MercoPress. South Atlantic News Agency

Chile has trade access to 49% of world's GDP

The expansion of the European Union means Chile now has 38 free trade agreements, second only to Mexico and ahead of Israel.

"As a country we are clearly export oriented, which is one of the great assets of Chile made evident by the number of accords. On this orientation we're fully committed, government and opposition", remarked Chilean Director of the Foreign Affairs Ministry International Economic Relations Department, Osvaldo Rosales.

Only Mexico is ahead of Chile, followed closely by Israel with 35 free trade agreements.

Contrary to limited, small trade agreements, the free trade agreements include almost all goods from both sides in a given period of time, plus usually services, investments, intellectual property and clear rules for solving disputes.

Chile, Mexico and Israel share free trade agreements with United States, European Union, Canada and the European Free Trade Association.

Chile and Mexico also share agreements with Central American countries besides the fact that they have a bilateral free trade, as well as Mexico has one with Israel.

Mexico has trade agreements with Venezuela, Colombia, Bolivia, Uruguay and Japan.

Chile on the other hand recently reached a free trade accord with South Korea.

However given the growing number and significance of free trade agreements analysts believe it's more accurate to gauge what percentage of the world's GDP is covered by these accords. And therefore calculate unitary GDPs taking into account the Purchasing Power Parity of each country.

This means for example that the current PPP of the European Union GDP is equivalent to 27% of the world's GDP; for the United States, 21%.

But Mexico, Israel and Chile actually have access to over 40% of the world's GDP, PPP. Chile has free trade agreements with 49,1% of world GDP; Israel 48,6% and Mexico 54,2% given its recent accord with Japan.

However this could change in the near future: Chile has begun talks with China which will be formalized next November, and could be reaching a free trade agreement in 2006 or even 2005. Something similar is also in the making with India.