Chile Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The European Union has a free trade agreement with Chile, under which more than 98% of all trade is carried out duty-free. Exports of the EU as a bloc to Chile have a high growth rate, but in terms of volume they are far behind China and the USA. The EU is the largest foreign investor in Chile. The main items of import from Chile to the EU in 2020 were: mineral products, plant products and metal ores. Among the most important export items from the EU to Chile in 2020 were: chemical products, machinery and transport equipment. Currently, the EU is negotiating with Chile to modernize the Association Agreement, which the EU is very interested in. The EU has a long-term positive trade balance with Chile, mainly due to the fact that Chile mainly exports unprocessed mineral raw materials and then agricultural products.

  • Allcountrylist: Overview of major industries in Chile, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 8,094.00 9,317.50 10,093.70 7,530.30 10,018.70
Imports into the EU (million EUR) 7,390.10 7,361.70 6,509.10 5,932.10 6,848.30
Balance with the EU (million EUR) -703.8 -1,955.8 -3,584.5 -1,598.3 -3 170.4

Source: European Commission

Trade relations with the Czech Republic

After Mexico and Brazil, Chile is the third largest trading partner of the Czech Republic from the LA region. The annual turnover of mutual trade is around 110 million USD. The Czech Republic has a long-term positive trade balance with Chile. Passenger cars and machinery have long been among the most important items of Czech exports to Chile. In recent years, the share of exports of dog and cat food has been growing significantly. Chilean exports to the Republic of Poland are clearly dominated by agricultural products and food products.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.9 1.7 2 1.7 ON
Imports to the Czech Republic (billion CZK) 2 1 0.8 0.9 ON
Balance with the Czech Republic (billion CZK) 0.7 -0.8 -1.2 -0.8 ON

Source: CZSO

Trade relations with countries outside the EU

The country has concluded more than 60 trade agreements providing access to markets representing almost 90% of world GDP. The largest trading partners outside the EU are the PRC and the USA. The most important export items are mineral raw materials and agricultural products.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 50,480.2 54,684.2 49,387.5 53,516.4 68,696.4
Imports to countries outside the EU (million EUR) 48,055.4 56 120.2 52,895.9 44,410.0 69,731.9
Balance with non-EU countries (million EUR) 2,424.8 -1,436.0 -3,508.4 9 106.4 -1,035.5

Source: EIU, Eurostat

Foreign direct investment

The volume of FDI in 2021 reached 16.782 billion USD. The largest amount of FDI flowed into the energy sector at USD billion, mining industry (USD billion), financial services (USD billion) and construction (USD billion). The largest investors were the USA (USD billion), Canada (USD billion) and the Netherlands (USD billion). Almost half of FDI went to the Santiago Metropolitan Region, the rest mainly to the three northernmost regions of Chile, where the largest mines are located.

There are not many restrictions on investment in Chile. Exceptions are strategic sectors: e.g. the mining industry or agriculture.

In the last decade, FDI from the Czech Republic in Chile has been directed mainly to the food industry and the energy sector. In 2008, the first Czech investor was the company Rudolf Jelínek, which bought a distillery in the area of ​​the town of Quillón, which it gradually modernized and expanded. The company also invests in agricultural land on the spot, on which it establishes pear orchards. In addition to its own pears, the company also processes fruit from local producers, from which it produces pear distillate, which is then exported to the Czech Republic. The company Rudolf Jelínek has so far invested USD 10 million in Chile.

The largest Czech investor in the country to date is Solek Group, which specializes in the development of solar parks with a capacity of up to 9 MW. Solek builds solar power plants all over the country. It has already successfully completed and sold a number of projects to foreign investors. He is currently working on several dozen projects that are in various stages of construction. Solek’s total investment in Chile is around USD 500 million.

In recent years, the interest of Czech investors in investing in land in the southern part of the country for the purpose of operating tourism or wine production has been increasing.

