ETC International Freight System

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In an article reported by JOC (below), no one should deny the importance of latin America and U.S trades.

US-Latin Trade: En Fuego

Latin America may have a long way to go if it’s ever going to replace China as the largest exporter to the U.S., but the region is certainly making its presence felt in products as diverse as automobiles, electronics and apparel.

Two-way trade between the U.S. and Latin America increased 82 percent over the past decade, compared with a 72 percent increase in U.S. trade with Asia and 51 percent with Europe, according to a report by the Congressional Research Service.

U.S. containerized imports from Latin America are growing faster than U.S. exports to that region, according to PIERS, a sister company of The Journal of Commerce. Imports from South America, Central America and the Caribbean were up 6.7 percent in 2011, and are projected to increase 6.7 percent again in 2012 and 10.4 percent in 2013.

U.S. exports to Latin America increased 3.4 percent in 2011, and are projected to inch up 0.8 percent in 2012 and grow 3 percent in 2013, according to PIERS.

Latin America has a growing middle class and a keen interest in foreign trade. Latin America is emulating the Asian model, which means export-led growth, said Paul Bingham, economics practice leader at Wilbur Smith Associates. The big difference between the regions is that Asian exports are primarily higher-priced consumer goods, while Latin America’s exports are still mostly commodities and raw materials.

Latin America plans to increase its merchandise exports, however, as U.S. companies shift some of their sourcing away from Asia. Wages in China are rising, and the yuan in recent years has increased in value against the dollar, making exports from Latin America more competitive in the U.S.

Automobile manufacturing in Latin America is booming, with U.S., European and Asian companies producing cars for the domestic and U.S. markets. High-tech, electronics, medical supplies and apparel industries also are increasingly penetrating the U.S. market.

Regional free trade agreements are contributing to the growth in trade. The North American Free Trade Agreement has had a huge impact on commerce between the U.S., Mexico and Canada since it was signed in 1994, and the Central America Free Trade Agreement has likewise resulted in increased hemispheric trade since 2004.

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The U.S.-Chile free trade agreement has become the model for bilateral free trade pacts since it was signed in 2003. U.S. free trade agreements implemented in 2012 with Colombia and Panama should result in steadily increasing two-way trade.

The Panama Canal expansion project also will provide a boost to hemispheric trade when it is completed in 2015. Ports in the U.S. and Latin America are deepening their harbors and building modern marine terminals to accommodate ships capable of carrying 8,000 20-foot-equivalent container units and more. Panama already is staking out a position as a transshipment center for the north-south trades as it expands port facilities on both ends of the canal.

But except for Panama and Chile, most countries in Latin America lag in infrastructure development. Trade in the region is increasing faster than the development of ports, highways and rail lines, resulting in costly delays in moving cargo to and from seaports. There is a general awareness that infrastructure development must be a priority, and many of the governments in the region now welcome foreign investment in goods movement infrastructure.

If Latin America addresses these challenges, it will build on its natural advantages of proximity to the U.S. market, competitive labor costs and cultural similarities to make the region an important location for near-sourcing to the U.S.  



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