U.S. Commerce Secretary Penny Pritzker unveiled a new initiative aimed at increasing business with trade partners in Latin America, only days after the 20th anniversary of the North American Free Trade Agreement’s implementation.
The Look South initiative encourages U.S. companies to do business with Mexico and the U.S.'s 10 other free trade agreement partners in Central and South America, Pritzker told reporters Thursday before her Los Angeles speech announcing the initiative.
Pritzker said there are many untapped business opportunities south of Mexico, which the program hopes to open up for U.S. companies. Currently, only 1% of U.S. businesses export their products, and of those, 58% export to only one country, usually Canada or Mexico.
But Pritzker emphasized that U.S. businesses need to take advantage of the free trade agreements.
Economic growth projections for the target countries in the initiative range from 4% in Colombia to 7% in Panama, and the Commerce Department hopes to tap into that growth to benefit U.S. businesses.
“We’re really trying to encourage exports and more global thinking by American businesses,” Pritzker said.
The initiative is part of the department’s new Open for Business agenda, which prioritizes trade and investment.
“We need a real cultural change in America,” the billionaire businesswoman said. “You’ve got a new product, new idea that you want to bring to the market, you need to think not only about how you present it to the U.S. market, but 95% of customers exist outside of the U.S.”
U.S. exports account for roughly 13.5% of the nation’s GDP and have increased more than $600 billion since 2009 to $2.2 trillion in 2012, with a predicted increase in 2013.
Yet vast opportunities remain, Pritzker said in her speech to the Los Angeles World Affairs Council.
“These markets are fertile ground for more U.S. exports: Tariffs are low, if they exist at all,” she said. “More importantly, businesses, governments and consumers in these countries want the high-quality goods and services that our companies offer.
“Let me be clear: if you are an American business, the time is now to consider selling your product or service abroad.”
Pritzker’s audience in a downtown Los Angeles banquet room included consuls general from Mexico, France and the United Arab Emirates as well as former Los Angeles Councilwoman Jan Perry, who heads the city’s Economic and Workforce Development Department.
To kick off the initiative, Pritzker will lead a group of 18 businesses on a trade mission to Mexico in February.
Pritzker hopes that the Look South initiative will become a gateway to exportation beyond Mexico, one of the country’s leading trade partners.
“If you export to Mexico, why wouldn’t you consider Colombia or Chile or Peru?” Pritzker said. “If there’s demand for your product in one country, there’s probably interest in another country.”
Businesses that export to only one country generate about $375,000 in export sales, while companies that sell to two to four export markets have average export sales of $1 million and those that export to five to nine markets generate $3 million in export sales, Commerce Department data show.
The website for the new initiative, export.gov/LookSouth, went live Thursday and includes market research, which will provide country-specific and product-specific information for businesses looking to expand to new areas.
Michael D. Masserman, executive director of export policy, promotion and strategy at the Commerce Department, said the initiative intends to inform businesses about opportunities in Latin America that they may not be aware of.
“There’s an array of sectors that we’re focused on: environmental technology, information, communication,” he said. “These are sectors that many American companies aren’t necessarily looking for opportunities in these regions.”
Pritzker noted that with recent energy reforms in Mexico, U.S. businesses will have an opportunity to enter sectors in that country that had previously been closed off to them.
Prizker also stressed the importance of two other proposed free trade agreements, which would help the U.S. remain competitive on the economic scene: The Trans-Pacific Partnership with 11 countries including Japan, Singapore and Vietnam and the Transatlantic Trade and Investment Partnership with the European Union.
She also asked businesses to help promote foreign investment in the United States and threw support behind passing comprehensive immigration reform, which she said would help give U.S. business a competitive edge in innovation.
Immigration reform “must be at the top of our to-do list,” said Pritzker, who whose family founded the Hyatt hotel chain.
Pritzker, whose great-grandfather emigrated from Russia at age 10, said in an interview after her speech that immigration reform is a “moral, as well as an economic issue” and one that held “economic opportunity” for the country.
The immigration bill passed by the Senate would “expand the temporary and high-skilled worker programs that our businesses need to grow.”
“It allows us to staple a green card to the degrees of graduate students, instead of forcing potential innovators and job creators to leave after being trained at our universities — a mind-boggling concept to me,” Pritzker said.
Immigration changes under a Senate-passed bill would boost the U.S. economy by $1.4 trillion over the next 20 years, she said. In California, Pritzker said, the reform would create 77,000 jobs and swell the economy by $7 billion “in the near term.”