European Union and Chile update trade association agreement

After five years of negotiations to modernize the trade agreement that governs their bilateral relations, the European Union (EU) and Chile announced on December 9 that they had reached an Advanced Framework Agreement. The treaty updates and establishes new criteria on environmental, social, and gender issues and is emerging as a model to be followed in the EU’s negotiations with Mercosur.

The text is currently undergoing legal scrutiny and translation before it can be signed and entered into force, which is expected by the end of the year.

The treaty will expand the percentage of Chilean products that have access to some tariff reduction from the EU from 94.7% to 99.6%. There are 918 products with improvements: 653 in tariff reduction schedules; 140 in “improved” quotas such as meats, garlic, tuna preparations, a line of confectionery, and chocolates; and 125 products that could now enter percentages with zero tariffs.

In the area of energy, measures are established to facilitate trade and exchange, through public policies, in the transition to a green economy where access to raw materials, such as copper and lithium, and clean fuels, such as green hydrogen, are crucial.

The agreement will allow Chilean SMEs better access to the European market by modernizing the principles and obligations regarding public procurement, allowing access to the same treatment as a European supplier. For their part, European companies will find it easier to provide services in Chile after the purification of public contracts related to the concession of goods, services, and works. In addition, the text states that European investors in Chile will have the same treatment as Chilean investors in Europe.

Greater facility for Chilean business people to enter European territory to provide services, hold business meetings, and attend conferences due to utilizing clear and more favorable rules.

Sustainable development and the environment appear as relevant points in the agreement. Standards from the Paris Agreement on environmental compliance and protection are incorporated, as well as the parties’ commitment to International Labor Organization standards.

A specific chapter on trade and gender, with commitments to eliminate discrimination against women.

Digital trade, which was not covered in the previous agreement, makes cross-border recognition of electronic signatures and consumer protection in digital commerce, among other measures.

No less important is the commitment made by Chile and the European Union to place at the center the values shared in this cooperation alliance, such as human rights, the rule of law, peace, justice and international security, sustainable development, and a renewed focus on science, technology, and innovation.

The European Union is Chile’s third-largest trading partner and largest foreign investor. Chile’s trade exchange with the EU totaled more than US$ 19,764 million during 2021, with a growth of 27.2% over the previous year.

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