MercoPress. South Atlantic News Agency

Chile-China sign free trade agreement November

Chile and China successfully finished this week the round of negotiations for a free trade agreement which is scheduled to be formally signed by President Ricardo Lagos and Chinese President Hu Jintao next November in South Korea.

Chilean Foreign Affairs minister Ignacio Walker broke the news emphasizing it's the first agreement of its kind to be signed by Beijing with a Latin American country.

Once the agreement becomes effective 92% of Chilean exports, mainly copper, cellulose, fruit, beef, fish and wines, will enter China with zero tariffs. "This is very good news for Chile particularly with prospects of generating more and better jobs", said Mr. Walker recalling that 36% of Chile's trade is with Asia.

Currently Chile sells China 4 billion US dollars and purchases 2 billion US dollars.

"By 2008 we expect to double the volume of trade. China is the fastest growing economy in the world so we are particularly pleased with the agreement. We are the first country in the hemisphere in reaching a free trade agreement", said Mr. Walker.

As to sensitive produce for the Chilean economy, Mr. Walker explained that tariff reductions for specific cases are contemplated in a ten year period and "152 Chinese products mainly from the textile sector have been excluded".

Apparently in the agreement Pisco (Chile's national drink) is recognized as originally from Chile, a significant support in Santiago's litigation with neighbouring Peru.

Contrary to other free trade agreements signed by Chile, the one with China is exclusive to market access for produce, leaving the door open for future negotiations involving investments and services.

Chile' president of the Agriculture Society, SNA, Luis Schmidt Montes, who was in Beijing for the last round of negotiations admitted the farming sector will most benefit from the free trade agreement with China, in spite of his initial reluctance when talks began in January 2005.

Fruit, forestry, dairy products, pork, poultry, are some of the "sub-sectors which will most benefit, and this means more jobs and work for Chileans. We should all be happy", said Mr. Schmidt Montes.

Patricia Perez from the Export Manufacturers Association also expressed satisfaction pointing out that not only will Chile "increase exports", but could become the launching pad for strategic agreements to distribute Chinese produce in Latinamerica.

President Lagos said that over 90% of products will undergo an immediate complete reduction of tariffs, once the agreement is signed.

The signing ceremony will take place in South Korea during the Asia-Pacific Economic Cooperation, APEC, forum next November 18/19.