Australia and Chile have a strong bilateral relationship, based on many shared interests and cooperation in a range of international fora. Both countries are major mining and agricultural economies, and share an Asia-Pacific trade focus. Bilateral free trade, double taxation and social security agreements underpin the growing trade and investment relationship between our two countries.
The Chilean government had consular representation in Australia as early as 1899 in Newcastle. Diplomatic ties were established when the first Chilean chargé d'affaires en titre presented credentials in Canberra on 5 July 1945. After several periods of suspension, the mission was upgraded in September 1969 to an Embassy and an Ambassador was appointed. Similarly, an Australian Legation in Chile was established in August 1946 and after a period of suspension, Australia announced the decision to re-establish a mission in the form of an embassy in Santiago in June 1968. 2015 marks the 70th anniversary of diplomatic relations with Chile.
Chile is a long, narrow country on South America’s southern Pacific Coast, extending 4,270 km in length and averaging 177 km in width. It encompasses approximately 2,300 islands, including Easter Island and spans from the Strait of Magellan, which separates South America from Antarctica, to the arid north dominated by the Atacama Desert. Chile is slightly smaller than New South Wales in terms of total land area. The high, snow-capped Andes mountain range, with peaks reaching over 6,000 metres, runs the length of Chile, creating a natural 6,691 km border with Argentina to the east and a 942km border with Bolivia in the far north-east. Chile also shares a short 168km land border with Peru. Chile’s geography ranges from arid desert in the north, temperate agricultural in the central regions, to glacial ice fields in the southern Patagonian region. The etymology of the word ‘Chile’ is subject to many theories, including but not limited to: the name of a bird in a local indigenous language; the name of a local chieftain, ‘Tili’, which was pronounced ‘Chili’ by the Inca; or a local word for the ‘end of the world’.
Chile’s population is approximately 17.8 million (2014 est.), comprising 89 per cent of non-indigenous and 10 per cent indigenous peoples. Roman Catholicism is the main religion (67 per cent) with other Christian groups (17 per cent) and no-religion (12 per cent) the main minorities. Spanish is the official language.
Following the indigenous Araucanian people’s successful resistance against the first Spanish invasion of Chile in 1535, Pedro de Valdivia began the final Spanish conquest in 1541 and founded the city of Santiago. Chile achieved independence from Spain in 1818 after the Spanish were defeated by the Army of the Andes, led by Jose de San Martin and Bernardo O'Higgins. The War of the Pacific, which took place from 1879-83, involved Chile, Bolivia and Peru. The conflict grew out of a dispute between Chile and Bolivia to control part of the Atacama Desert, an area considered to contain valuable mineral resources. Peru’s interest stemmed from its long running tensions with Chile for hegemony on the Pacific Coast and as such it supported Bolivia in its war against Chile. A truce was ultimately drawn between Chile and Bolivia, following defeat and loss of life, in which control of the Bolivian Coast was given to Chile. This arrangement was made permanent in 1904.
In modern times, the armed forces, under the leadership of General Augusto Pinochet, staged a coup on 11 September 1973, overthrowing the left-wing government of Salvador Allende. President Allende died in the Presidential Palace on the same day. The military junta suspended the constitution, dissolved congress, imposed strict censorship and banned all political parties. During a military dictatorship lasting 16 years, thousands of political opponents were arrested, tortured and/or executed, or forced into exile. In December 1989, Chile returned to democracy, with Christian Democrat Patricio Aylwin winning the presidential election. President Aylwin’s administration, as well as successive governments, have maintained Chile’s liberal economic policies. Chile is the only South American nation to have acceded to the OECD.
President Michelle Bachelet, of the Nueva Mayoría coalition (comprised mainly of centre-left political parties), was elected President on 15 December 2013 defeating rival Evelyn Matthei in a second-round runoff. President Bachelet took office on 11 March 2014. This is her second term, having previously served as president between 2006 and 2010.
President Bachelet’s administration has adopted a wide-ranging reform agenda. While Chile has one of the lowest poverty rates in Latin America, inequality remains significant. The focus has been on implementing redistributive policies including tax and education reforms, and other measures intended to address income inequality.