FTAs and treaties

Treaties with the EU

The modernization of the Association Agreement between the EU and Chile, including a free trade agreement, is currently under negotiation. The negotiating mandate was approved in November 2017, when the first round of negotiations also took place. So far, the last 10th round took place at the beginning of May 2021. Support for the modernization of the Association Agreement by the Czech Republic has as its main interest the protection of GIs and the reduction of tariffs for agricultural products; improving market access to public contracts and services, removing non-tariff barriers to trade.

Contracts with the Czech Republic

There are currently three main contractual documents between the Czech Republic and Chile in the field of trade and economic relations with Chile: Agreement on the support and protection of investments (signed during the visit of the Chilean Minister of Foreign Affairs to the Czech Republic on 24 January 1995) entered into force on 2 December 1996. It was concluded for 15 years with the possibility of automatic extension by 1 year. As a result of the accession of the Czech Republic to the EU, it was necessary to bring the wording of the Agreement into line with EU standards. Agreement on cooperation in the field of veterinary medicine (signed on 3rd 1999 during the visit of President E. Frei to the Czech Republic) Agreement on social security (signed on 7th December 2000 in Santiago de Chile during the visit of the Deputy Prime Minister and Minister of Foreign Affairs Jan Kavan). The Memorandum on cooperation between the armed forces of the Czech Republic and Chile is ready for signing. In the political field, trade and development cooperation is defined as mutual cooperation between the Czech Republic and Chile by the provisions of the association agreement between the EU and Chile (the AD fully entered into force on 1 March 2005 after the ratification of the Accession Protocols to the AD). As a member of the OECD, Chile no longer meets the conditions of a recipient of development funds in terms of EU criteria. Cooperation takes place at other levels, especially on the basis of specific projects of a regional and thematic nature. Development cooperation from the state budget of the Czech Republic is not implemented in Chile.

Developmental cooperation

As a member of the OECD, Chile no longer meets the conditions of a recipient of development funds in terms of EU criteria. Cooperation takes place at other levels, especially on the basis of specific projects of a regional and thematic nature. Development cooperation from the state budget of the Czech Republic is not implemented in Chile.

Prospective fields of study (MOP)

You can find a detailed map of Global industry opportunities, including sector analyses, HERE.

Mining, mining and oil industry

The mining industry is the backbone of the Chilean economy and accounts for almost 60% of Chile’s exports, on average around US$5 billion is invested in the mining industry every year. Chilean mining companies are trying to become the main promoters of so-called “green mining”. The biggest opportunities for Czech companies are in the following areas: supply of technological equipment for deep and surface mineral extraction, smart mining (innovative solutions for modern mines), greening of operations, water management, pollution measurement, early warning systems, liquidation of damages caused by mining activities, geological and consulting services.

Chile is the second largest producer of lithium, molybdenum and boron. 67.5% of the mining industry in Chile is owned by private companies. In this case, there are several groups of large international companies that own some copper, lithium, gold and silver mines here. On average, around USD 5 billion is invested annually in the country’s mining industry. The state-owned company accounts for 27.8% of all industry in the country. Of the 4.7%, the mining industry is composed of medium and small companies. Chile has 28% of all the world’s copper reserves and up to 20% of the world’s molybdenum reserves. The mining industry has also become the cornerstone of the Chilean economy. It provided 9.3% of the country’s fiscal revenue in the period 2010-2020. The mining industry in Chile creates a total of 840 thousand jobs and approximately 12% of the total VAT for 2020. It also accounted for 56% of all Chilean exports in 2020. 81% of copper production is extracted from surface mines. Chile is home to 6 of the 10 most important copper mines in the world. With a strong copper and lithium mining base, Chile is able to rise to the forefront of the global economy. Chile also has the potential to become the largest producer of green hydrogen in the world. In the Chilean mining industry, there is always a lot of room for new investment and a number of projects, especially in the area of ​​expansion and efficiency of copper and molybdenum mining. The trend of recent years also confirms that there will be a gradual transition from surface mining to deep mining. From the point of view of Czech companies, the supply of modern technologies and expert solutions is promising.

