Chile has expressed fears that a slump in sterling following Brexit could damage exports of high-value products such as fruit and wine to to the UK.
Customs data shows that Chile exported US$630m of products to the UK, representing 1.04 per cent of total shipments and 8.2 per cent of exports to the European Union. Together, fruit and wines accounted for 62 per cent of shipments with US$244m and US$149m of the total value respectively.
“Our foreign trade is strongly affected by the exchange rate between the currency of the destination country and the Chilean peso and in this sense,” said Renato Segura, director for the Bío Bío Region for trade promotion agency ProChile, adding that the uncertainty caused by Brexit was generating concern among the region’s small and medium-sized producers.
Asoex president Ronald Bown said: the impact of Brexit on fruit exports was two-fold.
“Firstly, we have the devaluation of the pound, which has fallen from £0.70 per US dollar to £0.80 per dollar, makes Chilean exports more expensive to British consumers, and also makes imports of goods from any part of the world more expensive for the UK,” Bown told Fruitnet.
“Furthermore, if demand falls in the UK, this could lead to oversupply within the EU, which would not only affect Chile but also other suppliers to Europe who, generally speaking, do not have alternative export markets.”
The second effect, according to Bown, is over the medium term and refers to a possible increase in tariffs on Chilean products once the UK leaves the EU and Chile’s free trade agreement with the trading bloc no longer applies.
“This is possible, but unlikely, since our Foreign Ministry should be working on a new trade agreement with the UK so that we don’t lose our competitive advantage that we worked for so many years to obtain,” Bown said.
Regarding the measures Asoex is taking to avoid being adversely affected by the Brexit, the president of Asoex said: “for years our sector has been struggling to counteract the negative effects of a low dollar in our country.
“That gives a special strength to our fruit exports. Nevertheless, we are likely to see a decrease in demand for all products due to the fact that consumers’ purchasing power will have fallen.”
He said that Asoex would adopt a “wait and monitor” strategy during the two years of negotiations.
Asked if Brexit would spur Chile’s search for new export markets, Bown told Fruitnet: “Our sector exports fruit to more than 100 destinations worldwide. We are always looking for new opportunities in emerging markets such as Asia and Africa among others.
“It could be that Brexit reaffirms the need to find new markets, depending on the impact it has on tariffs and exchange rates.”