What Will a Trade Deal Update Mean for the EU and Chile?

Latin American Advisor - 04/01/2023

Anna Ayuso, Senior Research Fellow at CIDOB, answers to this question: “In the two decades since the first association agreement that the European Union and Chile signed in 2002, bilateral trade has multiplied, and European investments in the country have doubled. However, the world has changed remarkably since then, and the European Union has been relegated to third place as Chile’s trading partner with only 11 percent of trade share compared to 38 percent with China. We are also in a scenario of growing competition between powers, in a production transformation process with an impact on value chains and facing energy and digital transitions that pose new challenges for all countries. The 2022 agreement modernizes the rules related to trade, but it goes much further, by introducing, for example, regulations that are under negotiation in the global multilateral agenda such as the protection of biodiversity, pollution, animal suffering, digital policy and data protection. It also introduces a gender perspective in trade regulations. Additionally, the agreement advances an improvement in the institutional framework for the participation of civil society and creates a common mechanism for the protection of investments, as well as an arbitration process for the solution of controversies. The modernization of the treaty between the European Union and Chile sends a positive signal to relaunch not only bilateral, but also bi-regional relations. With this agreement, as with those adopted but pending closure with Mexico and Mercosur, the European Union tries to recover part of the lost ground against China and other competitors, especially in the most innovative sectors. Chile seeks to maintain a balance between its different trading partners, while also increasing its competitiveness and adapting its economy to the changes required by the new international context.”

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