Energy industry

The main goal of Chile’s energy plan is to achieve complete carbon neutrality by 2050. Thanks to good natural conditions, the country has a huge potential for the development of energy from renewable sources, mainly geothermal, solar and wind. So-called “green hydrogen” will also be a key energy field in the coming years. By 2030, battery storage facilities with a volume of 2000MW should be created in the country. Projects for the modernization and construction of thermal power plants are being prepared, opening up opportunities for Czech suppliers, just as in the case of small and medium-sized hydropower projects.

In 2015, the Ministry of Energy in Chile published the National Energy Strategy to 2050, which includes a broad set of energy efficiency goals for the years 2035 to 2050. This plan envisages producing 60% of energy from modern renewable sources by 2035 and 70% by 2050. Chile’s goal is to achieve carbon neutrality in 2050. Chile has become a world player for energy production primarily from the sun and wind. The Atacama Desert has some of the highest levels of solar radiation in the world. New legislation supports investment in energy production across the energy sector. The expanded role of the state in energy planning helped to support the development of projects, especially in the field of electricity transmission. The country now also has a newly interconnected national electricity grid. Chile’s energy sector has undergone major changes in recent years. In 2013, Chile produced only 5% of its electricity from renewable sources. The renewable energy mix at the beginning of 2020 was as follows: 11% solar, 6.7% wind, 2% biomass and 2% small hydro (less than 20 MW). Chile also has huge potential for the development of other sources of renewable energy.. Currently, coal is still the main fuel source for electricity generation, accounting for 40% of electricity production in 2015, which Chile, like oil and gas, has to import for the most part. Chile also has huge potential for the development of other sources of renewable energy.. Currently, coal is still the main fuel source for electricity generation, accounting for 40% of electricity production in 2015, which Chile, like oil and gas, has to import for the most part.

ICT

Internet penetration in Chile is 11internet connections for every 100 inhabitants, 84.4% of connections are via mobile phones. ICT contributes more and more significantly to GDP growth, the demand for sub-sectors of ICT, such as SW development, cyber security, provision of computer services, etc. is also growing. There is also interest in fields related to artificial intelligence.

In some industries with low IT spend, such as mining, there are more concrete opportunities available, such as new solutions based on cloud computing. The main scenario for the slowdown is the potential financial crisis in China and the effects of the crisis caused by the covid-19 pandemic, which would be transmitted to domestic Chilean economic performance and purchasing power. The FinTech industry is a thriving part of Chile’s startup scene, especially when it comes to banking and retail. The population has rapidly adopted contactless payment services, expanding to mobile applications, digital signature verification and advanced consumer banking applications. The high use of mobile technology has revolutionized marketing for a large number of companies, including banks. Chile is currently spending more on R&D than it did before the 2008 crisis. This government spending spurs innovation by investing in start-ups and easing restrictions on larger companies looking to break into the Latin American market. Chile also ranks 14th in the world in terms of the number of new businesses created per year. Furthermore, Chile has developed a digital transformation strategy, which is an essential part of the state’s modernization, as it tries to materialize a number of principles linked to the technological changes that are happening globally and which experts have called the fourth industrial revolution (ICT industry 4.0). Chile is also a world leader in electronic invoicing. The introduction of mandatory electronic invoicing in Chile has streamlined business and tax solutions in the country. Electronic invoicing has many benefits, including the ability to optimize cash management, minimize risk, improve real-time traceability, improve quality, accuracy and access to data. The total investment in the Chilean ICT industry is 7.5 billion USD. Two-thirds of Chileans have a bank account, and Chile is among the countries with the most developed banking sector in Latin America. The number of current accounts in the country has tripled in 10 years to more than 21 million. Chilean consumers also use online banking.

