AUSTRALIA-CHILE TRADE RELATIONSHIP OVERVIEW
Chile retains an open economy with a liberal trade regime and has a stable democratic government. Driven by a market-oriented economy, Chile’s economic growth is propelled by exports, which account for more than one third of GDP, with commodities constituting almost three quarters of total exports. Copper, the country’s key export, provides one third of government revenue. Other key exports include forestry products, vegetables, fruit, fishmeal, fish (salmon in particular) and wine.
Australia’s trade relationship with Chile is worth approximately AUD$2 billion and Australia is the sixth largest investor in Chile. The relationship between the two countries has been bolstered by the Free Trade Agreement (FTA), which entered into force on 6 March 2009. It was Australia's fifth FTA and the first with a Latin American country. The key interests and benefits of the agreement are:
• Elimination of tariffs on all existing merchandise trade by 2015
• National treatment for Australian goods, services and suppliers in the Chilean market for procurements above agreed value thresholds.
• Locks in both sides' liberal services and investment regimes
• Locks in both sides' high standards of IP protection for patents, trademarks, geographical indications and copyright.
Australia’s key exports to Chile are coal, beef, coke and semi coke of coal and measuring and analysing instruments. Major imports from Chile include copper, lead ores and concentrates, wood and fertilisers (excluding crude).
The export of services to Chile are valued at AUD$224 million dollars with the two major contributors being professional, technical and other business services ($119 million) and education, worth $260 million.
Chile has a uniform tariff of 6 per cent; however, due to its network of FTAs, the average tariff applied is well under that. Chile has preferential trade agreements in place with 64 countries (including with 10 other APEC members – the USA, South Korea, Mexico, New Zealand, Singapore, Brunei, Japan, China, Malaysia, Vietnam and Peru). Chile recently signed agreements with Thailand, Hong Kong, Indonesia and Russia and is also participating in the Trans-Pacific Partnership negotiations.
TIPS FOR DOING BUSINESS IN CHILE
Currently there are roughly 120 Australian businesses operating in Chile. As with most countries, it is difficult to do business without connections in the market. For that reason it is advisable to utilise the services provided by Australia’s state and federal trade bodies. They will be able to assist in providing forums to network and can connect you with the right people. The badge of Government is looked upon favourably in the Chilean business community.
Trade and Investment Queensland
Av. El Golf 40 Piso 12
Las Condes, Santiago
Tel: +56 9 7387 2390
chris.rodwell@trade.qld.gov.au
Austrade
Av Isidora Goyenechea 3621
Floor 9, Office 902
Las Condes, Santiago
Tel: +56 2 733 4700
Daniel.Sullivan@austrade.gov.au
• Chile is considered a high-context culture, which means that generally the people are relational, collectivist, intuitive, and contemplative. People in these cultures emphasize interpersonal relationships and developing trust is an important first step to any business transaction. Moreover, people in these cultures are less governed by reason than by intuition or feelings. Words are not as important as context, which might include the speaker’s tone of voice, facial expression, gestures, posture and even the person’s family history and status.
Australia’s trade relationship with Chile is worth approximately AUD$2 billion and Australia is the sixth largest investor in Chile. The relationship between the two countries has been bolstered by the Free Trade Agreement (FTA), which entered into force on 6 March 2009. It was Australia's fifth FTA and the first with a Latin American country. The key interests and benefits of the agreement are:
• Elimination of tariffs on all existing merchandise trade by 2015
• National treatment for Australian goods, services and suppliers in the Chilean market for procurements above agreed value thresholds.
• Locks in both sides' liberal services and investment regimes
• Locks in both sides' high standards of IP protection for patents, trademarks, geographical indications and copyright.
Australia’s key exports to Chile are coal, beef, coke and semi coke of coal and measuring and analysing instruments. Major imports from Chile include copper, lead ores and concentrates, wood and fertilisers (excluding crude).
The export of services to Chile are valued at AUD$224 million dollars with the two major contributors being professional, technical and other business services ($119 million) and education, worth $260 million.
Chile has a uniform tariff of 6 per cent; however, due to its network of FTAs, the average tariff applied is well under that. Chile has preferential trade agreements in place with 64 countries (including with 10 other APEC members – the USA, South Korea, Mexico, New Zealand, Singapore, Brunei, Japan, China, Malaysia, Vietnam and Peru). Chile recently signed agreements with Thailand, Hong Kong, Indonesia and Russia and is also participating in the Trans-Pacific Partnership negotiations.
