WorldCity Business Magazine

Miami Trade 2006: Latin Trade

by Claudio Mendonça

South Florida trade results reflect the Customs district’s dependence on Latin America.

Latin America’s ongoing economic expansion has parlayed into notable trade growth with South Florida.

Statistics from the U.S. Census Bureau show that eight of Miami Customs Districts Top 10 trade partner spots for 2006 went to Latin American countries. All but three Brazil, Guatemala and El Salvador registered gains as the Customs district chalked up $72.1 billion in annual trade, an upswing of 9.4 percent.

Although South Florida has seen dramatic growth in Asian imports (see An eye on the East, page 18), Latin America remains the district’s main market. And the Miami Customs District holds on to its distinction as the most important United States gateway for goods from Central America, South America and the Caribbean.

It is also an important transshipment point for cargo that enters the Customs district in bulk but then is exported, often in smaller shipments, throughout the region.

As Latin America’s economies grow, South Florida’s trade swells. The correlation is borne out by the 2006 trade results.

As a regional economy, Latin America grew more than 5 percent in 2006, led by Venezuela and the Dominican Republic, each with GDP growth of 10 percent, according to the Economic Commission for Latin America and the Caribbean. A surge in consumer demand within the region, rising exports, including commodities sent to China, and high petroleum prices were drivers for growth.

For 2007, the region’s economy is projected to expand another 4.7 percent.

As a result of Latin America’s good times, South Florida’s exports to Chile galloped ahead in 2006, turning the South American country into the fastest growing among Miami’s Top 10 trade partners. Chile and South Florida exchanged $2.4 billion in goods, a jump of 20 percent from a year earlier.

Trade with Miami has improved significantly since the 2004 implementation of the U.S.- Chile Free Trade Agreement. South Florida exports to Chile have risen 50 percent in the last two years and imports have jumped 44 percent during the same period.

Exports now outweigh imports by a ratio of nearly 2-to-1.

Exports of auto parts and telecommunications equipment and imports of seafood have benefited disproportionately under the trade pact. To illustrate this, salmon accounted for about $430 million of the $796 million in total imports from Chile.

Chile’s neighbor, Peru, also made huge strides clocking up $1.6 billion in trade with South Florida in 2006. That reflected growth of nearly 26 percent the most of any Latin American country and pushed the Andean nation up three spots on the trade roster to No. 13.

Exports dominated, with Miami shipping $1.1 billion in cellular phones, computers, computer parts and heavy machinery to Peru. That represented a hike of 38 percent when compared with trade results in 2005. Asparagus tips the scales accounting for about one-fourth of the $457 million in Peruvian imports.

Although Latin America is performing well, Miami’s biggest gain among top traders was in Europe. Imports and exports with the United Kingdom grew 30 percent to exceed $1.9 billion in 2006, pushing it ahead of Argentina and El Salvador on the trade roster.

The jump was the result of a 51 percent leap in imports from England, Scotland, Wales and Northern Ireland, principally non-crude oil and whiskies. Imports from the United Kingdom climbed to nearly $1.4 billion.

Trade with Switzerland was also up, by 41 percent, to $492 million.

At Miami International Airport, marketing director Chris Mangos observed that the European market had been performing better generally.

Still John Price, president of Coral Gables market research and consulting firm Infoamericas, forecast that Latin America would continue to shape South Florida’s trade. He predicted that Brazil would remain the region’s top partner for years to come.

Trade with Brazil slipped 1 percent in 2006, as the South American country’s economy slowed and the Real gained value against the dollar, making U.S. imports from the country more expensive. The stagnant performance came largely as a result of a 27 percent plunge in imports.

Despite that, Miami-Brazil trade totaled nearly $9 billion, and South America’s largest economy stayed safely entrenched as South Florida’s No. 1 trade partner.

South Florida’s trade with Venezuela, meanwhile, continued to defy the overall U.S. trend, which gave the United States a deficit with the oil-rich nation. For the Miami Customs District, exports made up $3.9 billion of the nearly $5 billion between the Customs district and Venezuela in 2006.

Miami sent an avalanche of goods to the OPEC nations, from electronics to heavy machinery. Venezuela’s GDP growth spiked in 2006 and its residents showed an appetite for big-ticket consumer products. At the same time, the government of President Hugo Chvez went on a spending spree, buying construction equipment and other supplies to facilitate massive infrastructure projects.

On the other side of the trade exchange, refined petroleum made up 80 percent of $1.1 million in Venezuelan imports to South Florida. The petroleum goods from South Floridas second most important trade partner entered at Port Everglades.

When it came to Central America, 2006 produced mixed results. The Dominican Republic and Costa Rica each saw their trade leap 10 percent. The Dominican Republic posted $4.6 billion in trade with South Florida while the exchange with Costa Rica accounted for $3.9 billion. Nicaragua saw a gain of nearly 19 percent to close the year at $841 million.

But Honduras’ trade was nearly flat and Guatemalas dipped nearly 2.8 percent. South Florida’s commercial exchange with El Salvador, which has one of the slowest-growing economies in the region, fell 2 percent in 2006.

Those countries could spring back in 2007 as a result of benefits from the U.S.-Dominican Republic-Central American Free Trade Agreement. South Florida’s trade with the rest of the region is expected to continue to make gains this year.

“Latin America continues to perform exceptionally well and we will no doubt see growth from that region this year,” said Mangos. WC