Chilean, Chinese Leaders Sign Deal to Amend Trade Pact

16 November 2017

Chile and China are set to update their bilateral trade pact, with officials signing a protocol to amend the deal last week on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Da Nang, Vietnam.

The process to start amending the accord was announced in 2016, following a meeting between Chinese President Xi Jinping and Chilean President Michelle Bachelet. The negotiations began that year, with delegates meeting for three formal rounds.

The original accord dated back to 2005, entering into force the following year, and officials say the changes were needed to reflect new trade realities.

"Since the signing of the Free Trade Agreement with China in 2005, our bilateral exchange has quadrupled. With the Protocol signed today, we incorporate the digital economy and services. A better Chile emerges integrated to the Asia Pacific,” said Bachelet, according to a statement on social media site Twitter.

This new treaty responds to the needs of a world that "twelve years later, is another," said Jorge Heine, Chile’s Ambassador to China, in a blog post for La Tercera last week. He also noted that the previous FTA led to increased bilateral trade flows that far exceeded expectations.

Among the changes are tariff cuts to Chilean exports of forestry products and Chinese exports of sugars, textiles, and certain industrial products. The updated FTA will also include chapters involving e-commerce and trade facilitation, along with revisions to the existing terms on rules of origin. The two countries also agreed on a chapter about technical and economic cooperation.

“I think that China being the rising power that we all know, I believe signing the amendment to upgrade the bilateral agreement will be one of the great achievements of this meeting,” said Chilean Foreign Affairs Minister Heraldo Muñoz to El Mercurio, a Chilean newspaper, prior to the leaders’ discussions.

The original deal focused mainly on goods trade, adding in services in 2008. It also marked China’s first trade pact with a country in the Latin American region.

The two countries originally agreed to eliminate tariffs on the vast bulk of tariff lines within a decade. On services, they had agreed to specific sectors for improving market access, including financial services, education, tourism, and travel.

Before the original agreement, bilateral trade was relatively low. Today, the Asian economic giant has become the largest trading partner for the South American country, making up over one quarter of its trade flows.

ICTSD reporting; “Comercio electrónico y rebajas arancelarias mutuas: Los detalles de la ampliación del TLC entre Chile y China,” EL MERCURIO, 11 November 2017; “Xi, Bachelet witness upgrade of China-Chile FTA,” CHINA DAILY, 13 November 2017; “China-Chile FTA,” CHINA FTA NETWORK, 14 November 2017; “La Presidenta Michelle Bachelet firmó actualización de TLC con China,” SOY CHILE, 11 November 2017.

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