Business Monday

Regional FTAs benefit Houston more than South Florida

Ken Roberts
Ken Roberts

Here’s the somewhat surprising truth: Houston has seen its trade grow more rapidly than South Florida after the enactment of free trade agreements (FTAs).

South Florida, it would seem, would be ripe to take advantage of free trade agreements that concern Latin American and Caribbean nations. We are, after all, the Gateway to Latin America or the Capital of Latin America.

The truth is a little more nuanced. And that’s being kind.

Although the United States has entered into numerous FTAs, agreements that generally eliminate or greatly reduce tariffs, duties and quotas, there are five that primarily affect us here: Chile (effective in 2004); the Central America Free Trade Agreement, which includes the Dominican Republic (2005); Peru (2007); Colombia (2011); and Panama (also 2011).

The chart at the right looks at all FTAs, including the North America Free Trade Agreement, the U.S.-South Korea FTA and others, then shows which Customs districts trade most heavily with them. Because of the heft of NAFTA – Canada is the United States’ leading trade partner and Mexico No. 3 behind China – Customs districts trading with those two dominate the chart.

But here’s the somewhat surprising truth that spilled out of the U.S. Census Bureau’s data when I looked at the FTAs with the Latin America and Caribbean nations: Houston has seen its trade grow more rapidly than South Florida with those FTAs after their enactment.

Here’s a quick rundown, FTA by FTA:

CHILE: South Florida accounted for more than 20 percent of all U.S. trade with Chile in 2002 and 2003 – before the treaty went into effect in 2004 – but it happened only once since then, in 2009, according to U.S. Census Bureau data through the first eight months of 2014, the most recent available. The 2014 total is 19.36 percent, the highest total since 2009.

Winners over the last decade? Houston. Its percentage has grown from 10.08 percent to 16.81 percent, making it the second most important Customs district for U.S. trade, behind South Florida. Florida’s other Customs district – the one led by Tampa and Jacksonville – has grown from 1.49 percent in 2002 to 7.21 percent in 2014. San Francisco is up from 2.13 percent to 7.17 percent.

Over the last decade, Chile’s U.S. trade has increased 239.18 percent; South Florida’s slightly less, at 228.47. That’s not a positive.

D.R.-CAFTA: In 2002, South Florida was accounting for a majority of all D.R.-CAFTA trade through the first eight months of the year, at 50.41 percent. It dipped to 46.77 percent the year before the treaty when into effect, in 2005, but no other Customs district was in double digits.

Fast forward to 2014 and South Florida’s percentage of all U.S. trade with the D.R.-CAFTA nations has fallen to a still-dominant 34.96 percent while Houston is at 16.36 percent, up from less than 6 percent.

South Florida’s trade with D.R.-CAFTA nations is up 38.45 percent over the last decade, compared to the U.S. average of 85.25 percent. Houston in that time has seen its trade with D.R.-CAFTA increase 432.95 percent.

Over the last five years, South Florida trade with these nations is up 50.47 percent, compared to 67.22 percent for the nation. Houston? Up 137.643 percent.

PERU: The U.S. FTA with Peru came into effect two years later, in 2007. Here, South Florida fares better. Its percentage of U.S.-Peru trade in 2006 was 17.61 percent, though it has been as high as 25.50 percent in 2002. Through the first eight months of this year, South Florida is accounting for 20.83 percent of all U.S.-Peru trade.

In 2006, when South Florida stood at 17.61 percent, Houston was registering 12.75 percent. In 2014, that percentage has increased to 18.84 percent. In 2011, Houston actually surpassed South Florida to rank as Peru’s top gateway for U.S. trade, a rank it held only that year.

Over the last decade, South Florida’s trade with Peru has grown slightly more rapidly than overall U.S. trade, 222.85 percent to 218.23 percent. Over the five-year period, it is reversed, with U.S. trade outpacing South Florida growth, 88.02 percent to 62.79 percent.

COLOMBIA: Houston is the nation’s leading gateway for U.S. trade with Colombia, a ranking it first snatched from South Florida in 2008 and again in 2010, one year before the FTA became effective. Thus far in 2014, its market share has fallen slightly from the record 30.42 percent in 2013. Prior to this, only South Florida had ever accounted for more than 30 percent of U.S.-Colombia trade, something it last did in 2004.

