The President of the Chilean-American Chamber of Commerce (AmCham), Kathleen Barclay, gives insights into the excellent business relations between United States and Chile, and explains why the US-Chile Free Trade Agreement is probably one of the most successful FTAs ever signed by the US, as it has proven to be beneficial for both countries allowing them to grow together.
You were first appointed President of AmCham Chile from 2001 to 2003. In 2013 you were re-elected to this position, which gives you a great insight into the evolution of the institution. What would you highlight as the main achievements of AmCham Chile in recent years?
AmCham is a 96-year old institution that represents American business in Chile and our mission is to promote investment and trade between the two countries. We have 600 companies that are members. An interesting fact about AmCham Chile is that more or less one third of the capital is 100% American; one third is 100% Chilean; and the remaining third is a mixture of joint ventures and other types of bi-national associations. Therefore, we are not an institution that represents purely American interests. We are interested in trade and investment in both directions. I think that is very interesting because it shows shared values in terms of how you do business.
If you look at other AmChams around the world, you will not normally see this kind of member structure. Many times their activities are strongly oriented towards promoting American companies. So why is AmCham Chile different? Because of the Free Trade Agreement (FTA), there is alignment on how we do business, involving support of free market and free enterprise. Frankly, you don’t see many differences between US businesses and Chilean businesses because they both want to be global and competitive. This is an open market economy and you have to apply best practices if you want to be successful in a competitive global market.
The year 2014 marked the 10th anniversary of the US-Chile FTA. What are the main benefits that this agreement has brought to both countries?
The US-Chile FTA is probably one of the most successful free trade agreements ever, at least from the United States point of view. The commerce between the two countries has gone up 300% over the past 10 years, which has benefited both sides. Both sides have grown together, which was again based on sharing common values and doing complimentary activities. For example, agriculture was one of the big issues during the negotiation of the FTA. How are we going to work? Both, the US and Chile are big agricultural countries, but they are in different hemispheres. So they complement each other because the growing season in Chile is winter in the US and vice versa. That provides benefits to the people in US, and it provides benefits to the people in Chile. That is a clear example.
Another example is the mining industry. Chile has a strong mining industry and having access to high technology through US equipment has been very important in contributing to making the mining industry more competitive. It was also fantastic for US machinery business. So the FTA has been extraordinarily positive and very complementary for both sides.
The US is the number one foreign investor in Chile contributing with over 17% to the country’s FDI. In your opinion, what are the most attractive sectors for American investors at this point in time?
US companies are still the largest group of foreign investors in Chile and they continue investing in important areas, particularly in the financial sector. Over the last year and a half, we have seen significant investment in the domestic pension funds with the arrival of MetLife, Principal and most recently Prudential.
We have also seen tremendous opportunities in the energy sector, where Chile has important challenges in terms of self-sufficiency and energy cost. Some very large US companies such as First Solar and SunEdison Energy, have made significant investments in renewable energy in Chile.
What is the current status of the collaboration between US and Chile in the energy sector?
Chile imports most of its energy and the government has come up with a very positive and clear energy strategy to address the short-term and long-term challenges. AmCham has been working very closely with the government to tackle these issues over the past couple of years. Through the US-Chile Energy Council that AmCham chairs, we have brought together the players in the energy sector in order to focus on how the US and Chile can work together to improve address Chile’s energy challenges. Our contribution is bringing to the table US experience, technology and investors to enrich the domestic dialog.
In 2014, when President Bachelet and Energy Minister Pacheco traveled to the US, they spent a lot of time discussing energy issues. AmCham accompanied them on the visit where opportunities offered by US shale gas production, among other topics, were explored. Most recently, AmCham worked with the Chilean Embassy in Washington to structure a mission where energy companies and the Ministry of Energy traveled to Boston and Washington to talk about the US regulatory and technological experience regarding energy efficiency. In addition, US companies were there, along with representatives of the private sector from Chile, to talk about what experiences and technologies can be brought from the US to help in the effort to introduce more energy efficiency and to promote more solar energy. AmCham is working hard and we seeing some really good results.
Are there many Chilean companies investing in the US?
Yes, of course. Celulosa Arauco, a member of our board, has significant investments in the board plants in the US. They began with a small import-export office in Atlanta, worked the market and were able to acquire companies over time building a significant presence. They are located in at least four states.
Additionally, the wine producer, Concha y Toro, has acquired a major wine presence in California by purchasing Fetzer. There are also other Chilean entrepreneurs in this area that invested in California years ago, for example, Agustin Huneeus, who owns Veramonte vineyard and other vineyards in California.
According to the Minister of Foreign Affairs, Heraldo Muñoz, Chile would like to deepen its relations with the U.S. at the state level, not only at the federal level. What is your opinion on that?
When small countries look at the U.S., they gasp when they realize it is not one country, but 50 countries. The U.S. has a federal system, so every state has its own rules, as well as federal regulations. The U.S. is an enormous market, but it is not homogenous.
In that respect, Chile has done something very innovative in its foreign relations; the country has developed agreements with certain states. Chile has agreements with California and with Massachusetts. This strategy is extraordinarily helpful because it provides more effective focus.
The example of California is very interesting. It is a relationship that was developed in the 1960’s with the University of California at Davis. UC Davis helped Chileans to develop the agricultural industry. During President Bachelet’s first administration, Chile decided to take this agreement and this experience to the next level. If you look at the world map, you will see that California and Chile are like photocopies. Geographically they are very similar, they have the same energy challenges, and related challenges in education and innovation, as well as the same water and environmental issues. In the case of Chile’s agreement with California, a public private council has been established to define and develop specific opportunities.
Chile is the country with the highest number of trade agreements in the world. It also has an important role in the negotiations of the Trans Pacific Partnership (TPP), being the only country that already has agreements with all the other countries. How do you see the future of the TPP and the role of Chile in the negotiations?
First of all, an increased integration between Asia and Chile converts Chile into a key port of entry for Asia. The TPP will provide great opportunities to link Latin America to Asia and, therefore, promote positive integration in the region.
In the specific case of Chile, I believe that eventual increased access for the agricultural sector to markets such Japan will be important. Additionally, it is very important to free trade forward in the absence of broader negotiations of the WTO. Open trade is obviously one of the key factors in Chile’s success. Chile has a policy of pursuing multilateral, bilateral and regional agreements because agreements that open trade are in the country’s interest and Asian markets are important.
In which areas do you think United Sates and Chile should cooperate more in the future?
We see a lot of opportunity with increased integration with Asia, for example. We want to be supportive of the Pacific Alliance, which it is something Chile has committed to and that brings together Peru, Colombia and Mexico. The Alliance offers tremendous opportunities in the financial sector for example. It brings the markets together, which will make the Pacific countries a market the size of, for example, Brazil. That is very interesting globally. I believe Chile could be a platform for the region and I think the Pacific Alliance helps. I also see other areas, for example, the TPP, which is under negotiation.
What message would you like to launch to our international audience of USA Today, about today's Chile?
First of all, Chile is a great place to invest. It has strong institutions with a solid democracy and macroeconomic track record. Growth rates have been strong over a sustained period of time. AmCham has a good relationship with the government, which helps us to work together to promote investment. We have confidence in the country and its stability to manage through important reforms that are currently under discussion. We see continued attractive opportunities that are beneficial for both countries and their people.