In 2005, Chile and China signed a free trade agreement, the first such agreement ever signed in Latin America. Since the signing of the agreement, trade between China and Chile has grown exponentially. Chile is the main Latin American country to maintain good relations with China, since 1970, when Chile was the first South American country to recognize the People's Republic of China (Jenkins, 2009). Over the years, their relations have continued to develop through the numerous rounds of discussions that have taken place since the creation of the FTA. Looking at the economic implications of the China-Chile FTA on the Chilean economy, we see that although both countries' trade markets benefit, the Chilean market faces more negative impacts than the Chinese economy. Although both countries have strong reasons to invest with each other, China has had much more to gain from establishing these trade relationships. In the early 1990s, as Chile transitioned to democracy, a campaign was launched to position Chile as the "gateway to the world." Americas. » This campaign focused on "opening up" or better said "open regionalism" to promote market growth and advance its diversification (China Quarterly). Following its new market strategy, Chile shifted its focus from trade with superpowers such as the United States and the European Union to the Asia-Pacific region (Heine 2005). In 1993, Chile joined the APEC organization, making it the second Latin American country to do so (Alvarez 1998). Being part of this agreement allowed Chile to further tap into Asian markets and gave it the opportunity to be exposed to many other trading partners. He also projected more of their trade ...... middle of paper ...... from Latin America, both countries envisioned that they would benefit greatly from this trade agreement. The conventional wisdom that the Chile-China free trade agreement would boost all sectors of investment and trade within both countries has been partly successful, but it has also been a slight failure . Although trade between the two countries is booming, Chile is increasingly feeling the pressure of competition in the Chinese market and, moreover, both countries have been losing out in the increase in foreign direct investment. Since Chile's main exports are natural resources, China has more sustainable market power simply because its main export sector is not perishable. This raises the question of how the Chile-China free trade agreement will be impacted in the future if Chile does not invest in new materials export markets..