MercoPress. South Atlantic News Agency

China/Chile free trade agreement becomes effective

China and Chile's free trade agreement, the first even signed with a Latinamerican country and which is expected to eventually exempt 97% of all trade goods from import tariffs, became effective Sunday October first.

According to the terms of the agreement China lifts tariffs on 2,834 products imported from Chile, including copper. Chile will give duty free status to 5,891 commodities from China, including vegetables, fruits and mechanical and electrical equipment.

However tariffs remain on another 7.000 items from both sides and are expected to be addressed in further negotiations. China and Chile expect bilateral trade to keep increasing at an even faster step than in the last five years, 20% annually and 30% in 2005.

China is Chile's second largest trading partner, with copper contributing to 30% of China's imports from Chile. Statistics from the International Copper Association (China) show that 50% of China's imported copper comes from Chile. Chinese factories that process and consume copper will benefit from the tariff cuts said representatives from the copper industry.

China and Chile initiated free trade talks in November 2004 and it took five rounds of negotiations before a consensus was reached on November 18, 2005.

The Ministry of Commerce said bilateral trade commodity trade volume reached 7.13 billion U.S. dollars in 2005, with China's imports standing at 2.15 billion U.S. dollars and Chile's imports hitting 4.98 billion U.S. dollars. Chile also became in 2005, China's Latinamerican most important trade partner behind Brazil and Mexico, according to official figures from the Chinese Ministry of Commerce.

Chile has free trade agreements with the European Union, Canada, South Korea, Mexico, China, EFTA, United States and Central America. Chilean authorities hope to sign an agreement with Japan in 2007, are holding talks with Malaysia; with India, for a limited understanding and are holding talks for an Economic Association with Singapore, Brunei and New Zealand.

China has trade agreements with Australia, New Zealand, Pakistan and the Association of Asian Southeast Nations.