On February 1 the commercial part of the Free Trade Agreement between Chile and the EU came into effect. The treaty establishes an area of free trade in goods, services, public contracts, liberilisation of investment and capital flows, and protection of intellectual property rights.

Some 91 per cent of European products will be imported tariff-free with immediate effect. While 85 per cent of Chilean exports will be tariff-free in the EU. The remaining tariffs will be reduced over a period of five to 10 years.

Speaking at a London-based seminar discussing the agreement, the ambassador of Chile, Mariano Fernandez, said this week; 'It is a great reflection on Chile as a country that it has signed this agreement. Over the last few years Chile and Mexico have been willing to sign with any country offering equal trading terms.' Alberto Van Klaveren, Chilean ambassador to the EU, went on to say: 'I stress the importance of the UK market for the Chilean economy. For most of our products it is a very important market.

'Chile has combined unilateral tariff reductions, commitments to multilateral disciples, and World Trade Order preferential bilateral agreements as compementary trade policy instruments.

.'Chile has sought an active participation in the multilateral trading system. We strongly support the new round of negotiations at the World Trade Order ministerial in Doha.

'Chile has engaged in a series of preferential agreements that guarantee market access and the ability of trade rules and disciples within specific markets.' Speaking on behalf of the UK's Department of Trade and Industry was senior policy advisor Stuart Pyle. He stressed the importance of the UK to the Chilean economy and said: 'The UK is one of the largest investors in Chile. In 2001, some £1.793bn was invested. The EU is Chile's principle trading partner and investor.' Going on to talk about the benefits of the agreement, Pyle added; 'Overall gains will be relatively small for the EU in percentage terms and will happen over the medium to long term. No significant changes of member states' sectoral trade or employment levels.

'UK exports will increase by E80m, and UK imports from Chile will increase by E133m.The agreement is likely to have a big impact on Chilean and UK trade. It's over to our companies to take advantage of the scheme.' Mexico has had the agreement in place for a while and enjoyed the benefits. In hindsight, Elena Espinosa de Wingate from the Embassy of Mexico, stated: 'Nobody can deny a free trade system is one of the best ways to increase exports and productivity. This is very important for businessmen. Each agreement will give different strategies and advantages. If there's one lesson Mexico has learnt is the agreement does work but it requires a lot of hard work.'