Xi Jinping in Ecuador

Chinese President Xi Jinping in Ecuador in 2016. (AP)

Explainer: China's Free-Trade Agreements in Latin America

By Jon Orbach

AS/COA Online looks at Beijing’s bilateral trade pacts with Chile, Costa Rica, Ecuador, Nicaragua, and Peru.

China’s trade relationship with the Americas keeps growing. On February 7, Ecuador’s National Assembly ratified the free-trade pact that the country signed with China in May 2023 under President Guillermo Lasso (2021–2023). That makes Ecuador the fifth Latin American country with a free-trade pact with Beijing, and the move comes weeks after Nicaragua’s came into effect on January 1. These join China’s existing agreements with Chile, Costa Rica, and Peru.

The two new trade pacts come at a time of increasing Chinese engagement in the region: trade with China went from 0.6 percent of Latin America’s GDP in 2000 to 8.5 percent in 2021. Trade volume grew from $8.5 billion in 2000 to $180 billion in 2020, even as foreign direct investment has dipped in recent years. And, growing trade is complemented by China’s Belt and Road Initiative, which has invested in long-term infrastructure projects, building stadia, libraries, and ports in 21 Latin American countries since 2013.

Trade, experts say, is an area in which the United States is under threat of ceding ground to Beijing as Washington has stalled on inking agreements with countries in the region. However, a bipartisan bill introduced in March 2023 aims to expand trade benefits to Ecuador, and U.S. trade with the Western Hemisphere still increased by more than 300 percent between 2012 and 2022. As Latin America could find itself feeling the consequences of China’s economic downturn, will the United States take advantage of the moment to deepen trade ties

AS/COA Online looks at the bilateral pacts China has with Latin America and which countries are looking to sign ones.

The Western Hemisphere Is in Play

It’s a moment for the U.S. to help shape the future of the hemisphere through economic engagement and trade, writes AS/COA's Eric Farnsworth in Barron's.


Signed: May 10, 2023 

Implemented: Not yet implemented

The country signed a trade accord with China in May 2023, becoming the only Latin American country to have an agreement with Beijing and not Washington. But the United States remains the Andean country’s biggest trade partner, with bilateral trade totaling $16.5 billion in 2023. 

The China-Ecuador pact was ratified in February 2024 by Ecuador’s National Assembly, where it passed with 55 percent of legislators voting in favor. It faced resistance, especially from former President Rafael Correa’s (2007–2017) Citizen Revolution party, some of whose lawmakers expressed concern over Ecuadoran industries losing competitiveness in the face of Chinese imports. On the other side, supporting legislators cited the promise of development and jobs. The agreement will allow for preferential trade for 99.6 percent of exports. Currently, bilateral annual trade is estimated at over $10 billion.

The Ecuador-China accord follows a 2022 debt restructuring deal between the two countries that involves Beijing providing Ecuador with $1.4 billion in relief through 2025.


Signed: August 31, 2023 

Implemented: January 1, 2024

On the first day of 2024, China’s free-trade agreement with Nicaragua came into effect, just over two years after the Central American country opened its diplomatic relations with Beijing. The accord, signed in August 2023, allows Nicaragua to export 71 percent of its products to China tariff-free, but maintains tariffs on Chinese goods that could compete with Nicaragua’s products, like meat and coffee. The United States remains Nicaragua’s top trade partner, given the Central American country’s inclusion in the Dominican Republic-Central America FTA, known as CAFTA-DR.

Costa Rica

Signed: April 8, 2010 

Implemented: August 1, 2011

In 2007, Costa Rica became the first Central American country to switch recognition from Taiwan to China, doing so under the leadership of President Óscar Arias (1986–1990; 2006–2010). The trade deal, China’s first with a Central American country, was signed in 2010

But despite the trade deal, Costa Rica’s exports to China dipped 37 percent from 2007 to 2021. Just 2.7 percent of Costa Rican exports, or $463 million, went to China in 2021. 

The country’s top trade partner remains the United States.


Signed: April 28, 2009 

Implemented: March 3, 2010

On April 28, 2009, Peruvian President Alan García (1985–1990; 2006–2011) signed an FTA with China during a period when the country inked deals with several commercial partners, such as the United States, Canada, and the European Union. 

Trade between Peru and China has jumped in the years since, doubling in 2022 to $33 billion since 2012. In 2014, China overtook the United States as the Andean country’s largest trade partner, with Beijing upping its minerals intake. Peru is the world’s second-largest producer of copper and China’s second-biggest supplier of copper ore. 


Signed: November 18, 2005

Implemented: October 1, 2006

In November 2005, Chile, under President Ricardo Lagos (2000–2006), became the first Latin American country to sign a free-trade pact with China—marking China’s second bilateral agreement ever. The trade pact built on the countries’ history of close ties; Chile was the first Latin American country to establish diplomatic relations with China in December 1970. 

In 2017, the countries signed an expanded free-trade agreement, which came into effect in 2019. The new deal added specifics about the environment, e-commerce, and other topics to the agreement. 

In 2022, trade between Chile and China reached $65.6 billion. Chile’s main export to China, its top trading partner, is copper, of which it is the world’s top producer.

Which countries might be next?

Honduran President Xiomara Castro ended her country’s ties with Taiwan, switching to China in March 2023. In June of that year, Beijing approved imports of bananas, coffee, and shrimp from Honduras, and in July, negotiations began for a free-trade agreement. 

Meanwhile, Uruguay is working toward an FTA with China; the countries announced that they were working on advancing such a pact during President Luis Lacalle Pou’s visit to Beijing in November 2023. A bilateral trade agreement would contravene the rules of Mercosur, of which a Uruguay is a member, which bars trade agreements with individual member countries. But during the same visit to Beijing, Lacalle Pou made a call to “accelerate” talks toward a China-Mercosur deal as well. Paraguay, a member of Mercosur, is the only remaining ally of Taiwan in South America, which could complicate an agreement. 

Panama’s talks with China on an FTA began in 2018 following a visit to China by President Juan Carlos Varela (2014–2019) but stalled due to the Covid-19 pandemic. But in 2022, President Laurentino Cortizo signaled intent to resume the process.