August 24, 2020
Foreign Trade

Chile’s Congressional Upper House approves Free Trade Agreement between Chile and Brazil

Chile’s Congressional Upper House approves Free Trade Agreement between Chile and Brazil
“Strengthening our trade alliances is now more important than ever for stimulating economic recovery. And this agreement is taking us in the right direction by providing a more solid structure for our relationship with Brazil, our foremost trading partner in the region,” said Minister Allamand.

On Tuesday, the Senate passed the Chile-Brazil Free Trade Agreement bill. The session was attended by Foreign Affairs Minister Andrés Allamand, along with International Economic Relations Undersecretary Rodrigo Yáñez.

“Strengthening our trade alliances is now more important than ever for stimulating economic recovery. And this agreement is taking us in the right direction by providing a more solid structure for our relationship with Brazil, our foremost trading partner in the region,” said Minister Allamand after the bill was approved. He added, “this agreement will allow us to modernize the rules of our relationship with Brazil. It will incorporate the most recent disciplines, update those that already existed, and allow small- and medium-sized Chilean businesses to gain access on equal terms to the huge public procurement market in Brazil.”

Undersecretary Rodrigo Yáñez said that the Senate’s approval of this agreement reinforces Chile’s free and open trade policy, and it also incorporates matters that will directly benefit SMEs. “Trade policy today is an instrument with which we can respond to the crisis, making trade more resilient and fostering economic reactivation, especially for our small and medium-sized enterprises. The Chile-Brazil FTA is moving in that direction,” said the Undersecretary.

The agreement is supplementary to the Economic Complementation Agreement (ACE 35) signed in the 1990s by Chile and the countries that are part of Mercosur (the Southern Common Market) and which regulates our trade of goods. This agreement incorporates new generation disciplines, such as telecommunications, e-business, trade in services, environment, labor, gender, MSMEs, trade economic cooperation, technical barriers to trade, government procurement and competition policy, trade facilitation, good regulatory practices, and temporary entry for businesspersons.

Once the FTA goes into effect, SMEs will be able to gain access on equal terms to the Brazilian public procurement market, which generates ten times more tenders than its equivalent in Chile. Likewise, and as part of the chapter on e-business, the FTA will facilitate the operation of national suppliers of digital products and services.

Furthermore, for the first time in a Free Trade Agreement, a chapter on regional and global value chains has been incorporated, constituting a modern regulatory framework that meets the expectations and standards of current international negotiations.

The agreement also includes the elimination of roaming charges between the two countries. This will have a positive impact on the development of economic activities such as tourism, digital trade and different kinds of enterprises.

Bilateral trade 

With a population of 213 million people, Brazil is our most important trading partner in the region, representing 4.5% of our global exports and 30% of our shipments within Latin America, totaling US$3.2 billion in 2019.

In 2019, Chile was the main supplier to Brazil of products such as copper cathodes, salmon, bottled wine, methanol, iodine, and others. In turn, Chile was the main destination for Brazilian exports such as boned beef products, car chassis, iron or steel manufactured articles, among others.