The European Union and Chile would like to see a better association agreement between themselves in response to the flourishing trade flows that have doubled in the past 15 years. Both sides described the 2002 association agreement to be a “complete success”. To address the new economic dynamic, both partners have been involved in negotiations, looking into the possibility of “modernizing” the agreement’s trade chapter with the help of the action plan proposed by the European Parliament.
Bilateral trade between both partners that has doubled from 2003 and 2016 now totals almost 16 billion euros. The EU is Chile’s third most important trade partner and the leading investor in the country. 15% of Chilean trade belongs to the EU. There is an overall perception that the current agreement “does not address some important trade and investment issues, such as specific provisions on investment, non-tariff barriers, intellectual property rights and some geographical indications and contributions to sustainable development.” To overcome these shortcomings, the new agreement should build on the existing cooperation, decrease consumer prices and boost economic growth.
The new agreement also aims at higher goals such as good tax governance, micro-enterprises, fight against corruption and support for small and medium enterprises, which accounts for 40% of exports to the EU. The EU would also like to add a chapter on energy and particularly renewable energy. The green energy sector has benefited 36% of the 46.9 billion of European investments in Latin America. On a different note, Brussels is also considering sanctions in case Lima fails to comply with the new regulations on sustainable development. Chile is hoping that the new deal will be an opportunity to trade its products such as olive oils on the European market and increase the quota of meat and dairy products exports.