Nothing From NAFTA, Chilean Critics Say

Chile's leaders celebrate greater access to markets and say foreign investment will power economic growth

THE wish of Chile's leaders came true last weekend in Miami.

At the Summit of the Americas, the southern Andean country was invited to become the fourth nation to enter the North American Free Trade Agreement (NAFTA), one year after Mexico's entry.

Despite possible opposition to the move in the United States Congress, Chile's finance minister, Eduardo Aninat, doesn't expect difficulties in finalizing a pact with the US, Mexico, and Canada.

``Chile is small, far away, there are no border problems, no immigration problems. `Do it quick,' that's the feeling [in Congress],'' he told the Monitor in an interview.

But in Chile, while the prospect of joining NAFTA is favored by most, some groups worry that workers and the environment will be exploited by the changing rules of trade.

Though opposition to Chile's entry is not expected to disrupt the negotiations - set to begin next month and finish by March 1996 - voices of dissent are emerging.

Negative reaction over the weekend came as a shock in Chile, which has been a Latin American pioneer in restructuring its economy.

Even before the official NAFTA announcement on Dec. 11, the nation's largest trade union refused an invitation from President Eduardo Frei Ruiz Tagle to attend the Miami summit, protesting what it called the government's pro-business bias.

``We're going to call one work stoppage after another,'' says Arturo Martinez, vice president of the Unified Workers Center. ``We're not going to stand back with our arms folded and watch while the country's wealth is handed over to the private sector,'' Mr. Martinez says.

``Nor are we going to allow the transnationals to come in here and invest, because in the end, it won't even be Chilean capitalists who control our state enterprises,'' he says.

Aucan Huilcaman of the Whole Earth Council, representing 350 communities of Mapuche Indians throughout the country, says that the indigenous will be most negatively affected by more free trade.

``We are completely opposed to NAFTA because NAFTA has the intention of extracting and exploiting resources, many of which belong to the indigenous people,'' he says.

Environmentalists are airing similar complaints. ``We know that if Chile enters NAFTA, investment in the mining sector will grow even more,'' says Pedro Fernandez, president of Codeff, a well-known environmental organization in Chile. ``And that's the sector that has most polluted both our air and our water,'' he says.

In the fishing sector, catches have dropped in recent years. In forestry, entrepreneurs are hungrily eyeing 85 million acres of native forests, which take more than a hundred years to grow back once cut down.

Chile ushered in an environmental- guideline law last March, but regulations that would permit its implementation have not yet been approved.

Times are changing

Finance Minister Aninat counters objections to NAFTA, saying that open markets and foreign investment will propel Chile away from traditional dependence on the export of raw materials and toward more industrialized goods. It is a course, he says, that Chileans are already taking.

In 1970, he says, 8 percent of Chile's exports were value-added goods compared with 36 percent in 1990. Aninat says this shows that in actuality, opening markets has been ``exactly contrary to predictions the same people had when we opened up in 1975,'' he says of critics.

President Frei answers critics by saying that the country must privatize and reach out to foreign investors if it wants to survive. ``Today, open markets are the word,'' he says. ``The development process of Chile has exports as its engine. If we want to grow, we have to favor that sector.''

The NAFTA invitation is seen as a reward for Chile's economic progress. US Secretary of Commerce Ron Brown said at the summit that ``there's been discussion for the last couple years, at least, about Chile being first in line'' for NAFTA.

He said it was chosen over others because it has ``moved further along with economic reform, with an open economy, than other countries in the region.''

With 6 percent growth last year, inflation that has dropped dramatically in the last 20 years, and exports of 35 percent, Chile boasts one of the strongest economies in the region. In a push to open its markets that has been under way since the 1980s, Chile has slashed its tariffs to today's rate of 11 percent.

The new foreign investment expected to accompany NAFTA for Chile ``is a crucial issue,'' Aninat says. Investment could raise growth levels, he says, allowing the government to better aid the 40 percent of the population living in poverty.

Chile is not stopping with access to NAFTA investors either. It will begin negotiations with the four South American Common Market (Mercosur) countries - Argentina, Brazil, Uruguay, and Paraguay - this June, and is negotiating trade deals with European Union countries.

Chile became an Asian Pacific Economic Cooperation member last May, and has bilateral agreements throughout Latin America and around the world.

Free-trade cornerstone

The promise of NAFTA-member status for Chile - announced in tandem with a vow by the 34 countries participating in the summit for free trade among all the Americas by 2005 - made Chile the first in what is expected to be a new wave of free-trade agreements for the Americas.

``[Chile] has to take credit for being a forerunner,'' Aninat says. ``Others in the region will look at our Chilean case as a sort of cornerstone, a first step for others to come later.

``Suppose the negotiations went wrong? What would happen to the 2005 date then?'' he asks.

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