Chile and EU agree on a new trade deal that eliminates most tariffs and promotes investment

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.

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.

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.

Source: Mercopress

To read the source material, please access: https://en.mercopress.com/2022/12/21/chile-and-eu-agree-on-a-new-trade-association-which-eliminates-most-tariffs-and-promotes-investment

Sharing is caring!