The extension of the Partial Scope Agreement (PPA) between Chile and India entered into force today. Both Governments have high expectations regarding the qualitative jump that the extension of tariff reductions for 2,829 trade lines, compared to the 474 covered so far, will have on trade.
"This is a big step," said the Ambassador of Chile in New Delhi, Andres Barbe, underlining the importance of this agreement.
This agreement covers nearly 90% of the products traded between the two countries, something which, in the opinion of Barbe, "facilitates trade with Chile, as it places controls and regulations, but also adds a framework of solutions before any controversy."
The extension of the agreement, which was signed in April, stipulates a 30% to 100% decrease in tariffs for 1,798 trade items from India, and a 10 to 100% tariff reduction for 1,031 Chilean products.
"This cheapens products, making them more competitive," said Barbe, who noted that Chile was at a disadvantage with many countries because of the cost of transporting products from Chile for 50 to 60 days to India.
The Ambassador said that Chile's flagship product for India was copper, as it accounts for about 82 percent of its exports, but that the South American country wanted to change this trend.
"What we want is to have a greater number of products present in India and the way to do it is with these type of agreements," said the diplomat, adding that he hoped the agreement would work well so they could talk later about the possibilities of expanding it in the medium term, or of reaching a free trade agreement.
Rita Teaotia, India's Commerce Secretary said last week that the agreement covered all areas of interest, 98% of the current trade between Chile and India. India imports copper and derivatives, fertilizers, machinery, fruits or inorganic chemicals, among others products, from Chile.
She also said that Chile was India's oldest ally in Latin America, even though negotiating the extension of the agreement took over a decade, since its first version came into force in 2006.
The AAP, signed in 2006 and implemented since 2007, is the only agreement of this nature that India has signed with an individual Latin American country.
Peru will begin negotiating an FTA with India in June and, as a bloc, the founding countries of Mercosur: Argentina, Brazil, Paraguay and Uruguay, are negotiating with the Asian country.
The expansion also includes a review of the tariff barriers by incorporating new provisions regarding Technical Barriers to Trade, and Sanitary and Phytosanitary Measures.
Chile is India's fourth biggest Latin American trade partner after Brazil, Venezuela and Argentina. In 2015, bilateral trade with India amounted to 2,723 million dollars, 2,003 million of which were of Chilean exports.
Sources: EFE