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U.S. telecom firms back Chile's entry into NAFTA
Telephony / January 22, 1996

By Larry Luxner

WASHINGTON -- Key players in the U.S. telecom industry strongly support efforts by Chile to gain membership in the North American Free Trade Agreement. They say granting NAFTA entry to Chile -- a move that would require the approval of fellow NAFTA partners Mexico and Canada -- will help rather than hurt the U.S. in the long run.

"NAFTA equals increased trade," says Sprint spokesman Matthew Piette. "In that sense, it presents a lot of opportunities to increase cross-border traffic. Chile's entry into NAFTA would present yet another opportunity."

Adds MCI spokesman Alan Garrett: "We're in favor of it. We think it'll help the economies of both countries."

Free trade with Mexico has proved a boon to U.S. telecom firms, which have seen duties on their exports to Mexico drop to zero. More phone traffic now exists between the U.S. and Mexico than any other two countries in the world; AT&T, Sprint and MCI all have "seamless networks" linking people and businesses on both sides of the Rio Grande.

Despite an intense lobbying effort by the Chilean-American Chamber of Commerce, however, Chile -- whose 14 million people enjoy the most advanced telecom network in Latin America -- probably won't make it into the exclusive club this year. In fact, Chile is unlikely to see any progress toward membership in NAFTA for a long time, concedes even the movement's strongest backers. Last month, Canada and Chile announced they would pursue their own free-trade agreement, independent of the United States.

Barbara Urzua, director of AmCham's Free Trade Agreement Office, says she's still pushing Congress to grant President Clinton so-called "fast-track" authority to negotiate the terms of a free-trade agreement with Chile. But with 1996 being an election year, it's doubtful the Democrats will want to make NAFTA a campaign issue -- so the whole thing may very well be put off until 1997 or later.

If that happens, it won't be Chile's fault, says Luisa Cerar, director of institutional relations for AT&T's Southern Cone operations.

"This is a significantly different environment than the one we had a few years ago, when Mexico was admitted to NAFTA," said Cerar, who is based in Buenos Aires. "This is now a Republican-controlled House. The expansion of free trade is a campaign issue, and the Democrats need the labor unions, while the Republicans don't want labor and environment to be part of the final agreement."

Chilean President Eduardo Frei, who's pushing hard for membership in NAFTA, said recently that "the delay represents an internal political dispute in the United States, within which the Chilean government does not play any role."

Meanwhile, the Frei administration is pursuing trade deals with the Southern Common Market (Mercosur), which comprises Argentina, Brazil, Uruguay and Paraguay. It is also negotiating a free-trade agreement with the European Union, and expects to have a deal signed sometime in late March. If that happens before Chile gains access into NAFTA, warns Urzua, it would be "terrible" for U.S. businesses, predicting that "we would lose our leadership and credibility in the region."

Adds AT&T's Cerar: "If Chile were in NAFTA, we could ship telephone sets made in Guadalajara, Mexico, to Chile without paying duties, and from Chile to the Mercosur countries. If not, European companies like Alcatel and Siemens -- because they have factories in Brazil and Argentina -- would be able to outbid us in price, because we'd need to bring our equipment from the States."

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