In September 2014, the government passed a comprehensive tax reform aimed at tackling inequality, the structural deficit and raising public funds for an ambitious education reform. A package of bills to reform the education system, aimed at strengthening public schools and promoting free access to higher education, is being debated in Congress. Two bills limiting profit-making and arbitrary selection in public schools and ensuring free primary and secondary education have already been enacted and more bills are expected to be passed in 2015. President Bachelet has also flagged amendments to the constitution, which despite many amendments date back to the era of military leadership under Pinochet.
System of government
Under Chile's constitution, the president, as head of state, serves a four-year term and is unable to serve a second consecutive term. In the bicameral congress, Chile's Chamber of Deputies and Senate have 120 and 38 elected members respectively. Deputies sit in office for four years, while Senators are elected to serve an eight-year period.
Chile's important regional partners are Argentina, Brazil, and the 'Pacific Alliance' members, Colombia, Mexico and Peru. The Pacific Alliance economic integration process, covering goods, services, people and capital, offers potential economic opportunities beyond Chile's current bilateral FTAs with these countries. For example, Pacific Alliance members have agreed to integrate their stock exchanges to form the second-largest stock exchange in Latin America.
Chile has maintained consular, but not diplomatic relations with Bolivia since 1978 and the War of the Pacific, which has led to a long-term border dispute. Bolivia has sought to regain a coastline, including by bringing a claim against Chile before the International Court of Justice (ICJ) in 2014. Hearings regarding this claim commenced at the ICJ in May 2015.
On 27 January 2014, the ICJ issued its final judgment over a longstanding maritime border dispute between Chile and Peru. Despite requiring Chile to cede territory, both countries have agreed to abide by the ruling in what some see as a cause for optimism regarding bilateral relations between the two nations. Chile is an associate member of Mercosur (the Customs Union comprising Argentina, Brazil, Paraguay, Uruguay and Venezuela). It is also an associate member of the Andean Community (comprising Bolivia, Colombia, Ecuador and Peru).
Chile is an active participant in major international forums, including the United Nations, Organisation of American States (OAS), Asia Pacific Economic Cooperation (APEC), Organisation for Economic Development and Cooperation (OECD), International Monetary Fund (IMF), World Bank, Inter-American Development Bank, World Trade Organisation (WTO), Union of South American States (UNASUR) and Community of Latin American and Caribbean States (CELAC). Chile served as a non-permanent member of the United Nations Security Council from 1996-97 and 2003-04, and is a currently sitting for the period 2014-15.
Chinese economic and trade relations with Chile are growing strongly, particularly following the entry into force of the Chile-China FTA in 2006. China is now the largest source of imports and largest destination for Chilean exports globally. In 2014, trade between Chile and China totaled US33.5 billion. Chile and China upgraded relations to a "strategic partnership" in June 2012. Chile was the first South American country to establish diplomatic ties with China in 1970, the first country in South America to sign off bilaterally on China's accession to the WTO and the first to conclude an FTA with China.
Chile's trade focus in Asia is supported by a growing list of free trade agreements and investment treaties, including with China, Hong Kong, Japan, Malaysia, Republic of Korea and Vietnam.
Chile has strong political, economic and trade relations with the United States (US). Bilateral trade has more than doubled since the US-Chile Free Trade Agreement (FTA) entered into force in 2004. The United States is Chile's second-largest trading partner , and the largest foreign investor in Chile, with two-way trade totaling US23.5 billion in 2014 and stock of US investment in Chile totaling US29 billion.
As members of the Cairns Group, Australia and Chile work to ensure that agricultural trade reform issues are a priority in the World Trade Organization (WTO) Doha Round. Both are among the countries negotiating for the Trans-Pacific Partnership (TPP) and the Plurilateral Services Agreement. In 2012, Australia became an observer of the Pacific Alliance (Chile, Colombia, Mexico and Peru) and commenced a senior officials' dialogue with the Community of Latin American and Caribbean States (CELAC) during Chile's pro-tempore presidency of both organisations. Australia and Chile cooperate in APEC to promote trade and investment liberalisation and facilitation in the Asia-Pacific region. Both countries also share common interests in regional and global issues ranging from the environment, the Antarctic and illegal fishing, through to disarmament and regional security.
The first known Chilean to arrive in Australia was former president and political exile, General Ramon Freire, who arrived in 1838. Australia's third Prime Minister, John Christian (Chris) Watson, was born in the Chilean port city of Valparaiso in 1867 and emigrated to Australia, via New Zealand, in 1886. Chileans in Australia numbered 90 in the 1901 Census and grew slowly until the late 1960s. Numbers increased more rapidly from the 1970s onwards, with the 2011 Census recording around 25,000 Chilean-born people in Australia. Australia's Chilean diaspora now includes second and third generation Chilean Australians. More information on Australia's Chilean population can be found at the Department of Social Services’ Community Information Summary page.
