The European Union has been waiting for this moment for several months: it was finally able to conclude, on Friday 9 December, the negotiations on the modernisation of the association agreement with Chile. The conclusion was formalised by the EU Commissioner for Trade, Valdis Dombrovskis, the High Representative of the Union for Foreign Affairs, Josep Borrell, and the Chilean Foreign Minister Antonia Urrejola.
This new ‘Advanced Framework Agreement’, which includes political and trade components as well as investment protection, will have to be ratified by all national and regional parliaments. During the negotiations, however, the European Commission provided for an intermediate trade agreement, which excludes the ‘investment’ part and is based on the EU’s exclusive competences. This can only be applied after ratification by the European Parliament and the EU Council until the framework agreement, including political cooperation and investment protection, enters into force.
“This is an innovation, certainly, but for the benefit of all parts. It takes out any kind of risk of the agreement not being ratified and becoming something which is in provisional application for too many years”, said Josep Borrell.
The new trade agreement will remove 99.9% of tariffs on EU exports to Chile, with sugar being the only product not liberalised. In exchange, Chile obtained greater access to the European market, notably for meat (beef, poultry, pork) and olive oil, for the first time. However, quotas will apply to these products. So far, about 96% of trade has already been liberalised with the current agreement in force since 2003.
In addition, the new agreement provides for greater access to Chilean raw materials such as lithium, hydrogen or copper for the Europeans. “Strategically, the EU is working to diversify our supply chains to deal with dependencies on certain supplies and this agreement with Chile is an important contribution to this work”, Mr Dombrovskis said.
This new non-discriminatory access for European companies to raw materials in Chile could serve as a model for future raw materials agreements with other partners such as Australia, for example, said a European official.
Equal treatment for investors from either side and greater access to public procurement for goods, services, works and concessions were also negotiated.
Sustainable Development
The modernisation of the agreement includes chapters on democratic principles, human rights, Rule of law, sustainable development and gender.
A chapter on gender equality was indeed included in the text to “empower women” both in Chile and in trade relations abroad, noted Antonia Urrejola, recalling her country’s “feminist foreign policy”. According to Mr Dombrovskis, this chapter is “a first” in the EU’s trade agreements and includes the implementation of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW).
In particular, the negotiators introduced a binding chapter on the Trade and Sustainable Development (TSD) which refers to the standards of the International Labour Organization (ILO) and the Paris Agreement.
However, these elements do not correspond to the latest model agreement proposed by the Commission, which includes sanctions for non-compliance with the Paris Agreement and the ILO core conventions. The reason is that it was negotiated a year ago, before the Commission presented its review of the ‘TSD’ chapter in free trade agreements (see EUROPE 12977/13).
However, a commitment is made to initiate a review of the TSD chapter of the agreement as soon as it enters into force and with a deadline of one year in mind to conclude it. Mr Dombrovskis told EUROPE that he could not prejudge the outcome of the talks, but that he had observed “a willingness on the part of Chile to be ambitious on sustainable development”.
This is not enough, says Anna Cavazzini MEP (Greens/EFA, German): “After the change of government in Chile, there was an opportunity to make this agreement a real reference for sustainability and fair trade relations. Unfortunately, the Commission has refused to reopen the agreement that was hastily negotiated a year ago, just before the change of government”.
The Chair of the European Parliament’s Committee on International Trade, Bernd Lange (S&D, German), welcomed the conclusion of the agreement and its “many positive elements, such as a historic stand-alone chapter on gender and trade”, although he, like his colleague Ms Cavazzini, regretted the non-inclusion of sanctions for sustainable development chapters in the agreement for the time being.
Even broader cooperation
Mr Borrell pointed out that the revision of the Association Agreement with Chile is broader than the bilateral trade relations between the EU and Chile. This modernisation will, according to him, enable cooperation to be deepened in new areas such as “the fight against climate disruption, scientific cooperation, human rights and multilateralism”, he stressed. His Chilean counterpart cited “children’s rights, protection of the oceans, the digital sector and the fight against money laundering”.
The legislative text of the agreement is expected to be published in the coming weeks. It will then be finalised for signature, expected in September 2023, said Valdis Dombrovskis. He hopes that “the Member States and the European Parliament will then proceed swiftly with the ratification”.
See the EU-Chile joint communiqué: https://aeur.eu/f/4ll (Original version in French by Léa Marchal and Mathieu Bion)