For Florida, the TPP is More Than Just Another Free trade Agreement
The Trans-Pacific Partnership (TPP) is a trade agreement among twelve Pacific Rim countries which currently represent 40 percent of all global trade.
Free trade has been under attack lately. It seems that everywhere you turn – newspapers, the Presidential campaigns, the streets of some faraway place or the internet – you will find an image of someone holding up an anti-TPP sign.
It must be acknowledged that trade has not benefited everyone and its gains have not been shared by all industry sectors. Some have suffered while others have prospered. Jobs have moved away to never return and some communities have been forever scared by those losses. Not all have enjoyed the advantages that trade brings.
We must be more mindful of this as trade and increased competition will be stressful to some communities that have not yet reaped its rewards. It is up to us, the champions of trade, to also champion measures to mitigate its impacts and offset losses.
Trade, none the less, is part of our economic reality and our daily lives. It is how oranges and grapefruit from Central Florida arrive at a Japanese grocery store, it’s how medical devices made in North Florida end up in operating rooms around the world, it is how we are able to order last minute gifts at a click of a button and how we send our loved ones flowers on Valentines’ Day. Our lives depend on trade and we benefit from it without even thinking about it.
Trade is one of our most important tools for economic growth and it provides a level playing field for our exporters to access 95 percent of the global marketplace. It brings foreign direct investment which provides employment for thousands of Floridians. Trade is a multiplier, catalyzing many industry sectors that directly and indirectly benefit from it.
For Florida, the TPP means securing and having greater integration with our most important consumer and trade partner- Latin America. It is a marriage forged by geography, history and culture. A marriage that has benefited Florida in immeasurable ways. The TPP will only enhance it.
This agreement would not only strengthen this partnership and provide us greater access to markets where we are less competitive, but it will further limit competition from bad actors and reduce their influence in a region that is not only significant to us economically but strategically as well. Its ratification and implementation would serve to crystalize a crucial relationship and open the door to other Latin American partners who will, in turn, improve their standards to gain entry.
With 50 percent of our state’s trade going to Latin America, Florida’s Congressional leadership should be at the forefront of championing trade and greater integration with the region. The Florida Chamber recognizes this special relationship and its importance to securing our future.
Join us in promoting and supporting the TPP during this congressional recess. Let us know if your company would be willing to sign-on to or send a letter and/or if you would be willing to contact your member of Congress. Contact me at email@example.com or at 850-521-1210.
Latin American Hang Over
It’s Groundhog Day for Brazil. As if 2015 was not bad enough, the International Monetary Fund (IMF) and other forecasters have downgraded its economic forecast for Brazil for 2016.
To recap 2015: Brazil fell deep into the longest running recession since the 1930s, coupled by the Petrobras Investigation and high unemployment. Brazil’s economy also shrank 3.8 percent last year, according to the IMF.
IMF now believes Brazil’s economy will shrink 3.5 percent this year, down significantly from its previous estimate of a one percent contraction. Others had predicted minimal growth have also revised down their estimates.
Venezuela is expected to face a catastrophic economic contraction of 4.8 percent in 2016.
Other Latin American countries are in for another tough year as their economies struggle with weak Chinese demand for their raw materials.
Per Enterprise Florida, Total Merchandise Trade by Country through September 2015 ranks our top 10 markets as follows:
- Dominican Republic
In 2016, Chile is forecast to grow 2.4 percent, Peru 3.5 percent, and Colombia 2.6 percent. Colombia is in a much more fragile position than a year ago, more vulnerable to external shocks.
What This Means For Florida:
Many of our top trading partners will be experiencing a challenging 2016, yet there are some bright spots in Latin America: Mexico and Argentina.
Mexico’s growth has picked up to the fastest in two years in the third-quarter while inflation fell to a record low, helped by government efforts to spur competition. Mexico’s growth remained unchanged at 2.8 percent. In Argentina, optimism remains high with since they elected a new President. Argentina was the only Latin American country have its growth outlook revised higher. It is Florida 11th largest trading partner.
While the Latin American down turn is dominated by the Brazilian recession, opportunities remain. Enterprise Florida will be taking a trade mission to Mexico May 23, 2016 – May 26, 2016 and is planning a future trade mission to Argentina. Latin American still remains a significant market for Florida. While the downturn will have an impact on overall trade number and affect our exports, Florida still has nuggets to mine.
MERCOSUR, a trading bloc made up of South American countries, was created in 1991 to promote free trade and the fluid movement of goods.
MERCOSUR bloc met in July at their 48th summit where Bolivia was officially incorporated as its sixth permanent member. More newsworthy, particularly in light of the bloc’s troubled economic performance, there was some progress towards advancing on long-stalled trade initiatives, specifically an agreement with the EU. These initiatives appear to show promise are in part due to mounting pressure from Brazil to gain greater market access.
