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e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021)

FOREIGN POLICY, DEVELOPMENT, AND INTERNATIONAL STRATEGIES

TOWARDS ASIA PACIFIC: THE CASES OF ARGENTINA AND CHILE

FLORENCIA RUBIOLO

frubiolo@gmail.com

Associate Researcher at the National Scientific and Technical Research Council (CONICET,

Argentina). PhD in International Relations (National University of Rosario). Director of the PhD

Program in International Relations and Professor of International Relations History at Córdoba

Catholic University (UCC)

PAOLA ANDREA BARONI

paobaroni@yahoo.com.ar

Researcher and professor at Universidad Siglo 21 (Córdoba, Argentina). PhD in International

Relations from Universidad Nacional de Rosario (Argentina)

Abstract

In the 21

century, the links between South America and the Asian region have been more

constant, and these links have had different interpretations according to their consequences

in the domestic South American economies, as well as their relation with the current

integration processes in the region and the different economic insertion strategies. It is

observed that there are differences in the way in which the South American countries insert

in Asia, so the aim of this work is to analyze the characteristics of the foreign policy and the

strategies of foreign insertion of Argentina and Chile towards China, South East Asia and India,

highlighting the articulation between the economic and productive structures, the

international insertion models and some economic implications. The case studies selected

represent two different development models that have chosen dissimilar foreign insertion

strategies, with the consequence of diverse relationships with the Asian region. The research

was carried out through a qualitative methodology and a South American theoretical

perspective.

Keywords

Asian region, development model, international insertion strategy, foreign policy, South

America

How to cite this article

Rubiolo, Florencia; Baroni, Paola Andrea (2020). "Foreign policy, development, and

international strategies towards Asia Pacific: The cases of Argentina and Chile". In Janus.net,

e-journal of international relations. Vol. 11, No. 2 Consulted [online] at date of last visit, DOI:

https://doi.org/10.26619/1647-7251.11.2.5

Article received in October 14, 2019 and accepted for publication on August 3, 2020

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

FOREIGN POLICY, DEVELOPMENT, AND INTERNATIONAL STRATEGIES

TOWARDS ASIA PACIFIC: THE CASES OF ARGENTINA AND CHILE

FLORENCIA RUBIOLO

PAOLA ANDREA BARONI

Introduction

In the 21

century, East Asia surges as a world economic growth and development region

due to, in part, the relocation of production as a consequence of the competitive

advantages the Asian region provides, such as the low costs of production, which are a

result of the cheap labor and the investment incentives. China’s consolidation as a main

producer of manufactures and, recently, as a source of investments, as well as Southeast

Asia (SEA)

and India’s consolidation as markets for raw material exports, have turned

the region into an economic alternative for countries that are in search of diversification.

South America and the Asian continent have had occasional links throughout their

histories due to cultural, geographic, historical and political reasons. The links boosted

with the end of the Cold War; with the boom of the economic growth of China, SEA and

India, and with the implementation of trade openness and liberalization of economic

measures in the South American countries that favored the search of new markets to

export raw material and its by-products. In this context, Latin American started revaluing

the Asia Pacific region in their foreign agendas within a search for diversification (Mols

and Faust, 1998).

In the 21

century, the links between these two regions have been more constant due

to the growing multilateralism in the international system, the raise of commercial

interdependence, the globalization of finances, the progress of communication and

transport, among others. However, these links have had different interpretations

according to their consequences in the domestic South American economies, as well as

their relation with the current integration processes in the region and the different

economic insertion strategies that result in a competence for market shares and for

interregional investments.

The links between South America and the east and south of Asia have not been deeply

explored in the academic research since the bilateral and multilateral relations are still

For the purposes of this piece, the countries that are part of ASEAN-6 shall be considered: Indonesia,

Thailand, Philippines, Malaysia, Vietnam and Singapore, since they are the main commercial partner in the

South American region.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

under a consolidation process. Most East Asian academic work on Latin America focus on

the comparison of economic policies, divergent economic performance and the causes

and consequences for both regions.

