The U.S.-Chile FTA’s Role in Saving Lives
Founded in 1900, Schramm is a global leader in cutting-edge, customized mobile drilling rigs, and serves industries around the world, including the energy, mining, geothermal, and water well sectors. Based in West Chester, Pennsylvania, over 75 percent of the Schramm’s revenues come from export sales, and the company estimates that 123 of the firm’s 165 employees have jobs that are dependent on exports.
Heavy machinery like Schramm’s drill rigs became duty-free immediately when the U.S.-Chile Free Trade Agreement (FTA) went into effect on January 1, 2004. The tariff savings helped Schramm’s equipment be even more competitive in Chile. Though Schramm had been doing business in Chile prior to the FTA, the company has seen exports grow dramatically since 2004. For example, by 2005, Schramm’s sales to Chile had increased by over 300% compared to pre-FTA levels, and the number of Schramm rigs in Chile has increased every year since.
“The Free Trade Agreement with Chile made a difference, significantly improving our competitive position, and the pro USA buyer orientation,” said Schramm’s Vice President of Business Development Fred Slack.
On August 5, the day the San Jose mine in Copiapo, Chile collapsed, trapping 33 miners 2,300 feet underground, Schramm already had 31 drilling rigs in place in the country. Four Schramm T685 drills were immediately deployed to help in the search for the miners, with one of the T685s eventually making contact with the miners. A larger Schramm T130XD rig was moved to Copiapo for the rescue phase. That rig ultimately drilled the 28 inch rescue hole through which the miners were pulled to the surface, with the world watching, after 69 days underground.
Textile and apparel products became duty-free immediately with the passage of the U.S.-Chile Free Trade Agreement (FTA) on January 1, 2004. Since 2004, U.S. apparel product exports have grown 236 percent. Lion Apparel is a 110 year-old family-owned company based in Dayton, Ohio that designs and manufactures apparel for emergency responders. Since the FTA’s implementation, Lion Apparel won a three-year contract to supply 6,000 firefighting suits to Chile’s all-volunteer national firefighters. Each firefighting suit contains a barcode label that allows the fire department to track and identify the use and repair history of each suit. Proper maintenance of the gear assures that each and every suit is safe and fit for duty. The fabric layers of the gear are engineered to manage moisture so that the gear stays lighter in weight, dries faster, and reduces the risk of scald burns. This technology, called “isodri,” was invented and patented by Lion Apparel. According to Lion’s local partner, Codigo 33, this is the first time that Chilean firefighters have had such high-technology suits.
Sioux Corporation is a small, 70-year-old manufacturing company based in Beresford, South Dakota. Sioux Corporation’s products include decontamination equipment, steam cleaners, pressure washers, and industrial water heaters. In 2008, Sioux Corporation was looking to expand its international operations and decided to focus on Chile, largely because of the U.S.-Chile Free Trade Agreement (FTA). In mid-2008, representatives from Sioux Corporation traveled to Chile to find a distributor, and by late 2008, they had already sold two pieces of large equipment. Sioux Corporation continues to thrive in Chile today. Under the FTA, the equipment faces zero tariffs upon entering the Chilean market, saving the customer money and making Sioux’s products more competitive in the Chilean market.
The U.S.-Chile Free Trade Agreement (FTA) opened up the Chilean market to Flanders Electric, a small company located in Evansville, Indiana that manufactures and repairs electric motors. In 2007, Flanders Electric was in the midst of a growth period and looking to expand into new markets. The fact that the United States has a free trade agreement with Chile and that Chile has a large mining
industry that requires the use of heavy equipment contributed to Flanders Electric’s decision to begin exporting there. Flanders now supplies motors to mining companies throughout Chile. Flanders Electric also began exporting to Australia in 2005, another United States trade agreement partner. As a result of these two new export markets, Mr. Steven Graves, International Accounts Manager for Flanders, reports that the company has been able to add another 75 employees to their workforce.
Chile’s robust mining sector accounts for 18 percent of GDP (2010), and the United States is the single largest equipment supplier to this sector. Westrock is a small manufacturing company, with 20 employees, based in Little Rock, Arkansas. Westrock makes friction discs and steel reaction plates for industrial, off road equipment, earthmoving machinery brakes, and other specialty parts. In 2007, a Chilean industrial distributor contacted Westrock after seeing the company’s products at a trade show. This initial exporting success has led Westrock to continue to supply brake components for mining equipment in Chile to several clients, and all of these products enter Chile duty-free under the U.S.-Chile Free Trade Agreement (FTA). U.S. exports of machinery parts to Chile have grown 309 percent since the FTA’s implementation.