In December 2014, the inaugural Australia-Chile Economic Leadership Forum (ACELF) was held in Santiago with the aim of exploring new ways to expand and deepen the Australia-Chile bilateral relationship. The event attracted high-level public and private participation from both countries, including Australia’s Minister for Trade and Investment, Andrew Robb AO MP, the President of Chile, Michelle Bachelet, former Chilean Presidents Ricardo Lagos and Eduardo Frei Ruiz-Tagle, as well as the Chilean Ministers for Foreign Affairs, the Economy, Mining and Energy.
In 2001, the Australian Government established the Council on Australia-Latin America Relations (COALAR) which aims to enhance commercial, political and cultural relations between Australia and Latin America. Since its inception, COALAR has been active in promoting business, education, tourism and cultural links between Australia and Latin America. For updates on COALAR activities and information on the annual grants program, follow COALAR on Facebook.
People to people links
Australia is an attractive education destination for Chileans. In 2014, there were over 2,300 Chilean students studying in Australian educational institutions making Chile the third-largest source of international students from Latin America, after Brazil and Colombia.
Australia's bilateral education relationship with Chile is well developed. In July 2015, Foreign Minister Julie Bishop MP signed a Memorandum of Understanding on Education with Chile’s Vice Minister for Education Valentina Quiroga in Santiago. Additional collaborative agreements exist between Australian education and training institutions, the Chilean Government and local education providers, covering scholarships, student exchanges and double degree arrangements. Australia is among the top destination countries for scholarship students funded by the Chilean Government's Becas Chile Scholarship Program, under which more than 760 students have been sent to study in Australia since 2009. The program includes postgraduate, undergraduate and vocational education and training scholarships. New opportunities are emerging for Australian education and training providers in areas such as mining, energy and water management, where Australia has research and teaching strengths and Chile has human-capital development needs. Greater engagement between government, researchers, education and training providers and industry is taking place as a result.
Short-term visitor numbers have been growing since Qantas began direct flights from Sydney to Santiago in March 2012, in addition to LAN services via Auckland, which commenced in 2002. Since December 2014, Qantas operates four direct flights a week on the Sydney-Santiago route; this will increase to five non-stop services each week from December 2015. In February 2015, capacity was doubled to 4,000 seats per week each way under an expanded bilateral air service agreement. Chilean tourism authorities recorded the arrival of 42,133 Australians in 2014.
In September 2011, Australia introduced an e-visa for Chilean tourists visiting Australia. The e-visa processing system has benefitted relatives of the large resident Chilean community in Australia and facilitated a greater flow of Chilean tourists to Australia. In July 2005, Australia and Chile signed a MOU establishing a work and holiday visa program. This program began with 100 available places, and has increased to 1,500 places, reflecting the popularity of the program. Under the program, young Chileans and Australians with appropriate qualifications and language skills can explore living and working in the other country. Also, since October 2014, Chileans transiting Australia for a period of eight hours or less do not require a visa.
From 2010 to 2014, Australia provided $100 million in official development assistance to Latin America, including 250 Australia Awards scholarships. Chile received 23 Australia Awards Scholarships, while the Australia Awards Fellowships program remains in place of which 14 have been awarded to Chileans including in the current round. The regional development assistance program has now closed, though some activities that have already been funded will continue until 2017. Following the 2010 Chile earthquake and tsunami, Australia provided $5 million for the immediate emergency relief, and helped Fundación Integra to reconstruct and restore 32 child care centres.
The Australian Embassy in Santiago manages a Direct Aid Program (DAP), which provides financial support to a broad range of projects in Chile, including community development projects and those designed to address challenges in vulnerable communities.
At a glance
For the latest economic data refer to Chile country fact sheet [PDF 31 KB]
Chile retains an open economy with a liberal trade regime, including a floating exchange rate, a rules-based counter-cyclical fiscal policy, and inflation-targeting, all geared towards reducing economic volatility. The Chilean government's strong fiscal position has allowed for the repayment of debt and, until recently, placed the government in a net creditor position. In recent years, the strong performance of the mining sector, combined with economic growth and a favourable domestic investment climate contributed to a reduction in unemployment to an estimated 6.4 per cent in 2014 (from over 10 per cent in 2004). In 2014, real GDP growth fell to 1.8 per cent due to lower commodity prices; however it climbed back up to 2.4 per cent in the first quarter of 2015 and is expected to grow further into 2016.
