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CHILE
Civil society wakes up
Pascale Bonnefoy
12/16/2004
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Thousands attended Social Forum held alongside the APEC summit.

The slew of bilateral and multilateral accords reached by Chile over the last several years does not necessarily mean that Chile negotiated well, participants in the Chilean Social Forum (FSC) said. On the contrary, it has mortgaged its sovereignty in many aspects.

Using the World Social Forum, whose fifth edition will be held in Brazil in January, as an example, some 240 national organizations critical of globalization got together to hold the FSC, an unprecedented experience in Chile that included 186 panels and seminars and around 100 cultural events in Santiago in search of "globalization with solidarity."

The 8,000 participants in the FSC could not have found a better time to meet than during the summit of the Asia-Pacific Economic Cooperation Forum (APEC) held on Nov. 20 and 21 in Santiago.

The APEC meeting ended without major announcements as President Ricardo Lagos’s government congratulated itself for its efficiency in having brought together 21 heads of state from the Western hemisphere and Asia. The most relevant event for thousands of Chileans was that the meeting of the "Club of the Rich" of the Pacific Rim made it possible to revitalize the civil society, which managed to get 60,000 people out on the streets in what was became the biggest demonstration since the end of the dictatorship in 1990.

"The massive attendance at the demonstration and the Social Forum reflects a movement taking place in Chilean society in which citizens want to be actors in their destiny and are looking for ways to participate," said Victor Hugo de la Fuente, director of the Chilean edition of the French magazine Le Monde Diplomatique and one of the main promoters of the FSC.

APEC leaders promised efforts to jumpstart the 2001 Doha Round negotiations of the World Trade Organization to advance in the liberalization of trade and investment.

The process of unilateral liberalization and privatization of Chile’s economy began in 1979, in the midst of the military dictatorship, and was deepened in 1990 by the civilian governments. The single 11 percent tariff for all imports set by the military regime was gradually lowered, the reserve requirement for short-term foreign investment, that allowed 30 percent of this capital to be retained in the Central Bank for a year, was eliminated and subsidies were ended.

To offset the impact of opening the Chilean economy to foreign investment, the governments of the ruling Concertación coalition began a genuine frenzy of trade negotiations to make external markets more accessible to national products. They reached free trade, cooperation and economic complementation agreements with almost all of Latin America, Canada, the European Union, the Southern Common Market (MERCOSUR), the Andean Pact, and most recently with the United States and South Korea.

As a result of these accords, the FSC participants said, the governments that followed the dictatorship succumbed to conditions imposed by powerful countries like the United States, such as bidding a definitive goodbye to the reserve requirement. In addition, these accords failed to provide guarantees that non-tariff barriers to Chilean products would not be applied.

With these agreements, Chile did not become a net exporter of manufactured goods and services, as it hoped, but remained primarily dependent on the export of prime material (mining, agriculture, fishing and forestry products) and without raising its labor and environmental standards, since the free trade accords it has signed only stipulate that the signatory should commit to apply its own laws, whatever they are.

As a result of the terms reached in these accords regarding foreign investment, treatment of national investment, services, access to markets and other aspects included in these commercial trade agreements — in which tariffs are no longer the central focus — the main export and public service companies and banks have ended up in foreign hands.

While Spain controls a large part of the banking, telecommunications and electricity sector in Chile, Japanese and Canadian companies extract lumber and fish products, while British and American companies do the same with copper. Copper is the country’s main export that, after a gradual process of privatization, today is 70 percent managed by the private sector, most of which are transnational companies that do not pay any royalty for its extraction as they do in other parts of the world.

It is expected that this year the Chilean economy will grow 5.5 percent and inflation will reach 3.0 percent, with an unemployment rate of around 10 percent. Academics and governments would say this is all a success, but not workers.

"The liberalization process has meant the destruction of an important part of public sector employment, imposing a regime of labor flexibility and precariousness, meaning there are more people working without social security or health protection. In addition, they have to work more than 48 hours a week to compensate for their low incomes," said economist Claudio Lara. In spite of government efforts to reduce poverty from close to 40 percent in 1990 to 18.8 percent in 2003, none of the macro-economic achievements and trade accords has made a dent in the highly unequal distribution of income in Chile.

"The type of free trade accords negotiated fail to recognize the differences in development, culture, history and economies among the countries," Lara said. "They suppose they are all are equal; therefore there is a single recipe. This world requires integration agreements with a high political-social component that includes productive complementation and cooperation."


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