Ex-ante Study of a Possible Modernisation of the EU-Chile Association Agreement

This study provides an ex-ante impact assessment of the possible modernisation of the EU-Chile Association Agreement. Since the current Agreement entered into force in 2003, Chilean exports of agricultural/food products and services to the EU have nearly tripled while EU exports to Chile have doubled in most sub-sectors. Going forward, simulation results provided by the European Commission shows potential growth in bilateral exports with the EU, especially for goods belonging to manufacturing sub-sectors, with modest positive effects on the macroeconomic variables in both partners. This includes increased opportunities for small and medium sized enterprises and general consumer welfare gains. Trade redistribution may also occur among the main trading partners of the EU and Chile. Furthermore, there are decided advantages to a single EU-wide comprehensive investment chapter to facilitate foreign direct investment flows, while gains from easing market access and regulatory barriers to public procurement in both Chile and the EU are more muted. Overall, limited environmental, employment and labour market impacts are expected in both partners. However, potential exists for reinforcing labour standards in Chile and increased environmental cooperation through a modernised Agreement. The net impact of increased trade on human rights is unclear but likely to be marginal.