Trade among member countries continues to decline with a 20.3 percent drop in the first quarter of 2015 compared to the same period last year. Last year, intra-bloc trade declined 13.1 percent. All of the Mercosur member countries were hit with a decline in exports to other member states according to a report recently released by the Argentine Chamber of Commerce (CAC). The report highlighted the following:
- Venezuela with a 46.3 percent decline
- Uruguay with a 32.6 percent decline
- Argentina with 24.9 percent decline
- Brazil with 13.7 percent decline
- Paraguay with a 12.5 percent decline
Intra-regional trade has not been the only problem as the overall export sector has taken a hit due to commodity prices and economic instability as well as uncertainty facing its largest member nations.
Obstacles still remain such as Mercosur’s Resolution 32/2000, which requires consensus from all members in trade issues, including bilateral agreements. Resolution 32/2000 has been called a source of gridlock by Forbes because of the requirement of consensus from all members on all trade issues. Overcoming a culture of protectionism will also be a challenge as this has led to a countless regulations which will be difficult to reverse and will likely makes any short term gains improbable.
What does this mean for Florida? A decline in MERCOSUR bloc economies has had an impact on Florida’s overall trade numbers. Brazil, Florida’s most important trading partner, saw a decline of 11.3 percent, significantly affecting Florida exports in several sectors. Argentina and Venezuela are also important Florida export destinations and their instability and uncertainty have also had repercussions.
But bright spots remain in Latin America. Peru, an important member of the Pacific Alliance, is growing and is well positioned for additional growth. While the Pacific Alliance bloc is not as large – economically speaking – as MERCOSUR, its benefits from strong policies that favor increased market access and openness which will certainly generate new opportunities for Florida exporters.
Learn what your business needs to know in order to successfully trade with the world’s growing economies by becoming a part of the Florida Chamber’s Global Florida program. Contact Alice Ancona today for more information.
Latin American Outlooks and What They Mean for the U.S. and Florida
The region’s economy is projected to grow only 0.1 percent this year according to economist projections. The combined forces of worsening terms of trade, a stronger dollar, a slower Chinese economy as well as economic crises in Argentina, Brazil and Venezuela are all hampering growth.
What do these changes mean for the U.S. and Florida?
- Reduced Exports:
Weaker demand and a stronger dollar impacting Latin American markets may result in reduced U.S. and Florida exports.
- Decreased Tourism:
Stalling economies have caused tourism and business travel to the U.S. to take a hit. Florida’s tourism industry, a crucial part of the state’s economy, may suffer.
However, there are several positive opportunities for both the U.S. and Florida within several nations:
Chile’s industrial sector remains stable for the remainder of the year. While copper demand has taken a hit, renewable energy and construction sectors are likely to be the two major growth sectors in 2015. A stable political environment, rising domestic demand for energy, and a significant pipeline of infrastructure projects are expected to drive growth in the short run.
Colombia’s industrial sector remains stable and diversified. Continued domestic demand from an increasing middle-class population and steady investment are expected to create GDP growth for the rest of the year. Reduced oil prices will have a minimal impact on growth.
Mexico seems to be a bright spot for the Americas. A steady improvement of the U.S. economy and a depreciated PESO is expected to increase Mexican exports as well as foreign investment inflows in 2015. Reformed laws which have opened up its energy sector are also expected to attract significant investment.
Even more opportunities arise from the area as a whole. Latin America, with a population of approximately 600 million people, is home to nearly 15,000 “ultra high net worth” individuals, or people with fortunes of at least $30 million, according to the luxury industry consultancy Wealth-X.
The number rose 5 percent last year, while the number of billionaires in Latin America rose to 151, a 38 percent increase resulting in the fastest growth rate for billionaires of any region on earth.
The region’s largest economies, Mexico and Brazil, remain the largest generators of growth and wealth. Mexico is the world’s second-largest market for private jets, behind the US, with Brazil poised to surpass it within the next decade, according to a recent market study by the Brazilian jetmaker Embraer. According to the market research firm Euromonitor, the Latin American luxury market will total $26.5 billion in 2019, up 88.8 percent from 2014 boasting the strongest growth in the world.
Team Florida Prepares For Economic Mission Trip to Panama
Global trade is now, more than ever, at the forefront of Florida’s recovering economy. we cannot deny that global trade is big business in Florida. Global trade means high-wage jobs and economic prosperity for Florida. The Sunshine State is home to more than 60,000 firms dedicated to bringing their goods and services to consumers around the globe. International business and foreign direct investment accounts for approximately 17 percent of Florida’s economic activity, and directly supports more than one million Florida jobs.
Solidifying Florida’s position as a global hub for trade is a key strategic initiative of the Florida Chamber of Commerce. Florida has long been an important consumer market and a gateway for trade between the United States and Latin American and Caribbean nations.
