Latin America Market Appeals to Texas
Lone Star State leapfrogs Mexico, with its ongoing economic troubles
WHEN 34 nations convene in Denver at the end of June to lay the groundwork for an eventual Western Hemisphere free-trade agreement, Texas businessman Frank King will be present to cheer them on.
"Man alive," he enthuses, "the combined synergies of the Americas will let us challenge anyone." Mr. King directs Latin America marketing at Bell Helicopters, a Fort Worth-based division of Textron Inc.
His optimism is shared by other Texas businesses, large and small. Far from being discouraged when years of free-trade hype were followed last December by Mexico's collapse as an export market, businesses here are leapfrogging that country to penetrate the rest of the Latin American market. Instead of asking about Mexico, Texas exporters are now begging for information on other potential Southern markets, says Teresa de Onis of the Texas Department of Commerce.
"Last year, everything was China, China, China," says John Flick, a United Parcel Service spokesman in Atlanta. UPS shipments to Latin America, excluding Mexico, are up 40 percent this year - with Texas, California, and Florida the biggest shippers.
Texas has seen its exports to Chile, with the lowest tariffs in South America, grow 86 percent in five years. Chile's stable democratic government, low inflation, and free-trade accords with much of the rest of Latin America are appealing. Chile has sustained an economic growth rate above 6 percent for 11 years running - the best record in the Western Hemisphere.
Chile was promised last December that it would be the next country to join the North American Free Trade Agreement.
Then there's Brazil, which boasts the world's eighth-largest economy. "After the G-7, they're next in line," Ms. de Onis says. Brazil is the largest market in Latin America for information technology, which Texas is strong in through companies like Dell, Compaq, and Texas Instruments.
Houston-based Enron, which operates natural-gas pipelines and power plants, is building a $1.5 billion pipeline from Bolivia to Brazil and is negotiating with Sao Paulo's electric company over generating stations worth a similar amount. The company also has pipeline deals in Argentina and Colombia.
"We see those countries as markets that hold good opportunities," says Carol Hensley, an Enron spokeswoman. Enron bills itself as "the world's largest energy company." But small and even home-based businesses are also looking south.
Jan Triplett, president of the Entrepreneurs Association in Austin, led a group to Ecuador last year and plans another trip this summer. "Big [US] businesses were absolutely ignoring" that country, she says.
Her group of would-be exporters and importers made productive contacts with similar-sized Ecuadoran companies. She found that companies from both countries had similar complaints - government regulation and unfair competition - and similar preferences, such as the family feel of small enterprises.
One company on the trip has begun importing Ecuadoran coffee and roses, and plans to bring in leather goods next.
Bell Helicopters has long been active in South America. But business has really picked up in the past few years, King says. For instance, Argentina and Brazil used to have "inflation that was out of sight." Now it's in check, making corporate customers willing to buy again, he says. Last year, Latin sales equaled US sales for the first time. King expects the same this year.
All this is happening with US government blessing. House Speaker Newt Gingrich (R) of Georgia last month promised to give President Clinton fast-track authority to negotiate free- trade agreements with Latin America.