The Chile Economy, Social Crisis and Virus Impact

National Crisis, Emergencies, and Natural Disasters in Chile; including the experiences of Chile Forum Members have shared in current and in past crisis, as they have assisted each other and Chile. Things will always go wrong. It is how you deal with it that counts, and that starts with information. When things go wrong, this is the place to come to exchange information about what is going on in Chile.
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Huelshoff
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by Huelshoff » Wed Nov 25, 2020 1:52 pm

Those Chilean FTAs are not as beneficial as the name suggests. FTAs don't create free trade. They regulate trade in more predictable patterns. They set rules for the game. To give a couple of examples, the EU-Chilean FTA sets tariff quotas for Chilean exports to the EU zone (unlike the US-Chilean FTA, which phased in a tariff-free zone for many, but not all, products). Tariff quotas allow duty-free trade up to the quota limit, then the tariffs kick in. Its been some time since I studied these FTAs, but a few years ago the Chilean government was frantically trying to renegotiate the FTA with the EU to raise the quotas and allow more Chilean exports in to the EU duty free. I haven't followed the issue closely since then, so I don't know if they were successful. According to one guy I interviewed who had participated in the negotiations creating the EU FTA, the Chilean government simply applied the same negotiating position it used in its FTA negotiations with Mexico (which was, if I recall correctly, one of the first FTAs signed by Chile, followed quickly by the EU negotiations) to its negotiations with the EU. Thus, while the motivation for embracing FTAs certainly includes Chicago Boys-style economic ideology, there is a lot of other stuff going on in there too.

Another example of FTAs setting rules, if from a completely different direction: When the Bush Administration was trying to gin up support for its invasion of Iraq, it threatened to cut trade with Chile if it didn't support the US in the UN Security Council (Chile was at the time a rotating member of the Council). I happened to be interviewing a guy in the Chilean foreign ministry about its FTA with the US at the time, and I asked him about the threat. It was a politically sensitive question, and I just played the dumb gringo professor. He looked at me hard, and just pointed to the text of the treaty. The clear implication was that they didn't take the US threat seriously, because the treaty was in place.

Chile's FTAs have had all kinds of unexpected impacts on the Chilean economy and society, from improving the quality of the packaged chicken you buy in the store to improving public health in rural communities involved in export sectors. The economic impacts are less than was widely expected when Chile began to sign all those treaties. Yet those are different if interesting questions.

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41southchile
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by 41southchile » Wed Nov 25, 2020 2:43 pm

Huelshoff wrote:
Wed Nov 25, 2020 1:52 pm
Those Chilean FTAs are not as beneficial as the name suggests. FTAs don't create free trade. They regulate trade in more predictable patterns. They set rules for the game. To give a couple of examples, the EU-Chilean FTA sets tariff quotas for Chilean exports to the EU zone (unlike the US-Chilean FTA, which phased in a tariff-free zone for many, but not all, products). Tariff quotas allow duty-free trade up to the quota limit, then the tariffs kick in. Its been some time since I studied these FTAs, but a few years ago the Chilean government was frantically trying to renegotiate the FTA with the EU to raise the quotas and allow more Chilean exports in to the EU duty free. I haven't followed the issue closely since then, so I don't know if they were successful. According to one guy I interviewed who had participated in the negotiations creating the EU FTA, the Chilean government simply applied the same negotiating position it used in its FTA negotiations with Mexico (which was, if I recall correctly, one of the first FTAs signed by Chile, followed quickly by the EU negotiations) to its negotiations with the EU. Thus, while the motivation for embracing FTAs certainly includes Chicago Boys-style economic ideology, there is a lot of other stuff going on in there too.

Another example of FTAs setting rules, if from a completely different direction: When the Bush Administration was trying to gin up support for its invasion of Iraq, it threatened to cut trade with Chile if it didn't support the US in the UN Security Council (Chile was at the time a rotating member of the Council). I happened to be interviewing a guy in the Chilean foreign ministry about its FTA with the US at the time, and I asked him about the threat. It was a politically sensitive question, and I just played the dumb gringo professor. He looked at me hard, and just pointed to the text of the treaty. The clear implication was that they didn't take the US threat seriously, because the treaty was in place.