With the expansion of the Panama Canal and the Free Trade Agreement, Panama presents Florida companies tremendous opportunities. The Florida Chamber Foundation’s original Trade and Logistics Study (2010), identified the Panama Canal expansion as a seminal moment and called for our state to take advantage of this once-in-a-generation opportunity to invest in ports and infrastructure. Governor Rick Scott and the legislature stepped-up with significant investments, and now Florida is poised to have the first port south of Virginia, PortMiami, that can receive the post-Panamax ships that will be coming from Asia through the Canal.
Post-Panamax vessels are nearly three times the size as current vessels being used. Florida’s gateways are better prepared at being able to facilitate the trade relationship between Florida and Panama.
Currently, Panama is one of the strongest economies in Latin America. The country boasts the second fastest growing GDP in the region, expected to reach a 6 percent growth in 2015. Total merchandise trade between Florida and Panama totaled $2.3 billion in 2013 and is expected to grow.
For these reasons, the Florida Chamber of Commerce- lead by Florida Secretary of Commerce Gray Swoope- will be joining partners Port Tampa Bay, Gulf Power, Keiser University, Port Miami, Tampa Hillsborough EDC, Bank of America, St Joe Company, Port Everglades, Tampa International Airport Florida Department of Transportation Secretary Ananth Prasad, and Doug Wheeler of Florida Ports Council on an Export Sales Mission to Panama October 5-7.
The widening of the Panama Canal, together with the growth in Latin American and Caribbean markets, will realign global trade lanes and increase flows through this region in the coming decades.
Today the state of Florida is a global hub for trade. It took decades of innovative efforts, resourcefulness and entrepreneurship from the private sector, strategic investments from the public sector and capitalizing on opportunities like free trade agreements and the expansion of the Panama Canal to claim this title.
Florida’s international relationships are invaluable to our economy. By working to create opportunities with nations like Panama, and fueling massive economic development projects like the Panama Canal expansion and the dredging of PortMiami, we can diversify our own economy and fuel long-term investments by global businesses. Everything we do, we do on a global scale.
Florida’s future prosperity and our growth as a global hub for international trade are inextricably linked. In order for Florida to continue on its mission to be a global hub for trade, the business community must unite and policymakers must remain committed to Florida’s trade future. We hope you will save the date for International Days 2015, April 7-9. Contact firstname.lastname@example.org for more information.
BRICS Meet In Brazil, Create Bloc Development Bank
Leaders of the BRICS group of emerging powers – Brazil, Russia, India, China and South Africa – have decided to create their own development bank as a counterweight to what they perceive are “western-dominated” financial organizations like the US-based World Bank and International Monetary Fund.
The move came during the BRICS Summit earlier this week in Fortaleza, Brazil. The summit comes as the five countries, whose economies together represent 18 percent of the world total, are experiencing sharp slowdowns in their once fast-paced rates of growth.
The new development bank will reportedly be based in Shanghai and is expected to be functional within two years. It will be capitalized at $50 billion, a figure that could grow to $100 billion to fund infrastructure projects. The fund would also have $100 billion at its disposal to weather economic hard times.
The new development bank’s first director will reportedly be from India.
“We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness,” the group said in a joint press release.
The BRICs leaders are now in the Brazilian capital of Brasilia, meeting with their counterparts from Argentina, Chile, Colombia, Ecuador, Venezuela and several other Latin American nations to discuss future economic and trade cooperation.
BRIC giant China is particularly interested in Latin America. After this week’s discussions, Chinese President Xi Jinping will stay in Brazil to launch a China-Latin America forum with the leaders of several regional countries including Cuba, Argentina, Ecuador, and Venezuela.
China is growing in influence in the region. Last year, the country, two-way trade with the region amounted to more than $261 billion.
BofA, SocGen Slash Forecast for Brazil’s 2014 Growth
(Reuters) – Economists at Bank of America Merrill Lynch and Societe Generale on Friday slashed their forecasts for Brazil’s economic growth this year, the latest of a series of revisions highlighting mounting pessimism about Latin America’s largest economy.
BofA economists David Beker and Ana Madeira expect Brazil to grow just 0.7 percent this year, down from a previous estimate of 1.6 percent, as low business and consumer confidence hampers government efforts to jumpstart the economy.
Societe Generale’s Dev Ashish trimmed his forecast to 1.1 percent from 1.7 percent, saying that weak industrial and trade data dashed hopes of a positive second quarter.
Both revisions were published in research reports on Friday.
The consensus view for Brazil’s 2014 growth in a Reuters poll on Thursday was at 1.1 percent.
BofA also trimmed its forecast for Brazil’s 2015 growth to 1.5 percent from 2 percent.
