Maritime transport liberalization and the challenges to further its implementation in Chile

The liberalization of Maritime Transport is one important element to increase the export competitiveness of a country. In fact, studies remark that, for some countries, the effective rate of protection by the costs of transport is much higher than that of tariffs. One of the most relevant elements in the determination of the costs of maritime transport refers to the efficient management of ports. The global trend towards trade liberalization and integration and economic interdependence led Latin American countries to opt for programs of economic reforms that incorporated the participation of domestic and foreign private agents in sectors of the economy that were previously reserved to the state. Among the most significant of these was the reform of ports. In this area, the most vital seems to be to secure that the competition potential among operators is maximized. In the case of Latin American countries one should consider three factors which concur to the successful implementation of a public/private financing for the ports: a) seeking capital is very important for the financing of investments, since many governments have restricted budgets due to the debt service payments; b) the rapid economic growth has generated new traffic that demands new facilities and more efficient services and, finally, c) the strong competition makes indispensable the improvement of port facilities because otherwise the ports can be displaced by their rivals. Another problem that affects maritime transport efficiency refers to the regulation of the cabotage traffic. Restrictions to cargo and passenger transport inside the national territory are part of the maritime legislation of nations on a worldwide scale. Several countries still restrict this type of transport to the ships with national flags, and they establish minimum percentages for crews of national origin. Nonetheless, some countries have liberalized cabotage completely. The liberalization of cabotage traffic brings advantages in terms of: smaller freight costs, better use of idle capacity, higher frequency, higher competition, needlessness of the waivers and more maritime cargo transportation. Although Chile has been at the forefront of the process of trade liberalization this process has not been without difficulties. In the case of maritime transport Chilean law and regulations have been extensively modified and liberalized. The objective has been the increase of efficiency and the attraction of foreign direct investment. However, there are limits to this process that refer specially to questions of sovereignty, security and simple protectionism. In the area of cabotage and pilotage the evolution of maritime trade liberalization has been an example of the challenges that still face the liberalization process in Chile. The present document will briefly review the modifications implemented in the Chilean maritime legislation and the difficulties that remain for a more efficient public sector management. Taking into consideration the transformations that happened on a global scale, it discusses some aspects of the maritime transport sector and suggests areas of policy action that may assist the construction of a common regional maritime integration regime.