Chile and Mexico are two of the most open economies in the Latin American Region. They signed a Free Trade Agreement in Santiago that came into effect on the 1st of August, 1999. It replaced the Economic Complementarily Agreement No 17 subscribed to between the two countries back in 1991. It was not, however, negotiated under the Asociación Latinoamericana de Integración (ALADI) Agreement.
The Agreement is divided into six parts. The first contains general aspects and definitions; the second refers to trade in goods and covers matters related to market access, rules of origin, customs procedures and safeguard measures. The third part covers technical rules, such as sanitary rules and other standards. The fourth is related to investments, services and related matters. The fifth part details the application of intellectual property rights and finally, the sixth part contains administrative and institutional provisions. The Free Trade Agreement between Mexico and Chile establishes a free commerce zone with built-in stimulation for expansion and diversification of their components. Also, the Agreement between Mexico and Chile is a forward looking treaty that promotes conditions for competition and creating opportunities for investment in the respective markets.
Exhibit 1 summarizes the Trade Balance between Mexico and Chile. It shows that commerce between the two countries reached its maximum level in the year 2008, with an important decrease the following year 2009 and recovering in a satisfactory way in 2010. What really stands out is that since 2002 commerce between Mexico and Chile has been evolving very satisfactorily following a path of continuous growth, with the exception of the year 2009.
Several important factors in the trade balance between Mexico and Chile are revealing. Take, for instance, the fact that during the 12 year time span from January 1999 to December 2011, total exports from Mexico to Chile rose from US$437.2 million to US$2.07 billion (+373%). And at the same time imports from Chile to Mexico also showed an impressive 207% growth.
Total commerce between the two countries and reciprocal action brought in US$4.17 billion during the 2011 in trade between the two partners. Total commerce between Mexico and Chile showed important improvements, especially during the period since 2006. This was when, for the first time, the total commerce stats were available identifying the US$3 billion worth. In fact, the period 1999 to 2011 represents a 272% growth rate in total commerce between the two nations. And, in 2011 there was a 9.32% increase in commerce (US$4.17 billion) compared with (US$3.8 billion) in 2010.
Exhibit 2 shows Chilean Investment in Mexico. During the period from January 2000 through December of 2011, companies with capital from Chile invested US$476.3 million. This amount represents 0.1% of the total invested in Mexico during that time. According to this information Chile is the third largest investor in Mexico from South America following Argentina (US$649.6 million) and Brazil (US$ 583 Million).
The main products imported by Mexico from Chile are copper, wood, gold, refined copper and many other minerals, as well as auto parts and food products. Among the main companies from Chile that have invested in Mexico are Farmacias Benavides (Drug Stores); Molymex (Minery) Araucomex (Forestry) and CMPC (paper).
Benavides is the largest drug stores chain in Mexico, with stores covering over half the nation, mainly the north of the country. This position has been gained through the Company’s own character by pursuing differentiation strategies through value added services and depth of categories carried.
Through their regional expansion, Farmacias Benavides has been able to position itself servicing the most affluent and highest growth regions of the country by serving 24 states, and more than 129 cities on the Northern and Central regions in Mexico with their corporate offices located in the city of Monterrey, N.L.