TIPS FOR DOING BUSINESS IN CHILE
Currently there are roughly 120 Australian businesses operating in Chile. As with most countries, it is difficult to do business without connections in the market. For that reason it is advisable to utilise the services provided by Australia’s state and federal trade bodies. They will be able to assist in providing forums to network and can connect you with the right people. The badge of Government is looked upon favourably in the Chilean business community.
Trade and Investment Queensland
Av. El Golf 40 Piso 12
Las Condes, Santiago
Tel: +56 9 7387 2390
chris.rodwell@trade.qld.gov.au
Austrade
Av Isidora Goyenechea 3621
Floor 9, Office 902
Las Condes, Santiago
Tel: +56 2 733 4700
Daniel.Sullivan@austrade.gov.au
• Chile is considered a high-context culture, which means that generally the people are relational, collectivist, intuitive, and contemplative. People in these cultures emphasize interpersonal relationships and developing trust is an important first step to any business transaction. Moreover, people in these cultures are less governed by reason than by intuition or feelings. Words are not as important as context, which might include the speaker’s tone of voice, facial expression, gestures, posture and even the person’s family history and status.
•Although you will find that most top level government officials and businessmen and women can and will speak English, it is not generally very widely spoken in the country. When meeting with companies, unless you are sure that there will be a fluent English speaker present, it is advisable to have a translator. It is not uncommon for people to say they can speak English when really their English is very limited and this can make meetings difficult to conduct effectively.
•Translating marketing material into Spanish is also very important if you want to promote your service/product effectively. In the initial instance, translating a one pager on your company into Spanish and using that at expos and conferences may prove useful (Google Translate will not suffice).
•Be aware that generally the working day starts between 9am and 10am and most people take roughly an hour, sometimes more for lunch. Most people finish work around 7pm (in Santiago peak ‘hour’ goes from about 6pm -8:30pm).
OPPORTUNITIES FOR AUSTRALIAN EXPORTERS
Mining and METS
Chile’s copper industry is the largest in the world and is complemented by a strong history of sustained growth in the mining sector and world class export infrastructure. Local demand for mining equipment and technology has been propelled by the growth in the mining industry (roughly 10 per cent per annum), and is serviced for the most part by foreign suppliers.
Looking ahead, a portfolio of mining projects equating to approximately USD $70 billion by 2018 puts the sector at the gates of a phase of unprecedented expansion. This will require overcoming several operational and geological challenges, for instance, decreasing ore grades. This creates opportunities for Australian suppliers, especially those that produce technologically advanced products and services that improve efficiency, productivity and sustainability.
Education and training
During his visit to Australia in July 2008, Foreign Minister Foxley signed three Memoranda of Understanding with Universities Australia, the Group of Eight Universities and TAFE Directors Australia for up to 500 Chilean scholarship students to study at the postgraduate level at Australian universities and up to 400 at TAFE Colleges, commencing in 2009.
In May 2012, 1,354 Chilean students were enrolled in Australian education institutions. Chile is currently the third-largest source of international students from Latin America, after Brazil and Colombia.
Chile also has the highest rate of computer ownership in the region and the Government invests a significant amount into ICT. There are therefore opportunities for hardware and software suppliers and demand for training and niche accreditation in the areas of insurance, banking, IT, hospitality and catering.
Energy
Chile is diversifying its energy supply matrix and increasing power generation capacity. The country boasts two liquefied natural gas regasification plants, a number of coal-fired plants in construction and others in planning, and large, medium and small scale hydro projects under development. There are opportunities for Australian companies in asset management, construction and consultancy. Renewable energy is also well supported by the Government, creating opportunities in project financing/ management, carbon trading and consultancy.
Financial services
The financial services sector is the second-largest in Chile (behind mining) accounting for 16 per cent of GDP (approximately US$27 billion). There are opportunities for Australian financial services companies in the Alternative Investment Market as well as with mid-tire mining companies looking to raise capital/expand/diversify.
Other
There are franchising opportunities for Australian companies in Chile as well as opportunities for agribusiness in the areas of ovine and bovine genetics and production technologies.
TIPS FOR IMPORTING INTO CHILE
For those looking to import in goods into Chile, there are two free trade zones (Zonas Francas), Punta Arenas in Region XII in the South of Chile and Iquique in Region I in the North. They are areas close to port facilities where goods are stored and technically considered outside of the national customs territory and therefore are free of import tariffs and the 19 per cent VAT payment. The goods can be stored in these zones for however long is necessary before they are transferred to their final destination. Customs taxes are only payable when the goods reach their final destination.
Author: Stacey Mills
Export Council of Australia
Ph: + 61 2 8243 7460
Email: StaceyMills@export.org.au
Website: www.export.org.au
Education & Training: www.aiex.com.au
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