The US-China trade war drama hit a bump in the road last week as Chile, the host country of the Asia-Pacific Economic Cooperation summit (APEC) canceled the meeting scheduled for Nov. 16-17 in Santiago. The reason is the continuing protests and riots in the streets of Santiago brought on by rising public transportation fares and cries of inequality.
On October 18 mass protests and rioting broke out in Chile’s capital city over a metro fare hike of about 4% which went into effect on October 6. Twenty people have been killed and hundreds have been injured during these riots. The number of people protesting is substantial by any standard – over a million took to the streets of Santiago on Friday. The protests turned into riots with looting, arson and other acts of violence. The march held Friday is reported to have been peaceful.
President Sebastián Piñera canceled the fare hike and met the demands of protesters that some cabinet members be replaced, along with an economic package with raises in wages and pensions. Nonetheless, new protests continued, the violence has escalated, and now there are calls for the country’s constitution – leftover from the Pinochet era – to be rewritten. Pinera canceled the APEC summit Wednesday citing the public unrest and a need to re-establish order in Santiago.
This has been a very difficult decision, a decision that causes us a lot of pain, because we fully understand the importance of APEC and COP-25 for Chile and for the world, President Sebastian Pinera said in a statement.
A president must always put his compatriots above all else, he added. Our main concern is re-establishing public order, our citizens safety and social peace along with pushing through a social agenda to respond to the main demands of our citizens.
Pinera made the right call, of course. A city can’t hold an international economic summit with a million people protesting in the streets and the potential of deadly riots breaking out. Twenty world leaders were expected to attend APEC, including President Trump. Trump hoped to sign a major trade agreement with Xi Jinping – a ‘phase one’ interim trade deal. The cancelation was a surprise, given the short notice, and points to continued instability in Chile. Chile’s stock market took a hit upon the news.
APEC being canceled would be a sign the government is struggling to handle [the protests], and it needs to focus its resources on it. Its due to the fact that the protests have not died down, and the attempts by the president to quell them have failed, said Quinn Markwith, Latin America economist at Capital Economics.
Analysts initially had expected Chile to contain the unrest, since Chile is seen as the most stable and economically viable country in the region. The protests have also been accompanied by strikes, which have hit the mining sector.
Chile is also the worlds largest copper miner, and already in September production dropped 1.5% compared to a year ago. October production could be hit harder due to strikes. Copper prices are up about 2% since the protests began.
Last Monday, before the cancelation on Wednesday, President Trump said negotiations with China were running ahead of schedule and expressed his hope of signing an agreement with President Xi at the APEC summit. The deal will benefit American farmers, in particular, who are feeling the effects of the trade wars and tariffs levied by the Trump administration.
We are looking probably to be ahead of schedule to sign a very big portion of the China deal, and well call it Phase One but its a very big portion, the president told reporters. That would take care of the farmers. It would take care of some of the other things. It will also take care of a lot of the banking needs.
Washington and Beijing have been engaged in a trade war that has led to the countries slapping tariffs on each others imports, but the Office of the US Trade Representative said both sides have made headway on specific issues after a recent round of talks.
Beijing announced earlier this month that it would buy up to $50 billion worth of US agricultural products if the Trump administration would back off imposing more tariffs on Oct. 15.
A new site for a trade deal signing hasn’t been selected yet.
China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances. The new location will be announced soon. President Xi and President Trump will do signing!
— Donald J. Trump (@realDonaldTrump) October 31, 2019
At the same time the APEC summit was canceled, President Piñera also canceled a UN Climate Conference (COP25) in Santiago scheduled for early December. As he made the announcement, a group of 36 young environmentalists who set off from Amsterdam on October 2 in a sailboat, were about half-way into their voyage to Santiago. Visions of climate alarmist Greta Thunberg’s trip via a multi-million dollar ‘green’ sailboat earlier this year come to mind. Given the change in plans, the group known as the Sail to the COP group, are sailing on to Belem, Brazil instead of simply turning back. It sounds like the young activists have plenty of time on their hands.
“After the initial shock and sadness the news brought, everyone came together determined to continue what we started: putting the climate impact of aviation on the international agenda,” read a statement from the group.
With Costa Rica and the city of Bonn, Germany, floated as potential alternative sites for COP25, the activists say that sailing to Brazil means they will be able to attend the eventual summit.
“If the COP would be in Bonn in early 2020 we can still be on time and meanwhile learn from sustainable travel ideas in South America,” the group said.
If it takes place in Costa Rica they could change course and head to Central America, added the statement.
In the meantime, let’s hope that the Chilean president is able to restore peace in Santiago and get business back to normal. Chile has the highest GDP in the region. Investors are uneasy about the calls for a new constitution. If the socialist demands of Chileans, especially young Chileans too young to remember the days of Pinochet, overrule the current economic climate in the country, Chile runs the risk of going the way of Venezuela.