As a major exporter of copper and other commodities, Chile was significantly affected by the global financial crisis. While the OECD has noted that Chile remains vulnerable to a sharper than expected economic downturn because of the dominance of copper in its exports (approximately 50 per cent), the underlying strengths of the economy, its strong public-sector financial position, flexible exchange rate regime and relatively well-capitalised and well-regulated banking sector put it in a better position than many countries to respond to financial uncertainty.
Chile has eliminated most trade distortions and non-tariff barriers. It has a uniform tariff of six per cent, although due to its network of FTAs, the average applied tariff is much less. The Central Bank of Chile maintains an independent monetary policy aimed at maintaining inflation at OECD standards. Privatisation over the past two decades has meant that relatively few state-owned enterprises remain. However, CODELCO, the Chilean National Copper Corporation, Chile's largest company, remains state-owned.
Chile's strong push to engage economically with the Asia-Pacific region and to build strategic alliances along the eastern seaboard of South America is reflected in its busy FTA agenda. Chile has 25 preferential trade agreements in place, including a partial-scope agreement with India. Chile participates in the Trans-Pacific Partnership negotiations.
Bilateral economic and trade relationship
Chile and Australia share a dynamic and growing economic and trade relationship. Chile is Australia's third-largest trading partner in Latin America, with two-way goods and services trade totalling $1.211 billion in 2014. Merchandise exports to Chile totalled $267 million in 2014 comprising coal, civil engineering equipment and parts, beef, and measuring and analysing equipment. Services exports to Chile totalled $185 million in 2013-14, including education-related travel, and professional, technical and other business services. Australia's goods and services imports from Chile totalled $1.944 billion in 2014, and primarily included copper, other ores and concentrates, wood, and prepared and preserved fruits. Services imports from Chile totalled $227 million in 2013-14, comprising mainly transport and personal travel/tourism. In total, services account for a quarter of total bilateral trade between Australia and Chile. The entry into force in March 2009 of the Australia-Chile Free Trade Agreement (ACIFTA) eliminated tariffs on 97 per cent of existing merchandise trade. As of 2015, tariffs have been eliminated on 100 per cent of existing merchandise trade, except on sugar. The FTA also contains provisions with respect to services and investment liberalisation, and guarantees access to government procurement markets. The ACIFTA was Australia's fifth free trade agreement and the first with a Latin American country.
The Australia-Chile Double Taxation Agreement (DTA) entered into force in February 2013. The agreement provides certainty for Australian and Chilean businesses through a framework for the taxation of cross-border transactions. It reduces barriers to the cross-border movement of people, capital and technology, primarily through reducing withholding taxes on dividend, interest and royalty payments.
The Australia-Chile Social Security Agreement, which came into effect on 1 January 2004, improved social security protection for those who have lived and/or worked in both Australia and Chile. The social security agreement also exempts Australian employers from the need to provide Chile social security support for Australian employees sent temporarily to work in Chile, provided the employee remains covered in Australia, by compulsory superannuation arrangements.
Further information is available on the Australian Taxation Office website or the Department of Social Services website.
Trade and investment
Chile is developing frameworks to encourage more foreign investment and trade, with a view to stable and sustainable economic growth.. Developments in the relationship, such as the ACIFTA and DTA have significantly reduced barriers to trade and investment. The ACIFTA has a review process, and we would welcome advice of any further obstacles faced by Australian companies when doing business in Chile. Austrade's Santiago office and the Australia-Chile Chamber of Commerce work on promoting trade and investment links between the two countries.
