Free Trade Agreement between Chile and Canada: Benefits, Challenges, and Future Prospects

Free trade agreements have been a hot topic in recent years, with countries around the world looking to boost their economies by expanding trade opportunities with other nations. One such agreement is the Free Trade Agreement (FTA) between Chile and Canada, which was signed in 1997 and came into effect in 1999. This article will explore the benefits and challenges of this FTA and its future prospects.

Benefits of the Chile-Canada Free Trade Agreement

The Chile-Canada FTA is considered to be one of the most comprehensive agreements of its kind, covering a wide range of goods and services. The agreement has been successful in promoting increased trade between the two countries, with bilateral trade growing from $1.7 billion in 1997 to $2.9 billion in 2019.

One of the key benefits of this FTA is the elimination of tariffs on goods traded between Chile and Canada. This has led to increased competitiveness for businesses in both countries, as they can access each other`s markets without facing costly tariffs. In addition, the FTA has facilitated the movement of people between Chile and Canada, making it easier for professionals, academics, and students to work or study in either country.

Another benefit of the Chile-Canada FTA is the promotion of foreign investment. The agreement includes provisions that protect investors and encourage investment, such as the establishment of a Bilateral Investment Treaty (BIT) and the creation of a joint committee to oversee investment-related issues. These measures help to reduce risks for businesses looking to invest in either country, and promote cross-border investment flows.

Challenges of the Chile-Canada Free Trade Agreement

The Chile-Canada FTA has also faced some challenges over the years. One of the main issues has been the limited participation of small and medium-sized enterprises (SMEs) in the agreement. While larger companies have been able to take advantage of the FTA to expand their operations, SMEs have struggled to access new markets due to lack of resources and information.

Another challenge has been the impact of the FTA on certain industries, particularly in Chile. Some sectors, such as agriculture and textiles, have faced increased competition from Canadian imports, which has led to job losses and other economic challenges. While the FTA has overall been positive for the Chilean economy, these challenges highlight the need for targeted policy interventions to address the specific needs of affected industries.

Future Prospects for the Chile-Canada Free Trade Agreement

Despite these challenges, the Chile-Canada FTA is expected to continue to play an important role in promoting trade and investment between the two countries. There are opportunities for further expansion of trade, particularly in sectors such as renewable energy, mining, and technology. The recent renegotiation of the North American Free Trade Agreement (NAFTA) could also provide new opportunities for Chile and Canada to work together in the North American market.

In addition, there are efforts underway to increase SME participation in the FTA. The Chile-Canada Joint Working Group on SMEs is working to identify barriers to SME participation and develop strategies to overcome them. This could help to ensure that more businesses are able to take advantage of the benefits of the FTA, and contribute to increased trade and investment between Chile and Canada.


Overall, the Chile-Canada Free Trade Agreement has been a largely positive development for both countries, promoting increased trade and investment. While there have been some challenges, these can be addressed through targeted policy interventions and joint efforts to expand the FTA to new sectors and markets. As both countries continue to grow and adapt to changing global economic conditions, the Chile-Canada FTA is likely to remain an important element of their bilateral relationship.