The Diplomat
The Executive Vice-President of the European Commission and Commissioner for Trade, Valdis Dombrovskis; the High Representative of the Union for Foreign Affairs and Security Policy, Josep Borrell; the Minister of Foreign Affairs of Chile, Antonia Urrejola; and the Undersecretary of International Economic Relations of Chile, José Miguel Ahumada Franco, announced yesterday the adoption of the agreement for the modernization of the EU-Chile Association Agreement.
This Association Agreement, in existence since 2003, includes a comprehensive free trade pact and an investment pact, in addition to a framework for political relations. Negotiations for the modernization of these agreements were launched in 2017 to address new global challenges and developments in bilateral relations between the two parties. The conclusion of this agreement has been a priority for Spain, which has worked from the beginning of the negotiation in the EU Council to this end.
“The agreement strengthens our ties with Chile as a strategic partner in the area of trade and investment,” said the Minister of Industry, Trade and Tourism, Reyes Maroto. “In the face of the current economic difficulties, this decision will increase the diversification and resilience of EU and Chilean supply chains, improving access to key inputs for the EU and increasing export and investment opportunities for our companies, underpinning the necessary economic recovery in both regions,” she continued. “Spain hopes that the modernization of this agreement will serve to accelerate the conclusion of the agreements with Mexico and Mercosur”, she added.
The agreement will reduce existing barriers to bilateral trade in goods and services, including raw materials and energy, in access to public procurement markets, and promote sustainable and inclusive growth. It also promotes trade and sustainable development and includes provisions on gender equality, “a very relevant issue for both Spain and Chile,” the Spanish government said. Following the agreement in principle reached yesterday, the next objective is to accelerate the procedure so that the trade agreement can be signed in 2023 and enter into force in 2024. The full Association Agreement will enter into force at a later date.
For their part, the President of the European Commission, Ursula von der Leyen, and the President of Chile, Gabriel Boric, celebrated yesterday, in a joint statement “the successful conclusion of the negotiations” for the modernization of the agreement, which “marks the beginning of a new chapter in bilateral cooperation between the EU and Chile, with our common values at the center” and represents “an opportunity to deepen our cooperation for the benefit of all citizens, businesses and other stakeholders in Chile and the EU”.
Spain-Chile bilateral trade
In 2021, Spain exported goods to Chile worth 1.75 billion euros and imported goods worth 1.3 billion euros, with Chile ranking 30th in the ranking of most important markets for Spanish exports, and 44th as a supplier, while Spain ranked as Chile’s 10th customer and 7th supplier. With regard to trade in services, according to the OECD, in 2020 the export of services to Chile reached US$1,077 million, and imports US$331 million.
In terms of Spanish investment per capita, Chile is by far the first destination in Ibero-America, with a gross investment flow (not ETVE) in 2021 of 201 million euros, and a stock recorded in 2020 (not ETVE) of 14,843 million euros. On the Chilean side, although Chilean investments in Spain are not very significant, in 2021 there has been a notable upturn in the flow of investment, reaching 222 million euros.
