Chile And China Head Down The Free Trade Route

The Age

Friday November 18, 2005

By PAUL HARRIS, SANTIAGO

CHILE and China have agreed terms for a free trade agreement to remove trade tariffs, according to Chilean Foreign Minister Ignacio Walker.

Presidents Ricardo Lagos and Hu Jintao are expected to sign the deal within days. They are attending the Asia-Pacific Economic Co-operation forum leaders meeting in Busan, Korea.

When the agreement takes effect in 2006 following ratification by the congresses of both countries, 92 per cent of Chilean products will be able to enter China's market of 1.3 billion people without tariffs, strengthening ties between the world's biggest copper producer and its biggest consumer.

Chile produced 5.41 million tonnes of copper in 2004 and exported over 1 million tonnes (19 per cent) to China worth $US2.7 billion ($A3.7 billion).

Chile's exports to China had risen 55 per cent in the year to September to $US3.37 billion, making China its second-largest trade partner after the US, but the FTA could double this to $US8 billion by 2008, Mr Walker said.

Minerals, fish flour and wood represent 84 per cent of Chile's exports to China and the FTA will immediately abolish duties for 92 per cent of products.

China's priority imports under the FTA are copper and other minerals, agricultural products, fish oil, fruit including cherries, plums and nectarines, smoked salmon, chocolate, tomato sauce and poultry, according to the Government.

Tariffs on other products will be abolished in stages of one, five and 10 years, with fresh and frozen salmon, wine, grapes and apples remaining blocked for five to 10 years.

China's exports to Chile have risen 38 per cent in the same period to $US1.63 billion and Chile will immediately open its market to DVDs, computers, cellular phones and cars when the agreement comes into effect.

However, Chile has excluded 152 products including textiles and whitegoods to protect domestic industries.

China chose Chile for its first FTA to gain experience negotiating exemptions with one of the world's smaller countries before grappling with majors like Japan, the US or European Union.

The Chile-China deal does not tackle contentious issues such as intellectual property.

© 2005 The Age

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