Chile joining NAFTA equals cheaper fruits and vegetables for the US
Any American wondering why Chile has been invited to join the North American Free Trade Agreement (NAFTA) need only go as far as his or her grocery store.
A portion of this winter's supply of fresh fruits and vegetables is now starting to arrive from Chile's farms, where the seasons are reversed. A shopping cart of Chilean goods could include grapes, nectarines, plums, pears, peaches, raspberries, kiwis, and apples. It's also possible to find Chilean onions and tomatoes.
The Chilean fruit often wins praise for its quality. If Chile joins NAFTA, the fruit may also win converts because of its reasonable price. For example, Chilean grape exporters pay a duty ranging from $1.41 to $2.12 per cubic meter depending on the time of year. But many Chilean fruits, such as apples, pears, peaches, and plums, enter the US with no duty.
While in the grocery store, stop at the seafood section. Chile is shipping fresh and frozen salmon, swordfish, sea bass, and mackerel. In the processed-food section, Chilean juices and processed tomatoes line the shelves.
To see the benefits of Chilean trade, go to Philadelphia.
Starting in 1984, the port of Philadelphia and Camden, N.J., worked hard to attract Chilean trade. The city built special refrigerated piers. Freighters arriving from Chile provide jobs for longshoremen, harbor pilots, and stevedores. Truckers move the produce from Philadelphia to other East Coast cities.
The City of Brotherly Love garnered nearly 100 percent of the Chilean trade. Since then, fruits and vegetables from Chile have increased by 132.55 percent.
Unfortunately for Philadelphia, though, it now has competition from the ports of Wilmington, N.C., and Wilmington, Del.
Realizing the benefits of their long-term relationship with Chile, this fall the Philadelphia Chamber of Commerce sent a trade mission of Pennsylvania companies to Chile. The state sent only firms that had products on Chile's shopping list. Every company garnered orders. A significant number of those orders will be shipped to Chile from the port.
While the United States is buying grapes, the Chileans are buying heavy equipment such as bulldozers, auto parts, and computers from the US.
As a result, Chile has a trade deficit of $900 million with the US. One of the Philadelphia-area companies successfully sold machinery to Chile's largest steel plant.
It takes a lot of grapes to pay for parts for a steel mill. However, Chile also exports a large amount of copper to Japan, as well as the US. It uses a surplus in yen to buy US products.
There will certainly be an array of groups opposed to Chile's admittance to NAFTA. Chile also exports small amounts of wood products, such as kitchen utensils and wooden doors. A small quantity of denim and shoes also finds its way to US shores. However, some US companies and unions will argue that these exports will soar if tariffs are removed.
Although it's likely some US workers will be displaced because of Chilean imports, Chilean trade officials don't expect any dramatic changes if the nation is admitted to NAFTA. Instead, they just expect more trade, which should benefit both countries - and your supply of fruits and vegetables.