China and Nicaragua have recently finalized a significant milestone in their economic relationship with the signing of a free-trade agreement (FTA) after a year of negotiations. This move is expected to foster enhanced trade and investment collaboration between the two nations, yielding tangible benefits for both their populations.
The FTA was formalized through a virtual signing ceremony between China’s Commerce Minister Wang Wentao and Laureano Ortega, an adviser on investment, trade, and international cooperation to the Nicaraguan president. This agreement marks a substantial advancement in the bilateral economic and trade connections between China and Nicaragua, highlighting the ongoing growth in their diplomatic ties.
The comprehensive FTA encompasses various aspects, including provisions for expanded trade in goods and services as well as greater access to investment opportunities. The mutual opening of these sectors is anticipated to contribute to the realization of the countries’ diplomatic aspirations, while also fostering deeper collaboration for their mutual development.
Experts have noted that the FTA’s prompt conclusion, following four rounds of negotiations, underscores the shared urgency of China and Nicaragua to reinforce their economic partnership and establish robust institutional frameworks. Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation, emphasized that this aligns well with the expectations of businesses in both nations.
Despite the geographical distance between China and Nicaragua, their economic ties have thrived since the resumption of diplomatic relations in late 2021. Their enhanced engagement culminated in negotiations for the FTA, which began in July 2022. The resulting agreement is anticipated to bring about a more favorable environment for both countries to intensify trade and investment cooperation, ultimately contributing to sustained growth over the long term.
Nicaragua’s entry into the list of China’s FTA partners in Latin America, which includes Chile, Peru, Costa Rica, and Ecuador, underscores the nation’s growing significance in the global economic landscape. In 2022, the bilateral trade volume between China and Nicaragua amounted to approximately $760 million, witnessing a substantial year-on-year increase in China’s imports from Nicaragua.
Notably, the FTA envisages the eventual elimination of tariffs on over 90 percent of the traded merchandise between the two nations, further facilitating trade flows and enhancing market access. This step holds the potential to create a conducive environment for expanding trade networks and investment collaborations, thereby invigorating both countries’ economic prospects.
China’s position as a market of substantial scale presents a favorable opportunity for Nicaragua to export high-quality agricultural and aquatic products. In return, Nicaragua could import various goods such as computers, motorcycles, and communication equipment, tapping into China’s competitive technological edge.
Moreover, the FTA opens avenues for Chinese enterprises to increase investment and cooperation across several sectors, including infrastructure, manufacturing, and telecommunications. This engagement is expected to generate local employment opportunities, enhance public welfare, and contribute to sustainable economic growth.
the recently signed FTA between China and Nicaragua marks a significant achievement in their bilateral relations. By creating a framework for enhanced trade and investment cooperation, the agreement sets the stage for both nations to reap mutual benefits and contribute to broader economic growth. This pact is aligned with their shared commitment to bolstering international economic ties and promoting post-pandemic global economic recovery.