Since 1994, US-Chilean relations have been centered on Chile's potential accession to the North American Free Trade Agreement (NAFTA). The Clinton Administration views Chile' s accession as a first step in realizing the creation of a Free Trade Area of the Americas by the year 2005, a goal set forth by hemispheric nations at the December 1994 Summit of the Americas. (Chile will host a second summit of hemispheric leaders to be held in April 1998. ) In the 104th Congress, movement on accession was stymied because of differences of views in Congress over whether to approve fast-track legislative procedures to consider such an agreement, and if so, under what conditions..
President Clinton has continued to call for fast-track authority in 1997 maintaining that Chile would make an excellent candidate for accession to NAFTA On September 17, the Administration submitted a proposal for congressional consideration. In an effort to accommodate Republicans and Democrats, the proposal limited the scope of labor and environment measures to those "directly related to trade" while also including a mandate that the United States address labor and environmental issues in the World Trade Organization.
Another significant issue in bilateral relations is the potential sale by US companies of advanced combat fighter aircraft to Chile. On August 1, 1997, the Clinton Administration announced that after a review of U. S . security policy in Latin America, the President had decided to establish a process for case-by-case consideration of requests for advanced arms transfers to Latin American nations. A sign that this policy change was coming occurred in March 1997, when the Clinton Administration allowed U. S. aircraft companies Lockheed Martin and McDonnell
Douglas to provide technical data to Chile on their combat planes. The
next step in the process would be for Chile to request the purchase from
the Clinton Administration. If the Clinton Administration agreed to issue
an export license for such a sale, it would then have to justify the purchase
to Congress, in accordance with the terms of the Arms Export Control Act.
Chile: Political/Economic Situation and US Relations
Political SituationThe administration of President Eduardo Frei, inaugurated in March 1994 for a six-year term, is Chile's second elected government since the country returned to civilian democratic rule in 1990. Frei, a Christian Democrat who heads a center-left coalition known as Concertación, received 58% of the popular vote, the largest victory for any Chilean head-of-state in 60 years.President Frei succeeded Patricio Aylwin who had been supported by the same coalition when elected President in 19891 . Aylwin's election ended 17 years of military rule under General Augusto Pinochet who came to power in 1973 with the military's violent overthrow of President Salvador Allende a socialist. General Pinochet, who turned 81 in November 1996, remains military commander until 1998, when he is required to retire (and at which time he may become a member of Chile's Senate). |
|
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| In the aftermath of the 1973 coup, the military regime
was responsible for widespread human rights violations, including the execution
or "disappearance" of thousands of Chileans. An official Truth and Reconciliation
Commission in Chile reported that there were 3,197 cases of murders and
disappearances committed during the Pinochet dictatorship.2
The resolution of the fate of hundreds of "disappeared" leftists remains
a political issue in Chile today. According to the State Department's human
rights report for 1996, the courts continue to struggle with the application
of a 1978 Amnesty Law for cases during the first 5 years of military rule.3
Since the country's return to democratic rule, human rights have generally been respected. Nevertheless, in addition to resolving past human rights violations committed under military rule, the U. S. State Department' s 1996 human rights report noted several current problems in the human rights situation, including: allegations of torture, brutality, and police use of excessive force, physical abuse in jails and prisons discrimination against women and indigenous people, and violence against children.4 |
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Brigadier General Espinoza was discharged from the army on June 20, 1995, and began serving his six-year prison sentence. On July 22, 1995, however, more than 1,000 active duty military officers and civilian backers demonstrated outside the jail raising concerns over the possibility of escalating civil-military conflict. The Frei government expressed serious concern about the rally and on July 24, Defense Minister Edmundo Perez Yoma ordered General Pinochet to a meeting to explain the demonstration. Significantly, on July 27, 1995, General Pinochet met with some 1,400 military officers stating the army would respect the country's elected leaders and the rule of law.
With regard to General Contreras, soon after the Supreme Court ruling
in May 1995, he stated that he would never spend one day in prison. On
June 13, 1995, Contreras was secretly moved to a military hospital pending
judicial clarification on whether his medical condition could excuse him
from serving prison time. On July 31, a Chilean court rejected an appeal
by General Contreras to forgo serving prison time After further legal appeals
failed, Contreras finally was imprisoned on October 21, 1995. Many observers
view the imprisonment of Espinoza and Contreras as a victory for Chilean
democracy. Some maintain that their imprisonment is symbolic justice for
the thousands killed or disappeared under military rule.