Likewise, very few works present analytical frames

that may go beyond the statistical analysis of the links and that, at the same time, make

it possible to compare dissimilar cases

Due to the need to go deeper into the intrinsic differences in the way in which the South

American countries insert in Asia, the aim of this work is to analyze the characteristics of

the foreign policy and the strategies of foreign insertion of Argentina and Chile towards

China, South East Asia and India, highlighting the articulation between the economic and

productive structures, the international insertion models, and the main economic

implications.

To this end, we take into consideration the effect produced by the growing dependence

on the East Asian markets, mainly in the following aspects: a) characteristics and

implications of Argentina and Chile's bilateral policies in their relation with Asia Pacific;

b) the degree of partners and/or markets diversification for exports; c) the changes in

the export structure that may have an impact on the productive structures (concentration

in primary products and manufactures of agricultural origin [MAO]).

The cases selected are Argentina and Chile because they represent two different

development models and they have chosen dissimilar international strategies, leading to

diverse relationships with the Asian region. On the one hand, the Andean country opted

for a neoliberal development model, with a productive structure oriented to the primary

sector and an international strategy based on open regionalism with a dense network of

free trade agreements (FTA). Argentina, since 2003, has implemented a neo-

developmentalism model based on a more diversified productive structure and an

international strategy based on a semi-closed regionalism.

Concepts from a South American theoretical perspective

Development models and international strategies

To understand the economic implications in Chile and Argentina of the commercial

relations with Asia Pacific, we must draw on local concepts related to foreign policy and

the articulation between development models and international strategies.

In this respect, Lee & Kim (2018) analyze the innovation systems and the relation to economic performance

in Latin America and East Asia, from a developmental perspective; Zhang (2007) discusses the relation

between foreign direct investment and economic growth in both regions; and Lin (1989) also focuses on

the comparison of economic performance and development policies in East Asia and Latin America.

Before the 21

century, studies about Asia and LAC were concentrated in Japan, South Korea and some

aspects of China (e.g. Taiwan). Since 2000, studies on the links between LAC and Asia-Pacific were first led

by international organizations such as the ECLAC, the Inter-American Development Bank, and the World

Bank –among others-, due to the economic complementarity of the regions and the possibilities that this

fact meant for economic growth and development. The analysis concentrated on economic, commercial and

infrastructure dimensions. When the links started to grow and strengthen later on, studies on China

skyrocketed and studies on Southeast Asia and India started to flourish, including other aspects like politics,

culture, diplomacy, cooperation, etc. Due to the increased impact of these countries in the foreign policies

of LAC countries, last decade has witnessed a higher amount of academic initiatives which have been carried

out from different analytical frameworks, like foreign policy analysis. This paper is included in this last

category.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

First, we set off from a wide definition of foreign policy, which is understood as a state

policy “that is planned and designed taking into account national objectives, domestic

demands, and conditions that arise from the external frame” (Colacrai, 2006: 25). It is

the combination of State decisions and actions projected abroad that combine multiple

conditionings of the internal and external levels. According to Van Klaveren (1992), since

Latin American economies are part of a developing world, it is development the domestic

imperative that determines the States' external decisions. It is not just about assessing

the foreign policy in terms of its contribution to the promotion of exports and trade and

financial stability, but also in terms of the ability to transform the international variables

“in a more favorable way for the achieving a development strategy” (Van Klaveren,

1984:36). We agree on the fact that there is a common condition in the influence the

development imperatives have on Latin American foreign policies. However, the way in

which these goals are projected abroad is not homogeneous. Therefore, we distinguish

the different models of approaching Asia, and these distinctions will be based in the

material abilities –mainly economic structures of the countries under study – and in the

preexistent regional commitments, which have shaped, in different ways, the foreign

policy and economic strategy decisions.

