OECD: Chile is bloc’s third country placing fewest barriers to international trade in services

RIO DE JANEIRO, BRAZIL – The most recent installment of the OECD’s Services Trade Restrictiveness Index (STRI), which delves into policy trends in 2021, placed Chile third in the ranking of countries with the fewest barriers to international trade in services.

“The top ten economies with the best regulatory performance on average in the 2021 STRI were the Czech Republic, Japan, Chile, the Netherlands, Latvia, the United Kingdom, Germany, Lithuania, Colombia, and Spain,” reads the recently released report.

According to the OECD, the national result is not surprising. “Chile’s STRI 2021 is below the OECD average and low compared to all countries in the STRI sample. It has not changed since 2020. Chile’s regulatory environment for services has remained stable in recent years,” the report states.

However, the fact that it is imposed on most of the countries of the bloc, in addition to Brazil, China, Costa Rica, India, Indonesia, Kazakhstan, Malaysia, Peru, South Africa, and Thailand, which were also considered in this study, does not imply that there are still pending tasks.

“Improving regulatory transparency increases predictability and reduces uncertainty costs for companies. In this context, Chile could improve its regulatory transparency by allowing a reasonable time between the publication of new laws and their entry into force, so that domestic and foreign suppliers can familiarize themselves with the relevant regulations,” the report states when making recommendations to the country.

In light of these results, Rodrigo Yáñez, Undersecretary of International Economic Relations, said on Twitter that “we must continue to move forward to consolidate Chile as an exporter of world-class services in mining, aquaculture, forestry, ICTs, and agriculture, among others”.

When asked by PULSO, he added that “the future of trade is going to be played in services and when we talk about its potential, our analysis shows that the companies that today account for two-thirds of Chile’s exports of goods, i.e., copper, mining, the fruit industry, forestry, and even ICTs, buy US$19 billion in services in Chile and 90% of these services are provided by Chilean companies”.

In this context, the leader of the Subrei indicates that “these services, in turn, are a very strong potential exportable offer; therefore we believe that there is a tremendous potential to jump from the 12% that services represent today in our export basket to 24%”.

The STRI is “a tool of the aforementioned multilateral organization that is based on evidence on restrictions to trade in services” and “also allows countries to compare their regulations on the matter with the best global practices, identify atypical restrictions and current bottlenecks”, according to the definition of the organization itself.

It points out that Chile’s result “is partly explained by the low level of restrictive regulation throughout the economy that applies particularly to professional services”. In addition, they point out that it is “one of the few countries without restrictions on foreign capital in air transport services. Foreign investment in air transport services to, from and within Chile is allowed, explaining that air transport is, comparatively, one of the least restrictive sectors”.

As mentioned above, none of this is new. According to the OECD, “the regulatory environment in Chile has been relatively stable in recent years, with moderate liberalizations in some sectors, including the commercial banking, distribution, and logistics sectors”.

On the other hand, they specify that “accounting services, air transport, legal services, and architectural services are the sectors with the lowest score compared to the average STRI in all countries”. In contrast, “broadcasting, telecommunications, logistics, customs brokerage, and courier services are the sectors with the highest score compared to the average STRI in all countries”.

Despite the stability, the agency highlights that “in 2017, Chile revised its customs regulation, introducing an Authorized Economic Operators Scheme open to foreign firms and authorizing the clearance of goods before the determination and payment of duties.”