MercoPress. South Atlantic News Agency

Mercosur and Chile's Asian seduction.

Chile denied that it's planning to abandon regional agreements such as Mercosur and privilege relations with Asia-Pacific Economic Cooperation, APEC members.

"On the contrary they will help boost the region, we will act as a bridge with the Asian countries", said President Ricardo Lagos during the press conference in Santiago which marked the end of the APEC Economic Leaders Forum.

Chile already has an active trade agreement with South Korea and is negotiating similar ones with China, Singapore, New Zealand and Japan.

The country also has the lowest external tariffs in South America which conditions its full access to Mercosur whose tariff policy is far more conservative.

President Lagos underlined Chile's close links with Mercosur but recalled that "your foreign policy is conditioned by where you live. We're in Latinamerica and if the Asian countries continue to grow this means consumption and demand for our soybeans, manufactured goods, beef, wheat, dairy produce".

During the last two decades Chile has strongly diversified its foreign trade which is now split almost in thirds with a slight predominance of Asia, plus Europe and the Americas.

"The earth is round and you have to look at it dynamically" added Mr. Lagos who mentioned as an example Mexico, which has a strong surplus with the United States, but a significant deficit with the rest of the continent.

"Argentina and China have recently signed an important mining investment program; Peru and Brazil are talking about bi-oceanic corridors", indicated Mr. Lagos.

However Brazilian Development and Trade minister Luiz Fernando Furlan who witnessed the APEC summit in Santiago went back with the impression that the Chileans "are seduced with Asia; you can feel it when you talk to officials and private businessmen".

During the Santiago summit Chile announced it was beginning talks with China in 2005 for a free trade association and a similar feasibility study with Japan.

China has become Chile's main copper customer, the country's main export, and both countries have signed government to government mining agreements.

Several APEC country members, Russia, Indonesia, Australia, also offered Chile an abundant supply of natural gas, a tempting situation given last winter's experience when Argentina, the country's main provider, unilaterally limited contracted supplies favouring domestic demand and causing problems to Chilean consumers and industry.

The situation exposed Chile's energy vulnerability and the Lagos administration seems determined to have a less dependent situation.