As a main premise we consider there is a connection between a country's productive and

export structures, and its international strategy, as well as with its foreign policy. This

connection is not always linear, since a country's productive structure imposes domestic

condition not only to the international economic policy, but also to foreign policy, in terms

of commercial partners and regional integration.

Bernal Meza (2000) states that foreign policy analysis cannot be separated from the

development or international economic model. The development model includes “the way

in which the policy and the economy connect, between the State and the market, in

certain context. Each model has its own way of wealth accumulation, production and

distribution, as well as a foreign insertion strategy. Because of this, the currency

exchange patterns, the foreign trade regulations and the demands in foreign negotiations

will differ” (Zelicovich, 2012: 6). That is to say that as domestic conditionings of the

external action of the South American countries towards the Asian region, the influence

of the productive model and, within it, the roles of the State and the market, should be

considered central when defining economic decisions.

Each model of development has a specific international strategy, which can be

understood as the strategy used by the States in their interaction with the international

system. According to Lorenzini (2011) this strategy expresses the choices made by a

State regarding foreign policy orientations and guidelines that it implements in order to

relate with other actors in different spheres, such as the political, economic and security

ones.

A highly determinant element in the international economic strategies of the countries

under study is the preexistence of a primary export model that, in the case of Argentina,

is combined with an industrial model based on regional agreements (Southern Common

Market [MERCOSUR, by its Spanish acronym]) and mainly oriented to the domestic and

Latin American markets. The latter also presupposes “a gradualist strategy where the

protection and the economic action of the state play a main role, the aim is to have more

autonomy from the center” (Guillén, 2008:25).

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

To conclude, both countries present heterogeneous productive structures which directly

affect how international economic insertion takes place, thus turning into the material

conditions on which the external strategies are built, and reflecting different ways of

interaction and intervention between State and market, which show different

development model.

Diversification, neoextractivism and the role of emerging economies

In the early 21

century, and especially since the 2008 crisis, the South American States

opted to expand their commercial partners to increase their autonomy, improve their

international insertion and mitigate the effects of the crisis diversifying partners and

attracting investments. The combination of domestic conditions, an unstable

international economic context and a growing competition between developing countries

for market shares and investments favored the approach of South America to China and,

to a lesser extent, to the main economies in SEA and India.

The diversification became a tool to reach higher levels of autonomy reducing the

economic and political dependency, to avoid the discrimination of integration processes

and to improve the participation in the world economy so as not to end up in the periphery

(Olivet, 2005). Asia Pacific, with its high rates of economic growth, appeared as the best

option for an alternative economic insertion to the traditional partners. The result,

combined with Asian regional conditions, has been the multiplication of commercial

partners –in most of the countries in the region–, with a high participation of the Asian

countries among the destination of he South American exports, and having China the

main role.

In this sense, we have observed that, in the case of Argentina, there has been a reduction

of the export concentration to the first five destinations between 2003

and 2019:

whereas in 2003 it represented 51%, in 2019 it plunged to 41% (Brazil, China, the United

States, Chile and Vietnam). In the case of Chile, we have observed a growing

concentration of the sales in the same period to its five main destination partners, but a

growing involvement of the most important Asian markets. In 2003, 47% of the country's

exports went to its main partners, while in 2019 that participation increased to 66%

(China, the United States, Japan, South Korea and Brazil) (UN Comtrade, 2020).

It has been noticed that the process of diversification of export destinations shows

positive results in the case of Argentina, whereas in the case of Chile, there has been the

opposite effect. We understand that signing bilateral FTAs with economies such as the

United States and China has caused a greater concentration of commercial partners for

Chilean exports.

As regards the composition of the export basket, there is a growing concentration of

primary products and their byproducts in the South American exports. This concentration

is connected to the international division of labor which has led to an economic growth

of the Asian countries and the improvement of its citizens' standard of living, which

We have selected the year 2003 because we consider it the beginning of the impact of the commodity boom

–rapid increase of prices of commodities due to growing demand from emerging economies- in Latin America

that started in 2002. This will allow us to see the change during diversification.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

produces a raise of commodities consumption (Frechero, 2013), thus boosting primary

South American exports.

