Yellen vows to work for closer ties, work on green energy in visit to Chile

U.S. Treasury Secretary Janet Yellen on Friday underscored the United States' keen interest in deepening ties with Chile, a key producer of copper and lithium, as both allies work to address climate change and accelerate the energy transition.

Yellen kicked off a visit to Chile with remarks at a green energy roundtable, where she hailed President Joe Biden's landmark Inflation Reduction Act. The act offers tax credits for electric vehicles, solar panels and other renewable energy products made from metals extracted in the United States or countries with U.S. free trade deals - including Chile.

"The United States is focused on deepening ties with trusted partners like Chile and building resilient and reliable clean energy supply chains through investments at home in the U.S. and abroad," Yellen told the event, which was co-hosted by Chilean Finance Minister Mario Marcel.

After a private meeting with Marcel, Yellen told reporters that Chile - a lead producer of lithium and copper, had a critical role to play in the supply chains that will power the world’s transition to clean energy.

"We see opportunities to further integrate our supply chains with benefits for both our economies," she said, adding that the possibilities for collaboration extended far beyond clean energy to include investment screening best practices.

There was also significant scope for Chile and the United States to work together in the context of multilateral forums such as the Inter-American Development Bank, she said.

The visit is part of a broader push by the Biden administration to reduce its reliance on critical minerals from China and to build more diversified and resilient supply chains.

Yellen told Reuters that the United States, in what she calls "friendshoring," did not indicate any desire to decouple from China, despite concerns raised by the International Monetary Fund and others about growing geoeconomic fragmentation.

“The IMF has made more of this than I’m personally comfortable with," Yellen said in an interview. "When you see us trying to diversify important supply chains, they act as though our economy is going to completely decouple and trade is going to collapse, and I think that’s a vast exaggeration."

MUTUAL BENEFIT

Neither the United States nor China had any desire to see the collapse of their bilateral trade, she said, nor was Washington urging countries to halt their trade with China.

Moves by Western countries to reduce their over-dependence on China had prompted some production to move to other countries such as Vietnam, India or Chile, but that was continuing to benefit trade, she said.

"It’s not as though every country is shutting its doors and ceasing to trade," she said.

The Treasury Secretary said continued collaboration between the two long-standing allies would benefit both countries, now benefiting from a new tax treaty seen as crucial for ensuring access for U.S. companies to lithium, a mineral essential for electric vehicle batteries. The treaty went into effect on Dec. 19.

U.S. goods and services trade with Chile totaled an estimated $48.6 billion in 2022, with U.S. exports totaling $28.9 billion and imports $19.7 billion.

Chile's largest export market remains China, with 39.4%, followed by the United States with 13.9%, Japan with 7.6%, and South Korea with 6.2%.

Yellen said the Inflation Reduction Act put the United States on track to reduce greenhouse gas emissions by at least 40% by the end of this decade, and offered businesses and investors the long-term clarity and certainty to make large-scale investments.

She lauded Chile's government for its leadership on the energy transition, including through rapid work to decarbonize the electricity sector, leading green bond issuance, and supporting progress in the domestic lithium industry.

"We look forward to further collaboration between our ministries and our countries more broadly, including our private sectors, to continue promoting investments that drive the energy transition forward," Yellen said.

Yellen will meet privately with Marcel later Friday, as well as with Chilean President Gabriel Boric and Chile's top central banker Rosanna Costa.