Chile’s key legal issues for fruit exporters
Chilean law firm Araya & Cía Abogados held an international trade seminar for exporters last week, with experts covering a range of topics of importance to the fruit industry. Among them were the consequences and legal actions in response to the port strikes in March and April, the fine print of hiring foreign workers, and opportunities in the Asian and European markets.
Maritime and Security law expert Rafael Durán kicked off proceedings by discussing the options at exporters’ disposal after the port strikes, which was particularly damaging for shippers in the port of San Antonio.
Decofrut president Manuel José Alcaíno determined that grape exporters were the most hurt from the ordeal, with losses from the strike reaching US$28 million in the Far East, US$12.5 million in the U.S., US$7.5 million in Europe. In terms of varieties, Red Globes were the most affected with this fruit’s losses alone reaching US$22 million.
The industry veteran also mentioned the enormous damages that Chile’s grape export delay had on international growers, especially in Mexico and southern California, who usually start the season at a price of US$25 per box. However, due to the strike these growers began with lower prices and were selling the fruit at US$12 in the third week.
As a response to the situation, Duran declared that Araya & Cía would take legal action against the Port of San Antonio operator, insisting that growers speed up processes with their respective insurers so that a more concrete value of losses could be calcuated. Once completed, this calculation could be used in a lawsuit.
Another of the firm’s lawyers, Álvaro Varas, discussed the issue of seasonal foreign workers, covering the types of visa and residency options available and the processes employers needed to undertake, as well as the responsibilities and exceptions involved. He emphasized that companies wtih more than 25 staff could not have more than 15% foreign workers, unless the efforts undertaken were for a short period.
Varas added that a current migration bill aims to deliver temporary residency to farm workers for up to five years, extending the number of migration categories and the types of residency Chile can use to facilitate the entry of foreign workers. He also explicitly added the condition of equality between migrant and local workers with respect to rights and obligations.
Opportunities in international markets
Associate attorney Sebastián Norris told attendees about the importance of strategy and the requirements of setting up offices overseas, involving Araya & Cía’s Guangzhou correspondent lawyer Tony Wei in the presentation. He said branching out into China offered greater competitiveness and also highlighted the consolidation of distribution and sales chains overseas.
Wei said a good level of capital was needed to enter the Asian country, along with clear definitions as to the nature of the business and its location. The most common structure for foreign businesses is as a Wholly Foreign-Owned Enterprise (WFOE).
Another of the country’s lawyers, Inés de Ros, explained the importance of the Netherlands for those companies wishing to set up a European headquarters, due to its strategic trade significance.
She said the most common society model in the Netherlands was B.V., which ensures the subsidiary is 100% owned by the foreign company. De Ros mentioned there were currently 95 agreements to avoid double taxation and Chile was processing this project that would benefit employers.
She said the Flex BV Act eliminated requirements of obligatory capital contributions (from an €18,000 minimum previously to a one euro cent minimum), which streamlined incorporation procedures, while it also didn’t demand the opening of a bank account before the creation of a company. De Ros believed all of these changes would benefit Chilean growers and exporters.