A mega multilateral trade deal, conceived and propelled by the United States, will now continue without U.S. participation. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be signed on March 8th in Chile by 11 nations. The location is no accident. As the U.S. departed the stage, Chile, a longtime free-market champion, stepped up as a surprisingly effective global player in advancing free trade.
Despite its relatively small population, Chile has long been a regional leader on trade and economic integration. It has negotiated 26 free trade agreements with 64 countries, representing over 85% of global GDP and 60% of the world’s population. It is also a major driver of the Pacific Alliance, a regional trade bloc formed in 2011 that includes Mexico, Peru and Colombia. Yet on global trade issues—including the once defunct and now resurrected Trans-Pacific Partnership—Chile has often followed the lead of the United States.
Now, however, given sudden U.S. protectionism and the Trump administration’s lack of interest in multilateral trade agreements, Chile has raised its leadership profile by promoting trade in the Americas as well as the Asia Pacific.
Following President Trump’s election on a protectionist platform and his executive order to withdraw from the (then named) Trans Pacific Partnership (TPP) last January, Chile launched an uncharacteristic diplomatic blitz to rescue the agreement. The centerpiece was a global summit in Viña del Mar only months after the U.S.-TPP reversal. The summit was designed to keep the remaining 11 TPP members in negotiations despite the U.S. withdrawal from the deal, and to discuss trade issues and economic integration for Pacific countries.
Later, during the Asia-Pacific Economic Cooperation (APEC) summit in Vietnam last November, the Chileans again played a leading role in teeing up discussions about the TPP, which members rebranded as the Comprehensive and Progressive Trans-Pacific Partnership. Despite last minute objections from Canadian Prime Minister Justin Trudeau, last month an agreement was reached for all 11 countries to sign the CPTPP in March at a high-level gathering hosted by Chile. Ratification of the agreement is expected in 2019.
Given its size, Chile’s leadership has been surprisingly effective. In one year’s time, Chile’s negotiators helped salvage the TPP, despite complex negotiations with diverse nations including Brunei, Malaysia, Mexico and Singapore. Even without the United States, the revised TPP will be the largest multilateral free trade agreement ever signed.
The revised TPP provides a model for future trade deals on issues such as labor rights, gender equality, environmental protections and intellectual property. For Chile and other Pacific Alliance members, it offers greater market access to robust Asian economies.
Chile’s emergence as a global player in multilateral agreements reflects its commitment to practicing and promoting trade openness since the return of democracy in 1990. During the March TPP summit, Chile invited not only TPP members, but also representatives from Colombia, China and South Korea.
China, which had previously been critical of the TPP, sent its special envoy for Latin America, Yin Hengmin, to Chile for the summit. In a speech at the Wilson Center last September, Chilean Foreign Minister Heraldo Muñoz said Chile’s ambitions extended beyond the TPP. The Pacific Alliance, he said, would serve as a springboard for Latin America’s broader integration with the Asia Pacific.
Moving forward, it is likely Chile will continue to wield outsized influence on trade issues in the Western Hemisphere. It has committed to convergence between the Pacific Alliance and the struggling Southern Common Market (Mercosur), which includes Argentina, Brazil, Paraguay and Uruguay. Meanwhile, the Pacific Alliance has launched negotiations on free trade agreements with major economies, including Australia, and it has signaled interest in agreements with Singapore and Canada as well.
For now, the Trump administration has ceded the U.S. leadership role on trade issues in the region, allowing Chile and other local actors to shape economic integration in the Americas. The signals sent by the Trump administration regarding NAFTA, as well as recent tariffs on foreign-made solar panels and washing machines, have continued to undermine U.S. credibility on issues of trade and integration.
That could change should the United States manage to persuade governments to pursue bilateral trade deals, and show that “America First” agreements can be beneficial to U.S. trading partners. But for the time being, governments in Latin America and Asia looking for economic opportunities will be turning to Santiago, instead of Washington, for guidance.
Anders Beal is a Program Assistant at the Wilson Center’s Latin American Program. Benjamin N. Gedan is a former South America director on the National Security Council and a fellow at the Woodrow Wilson International Center for Scholars and the Council on Foreign Relations.
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