Brazil, once one of the most dynamic of emerging economies, could be in a recession already as factories start to cut jobs, according to some analysts.
But even as the economy falters, both BofA and Societe Generale reiterated that interest rates would probably go up next year as inflation remains high. Both teams expect the benchmark Selic rate to end 2015 at 12 percent, up from 11 percent currently.
Brazil’s sluggish economy could be decisive in the upcoming October presidential elections, in which President Dilma Rousseff will seek another four-year term. Support for her has slipped in the last two weeks, and she is statistically tied with her main challenger in a possible second-round runoff, a poll released on Thursday showed. (Reporting by Silvio Cascione; Editing by Lisa Von Ahn)
Itau Sounds Brazil Slowdown Alarm as 12% Rates Dismissed
By Matthew Malinowski
Latin America’s largest bank is clashing with traders and economists by predicting the economic slowdown in Brazil will prevent its central bank from raising interest rates through next year.
Itau Unibanco Holding SA said July 11 it no longer anticipates any rate increases as data from lower business confidence to a weaker labor market suggest the region’s largest economy shrank last quarter for the first time in almost a year. Swaps trading and results from a weekly central bank survey of 100 analysts show that policy makers will boost rates one percentage point to 12 percent by the end of 2015.
With benchmark borrowing costs that are already the highest among rate-setting nations in the Group of 20 and surging consumer prices, Brazil’s $2.25 trillion economy will expand 0.7 percent this year, less than at any time since the recession in 2009, according to Itau’s forecasts. The growth projection would match the lowest among 33 firms surveyed by Bloomberg.
“As we are seeing weaker economic activity than we imagined, keeping the key rate at 11 percent is enough for where the central bank wants to go,” Itau economist Caio Megale said by phone from Sao Paulo. “The current interest rate level is not high enough to lead to a recession and a great drop in inflation. It is sufficient to bring prices down.”
Panama is Unrivalled – Just Look at the Rankings
By Dr Ian Collard, British Ambassador to Panama.
In recent years, while Europe has been struggling with the impact of an economic downturn, the economies of Latin America have bucked global trends and exceeded expectations.
High rates of economic growth, substantial infrastructure development and the emergence of the Pacific Alliance are evidence of Latin America’s new role in a changing world economy.
Panama – tagged by many as the Central American Tiger – has led the region’s economic performance for the last decade, with an extraordinary annual growth rate averaging around 8%.
Panama is the region’s emerging logistics hub with an unrivalled distribution network and connectivity, representing an easy and business-friendly entry point into wider regional markets.
With World Economic Forum indicators ranking Panama fourth in the world for the quality of its port facilities, first in Latin America for its air transport facilities, and first in the western hemisphere for the availability of its financial services, it is difficult to argue against its self-declared moniker as a gateway to the Americas.
Panama also has the largest public infrastructure programme in Central America. Mega projects include the expansion of the Panama Canal, development of Panama City’s Metro system, and development over several years of new logistics and port facilities.
Construction of an additional container port on the Pacific coast, a logistics park at the Pacific end of the Canal, container-on-barge services across the Canal, and a LNG bunkering station are some of the additional projects mooted.
It is little wonder that UKTI has added such projects to its list of global High Value Opportunities for British businesses.
Many of these endeavours will strengthen Panama’s logistics capacity, reinforcing its important geostrategic position in world trade and regional distribution, and enhancing its offer as a one-stop location for value-adding services.
Panama has a key role facilitating trade across the region, connecting north and south, providing a natural hub for commerce, and acting as a magnet for investment. Panama’s banking centre is home to 65 Latin American institutions, competing with Miami to be the regional financial centre of the Americas.
More than 100 multinational companies have established their regional and logistical headquarters in Panama, taking advantage of its communications, maritime and air links, and the tax incentives on offer.
In Colon, Panama has the second largest free trade zone in the world after Hong Kong, providing a home to more than 2,500 companies and handling more than $30bn in imports and re-exports from all corners of the world each year. As an increasingly popular regional distribution base, Panama has also become the shopping capital of the region for tourists and business visitors. In its highly diversified economy, retail accounted for as much as 14% of GDP in 2012
The indicators are already positive. With Panama’s ambition to join forces with the other Pacific
Alliance countries, Panama’s economic and commercial future looks even brighter.
The signing of a Free Trade Agreement with Mexico earlier this year was the last technical hurdle to Alliance membership. As a bloc, Alliance countries represent the second largest user of the Panama Canal, reinforcing the importance of Panama at the centre of the group’s trade strategy with Europe, the Caribbean and the eastern seaboard of the United States.
Panama is booming and it is open for business. I am confident that this country and the wider region will continue to grow, and will provide exciting new opportunities for UK businesses. I encourage you to read on and discover more about this fascinating and vibrant region.