New ‘global value chains’ increase the importance of Brazil-Florida trade | Opinion
The pandemic affected global value chains with shortages of materials along with increases in both production and transportation costs. However, the improvements in efficiency and economic gains achieved in production through global value chains in recent decades should not and will not be simply abandoned.
Global value chains are a form of international production, a division of labor where different activities and tasks are carried out in different countries.
It is in this context that the Brazil-Florida relationship and, of course, the trade between the two largest economies in the Americas, falls.
For U.S. companies, Brazil is the ninth-largest destination for goods exports. The United States, in turn, is the second-largest destination for Brazilian exports and the second source of imports. A striking feature of this trade is that more than half are in high-tech products.
Solid investments
Business relations are also strong in services and investments. The United States is the second-largest source of Brazilian foreign purchases of services and the first in Brazilian foreign sales. U.S. companies have the largest stock of foreign investments in Brazil, with $110 billion, while 65% of the Brazilian multinational companies have a presence in the United States. with more than $15 billion invested.
The numbers are even more impressive for the relationship with Florida. Brazil is the top destination for Florida’s exports, nearly $14.9 billion between 2011 and 2020, or 19.2% of the total sold by the United States abroad.
Trade quality is also important. Seven of the top 10 products sold to Brazil are medium-high or high technology, with emphasis on aircraft and aviation cutting-edge tech products (27.5% of the total) and on other goods such as processors, equipment, medicines or medical devices.
Florida and Texas are the largest partners in Brazil’s exports to the United States. However, while Brazilian sales to Texas have been falling in the last decade, those destined for Florida grew strongly, by 51.3% between 2011 and 2020. If it was a country, Florida would be Brazil’s seventh largest partner.
The high added value of the trade has its origin in bilateral investments between Brazil and Florida. In the last decade, almost $1 billion worth of investments in green field projects (those started from scratch) involved at least 75 medium or large companies in sectors such as finance, aerospace and consumer goods.
New opportunities
With the end of the pandemic approaching, the world is already witnessing a new phase of global value chains. Thus, a great opportunity arises for Brazilian companies to integrate with North America. To achieve this, both businesses and the governments of the two countries should promote an ambitious agenda. This includes actions to bring businesses closer together and governmental actions to improve the regulatory framework between the two countries, by facilitating trade and the convergence of commercial and tax rules.
In the face of this evolving economic and innovative scenario, the president of the Brazilian National Confederation Industry (CNI), Robson Andrade, has recently held key talks with some of his counterparts in Florida to identify bilateral investment opportunities, and set an agenda to reinstate, in strategic sectors, a hemispheric industrial supply chain.
It is time to connect even more closely the two economic and industrial powerhouses, for the sake of a more sustainable and reliable business environment, less vulnerable in terms of supply chain bottlenecks.
Rodrigo Fonseca is a career diplomat and head of the Economic and Commercial Affairs Office of the Consulate General of Brazil in Miami.