Monday, November 12, 2018
Business

Brink: There’s a lot at stake for Florida as NAFTA talks loom

Canada is undeniably one of Florida’s most important international economic partners.

No other country — not China, Brazil or Mexico — is so ingrained in as many parts of the state’s business. Canada ranks tops in visitors, second in foreign investment, second in exports and third in imports into the state.

Canada needs Florida, but we rely on Canada, too.

The long and stable relationship entered a rough patch this year, as the United States and Canada traded blows in an ongoing tariff squabble.

Another uncertainty: The pending renegotiation of the North American Free Trade Agreement. The United States and Mexico are still hammering out differences, after which Canada will rejoin the talks. Florida and Canada are linked in enough ways that any substantial changes to the trade pact will have some effect, for better or worse.

Laurent Morel-à-l’Huissier, consul with the Consulate General of Canada’s office in Miami, remains optimistic.

"Considering that Canada is the No. 1 customer for U.S. goods, and Florida is an important part of that, one can only imagine the impact if trade barriers go up in a world without NAFTA," he said. "It would hurt everyone."

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Last year, Florida and Canada enjoyed more than $7 billion in trade, which supported about 600,000 jobs in the state, the U.S. Census Bureau and the Canadian government reported.

Florida sent almost $3.6 billion in exports to Canada, second only to the nearly $4.1 billion exported to Brazil, according to TradeStats Express. About 22 percent came from the Tampa Bay area.

Much of the trade is highly integrated — companies in both places rely on each other as part of their supply chain and distribution network. It’s a fancy way of saying that we make things together.

Canada, for instance, sends organic chemicals used by Florida’s fertilizer and pharmaceutical manufacturing companies. Some strawberry seedlings begin their lives in Canada. Florida farmers turn them into fruit, which they can sell back to Canadians.

Same goes for the aerospace industry. Both Florida and Canada send each other a lot of airplane parts. Aircraft assemblers in Florida look to Canadian parts suppliers to feed their production, while Canadian companies depend on Florida to boost their U.S. and Latin American sales, said Morel-à-l’Huissier.

"Canada might have better prices or better expertise when it comes to a particular part of a product, or vice versa, the prices and expertise might be better in Florida," he said. "Either way, I think the strong trade ties have helped make Canada and Florida competitive in a global marketplace. The relationship is an advantage that we have against the rest of the world."

Not all the exports are that integrated. Florida sends far more agricultural products to Canada, especially in the winter. In fact, Canada is the largest foreign consumer of Florida’s produce, gobbling up more than $800 million worth of oranges, strawberries, bell peppers and other fruits and vegetables. Canada sends back a lot more meat, grains, furniture, fuel and wood products.

So far, the tariff dispute has centered mostly on steel and aluminum and only threatens about $214 million worth of Florida’s exports to Canada, according to the U.S. Chamber of Commerce. But it’s easy to see how that number could rocket up if the dispute spread to machinery, fertilizer or fruits and vegetables.

As for foreign business investments, more than 580 subsidiaries of Canadian companies call Florida home, including 81 in Hillsborough County and 25 in Pinellas. Only the United Kingdom has a bigger footprint in Florida.

The Canadian companies employ 43,000 people around the state. Some of the bigger names: Circle K, TD Bank, shoe seller Aldo, and Nova Scotia-based Emera, which owns Tampa Electric and TECO Energy.

Canadians also visit Florida much more often. The 3.5 million visits last year equaled the tally of the next four countries combined. They stay longer, thanks largely to the approximately 350,000 Snowbirds, mostly from Ontario and Quebec, fleeing the winter cold. They also spend more as a whole, about $6.5 billion annually and pump about $600 million into tax coffers.

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Canadians bought more real estate, too, about $7 billion worth in 2017 alone.

"When you buy a house, you need beds, a sofa and you buy a blender," said Morel-à-l’Huissier. "That spending doesn’t show up in trade numbers. … But the tax revenue helps pay for schools and roads."

The numbers show there’s a lot at stake as the two countries navigate this difficult stretch. Here’s to coming through it with Florida and Canada still on such strong terms.

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Contact Graham Brink at [email protected] Follow @GrahamBrink.

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