EU, Chile Launch Talks to Modernise Trade Deal

23 November 2017

The EU and Chile have formally kicked off negotiations to modernise their existing Association Agreement, including its trade component, holding their first round of talks last week in Brussels, Belgium.

“A modernised agreement with Chile will further strengthen our already excellent relations and open new areas of cooperation. It will provide us with a state of the art framework to continue championing global peace and security, free and open economies, inclusive societies and the promotion of global common goods,” said Federica Mogherini, Vice-President of the European Commission and the EU’s High Representative of the European Union for Foreign Affairs and Security Policy.

According to an official statement announcing the launch, both sides have pledged to be “ambitious and visionary” in order to strike a “progressive and innovative” deal. The Association Agreement, which governs EU-Chile political and economic ties, was signed 15 years ago, and began provisional application the following year.

In the years since, bilateral trade in goods had more than doubled, from the initial €7.7 billion in 2003 to €15.9 billion in 2016, according to EU statistics. The 28-nation bloc is the second largest trading partner for the South American coastal nation, with Chile exporting copper, foodstuffs, and manufactured products, while importing machinery, chemicals, and other industrial products from the European bloc.

Expanding the scope

The existing agreement covers political, commercial, economic and financial, scientific, technological, social, cultural and cooperation fields.

On economic and trade-related issues, the deal contains provisions related to cooperation in various areas, including standards, technical regulations and conformity assessment procedures, small and medium-sized enterprises, services and investment, agriculture, customs, consumer protection, intellectual property rights, transport, fisheries, and energy, among a host of others. The current accord also liberalised goods trade significantly between the two sides.

Proponents say that an updated deal could capture new facets of their bilateral economic relationship, along with some of the wider global developments seen in international trade and investment. For example, the EU has flagged specific provisions on investment, non-tariff barriers, intellectual property rights, and some geographical indications and contributions to sustainable development as areas it would like to see addressed.

“In order to address today’s full range of political and global challenges, we need a new, modern agreement in place, since the one from 2003 leaves out many important trade, services, and investment issues,” said Cecilia Malmström, EUTradeCommissioner.

“The talks that we are now launching aim to put in place a modern trade agreement of the highest calibre, covering all issues – including those that reflect shared values such as sustainable development, helping small and medium-sized companies, and efforts against corruption. And for the first time, a trade deal of ours will include common goals on the key role of women in trade,” she added.

Chile and Uruguay already have a gender-specific chapter in their FTA, and Chile recently negotiated a gender chapter to add into its trade accord with Canada. (See Bridges Weekly, 22 June 2017)

The EU-Chile Joint Consultative Committee (JCC), a coalition of civil society members from both sides,  has called for a specific chapter on micro, small, and medium-sized  enterprises (MSMEs), along with highlighting the importance of using an updated accord to advance the implementation of the UN’s Sustainable Development Goals (SDGs), calling for a multilateral approach and inclusion of a “strong and ambitious” chapter on trade and sustainable development.

The European Parliament gave its recommendations in September as to what it would like to see in a final deal, which it would be required to vote on. For example, lawmakers have called for a sustainable development chapter with a gender component, as well as provisions on tax good governance, government procurement, MSMEs, and renewable energy.

They have also called for addressing trade and investment via separate deals, and including the investment court system (ICS) that the EU has been pushing for in more recent trade accords within the latter.

Inter-continental cooperation

The news comes as the EU pursues a series of other trade and economic integration efforts with various Latin American partners. For example, EU negotiators are working to modernise their trade deal with Mexico and to reach an agreement with South American trade bloc Mercosur. (See Bridges Weekly, 9 February 2017, 27 July 2017, and 19 October 2017)

EU officials have also expressed interest in deeper ties with the Pacific Alliance, the four-country coalition that includes Chile and Mexico, as well as Peru and Colombia.

The second round of talks between EU and Chile will take place in early 2018. Chile will be preparing for a leadership transition in March, with the second round of presidential elections set for December of this year.

ICTSD reporting; “EU, Chile To Launch Talks On FTA Modernization,” TAX NEWS, 14 November 2017; “EU governments agree to review Chile trade deal,” EURACTIV, 13 November 2017.

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