context: FTA (free trade agreement) negotiations with Nicaragua started in July 2022 and the FTA was signed by the two countries on 31 Aug 2023. Nicaragua is the PRC's 28th FTA partner and fifth FTA partner in Latin America. Expanding trade with Latin American countries is integral to the BRI (Belt and Road Initiative)'s broader goal of capturing emerging market growth, increasing imports and promoting the PRC's influence in international trade rules setting.
MofCOM (Ministry of Commerce) has broken down the highlights of the new PRC–Nicaragua FTA
- the provisions of the FTA are modern, inclusive and reach a high level of openness; the FTA covers
- opening up investment, goods and services trade
- traditional provisions in customs procedures and trade facilitation, rules of origin, sanitary and phytosanitary measures, cross-border services trade, and financial services
- 'behind the border' issues such as digital economy, environment and competition policy
- this reflects the FTA seeks to align with international economic and trade rules of a high standard
- chapters on encouraging economic and technical cooperation with SMEs, especially in agriculture, textiles, logistics and tourism
- tariff reduction for goods
- over 95 percent of tariff lines are covered by zero tariffs, with immediate zero tariffs on approximately 60 percent of products
- on the PRC side
- the zero tariff applied by the PRC covers the main export products of Nicaragua
- specific products, such as beef, shrimp, coffee, cocoa, jams, peanuts and ethanol, will gradually enter the Chinese market with reduced tariffs
- the PRC will also provide Nicaragua with an annual tariff quota of 50,000 tons of sugar
- on the Nicaraguan side
- it will implement zero tariffs on major PRC exports
- the tariffs on automobiles (including new energy vehicles), motorcycles, batteries, photovoltaic components, clothing, textiles, footwear, aquatic products and vegetables, will be gradually reduced or eliminated
- on the PRC side
- over 95 percent of tariff lines are covered by zero tariffs, with immediate zero tariffs on approximately 60 percent of products
- cross-border services trade and market access for investment
- this is the first time for the PRC to sign an FTA that opens up cross-border trade in services (including financial services) and investment in the form of a negative list
- both sides commit to granting each other market access for service trade and investment at a level not lower than that given to their respective free trade partners
- Nicaragua has made a higher level of commitment to open up key areas of manufacturing, construction engineering, electric power and maritime transport
- this will provide greater certainty and broader space for Chinese companies
- the PRC will also open up areas such as commercial services, environmental protection, banking and insurance, wholesale and retail and maritime transport on the basis of its World Trade Organisation commitments
- the FTA also includes
- facilitated arrangements for business personnel exchanges, such as entry and residence for business visitors, internal company personnel and contract service providers, and will allow parents of business personnel to accompany them for the first time
- clear provisions regarding most-favoured-nation treatment, market access for financial institutions and regulatory transparency in the financial services sector
- this is the first time for the PRC to sign an FTA that opens up cross-border trade in services (including financial services) and investment in the form of a negative list
- the digital economy chapter
- provisions cover domestic e-commerce frameworks, electronic signatures, online consumer protection, personal information protection, paperless trade, SMEs and digital economy cooperation