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Florida, Brazil to renew ties, maybe issues

The South American giant is a key trading partner with the state, but battles over citrus remain a thorny subject.

Brazilian ambassador Rubens Antonio Barbosa undoubtedly will be greeted by diplomatic smiles and handshakes when he arrives at Tampa International Airport on Sunday night.

After all, Brazil is Florida's top trading partner and the third-biggest provider of tourists to the state. Brazil's quick recovery from last year's sudden recession can only mean economic opportunities in Florida.

Unless, that is, you happen to work in the state's citrus industry.

Brazil, where orange trees outnumber people, is the world's largest grower of oranges; Florida is No. 2. The gap between the two could widen dramatically if Brazil is successful in a renewed campaign to lower or remove tariffs that have restricted its access to the U.S. market and protected Florida growers for more than a decade.

In Florida, where the citrus industry is second only to tourism with an annual economic impact of $8.5-billion, a tariff reduction could be disastrous. "It's such a struggle now that if (the tariff) was lowered, I think it would put us out of business," said Derrill McAteer, 67, who has grown orange trees in eastern Hillsborough and Hernando counties for 50 years.

The citrus dispute, the main obstacle keeping the United States and Brazil from reaching a free trade agreement, will be the dark undercurrent to an otherwise upbeat affair: Barbosa's first visit to Tampa. Mauro Couto, Brazil's deputy consul general in Miami, said he expects the issue will be brought up repeatedly Monday as Barbosa is whisked from a news conference to a seminar to a luncheon with Florida Secretary of State Katherine Harris.

Organizers and hosts of Barbosa's visit think this is neither the time nor place to debate citrus.

They prefer to talk about the interdependence of Florida and Brazil. They point to the success of Brazilian-owned Florida businesses such as Ameri-Steel in Tampa and how BellSouth has sold 1.6-million cell phones in Brazil since entering the country in 1998. They emphasize ways that Brazilian goods are crucial in everyday Florida life _ clothes, construction materials, and, increasingly, commercial commuter airplanes.

Florida exported $5.8-billion worth of machinery and other goods to Brazil last year, 17 percent of all its exports and more than twice as much as the state's second-biggest trading partner, Venezuela. Brazil is the third-largest importer to Florida, shipping $2.8-billion worth of goods here in 1999.

"What unites us far exceeds the differences," said Manny Mencia of Enterprise Florida, the public-private partnership sponsoring the ambassador's visit. "The opportunities bilaterally far exceed any problems we may have. Florida is extremely important as a supplier and increasingly as a market for Brazil."

Florida's ambivalent relationship with Brazil puts Gov. Jeb Bush in a tough spot. Barbosa's one-day stay in the Tampa Bay area is supposed to lay the groundwork for a major trade mission to Brazil that Bush is leading in July.

"It's a real challenge for the Bush administration. They have to balance these things, and I don't envy them," said Terry McCoy, director of the Latin American Business Environment Program at the University of Florida.

For now, the Bush administration seems to be downplaying the citrus dispute.

Florida Department of Agriculture spokesman Terence McElroy said he did not believe anyone with the department was meeting with Barbosa during his stops in Tampa and Miami. And he didn't see much purpose to airing the issue: "Our position is pretty well-known and would come as no surprise to him or anyone else."

Andrew LaVigne, chief executive of the Florida Citrus Mutual, a co-op representing 11,500 citrus growers, won't push the issue with Barbosa next week for a simple reason. "I wasn't invited," he said.

Florida's international problem is one it helped bring on itself. American growers and processors helped develop the Brazilian orange business 40 years ago as insurance against freezes that have periodically devastated Florida's citrus groves.

Brazil turned out to be too successful, outproducing Florida's groves by the early 1980s.

Beginning in 1987, the United States started imposing heavy tariffs on Brazilian orange juice.

The Clinton administration has maintained the tariffs in what Brazilians see as a sharp departure from its professed free-trade stance. The tariffs run as high as 63 percent, which adds about 30 cents to the cost of a gallon of juice in the United States.