Despite this phenomenon, we have noticed that, in the chosen cases, there has been a

steady participation distribution of each of the big areas in the exports between 2005

and 2015. In the case of Argentina, in 2005 the manufactures exports accounted for

30.7% of the total, and those of primary products 69.3%; while in 2015 the manufactures

represented 29.4% and primary products held a 70.6% of participation. In the case of

Chile, the scenario is similar as regards stability, although the composition of the basket

shows a higher concentration of raw material. In 2005, the manufactures accounted for

13.7% of the participation in the basket, whereas the primary products represented

86.3%. In 2015, the participations in the baskets were 14.4% and 85.6% respectively in

the total of the Chilean sales to the world (ECLAC, 2016)

In both cases, the export basket has a high component of primary products and their

byproducts which is related to the international conditions before mentioned, and to the

important raise of the international prices of commodities.

Nacht (2013) and Bittencourt (2012) explain some of the implications that the

concentration of commodities' sales may have for the internal development of South

American countries. Firstly, the commerce of South America with China highlights the

region's role as raw material supplier. This favors the fragility of the economic insertion

strategy conditioned by the “swings of the good and bad harvests (in the case of the

agricultural products), as well as by the volatility and deterioration of the exchange

terms” (Nacht, 2013: 151). Secondly, Bittencourt (2012) states that the main

primarization of the South American economies and the growing competition with China

in industrial areas –in particular with the MERCOSUR – represents a problem for the

South American development in the long term.

These changes have put the phenomenon of extractivism back in the spotlight, together

with its consequences for the development of the countries in which it is a central trait

for their productive structures (Gudynas, 2012). Gudynas (2009) talks about progressive

neo-extractivism to describe the 21

century phenomenon in South America, where

different premises are combined: a) development is conceived based on extractivist

sectors; b) there is a greater presence and active role of the State, which seeks

legitimation by means of redistributing the surplus obtained; c) generate an international

insertion dependent on raw materials and subordinate to the power centers; d) deeper

territorial fragmentation, social and environmental impacts, among others.

In South America, this phenomenon is shown in extractive activities such as the

development and deepening of the open-pit mining already existing and in the oil

exploration and exploitation. There has also been a change in the practice of agriculture,

and export monocultures such as soy have been promoted (Gudynas, 2009). Slipak

(2012) adds that prices of commodities generate a high opportunity cost if production

factors are not destined to these activities, thus facilitating this model's continuity.

For 2019 the trends are similar: in the case of Argentina primary products accounted for 27% of total

exports; fuel and energy 7%; MOA 37%, and Manufactures of Industrial Origin (MIO) 29% (INDEC, 2020).

In the case of Chile, mineral products accounted for 52% of total exports; agriculture, livestock, forestry

and fishing 10%, and industrial goods 38% (SUBREI, 2020).

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

Besides, until mid-2014, there was a national currency appreciation, which raised the

incentive of the import of middle and final goods, and the export of primary products and

MAO (Durán Lima and Pellandra, 2017).

Maristella Svampa (2019), who coined the concept commodities consensus to explain the

large-scale exports of primary products, economic growth and the increase of

consumption due to neo-extractivism, said that the economic opportunities that the

increased prices and demand of commodities generated, led to another concept:

developmentalist illusion. According to Svampa, regional governments –either

progressive or conservative- thought that it would be possible, thanks to these new

economic openings, to shorten the distance with the industrialized countries so as to

achieve development.

Actually, the strong income that the South American States have received due to this

kind of exports caused more disincentive to the development of the national industry and

supported the continuity of an unfavorable exchange for the South American region

(Slipak, 2012; Nacht, 2013). An absence of industrial policy can be observed in almost

the majority of the countries in the region, and in those where there is one, it has

defensive characteristics, which does not make the adaptation to new technological

models possible (ECLAC, 2016).

