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2nd. 2008 Vol.62

China and Chile Signed FTA on Trade in Services

Witnessed jointly by Chinses President Hu Jintao and his Chilean counterpart Michelle Jeria Bachelet, Chinese Minister of Commerce Chen Deming and Chilean Deputy Foreign Minister Alberto Van Klaveren, respectively on behalf of each governments, signed the Supplementary Agreements on Trade in Services of the Free Trade Agreement between the Government of the People’s Republic of China and the Government of the Republic of Chile in Sanya, Hainan province on April 13, 2008.

China-Chile FTA negotiation on trade in services was jointly declared to launch by Wu Bangguo, the Chairman of the Standing Committee of Chinese National People's Congress and Chilean President Bachelet in September, 2006. Since then, China and Chile set 6 rounds negotiations for the specific terms and schedules of opening department commitment and the other contents of the agreements on trade in services, which reached to a consensus entirely in recent days. According to the agreements, China’s 23 industries and sub-industries including computer, management and consulting, real estate, mining, environment, sports and air transport, and Chile’s 37 industries and sub-industries including law, building and designing, engineering, computer, researching, real estate, advertisement, management and consulting, mining, manufacturing, leasing, distributing, education, environment, tourism, sports, and air transport would further opening up on the basis of their commitments to WTO.

This is the first free trade agreement signed with a Latin American country, as well as a milestone of the relationship in the history between China and Chile. The singing of the agreement would: 1, help the two countries to further mutually open up service market, increase mutual complementary predominance, promote international competitiveness; 2, help to improve investment environment, create business opportunities, reduce trading cost and bring more benefit for the enterprises and people of the two countries; 3, help to boost an all-round cooperation in all sectors between the two countries, broaden cooperative field, improve cooperative level, and promote a thorough development on a comprehensive cooperative partnership.

During the informal meeting of the APEC leaders in Busan, Korea on Nov. 18, 2005, China and Chile had signed China-Chile Free Trade Agreement and made an arrangement for the free bilateral good trade. The said agreement sees a favorable result since it is enforced starting from Oct. 1, 2006. China-Chile bilateral trade volume amounted to US$14.7 billion in 2007, up by 65% than the previous year, out of which China’s import from Chile hit US$10.3 billion, up by 79% than that in 2006, and China’s export to Chile hit US$4.4 billion, up by 42%. .

MOFCOM Spokesman Answers Questions Concerning FTA on Trade in Services between China and Chile

Question: Would you please make a briefing on the process of the negotiations for China-Chile FTA on Trade in Services?

Answer: During his visit to Chile in September 2006, Wu Bangguo, Chairman of the Standing Committee of the Chinese National People's Congress, announced jointly with the Chilean President Michelle Jeria Bachelet the launch of the negotiations on trade in services. Since the very beginning, the leaders of the two countries have been attaching importance and showing support to the negotiation, creating a sound political environment for an early conclusion. Following one and a half years and 6 rounds of negotiations, the two sides finally reached an agreement on all the contents of the Agreement on Trade in Services in the end of last March. Witnessed by the Chinese President Hu Jintao and his Chilean counterpart Michelle Jeria Bachelet, the two sides signed the Supplementary Agreement on Trade in Services of the Free Trade Agreement between the Government of the People’s Republic of China and the Government of the Republic of Chile (China-Chile FTA on Trade in Services) on April 13.

Q: What is the content of China-Chile FTA on Trade in Services and when will it come into effect?

A: The Agreement primarily contains 22 provisions and 2 annexes. The full text can be divided into 4 sections, namely definition and scope, obligations and disciplines, specific commitments and organization clauses. The annexes are the Schedules of Specific Commitments for Temporary Movement of Business Person and the mutual opening of services. The detail of the Agreement (and the Schedules of Specific Commitments) can be found on the MOFCOM website (www.mofcom.gov.cn).

According to the Agreement, China’s 23 industries and sub-industries including computer, management and consulting, real estate, mining, environment, sports and air transport, and Chile’s 37 industries and sub-industries including legal service, construction and architecture, engineering, computer, R&D, real estate, advertisement, management and consulting, mining, manufacturing, leasing, distribution, education, environment, tourism, sports and air transport will further be opened up on top of their respective commitments under the WTO.

