%)

Australia 23 1,505 45,138 485 29%

Brunei 0.4 16 73,823 15 64%

Canada 35 1,827 43,253 918 72%

Chile 18 277 22,534 156 31%

Japan 127 4,898 36,654 1,548 28%

Malaysia 30 313 23,160 435 39%

Mexico 118 1,261 17,390 761 72%

New Zealand 4 182 33,626 78 41%

Peru 31 202 11,557 85 35%

Singapore 5 298 78,761 784 30%

United States 316 16,768 53,001 3,906 40%

Vietnam 90 171 5,295 228 33%

TRANS-PACIFIC PARTNERSHIP:MACROECONOMIC INDICATORS

Source: Studies Department, DIRECON, based on data of IMF (WEO, October 2014) and TradeMap.

» Only Chile and Singapore have agreements with every member. However, the agreements differ indisciplines and coverage.

CHILE CANADANEW

ZEALANDSINGAPORE BRUNEI USA AUSTRALIA VIETNAM PERU MEXICO MALAYSIA

CHILE FTA (1996)

FTA P4 (2006)FTA P4 (2006)

FTA P4 (2006)

FTA (2004) FTA (2008)FTA

(2014)FTA (2009) FTA

FTA(In force25/2/12)

CANADAFTA

(1996)Under

negotiationFTA FTA FTA

NEW ZEALANDFTA P4 (2006)

FTA P4 -ASEAN (2009)

FTA P4 (2006)

FTA (2008)Negotiation

in ASEANFTA (2010)

SINGAPOREFTA P4 (2006)

Under negotiation

FTA P4 -ASEAN (2009)

FTA P4 -ASEAN

FTA (2003)FTA - SAFTA

(2004)ASEAN FTA (2009)

Undernegotiation

ASEAN

BRUNEIFTA P4 (2006)

FTA P4 (2006)FTA P4 -ASEAN

ASEAN ASEAN ASEAN

USA FTA (2004) FTA FTA (2003) FTA (2005)PTPA

(2007)FTA

AUSTRALIA FTA (2008) FTA (2008)FTA - SAFTA

(2004)ASEAN FTA (2005)

Negotiation in ASEAN

TOR (agreed)

VIETNAMFTA

(2014)Negotiation

in ASEANASEAN ASEAN

Negotiation in ASEAN

ASEAN

PERU FTA (2009) FTA FTA (2009) PTPA (2007) FTA

MEXICO FTA FTAUnder

negotiationFTA FTA

MALAYSIAFTA

(In force25/2/12)

FTA (2010) ASEAN ASEAN TOR (agreed) ASEAN

TOTAL 10 5 6 10 6 6 7 6 5 5 6

TRANS-PACIFIC PARTNERSHIP:PARTNERS' TRADE AGREEMENTS

Source: DIRECON

JAPAN IN CHILE-TPP TRADE

Source: Studies Department, DIRECON, based on data of the Central Bank of Chile

» Exports to Japan represent

32% of Chilean exports to TPP.

» Chilean exports to TPP reached

US$ 23 billion in 2013.

-

5

10

15

20

25

30

35

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Chilean exports to TPP countries(billion US$)

TPP

Japan

-

5

10

15

20

25

30

35

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Chilean imports from TPP countries (billion US$)

TPP

Japan

» Imports from Japan represent

10% of Chilean exports to TPP.

» Chilean imports from TPP

reached US$ 26 billion in 2013.

The Pacific Alliance is a regional integration initiative created on April 28, 2011 by Chile, Colombia,

Mexico and Peru.

The main objective of the Pacific Alliance is to form an area of deeper integration to boost further

growth, development and competitiveness of the participating economies through the progressive

search of the free movement of goods, services, capital, people and cooperation.

Currently 32 countries have been accepted as observer states in the Alliance: Germany, Australia,

Belgium, Canada, China, South Korea, Costa Rica, Ecuador, El Salvador, Spain, USA, Finland,

France, Guatemala, Holland, Honduras , Israel, India, Italy, Japan, Morocco, New Zealand, Panama,

Paraguay, Portugal, United Kingdom, Dominican Republic, Singapore, Switzerland, Trinidad and

Tobago, Turkey, and Uruguay. Recently Austria and Haiti have formally applied for the observer

status.

Japan is an Observer State in the Pacific Alliance since February 2013. The group of external

observers held their first meeting with nine observer states (Australia, Canada, China, South

Korea, Spain, USA, France, Japan, New Zealand) in April 2014 to identify possible areas of joint

work focused on the pillars of the Alliance. In particular, with Japan the areas of SMEs,

infrastructure and public-private cooperation were defined.

Source: DIRECON

PACIFIC ALLIANCE - JAPAN

Source: DIRECON

CHALLENGES AHEAD

22%

31%

26%

2%

17%

18%

3%

PRODUCT DIVERSIFICATION

EDUCATION, SCIENCE AND TECHNOLOGY

CULTURAL EXCHANGE

PROMOTION OF INVESTMENT

Minería78%

Resto22%

ありがとうございます

www.direcon.gob.cl

@direcon_chile