CHILE NEGOTIATES FREE TRADE AGREEMENT WITH CHINA

Chile and China celebrated their new free trade agreement (FTA) on Saturday after concluding five days of final negotiations in Beijing. The agreement allows Chilean producers to export their products duty-free to the world’s fastest growing market.

The pact between Chile and China is the first FTA China has ever negotiated with a non-Asian country, for Chile it represents their 42nd. The agreement will be officially ratified by Chilean President Ricardo Lagos and China’s President Hu Jintao at the Asia Pacific Economic Cooperation (APEC) summit meeting in Pusan, Korea on Nov. 17.

Luis Schmidt, president of Chile’s National Agriculture Society and member of the negotiation team in Beijing, was very pleased with the final agreement worked out between the two countries. “We were very anxious when we left for China, said Schmidt. “However, at the end of this round of negotiations, we feel very satisfied with agreement.”

By the end of 2006, 92 percent of Chilean exports to China will enter the country tariff free. This includes primary products such as copper, cellulose, and whey. The negotiations provided a five year window for the removal of trade tariffs on a wide variety of agriculture products like salmon, fruits, and meats. Ten years from now the agreement takes full effect, lifting tariffs on wines, milk, grapes, and apples. The only products that will remain protected in China at that point will be iodine, rice, lumber and televisions.

Chilean can also expect to see a reduction of the price of certain Chinese imports by the end of 2006. Automobiles, heavy machinery, computers, cell phones, video and DVD players are on the list of goods eligible for an immediate tariff removal. In 2011 other electronic equipment will enter Chile tariff free, and at the end of 2016 China will begin to export various textile products to Chile with no protective tariffs. Wheat, sugar, assorted underwear, and washing machines are among the products Chile requested remain outside the FTA.
Chile is also finalizing free trade agreements with Peru, Ecuador, and Panama, all expected to be signed by the end of 2005. When the negotiations are complete, Chile will lead the world with the highest number of bilateral free trade agreements. In 2006, Chile hopes to add Japan and Korea to the list and move even further into the rapidly growing Asian market.