2009 California Trade Mission to Chile – Background

California Trade Mission to Chile – September 27-29, 2009


Chile President Cites Natural Affinities in Trade Relationship with California

California and Chile are natural partners, linked by a history dating back to the Gold Rush, plus climate and culture, the President of Chile, Michelle Bachelet Jeria, told a breakfast gathering at the California Chamber of Commerce on June 12, 2008.

President Bachelet’s talk at the 2008 California Chamber of Commerce event was part of a Northern California tour and attracted more than 160 guests, including representatives from the U.S. and California governments, local universities and businesses. President Bachelet highlighted the growth in trade between Chile and the United States, as well as Chile and California since the signing of the U.S.-Chile Free Trade Agreement (FTA) four years ago.

Describing “social cohesion” as a particular challenge in Latin America, President Bachelet cited the need to pursue economic growth and social justice at the same time. “It is impossible to have economic growth and a stable democracy with large segments of the population being excluded from progress,” President Bachelet said.

Chile has been investing record sums in education, including redesigning the research and development system, as well as investing in infrastructure with a particular focus on competitiveness, President Bachelet said.

Chilean Delegation to California in 2008

The President’s delegation included the Chilean ministers of foreign affairs, the economy and energy, and several members of the Chilean Parliament. Also accompanying President Bachelet to the CalChamber breakfast were Paul Simons, the U.S. ambassador to Chile; and the Chilean ambassador to the United States, Mariano Fernández.

After speaking at the CalChamber, President Bachelet and her delegation went to the State Capitol, where they were greeted by Governor Arnold Schwarzenegger and the President spoke to the California Assembly.

Next came a stop at the University of California, Davis, where the Governor and President Bachelet signed a memorandum of understanding to promote collaboration in “human capital development,” education, environmental protection, energy, agriculture, information and communication technology, trade and business.

Chile-California Plan

In June, 2008, President Bachelet signed an MOU with Governor Schwarzenegger of California, marking the start of a program called “Chile-California Plan: A Strategic Association for the 21st Century.” The association is based on the joint commitment of Chile and California to develop business opportunities, expand research and teaching in education, and develop projects in different areas that are strategic for both territories: human capital, education in environmental issues, energy, agriculture, information and communications technologies and trade. There are three top areas that have been determined to be key areas for initial promotion and coordination: human capital, research and development and trade and business.

It is anticipated that the Plan will generate opportunities for the development of innovative international exchange models and public-private networks in government, business and academic fields.

For further information, please contact: Trade Commissioner – PROCHILE.

President Bachelet

President Bachelet became the first woman president of Chile on January 15, 2006. The President is trained as a doctor, has completed graduate studies in military sciences and speaks German, French, Portuguese, Spanish and English.

Before her election to Chile’s highest office, President Bachelet served as Chilean Minister of Health starting in 2000. In 2002 she was named Minister of Defense, the first woman in Chile and Latin America to hold such a position.

Trade with Chile: U.S.-Chile Free Trade Agreement

Since the U.S.-Chile Free Trade Agreement was implemented on January 1, 2004, bilateral trade between Chile and the United States has doubled and both trade and investment opportunities abound. Under the Free Trade Agreement, 85 percent of industrial products are traded without duties together with 75 percent of farm production. After just ten years, all trade in non-agricultural goods will take place without tariffs or quotas; for agriculture, the phase-out will take 12 years.

Two-way trade in goods between the United States and Chile rose to $20.3 billion in 2008. According to the US Department of Commerce, exports to Chile from the United States have risen by over 300 percent since implementation of the Agreement. Exports to Chile of petroleum, machinery, and fertilizer from the United States have experienced a marked increase since 2003. Chile is the United States’ 28th largest export partner. Top exports from Chile to the United States include copper cathodes, fresh grapes and salmon. Top exports from the United States to Chile include transmission receptors, computers and diesel trucks.

According to the American Chamber of Commerce in Chile, over 300 US companies have investments in Chile, with over 40 of them using Chile as a platform for services in the region. Chilean affiliates of US direct investors are estimated to employ over 58,5000 people and their value-added contributed 3.2 percent to Chile’s gross domestic product.

Chile is roughly equal in size to California and home to 16 million people and renowned copper mines. Chile holds $15.3 billion in reserves. In 2003, the Chilean economy began to recover after a 1999 slump, reaching a 3.3 percent growth in real GDP. GDP grew by 4.2 percent in 2006. Since 1990, there has been more than $50 billion in direct foreign investment in Chile. Chile has the most stable and fastest growing economy in the region which puts it in the best position to promote democracy and political freedom. Chile has now signed 56 Free Trade Agreements with various countries round the world.

See U.S.-Chile Trade Fact Sheet: Focus on California

Chile is California’s 22nd largest export partner. In 2008, California exported more than $1.7 billion to Chile, doubling the amount from 2007. This included petroleum and coal products, computer and electronic products, machinery, and transportation equipment. California imports the following from Chile: fresh fruits, forestry products, wines, and seafood.

History of the U.S.-Chile FTA Negotiations

The terms of the bilateral FTA were concluded in December 2002 after over a decade of waiting for an agreement between Chile and the United States which was promised at the Summit of the Americas. The U.S.-Chile FTA will be considered a template for a host of future free trade agreements, including a Free Trade Area of the Americas. The United States and Chile concluded the comprehensive (800 page) bilateral free trade agreement on December 11, 2002. The FTA builds on the progress made by the U.S.-Chile Joint Commission on Trade and Investment that was established during President Bill Clinton’s state visit to Chile in April 1998.

The U.S.-Chile FTA was signed in Miami on June 6, 2003 by then U.S. Trade Representative Robert Zoellick and Chilean Foreign Minister Soledad Alvear. It is the first free trade agreement between the United States and a South American country.

The U.S. House of Representatives and Senate passed the FTA in July 2003 by a vote of 270-156 and 66-31 respectively. The vote was held under the Trade Promotion Authority which allows for an up or down vote with an expedited time frame or ‘fast track.’ Chile also approved the agreement.