Water management and waste industry

Most of Chile’s regions have been struggling with both drought and water supplies for a long time. The focus is mainly on: growing flood risks, inefficient use of water in urban and rural areas, leaks and unauthorized water consumption, insufficient data collection, streamlining of administrative procedures, etc. Private companies estimate investments in this sector at 1.169 billion USD by 2025. Opportunities for Czech companies are mainly in the areas of: water management, irrigation systems, waste management or the supply of technologies for wastewater treatment.

Healthcare and pharmaceutical industry

The government is continuing the “Health Investment Program”, which should be completed by 2026. The main purpose of this program is to modernize the state’s health system. This is a historic investment worth USD 10 billion. The modernization plan envisages focusing on new technologies, introducing more competition in laboratories, in the pharmaceutical industry and promoting the use of bio-equivalent drugs.

Defense industry

Annual defense spending is around billion USD and thus represents approx. 6% of public spending. In addition to the supply of finished products, our companies are offered the possibility of production cooperation with a state company serving the ground troops. The Czech aviation and space industry also has significant opportunities for application. Czech high-tech products in the field of communication technologies or passive surveillance systems also have a chance to succeed on the local market, as do firearms of Czech origin.

Opportunities for Czech companies in the field of military aviation arise, for example, in land border surveillance systems, in the supply of communication equipment for military aircraft, and in recent years the demand for drones and unmanned aerial vehicles has also been growing.

The space industry

The Office of the President together with the Ministries of Science and Defense confirmed the development of the new National Satellite System (SNSAT) on the territory of the country. Its main goal will be to support the space program. This will enable scientific and technological progress in Chile. The program aims to replace the current Fasat-Charlie satellite, which has already ended its useful life. It will also enable the production, launch and commissioning of two new high-resolution satellites, one of which will be constructed directly in Chile. An important step is the construction authorization for Satellite Earth Stations, which will be located in Santiago, Punta Arenas and one mobile also in Antofagasta. They will be interconnected and thus allow decentralized access to satellite images and increase the possibility of international space cooperation. Along with this project, progress is being made in the management model of the Chilean space system, which will include a new institutional framework. This will enable effective cooperation and integration between different public services. Chilean universities will participate in the project, and the country’s national industry and defense sector will also be involved. Of the 10 satellites that will make up the SNSAT system, 8 will be constructed in Chile. Two satellites in 2023, three in 2024 and another three in 2025. All of them have the main task of monitoring the territory, but they will also have several useful functions of communication and environmental monitoring. They will not only be used to observe the Earth, but some of them will also be used to observe space, more precisely to observe space debris and also to study the space climate. If this type of satellites will already be manufactured and operated in Chile, the only option left is to send them into space, but that is a matter for the second phase of the program. It is planned for a total of 15 years. The first five will focus on satellite production and operations capacity and improving space climate study and satellite security capabilities. In the second phase, which should start in 2026, the main task is to speed up the development of sending satellites into space. The goal is to get satellites 100 to 200 km high into space, and later even higher. In connection with the second phase, the president also mentioned the need to improve autonomous communication, which the space program and the installation of all satellites should bring. This is very important for a large economy and a country often affected by earthquakes like Chile. Thanks to this, the space where optical fibers do not reach will also be covered. Furthermore, the change will also apply to navigation systems. In this area, there is a possibility of a high level of national development. Sporting firearms and short firearms for self-defense are very popular in Chile. Export of firearms to the civilian sector, which continues to offer significant growth potential.

Rail and rail transport

The currently implemented railway development plan envisages investments of USD billion by 2027. The construction of new metro lines in Santiago de Chile, the construction of cable cars in Iquique and Valparaís, the expansion and modernization of suburban trains in Santiago (Quinta Normal, Batuco, Melipilla) with a total length of about 100 km are also being prepared. Opportunities for Czech companies are mainly found in the field of supply of control and signaling equipment, software, electrical equipment, etc.

Chile Trade