Mauricio Macri will meet Michele Bachelet in 2018. Photo via TN.

The foreign ministers of Argentina and Chile – Jorge Faurie and Heraldo Muñoz – signed a free trade agreement at the Argentine Foreign Ministry yesterday. The agreement, which was concluded after five rounds of negotiations, will facilitate bilateral trade, improve the efficiency of customs, increase investment, create joint service schemes, and catalyze infrastructure projects.

Argentina’s President Mauricio Macri will travel to Chile on June 27, 2018 to meet his counterpart, Michele Bachelet, to inaugurate the new “historic” accord. “We are before the doors of a profound economic agreement that exceeds what we have seen up to now with our bilateral relations,” a Chilean official in the foreign ministry stated.

“The end of roaming and other benefits are the key benefits of the new trade agreement between Chile and Argentina,” the Chilean foreign ministry wrote on Twitter.

According to Infobae, the agreement will increase trade between both countries which today remains near US $3 billion annually; it will facilitate state purchases, labor agreements, liberalization of tariff barriers, and investment from small and medium sized enterprises.

Moreover, a joint statement released following the fifth round of trade negotiations in September indicated that Chile and Argentina will both gain a variety of benefits from the new set of agreements. Among such benefits are opportunities in government procurement, a commitment to eliminating roaming in telecommunications, a modern legal framework for protecting investment, and new cooperation in the field of e-commerce. The new accord’s chapter on government procurement will open a market that represents between 5 and 15 percent of GDP between the two countries.

Bilateral economic ties are currently governed by Economic Complementarity Agreement No. 35 with the MERCOSUR trading bloc – which is comprised of Argentina, Brazil, Uruguay an Paraguay – an agreement that entered into force in 1996. The new agreements will complement the previous agreements and attempt to modernize trade between Chile and Argentina.

According to Chile’s foreign ministry, Argentina is the top destination for Chilean exports; in 2016, those exports amounted to US $1.23 billion. Chilean firms have US $29.3 million in investments in Argentina in various sectors including services (38%), manufacturing (24%), energy (20%), agriculture (10%), and mining (8%). Argentina exported US $2.3 billion to Chile in 2016. The agreement is also intended to improve the balance of trade between the two countries.