Signed on March 8, 2018 in Santiago de Chile, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam (the UK also intends to pursue accession to the CPTPP). Once fully implemented, CPTPP will form a trading bloc representing 500 million consumers and 13.5 percent of global GDP. According to the Peterson Institute for International Economics (PIIE), CPTPP members pledged to eliminate almost all tariffs and import charges on each other’s products and accepted common obligations on food regulations, environmental protections, the digital economy, investment, labor, and financial services, among others.

Chile has ratified the CPTPP, which will enter into force for the Andean country on February 21, 2023, according to The Star. Chile’s market-oriented policies general respect for property rights have created opportunities for foreign investment. According to the World Investment Report 2022 published by UNCTAD, FDI flows to Chile rose by 32 percent to USD 13 billion (compared to USD 8.4 billion in 2020). Chile also ranks high in GDP per capita among Latin American countries.

Ninety percent of Chile’s foreign trade is conducted by sea, according to the ITA, and Mordor Intelligence forecasts Chile’s freight and logistics market to register a CAGR of over five percent in the period 2023-2028. ITA also reports that the Outer Port in San Antonio (Puerto Exterior) and Terminal 2 of the Port of Valparaíso are planning expansion projects to increase capacity.

In the medium to long term, and barring unforeseen political instability, the CPTPP regime is likely to boost trade volume and also increase demand in Chile for logistics/industrial real estate—a sector which is already supply constrained. Santiago’s industrial sector ended H2-2022 with a zero-vacancy rate and because of this vacancy absence, companies are signing contracts for under construction projects, according to research from Cushman & Wakefield. During H1-2022, of the 188,905 sq. m. forecasted to be added to the market, 93 percent had already been leased, according to Cushman.

Last Updated on February 17, 2023 by Ramin Seddiq