The EU and Chile have signed an Advanced Framework Agreement and an Interim Trade Agreement to strengthen political cooperation and boost trade and investment.
The EU and Chile signed the agreement in a meeting between Executive Vice President and Commissioner for Trade Valdis Dombrovskis, High Representative/Vice-President Josep Borrell, the Chilean Minister of Foreign Affairs Alberto van Klaveren Stork, the Spanish Minister for the Economy and Digital Transformation Nadia Calviño, and the Spanish Minister of Foreign Affairs, European Union, and Cooperation José Manuel Albares on behalf of the Spanish Presidency of the Council.
The trade agreement will help to deepen the relationship between the EU and Chile, creating new economic opportunities for both sides whilst promoting shared values. These include substantive commitments and provisions on human rights, sustainable trade, and gender equality.
EU and Chile collaboration on critical mineral supply chains
The agreements help to foster co-operation between the EU and Chile as partners on global issues. Namely, de-risking supply chains, securing a sustainable supply of critical raw materials, and mitigating climate change.
The collaboration will support the competitiveness of businesses while helping to achieve the shared goal of transitioning to a net zero economy.
Underpinned by the Global Gateway Investment Agenda, the efforts include support for projects in critical raw materials value chains, such as the development of lithium and copper, and green hydrogen in Chile.
Taking advantage of the partnership
As the connection between the EU and Chile strengthens in the battery metals industry, German chemicals giant BASF SE is considering a lithium processing project in Chile’s salt flats.
According to a Bloomberg report, the company is exploring the possibility of building a plant that turns Chile’s lithium into an electric vehicle battery cathode.
If the project receives the green light, BASF will join Chinese firms BYD CO. and Tsingshan Holding Group in developing cathode factories in Chile.
Lithium offtake from Albemarle Corp.’s mine in Chile will become available next year.
Chile’s government is mandating cleaner mining methods to appeal to EU companies looking to invest in the country’s lithium supply. The nation is set to leverage its supplies to move further down the battery supply chain to help its transition to clean energy.
The first country in the region to finalise a next-generation agreement with the EU
The collaboration between the EU and Chile represents the first of its kind in the region, bolstering a renewed ambition to tackle present and future challenges.
The EU and Chile have agreed on a separate Interim Trade agreement, replicating the provisions of the Trade and Investment pillar of the Advanced Framework Agreement, except for the Investment protection provisions.
The Interim Trade Agreement allows an early entry into force of the modernised trade rules and will expire once the Advance Framework Agreement becomes enforced.
Next steps
Now, the new agreements will be submitted to the European Parliament for approval. Once Parliament gives its consent, the Council can adopt the decision to conclude the agreements.
Part of the Advanced Framework Agreement will come into provisional application. The Interim Trade Agreement will come into force when Chile’s Congress concludes its ratification procedure.
