U.S. Commercial Service Chile

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					                U.S. Commercial Service Chile


Chile Briefing for
Sacramento Metro
 Chamber & NorCal
       WTC
  February 2011
      Mitch Larsen
 Commercial Counselor
 U.S. Embassy Santiago
                          U.S. Embassy Santiago

e


• 101 U.S. Employees

• 171 Chilean Employees

• 7 Federal Agencies

• Total Annual Budget: $12 million

• Built in 1993
                            Key Facts


• Nearly 2,800 miles long
• Just 100 miles wide (average)
• Diverse climate and geography
• Opposite seasons from the U.S.
• Isolated by mountains, desert & sea
• 17.2 million population
• Principal city and capital - Santiago
                                       Brief History

• Spanish Colony 1541 – 1810
• Allende/Marxists take power – 1970
• Military coup in 1973
• Open economy begins to grow--1974
• Structural changes – 1981
• Return to Democracy -- 1989
               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
                         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
• Fifth democratic elections for
  President & Congress in
  December 2010; Center-Right
  Alianza takes power in March 2010
                                    Chile Today

• President Sebastian Piñera took office on March 11, 2010. New
term runs from 2010-2014.

• Transition from Center-Left “Concertación”
Coalition to Center-Right “Alianza” of the
President

•   Broad Consensus
•   Open Economy – Free Market
•   Democratic Institutions
                        Global Leadership


•   Peacekeeping operations
•   Promoting free trade
•   Combating nuclear terrorism and proliferation
•   Serving on the IAEA Board of Directors
•   Running for a seat on the Human Rights Council
•   Chairing the Community of Democracies (2005)
•   Accession to Organization for Economic Cooperation and
    Development (OECD)
                              Sustained Economic Growth




Source: Central Bank, Chile
                                 Unemployment Level




Source: Banco Central de Chile
                                                      Price Stability
                                                    Annual Inflation (%)



10.0
 8.0     8.9 8.2
                                                                        7.8 7.1
 6.0               6.6 6.0                                    3.7
 4.0                         4.7      4.5
                                  2.3      2.6 2.8        3.0      2.6                 3.0
 2.0
                                                     1.0
 0.0
                                                                            -1.4
-2.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-4.0




                          Source: Asociación de Bancos e Instituciones Financieras
                                              Declining Poverty Rates
                                                     (as a percent of population)
50
             45.1
40                  38.6
                            32.6
30                                    27.5                                                             Below Poverty
                                             23.2 21.7 20.6                                            Line
                                                            18.8
20               17.4                                                                                  Indigent
                          12.9                                               13.7 15.7
10                                8.8 7.6
                                               5.8     5.6 5.3 4.7
                                                                                 3.2      3.8
  0
           1987 1990 1992 1994 1996 1998 2000 2003 2006 2009
                                                       Note: Indigence is defined as having income inadequate for a
Source: Mideplan, CASEN Study, 2010                    basket of goods sufficient to support a family of 4. Poverty is
                                                       defined as income less than 2x the value of the same basket.
                     Chile: Leader in Free
                             Trade

                                    Australia     2009
FTAs:                               Peru          2009
Canada                   1997       CEAs:
Mexico                   1998
                                    Bolivia       1993
Central America          1999
                                    Venezuela     1994
European Union           2003
South Korea              2004       Ecuador       1995
United States            2004       Mercosur      1996
Trans-Pac. Partnership   2005       India         2006
China                    2006   TPP = New Zealand, Singapore,
Japan                    2007   Brunei, U.S., Chile, Australia,
Colombia                 2009   Peru, Vietnam, Malaysia
                          Business - Why Chile?


