Official relations between Chile and the European Union (formerly the European Communities) date back to 1967 when the two parties first opened diplomatic representations in Brussels and Santiago, respectively. As Chile transitioned to a democratic polity from 1990, the relationship deepened. Reflecting the EU’s support for democratization in Latin America, both parties formalized ties through the signing of a Cooperation Framework Agreement in 1991 and a Framework Agreement on Trade and Economic Cooperation in 1996. The latter set Chile and the EU on the path to eventually negotiating an Association Agreement, including a preferential trade agreement (PTA), between 1999 and 2002. The Association Agreement has been in force since 2003, and in 2017 Chile and the EU decided to launch negotiations to modernize the preferential trade agreement part of the Association.
The bilateral relationship, and its study, have been defined by three key areas: (1) political relations, (2) cooperation relations, and (2) economic relations. The political and cooperation ties between the two parties have, in turn, been determined by two strands of EU external policies: (1) the EU’s overarching approach toward relations with Latin America, and (2) the evolution of the EU’s development policy. Economic relations, for their part, cover rising trade flows and increasing investment (especially EU foreign direct investment outflows and stocks in Chile). Chile’s attractiveness, despite its relatively small economy and population, derives from its specific political economy. Chile’s painful market reforms under the Pinochet regime set it on a path of greater economic openness than its neighbours. Democratic governments since 1990 have continued policies of trade liberalization, low tariffs, and active engagement in the creation of a dense network of global preferential trade agreements with Chile at its center as a gateway to Latin America. This has helped to diversify Chilean trade relations away from over-reliance on the EU or the United States, and has made Chile an attractive target for foreign investment. The trade agreement part of the Association Agreement ushered in deeper economic ties, and a body of scholarly analyses of the agreement and its impacts has slowly emerged.
Relations with Chile have formed part of the EU’s broader strategy toward Latin America, rather than independent EU strategy. Initial steps toward an Association Agreement were within the context of negotiations for an Association Agreement between the EU and Mercosur (the Common Market of the South). Analysis of the EU–Chile relationship has, as a result, tended to be sparse and to be included as a subsection in studies of broader EU–Latin America relations, and especially EU–Mercosur relations. Nevertheless, the relationship represents a positive example of successful engagement with a relatively like-minded partner in a mature association, and demonstrates the extent of and possibilities for EU foreign policy engagement. Moreover, the relationship has served as a testing ground for new types of projects and collaborations and for mutual learning, such as the parties’ joint projects on increasing gender representation in politics, or the inclusion of gender clauses, for the first time in an EU preferential trade agreement, in the modernization of the EU–Chile agreement.
Analysing the trade effects of the EU-SA & SADC trading agreements: a panel data approach