At first it looked hopeful for the package of reforms to be approved by the Chilean Congress, but the government's attempt to move legislation through the Senate in 1996 was unsuccessful. In late October 1995, President Frei had reached an agreement with the leadership of the right-wing opposition National Renovation party (RN) in support of the changes curbing the military's power and on the proposal to speed up investigations on the fate of the disappeared. But congressional approval of the proposals ultimately was blocked in April 1996. President Frei's agreement with the RN leadership sparked a rift within the opposition rightist coalition. Seven Senators from the RN, Senators from other parties in the rightist coalition, and Pinochet's appointed Senators opposed the agreement because of resistance to changing current constitutional provisions that ensure the interests of the right. Moreover, the human rights proposal even sparked a rift within the government' s own coalition. The Socialist Party opposed the human rights plan because it viewed it as giving up efforts to prosecute those responsible for human rights violations under military rule.
In 1997, another attempt by the Frei government to eliminate the positions
of the designated Senators was defeated in June when once again rightist
and designated Senators blocked the legislation despite support from some
opposition Senators. Reportedly, the Frei government will try its reform
efforts once again in 1998, after a new Congress takes office.6
In the current Chamber of Deputies, elected in December 1993, the ruling Concertación (or the Coalition of Parties for Democracy) has 70 seats, with the Christian Democratic Party (PDC) of President Frei having 37, the Party for Democracy (PPD) 15, the Socialist Party (PS) 15, the Social Democrat Radical Party (PRSD) 2, and 1 independent deputy. The opposition rightist coalition, known as the Union for the Progress of Chile (UPP), has 50 seats, with the National Renovation Party (RN) having 29, the Independent Democratic Union (UDI) 15, the Central- Central Union (UCC) 2, and 4 independent deputies.8
The Senate normally has 47 seats, 38 directly elected and nine designated, but the death of one designated Senator leaves the current Senate with 46 members. All designated Senators were appointed by the military government in 1989, while half of the elected Senators are elected every four years, most recently in December 1993. In the current 46-member Senate, the government' s Concertación coalition holds 21 seats, while the opposition rightist UPP holds 17 seats, including support from two independent Senators. These 17 seats, combined with the support from eight non-elected Senators, gives the right a majority in the Senate, and has allowed the right to block the government efforts to legislate reforms curbing the power of the military.
This December, the term of the nine designated Senators will expire. President Frei is entitled to appoint two (an ex university rector and an ex government Minister), while three are to be selected by the Supreme Court (two ex Supreme Court magistrates and one ex government controller), and four by the National Security Council representing the Army, Navy, Air Force, and national police or the Carabineros.
The Frei government is hoping that its coalition will gain seats in both the Chamber of Deputies and in the Senate, enough to push through reforms to curb the power of the military, including the elimination of the designated Senators.
7 More of the Same from Frei. Latin American Weekly Report, July 29, 1997, p. 356
8 Information provided by the US Embassy in Santiago, Oct. 1, 1997.
Despite Chile's impressive economic growth, critics of the Pinochet regime argued that the gap between rich and poor widened under military rule because the state dismantled many public services. The Aylwin government narrowed the gap by increasing social spending, with the poverty rate dropping from 45% to 30%.
President Frei vowed to continue such efforts to overcome extreme poverty. After three years in office, President Frei noted in his March 1997 state of the nation address to Congress that his government had made some progress in eradicating poverty, with the poverty rate dropping to 25%.11 Nevertheless, the President also stated that extreme poverty stands at around 6.5%, a figure that amounts to almost 1 million Chileans. In order to combat extreme poverty, President Frei announced that the government would launch a program know as Chile Barrio that would target 500,000 Chileans in almost 1,000 encampments throughout the country. The objectives of the program will be to provide technical and professional training in order to prepare individuals to enter the job market, to provide housing and basic public utilities, and to strengthen community organization and development.12 Some critics, maintaining that the government has not been doing enough to reform Chile's free-market model, point out that major efforts to redistribute wealth are rebuffed as populist and inflationary, even among some on the left.13
Under both military and civilian rule, Chile has pursued an export-led growth strategy. Although copper is still the dominant export (accounting for about 40% of exports), Chile has diversified its export sector, and major exports now include fish, forestry products, fruit, and wine. In 1995, Chilean exports surged to $16 billion, almost a 40% growth over 1994 exports, because of an increase in the world price of copper, and the country registered a positive trade balance of about $ 1.4 billion. In 1996 however, a rise in imports combined with falling prices for copper and wood pulp resulted in a negative trade balance of about $800 million.
