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Florida - Brazil Trade : Recovery Is Underway Florida's trade with Brazil is rather more diversified than it is with other Latin American countries. The top 20 exports and imports tend to represent about 70% to 73% of the total amount traded, whereas for the other Latin American and Caribbean countries the top 20 usually account for more than 80%. Background On November 1, 2000, the World Trade Organization completed its trade policy review of Brazil. The WTO found that "open market reforms in Brazil over the past decade have bolstered trade and investments in the country, but lingering restrictions on imports are holding the nation back from full economic recovery." The report called for Brazil to take further steps to eliminate such restrictions, "although reforms undertaken over the past four years have led to a more market-oriented economy through price deregulation and privatizations." In the WTO's estimation, "Brazil has improved its distribution of resources and its new-found adaptability to external factors has helped the country recover from the financial crisis that forced Bras�lia to float the currency, the real, in 1999. But Brazil needs to go a few steps further by adopting measures to reduce or eliminate trade restrictions in order to completely break away from past policy miscues. Steps taken by the government since the country's 1998 financial crisis have had better-than-expected results, economic growth this year will reach 4.0 percent while inflation is within Bras�lia's target of 8.0 percent. Direct foreign investment has increased substantially since 1996, surpassing 30 billion dollars in 1999, thanks mostly to the breakup of state monopolies and Brazil's position as a gateway to the huge common market Mercosur. The United States and Mercosur nations, especially Argentina, are Brazil's top two main markets, followed by the European Union. Most of Brazil's imports come from the same three regions, but in reverse order. The biggest complaint is that Brazilian trade is controlled by patchwork of edicts, resolutions and provisional measures that need to be simplified under one single trade law in order to attain transparency." Florida Exports to Brazil Florida's exports to Brazil totaled $5.84 billion in 1999. This figure is projected to grow in 2000; in the first semester of the year, the total had already reached $3.11 billion. Florida's main exports to Brazil are: turbojets and gas turbines, ADP machines, parts for office machines and typewriters, and electronic integrated circuits. In addition to these items, Florida exports destined for Brazil also included parts for balloons and aircraft, electrical apparatus for line telephony, TV and radio parts, and transmission apparatus for radiotelephony and rediotelegraphy. The top 20 exports as of June 2000 included two new items that didn't make the list in 1999: diodes, transistors and semi-conductors, at $25.8 million, showed a 52.6% increase, and X-ray, radiography and radiotherapy apparatus, at $21.3 million, increased by 126.6%. As usual, the large exports were also those that showed the largest changes in dollar value. For example, in 1999 electronic integrated circuits increased by $128.6 million (112%) and in first semester 2000 by $171.8 million (108%). This represented a huge gain in 2000 for Florida's Brazilian market in this item (58%), while total Florida and US exports of this item by only 12% and 0.4%, respectively. In the first half of 2000, exports of parts for radio and TV grew by $87.8 million (171%), a big gain over the same period in 1999 ($58.5 million, or 68.4%). Brazil accounted for 50.3% of Florida trade in this category, for which Florida exports grew by 18.7% and US exports by 3.1% (it must be noted, however, that the Brazilian market accounts for only 5.7% of total US trade in this item). Of the top 10 exports with the largest increase in 1999, only three were in the top ten in the first semester of 2000, a sign of the dynamism in Florida-Brazil trade. The export with the largest percentage increase among the top 10 in both periods was direction-finding compasses and navigational equipment, an area that grew by 792.7% ($12.1 million) in first semester 2000. This represented a big gain for the Brazilian market in this item (16.8% of Florida trade). Total Florida exports in this category grew by only 13% and US exports by 1%, but Brazilian imports were only 1.2% of total US exports of this item. Two items figured among the 10 exports with the biggest drop in each period. Exports of aluminum plates and sheets declined by $44.6 million (53.5%) in 1999 and by $16.2 million (57%) in first semester 2000. Although Florida exported only 1.1% of total US exports of this item, its percentage decrease was much more severe than the figures for the country (1.6%). Parts and accessories for tractors and other vehicles also dropped by $92.1 million (37.2%) in 1999 and by $52 million (47%) in first semester 2000. The decrease in US trade of this item was only 0.4%, compared to 13% for the state of Florida as a whole. Florida exports of this item were less than 1% of total US exports, but trade with Brazil represented 22.3% of total Florida trade in this item. The large decrease meant a drop in market share. The biggest dollar drop, however, was in the area of transmission apparatus for radiotelephony or telegraphy, TV or video cameras. Exports of this item fell by $211.1 million (66.2%) in first semester 2000 alone. Total Florida and US exports of this item were down by 20.2% and 6.4%, respectively. Florida Imports from Brazil The number one Florida import from Brazil in both 1999 and first semester 2000 was powered aircraft and spacecraft. The $1.16 billion total showed a $380.1 million increase (48.6%) in 1999, and in the first half of 2000 it already totaled $642.9 million-a $201.4 million increase, or 45.6%. Brazil increased its market share in both the US and Florida markets for this item. In first semester 2000, Brazil captured 46.8% of Florida imports in this area (12% of US imports); Florida imports grew by 9.4%, while US imports grew by only 0.9%. The next most important imports in both 1999 and 2000 were reception apparatus for radiotelephony and radiotelegraphy, and footwear (see Tables 5 and 6 for details). Imports showed more stability than did exports; few changes were recorded in the top 20 imports between the two periods. Fresh fish was replaced by live crustaceans in twentieth place, and transmission shafts and cranks and bearing housings came in nineteenth with a $3.9 million increase (108.7%). The largest import items mentioned above were also among the 10 items to record the largest increases in import value for the two periods. In 1999, imports of articles exported and returned was in second place with an increase of $74.8 million (116.8%) and oils of petroleum and bituminous minerals were third with an increase of $30.7 million (101.4%). In first semester 2000, chemical wood pulp was in second place on the list of the 10 largest increases in import value, with an increase of $43.2 million (135.3%). Sawn and chipped wood were in sixth place with an increase of $12 million (236%)-the largest percentage increase among the top 10 in growth. Bed linens, with $9.5 million, grew by 152.9%, while crustaceans recorded growth of $7 million, or 211% (one cannot help but wonder whether this might have been influenced by a reclassification of import categories, as fresh fish was a major import in 1999). The 10 imports from Brazil with the largest drop in value were usually not repeated in the two periods. However, turbojets and new pneumatic tires appeared in the bottom 10 in both periods. Both showed the largest percentage drop in first semester 2000, 97%. Some big import items appear on the list; for example, in 1999 receptor apparatus for radiotelephony and chemical wood pulp were near the bottom. Coming in last was air or vacuum pumps at -$45.1 million with the largest percentage drop on the list in 1999, 77%. In 2000, coffee (-$20.5 million at -42.2%) and fruit juices (-$33 million at -57%) were third from the bottom and dead last, respectively. Summary Florida imports from Brazil in first semester 2000 were one half the total of exports to that country. Brazil is recovering from an economic recession and its GDP is projected to grow by 4% in 2000. This means that imports from Florida will grow even more. In fact, in first semester 2000, exports from Florida to Brazil were 53.3% of 1999 exports. Although an imperfect measure, this figure indicates that Brazilian imports from Florida will likely be greater in 2000 than they were a year earlier, confirming the increase in economic growth and trade in Brazil. The Florida economy is also strong. The state's imports from Brazil in first semester 2000 were 55% of full year 1999, indicating that imports from Brazil are growing above last year's levels. In fact, they seem to be growing faster than Florida exports. www.wto.org FIU Center for Banking and Financial Institutions (Note: If asked
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