The FTA between China and Nicaragua comes into force after raising the level of their relations

He FTA (FTA) between the People’s Republic China and Nicaragua It came into force this Monday, January 1, two years after both countries reestablished their diplomatic relations and two weeks after raising them to the level of “strategic partnership.”

The FTA between the Asian giant and the Central American country, signed on August 31, 2023, comes into force, giving immediate access to that market to 60% of the products that Nicaragua currently exports with a 0% tariff as the cbovine harness, sugar, seafood, honey, harnesses and textiles, among others.

In terms of trade in goods, the two sides will eventually implement zero tariffs on 95% of the products in their respective tariff lines, of which 60% will receive zero tariffs immediately, according to the agreement.

The remaining 35% will be exempt from tariffs gradually, according to a statement released by the Nicaraguan Governmentdated December 29.

The expected benefits

According to Nicaraguathe two sides will achieve high-level mutual opening in the fields of trade in goods, trade in services and access to investment markets.

“With regard to trade in services, the FTA It is the first in China to open cross-border trade in services and investments,” highlighted the Nicaraguan Executive.

In addition, the treaty will promote economic and technical cooperation between the two parties in the fields of agriculture, textiles, logistics, tourism and small and medium-sized businesses, he stressed.

On November 16, the National AssemblyThe Nicaraguan (Parliament), controlled by the Sandinistas, unanimously ratified the FTA between China and Nicaragua.

According to the Nicaraguan Parliament, this agreement will allow Nicaragua to multiply its commercial exchange with the world by two.

Nicaragua hopes that China becomes one of the main suppliers of raw materials, inputs, capital goods, consumer goods, machinery, equipment, among others, and a buyer of Nicaraguan agricultural exports and invests in the installation of free zone companies.

Nicaragua’s agricultural sector represents 16.5% of the country’s gross domestic product (GDP) and drives 35% of total exports, according to data from the Nicaraguan Central Bank.

“The treaty is a milestone in the development of bilateral economic and commercial relations between China and Nicaraguawhich leads to further stimulating the potential of bilateral cooperation in trade and investment, promoting the quality and improvement of cooperation and better benefiting the companies and people of the two countries,” according to the Nicaraguan Government.

“Great news” for Ortega

On December 20, the president of Nicaragua, Daniel Ortega, called the entry into force of that “the best Christmas gift” and “great news.” FTA and the agreement between China and the Central American country to elevate its diplomatic relations to the level of “strategic partnership.”

The decision to elevate diplomatic relations to the level of “strategic partnership” was made official after Chinese President Xi Jinping had a telephone conversation with Ortega on the night of December 19, according to the Sandinista leader.

The diplomatic relations between the People’s Republic of China and the Republic of Nicaragua were initially established in December 1985, during the first Sandinista Government (1979-1990).

In 1990, the Government of Violeta Barrios de Chamorro established ties with Taiwan and finally, on December 10, 2021, China and Nicaragua resumed diplomatic relations after the Central American country cut ties with Taipei, a territory whose sovereignty Beijing claims.

According to official data, exchanges between China and Nicaragua totaled 760 million dollars in 2022. (With information from EFE)