Since 2011, New Orleans has grown its market share of U.S. trade with Colombia from 8.95 percent to 13.43 percent.

The historical trends are not good for South Florida, either. Over the last decade, U.S. trade with Colombia has increased 238.84 percent while Houston’s trade increased 494.71 percent and South Florida’s 161.09 percent. Over the five-year period, a similar story: U.S. is up 97.23 percent, Houston up 144.84 percent and South Florida is increasing at a 69.06 percent clip.

PANAMA: Finally, there’s Panama. Prior to the 2011 enactment of the Panama-U.S. FTA, South Florida had been the top gateway for U.S. trade with Panama every year except one. In 2012, Mobile, Ala., took the title and this year and last, Houston has ranked No. 1.

South Florida’s market share for trade with Panama had slipped prior to the FTA. For seven of the eight years before 2010, South Florida accounted for more than 30 percent of all U.S.-Panama trade. In 2014, the percentage stood at 20.04 percent, up slightly from 2013, the only year it dipped below 20 percent.

Looking at the five- and 10-year trends, the storyline is a familiar one: South Florida’s trade has grown more slowly than the national average and Houston’s has grown more rapidly. Over the last decade, U.S. trade with Panama has increased 419.70 percent, Houston’s 688.52 percent and South Florida’s 182.29 percent. Over the last five years, U.S. trade is up 157.58 percent, Houston’s is up 293.45 percent and South Florida’s 48.10 percent.

So, South Florida benefits from FTAs within Latin America and the Caribbean – just not nearly as much as Houston.

Ken Roberts is the founder and president of WorldCity, a Coral Gables-based company that pays attention to the impact of globalization on local communities. He can be reached at kroberts@worldcityweb.com.

Customs district trade with FTA partner nations

Change

August

Total Trade

August

1-year

1-year

10-year

10-year

2014 YTD

with FTA nations

2014 YTD

change

change

change

change

All Districts

$ 1,056,898,041,722

$37,193,945,090

3.65%

$449,354,408,103

73.96%

0

1

Laredo

$ 178,734,753,366

$17,882,791,679

11.12%

$95,196,256,261

113.95%

0

2

Detroit

$ 151,339,288,114

$10,301,668,129

7.30%

$29,670,678,016

24.39%

0

3

El Paso

$ 57,652,176,717

-$1,035,623,498

-1.76%

$28,268,585,443

96.21%

0

4

Buffalo

$ 57,285,573,111

$2,124,873,610

3.85%

$10,372,810,034

22.11%

0

5

Houston

$ 55,357,876,677

$4,574,796,680

9.01%

$40,764,443,206

279.33%

1

6

Los Angeles

$ 40,046,573,309

$1,280,025,353

3.30%

$14,232,834,317

55.14%

1

7

New Orleans

$ 36,885,864,041

-$1,133,790,897

-2.98%

$19,094,682,472

107.33%

1

8

New York City

$ 36,348,364,099

$2,324,229,499

6.83%

$11,751,449,342

47.78%

2

9

San Diego

$ 35,810,405,401

$2,618,456,462

7.89%

$14,218,722,976

65.85%

-4

10

Seattle

$ 35,467,297,790

-$4,547,154,054

-11.36%

$14,636,840,583

70.27%

1

11

Pembina, N.D.

$ 34,219,143,540

$1,390,615,035

4.24%

$20,018,144,078

140.96%

-2

12

Miami

$ 30,398,254,573

-$3,493,431,819

-10.31%

$14,025,576,706

85.66%

2

13

Chicago

$ 30,042,201,023

$5,215,322,247

21.01%

$21,358,021,577

245.94%

0

14

Low Value Shipments

$ 29,673,352,722

$1,850,609,244

6.65%

$11,215,503,282

60.76%

-2

15

Ogdensburg, N.Y.

$ 29,056,951,610

-$159,980,533

-0.55%

$7,121,984,479

32.47%

Source: WorldCity analysis of U.S. Census Bureau data

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