The two parties agreed on trying to implement the Agreement starting from January 1, 2009, after the approval procedures are completed in both countries.

Q: Why does the Agreement regulate for the temporary movement of business people?

A: The Agreement specifically establishes the annex regulating the temporary movement of business persons, and sets up a working group on temporary entry of business persons under the FTA framework to meet China’s demand. Henceforth, the two parties will hold regular negotiations on the facilitation of business visa and simplification of visa application procedures. The working group will establish a stable mechanism for the contact and communication on the visa issue for the two way movement of the two countries’ business people, and facilitate the business people relative to trade, investment and relevant events of the two countries.

Q: Will China and Chile conduct FTA negotiations on investment in future?

A: The two sides have always maintained communication and contact on the said investment issue. The investment authorities of the two countries have exchanged views on their respective investment regimes, policies as well as the status quo. According to the consensus reached in the FTA on Trade in Services, the two countries will launch the negotiations on investment at a proper time.

Q: What kind of impact can the agreement have on China and Chile after the signing of the FTA on trade in services?

A: The singing of the agreement will: 1, help the two countries further open up their own services market to each other, increase complement each other’s advantages, and promote international competitiveness; 2, help improve the investment environments, create business opportunities, reduce trading cost and bring more benefits to the enterprises and people of the two countries; 3, help boost an all-round cooperation in all sectors between the two countries, broaden the cooperative areas and improve cooperative level. In addition, it will provide a new opportunity for developing a comprehensive cooperative partnership; play a positive role in boosting the relationship between China and Latin American countries.

The China-Chile FTA on Trade in Services is an arrangement of mutual benefits and reciprocity, highlighting further openness in each other’s market. In terms of the arrangement, 23 industries of China, including computer, management and consulting, mining, environment, sports and air transport, etc. as well as 37 industries of Chile, including legal service, construction and architecture, engineering, computer, researching, real estate, advertisement, management and consulting, mining, manufacturing, leasing, distribution, education, environment, tourism, sports, and air transport will be further opened up to each other. For the majority of Chinese enterprises in services, the signing of the Agreement is a wonderful opportunity to further explore in services market in Chile, as well as other Latin American countries. As for the Chinese enterprises in the air transport, sports, mining, management and consulting, industries which shall be further opened up to Chile on top of the China’s commitments to the WTO, competition pressure is likely to rise in the future. However, whilst bringing competition to China, foreign businesses also bring in advanced information, technology and management. We believe that our enterprises in services can certainly seize the opportunity and turn the pressure into driving forces, and will not just survive in economic globalization and the fierce international competition, but also thrive with a more rapid development in a larger and more open market.

Q: Would you please assess the impact upon the bilateral trade since the beginning of the FTA implementation one and a half years ago?

A: A relatively high standard of openness was set in the China-Chile FTA on Trade in Goods, as the agreement itself was a high-quality one. Since the start of the implementation, China-Chile bilateral trade volume has been continuously rising; the economic cooperation has been deepening; business links have been strengthening; people’s daily life has been benefited, and the political elations have become increasingly close. The two countries have in deed realized win-win, mutual benefits and common development.

The trade volume between the two countries totaled 14.7 billion US dollars in 2007. The growth rate jumped from 20% before the implementation to the current level of 65%. The goal of exceeding 10 billion US dollars has been reached ahead the schedule. In breakdown, China’s import form Chile reached 10.3 billion US dollars, up by 79% over 2006; while China’s export to Chile reached 4.4 billion US dollars, up by 42%. The share of China’s high-tech exports and electromechanical exports to Chile has greatly increased in 2007. In addition, China’s import of copper and copper products, timber and other products of first-stage processing hit record highs continuously.

We have reasons to believe that, as the China-Chile FTA on Trade in Services is implemented, the two countries’ trade and economic relations will move on to a new stage with a sound momentum in overall development.

(Source From MOFCOM)

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