•   Free Trade Agreements – 58+
•   Steady, positive growth
•   Prudent fiscal policies
•   Stable democratic government
•   Solid business practices
•   Rule of law
•   Low corruption
               Economic Indicators and
                       Facts

• Overall GDP „10: $199.2 billion; GDP Growth: 5.0%
• 2010 Per Capita GDP: approx. $15,000
• Unemployment 2010: 7.1% ; 2009: 9.6%
• Import growth: 30% (2010 over 2009)
• Inflation 2010: 3.0%
• Newest Member of OECD (best projected growth for
  2011)
• Mobile Phone Penetration: 97%
   Competitiveness &
   Economic Freedom



"Cole, Catherine A" <cathy-cole@uiowa.edu>




                                             www.latintrade.com
        AON 2011 Political Risk Map
             Americas-South




"Cole, Catherine A" <cathy-cole@uiowa.edu>




                                   Source: AON Corporation 2011
                                           Strengths


 Growth of exports
 Great management capacity
                    "Cole, Catherine A" <cathy-cole@uiowa.edu>


 Transparency of financial institutions
 Availability of qualified engineers & other
professionals
 Good level of telecommunication technology
(97% mobile penetration; decreasing fixed lines)
                                                                 Source: Facultad de Economia de la
                                                                 Universidad de Chile
                         Challenges



   Unemployment / underemployment
   Low GDP per capita
   Low level of value added to exports
   High labor costs
   Low productivity rates
   Deficient educational system
                                     Institute for Management
                                     Development (IMD) 2009
                                     Competitiveness Rankings:

                                                          2007     2008   2009
 Overall Competitiveness:                                   26      26     25
 Economic Performance                                       28      43     35
 Business Efficiency:                                       21      22     14
 Government Efficiency:                                     16      9      13
 Infrastructure:                                            39      38     36
Source: International Institute for Management Development (IMD)
                              Investment Welcome


• “A+” credit rating (S&P)
• $ 9.0 billion in new foreign investment in 2010
  (compared with $6.3 billion in 2009)
• Over $15 billion total (FDI plus portfolio)
• Since 1974, total FDI in Chile has topped well
  over $75 billion. Top investors: U.S., Spain,
  Canada, U.K., Australia
• Santiago selected as “Best City for Business‟‟
  in Latin America
• A springboard to other markets
                       U.S. Companies Invest in Chile

• Wal-Mart placed a big bet on Chile in late 2008
       The major shareholder in D&S, one of the country’s largest retail
       chains
• AES Corporation owns AES Gener
    Largest thermal generator and second largest generator of electricity in
    Chile
    Constructing 4 new generation facilities in Chile
• Freeport-McMoRan Copper & Gold
    51% interest in Chile’s El Abra mine
    80% interest in several other mining operations around Candelaria
• Investments like these and others tend to inspire even more confidence in
the Chilean economy
                                    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 was up to around 20% in 2010; under 15% in
     2003
Visit our U.S. Exporters Guide to the US – Chile FTA at http://www.buyusa.gov/chile/en/ftaguide.html
                                             U.S.-Chile Trade
                                          in Merchandise/Goods
                                                      (In US$ Billions)

                                                                                                      14
                                                                                  12.1
                                                                                               10.9   12
                                                                     9.6                 9.4
                                                                            9                         10
                                                                             8.3 8.2

                                                              6.7     6.8                      7      8
                                                                                         6
                                                               5.2
                                                      4.7                                             6
                                      3.5 3.8 3.7       3.6
                                        3.1
                                            2.6 2.7                                                   4

                                                                                                      2

                                                                                                      0
                                       2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


                                         Imports from Chile                  Exports to Chile




U.S. Department of Commerce, Bureau of the Census (www.census.gov)
                                              Source: TradeStats Express



                                 Main U.S. Exports
                                      to Chile

NAICS                                       US$ Millions FAS

                                           2008    2009       2010
Total Exports (billions):                  11.8    9.3        10.9

324- Petroleum & coal products             3,525   1,747 2,162
333- Machinery, except electrical          1,917   1,707 1,946
334- Computer & electronic products        1,227   1,152 1,452
325- Chemicals                             1,529   1,032 1,380
336- Transportation equipment              1,196   1,689 1,251
                                                       Source: Bureau of Census




                               Main Chilean Exports
                                    to the U.S.
NAICS                                      US$ Millions Customs Value