In this sense, this type of commodity economy, without an innovation policy, has shown

the problem of the lack of diversification of the productive matrix. The Fourth Industrial

Revolution is characterized by the development and implementation of the artificial

intelligence, internet of the things, additive manufacture, biotechnology, big data, block

chain, among others, and Latin American countries are behind in these fields. In a global

knowledge-driven economy, the Latin America region assigns scarce resources to

research and development (R&D), representing only 0.6% of the regional GDP (RICYT,

2019) and, as a consequence, has a limited number of researchers in the STEM area,

lack of incentives to research and a poor generation of patents and licenses (representing

only 2% of world’s total) (OMPI, 2020).

So, the dependence on this type of production specialization –based on products intensive

in labor and natural resources-, increases the State's vulnerability to external changes –

many times linked to weather, social and political factors– (Nacht, 2013) and, at the

same time, decreases its margin of economic, commercial and political autonomy. To

complete the scenario, this insertion model strengthens the foreign direct investment

(FDI) presence which focuses on the extraction of natural resources or their basic

processing, reinforcing the specialization pattern of the region and making the

development of low technological content activities stronger (Dussel Peters and Armony,

2018).

To conclude, the economic and productive structure of the South American countries is

affected not only by the damages to the exchange terms, but also by the deceleration of

the Chinese FDI, as well as its exports and imports and those of the SEA countries and

India. This shows the vulnerability faced by those countries focused in a development

model based on products with little added value.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

Divergent international strategies towards East Asia: Chile and

Argentina

Since Argentina and Chile's development models present structural differences, their

international economic strategies also show dissimilar characteristics.

Regarding Chile, the international insertion strategy is based on the premises of unilateral

commercial openness, financial liberalization and economic deregulation, which gives

priority to the open regionalism and to the signing of preferential and free trade

agreements. The main results of this model, promoted between 1973 and 1990 and

continued by the democratic governments until now, have been a steady growth of

natural resources exports, the concentration in big extra-regional commercial partners,

a decrease of non-traditional exports and the disincentive of the development of

industrial manufactures, among others (Aninat del Solar, 2007).

In line with this, and with a pragmatic vision of insertion, in economic terms, Chilean

foreign policy followed a commercial agenda oriented to growth by means of primary

exports (Colacrai and Lorenzini, 2005). In the political sphere there is also the privilege

given to the multilateral negotiation instances, which had a main role in the country's

rapprochement with Pacific Asia (Quezada, 2010).

Under this vision, the Asia Pacific region became a pillar in the Chilean foreign policy. The

military government had the capacity to see that the development of new links with Asian

countries could alleviate the limitations faced by the State due to its international political

situation of isolation

. The democratic governments that followed, continue with a policy

of deepening and strengthening the relations with these countries, especially due to the

need of the international re-insertion of the country (Wilhelmy, 2010).

In accordance with this, a dense network of agreements multiplied and consolidated: the

signing of FTAs with South Korea (2003), China (2006), Malaysia (2012), Vietnam

(2014), Hong Kong (2014) and Thailand (2015); the negotiation of a FTA with Indonesia,

an Economic Partnership Agreement with Singapore (called P-4 in 2008) and a

Preferential Trade Agreement with India (PTA) (2007). Some conditions that favored this

dynamic rapprochement were the economic complementation, the Chilean need for big

markets to insert exports, and the Asian Commercial opening and liberalization policy

that also privileged the signature of FTA. This is added to the Asian growing demand for

resources to sustain an industrialization process that is developing fast, which made the

rapprochement to the trans-Andean country –first producer and exporter of copper and

byproducts– natural.

In the case of Argentina, and taking into account the period since the redemocratization

until now, the development model has varied, from imports replacement to a neoliberal

model in the 90s, to another neo-developmentalism from 2003 up to 2015. This way, the

foreign policy and the international insertion strategies went through changes and

adjustments with each of these models. The only characteristic that prevails since the

end of the Cold War has been the adoption of a closed regionalism, with the aim of

widening the domestic markets and developing an industrialization policy.

