“Reiterate once more than the Government is not against the Free Trade Agreements, what we have raised is the need to review the conflict resolution mechanisms,” said Urrejola.
This Friday the Government signed the political closure of the long-awaited modernization of the trade agreement with the European Union (EU), in an activity led by Foreign Minister Urrejola, together with the head of European diplomacy, Josep Borrel in Brussels.
Let us remember that the European Union and Chile decided in 2017 to update their 2002 association agreement, which governs trade and investment between the two parties.
The technical negotiations of the new agreement concluded last November, however, for it to enter into force, it must be ratified.
The latter was delayed, after the Government decided to review some aspects, something that earned it harsh criticism of the undersecretary for International Economic Relations (Subrei), José Miguel Ahumada.
In this regard, Foreign Minister Urrejola defended the delay, as did the president himself Gabriel Boric last week.
“To reiterate once again that the government is not against the Free Trade Agreements, what we have raised is the need to review the dispute resolution mechanisms,” Urrejola said in Brussels.
“The agreement contemplates the establishment of a permanent investment court, which will have gender considerations in its composition, as well as strict codes of ethics for its members,” he added.
“It will also contemplate an appeal instance, which will substantially improve this dispute resolution mechanism,” said the Minister of Foreign Affairs.
“This instrument is in line with the objective of Chilean trade policy to ensure the country’s strategic and regulatory autonomy, allowing the development of productive, environmental policies and other key areas for national development”, he concluded.
For its part, the < strong>undersecretary José Miguel AhumadaHe pointed out that this agreement “protects the strategic and regulatory autonomy of the country, and consolidates an agenda for the protection of the environment, gender equality and deepens the economic-commercial relationship between Chile and the European Union”.
“When it enters into force, it will replace the 15 current investment protection agreements and will establish a permanent investment court that will substantially improve the dispute settlement mechanism between investors and states” , he added.
The changes included in the Agreement with the EU
According to the Government, this modernization of the agreement will grant better access to the European market and offer permanent dispute resolution mechanisms between investors and effective states, impartial and predictable.
In fact, for the first time for Chile, the agreement will include the creation of a permanent investment court system to resolve disputes between investors and States, which contemplates high ethical standards for judges, appeal instances and gender consideration at the time of appoint judges.
Regarding its content, this Agreement will be the greenest that Chile has ever signed, establishing high levels of sustainable development, promoting environmental and labor protection.
In addition, this will be the first time that the European Union has signed a Gender and Trade chapterin an economic-commercial agreement, promoting equal opportunities and treatment between men and women.
Likewise, this modernization will include a new chapter on digital trade that addresses the current challenges of foreign trade.
It is estimated that, considering the deadlines for these processes, the Modernized Agreement could be signed by the end of next year and ideally sign it at the CELAC-EU summit of heads of state, to be held in November 2023.
After signing, the Association Agreement must be approved by the countries that make up the European community bloc, by their respective parliaments, and by the National Congress of Chile.
European Union highlighted agreement with Chile
As highlighted by the European Union, the agreement will promote trade and investment, supporting the green and digital transition and will offer new opportunities to companies.
The executive vice president and trade commissioner of the EU, Valdis Dombrovskis, said that “99% of trade will be free of tariffs.”
“Our new trade rules will facilitate investment and offer greater opportunities for SMEs on both sides. This modern, dynamic agreement reflects our shared ambitions to build greener economies, including cooperation on raw materials and clean energy sources,” he stressed.
Meanwhile, the high representative and vice president, Josep Borrell, stated that “at a time of unprecedented geopolitical challenges, with this new Advanced Framework Agreement, we are modernizing and updating our relationship to match our shared ambition and deepen our political dialogue, cooperation and economic relationship”
“This historic agreement also lays the foundations for closer cooperation on justice, peace and security and will foster connections between people, businesses and civil society in the EU and Chile in the next decades”, he stated.