Chile formally joins Trans-Pacific Partnership
In February, Chile officially entered the Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP), also known as TTP-11.
It is the eleventh country to become a member of this treaty, along with Australia, Brunei, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
CPTPP is a multilateral economic integration treaty, meaning an agreement between countries in the Asia-Pacific region that allows member countries to engage in trade with each other at reduced tariffs to strengthen and facilitate the flow of resources and the economic partnership between them.
This is the third largest free trade agreement in the world, after CETA (Canada & USA) and the USMCA between the United States, Mexico, and Canada.
The main advantage of joining this treaty is that it allows members to have free trade agreements amongst themselves, which generates a potential market of more than 500 million people with all populations considered.
Chile was the last country to join after a nerve-racking process that faced delays due to some opposition from the local government. Even though the agreement had been sealed between the 11 countries in March 2018, Chile remained the only country that had not ratified it.
Andres Guillon, Executive Director of Growers Chile, an exporter of cherries, citrus and table grapes toldFreshFruitPortal, that:
“We are very pleased that it has finally been signed because we had many apprehensions about Chile's incorporation into the TPP-11, something that would have set back what we have advanced as an industry in order to be more competitive with our products.”
One of the main concerns for producers of the South American country was that their main competitors, such as Mexico and especially Peru, were already part of this agreement. Therefore, being left out of the treaty automatically put Chile at a disadvantage compared to its competition.
Diving into emerging markets in Asia
Chile already had commercial relationships with every country in the treaty. However, the CPTPP provides greater opportunities and facilities to create new trade relationships.
Isaac Bon, a partner of Compañía Frutera del Norte and Sociedad Agrícola Rivadavia, who has been exporting table grapes for decades, spoke with FreshFruitPortal.com about the new opportunities for Chile.
"The Chilean fruit industry in recent years has been looking more to Asian countries than to traditional markets such as Europe and the United States. The great advantage, in the case of grapes, is that we have easier access to interesting markets such as Japan and Vietnam, which has been increasing its consumption of table grapes," he said.
The new alliances will not only allow a fluid exchange of fruit products but also of technology that could benefit all members involved.
“We will have very important partners in this treaty, who are leaders in genetic development, varieties, biological controls, among many other areas in which in Chile we do not allocate many resources for research and development," said Guillon regarding the technologies that could be implemented in Chile.
Regarding technological advances, Jorge Valenzuela, President of Fedefruta, said in a statement that: "Southeast Asian countries are leaders in technologies and digital tools, something we need for fruit development: Bigdata, state-of-the-art machinery, digital transformation of processes such as water management and agronomic management, many tools that can accelerate the modernization and sustainability of the industry."
The complexity of this industry in itself makes the industry tremendously dynamic and unpredictable.
For Guillon, the most valuable aspect of this agreement is that it confirms Chile's commitment to breaking down tariff barriers and becoming more involved in today's commercial world.
"Not being part of these groups means being left behind, and to stop in this industry is to go backward. This gives us the possibility of continuing to develop individual treaties with other countries and markets as they are incorporated and this gives us experience in how to negotiate and conclude agreements, thus keeping us aligned with the interests of the industry," said Guillon.