In addition to seeking to join the NAFTA, Chile also seeks closer economic relations with Latin America. It has negotiated bilateral free trade agreements with several nations in the region, including Mexico, Colombia, and Venezuela. In June 1996, Chile signed an association agreement with the four-nation Southern Cone Common Market (MERCOSUR) whereby it participates in a free trade agreement with Argentina, Brazil, Paraguay, and Uruguay. Beyond Latin America, Chile became a full member of the Asia Pacific Economic Cooperation group (APEC) in November 1994. In April 1996, Chile concluded negotiations with the European Union for a new framework agreement for economic cooperation. In late 1996, Chile also signed a bilateral free trade agreement with Canada on the basis of NAFTA rules, the first free trade accord with a G-7 industrialized nation. The accord with Canada became effective in early July 1997.
US-Chilean Relations
US-Chilean relations improved considerably with the nation's return to democracy in 1990. In a February 1996 visit to Chile, Secretary of State Warren Christopher stated that US-Chilean relations have never been better. The Secretary strongly praised Chile's economic gains over the last decade, noting that "Chile's reforms have created one of the most open and successful economies in the world." He reaffirmed the Administration's commitment to negotiating Chile's accession to NAFTA. The Secretary also expressed appreciation for Chile's role as a guarantor nation (along with the United States, Argentina, and Brazil) in the peace process in the Ecuador-Peru border conflict.
In February 1997, President Frei made an official state visit to Washington
and addressed a joint session of Congress. During his visit, President
Frei voiced concern that the United States could miss a chance to strengthen
the region's political and economic reforms because of apprehension over
expanding free trade accords. He maintained that free trade is a pillar
for Chile's development. President Clinton reiterated U. S. commitment
to concluding a comprehensive free trade agreement with Chile. He maintained
that "Chile's record of reform, good government, and sound fiscal policies
make it an excellent candidate for the first use of such [fast track] authority."14
At a June 7, 1995 trade ministers' conference in Toronto, the top trade officials of the NAFTA partners and Chile announced the structure and initial work schedule for the negotiation of Chile's accession to NAFTA. The trade officials agreed to establish four working groups to examine the NAFTA's 22 chapters and the two side accords covering environmental issues and labor standards. An initial meeting of negotiations took place in Mexico City in late July 1995, but negotiations remained preliminary since the Clinton Administration lacked fast-track authority for considering such a trade agreement. Chile decided not to negotiate on any crucial issues until the US Congress approves fast-track authority.
In the 104th Congress, disagreements, including those on workers' rights and environmental agreements as part of the negotiating objectives of an agreement, stymied the consideration of fast-track negotiating authority. The Clinton Administration and congressional Democrats favored linkage between workers' rights and environmental agreements as part of the negotiation of any future free trade accord while Republicans opposed the inclusion of such provisions.
