California ''Lynchpin'' to Success of Chile-US FTA
State's exports to Chile totaled $283 million in 2002
LOS ANGELES - 10/20/03 - The Chile US Free Trade Agreement is "crucial" to the future growth of Chile's economy, and California, in turn, is the "lynchpin" of the agreement, says Hugo Lavandos, Director of ProChile - the trade promotion arm of the Chilean Foreign Ministry in Santiago.
California is "key to the success of the new agreement because of its proximity to Chile, an infrastructure that enables efficient movement of goods between both countries, and an economy that energizes a significant portion of America's economy," Lavandos told the CalTrade Report in an exclusive interview following a recent day-long event promoting the new pact sponsored by the Los Angeles Area Chamber of Commerce.
According to Lavandos, who was educated at Boston University, ProChile has crafted an "extensive marketing strategy" to educate both US and Chilean companies as to the trade and investment opportunities that will be opening up when the agreement takes effect next January 1.
Trade between the two countries totaled around $6.4 billion or around one third of Chile's total foreign trade in 2002, while California exports alone to Chile during the year amounted to almost $283 million in value.
According to the latest US Census figures, the leading California exports to Chile include input and output units for ADP machines, color televisions, machine parts, communications equipment, and paper products.
"We want to see that grow and we've given ourselves a three-year window to communicate the benefits of the agreement both here and in Chile," he said, adding that the ProChile offices in the New York, Washington, DC, Miami, and Los Angeles will be actively looking at specific industry areas such as environmental technology, telecommunications, and biotechnology for "special concentration.
One of the major areas for trade growth is agriculture, said Lavandos.
"For example, Chile and California grow similar products such as avocados, plums, and nectarines. As both countries are in opposite hemispheres [Chile's summer is winter in the US and vice versa], markets in the US and Chile can be supplied with such seasonal 'summer fruit' all year round," he said. "The potential for these products alone is tremendous."
The Chilean government has said the accord will greatly benefit Chile's economy by lifting 85% of customs fees in bilateral trade with the US.
The University of Michigan completed a study on the possible impact of a free trade agreement on the economies of both the US and Chile and concluded that one would boost annual GDP by an estimated $4.2 billion in the US and $700 million in Chile.
The country, which, by common account, has one of the healthiest, most open economies in Latin America, has signed similar free trade accords in recent months with the European Union and South Korea. Chile is also pursuing FTAs with the European Free Trade Association and Bolivia, while the US is touting similar agreements with Australia, Thailand, South Africa, and regional pacts with Central America and the Middle East.
According to sources, Chile's economy, which attracted more than $86 billion in foreign direct investment between 1974 and September of last year, is expected to grow at a rate of around 3.5% this year.
Chile's lower house of Congress has overwhelmingly approved the agreement with the US despite vocal, and often violent, opposition from elements of the Communist Party and the country's labor unions.
The measure was then sent to the Senate, where it's expected to be approved by the end of the month.
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