Wednesday, April 27, 2011

A late August trade mission aims to help local companies increase their business by exporting their equipment, goods and services to Peru and Chile. By Ted McManus

South Louisiana companies are being encouraged to become part of the global economy by seeking out buyers of their goods and services beyond America’s borders. To assist companies in that search, local and regional trade associations are partnering with the U.S. Department of Commerce to organize an Aug. 21-27 business development trade mission to the South American countries of Chile and Peru.

Those trade officials say countless Louisiana companies, many of which have struggled in a precarious national economy, have neglected to take full advantage of opportunities to extend their presence into the global marketplace. That’s created an obstacle to future growth, they maintain, which must be cleared to keep many local businesses afloat.
Companies looking to increase exports to Chile and Peru have until the June 24 registration deadline to contact Le Centre International de Lafayette, a division of Lafayette Consolidated Government, to reserve a spot on the upcoming trade mission.

Christophe Pilut, information and translation specialist for Le Centre, notes that the August event, certified by the U.S. Department of Commerce, will help Louisiana companies increase their business by exporting their equipment, goods and services to Peru and Chile. The U.S. Commercial Service offices in Lima, Peru, and Santiago, Chile, will organize market briefings and networking events for the delegation during the week-long visit, according to Pilut. “Based on each participating company’s profile, the USCS will also organize business meetings with qualified foreign companies that can serve as agents, distributors or joint venture partners in these two growing markets,” he says.

Chile and Peru have been identified as attractive potential customers for U.S. companies due to improved market access conditions, especially since free trade agreements with those countries have been approved.

The United States-Chile Free Trade Agreement was signed June 6, 2003, and took effect Jan. 1, 2004. Since then, tariffs on 90 percent of U.S. exports to Chile and 95 percent of Chilean exports to the U.S. were eliminated. The agreement also established that Chile and the U.S. establish duty-free trade in all products for a maximum of 12 years (through 2016).
Bilateral trade between the U.S. and Chile in 2009 reached $15.4 billion, a 141 percent increase over levels before the trade agreement took effect. In particular, U.S. exports to Chile during 2009 showed a 248 percent increase over the pre-agreement level. According to the U.S. State Department, trade between the two countries has more than doubled since the trade agreement took effect, with two-way goods trade totaling $17.9 billion in 2010 and the U.S. running a surplus of $3.9 billion.

The U.S. is Chile’s second-largest goods trading partner overall, and the largest foreign investor in Chile, accounting for 24 percent of foreign direct investment in Chile from 1974-2010, according to the Chilean Foreign Investment Committee.

This year the two countries will eliminate tariffs on 134 products, further promoting trade between them. Chile is considered one of the most prosperous developing nations and, according to Pilut, is “a very open, stable and attractive market in Latin America.”

Ninety percent of U.S. exports to Chile enter the country duty free. In international circles, Chile ranks high in terms of political stability, economic freedom and an especially low perception of corruption.

Among the best business prospects there are electric power, power generation and transmission, renewable energy equipment, construction equipment, machinery and supplies, mining equipment, pollution control equipment, water resources equipment and technologies, and water and wastewater treatment equipment and technologies. Other excellent prospects include health care and medical equipment, computer hardware and software, food processing and packaging, travel and tourism, franchising and consumer-oriented products for retail.

Water desalination investment plans have been launched in northern Chile. Estimates call for spending between $4 billion and $5 billion with at least 30 mining firms currently evaluating the chance to establish water desalination plants there.

In Peru, a strong demand also exists for U.S. products and services, including those offered by specialized south Louisiana companies.

The United States-Peru Trade Promotion Agreement was signed April 12, 2006, and the Peruvian Congress ratified the agreement two months later. On Dec. 14, 2007, the United States-Peru Trade Promotion Agreement Implementation Act became law, and the PTPA took effect Feb. 1, 2009.

Two-way trade between the U.S. and Peru was pegged at $8.8 billion in 2009, with U.S. goods exports to Peru totaling $4.8 billion. Growth resumed in 2010 at a healthy rate of nearly 8 percent, due partly to increased exports.

The agreement eliminates tariffs and removes barriers to U.S. services, provides a secure, predictable legal framework for investors, and strengthens protection for intellectual property, workers and the environment. It is the first pact in force to include ground-breaking provisions concerning the protection of the environment and labor rights that were enacted as part of the Bipartisan Agreement on Trade Policy developed by Congress on May 10, 2007.

Since the agreement went into effect, market access conditions have improved significantly and tariffs on many goods have been eliminated, Pilut points out, emphasizing that U.S. exports have risen by more than 100 percent annually.

Because extractive industries — mining and petroleum — represent the largest Peruvian customers for U.S. goods and services, many of the best prospects include mining, oil and gas equipment and services and marine, environmental and construction equipment and services.

Other excellent prospects exist for transportation equipment, industrial and electrical machinery, pumps, valves and compressors, refined petroleum products, plastics, computers and telecommunications equipment, Pilut adds.

In 2011, an investment of $5.5 billion is expected in the Peruvian hydrocarbons sector for exploration and production activities.

Le Centre International de Lafayette is teaming with the New Orleans U.S. Export Assistance Center, a division of the International Trade Administration, in planning the trip to South America.

Because space for the August trade mission is limited, prompt reservations are urged. The deadline to sign up is June 24. For more information contact Le Centre International at 337-291-5474.

Two-way goods trade
between the U.S. and Peru in 2009: $8.8 billion

Two-way goods trade between U.S. and Chile in 2010: $17.9 billion