Made in China

International Political Relations

The concept of international relations is often used to designate a discipline that is part of political science and which focuses on the links established between states or international organizations. Generally, is considered that international relations have to do with politics and although it is undeniable, we can also say that many times these relations are established regarding to cultural, economic, military and geographical aspects, among other things.

Originally, the main reasons because states have been related were war and economy. So, on one hand commercial exchanges has been the main reason for international relations. These relations maintain today throughout the world.

International relations focused on the economy are today ruled by a number of norms and agreements. These agreements are called Free Trade Agreements (FTAs), which are established between two countries when they have a good political relation and this partnership represents a political, economic and cultural benefit to both countries.

Our country has a large number of FTAs with different countries, including China, one of the great powers. We believe that this agreement is one of the most important FTAs that has Chile, because in recent years, China has been an important role in the development of our economy; every day we see as Chinese products arrive to Chile and invade stores in our country.

Chile Free Trade Agreement

Since the late 1990s, Chile has acceded to a number of FTAs with countries in Latin America and around the world, including those signed with the major economies of the world: United States, China and the European Union. To date, through FTAs signed, Chile has free access to major market in the world.

The following list shows all the FTAs that currently has Chile with other countries:

 

FTA Chile - Hong Kong

FTA Chile - Vietnam

FTA Chile - Malaysia

FTA Chile - Turkey

FTA Chile - Australia

FTA Chile - Panama

FTA Chile - Japan

FTA Chile- China

FTA Chile - United States

FTA Chile - Canada

FTA Chile - Mexico

FTA Chile - Korea

FTA Chile- Central America

FTA Chile - European Free Trade Association

FTA Chile - Peru

FTA Chile - Colombia

Free Trade Agreement with China

Among all treaties between Chile and other countries, the treaty signed with China has been one of the most important for a commercial growth, meaning for both countries the beginning of a mutually beneficial relationship.

Around the world, Chile is the furthest country from China. However, the distance has not been an impediment to progress and take important steps that demonstrate the closeness between the two countries, based on the close relationship built up over the years: In 1970, Chile was the first country in South America to establish diplomatic relations with China; In 1999, Chile was the first Latin American country to support China's entry to the World Trade Organization (WTO); in 2004, it was the first Latin American country to recognize China as global economy; and in 2005, it was the first to sign a FTA with China.

Benefits of free trade agreements for Chile

The Free Trade Agreement between Chile and China was a quick and effective negotiation. In June 2002, China proposed to Chile to begin negotiations for a trade agreement, which began in Beijing in January 2005 to culminate in October of the same year, establishing an important step by the end of the agreement. It was considered as a relevant agreement to our economy, allowing Chile have the key to enter a market of 1,300 millions people.

Since the entry into force of the FTA, on October 1st, 2006, China was increasing its presence on local trade, until become in the first trading partner of Chile in 2010, and receptor of 20% of total exports from Chile to the world.

Thanks to the FTA Chile-China, our country witnessed a decline in the prices of electronics, clothing and cars. Also, it has allowed to the mining to achieve historic exports to China, and witnessed a considerable increase in shipments of fresh fruits. Furthermore, in the agribusiness sector, it has begun to export products with higher elaboration, including wine, whose European competitors have a very high tariff; in the category of fresh fruits it was registered a strong increase by 111% in exports, as the treaty has allowed phytosanitary agreements, which has given a great boost to shipments of grapes, apples, cherries, plums and blueberries.

Disadvantages of free trade agreement with China

When exists a financial settlement with a great power like China, obviously a world of possibilities opens to Chile in the economic and cultural field. But not everything is perfect. What are the disadvantages of this FTA?

First, we have to start emphasizing the linguistic and cultural differences between the two countries, which is not a surprise considering that both are located in a completely opposite place on earth. This is complicated for business, especially for Chilean small and medium-sized enterprises, which do not possess the necessary tools to help them complete their business, such as professional translators to help them understand what their partner says. In addition, trade offices in Asia Pacific have little access to local businesses to promote the benefits and business opportunities in these markets.

There are also some large companies that are not entirely satisfied with this treaty, as the wine industry and dairy, which reduced their earnings during more than four years. Another important point is the latent fear that has the Chilean businessman. The fear that our market will be flooded with Chinese products, which are clearly cheaper and massive, and put aside manufactured in Chile. It could happen if the client prefers those low cost products, and Chilean manufacturing will be put aside in the future. But is the quality the same? Unfortunately, Chinese products usually are not of the best quality, and people realize it, but since the prices are outrageously low, people are increasingly inclined to them.

The problem lies in the small and medium-size enterprises, as they have not protection from the state or the authorities. Unfortunately they are losing their profits and their customers, since it is impossible to compete against the mass production of China.

The Free Trade Agreements are important because they are an effective way to ensure access to products and services to foreign markets, easily and without barriers. They also help to maintain good relations with other countries.

We must consider that FTAs have advantages and disadvantages for both countries. The main disadvantage for Chile is the invasion of Chinese products, which has harmed to small and medium-sized enterprises. But one of the great advantages of the treaty is that a few decades ago, we have been able to acquire Chinese novel products at very low cost, which partly helps people engaged in buying wholesale. However, we can not fail to note that even though these are low cost products, mass production reduces notably his quality.

We must not forget that China is the main manpower of many major brands.It is common to find clothing labels with the famous MADE IN CHINA. That is why many Chinese products are very similar to those products that we believe are exclusive. After all, most of the products we buy come from China, whatever the designer and product branding.

The free trade agreements, with its advantages and disadvantages, are the key to globalization and to create not only a commercial opening, but also culturally.

What do you think about FTAs? It is a benefit to Chile to have an agreement with countries like China?