PowerSource Voice: Free trade agreements in Latin America provide demand for electricity

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Almost half of Pennsylvania’s exports in 2013 went to countries that have free trade agreements with the United States. Of the state’s top five free trade agreement partners, three are Latin countries: Mexico, Colombia, and Chile. Combining these trends with the fact that 11 out of 20 existing free trade agreements are in Latin America highlights the region’s importance as a destination for Pittsburgh’s exports.

Pittsburgh-area exporters can now learn more about the growing markets in Latin America, since the U.S. Commercial Service, which is part of the commerce department’s International Trade Administration, is sponsoring a business development conference in Bogota, Colombia, in May. It will highlight opportunities and challenges in doing business in the region, as well as sponsor business-to-business meetings with potential local partners in Panama, Colombia, Peru and Chile.

Choosing which free trade agreement partners in Latin America to target got easier when the top four U.S. partners in the region, Mexico, Colombia, Peru, and Chile, joined forces in 2012 to form a new trade group, the Pacific Alliance. Panama, another U.S. free trade agreement partner, is also negotiating its entry to the alliance.

Pennsylvania has seen its exports to the Pacific Alliance countries and Panama increase by 150 percent since 2005.

These five countries are by far the best economic achievers in the region. Even compared with the region’s economic giant, Brazil, they have grown faster for a longer time, have a larger combined population, similar economic size, comparable purchasing power, and are much more open to U.S. exports.

This growth is generating substantial demands for new infrastructure, including more electric capacity, new renewable energy technologies, and the upgrade of existing power facilities.

Another area of great opportunity in this sector is oil and gas exploitation equipment. Thanks to the agreements in place, energy-related equipment, spare parts and accessories enjoy duty free access to these markets. A favorable exchange rate for the dollar also adds an additional competitive edge for U.S. goods and services.

For power generation opportunities, Colombia, Chile and Panama are planning new projects to accommodate for expanded demand through 2020. Specific opportunities include transformers, generators, industrial controls, turbines and smart grid technologies. There are also expanding opportunities for renewable energy systems such as solar, wind, hydroelectric plants. Hydroelectric generators and equipment are in great demand in Colombia and Panama.

For oil and gas exploitation equipment, Mexico, Colombia, and Peru represent the best export opportunities. These investments are in addition to private companies’ activity in exploration, drilling, and upgrading of production and refining facilities. Best prospects in these markets, particularly in Mexico and Peru, are exploitation machinery, transportation equipment, pipe fittings, as well as offshore oil and natural gas production platforms.

Moreover, if peace negotiations are concluded as expected in 2014, Colombia could open access to large swaths of territory to oil, gas, and mining exploration.

Pittsburgh exporters interested in these markets should take advantage of the Trade Winds mission, contacting the Pittsburgh-area office of the U.S. Commercial Service before March 31 at tradewinds@trade.gov.

Rodrigo Soto-Miranda is a global trade consultant specialized in Latin American markets.

PowerSource Voice is a regular feature offering insight and opinion on energy subjects. To contribute, contact Teresa F. Lindeman at tlindeman@post-gazette.com.

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