Publicised as a beacon of progress, prosperity and independence for the EU from certain international markets (read: China), the so-called Advanced Framework Agreement (AFA) struck between the EU and Chile masks deeper problems rooted within the global economic system and embodies the perils of prioritising corporate interests over the well-being of communities and ecosystems.
The EU-Chile AFA will be put to a European Parliament vote on the 29th of February updates the existing 2002 Association Agreement which includes a comprehensive FTA that entered into force in February 2003.
Built upon decades of diplomatic ties, this updated agreement was negotiated under the right wing neoliberal administration of President Piñera and finalised before the mandate of current President Boric began. The AFA aims to expand the existing framework by slashing tariffs on goods and services and expanding areas of liberalisation. Despite initial requests for renegotiation by President Boric, the European Commission resisted attempts to adjust the deal to the new democratic reality in Chile. Particularly, the agreement aims to secure a stable supply of critical raw materials for the EU’s green and digital transition, with lithium being a focal point, where Chile is the main supplier – around 80% of the EU total demand of this material.
Despite some commitments in the AFA to sustainable development, gender equality, and sustainable food systems, there are multiple negative aspects, with Left and progressive forces in Europe and Chile expressing particular concern over the energy and raw materials chapter of the text, which restricts Chile’s ability to regulate the flow of critical resources to Europe. Additionally, the investment protection section potentially favours investor rights over policies instigated by democratically elected governments.
Peeling back the layers of this agreement reveals its negative impact on the agricultural sector. While large agribusiness corporations stand to benefit from increased market access and reduced tariffs, small-scale farmers face the prospect of displacement and marginalisation. Moreover, the asymmetry in trade terms, where Chile primarily exports raw materials while importing manufactured goods from the EU, raises concerns about perpetuating an imbalanced economic model. The agreement’s impact on environmental issues, indigenous rights, access to medicines, and digital rights further fuels the debate surrounding its implications. Lithium extraction, a central point of interest for the EU, threatens indigenous communities’ rights and exacerbates Chile’s water crisis, yet the agreement lacks safeguards for their protection.
In response to these concerns, The Left is confronting these issues head-on during the planned review of the agreement. The stakes are too high to ignore the potential ramifications of a flawed trade deal that prioritises corporate profits over people and planet. On this note, our MEP Helmut Scholz (Die Linke, Germany) said: “Chile is rich in numerous minerals, such as lithium, a key resource for the green transition. This deal aims at securing the EU’s lithium supply. A further expansion of mining in the country will likely aggravate Chile’s water crisis, and put indigenous communities at risk, living close to potential mining sites. In addition, the Chilean government will face new obstacles when developing its own refining industry. Clearly, this deal does not deliver on the Commission’s promises for fair partnerships with Latin America.”
Beyond the EU-Chile AFA, there is an urgent need to rethink current EU trade policy to align with principles of fairness, solidarity, and ecological integrity. Parallel to these negotiations are ongoing talks and controversy over the EU-Mercosur agreement, which, if approved, would expose European farmers to unfair competition from products with lower environmental and social standards, undermining the conditions necessary to implement the Green Deal in the agricultural sector. Instead of prioritising the interests of multinational corporations in the short term, future trade agreements must prioritise the well-being of workers, farmers, and vulnerable communities in Europe and around the world. They should foster social protection, respect labour rights, and promote climate justice, ensuring that the benefits of trade are shared equitably and contribute to the collective good.