While this month’s Summit of the Americas in Quebec City drew public attention toward the proposal for a hemispheric free-trade zone, the creation of a bilateral trade agreement between the United States and Chile is a more likely prospect and area businesses are ready to take advantage of this.
Food and other goods from Chile are already becoming a growing part of the local market. Likewise, local companies are looking to expand their exports by making inroads into the South American country.
“We’ve been watching (imports from Chile) grow double-digits every year,” said Al Fierstine, director of business development at the Port of Los Angeles. “This is a very good market for us.”
President Bush and President Ricardo Lagos of Chile discussed a possible trade pact at a meeting in Washington, D.C. this month, after which both said they hope to work out an agreement before the end of the year.
Such a pact between the two nations would bring additional jobs to the Los Angeles area, Fierstine said.
“It opens up brand new markets for everybody,” he said. “It’s an entrepreneur’s delight.”
The agreement could affect businesses from technology firms to grocers.
Cars, electronics, telecommunications products, and agricultural and mining machinery are the main American exports to Chile. Goods coming into the United States from Chile are primarily copper, fish, fruit and lumber, officials said.
Chile already intends to trim the 8 percent tariff it imposes on all imported products to 6 percent over the next two years. If Chile reaches an agreement with the United States, that tariff would eventually be eliminated for American goods, confirmed Roberto Matus, economic counselor for the Embassy of Chile in Washington, D.C.
The United States would remove tariffs on imported Chilean materials and products, and other trade barriers, such as subsidies and quotas, would also be eliminated, he said.
Imports increase
Local imports from Chile have been increasing steadily in recent years.
South Pasadena-based Trader Joe’s Co., a specialty food store chain, buys about 250,000 cases of Chilean wine a year for its 85 West Coast locations, according to Chris Condit, a wine buyer for the stores.
“We’re buying more,” he said. “They’re making a lot of wonderful wines.”
About 2 million cartons of Chilean grapes, peaches, nectarines and other fruits come through the Port of Los Angeles each year, Fierstine said.
While Chile continues to find customers in California, businesses throughout L.A. County are likewise hoping to develop new customer relationships in Chile.
“I see Chile as just beginning to offer a lot of interest to companies,” said Alexander Kramer, executive vice president of international trade for the World Trade Centers Association office in Long Beach.
“I’m hearing some of the freight forwarders are already looking for partners in Chile,” he said. “That must mean they have business needs in the pipeline.”
Though interest in the entire South American region is growing, Chile is the most attractive prospective market because of its stability and the nation’s openness to trade, Kramer said.
Aqua Mix Inc., a Santa Fe Springs-based chemical manufacturer, recently made its first foray into the South American market by exporting its stone and tile sealers and cleaners to a Chilean chain of hardware stores.
“They like American-made products,” said Frank Toms, director of international sales for Aqua Mix. “They’re also very easy to do business with. There’s literally no corruption in Chile.”
U.S. imports from Chile totaled $2.9 billion in 1999 (the most recent statistical year available), up from $2.4 billion the previous year, according to the World Trade Center.
Meanwhile, the U.S. exported $3.1 billion worth of goods to Chile in 1999, less than the $3.9 billion exported in 1998. Kramer said the South American nation has been more “export-oriented” in recent years but is looking to increase its imports.
California exports to Chile reached nearly $283.4 million in 2000 and accounted for 8.2 percent of total U.S. exports to the country, Matus said.
Bright spot for trade
Chile is one of the few bright spots among South American countries in terms of trade with the United States.
While visiting Argentina, Chile and Uruguay during a tour for local entrepreneurs put on by the Los Angeles Area Chamber of Commerce and other groups in 1999, businessman Rod Gutierrez discovered distinct differences among the South American countries.
The tour opened Gutierrez’s eyes to some of the challenges of trading in the region.
“We found it difficult to compete because of the trade barriers for our products,” said Gutierrez, majority owner of Modulex Inc., a Compton manufacturer of aluminum doors and frames.
Argentina, Brazil, Paraguay and Uruguay have created a South American trade bloc called Mercosur. Chile has remained only an associate member in order to keep from having to raise its tariffs and to maintain autonomy in negotiating trade agreements, Matus said.
Of the countries he visited, Gutierrez found that Chile offered the best prospects for Modulex.
“I felt, at least from the companies I met, that we could compete in that market,” he said.
Though U.S. and Chilean officials are confident that the two nations will soon work out a trade agreement, some think that such a deal is unlikely to be finalized before 2002.
“The big hurdle on the horizon is whether Bush gets fast-track authority,” Kramer said.
Fast-track authority, now officially known as “trade promotion authority,” would give the president the power to negotiate trade agreements. But the authority must be granted by Congress, which has refused to give the president such control since it lapsed in 1994.
