WorldCity Business Magazine

Record South Florida trade

by Joachim Bamrud

South Florida’s trade with the world surged to a record $58.8 billion in 2004, but that was not enough to keep the Miami area from falling to its lowest national ranking among U.S. Customs districts in years. Proving that business is all too often blind to politics even in stridently conservative South Florida, two of the three biggest gainers among top trading partners in 2004 were socialist-leaning Venezuela and still-communist China.

The other big gainer was Brazil, whose left-leaning President Lula da Silva has stood firm in his opposition to U.S. agricultural trade policy and, in doing so, essentially derailed the Free Trade Area of the Americas agreement.

It was here in Miami 11 years ago that then-President Clinton and the heads of 33 Western Hemisphere nations agreed to complete the FTAA agreement in January 2005. It didn’t happen and it remains unclear what will break the impasse, though the two sides are finally talking again.

The last several years have not only been witness to contentious and slow trade negotiations, they have been witness to a sluggish U.S. and global economy and the focus-shifting 2001 terrorist strikes. During that time, South Florida snapped a two decade run of record trade totals.

In 2004, however, the tide swung again. South Florida’s trade increased by 12.7 percent last year. And the 2004 total eclipses the previous record set in 2000.

Even so, South Florida’s $6.6 billion increase over its 2003 total trade in goods was not enough to keep it from slipping to No. 13 in the national ranking of U.S. Customs districts, behind both Cleveland, Ohio, and Savannah, Georgia, which includes Atlanta, as previously forecast by WorldCity.

Of even greater concern is the fact that all 12 of the Customs districts ahead of South Florida registered a greater dollar increase in total trade, and 10 of the 12 registered a greater percentage gain.

The South Florida Customs district runs from Palm Beach County, through Broward and Miami-Dade, to the Florida Keys. The dominant players are Miami International Airport, the Port of Miami and Port Everglades. The Port of Palm Beach, the Miami River, both focused on the Caribbean, and Fort Lauderdale / Hollywood International Airport are also contributors.

The only other Florida Customs district, led by Tampa and Jacksonville, finished the year No. 26, unchanged from the previous year.

LOS ANGELES ON TOP

For the fourth consecutive year, Los Angeles reigned supreme, with total trade of $264 billion, 4.5 times larger than South Florida, followed by New York ($245 billion); Detroit ($206 billion); Laredo, Texas ($131 billion); New Orleans, Louisiana ($116 billion); Houston ($105 billion); Chicago ($95 billion); San Francisco ($94 billion); Seattle ($87 billion); and, rounding out the Top 10, Buffalo, New York ($75 billion).

South Florida did earn a major distinction with the release of the 2004 statistics: It is the only Customs district in the United States with a trade surplus, the last one standing. Seattle, previously in surplus, fell into deficit in 2004. South Florida, which once had an $11 billion surplus, had a $1.2 billion surplus in 2004.

The deficit culprit for the U.S., as a whole, and not all economists agree that a deficit is in and of itself inherently bad for the U.S. economy is not just China. The United States has trade deficits with 118 nations, from the $162 billion with China to $187,362 with Kiribati, a group of 33 coral atolls nestled between Hawaii and Australia. (A statistical footnote: South Florida is Kiribati’s No. 2 trade partner, behind the nation’s Pacific Ocean neighbor, Honolulu.)

The United States’ biggest deficits, after China, are with Japan, Canada, Germany, Mexico and Venezuela.

The United States has trade surpluses with 112 nations, led by the Netherlands, Australia, Hong Kong, Belgium and Singapore. Still, the U.S. trade surplus with those 112 nations amounts to less than a third of the trade deficit with China alone.

TRADE SURPLUS FOR SOUTH FLORIDA

South Florida’s trade balance is a different story. It has a surplus with 137 nations and a deficit with just 85.

Its biggest surpluses are with the Latin American and Caribbean nations that are South Florida’s leading trade partners: Venezuela, Brazil, Costa Rica, Argentina, Paraguay, Chile, Panama, Mexico, Jamaica, and Trinidad and Tobago.

South Florida’s biggest deficits, on the other hand, are with China, Italy, France, Taiwan, South Korea, Germany, Japan, Thailand, Sweden and the Netherlands.

Looking at total imports and exports, South Florida’s two largest trade partners, No. 1 Brazil and No. 2 Dominican Republic, have held those rankings since 1998. In 2004, they were followed by Colombia, which had been No. 2 in 1997 but slipped in recent years to a low as No. 5, Costa Rica, Honduras, Venezuela, China, Guatemala, El Salvador, and rounding out the Top 10, Chile.

The highest-ranking European nation is the United Kingdom, at No. 11. It is the only European nation to have cracked the Top 10, having done so in 2002. China remains the only Asian nation to have ever finished in South Florida’s Top 10.

At the national level, Canada and Mexico are the top two trade partners, followed by China, Japan, Germany, the United Kingdom, South Korea, Taiwan, France and, at No. 10, Malaysia. The top-ranked Latin American or Caribbean trade partner with the United States is Brazil, at No. 15, up one position from 2003.

With South Florida, Brazil has yet to recover the ground lost since 2001, when it registered more than $9.2 billion in trade. It finished 2004 at $8.8 billion, an increase of 24 percent over 2003, almost double the growth rate for South Florida as a whole.

Brazil’s trade with South Florida depends heavily on the aviation business and Embraer, the Brazilian jet manufacturer with operations at the Fort Lauderdale / Hollywood International Airport. In 2004, aircraft imports were again the No. 1 import into South Florida, topping $2.4 billion in value, more than a third greater than in the previous year. On the export side, regional jet parts and aircraft parts were Nos. 5 and 6, accounting for $2.2 billion in trade.

The resurgence of Latin American economies is clear in the growth of South Florida’s exports of high-tech equipment, from computers and computer parts to cell phones and cell phone equipment. Exports grew more than 14 percent in 2004, outpacing the nearly 11 percent growth in imports, stretching the trade surplus.

On the import side, after aircraft, several apparel categories, refined oil products, gold and fresh-cut flowers were the key categories.

The apparel industry is centered in Central America and the Dominican Republic. Exporters in these countries are hoping that the Central America Free Trade Agreement (CAFTA) will be ratified as a hedge against the impact of the growth of the Chinese apparel industry. As of January 1, China was released from most quotas and tariffs on apparel as part of its earlier ascension into the World Trade Organization.

Refined oil, largely from Venezuela, enters South Florida through Port Everglades, and the rising price of oil led to the 77 percent surge in the value of the import.

South Florida’s gold and the fresh-cut flower import industry, dominated by Colombia, also showed solid growth in 2004.