Chile moves to join RCEP for trade boon

Chile, following in the footsteps of China's Hong Kong and Sri Lanka, recently applied to join the Regional Comprehensive Economic Partnership, signifying the growing recognition of the benefits and opportunities of the world's largest free trade deal, analysts said.

The application came on the heels of the anniversary of the full implementation of the mega trade pact among its 15 signatory countries — China, Australia, Japan, New Zealand, South Korea and the 10 member states of the Association of Southeast Asian Nations.

Claudia Sanhueza Riveros, Chilean undersecretary for international economic relations, handed over the formal letter of application for the country's accession to the RCEP in mid-June, according to a statement released by the Ministry of Foreign Affairs of Chile.

If successful, Chile will become the first Latin American nation to join the RCEP, said Xu Ningning, chairman of the RCEP Industry Cooperation Committee.

Xu stressed that Chile, which is pursuing an open and free market economy, had always sought to diversify its export markets and attract foreign investment through the signing of trade deals.

Chile has negotiated 33 trade agreements, covering 65 economies, representing 88 percent of the world's GDP, data from the US-based International Trade Administration showed.

Chile's membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and its existing free trade agreements with RCEP member nations such as China, Japan, South Korea and Australia, have fostered a favorable climate for its accession to the RCEP, Xu added.

The value of merchandise exports from Chile totaled about $94 billion in 2023, with China, the United States, Japan and South Korea as its top export destinations, according to official data.

China, Japan and South Korea have emerged as significant trading partners and key sources of foreign direct investment for Chile. By seeking to join the RCEP, the South American nation aims to strengthen its trade networks and tap into the vast opportunities offered by ASEAN nations, said Yuan Bo, a researcher at the Chinese Academy of International Trade and Economic Cooperation.

Meanwhile, Chile's inclusion in the RCEP would extend the trade pact's reach to South America. Additionally, this development could promote connectivity between the RCEP and the CPTPP and also holds potential to drive the future establishment of an Asia-Pacific free trade area, Yuan said.

In particular, China and Chile's economic links have grown robustly over the years despite their geographical distance, driven by each other's strengths and resources.

Currently, China is Chile's largest global trading partner, top export destination and primary source of imports, while Chile ranks as China's third-largest trading partner in Latin America and its leading supplier of imported copper.

China predominantly exports machinery, electronic products, textiles, steel and household appliances to Chile. In return, it imports copper, lithium, iron ore, pulp, fruits and wine from the country, said Cui Fan, a professor at the University of International Business and Economics in Beijing.

Notably, Chile's cherry exports to the Chinese market for the 2023-24 season reached 377,000 metric tons, representing a 91.1 percent market share and reinforcing China's status as the primary export destination for Chilean cherries, according to the cherry yearbook recently published by iQonsulting in April.

China and Chile are at different phases of development with high economic complementarity in industrial structures and diversity in resources, and the signing of the FTA will foster a more enabling environment for expanding trade and investment partnerships and give both nations' long-term growth a boost, Cui said.

Spanning a diverse range of member economies, RCEP encompasses affluent developed nations alongside three of the world's least developed countries. This unique composition allows it to cater to the needs of economies at varying stages of development, Cui added.

Despite rising protectionism and a global trade slowdown, intraregional trade among member countries of the RCEP soared to $5.6 trillion in 2023, showing a slight increase compared to the pre-agreement year of 2021, data from the Ministry of Commerce showed.

Furthermore, the RCEP region attracted $234.1 billion in greenfield investments in 2023, marking a substantial growth of 29.8 percent and more than double the number from 2021, according to the ministry.

Bangladesh is in the process of preparing its application. By embracing new members and continuously upgrading its framework, the RCEP can contribute to an inclusive and rules-based global trading system, promoting economic collaboration in the Asia-Pacific region and beyond, Cui said.