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Miami-Bahamas Annual Report: No. 18 trade partner- Feeding the toursim sector

July 27th, 2006

Ecuador remains a strong trader with South Florida, but a free trade pact is not likely to figure into the equation soon.

In January 2006, Governor Jeb Bush led an economic development mission to Ecuador to promote free trade and to win support for Miami bid to become headquarters for the Free Trade Area of the Americas, if it is ever approved.

The mission did not obtain the expected success with Ecuador, which saw bilateral trade with South Florida rise 14 percent to nearly $1.3 billion in 2005, and U.S. trade experts have since become even more pessimistic about free trade opportunities with the Andean nation.

In May 2006, the Ecuadorian government revoked drilling contracts linked to Occidental Petroleum Corp., a California-based energy company. The Ecuadorian government accused Occidental of selling part of an oil block to Canadian energy company EnCana without authorization in 2000. Foreign companies in Ecuador are, by law, required to partner with state oil firm PetroEcuador.

Manny Mencia, senior vice president of international trade and business development at Enterprise Florida, traveled with Bush to Ecuador. “The United States ceased negotiations after their government expropriated Occidental Petroleum properties,” he said. “It is very difficult to negotiate in a difficult political climate.”

In addition to the Occidental Petroleum dispute, Mencia says free trade agreements face strong opposition from various sectors of Ecuadorian society. From labor unions to indigenous groups, opposition forces fear a trade agreement with the United States could have a negative impact on their economy.

That said, Ecuador remains a strong market for the Miami Customs District, which exported more to the South American country than any other Customs district in the country. Florida exports to South Florida surpassed $864 million, an increase of nearly 24 percent when compared with 2004. Houston, the second most important gateway for exports to Ecuador, sent shipments valued at $455 million, also a jump of 24 percent.

In two-way trade, however, Miami trailed Los Angeles as the most important port for Ecuador.

Among exports, transmission apparatus for cell phones rose a dramatic 77 percent to hit $220.5 million. At the same time, computer exports expanded by 21 percent to nearly 85 million, although exports of computer parts dropped 15 percent to close the year at $36 million.

Parts for winches, derricks and other oilfield machinery were the third most important export. They reached $43 million, but that reflected a 12 percent drop from a year earlier. Heavy machinery, however, saw gains, rising 45 percent to total nearly $13 million.

There was also a 2 percent improvement in exports of airplane parts, which neared $10 million. Airplane engines, meanwhile, jumped a notable 28 percent to close the year at $11 million.

Outside of the top 10 exports, the biggest gains came with cars and trucks. Exports of motor vehicles skyrocketed 122 percent to $6 million from $2.8 million. In the technology sector, meanwhile, shipments of computer chips rose 40 percent to nearly $10 million while exports of medical instruments were just a hair behind, reflecting an increase of 35 percent.

Exports of U.S. pharmaceuticals jumped 58 percent to nearly $6 million.

For 2005, imports from Ecuador pushed close to $389 million, but that was down 2 percent when compared with trade data from a year earlier. Seafood led the import lineup.

Total fish fillet imports totaled nearly $74 million, a drop of 13 percent from 2004. Additionally, South Florida purchased $63.5 million-worth of shrimp and crab predominantly shrimp in 2005 for a gain of 7 percent. Separately, the Miami Customs District processed $9 million in preserved or prepared shrimp imports. That was up 14.5 percent from 2004.

Fresh flowers, long a key import from the South American country, suffered a 6 percent decline. Some $121 million in Ecuadorian flowers came into the United States through the Miami Customs District. In 2004, those imports reached $129 million.

Ecuador also supplied South Florida with plywood, to the tune of $16.5 million a drop of 1 percent.