U'S' Commercial Service Chile

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U.S. Commercial Service Chile

• Chile Briefing for
• State of Alabama Trade Mission
• June 2, 2008

Mitch Larsen Commercial Counselor U.S. Embassy
Santiago
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Key Facts

• 2,600 miles long
• Just 100 miles wide (average)
• Diverse climate and geography
• Opposite seasons from the U.S.
• Isolated by mountains, desert and sea
• 16.4 million population
• Principal city and capital - Santiago

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Brief History

• Spanish Colony 1541 1810
• Allende/Marxists take power 1970
• Military coup in 1973
• Open economy begins to grow 1974
• Structural changes - 1981

Democratic elections in 1989
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Economic Transformation

• Chicago Boys take charge in 1974
• Huge budget deficit eliminated
• State-owned firms privatized
• Tariffs slashed
• Foreign investment restrictions ended
• Economy begins to grow rapidly

5
Return to Democracy

• Popular protests grow in 1980s
• Opposition unifies
• embraces economic reforms
• Pinochet loses 1988 plebiscite
• Center-Left Concertacion coalition wins
  democratic elections in 1989
• Fourth democratic elections for President and
  Congress in December 2005

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Chile Today

• President Michelle Bachelet took office
  March 11, 2006 (2006-2010)
• Concertacion Coalition
• Christian Democrats
• Party for Democracy
• Socialists
• Broad Consensus No Change
• Open Economy Free Market
• Democratic Institutions

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Sustained Economic Growth

Source Central Bank of Chile
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Unemployment Level
Source Banco Central de Chile
9
Price StabilityAnnual Inflation ()
Source Asociación de Bancos e Instituciones
Financieras
10
Declining Poverty Rates(as a percent of
population)
Note Indigence is defined as having income
inadequate for a basket of goods sufficient to
support a family of 4. Poverty is defined as
income less than 2x the value of the same basket.
Source Mideplan, Biannual CASEN Study, 2007
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Chile Leader in Free Trade

• CEAs
• Bolivia 1993
• Venezuela 1994
• Colombia 1994
• Ecuador 1995
• Mercosur 1996
• Peru 1998
• India 2006

• FTAs
• Canada 1997
• Mexico 1998
• Central America 1999
• European Union 2003
• South Korea 2004
• United States 2004
• P4 2005
• China 2006
• Japan 2007

P4 New Zealand, Singapore Brunei Darusalam
(now U.S. too)
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Business - Why Chile?

• Free Trade Agreements 58
• Steady, positive growth
• Prudent fiscal policies
• Stable democratic government
• Solid business practices
• Rule of law
• Low corruption

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Strengths and Challenges of Chile

• Challenges
• Unemployment/under-employment
• Low GDP per capita
• Low level of value added to exports
• High labor costs
• Low productivity rates
• Deficient educational system

• Strengths
• Growth of exports
• Great management capacity
• Transparency of financial institutions
• Availability of qualified engineers
• Good level of telecommunication technology
• Source Facultad de Economia de la Universidad de
  Chile

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Institute for Management Development (IMD) 2008
Competitiveness Rankings

• 2007 2008
• Overall Competitiveness 26 26
• Economic Performance 13 11
• Business Efficiency 21 22
• Government Efficiency 16 9
• Infrastructure 39 38

Source International Institute for Management
Development (IMD)
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Investment Welcome

• A credit rating (SP)
• 3.4 billion in new foreign investment in 2006
  (80 goes to mining, water, gas, electricity)
• Since 1974, total FDI in Chile has topped 41
  billion. Top investors Spain, the U.S., Canada
  and the U.K.
• Santiago selected as Best City for Business in
  Latin America
• A springboard to other markets

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Our Free Trade Agreement
Effective January 2004

• 95 of bilateral trade in goods duty-free
• 75 of U.S. farm goods duty-free by 2008
• Stronger protection of intellectual property
  rights (IPR)
• Open and fair government procurement
  (www.chilecompras.cl)
• Commitments on labor rights and environmental
  protection
• Phases out all tariffs within 12 years (by 2016)
• U.S. market share over 17 in 2007 only 14.5 in
  2003

