1. Negotiations
2. Chile

Chile-China trade pact could be signed in November

Reuters

UPDATE 1
Chile-China trade pact could be signed in November

Tue Sep 20, 2005

(Adds quotes, context, from sixth paragraph)

SANTIAGO, Chile, Sept 20 (Reuters) - Chile and China could sign a free trade agreement as early as November, tying together the world’s biggest producer and consumer of copper, Chilean President Ricardo Lagos told Reuters on Tuesday.

Lagos said the two countries would conclude their final round of talks in October. It would be the first full-fledged trade agreement for the Asian nation.

"We want to be a bridge between Latin America and Asia, to position ourselves as a platform for Asia to reach Latin America," Lagos said in an interview with Reuters correspondents in Santiago and by telephone in Tokyo, London and New York.

Twenty-five percent of Chile’s trade is with Asia, where Chile already has a free trade agreement with South Korea and is studying whether to begin talks on free trade with Japan.

Chile’s economy is booming — with growth of more than 6 percent expected this year — on the back of strong exports of products including copper, wood pulp and fertilizer.

"We expect to hold a (final) round in October and around November, before or during the APEC (Asia-Pacific Economic Cooperation) summit, we should sign an agreement with China, for access for goods and services," Lagos said.

The influx of dollars from exports has helped boost the Chilean peso to its strongest against the dollar in years.

CHILE PESO

Lagos, whose six-year term ends in March, said that while the strong peso was making some exporters less competitive in global markets, the currency was in the right place.

"I believe that the Chilean peso should stay at its current level. It’s a strong peso, but not too strong," Lagos said.

With government coffers full to the brim with tax income from exporters, Chile has been prepaying foreign and internal debt, and it expects to roll up hefty budget surpluses this year and next. Finance Minister Nicolas Eyzaguirre’s budget plan projects a surplus of 2.3 percent of gross domestic product in 2006, compared with 3.4 percent seen for this year.

Lagos said the country has no plans to issue new bonds on foreign markets. "Our debt is at a minimum level, it’s on the road to extinction," he said.

But he added Chile could issue government bonds if the need arose in the future, to help fund an ambitious $15 billion expansion program at Codelco, the state-owned miner and biggest copper producing company in the world.

He ruled out privatization of Codelco to help raise funds for expansion.

"The control of Codelco should stay in government hands," he said.