MERCOSUR

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.

 

Get Involved:

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.

Tourism Group Pushes to Ease Travel-Visa Restrictions

By Jim Stratton

If you listen to Oren Lotringer, Central Florida could become a hotbed for Israeli tourism.

It has theme parks, shopping, outdoor adventures and plenty of hotels for Israeli families looking for a taste of the U.S. — all the ingredients his countrymen are looking for, he said, with one exception.

“It’s very difficult to get a visa,” said Lotringer, president of the Central Florida-based Live Israel Tours. About 331,000 Israelis visited the U.S. last year, but Lotringer said many more would come “if it wasn’t so hard.”

It’s a message being pushed by tourism-industry interests as small as Live Israel Tours and as big as Walt Disney Co.

Under the name Discover America Partnership, they are lobbying Congress to expand the Visa Waiver Program, which lets visitors from 38 countries – such as France, Japan and Germany — visit the U.S. for 90 days on a passport only, with no visa required. The group has identified a number of countries it would like to add to the list, including Brazil, Poland, Croatia, Israel and Uruguay.

Expanding the program would pump nearly $10 billion into the economy and create nearly 60,000 new jobs, according to Discover America estimates. Lotringer, who arranges visits to the U.S. for about 2,000 Israelis each year, can’t vouch for those numbers. But he’s confident Israel’s inclusion in the program would help Orlando.

“Many Israelis consider the U.S. to be the ‘big brother,’” he said. “They love to travel here and to spend money when they travel here.”

To get a visa, Israelis must visit the U.S. embassy, fill out forms and submit to an interview. They pay a processing fee – between $160 and $190 – that is non-refundable, even if the visa is denied.

The process is similar in other countries, though, logistically harder in some. In Brazil, families may have to travel hundreds of miles for visa interviews. The country, roughly the size of the continental U.S., has just four consular offices that conduct the interviews.

Applicants can be rejected for several reasons. Interviewers may decide they’re a security risk or worry that they may try to stay longer than permitted.

Those issues also affect which countries are granted visa waiver status, according to the Congressional Research Service. They must meet certain security protocols and have a stable government and a functioning economy. Argentina was booted out of the program in 2002 because U.S. officials feared an economic collapse there might drive large numbers of Argentines to the U.S. in search of work.

Sometimes a country is kept out of the waiver program for political reasons.

Israel, for example, is a strong U.S. ally, but the country makes it difficult for Americans of Palestinian or Arab descent to visit and travel. Consequently, the U.S. has been reluctant to make it easy for Israelis to travel here.

“In that case, it’s purely political,” said Duncan Dickson, a professor at the University of Central Florida’s Rosen College of Hospitality Management.

In Central Florida, the focus is on South American countries not currently in the program — Brazil and Argentina, in particular. Even without the advantage of the waiver program, Brazil has become Orlando’s biggest source of overseas tourists, and industry leaders see similar potential in Argentina.

The stakes are so high that some of the area’s biggest tourism players – including Disney, Universal, Visit Orlando and Visit Florida – sit on the executive committee of the Discover America Partnership. Those seats cost $10,000.

“For us, there’s nothing but upside,” said Visit Orlando President and CEO George Aguel. “We know when those barriers come down, you can see benefits quickly.”

UCF Professor Asli D.A. Tasci studied the effects of tougher visa restrictions on the 2008 Olympics in Beijing.

“The numbers were clear,” she said. “Declining numbers coincided with tightening regulations,” and China “did not get the return on their massive investment on this mega-event.”

Although countries can be added to the program by the Department of Homeland Security, the industry is urging Congress to pass legislation that eases eligibility requirements. The legislation doesn’t explicitly add countries to the program, but more would become eligible under its provisions.

The measure is supported by more than 150 members of Congress, but it’s part of a larger immigration reform package that appears dead for now.

“Candidly,” said Aguel, “it’s stalled.”

That frustrates tour operators such as Honorata Pierwola, president of the New Jersey-based Society of Polish American Travel Agents. Pierwola said Poland, like Israel, is filled with people who would like to see the U.S. and Florida if getting here was easier.

“People don’t understand why they need it [a travel visa],” she said. Eliminating that requirement, she said, “would be very good economically for Florida.”