The military government (1973-1990) suffered from international restrictions due to the violations of

political, social and human rights.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

Historically, Argentina’s foreign policy towards Asia has a scarce background because the

region has been considered distant from local interests. It gained visibility in the 80’s

when a group of countries emerged in the international economy. Under Alfonsín’s

government, fresh impetus towards the Asian region could be observed due to the need

of new sources of external financing as well as new alternatives to international insertion

(Cardozo, 2008). The main feature that has characterized the links with this region has

been the commercial and economic aspects that in only few occasions have been

accompanied by governmental political initiatives. Most of these actions were

concentrated in the decade of the nineties, when the Southeast Asian region received

great attention by the government and its diplomacy (Baroni & Rubiolo, 2013).

Leaving the convertibility plan by devaluating the national currency in 2002, together

with the increase of the international price of commodities, favored the adoption of an

economic growth model based on exports with a high component of primary products

and MAO, whose main destinations are the Asian economies. Likewise, the limited

opening of the market and the closed regionalism made it possible to keep the

industrialization process, thus ensuring Latin American markets for the country's

industrial exports.

Taking into account this commercial insertion double logic, the Asian region acquired

relevance within the Argentinean foreign agenda as an agricultural exports receptor, in

line with China, SEA and India's growing demand. The foreign policy towards these

countries followed the trend and, gradually, the political actions to approach the main

markets began multiplying by means of high rank state visits, trade missions, and the

signing of diverse bilateral agreements, among others (Rubiolo, 2017).

Trade as rapprochement key: characteristics and implications

The commercial dimension has been key both for Argentina and Chile in their bilateral

links with Asia. In general terms, the Asian nations became important partners in the

last 15 years. The differences are focused, mainly, in China, SEA and India's participation

as destination and origin markets of both South American countries' goods.

In the case of Argentina, China is the third sales destination and second origin at a global

level. Since 2008, there has been a steady increase of imports coming from this market:

in 2018 the total of goods coming from China represented 19% of Argentina's global

purchases. Meanwhile, Argentina's sales had a fluctuating movement that led to a

reduction of the percentage destined to China to 6.8% in 2008. This information shows,

on the one side, the asymmetric relation between exports and imports that causes a

constant negative trade balance for Argentina in relation to the Asian giant which, since

2014, is over 6,000 million dollars (ALADI, 2019; UN Comtrade, 2020). At the same time,

we notice that Argentina is more dependent on the Chinese market as manufactured

goods supplier rather than as destination of local sales, where we observe more diversity.

Chile's commercial relation with China is different from that of Argentina. Firstly, Chile

and China have a FTA in place since October 2006 which has had an impact on the

bilateral commercial link: both Chilean exports and imports from the Asian giant have

had an incremental steady pace since 2008, turning it into the trans-Andean country's

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

first commercial partner (as destination and origin market). In 2018, Chinese goods

accounted for 23% of the world Chilean purchases, and Chile destined 33% of its exports

to China. In both senses there is a growth regarding the previous year which continues

a constant line since 2008 (UN Comtrade, 2020). Unlike the case of Argentina, we see

that Chile's foreign commerce has a high and growing degree of dependence on Chinese

market, which shows a progressive trend to a larger commercial concentration.

Now, if we take a look at the numbers regarding Chile's relation with SEA, the situation

is considerably different, since the concentration in the Chinese market has damaged the

commercial links with partners in the region who are less important, but more similar

economically and politically. The SEA is a secondary partner: the exports have shown a

decreasing trend, which in 2018 reached a total of 1000 million dollars regarding the six

main economies. This figure represents only 1.4 % of the total Chilean sales to the world.