In 1997, President Clinton called for fast-track authority and maintained that Chile would make an excellent candidate for accession to NAFTA. On July 24, 1997, the President appointed Jason Berman, Chairman of the Recording Industry Association of America, to head the Administration' s effort to secure congressional approval of fast-track. And on September 17, 1997, the Administration submitted a proposal for congressional consideration. In an effort to accommodate Republicans and Democrats, the proposal limited the scope of labor and environment measures to those "directly related to trade" while also including a mandate that the United States address labor and environmental issues in the World Trade Organization.16
US exports to Chile amounted to $4.1 billion in 1996, 14.4% more than in 1995, and Chile was the 27th largest export market for the United States. US imports from Chile in 1996 amounted to $2.3 billion, 16.8% higher than in 1995. Since 1989, the United States has run a trade surplus with Chile. The 1996 trade surplus was $1.9 billion, the largest during this period.17 Major US exports to Chile include machinery and transport equipment, while major US imports from Chile include fruit, copper and seafood. While the United States is an important trade partner for Chile, the country has other significant partners, such as Japan and other Latin American nations. In 1995, Japan replaced the United States as Chile's single largest export market. The United States became Chile's second largest export market, absorbing 14.4% of its exports, but remained the single largest source of imports for Chile, accounting for 25% of Chile's total imports.18
According to the Office of the U. S. Trade Representative (USTR), Chile has a generally open trade regime, with a uniform tariff of 11 % on imports from countries with which it does not have free trade agreements. Nevertheless, USTR maintains that some significant trade barriers do exist, including: a price band system on agricultural commodities such as wheat, wheat flour, vegetable oils, and sugar; animal health and phytosanitary requirements that make it extremely difficult for US exporters of fruit and poultry to gain access to Chile's market; and a tax structure that discriminates against imported spirits to the benefit of a locally-produced spirit, pisco. USTR also maintains that Chile's intellectual property rights regime has several deficiencies involving patent protection for pharmaceuticals and copyright protection for computer software that result in millions of dollars in trade losses annually for US industries.19
Representatives of several US industries expressed concerns about Chile's accession to NAFTA at an April 25, 1995 USTR public hearing.20 These included representatives of the cling peach and tomato industries and salmon harvesters, who maintain that Chile's accession would damage their industries. Software producers also called for a requirement for Chile to improve its intellectual property rights protection for computer software and other U. S . exports. Representatives of other industries, such as AT&T and Mattel Inc., expressed strong support for Chile's accession to NAFTA21
Some environmental groups have also expressed concerns about Chilean environmental problems, including problems caused by mining and other Chilean export industries, which they fear could be exacerbated by free trade. A Department of State report notes that while Chile has significant environmental problems because of insufficient attention in the country's rush toward development, the Chilean government has been working since 1994 to establish regulations and enforcement mechanisms.22
In late July 1997, the US International Trade Commission (ITC) found
that Chile's salmon exports, which are allegedly subsidized and sold in
the United States at less than fair value, may have hurt the US salmon
industry and ruled that the Commerce Department should continue investigating
the allegations. In August 1997, Chile notified the WTO that it would be
requesting consultations with the United States on the issue.
A sign that this policy change was coming occurred in March 1997, when the Clinton Administration allowed US aircraft companies Lockheed Martin and McDonnell Douglas to provide technical data to Chile on their combat planes. Chile is seeking to replace its aging Northrop Grumman F-5 aircraft. The next step in the process would be for Chile to request the purchase from the Clinton Administration. If the Clinton Administration agreed to issue an export license for such a sale, it would then have to justify the purchase to Congress, in accordance with the terms of the Arms Export Control Act.24
Critics of the Clinton Administration's decision to change its arms transfer policy toward Latin America fear that it could trigger an arms race in the region. They fear that Chile's decision to buy advanced combat planes could lead to other South American countries such as Brazil to do the same. Other critics maintain that money spent by Latin American nations on advanced fighter aircraft would be better spent on social expenditures to combat poverty and redress income inequality. Still others fear that the measure could weaken the region's democracies by altering the balance of civil-military relations.
The Administration argues that the change in policy will not ignite an arms race in the region. Assistant Secretary of State for Inter-American Affairs Jeffrey Davidow said that the United States would probably reject sales to countries like Peru and Ecuador where a long-standing border dispute led to armed conflict in 1995.25 Other supporters of the Administration's decision argue that the region has undergone a dramatic democratic transformation and that putting the region on par with other regions of the world is a demonstration of support for Latin America's progress.
The Administration's policy change did elicit some negative reaction in Latin America, particularly in Argentina, although that government has publicly stated that it does not oppose the lifting of the ban. As a result, in what many analysts view as a symbolic gesture, the Clinton Administration announced in mid-August 1997 that it was considering non-NATO ally status for Argentina. Administration officials cited Argentina's important role in international peacekeeping missions. Many analysts view the measure as a means of compensating Argentina for the potential U. S. sale of advanced military aircraft to Chile.