Chile's FTAs have had all kinds of unexpected impacts on the Chilean economy and society, from improving the quality of the packaged chicken you buy in the store to improving public health in rural communities involved in export sectors. The economic impacts are less than was widely expected when Chile began to sign all those treaties. Yet those are different if interesting questions.
Very interesting, thank you for taking the time to explain.
Do you have any opinions on groups that oppose FTAs as sectretive nefarious agreements, on the grounds that they negatively affect a countries sovereign rights or override existing agreements with indigenous peoples for example, or the inability of memeber countries to persue multinationals legally, etc etc .
I guess it depends a great deal on the agreement, is there any justification for these arguments in your opinion? or are they just pursuing other agendas ? and assume the average person on the internet will not read the 500 or so pages of an FTA.
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Huelshoff
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by Huelshoff » Wed Nov 25, 2020 6:20 pm

There are a separate set of treaties for investment--BITs, I think they are called. They are even more obscure than FTAs. Both affect state sovereignty, although the impact can be a little convoluted. All limit independence of action, but they also can increase state capacity, which for developing countries can be seen as a gain in sovereignty. To the extent to which BITs and FTAs help governments modernize their operations, they are better able to exercise their capacity to control their societies. There was, for example, a lot of training of Chilean bureaucrats that went on when they signed their FTAs with the EU and US. This was part of the agreements. If this resulted in a more efficient Chilean bureaucracy, then I guess you could say that it was a bit more sovereign (although I would never argue that this resulted in an efficient bureaucracy in Chile!). Some of those skills are fungible across policy areas too. Yet I'd still argue that the net result is less sovereignty, and that Chile is better off for having signed the treaties.

You are right, none of these treaties are likely to become popular reading, but as far as I can tell there is nothing secret about them. I think that the main line of criticism is that they further the intrusion of the neo-liberal model into national markets, and are much more efficient at doing so than the more general agreements that the WTO would like to sign. Those who don't like the neo-liberal model often view FTAs negatively as a result. Personally, I think the results are much more mixed. The sanitary and phyto-sanitary provisions of the EU's FTAs, for example, really do push sustainable development, which most critics of FTAs would value. Chilean businesspeople often complained that they were little more than non-tariff barriers to trade, while mostly meeting the requirements. And there is the very odd case of the European Parliament's intervention into the controversy over the kill-off of black-necked swans in Valdivia after the construction of the Arauco plant near Mariquina.

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Re: The Chile Economy, Social Crisis and Virus Impact

Post by admin » Wed Nov 25, 2020 7:01 pm

obviously not all FTAs are created equal.

My post was in referal to a study done a few years back (sure I posted it somewhere on the forum), that found countries with more trade agreements / treaties, also had more dynamic econmies that were better able to respond to crisis and recover faster.

yea, FTAs in general are often little more than special interest circle jerks. However, the bigger point was that the economy is engaged in world trade, and those FTAs tend to preserve that trade flow, in spite of what ever domestic political stupidity might be going on.

The obvious contrasting example is Argentina, which fundemantaly has one free trade agreement the MERCOSUR; which is essentially an anti-free trade agreement block (it has blown-up the EU mercosur among other problems).

The Pacific Alliance in contrast has no such restrictions on the members other trade agreements, and has created a lot of trade flow between the members, and none-members.

It is simple, no matter how nationalistic chile might get, it is just too small an economy to go it alone. pretty rare that chile would enter one and come out in an overall worse position.

what is the alternative?

isolationist, nationalistic economic policies. how has that worked out for Argentina?

look at what happened to Peru and Colombia when they abandoned such policies.