Australian companies are significant investors in Chile as the country maintains a relatively open business environment that has made it an ideal base for Australian companies looking to expand into Latin America. Over 120 companies are active in Chile of which over a quarter are listed on the ASX200. More than half of the Australian or Australian-affiliated companies with offices in Chile are related to the mining industry, although this has diversified in recent years. Australia is the sixth largest foreign investor in Chile, worth over US$5 billion. Significant Australian investors include BHP Billiton, Rio Tinto, Origin Energy, Orica (chemicals) and Pacific Hydro (power generation). One of the largest investments is a joint venture between BHP Billiton (57.5 per cent equity) and Rio Tinto (30 per cent) in the world’s largest copper mine, Escondida. The stock of Chilean direct investment in Australia is around US$750 million, making Australia Chile’s 12th largest destination for foreign direct investment
CSIRO Chile was established in October 2013 as CSIRO’s first permanent international office. CSIRO Chile was originally established as a Centre of Excellence in Mining and Minerals Processing (co-funded by the Chilean Government) and has since expanded its research into additional sectors, including water basin management and aquaculture. In 2014, SMI-ICE Chile was established, a partnership between the University of Queensland's Sustainable Mining Institute, JK Tech and Chile’s University of Concepcion, which is funded by the Chilean Government and managed through CORFO, Chile's Economic Development Agency.
Mining and associated services remain significant players in the bilateral economic and trade relationship, however, growing income levels within Chile and a good economic outlook for the country means Australian agribusiness, financial services, energy and water, and education providers will also see significant opportunities in the future.
The 2014 Australia-Chile Economic Leadership Forum (ACELF) raised the profile of Australian business in Chile significantly, and has prepared the ground for further expansion of trade and investment links and institutional cooperation between both countries. The ACELF explored commercial opportunities and challenges for Australian and Chilean businesses in six key industry sectors - mining, energy, water management, education, transport and logistics, and financial services. It promoted the concept of Australia and Chile as platforms for trade and investment in Asia and Latin America respectively, in addition to underscoring the importance of the bilateral trade and investment relationship.
Visit the Austrade website for information on doing business and opportunities in Chile.
High level visits
July 2015: The Minister for Foreign Affairs, Julie Bishop MP visited Chile and met with President Michelle Bachelet, Foreign Minister Heraldo Muñoz, Economy Minister Luis Felipe Céspedes, Mining Minister Aurora Williams and signed an MOU on Education with the Vice Minister for Education, Valentina Quiroga. She also officially opened CSIRO Chile’s offices and delivered the keynote address at the Chile-Australia Chamber of Commerce Australian Business Networking event.
December 2014: The Minister for Trade and Investment, the Hon Andrew Robb AO MP, visited Chile and gave the keynote address to the inaugural Australia‑Chile Economic Leadership Forum in Santiago. Mr Robb met with President Bachelet, former Chilean Presidents Ricardo Lagos and Patricio Aylwin, as well as with the Chilean Ministers for Foreign Affairs, Economy, Mining and Energy.
October 2014: Australia’s Chief of Army, Lieutenant General David Morrison, visited Chile to meet with the Commander in Chief of Chile’s Army and further strengthen the relationship between Australia’s and Chile’s Armies.
September 2014: Chilean Mining Minister, Aurora Williams visited Australia to attend the International Mining and Resources Conference in Melbourne. She also met with government officials in Brisbane and Canberra, and visited the Olympic Dam mine site in South Australia.
February 2014: Vice Chief of the Australian Defence Force, Air Marshal Mark Binskin AC, travelled to Chile to meet the Chiefs of the Chilean Army and Air Force, Senior Naval Officers and the Vice Minister of Defence. This visit was the most senior level Australian Defence Force visit to Latin America in recent memory and laid the foundation for practical and sustainable defence engagement, with a particular focus on the Pacific.
May 2013: Then Parliamentary Secretary for Trade, the Hon Kelvin Thomson, visited Chile on his way to the Pacific Alliance Summit in Cali, Colombia.
March 2013: Then Environment Minister of Chile, Maria Ignacia Benitez, visited Australia.
September 2012: President Sebastián Piñera visited Australia, accompanied by Foreign Minister Alfredo Moreno. Memorandums of Understanding on trilateral development cooperation with AusAID, mining with the CSIRO and biosecurity with the Department of Agriculture, Fisheries and Forestry were signed during the visit.
2012: Then Chilean Minister for Labour and Social Welfare Evelyn Matthei and then Minister for Defence, Andrés Allamand, visited Australia
April 2012: Then Minister for Trade and Competitiveness, the Hon. Craig Emerson, visited Chile.
May 2011: Then Minister for Broadband, Communications and the Digital Economy, the Hon. Stephen Conroy, visited Chile.
2011, 2012, 2013: The Chilean Minister for Mines, Hernán de Solminihac visited Australia and signed MOUs with the Department of Resources, Energy and Tourism and the South Australian Government.
Last Updated: July 2015