- The announced EU-Chile trade agreement facilitates EU investments in Chile’s mineral sector, while making some steps towards more sustainable mining.
- However, it may also limit Chile’s capacity to use its mineral reserves to upscale nascent green industries at home and improve its position in clean supply chains.
- The EU should facilitate Chile’s efforts to build new green industries on its domestic mineral reserves since this will lock-in Chile’s commitment to the climate transition.
Story: EU-Chile trade agreement
Chile hosts a large portion of global reserves of minerals needed for the energy transition, such as lithium and copper.
On Friday, the EU concluded its second trade negotiations since the Russian invasion of Ukraine. The invasion has prompted the EU to resume its bilateral trade agenda, seeking increased trade diversification and international cooperation to offset the economic downturn caused by the war.
The agreement facilitates EU investments in Chile’s mineral sector, while making steps towards more sustainable mining practices via impact assessments, due diligence, and rules on responsible sourcing. However, foreign mineral buyers may still outbid domestic green industries, limiting Chile’s capacity to retain the value of its minerals domestically and use them to improve its position in new clean value chains.
The EU should help Chile benefit from the comparative advantages offered by its mineral reserves to build strong green industries, such as producing batteries, solar panels, and renewable hydrogen. This will strengthen Chile’s commitment to climate action and win the EU a reliable partner in the transition, eventually expanding markets for the EU clean economy. To better achieve this, the EU could accompany this deal with a tailored support package, including capacity-building schemes, regulatory cooperation to lower non-tariff barriers and genuine technology transfers to improve local skills and capacities.
Ignacio Arroniz, Researcher on Trade & Climate at E3G said:“EU trade tools could do much more to proactively support its partners’ climate transitions. The EU’s future prosperity and security rely on bringing partners along towards a clean economy. The new EU-Chile agreement recognises this goal but somewhat falls short of meeting the challenge. There is much more the EU could do to support Chile’s nascent green industries – the upcoming process will offer opportunities to strengthen this agenda.”
Available for comment on EU-Chile trade agreement
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Notes to Editors
- E3G is an independent climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G
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