Continental Manufacturing Company, Ltd. (CBMW)
U.S. exports of construction equipment have risen each year since these products became duty-free immediately with the implementation of the U.S.-Chile Free Trade Agreement (FTA). Continental Manufacturing Company, Inc.’s (CBMW) headquarters and manufacturing facility are located in Houston, Texas. The company manufactures rear discharge concrete mixers. The Houston Export Assistance Center let CBMW know that their products would enjoy duty-free status under the FTA, and CBMW became first-time exporters to Chile in 2007. CBMW’s success continued each year. In
2010, CBMW exported 30 mixers, and as of February 2011, CMBW has already shipped 45 mixers and has outstanding orders for 65 more.
Richard Grana, President of IMPEX, was among the first Kentucky exporters to benefit from the new trade agreement with Chile. In fact, by August 2004, Mr. Grana had already sold more products to Chile than he had sold in all of 2003 to the country. IMPEX, located in rural Paducah, Kentucky, is an export management company that markets conveyor systems and environmental technologies for U.S. manufacturers. The Chilean mining sector uses the products marketed by IMPEX to complete maintenance and improvement projects. With some technical guidance on the FTA provided by the Louisville U.S. Export Assistance Center, Mr. Grana found that his products became duty-free immediately under the agreement, which enabled him to increase sales in what was already a good market for his firm. The recent rise in the price of copper has made Chile’s mining sector all the
more active, and Mr. Grana feels confident that with the FTA in place his sales will continue to increase as well. In February of 2011, Mr. Grana was planning his next business trip to Chile.
Project Development International (PDI)
Roberto Sanchez, Program Manager for Project Development International (PDI), believes his company’s success in Chile is attributable to the U.S.-Chile Free Trade Agreement (FTA). Started in 1984 in Clearwater, Florida, PDI is a small company of eighteen professional employees that is dedicated to innovative and effective management services for the construction industry. The company has found success helping clients complete their projects on time and within budget. With the assistance of the U.S. Commercial Service staff in Santiago, PDI signed a representation agreement with Integra Proyectos, a Chilean consultancy firm based in Santiago. Mr. Sanchez believes the FTA facilitated the partnership with Integra and will make it easier for PDI to export its services. Working with PDI, Integra supplied temporary classrooms to 40,000 elementary and high school students that were displaced during Chile’s 2010 earthquake. PDI sees a bright future for future development projects in Chile.
Sun Pacific Shippers Sales
With the U.S.-Chile Free Trade Agreement (FTA) in place, Sun Pacific Shippers of Los Angeles, California, found it attractive to export California-grown citrus to meet market demand during Chile’s off-season, as the FTA immediately reduced Chilean duties on products such as clementines from six percent to zero. After business negotiations between Sun Pacific and leading Chilean fruit company Subsole Exportadora de Frutas, Subsole agreed to import California-grown clementines as a test case for the Chilean market. The idea was a success; with the assistance of the U.S. Foreign Commercial Service in Santiago, Sun Pacific’s “California Cuties” reached Chilean supermarkets, and Sun Pacific continues to find opportunities in Chile. The fact that California and Chile have opposite growing seasons, combined with new market access afforded by the FTA, holds promise for continued U.S. fresh fruit exports to the Chilean market.
Since implementation of the U.S.-Chile Free Trade Agreement in 2004, exports from Illinois-based manufacturer Caterpillar Inc. have more than tripled. Bolstered by sales to Chile's strong mining and commercial building markets, the country now consistently ranks among Caterpillar's top six global export markets. This boom in export of new and remanufactured construction, mining, and power generation equipment drives growth throughout Chile and supports thousands of good jobs at
Caterpillar and supplier locations across the United States. In exchange, Americans benefit from increased access to Chile's rich supply of natural resources and food products.
As one of America’s largest exporters, Caterpillar shipped more than $13.4 billion in U.S.-built products overseas in 2010, helping drive positive and sustainable change around the world. Like so many agreements before, the U.S.-Chile Free Trade Agreement has proven time and again that when we level trade's playing field, the American Caterpillar worker and consumer benefits.
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