By the time the United Kingdom (UK) left the European Union (EU), it had signed trade agreements with 63 countries outside the EU. The first of which was with Chile in Santiago de Chile on 30 January 2019. Chile agreed to transfer the same conditions of EU trade to a bilateral agreement with the UK – a significant political win for the UK and a concept it would seek to replicate widely.
Some studies estimate that Latin American trade with the UK could increase up to 60%, with some governments in the region hoping the new agreements will stimulate investment from British companies in areas such as technology and energy.
According to an advisor to the Chilean Ministry of Foreign Affairs, “Although the Chile-United Kingdom Association Agreement entered into force this month, negotiations about its scope will continue in future revisions and updates of the instrument. No big surprises or conflicts are expected. The agreement was very well received by local industry and by the government, however, the potential for the volume of exports from Chile to the UK is limited and it is not expected that there will be great differences to the current commercial terms.”
“The potential for the volume of exports from Chile to the UK is limited and it is not expected that there will be great differences to the current commercial terms.”
Advisor to Ministry of Foreign Affairs, Chile
There are no sticking points for now in the implementation of this agreement, for several reasons. Firstly, it is not expected that this agreement will significantly increase or modify exports. Secondly, the agreement does not seek to establish new or innovative conditions above what already exists with the EU. Finally, Chile wishes to be considered a stable country with fiscal responsibility, so it was not considered prudent to modify the conditions of the agreement.
A senior trade advisor to the government stated, “There is a particular interest in wine, fruit and other produce – wine is important as the UK represents nearly 10% of our exports. For the UK, it was important to maintain the relevance of the London Metal Exchange (LME) in the commercialisation of Chilean copper.”
A director at an investment bank in Chile agrees, “Despite the relevance of the products exported directly between the two countries, the agreement is not important because of the volume of direct exports to the UK but because of its strategic position. On the one hand, maintaining the relevance of LME in the international market, despite the fact that LME is currently owned by Hong Kong Exchanges and Clearing. On the other hand, London aspires to remain a leader in the global financial services industry and Chile is considered a relevant partner in Latin America.”
“For Chile, this agreement is very important because it provides certainty to foreign investors in the climate of uncertainty.”
Economic advisor to the government, Chile
Considering the other side of the argument, an economic advisor to the government states, “For Chile, this agreement is very important because it provides certainty to foreign investors in the climate of uncertainty that is affecting businesses and investors associated with the constitutional discussion. It is strategically very relevant to have trade agreements signed to limit any possibility of altering bilateral relations due to changes in the country’s internal policies.”