Brazil-Chile free trade agreement to enter into force

The new Brazil-Chile free trade agreement, signed in the final days of Michel Temer’s presidency and approved by the National Congress in September last year, will enter into force next week. The presidential decree enacting the treaty is scheduled for Tuesday, January 25th, according to the Ministry of Foreign Affairs.

Considered the most modern of Brazil’s trade agreements, it should open the Chilean market to companies interested in public tenders in the country and reduce customs processing costs, allowing for greater flexibility in exports and imports.

In 2021, Chile became the fifth largest destination for Brazilian products. As of now, Chile only falls short of China, the European Union, the United States, and Argentina. Its main distinguishing feature is the breadth of its export agenda, which ranges from oil to automobiles, from beef or chicken to heavy machinery.

The Brazilian National Confederation of Industry (CNI) highlights that unlike other markets where there have been losses to competitors, the share of “made in Brazil” goods in Chile has gone from 8.4% to 8.6% in the last ten years.

The Economic Complementation Agreement (ACE) No. 35 of 1996, the first between Mercosur and other nations, completely liberalized trade between the two countries. In two decades, it eliminated the incidence of all import tariffs. What was missing, however, was a broader opening process that went beyond tariff issues.

“The expanded Brazil-Chile free trade agreement is the most modern we have with countries in the region and the model we would like to replicate with other partners,” says Ambassador Pedro Miguel da Costa e Silva, Secretary of the Americas at Itamaraty and a key trade negotiator. “It served as a learning experience and facilitated the inclusion of new topics in other negotiations,” the diplomat adds, citing the Mercosur-Canada talks as an example.

The new treaty covers 17 areas, including services, public procurement, good regulatory practices, sanitary and phytosanitary barriers, investments, and protection of geographically indicated products (such as cachaça and pisco).

According to the ambassador, one of the agreement’s main benefits is the trade facilitation section, which is referred to as “WTO Plus” – that is, it goes above and beyond the World Trade Organization’s minimum commitments. This entails the interoperability of foreign trade portals and the mutual recognition of economic operators authorized by each Federal Revenue Service, which are exporters and importers with the “highly reliable” seal, and thus have greater agility in the release of international cargo.

Fabrizio Panzini, CNI’s manager of International Integration, points out that two aspects of the agreement create more business opportunities. One example is the government procurement chapter, which will allow Brazilian companies to compete in Chilean public tenders on an equal footing with local competitors.

According to Panzini, this opens up new opportunities in industries such as pharmaceuticals, civil construction, port services, electrical machinery, and information technology.

The second point he emphasizes is “pre-listing,” which allows exporting establishments to operate without individual prior inspection. This can expedite slaughterhouse accreditation to sell meat to Chile. This prevents the importer from using this enabling power as a potential technical barrier.

However, not all economic agents are pleased with the agreement’s entry into force. The elimination of international roaming fees between Brazil and Chile has been criticized by cellphone operators.

Source: Valor Econômico

To read the full original article please visit:

https://valor.globo.com/brasil/noticia/2022/01/18/acordo-brasil-chile-comeca-a-valer.ghtml

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