Updated: 2005-08-16 08:30
China is expected to ink its first free trade agreement (FTA) with a single country this year. "It is hopeful that we can finalize it at the end of this year. after the fourth round of talks," Pablo Cabrera, the Chilean Ambassador to China, said.

The fourth round of talks are scheduled to be held in Chile's capital Santiago from September 12.  They will be headed by Yi Xiaozhun, China's assistant minister of commerce, and his Chilean counterpart.

"It is a very key moment of the negotiation process," said the ambassador.

"We don't foresee any big problems to accomplish the deal."

The ambassador believed a FTA between China and Chile would be of high quality.

"A high quality FTA must include all issues involving free trade, covering three aspects: goods, services and investment," he said.

He regarded the FTA as a key factor to the Sino-Chilean relationship as the deal would not only facilitate trade and investment flow between the two countries but also promote the relationship, including in political, scientific and cultural co-operation.

China mainly exports textile goods and clothes, high-tech goods, shoes and toys to Chile. Imports from there to China are mainly copper and copper ore, paper pulp, fish meal, iron ore and nitre.

The past few years have witnessed vigorous trade growth between the two countries.

From 2000 to 2004, China's exports to Chile surged 22 per cent annually and its imports from Chile 42 per cent each year.

Bilateral trade reached US$5.4 billion in 2004. Trade volume was likely to see a large increase in the short term and remain steady in the medium and long term, said Cabrera.

When the FTA is set up, it is expected to spur Chinese on to invest in Chile.

By the end of last year, China had 19 enterprises in Chile with a total investment of US$24.6 million.

However, the ambassador was not satisfied with that, saying there was still great potential.

Chile has organized roadshows in various Chinese cities, such as Shanghai, Fuzhou and Shenzhen and is planning more in other cities in the near future.

Cabrera hoped these events in China would help to increase knowledge and interest in Chile among Chinese people, in particular in the business sector.

Besides trade, the free trade agreement is expected to strengthen co-operation in many areas including transportation, technology and tourism.

Cabrera said the FTA would also help each nation have more confidence in the other country's society. Chile expects to provide Chinese companies with a new entry point to the American market.

"(When the agreement is reached,) South America, even the whole of America, will become a complete free trade area for China," he said.

The two countries spent around one year looking at the feasibility of an FTA and one year on negotiations which were officially launched in January.

Three rounds between the two countries have been held so far, in Beijing, Santiago and Wuxi in East China's Jiangsu Province.

Topics concerning a number of issues, such as the framework for the agreement and trades have been settled so the final phase can be reached.

Chile has already signed over 30 FTAs while China is negotiating and carrying out feasibility studies for FTAs with a number of trade partners, including the Association of Southeast Asian Nations (ASEAN), Australia and New Zealand.