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  • Print publication year: 2009
  • Online publication date: December 2009

3 - Chile–China Free Trade Agreement



Chile and China have a long history of positive relations in trade and other matters. Chile was one of the first Latin American countries to engage in trade and economic exchanges with China. After the establishment of diplomatic relations in 1970, bilateral trade developed quickly.

In this context, in 1999, Chile was the first among Latin American countries to reach a bilateral agreement with China on China's entry to the World Trade Organization. In 2002, China supported Chile running for non-permanent member of the United Nations (UN) Security Council for the period 2003–2004.

Furthermore, Chile and China have signed a number of governmental agreements on trade, science and technology, culture, mutual visa exemption for diplomatic and service passports and investment protection. The two countries have conducted consultations in international affairs and enjoyed satisfactory cooperation in international organizations and conferences.

As noted by a group studying the prospects for a Chile–China free trade agreement:

In 2003, bilateral trade between Chile and China reached a record high of 3.155 million dollars. This places China as Chile's third global trading partner, behind Argentina and the United States, but also above countries like Japan, Brazil and all of the European Union economies. The latter strongly diverge from what was recorded a decade ago, when bilateral trade flows ranked in the fifteenth place.

The strong growth in trade between Chile and China is the result of a dynamic evolution in exports and imports, thus generating an increase in bilateral exchange of no less than 662% between 1994 an 2003, surpassing in more than six times the growth of Chile's global trade in the same period (94%).

The trade balance, exports minus imports, in 2003, also marked a record high with a surplus for Chile of 575 million dollars, [a] sum that is far from the 147 million dollar deficit of 1994. The traditional deficit in favor of Chile dates to 2001 and has increased since then.

As in total trade exchanges, in 2003, the Chinese economy represented the third destination of Chilean exports, accounting for 1.865 million dollars. Between 1994 and 2003 Chilean exports destined to China grew in an accumulated amount of 1,299%, meaning an average of 130% annually, growth that is ten times greater than that shown by total Chilean exports.

Imports coming from China in 2003, reached a sum of 1.290 million dollars, placing China as the fourth supplier of imported goods to Chile. Although imports from the Asian giant haven't shown the spectacular surges as those in imports, these do not cease to amaze given that between 1994 and 2003 imports reached a growth rate of 360%, [a] fact that is of no minor importance considering that global imports only grew by 124% in the same period.

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