State's trade with South America appears on rebound from miserable 2002

MiamiTodayNews.com Week of April 24, 2003     By Frank Norton

   Florida's trade with South America is rebounding, industry observers say, and this year's numbers should show an improvement from a miserable 2002.

   Many freight forwarders expect Florida exports to the continent to grow in the second half of this year as Brazil, Argentina and Colombia regain strength and the ability to buy foreign goods. And customs brokers see local import volumes rising as those nations turn their weak currencies toward shipping competitively priced goods.

   "From a trade point of view, the expectation for the region is good except for Venezuela," said J. Antonio Villamil, head of Gov. Jeb Bush's Council of Economic Advisors and CEO of Washington Economics Group in Coral Gables.

   Mr. Villamil said that short of a regime change, Venezuela's chances for regaining strength as a Florida business partner this year are slim to none. But he said sunnier roads lie ahead for the state in other key South American economies - including Chile, which could have a trade agreement with the US signed this year.

   "It's nothing to write home about, but we've at least arrested the downturn in trade and are on the way back up to 2001 levels," said Mr. Villamil.

   Because of South Florida's heavier economic exposure to South America, the state's exports declined more severely last year than did the US average.

   Florida-origin exports to Brazil, the state's largest trading partner, fell 23%, or $843 million, in 2002 to $2.8 billion, according to Enterprise Florida, the state's economic development agency. Origin exports are goods produced in Florida, as opposed to goods shipped to Florida from elsewhere in the US and then exported.

   The state's other key South America partnerships fared even worse. Origin exports to Venezuela dropped 25% in 2002, while those to Argentina plummeted 69%.

   Florida's trade last year with South America hit bottom, said John Abisch, president of Miami-based transporter Econocaribe Consolidators, and should be on the rebound.

   Mr. Abisch estimated that his firm's export-related business to South America is still down 20% from 18 months ago even though it has stabilized this year. He said he expects business levels this year to improve about 10% from last year.

   According to John Price, president of Latin America market researcher InfoAmericas, Mr. Abisch's expectation is representative of expected improvements statewide. He said overall trade between Florida and South America should pick up 5-10% this year if first-half trends hold into the rest of the year.

   He said positive perceptions about President Luis Inácio "Lula" da Silva's administration will continue to cut borrowing costs in Brazil and help the country regain trade with Florida and the rest of the world. And the strengthening of the Brazilian real is boosting the country's ability to buy foreign goods, he said.

   Likewise, positive perceptions could also help the country attract $12 billion this year in foreign investment, Mr. Price said.

   "I think we could see Brazil within a year get back to 2001 trade levels," he said.

   He said he expects Argentina imports to surge about 20% this year, with slight gains in foreign investment driven by investors' interest in undervalued assets.

   Comparative stability in Colombia should help it purchase more Florida-origin goods in 2003, Mr. Price said, but continued political unrest will preclude any dramatic improvements.

   The most serious and uneasing problems remain in Venezuela. The consensus among South Florida trade experts and economists is that the country will gain little if any ground this year as a producer, exporter or importer. "Very little will be exported there because of increasingly strict currency restrictions and the fact that its economy is grinding to a halt," Mr. Villamil said.

   Encouragingly, economies in Brazil, Colombia, Argentina and others are performing better than had been expected in terms of monetary and fiscal policy and the welcoming of foreign investment, he said. And the US could see as much as a 10% jump in short-term trade with Chile if Congress ratifies a free-trade agreement.

   Since 1999, Florida has led the nation in exports to Chile, followed by California, Texas and Illinois, according to the American Chamber of Commerce in Chile.

   "I see good things to come, given the trust in economic policies and the US-Chile agreement," Mr. Villamil said - "good for the nation, good for South Florida."