China and Nicaragua signed a free trade agreement (FTA) on Thursday, China’s commerce ministry said, in confirmation of deepening economic ties since the Central American country switched its allegiance to Beijing from Taiwan in 2021.
China and Nicaragua, one of the poorest countries in Latin America, launched negotiations in July 2022, with working teams conducting consultations on a deal focusing on the trade of goods, services and market access for investment.
Minerals-rich Nicaragua and China are working on executing the agreement, which covers a wide range of areas including customs, tariffs, financial services and multilateral environmental deals.
“The China-Nicaragua FTA is conducive to continuously releasing the dividends of the resumption of diplomatic relations between China and Nicaragua, which will create a better business environment for enterprises of the two countries,” the commerce ministry said in a statement.
The two countries also agreed on an electronic transaction framework, online personal data protection, and digital economy cooperation.
China has been gaining more economic influence in Latin America, a region that has traditionally depended more on the United States for trade.
In June, during a visit to China by the president of Honduras, Xiomara Castro, President Xi Jinping said China was willing to begin talks on a free trade agreement with the Central American country “as soon as possible”.
Recently, the Central American Parliament – which includes Nicaragua and Honduras – voted to expel Taiwan after more than two decades as a permanent observer and replace it with China.
Nicaragua, El Salvador, Honduras, Panama and the Dominican Republic have all broken off diplomatic relations with Taiwan in recent years.
Guatemala, the most populous country in Central America, is the only member of the six-nation Central American Parliament, also known as Parlacen, that still recognizes Taiwan.
China claims democratically ruled Taiwan as its territory. (Reuters)