As regards imports, although slightly superior, they were not representative either: a

regional total of 2300 million dollars that account for 3.2% of Chile's world exports (UN

Comtrade, 2020). In both senses, we see how irrelevant SEA is as a commercial insertion

market for the South American country.

In the case of India there is a similar situation. Although there is a PTA –which boosted

Chilean exports and made the markets diversification easier–, it is not a strategic partner

for the trans-Andean country, despite its market's potential. Between 2012-2018 the

average participation as Chile's exports destination was of 2.7%, the highest point being

in 2014 (3.4%), with exports for 2571 million dollars. Regarding imports, they do not

show a quantitative leap, since they represent less than 1% of Chile's total imports during

the same period. This shows a constant positive commercial balance for the trans-Andean

country (UN Comtrade, 2020).

On another note, Argentina's commercial relationship with SEA went through a unique

deepening process in South America since 2003, with more intensity since 2008, which

made it possible to avoid the concentration on Chinese market as sales destination: in

2018 the Argentinean sales to the six main economies of the SEA exceeded the 4500

million dollars, which accounts for 7% of Argentina's total sales to the world. Among the

destination countries in the region, Vietnam and Indonesia stand out as the main buyers.

For their part, imports that have also had a steady growth are not important for the

Argentinean commerce since, currently, they only account for 4% of the country's total

purchases (UN Comtrade, 2020).

As regards the commercial relation with India, there has been a progressive increase of

its role as Argentina's exports destination since 2010 and with greater emphasis since

2014, when it was included in the Export Increase and Diversification Program

. Its

average participation as exports destination in the period 2012-2018 was 2.7%. As

regards imports from India, they show a greater plateau and little growth, going through

a participation of 0.9% in 2012 to 1.3% in 2019. In this case, we can also observe a

positive commercial balance for the South American country (UN Comtrade, 2020).

What is peculiar about Argentina's relation with China and SEA and India is the triangular

commerce configuration: China concentrates the main imports flow, while exports go,

Program started in 2013 whose aim was to improve Argentina's exports both quantitative and qualitative

by means of partners and products diversification.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

mainly, to SEA and India's markets. This way, Argentina set a commercial insertion

strategy with larger market diversification than Chile, besides adding markets that are

no big world economies, such as Vietnam and Indonesia, and other emerging country

such as India, to the ranking of main partners thus shaping a South-South commercial

insertion.

One of the main characteristics of both countries' commerce with East and the South of

Asia is the exports concentration in a few products. In the case of Chile, four products

account for the 83% of sales to China: copper ore and its byproducts, Iron ore and wood

pulp. Exports to India follow a similar pattern, with more than 90% concentrated in three

products: copper ore and its byproducts, wood pulp and iodine (ALADI, 2019).

Argentina's exports also show a high level of concentration in agricultural products. Sales

to SEA are formed, mainly, by soybean, maize and wheat pellets, that represent

approximately 85% of what is sold to the region. Those sent to China are mainly

soybeans, oil, fish and sunflower oil, and they account for 82% of what is sold to the

country. In the case of India, the concentration is higher since the main exported product

is soy oil, whose participation fluctuated between 72% and 90% in the period 2012-2018

(ALADI, 2019).

As we mentioned, South American imports of Chinese products have gone through a

growing process since the early 2000. The two main import areas are textile and

confection, and IT, machinery and electronics (ALADI, 2019). The quick growing process

of imports increased the governmental and business concern about the impact on local

production, on employment and on the competition in other markets, among other

variables.

The productive and exporting concentration of commerce of South American countries

with China, SEA and India have many impacts in their foreign trade insertion. With a

greater or smaller opening level, the strategies adopted do not become efficient tools for

a sustainable development of trade. Argentina and Chile have not developed economies

of scale that allow them to set their products apart and develop an intra-industrial kind

of trade. Therefore, the most relevant proportion in the exchange is given by the

comparative advantages, whether by the provision of natural resources, the low labor

costs, their geographic position, or the combination of these and other factors. In this

sense, the trade openness they have set in place has not come into play at the time of

achieving a better position in the market by means of long term bonds hard to replace

(De la Cruz y Marín, 2011).

