The EU Chile Interim Trade Agreement (ITA) has entered into force, following the completion of Chile’s ratification process.
The ITA, which was signed in December 2023, is of key geopolitical importance and aims to boost the competitiveness of businesses on both sides, while providing a shared platform for the development of Net Zero economies.
The work will be further underpinned by ongoing initiatives under the Global Gateway, such as the production of green hydrogen in Chile – the third biggest EU trading partner in Latin America – and development of critical raw materials value chains for lithium and copper.
The agreement will enable the EU and Chile to cooperate as ‘like-minded, lasting partners on global challenges’, such as the de-risking of supply chains and the fight against climate change, and comes amid a tense international trade environment with the US introducing tariffs on Canada (25%, 10% on energy), Mexico (25%) and China (10%), and having Europe in its sights next.
The ITA will deepen EU Chile bilateral trade and investment relations and provide new opportunities for businesses by eliminating tariffs on almost all EU exports and providing a level playing field for EU goods on the Chilean market and ensuring more effective and sustainable flow of raw materials and derived products.
An Energy and Raw Materials chapter will foster investment and provide the EU with steady, reliable and sustainable access to critical raw materials such as lithium, copper as well as clean fuel like hydrogen.
Maroš Šefčovič, Commissioner for Trade and Economic Security; Interinstitutional Relations and Transparency, said the EU continues to create effective partnerships around the world, supporting economic growth and economic security.
“It will help us diversify our supply chains, while creating new opportunities for our businesses, including SMEs,” he said.
Chilean LNG firm GNL Quintero and Acciona Energía received environmental approval for a 10MW green hydrogen project near Valparaíso last November.
Read more: 10MW green hydrogen project in Chile secures environmental approval
The South American country plans to support hydrogen electrolyser and component manufacturers by building factories with up to $10m investment support.
However the current status and progress of green hydrogen development indicate a gap ‘between goals and reality,’ according to Rystad Energy.
The targets of 5 gigawatts (GW) of electrolysis capacity by 2025 and 25 GW by 2030 are ambitious and likely to face challenges in implementation, it warns, adding that Chile currently has less than 900 megawatts (MW) of green hydrogen capacity due online by 2026.
Nine hydrogen production facilities are currently in operation, according to H2 Intelligence.