"Trade is supposed to be a two-way street, and we have had substantial difficulty coming into the U.S.," said Couto, the deputy consul general in Miami.

Citing University of Florida data, Couto estimates that the entire citrus industry generates fewer than 200,000 jobs. He said he is mystified that such a "small group of people" could wield enough influence to stop U.S. consumers from getting cheaper Brazilian juice.

LaVigne of the Citrus Mutual contends the tariffs are fair because Florida growers are more regulated and, therefore, have a higher cost of production than their Brazilian counterparts.

McCoy, the University of Florida expert on Latin America, said Brazil uses the tariff fight in two ways.

"It's an issue, but it's also a cover for the Brazilians," he said. "It's not clear how resolute Brazil is in its commitment to implement a free-trade agreement. Brazil has a long history of protectionism."

To protect its citrus interests, Brazilian companies have established a beachhead of sorts in Florida, investing heavily in processing. Between 40 percent and 45 percent of Florida's juice processing industry is now Brazilian-owned, LaVigne said, giving the country significant clout over Florida growers looking for a place to sell their crop.

But the Brazil-Florida connection goes far beyond citrus.

Lucent Technologies, Jabil Circuit Inc., Tech Data Corp., Baxter Healthcare Corp. and dozens of smaller companies are active in South America's biggest country.

Brazil has become a major provider of aircraft to the state, with aircraft/spacecraft imports soaring more than 300 percent to $1.2-billion over the past two years. Florida's Space Coast is poised to reap the benefits from Brazil's development of a spaceport.

Brazil comes to the state for medical supplies, computer equipment and electronics. Florida relies on its overseas partner for footwear, machinery and, perhaps the most important export, Brazilian tourists.

The two economies are intertwined enough that if Brazil gets a cold, Florida sneezes.

Many feared that diagnosis last year when Brazil's economy stumbled, but it turned out to be a sniffle. After two lackluster quarters and a severe drop-off of its currency, the real, Brazil rebounded.

Florida's exports to Brazil fell just 6.8 percent in 1999 and are poised to make up lost ground this year if the country achieves an expected 3 percent to 4 percent rise in gross domestic product.

"I'm bullish on them," said Mencia of Enterprise Florida. "There is probably no market in the world that has more upside than Brazil."

McCoy doesn't go that far, but he believes Brazil is in much stronger shape than a year ago, attracting private capital beyond expectations.

George Martinez, a trade specialist with the U.S. Department of Commerce in Tampa, offers a few points of caution to eager investors.

The savviest investors, he said, are the ones with business partners in Brazil who know how to work the bureaucracy. He also urged American companies to pay close attention to fast-changing global markets.

"Brazil is so subject to external forces with financial crises," Martinez said. "Things could change overnight and affect your bottom line. You have to be prepared to ride the storms."

_ Information from Times wires was used in this report.

FULL TEXT OF CHART NOT AVAILABLE ELECTRONICALLY. PLEASE SEE MICROFILM.

FLORIDA's TOP TRADING PARTNERS

EXPORTS

COUNTRY VALUE SHARE

All countries $34.16-bil 100 percent

1. BRAZIL $5.84-bil 17.1 percent

2. Venezuela $2.61-bil 7.6 percent

3. Dominican Republic $2.25-bil 6.6 percent

4. Argentina $2.0-bil 5.8 percent

5. Colombia $1.81-bil 5.3 percent

IMPORTS

COUNTRY VALUE SHARE

All countries $35.44-bil 100 percent

1. Japan $4.01-bil 11.3 percent

2. Federal Repub. of Germany $2.91-bil 8.2 percent

3. BRAZIL $2.75-bil 7.8 percent

4. Costa Rica $2.71-bil 7.7 percent

5. Dominican Republic $2.44-bil 6.9 percent

Source: Enterprise Florida Inc.

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