Chile and other Latin American nations expressed concern about the Administration's offer to Argentina, fearing that the effect would be to divide the region. Chilean Foreign Minister Jose Miguel Insulza called for the United States to articulate a clear strategic policy for the region and noted that there had been little US consultation with the region on Argentina's non-NATO ally status. Largely because of this concern, Foreign Minister Insulza and Secretary of State Madeleine Albright agreed in New York on September 25, 1997, that Chile and the United States would create a permanent committee to study defense issues affecting the two countries.
Copyright 1998 National Law Center for Inter-American Free Trade
2-[ Pinochet Era Toll. Latin American Weekly Report , September 5, 1996. p. 408.]
3-[ US Department of State. Chile Country Report on Human Rights Practices for 1996. January 30, 1997.]
5-[ Orgill, Margaret. "Chile Leader To Curb Armed Forces' Political Power," Reuters , Aug. 21, 1995.]
6-[ Right Blows Its Chance for a Deal. Latin American Weekly Report , June 24, 1997. p. 290.]
7-[ More of the Same from Frei. Latin American Weekly Report , July 29, 1997, p. 356.]
8-[ Information provided by the US Embassy in Santiago, Oct. 1, 1997.]
9-[ For more extensive information on Chile’s economic situation, see: Chilean Trade and Economic Reform: Implications for NAFTA Accession , CRS Report 97-56 E, by J.F. Hornbeck, January 2, 1997. 32 p.]
10-[ Steady, High Growth for ‘97. Latin American Weekly Report , Sept. 19, 1996, p. 431.]
11-[ Chile: Frei’s State-of-the-Nation Address, May 21, 1997. Foreign Broadcast Information Service. May 28, 1997.]
13-[ Rosefeld, Stephanie and Juan Luis Marré. "How Chile’s Rich Got Richer", NACLA Report on the Americas. May/June 1997. p. 26.]
14-[ White House. Press Conference of President Clinton and President Frei of Chile. February 26, 1997.]
15-[ For information on legislative developments, see Trade and the Americas , CRS Issue Brief 95017 (updated regularly),15 p., by Raymond J. Ahearn. For information on issues in Chile's accession to NAFTA, see Chilean Trade and Economic Reform: Implications for NAFTA Accession , CRS Report 97-56 E, January 2, 1997, 32 p., by J.F. Hornbeck. For an assessment of the movement towards hemispheric free trade, see Hemispheric Free Trade: Status, Hurdles. and Opposition CRS Report 97-514 F, June 3, 1997, 14 p., by Raymond J. Ahearn.]
16-[ For further background and legislative action on the fast-track proposal, see: Fast-track authority: debate over the President s proposal , CRS Report 97-876 F, by George Holliday; Trade agreements: renewing the negotiating and fast-track implementing authority , CRS Issue Brief 97016, by Vladimir N. Pregelj; and Trade and the Americas , CRS Issue Brief 95017, by Raymond J. Ahearn.]
17-[ United States Trade Representative. 1997 Foreign Trade Barriers Report.]
18-[ International Monetary Fund. Direction of Trade Statistics, 1996 Yearbook.]
19-[ United States Trade Representative. 1997 Foreign Trade Barriers Report, pp. 39-42.]
20-[ For further information on the implications of Chile's accession to NAFTA, see: Hornbeck, J.F. Chilean Trade and Economic Reform: Implications for NAFTA Accession . CRS Report 95-751 E. June 23, 1995. 26 p.]
21-[ See: Cling Peach, Tomato Industry Oppose Chile NAFTA Bid, AT&T Voices Support. International Trade Reporter . Apr. 26, 1995, p. 727, AT&T, Others Lay Out Priorities for Talks To Bring Chile into NAFTA. Inside US Trade . Apr. 21, 1995. pp.4-5.]
22-[ Department of State. FYl997 Country Commercial Guide: Chile.]
23-[ For further details, see Conventional Arms Transfers to Latin America: US Policy . CRS Report 97-512 F, by Richard F. Grommet, updated August 5, 1997. 9 p.]
25-[ Marquis, Christopher. US Scraps Ban on Arms for
Latins. Miami Herald, August 2, 1997.]
Copyright 1998 National Law Center for Inter-American Free Trade