                                               2008     2009        2010
Total Exports (billions):                       8.2      6.0        7.0

331- Primary metal mfg.                       3,388     1,752      2,656
111- Agricultural products                    1,432     1,463      1,620
321- Wood products                              658      502        518
311- Food manufactures                          455       462        442
114- Fish, fresh/chilled/frozen & others        299       314        315
325- Chemicals                                  372       272        293
312- Beverages & tobacco products               229       278       283
                        Main Destinations for Chilean
                               Exports (2010)




Source: www.aduana.cl
                  2011 Growth Sectors / Best
                  Prospects for U.S. Exports

• Construction
• Energy / Electrical Power Equipment
• Medical Equipment & Healthcare
• Food Processing & Packaging Equipment
• Environmental Technologies & Services
• Agricultural Machinery & Equipment
                   2011 Growth Sectors / Best
                Prospects for U.S. Exports (cont.)

• Mining Equipment
• Telecommunications Equipment & Services
• Travel & Tourism Services
• Franchising
• Safety & Security
Earthquake – February 2010

 • More than 75% of population concentrated in affected
 region


 • Affected Industries:
     •Pulp & Paper; Forestry; Sea Port
                     Estimated Damages & Costs


• Total cost of damage and lost production:
      • US$30 billion; 17% of 2009 GDP
•Infrastructure
      •Estimated economic impact of
      infrastructure projects: US$173 billon
      •Damaged or destroyed bridges: 221
      •Damaged highway: 966 miles
      •44% of port infrastructure in
       Concepcion must be rebuilt
      •49% of canal and reservoir in
       Concepcion must be repaired
•Schools
      •Damaged or destroyed schools: 3,049
      •Affected students: 1,250,000
•Hospitals
      •60 Damaged and 15 destroyed
•Homes
      •Damaged or destroyed: 370,000
Chilean Government
     Response
                             Opportunities for U.S.
                                 Companies


•   Who is needed?
     • Subcontractors
     • Suppliers
     • Engineering and Consulting

•   What is needed?
     • Energy Efficient Technology
     • Machinery & Equipment
     • Specialty Building Materials
     • Structural Engineering

•   Success Story Examples…
     – Acrow (earthquake)
     – Center Rock Inc. (mining collapse)
              Opportunities for U.S. Companies


•What is the channel?
   • Competitive bidding
   • Partnership with local contractor
   • Sale of product or service to contractor
   • Government concessions
      www.chilecompra.cl
      www.mercadopublico.cl
                                  Recent / Upcoming
                                  Local Trade Events

 Exponor – Antofagasta, Chile        June 13-17, 2011

 Expo Hospital – Santiago, Chile      June 22-24, 2011

 Pesca Sur – Concepción, Chile        October 25-28, 2011

 Expocorma – Concepción, Chile        November 16-19, 2011

 FIDAE – Santiago, Chile              March 27-April 1, 2012

 Expomin – Santiago, Chile            April 2012
                        Int’l Buyer Program (IBP) Events



 American Int’l Toy Fair             February 13-16, 2011
 Graphics of the Americas            February 24-27, 2011
 ProMat                              March 21-24, 2011
 International Franchise Expo        April 1-3, 2011
 Waste Expo                          May 9-12, 2011
 National Restaurant Assoc. (NRA)    May 21-24, 2011
                          We Can Help!


Visit the Sacramento U.S. Export Assistance
Center to receive export assistance.

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


Tony Hill                       George Tastard, Director
Senior Trade Specialist         916.566.7170
916.566.7011                    George.Tastard@trade.gov
Anthony.Hill@trade.gov

U.S. Department of Commerce
U.S. Commercial Service
1410 Ethan Way
Sacramento, CA 95825
Fax: 916.566.7123
http://www.buyusa.gov/sacramento/
                                 Thank you!




   U.S. Embassy / Department of Commerce
              Santiago, Chile
          www.buyusa.gov/chile
      E-mail: mitch.larsen@trade.gov
Tel: (56-2) 330-3316   Fax: (56-2) 330-3172

				
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