As of February 1, all trade relations between Chile and the European Union Chile and the European Union will be governed by the Interim Trade Agreement (ITA).
This, after their approval in the European Parliament (February 29, 2024) and in the Chilean Congress (November 13, 2024), and the publications in the respective official gazettes.
The AIC, which replaces Part IV (trade) of the existing Association Agreement, includes new provisions governing trade in goods, services and investment liberalization between the two parties and will be in force until the entire processing and approval of the new Advanced Framework Agreement (AFA) in the 27 EU Member States is completed in the European bloc. For the time being, the Political and Cooperation areas of the 2003 Association Agreement will remain in force together with the AIC.
Key benefits of the Interim Trade Agreement
The Undersecretary for International Economic Relations (SUBREI), Claudia Sanhueza, stated that "the entry into force of the Interim Trade Agreement implies an important change to facilitate trade operations between Chile and the European Union. It expands the list of products that can enter EU markets without paying tariffs and also simplifies and makes more flexible the requirements that Chilean exporters must meet to benefit from the new preferential access". He added that the timely preparation of these changes has been possible thanks to a very efficient coordination between SUBREI, Customs, ProChile, trade operators and also with European counterparts.
Among the main changes of the ITA, with respect to its predecessor, are that the percentage of Chilean products covered by a tariff reduction by the European Union will expand from 94.7% to 99.6% of the tariff lines, representing almost all Chilean exports to that market. "With the entry into force of the Interim Trade Agreement, the more than 1,800 Chilean products that are currently exported to the EU will benefit from zero tariffs and will be able to access a market of 450 million people. This is essential to strengthen the internationalization of the exportable supply of our regions and diversify our local economies," said Undersecretary Sanhueza.
New opportunities for Chilean exporters
Among the products with improvements are: olive oil; beef, veal, sheep, poultry, pork; milk; agro-industrial products; food preparations and salmon, hake and tuna preparations, among others.
The EU will recognize in the European market all the geographical indications and appellations of origin recognized in our country (18), giving them exclusivity to distinguish themselves in this market, and Chile will do the same with the European ones (216).
"Geographical indications are part of our heritage and cultural heritage, and the recognition of this heritage, linked to native peoples and local communities, is of great importance for Chile. This agreement includes, for example, salt from Cáhuil, prosciutto from Capitán Pastene, lemon from Pica, lobster from Juan Fernández or tuna from Easter Island, and sweets from Curacaví, to name a few. This will allow us to differentiate ourselves in the European market and attract consumers who value authenticity and tradition", added the SUBREI authority.
Another important issue is that the Agreement introduces important modifications to the Rules of Origin and Procedures related to origin. As of February 1, 2025, the declaration of origin issued by the exporter or the importer's knowledge that the product is originating must be used to certify origin. For this reason, ProChile will stop issuing EUR1 certificates for the European Union and pre-certifying entities will no longer receive these documents for that market.
More integration in services, digitalization and sustainability
In the area of services, it will allow national service providers to be treated almost at the level of a European service provider, which will have a positive impact on exports in this area.
It also covers relevant areas such as the protection of labor rights and the environment, while containing very ambitious clauses on environmental issues, including fisheries, forestry and climate change, and incorporates the effective implementation of the commitments of the Paris Agreement. Consistent with the domestic treatment of labor rights, it is recognized that economic and commercial development cannot be built on the basis of the violation of transcendental principles such as labor rights.
New chapters
The IYC also includes new subjects. Such as Sustainable Food Systems, which has provisions to cooperate, for example, on the sustainability of the food chain and the reduction of food loss and waste, the fight against food fraud along the food chain, animal welfare, the fight against antimicrobial resistance and risk reduction in the use of fertilizers, among others.
There will also be a chapter dedicated to Small and Medium-Sized Enterprises that will include provisions requiring both parties to provide a specific website that will help SMEs access the information they need to enter their respective markets. "This chapter aims to benefit MSMEs that are located in regions, in rural areas, such as small farmers, and SMEs that have a high participation of women," said Undersecretary Sanhueza.
She added that "I would also like to highlight the chapter on Gender and Trade, which is the first signed by the European Union, but which we have been promoting since 2016. For Chile and for the government of President Boric this issue is a priority and part of the Feminist Foreign Policy. And in this way we advance in the economic empowerment and autonomy of women".
Also added are chapters on Digital Commerce, which includes cross-border recognition of electronic signatures, non-application of tariffs to electronic transmissions, consumer protection to promote and expedite digital commerce; and Energy and Raw Materials , which seeks to promote dialogue and cooperation in these areas and seeks to facilitate trade and investment in renewable fuels, in particular green hydrogen, for export to the EU.
Chile-EU trade figures
Trade with the European Union has been conducted to date under the Association Agreement (AA), which has been in force since 2003 and will be 22 years old in February 2025.
Since the entry into force of the AA, trade with the EU has grown at an average rate of 4.2%, from US$ 8,197 million in 2024 to US$ 19,585 million. In the same period, exports grew at an average annual rate of 3%, from US$ 4,910 million in 2003 to US$ 8,853 million in 2024.
Domestic shipments to the bloc consisted of 1,840 different products, including copper, iodine, molybdenum, cellulose, wines, nuts, salmon, mussels, potassium nitrate, hazelnuts, avocados, fresh blueberries, seeds, lithium carbonate and fresh grapes, just to mention a few.
In 2024, exports of services to the EU totaled US$ 262 million, with highlights including IT consulting, investment and insurance services, filming of commercials, original software design, R&D in chemistry and biology, and consulting in engineering applied to mining.
In 2024, the country's 16 regions recorded shipments to the EU, with Antofagasta, Metropolitana, O'Higgins, Valparaíso, Coquimbo, Biobío, Los Lagos and Atacama leading the way.
In 2024, the European Union became the largest destination for Chilean exports of nuts, molybdenum oxides and hydroxides, canned mussels, potassium nitrates, hazelnuts, avocados, seeds for planting. Fresh kiwis, dehydrated plums, bottled Chardonnay, Sauvignon blanc and Merlot wines, frozen asparagus, cranberry juice, honey, sheep meat, chestnuts and liliums.
Imports from the EU have expanded at an average annual rate of 5.8%, from US$ 3,287 million in 2003 to US$ 10,733 million in 2024.
The European Union has also played an important role in investment projects in the country, positioning itself as the largest foreign investor in Chile, with a capital stock of US$ 67,763 million, which represents 25% of the total accumulated FDI in Chile by 2023.
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