Framework agreement boosts EU relations with Chile

Date: 20/06/1996

By Ivo Ilic Gabara

FOLLOWING a UK decision not to block a new cooperation pact with Chile, even if the beef crisis is not resolved, EU leaders are expected to sign a framework agreement this weekend in the margins of the European Union summit in Florence.

The new agreement has as its final objective the establishment of a political and economic association between the EU and Chile, and is modelled on the agreement signed with Mercosur last December.

It will replace the 'third generation' agreement currently in force and significantly upgrade the Union's relations with Chile through a permanent political dialogue, a mechanism for the progressive liberalisation of commercial exchanges, by strengthening existing economic ties, and the introduction of new sectors of cooperation.

The agreement is a remarkable victory for the pro-European school of thought against the so-called 'Chicago Boys'.
The latter, for the most part Chilean economists and politicians sent to the US in the 1970s and 1980s by Augusto Pinochet to acquire higher education, wielded considerable power upon their return and today favour stronger ties with North America rather than with Europe.

However, negotiations with the North American Free Trade Agreement (NAFTA), conducted in parallel with the talks with the EU, have so far proved inconclusive.

The Chilean side attaches enormous importance to the new framework agreement. Chile is traditionally one of the Latin American countries closest to Europe. Its institutional, legal and educational systems, as well as its political and social organisations, draw much of their inspiration from Europe and Chilean society recognises in Europe the roots of its cultural identity.

These historic bonds were further developed through strong immigration from Europe, in particular from Italy and Spain, in the late 19th and early 20th centuries.

More recently, during the Pinochet dictatorship, many Chileans found refuge and support in Europe. President Eduardo Frei himself did his postgraduate studies in management and administration in the north Italian city of Milan.
The request for a new form of association with the EU is part of Frei's overall policy of opening the Chilean economy to international trade after the years of dictatorship, which sees the country as a full member of the WTO, the Asian-Pacific Economic Cooperation forum (APEC) and other regional organisations.

For the Union, the new agreement with Chile is part of its 'regional approach' policy and the logical complement to the agreement negotiated with Mercosur. Chile's low external customs tariff of 11&percent; precludes the country from becoming a full member of the Mercosur customs union, whose average tariffs are far higher.

A four-plus-one association formula has consequently been agreed between the two parties and is due to be formally approved next Tuesday (25 June) in San Luis, in Argentina.

With this new agreement, the EU will extend to Chile the privileges that the Mercosur countries already enjoy. The Union also wishes to give a tangible sign of support to the consolidation of democracy in Chile and the country's commitment to a policy of regional economic integration and openness.

The fact that Pinochet still heads the army does not seem to raise too many eyebrows. As one senior European official put it: “It is a problem that will soon come to an end - he is an old man.”

ESO: Key Source: Relations between Chile and the European Union http://www.europeansources.info/record/relations-between-chile-and-the-european-union/

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