Chile – Exporting Products and Foreign Direct Investment

Francisco A. Laguna

Twenty-three years after a peaceful transition from dictatorship to democratic government, Chile has become an economic leader in the Southern Cone and Latin America generally. The country is recognized for its agricultural and industrial capacity, fiscal responsibility, ease of doing business and low levels of corruption. In May 2010, Chile became the first South American country to join the Organization for Economic Co-Operation and Development.

Free_Nature_Wallpaper_Llaima_Volcano_In_ChileChilean entrepreneurs have been successful at creating global markets for their agricultural products. The majority of supermarkets and wine shops in the United States – if not all – routinely stock Chilean fruits, vegetables and wines. And, on a recent trip to Vietnam, I was impressed by the variety of Chilean wine available on store shelves at competitive prices.

The Chilean government has promoted exports by entering into some 59 bilateral or regional trade agreements, including with the United States, European Union, Mercosur, China, India, South Korea, and Mexico. Currently, it is working with Colombia, Mexico and Peru to form the Pacific Alliance, a trading block that Chile and the other member states hope will give them a platform to increase trade with the Asia.

Chile’s primary exports are copper, fruit, fish products, paper and pulp, chemicals, wine. In 2011, its largest export market was China, with 22.8% of exports, followed by the United States and Japan with 11.1% each. The only Southern Cone market of significance was Brazil at 5.5%.

free_chile_tower_01

Photo Credit: Alvaro J. Covacevich & Sergio Covacevich

Given the importance of agriculture to the Chilean economy, farmers are keenly aware of the advances in biotechnology and genetically modified crops, as well as the potential advantages they offer. However, there is little effective legislation governing genetically modified foods in Chile. Lawmakers have commented that the country is in the worst position vis-à-vis GMOs: the law allows the production of GM seeds, but only for export purposes – no domestic use (or benefit) is allowed; and transgenic foods are being freely imported into the country without effective regulation, disclosure or labeling requirements. The new government may well have to grapple with these issues. Elections are slated for November 2013.

chile__400x350

Foreign direct investment in Chile has increased steadily, reaching an estimated US$15 billion in 2010. However, both the Chilean government and private enterprise are investing abroad. The government holds US$ 18 + billion in sovereign wealth funds, held mostly outside the country and kept separate from Central Bank reserves to be used as an economic safety net. Similarly, in 2012, FDI by Chilean companies abroad increased 47% in comparison to 2011 levels. Chilean foreign investment has concentrated in Argentina, Colombia, Brazil, Peru, the United States, Uruguay, Mexico, Belgium, Panama and Australia.

Results of the 2012 Census were released this week. The indicators clearly demonstrate the results of increased globalization and industrialization, including: 9.5% of the population over age 5 reported being able to speak English (16% for ages 14 -29); women are having less children; the number of persons per household has decreased; the number of single-person households increased; and more couples are living together before marriage.

TransLegal has worked extensively in Chile, assisting clients with regulations related to accessing genetic patrimony under the Convention for Biological Diversity and the Nagoya Protocol, the importation and sale of food products that have been genetically modified or that are derived from GMOs and the importation of dietary supplements from novel sources. Contact us with your questions related to Chile.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s