In recent days, technical negotiations have been concluded for the modernization of the Association Agreement between Chile and the European Union (EU), a process based on the terms of reference agreed with the latter in 2017, during the last government of former President Michelle Bachelet.
With this modernization, whose negotiation was finalized after 13 rounds of negotiations since 2018, both Parties seek a new, more robust, cutting-edge Agreement that projects the bilateral relationship in political, cooperation and commercial terms. Chile takes a leap forward in its relationship with Europe, strengthening alliances in digital trade and services, benefiting thousands of SMEs; in environmental care and gender equality.
The agreement reached will open up new perspectives and opportunities within the framework of a consolidated economic-commercial relationship, especially in a context of economic recovery, with the European Union.
From an economic point of view, the EU is Chile's third largest trading partner, the leading investor and the third regional destination for our investments. The basis of this relationship has been, precisely, the Association Agreement that came into force in 2003. In the context of reactivating our economy in the post-pandemic period, the modernization of the aforementioned Agreement will be key to increasing our global competitive value and reinforcing a significant commitment to attracting foreign investment to our country while opening up new opportunities abroad for our entrepreneurs.
El Foreign Minister Andrés Allamand, noted: “The technical conclusion of the modernisation of the Chile-EU Association Agreement is the result of a 4-year process that has involved different Chilean governments and EU mandates.
This modernisation addresses the new challenges we face, such as climate change, through the effective implementation of the Paris Agreement, collaborative work on energy transitions, being strategic partners to promote the EU Green Deal and our National Green Hydrogen Strategy, the digital economy, as well as trade and gender, by incorporating a specific chapter on this matter for the first time in any EU trade agreement, among others.".
We are very We are pleased to have achieved this result together with our negotiating teams and Executive Vice-President Dombrovskis and High Representative Borrell. This is an important milestone, with legal issues remaining and still requiring approval by the European Council and Parliament, but it is an important step towards the long-awaited – and necessary – modernisation of an agreement that has been in force for almost 20 years.".
The negotiation of the Agreement, in its Commercial and Investment pillar, was under the responsibility of the Undersecretary of International Economic Relations, led by Rodrigo Yáñez, while its Political and Cooperation Pillar was under the responsibility of the Undersecretary of Foreign Relations, led by Carolina Valdivia.
Amongst the Main benefits What the modernization of this Agreement would mean for Chile, they highlight:
Liberalization of Trade in Goods: The new agreement provides for a significant improvement in the conditions of access to the European market for nearly 900 products from the agricultural, agro-industrial and fishing sectors, bringing the total number of Chilean products with tariff preferences in the EU market to almost 99,6%.
Services: The modernization of this Chapter will allow for updated disciplines that are more ambitious than those contained in the 2003 Association Agreement and will facilitate access to the European Union for thousands of SMEs, being the most ambitious agreement on market access in services signed by Chile. In terms of national regulations, clear and transparent rules will be established for the granting of licenses and licensing procedures in those sectors that require them.
Temporary Entry of Business Persons: The agreement will establish clear and more favorable rules that will allow Chilean business people to enter European territory to provide services or make investments, as well as attend business conferences and meetings. In addition, clear and transparent rules will be established to regulate obtaining immigration formalities to enter European territory in order to carry out the economic activities contained in this chapter.
Investments: A comprehensive legal framework is established to regulate investments between Chile and the EU, replacing the 16 bilateral Investment Protection Agreements in force between Chile and EU Member States and two that were signed but did not enter into force, correcting inconsistencies and divergences between them, which have been criticized by various sectors in recent times. Likewise, a chapter is established that would have a regime of protection and liberalization of investments that would at the same time guarantee the legitimate right of the State to regulate. In terms of dispute resolution, the parties establish a permanent Investment Court, although with a light and agile structure.
Sustainable development: The approach under which the negotiation was carried out implies a strengthening of the relationship between trade and the achievement of economic development with a significant sustainable component. In this way, our relationship with the economic bloc is given a priority concern for areas as relevant as the protection of labor rights and the environment, becoming the greenest agreement signed by Chile, by expressly incorporating the standards of the Paris Agreement. The current Economic Partnership Agreement does not contemplate commitments in this regard, and therefore we believe that it constitutes a positive aspect of the future agreement, and that, in addition, it is in line with the 2030 Agenda, which integrates the three pillars of sustainable development – economic, social and environmental.
Digital Commerce: This area is not covered by the Agreement currently in force, and its regulation will facilitate exchange through measures such as cross-border recognition of electronic signatures, non-application of tariffs to electronic transmissions, among other measures.
Gender and Trade: This is a pioneering Agreement as it includes this matter with a view to encouraging equal opportunities and treatment so that men and women can benefit equally from the development opportunities that will be opened with the implementation of the Agreement.
Energy and Raw Materials: The Agreement establishes a strategic alliance between Chile and the EU to develop Chile's National Green Hydrogen Strategy and the EU Green Deal, facilitating trade and exchange of these types of goods, while safeguarding the regulatory space for the development of public policies in support of emerging industries.
Environmental Matter: The Agreement promotes the establishment of high standards of protection and effective compliance with sectoral legislation, fostering the conservation and sustainable use of biological diversity. For the first time, the MEAs and the Paris Agreement are incorporated into a trade agreement signed by Chile as effective standards.
Public Procurement: The Agreement modernises the principles and obligations in public procurement, facilitating the access of Chilean suppliers to the European public market, through greater legal certainty and clear rules that prevent discrimination, allowing them to access the same treatment enjoyed by any European supplier.
Chile has an extensive network of trade agreements, including 30 free trade agreements, which give our entrepreneurs preferential access to 65 economies, more than 5 billion people and nearly 88% of the world's GDP.
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