Impact of the EU Modernization Agreement on the Chilean pork and poultry exporting sector

The recent approval of the Advanced Framework Agreement (AFA) and the Interim Trade Agreement (ITA) between Chile and the European Union by the Foreign Affairs Committee of the Chamber of Deputies represents a significant milestone for the Chilean exporting sector, particularly pork and poultry. The signing of both agreements in December 2023 in Brussels, and their approval by the European Parliament last February, mark the beginning of a new era for the EU-Chile bilateral trade, which dates back to the Association Agreement of 2003.

This updating of the Chile-EU AFA will significantly increase the number of Chilean products with preferential tariffs, going from 94.7% to 99.6% of tariff lines. This benefits the pork and poultry industry, which will be more competitive in a market of 448 million people. The tariff reductions facilitate access to this vast market, increasing Chilean exporters’ opportunities for growth and expansion.

The Undersecretary for International Economic Affairs, Claudia Sanhueza, celebrated the approval of the AFA and the ITA between Chile and the EU by the Foreign Affairs Committee of the Chilean Chamber. “This agreement brings great benefits for our exporting sector, expanding preferential tariffs for Chilean products, but also acknowledging denominations of origin for various products that are critical for our country’s regions,” she said.

Undersecretary Sanhueza also highlighted AFA’s improvements on the quotas for various meat exports from Chile to the EU market. Specifically, the current tariff quota for pork will grow from 10,800 to 19,800 tons and add a new tariff line. Similarly, the poultry quota will grow from 20,300 to 29,300 tons upon the Agreement’s entry into force, and to 38,300 tons after three years. This quota will add new 35 tariff lines.

The EU, which is the third largest global economy with a GDP of $18.349 billion USD (2023), offers significant trade opportunities for Chile. The deepening of trade with the EU through the AFA creates a favorable environment for the growth and development of the Chilean exporting sector.

Juan Carlos Domínguez, president of ChileCarne, highlighted the sustained growth experienced by Chile’s pork and poultry exporting sector, cementing its position as the country’s fourth largest food exporting industry in 2023, following salmon, fresh fruit, and wine. The AFA and the ITA reinforce Chile’s strategic position by increasing pork and poultry export quotas to the EU.

“By 2024, the initial quota for poultry will be 22,475 tons, with an over-quota tariff between €187 and €1,283 EUR per 100 kg. For pork, the initial quota will be 11,850 tons, with an over-quota tariff between €467 and €869 EUR per 100 kg. These quotas are designed to grow in the following years, which will allow a higher penetration of Chilean products in the European market,” added ChileCarne’s president.

In 2023, Chile was the EU’s third pork supplier, with 14,415 tons, and the ninth for poultry, with exports valued in €7.3 billion EUR. The modernization of the trade agreement increases the competitiveness of Chilean products, not only due to the increased quotas but also due to lower tariffs, which reduces export-related costs.

On the other hand, the AFA puts sustainable development as one of the key pillars of the business relationship between Chile and the EU, which includes the protection of labor rights and the environment, translating into a more responsible and sustainable pork and poultry production. Adherence to these standards improves the perception and acceptance of Chilean products in demanding markets such as Europe. European consumers will increasingly prefer products that meet high standards of sustainability and social responsibility.

The agreement also includes a chapter dedicated to SMEs, facilitating access to the information and resources needed to enter and compete in the European market. Access to specific information and resources helps SMEs improve their ability to compete in the international market.

The agreement also acknowledges certain denominations of origin, key to preserving the reputation and quality of Chilean products internationally. This acknowledgment ensures that products maintain their added value and differentiation in the demanding European market.