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Miami-Brazil Annual Report: No.1 Trade Partner Brazil loses ground in South Florida

July 27th, 2006

Brazil may have to work to hang onto its dominant position as South Florida’s largest trade partner.

Already China has pushed aside Brazil to claim the title as the top source of imports for the Miami Customs District. South Florida’s imports from the Asian powerhouse reached $779 million in the first quarter of 2006, compared to $492 million for Brazil during the same period.

In 2005, China was already closing in on the South American nation. As the year ended, South Florida had imported $3.4 billion-worth of goods from Brazil and $3.2 billion in Chinese merchandise. The figure for Brazil represented an 11 percent decline from 2004. For China, it was a nearly 32 percent increase.

Despite China’s headway on the import side, however, Brazil remained South Florida’s overall trade leader with $9 billion in bilateral commerce in 2005. With both imports and exports for South Florida calculated, China trailed in the seventh spot for 2005 at $3.3 billion.

Trade experts attributed Brazil’s backpedaling to the weak U.S. dollar. The U.S. currency has lost 24.3 percent of its value against the Brazilian real in the last five years. In 2001, the dollar-real exchange was approximately US$1-to-R$3. By June 2006, the dollar was valued at R$2.27.

Marcio Stewart, a director at Miami research and consulting firm Infoamericas, says Brazil’s economy has been strong, but the currency exchange strongly affects Brazilian exports. In particular, he noted that imports from small and medium Brazilian companies were highly sensitive to currency fluctuations.

Aircraft was South Florida’s most valuable import from the South American nation. In 2005, imports of jets from Brazilian manufacturer Embraer totaled $1.7 billion. Still, that was down 11 percent from the $2.4 billion posted in 2004 although the high value of aircraft means that the volume or unit decline in imports was not large.

Brazil ’s deputy consul general in Miami, Luiz Felipe Mendona Filho, says Embraer is facing stiff competition from Canadian aircraft manufacturer Bombardier in the business jet and regional jet segments. Bombardier enjoys trade benefits under the North American Free Trade Agreement, or NAFTA.

In addition to aircraft, transmission devices for cellular phones, footwear, wood, non-crude oil, granite, marble, tiles, automobile parts and women’s suits were also important imports from Brazil, which has a broad mix of products that it exchanges with the Miami Customs District.

Some of the most significant increases among import commodities came in the category of cell phones, which leaped 88 percent in value; wood, which rose more than 65 percent; refined petroleum products, up 75 percent; granite, which gained 66 percent in value; and auto parts, which jumped nearly 70 percent compared to 2004.

Among imports that declined in value, footwear dropped 9 percent last year. In 2005, the Miami Customs District imported nearly $125 million-worth of Brazilian shoes. That compares to nearly $138 million a year earlier. Brazil’s footwear industry, an important economic driver, is seeing tough pricing competition from the same industry in China.

Imports of women’s suits also fell, by 3 percent, to end the year just over $27 million. That’s a 3 percent drop from the more than $28 million in suits that South Florida imported from Brazil in 2004.

Imports of coffee, once a mainstay of the Brazilian economy, rebounded in 2005. They more than doubled to close the year in excess of $27 million. Handguns, another important Brazilian product, also rose. Handgun imports from Taurus International Manufacturing, Brazil’s principal supplier of the South Florida market, rose 5.2 percent to total nearly $23 million last year. That compares with just under $22 million in 2004. Since 1982, Taurus has had operations in Miami: Taurus U.S.A.

The Miami Customs District is the most important U.S. port of entry for handguns after Savannah, Georgia. Savannah imported more than $75 million in handguns in 2005.

On the export side, aircraft parts and tech equipment dominated the trade flows. South Florida exported $1.4 billion-worth of airplane parts, nearly unchanged from 2004. Parts for regional jets fell 8.2 percent to total more than $833 million while component exports for jetliners rose 12 percent to $544 million.

South Florida exports of computer chips, meanwhile, were up nearly 21 percent while computer exports increased 34 percent.