China and Nicaragua signed a free-trade agreement on Thursday after a year of negotiations, which experts said will bring out the greater potential of trade and investment cooperation between the two countries and deliver concrete benefits to the two peoples.
China's Commerce Minister Wang Wentao and Laureano Ortega, adviser on investment, trade and international cooperation to the Nicaraguan president, signed the agreement via video link, the Ministry of Commerce said in a statement.
The FTA would allow for high-level mutual opening between the two nations in the fields of trade in goods and services and access to the investment sector. It also marks a significant milestone in China-Nicaragua bilateral economic and trade relations, the ministry said.
It will assist in delivering the benefits of the two nations' diplomatic ties being resumed. Furthermore, it will also enhance and elevate China-Nicaragua collaboration and bring benefits to both countries and their peoples, according to the statement.
The two sides will expedite domestic steps to see that the FTA takes effect and is implemented at an early date, the ministry said.
Despite their geographical distance, China and Nicaragua's economic links have grown robustly since the resumption of diplomatic relations in December 2021, said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation.
The two sides have completed four rounds of FTA negotiations since last July and swiftly reached the deal, underscoring the urgent need for both countries to intensify economic and trade cooperation and establish institutional frameworks, Zhou said, adding that this is in line with the expectations of businesses in both countries' markets.
Through the agreement, China and Nicaragua are looking forward to building stronger networks of economic and trade cooperation that will benefit more nations in Latin America, as part of efforts to hasten the post-pandemic global economic recovery, he added.
Nicaragua is China's fifth FTA partner in Latin America after Chile, Peru, Costa Rica and Ecuador. Negotiations for the FTA began in July 2022, according to the ministry.
In 2022, bilateral trade was around $760 million, with China's imports from Nicaragua growing 43.7 percent year-on-year, according to data from the General Administration of Customs of China.
China and Nicaragua are at different phases of development with high economic complementarity in industrial structures and diversity in resources, said Dong Jingsheng, deputy director of Peking University's Latin America Research Center.
He added that the signing of the FTA will foster a more favorable climate for expanding trade and investment partnerships and give both nations' long-term growth a boost.
China will offer a sizable market for Nicaragua's high-quality agricultural and aquatic products, and Nicaragua could import goods such as computers, motorcycles and communication equipment, Dong said.
More than 90 percent of all merchandise traded between the two countries will eventually be subject to zero tariffs, according to the ministry.
Meanwhile, Chinese enterprises, with their comparative advantages in capital, technology and managerial experience, could scale up investment and cooperation in sectors including infrastructure, manufacturing and telecommunications, to increase local employment opportunities, improve public welfare and drive sustainable growth, he added.