By Estrella Gutiérrez
CARACAS, Dec 27 1996 (IPS)

A new agreement between Venezuela and Chile comes into effect at the start of 1997 which liberalizes 95 percent of trade between the two nations.

An earlier treaty, signed in 1993, had doubled bilateral trade figures. Venezuela has trade liberalisation agreements with the English-speaking Caribbean Community (Caricom) and all the continental Latin American countries, except for the four Southern Common Market countries (Argentina, Brazil, Paraguay and Uruguay).

Chile’s trade attache in Caracas, Sergio Arancibia, told IPS one of the last points of the new agreement would be cleared on January 1, with only two groups of products still under trade restrictions.

One group of 300 “sensitive products” – including agricultural, petrochemical and timber goods – will only reach zero tariff in 1999.

Other goods on a list subject to price banding and other restrictions really have no effect on trade, because in many cases they are not items produced by either venezuela or Chile.

Arancibia stressed that in the last three and-a-half years along with trade liberalisation, the respective legislations for the protection and encouragement of bilateral investments have been strengthened, with an expected expansion of the sector.

Investments have not yet been particularly encouraged by trade liberalisation, although there was movement in telecommunications and ceramics, and a Chilean group bought one of the two Venezuelan banks sold this month after being rescued by the State following the 1994 banking crisis.

Provisional figures for the first nine months of this year show bilateral trade reached the figure of 348 million dollars, favouring Venezuela which sold 226.76 millions compared with 121.3 millions of purchases.

Arancibia said this figure doubled traditional mutual trade and is even higher compared with the first nine months of 1994, when trade alone reached 148 million dollars, discouraged by protectionist policies which have now been removed.

The strategic perspective of liberalised trade was at a “very high level, and the fruits of this already have been extraordinary – considering from where we started out,” he said.

Venezuela’s best sales in Chile have been in cement, oils, lubricants and petrol distillates, propanes, butanes, liquid natural gas, coal, urea and alcohols, along with other petrochemical products, aluminium and steel products.

Meanwhile, in Venezuela, Chile sells milk, garlic, black beans, natural and preserved fruits and fruit products, wine, plates and film, wood paste, boxes, fabrics, copper cathodes and vehicles.

Chile already has liberalisation agreements with Mexico and Colombia, Venezuela’s two partners in the Group of Three, as well as with Mercosur under a collective agreement signed in June.

Within the Andean Community, apart from Colombia and Venezuela, Chile has negotiated a liberalisation agreement with Ecuador, but discussions with Bolivia and Peru have not yet come to an end, although mutual preference agreements are already in place to protect traditional trade currents.

The aim is for the Andean nations to negotiate a trade liberalisation agreement with Mercosur in 1997 hot on the heels of that signed this month by Bolivia, which will allow for the establishment of a South American Free Trade Area (ALCSA) that will also include Chile.

Arancibia said Mercosur had become Chile’s highest priority for trade liberalisation, which brings with it the nation’s preparation for the formation of the ALCSA, which will hopefully be in place by the year 2005.

As part of this objective, the reach of the zero rate tariff for 95 percent of trade with Venezuela acquires a strategic value, apart from the interest of broadening the trade horizon for its goods in itself.

Representatives of Venezuela’s new Ministry of Industry and Trade said this is the first South American nation to complete negotiations for a free trade zone with Chile, putting it in a privileged position in the most stable and dynamic market in the region.

It is also complementing liberalisation with the natural Andean area, even though Chile left the Andean bloc in 1974, following the military coup of Augusto Pinochet, in September 1973.

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