On his upcoming trip, the president will find abundant opportunities for American business.
BY MYRON BRILLIANT
If a little green businessman from Mars had landed in Washington, D.C. last fall, and spent the past months as a furtive observer of world affairs, he may have concluded that the one region of the world that matters to the U.S. economy is Asia.
He’d be wrong. As President Obama sets out this weekend on his trip to Brazil, Chile, and El Salvador, he’ll want to reflect on the millions of American jobs that depend on U.S. business ties to our hemispheric neighbors.
Over the past two years, the President has spent three weeks in Asia, but in the Americas he has only taken part in summits in Canada, Mexico, and Trinidad; he has never set foot in South America. And yet, our neighbors in the Americas purchased an impressive 43 percent of U.S. goods exports last year — well ahead of East Asia (26 percent) and Europe (22 percent).
And the pace is picking up: U.S. exports to Latin America and the Caribbean doubled in the decade before the recent recession (1998-2008), achieving a rate of growth greater than that of U.S. sales to Asia or Europe.
Last year, Canada edged out the EU as the top market for U.S. goods exports. That’s remarkable, given that the EU has a population 15 times larger than Canada.
U.S. exports to Brazil grew by a blistering 35 percent last year — a faster clip than U.S. sales to any other market in the world except Taiwan and Korea. Today, Brazil buys more U.S. goods and services than India, Russia, and Indonesia combined.
Also booming is U.S. trade with Mexico, the world’s third largest market for U.S. exports and one that purchases 77 percent more U.S. goods and services than China. The U.S. and Mexican economies are today so closely linked that more than half the content of “Made in Mexico” goods is produced in the United States.
Not only are our hemispheric neighbors critical for American business — American business is critical for them.
U.S. companies have invested more than $250 billion in Latin America and the Caribbean, a sum more than five times as large as U.S. direct investments in China. Those U.S. investments directly support more than 2.3 million jobs across the region and sustain millions more indirectly.
So if our Martian businessman asked our American neighbors, How’s business? In a word, great. Revenues from Latin America rose by an average of 17 percent for the top multinationals tracked by the Latin Business Chronicle’s Multinational Latin America Index in the third quarter of 2010.
Ford topped $2 billion in Latin American revenue for the quarter, and Coca-Cola and PepsiCo both surpassed $1 billion. In 2010, six of Caterpillar’s top ten export markets were in Latin America. Google’s revenue from Latin America surged 80 percent last year, outpacing every other market.
If it ain’t broke, don’t fix it, right? Wrong. Global competition for Latin America’s markets has become fierce, and while the raw numbers above attest to our volume of trade, the U.S. is now losing market share in several countries. The future won’t be as rosy for U.S. workers if Washington doesn’t act quickly.
What is to be done? First, free trade agreements with 10 of our hemispheric neighbors have contributed mightily to these remarkable export successes. Washington needs to take that lesson to heart, and end its four-year time out on trade by approving the pending trade deals with Colombia and Panama.
Similarly, the U.S. needs to move ahead with the deal recently struck to allow U.S.-Mexico cross-border trucking. Washington’s failure to meet this NAFTA commitment has subjected $2.4 billion of U.S. goods to punitive tariffs by Mexico.
Brazil, with an economy that grew 7.5 percent last year, deserves the attention it is getting. The Chamber-affiliated Brazil-U.S. Business Council will host an address to the U.S. and Brazilian business communities by President Obama during his visit to Brasília.
Signaling an upgrade to U.S.-Brazil ties, officials will sign a Trade and Economic Cooperation Agreement to remove obstacles that have long kept bilateral trade from reaching its full potential.
U.S. businesses will also be looking for progress toward a treaty to avoid double taxation with Brazil, the largest economy in the world with which the U.S. lacks such a treaty.
And as Brazil prepares to host the 2014 World Cup and the 2016 Olympics, vast investments in infrastructure upgrades are underway. The U.S. Export-Import Bank will announce new financing to help U.S. companies compete for these deals.
On a regional basis, the U.S. can offer a strategy for hemispheric competitiveness that emphasizes collaboration on the rule of law, protection of intellectual property, and open trade.
The Americas will remain a new world of opportunity for U.S. workers and farmers if Washington is prepared to lead. There’s no time like the present for American business to get a piece of the action — or for President Obama to help open the door.
Myron Brilliant is Senior Vice President for International Affairs at the U.S. Chamber of Commerce. He wrote this column for the Latin Business Chronicle.
© Copyright Latin Business Chronicle