Visit our U.S. Exporters Guide to the US Chile
FTA at http//www.buyusa.gov/chile/en/ftaguide.htm
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U.S.-Chile Trade in Merchandise/Goods (In US
Billions)
U.S. Department of Commerce, Bureau of the Census
(www.census.gov)
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Main U.S. Exports to Chile
Source TradeStats Express
HS Chapter (2 digits) US
Millions FAS 2006
2007 Total Exports (HS)
6,786.0 8,310.8 84--INDUSTRIAL MACHINERY
PARTS 84 1,422.4
1,659.3 27--MINERAL FUEL, OIL ETC. 85
1,069.5 1,626.7 87--VEHICLES, NOT
RAILWAY 27 628.5 765.3 88--AIRCRAFT,
SPACECRAFT 39 916.3
623.1 85--ELECTRIC MACHINERY/TELECOM EQUIP. 87
509.9 613.5 39--PLASTICS AND ARTICLES
THEREOF 29 229.1 408.7 98--SPECIAL
OTHER 38 231.7
284.4 90--OPTIC, MEDICAL, SURGICAL INSTRUM. 90
251.5 239.3 10--CEREALS 10
99.1 197.7 29--ORGANIC CHEMICALS 28
112.6 196.5
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Main Chilean Exports to the U.S.
Source Bureau of Census
HS Chapter (2 digits) US Millions
Customs Value 2006
2007 Total Exports (HS) 9,565.1
9,003.0 74--COPPER AND ARTICLES THEREOF
08 4,145.5 3,406.9 08--EDIBLE FRUIT
NUTS 44 1,232.5 1,253.9 03--FISH
SEAFOOD 03 910.9
973.9 44--WOOD AND ARTICLES OF WOOD
74 1,043.3 771.1 71--PRECIOUS STONES
METALS 27 424.9 464.4 26--ORES,
SLAG AND ASH 22 146.2
348.6 28--INORGANIC CHEMICALS 26 199.6
228.1 22--BEVERAGES 28 170.6
211.8 27--MINERAL FUEL, OIL ETC. 71
231.5 196.6 10--CEREALS
93.8 117.9
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Main Destinations for Chilean Exports (Jan.-Sept.
2007)
Source Central Bank of Chile
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Best Prospects for U.S. Exports

• Construction
• Electric Power Equipment
• Medical Equipment Healthcare
• Computer Hardware / Software Services
• Financial Services
• Franchising
• Food Processing Packaging Equipment

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Best Prospects for U.S. Exports (continued)

• Environmental Technologies Services
• Mining Equipment
• Plastics Machinery Materials
• Security Equipment Safety
• Telecommunications Equipment Services
• Travel Tourism

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Recent / Upcoming Local Trade Events

• November 7-10, 2007
• March 26-28, 2008
• March 31-April 6, 2008
• April 8-9, 2008
• April 15-18, 2008
• December 2-5, 2008

• Expocorma - Concepción, Chile
• Aquasur Puerto Montt, Chile
• FIDAE Santiago, Chile
• Visit U.S.A. Santiago, Chile
• Expomin Santiago, Chile
• (230 U.S. exhibitors in 2008, as compared with
  170 in 2006)
• Exponaval Valparaíso, Chile

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Recent Intl Buyer Program (IBP) Events

• October 30 Nov. 1, 2007
• November 12-16, 2007
• November 23-28, 2007
• January 22-25, 2008
• February 12-14, 2008
• February 13-16, 2008
• January 7-10, 2008

• Automotive Aftermarket Industry
• IAAPA Attractions Expo
• Greater N.Y. Dental Meeting
• World of Concrete
• World AG Expo
• International Builders Show
• Intl Consumer Electronics Show

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We Can Help!
Visit www.buyusa.gov to locate your nearest U.S.
Export Assistance Center and get information on
our services.

• Counseling and Advocacy
• Finding International Partners
• Customized Market Research
• Trade Events

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Thank you!
U.S. Embassy / Department of
Commerce Santiago, Chile www.buyusa.gov/chile E-m
ail mitch.larsen_at_mail.doc.gov Tel (56-2)
330-3316 Fax [phone]