U.S. launches initiative to increase exports to Latin America
Days after the 20th anniversary of the North American Free Trade Agreement’s implementation, U.S. Secretary of Commerce Penny Pritzker unveiled a new initiative aimed at increasing business with trade partners in Latin America.
The “Look South” initiative encourages American companies to do business with Mexico and the U.S.’s 10 other Free Trade Agreement partners, 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 American companies. Currently, only 1% of U.S. businesses export their products, and out 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 agreement that already exists.
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. business.
“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 by 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, according to an advance copy provided to the media.
“These markets are fertile ground for more U.S. exports: Tariffs are low, if they exist at all,” she said. “Most 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 said in her speech.
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?” Pritsker 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 around $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 with recent energy reforms in Mexico, U.S. businesses will have an opportunity to enter those sectors in that country, which had previously been closed off to them.
Prizker also stressed the importance of two other free trade agreements, which will help the U.S. remain competitive on the economic scene: The Trans Pacific Partnership 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 American business a competitive edge in innovation.
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