So, these characteristics reveal a dependent political economy that attempts also to

permeate every aspect of the commodity chain, which has deepened the peripheric status

of this type of countries and restricted their ability and possibilities for an autonomous

development (Giraudo, 2019).

Final Remarks

It is out of the question that many international, regional and domestic conditions,

permanent and occasional, must be taken into account when analyzing South American

international strategies. Some of these conditions –such as the international commodity

JANUS.NET, e-journal of International Relations

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Vol. 11, Nº. 2 (November 2020-April 2021), pp. 74-89

Foreign policy, development, and international strategies towards Asia Pacific:

the cases or Argentina and Chile

Florencia Rubiolo, Paola Andrea Baroni

prices, demand of raw materials, and the contraction of world commercial flows, among

others– affect every economy in the region, due to the similar conditions of extra-regional

commercial insertion they share: raw material suppliers and members of downstream

value chains. However, there are domestic differences that generate certain conditions –

such as the interregional trade levels, the Latin American demand, regional trade

agreements, among others– to have dissimilar impacts on the foreign trade insertion

policies of the countries in the region.

As a first conclusion, the international strategies based on raw material exports turned

out to be successful as platforms for economic growth and for overcoming economic

crisis, especially in the case of Argentina. Likewise, currency flow generated by the

growth of exports to China, SEA and India, made it possible to diminish the dependence

on external financing, as well as to diversify exports markets which also enabled higher

autonomy margins when making political and economic decisions.

Nevertheless, during the last decade, the links with China have become stronger, thus

contributing to a new dependence relationship. Among other effects, there is the high

concentration of export to Beijing –particularly in the case of Chile–, and the growing

competition for regional markets. As becoming locked into a commodity export-oriented

economy, these countries have shown a deficient capacity and autonomy to transform

their productive matrix.

Here, the characteristics of the foreign insertion strategies each State had at an economic

level had different implications, because of the domestic productive conditions. While in

the case of Chile we observe a wide openness process based on free trade with China, in

the case of Argentina we find selective policies of national and regional market protection

and privilege, connected to the current integration process. The various orientations of

foreign economic insertion of these two countries, which represent the two development

models and their corresponding foreign insertion strategies more extended in South

America, represent obstacles for the agreement on common regional policies when facing

the challenges set by China's presence in the region's commercial and financial

dimensions.

Similarly, the differences of the impacts according to the productive sector affected also

makes it difficult to design consistent and long-lasting policies aimed at balancing the

Asian economies' roles, especially China's, given their negative effect on the regional

industry. Thus, the States must decide on which sectors to favor and which ones to

relegate. In the case of Chile, the choice was an open model that benefits the primary

export sector and relegates the industrial one. As regards Argentina, there is still a

struggle: on the one hand, to favor the agricultural sector – main source of currency

income–, on the other, to go on protecting a wide industrial sector that, although solid

in some areas, is still developing.

The lack of innovation in the productive structure of both countries limits the possibilities

of economic growth and development since the access and advance of new technologies

are essential, not only for productivity and international competitiveness but also to avoid

the progressive increase of the technological gap and, as a consequence, of the conditions

of structural dependency.

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Foreign policy, development, and international strategies towards Asia Pacific:

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Florencia Rubiolo, Paola Andrea Baroni

In this sense, the construction of joint policies at a regional level is hindered by these

differences because the underlying interests which support states' decisions are opposite.

As long as South American leaders do not consider the consolidation of an extended

regional sphere a priority for the economic and trade insertion, so as to establish extra-

regional links –such as FTAs or others–, it is hard to foresee a joint way to respond to

the negative effects produced by the presence of China and, increasingly, of other big

Asian countries in the region's economies. The hazard is the intensification of an insertion

strategy dependent on the export of products with zero or little added value and the

gradual loss of international importance because of the growing dependence.

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