Three of the fastest growing economies in latin america are on the left hand side of the south american map. Three of the biggest basket cases in latin america, are on the right hand side of the map (yes, I know Brazil is not really a basket case, but it would be better with less protectionism). That is not an accident of geography. That was political policy.
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by Huelshoff » Wed Nov 25, 2020 7:11 pm

I agree, but there is some discussion of which way the causal arrow goes. Do FTAs create better economies, or do countries with better economies sign more FTAs (which means both that they are more interested in FTAs and more attractive partners). From what I saw, its a non-recursive relationship, and there was at one time a "FTA fever" in the Chilean foreign ministry--they thought they were good, so they looked to sign more. And I think they were right. What I found more interesting were the unintended consequences of the agreements.

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Re: The Chile Economy, Social Crisis and Virus Impact

Post by admin » Wed Nov 25, 2020 8:24 pm

I don't know. I have been living in developing countries since I was 12 years old. At least the countries with lots of FTAs, seem to have overall healthier economies and accelerated development. obviously, the country needs to be selective with what they are willing to give up in exchange, but overall I have seen lot of benefits in the countries I have lived in. I also think they should be a big stick for driving social development programs.
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by Huelshoff » Wed Nov 25, 2020 9:22 pm

I think that you are right. There are other factors that can throw off a country that otherwise follows that prescription, but openness does seem to work more often than not. Argentina once was the tenth wealthiest state per capita (1913), mostly by exporting, and look what they have done to it now. To badly mangle Churchill, capitalism may be the worst form of economy, except for all the others.

Interesting, the EU has used its FTAs as leverage to improve human rights in Africa, too. I have also seen evidence suggesting that the improvement in social and health conditions in some parts of rural Chile can be attributed to employment opportunities opened to women in the fruit exporting sector, one of the winners as a result of Chile's FTAs. Chile has had some losers from the FTAs, too.

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Re: The Chile Economy, Social Crisis and Virus Impact

Post by admin » Thu Dec 17, 2020 10:39 am

so, some signs of a turn around in the economy.

peso strengthens against the dollar, back to where it was around the start of the social crisis. they are expecting it to hit possibly 700 in the next weeks. part of that is the liquidation of AFP investments, which is often in dollars. Think they have paid 3 billion dollars so far.

https://www.df.cl/noticias/mercados/bol ... 91409.html

copper is at 3.60 a pound, and other commodieties are following.

revised projections for contraction of the economy 2020 are down to 6%, with a 5% growth projected for next year.
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eeuunikkeiexpat
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by eeuunikkeiexpat » Wed Feb 24, 2021 8:54 pm

Screen Shot 2021-02-16 at 12.14.44 AM.jpg
Que será, será.

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tiagoabner
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by tiagoabner » Wed Feb 24, 2021 9:20 pm

eeuunikkeiexpat wrote:
Wed Feb 24, 2021 8:54 pm
Screen Shot 2021-02-16 at 12.14.44 AM.jpg
How the fuck these guys keep on going through the pandemic? Where do they get the funds to continue their "protests"/anarchy?

:roll:
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gringalais
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Re: The Chile Economy, Social Crisis and Virus Impact

Post by gringalais » Wed Feb 24, 2021 9:43 pm

Ugh, and it starts again. I'm glad I am able to live relatively removed from things, but it still is just tiring to think about.

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Re: The Chile Economy, Social Crisis and Virus Impact

Post by fraggle092 » Fri Feb 26, 2021 4:16 pm

tiagoabner wrote:
Wed Feb 24, 2021 9:20 pm
How the fuck these guys keep on going through the pandemic? Where do they get the funds to continue their "protests"/anarchy?
:roll:
The only place where the money comes from - the government, indirectly of course. Clandestine contributions from NGOs, political parties, and public-sector unions, all assiduously sucking on the state teat. Remember all those hundreds if not thousands of laser pointers used to harass the cops last year? They're not cheap. Who doled them out? They are all broken or lost now, of course. Just one example, there are tons more I could cite.

As for the individuals involved, I bet most of them are still leaching off their parents for room & board.
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