Just over three years ago, the United States and Chile signed a free trade agreement, opening up markets and allowing for greater prosperity in both countries. Now, Chile has signed a free trade agreement with China, the first between the Asian giant and a Latin American country, bilaterally opening up markets on both sides. It will lead, just as it has in the past, to greater prosperity for both.

China and Chile have signed a free-trade agreement, Beijing’s first in South America.

The deal will give China better access to Chile’s extensive natural resources, such as copper, while Chile will be able to target the vast Chinese market.

Chilean president Michelle Bachelet said the deal was a “milestone” in the country’s economic expansion.

China is rapidly increasing trade deals in the developing world to help fuel its surging demand for raw materials.

Chile is an ideal free-trade partner for Beijing, as while China is now the world’s biggest consumer of copper, Chile is the largest producer of the metal.

“We are convinced that a treaty of this nature will be to the benefit of most Chileans,” said Ms Bachelet.

The treaty will free 92% of Chile’s exports to China from customs tariffs, and remove Chilean tariffs on 50% of China’s exports.

Other Chilean exports will remain subject to ongoing tariffs for between five and 10 years.

Chilean exports to China totalled $4.6bn (????2.4bn) last year, while those moving in the other direction amounted to $2.5bn.

Chile uses free trade and the business that comes with it to finance the expansion of its social programs, making it not only one of the most economically powerful countries on the continent but also the one that looks out for its people the best. It’s not as if Chile is just giving its resources away; the deals are good, and in this case, the deal looks to be the best for Chile.

While the world’s powers like the United States, China, Russia, etc. are all busy competing with each other, smaller countries like Chile and Singapore have figured out how to turn themselves into the middle-man. Their foreign policies are relatively neutral and their markets are open, making them ideal centers for commerce. The money flows in, the people become richer, and the government has money to finance programs which further improve the country.

Contrast this to the protectionists, like Hugo Chavez, whose money comes from oil, but instead of using it for the better of his country he uses it for political games. His argument is that free trade means burglary and slavery. In reality it means prosperity and freedom when done right. It means good relations and peace.

It seems that slowly but surely both the big guys and the small fries are learning the lessons of the past. Powers such as the United States have realized that bullying unfair deals only leads to resentment and uncertainty, while the middlemen like Chile have realized that they can make a killing. What must happen now is that other countries must learn these lessons and formulate similar policies that allow for the maximization of their potential.

Small countries aren’t just for destructive proxy wars anymore. Now they’re the center of trade competition, and they are the ones who benefit the most from it. This is the future.