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Chile's Trade and Investment Landscape: Insights from 1990-2006

This document offers a comprehensive overview of Chile's trade and foreign direct investment (FDI) performance from 1990 to 2006, highlighting total investments of US$38.3 billion abroad and US$63.5 billion in Chile. It outlines Chile's open economy, commitment to international trade, and transparent foreign trade policies, supported by a sound taxation system and absence of subsidies. The report details Chile's participation in multilateral and bilateral trade agreements, indicating a strong inclination towards regionalism and global trade cooperation, essential for understanding the nation’s strategic economic positioning.

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Chile's Trade and Investment Landscape: Insights from 1990-2006

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  1. Trade and Investment The Experience of Chile Rome, 2007

  2. Switzerland Uruguay 2% Spain Others 1% 1% Others France Venezuela 11% 8% 2% USA 1% Cayman 25% Netherlands Islands 2% 3% Argentina Italy 36% Panama 3% 3% Japan 3% USA 4% Australia 5% Colombia Spain 12% 22% UK Peru Canada Brazil 9% 14% 16% 17% Foreign Direct Investment from Chile to other countries Total 1990-2006: US$38,300 millions Foreign Direct Investment in Chile (DL 600) Total 1974-2006: US$63,517 millions Source: Foreign Investment Committee (www.cinver.cl) and Direcon (www.direcon.cl)

  3. Foreign Trade Policy Elements • Open economy • Dependent on international trade • Small country • Transparent

  4. Chile = Free Trade Domestics policies • Sound distribution of resources • No subsidies • Simple tax system • State • Subsidiary role • Regulator, not owner • Independent Central Bank Foreign trade policy • Looking outward (exports) • Unilateral openness (6%) • Welcome to Foreign Investment: • Open pre & post • Strong protection

  5. Options • Multilateralism • Plurilateralism or regionalism • Bilateralism “All of them”

  6. Multilateralism • GATT (1948)/WTO • Active participants • Tokyo round • Uruguay round • Doha round (Round of the development)

  7. Regionalism • FTAA (“momentum”) • APEC

  8. Bilateralism- FTA Canada Mexico C. America (5) EU (27) Korea USA EFTA (4) Venezuela Colombia* Ecuador Peru* Mercosur (4) Bolivia Panama* * Not in force • N. Zealand, Singapore, Brunei • India (partial trade agreement) • China • Japan 18 Agreements 56 countries 88% of actual trade

  9. Chile and the World

  10. Duties on International Commerce Year Percentage of total tax revenue 1996 11.9 1997 10.9 1998 10.3 1999 9.2 2000 8.3 2001 7.0 2002 5.7 2003 3.9 2004 2.9 2005 2.6

  11. Projected Fiscal income 1: With Free Trade Agreements and VAT 19% 2003 2004 2005 2006 Net Revenue Income 8,140.6 8,458.0 9,022.7 9,499.3 Tax burden 16.5% 16.3% 16.5% 16.5% Source: Budget and Tokman (2004)

  12. Projected Fiscal income 2: Without Free Trade Agreements and VAT 18% 2003 2004 2005 2006 Net Revenue Income 8,236.3 8,546.4 9,128.8 9,623.4 Tax burden 16.7% 16.5% 16.7% 16.7% Source: Budget and Tokman (2004)

  13. Protection of Foreign Investment Agreements • 5 Asia Pacific region • 20 in Europe • 14 in Americas

  14. Investment regime • National treatment • DL 600

  15. Chilean Double Taxation Treaties In Force Before Congress Negotiation concluded Argentina Brazil Ecuador Mexico Peru Canada Poland Croatia Spain Denmark Sweden France S. Korea Norway UK New Zealand Ireland Malaysia Portugal Paraguay Russia Thailand South Africa Colombia (signed)

  16. What are your objectives ? • Investment • In • out • Technology

  17. Chile's future.... OECD USA R EU FTAA EFTA APEC B WTO B B Korea

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