CHILE

Interim Trade Agreement between Chile and the EU came into force

“The entry into force of the Interim Trade Agreement implies an important change to facilitate trade operations between Chile and the European Union. It expands the list of products that can enter EU markets without paying tariffs and, in addition, simplifies and makes more flexible the requirements that Chilean exporters must meet to benefit from the new preferential access,” said Undersecretary Sanhueza.

Posted on Feb 05 ,00:20

As of Saturday, February 1, 2025, all trade relations between Chile and the European Union will be governed by the Interim Trade Agreement (ITA), following its approval by the European Parliament (February 29, 2024) and the Chilean Congress (November 13, 2024), and publications in the respective official journals.

The AIT, which replaces Part IV (on trade) of the current Association Agreement, includes new provisions governing trade in goods, services and investment liberalisation between the two parties and will remain in force until the completion of the entire process and approval of the new Advanced Framework Agreement (AFA) in the 27 EU Member States. For now, the Political and Cooperation areas of the 2003 Association Agreement will remain in force alongside the AIT.

The Undersecretary for International Economic Relations (SUBREI), Claudia Sanhueza, said that "the entry into force of the Interim Trade Agreement implies an important change to facilitate trade operations between Chile and the European Union. It expands the list of products that can enter EU markets without paying tariffs and, in addition, simplifies and makes more flexible the requirements that Chilean exporters must meet to benefit from the new preferential access". She added that the timely preparation of these changes has been possible thanks to very efficient coordination between SUBREI, Customs, ProChile, commercial operators and also with European counterparts.

Among the main changes in the AIT, compared to its predecessor, is that the percentage of Chilean products covered by a tariff reduction by the European Union will be expanded from 94.7% to 99.6% of tariff lines, representing almost all Chilean exports to that market. “With the entry into force of the Interim Trade Agreement, more than 1,800 Chilean products currently exported to the EU will benefit from zero tariffs, being able to access a market of 450 million people. This is essential to strengthen the internationalization of the exportable supply of our regions and diversify of our local economies,” said Undersecretary Sanhueza.

Among the products with improvements are: olive oil; beef, sheep, poultry, pork; milk; agro-industrial products; food preparations and salmon, hake and tuna preparations, among others.

The EU will recognise in the European market all geographical indications and designations of origin recognised in the country (18) giving them exclusivity to distinguish themselves in this market and Chile will do the same with the European ones (216).

"Geographical indications are part of our heritage and cultural patrimony, and the recognition of this heritage, linked to indigenous peoples and local communities, is of great importance to Chile. This agreement includes, for example, salt from Cáhuil, prosciutto from Capitán Pastene, lemon from Pica, lobster from Juan Fernández or tuna from Easter Island, and sweets from Curacaví, to name a few. This will allow us to differentiate ourselves in the European market and attract consumers who value authenticity and tradition", added the SUBREI authority.

Another important issue is that the Agreement introduces important changes in the Rules of Origin and Procedures related to origin. As of February 1, 2025, to certify the origin, the declaration of origin issued by the exporter or the importer's knowledge that the product is originating must be used. For this reason, and as of this date, ProChile will stop issuing EUR1 certificates for the European Union and pre-certifying entities will no longer receive these documents for that market.

In the area of Services, it will allow national providers to receive treatment almost at the level of a European service provider, which will have a positive impact on exports in this area.

Furthermore, it covers such relevant areas as the protection of labour rights and the environment, while containing very ambitious clauses on environmental matters, including issues of fisheries, forestry and also climate change; and incorporates the effective implementation of the commitments in the Paris Agreement. In line with the internal treatment of labour rights, it is recognised that economic-commercial development cannot be built on the basis of the violation of transcendental principles such as labour rights.

New chapters

The AIT also includes new subjects, such as Sustainable Food Systems, which includes provisions for cooperation, for example, on the sustainability of the food chain and the reduction of food loss and waste, the fight against food fraud throughout the food chain, animal welfare, the fight against antimicrobial resistance and risk reduction in the use of fertilizers, among others.

There is also one dedicated to Small and Medium Enterprises, which will have provisions requiring both parties to provide a specific website that will contribute to access to the information that SMEs need to enter the respective markets. "This chapter aims to benefit SMEs that are located in regions, in rural areas, such as small farmers, and SMEs that have a high participation of women", said Undersecretary Sanhueza.

She added that "I would also like to highlight the chapter on Gender and Trade, which is the first one signed by the European Union, but which we have been promoting since 2016. For Chile and for the government of President Boric, this issue is a priority and part of the Feminist Foreign Policy. And in this way we are moving forward in the economic empowerment and autonomy of women".

In addition, there are chapters on Digital Trade, which includes cross-border recognition of electronic signatures, non-application of tariffs to electronic transmissions, consumer protection to promote and speed up digital trade; and Energy and Raw Materials, which seeks to promote dialogue and cooperation in these matters and seeks to facilitate trade and investment in renewable fuels, particularly green hydrogen, for export to the EU.

Chile-EU trade figures

• Trade with the European Union has been carried out to date under the Association Agreement (AA), in force since 2003, which will be 22 years old in February 2025.
• Since the AA came into force, trade with the EU has grown at an average rate of 4.2%, going from operations worth US$ 8,197 million in 2024 to US$ 19,585 million.
• In the same period, exports grew at an average annual rate of 3%, rising from US$ 4.91 billion in 2003 to US$ 8.853 billion in 2024.
• National shipments to the bloc were made up of 1,840 different products, including copper, iodine, molybdenum, cellulose, wines, nuts, salmon, mussels, potassium nitrate, hazelnuts, avocados, fresh blueberries, seeds, lithium carbonate and fresh grapes, to name just a few.
• In 2024, services exports to the EU amounted to US$ 262 million, with the most notable services being IT consulting, investment and insurance services, commercial filming, original software design, R&D in chemistry and biology, and engineering consulting applied to mining.
• In 2024, all 16 regions of the country registered shipments to the EU, with shipments led by Antofagasta, Metropolitana, O'Higgins, Valparaíso, Coquimbo, Biobío, Los Lagos and Atacama.
• In 2024, the European Union positioned itself as the largest destination for Chilean exports of walnuts, molybdenum oxides and hydroxides, canned mussels, potassium nitrates, hazelnuts, avocados, seeds for planting, fresh kiwis, dehydrated plums, bottled wines of the Chardonnay, Sauvignon Blanc and Merlot varieties, frozen asparagus, cranberry juice, honey, sheep meat, chestnuts and lilies.
• Imports from the EU have grown at an average annual rate of 5.8%, from US$3.287 billion in 2003 to US$10.733 billion in 2024.
• The European Union has also played an important role in investment projects in the country, positioning itself as the largest foreign investor in Chile, with a capital stock of US$ 67,763 million, representing 25% of the total accumulated FDI in Chile by 2023.

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