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Montevideo, March 29th 2023 - 07:21 UTC



Chile and EU agree on a new trade association which eliminates most tariffs and promotes investment

Wednesday, December 21st 2022 - 09:48 UTC
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Chilean foreign affairs minister Antonia Urrejola pointed out the new agreement includes areas absent in the current accord Chilean foreign affairs minister Antonia Urrejola pointed out the new agreement includes areas absent in the current accord

The European Union and Chile reached an understanding to modernize their successful twenty years old trade association agreement, which is part of the EU strategy to diversify its suppliers of critical commodities for the green transition and at the same time cut its dependence from China.

“Our agreement was signed twenty years ago, but the world has much changed since then. With the new generation Frame accord we have opened a window of opportunities for our citizens, companies and the planet.” said Valdis Dombrovskis, economic vice-president of the European Commission.

Chilean foreign affairs minister Antonia Urrejola said the new text includes areas that were not considered or only mentioned lightly in the current agreement, such as “the promotion of democracy, human rights, fundamental freedoms, sustainable development and especially gender equality.”

The new accord which still has to be considered by the EU parliament followed by the legislatives of the 27 members, virtually eliminates all tariffs in goods transactions and opens markets for contracting public works plus reciprocity for European and Chilean investors, among other issues.

But for the EU one of the outstanding elements is the diversification of commodity providers, which are crucial to advance in the green transition, such as lithium, of which Chile is one of the world's main producers.

The new accord guarantees EU companies non discriminatory access to Chilean lithium, copper and hydrogen, which “will really help EU to diversify its resources and cut dependency from China,” according to the EU team which does not want a repeat of the Russian fossil fuels situation.

Dombrovskis said that advancing towards a green economy demands different supply sources, and “our accord with Chile fits in this strategy of diversification, and also as a model for future agreements.”

However before the accord is implemented both sides have to advance in the legal aspects of the documents which is estimated will extend well into 2023, and the official signing ceremony can be expected for the austral spring.

As to the trade agreement Chile will have greater access to the EU with different meats, beef, pork, chicken, mutton, and the EU with dairy products and protection for origin denomination of certain kinds of cheese and wines.

EU estimates that with the new Frame agreement most goods will be tariff-free and exports to Chile have the potential to increase to US$ 4,5 billion. According to the bloc, the current EU/Chile Association Agreement saw bilateral trade grow 163% between 2002 and 2021.

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