UAE And Chile Forge Economic Partnership, Targeting Customs Duties Cut Of 99.5%

The United Arab Emirates and Chile have formalised a Comprehensive Economic Partnership Agreement (CEPA) in Abu Dhabi, aiming to enhance economic ties. This agreement was signed during the official visit of Chilean President Gabriel Boric, who met with UAE President His Highness Sheikh Mohamed bin Zayed Al Nahyan to discuss various cooperation avenues.

Dr. Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, and Alberto van Klaveren, Chile’s Minister of Foreign Affairs, signed the agreement. The CEPA aims to eliminate or reduce customs duties on 99.5 percent of UAE imports from Chile. It will also open market access for services exports and facilitate investment and joint ventures.

Chile is South America's fourth-largest economy with a GDP exceeding US$300 billion. It leads globally in copper production and ranks second in lithium production. Additionally, it has significant agriculture, fishery, and forestry resources. The UAE has already invested in Chile's fruit production, real estate, and transport sectors.

The UAE-Chile CEPA is expected to boost non-oil bilateral trade to US$750 million by 2030, more than doubling the US$306 million recorded in 2023. Official estimates suggest that UAE exports will increase by US$247 million by 2030 due to this agreement.

Alberto van Klaveren highlighted the significance of this agreement for Chile as it marks their first trade deal with a Middle Eastern country. He stated, "This Agreement is very relevant for Chile. It is Chile's first Trade Agreement with a country in the Middle East and the Gulf in particular."

Strategic Importance

The CEPA aligns with the UAE’s foreign trade programme launched in September 2021 to support growth and diversification efforts. The UAE’s non-oil trade reached an all-time high of US$701 billion in 2023, reflecting a 12.6 percent increase from 2022 and a 34.7 percent rise from 2021.

Dr. Thani bin Ahmed Al Zeyoudi remarked on the importance of this deal for both nations' economies: "The UAE-Chile CEPA is a significant step forward for our foreign trade ambitions and consolidates our growing relationship with South America." He also noted that Chile offers numerous opportunities for the private sector in manufacturing, mining, financial services, renewable energy, tourism, and agriculture.

Broader Impact

This agreement follows another CEPA signed between the UAE and Colombia earlier this year. The CEPA programme aims to strengthen economic partnerships globally as part of the UAE’s broader strategy.

Alberto van Klaveren added that the agreement would facilitate future negotiations on an Investment Agreement beneficial to both countries: "We are confident that the broad liberalisation of access to both markets established in the CEPA will substantially impact bilateral trade."

The partnership underscores a mutual commitment to sustainable growth across various sectors including trade technology and eco-tourism. This collaboration aims to shape future economic landscapes beneficially for both nations.

With inputs from WAM