Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/313641 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 251/2025
Publisher: 
Hochschule für Wirtschaft und Recht Berlin, Institute for International Political Economy (IPE), Berlin
Abstract: 
Adequate policy space is essential for resource-rich countries to move up the value chain and seize the opportunities presented by global decarbonization and the demand for low-carbon technologies. However, WTO rules, investment and free trade agreements (FTAs) deprive nonhegemonic powers of the industrial policy tools used by successful developmental states in the past, thus reducing policy space and arguably 'kicking away the ladder'. The present article addresses these issues in the context of Chile's lithium industrial policy and the modernised EU-Chile FTA. With the objective of moving up the lithium value chain, Chile employs preferential pricing: offering lithium at a preferential price to companies that establish production sites for higher-value processes. However, the modernized FTA includes restrictions on the use of preferential pricing, as outlined in its Energy and Raw Materials Chapter (ERM) -a novel element in the EU FTAs aimed at safeguarding access to critical raw materials for the EU's Green Deal objectives. By means of document analysis and 21 expert interviews, we find that the modernised FTA and its ERM are compatible with Chile's current lithium industrial policy. Nonetheless, they further restrict Chile's policy space, potentially limiting future policy adaptations. These restrictions, alongside further national factors, may hinder the fulfilment of Chile's industrial policy goals. The article offers explanations for the negotiation outcomes and identifies factors beyond policy space that constrain the effectiveness of Chile's lithium industrial policy.
Subjects: 
Chile
Lithium
Policy Space
Industrial Policy
Free Trade Agreement
JEL: 
F63
O24
O25
O54
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.