EU-Chile Interim Trade Agreement: A new era of cooperation
Date of publication: February 14th, 2025
The EU-Chile Interim Trade Agreement (ITA) came into effect on February 1, 2025, marking a significant milestone in the bilateral relations between the European Union and Chile. The agreement was signed on December 13, 2023. This new agreement aims to strengthen the existing excellent relations between the two parties and create new opportunities for trade and investment.
Background and negotiations
The EU and Chile engaged in negotiations from 2017 to 2022 to modernize the EU-Chile Association Agreement, which has been in force since 2003. The goal was to address the changing global economic and geopolitical landscape and create a more comprehensive agreement. The parties reached a political conclusion on December 9, 2022, and signed the modernized agreement on December 13, 2023.
Key elements of the agreement
The ITA will deepen EU-Chile bilateral trade and investment relations, providing new opportunities for businesses by:
- Eliminating tariffs on 99.9% of EU exports and creating a level playing field for EU goods in the Chilean market
- Simplifying and making rules of origin more flexible
- Ensuring a sustainable flow of raw materials and derived products
- Making it easier for EU companies to provide services in Chile
- Ensuring equal treatment for EU investors in Chile and vice versa
- Improving access for EU companies to government procurement contracts in Chile
Sustainability and commitments
The agreement includes a strong commitment to sustainability, with provisions on:
- Trade and Sustainable Development (TSD), confirming the parties' commitment to International Labour Organization (ILO) standards and the Paris Agreement on climate change
- Energy and Raw Materials, fostering investment and providing the EU with steady and sustainable access to critical raw materials
- Sustainable Food Systems, making food supply chains more sustainable and resilient
Assessing the EU-Chile Trade Deal: Tariffs, Quotas, and More
This agreement is applicable on 14,791 CN Codes, with 94% of them being duty-free.
All industrial goods and certain fish and agricultural products already liberalized under the current Association Agreement will continue to be duty-free. The new agreement will liberalize 96% of the remaining tariff lines on Chile's side and 66% on the EU's side within 7 years, resulting in over 95% of trade between the EU and Chile being duty-free.
Chile will also liberalize EU dairy products and food preparations. Existing tariff rate quotas for EU Cheese and Fishery and Chilean meat (Chapter 2), Fish (Chapter 16), Egg and Egg Products (Chapter 4 and Tariff Heading 3502) while processed cereals (Tariff Heading 1104), sugar confectionery (Tariff Heading 1704), chocolate (Tariff Heading 1806), sweet biscuits (Tariff Heading 1905), and prepared mushrooms (Tariff Heading 200310) will remain temporarily but will be fully liberalized within seven years of the new agreement's entry into force.
Exclusions are minimal, focusing on very sensitive products like sugar (on both sides), and bananas and rice (on the EU side). The preferential treatment for Chilean fruits and vegetables under the EU entry price system will remain unchanged. For other products, the EU will offer additional market access through duty-free quotas.
Tariff elimination categories
- Category "0":Duty-free from the agreement's start.
- Category "3":Eliminated in 4 equal stages, duty-free from January 1 of year 3.
- Category "5":Eliminated in 6 equal stages, duty-free from January 1 of year 5.
- Category "7":Eliminated in 8 equal stages, duty-free from January 1 of year 7.
- *Category "7" (Chile)**:Eliminated in 3 equal stages starting January 1 of year 5, duty-free from January 1 of year 7.
- Category "0+EP" (EU):Ad valorem duties eliminated from the agreement's start; specific duties maintained if import price falls below entry price.
- Category "E": Exempt from tariff elimination.
Conclusion
The EU-Chile Interim Trade Agreement strengthens the trade and investment ties between the EU and Chile. The agreement also introduces a new chapter on trade and sustainable development, focusing on sustainable practices in areas such as climate change, energy, the environment, raw materials, disaster risk reduction, and sustainable food systems. Access a Fact Sheet.
Recognizing the importance of these changes for our clients, we have already made them available on OneSource Global Trade Content (GTC). Within the OneSource Global Trade platform, clients can now access preferential duty rates stipulated by both parties of the agreement between the EU and Chile.
For more information on how ONESOURCE Global Trade solutions can assist by adopting our Global Trade Content and Free Trade Agreement (FTA) Management which can assist you in taking advantage of FTAs by identifying opportunities to qualify goods under FTA-specific rules of origin, contact your Account Manager or Customer Success Manager.