Orange County companies doing business with Chile have been waiting seven years for South America’s most advanced economy to join the North America Free Trade Agreement. Now they’re betting their waiting days are numbered.
“Chile will be the next country added to NAFTA,” asserted Jorge Gonzalez, Beckman Coulter Inc.’s director of Latin American field operations.
Gonzalez said he expects President George W. Bush to pursue free trade with Chile and other Latin American countries more vigorously than any other president in U.S. history.
“Bush is very concerned about competition from Western European countries in the Americas,” he said.
If Bush succeeds, Chile could become an expanded market for OC exports. As it is, local companies export only about $40 million in goods annually to Chile.
“We see all kinds of growth opportunities there in a variety of industries,” said John Nichols, vice president of sales for the Americas at Irvine-based software maker Wonderware Corp., a unit of Britain’s Invensys PLC.
Since 1993, Chile has been waiting to join the U.S., Canada and Mexico in NAFTA. With an open economy and few barriers to trade, Chile once was considered a shoe-in. But the country got pushed aside during the Clinton administration, which focused its political will on trade deals with China, Vietnam and the World Trade Organization.
In the waning days of the Clinton administration, Washington started trade talks with Chile, which Bush is expected to continue. Technically, Chile won’t join NAFTA but rather enter a free-trade agreement with the U.S. But the effect is the same: Chile signed similar deals with Canada in 1996 and Mexico in 1998.
With a slim Republican majority in Congress, Bush should be able to pass a Chilean free trade deal, analysts expect.
Chile is Lake Forest-based Western Digital Corp.’s third-strongest market in Latin America, after Brazil and Argentina and ahead of Venezuela and Mexico, according to Bernd Robatzek, vice president worldwide sales and services for the disk drive maker.
“Chile is a very sophisticated market from an information technology standpoint,” Robatzek said.
Despite a troubled political past that continues to cast a shadow on public affairs, Chile is seen as the most politically and financially stable country in Latin America.
“Chile is the most capitalistic country in the Western Hemisphere, even more so than the U.S.,” said Beckman’s Gonzalez. “It’s the only country in the Americas to have privatized social security.”
But the Chilean economy has sputtered lately, partly due to cyclical downturns in some of its major sectors, such as copper. An economic downturn in neighboring Argentina and the devaluation of Brazil’s peso has affected the nation of 15 million people.
In 1999, OC exports to Chile totaled $39 million, down from a record of $47 million in 1997.
“Chile has been the victim of a soft economy, like most parts of the Americas lately,” said Nichols of Wonderware, which recently opened a sales office in the country’s capital of Santiago.
Aliso Viejo-based engineering services company Fluor Corp.’s Santiago-based subsidiary, Fluor Chile SA, is involved in copper mining. The company’s Chilean business currently is at “low ebb,” according to Mark Stevens, a senior executive of marketing and strategy at Fluor.
“Our business there is cyclical,” he said.
Beckman, a Fullerton maker of medical diagnostic products, has seen no sales growth in Chile in recent years, according to Gonzalez. The company has a Santiago distributor representing all of Beckman’s products. Beckman has adopted a policy of “cautious optimism for Chile,” Gonzalez said.
Economists are forecasting economic growth for Chile this year. Copper sales are under pressure because of a slowdown in the U.S. and global economy, according to Anil Puri, dean of the College of Business and Economics at California State University, Fullerton.
But Puri thinks Chile will recover this year with help from other exports such as wine.
“Wine sales are setting records,” Puri said. “I think the Chilean economy will do very well by world standards.” n
