The free trade agreement initiated in 2022 between Nicaragua and China went into effect on 1 January 2024.
China promised Nicaragua a free-trade deal in return for it switching diplomatic recognition from Taiwan in December 2021.
The China-Nicaragua Free Trade Agreement frees up 71 percent of the products sent by Nicaragua to China – including fish, shrimp, lobster, and sea cucumber – from facing tariffs, according to Reuters.
The agreement was signed in October 2023 in a virtual ceremony, with Presidential Advisor Laureano Ortega saying it would "generate economic and social benefits for Nicaraguan families, new investments and jobs, and transfer technology from China to Nicaragua."
Nicaragua President Daniel Ortega called the agreement "the best Christmas present" in a 22 December 2023 speech.
Nicaragua has faced economic sanctions from the U.S., Canada, the U.K., and the E.U. as a result of anti-democratic moves made by Ortega, who has served as president of the country for 17 years. A March 2023 United Nations Human Rights Council report concluded the Nicaraguan government had committed "widespread and systematic human rights violations that amount to crimes against humanity,” according to Reuters.
For its part, China has increased its diplomatic and economic engagement across Latin America in recent years. It recently established diplomatic ties with Honduras and is a major backer of the Cuban and Venezuelan governments. Additionally, China signed a free trade agreement with Ecuador in May 2023, a separate deal with Honduras in April 2023, and firmed up a deal with Chile’s government in October 2023 that will result in an increase exports of Chilean aquaculture products.
"I am willing to work with President Ortega to take today's announcement of a China-Nicaragua strategic partnership as a new start, to push relations between our two countries forward to build a model of solidarity, cooperation and mutual benefit," Chinese President Xi Jinping said in a recent call with Ortega, Reuters reported.
The Nicaragua agreement is unique for China, in that it is the first free trade agreement it has signed that involves a negative list, specifying sectors off-limits to foreign investors, according to the Chinese Ministry of Commerce.
China had signed 22 FTAs with 29 countries, and trade with these countries accounted for 33 percent of its total foreign trade in 2022, according to the China Commerce Ministry.
Gao Lingyun, a researcher at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics, told China Daily the country’s government is pursuing a strategy of combining unilateral tariff cuts with reciprocal tariff reductions through free trade agreements “to expand its degree of opening-up, and further advance trade and investment liberalization and globalization.”
China signed an Early Harvest Agreement with Nicaragua in July 2022, implementing specialized tariffs on a number of goods classified as agricultural in origin, including seafood. The deal created zero-tariff access to Chinese shipments of sardines, tuna, and aquafeed, among other seafood-related items, to Nicaragua.
Nicaragua’s seafood sector has obtained the necessary certifications from China to export most of its major commercial products, including shrimp, lobster, and conch, according to Sindicalista CST Secretary General Pedro Ortega, who represents the country’s largest union of fishermen, told Canal 10 Nicaragua in April 2023.
Nicaragua National Assembly Member Carlos Wilfredo Navarro Moreira said he expects Nicaraguan exports to China to increase by as much as USD 100 million (EUR 100 million) in 2023.
Photo courtesy of Embassy of the People’s Republic of China in the United States of America
